Attention Wal-Mart Shoppers How Wal-Mart’S Sourcing Practices Encourage Illegal Logging and Threaten Endangered Species Contents © Eia
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ATTENTION WAL-MART SHOPPERS HOW WAL-MART’S SOURCING PRACTICES ENCOURAGE ILLEGAL LOGGING AND THREATEN ENDANGERED SPECIES www.eia-global.org CONTENTS © EIA ACKNOWLEDGEMENTS 1 EXECUTIVE SUMMARY Copyright © 2007 Environmental Investigation Agency, Inc. No part of this publication may be 2 INTRODUCTION: WAL-MART IN THE WOODS reproduced in any form or by any means without permission in writing from the Environmental 4 THE IMPACTS OF ILLEGAL LOGGING Investigation Agency, Inc. Pictures on pages 8,10,11,14,15,16 were published in 6 LOW PRICES, HIGH CONTROL: WAL-MART’S BUSINESS MODEL The Russian Far East, A Reference Guide for Conservation and Development, Josh Newell, 6 REWRITING THE RULES OF THE SUPPLIER-RETAILER RELATIONSHIP 2004, published by Daniel & Daniel, Publishers, Inc. 6 SQUEEZING THE SUPPLY CHAIN McKinleyville, California, 2004. ENVIRONMENTAL INVESTIGATION AGENCY 7 BIG FOOTPRINT, BIG PLANS: WAL-MART’S ENVIRONMENTAL IMPACT 7 THE FOOTPRINT OF A GIANT PO Box 53343, Washington DC 20009, USA 7 STEPS FORWARD Tel: +1 202 483 6621 Fax: +1 202 986 8626 Email: [email protected] 8 GLOBAL REACH: WAL-MART’S SALE OF WOOD PRODUCTS Web: www.eia-global.org 8 A SNAPSHOT INTO WAL-MART’S WOOD BUYING AND RETAIL 62-63 Upper Street, London N1 ONY, UK 8 WAL-MART AND CHINESE EXPORTS 8 THE RISE OF CHINA’S WOOD PRODUCTS INDUSTRY Tel: +44(0)20 7354 7960 Fax: +44(0)20 7354 7961 10 CHINA IMPORTS RUSSIA’S GREAT EASTERN FORESTS Email: [email protected] 10 THE WILD WILD FAR EAST 11 CHINA’S GLOBAL SOURCING Web: www.eia-international.org 10 IRREGULARITIES FROM FOREST TO FRONTIER 14 ECOLOGICAL AND SOCIAL IMPACTS 15 THE FLOOD OF LOGS ACROSS THE BORDER 17 LONGJIANG SHANGLIAN: BRIEFCASES OF CASH FOR FORESTS 18 A LANDSCAPE OF WAL-MART SUPPLIERS: INVESTIGATION CASE STUDIES 18 BABY CRIBS 18 DALIAN HUAFENG FURNITURE CO. 19 FINDING THE ‘SECRET SOURCE’ 20 DONGMEN GROUP (QINGDAO HONGYANG) 20 AUSMART COVER PHOTOGRAPHY: 21 FURNITURE MAIN IMAGE: 21 WHALEN FURNITURE 21 GUANGRUN WOOD PRODUCTS © EIA Strip (left to right): 22 TOILET SEATS TO POPSICLE STICKS © iSTOCK, © EIA 22 DANDONG MAISAIFU TRADE CO © EIA © EIA 22 DALIAN ASL WOODEN CO. Design by Revolting 23 WAL-MART’S OPPORTUNITY FOR IMPACT ��� www.wearerevolting.co.uk 23 THE CHINESE INDUSTRY’S POTENTIAL FOR RAPID CHANGE Printed using 100% wind power with vegetable based inks. Printed by a FSC-certified printer on 24 CONCLUSION: TOWARDS TRULY GOOD WOOD recycled paper. 24 WAL-MART’S UNTAPPED POTENTIAL: LESSONS FROM PREVIOUS ENCOUNTERS WITH ILLEGAL WOOD 25 RECOMMENDATIONS 26 REFERENCES EXECUTIVE SUMMARY Despite Wal-Mart’s newfound corporate it is inevitable that Wal-Mart’s sourcing protection payments to the Russian mafia emphasis on sustainability, undercover practices will contribute to the depletion and illegal cutting in the most valuable and investigations in China by the of Russia’s “protected” forests unless protected forests of Siberian tiger habitat. Environmental Investigation Agency (EIA) concerted changes are made. Diverse products like toilet seats and craft have found that Wal-Mart is turning a blind All products that EIA investigators sticks also raised concern. At least 31,000 eye to illegal timber sources in its supply examined were found to be highly trees reach Wal-Mart each year in the form chain which threaten some of the world’s vulnerable to containing unsustainably and of solid wood toilet seats made in Dandong, last great natural forests. Wal-Mart’s ‘no in many cases illegally-logged wood. One China on the border with North Korea. questions asked’ sourcing policy is having example involves one of the largest wood EIA’s investigation makes clear that Wal- particularly dangerous consequences for manufacturers in China, which produces Mart’s customers currently risk financing the high conservation value forests of the over 200,000 baby cribs a year for Wal- criminal timber syndicates and forest Russian Far East and the endangered Mart, made of Russian poplar and birch. destruction through their purchase of species dependent on them, including the The company’s dominant wood supplier basic home goods. However, the leverage world’s largest cat, the Siberian tiger. from Russia, called Chuguevskaya LPK, that Wal-Mart has over its suppliers EIA’s investigators see Wal-Mart’s is buying wood from areas that have was also revealed to investigators. This footprints around the globe, but nowhere the highest illegal logging rates in the leverage gives the company an enormous more so than in China, which produces Russian Far East and cuts its own timber, opportunity to improve governance in 84% of Wal-Mart’s wood products (see whether legally or not, in the middle of China and many developing countries figure 1). The Chinese manufacturing tiger breeding habitat. In December 2007 whose natural forests sequester enormous sector relies on large quantities of high-risk LPK employees were observed handing amounts of carbon and sustain unparalleled timber imported from the world’s illegal cash to Russian police officers after local biodiversity. This opportunity remains logging hotspots. In the north, thousands conservation experts suspected them of inexplicably wasted at the present, despite of train cars of wood cross the Russian- smuggling illegally logged timber. Wal-Mart’s stated intention “to sell Chinese border daily from Russia’s vast The baby cribs are one example of a much products that sustain our natural resources Far Eastern forests. Experts estimate that larger problem. When EIA undercover and the environment.” 35-50% of the logging in this region is investigators visited Wal-Mart’s leading EIA calls on Wal-Mart to commit to illegal under Russian law. furniture manufacturers in the south of eliminating illegally sourced wood from EIA investigations into Wal-Mart’s links to China, they found that a common source of its supply chains, and to implement a this highly criminalized trade have revealed wood was from Suifenhe, the major Chinese rigorous purchasing policy for wood the company’s inattention to the legality of timber gateway on the Russian border. products that includes auditing and its raw materials. During 2007, undercover An EIA undercover investigation into tracking mechanisms. investigators met with eight Chinese the leading supplier in Suifenhe revealed manufacturers that supply Wal-Mart with wood products ranging from baby cribs to toilet seats. All suppliers independently attested to Wal-Mart’s strong influence and their emphasis on price as the dominant consideration for raw material 3295 China procurement. All of them used wood from 163 Brazil the Russian Far East, most exclusively so. 123 Indonesia Wal-Mart’s giant size gives it tremendous 112 Malaysia influence in this part of the world. The 80 India forest industry and manufacturing sectors support thousands of Russians and Chinese 65 Hong Kong who are eager to supply the goods to meet 52 Vietnam Wal-Mart’s demand. Despite Wal-Mart’s 51 Taiwan control over its manufacturers and their 42 Thailand standards, the company has not concerned itself with the origin of the timber used 40 Philippines for its products. Considering both the lack 37 Other of questioning along with an emphasis on low price in a region where government FIGURE 1 Based on U.S. customs data, this graph shows the number of inport transactions of wood products, based on export oversight is sparse and bribes routine, country, going to Wal-Mart between May 2006 and April 2007. 1 INTRODUCTION: WAL-MART IN THE WOODS © Dave Currey / EIA / Telapak population.2 Almost ten percent of China’s exports to the U.S. now go directly to Wal-Mart stores.3 The dramatic trade stream growth in furniture and other wood products in the past decade – since 1997, U.S. imports have increased over 1000% from China alone4 – is fueled in part by the demand for inexpensive mass-produced products sold in the aisles of big box retailers like Wal-Mart, which have seen explosive growth during this same period. It is not inherently bad that more people can afford to buy more furniture, especially made from a material that is, in theory, a renewable resource. The problem is that timber is currently being harvested illegally from forests around the world to meet this demand. This harvest is not sustainable, and what’s being lost is anything but renewable. Illegal logging and associated © EIA trade have well-documented environmental, social and economic impacts. One of four aisles of wooden furniture From furniture to picture frames, candle in a typical Wal-Mart. holders to hammer handles, although Wal- Illegal logging is fueled by a global market Mart is not a wood products company per se, where few actors – factory suppliers, importers, the world’s largest retailer has an enormous retailers, or consumers – have the incentive footprint in the forest. The combined factors of to ask questions. Wal-Mart, with a business its sales volume and its vast network of highly- strategy that has insisted on low prices before controlled supply chains gives Wal-Mart the all else,5 is currently a central participant in potential to generate enormous negative impacts this “no questions asked” market. Although for biodiversity, forest-dependent communities, the company has stated its aim, to “develop and the global climate – and, conversely, transparency” in its wood sourcing,6 EIA the opportunity to positively influence the investigations documented in this report reveal international timber sector. the use of illegal and high-risk wood in a wide variety of products on Wal-Mart’s shelves. Ninety percent of Americans live within 15 miles of a Wal-Mart. There were 7.2 billion On November 15, 2007, Wal-Mart released visits to Wal-Mart in 2006 – more than Earth’s its “Sustainability Progress Report”, a 2 © EIA comprehensive overview of the company’s commitments and initiatives to address the environmental and social impacts of its business operations.