Beef and leather companies in China silent on Brazilian deforestation

Christina MacFarquhar

Leather from Brazil is used by companies in China to manufacture leather car seat covers, among other things

This is the third in our series on deforestation risk in the Brazil-China beef and leather trade, and is available in Chinese here. Read the first and second blogs here and here, or visit here for Chinese versions.

Are companies in the car seat, furniture, footwear and food industries in China aware of the risk that some of their raw materials could be associated with deforestation in Brazil?

These industries use most of the Brazilian beef and leather imported into China (including Hong Kong), which is the world’s biggest importer of beef and leather from Brazil. Cattle ranching for beef and leather production is the leading driver of deforestation and other native vegetation loss in Brazil.

However, the policies and statements on company websites suggest that they have other priorities when it comes to corporate responsibility.

“Zhuochen can… guarantee food safety from the field to the table,” reads the website of Beijing Zhuochen Animal Husbandry. Chinese furniture manufacturer Man Wah Holdings, meanwhile, describes efforts to reduce pollution from its factories.

Zhuochen and Man Wah are two of the 20 companies operating in China that have been identified by Global Canopy as having the greatest potential to help address Brazilian deforestation risk in China’s beef and leather supply chains.

An assessment by Global Canopy of the companies’ websites has revealed that, while a few describe their efforts on issues such as food safety and local pollution, none of the companies appears to be alert to deforestation risk in their beef or leather supply chains.

Food safety and pollution are leading concerns within the meat and leather industries in China and worldwide. For well over a decade, China’s government has been issuing new regulations and cracking down on offending companies. So it is not surprising that these issues appear in some manufacturers’ public communications.

But their lack of publicly available policies on forests is worrying given their importance within beef and leather supply chains. The 20 companies account for at least a fifth of Brazilian leather and a quarter of beef imports into China and are major players within their industries.

Beef imports from Brazil can be associated with a risk of deforestation

Risk to forests, risk to companies

A lack of awareness and policies on deforestation among companies in China means that they could be helping drive deforestation and other native vegetation loss in Brazil (and in other countries that export beef and leather). This exposes companies to several forms of risk.

If their beef and leather are indeed sourced from places where production is unsustainable, companies could face risk to their future operations through supply shortages, disruptions, or price changes. Also, changing national policies in either China or Brazil, to address vegetation loss, could lead to regulatory risks for companies that are caught unprepared.

And, as public awareness of deforestation increases, companies increasingly face reputational risk if they are not seen to be actively addressing the issue. This is particularly important for downstream companies such as shoe, car and furniture brand owners and retailers, who are directly exposed to consumer preferences and pressure.

As a result, these companies could, in turn, put pressure on manufacturers in China to disclose and address their own supply chain risks. Or they might simply withdraw their business and turn to other manufacturers with more advanced forest policies.

Forest policies to rely on

Corporate forest policies on leather and other commodities come in all shapes and sizes, differing wildly in their potential to address deforestation risk. Global Canopy’s annual Forest 500 assessment reveals the full range, from bare bones, one-off statements to comprehensive commitments with detailed implementation plans and regular updates.

The most robust commitments, according to the assessment, are those that include clear deadlines, quantifiable targets, and transparent and independent monitoring and reporting processes. They apply to companies’ entire operations and all direct and indirect suppliers, not just a limited part of their supply chain.

For companies in China that want to develop their own policies, these assessments can be a helpful template. Companies can also engage with CDP China, which invites and supports companies to disclose information on deforestation risk in their supply chains. They can join the CDP Supply Chain Forest Project to request information from their suppliers, which can help them evaluate deforestation risk in their supply chains.

And Trase will soon launch a sub-national mapping of beef supply chains in Brazil, shedding light on where each importing company sources its beef from, along with the associated deforestation risk.

Involvement in high level, joint commitments such as China’s bold 2017 Sustainable Meat Declaration can also help companies take their first steps. Announced in late 2017 by the China Meat Association, 64 of its members, and WWF, the Declaration includes a commitment to develop time-bound plans to avoid deforestation in livestock production, with accompanying traceability and reporting systems.

Knock-on risk for European and US companies?

The strongest company policies found in the Forest 500 assessment are mostly from European and American manufacturers and retailers.

But do any of these apply to leather, and to the supply chains of key furniture, shoe and car companies?

And what does it mean if, say, retailers of leather shoes in the UK commit to deforestation-free furniture, if shoe manufacturers in China don’t have matching policies?

In the next two articles in this series, we’ll explore this question by looking at European and American car, furniture and shoe companies, including some of those supplied by the 20 key companies in China.

To read the rest of the series, click on the links below:

1. The Chinese industries importing Brazilian beef, leather — and deforestation risk

2. Tackling deforestation risk in Brazilian cattle exports: 20 key companies in China

This work was made possible thanks to funding from NICFI, as part of CDP’s Power of Procurement project, and DFID.