A report by the NGO Earthsight links the loss of forest between Paraguay, Argentina and Bolivia and the exports of leather in Italy. Importing companies: we respected the rules in Paraguay.
Italian leather has been placed at the center of an international dispute involving car manufacturers and the Paraguayan government, after a dossier from a British NGO accused some tanneries of buying leathers from deforested areas of the Gran Chaco in Paraguay.
The dossier that triggered the fuse is called Grand Theft Chaco and was published in recent days by the English non-governmental organization Earthsight. Yet before the publication the document raised reactions in leather and automotive industries, to which it has been subjected to give the possibility of replication.
“Major European car manufacturers, including BMW and Jaguar Land Rover, are using leather linked to the destruction of a protected area of South American forest, inhabited by one of the last indigenous peoples who have no contact with civilization,” is the accusation by the NGO, supported by a report of over 40 pages.
Deforestation of the Chaco
The Gran Chaco is the second largest forest in South America after the Amazon. It stretches for 800,000 square km between Argentina, Bolivia and Paraguay and is home to thousands of species of animals and plants, as well as a population of 250,000 indigenous people. In recent years it has been the victim of one of the fastest deforestations in history: according to NASA, between 1985 and 2016 about one fifth of the Gran Chaco was converted into agricultural land and pastures.
In Argentina, the forest has given way above all to soybean fields while in Paraguay the different characteristics of the territory have favored the expansion of cattle pastures. According to Global Forest Watch, Paraguay lost 50,000 hectares of primary forest in 2019, particularly in the Chaco regions.
“Of the 255,000 hectares deforested in the Paraguayan Chaco between August 2017 and August 2018, only 94,000 were authorized,” writes Earthsight, citing a report from the government environmental agency Infona. The NGO, recounting a long series of field interviews with officials and former government officials, intermediaries and “land merchants”, denounces a widespread system of corruption even within the ministries, made of concessions to deforest very simple to obtain and impunity for any violations.
“At least 20 percent of the deforestation of the Chaco in Paraguay is illegal, but there is not a single person in jail for this,” argued Argentine lawyer Ezequiel Santaganda in the dossier. Earthsight focuses in particular in a protected area of the Gran Chaco (PNCAT, in Alto Paraguay) where lives one of the last indigenous tribes in the world without contact with the rest of civilization, the Totobiegosode.
Through satellite images, the dossier documents deforestation in this area until 2019; then using records and information acquired in the field, the document traces the cattle raised to the main slaughterhouses in Paraguay, FrigoAthena, Frigomerc and Frigorifico Concepcion. The NGO continues to follow the path of hides towards two Paraguayan tanneries, Cencoprod and Lecom, and brings up the Italian leather industry: “Paraguay exports over a billion dollars worth of meat and leather every year. While most of the meat is destined for Chile and Russia, 60 percent of the leather reaches a single country: Italy, “the report reads. “We also sell in other countries, but most of the leather goes to Italy.”
“Italy is a gateway to Europe, “says Ferdinand Kehler, director of the Paraguayan tannery Cencoprod, in a recorded conversation that we have seen in full. “We sell almost 80 percent in Italy, but the figure also includes Germany, France and others. It goes to Italy but ends up in other countries”. According to Eurostat data, in 2019 Europe imported 24,2 thousand tons of “wet blue”, a semi-finished leathers, from Paraguayan tanneries. Almost all, 24.1 thousand tons (worth 20 million euros), were destined for Italy. According to a commercial database, between 2014 and 2017, 39 percent of the leathers exported from Paraguay were bought by the Italian Pasubio, followed by other tanneries such as Gruppo Mastrotto, Nuti Ivo and Rino Mastrotto Group.
The car industry
Pasubio is one of the main tanneries in Italy: 307 million euros of revenues in 2019, it belongs to a fund of CVC Capital Partners through a company based in Luxembourg. Located in the Veneto district of Arzignano, Pasubio is the leading European producer of leather for the automotive sector, which accounts for 90 percent of its turnover. Pasubio has a structured presence throughout the panorama of automotive brands, especially in the luxury segment, where a greater demand for leather is concentrated.
The commercial data indicate that the tannery bought semi-finished leathers from all the tanneries mentioned in the Earthsight report: this is why the dossier, which ended up on the hands of all the automotive groups, triggered a series of reactions in many companies. “We take allegations of illegal or unethical behavior in our supply chain very seriously and immediately took action to investigate the points raised by the relationship with our suppliers,” said Steven Slocket, UK sustainability manager at Jaguar Land Rover.
The BMW group had a similar reaction: “So far we have no information that the BMW Group’s supply chain in South America is linked to the problems raised,” said Kai Zoebelein, Group sustainability manager, who announced the temporary suspension of supplies from South America and the development of a better traceability system.
The government guarantee
“Paraguay represents a marginal source of the total leather purchases we make”, says Luca Pretto, CEO of Pasubio. “On the other hand, reading information that does not honor the truth bothers us and harms us due to the set of requests and reassurances that we receive from our customers”.
Reached by a series of requests for clarification from its customers in the automotive sector, the company has in turn taken action towards suppliers in Paraguay: “All our suppliers have assured us that they operate in compliance with Paraguayan law,” he said. Pretto. “To ensure that this was true, we got in touch with the Paraguayan government.”
Urged by the company, the Minister of Industry and Trade of Paraguay Liz Rossanna Cramer Campos wrote a letter to Pasubio in which she assured that “the production sector and the national industry of products and by-products related to pastures have been working for decades alongside the State in compliance with the regulations “. According to Pretto, the letter gave the company “ample assurance that the operators in the market, who represent part of our raw material supplies, are operating and have operated in perfect compliance with Paraguayan law. With this we felt protected.”
“We have neither the power nor can we have the burden of having to question the government of a country that guarantees us this“, added Pretto. “The Paraguayan government has confirmed that their work is in full compliance with Paraguayan laws: they do not have to follow Italian or German or French laws, they are in Paraguay, they follow Paraguayan laws.”
The crux of traceability
The traceability issue for leather producers is the crux that contrasts the Earthsight report with the attitude of the tanning industry. “We remind you that leather processing is the use of waste from the food industry. There are no cattle killed for their skins, there are cattle killed for food, “, claims Pretto.
For this reason, according to Maurizia Contu of the economic department of the National Tanning Industry Union, “there is very strict legislation regarding traceability, but only for the food chain. The same cannot be said for the skin.”
Even the main certification systems in the leather sector, Icec and Lwg, in addition to being volunteers for companies, trace raw materials only up to the slaughterhouse, thus not verifying whether the garments come from deforested areas.
After the debate on leather and deforestation raised in Italy in 2017, the tanning industry has launched a pilot program in Brazil to try to trace the skins to the farms: “We need to start thinking about the issues of animal welfare or deforestation to make additions or risk analyzes on these issues of traceability,” said Sabrina Frontini, director of Icec, at a conference. His counterpart Rafael Andreade of Cicb, the Brazilian certification body for the sustainability of leather, shares the same opinion: “We must do more, we must go beyond the concept of legality. All the tanneries are legal, all do their homework.”