Deforestation is the number one risk topic facing our industry

We have been listening to reports on the harm that deforestation does to our planet, and how important it is to preserve our forests for a healthy ecosystem, for a long time now. However, the time for listening is over and the time for action is here.

Industry has known that regulation was on the horizon since 2021 and certainly SLF started talking with companies then about preparing for the inevitable by mapping suppliers and understanding at least whether there was a deforestation risk in the value chain.

Here is what you need to know about the first key piece of regulation that could have far reaching consequences for our industry – the European Union Deforestation Regulation (EUDR):

• The Regulation will be in force from 30 December 2024 for the largest companies with SME companies being affected in 2025/26.
• The Regulation covers key commodities that include soy, palm oil, beef*, wood, rubber, cocoa and coffee.
• *It also includes the derived by-products such as leather, chocolate, tyres and furniture.
• For the leather value chain, all materials are included:
  • Raw hides and skins (fresh, salted, dried, limed, pickled or otherwise preserved).
  • Tanned or crust hides and skins of cattle, without hair on, whether or not split, but not prepared.
  • Leather of cattle, further prepared after tanning or crusting, including parchment-dressed leather, without hair on, whether or not split.
• These obligations extend to traders and manufacturers, as well as brands, to prove due diligence for deforestation-free supply chains.

Operators who wish to import to or export from the EU will have to provide information about the commodity (such as what it is, how much, where it came from with geographical coordinates of all plots of land where the commodity was produced/grazed) and enter that information as a “due diligence statement” into an IT system that will generate authorisation to meet the regulation.

If a company cannot collect the required information, then it cannot place products on the EU market, or export from it.

This is just the first piece of regulation that will have a profound effect on the international leather market. There is also the UK Environment Act which is being updated to include the UK Forest Risk Commodities Regulation, and there is the US Forest Act also in development.

The potential for costs to be impacted is huge…supply and demand will be affected by those wanting to source from low-risk regions which will push prices up there…and prices will plummet for high-risk material that no-one can use because it doesn’t have birth farm traceability.

The bigger knock-on issue could be brands moving further away from leather as a material choice because it’s too challenging to source.

If you would like more information about the implication for our industry and how SLF is working to find solutions with our partners, then please contact: info@sustainableleatherfoundation.com