Pasubio pledges no more links to deforestation in Ayoreo Totobiegosode lands, but is this enough?

20.12.2023

An aerial view of a cattle truck in the Paraguayan Chaco. © Earthsight

Today Conceria Pasubio, the Italian tannery at the centre of Earthsight’s Grand Theft Chaco investigation, publicly announced that, as of now, it “will halt all commercial relationship with any Paraguayan supplier unable to provide appropriate guarantees regarding the absence of any relationship, direct or indirect, with the cattle ranches located within the [Ayoreo Totobiegosode indigenous territory] PNCAT.”

The company said it intends “to ensure that it does not in any way contribute to the illegal deforestation in the Ayoreo Totobiegosode territory, and expresses its support for the Ayoreo Totobiegosode in their fight for their human and territorial rights.”

In its announcement Conceria Pasubio acknowledged Earthsight’s investigations have allowed it to have “access to current and detailed information about the threat to the Ayoreo Totobiegosode people of Paraguay's Gran Chaco region.”

Grand Theft Chaco showed the company – the largest European buyer of Paraguayan leather over the last 10 years – had been importing leather from exporters Cencoprod, Lecom and Frigorífico Concepción in Paraguay, which are linked to cattle ranches implicated in illegal deforestation of the Ayoreo Totobiegosode Natural and Cultural Patrimony, known by the Spanish acronym PNCAT.

Pasubio is a key supplier to giants of the European automotive industry, providing leather for the interiors of cars manufactured by BMW, Jaguar Land Rover, Volkswagen, Peugeot, Porsche, Citroen and several others.

Grand Theft Chaco revealed two ranches within PNCAT – Caucasian SA and Cooperativa Chortitzer – had been found to have illegally cleared over 2,700 and 500 hectares respectively. A third farm, Yaguareté Porã, had a long history of illegal land dealings and pasture development within PNCAT. Earthsight was able to link hides from these ranches to the exporting tanneries and on to Pasubio and its clients BMW and Jaguar Land Rover.

At the time, Pasubio reacted to Earthsight’s investigation not by attempting to end its apparent contribution to illegal deforestation, but by seeking empty assurances from the Paraguayan government – which for decades has blatantly failed to protect PNCAT and punish illegal deforesters – that its supply chains were in compliance with the law.

Illegal deforestation at a ranch inside Ayoreo Totobiegosode indigenous territory. © Earthsight

After years of denial and an apparent lack of concern for the origin of its leather, Pasubio’s announcement seems to finally indicate a belated recognition by the Italian tannery that its Paraguayan supply chains have long been tainted by illegal deforestation and indigenous rights violations. This is a significant departure for a company that not long ago callously dismissed any cause for concern.

Partly, this is likely due to the complaint indigenous rights organisation Survival International submitted last year to the OECD against Pasubio, which has forced the tannery to review its attitude.

But it may also be linked to the recently approved EU Deforestation Regulation (EUDR) – which from the end of 2024 will require firms to guarantee their leather is not linked to deforestation or illegalities in the country of production. As EUDR looms large in the horizon, it’s perhaps not surprising the company is only now beginning to take any action, despite years of Earthsight calling on the industry to clean up its act.

Pasubio’s announcement raises a number of questions that are not addressed in the company’s statement. Strikingly, the tannery is only pledging to cut ties to illegal deforestation at PNCAT. What about hides linked to deforestation and human rights abuses elsewhere in Paraguay or other source countries, such as Brazil? Is Pasubio going to turn a blind eye to problems in these supply chains? The absence of any commitments outside PNCAT feels like a missed opportunity and is a major cause for concern.

In addition, the Italian company did not even begin to indicate how it is going to monitor whether its Paraguayan suppliers are complying with its policy. Is Pasubio simply going to repeat past mistakes and trust assurances provided by Cencoprod, Lecom and Frigorífico Concepción? Or is it going to trace all its leather back to farms of origin, the only level of traceability that truly matters?

The leather industry’s history is not reassuring. Time and again Earthsight has been confronted with the complete inadequacy of the sector’s traceability and due diligence meagre efforts. All this is made worse by the reality on the ground in Paraguay, a country where the agribusiness lobby holds sway, the environment ministry’s licensing processes have been linked to corruption, and government agencies are unwilling or unable to enforce environmental law and indigenous protections.

Pasubio must realise this announcement is far from enough. The ball is still firmly in its court. The tannery should urgently commit to a zero-deforestation policy covering all its leather sources. It needs to swiftly put in place and publicly disclose credible plans to fully trace its leather, enforce its new policy and deal with non-compliance. Pasubio must also allow for independent third-party verification of its supply chains. Transparency will be key. The company has to be honest about shortcomings and work to fix these, not shying away from ditching non-compliant suppliers.

Ultimately, the whole European leather industry must accept that soon it will have to comply with EUDR. The sector has badly lagged behind others in supply chain traceability and monitoring, and spent much of recent years fighting against regulation instead of reforming itself. Pasubio’s change of tune, however incomplete, offers an opportunity for others to rethink their leather sourcing practices and put an end to their complicity in deforestation and human rights abuses. They must not waste valuable time.

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