Responsible LeatherInternational Working Group Meeting #4(RL IWG)

Tuesday, November 26th, 2019

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1. RL Review2. Shared Updates3. Vancouver Update4. Progress Report

• Funding5. Scope Committee Updates

• Deforestation/Conversion - Free• Leather Production• Animal Welfare• Traceability • Claims

6. Next Steps

Agenda

Responsible Leather is a Textile Exchange initiative aimed at addressing the many issues found within the global leather value chain; it encompasses the Responsible Leather Round

Table (RLRT) and the development of the Responsible Leather Program (RLP).

What is Responsible Leather?

Responsible Leather Round Table (RLRT)

Scope Committees

Members selected based on expertise and willingness to commit time.

Deforestation / Conversion-Free

Leather Production

Responsible Leather International Working Group (RL IWG)

Voting Members Non-voting Members

Governance

Committee Committee

Animal WelfareOversees RLRT + RL IWG

All stakeholders

Claims (TBD) Impact Credits

Responsible Leather Meetings Structure

Responsible Leather Round Table (RLRT) Meetings

1x per Quarter | 3rd Tuesday | 9:00 AM – 10:30 AM ESTShared industry updates, update on RL IWG work. Each meeting with have a theme, with 2-3 guest speakers

presenting their work; Q&A/discussion to follow.

RL International Working Group (RL IWG) Meetings

Once every 2 months | 1st Tuesday | 9:00 AM – 10:30 AM ESTKey items up for review will be shared, otherwise, summaries of Committee work will be presented as an FYI, with

opportunities for feedback/voting when necessary.

Scope Committee Meetings

1-2x per month, as determined by Committee leadMeet as needed to discuss key areas; outcomes will be presented to the IWG for feedback and voting, when necessary.

Responsible Leather Program (RLP)

The Responsible Leather Program (RLP), which is being developed through the Responsible Leather International Working Group (RL IWG), will establish a benchmark of agreed-upon best practices, which aims to identify and give recognition to existing industry standards. As a part of the RLP, a Responsible Leather Toolkit will be created which brands utilize for their sourcing. Most importantly, it will give everyone the ability to clearly and effectively communicate about their actions.

Responsible Leather Program (RLP)

Leather Production benchmark

Animal Welfare

benchmarkDCF protocol

Impact Credits

(traceability)

Responsible Leather Toolkit

Claims Framework

Cow-calf farm

Raising farm

Finishing farm Slaughter Tannery 1 Tannery 2 Tannery 3 Production Brand/retail

The RLP give brands a tool to communicate their expectations and support of best practices to their supply chains, and to talk about their actions to their consumers and stakeholders.

Shared Updates

• Climate Emergency: 11,000 Scientists confirm that Earth “clearly and unequivocally faces a climate emergency”https://www.seti.org/more-than-11000-scientists-confirm-earth-climate-emergency

• Fires continue in the Amazon: “From January to the end of September, 85% more rainforest had been chopped down than in the same period last year, and as a result there had been over 70,000 fires, a 30% increase from 2018.”

https://www.vice.com/en_us/article/vb5n54/why-the-amazon-is-really-on-fire-and-why-its-going-to-keep-burning

• Leather in decline: A new poll shows many UK consumers are no longer sold on leather clothing, with a growing ethical backlash a worry for the industry

https://www.voguebusiness.com/sustainability/fur-leather-luxury-poll-peta

• Other Updates? (feel free to type into the chat box)

In the News

Vancouver Update

https://textileexchange.org/wp-content/uploads/2019/11/2019_Overview-Report_Final.pdf

TEXTILE EXCHANGE 2030 STRATEGY: CLIMATE+

Textile Exchange announced its new 2030 Strategy: Climate+ (pronounced Climate-Plus) during its annual Textile Sustainability Conference that took place in October 2019. Under the Climate+ strategic direction, Textile Exchange will be the driving force for urgent climate action with a goal of 35-45% reduced CO2 emissions from textile fiber and material production by 2030. [1],[2]

[1] Scope is pre-spinning. Measured from a 2017 baseline; subject to Science Based Targets validation.[2] The range reflects the additional work we would like to do to ensure our target is aligned with a 1.5-degree Celsius scenario (defined by the UN IPCC), aligned with Science Based Targets as well as with the UNFCCC Fashion Climate Charter.

Responsible Leather Round Table Summit

Producers

Retailers

NGOs

Specialists

Brands

Over 80 participants!

https://responsibleleather.org/meetings/rlrt-meetings/

Progress Report

Responsible Leather Progress

DCF Animal Welfare

TraceabilityLeather -Social

Leather -Environmental

Credits

Canada2017 2018 2019

Q2, 2020 Q4, 2020

IrelandMay 24

ClaimsTool

2020

1st Qtr 2nd Qtr 1st Qtr 2nd Qtr

To be completed Completed

…

Big Decisions

• Animal Welfare and Deforestation/Conversion-Free credits will be decoupled

• Will aim to have first draft completed in Q1 of 2020• Credit determinations

SUPPORT

We still need your support! We are in the home stretch, but we will need your help to get us to the end line:

• Become an IWG member• sign the RL IWG Charter (to follow)

• Attend key calls• Give feedback• Set aside budget to keep us funded

Scope Committee Updates

DCF Committee Updates

• Agreement on definitions and targets• Draft verification requirements in alignment

with the Accountability Framework

• Reference CFA guidelines• Finalize verification requirements• Cut off date TBD

Deforestation/Conversion-Free Progress

1st Qtr 2nd Qtr

Accountability Framework Definitions

Deforestation-free (synonym: no-deforestation): Commodity production, sourcing, or financial investments that do not cause or contribute to deforestation of natural forests. For companies and supply chains, the appropriate policy and goal is “no gross deforestation” (a “net” approach is NOT appropriate).

Conversion-free (synonym: no-conversion): Commodity production, sourcing, or financial investments that do not cause or contribute to conversion of natural ecosystems. For companies and supply chains, the appropriate policy and goal is “no gross conversion” (a “net” approach is NOT appropriate).

DCF Verification

• Must be done by a credible third party organization

• Must indicate clear boundaries of the property (property polygon)

• Validation will require map-based comparison of forest/natural ecosystem coverage from cut-off date and yearly afterwards (via remote sensing)

• Data must be made available to the auditing body

Cut Off Date

A cut-off date is a date after which forest conversion is prohibited.

A too ambitious cut-off date can lead to only those producers producing far from the forest frontier being certified while those responsible for deforestation are not certified and do not have any incentive to change practices..

On the one hand, a static cut-off date set some time ago in the past can be a guarantee that forests have not been cleared. Furthermore, producers that have set ambitious targets early on to halt deforestation are rewarded for their pioneering or early mover efforts.

Cut Off Date2008• Baseline that is already accepted in most countries affected by deforestation

2020• Matches timing of Responsible Leather and New York Declaration on Forests

and Target 15.2 of SDGs

Survey to follow

Leather Production Committee Updates

• Outreach with existing standards• LWG bronze has been set as baseline threshold• Gap analysis begun with other production

standards• Traceability work started

• Finalize benchmarking criteria and assessment protocol

• Complete gap analysis• Set traceability protocol

Leather Production - Environmental

Responsible Leather Production sub-scopes

Environment

Social and labour conditions

Traceability

Environmental baseline = Leather Working Group standard• LWG is a leather processing standard recognized by the industry• Growth in the adoption of the LWG in the sector (450 manufacturers certified)• LWG is impact driven

Responsible Leather production: Environmental Baseline

Leather Production Responsible Leather benchmark baseline

LWG Std.B Std.C Std.D Std.E

Environmental Benchmark = Leather Working Group

(Bronze level)

LWG Standard B Standard C Standard D

Option 1: LWG certification only

Benchmark

Traceability

Slaughterhouse

Audit Protocol - Section 4• The current environmental audit requires companies to have visibility through the supply chain of their raw

material.

• Raw Materials in Brazil:• Those sourcing raw material in Brazil will need to demonstrate traceability to the slaughterhouse including

the date of slaughter. Suppliers sourcing from Brazil will need to ensure that the meat packers, where the material originates, meet minimum acceptable criteria.

• Raw Materials from the Rest of the World:• All raw material suppliers from other parts of the world must be able to supply the following information:

• ➢ Name of the slaughterhouse and Breakdown of slaughterhouses if relevant

LWG traceability criteria

Brand commitment over a 5 or 10 year period:

1. Must commit to securing 100% of their hide use through credits within 5 years

2. Must commit to mapping their leather production and meeting the RLA in their entire leather supply chain to:• YEAR 1: Finishing • YEAR 2: Splitting/post-tanning • YEAR 3: Tanning operations • YEAR 4: Beamhouse• YEAR 5: Slaughterhouse

3. Required to report progress by completing the CFMB leather module on a yearly basis

Program Supporter: DRAFT CONCEPT

• Identify high risk issues to be addressed• Map out existing standards and tools• Work with Textile Exchange Integrity team

on a common approach that will work across multiple fibers and materials

Leather Production - Social

Animal Welfare Committee Updates

• Animal welfare framework developed• Key standards are unofficially mapped• Initial benchmark set• Progressive strategy developed

• Confirm final benchmarks• Begin formal assessments• Piloting

Animal Welfare

• Reminder: We are developing a benchmark, not a standard

• If we have a single level benchmark and we set the requirements too high, no existing global standard will have equivalence.

• If we have a single level benchmark and we set the requirements too low, there is no reward for beef farmers operating under programs with higher welfare requirements.

• What alternative models are we exploring?

Animal Welfare

• Animal welfare framework developed for use for all species/fibers/leather

• Last IWG: presentation of a proposal to have different levels within the AW benchmark aligned with the TE preferred fibers matrix

• Improved• Progressive• Advanced

Animal Welfare Update: Recap

Status-Quo(Conventional

Materials)

Improved(Minimizing

harmful impacts)

Progressive(Maximizing

positive effects)

Advanced(Regenerative

production systems: best practice implemented)

• RLRT meeting at the TE conference: presentation of further development of the proposal to have different levels and how existing certifications might fit into this benchmark

• Review of the main sections of the AW framework and requirements that might fall into each of the three levels.

Animal Welfare Update: Recap

Current position

Three options:

• Not improved, progressive, advanced• Simply option A, option B & option C• Simplified benchmark focusing on key welfare

outcomes• Best practice/improvement criteria cited with

intent that these become required in future years

Option A - proposal

• Feed of suitable quality and quantity for the animals’ age and needs• Adequate supply of clean water• No abuse/mistreatment• Sufficient space in lots and/or

housing• Protection from heat/cold

stress• Responsible use of

antimicrobials

Option A - proposal

• No spaying heifers or cows• No confinement on fully slatted floors at

any stage of the animals’ lives.• All other housing/finishing/feedlot

systems OK• All other painful procedures OK

(castration/disbudding/dehorning)

Option B - proposal

• Maximum age for castration• Maximum age for disbudding/dehorning• Requirements for transport (space/thermal comfort/ventilation)• Maximum transport duration• Stricter handling requirements –

no electric prods/electro-immobilization

• No poisons/snares/traps for predators

• Housing/feedlots as at option A

Option C - proposal

• Grass based systems• No confinement at any stage of the

animal’s life [no feedlots]

• Pain relief for painful procedures [future requirement]

Other considerations

• Taking account of legislation when benchmarking animal welfare programs• Traceability as part of animal welfare programs• Audit protocols for animal welfare programs

• How often beef farms are audited• Who audits [internal/third party]• Frequency of audit

Next steps

• Finalize requirements for each of the three options

• Include development criteria/best practice for future requirements

• Check with informal review against example certifications

• Pilot phase

Traceability Committee Updates

• Concept developed, key processes set• Initial modeling• ChainPoint and ACT Commodities

connection • Impact Alliance agreement in principle

• MOUs and contracts• Set work plans and define Impact and data

to be collected (Alliance)• Development of trading platform• Begin pilot programs

Impact Credits

How to connect brands with farms to recognize best practices?

Birthing farms Slaughter

Tanning Finishing Sewing Brand/retail

Backgrounder farm

Direct farm

Beamhouse

Feedlot

1.7 billion cows on 140 million farms

Why do we need credits?

• Address long, opaque and/or complex supply chains• Drive scale at the farm level by offering an efficient and effective means for

brands to support best practices • Address the price paradigm by eliminating the mark-up on farm premiums

m/u

$1

m/u m/u m/u m/u m/u m/u

$XX

$1 $1.0X

Identity-Preserved ModelThe initial premium paid to the farmer gets multiplied by the normal mark-ups as materials pass from one point to the next along the supply chain.

Credit Trading ModelThe final brand supports the farmer for meeting best practice through the credit trading platform, with a small fee taken to support the program.

$.0X

Impact Partnership Credits

Data collection

Increased availability of responsible and

traceable cattle

Trainings

Verification

Program Partner

Farmers/Farm Groups

Brands

Data

Stories

Credibility

Impact Partnership Credit

trading

$$

$$

Facilitator

• Impact Partnerships will be set up to help drive progress towards the benchmark thresholds. Brands will give money to program partners that will then work with producers on capacity building, data collection, verification and trading support

• Producers can be part of the Impact Partnership for up to three years.

• When they exit the partnership, they can trade credits directly (which is a financial incentive)

• Brands can also make long-term commitments to buy partnership credits

Impact Credit trading

Impact Partnerships –Helping Make Change Happen

Animal Welfare

Farm Group A Farm Group B Farm C

Impa

ct

Cre

dits

Impa

ct

Part

ners

hips

Environmental Welfare

Social Welfare

Brands will have multiple sourcing models

Impact Partnership Credits

Impact Credits

Physical Trading

Brands can use different strategies:

Buy credits to match sourcing regions

Buy credits to meet targets

Combination

Brands have a path forward

year

100% of leather use balanced with Responsible Leather Impact

Credits or Impact Partnerships

2025 2030 2040

50% of leather sourced from fully traceable Responsible

Leather supply chains

50% of leather use balanced with Responsible Leather Impact

Credits or Impact Partnerships

100% of leather sourced from fully traceable Responsible

Leather supply chains

We have been working!

(Join us for a moment in the weeds)

6.a Concept: Credit and Payment Flow

Credit Platform

Facilitator

ResponsibleLeather

IMPACT ALLIANCE

Farm or Farm Group

Brand

Verification Body

1.

2

3 5

$

$

$

$

Claims

4

6

7

9

8

1011

Facilitation fee: to be transparent

$

6.e.1. Credit Calculations: Brands : Option Chosen

Top grain

Split

Etc.

Allocation Options

Y%(based on thickness,

weight or value)

X%(based on thickness,

weight or value)

Z%(based on thickness,

weight or value)

Option A Option B

+ Most accurate- Complicated to

determine

Option C

+ Simple- Leads to double counting of hides

+ Simple+ No double counting of hides

- Less accurate

0% 0%

100%(1 credit)

50%(1/2 credit)

50%(1/2 credit)

100%(1 credit)

6.e.2 Credit Calculations: Farms: Sample Calculation

Cow/Calf

Raising

Finishing

100 7020

100 50

200 100 200 200

Slaughter

Other Farms

50

Other Farms

30

Other Farms

500

Other Farms

150

6.e.2 Credit Calculations: Farms: Sample Calculation

Cow/Calf

Raising

Finishing

Farm Level # cows # months cow is on the farm

Cow month equivalents

100

70

20

100

50

700

x

x

x

x

x

x

12

6

12

12

5

1

+

+

+

=

=

=

=

=

=

1200

420

240

1200

250

700

1860

1450

700

Cow equivalents

Credits to sell

(= cow months/12)

155

121

58

52

40

19

(yearly cow equivalent per stage )

(= cow equivalents/3)

Claims Framework Updates

• Research on claims strategies for similar systems

• Initial work with Integrity Team to set up claims structure for different materials and traceability systems

• Set final language for claims: what is allowed and what is not allowed, where can claims be made.

• Logos

Claims

4 opportunities to communicate about Responsible Leather

PurchasingImpact Credits

Purchasing Partnership Credits Program Supporter Full

RL Toolkit User

Responsible Leather Program

Support claim RL Product claimCommitment claim

Commitment claim

With Impact Credits…

NO guarantee can be made that any Responsible Leather is physically present in the finished product and in what quantity.

Allowed messaging should focus on claiming support of responsible leather production, and not the content of the product itself.

1. Should we allow on-product claims about Impact Credits or Impact Partnership Credits?

2. Should the allowed language be strict and prescriptive, or should we allow for more flexibility?

3. Do we need different logos for each category? (i.e., Impact Credits, Program Supporter, Tool User, etc.). Does the logo(s) need to have Textile Exchange’s name on it?

Vancouver RLRT Table Discussion Questions

On-Product claims should not be allowed On-Product claims should be allowed

Not product-related, so meaningless Strict, clear language is needed if allowed

Only if the company is talking about initiatives somewhere else (for added context)

Important for driving uptake

Need a clearly differentiated logo

Requirement for how many credits are purchased

1. Should we allow on-product claims about Impact Credits or Impact Partnership Credits?

Strict & Prescriptive Language Flexible Language

Needs to be strict, but with a wide range of options for different types of uses

There should be some room for more customized statements to be made, at minimum in high profile cases (and possibly with approval from Textile Exchange). Brands should have room to tell the story of their credits, esp with IPCs.

Should be simple + straightforward

Criteria should be in place to avoid generic statements implying that more is covered than is the case

2. Should the allowed language be strict and prescriptive, or should we allow for more flexibility?

Level of communication

Off-product

We are buying:

Impact Credits

Messaging ALLOWED

• Supports the production of Responsible Leather [in XX region] [by purchasing Impact Credits]

• Supporting Responsible Leather production [in XX region] through the purchase of Impact Credits

Messaging NOT ALLOWED

• Any wording that will mislead the consumer to believe product(s) are certified On-product?

Impact PartnershipCredits

• Supports [impact] programs working with beef producers to achieve Responsible Leather-approved practices [in XX region]

• Supporting Responsible Leather [through the purchase of Credits]

• Any wording that will mislead the consumer to believe product(s) are certified On-product?

Off-product

Different logos Textile Exchange name on logo

Yes Same basic logo, but a differentiator No Does not need TE’s name on it

Yes Yes, we do need different logos for each category – avoid green washing so we want it to be very, very clear

No Perhaps not the whole name and logo – it could be a “nod” to it

No Impact Credits vs IPCs should have the same logo. Differentiation can happen in the text.

TBD TE name should come from broader strategy internally (TE standards logos)

Yes Different logos for the credit schemes, but the RL Program logo doesn’t seem useful for brands

No No TE logo for consumer-facing, but should be there for B2B communications

No Nuances will be confusing to consumers, so simplicity is better – good to include link to more info for those who seek it

3. Do we need different logos for each category? Does the logo need to have Textile Exchange’s name on it?

• Do you have experience developing claims framework/guidance for sustainability standards or programs? If yes, please contact Stefanie@TextileExchange.org to join the Claims Committee.

• Claims Committee meetings will commence at the start of 2020 and plan to go until Q3• Areas of work and topics of discussion/decision-making include:

• Defining key terms• Building Claims Framework for the Responsible Leather Program

• Program commitments• Allowed language for making claims• How to communicate about Impact Credits

• Logo development• Etc.

Next Steps for Claims

Next Steps

2020 Meeting Schedule –invitations coming soonDate Meeting Time

Q1

Tues. Feb 4 Responsible Leather IWG 9:00-10:30 AM EST

Tues. Feb 25 Responsible Leather Round Table (RLRT) 9:00-10:30 AM EST

TBD March Responsible Leather Webinar Series: Pt 1 TBD

Q2

Tues. Apr 7 Responsible Leather IWG 9:00-10:30 AM EST

Tues. May 12 Responsible Leather Round Table (RLRT) 9:00-10:30 AM EST

Tues. June 2 Responsible Leather IWG 9:00-10:30 AM EST

TBD June Responsible Leather Webinar Series: Pt 2 TBD

Q3

Tues. July 21 Responsible Leather Round Table (RLRT) 9:00-10:30 AM EST

Tues. Aug 4 Responsible Leather IWG 9:00-10:30 AM EST

TBD September Responsible Leather Webinar Series: Pt 3 TBD

Q4TBD November Responsible Leather Round Table Summit 9:00-5:00 PM Dublin

Tues. Dec 8 Responsible Leather IWG 9:00-10:30 AM EST

1. Voting on Deforestation “cut-off” date2. Decoupling AW and DCF Impact Credits3. Finalizing Animal Welfare levels

Feedback to be submitted through Feedback Form – to be created and shared via email and website

RL IWG - upcoming opportunities for feedback & voting

We will be sending funding letters along with a digital pledge form to support out 2020 work.

Funding Request

Thank you!

Email us at ResponsibleLeather@TextileExchange.org

Or visit ResponsibleLeather.org for more information

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