As we enter the holiday selling season, Jewelers of America’s Risk Report offers a snapshot of some of the hot-button issues that could affect the jewelry industry during this important time.

The Jewelers of America Ethical Initiatives Committee met on Thursday, October 21 to discuss and review both risks and opportunities in the supply chain. What follows is a summary of the latest reputational risk analysis prepared by for the Committee by Sustainable & Responsible Solutions (SRS), a UK-based consultancy that specializes in risk assessment and strategy.

For information on how your business can address these challenges, please access JA’s Member Guidance.


Unrest Leads to Greater Risk


OECD Report Highlights Venezuela Risks to Gold Supply Chain 

As highlighted in September’s Report, mining from Venezuela has been linked to violence and corruption. Since that update, the OECD released a new report highlighting the multiple risks in “Gold Flows from Venezuela” where it noted that violations extend beyond human rights abuses and environmental destruction and include criminal economies linked with various forms of trafficking and money laundering, as well as the financing of terrorism. This follows earlier reports, including a UN Report from 2020 charging Venezuelan authorities had failed to investigate crimes linked to the industry, in the region of Arco Minero del Orinoco.

The situation is compounded by the fact diamonds are also produced – alongside gold – in the country and could soon be exported with KP Certificates.


Taliban Takeover Could Impact Gem Supply

The Taliban swiftly made gains in Afghanistan, with Kabul falling in late September. Since that time, the US and other governments have not clarified how the country’s gemstones – particularly lapis lazuli, where it is the world’s largest producer – will be affected. There are no current sanctions on lapis or any other gems from Afghanistan, which include emeralds, aquamarine, tourmaline and kunzite. That said, several Taliban Ministers – including the Minister of the Interior – are named in international sanctions with ties to terrorist groups.

Jewelers of America continues to monitor these and other situations and will share information with members as it becomes available. Given the high level of risk and uncertainty, Jewelers of America advises members to conduct due diligence, following the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, when sourcing from these high risk regions.


Kimberley Process to Hold Hybrid Plenary

The 2021 KP Plenary meeting will be held from November 8-14, primarily through Zoom, but with some attendees in Moscow. On the agenda are decisions regarding the 2023 Chair, the definition of conflict diamonds and establishment of a permanent Secretariat. Expectations are that while some technical decisions could be reached – such as the digitalization of KP Certificates, significant progress will continue to be hindered by the consensus decision-making system. Industry, represented by the World Diamond Council, will continue to push for reform as well as better understanding and awareness of consumer pressure among producers.

 

World Diamond Council Launches Online Toolkit

Even as the KP continues to resist major change, the diamond industry took a major step forward on September 21 as the World Diamond Council (WDC) announced the public launch of its updated System of Warranties statement and adopted SoW Guidelines, including a dedicated website where SoW users will be required to register and complete an online self-assessment annually. Industry stakeholders of all sizes can use the portal to gauge their compliance with the WDC Guidelines. Once a self-assessment is completed, the system will generate a PDF with the user’s responses. It is recommended that businesses print it and/or store it on their own system.

As a Jewelers of America member, you should make sure that you are using the updated SoW statement:

“The diamonds herein invoiced have been (sourced) purchased from legitimate sources not involved in funding conflict, in compliance with the United Nations Resolutions and corresponding national laws (where the invoice is generated). The seller hereby guarantees that these diamonds are conflict free and confirms adherence to the WDC SoW Guidelines.”

Buyers and sellers of rough diamonds, polished diamonds and jewelry containing diamonds are required to use the SoW statement on all of their invoices.

The revisions strengthen the SoW so that it not only addresses the minimum requirements and recommendations of the KPCS, but holds adherents to additional areas of compliance related to human rights, anti-corruption and anti-money laundering.

To get more information on the changes to the WDC SoW and create an account, visit www.wdcsow.org.

JA has updated our Kimberly Process & Conflict Diamonds guidance to reflect these changes.

About JA’s Industry Risk Reports

Staying well ahead of the curve on issues that can damage consumer confidence or restrict your business operations is a critical component of the work Jewelers of America is doing on behalf of our members. In fact, part of our Board governance includes a committee dedicated to ethical initiatives within the industry. Each quarter, the committee reviews a professionally prepared “risk report” to identify key risks -- and opportunities -- facing the jewelry sector. While we don’t have a crystal ball forecast of the future, the risk assessment reports help Jewelers of America develop member guidance on issues, so your business remains risk-free and your reputation secure.

For further information, JA Members have access to a full range of Member Guidance and can browse past Risk Reports. 
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