International

RITU GUPTA
20MBA2151

Marketing
Management
Assignment 3
CASE STUDY:

Case Study on Ethical Production and Marketing of Diamonds:

The ancient Greeks called diamonds the tears of the gods. Today, we know that natural diamonds
consist of highly compressed carbon molecules. They have become a symbol of beauty, power,
wealth, and love. Nevertheless, diamonds and the diamond trade are plagued by a sad reality: the
exploitation of people for diamond extraction and the use of diamond profits to fund terrorist activity
and rebel groups. Trade in diamonds is highly profitable. The stones are readily converted to cash,
small and are easily transportable, and not detectable by dogs nor do they set off any metal detectors.
Unfortunately, this makes them an easy target for money laundering activities by terrorist and rebel
groups. In addition, their high value encourages some diamond producing countries to employ means
of extraction that may violate human rights. Consider the case in Botswana where a rich diamond
deposit was discovered on the land belonging to a tribal group, the Bushmen. The government
forcibly resettled all 2,500 of them.

The Blood Diamond: Not so Dazzling Side of the Diamond

While women across the world may want a diamond on their finger, the industry’s sparkling
reputation has been tarnished. Reports have shown that profits from the diamond trade have financed
deadly conflicts in African nations such as Angola, Sierra Leone, Congo, Cote d’Ivoire, and Liberia.
In addition, reports by the Washington Post and Global Witness (http://www.globalwitness.org), a key
organization in monitoring the global diamond trade, revealed that Al Qaeda used smuggled diamonds
from Sierra Leone, most likely obtained via Liberia, to fund its terrorist activities. Diamonds that have
been obtained in regions of the world plagued by war and violence are called “conflict diamonds” or
“blood diamonds.” The use of diamonds for illicit activities has been widespread. During the Bush
War of Angola in 1992, Jonas Savimbi, the head of a rebel movement called UNITA (National Union
for the Total Independence of Angola), extended his organization into the vast diamond fields of the
country. In less than one year, UNITA’s diamond-smuggling network became the largest in the world
—netting hundreds of million dollars a year with which they purchased weapons. Diamonds were also
a useful tool for buying friends and supporters, and could be used as a means for stockpiling wealth.
Soon warring groups in other countries like Sierra Leone, Liberia, and the Democratic Republic of
Congo adopted the same strategy. For example, the RUF (Revolutionary United Front) in Sierra
Leone, a group that achieved international notoriety for hacking off the arms and legs of civilians and
abducting thousands of children and forcing them to fight as soldiers, controlled the country’s alluvial
diamond fields and used them to fund their activities. According to current diamond industry
estimates, conflict diamonds make up between 2 and 4 percent of the annual global production of
diamonds. However, human rights advocates disagree with that number. They argue that up to 20
percent of all diamonds on the market could be conflict diamonds.

The Kimberley Process:

Diamonds are generally judged on the “Four Cs”: cut, carat, color, and clarity; some have recently
pushed for the addition of a “fifth C”: conflict. On November 5, 2002, representatives from 52
countries, along with mining executives, diamond dealers, and members from advocacy groups, met
in Interlaken, Switzerland, to sign an agreement that they hoped would eliminate conflict diamonds
from international trade. The agreement was called the Kimberley Process and took effect on January
1, 2003. The Kimberley Process is a United Nations–backed certification plan created to ensure that
only legally mined rough diamonds, untainted by conflicts, reach established markets around the
world. According to the plan, all rough diamonds passing through or into a participating country must
be transported in sealed, tamper-proof containers and must be accompanied by a government issued
certificate guaranteeing the container’s contents and origin. Customs officials in importing countries
are required to certify that the containers have not been tampered with and are instructed to seize all
diamonds that do not meet the certification requirements. The agreement also stipulates that only
those countries that subscribe to the new rules will be able to trade legally in rough diamonds.
Countries that break the rules will be suspended and their diamond trading privileges will be revoked.
Furthermore, individual diamond traders who disobey the rules will be subject to punishment under
the laws of their own countries.
 
Q.1. Read the above case carefully and describe that as a diamond retailer, what options do you
have to ensure that the diamonds you sell are not conflict diamonds?

Conflict-free refers to diamonds which have not financed civil wars. Ethical diamonds go further,
ensuring fair pay, safe working conditions, environmentally sound practices, and no human rights
abuses
According to CNN, these diamonds are defined as, “illegally traded to fund conflict in war-torn areas,
particularly in central and western Africa, according to the World Diamond Council, which represents
the commercial diamond trade.”
Although conflict-free diamond practices continue to be questioned, many companies in the diamond
industry continue to promote their ‘conflict free’ diamonds.
Brilliant Earth, for example, advertises these diamonds as ‘Beyond Conflict Free Diamonds’. Their
website states, “Brilliant Earth goes above and beyond the current industry standards to offer Beyond
Conflict Free Diamonds™ with a listed country of origin of Canada, Botswana Sort, or Russia. Our
select group of diamond suppliers demonstrate a robust chain of custody protocol for their diamonds
and have the ability to track and segregate diamonds by country of origin.”

As an independent diamond retailer, jewellery designer-maker, member of the press or consumer, you
can play a role in driving positive change in any industry by asking questions. The diamond industry
is no exception.

Now, In 2003, the United Nations introduced an international certification program called the
"Kimberley Process Certification System" (KPCS) to prevent the illegitimate usage of conflict
diamonds that is often related to the funding of war and other heinous crimes. This process maintains
a constant vigilance against blood diamonds by tracking the source of every diamond that is being
traded. Now, almost 99% of the diamonds available, comply with the Kimberley Process.
To put a complete stop on the illicit traffic of diamonds, KPCS has implemented some stern measures.
A careful watch is set on the whole process of retrieving the diamonds starting from the initial mining
to the retail sale of the diamonds in order to prevent the diamonds from the conflict sources from
entering in the legal diamond supply chain.

A list of all the strict measures taken by KPCS helps in reducing the dealing of blood diamonds,
some of which are mentioned below:

1. Each consignment of rough diamonds crossing an international border must be:

a> Transported in a tamper-resistant container

b> Accompanied by a government-validated Kimberley Process Certificate

2. Each certificate must be resistant to forgery, uniquely numbered and describe the shipment's
contents.

3. The shipment can only be exported to another Kimberley Process participant country.

4. It is illegal for uncertified shipments of rough diamonds to either be imported or exported by a

Kimberley Process participant country.

5. Failure to comply with these procedures can lead to confiscation or rejection of parcels and/or
criminal sanctions.

6. If any concerns arise regarding a country's adherence to the Kimberley Process, they are
investigated and dealt with at an intergovernmental level.
Q.2. Describe trade in diamonds through the perspective of ethical and legal marketing

The term “ethical diamond” has emerged as a way for conscientious consumers to identify diamonds
that are mined without exploiting workers or the environment. 

Through the perspective of ethical and legal marketing we can look out for the following:

1. Regulatory Framework and International Standards

The natural diamond industry abides by numerous international human rights frameworks and labor
regulations, alongside country-specific regulations and further rigorous ethical, social, and
environmental requirements to ensure it does business in the ethical diamond industry in a responsible
way.

The Kimberley Process

The Kimberley Process, also known as the Kimberley Process Certification Scheme (KPCS), is a joint
initiative between governments, diamond industry bodies and civil society, mandated by the United
Nations and the World Trade Organization, to stem the flow of ‘Conflict Diamonds.’

“The Kimberley Process has been notably successful in promoting peace in diamond-producing
countries.”

2. Ethical Diamond Industry Standards

The diamond industry goes above and beyond the Kimberley Process by committing to a range of
self-regulatory measures that encompass people, planet, and business ethics. This includes codes of
conduct and guidelines for the diamond industry, as well as third-party oversight measures and own
in-house due diligence structures. This is an ongoing, proactive and reactive process through which
diamond companies can ensure they protect human rights and generate value from sustainable
diamonds.

World Diamond Council System of Warranties

As the body that represents the diamond industry in the ‘tripartite composition’ of the Kimberley
Process, the World Diamond Council created the System of Warranties (SoW) to strengthen the
KPCS through diamond industry self-regulation that covers not only trade in rough diamonds, but
also trade in polished diamonds and diamond jewelry.

Sustainable Companies
Sustainable companies trading in natural diamonds must keep records of the warranty invoices they
receive and the warranty invoices they issue. This flow of warranties in and out must be audited and
reconciled on an annual basis by the diamond company’s own auditors.

Responsible Jewelry Council Codes of Practice

The Responsible Jewelry Council (RJC) is the leading global standards and certification organization
for the jewelry and watch industry and brings together a global set of standards providing clear and
independent assurance.

3. Diamond Company Initiatives

The diamond industry therefore works tirelessly to ensure that consumers can buy diamonds with
confidence. Numerous companies have established their own standards and assurance processes to go
alongside international and industry-wide legislation and standards.

Supply Chain Initiatives

Many organizations also set up their own diamond standards based on and in addition to international
ones to cascade responsible business conduct from sustainable diamonds along the diamond supply
chain. For example, natural diamond producers have developed business practices requirements for all
those doing business with them. 

Environmental & Ethical Diamond Initiatives

Large scale diamond mining companies also adhere to strict environmental standards and develop
environmental management, monitoring, and protection plans. These plans are created in
collaboration with local communities, as well as local and national governments, through a
comprehensive multi-stakeholder engagement process that begins before permitting, well over a
decade before one single sustainable diamond is recovered.
Q.3. If you are managing trade of diamonds in your organization, based on the above cases
what steps and ways will you suggest to make your product legally and ethically accepted in
world market. 

In order to counteract any potential harm, ethical practices have been adopted to improve both
sustainability and the quality of life for those sourcing the gems. There are a number of ways in which
these changes have been implemented.

Supply chain transparency.

Added impetus has been placed on ensuring each step of the diamond mining process is recorded and
made publicly visible. That means tracing the origin of a diamond from the moment it’s found to
when it’s used for jewellery.

So far great progress has been made in this regard, with De Beers even going as far as to create a
blockchain platform which allowed them to trace the journey of any diamond from the earth to a
shopfront. This guarantees only sustainable methods have been implemented.

No use of child labour.

It goes without saying that the use of child labour – especially in such harsh conditions – goes against
what most people are willing to tolerate. Shockingly, mines in India and Africa sometimes use this
type of workforce.

This will often resort in kids missing out on an education, in the process condemning them to a
lifetime of mining work. Unsurprisingly, ethical jewellery bans the use of an underage workforce.

Despite exisiting child labour laws forbidding the practice, some developing countries will overlook
the regulations. Organisations like Diamonds For Peace are working to ensure all sanctions are
enforced, to prevent any further harm to the youth of third world countries.

More money and resources given back to the local community.

The government in countries which have diamond mines will often benefit from taxation on the gems,
as well as profit-sharing arrangements. Mining companies also take a large percentage of the money
earned.

Ethical diamonds can only be classified as such if there’s clear evidence of the local community
receiving a fair and equal cut of the money being made. This can be pumped back into crucial
resources like education, health and housing.

It’s hard to know for sure if the diamonds you’re purchasing are from areas where a labour force is
given a fair and equal pay. As such, it’s best to turn to fairtrade institutes. They help to set up a system
where those sourcing the diamonds are able to directly benefit from profits.
Recycled diamonds.

Recycling is a viable option for the diamond community. It’s sustainable because precious gems are
repurposed. Using jewellery which has already been sourced means you cut out the mining process.

A limited impact on the environment.

While diamond mining is less hazardous to the environment than most forms of mining (owing to the
lack of harmful substances present), it still poses a potential risk.

When ripping up large layers of the Earth’s crust, local ecosystems can be majorly disrupted. This can
have a detrimental impact on wildlife, greenery and even small villages if their water system is
disrupted.

In countries like Namibia and Botswana, systems have been put in place to ensure the surrounding
ecosystem is protected when mining occurs. Artisanal mines are also a brilliant way of ensuring
minimal damage is done to the world around us.