Quest for Conflict-free Diamond

April 1, 2014

Student and Clarity Project Co-Founder Rachel Lichte Travels to War-Ravaged Sierra Leone to Take on the Problem at its Heart

by Shannon Switzer MEM ’15


That equates to millions of diamonds being placed on the hands of newly engaged people each year. Historically, many of these diamonds have come from countries torn by civil wars, or have been mined by disenfranchised, sometimes enslaved, workers.

So what is a star-struck lover to do if he (or she) doesn’t want to support such a corrupt system?

Until several years ago, there were few environmentally and socially sound options. But Nicholas School graduate student Rachel Lichte MEM/MBA ’14 is work-ing to change that.

Lichte has co-founded Clarity Proj-ect, a start-up that sells conflict-free diamond jewelry. The company seeks to recast the diamond industry as a driver of development and prosperity in impoverished mining communities. They craft fine jewelry with diamonds that meet high social and environmental standards, using a portion of profits to support community development.

Lichte established the company in 2009 after several of her friends be-came engaged. Her friends knew about conflict diamonds and wanted an alternative, but became discouraged and frustrated when they couldn’t find one.

Realizing there was an unmet need, Lichte joined forces with some childhood friends and formed Clarity Project.

“Despite the high value of diamonds, many mining communities remain in extreme poverty,” she says. “We knew the system was broken, and people were suffering because of it.”

Earlier efforts to curb international trade in conflict diamonds through sanc-tions and third-party certification had fallen short of their goal, she explains. One of the most promising of these ef-forts, the 2003 Kimberley Process Certifi-cation Scheme, had been deemed ineffec-tual by several non-profit organizations including Human Rights Watch and Global Witness. The groups cited the dif-ficulty of tracing a diamond’s true origin as well as the ease with which Kimberley Process papers could be falsified as the reasons for the program’s failure.

A different approach was needed.

To learn how they could help, Lichte and her start-up co-founders Jesse Finfrock, Shane Rogers and G. Ryan Asin made multiple visits to small-scale mining operations in the diamond-rich, war-torn West African country of Sierra Leone, and met with lawyers and members of mining communities across the region. What they saw and learned convinced them that ignoring the situation or wishing it away would simply make it worse.

“Whole communities depend on income from these small-scale mines. We realized if we wanted to make a difference, we would have to engage with the industry and change it for the better,” Lichte says.

Lichte, a Northern California native, is in her third year in the MEM/ MBA program at Duke, a joint degree between the Fuqua School of Business and the Nicholas School of the Environment. She helped found Duke ENVENT, a student-led environmental entrepreneurship group, and has spent the last few years juggling school responsibilities while building her start-up.

This has meant spending months on the ground in Sierra Leone, in chiefdoms like Kono, where much of the most brutal conflict in the nation’s recent civil war was concentrated. Rebel forces exacted a heavy toll on local communities in Kono, which to this day has Sierra Leone’s highest percentage of amputees—war victims who had limbs chopped off by rebel forces. In addition, all but six schools were destroyed during the conflict.

Employing translators, Lichte spoke with local NGOs, “community mammas,” and diamond miners to glean more information about the current situation.

Through their initial investigative work, the team found that in addition to serious social issues, the artisanal mines, which account for 20 percent of the nation’s diamond industry, also cause significant environmental degradation.

When digging for diamonds, miners often remove the nutrient rich topsoil and layers of sand and clay beneath it and discard this “overburden” in nearby rivers, leaving behind deep pits that are abandoned and can quickly fill with water once mining ceases. These pits increase the risk of accidental drowning, and create breeding grounds for malaria and schistosomiasis, a parasitic infection that can damage internal organs and impair children’s growth and cognitive development. The unsustainable mining practices also leave behind large swaths of barren and agriculturally unproductive land.

Despite the overwhelming scale of the environmental and social problems, it was clear to Lichte and her partners that if they could make small changes, they could have a big impact—even if a local supply of sustainable mined diamonds didn’t yet exist.

“We realized that we had to start somewhere, and if our first attempt was the best thing on the market, that was a good place to begin. Then we could keep refining it from there,” she says.

Because there were no socially or environmentally responsible mining operations in Sierra Leone, Lichte and per partners decided they didn’t want to source their first diamonds from that area. Instead, they worked closely with the Fair Trade in Gems and Jewelry to source gems from the Liqhobong Diamond Cooperative, a women’s co-op in Lesotho, and to track down reclaimed gold from U.S. sources.

And their prototype ring was born.

Clarity Project has since sold dozens of rings, and according to Lichte, their greatest challenge is now scaling up the operation and converting its legal status to one that will allow them to keep up with demand and do the greatest good back on the ground in Sierra Leone.

To ensure that the communities providing the gemstones they use are earning a more equitable chunk of the $7.7 billion global diamond market, Clarity Project has teamed up with local nonprofit Shine on Sierra Leone (SOSL) to donate all of their net profits to fund SOSL projects.

Although net profits from each ring are modest, collectively they add up. An average one-carat sustainable diamond ring can sell for around $15,000, depending on the gem’s cut, color and clarity as well as the ring design

To date, the company has contributed net profits from its sales to four adult literacy programs and funded teacher salaries at the Muddy Lotus Primary School in Kono, supporting education for more than 1,000 primary schools and 300 adult students.

She and her colleagues are now switching the company’s legal status from an limited liability corporation (LLC) to a c-corporation—a distinction that means its profits are taxed at the corporate levels. They are also shifting Clarity Project’s giving model. This will allow the company to begin investing in operating its own diamond mines in Sierra Leone, and incorporating all the knowledge they’ve gained thus far about running a socially and environmentally responsible artisanal mine.

Customers say they appreciate both the beauty of the rings Clarity Project sells, and their social and environmental benefits.

“The quality and design of the ring is amazing. I’ve received so many compliments on it from friends, family and complete strangers,” says Jenné Greene of Redwood City, Calif. Greene says that while her fiancé felt buying a conflict-free diamond was important, she hadn’t been aware of the social and environmental issues related to diamond mining prior to receiving the ring. “I think it [conflict-free] is important now that I have been educated about the process,” she says.

Despite having growing numbers of happy customers like Greene, there is still much room for Clarity Project to grow, Lichte says.

“If the company does scale up to a vertically integrated supply chain, there’s potential for it to make a significant difference for both consumers and miners,” she says.

Clarity Project’s future plans include working with a third party certification through the Diamond Development Initiative based in Canada. They also hope to work closely with organizations like LifeAfter Diamonds, a nonprofit that helps teach miners a variety of professional and personal skills, from the value of having a savings account to the importance of reclaiming soil for agriculture after mining ceases.

By working on the ground to help train the miners, Lichte believes Clarity Project can directly invest capital, knowledge and resources back into the community, rather than just dollar bills. They also will know the exact conditions under which their diamonds were mined.

Many of the innovative practices she hopes to integrate into Clarity Project’s operation were honed through her classwork at the Nicholas School. She cites ongoing work with her adviser, Erika Weinthal, an expert on conflict and environment, as well as a course on soil resources, taught by Dan Richter, professor of soils and forest ecology, as being especially influential.

“From Dean Chameides to human rights activist John Prendergast, the network through the Nicholas School and Fuqua has been game-changing for Clarity Project,” Lichte says.

Shannon Switzer MEM ’15 is a member of the Duke Environment blogging team and is a Nicholas School communications assistant.