October 8 - For years, deforestation risk related to natural rubber has attracted far less attention than palm oil, despite both being linked to millions of hectares of tropical deforestation and widespread biodiversity loss in Southeast Asia.

Natural rubber, which is mainly found in tyres, has escaped the intense scrutiny by consumers, NGOs and investors that palm oil has come under over the last two decades, given its presence in countless packaged consumer goods. This led the industry to respond with no-deforestation commitments, a robust certification system and widespread satellite monitoring. Malaysia and Indonesia also have their own palm oil certification schemes.

But now, with Europe's anti-deforestation regulation (EUDR) looming, companies that use rubber are facing unprecedented pressure to bring traceability to their supply chains.

Europe’s largest tyre makers have spent years preparing for the EUDR, although they differ in how they support farmers and monitor their supply chains.

The task is formidable. Around 85% of the world’s natural rubber is produced by smallholders (compared with 40% for palm) farmed on scattered plantations of a couple of hectares, too small to monitor through traditional satellite imaging.

Recent improvements in Earth observation data have allowed researchers to link rubber to around 4 million hectares of tropical deforestation since 1993, an area roughly the size of Switzerland.

But farm-level traceability is notoriously difficult because a single tyre may contain latex from thousands of farms, passing through collectors, traders, processors and exporters before reaching a manufacturer.

Most smallholders lack the capital and technical support to replace ageing trees, reduce agrochemical use, adopt agroforestry or map their farms for EUDR compliance. Without financial assistance, many risk being shut out of premium export markets as buyers tighten environmental requirements.

Years of low and volatile rubber prices have left farmers with little incentive to invest in productivity or environmental improvements, prompting many in Malaysia, Indonesia and elsewhere to switch to more profitable crops such as oil palm and durian.

Prices have rebounded over the past year, encouraging some growers to replant ageing trees with higher-yielding varieties. But stronger prices also increase the incentive to expand plantations, raising the risk of further deforestation.

Central to the problem is that too few smallholders earn a decent wage. "We continue to see smallholders not getting a fair share of the value of rubber, which opens up a whole universe of nefarious activity," says Kristin Urquiza, senior adviser at Mighty Earth, an environmental advocacy group. "Smallholders are eager to understand how to boost their yield, but are unaware that there are better practices that lead to better prices." Michelin has positioned itself as the tyre industry's sustainability frontrunner, adopting the sector’s first zero-deforestation policy a decade before the EUDR and helping to establish the Global Platform for Sustainable Natural Rubber (GPSNR), a multi-stakeholder initiative to weed deforestation and human rights abuses out of the rubber supply chain.

It also developed RubberWay, a digital mapping platform that has gathered data from more than 280,000 smallholders to identify deforestation risks.

A 2025 study by the Zoological Society of London found Michelin was the only major tyre maker to provide verified evidence that at least parts of its rubber supply chain were deforestation-free.

But its efforts have not escaped controversy. In 2020, Mighty Earth alleged that Michelin's flagship Royal Lestari Utama sustainable rubber project, a joint venture with Indonesia’s Barito Pacific Group (BPG), was linked to deforestation by concession holders connected to BPG shortly before the joint venture was completed in 2015 – something it said Michelin should have known and revealed to investors in the sustainable green bond that had been issued to fund the project.

Michelin disputed Mighty Earth's findings, saying the land was already heavily degraded before its involvement and that funds raised through the green bond were used for environmental recovery. Michelin sustainability head Pierre-Martin Huet told The Ethical Corporation that the company had consistently offered critics full access to the project's managers, documents and sites, and argued that its subsequent environmental and social results demonstrated the project’s value.

The company says it has sourced only EUDR-compliant, deforestation-free natural rubber since December 2024. "Even though we regret the complexity of its implementation, we continue to support this regulation," Huet said.

Michelin’s German rival Continental works with development agency GIZ in Indonesia’s Kapuas Hulu district on Borneo to train smallholders in sustainable practices. It sources directly from these farmers, shortening the supply chain, and pays a premium for sustainably farmed rubber.

The project started in 2018 with 400 smallholders. It now reaches 4,000 farmers, with chief sustainability officer Michael Radke echoing his peers in stating that the big challenge is scaling the project. The company aims to train 6,000 farmers by 2027, which is just 0.1% of the 6 million rubber smallholders globally.

Pirelli has taken a similar approach in Indonesia, supporting farmer training towards Forest Stewardship Council (FSC) certification. The Italian brand claims to be the only manufacturer currently producing tyres made with FSC-certified natural rubber, as well as scholarship programmes for the children of smallholders to build resilience into the supply chain.

According to Mighty Earth, one promising way to reduce deforestation risk and support farmer livelihoods is growing rubber in agroforestry systems, rather than as monocultures. A 2019 study in Hainan, China, found that rubber farmers with intercropped plantations earned twice as much per hectare as those with pure rubber plantations, with no significant difference in input costs.

Bridgestone has trained thousands of growers in Indonesia, India and West Africa to intercrop rubber trees with food and cash crops such as coffee and cocoa, improving the soil while generating income as they wait for their rubber trees to mature. In Indonesia, the company uses a “farmer-to-farmer” training model to spread better practices in areas where many farmers have switched to oil palm because of low rubber prices.

Pirelli, Michelin, and Durex manufacturer Reckitt, also have agroforestry pilot projects. But agroforestry is not a perfect solution. While it improves soil health and biodiversity, and makes farms more resilient to disease, long-term studies of rubber agroforestry in Indonesia and Kenya have found low productivity, while fruit trees attract monkeys and wild pigs that can damage young rubber trees. Some farmers became so frustrated with crop raids that they abandoned mixed farming and reverted to monoculture plantations.

There has also been innovation in a quest to diversify natural rubber supply. Continental, for example, has been researching natural rubber sourced from Russian dandelion (Taraxacum kok-saghyz) roots.

Grown in temperate regions and harvestable after one to two years, compared with around seven years for rubber trees (Hevea brasiliensis), dandelion fields can be sited closer to tyre factories, reducing transportation distances, and therefore emissions.

Continental started the dandelion rubber project in 2011 and unveiled the first dandelion truck tyre in 2016. But large-scale commercial production is some way off. The volume of dandelion rubber harvested per hectare is lower than that of mature rubber tree plantations, which can be tapped repeatedly for 25-30 years, and production is more labour-intensive.

The Global Platform for Sustainable Natural Rubber GPSNR, whose members account for nearly 60% of the natural rubber value chain, is a key player in the drive to scale solutions.

Unlike palm oil’s Roundtable on Sustainable Palm Oil (RSPO), GPSNR is not a certification scheme. Instead, it provides its members tools to help them avoid deforestation risk.

The most important is the Shared Investment Mechanism (SIM), which requires members to contribute to a fund to help smallholders farm better. The SIM raised about $3 million last year, reaching around 60,000 smallholders through 18 projects in Thailand, Indonesia, Ivory Coast, Sri Lanka and China.

In an interview, GPSNR CEO Stefano Savi said most of the platform's members are Europe-based multinational tyre manufacturers. He wants to recruit companies from non-tyre sectors, as well as businesses in India and China, which consume more than half of the world’s natural rubber, but lack environmental regulations like EUDR.

One way to do that is to pitch supply chain resilience rather than sustainability, he says. “Our projects promote better practices so that farmers achieve higher yields and see that rubber is still a viable business,” he says. “That’s of genuine interest to companies – even those that don't necessarily want to make sustainability claims to their consumers.”Critics say GPSNR allows companies that joined before 2025 to make voluntary commitments without verifying that they were put into practice. From next year, however, all members will have to undergo independent third-party assessments that they are implementing their commitments.

Climate impacts such as extreme heat, unpredictable rainfall and more frequent droughts – which are reducing latex yields – as well as increasing vulnerability to disease, mean that more investment is needed in landscape restoration to build industry resilience.

“Companies should also commit to healing past harms,” Urquiza says. “For the rubber industry, this is a big accountability gap, but also a big opportunity to future-proof the sector.”She points to the Legacy Landscapes Fund, a public-private finance platform established by the German government in 2020 that provides long-term protection for nature in the global south, as a potential model for companies to invest in restoration.

“I think the industry understands that business-as-usual is not sustainable. Companies need to take the next step in their commitments – and help to restore lost landscapes,” Urquiza says.

This article is from the latest issue of The Ethical Corporation magazine, on deforestation risk. You can download the digital pdf of the magazine by clicking here Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Ethical Corporation Magazine, a part of Reuters Professional, is owned by Thomson Reuters and operates independently of Reuters News.