It’s a new year and jewelers are being met with many of the same ongoing challenges, with other potential risks on the horizon. 

The Jewelers of America Ethical Initiatives Committee met on Monday, January 10 to review and discuss these issues. Jewelers of America’s Risk Report offers a snapshot of the latest reputational risk analysis prepared 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.


Key Areas of Concern for the Jewelry Industry


Central African Republic 

Unrest in the country continues to pose challenges. In December 2021, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) updated its sanctions on CAR and while there are regions that are considered “green zones” where diamonds can be exported via the Kimberley Process, the WDC has warned companies to practice due diligence. In closing remarks during the 2021 KP Plenary, WDC President Edward Asscher expressed industry support for suspending the expansion of green zones in CAR until the KP can verify it can be reliably implemented in non-compliant parts of the country.


Myanmar (Burma)

US sanctions that target companies in the gemstone and pearl sectors are likely to continue as the military junta remains in control and has sentenced elected leader Aung Sung Suu Chi to years of imprisonment to be served cumulatively for several offences, including using an “illegal walkie-talkie.” Significant evidence is also emerging of international human rights crimes carried out by the Myanmar military, with both photographic and video evidence coming to light.


Global Watch List

In addition to those issues/sanctions that are having a direct impact on the jewelry supply chain, Jewelers of America is keeping an eye on areas where conflict could affect jewelry in the future:

Russia

Tensions are high as Russian forces have amassed on the border with Ukraine and threaten to invade. The high stakes of the situation, with the US and other Western powers promising harsh sanctions in response to an invasion, go well beyond the jewelry industry. However, diamonds are a major source of funding for the Russian government; a move to hurt the country financially could include sanctions that impact the diamond trade.

Afghanistan

While the US State Department continues to allow international aid to the country, the question of targeted commercial sanctions on the Taliban government remains an open one. Given that Afghanistan is the world’s largest producer of lapis lazuli and a source of emeralds, aquamarine, tourmaline and kunzite (among others), there is ongoing concern over how the politics of the region will hit the gem trade. JA recommends practicing due diligence when sourcing from the region.

Ethiopia

Fighting in the northern Ethiopian region of Tigray has spread. The Tigray region’s dominant political party, the Tigray People’s Liberation Front (TPLF) have been on the offensive in response to the Ethiopian President sending in the army to detain TPLF leaders. Current estimates are that the TPLF now control well over 60 percent of the entire country. The war is expected to be ongoing, with neighboring Eritrea supporting the TPLF forces. The Tigray region has a 300 square mile sapphire field and Ethiopia also produces diamonds, gold, platinum, emeralds, opals and tourmaline. Eritrea produces gold, copper and silver.

Jewelers of America advises members to conduct due diligence to assess risks throughout their supply chains. While the risks change, being proactive by following best practices, including the JA Code of Professional Practices, OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and the World Diamond Council’s System of Warranties.

Kimberley Process Holds Hybrid Plenary

The 2021 KP Plenary meeting, held in November via Zoom and in person in Moscow, included some small progress. The industry welcomed the KP Declaration on Supporting Principles for Responsible Diamond Sourcing as Best Practices, which WDC President Edward Asscher called “a positive step that further highlights the important role of the KP in stemming the flow of conflict diamonds.” That said, there was disappointment that a decision was not made to expand the conflict diamonds definition. Leading the industry’s efforts, WDC will position the conflict diamonds definition as a priority agenda item when the KP undertakes its review cycle. Asscher also made it clear that the industry is moving forward with measures – starting with the WDC’s updated System of Warranties statement and adopted SoW Guidelines – given the slow changes within the KP.

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. 
Follow Us: Facebook Twitter Pinterest Instagram Linkedin