Ethically Traded Diamonds

The ethics of diamonds: a subject which relates to the mining practices, that in addition to adhering to the laws that govern this process-which differs from country to country-also relates to the adherence of social and environmental concerns that surrounds not only the mining but also, the sourcing, and trade of these gemstones and its relationship to the wider community. Thus the business of purchasing an ethically traded diamond is a question that goes all the way back to the source, and to virtually every other stage that involves the journey of a diamond: From the mining of these minerals: the character of environments from which they are sourced; the leadership structure of those who manage the mines and their wider social function in society; the safety and socio-economic well being of those who work the diamond mines, and the role profits that are made from this process and their destination. And how all of these factors relate to the expectations of consumers. As one can see there are numerous factors that work into this equation, with each being interconnected with others. So the challenge lies in clarifying the nature and importance of these stages of diamond production (e.g. the country origin, the well-being of the workers), and understand how they come to impact the final decision of the consumer. As a first step when it comes to understanding how to purchase an ethically traded diamond it is important to first understand the factors that contribute to the unethical character of diamonds.

What Makes a Diamond Unethical?

The simple answer is that there are too many to list. First, one needs to understand the nature of diamond mining in order to understand why the question of ethics arises. The ethics of a business is not always tied to the profits that can be made via the venture. As students who have spent any time in Business School would know, the pursuit of profits and the concern for the wider environment do not always fit together. Profits, if they become the sole driver of the enterprise, would mean that the human and invariably the social dimension of the business is likely to suffer. Since businesses naturally operate in environments that are connected to the wider legal, economic, and important political, social, and natural environments. Thus the decisions made by the organization invariably affects these other external factors. Further, the ethics of a business also relates to its internal environment. A key factor being the well being of workers. How each of these factors relates to each other within the business and those in the external environment, comes down to the nature of the business and the manner in which it seeks to operate in the wider social environment.

Artisanal Mining

Most of the diamonds in the world come from the continent of Africa. Africa has long been the main home for top naturally sourced diamonds. The history of diamond mining in Africa is a vast subject, one which we have engaged in a dedicated blog post. First, it is important to understand that not all of the major diamond operations are carried out by the world’s top diamond miners. Many of these smaller diamond mining projects based in Sub Saharan Africa, a part of the world that is stricken by lower economic development, political instability and conflict. Owing to these factors the mines and those small enterprises that run them are projects which often not accompanied by huge investments in machinery, support infrastructure, and codified employment laws. All of which have an adverse effect on the well being of workers. In parts of Africa, a relatively large number of these diamond mines are controlled by such small local operations, known as artisanal miners. These localised operations owing to their smaller scale, function with less formal organizational structures, and with lack of international oversight. Those that the large diamond corporations are subjected to. Hence they are prone to many of the troubles that affect diamond mining. The problems faced by these smaller, local miners are much fold. First, the lack of infrastructure and expert oversight means that the business processes are not always optimal when it comes to worker well-being, environmental safety and compensation.

Further, given that these operations are taking place in developing, and unstable parts of the world, the ability of the local governments to enforce these standards are also weaker. Thus those involved in such work, either as employees and owners are subject to the many unpredictable conditions which affect the ethicality of the final product. For when one speaks about the ethical character of diamonds, a key determinant is the integrity of the process that has led to it. If the mines where the diamonds are sourced are dangerous, with workers being subjected to long work hours; if it employs minors and those who are not physically able. And if the compensation is below the minimum threshold, then the diamonds that result from such a process fall under the unethical category. Further, the trade-in of diamonds is not always conducted through formal channels. Often times the distributors and other middlemen who are involved in the trade are involved in or support political and military coups. Given the unstable character of the region, with low economic development, the diamond trade is a lucrative means of financing not only livelihoods but also conflict. Which takes us to the next subject.

Blood Diamonds

The subject of blood diamonds was popularized by the 2006 Hollywood movie, which deals with precious stones which are mined in war zones, and where the profits from the sale of diamonds go to the funding of armed conflicts. The subject of blood diamonds is a complicated matter as it relates to the profits that are made in conflictual environments, but also those that involve established governments (i.e. those who are not insurgents). Which introduce new complexities. For some times the insurgents are involved in armed conflict against oppressive governments, thus giving their actives a degree of legitimacy. Or when an oppressive government (a common sight in parts of Africa) fights to stay in power and uses profits from the local diamond trade to sustain its power. Blood diamond is often associated with conflict minerals. Owing to the fact that diamonds are amongst the many natural resources which are exploited to fund conflict that lead to, and increases regional instability.

Unstable Governments

As noted diamonds are primarily sourced from the continent of Africa. Particularly from the highly unstable Sub-Saharan parts of the region. A characteristic of this region is the prevalence of weak or unstable governments. The weak political environment, characterised by poor law enforcement, broken down or non-existent infrastructure, social instability in addition to weak economic fundamentals all contribute to the conditions that enable the rise of many of the problems that relate to unethical diamonds, and by extension to the much broader problem of conflict minerals. For the trade-in, diamonds are not the only precious resource that is driving or contributing to the prevalence of conflicts in the region. Africa is a continent rich in many mineral resources, and given political instability, poor institutions, and weak economies all contribute to a negative cycle that gives rise to a diamond trade that causes harm to humanity. In sum, the problem with unethical diamonds is the result of weak institutions, which are characteristic of the African continent.

The Kimberly Process

The Kimberley Process is a multilateral trade aggrievement that was put in place in 2003 and was implemented to ensure that the diamond industry made special efforts in tracking the origins and movement of diamonds through the supply chain to ensure they are conflict-free, and by placing roadblocks that stop or inhibit the flow of conflict diamonds. The effectiveness of the Kimberly process has been brought into question in recent years, owing to the limitations in tracking the entire journey of the diamonds from mines to the hand of consumers. The many stakeholders, local and international, who are involved in the process can err in more than one ways, and the difficulty of overseeing the process at every stage raises questions on the efficacy of the Kimberly Process. Oftentimes the problem with unethical diamond is not always their relationship to conflict minerals, but the nature of the business practices that characterize the efforts at their mining and trade.

Lab-grown Diamonds

Whilst lab-grown gemstones like sapphires and diamonds have been around for a while, as they have been an industry staple when it comes to manufacturing and other business practices. Lately, the growing awareness of the vast efforts that go into the mining, transport, and production of high-quality diamonds has led to a growing interest in such lab-grown variants for the sake of consumer use. Lab-grown mines which have been noted for their cleaner, more environmentally friendly character; have attracted the attention of new diamond buyers. Notably younger, more environmentally conscious millennials. For lab-grown diamonds, besides being relatively cheaper options, are viewed as the ethical choice from an environmental standpoint. Given the wider awareness of the global challenges that people in countries like Africa are facing and the need for more sustainable mining practices, lab-grown diamonds are viewed as a good choice. But these too come with a set of weaknesses: such as the low resale value. So it is a balancing game from the standpoint of the buyer who is seeking top-quality gemstones.