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New Greenpeace Report Sheds Light on Supply Chain Issues

The report indicates that a number of footwear firms were possible unwitting recipients of illegal hides.

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Illegal cattle ranches in Brazil have been blamed for deforestation of the Amazon rainforest

A growing number of footwear brands are committed to “greening” their products, but with an increasingly fractured supply chain, guaranteeing the sustainability of every component, process and source is no easy feat.

Earlier this month, environmental watchdog group Greenpeace released a report (covering 2005 to date) saying that illegal hides were making their way into the footwear supply chain — and mentioning Adidas, Gucci, Nike, Timberland and Clarks as potential, possibly unwitting end users. The report, “Slaughtering the Amazon,” alleged that some leather sourced from Brazil originated on illegal cattle ranches in the Amazon rainforest that contribute to deforestation. The report highlighted a problem most environmentally aware manufacturers face: How do you ensure that every shoe is as sustainable as possible when you don’t control every stage of the supply chain?

For footwear companies, which rely on a complex, global chain with many different partners, controlling green practices can be one of the biggest issues, said Barry McGeough, former head of The North Face footwear and consultant for footwear and outdoor brands — particularly since most companies contract a significant portion of their supply chain to outside companies.

“Our influencing skills become as important as our controlling skills,” said Craig Throne, VP of marketing for the outdoor group at Wolverine World Wide. Companies often must leverage their buying power to set standards with third-party companies, he said. But the level of commitment a footwear brand has to the environment and sustainability may not be matched by every partner with which they work.

“The supply chain is currently fractured between businesses attempting to be sustainable with minimal investments and those wholeheartedly committed. There is also a lack of a common language around what is sustainability and what makes a product and process sustainable,” said J.P. Borod, product director of footwear for The North Face.

Nike, Wolverine and The North Face work with the Leather Working Group to certify that the tanneries they use follow a well-defined environmental protocol. Sources said that getting help from outside organizations such as LWG and Bluesign, which certifies textile companies, can be a crucial tool in establishing a sustainable supply chain.

But despite the many strides companies have made around environmental issues, the Greenpeace report — which alleges that a number of major footwear brands were not looking deep enough into their supply chains to ensure that their products were being made responsibly — highlighted an area where monitoring could be stronger, said Adam Hughes, LWG administrator. In a statement, LWG said it was working with Greenpeace on the allegations.

And while many brands mentioned declined to comment, others said they were taking the report seriously.

“We obtained confirmation from our leather suppliers that they only source marginal volumes of raw hides from Brazil, and those that do so fully support the National Plan of the Amazon Forest Clearing Prevention and Fighting. We will further investigate and continue to engage with our suppliers on this matter,” said a spokeswoman for Adidas Group.

Nike also said it had contacted its suppliers and tanneries to determine if the allegations were accurate, and if so, how best to solve the problem. The company planned to meet with the tanners this month to address the issues raised in the report, said Kate Meyers, communications manager for the brand.

And Gucci Group, in a statement, said that all its leathers were from Europe, adding, “We confirm that our products do not contain bovine leather from Brazilian cattle. Through the processes we have in place, we take action to ensure that there is no leather in our supply chain that is linked to illegal deforestation.”

The issue is technically challenging, Hughes said, because footwear companies purchase hides from slaughterhouses whose primary focus is meat. There are millions of heads of cattle in Brazil on hundreds of farms, he explained, and one slaughterhouse may process cows from any number of those farms. It is easy to trace hides back to the slaughterhouse, but beyond that, the trail is murky.

Last week, the International Finance Corp., the private lending arm of the World Bank, reportedly withdrew a multimillion-dollar loan from Bertin, Brazil’s largest cattle corporation. It was not immediately clear why the IFC recalled the loan, but environmental groups in the region had lobbyed for action against Bertin for alleged illegal cattle farming for some time. Greenpeace named Bertin as one of the companies that supplied illegal hides for leather shoes.

Ultimately, the integrity of the component supply chain could be the next frontier for green-minded footwear companies. Similar to the evolution of the social responsibility movement, which pushed minimum wage issues and workers’ rights into the DNA of major footwear brands, environmental sustainability will become a core industry measurement, said Wolverine’s Throne. “[Sustainability] is becoming a requirement of good business practices, just like minimum wage did,” he said.

Brands want to find solutions to sustainable challenges, and when necessary, they are inventing those solutions as they go, sources said.

“The steps to setting up a [green] supply chain are defining what exists and then innovating what doesn’t exist,” McGeough said. “That has to happen at a brand level. The good news is, consumers are willing to reward brands that do it.”

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