A lack of transparency in global rubber-industry supply chains obscures its impacts on the environment. This blurring of facts on the ground is putting endangered animals at increased risk according to the findings of a new study.
Research by the Zoological Society of London (ZSL) has found that only two firms, Michelin and Bridgestone, are able to demonstrate that they can trace their rubber back to where it was harvested.
The ZSL insists on the need to create traceable, transparent natural rubber supply chains in order to restore ecosystems and protect endangered animals.
Conservationists argue a lack of transparency in potentially unsustainable practices significantly increases the risk of deforestation and further endangers critical animal habitats.
Tire manufacturers often compete for access to rubber sources, which in turn means, disclosing locations of suppliers gives away competitive advantage.
In the latest Sustainability Policy Transparency Toolkit (SPOTT) report, ZSL shows that ⅘ of the natural rubber manufacturers assessed are yet to publicly claim traceability to the rubber-processor level.
Tire manufacturers, Pirelli, Continental and Hankook are also dominating the rubber supply chains globally.
Sam Ginger, ZSL’s Sustainable Business Specialist, who led the assessment explains:
“Tire manufacturers are the major players in the rubber supply chain, consuming over 70 percent of production.”
Ginger goes on to say, “they often compete for access to the same rubber sources, and disclosing supplier locations could reveal competitive advantages, such as better pricing or more secure supply chains. The majority of rubber production occurs in Southeast Asia, home to species such as endangered Asian elephants and critically endangered pangolins.”
“Unsustainable practices threaten the future of these animals through habitat loss and increased human-wildlife conflict as animals stray onto plantations.”
“Without supply chain traceability, companies cannot determine if they are negatively impacting habitat destruction and biodiversity loss,” Ginger argues.
The ZSL assesses that the majority of the world’s rubber is produced by 6 million smallholder farmers. Pilot projects have shown it is possible to trace rubber from processing facilities back to smallholder farms, enabling buyers to target interventions to improve farm sustainability.
Mr. Ginger warns us: “Buyers, investors, and organisations such as Global Platform for Sustainable Natural Rubber (GPSNR) are all calling for greater supply chain transparency in the natural rubber industry.”
Adding, “Companies that are transparent about their supply chains can build trust with stakeholders, demonstrate their commitment to sustainability, and differentiate themselves from competitors. If they can also trace supply back to origin, claims of action on sustainability commitments can be corroborated.”
ZSL’s research also highlights the fact that rubber companies may not be ready for the EU Deforestation Regulation (EUDR), to be introduced next year.
The regulation aims to reduce deforestation and forest degradation associated with the production and trade of agricultural commodities such as palm oil, soy, timber, beef, and rubber.
Under the new EUDR rules, companies placing products on or exporting from the EU market must demonstrate that products are deforestation-free and legal.
This includes rubber derivative products including tires, gloves and apparel.
Penalties for non-compliance could reach up to four percent of EU-wide turnover, as ZSL’s research shows just seven percent of companies currently publish evidence that they regularly monitor deforestation in suppliers.
The ZSL’s assessment, published every year, also showed an additional seven percent of companies now have public deforestation policies – up from 62 percent of companies last year – and 33 percent of companies now have time-bound commitments to reduce greenhouse gas emissions, up from 27 percent last year.
Joe Horrocks Taylor, an Environmental, Social, and Governance analyst at Columbia Threadneedle Investments, which utilizes the SPOTT assessment to rate rubber manufacturers across the globe, says the EUDR should convince companies to publish the locations of their suppliers.
“With agreement on the EUDR reached and natural rubber included in the final list of covered commodities, there is now an even stronger imperative for natural rubber manufacturers to disclose geo-location data for upstream production locations and to strengthen due diligence efforts.”
ZSL SPOTT’s Natural Rubber assessments are a crucial input which we use at Columbia Threadneedle Investments to be able to rate the quality of natural rubber manufacturers’ traceability, due diligence and environmental and social management.
“We engaged with seven natural rubber manufacturers and eight automotive companies in 2022, using ZSL SPOTT’s assessments and framework to focus on the most material issues.
“This is a program which we will look to expand in 2023 by working with ZSL and our financial sector peers to accelerate the pace of change in the natural rubber industry.”
They are also strongly urging all stakeholders in natural rubber supply chains to ‘put nature at the heart’ of their decision-making, and take ‘proactive steps’ toward transparency and traceability to ‘mitigate risks, build trust and use the opportunities associated with sustainable rubber.
Mr. Ginger defends the case for the environment: “Companies must publish lists of their suppliers – an action already commonplace for buyers of palm oil. Companies must trace rubber to their source so that investments in sustainable-cultivation practices can reach the farmers and habitats in most need of assistance.”
