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Pandora A/S—the world’s largest jewelry maker by volume—is aiming to completely end its use of mined diamonds, making it one of the first major jewelers to do so.

The Copenhagen-based jeweler famous for its charm bracelets is launching a lab-created diamond collection as part of a broader strategy to end its affiliation with unethical diamond mining.

It will release the new lab-grown diamond collection in the U.K. before a worldwide debut in 2022.

Diamonds produced in a lab are visually and chemically identical to those excavated from a mine, their difference imperceptible to the naked eye. They also aren’t plagued by reports of human rights abuses at mines and factories.

And as costs for lab-grown diamonds drop and sustainability-conscious millennials buy more engagement rings, jewelers are starting to see the value in not mining the jewel.

Pandora CEO Alexander Lacik said in a statement that lab-produced diamonds “are as much a symbol of innovation and progress as they are of enduring beauty, and stand as a testament to our ongoing and ambitious sustainability agenda.”

Shares in the Danish company rose by as much as 7% and traded 5.6% higher at noon in Copenhagen.

Millennials drive demand

Very few jewelers use lab-grown diamonds, save for a number of new entrants, such as Austrian crystal jeweler Swarovski. Despite this, demand is changing radically.

According to a Morgan Stanley report, rising sales of lab-grown diamonds are driven by millennials, who are at the prime age to buy engagement rings.

And even without considering the environmental and ethical factors, the cost of the lab-based alternative also helps.

A report from the Antwerp World Diamond Centre (AWDC) and the consultancy Bain & Co. notes that the diamond industry has struggled over the pandemic, with global sales dropping 20% owing to lockdowns, travel restrictions, and economic uncertainty.

At the same time, the supply of lab-grown diamonds has risen. In 2020, lab-produced diamond production grew to between 6 million and 7 million carats, while mined diamond production fell to 111 million carats—dropping from its peak of 152 million in 2017.

The pandemic has further accelerated a trend that already existed. According to Morgan Stanley, the cost of producing lab-grown diamonds has declined materially over the past five years. Quality has improved so much that even diamond dealers cannot tell the difference.

By February 2020, before the pandemic began spreading fast, lab-produced diamonds retailed at less than half the price of mined diamonds, from price parity in 2015.

Pandora’s Lacik said a lab-produced diamond could cost a third of what it costs to dig it up from the ground.

As a result, the number of market players is surging. Swarovski executive Nadja Swarovski expects the number of participants in the lab-grown diamond market to be “totally disruptive” as production costs drop further in the coming years.

Lab-grown vs. mining

Beyond the imagery provided in the opening scenes of Blood Diamond and in Kanye West’s “Diamonds From Sierra Leone,” there are some positives and negatives to both alternatives.

People tend to believe that lab-grown diamonds have a lower carbon footprint than mined diamonds. However, the production process involved is very energy intensive. Using “high-pressure, high-temperature technology” without renewable energy, the process to produce diamonds in a laboratory emits a lot of carbon dioxide. In Pandora’s case, the company intends to use 100% renewable energy to produce the diamonds—up from 60%.

Additionally, there are societal benefits to mining the jewels: The seven major diamond companies employ over 77,000 skilled workers, namely in emerging markets. The jobs pay salaries 65% higher than average in these countries, and mining diamonds has an overall positive knock-on effect in local economies, according to Morgan Stanley.

Tiffany & Co., the jeweler most exposed to the diamond market compared with its competitors, such as Cartier, VCA, or Bulgari, is sticking with mined diamonds.

From 2019 Tiffany, now part of LVMH, began providing customers with details that track a stone’s path all the way back to the mine in which it was found.

“Our position is lab-grown diamonds are not a luxury material. We don’t see a role for them in a luxury brand. They have their use, and they have their place, but I think luxury consumers will continue to desire the rarity and amazing story of natural diamonds,” Andy Hart, SVP of Tiffany & Co., said at the time.

But, as ever, the final arbiter of luxury and taste is the customer.