Business, Economics and Jobs

Michelin isn't reinventing the wheel, it's reinventing the rubber supply chain

Michelin tires crop.jpg

Michelin is committing to "responsible and sustainable management of natural rubber" for its tires.

Credit:

Regis Duvignau/Reuters

Scientists estimate that a forest the size of Indiana will be cut down to plant rubber trees over the next eight years. That’s creating biological deserts, driving some of our favorite exotic animals toward extinction.

Player utilities

Listen to the Story.

“I don’t know if you’ve ever had the chance to get close to orangutans or go and watch macaques and gibbons, but these are incredibly cute little animals. They also mate for life,” says Etelle Higonnet with Waxman Strategies, former Congressman Henry Waxman’s advocacy group in Washington, DC.

But environmentalists aren’t just tugging at our heartstrings. Burning forests in Southeast Asia for commodities — like rubber, palm and paper — releases carbon stored in trees. Last year, fires in Indonesia raged out of control.

“And for 26 days in a row, the fires in Indonesia released greenhouse gasses that outstripped those of the US economy. It was just an incredibly serious climate change catastrophe,” says Higonnet.

There are also human rights abuses: Indigenous people have been forced from their lands in Laos, Burma and Cambodia to build new rubber plantations. And there have been problems with child labor.

Now, to be clear, tire companies like Michelin, Pirelli and Goodyear aren’t engaging in these practices or burning forests directly, but they buy rubber from contractors who do.

Collecting wet (tapped) rubber in Attapeu Province, Southern Laos. 

Credit:

Jefferson Fox

So, that’s the bad news. Here’s the good: Michelin, the world’s largest buyer of natural rubber, says the deforestation has to stop and it’s pledging to go green. It’s still early, a work in progress, but environmental groups are praising Michelin. Higonnet says Michelin’s shift in tone is huge.

“I think it’s a game changer. Now that Michelin has opened the door, other companies will feel some pressure to walk through and join on that path of sustainability, if only because there is growing scrutiny.”

Other tire companies may well follow Michelin’s lead.

“It may be that they’re worried about reputational risk or alternatively hoping that really committing to sustainability will give them an advantage with consumers,” says Harvard business school professor Rebecca Henderson.

That has certainly played out in other industries. California-based clothing brand Patagonia has long been a leader in its commitment to the environment, and other companies have followed its example. Now, Patagonia is also turning its attention to rubber with its wetsuits.  

“Just looking to build the most environmentally benign suit on the market,” says Jason McCaffrey at Patagonia. “We joke here, that you can get any color here as long as it’s black.”

And now, as long as it's made from sustainablly-harvested rubber. Patagonia’s new wetsuits will now use only rubber from trees harvested in Guatemala, and soon Sri Lanka, in accordance with principles designed by the Forest Stewardship Council and certified by the Rainforest Alliance.

“Which is a lot of words that means it prevents any new deforestation or clearcutting from occurring,” says McCaffrey. 

Jason McCaffrey, left, and Hector Castro of Patagonia look at one of the company's wetsuits at the company's headquarters in Ventura, Calif. 

Credit:

Jason Margolis

Of course, these new suits will cost a bit more.

“On average, it’s only about $20 or $30 more,” says McCaffrey. (Patagonia’s wet suits range in price from about $300 to $500.) “I think it’s a bearable amount for people to pay extra, knowing that where their suit came from doesn’t contribute to deforestation.”

Patagonia is banking on that. This year, it has more than doubled production to keep up with early demand projections.

Studies have shown that people will pay 30 percent extra for fair trade coffee. But will they pay more for greener tires? 

"The short answer is: I don't think anybody knows," says Harvard's Rebecca Henderson. But she adds that switching to sustainably-grown rubber won’t hurt Michelin's business.

“The thing that the environmentalists say, which is we can behave better and it wouldn’t be that much more expensive, and is sometimes cheaper, turns out ... to be often true.”

I tried to find out if Michelin’s new tires might cost more, but the company didn’t answer that question, or any of my questions.

Overall, Michelin’s marketing team hasn’t really been playing up its new sustainable rubber policy. It’s curious to many, especially when environmental groups are praising the company.

McCaffery with Patagonia was similarly confused by Michelin’s relative silence. He called Michelin’s new stance “a gigantic step forward for the entire rubber industry,” and didn’t know why the company isn’t touting it more. “I don’t know, to me it’s an opportunity missed.”

Michelin does have a checkered past with environmental groups that have dogged the company for contributing to deforestation, and those groups still want to ensure Michelin's compliance. Perhaps Michelin wants the whole rubber issue, even when it’s good news, to just go away. It’s hard to say. 

A forest area in Xayabouri, Laos cleared to plant rubber trees.  

Credit:

Kaspar Hurni