Rubber Reports

Michelin moves to keep rubber in EU Deforestation Regulation

Michelin today became the first major company to publicly express support for the inclusion of natural rubber under the forthcoming European Union Deforestation Regulation, which is entering the crucial final week of negotiations.  

The draft Regulation, which will prohibit the sale of agricultural products linked to deforestation in the EU, does not currently include rubber amongst the list of commodities covered. However, the European Parliament is pushing for rubber to be included, whilst individual member states are divided on the issue; leading to a stalemate in the negotiations. 

Crucial to swaying country positions is the opinion of companies that buy and sell rubber products, particularly tire companies, which are by far the largest users of natural rubber. To date, the industry has been lukewarm, with the trade association ETRMA (European Tire and Rubber Manufacturers Association) failing to offer a clear position either way. 

Today's announcement by Michelin represents a breakthrough. In their statement, the company writes: 

"Michelin confirms that it supports the inclusion of natural rubber in the list of commodities affected by the regulation on imported deforestation, provided that the traceability’s requirements are adapted to the natural rubber supply chain, which is particularly complex and fragmented". 

The company prefers a district-level approach to traceability, rather than individual farm plot level. 

Responding to the statement, Mighty Earth Senior Director, Dr. Julian Oram, commented:" 

This demonstrates that industry can move quickly when the will is there. Michelin’s support for the inclusion of rubber within the EU Deforestation Regulation shows the company's serious commitment to leadership on sustainable natural rubber. Other tire companies now need to follow Michelin's lead and tell policymakers that the industry is ready and willing to make legal commitments on zero-deforestation natural rubber supply chains. Whilst Michelin has concerns about the complexity of rubber supply chains, Mighty Earth believes regulators should expect the rubber industry to go further than district-level traceability, which we have seen is possible for other complex commodity supply chains dominated by smallholders, such as coffee and cocoa." 

The final Trialogue discussions between EU member states, the Parliament, and the European Commission are due to take place on Monday, December 5, 2022. 


Excavator in action at RLU/LAJ concession on High Conservation Value (HCV) potential area on the edge of Bukit Tigapuluh National Park, Jambi in Sumatra, November 2014. Credit: TFT/Earthworm (2014)

New investigation alleges deforestation and greenwashing linked to Michelin.

A major new year-and-a-half long investigation by Voxeurop into a “sustainable” rubber project by French tire giant Michelin and Indonesian conglomerate Barito Pacific has led to fresh allegations of widespread deforestation, wildlife habitat destruction, and greenwashing linked to the joint venture. 

The investigation, initially sparked by Mighty Earth’s 2020 Complicit report, alleges investors in a $95 million so-called “green bond” used to finance the PT Royal Lestari Utama (RLU) project in Jambi, Sumatra, were misled and never told that Michelin’s local partner had deforested thousands of hectares of tropical rainforest and global priority wildlife habitats just prior to the launch of the flagship project in January 2015. 

Michelin had claimed to investors that the RLU project would promote good practices for sustainable natural rubber production and support the development of local communities while protecting, reforesting, and restoring crucial habitats for the critically endangered Sumatran tigers, elephants, and orangutans, which live in and around RLU's rubber plantations.  

Specifically, Michelin said in a key press statement in May 2015 that their RLU project with Barito Pacific would include: “The reforestation of three concessions, representing a total surface area of 88,000 hectares, ravaged by uncontrolled deforestation.” But analysis of historical satellite imagery published in the Voxeurop report found much of the landscape within RLU’s concessions in Jambi was not previously “ravaged by uncontrolled deforestation” at all.  

Instead, Voxeurop’s investigation claims that 8,468 hectares of pristine rainforests within the concession were industrially deforested to make way for RLU’s monoculture rubber plantations and that, in doing so, vital habitats in Sumatra’s No.1 conservation priority area – including key tiger ranges, elephant corridors, and orangutan re-introduction sites – were destroyed and fragmented. Two highly vulnerable forest-dwelling Indigenous communities also lost their ancestral lands, and other villagers and local communities have claimed they did not give their free, prior and informed consent for these forest clearances.

Overall, Voxeurop found about a third of the rubber plantations financed by the green bonds are located in the area that was deforested in Jambi before the joint venture with Michelin and Barito Pacific was signed.

The RLU project was supported by major organisations such as the UN Environment Programme (UNEP), USAID, and WWF and backed by key banks and financiers such as BNP Paribas, ADM Capital and the &Green fund. But the investigation published by Voxeurop asserts that Michelin and the Tropical Landscapes Finance Facility (TLFF), which issued the 15-year $95m green bond, knew from an independent assessment report by Earthworm that Michelin’s local partner, Barito Pacific, had intentionally deforested the Jambi rainforests between 2011 and 2014. According to Voxeurop and an earlier complaint by Mighty Earth, this information was not shared with investors during the sale of $95m of green bonds on the Singapore Exchange in 2018 to finance the RLU project – a financial innovation dubbed as “Asia’s first green bond”, and which seemingly complied with Climate Bonds Initiative standards.  

In June 2022, Michelin acquired RLU as a sole shareholder. In an extraordinary twist, that following month, the entire $95m in long-dated green bonds were quietly redeemed and paid back in full to investors for reasons which remain unclear. 

Following the publication of the new evidence by Voxeurop, Mighty Earth Senior Director, Alex Wijeratna, said: 

“This is a major scandal and a classic example of how green bonds are fuelling corporate greenwashing.” 

“Two years ago, Mighty Earth produced evidence which suggested that Michelin knew its local partner had carried out extensive deforestation in Sumatra’s number one priority conservation area prior to the official launch of their joint venture. Voxeurop’s new investigation adds weight to our assertion that Michelin and other key actors failed to disclose material information about that critical habitat destruction to investors in this collapsed green bond scheme.” 

“Local communities claim they were allegedly forced off their ancestral land in Jambi without free, prior and informed consent, while global priority habitats of critically endangered species were destroyed, bringing people and wildlife into conflict. Mighty Earth is joining local groups in Indonesia calling for an urgent UN investigation into alleged Indigenous, environmental, and human rights violations linked to Michelin’s RLU rubber project in Sumatra.” 

With the publication of Voxeurop’s new investigation, there is now considerable evidence demonstrating that the RLU project in Jambi was in likely violation of the voluntary Green and Sustainability Bond Principles. Mighty Earth submitted a formal complaint to the green bond oversight body, the Climate Bonds Initiative (CBI) in London in March 2021 against the $95m green bond listing on the RLU project, but the CBI failed to formally respond to or investigate Mighty Earth’s complaint. With moves to tackle corporate greenwashing hitting the headlines at COP27, and the UN demanding a tightening of these voluntary standards, this case exemplifies all that is wrong with so-called “green” bonds.  

Dr Julian Oram, Senior Director at Mighty Earth, is calling for proper scrutiny of green and sustainability-linked bonds to prevent greenwashing:  

“Voxeurop’s evidence has exposed grave flaws in the booming but wildly unregulated green bond market. It has revealed how Southeast Asia’s first corporate green bond was glaringly unfit for purpose and facilitated greenwashing of a project with patently unsustainable origins.” 

“With proper human rights-based due diligence and close stakeholder consultation, green finance schemes can play an important role in leveraging vital funds into nature-enhancing agriculture projects. But we need tougher regulation and scrutiny of green, climate and sustainability-linked bonds to ensure these schemes don’t mislead investors or inadvertently fuel climate change or forest and wildlife habitat destruction.” 

Abdullah Bedoel, Executive Director of local environmental group Walhi Jambi, said human-wildlife conflict has become a bigger problem following the RLU project: 

“The local community in Jambi have lost most of their ancestral forests due to massive land clearing for Michelin’s RLU project. In the past, the community could use the forests as a source of livelihood and grow crops. Now the animals that used to live there have lost their habitat, and the area has been opened to wildlife hunters. The food chain is badly disrupted, causing wildlife such as tigers and elephants to descend on community settlements in search of food. In the past, before the large-scale forest clearing, there were no cases of wildlife attacks on local communities. Now, communities around the forest must deal with elephant herds entering their farmlands and tigers preying on their livestock, even resulting in fatalities.” 

Mighty Earth is calling for: 

  • An urgent UN investigation into alleged Indigenous, environmental and human rights violations in the RLU project area in Jambi, specifically those relating to the violation of Indigenous peoples’ rights; 
  • The publication of all environmental and social assessments, wildlife surveys, FPIC and community consultation exercises conducted before the launch of the joint venture between Michelin and Barito Pacific; 
  • Restoration of environmental damage done and full compensation for all negatively affected communities.
  • Tighter regulation of green bond markets to stop the mis-selling of financial products linked to “sustainable” rubber and other commodity projects without adequate due diligence checks.
  • A formal response to a written complaint submitted by Mighty Earth in March 2021 to the Climate Bonds Initiative, which played a crucial role in rubber-stamping the “green” credentials of the RLU project.

Hat Yai sustainable rubber workshop

Learning how to 'do' sustainable rubber

July 27, 2021

Read the Report

As part of Mighty Earth’s continuing efforts to advance sustainability within the natural rubber sector, we are thrilled to be co-publishing a new practical guide for rubber industry actors, entitled “Sustainable Natural Rubber: pathways, policies and partnerships”.

The guide is based on expressed demand from stakeholders following a workshop of the same title, held in Hat Yai, Thailand, in September 2019, which was co-hosted by Mighty Earth, Rainforest Allianceeinhorn ProductsEarthnet Foundation, and the Prince of Songkla University. This event brought together over one hundred rubber farmers, traders, processors, CSOs representatives, government officials, academics, and consumer brand companies to share knowledge and and potential solutions to environmental, social, and economic challenges in the industry.

Like the workshop itself, the guide is a collaborative piece, consisting of four distinct yet complementary perspectives on the proactive steps companies purchasing natural rubber can take to engage with their supply chain. These are just four potential ways out of a long list of courses of action a company may find themselves interested in pursuing. The ultimate goal of this guide is to encourage companies interested in establishing sustainability initiatives to expand their knowledge of potential paths, and further learn how they can best accomplish each route.

Mighty Earth and our partners hope that this resource will equip companies interested in sourcing sustainable natural rubber with additional tools and ideas for doing so.


New Mighty Earth Report Finds Agroforestry Drives Sustainability in Rubber Supply Chain

Switching over from monocultures to more diverse systems of rubber agroforestry can drive sustainability in global rubber supply chains and help tackle climate change, finds a new report published by Mighty Earth today (see the summary here).

Mighty Earth’s report, co-authored by three leading academic scientists, found that rubber agroforestry – a set of mixed farming systems involving the production of rubber trees alongside a variety of other plants, crops and livestock – has multiple benefits for smallholder farmers, biodiversity and the environment, including:

    • Better support for smallholder incomes and livelihoods
    • Better support for smallholder food and nutrition security
    • Social advantages for smallholder farmers and rubber tappers
    • Improved soil health and water quality, and other beneficial environmental, biodiversity and climate resiliency outcomes.

The new study for Mighty Earth assessed over 800 peer-reviewed scientific reports and papers on rubber agroforestry worldwide and was conducted by a team from the Global Agroforestry Network (GAN). Natural rubber – which is used in products from tires to condoms – is predominantly grown in the tropics in Asia. About 90% of natural rubber is produced by smallholder family households, largely in monoculture systems where rubber trees occupy all the available farmland.

However, monoculture rubber poses increasing environmental and climate problems, including widespread pollution and degradation of soils and water resources, rampant deforestation, habitat loss and ecosystem destruction, as well as risks to rubber tree health from disease, pests and drought, plus growing vulnerability to climate change. In addition, smallholder households face potentially catastrophic threats to their livelihoods due to fluctuations in global rubber prices.

Drawing on a geographically diverse set of studies on low-input rubber agroforestry and intercropping systems, ranging from China to Indonesia, Sri Lanka, Thailand, India and Cote d’Ivoire, the authors reveal the multiple livelihood, environmental and climate benefits of rubber agroforestry, and highlight the need for greater support and incentives from Governments, the rubber industry, researchers and civil society to accelerate the widespread scale-up of agroforestry through smallholder farmer-to-farmer networks.

Please find a GPSNR report launch webinar and slide deck presentation on Mighty Earth's agroforestry report findings.

###

Notes: The report, “Rubber Agroforestry, Feasibility at Scale” was authored by:

  • Maria Wang Mei Hua, Grantham Centre for Sustainable Futures and Department of Animal and Plant Sciences, University of Sheffield, UK
  • Dr Eleanor Warren-Thomas, School of Natural Sciences, Bangor University, UK
  • Associate Professor Dr. Thomas Cherico Wanger, Sustainability, Agriculture & Technology, Westlake University, China; Agroecology, University of Göttingen, Germany

Complicit: An Investigation into Deforestation at Michelin's Royal Lestari Utama Project in Sumatra, Indonesia

This report alleges that Michelin, the world’s largest tire company, was complicit in and covered up industrial-scale deforestation of over 2,500 hectares of rainforest in the run-up to the launch of its flagship  ‘eco-friendly’ sustainable natural rubber joint venture project in Sumatra, Indonesia. The project, undertaken in partnership with a company described as ‘within the Barito Pacific Group’, is currently seeking an additional $120 million in investment from green financiers.

Read the full report here and find the press release below.
---

Report: Michelin Covered Up Industrial Deforestation by its Indonesian Partner in “Eco-Friendly” Rubber Venture

New report claims world’s largest tire company currently seeking millions of additional dollars from investors to restore forest that its own business partner destroyed

Available in Français, Bahasa Indonesia

WASHINGTON, DC – A new report released by environmental campaign group Mighty Earth alleges that Michelin, the world’s largest tire company, was complicit in and covered up industrial-scale deforestation of over 2,500 hectares of rainforest in the run-up to the launch of its flagship  ‘eco-friendly’ sustainable natural rubber joint venture project in Sumatra, Indonesia. The project, undertaken in partnership with a company described as ‘within the Barito Pacific Group’, is currently seeking an additional $120 million in investment from green financiers.

Evidence in the new report shows some 2,590 ha of rainforest – over seven times the size of New York’s Central Park, or equivalent to the size of central Paris – was industrially deforested by subsidiaries of Michelin’s Indonesian joint venture partner in a 33-month period to January 2015 to make way for natural rubber plantations in the flagship rubber, wildlife and conservation-focused Royal Lestari Utama (RLU) Project in Jambi, Sumatra. Of this total, Mighty Earth also found 1,298 ha of rainforest was industrially deforested in a Wildlife Conservation Area, and which is now planted with thousands of rubber trees under the RLU Project.

Situated adjacent to the Bukit Tigapuluh National Park in central Sumatra, these globally significant, wildlife and nature-rich tropical rainforests are home to two forest-dependent Indigenous communities – the Talang Mamak and Orang Rimba – and provide critical habitat for endangered Sumatran elephants, tigers and reintroduced orangutans.

France-based Michelin Group is the world’s largest tire company, and natural rubber is the key ingredient in the vehicle tires that it manufactures and sells worldwide. The RLU Project has since gone on to attract financing from Asia’s first $95 million corporate sustainability ‘Green bond’, as well as public funds from the Norwegian, UK and US governments, and is imminently slated to receive further financing from a second $120 million green bond.

“This is a major deforestation scandal,” says report author Alex Wijeratna, Campaign Director at Mighty Earth. “Our evidence shows thousands of hectares of wildlife-rich rainforests were industrially deforested in Jambi in the run-up to the agreement of the RLU Project in late 2014. Michelin knew about this terrible forest destruction, they didn’t do enough to stop it, and instead chose to provide green cover to the project in order to attract green bond investors that have since sunk millions of dollars into the scheme.”

Michelin publicly announced its 88,000-hectare joint venture RLU Project in May 2015, with an Indonesian company later officially described as ‘within the Barito Pacific Group’. At the time, Michelin said the Jambi concession area was “…ravaged by uncontrolled deforestation”, blaming outside culprits such as encroachers, migrants and organized criminal groups.

In contrast, Mighty Earth’s report alleges that it was Michelin’s joint venture partner itself – RLU’s subsidiary on the ground known as PT Lestari Asri Jaya (LAJ) – that perpetrated much of this destruction through industrial forest clearance, particularly within a block of the concession known as LAJ 4. The new publication, Complicit: An Investigation into Deforestation at Michelin’s Royal Lestari Utama Project in Sumatra, Indonesia, shows that, in April 2012, there were 3,966 hectares of intact forest covering almost the entire case study area within LAJ 4. By the time the RLU joint venture project began in January 2015, just 138 hectares of that forest remained. Analysis by Mighty Earth of high-resolution satellite images points to large-scale rubber planting replacing this natural forest.

Mighty Earth has been in talks with Michelin and RLU in Indonesia about its research in Jambi since September 2019, and has requested several key social and environmental due diligence documents and reports conducted prior to the project launch to be made publicly available. The companies have repeatedly turned down Mighty Earth’s requests, despite the fact that public funds have been used to back the project.

The campaign group did manage to view one of these confidential pre-venture assessments, and insist it confirms that Michelin was told what was happening on the ground in Jambi at the time.

“Mighty Earth has seen a confidential report commissioned by Michelin that shows the company knew deforestation in the PT LAJ concessions was partly the result of land clearing carried out by PT LAJ itself,” says Wijeratna. “The report includes geo-tagged photos of LAJ bulldozers clearing land and forests next to the Bukit Tigapuluh National Park, but it’s unknown if Michelin ever shared this information with donors, funders, or green bond investors.”

“Public and private investors in these new so-called ‘green bonds’ or ‘sustainability bonds’ have so far pumped nearly $100 million into the RLU Project in Indonesia in good faith, and will soon be asked for $120 million more,” says Wijeratna. “We’re calling for an independent investigation to get to the bottom of the murky business during the run-up to this so-called green rubber project, and believe the second ‘green bond’ offering shouldn’t go ahead until all the facts about what happened in Jambi are in the public domain.”

The opaque due diligence and community consultation processes also continue to have ongoing social ramifications in Jambi. “Farmers reported land tenure conflicts with RLU’s local subsidiary on the ground,” says Fenna Otten from the University of Göttingen’s department of Human Geography, who conducted field research in nearby Muara Sekalo village in 2017. “Villagers said they had no choice but to leave their land to the company. They were pushed off and felt powerless. Michelin shouldn’t gain green bond finance and public praise for this sham of a sustainable development project.”

In mid-September, local communities again protested what they say are unfair landgrabs carried out to establish the RLU project, holding a demonstration in Tebo, Jambi.

“You can’t stop deforestation and land grabbing unless you know who’s responsible,” says Wijeratna. “It’s part of a broader transparency problem with Michelin and the rubber industry as a whole. Michelin won’t even reveal what companies it sources its rubber from. If Michelin is to live up to its stated zero-deforestation and human rights aspirations, it needs to come clean about what happened in Jambi, and use its industry leadership position to become a champion for greater transparency across the whole rubber supply chain.”

 


A Bridge Too Far? Social and Environmental Concerns in Bridgestone's Liberian Rubber Plantation and A Plan for Remediation

February 2020

New investigation documenting serious labor and environmental concerns at the single largest rubber plantation on the planet – the Firestone Rubber Plantation in Harbel, Liberia.

Download


Restoration & Reparations: Reforming the world’s largest rubber company

August 2019

Report documents social and environmental problems found at the Hévécam rubber plantation in southern Cameroon, which is owned by Halcyon Agri, “the world’s leading rubber franchise.”

Download


Bad Year: Driving Deforestation

April 2018

Investigation finds that at least two of Goodyear’s major current suppliers have been linked to deforestation and human rights abuses at their rubber plantations in Cambodia and Cameroon.

Download