Despite decades of reform, the global jewelry market remains marred by reports of human rights violations in mines and factories. To address these concerns, Tiffany & Co. last year began providing customers with details of newly purchased and individually registered diamonds that trace a stone’s path to the mine.
Pandora, which is based in Copenhagen, said on Tuesday that it would now only use diamonds made in laboratories. The company is set to release its first collection using lab stones in the UK and will look to other markets in 2022.
While diamonds represent a small fraction of Pandora’s sales, the move reflects increased demand for sustainability in the broader market and comes as jewelry faces stiff competition from other luxury goods, such as travel and iPhones, especially among younger consumers. A host of Manufacturers and retailers of lab-grown diamonds have sprung up in recent years eager to target customers with more affordable stones that aren’t marred by the same ethical and environmental issues as mined diamonds.
Read: Multi-billion diamond stock sold after demand returns
Global diamond sales fell 15% in 2020 due to lockdowns, travel restrictions and economic uncertainty, according to a Antwerp World Diamond Center and Bain & Co. research report Rough diamond production fell by 20% in 2020 and prices fell by 11%.
Diamond sales and prices have rebounded this year, with De Beers selling more than $ 1.6 billion in rough diamonds, the most since 2018. De Beers, the world’s largest diamond company, says young people are staying loyal to quarried stones and represent around two-thirds of world demand.
Diamonds produced in Pandora’s lab are produced from carbon with over 60% renewable energy on average, a ratio that is expected to increase to 100% next year. Decision to avoid mined diamonds comes less than a year after Pandora pledged to stop relying on newly mined gold and silver in her jewelry. By 2025, all of its production will use only recycled precious metals as part of a plan to ensure carbon neutrality of its operations within four years.
The Bain report shows that the market for lab-created stones is growing at double digits, with younger customers in particular keen to identify sustainable producers. He also found that sustainability, transparency and social welfare “are priority issues” for consumers and investors.
Pandora is taking a stance on its commodities as investors increasingly focus on sustainability. Nordea’s asset management unit recently stated plans to only hold securities that live until environmental, social and governance standards in all its portfolios.
The Danish company, which has established itself as an affordable jewelry maker, used diamonds mined in just 50,000 pieces last year out of a total of around 85 million.
Pandora also highlighted the price as a consideration behind its decision. Lab-made stones cost around a third of the stones mined and the change will make diamond jewelry accessible to more consumers, he said.
Lab-made diamonds will have the same physical characteristics as mined stones, Pandora said. The new collection will include rings, bracelets, necklaces and earrings, he said.
Pandora’s emphasis on sustainable production methods has coincided with a considerable growth in its market value. In the past year alone, the company’s shareholders have seen the value of their investment triple. And this week, Pandora raised its profit forecast to reflect faster-than-expected sales growth.
Shares of the Danish company climbed to 7% on Tuesday.
– With the help of Kim Bhasin and Thomas Biesheuvel
(Adds details on diamond industry, Pandora results)