conflict_free_banner.jpgImpact of social/political factors on the supply chain

Items that will be covered in this section:

Social and Political effects on supply chain
Conflict Diamonds
Child Labor
Kimberly Process& World Diamond Council
Oversight of the supply chain – the World Diamond Council

Child Labor

Diamonds are a girl’s best friend but the term “diamond in the rough” comes to mine when I think of child slavery and its association with the diamond industry. The diamond industry is an infamous venue of exploitation towards youth workers and mines in South Africa and India are notorious locations that produce exquisite diamonds that were made by the hands of child salves. (Travis Molina, November 2006)
The DeBeers Group was founded in 1880 and become famous in the twentieth century under the financial direction of the Oppenheimers, who were shareholders. Before the end of the 19th century, a large diamond rush started in South Africa and DeBeers need a large workforce to mine the diamonds. Production was successful; however the workers were confined because the owner’s paranoia of theft.
DeBeers held a monopoly of diamond industry and advertised the diamond as the quintessential gift of love and the perfect gift, “Diamonds are forever” but in reality the consumers were overcharged and the miners were paid poorly and most of them were children.
Sierra%20Leone_Diamond%20Mining.pngChild Slavery continues around the world and these children ranging in age from seven to sixteen are exposed to overcrowding, abuse, long work hours, and cheap pay in working conditions that cramped, filthy and dangerous conditions. The diamond mines are large, open pits of heavy mineral, oil, machinery exhaust, and any other rubbish. There is always the possibility of mudslides, drowning, collapsing walls and other accidents associated with the mining industry as miners search for diamonds in the alluvial deposits. It is reported that these young workers are exposed to malaria, dysentery and sexual transmitted diseases.
The children number in the several millions and many of them get the blessing of their parents, who rely on their income to survive. The majority of these children are from third work countries. Many parents see little hope for children go to school and get an education and hope that their work in the diamond industry will enable the children to escape poverty which they have not been able to escape. In some instances, families bond their children. Bonding is when an employer pays the family in advance and the child works to pay off the debt. Unfortunately, the children cannot pay the debt due to the interest and children are forced into a life of servitude which many pass onto their descendents.
The diamond industry has made strides to improve the conditions of the informal mines to bring them in compliance with the formal mines through agencies such as The Anti-Slavery Society, IndianNGO, Child Labor News Service (CLNS) managed by the Global March Against Child Labor, Diamond Development Initiative and the World Council of Diamonds.

The Political and Social Effect

The effects of political and social instability can impact the global supply chain so it is important to be prepared for any potential disruption of service to minimize risks. Many British companies were linked with the violent conflict in the Democratic Republic of the Congo. ManyKimberley_1872_Diamond%20Mining.png of the companies were purchasing diamonds and other mineral from traders who work for the rebels and soldiers who exploited the civilians of this country. The damage to the company’s credibility and reputation spread quickly thanks to Twitter and other social media sites. How does a company avoid these types of situations when their supplier or suppliers further down the supply chain are involved in conflicts that could potentially become a public relations nightmare? It is important to carefully monitor all the links of the supply chain because no company or consumer knowingly wants their money funding a brutal conflict. Organizations should have close communications with suppliers and a clear understanding of expectations between buyers and supplies throughout the entire supply chain. In the Congo or other known areas of conflict, the organization would focus on the region, suppliers and direct materials where the supply risk is present . In regions deemed risky, the organization must recognize the potential political and social risks. Companies can chose to ignore the risks, but it may come back to haunt them.

Companies must see sociopolitical issues just not as risks but opportunities. These sensitive matters can be a threat to the creation of value in the supply chain. Businesses have always been aware of social and political expectations. What’s different today is the intensifying pressure and the growing complexity of forces, the speed with which they change and the ability of activists to mobilize public opinion, . (Bonini, Mendonca, Oppenheim 2006)

Conflict Diamonds and the Kimberly Process

Conflict diamonds are diamonds illegally traded to fund conflict in war-torn areas, particularly in central and western Africa. The United Nations (UN) defines conflict diamonds as " that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments, or in contravention of the decisions of the Security Council." These diamonds are sometimes referred to as "blood diamonds." (
Conflict diamonds captured the world's attention during the extremely brutal conflict in Sierra Leone in the late 1990s which used children as soldiers and workers. Illicit rough diamonds have also been used by rebels to fund conflicts in Angola, Liberia, Ivory Coast, the Democratic Republic of Congo and the Republic of Congo (also known as Congo Brazzaville). (
In July 2000, the global diamond industry sent a strong message to the international community its zero tolerance policy towards conflict diamonds. Dedicated to eradicating the trade in conflict diamonds, it worked closely with the United Nations, governments and non-governmental organizations (NGOs) such as Global Witness and Partnership Africa Canada to create the Kimberley Process Certification System. (
Brazil_diamond_washing_cartoon.pngThe Kimberley process (KP) is a joint government, industry and civil society initiative to stem the flow of conflict diamonds-rough diamonds used by rebel movements to finance wars against legitimate governments. The trade of this illicit stone has fuelled decades of devastating conflicts in countries such as Angola, Cote d’Ivoire, the Democratic Republic of the Congo and Sierra Leone.
The Kimberley process started when Southern African diamond-producing states met in Kimberley, South Africa, in May 2000, to discuss ways to stop the trade in “conflict diamonds”. The negotiators found the following common interests to win support for an international ban on trade in conflict diamonds used to finance war;

  • In memory of those who died in Sierra Leone, in Angola, in the Democratic Republic of the Congo and other African countries in conflicts fueled by rough “Conflict’ Diamonds;”
  • To end the killing in on-going conflicts in Africa;
  • To save the children of Africa whose lives would be threatened by future conflicts fueled by conflict diamonds;
  • To ensure those countries which depend on diamonds for their development and economic well-being will benefit from their patrimony;
  • To assure consumers the diamonds they wish to enjoy are without the taint of conflict.

In December 2000, the United Nations General Assembly adopted a landmark resolution supporting the creation of an international certification scheme for rough diamonds. By November 2002, negotiations between governments, the international diamond industry and civil society organizations resulted in the creation of the Kimberley Process Certification Scheme (KPCS) which imposes extensive requirements on its members to certify shipments of rough diamonds are conflict free. Currently, the KP has 49 members, representing 75 countries with the European Community and its Member States counting as an individual participant.
The World Diamond Council, represents the international diamond industry and civil organizations-Global Witness, Partnership-Africa Canada participates in Kimberley Process and has played a major role.
Under the terms of KPCS, participating states must meet the minimum requirements and must agree to implement national legislation and institutions; export, import, and internal controls and they must commit to transparency and exchange of statistical date. Participants can only legally trade with other participants who met the minimum requirements of the scheme and shipments of rough diamonds must be accompanied by a Kimberley Process certificate guaranteeing the diamonds are conflict-free. Implementation is monitored through review visits and annual reports as well as by regular exchange of analysis of statistical data.
The Kimberley Process is chaired on a rotational basis by participating countries. South Africa, Canada, Russia, Botswana, the European community and most recently India have all chaired the meeting and participating countries gather twice a year for meetings. kimberley_process_banner.jpg
The Kimberley Process Certification Scheme is recognized as a unique conflict prevention instrument to promote peace and security and its processes have created changes in the diamond industry in a relatively short amount of time. The KP has made it difficult for criminals and has brought large volumes of diamonds into the legal market which has increased revenue for poor governments and assisted them in addressing their countries development challenges. The vast majority of diamonds come from countries at peace. These countries have been able to invest the revenue from diamonds into the development of infrastructure, schools and hospitals for the good of the communities in which diamonds are found. These countries include Australia, Botswana, Canada, Namibia, Russia, South Africa and Tanzania. For example, over 125 million worth of diamonds were legally exported from Sierra Leone in 2006 compared to almost none in the 1990s.
Experts in the diamond industry estimate conflict diamonds now represent one percent of international trade in diamonds, compared to fifteen percent in the 1990s.

It is difficult to ascertain the origins of diamonds. However, there is a growing trend of using a “chain of custody” system that provides a detailed record of each diamond’s source and each part of the supply chain. Under such a system, consumers can be confident that they are purchasing conflict-free diamonds. According to the Conflict Free Diamond Council, there is currently only one program that meets all of its standards. The Government of the Northwest Territories (GNWT) in Canada has instituted a Diamond Certification Program that includes a chain of custody system, though participation in the program is completely voluntary.8 These chain of custodies, while voluntary, are becoming increasingly valuable (if not necessary) as more consumers clamor for them.
Ultimately, the power to change lies in the consumers. Consumers are beginning to demand documentation and a certificate of conflict-free authentication. Therefore, diamond producers and retailers are increasingly offering these. The hope among human rights groups is that this will help eradicate conflict diamond trades abroad. Thus far, it seems that changes in consumer demand have accomplished more than government institutions, and as public consciousness continues to grow, we believe there will be more hope for the eradication of conflict diamonds.