A LEGISLATIVE CLOCK IS TICKING
‘ESG is that light in the distance that actually is a train rushing towards you. Just as it was in 2003, when many awoke and realized that compliance with the Kimberley Process was now a legal obligation, so it soon may be with ESG.’
Gaetano Cavalieri is President of the World Jewellery Confederation (CIBJO). Uniting national jewelry and gemstone associations from more than 45 countries, and including many of the industry’s major corporations and international associations, it is the industry’s oldest international body, having been established in 1926.
In 2006, he was responsible for CIBJO receiving “Special Consultative Status” with the United Nations Economic and Social Council (ECOSOC), making it the first and only jewelry and gemstone representative to be officially recognized by the international body.
APRIL 10, 2025
I am one among the few jewelry and gemstone industry leaders who already held office when, 25 years ago, the full significance of the conflict diamond crisis became apparent. I participated in a good number of those initial meetings, starting in 2000, as we began to understand that the world as we knew was about to change forever.
The launch of the Kimberley Process Certification Scheme (KPCS) on January 1, 2003, was a watershed moment not only for the international jewelry trade in general, but for us in its leadership as well. This is because it represented the first significant effort by government authorities, and with our support I would note, to override our authority, by monitoring and regulating the flow of goods though our supply chain.
This is not to say that we had not experienced government regulation before the KP. In many countries, regulatory systems, such as those which issued us licenses to operate, were a fact of life. But they were imposed to ensure that the countries in which we lived derived full economic benefit from the trade in precious metals and gemstones. The KPCS focused on broader social consequences, most often in foreign lands, rather than exclusively on monetary impacts.
Indeed, before the launch of the KPCS, most corporate responsibility programs were voluntarily applied, and not only in the diamond and jewelry industries. There were exceptions, of course. Mining companies, including those serving our industry, were already subject to strict environmental regulations, and some of you may remember the Montreal Protocol from the late 1980s, which was a global agreement to protect the Earth’s ozone layer by phasing out the chemicals that deplete it. But those were outliers.
The author in 2024, before addressing the United Nations General Assembly in New York.
During the past two decades, however, we all have witnessed an increasing readiness on the part of governments to impose standards of practice on their business sectors. A good deal of this has been driven by global warming. Growing concern about climate change, which had first led to the Kyoto Accord in 1997, produced the Copenhagen Accord in 2009 and the Paris Agreement in 2015. These instigated the passing of laws, regulations and decrees around the world, as countries moved to comply with obligations that they had taken upon themselves internationally, which now needed to be applied domestically – not dissimilar to the process applied with the KPCS.
But it was not only environmental behavior that was becoming more regulated. The global recession of 2008 was a seismic event, which raised fundamental moral and ethical questions. Public anger about the causes of the worldwide recession led to the passing of legislation designed to prevent financial institutions from unilaterally taking the types of risks that led to the crisis. The most prominent of the laws passed during this period was most probably the Dodd Frank Act in the United States, which was approved by the U.S. Congress in June 2010.
As it so happened, the Dodd Frank Act had an unexpected and substantial effect on the jewelry industry. This is because it had a codicil added to it at the last moment, which was almost not debated by Congress at all, but still was approved. Known as Section 1508, it enacted a supply chain reporting requirement on publicly traded companies that bought gold, as well as three other minerals used mainly in electronics—tin, tungsten and tantalum—from the DRC and its neighboring countries in the Great Lakes region of Africa. As a result, many gold merchants simply selected to stop buying gold from suppliers in the Great Lakes region, so as to avoid the regulatory requirements in the law. The social and economic impact on local communities in the area, who were dependent on gold mining for their livelihoods, was devastating.
Initially, very few people appreciated the significance of Section 1508. One who did was a friend and colleague, Michael Allchin, who at the time was Assay Master of the Birmingham Assay Office in the United Kingdom and also President of the CIBJO Precious Metals Commission. Having spent much of his childhood in Kenya, he had a strong emotional connection to East Africa. I remember well the seminar in Italy in which Michael made the chilling prediction of what was about to happen to millions of innocent people living in the region.
Ultimately, it was the unintended consequences of Section 1508 of the Dodd Frank that led to the OECD setting up the Forum for Responsible Mineral Supply Chains, which in turn led to the publishing in 2011 of the first edition of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. It became the foundation stone for a range of more well-thought-out responsible minerals statutes and regulations in Europe, Central Africa, the Middle East and the Americas, in addition to market and exchange requirements in Europe and Asia. Among them was the Conflict Minerals Regulation passed by the EU in May 2017, for which CIBJO was a key advisor.
Fast forward to today, and there clearly is an increasing tendency of governments to impose on business stricter requirement concerning ESG (Environment, Social and Governance) practices.
Compared to the earlier perspective of Corporate Social Responsibility, which saw it as a largely aspirational set of practices that focused on ways in which companies would act to reduce negative impacts and increase positive impacts, ESG is a more methodologic approach that prescribes quantifiable activities and benchmarks to reflect one’s external impacts on society and the environment.
CIBJO’s ESG wheel for the jewelry industry, showing 14 environment, social and governance principles, at the Sustainable Development Goals related to each. The wheel was designed for CIBJO by ESG consultants Jon Key and Helen Mitchell.
And ESG is fast becoming the law of the land. On June 2023, the European Commission enacted its first set of ESG regulations, requiring companies to track and collect relevant data. They will be phased in over time, but by 2027 they will cover a large portion of the jewellery industry, as well as non-European companies supplying the markets of the EU.
And the EU is not alone. Similar packages of legislation are being debated and voted on in other countries and regions, among them the United States, the United Kingdom, India, Australia and China.
We in CIBJO released our first guidance document outlining ESG principles in January 2024. Initiated by our Laboratory-Grown Diamond Committee, it was designed to assist companies in that sector face greater regulatory requirements. While relevant to businesses of every size, the document was formulated with the specific needs of small and medium-sized enterprises in mind. It was made available for downloading at no charge on the CIBJO website.
The guidance document presented 14 specific principles, five of which relate to environmental policy, four to socially responsible policies, and five to governance. Each principle includes a set of recommended actions, and an indication of its relevance to specific United Nations Sustainable Development Goals. These were presented graphically, using what we now refer to as CIBJO’s ESG wheel, a design that was the brainchild of the two ESG consultants we have been working with.
In January 2025 we released our second ESG guidance document. Called the “CIBJO Guidelines for Measuring ESG Performance,” it was again developed by the Laboratory-Grown Diamond Committee, this time working in close collaboration with our Sustainable Development Commission. It, too, can be downloaded at no cost from the CIBJO website.
The second document provides measurement areas and metrics, not only for the laboratory-grown diamond sector, but for different parts of the industry and distribution chain as well, and is applicable to both larger and smaller companies. They are built around the 14 earlier designated ESG principles, identifying between four and 16 measurement areas, as well as sample metrics, for each principle.
The work done thus far was a prelude and foundation for a project currently being undertaken by our Sustainable Development Commission, the goal of which is to produce a comprehensive “ESG and sustainability roadmap” for jewellery market participants. It will condense the vast array of ESG topics and sustainability objectives into a structured and prioritized framework, tailored to the specific needs and characteristics of the sector. Framed around the concepts of “our People, our Planet, and our Products,” with a set of key priority industry issues associated with each, the roadmap will provide a clear set of reference points to enable jewellery companies to focus their resources, efficiently and effectively, on the ESG issues of most relevance to their businesses. It is envisioned that it eventually will achieve the status of a CIBJO Blue Book.
Writing these words, I am conscious of fact that many of you may be asking yourselves what has this got to do with me? Discussions about ESG policies is commendable, you may be thinking, but for most is detached from the day-to-day management of our companies. But I would caution that a legislative clock is ticking, and ESG is that light in the distance that actually is a train rushing towards you. Just as it was in 2003, when many awoke and realized that compliance with the Kimberley Process was now a legal obligation, so it soon may be with ESG.