You really can’t call yourself a “promoter of ethical behavior in the jewelry supply chain” by fabricating irrational, inconsistent, factually wrong and actually quite weird arguments to exclude from membership companies that are active in the jewelry business and have an outstanding ethical record, but also sell some products the mainstream of the business would prefer did not exist. The recently formed Council for Responsible Jewellery Practices (CRJP), whose stated objective is the “promotion of responsible, ethical, social and environmental practices throughout the diamond and gold jeweler supply chain from mine to retail,” has rejected the membership application of Gemesis Cultured Diamonds, the organization that sells gold jewelry set with diamonds and synthetic diamonds, as well as loose synthetic (“cultured”) diamonds.

It is kind of curious that the CRJP, which has encountered serious problems convincing large industry bodies like IDMA, WFDB, CIBJO and others that it is really important and worthwhile to join the organization, would violate its own rules and/or presentations to keep significant players out – especially players from a group that has been identified as “a threat to the diamond business.” By talking to the “threat” – it may actually reduce the risk the industry perceives to be facing.

We readily acknowledge that the Gemesis people come from a “different planet” that is miles away from the traditional diamond and jewelry business. However, from day one of the Gemesis arrival on earth, the diamond industry – including De Beers – has been hammering one message: you MUST, MUST, MUST declare, disclose and state clearly that your diamonds are not natural, that they are man-made, that they are synthetics, etc. And, lo and behold, something unique happened: these alien Gemesis people happen to be honest and thoughtful entrepreneurs who listened to the industry – and complied. They have taken the quite unprecedented step of having the European Gemological Laboratory USA (EGL USA) provide laser inscriptions and identification reports for all Gemesis-created diamonds weighing 0.25 carats and above.

As their product is new and could create confusion, Gemesis has initiated the first-ever program to assist retail jewelers, designers and consumers in clearly identifying laboratory-created diamonds. The inscriptions contain a unique serial number on the girdle, noting that it is a Gemesis-created diamond. The company is even adding some nickel to the production process for the sole purpose of making it easier for laboratories to identify the stones. Without this, many of the mostly yellow, fancy colored stones might still escape detection.

One may not be fond of synthetic diamonds – and most of us would be far happier if they simply didn’t exist – but they are part of the gold and diamond value chain, whether we like it or not. We cannot fault Gemesis on ethical grounds – and every applicable clause and objective in the CRJP’s Mission Statement is fully met by the company, something that (at this point) cannot yet be said about each and every accepted member.

It is intriguing, however, to see what brilliant reasons the CRJP would give to keep Gemesis out. Says CRJP Chairman Matthew (Matt) Runci: “To achieve our objectives without stretching our resources and weakening the message, the CRJP has chosen, for now, to focus on two specific areas - diamonds and gold. We are restricting active membership of the CRJP to those two areas for the time being.” Gemesis CEO David Hellier wonders about that. “At the 2005 Hong Kong Fair CRJP representatives encouraged all members of the trade to apply. According to the organization’s Mission Statement, the organization “seeks to be inclusive and extending the membership opportunity throughout the industry. In neither presentation was a qualification that there were restrictions on the membership,” says Hellier.

CRJP’s Runci continues: “As you are aware, the CRJP has developed a set of draft principles which it considers are fundamental to maintaining consumer confidence in the diamond and gold jewelry supply chain. These principles will form the foundations of the standards of ethical, social and environmental best practice to which active members must adhere. One of the fundamental principles of business ethics is to fully and accurately disclose the characteristics of the products being sold by members.”

Now, Matt knows as well as everybody else that Gemesis is not, has not and will not deceive the public, so it is puzzling why this point needed to be stressed in the CRJP’s rejection of the application. Matt then explains that the CRJP follows a specific definition of diamonds, which does not apply to synthetic diamonds. One can argue that point, but it isn’t relevant. Gemesis is also selling gold jewelry and it is also selling natural diamonds. So it fully meets the membership qualifications of the CRJP. I don’t think that Cartier, Tiffany’s, Zale or Signet would be disqualified because some of their gold jewelry contains cubic zirconia, precious or semi-precious stones, or other materials.

Matt probably knows darned well that he is merely singing the political tunes of his masters by looking for ways to keep Gemesis out. As the U.S. Federal Trade Commission has never spoken out against the use of the term “cultured diamonds” (and it is my understanding that it has no objections to it), Matt claims to rely on CIBJO, Canadian and Australian rules that state that “synthetic ‘diamonds’ must be described as ‘synthetic’, ‘man-made’, ‘lab created’ or ‘artificial’, and any terms that are designed to disguise the fact that a stone is synthetic or that deceive or mislead the consumer in any way must not be used. Under these rules and guidelines, the term ‘cultured diamond’ is considered to be misleading and liable to lead to consumer confusion and, as such, should not be used to describe a synthetic ‘diamond’,” says Matt Runci.

The latter is already a point of interpretation. If the use of the term “cultured diamonds” was actually illegal, Matt Runci’s Jewelers of America or Cecilia Gardner’s Jewelers Vigilance Committee would already be in court in the United States and would have been granted injunctions against Gemesis. They haven’t done that – because they know that Gemesis is not violating any law or rule in the United States, which is its operating environment.

The CRJP Bends the Rules to Fit its Needs
Reading the CRJP position, which bases itself on the Australian rules to suggest that Gemesis should use the word “synthetic” rather than “cultured,” is not what the Australian rules actually say. You judge for yourself – and this comes from the August 2005 Advertising and Promotion in the Jewellery Industry Guide published by the Australian Competition and Consumer Commission (ACCC):

“For example, ‘synthetic’ may be used in the industry to describe ‘artificial products having essentially the same chemical composition, physical properties and structure as that of their naturally occurring counterparts’. Consumers may or may not have the same understanding. Therefore, describing an imitation gemstone as a synthetic gemstone risks being misleading and deceptive conduct. The safer and more appropriate descriptor in this context would be ‘artificial’ or ‘imitation’. The ACCC considers that the descriptor ‘laboratory-created’ is unlikely to be misleading when used to describe, for example, laboratory-made gemstones such as laboratory-made diamonds.”

If the CRJP is concerned about misleading the consumer, and if it wants to rely on the Australian rules to keep out Gemesis, they cannot recommend that it uses the word “synthetics.” That, says the Australian guide, may well be “misleading and deceptive conduct.” CRJP – Please take note.

The Canadian rules, also quoted by the CRJP in its “rejection letter,” define synthetic and cultured in an identical way: “A substance that has been created completely or partially through human intervention. Its physical, chemical and optical properties essentially correspond to its naturally occurring counterpart.” It then says that “It is contrary to the purpose of these guidelines to use the word synthetic or a similar term [i.e. cultured – and that is my addition] unless the substance’s physical, chemical and optical properties correspond to its naturally occurring counterpart. For such substances, the word synthetic must be placed immediately preceding the gem name and neither word(s) shall be given greater prominence or emphasis than the other(s), nor may they be separated.”

So, if the rules provide the identical definition for the term “synthetic” and “cultured” – why is the CRJP pushing for the word “synthetic”? The answer is amazingly simple: synthetics has a less friendly connotation than “cultured.” The word “cultured” is respected; it sounds “expensive” and has a warm feeling. The word synthetic, in contrast, gives more of a plastic or a kind of recycled compost connotation. Culture is inevitably better – and that’s why many within the CRJP want that word.

To be fully accurate I must add that in another section of the Canadian rules, it is stated that the word “cultured” is solely reserved for pearls and shouldn’t be used otherwise. It is obvious that there are internally inconsistent clauses and that the CRJP prefers those which best describe its “cause” or “case”, whatever is the applicable word. [Incidentally, to put the word diamond between quotation marks, when followed by the word synthetic, as the CRJP did in its letter to Gemesis, violates the Canadian rules. This is not allowed.]

CIBJO has widely publicized an isolated German court decision that depended on the CIBJO rules against the use of the word “zuchtdiamant,” the German translation of "cultured diamond." The German court stated specifically that the prohibition only applied to the German language word and that the term “cultured diamonds” was perfectly legal use in the country. Even though CIBJO created noise, as if this were a precedent setting decision by the U.S. Supreme Court, the fact is that there is no consensus - no universal agreement – which is an extra reason to include Gemesis within an organizational framework in which these issues can be resolved.

The odd thing is – as we shall show shortly – that Matt Runci seems to be torn; he wants Gemesis out, but he also wants them in. Matt Runci is a very decent, honorable and respected professional – I wouldn’t be surprised at all if he would personally favor the inclusion of Gemesis as a member of the CRJP, but he may have found his hands to be tied. It is rather sad if, at this early stage in the life of CRJP, pressures exerted by some heavy interests will determine the make-up of the organization. The sources we approached for understanding the CRJP’s decision-making process each, in their own way, stressed that this was not a Runci choice but rather a board decision.

In fairness to the CRJP, it is not the only trade organization that grapples with the issue of synthetic diamonds. Some bourses prohibit the trading of synthetics on their premises – mostly inspired by fears that unscrupulous traders (i.e. their members) would be tempted to sell them as naturals. Likewise, the GIA is, for the time being, refusing to grade synthetic diamonds – a decision which cannot be in the best interest of the consumers they purport to serve.

The Ethics of Gemesis is Not an Issue
We think it would be unfair to suggest that Gemesis is “misleading” and that its marketing practice is “liable to lead to consumer confusion.” Gemesis sells its pink cultured diamonds at 10% of the value of natural pinks; its fancy yellows are traded at 20%-25% of its natural counterpart and its blue cultured diamonds sell at 1/15th of the natural price. These are not prices aimed at deceiving the consumer. It makes every conceivable disclosure statement it can make and, as of next month, it will even teach gem laboratories on how they can most effectively detect its synthetic product.

After having rejected the Gemesis application, Matt quickly adds that “I would emphasize that the CRJP is committed to ensuring that its consultation exercises are inclusive and strongly encourage Gemesis to participate in future consultations. I also encourage you to regularly visit the CRJP website (www.responsiblejewellery.com) for further information on CRJP developments. The website describes how businesses that fall outside of the scope for active membership are still able to make a meaningful contribution to the CRJP’s activities. We will retain Gemesis on our e-mailing list so that it is able to stay abreast of developments,” concludes Matt Runci.

Now, that is either a stroke of genius or utterly stupid: we want you out, but we also want you in. It is almost insulting: you are out, but there are ways you can contribute to CRJP’s activities.

We think that the CRJP is making a blunder. Gemesis has shown it wants to be responsible. That is why it applied for CRJP membership. Gemesis is far from perfect (and, personally, I don’t like that it sells jewelry that contains both natural and synthetic diamonds in one piece), but the company has shown that it wants to be an ethical, responsible player. There is no law that requires it to put nickel in its product to ease recognition and identification. If we keep them “outside” industry organizations, why should they bother? Why should they continue to put in the nickel? Why should they laser-inscribe their stones? There is no legal requirement to do so. Why turn them off? Why turn them away?

The fact that Runci and friends are not suing Gemesis (or Apollo, for that matter) for the use of the word “cultured” is because it is clear to them that these companies are fully operating within the law. I expect that Apollo “will not bother” and will not apply for membership at the CRJP. That is a pity – I think the diamond jewelry world would be a better place if it is as inclusive as possible. If we would like to change a company’s marketing practice, it is always easier and more effective to influence them from within than from without. Synthetic diamonds will become a part of the jewelry landscape. Jonathan Oppenheimer has called this a “terrifying prospect.” The CRJP has clearly missed an opportunity to bring the first major synthetic producer (of some 20,000 carats a year) within its ranks. This would have reduced the “threat level” and enabled the dialogue which would better protect the market and maintain consumer confidence.

Maybe it is not yet too late.

Have a nice weekend.