Valentine’s Day: How the cocoa supply chain is falling in love with ethical practices
Chocolate remains the most popular gift for Valentine's Day, but climate change and environmental pressures are already creating tensions along the global supply chain. Here, edie explores how the food and drink industry is working to make its reliance on cocoa more sustainable.
Much like love, chocolate can take many forms. From the colourfully wrapped bars that swarm supermarket checkouts to the handcrafted selections immaculately wrapped for occasions such as Valentine’s Day, cocoa has grown from a luxury item to a global commodity.
Since it was first discovered by the Mayans in 600, cocoa has undergone a drastic transformation. Population growth and consumer demands have pushed global annual production past three billion tonnes – 70% of which is grown in West Africa.
A near-insatiable demand for the product has seen the global chocolate market reach $131bn, but this economic boom has historically neglected environmental and societal aspects.
In 2017, an exposé by The Guardian revealed that cocoa traders linked to some of the world’s biggest confectionary firms had been growing beans illegally in protected areas along the Ivory Coast, where all forest in the region could be lost by 2030 as a result. Large-scale deforestation has also been tracked across four of the world’s other major cocoa farming regions in Indonesia, Peru, Ecuador and Cameroon.
The industry has been historically unsustainable, but its future appears even bleaker. Scientists believe that cocoa farming could be ravaged by climate change to the point where chocolate can no longer be produced by 2050.
With the alarm bells ringing, key players across the sector are slowly banding together to create a new legacy that will enable the entire value chain to grow in a sustainable fashion – by focusing on the prosperity of farmers.
As one of the largest B2B cocoa suppliers in the world, Olam Cocoa procures more than 9.5 metric tonnes of cocoa every year, supplying it to more than 2,200 customers. The organisation’s vice president for sustainability Simon Brayn-Smith believes stakeholders are increasingly collaborating to drive improvements to cocoa supply chain sustainability, notably in recent months.
“One of the big changes over the past few years has been a shift to a multi-stakeholder approach – working with governments, civil society and NGOs to really approach sustainability issues from a much broader place than industry,” Brayn-Smith tells edie.
“I would like to think that we’ve always taken a bottom-up approach to sustainability, placing farmers at the centre of our solutions and trying to build capacity at the farmer group level.”
While joint corporate commitments in this space are nothing new, growing awareness of the biggest sustainability challenges facing the cocoa sector – and the benefits all stakeholders could reap from tackling them – is now driving progress across the value chain.
Companies such as Mondelez, Mars, The Hershey Company and Barry Callebaut have all launched supply chain initiatives focused on farmer education, wellbeing and productivity. The industry views these types of initiatives as an essential means to drag parts of the supply chain out of poverty while ensuring the sector can implement new farming techniques that boost resilience against the harsh realities of climate change.
The focus is welcome. Millions of African adults and children are believed to be affected by forced labour in cocoa supply chains. Cocoa growers globally earn just 6.6% of the value of each tonne of cocoa sold, with growers in the Southern Hemisphere earning as little as 90p a day.
Brayn-Smith believes that “embedded” and “community-focused” approaches are increasingly being adopted by food and drinks manufacturers but that future goals would focus on creating self-sufficient supply chains.
“The idea is that, eventually, we would be able to step away and let the farmer communities themselves continue working on solutions, scaling them up,” he adds.
Photo provided by Olam Cocoa
Investor trends and consumer demands
As a major player in the industry, Olam Cocoa has developed a birds-eye view of not only the sustainability actions taken by other businesses, but the drivers behind these moves as well.
Small customers, large brands and investors alike are now asking Olam Cocoa “detailed questions” around its sustainability strategy – which includes a headline goal of achieving 100% traceability by 2020.
According to Brayn-Smith, the company isn’t alone in facing these questions. Pressure for transparency and disclosure is now being observed across the sector’s value chain, from local communities in all supply chain tiers, up to consumers.
Currently, nine in ten corporates have seen an increase in consumer demands for transparency around ESG or CSR issues, with 95% forecasting that this pressure will increase over the next five years.
Demands are also emerging in the risk-averse finance sector, as investors and banks seek to future-proof their portfolios. Finance firms and individual investors alike are now calling on food and drink companies to improve their ESG practices “as a matter of urgency” and divesting from those which cannot guarantee a deforestation-free supply chain.
Compounded by the fact that sustainability is becoming more business critical to food and drink firms, these pressures are spurring a huge increase in the number of corporates asking suppliers for more sustainability information, according to CDP.
But as data and disclosure become important considerations for business, Brayn-Smith believes the art of storytelling is also helping consumer-facing companies link the products they sell with the ethical and sustainable evolution taking place down the supply chain.
Mondelez’s Coca Life communications, for example, place a focus on the daily lives of the 100,000 women the company is aiming to empower through the initiative. Similarly, Hershey’s Cocoa for Good website is topped with a statement claiming that the firm’s vision is of a world where “cocoa farmers and their families are able to live healthy, prosperous lives”. Both companies use images of their farmers in their communications.
This story-centric approach isn’t exclusive to the cocoa sector, but it does highlight the willingness of firms to provide stakeholders with anecdotal proof of progress. In fact, some experts within the sustainability sector believe that worker rights could be set to capture the public’s attention in the same way that plastics have. Supply chain stories could soon become as important to the wider public as the packaging that houses the chocolate they purchase.
“The cocoa sector faces many issues, which I don’t think anybody pretends have all been solved, but there are a lot of companies working extremely hard and putting a huge amount of resources into solving key sustainability issues,” Brayn-Smith concludes.
“Getting that story across – even though solving some of these issues is extremely complex and might take generations – is very important.”
By focusing on farmer wellbeing that promotes sustainable cultivating methods, the sector is slowly pulling away from a climate-driven abyss. Swifter progress is needed, but we’re finally approaching an era where one of the world’s most romantic products is being created through compassion for the farmers that need it most.
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