Tackling Traceability: Leather’s Role in the Fight Against Deforestation

The leather industry has found itself at the center of the European Union’s push to combat deforestation, with new regulations like the EUDR (European Union Deforestation Regulation) setting the stage for stricter traceability requirements. But as the industry grapples with these changes, it’s clear that achieving sustainability is no simple task. Let’s dive into the challenges, collaborations, and innovations shaping this critical discussion.

The Tangled Web of Leather Supply Chains

At its core, leather is a by-product of the meat and dairy industry, accounting for just 1-2% of an animal’s value. This low percentage creates challenges because the leather sector has minimal leverage to influence upstream practices like farming and slaughtering, where deforestation risks often originate. This makes it difficult for the leather sector to wield influence over upstream practices, such as farming and slaughtering. Add to this a globally fragmented supply chain—where raw materials from different sources are mixed and aggregated—and the complexity of achieving full traceability becomes evident.

Case in Point: Brazil
Brazil, one of the largest leather producers, processes 40 million hides annually and exports 25% to the EU. While efforts are underway to monitor cattle farms and slaughterhouses, the current reliance on batch-level identification falls short of EUDR requirements. Moving from “batch” to “individual animal” traceability will require significant investments in both technology and time.

The Price of Traceability:
While a simple ear tag costs less than $1, the true cost lies in creating systems to track an animal from birth to product. For example, the Dutch veal producer Van Drie Group invested a staggering €50 million to vertically integrate and ensure traceability. Smaller players in the leather supply chain face daunting financial hurdles to implement similar systems.

Collaboration: The Key to Sustainable Solutions

The leather industry is stepping up its game with collaborative efforts that aim to unify traceability standards and share the burden of compliance.

Leather Traceability Cluster:
This voluntary platform brings together certification bodies (e.g., Leather Working Group, Sustainable Leather Foundation) and international organizations like UNIDO and the WWF. The goal? Develop aligned, sector-wide traceability systems to avoid redundant or conflicting approaches.

Lessons from the Beef Sector:
Efforts by the National Wildlife Federation (NWF) in Brazil demonstrate the power of stakeholder collaboration. For example, NWF worked closely with meatpackers to develop a monitoring system for indirect suppliers, addressing a critical gap in the supply chain and setting a benchmark for sustainable practices. Since 2008, NWF has worked with meatpackers to implement supply chain monitoring, helping address deforestation risks linked to indirect suppliers. These models could provide valuable insights for the leather industry.

The Costs and Benefits Debate

The question everyone is asking: Who will foot the bill for traceability?

Economic Impact:
Traceability systems have already increased leather costs by €2 per square meter in some cases. Brands are reluctant to absorb these costs because sustainability investments often come with slim profit margins and heightened competition. Additionally, passing these costs onto consumers risks pricing products out of reach, especially in markets where affordability is a key factor. While this might seem manageable, brands have shown reluctance to absorb additional expenses, creating a bottleneck for implementation. Meanwhile, consumers expect sustainability but often balk at higher prices.

The Bigger Picture:
As Deborah Taylor of the Sustainable Leather Foundation aptly noted, “This is all about proving you’re not part of deforestation, but it’s not addressing the root issue.” Indeed, traceability ensures compliance but doesn’t necessarily halt deforestation. To drive real change, the industry must shift its focus toward forest-positive actions.

Moving Beyond Compliance: Forest-Positive Actions

What’s the ultimate goal? Protecting forests while fostering sustainable business practices. Here’s how the leather sector can rise to the challenge:

Engaging with High-Risk Regions:
Instead of exiting deforestation-prone areas, brands should support local farmers and communities with resources and incentives to adopt sustainable practices.
Promoting Sustainable Forest Management:
Collaborative efforts between the leather and forestry sectors can create value for forested land, making conservation a viable alternative to deforestation.
Leveraging Existing Systems:
The beef industry’s traceability systems, built for food safety, can be adapted to include leather by-products. Such cross-sector cooperation could streamline processes and reduce costs.

The Road Ahead: Collaboration and Communication

If there’s one lesson from the EUDR discussions, it’s the importance of collaboration and open dialogue across the supply chain. Stakeholders—from farmers to tanneries to brands—must align their efforts to meet regulatory requirements while addressing the root causes of deforestation.

Communication will be key in bridging gaps between different actors in the value chain. As Francisco Beducci of NWF emphasized, “Producers and brands often don’t understand each other. Improving communication can build a common future.”

Final Thoughts

The EUDR represents both a challenge and an opportunity for the leather industry. Now is the time for stakeholders to embrace innovation, invest in sustainable practices, and collaborate across the value chain to create a future where leather production supports both people and the planet. By embracing traceability, fostering collaboration, and prioritizing forest-positive actions, the sector can play a pivotal role in global sustainability efforts.

While the path forward is complex, one thing is clear: The leather industry’s success in tackling deforestation will depend on its ability to innovate, communicate, and invest in sustainable solutions. Let’s make every hide count—for the planet and its people.

Reference: Deforestation risks linked to leather – engaging the value chain