Financial Overhaul Bill Takes Aim at Dirty Gold
The financial regulatory bill signed into law by President Obama last month primarily aims to overhaul the guidelines that govern Wall Street. While we will leave it to the political pundits and the economists to provide commentary on the bill’s implications for the U.S. financial system, we would like to highlight a little-noted provision in the bill that affects the market for luxury jewelry. Hidden away in a section entitled “Miscellaneous Provisions” is a measure requiring large, publicly-traded companies to report to the federal government whether certain “conflict minerals” in their products come from the Democratic Republic of Congo or the surrounding region. Since 1998, a civil war in Congo has claimed more than 5 million lives, making it one of the deadliest wars in history. As we wrote in our blog last December, the conflict has been fueled, in large part, by contestation over mineral resources. The goal of the provision is to create a degree of transparency and accountability surrounding minerals in these regions.
The provision in the financial bill targets several minerals—including tin, tantalum, tungsten, and gold—that are mined in Congo and that have been contributing to the bloodshed. Many of these minerals are typical components of products such as laptops and cell phones. Gold, of course, is a major component of jewelry. However, most major jewelry retailers in the United States are presently unable to say with any certainty whether the gold in their jewelry comes from Congo. We attribute this untenable situation to indifference and lack of initiative, as well as to the difficulties inherent in tracing a fungible metal like gold back to the source. At Brilliant Earth, we use only recycled gold and fair trade gold in our jewelry, allowing us to be certain that none of our gold originates in Congo and that it meets the highest of ethical standards.
We, at Brilliant Earth, hope this bill will use government leverage to speed up the process of creating a more transparent and accountable gold supply chain. Although the bill does not ban the sale of gold from Congo, it should give consumers and jewelry retailers the information they need to avoid buying and selling such gold. Potentially just as important, the bill may spur reforms that will make all gold, not just gold from Congo, more easily traceable. In many places, although gold is not contributing to civil wars, it is not being mined in a way that is ethical or environmentally responsible. Jewelry buyers deserve to know where their gold comes from and the conditions under which it is mined so that they can make informed decisions.
The Securities and Exchange Commission (SEC) has until April 17, 2011 to promulgate regulations that will clarify the meaning of the bill’s measures against Congo gold. Much of the effectiveness of the law will depend on the regulations that the SEC adopts. As the law is implemented, Brilliant Earth will continue to fight for increased transparency in the gold supply chain and to support efforts to develop responsible sources of gold.