- Despite several attempts, Earthsight has not obtained from BMW evidence to support the automaker’s claim that our Paraguay leather investigation was ‘inaccurate’
- The lack of convincing evidence shows once again that leather must not be dropped from an upcoming EU ban on imports of commodities linked to deforestation and human rights abuses overseas
- A recent amendment proposing leather is excluded from the new law should not be supported by the European Parliament
Bulldozer clearing Chaco forest in Paraguay, December 2019
Earthsight found that BMW had been using hides sourced from two slaughterhouses processing cows from ranches responsible for illegal clearances in the Ayoreo Totobiegosode’s forests of the Paraguayan Chaco. The area is home to some of the last uncontacted communities in South America and has been protected by the Paraguayan government since the 1990s.
In its statement BMW also said it had “engaged external companies to provide transparency down to the origin of our leather supply chain. For this we worked with Satelligence … and Sourcemap …, who used satellite data, big data analysis and risk assessments for the evaluation. Both partners have confirmed that our supply chain is not related to deforestation in Paraguay.”
In order to verify BMW’s claims, over the past months Earthsight held meetings with Satelligence and Sourcemap and made several attempts to obtain the necessary evidence from BMW itself. The results of this exercise are both revealing and troubling. They demonstrate once more the urgent need for regulatory action on forest-risk commodities, not least leather.
An Ayoreo Totobiegosode woman
The quest for evidence
In January Satelligence, a remote sensing company based in the Netherlands that monitors agricultural supply chains, confirmed to Earthsight it had provided farm-level satellite image analyses to BMW. However, it was clear from the meeting that Satelligence had no role in identifying the source farms in BMW’s Paraguayan leather supply chains.
The fact that Satelligence provided satellite image analyses to BMW is not in itself evidence that BMW has been able to identify all the source farms in its Paraguayan leather supply chains in the first place.
In February Earthsight held a meeting with Sourcemap, a consultancy firm that provides end-to-end supply chain mapping software to clients. Again, Sourcemap confirmed it had provided BMW with its supply chain mapping software. Sourcemap further said BMW had performed independent verification of its supply chain mapping. However, the consultancy firm could not provide any assurances the mapping had been done appropriately as Sourcemap had not been involved in the effort or been called upon to work with BMW on the verification stage of the mapping exercise.
Sourcemap also acknowledged that while its mapping software can go a long way in helping firms gain more visibility of their supply chains, it cannot guarantee 100 per cent certainty in identifying all links to environmental or human rights issues for jurisdictions with complex governance, law enforcement and corruption challenges such as Paraguay.
Earthsight then contacted BMW in late February to give the company one last chance to share its supply chain mapping evidence with us.
But no evidence came. Ahead of the publication of this analysis, BMW stated it had “taken extensive measures to verify [Earthsight’s] allegations, internally and externally. The results are clear from our point of view. In addition to these clarifications, we see no need to provide further explanations.”
The company highlighted its work with “two partners who have re-examined our previous results based on an external analysis and have come to the same conclusion.” It’s not clear from this if BMW means Satelligence and Sourcemap.
As previously noted in Grand Theft Chaco, BMW again denied links to Paraguayan exporter Cencoprod. But Earthsight’s evidence points to BMW’s links to two other exporters, Lecom and Frigorífico Concepción, that use hides connected to illegal deforestation at Ayoreo lands. The automaker did not mention these firms in its statement.
BMW also emphasised that from 2023 onwards the company “will stop using leather from Paraguay for new models” (see BMW’s full statement here). This apparent admission that BMW continues to use Paraguayan leather, 20 months after being alerted to the risks by Earthsight’s report, raises further questions. Every single meatpacker and leather exporter in Paraguay was implicated in Earthsight’s previous findings. Every cow in the country is being reared on land which was deforested – the only real questions are how recently, and whether legally. Earthsight’s research has revealed that the third-party firms BMW touted as having given it a clean bill of health never even saw the key evidence. Whatever real evidence BMW has is likely being provided by the implicated Paraguayan tanneries and meatpackers themselves.
Without seeing the necessary evidence to the contrary, Earthsight stands by its research and original findings, which were the result of extensive field work, detailed data analyses, undercover meetings, and exchanges with the companies involved in these supply chains.
Satelligence stated that “depending on the service level and contractual arrangements, the responsibility to provide stakeholders with the results and necessary assurances ultimately lies with the client” (read Satelligence’s full statement here). Sourcemap was made aware of this analysis and provided some feedback but not a full statement.
Cattle ranching in the Paraguayan Chaco
Regulatory implicationsThis case has important lessons for ongoing debates on an EU regulation to ban commodities and derived products linked to deforestation abroad. It’s clear the leather industry – including supply chains reaching some of the world’s largest car manufacturers – lacks transparency. None of the leather firms scrutinised by Earthsight over the last three years has been able to demonstrate they can consistently trace their leather back to farm of origin, the only level of traceability that really matters. One large Italian tannery importing from high-risk countries in Latin America told Earthsight undercover investigators they couldn’t even be bothered to try.
Our undercover work in Paraguay revealed that even when exporters in producer countries have wanted to implement more robust traceability, they were discouraged by European buyers’ unwillingness to share the costs. Grand Theft Chaco II laid bare how the leather industry’s incipient efforts on traceability have a long way to go before supply chains can be free from deforestation, human rights abuses or other illegalities. The wider problems that plague the cattle industries in Brazil and Paraguay, two of the world’s top leather exporters, indicate it may not be possible for the leather industry to reduce risks to acceptable levels for some source areas.
How BMW has been able to overcome these obstacles is not clear, especially considering its inability to share convincing evidence about its supply chain mapping.
Leather research done by Earthsight and others in recent years initially seemed to have convinced policymakers of the need to include the commodity in the upcoming EU regulation. The EU Commission’s proposal released in November reflected this. Yet these gains are now in danger of being reversed.
In late March the European Parliament’s rapporteur on the regulation, MEP Christophe Hansen (EPP), submitted a draft report to the EP’s ENVI Committee with an amendment for leather to be dropped from the law. As far as Earthsight is aware, no reason has been provided for this amendment.
In light of the above, it would be a serious mistake to remove leather from the scope of commodities covered by the regulation. It would let the leather industry off the hook when it is in fact one of the sectors most in need of oversight and reform. The European Parliament and Council must now defend the inclusion of leather in the new law as one of the most promising ways to start bringing much needed accountability to the industry.
Whether or not leather stays covered when the new law takes effect, it will be essential that authorities implement it properly and don’t fall for the kind of unsubstantiated claims made by BMW in this instance as evidence of compliance.
This is especially relevant considering that BMW remains one of the most progressive car firms on forest and human rights issues. Almost all other car giants surveyed by Earthsight showed less transparency and willingness to engage.