trading diamons responsibly
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Trading Diamonds Responsibly: InstitutionalExplanations for Corporate Social Responsibility
Franziska Bieri1 and John Boli2
This article identies factors that led to a comprehensive regulatory regime for the global diamond
trade, the Kimberley Process Certication Scheme (KPCS), established through negotiations among
NGOs, states, and the industry. The conict diamonds case provides important insights into the
processes by which global norms redene how corporations are expected to conduct business. First,
we show that global corporate social responsibility (CSR) norms rooted in the construct of world
citizenship facilitated the rapid progress of the conict diamonds campaign. Second, we detail how
these norms became institutionalized in the KPCS, stressing the importance of the legitimacy of
NGOs as bearers of corporate world citizenship models and the role of moral leaders within the diamond
industry itself. We consider two theoretical perspectives on CSR development: management theories,
which are strong on practitioner issues but mute regarding the content and authority of CSR ideology,
and institutional theories, which offer better frameworks for understanding the impact of cultural and
institutional environments on company responses to the moral claims advanced by NGOs. We use the
conict diamonds case to draw conclusions about how NGOs can effectively dene new social responsi-
bilities that companies come to see as obligations they must heed as responsible world citizens.
KEY WORDS: conict diamonds; corporate social responsibility; global governance; globalnorms; nongovernment organizations; world citizenship.
This article advances our theoretical understanding of corporate socialresponsibility (CSR) by identifying factors that facilitated the emergence ofnew norms and the implementation of regulations in the global diamondtrade. The diamond business has seen tremendous changes in the past decade,moving from a highly unregulated industry to what likely is the most far-reaching trade regulation regime instituted in recent decades. This sweepingchange was initiated by a set of carefully documented reports by NGOs andthe United Nations about the role of diamonds in nancing brutal civil warsin West Africa in the 1990s. Diamonds were no longer glittering symbols of
1 Department of Sociology, University of Maryland University College Europe, ImBosseldorn 30,69126 Heidelberg, Germany; e-mail: email@example.com.
2 Department of Sociology, Emory University, Atlanta, Georgia, 30322.
Sociological Forum, Vol. 26, No. 3, September 2011
2011 Eastern Sociological Society
love; they became conict diamonds or blood diamonds, linked to villagemassacres, chopped-off limbs, and massive refugee emergencies. As a state-ment in 2001 by De Beers, the dominant global diamond company, put it,once conict diamonds had become a prominent global issue: It is appallingthat a product which is the ultimate symbol of enduring love and purity andall that is best in mankind should be linked in any way with the obscenity ofwar and the suffering of the innocent (De Beers Group, 2001:14). Inresponse, states, NGOs, and the industry created the Kimberley Process Certi-cation Scheme (KPCS), a voluntary international agreement regulating thediamond trade. Designed and implemented with remarkable speed, the KPCShas restructured the way diamonds are traded globally. It is a striking exampleof the practical implications of CSR concerns. Amid continuing debates sur-rounding the motives for and effects of CSR, the conict diamonds campaignmanaged to extend the reach of CSR principles into the diamond industry,which had been isolated from and largely immune to CSR culture. The KPCStranslated CSR rhetoric into concrete actions enforced by a regulatory certi-cation system.
Adopted in 2003, the KPCS controls the trade in rough diamonds.Today, 75 countries participate, accounting for about 99% of the global roughdiamond trade. In this formally voluntary scheme, all member states have for-mally adopted domestic legislation in accordance with the minimum criteriaset out by the KPCS, which require the establishment of comprehensive con-trol systems and the issuance of KP certicates for all rough diamonds. In theUnited States, for instance, the KPCS was implemented via the passage of theClean Diamond Trade Act in July 2003, writing into law specic diamondtrade requirements regarding record keeping, oversight, customs operations,and penalties for violations. In addition, diamond-producing states in the KPmust put internal control systems in place to track rough diamonds all theway from the mine to the nished gem, a journey that often crosses multipleborders. The KPCS has in essence become compulsory for any state seekingto trade in diamonds because countries in the KPCS must agree to trade onlywith other KPCS members. High levels of participation in the agreement leaveoutsiders without trading partners. Private industry entities in any KP memberstate must follow the legally binding requirements, trading only those dia-monds that are accompanied by KPCS certicates verifying their conict-freeorigins. CSR principles on diamond trading have become legally codied withthe passing of national legislation in many countries. The KPCS is thereforemuch more far reaching than a voluntary code of conduct, which could merelyserve the preemptive function of avoiding stringent state regulation. Such isnot the case here: the KPCS is enforced via the KPs membership criteria andmandatory state legislation and implementation.
The KPCS has been largely successful in curbing the trade of diamondsfrom conict regions in western and central Africa, with the notable excep-tions of Cote dIvoire and the Democratic Republic of Congo. U.N. sanctionsprohibit the export of rough diamonds from Cote dIvoire, but rebel groups
502 Bieri and Boli
smuggle diamonds into the KP pipeline via neighboring countries, particularlyMali and Ghana, both of which are KP members. Conict diamonds are alsosmuggled from the eastern DRC, where ghting continues. Still, the prevailingestimate is that conict diamonds now account for less than 1% of the totaldiamond trade, a dramatic reduction from some 515% in the 1990s. A sec-ond concern is illegitimate trading by a few KP member countries. Mostrecently, the KP has come under re for failing to take vigorous action withrespect to Zimbabwe, despite mounting evidence that KPCS standards arebeing violated.3
States are the formal implementers of the KPCS, but nonstate actors havewell-dened roles within this global regulatory framework. The diamondindustry is represented at the KP by the World Diamond Council (WDC), anindustry organization that was created in 2000 in response to growing globalpressure to take action regarding conict diamonds. NGOs have observerstatus in the KP, but this designation understates their importance in the orga-nization, as we show below. The two NGOs that have consistently representedglobal civil society at the KP are Global Witness and Partnership Africa Can-ada (PAC). In initial KP proceedings, they were joined by other, more promi-nent civil society groups, including representatives from ActionAid, AmnestyInternational, and Oxfam International. The door to early KP engagementwas wide open, and neither states nor the industry preselected NGO partici-pants to keep more radical voices away from the negotiating table. However,consistent representation of African NGOs at the KP was restricted due to thehigh costs associated with attendance at frequent KP meetings around theglobe. Over time, resource constraints and the increasingly bureaucratic natureof implementation also led several of the more campaign-oriented NGOs likeAmnesty and Oxfam to leave their seats at the KP table.
NGO and industry representation at the KP extends to key areas of deci-sion making and global implementation of the KPCS. The KPs workinggroup system mechanism is tripartite in nature. In the absence of a centralsecretariat, most of the tasks are accomplished in seven working groups.Nonstate actors are involved in all activities of these groups, including settingrequirements for the submission of trade data by member states, monitoringcompliance, and deciding how to handle noncompliance. These and other keydecisions are made within the working groups, while the biannual plenarymeetings, with all KP participants and observers present, usually involve mererubber-stamping of working group recommendations. Thus, thanks to the tri-partite nature of the working group system, NGO and industry inuence isremarkably extensive.
3 Zimbabwe has been criticized for massive human rights violations and widespread violence inthe Marange diamond area, much of which is attributable to Mugabes military and policeforces (PAC, 2009, 2010). The KP has been considering suspending Zimbabwe for some timebut has yet to do so. While illegitimate, diamonds exported from Zimbabwe are not conict dia-monds, which the KP denes as rough diamonds traded by rebel groups to nance their warefforts. Repressive governments that derive revenues from diamond exports cannot be heldaccountable under the KP.
Institutional Explanations for Corporate Social Responsibility 503
The new norms that were created during the conict diamonds cam-paigndening the trade in conict diamonds as immoral, socially irresponsi-ble, and unacceptablehave been institutionalized in the KPs organizationalstructure. Through the working group system, the KPs participation criteria,and its mandatory minimum standards, the KP has redened legitimate dia-mond trading practices. Seen more broadly, the conict diamonds case pro-vides important lessons