TOWARD A CIRCULAR, SUSTAINABLE GEM AND JEWELLERY INDUSTRY

In this article, we introduce the concept of “circularity.” Could this be implemented in the diamond, gem and jewellery industry? What can we learn from other industries? Two guest writers share their thoughts.

This summer, a remarkable news item caught our attention. LVMH, the Paris-headquartered French multinational luxury goods conglomerate, confirmed it had acquired a stake in the Stella McCartney fashion house.

So why is this remarkable?

The immensely successful designer Stella McCartney – the daughter of musician Paul McCartney – is one of the fashion industry’s most passionate ambassadors on the issue of sustainability.

On her website, McCartney writes:

“We believe that the future of fashion is circular – it will be restorative and regenerative by design and the clothes we love never end up as waste. We want to completely reimagine the fashion industry as we know it and move to a new circular economy.”

Here, McCartney introduces the concept of circularity as follows:

“The systems we rely on to make, sell and dispose of clothing are broken,” she says. “Operated in an almost completely linear way, large amounts of non-renewable resources are continually extracted to produce the products we love, which largely end up going to landfill or incineration. We need to change the system by making fashion circular and eliminating the concept of waste.”

Of course, LVMH was aware of McCartney’s business philosophy and fully subscribes to it.

[In] the conversation I had with [LVMH Chairman and CEO] Bernard Arnault and his son Antoine, the passion and commitment they expressed towards the Stella McCartney brand alongside their belief in the ambitions and our values as the global leader in sustainable luxury fashion was truly impressive,” McCartney said.

Stella McCartney added that she will be special advisor on sustainability within LVMH to Bernard Arnault, and the executive committee members.

“Since the announcement of my decision to take full ownership of the Stella McCartney brand, there have been many approaches from various parties expressing their wish to partner and invest in the Stella McCartney House,” said McCartney.

On his part, Arnault stated: “We are convinced of the great long-term potential of her house. A decisive factor was that she was the first to put sustainability and ethical issues on the front stage, very early on, and [she] built her house around these issues. It emphasises LVMH Groups’ commitment to sustainability.”

The list of fashion brands controlled by LVMH is about 20 names long and includes such iconic names as Berluti, Celine, Dior, Givenchi, Kenzo and Louis Vuitton. In the watch, gem and jewellery trade, LVMH is well known for its ownership and operation of brands such as Bulgari, Chaumet, FRED, Hublot and Tag Heuer.

By definition, circularity is the pinnacle of sustainability. As per LVMH’s acquisition, could it be that sustainability is finally moving from the industry’s peripheral vision into the centre of its attention? And, if so, why is this happening and what does or could it mean for the future of the gem and jewellery industry?

MILLENNIALS AND GENERATION Z TO TRANSFORM THE LUXURY MARKET

The answer to this question comes directly from the consumer market.

In April 2019, the Boston Consulting Group (BCG) and Altagamma – Creativa Cultura Italia published the 6th edition of their True-Luxury Global Consumer Insight Report. The study covers the United States and China, the world’s two largest markets for luxury sales.

The report clearly shows that by 2025, Millennials (and Generation Z) will have radically transformed the luxury market. The expectations and demands of these consumers will in fact force luxury brands to implement radical changes.

One of those topics covered in the report is the withstanding power of sustainability. Luxury market analyst Pam Danziger, in her article in Forbes about the report’s findings, noted that since 2013 luxury consumers’ purchase decisions have shifted dramatically due to their concerns about sustainability and social responsibility.

“Today, 56 percent of luxury consumers are attuned to luxury brands’ stance on social responsibility, as compared with 45 percent in 2013. Some 62 percent say they will choose to do business with a brand that supports sustainability over a brand that does not, compared with 50 percent in 2013.

Interestingly, sustainability concerns are far greater for South Koreans (81 percent), the Japanese (70 percent), Chinese (66 percent) and French (66 percent) than for Americans (45 percent) or the British (43 percent).

Sustainable luxury consumers are primarily concerned with the environment (37 percent), animal care (27 percent) and ethical manufacturing (21 percent). Millennials place a higher priority on the environment (42 percent) and animal treatment (26 percent) than do Boomers whose primary concern is ethical manufacturing (32 percent),” Danziger summarised.

One of the authors of this article, Danielle Keller, is a graduate of the Akademie Mode und Design (Academy of Fashion & Design in Berlin, Germany) and is an active jewellery designer. Last year, Keller was asked to present a paper at the Global Fashion Conference 2018 in London on how sustainability can be implemented in the jewelry sector. In her research, Keller has been seeking answers as to how to encourage, build, increase and fine-tune sustainable practices in the jewellery industry and trade – i.e. practices that address the concerns of consumers.

During the course of her work, Keller came to understand that luxury brands may have overlooked the up-and-coming generation of consumers and, having underestimated the influence of Millennials a decade ago, they now realise that this group and, more importantly, Generation Z, are setting the tone in the luxury market. Over 50 percent of Generation Z is more influenced by sustainability and more active in the second-hand luxury market than any other consumer group.

WHAT DOES THIS MEAN FOR THE GEM AND JEWELLERY INDUSTRY?

It is here that we return to the topic of circularity.

Compared to the fashion industry, the number of locations, materials, processes, factories and operators may be even more numerous and complex in our industry. However, most of the materials used and applied in luxury jewellery share a common denominator: they are mostly mined, and therefore subject to often similar processes, risks and dangers.

Depending on what statistics one chooses to use, it can be assumed that globally, to name just two better-known products, about 90 million carats of rough diamonds and 1,600 tons of gold are mined for jewellery every year, generating over US$300 billion in revenue. When incorporating all other precious metals and gemstones, the number is probably closer to $550 billion.

Millions of people around the world make a living in all stages of the gem and jewellery supply pipeline.

Since the beginning of this century, general awareness of the negative impacts and footprint of mineral extraction has grown tremendously. Campaigns against dirty gold, the use of dangerous chemicals in precious metal extraction, have become all too common. In the diamond trade, the Kimberley Process Certification System (KPCS), while not perfect, demonstrates the diamond industry’s and governments’ efforts to banish conflict diamonds from the supply pipeline.

ACCOUNTABILITY, RESPONSIBLE SOURCING, RESPONSIBLE BUSINESS CONDUCT

In addition, accountability, responsible sourcing, responsible business conduct, and product traceability have become issues that consumers have come to care about and demand. The industry has responded by establishing guidelines, such as those set by industry associations like the Responsible Jewellery Council (RJC). These processes are all part of the industry’s ongoing efforts to lower its reputational risks and sustain market share. Slowly, but surely, the gem and jewellery industry at large is coming to the realisation that sustainable business practices, including corporate social responsibility, is better for business, as well as society.

THE CASE OF RECYCLING

Having said this, there is the other side of the coin to consider: in contrast to organic materials that can be regrown and harvested time and again, precious metals and gemstones, once mined and processed, remain physically present in the market in one form or another. Much of it sits in jewellery boxes and safes in consumers’ homes all around the world.

Interesting fact: There is 30 times more gold in a ton of discarded mobile phones than in the average ton of gold-bearing ore.

Therefore, the introduction of circular business processes is one of the cornerstones when considering how to make our sector more sustainable, alongside the mainstreaming of sustainability into all scales of mining and mineral processing. In the jewellery industry, precious metal recycling is already happening on a small scale, meaning that it has proven economic viability.

But for a mass shift into recycling precious metals, there is a need to create cross-industry collaborations, and to create incentives to locate, collect and save these minerals. Currently, there is no system in the supply chain to make this a reality; therefore, it is not surprising to see products containing precious minerals end up in a landfill or fall into neglect.

WHAT DEFINES SUSTAINABLE LUXURY JEWELLERY?

To be recognised as part of the circular process, ideally, sustainable luxury jewellery is made from certified mined precious metal materials or from certified recycled precious metals, both of which can be traced to the source, along with responsibly sourced, traceable or certified recycled coloured gemstones and diamonds.

Renewable energy should be used for the creation of prototypes and for mass production, with all leftovers and wastewater saved for reuse or to be recycled into beautifully crafted products. All these processes should be developed using a design based on circular strategies that takes the next incarnation of the product into account, so preserving the planet’s natural resources.

As indicated in the report by BCG and Altagamma, the demand for sustainable luxury is growing, and the gem and jewellery industry will have to reconfigure structures, processes and business models to authentically achieve the susatinability gains this market demands.

A CHALLENGE TO THE BIG BRANDS

As demonstrated by LVMH, it is obvious that the big brands will be setting the trend, both in sustainability and circularity. Due to the industry’s structure and the complexity of sourcing and treating the precious materials that it uses, only the larger firms have enough influence to demand meaningful changes from the upstream supply chain.

The gem and jewellery industry lags behind other sectors in the pursuit of sustainability and circularity. Further research and the development of more diverse frameworks, strategies and policies will put us some way on the long road towards a more sustainable sector. Tackling fragmentation in the industry through greater collaboration, as well as spreading and sharing knowledge that can improve sustainability performance is essential if we are to effectively deal with the complexity of buidling a more sustainable sector. The lack of reliable data and research on the topic and the dearth of suppliers for sustainable materials, and of craftsmen and manufacturers who authentically achieve sustainability through their practices severely impairs the industry’s ability to move forward and join others in the sustainability adventure. Focusing on these opportunities will not only help the gem and jewellery industry progress towards a more sustainable future but will do much to improve the industry’s image and market standing as well.