The EU Deforestation Regulation (EUDR) will come into force for the vast majority of automotive businesses in December of 2024. The regulation stipulates that all imports of rubber and leather, and products made from these materials, must be deforestation-free. Rubber and leather are key commodities for the automotive industry.
If companies can’t prove that goods imported into the EU meet the deforestation-free criteria, they can face delays at the border, fines, or be banned from the EU market. For a sector that relies on well oiled supply chains, these kinds of delays and issues are a car crash to be avoided.
Wider supply chain issues and looming trade wars mean that sustainability has taken a backseat in the automotive industry. Regardless of these problems, the EUDR is accelerating the race to a deforestation-free future. Organisations such as the Global Platform for Sustainable Rubber (GPSNR) are driving initiatives to build a sustainable natural rubber sector, for example. With the right data and tools the automotive sector can get into pole position.
Sustainable Leather and Rubber, a Natural Fit for the Car Industry?
Leather is produced on cattle ranches which are responsible for around 80% of deforestation in the Amazon, according to the FAO. Car companies might think they can ride in the tailwind of this problem, as leather products are often a byproduct of meat production. However, as the leather goods market was valued at $700 billion in 2021, there won’t be any shortcuts to EUDR compliance for the automotive industry.
Half of the leather the EU imports is used to make luxury car seats, and most of it comes from Brazil. A report from the Rainforest Foundation of Norway claims that more than 1.1 million hectares of deforestation between 2019 and 2020 took place to supply the tanneries of JBS Couros, Brazil’s largest leather processing company.
“Transparency and traceability are close to non-existent in leather supply chains, and it is highly likely that companies buying leather from the major Brazilian leather suppliers buy leather from cows that have grazed on deforested land. Currently, no one can prove that the leather they buy is deforestation-free”
– Anne Leifsdatter Grønlund, Zero Deforestation Advisor, Rainforest Foundation Norway.
While there is no direct proof that the leather used by Europe’s big automotive industry players was produced as a result of this deforestation, they can’t prove otherwise either. Under the EUDR, the burden of proof will fall on the companies themselves to prove their products are deforestation free.
Rubber doesn’t get off the hook either. There are issues with supply chain traceability and transparency as rubber producers are reluctant to share supplier data to remain competitive. Without adequate deforestation risk monitoring and supply chain traceability safeguards in place, automotive companies risk getting a flat tire in the European market.
A Sustainable Automotive Sector – A Difficult Road Ahead?
To be ready for EUDR compliance the automotive sector will need to:
- Prove all leather and rubber products and by-products were not produced on land deforested after December 2020.
- Complete a due diligence statement confirming the precise coordinates of where the commodities in these products were produced.
For more detailed information on EUDR compliance, see our handy guide.
Worryingly, a Capgemini survey in 2023 showed that the number of automotive businesses taking up sustainability initiatives actually fell by 9-11% from 2022.
Sure, the car industry is prioritising recycling and re-use of metals, but deforestation related to leather and rubber isn’t being talked about enough. It’s fair to say that the EUDR hasn’t been on the automotive sector’s sat-nav, but it needs to be.
Few automotive players have a policy for deforestation-free leather or rubber. The Textile Exchange has launched a call for deforestation-free leather by 2030, but most of the signatories are in clothing, not cars. The automotive industry is still a long way from becoming deforestation-free, but will still need to comply with the EUDR by the end of next year.
A Sustainable Car Industry is Possible, So Let the Rubber Meet the Road
Satelligence can provide the automotive sector with a deforestation risk assessment of its existing supply chain operations, and ongoing risk mitigation services with near-real time deforestation alerts and smooth alert-to-grievance processes, all in a customisable, API-friendly web-app.
With a simple drop down menu, companies can track their progress towards EUDR compliance, farm by farm, and supplier by supplier. Satelligence can verify the geocoordinates for the production of commodities and verify compliance with the EUDR’s December 2020 cut-off date. Satelligence keeps the supply chain traceability data of its users confidential, so supplier information won’t be leaked to competitors.
Since 2020, Satelligence has been monitoring land cover change for rubber producer Royal Lestari Utama (RLU). They provided an assessment of their existing deforestation risks and accountability across their concessions, and systematic, ongoing monitoring of land cover changes, health and other threats such as fire, or encroachment, to assist them with their Landscape Protection Plan.
“Thanks to satellite mapping and monitoring, companies like RLU can really make a difference and take action towards a more sustainable supply chain. Together, we can create meaningful impact and demonstrate conservation areas are not converted, promote greater transparency in the supply chain and drive towards a more sustainable, independently verified production model”
– Niels Wielaard, CEO, Satelligence
BMW used Satelligence’s deforestation monitoring and mitigation services to map their own raw material supply chain, track the materials they use to their source, and to verify the sustainability of those materials using Satelligence’s tools. Satelligence’s work has helped BMW improve the sustainability standards in the leather industry, and play a leading role in the Leather Working Group and the Global Platform for Sustainable Natural Rubber.
Read what Stefano Savi, founder of the Global Platform for Sustainable Rubber, had to say about Satelligence’s tools.
With Satelligence’s data, BMW was able to get visibility over their supply chains, assess any deforestation risks, take more efficient decisions to mitigate those risks, engage with potentially risky suppliers with confidence, and improve transparency with their customers.
All the tools the automotive industry needs to manage grievances raised by NGOs or third parties are in Satelligence’s toolbox. With Satelligence’s AI models and risk mitigation services, its users are able to predict and mitigate deforestation risks and events in their supply chains before third parties and NGOs are made aware of any issues.
The race to a deforestation-free automotive sector is hotting up.
Don’t fall behind in qualifying, start the race in first place.
Get in touch to find out more.