Synthetic Leather Industry ESG Thematic Report, 2023

ESG (Environmental, Social and Governance) in Synthetic Leather Industry

Integrating ESG into decision making and business strategies contributes to an effective due diligence and a better investment decision for the company as well as relevant stakeholders. The companies which fall under the synthetic leather industry have been transitioning and addressing their sustainability progress and agenda.

The demand for synthetic leathers is driven by increasing brand awareness and surging number of women in the workforce. Various stakeholders or consumers have been very much particular about material sourcing, whether the materials have any negative environmental impact ranging from fabric, lining, zippers, and various other materials. Preference for eco friendly and sustainable leather like vegan leather, plant-based and upcycled materials have been critical aspects for this segment. 

The United Nations’ Sustainable Development Goals (UN SDGs) is a comprehensive framework that helps companies in this market obtain a perspective on the impact of their products and operations on ESG parameters. 

Many companies have made a commitment for minimizing packages and plastic waste like PVC by having specific target years to reduce them and helping progress on UN SDG 6: Responsible Consumption and Production. Circularity also has been in focus for both product and product packages incorporating changes in design and strategies intended to reduce packaging and product waste. Companies are also transitioning to sustainable leather by reducing waste as well as soil or water pollution by stopping usage of certain chemicals and preparation methodologies.

During the pandemic, this segment also faced lockdown orders and travel restrictions, forcing most of the population to stay indoors.

ESG Trends

The companies which fall under this segment have both environmental and social impact. Many companies have also focused on innovation (promoting SDG 9- Industry, innovation, and infrastructure) like upscaling using eco-friendly, sustainable handbags which are plant based, vegan leather or upcycled material. One of the companies describes a product called Kipahima which is bio-resin is used to replace petrochemical resin, with recycled Polyester (or Nylon) substrate, which greatly reduces the dependency on native earth resources, and make it an excellent sustainable carbon emission reduction material. There is also another product called RF/ RFG which is intended reduce the burden on the environment and the waste products emerge; it consists of DMF-free resin combined with recycling Nylon (or Polyester) non-woven (or microfiber) substrate, which is one of the best materials that are eco-friendly to the environment. Most of the companies have made commitment to not use any single use plastic and PVC throughout their manufacturing procedures. For example, one of the companies have disclosed to eliminate single use plastic by 2025 and eliminate all virgin single-use plastics. In addition to this, few companies do have assurance of 100% PVC free from specific years. Companies have been utilizing such innovative strategies to implement circularity throughout their value chain.

ESG Challenges

Synthetic leather segment has challenges which could be mitigated with careful and responsible business strategies. One of the main challenges for this industry is raw material itself, PVC and Polyurethane can have a negative health impact. Toxic nature of such chemicals and by-products can be even carcinogenic in the long run. PVC releases dioxins, which are potentially dangerous in confined spaces and especially dangerous if heated. It also uses plasticizers such as phthalates to make it flexible which are also potentially dangerous for workers and consumers alike.

Growth of the Synthetic Leather Market

Overall, Synthetic leather Market has been an important segment as it is a substitute for natural leather and affordable. The companies are transitioning in sourcing sustainable materials which are eco friendly and have lesser environmental impact compared to leather products. The companies have a stable market as global market size has been valued at 36.24 billion USD in 2022 and expected to have a compound annual growth rate of 8.0%.

Key Companies in this theme

    • Kuraray Co., Ltd.

    • H.R. Polycoats Pvt. Ltd.

    • Alfatex Italia SRL

    • Filwel Co., Ltd.

    • Yantai Wanhua Synthetic Leather Group Co., Ltd.

    • San Fang Chemical Industry Co., Ltd.

    • Mayur Uniquoters Limited

    • Teijin Limited

    • Nan Ya Plastics Corporation

Scope of the Synthetic Leather Industry ESG Thematic Report

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of the Synthetic Leather Industry ESG Thematic Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the synthetic leather space, globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the synthetic leather industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment into the sector