WDC stepping up campaign to promote
adoption of revised System of Warranties

By Steven Benson

February 21, 2023, marked 16 months since the official launch of the World Diamond Council’s revised System of Warranties (SoW), in 2021 on the 40th anniversary of the establishment by the United Nations of the International Day of Peace.

Adoption of the revised SoW has been steady, although not swift, with some 377 companies having registered and/or renewed over the past year and four months, even though the preponderance of larger companies among them means that they represent a bigger proportion of the diamond trade than their number may suggest.

Be that as it may, the vast majority of companies operating diamond businesses continue to issue invoices using the original SoW declaration, which was introduced shortly before the launch of the Kimberley Process Certification Scheme (KPCS) in January 2003.

The clock is ticking, however. The current transitional period, during which companies still can decide to accept the original warranties from their clients, is steadily drawing to a close. In the case of rough purchases this will be in September 2024, and in the case of all other purchases in September 2026.


Fundamental upgrades to original SoW

There are similarities between the original and the revised System of Warranties, but there are several fundamental differences as well. Both require that all sellers of rough diamonds, polished diamonds and jewelry containing diamonds include a declaration on B2B invoices and other transaction documents, such as consignment memos, stating that the goods being sold comply with the KPCS, and thus confirming the Kimberley Process’ assurance of conflict-free origin.

Also, both the original and the revised SoW extend the reach of the KPCS beyond the rough diamond trade, where the KP is exclusively focused, to include loose polished diamonds and polished diamonds set in jewelry. Both also are applied every time the ownership of a diamond changes hands, rather than at the point of export or import, as is the case with the KPCS.

But where the revised SoW declaration differs from the original is that it includes a commitment that the sellers adhere to the updated WDC SoW Guidelines, which expressly support universally accepted principles of human and labor rights, anti-corruption and anti-money laundering (AML). The SoW goes beyond scope of the KPCS, relating to challenges to the distribution chain that are not necessarily related to “conflict diamonds” as per the current definition.

There is one more fundamental difference between the revised and the original SoW. To implement the original system, all that a company was required to do was include the SoW declaration on the transaction’s invoice or memo document. But to use the revised system, companies are required to register on a dedicated SoW website, and then complete an online self-assessment. This is to validate that the company indeed complies with practices that uphold the Kimberley Process, human rights, fair labor principles, anti-corruption and AML.

Furthermore, to continue applying the revised SoW, companies need to successfully complete the self-assessment once every 12 months.


Inertia and lack of information

“We have no evidence to suggest that the pace at which the revised SoW is being adopted is in any way related to the expanded scope of the system,” said Elodie Daguzan, the WDC Executive Director, who is leading transition from the older system to the new. “On the contrary, when we interact one-on-one with members of the trade, as we do at workshops and other events promoting the revised SoW, the overwhelming sentiment is of one support of the WDC’s efforts to bolster the integrity of goods in the distribution chain.”

“What we have seen is two main reasons for companies not having yet made the transition,” she continued. “The one is simply inertia, meaning that they do yet feel pressured to make an active change. That situation clearly is shifting as the end of the transitional periods draws closer.” 

“The second is a lack of information, in that a good number of companies are not fully aware of the revised SoW, or what needs to be done in order to implement it,” Ms. Daguzan added. “We are working to remedy this though a variety of actions, including an educational program, both online and in-person, and also public relations and social media campaigns.

To that end, Ms. Daguzan visited the United Arab Emirates las December, where the Dubai Diamond Exchange is actively assisting the WDC to bring all its members in line with the revised SoW. She also ran an online workshop in January together with members of the London Diamond Bourse.

An email and social media blitz in December saw revised SoW registration spike to its highest level in months. 

WDC Executive Director Elodie Daguzan conducting a System of Warranties workshop at the Dubai Diamond Exchange in December 2022.

The majority of new adopters were SMEs, with 68 percent of the companies registering reporting that they employ fewer than 100 members of staff.

A grass roots campaign

As the expiry dates of the original SoW declaration draw closer, the WDC’s educational and media campaign will continue.

As was the case in Dubai and London, the WDC Executive Director plans on collaborating closely with industry bodies in the various trading centers, leveraging their grass-roots ability to reach as many companies and individual traders as possible.

“The level of support of our colleagues in the different centers is extremely important, and it is definitely reflected in the adoption rates that we see,” Ms. Daguzan said. “After running the recent workshop in Dubai, with the active participation of the DMCC and Dubai Diamond Exchange, fully half of the new companies registering for the revised SoW that month were from the UAE.”

At the same time the WDC will draw on the assistance of industry leaders and opinion makers who have volunteered their support for promoting implementation of the revised system as SoW Ambassadors. 

WDC Executive Director Elodie Daguzan conducting a virtual SoW workshop for members of the London Diamond Bourse in January 2023..

The dedicated System of Warranties website is also undergoing a facelift, bringing it in line with renewed brand identity of the World Diamond Council, which was launched a year ago.

Ultimately, however, the greatest push to implement the revised SoW needs to emanate from ground up, stressed the WDC Executive Director. “We are talking about a System of Warranties, with an emphasis on the word ‘system,” Ms. Daguzan said. “The reliability of the warranty you provide is entirely dependent on the examination you carry out of your chain of distribution, by engaging with your business partners. You must communicate with your counterparts to ensure that they are up to date. The revised SoW raises the common denominator, and that is in all our interest.”

From the series