A new article by Harvard Business Review (HBR) essays why luxury brands including diamond companies no longer ignore sustainability, quoting a new report by Positive Luxury ‘2016 Predictions for the Luxury Industry: Sustainability and Innovation’ that says sustainability gap is closing fast.
The study by Luxury Institute and Positive Luxury emphasizes that sustainability and social responsibility are now imperative for any luxury brand. Changing regulations puts a direct impact on luxury companies. UK’s Modern Slavery Act 2015 requires companies to publish an annual slavery and human trafficking statements, driving enhanced transparency and supply chain tracking. Especially in case of diamond miners, where issue of conflict diamonds still persists, enormous pressure is being put on. Though many leading diamond companies now comply with the Kimberley Process, the general failure of KP itself may short-live the assurance and may put the onus back on the companies in the long term.
More importantly, globally the social norms on sustainability are changing with involvement of several high profile celebrities who are able to spread awareness on the subject widely and quickly. Expectations of the consumers themselves are also changing. 88% of US and UK Millennials and Gen X population feel that companies “need to do more good, not just ‘less bad’”. Considering that these consumers spend on experiences, a trend of “clean label” is expected from luxury brands. Moreover, investor community also puts sustainability performance pressure on companies.
Mining, processing, manufacturing and other processes in the diamond pipeline require labor, social, environmental and other touchpoints across the value chain and they translate into not just image risks but genuine business continuity risks.
Carbon neutrality, climate change, renewable energy are some issues on top agenda of business leaders, where several companies are trying hard to cut down their greenhouse emissions. Diamond companies though have a long way to go in the domain, in light of the fact that environmental cost of mined diamonds is alarming and diamond mining continue to destroy the environment and indigenous communities.
As the HBR article puts is “… The industry has some tough history to reconcile. ‘Blood diamonds’ were not just a campaigners evocative phrase, but based on real money flows to brutal dictators. Slavery is still a problem. Mines are immense operations that can impoverish people and land…”
A huge gap exists for the industry and needs to be closed fast, if diamond companies aspire to be sustainable businesses in the long run.