The System of Warranties (SoW) was introduced by the World Diamond Council (WDC) in 2002, acting on behalf of the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA), as an industry self-regulation system that would indicate that diamonds being sold comply with the minimum requirements of the Kimberley Process Certification Scheme (KPCS), which was scheduled to be launched at the beginning of 2003.
Unlike the KPCS, the SoW covers not only the trade in rough diamonds, but also the trade in polished diamonds and jewelry set with diamonds, and it intended to be applied each time diamonds changed hands, and not only when they are exported from one country or region to another.
In essence, the SoW required buyers and sellers of rough diamonds, polished diamonds and jewelry containing diamonds to pass on a warranty statement on B2B invoices and memos each time diamonds change hands, assuring the next buyer that the diamonds originated from sources in compliance with the KPCS.
Implementation of the SoW came to be required by numerous international industry bodies, including WFDB, IDMA, the Responsible Jewellery Council (RJC), as stated in its Code of Practices, and CIBJO, the World Jewellery Confederation, in its Responsible Sourcing Blue Book. Additionally, the implementation of the SoW is a required practice in responsible business codes of leading diamond and jewelry commercial bodies, among them De Beers’ Best Practice Principles, the ALROSA Alliance Guidelines on Responsible Business Practices, and Signet Jewelers’ Responsible Sourcing Protocol for Diamonds.
In June 2018, the WDC Board of Directors approved a revised SoW, designed to strengthen and expand the scope the original system, and to encourage its use and implementation across the diamond and jewelry industry.
Like the original version, it requires that all buyers and sellers of rough diamonds, polished diamonds and jewelry containing diamonds include a statement on B2B invoice and memos that the goods being sold are in compliance with the KPCS. It now also includes a commitment that the buyers and sellers adhere to WDC Guidelines, which support universally accepted principle of human and labor rights, anti-corruption and anti-money laundering (AML).
The revised SoW Guidelines specifically reference:
- The UN Guiding Principles on Business and Human Rights;
- The ILO Declaration on Fundamental Principles and Rights at Work;
- The UN Convention Against Corruption;
- and national AML guidelines that comply with the FAFT 40 Recommendations on Money Laundering for Dealers in Precious Metals and Stones.
To assist in the implementation of the revised SoW, WDC is a creating a toolkit based on self-assessment questionnaires, which will assist members of the industry in properly evaluating how they are complying with the process. It will take into consideration the stage or stages of the diamond and jewelry value chain in which the member is involved, the size of the member’s business, and whether the member is already compliant with other due diligence systems, like that of the Responsible Jewellery Council.
To view the revised SoW Guidelines, PLEASE CLICK HERE.