Dealing with the problem - slavery in the chocolate industry A case study from the view of Nestlé's CEO
In September 2000, a documentary filmed by British television station Channel 4 was aired. Nestlé group along with other companies in the chocolate industry was alleged to have purchased cocoa beans from farms of the Ivory Coast that use child slave labour. Cocoa trees are very environmentally sensitive - they grow only between 20° north and 20° south. There aren’t many places where the conditions are right to grow cocoa, and over half the world’s Cocoa is grown in two West African countries - Ivory Coast (39%) and Ghana (19%). Our company’s Cocoa supply is heavily reliant on the products from West African countries. As we claim to be a world leader in nutrition, health and wellness, Nestlé’s objective is to be trusted by all its stakeholders. Using the morally “tainted” cocoa beans from the Ivory Coast in our products is definitely against our company’s policy, so we soon took actions to ameliorate the problem. Considering Ivory Coast’s market share, simply changing the supply area is not realistic. Moreover, it is an escape from our social responsibility to solve the problem. We did some study on finding the origin of the problem and created a strategic action plan - Nestlé cocoa plan- to deal with it. Several factors were discussed. First, cocoa farming is a labour intensive industry. Most cocoa farming is small scale. Around 95% of cocoa is grown in small holdings of less than four hectares (10 acres) which is typically family enterprise, much as it was 100 years ago.
The whole process of growing, harvesting and drying the beans is usually not mechanized and requires a large workforce. Secondly, prices for cocoa beans on the global market have been depressed in recent years. In addition, local middlemen buy the farmers’ cocoa for half of its current market price, which adds economic difficulty for farmers to legally hire workers. Thirdly, the poorly enforced government and law make the slavery possible. To solve the problem we are working with over 30 coops and over 18,000 farmers in the Nestlé Cocoa Plan in Ivory Coast. We are training the farmers to improve the productivity of their orchards and the quality of their cocoa, and help them understand our stance on labour conditions – including child labour. We also give these farms and farmer organizations a form of official certification, like UTZ Certified or Fair-trade, as well as better prices for their cocoa to reward farmers and their organizations for producing sustainable cocoa.
In addition, we are involved with industry wide programs through the World Cocoa Foundation (WCF). To complement these activities, we have started a school project with WCF to build or refurbish 40 schools in 4 years. The progress and detail of the plan can be accessed through its official web site. http://www.nestlecocoaplan.com/ The Nestlé Cocoa Plan is a 10-year action plan. 110 million Swiss Francs were invested to tackle key issues facing cocoa farmers, their families and communities. In 2012, two years after we launched the plan, we trained 21 000 farmers, distributed 1.1 million high-yielding, disease-resistant plantlets and sourced 38 000 tons of cocoa through the plan. By 2013 we aim to source up to 15% of our cocoa through the Nestlé Cocoa Plan. We also have partnered with the Fair Labour Association to map the cocoa supply chain in order to prevent the use of child labour in Ivory Coast and with International Cocoa Initiative to develop and implement an innovative child monitoring and remediation system in our supply chain for child labour. On May 26, 2013 we announced a commitment with Mars through Oxfam International to begin the process to better understand and take action along the entire cocoa supply chain to deal with labour issues. Since we together control more than 40% of the global chocolate market share, this will be a good influence for the whole industry. However, there are still many things we need to improve in the future. First, increase the transparency. We are going to present all our statistics regarding usage of cocoa and their place of origin with the percentage on our official web site. We will also create a system to ensure that all our purchased cocoa beans are clean and no labour abuse happened during its process. In addition, we will give our stakeholders rights to check the process. Second, we will help to diminish the poverty in the region involve more farmers in the Nestlé cocoa plan, and create a system to secure the wage or payment for the farmers. For example, we can buy out small farmlands to create a more efficient super farm, hire farmers to work there and pay them fair and fixed wages. Another option would be to work with the Ivory Coast government on developing higher value added industry, such as a Nestlé factory or cocoa tourism. Thirdly, we will continue the improvements. We will review all our supply processes to check if there are any other raw materials or corporate behavior also involved with the same kind of problems or have the possibility to violate business ethics.
We will find them and correct them. With all the processes above, I believe our company can maintain its success, not only related to business profit but also with regarded to business ethics and social responsibility. Note
1. Beth Hoffman, “Love Chocolate? 4 Reasons Why Nestlé's Cocoa Plan Is Not Enough” Forbes, May 22, 2013. 2. Eoghan Macguire,“Ivory Coast seeks chocolate fairness for farmers,” CNN, November 25, 2011 3. Nestlé Cocoa Plan, http://www.nestlecocoaplan.com/
4. Nestlé, http://www.nestle.com/ 5. Nestlé annual report, 2012 6. Nestlé corporate business principals, June 2010 7. World Cocoa Foundation, http://worldcocoafoundation.org/ 8. http://www.foodispower.org/slavery-in-the-chocolate-industry/