Unraveling Hidden Value in
Unraveling Hidden Value in Diamond Sourcing
The diamond industry remains under pressure to improve its supply chain transparency, driven by a global push for sustainability and increased consumer demand for ethical sourcing (read more on diamond provenance and blockchain diamond tracking). Customers increasingly require supply chain transparency from the diamond industry – however, change is complex. In particular, midstream manufacturers face cost pressures, and struggle to differentiate. This leads to low margins and financing challenges that stifle modernization and data sharing. While progress has been made in ethical sourcing, issues persist around conflict zone sourcing, worker exploitation and environmental degradation.
It’s true that sustainability leadership in diamond manufacturing has risen up the agenda in recent decades. There are now clear examples of how both downstream leaders (retailers, jewelers, brands, etc.) and upstream leaders (top mining companies, their associations, and governments) can bring about positive change when they work closely with each other to extend best practices to smaller diamond manufacturers. These leaders can effectively stretch their sphere of influence further along the supply chain.
Where does this leave the midstream leaders? It’s important that they do not become the missing link in the chain, but act in concert with wider stakeholder groups and strategies. Similar to the midstream stakeholders in the electronics industries, midstream actors are ultimately responsible for carrying out a large proportion of the practical sourcing and reporting activities. This includes reporting reliable geographic origin, implementing third-party audits of their entire traceability systems, and in some cases, reporting specific indicators of risk and improvement regarding social or environmental impacts where diamonds or other gemstones are mined. But the midstream leadership cannot impact or implement change on the ground without significant support well beyond their immediate purchasing practices.