CIBJO Warns of “Reputational Risk” to Industry

A senior official from CIBJO, The World Jewellery Confederation, delivered a wide-ranging speech on the “reputational risk” to diamonds, gemstones and jewelry and ways of countering it at the recent International Jewellery Show in London.

Ernest Blom, president of the organization’s Sector I (Jewellery Manufacturing / Technology / Precious Metals), said consumer confidence in the industry’s products had been shaken by adverse publicity from a range of issues, including conflict stones.

In addition, there was the problem of money laundering, or the alleged purchase of gemstones and jewelry with “dirty” money by groups involved in crime, and more recently, international terrorism, with the intention of masking the money’s true origins.

Blom told his audience that treated and synthetic diamonds and coloured gemstones were also products that created reputational risk for the industry. “Reputational risk is increased exponentially when the true identity of the gemstone is not disclosed, and the purchaser is deceived. Absolute transparency is essential, at every link along the distribution chain,” he said.

Among other issues are fraudulent hallmarks, health risks, such as diamond dust and the use of dangerous chemicals, along with lax implementation of safety standards in developing countries. In addition, environmental damage caused by mining, child labor and the removal of indigenous tribes in African countries from ancestral lands to ease mining have all received extensive media coverage and created a poor image of the industry.

Blom, who is also vice president of the World Federation of Diamond Bourses, said the antidote to reputational risk could lie in self-regulation, backed by a code of business ethics that is agreed upon by the industry. This is problematic, however, since it required enforcement by bodies throughout the world and required a single umbrella organisation representing the entire industry.

Blom said CIBJO was ideally placed to play such a role since “it is the United Nations of the gemstone and jewellery business”, representing miners, rough gemstone and bullion traders, diamond and gemstone cutters, polished diamond and gemstone dealers, jewellery designers and manufacturers, jewellery wholesalers, jewellery retailers and many service industries.