Leather: Time for Business Unusual

By China Water Risk 11 February, 2014

Does the MEP's clampdown on pollution by the leather industry mean that it's time to think business unusual?

Leather industry amongst world’s top 10 toxic polluters; China is #1 global leather exporter at US$75bn in 2012
Focus on downstream chromium pollution but less action upstream in water-intensive salting of hides
43% of beef is produced in the Dry 11; is this supply secure? Time for less water-intensive leather options

We have talked about the polluting nature of the tanning process before (read more here) but thought we would revisit the topic given the recent overtures from the MEP to clamp down on industrial pollution in 2014 as part of efforts to clean up air, water & soil pollution. Cement, batteries & leather industries have been singled out by the MEP as all use heavy metals in their manufacturing process. So what does this mean for the leather industry? Is it time for leather to “go green”?

Leather: singled out by MEP as one of most polluting industries

Despite efforts to lower its environmental impact, the leather industry is still regarded as highly polluting. In China, the leather industry was thrown in the spotlight in early 2013 thanks to the talk of ‘cancer villages’ arising from excessive heavy metal pollution. On 27 December 2013, the Ministry of Environmental Protection (MEP) reiterated its drive to ‘clean up’ the industry and published the new discharge standard of water pollutants for leather and fur making industry (GB 30486—2013) (Chinese only). This is considered the ‘most-strictest’ standard ever for the leather industry and is expected to be in force on 1 March this year.
The tanning process requires prepared hides to be soaked in a variety of chemicals in order to achieve the desired finishing effects. The liquid and solid waste from this process contains a variety of harmful chemicals that require significant effluent treatment before they can be safely disposed of (see here for tanning process workflow). The MEP 2012 Environmental Statistic Annual Report (Chinese only) cites that total chromium as one of the main pollutants from the leather industry. We expect the MEP to keep pursuing falling trends in both industrial wastewater discharged and total chromium discharged. In addition, the MEP has also named fur making, feather and shoe making industries as other main sources for total chromium discharge. The new MEP standard to be enforced in 2014, sets the limit for total chromium discharge at 1.5 mg/L for both existing and new factories. As such, we expect pressure on leather manufacturers to comply this year.

China: the world’s largest leather exporter

Currently, China has the largest leather export industry in the world. According to the International Trade Centre, China is the number one producer and exporter of leather, exporting USD75 billion worth of leather in 2012; comfortably ahead of Italy (USD23 billion) and Vietnam (USD9 billion).  For the first nine months of 2013, China exported USD 60.3 billion worth of leather. With a skilled and relatively cheap workforce, as well as a developed supply chain infrastructure, the country is suited to the labor-intensive leather industry and is expected to remain as a top producer of leather in the foreseeable future. Indeed the total production value of the hide and leather industry in China is expected to increase to USD278 billion by 2015 from USD134 billion in 2011, according to the China Livestock Yearbook.
Given the size of the industry, it is not surprising that MEP is tackling its pollution. Chromium is one of the 5 heavy metals that central government has targeted to reduce in the 12FYP. The others are lead, mercury, cadmium and arsenic. We expect other industries with these heavy metal discharges, such as metal, mining and chemical industries, to also face increasing pressure to clean up in 2014. This in turn will support central government’s new strategic emerging industry #1 of Energy Savings & Environmental Protection. More on this in 5 Trends for 2014 .

The long & winding road to going green …

There are definitely more steps to go to achieve sustainable leather. Many parties have laid claim to producing “Eco-Leather”.

… the strict verbal sense of the definition, the term “Eco-Leather” has no formal meaning

BLC Leather Technology Centre (UK)

According to a study by BLC Leather Technology Centre (UK), in the strict verbal sense of the definition, the term “Eco-Leather” has no formal meaning. What appears to have happened is that the gauge of a leather’s “eco-ness” is measured by the absence of certain restricted chemicals (such as, Azo dyes, PCP and Chrome IV) or by the method of tanning used. Whilst this does address certain issues with tanning chemicals, it does not go far enough to consider the entire environmental impact of the industry, including its supply chain, as a whole.
Indeed, trade bodies such as the International Leather Working Group (LWG) and the China Leather Industry Association (CLIA) are addressing these issues in sustainable leather.  More on these groups efforts in Sustainable Leather: More Steps to go.
Currently, techniques employed to reduce pollution mainly revolve around the 3Rs (Reduce, Reuse and Recycle). Chemical companies claim to have developed new chemicals that are more efficient, hence reducing the overall environmental impact. Certain tanneries have also adopted recycling of tanning chemicals.

… less attention has been placed on “upstream process” in the preservation and preparation of hides, which has its own particular set of environmental impacts

Whilst these efforts and advances are a start, the road to going truly green is still long … the leather industry is lagging behind the textiles industry with respect to implementing environmental controls and standards. That said, leather producers such as PrimeAsia have minimized pollution and their water use in their operations (read more about these efforts here). Nevertheless, whilst some measures have been put in place by responsible leather producers in the “downstream” tanning process, less attention has been placed on “upstream process” in the preservation and preparation of hides, which has its own particular set of environmental impacts.

Upstream action: seeking less-salt / salt-less hides

Raw hides still contain a layer of fat and skin as they begin their journey to finished leather, and therefore need to undergo a preservation process using common salt. Salting helps avoid putrefaction before arrival at the tannery. The use of salt increases the weight of the hide, and hence also the carbon footprint involved in transportation. The hides also require additional packing precautions to avoid the runoff from the salt damaging the containers that carry them.
Once they arrive at the tannery, the first step is to remove all the salt that has been used to preserve the hide. Combined with the removal of the remaining hair and fat from the hide, this creates a large amount of solid and liquid waste which cannot be easily disposed of. As per TFL Leather Technology, for each tonne of raw hide, about 400kg of salt is used for preservation and about half of this salt enters the tannery’s wastewater. 

Efforts have been made to reduce the salinity issue. The Australian Centre of International Agricultural Research has made some progress with a project aimed at reducing the salinity of tannery effluents via methods such as low salt preservation of goat skins and preserving hides through chilling. The project has met with mixed results, highlighting the costs associated with upgraded technologies, and tanneries having insufficient control over their supply of hides. This highlighted the need for the industry to address the upstream part of the leather supply chain as well the downstream. The study also found that there was a reluctance to change, resulting from deeply entrenched behaviour, which would be difficult to address without government assistance or regulatory requirements to do so.

Saline run off from tanneries could also affect crop yield … The UNFAO estimates global cost of irrigation induced salinity to be ~USD1bn per annum

Why does salinity matter? Incorrect treatment of the salt waste water leads to increased salinity of the surrounding groundwater, which could lead to increasingly arid conditions, and increased salinity of other water sources such as rivers or streams. Saline run off from tanneries could also affect crop yield. The UNFAO estimates that the global cost of irrigation-induced salinity is equivalent to USD11 billion per year. Also, according to Institute of Advanced Sustainability Studies, globally 34 million hectares of land are affected by some level of salinity from irrigation.
Clearly salinity issues in agriculture are not solely down to saline run off from the preservation of hides – there are other factors at play such as seawater encroachment and over-extraction of groundwater … but obviously, whilst lowering the amount of salt used would be beneficial, totally eliminating the use of salt from the preservation stage would be preferable …

A ‘whole’-istic approach

To truly arrive at ‘green’ leather, a more ‘whole’-istic approach will be required to cover the ‘whole’ supply chain, such as salt-free hides upstream, together with recycling of tanning chemicals and best practices downstream.

Regulatory changes are afoot in China … there will be increased focus on the leather industry to clean up in 2014

Any proposed method must also address another fundamental issue: the challenge of successful implementation. Leather has been made since time immemorial and the tannery industry is very traditional. Changing such a fundamental part of the traditional process will require a mindset shift by the industry. Regulatory changes are afoot in China with the government stepping up enforcement. There will be increased focus on the leather industry to clean up in 2014. Not only is the size of penalties for illegal wastewater discharge expected to increase but industrial water tariff hikes are also imminent, with water-intensive users paying more for water with tiered tariffs. But is this enough to encourage change the ‘traditional’ leather industry? Or will they be blindsided by water risks?

Blindsided by cows & pleather …

Let’s not forget that leather can only be called “leather” if it comes from the animal. Leather alternatives such as pleather (synthetic leather), reconstituted waste/ coated materials that looks and smells like leather are all considered “imposter” materials and cannot use the word “leather” in their description. Basically the future of leather comes down to the cow/cattle …
Steak or BathIt is no secret that cattle are incredibly water intensive to rear. Just to put things in “CWR bathtub perspectives”, it takes:

  • 17 bathtubs of water to produce one 8 ounce steak; and
  • 40 bathtubs of water to produce 1 pair of leather shoes.

Leather shoe producers would argue that this is an unfair calculation as leather is a side product of the cattle which is primarly slaughtered for their meat and not their hide. As such, only 5% of the amount of water should be attributed to the hide, bringing the virtual water content of a pair of leather shoes down to 2 bathtubs full of water.
Whole Cow or 5 Percent Hide

43% of China’s cattle production lie in the Dry 11 provinces, which are dry as the Middle East

China Water Risk

Whilst footwear brands & producers can all feel good about this “low” number, in reality, in a limited water resources situation, the choice is not between 5% of cattle but rearing cattle or using the common pool of water resources for the manufacture of smartphones, irrigation of more wheat fields or extraction of more coal to support China’s growing hunger for energy. Is this really going to happen? When 43% of China’s cattle production lie in the Dry 11 (provinces as dry as the Middle East), the risk of the leather industry being blindsided by a decision to “import beef instead of making it in China” is high.
In the face of rising water scarcity, leather alternatives might be the only choice. Pleather may not be the solution as it can be chemical intensive in manufacture. It might be that we end up “growing leather” in a petri dish along with our hamburgers. Too far-fetched? Maybe, but it will use less water, emit less methane, be less polluting plus avoid salinity issues all together.
Regardless, any effective solution to the problem; whether upstream or downstream; will have to be greener, cost-saving and financially attractive. Solutions in “fake” and “real” leather are out there… one such possible solution in eliminating salt in the manufacture of hides is Litehide, where industrial trials have proved that the process not only works but saves costs. Don’t take our word on this, see why ex-banker Martin Haigh has decided to bankroll this in “Betting on Game Set & Match”.  We innovate to survive. Perhaps the leather industry has reached a tipping point … it’s time to step forward, think “business unusual” and colour the industry with a fresher shade of green.

This article has been updated for new regulatory requirements and feedback from industry. 
Further Reading

  • China Water Risk’s 5 Trends for 2014 With environmental risk cited as one of the top risks most likely to derail economic growth, check out our top 5 trends in water for the year of the Green Horse
  • More Power to Enforcement Debra Tan gives a run down of upcoming “institutional innovations” discussed at the 2013 Beijing Forum and why the path-of-more-enforcement is still full of “areas of confusion”
  • Food For Thought Would China import more chicken or corn from Brazil? Should farming regions swap beef with iPads? Will water hikes dampen demand for water? Debra Tan from China Water Risk muses
  • China: Moving Out of Silos As part of CLSA’s latest ESG in China report: “Mopping-up”, China Water Risk’s Debra Tan was interviewed on all things water: from water & coal to textiles, food & government policies
  • Cancer Villages: Toxic Tipping Point? With official recognition of cancer villages in 2013, we reviewed 255 media reports of such villages to look at their spread and industries that may be responsible. Is this the start of a long costly road to clean up?


China Water Risk
Author: China Water Risk
We believe regardless of whether we care for the environment that water risks affect us all – as investors, businesses and individuals. Water risks are fundamental to future decision making and growth patterns in global economies. Water scarcity has emerged as a critical sustainability issue for China's economy and since water powers the economy, we aim to highlight these risks inherent in each sector. In addition, we write about current trends in the global water industry, analyze changes occurring both regionally and globally, as well as providing explanations on the new technologies that are revolutionizing this industry.
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