The global leather industry—valued at over USD 400 billion—supports millions of livelihoods, especially in South Asia and Africa. Yet, despite its economic significance, the industry faces critical challenges regarding environmental sustainability, ethical sourcing, and global compliance with evolving regulations. As climate-conscious regulations tighten, particularly in Europe, the sector faces a critical juncture.
Countries like Pakistan and Bangladesh, where leather ranks among the top exports, are under mounting pressure to prove that their products are not only high-quality but also ethically and sustainably sourced and produced. The European Union’s new Regulation on Deforestation-free Products (EUDR) and the Leather Working Group’s 2030 deforestation-free pledge are reshaping what it means to be competitive in global markets. Without robust systems for traceability and due diligence, leather producers risk losing access to vital export destinations. Against this backdrop, the SMEP Programme and WWF-Pakistan convened a timely webinar on April 16, 2025, to explore how the industry can meet these fast-evolving standards and ensure a sustainable, inclusive future for leather in Pakistan and Bangladesh.
The webinar “Understanding traceability and due diligence in the leather supply chain: Perspectives from Pakistan and Bangladesh” brought together key experts from Leather Working Group, International Trade Centre, WWF Pakistan, Aston University and UN Trade and Development attracting 148 participants from different parts of the world.
Why is Traceability currently relevant?
The EU recognises its role as a major economy and consumer of commodities linked to deforestation and forest degradation like cattle, wood, cocoa, soy, palm oil, coffee, rubber and some of its derived products such as leather and chocolate. The EUDR (Regulation EU 2023/1115), in force since 2023, is the EU’s way of contributing to a solution to this challenge. Compliance will initially focus on large and medium-sized companies from 30 December 2025, with enforcement for micro and small enterprises scheduled to begin 30 June 2026. The regulations demand greater supply chain transparency through by putting the obligation on companies placing products on the EU market or exporting them, to ensure that they are:
- Deforestation-free,
- Compliant with relevant local laws of the country of production, (including human rights provisions) and,
- Traceable to their geographic origin.
To comply, companies identified as “operators” (those introducing products on the EU market for the first time or exporting them from the EU) and ”traders” (those making already-placed products available on the EU market) must carry out thorough due diligence.
This makes traceability and due diligence non-negotiable for exporters hoping to retain access to the EU market. Although Pakistan and Bangladesh are not considered high-risk deforestation zones, their industries remain highly vulnerable to trade disruption. According to the International Trade Centre, Pakistan in particular ranks among the top 15 most trade-vulnerable countries due to its leather export exposure to the EU.
The Leather Working Group (LWG), a global not-for-profit standard-setting organisation in the leather industry, has also set a commitment to be deforestation-free by 2030. The LWG are currently developing a three-part standards requirement in order to achieve this aim, including a Chain of Custody Standard (of which traceability is a core component), a Manufacturing Standard and Due Diligence requirements. A breakdown of the Standards Development Programme is shown in the diagram on the right.
The Chain of Custody standard offers a unified framework for how leather materials are sourced, tracked, processed, and verified. While it doesn’t prescribe how to trace the leather, it requires a working system tailored to each organisation’s needs—validated through independent audits. A clear definition of both Chain of Custody and Traceability is provided on the right.
Adapting to stay competitive
Through the SMEP Programme, two significant traceability initiatives—spearheaded by WWF-Pakistan and the University of Northampton—are supporting the sector’s transition in Pakistan and Bangladesh. These digital traceability toolkits (in pilot phase), developed in consultation with key stakeholders (brands, government departments, tanneries, slaughterhouses, leather product producers, etc.), offer many advantages, including:
These and other SMEP-funded projects in the leather sector contribute to improving traceability, reducing environmental pollution, and promoting circular economy practices.
You can watch the full webinar recording on YouTube and also read through the list of questions and answers put forward during the webinar here.
You can find more information on how SMEP is addressing these challenges through our two projects by following the links in the images below. The ITC and UNCTAD also offer extensive resources and workshops on how you as a company within the leather sector and others potentially within the scope of the EUDR can prepare and meet compliance requirements.
We will be sharing more information on all of SMEP’s projects within the tannery sector within the coming months. You can read more here.
Staci Warrington
SMEP PMA Junior Project Manager
With inputs from Amanda Dinan and Elzette Henshilwood