The presentation was delivered by senior officials of the WDC, who have provided an overview of the organization’s revised System of Warranties during two sessions on April 24 at the 13th Forum on Responsible Mineral Supply Chains of the Organization for Economic Cooperation and Development (OECD) in Paris.
During the briefings, WDC President Stephane Fischler described the revised System of Warranties as an “essential building block” for participants in the diamond supply chain towards implementing the OECD’s due diligence guidance for minerals from high-risk areas.
The OECD due diligence guidance has over the past several years become the gold standards for ensuring the integrity of minerals from areas of the world afflicted by civil war, other acts of violence and gross human rights violations. It involves a five-step process, for which the System of Warranties would contribute to part.
COMPANIES WILL NEED TO SELF ASSESS
The WDC’s revised System of Warranties was approved by the organization’s Board of Directors in October 2018. Like the earlier version, it requires all participants in the diamond and jewelry value chain, from mining companies to jewelry retailers, to issue warranty statements on their B2B invoices and memos, testifying that the diamonds being sold originated from sources in compliance with the Kimberley Process Certification Scheme (KPCS).
But the statement now also verifies that the participants adhere to a strongly strengthened system, which now will require that they conduct a self-assessment to ascertain whether they comply with universally accepted principles on human and labor rights, anti-money laundering and anti-corruption.
The revised SoW Guidelines specifically reference the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the UN Convention Against Corruption, and also national AML guidelines that comply with the FAFT 40 Recommendations on Money Laundering for Dealers in Precious Metals and Stones.
WDC President Stephane Fischler addressing the OECD conflict minerals forum in Paris.
Participants at the OECD conflict minerals forum discussing the diamond industry, in Paris in April 2018.
DESIGN TO PROTECT CONSUMER CONFIDENCE
“The revised SoW has to be seen within the context of a range of responsible supply chain opportunities being offered to a very diverse industry,” said Fischler. “The ultimate objective for all of us is the same – ensuring consumer confidence in the products we sell. The different systems need to be complementary, being building blocks on the road to full compliance.”
“The revised System of Warranties is designed to support the KPCS, covering not only the trade in rough diamonds, but polished diamonds as well, and also trading between every participant in the diamond and jewelry value chain, and not only trade between participants in different countries,” explained Peter Karakchiev, the CIBJO Board member who chaired the side event on April 24 that reviews the new protocol. “We are hoping that the KPCS will be expanded to include provisions related to human rights, labor rights, anti-corruption and AML, but we are not waiting for it to happen, and have already incorporated those elements in our own system.”
Fischler and Karakchiev both explained that diamond companies are not permitted to pick and choose what elements to implement. “Members of the trade who implement the SoW are required to fulfill all of its elements depending on their size and sector, as they are outlined in the guidelines,” Karakchiev said.
It should be noted that implementation of the System of Warranties is already required by a range of industry bodies, including RJC, the World Federation of Diamond Bourses (WFDB), De Beers’ Best Practice Principles and CIBJO’s new Responsible Sourcing Blue Book, and the procurement guidelines of Signet Jewelry, the world’s largest jewelry retailer.
To assist in the implementation of the new Warranties, WDC is a creating a toolkit based on self-assessment questionnaires, which will assist members of the industry in properly evaluating how they are complying with the process. It will take into consideration the stage or stages of the diamond and jewelry value chain in which the member is involved, the size of the member’s business, and whether the member is already compliant with other due diligence systems, like that of the Responsible Jewellery Council.