Case spotlight: Driving Sustainable Transformation: Michelin’s Road to Natural Rubber Sustainability and Meeting the EU Deforestation Regulation

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This case was featured in the August 2024 issue of Connect.

Who – the protagonist

James Chang, Project Lead at the Natural Rubber Sustainability department of the Michelin Group in Singapore.

What?

Michelin was one of the world’s largest tyre manufacturers, with its turnover in the EU alone in 2022 standing at €4 billion.

Michelin was recognised as a leading player in sustainability by their industry, sustainability rankings, and their consumers, something the manufacturer was proud of.

But a new EU regulation on deforestation-free products (EUDR), including natural rubber as a key commodity, threatened to disrupt supply chains in the sector.

Natural Rubber forest

Why?

The EUDR requirements were introduced to protect the planet’s forests, with emissions from land-use change and deforestation being the second-largest cause of climate change after burning fossil fuels.

85% of natural rubber globally was supplied by approximately six million smallholder farmers, but they lacked proper land titles, access to geolocalisation coordinates, and the capacity and resources needed to meet EUDR rules, putting their livelihoods at risk and potentially cutting them off from the EU supply chain.

James was committed to Michelin protecting the environment but he was also acutely aware of the damage it would do to the smallholder farmers they relied on for rubber.

When?

While browsing through his email in May 2023, a number of newsletters confirmed the European Parliament had adopted the EUDR.

The new measures would be enforced as of 30 December 2024.

Where?

James was responsible for overseeing due diligence in Michelin’s natural rubber supply chain and managed projects to build the capacity of smallholder farmers in Southeast Asia.

Key quote

“Honestly, James, the EUDR could mark a seismic shift in the fight against global deforestation. The EUDR means that no extra trees will be cut down to expand farmland. Farms are going to have to work with their current land: they will need to increase their yield to grow instead of deforesting more land to increase output. The world now has its first law banning imports of products linked to deforestation. The rest of the world will be watching closely to see whether the EU can successfully implement the Regulation. It could set an important precedent for similar laws under development in China and the United States.”
Sam Albers, environmentalist studies expert, talking to James.

What next?

James had to present possible EUDR strategies to the Human Rights and Environmental Governance Committee at Michelin.

He had to address a number of key themes, including navigating sustainability and making tough decisions, balancing the fate of smallholder farmers, the scope of Michelin’s accountability and influence, and a commitment or compliance-based future to sustainability.

AUTHOR PERSPECTIVE 

On the reasons for writing the case…

Rozanne said: “There are a couple of things that inspired me to take on this particular case challenge.

“First off, our access to the CEO and his team at SMPT, the sole natural rubber buyer for Michelin, provided invaluable insights into the value chain and challenges Michelin encountered in its natural rubber sustainability transition. We had multiple meetings brainstorming the challenges Michelin was facing, but what inspired me to specifically focus on this topic was the opportunity to examine the far-reaching impacts of EU sustainability law - in this case the EU Deforestation Regulation - especially through the lens of an industry I was relatively unfamiliar with - natural rubber production. Moving to Bangkok in 2022 and researching sustainability here gave me an outside perspective on how regulations like those proposed by the EU (where I grew up) could play out, for example for local smallholder farmers.

“There were some very interesting questions I explored while writing, and students can investigate in class whether the intended consequences of the EUDR will truly be realised on the ground."

On the case writing highlights…

Rozanne continued: “There were many highlights. I love learning new skills and this case gave me just that. This case was my first experience of case writing and that was probably also the biggest challenge for me. I’d never written a case before, so I followed a writing course at The Case Centre. I have academic and professional writing experience, but the creativity needed for writing a teaching case was new for me. I took time to explore that creativity within Michelin’s storyline and experiment with the writing. I loved it and had so much fun with it.

“Another highlight was getting to know an industry that we interact with every day (tyres, rubber soles on our shoes, rubber gloves etc.), but probably don’t know much about. This process brought me to natural rubber plantations in Sri Lanka and Thailand, which was an amazing experience. I’d never been to a rubber plantation before and getting to see it up close, interact with the farmers, and following their day-to-day processes was very interesting. Instead of hearing about it from James Chang, I could actually use my own experience in the case and the teaching note as well.”

Natural Rubber forest Harvest

On teaching the case…

She added: “In a word: FUN. It was incredible to see the case I put on paper come to life, with the discussions I intended actually taking place. Testing the case across three different MBA groups also provided unexpected insights. The first question students always ask is ‘to comply or not to comply?’ which created interesting discussions in every session and let me incorporate the pro/con compliance answers in the teaching note. It's crucial to remember that the case mirrors Michelin's unfolding journey: at the time of writing, Michelin's solution to the case challenge remained a work in progress. So, instructors and students can expect new insights, articles, compliance guides, and industry papers to emerge. Rather than dismiss them, it represents the ambiguity inherent in real-world decision-making.

“Another fun question was asked in the first test session, when a student remarked, "Rubber trees are trees. What's the big deal? Doesn't a rubber plantation count as a forest?" Many students had similar thoughts, resulting in revisiting and adjusting the case information. The reality is that to create rubber plantations, diverse forests, grasslands, and peatlands teeming with life are converted into rows of genetically identical trees. So, the answer is no: rubber plantations are monoculture tree plantations and don't qualify as forests.

“Another surprise was the variety of solutions the students presented during the interactive roleplay and debate, which simulated a presentation to Michelin's governance committee. I've actually incorporated some of their ideas into the teaching note discussion.

“Ultimately, trying the case in class enriched both the case itself and the teaching note. Sometimes this meant removing extraneous data or simplifying a mini-case, while other times it involved adding specific information.”

On how students react to the case…

She commented: “The students told me the complex case problem made them think about the numerous trade-offs in sustainability decision-making for a product that they had not thought thoroughly about before: tyres are tyres. Some students did not realise the tyres on their cars or bikes actually started at smallholder farms. They enjoyed thinking about the numerous trade-offs in sustainability decision-making, both on a global scale for the future of the planet and on a local scale for the future of smallholders.

“If instructors teach this case in Southeast Asia, there is a possibility that some of the students would be involved in the rubber industry.

“One student said: “My grandmother has a rubber farm, the trees she plants are an investment in the future, for her retirement, but also, she sees the new trees as heritage for me. I cannot imagine what the EUDR means for her, planting trees thinking you are leaving your family with a nice heritage, only to hear that everything planted on land cleared after 31 December 2020 is counted as deforested rubber, leaving them less valuable.”

“Personal perspectives like this one, add an extra layer to the case, and open up new areas for discussion.”

On case writing tips…

Rozanne explained: “As a first-time case writer, I’ll give a top tip for other first-timers: get creative, save all your drafts (even the silly ones, I had them too) and try to start over a couple of times. Mix and match your drafts, have fun with it and take enough time for this initial creative stage.

“Don’t be afraid to do things a bit differently. For me, that was choosing our format. Instead of one main case, I chose to write three mini-cases on environmental, social, and governance aspects of Michelin's sustainability journey, and one main case that ties it all together, setting the stage for an interactive in-class roleplay and debate, mirroring a presentation to Michelin's governance committee.

“Also, don’t be afraid to share your work and ask for feedback early on. I learned so much from the feedback I received during the case writing course, from my colleagues and other case writers.”

Final word…

Rozanne concluded: “My hope is that by digging into the details and different perspectives in the mini-cases, students can start to appreciate the human side of sustainability transitions a bit more.

“A lot of the time the human aspect is a bit ‘out of sight, out of mind’ for students. And at the end of the day, the classroom experience doesn't happen in a vacuum: everything this case brings into the classroom is interconnected with and influenced by various other factors, stakeholders, and real-world contexts. If this case study helps drive that point home and gets future leaders thinking more holistically about sustainable solutions, then I'll consider it a success.”

THE CASE 

The case

Who – the protagonist

James Chang, Project Lead at the Natural Rubber Sustainability department of the Michelin Group in Singapore.

What?

Michelin was one of the world’s largest tyre manufacturers, with its turnover in the EU alone in 2022 standing at €4 billion.

Michelin was recognised as a leading player in sustainability by their industry, sustainability rankings, and their consumers, something the manufacturer was proud of.

But a new EU regulation on deforestation-free products (EUDR), including natural rubber as a key commodity, threatened to disrupt supply chains in the sector.

Natural Rubber forest

Why?

The EUDR requirements were introduced to protect the planet’s forests, with emissions from land-use change and deforestation being the second-largest cause of climate change after burning fossil fuels.

85% of natural rubber globally was supplied by approximately six million smallholder farmers, but they lacked proper land titles, access to geolocalisation coordinates, and the capacity and resources needed to meet EUDR rules, putting their livelihoods at risk and potentially cutting them off from the EU supply chain.

James was committed to Michelin protecting the environment but he was also acutely aware of the damage it would do to the smallholder farmers they relied on for rubber.

When?

While browsing through his email in May 2023, a number of newsletters confirmed the European Parliament had adopted the EUDR.

The new measures would be enforced as of 30 December 2024.

Where?

James was responsible for overseeing due diligence in Michelin’s natural rubber supply chain and managed projects to build the capacity of smallholder farmers in Southeast Asia.

Key quote

“Honestly, James, the EUDR could mark a seismic shift in the fight against global deforestation. The EUDR means that no extra trees will be cut down to expand farmland. Farms are going to have to work with their current land: they will need to increase their yield to grow instead of deforesting more land to increase output. The world now has its first law banning imports of products linked to deforestation. The rest of the world will be watching closely to see whether the EU can successfully implement the Regulation. It could set an important precedent for similar laws under development in China and the United States.”
Sam Albers, environmentalist studies expert, talking to James.

What next?

James had to present possible EUDR strategies to the Human Rights and Environmental Governance Committee at Michelin.

He had to address a number of key themes, including navigating sustainability and making tough decisions, balancing the fate of smallholder farmers, the scope of Michelin’s accountability and influence, and a commitment or compliance-based future to sustainability.

AUTHOR PERSPECTIVE 

Author perspective

On the reasons for writing the case…

Rozanne said: “There are a couple of things that inspired me to take on this particular case challenge.

“First off, our access to the CEO and his team at SMPT, the sole natural rubber buyer for Michelin, provided invaluable insights into the value chain and challenges Michelin encountered in its natural rubber sustainability transition. We had multiple meetings brainstorming the challenges Michelin was facing, but what inspired me to specifically focus on this topic was the opportunity to examine the far-reaching impacts of EU sustainability law - in this case the EU Deforestation Regulation - especially through the lens of an industry I was relatively unfamiliar with - natural rubber production. Moving to Bangkok in 2022 and researching sustainability here gave me an outside perspective on how regulations like those proposed by the EU (where I grew up) could play out, for example for local smallholder farmers.

“There were some very interesting questions I explored while writing, and students can investigate in class whether the intended consequences of the EUDR will truly be realised on the ground."

On the case writing highlights…

Rozanne continued: “There were many highlights. I love learning new skills and this case gave me just that. This case was my first experience of case writing and that was probably also the biggest challenge for me. I’d never written a case before, so I followed a writing course at The Case Centre. I have academic and professional writing experience, but the creativity needed for writing a teaching case was new for me. I took time to explore that creativity within Michelin’s storyline and experiment with the writing. I loved it and had so much fun with it.

“Another highlight was getting to know an industry that we interact with every day (tyres, rubber soles on our shoes, rubber gloves etc.), but probably don’t know much about. This process brought me to natural rubber plantations in Sri Lanka and Thailand, which was an amazing experience. I’d never been to a rubber plantation before and getting to see it up close, interact with the farmers, and following their day-to-day processes was very interesting. Instead of hearing about it from James Chang, I could actually use my own experience in the case and the teaching note as well.”

Natural Rubber forest Harvest

On teaching the case…

She added: “In a word: FUN. It was incredible to see the case I put on paper come to life, with the discussions I intended actually taking place. Testing the case across three different MBA groups also provided unexpected insights. The first question students always ask is ‘to comply or not to comply?’ which created interesting discussions in every session and let me incorporate the pro/con compliance answers in the teaching note. It's crucial to remember that the case mirrors Michelin's unfolding journey: at the time of writing, Michelin's solution to the case challenge remained a work in progress. So, instructors and students can expect new insights, articles, compliance guides, and industry papers to emerge. Rather than dismiss them, it represents the ambiguity inherent in real-world decision-making.

“Another fun question was asked in the first test session, when a student remarked, "Rubber trees are trees. What's the big deal? Doesn't a rubber plantation count as a forest?" Many students had similar thoughts, resulting in revisiting and adjusting the case information. The reality is that to create rubber plantations, diverse forests, grasslands, and peatlands teeming with life are converted into rows of genetically identical trees. So, the answer is no: rubber plantations are monoculture tree plantations and don't qualify as forests.

“Another surprise was the variety of solutions the students presented during the interactive roleplay and debate, which simulated a presentation to Michelin's governance committee. I've actually incorporated some of their ideas into the teaching note discussion.

“Ultimately, trying the case in class enriched both the case itself and the teaching note. Sometimes this meant removing extraneous data or simplifying a mini-case, while other times it involved adding specific information.”

On how students react to the case…

She commented: “The students told me the complex case problem made them think about the numerous trade-offs in sustainability decision-making for a product that they had not thought thoroughly about before: tyres are tyres. Some students did not realise the tyres on their cars or bikes actually started at smallholder farms. They enjoyed thinking about the numerous trade-offs in sustainability decision-making, both on a global scale for the future of the planet and on a local scale for the future of smallholders.

“If instructors teach this case in Southeast Asia, there is a possibility that some of the students would be involved in the rubber industry.

“One student said: “My grandmother has a rubber farm, the trees she plants are an investment in the future, for her retirement, but also, she sees the new trees as heritage for me. I cannot imagine what the EUDR means for her, planting trees thinking you are leaving your family with a nice heritage, only to hear that everything planted on land cleared after 31 December 2020 is counted as deforested rubber, leaving them less valuable.”

“Personal perspectives like this one, add an extra layer to the case, and open up new areas for discussion.”

On case writing tips…

Rozanne explained: “As a first-time case writer, I’ll give a top tip for other first-timers: get creative, save all your drafts (even the silly ones, I had them too) and try to start over a couple of times. Mix and match your drafts, have fun with it and take enough time for this initial creative stage.

“Don’t be afraid to do things a bit differently. For me, that was choosing our format. Instead of one main case, I chose to write three mini-cases on environmental, social, and governance aspects of Michelin's sustainability journey, and one main case that ties it all together, setting the stage for an interactive in-class roleplay and debate, mirroring a presentation to Michelin's governance committee.

“Also, don’t be afraid to share your work and ask for feedback early on. I learned so much from the feedback I received during the case writing course, from my colleagues and other case writers.”

Final word…

Rozanne concluded: “My hope is that by digging into the details and different perspectives in the mini-cases, students can start to appreciate the human side of sustainability transitions a bit more.

“A lot of the time the human aspect is a bit ‘out of sight, out of mind’ for students. And at the end of the day, the classroom experience doesn't happen in a vacuum: everything this case brings into the classroom is interconnected with and influenced by various other factors, stakeholders, and real-world contexts. If this case study helps drive that point home and gets future leaders thinking more holistically about sustainable solutions, then I'll consider it a success.”

THE CASE 

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