A YEAR TO FORGET, OR ONE TO LEARN FROM?
Dear colleagues and friends,
As 2020 comes to an end, I am sure you are also asking yourselves – was it a year to forget as quickly as possible, or was it a year from which we have learned a lot?
The first point I would like to stress is that we should not underestimate the suffering that numerous people have been subject to. The COVID disease caused a general sense of depression, experienced by many, and especially those from younger generations. It also caused great financial burden imposed on companies and individuals, and above all the loss of life of so many, dear to us. This indeed makes it a period that one would prefer to forget.
But 2020 was also characterized by industry’s enduring resilience. Retail sales did dip, but then rebounded, even in countries where infection and casualty rates were high. Never before have we seen such a fast fall in polished diamond inventories and such a rapid return in demand.
So, apart from the irreplaceable loss of life, it was not all doom and gloom. The moratorium on rough imports into India brought a lot of liquidity back to the trade. Bank debt was reduced, inventories were cut, and shortages of certain goods meant that demand for polished sometimes outpaced supply.
The Natural Diamond Council was established in this year and collected a good deal of data. In short it suggests that diamonds remain clearly top of mind with consumers as a symbol of love, both in the United States and China. But the data also indicates that, when it comes to product integrity, there are standards that consumers demand their diamonds meet, in addition to being non-conflict and Kimberley Process-compliant. Today the modern consumer asks whether the diamonds they buy contribute to the well-being of all concerned. To them, “responsibly sourced” means that that the diamonds were mined, cut, polished and set under circumstances where human rights, labor rights, social rights and environmental impacts are verifiably respected.
There is a big difference to the situation that exists today and the one that I observed six years ago, when I was first elected president of the WDC. Then, industry was supply oriented. Today it is demand oriented. Consequently, when consumers demand specific guarantees, we need to be attentive, particularly if we want to maintain the market share of natural diamonds.
For the past three years, the WDC has been working to expand the scope of its System of Warranties (SoW) to encompass the broader perspective of responsible sourcing. We also have been developing a SoW Toolkit, which is designed to assist all participants to self-assess their degree of compliance and get a better understanding of what is expected of them.
The new SoW is in the final stages of testing, which is a process that we aim to complete by the end of the year. The feedback we are receiving is being used to fine-tune the system. Early in 2021 the official version of the new SoW and its Toolkit will be introduced to the diamond industry in general.
With SoW 2.0, we are clearly signaling the crucial importance of due diligence in our daily practices and also demonstrating that we are not waiting for KP consensus on an expanded definition of “conflict diamonds,” before we adopt such an approach as an industry. The WDC appreciates its responsibility to upgrade the standards by which we operate, and urges the industry to comply with them wholeheartedly.
Governments of countries in the KP should also realize that the consumer has changed. Those who adjust will prosper, while others may stay behind. Countries must take responsibility for human rights, social rights and environmental issues. The consumer demands this and, ultimately, we cannot afford to lose consumer confidence in the natural diamond industry.
I believe that the tough environment we were forced to cope with in 2020 will remain with us for some time into 2021. But COVID vaccinations are coming, and it is reasonable to believe that the virus will recede during the second half of the year. Confidence in general will resurge.
Let me conclude by quoting the former De Beers executive Anthony Oppenheimer. These are words I heard him use on several occasions, when speaking at a reception for Sightholders and other industry figures during the Basel Fair, particularly when sales were very slow.
“At De Beers, we are well prepared for the next boom in business,” Anthony would declare.
Well, I ask you, aren’t we all now?
Stay safe, stay healthy, good luck and my best wishes for a better 2021.