Sustainable Cocoa

Sustainable Cocoa

BACKGROUND

Chocolate is a sweet treat, but the cocoa it is made from is often associated with extreme poverty, human rights violations, child labour and deforestation.

The cocoa sector is characterised by a strong imbalance of power, a high concentration of a few large traders and large chocolate brands, and a multitude of small farmers. This leads to a strong inequal distribution of value along the chain.

The lack of living incomes for farmers is a serious issue in the cocoa sector, as it is a human right in itself and a pre-condition for the fulfillment of other human rights as well as a root cause of child labour and deforestation.

The chocolate industry has been under pressure for a few years to make the cocoa sector more sustainable. A number of voluntary initiatives have emerged, third party voluntary standard certification schemes, companies’ own programmes, multistakeholder initiatives, but it is becoming clear that this is not enough to bring about transformational change, and that legislation is required.

In July 2019, a significant step has been the introduction by the governments of Cote d’Ivoire and Ghana (the two main producer countries) of a pricing mechanism: the living income differential, to be paid on top of the market price, aimed to guarantee farmers a higher minimum price. This created a unique opportunity to address the issue of prices in the cocoa sector, and to make real progress towards sustainability.

Given its weight as the largest importer of cocoa, the EU bears a responsibility to ensure that the cocoa sector becomes more sustainable. In 2020, the EU launched a multistakeholder dialogue on cocoa: EU Cocoa Talks, to discuss how to address child labour and deforestation and achieve living incomes. This Dialogue takes place as the European Commission is working on a Sustainable Corporate Governance Initiative to make sure companies address human rights and environmental risks in their supply chain and adapt their corporate governance, as well as a legislative proposal on deforestation and forest degradation, to reduce the impact of products placed on the EU market. The former is horizontal and will apply to all sectors, while the latter focuses on forest-risk commodities (which will likely include cocoa).

WHAT ARE THE FTAO’S VIEWS?

The issues are complex and require a multifaceted response as well as the engagement of all stakeholders.

For the FTAO, the priority is to recognise that earning a living income is the key to making the cocoa sector sustainable. A smart mix of measures is needed, combining due diligence obligations for companies, bilateral partnership agreements with producer countries to support them in putting in place and implementing an enabling policy environment, as well as a pricing mechanism to reward the production of sustainable cocoa.

With regards to deforestation, the European Commission has committed to publish in 2021 a legislative proposal to minimise the risk of deforestation and forest degradation associated with products placed on the European Union Market. Cocoa production is a driver of deforestation, alongside other forest risk commodities such as timber, palm oil, beef or soy. But the difference is that cocoa is primarily grown by smallholders. And this characteristic needs to be taken into account, to ensure that the upcoming legislation does not end up having a negative impact on these smallholders, who tend to cut down trees for survival. In this case, addressing deforestation requires addressing the root cause of it, which is mainly poverty. Small farmers need to be supported in sustainable agricultural practices, alternative sources of income, and involved in protecting and restoring forests.

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