London – Recent reports suggest that the push to introduce sustainability-related standards in the global tire and rubber products industries is creating acute challenges for growers and suppliers in certain production countries –with Vietnam being cited in particular due to the lack of transparency in its supply-chains.
For an insight into these issues, ERJ asked leading environmental group the Forest Stewardship Council (FSC)* for its views on the current situation and the best way forward for all stakeholders in the natural rubber value-chain:
ERJ: What does FSC see as the main challenges around transparency within the natural rubber value chain?
FSC: Processors generally buy from intermediary traders, who often collect from an undefined geographic area. It is either the case that 1) the intermediaries do not know the origin of the raw material or 2) they do not reveal it to maintain a competitive advantage, or 3) the processor simply does not care.
ERJ: How widespread a problem is this?
FSC: The degree of this challenge varies country by country. In Thailand, there is a growing list of certified rubber supply chains that have addressed this, with an unbroken chain of custody from certified smallholder cooperatives to collection points to the processing factories.
This is partly because Thailand manufactures a lot of concentrated latex, in which the raw latex must be quickly delivered to the factory (short shelf life), resulting in shorter supply chains – compared to say tire-grade rubber, where there is no shelf life on the raw material (“cup lumps”), so the cup lumps can travel long distances and cross-country borders.
ERJ: But are there specific problems in Vietnam?
FSC: Regarding specific rubber producers in Vietnam, FSC disassociated with Vietnam Rubber Group in 2015 for commission of unacceptable activities in the VRG forestry operations. Because VRG has a very large market share and control of the market, their disassociation has significantly impeded progress of certification in the country as a whole.
FSC is in continued dialogue with VRG around ending the disassociation and the conditions thereto. Also, we are engaging the private sector companies (non-VRG companies) and other NGOs along the entire supply chain about certification, and thus sustainability and transparency. But Covid-19 has severely impeded this.
ERJ: But, I guess, Vietnam is not the only developing economy with such issues…
FSC: It’s correct that there are other countries with the transparency issue (e.g., Indonesia). But there are more consumer-facing brands (e.g. footwear, rather than tires and industrial components) that have their products manufactured in Vietnam and, therefore, need to source from Vietnam to avoid tariffs from importing.
Because these brands sourcing in Vietnam tend to be more consumer-facing, there is likely more urgency to source sustainably.
ERJ: Overall, so, what does FSC see as the best way forward to ‘level up’ the requirements of global corporates, regulators and indeed NGOs with the realities of growing, producing and supplying natural rubber in developing countries?
FSC: FSC certification is a market-based solution, which requires entire supply chains to be certified for end products to carry the FSC claim. For certification to be impactful back to the forest, there needs to be commitment and demand from the brands at the end of the supply chain toward certification to motivate their suppliers to get certified.
If the brands do not push for and support certification, then it will not work. NGOs, regulators, and sustainability-conscious consumers can exert pressure on these brands to accelerate this. On the supply side, NGOs and local governments can support smallholders.
ERJ: Many thanks for your valuable insights into this important topic.
*FSC International, based in Bonn, Germany, is a pioneer in forest certification with 25 years of experience in sustainable forest management.