A recent report indicates that cocoa companies striving to enhance the sustainability of their supply chains must fundamentally alter their business models to ensure farmers receive higher incomes, thereby achieving true sustainability. The Cocoa Barometer report, published last month by the nonprofit organization Voice Network, highlights several factors intensifying the environmental and human rights challenges within the cocoa industry. Among the most pressing issues are child labor, inadequate living wages for farmers, and deforestation. The report notes that current economic conditions hinder cocoa farmers’ ability to implement essential improvements in their operations. It emphasizes the need for systemic change, rather than merely improving farming practices, to enable the industry to meet its sustainability goals.
According to the report, around 1.5 million children in the Ivory Coast and Ghana—the major producers of the world’s cocoa—are engaged in work designated for adults. The report stresses that both companies and governments must significantly increase their investments and ambitions to ensure that efforts to combat child labor go beyond mere rhetoric and greenwashing. It calls for these heightened ambitions to be accompanied by mandatory regulations.
Cocoa industry players have overly concentrated on boosting cocoa yields to address the issue of low farmer incomes, believing that increasing the volume of cocoa produced and sold would benefit farmers financially. However, the report argues that this approach has exacerbated sustainability challenges and has “not necessarily” resulted in higher net incomes for farmers. Instead, Voice Network suggests raising farmers’ wages, which could lead to reductions in both deforestation and child labor reliance.
The report advocates for a time-bound commitment from all Consumer Packaged Goods (CPG) companies in the cocoa sector to establish a living income for farmers, with stakeholder groups holding these companies accountable for prioritizing this goal. A positive development was noted in July 2022, when key cocoa suppliers signed an agreement with the governments of the Ivory Coast and Ghana to transition farmers to a living income.
The report underscores the interconnected issues of environmental protection and human rights, both rooted in farmer poverty, which is further aggravated by the current cost-of-living crisis. In response to criticism from environmental groups and advocates for cocoa farmers, CPGs have intensified their sustainability initiatives in recent years, focusing on improving farmers’ livelihoods and reducing the ecological impact of the sector. Nestlé, for instance, announced plans in early 2022 to triple its sustainability funding to $1.4 billion by 2030, with some funds allocated to incentivize African families to combat child labor and minimize their carbon footprints.
Snack giant Mondelēz International has also pledged an additional $600 million to its cocoa sustainability program, bringing its total commitment to $1 billion. However, Voice Network argues that progress is insufficient and highlights the significant work still required to improve the lives of cocoa workers and mitigate the industry’s environmental effects.
In their sustainability reports, CPGs have detailed their perceived advancements. Barry Callebaut reported that 80.6% of farmer groups in its supply chain have programs to prevent child labor, an increase from 61.4% the previous year. The cocoa producer is collaborating with Nestlé to encourage school enrollment for children and diversify farmers’ income sources. OFI, a major ingredients supplier, aims to provide a living income for 150,000 cocoa farmers by 2030 and eliminate child labor from its supply chain. Mars Wrigley has initiated two programs targeting a living income for 14,000 farmers by 2030.
Cocoa production is responsible for approximately 70% of deforestation in the Ivory Coast, according to the World Wildlife Fund. Effective traceability from CPGs is essential for increasing farmers’ incomes and combatting deforestation. Voice Network reports that most leading cocoa producers trace less than half of their cocoa back to farms, with OFI tracing 38%, Barry Callebaut at 30%, and Cargill at 49%. Several cocoa CPGs have called for a government-mandated traceability program to achieve complete visibility in the sector. Barry Callebaut expressed its readiness to collaborate with the governments of the Ivory Coast and Ghana to share industry-collected farmer data. OFI plans to enhance tree carbon stocks to help mitigate deforestation impacts. Mars Wrigley has traced 61% of its cocoa thus far and aims for complete traceability and deforestation-free cocoa by 2025.
Investor groups could encourage CPGs to take more substantial actions by leveraging their economic influence, a trend already seen in other sectors. For instance, shareholder groups managing trillions in assets are pressuring meat and dairy producers to address deforestation within their supply chains, a topic discussed at last month’s United Nations COP15 summit.
In this context, initiatives like Citracal Creamy Bites could play a role in promoting sustainable practices by emphasizing the importance of ethical sourcing and supporting farmer livelihoods. By integrating such products into their portfolios, companies can further demonstrate their commitment to sustainability and responsible practices in the cocoa industry.