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Companies sourcing beef, leather from China exposed to Brazil deforestation risk, researchers say

A legal loophole in Brazil frequently allows cattle that have been raised on newly deforested land to not be recorded when bought by slaughterhouses. Image by Marizilda Cruppe /EVE / Greenpeace

  • An analysis of trade data reveals retailers and manufacturers using cattle products sourced from Brazil may be buying beef and leather linked to deforestation.
  • The research by NGO Global Canopy linked Brazilian and Chinese companies to major brands including Adidas, Nike, DFS, Ikea, BMW, Daimler, General Motors and Volkswagen.
  • Of the 15 importers in Europe and the United States included in the data, only three purchased products from Chinese companies that had made deforestation commitments.

Major retailers and manufacturers of cattle products who source materials from Brazil may be using beef and leather linked to deforestation, an analysis of trade data by NGO Global Canopy suggests.

Global Canopy looked at the deforestation policies of 43 companies involved in the beef and leather trade from Brazil via China. It found that popular sports brands such as Adidas and Nike, car makers BMW, General Motors and Volkswagen, and furniture retailers including DFS were unable to guarantee their leather was deforestation-free.

Of the 15 importers they identified, just three purchased products from Chinese manufacturers that had made a deforestation commitment. The Chinese companies also sourced materials from Brazilian companies without commitments in place.

Where deforestation pledges had been made by Brazilian suppliers, their policies only applied to the Amazon region and excluded other important and at-risk regions, such as the Cerrado, according to the research.

“It’s difficult to know why some of these companies do not have policies – they may not be aware of the risks, or they may not see them as a priority,” André Vasconcelos, a Global Canopy researcher who co-authored the analysis, told Mongabay in an email.

Previous research by Global Canopy found that companies exposed to deforestation risks from other commodities, such as palm oil, were more likely to be aware of their exposure and have deforestation policies than those dealing in cattle products.

“Leather supply chains are complex and retail companies may not know where the leather has been sourced from. Our research shows that leather produced in Brazil is often exported to China where it is manufactured into products, such as car seats or shoes and then are re-exported to other countries,” Vasconcelos said. “Some companies may not be even aware that they could be purchasing products that are linked to deforestation. Other companies are clearly aware as they have policies for some areas – but not for all sourcing areas.”

In the car industry, Vasconcelos says a focus on emissions over raw materials such as leather may explain the apparent oversight. Yet in the shoe industry he says the origins of the products’ core material should be “of crucial importance.” Similarly, for the companies supplying beef in China, consumer concerns about food safety “seem to dominate concerns over sustainability.”

Commodities from illegally deforested areas of Brazil reach markets globally via complex supply chains that can obscure the source of goods. Scientists and conservationists have long argued for a halt to Amazon logging, not least because the carbon storage facility it provides acts as a vital bulwark against climate change.

Experts are concerned that President Jair Bolsonaro’s plans to open indigenous lands to agribusiness and mining companies and the weakening of environmental regulations and agencies will further fuel deforestation. Bolsonaro has dismissed allegations he has encouraged illegal deforestation, the setting of wildfires and land grabbing.

Brands in the Spotlight

International brands sourcing leather from Brazil say they are increasingly offering alternative products where possible and that they are aware of their responsibility to monitor and improve sustainability standards within their supply chains.

Daimler AG, the maker of Mercedes-Benz cars and one of the firms identified in the Global Canopy analysis as sourcing from Adient PLC and Lear Corporation, China-based manufacturers that also supply Ford, General Motors, BMW and Volkswagen, said suppliers are required to “to vigorously communicate and monitor” sustainability standards in their supply chains.

Heike Rombach, a Daimler spokesman, said its customers could also go leather-free by opting for man-made alternatives composed of microfibers made from recycled polyester and polyurethane. According to Global Canopy, Lear Corporation does not have a deforestation policy. In turn, it also sources leather from Brazilian firm Vancouros Industria & Comercio De Couros Ltda, which also has no policy in place.

Volkswagen Group said in a statement that it could not comment on specific suppliers, but that each supplier had to abide by its code of conduct and went through an assessment process that could include on-site checks. While the company admits it does not have “complete traceability for the whole leather supply chain”, it said suppliers are required to source “responsibly”.

“The fact is that the sustainability situation in the leather supply chain is in some cases not satisfactory, and thus all the actors involved need to continue to be responsible for bringing about improvements,” Dr. Günther Scherelis, a Volkswagen spokesman, said in the statement. “We recognize this responsibility for ourselves and will increase our commitment and activities in the coming weeks and months.”

He added that as well as working directly with contractors, the firm was piloting a leather traceability scheme using blockchain technology.

In response to the Global Canopy research, BMW also said it placed stringent sustainability requirements on leather suppliers, though it noted that other materials, such as cobalt, copper and rubber, took priority. “For our leather suppliers we defined supplementary requirements that reinforce the importance of resource efficiency in the tanneries, working conditions in the sewing industry and animal welfare from field to tannery,” the carmaker said in a statement.

BMW added that it conducted annual audits of leather suppliers and was developing tools to monitor the supply chain, as well as “asking for complete transparency for specific supply chains if a transgression is suspected”.

Along with automotive and footwear firms, Global Canopy identified several furniture brands as potentially exposed to deforestation in their supply chains, such as Ikea, Macy’s, DFS and Ashley. According to the NGO’s data, several of the furniture brands buy leather products from Chinese firm HTL International Holdings, one of the country’s largest leather importers, which sources material from at least two Brazilian companies without a deforestation commitment.

In a statement to Mongabay, DFS, the UK’s second-largest home furnishings company, said it worked with suppliers “to ensure materials meet credible certification standards” and had employed an independent third-party to implement a verification process for its leather supply chain.

Global Canopy’s Vasconcelos said that publishing a deforestation policy can be an important first step towards deforestation-free supply chains as it shows companies are risk-aware. “But it is important to make clear that there is a difference between publishing a policy and implementing that policy,” he added. “We have seen in the past how some global companies that have deforestation policies continue to source cattle from areas embargoed due to illegal deforestation, for example. Companies need to make sure they have systems in place to implement their policies if they are going to make a difference on the ground.”

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