Whenever I meet with traders, manufacturers, and other diamond industry professionals, I continue to hear complaints about the strong emphasis placed on diamond traceability. This was especially true during the recent trade shows in Las Vegas.

The subject was most likely on people’s minds because of the frequency with which it was mentioned in presentations, panels, and other public forums during the shows.

However, since so many have asked me, here are the reasons why I think diamond traceability matters:

Twelve Reason Why Diamond Traceability is A Good Idea

1. From a moral standpoint, it’s simply the right thing to do. I don’t believe this needs further explanation.
2. If we want to strive for the highest industry standards, diamond traceability is part of what we need to do.
3. How you position your store counts. Anyone who disagrees with this statement is probably in the wrong business.
4. The issue is not just what we tell consumers—it’s also about what we need to do for ourselves. A little Zen, but true.
5. It goes hand in hand with luxury. If we want to sell a luxury item, then diamond traceability, together with any other ethical behavior, is part of the package. The high standards regarding what places an item in the luxury category were set many years ago. Ethics, environmental considerations, and traceability are all part of this.
6. In contrast, If we are okay with selling a commoditized product to consumers, then keep in mind that there will be no differentiation. A diamond will be just the sum of its GIA grading. Value won’t be part of it, leaving you with only price. Consumer products sold in such a way (like potatoes and tomatoes) leave truly little margins. This is a losing proposition.
7. When LGD was introduced to the market, one of its claims was that it was a more ethical choice than natural diamonds because of conflict diamond issues, alleged use of child labor and other labor conditions, and high energy use (!). So, if the diamond industry wants to prove that these are false accusations, it will need diamond traceability.
8. Many of those who asked me at the show why they should care about diamond traceability also demand that the diamond industry “confront” the LGD issue more vigorously. Diamond traceability is part of that opposition because it strengthens diamonds’ proposition.
9. It’s true that consumers hardly ask about diamond traceability in the store, but that does not mean that it’s not a concern. In survey after survey, consumers tell us that they prefer ethically made items over other items. However, every examination done into the validity of this claim has proven that price still eclipses ethical claims, especially in the US.

Let’s break this down. Of those who claim on a survey that ethical sourcing is paramount to their purchasing decisions, only a small percentage will actually buy a pricier item to ensure that they buy “ethical.” The majority will pick the more ethical item only if two items are otherwise identical, including price. The rest really don’t care that much, but report that they do because they think this is the “correct” answer.

And yet, of those that do care, only a few will mention it in store. They want to hear about it from the retailer and may even make up their mind about a store in advance based on its website and social media, and simply not set foot in it if they suspect they won’t get what they want in terms of ethical standing or diamond traceability.

10. Even if financial institutions don’t get the nuances, they like diamond traceability because it looks good on their statements. The negative news reported in the press about the diamond industry is reaching the ears of those that are financing or are considering financing the industry. And this does not bode well for investing in diamond assets. Showing that they meet higher standards tells the financial world that the diamond industry has long-term plans that include doing whatever it takes to do right and succeed.
11. Does diamond traceability even work? Yes, although it has not yet reached full fruition. I have more confidence in the existing systems than I have in the claims on tuna cans that no dolphins were harmed in the fishing process. And yet, I won’t buy canned tuna without that claim.
12. I remember the pains and complaints when Kimberley Process certificates were mandated. “It will kill the industry,” “it’s an acknowledgment of wrongdoing,” “it will invite poking even further into our affairs,” “it will be an unsurmountable financial burden,” and “it will invite more fraud than eliminate it” were just some of the statements I heard. Guess what? It’s a no-brainer today, seamlessly interwoven into the trade. Diamond traceability will be the same.

I look forward to the day when full diamond traceability is in place. That means tracing at least all diamonds weighing 0.25 carats or more from origin to the retail counter. The industry will outperform gold, cotton, sneakers, cars, and cellphones. In many circumstances, it is already doing significantly better. I know it appears difficult now. Change is difficult, but this is life. We learn, adapt, evolve, and progress.

P.S.: Whenever diamond traceability is mentioned above, it also refers to environmental considerations, ethical employment, and contributions to societies where diamonds are mined and polished.