Source certification adds significant value to high-quality diamonds. A polished diamond accompanied by a trusted document revealing its mining origin is more valuable than a similar diamond from an unknown source. While not everyone is concerned about the origin of their diamonds, many consumers, ethical retailers, and brands do care. Source certification is essential because diamonds linked to human rights abuses, money laundering, and terrorist funding can infiltrate the diamond supply chain. Additionally, knowing a diamond's origin allows sellers to promote ethically sourced diamonds and share stories about how these diamonds contribute positively to the world.
Consider this scenario: As a US consumer, you have the choice between a synthetic diamond made with solar energy and a natural diamond from an unknown source, which could potentially be a blood diamond. Which would you choose for an engagement ring? Now, imagine being offered a diamond with a source certificate from Botswana, where diamond revenues support national development, including healthcare, education, clean water, infrastructure, and future economic growth. Which diamond would you choose? How much more valuable is the ethically sourced diamond compared to the unknown one? Source certification helps capture this added value.
Source certification provides three types of added value: emotional, social, and legal. The emotional value is crucial when a diamond gift symbolizes emotional commitment, especially for natural-diamond engagement rings, which face ethical scrutiny and competition from synthetic diamonds. No bride wants an engagement ring associated with death or suffering. The natural-diamond industry is fighting for its survival, particularly in the engagement ring market. Without addressing the ethical issues of blood diamonds, natural diamonds risk losing market share to synthetics.
The importance of source certification cannot be overstated. While it offers many benefits, failing to provide source certification poses significant risks. If we do not distinguish between good and bad diamonds, the natural-diamond industry as we know it will cease to exist. We cannot sustain a business selling luxury items that cause severe human rights violations. The widespread support for the Kimberley Process (KP), which certifies some blood diamonds as legitimate, threatens our industry. If we do not separate good diamonds from bad, we do not deserve to be in business.
Source certification not only defends against bad diamonds but also creates positive value. A woman who receives a diamond that has contributed to making the world a better place feels proud of the diamond, her partner, and herself. She wears the diamond with pride and shares its story with friends. Creating this emotional value is central to the diamond business.
Social added value extends beyond personal emotions, fostering a collective mindset based on ethical values. This groupthink is crucial as new generations of consumers, influenced by social media, develop new decision-making models. Values are now more significant and easily influenced. Authenticity and truth are vital marketing tools that have become challenging to convey.
Society now recognizes the responsibility of spending money ethically. We are accountable for the unintended consequences of our purchases, not just legal constraints related to money laundering or terrorist funding. Ethical considerations now drive consumption. Global warming and other ethical concerns are increasingly important. Selling diamonds in this new world requires adherence to societal norms of ethical behavior. Natural diamonds have become less desirable due to ethical competition from synthetics and industry support of KP-certified blood diamonds. Source certification offers a lifeline, ensuring that ethically sourced diamonds attract new generations of consumers.
Globalization and international economic cooperation are deteriorating as economic conflicts intensify. Trade is being weaponized, and economic sanctions and political boycotts will impact the diamond, gem, and jewelry business.
Source certification provides legal protection as responsible companies strive to comply with sanctions. However, government agencies like the US State Department and the Office of Foreign Assets Control (OFAC) often create misguided regulations. The best protection for legitimate companies is to ensure they can document their diamonds' sources.
The foundation of source certification is traceability, involving physical identification of the diamond through scanning at all production stages. Once a polished diamond is uniquely identified, a Rapaport Source Certificate (RSC) is issued. The RSC accompanies the diamond through the supply chain, allowing small to medium-sized dealers and retailers to trade the diamond freely.
Physical traceability is essential but not sufficient for Rapaport Source Certification. Diamonds must come from reputable mines and manufacturers that adhere to ethical standards. For example, RSCs are not provided for diamonds from Zimbabwe or Angola unless specific conditions are met. Currently, RSCs are only issued for diamonds mined according to Responsible Jewellery Council (RJC) standards and manufactured by RJC-audited members.
Traceability involves repeated scanning throughout the production process, with all data uploaded to an authorized, independently auditable blockchain. Rapaport supports scanning and traceability reporting from various approved companies and technologies.
The process begins with scanning the rough diamond, typically done by the mining company. The rough diamond is then transferred to the manufacturer, where it is scanned again. The diamond is scanned multiple times during manufacturing, ensuring the polished diamond can be traced back to the original rough diamond. The final scan is uploaded to the blockchain, and a uniquely numbered Rapaport Source Certificate is created.
The Rapaport Source Certificate is an independent document that ensures traceability and ethical sourcing. Rapaport will accept diamonds from qualified mining companies and use approved scanning and blockchain technologies.
The diamond trade is undergoing a challenging transition due to competition from synthetic diamonds. De Beers' sales have declined significantly, and further declines are expected. By 2025, natural-diamond demand is expected to recover, focusing on more expensive diamonds for wealthier clients. New diamond jewelry brands will emerge, promoting the legitimacy of their diamonds. It is crucial for the natural-diamond trade to develop reliable source-certification systems.Nobel prize-winning economist Milton Friedman argued that the social responsibility of business is to increase profits. He believed that businesses must be socially responsible to make money. The diamond trade is in trouble, and source certification is a way forward. We must proactively define, document, and market our socially responsible diamonds, promoting the idea that good diamonds make the world a better place. It is a matter of survival.
