A T E. Earth Systems Senior Seminar. Gwendolyn Burke Iberia Zafira Jeanette Lim

C H O C O L A T E Earth Systems Senior Seminar Gwendolyn Burke Iberia Zafira Jeanette Lim

CHOCOLATE TASTING

CHOCOLATE THE FROM SOURCE

HOW IT'S GROWN Cocoa is the product of beans from the cacao tree. Farmers harvest pods from their cacao trees, and the beans and pulp are fermented together. http://nathan-palmer-royston.tumblr.com/

FURTHER PROCESSING The fermented beans are dried out in full sun and then prepared to be shipped http://nathan-palmer-royston.tumblr.com/

AT THE MANUFACTURER Beans are roasted, winnowed, milled, and mixed http://www.immortalhumans.com/wpcontent/uploads/melted_chocolate_bar-1340.jpg

DETAILED SUPPLY CHAIN Source: www.bcca.org

INTRODUCTION

Overview of Chocolate Question Industry Overview Social, Economic, & Environmental Impacts Legal Pressure Certification & Alternative Markets Conclusion and Consumer Power How YOU can make a difference

QUESTION

QUESTION Does consumer choice of chocolate matter? Does it ensure improvements in the social and environmental concerns associated with cacao production and a more responsible sourcing and supply chain?

SIGNIFICANCE Why chocolate? Goals Earth Systems Framework Source: http://sphotos-a.xx.fbcdn.net/hphotos-ash4/c0.0.403.403 /p403x403/398201_10151226499669841_912266250_n.jpgjpg

INDUSTRY OVERVIEW

COCOA MARKET $89 billion industry US 21% global net imports, European countries 58% Sales of chocolate confectionery in Latin America and Asia have more than doubled in the past 5 years Steady growth of market http://i276.photobucket.com/albums/kk17/cupcakequeen91/summer% 20trip%2008/DSC03647.jpg

COCOA PRODUCTION 90% of the world s Ivory Coast cacao is grown by 3 36.5% million smallholders, employing 14 million worldwide Africa produces 77% of world exports Asia and Oceania produce 17% Americas produce 6% Ghana 20.4% Indonesia 14.9% Source: World Cocoa Foundation, An Overview

MANUFACTURERS Net Sales of Top Companies, 2012 Mars Kraft Nestle Hershey $16.8 b $15.48 b $12.8 b $6.5 b Source: http://2.bp.blogspot.com/-hvu808vrldu/uaazs7zzfoi/aaaaaaaaflg/qp8bcljg_ga/s1600/picture1.png

SOCIAL & ECONOMIC IMPACTS

SOCIAL COSTS The greatest social impacts are felt at the beginning of the supply chain by the growers Child labor and unfair wages are the most notorious social costs Source: http://legacy.businesscasestudies.co.uk/company_images/67/177/11121853871.jpg

TONY CHOCOLONELY http://www.youtube. com/watch?v=5vgkvyhfqdc Tony from the Netherlands wanted to sue himself for procuring illegal chocolate via slavery His case was not pursued in court, so he made his own brand Took back his certification Source: http://oud.girlscene.nl/images/library/articles/images01/girlscene/tony5.jpg

CHILD LABOR Source: http://thumbnails.visually.netdna-cdn.com/the-truth-about-chocolate_5139edf7d0b08.jpg

CHILD LABOR 300,000 children <12 years old are forced to work on cacao farms for 12 hours a day Source: http://www.ethicalliving.co.za/wp-content/uploads/cocoa-child.jpg

TOP 3 ISSUES: CHILDREN 1. 2. 3. School attendance: access to education Participating in unfair farm tasks Injuries as a result of farm work Source: World Cocoa Foundation, An Overview

UNFAIR WAGES To escape poverty, the income of cacao farm laborers needs to be increased by 341-1608% Source: http://www.policymic.com/articles/28418/chocolate-is-more-sinful-than-you-think/390484

DISTRIBUTION OF WEALTH Cocoa has a lot of opportunity to support farmers, but ~50% of the profit goes to retailers In some cases, there can be 12 steps in a company's supply chain; companies rarely buy directly from farmers Source: http://www.ethicalliving.co.za/wp-content/uploads/cocoa-child.jpg

ENVIRONMENTAL IMPACTS

ENVIRONMENTAL COSTS Inevitable to have environmental impact since cocoa is only grown in tropical regions The greatest environmental impacts along the supply chain are by the growers, cocoa processors, and chocolate manufacturers Environmental costs are not as well-researched as social costs Limited information available on a true life cycle assessment of environmental costs of chocolate Source: http://legacy.businesscasestudies.co.uk/company_images/67/177/11121853871.jpg

FARMING TECHNIQUES Deforestation Pesticides No technology to improve crop yield Old harvesting tools Full-sun monocultures have led to lowefficiency scores Source: http://www.hardrainproject.com/thumbnail.php?im=sp1024232.jpg&type=u Source: http://www.sciencedirect.com/science/article/pii/s0921800911001029

HIGHER PRODUCTIVITY Source: http://www.idhsustainabletrade.com/content/images/405.jpg

HERSHEY'S COCOA LINK

ESTIMATING IMPACT 3,4,5 3,4,5 2 1 2 1 1 1) deforestation in tropical areas and pesticide use on cocoa farms, 2) international shipping, 3,4,5) processing, manufacturing, distribution & retail in developed in countries Source: http://thumbnails.visually.netdna-cdn.com/the-truth-about-chocolate_5139edf7d0b08.jpg

LEGAL PRESSURE

FRAMEWORK Source: World Cocoa Foundation, An Overview

WORLD COCOA FOUNDATION

HARKIN-ENGEL PROTOCOL Media flurry of 2000 Amendment bill passed in House to develop a label indicating slavefree chocolate Protocol emerged from the lobbying against Harkin-Engel in 2001 Goal was 2005, deadline extended to 2008, then to 2010, status currently unknown "Protocol for the Growing and Processing of Cocoa Beans and Their Derivative Products In a Manner that Complies with ILO Convention 182 Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor" http://i55.photobucket.com/albums/g147/buscheaux/imeem%20page%20stuff/my%20soapbox/treehugger-chocolate.png

PROGRESS Source: Payson Center, 2011 Report

CRITIQUES OF PROTOCOL Protocol should be applied globally Protocol "little more than a document and politics" Major companies admit perfect tracking in the supply chain is impossible International Labor Rights Forum opposed to Protocol see need for regulatory action Because of government instability, it's up to the industry to make large reforms!

NESTLE AND TRANSPARENCY Largest food company in the world Sources 10% of Ivory Coast cocoa Fair Labor Association Report Numerous violations of labor code, especially child labor Action plan in response Supplier code distributed, monitoring and remediation system The use of child labour in our cocoa supply chain goes against everything we stand for. As the FLA report makes clear, no company sourcing cocoa from Côte d Ivoire can guarantee that it doesn t happen, but what we can say is that tackling child labour is a top priority for our company. -Nestle

KRAFT Biggest in Europe In 2010, we continued to be the largest buyer of coffee from Rainforest Alliance Certified farms and the largest buyer of cocoa beans from certified Fairtrade or rainforest alliance farms. In 2010 we invested approximately $10 million to improve the quality of life for thousands of people in cocoa farming communities in West Africa. We re proud to have helped provide better access to education, improve family incomes, encourage responsible labor practices, and provide aid to atrisk children, while at the same time helping to protect the environment. And our commitment to work in communities continues as we plan to increase our investment over the years.

KRAFT REVEALED Response to Case ID: 24434434 We understand your concerns. Mondelez Global has been working with Anti Slavery International, companies, governments and others to help eradicate child labor. As the world s largest buyer of Fairtrade cocoa and one of the largest buyers of Rainforest Alliance cocoa, we re committed to expanding our investment. We recently announced that we re investing $400 million into our Cocoa Life program over the next ten years to improve the livelihoods of more than 200,000 cocoa farmers. This will then give us the best opportunity to address child labor issues in the cocoa supply chain. More transparency is needed - where is the money directly going?

CERTIFICATION & ALTERNATIVE MARKETS

CERTIFICATION LOOP Source: World Cocoa Foundation, An Overview

FAIR TRADE DEMAND

CERTIFICATION LOOP Source: World Cocoa Foundation, An Overview

INDICATORS & DATA The Case of Côte d Ivoire Poverty at 50% in 2008 slow deterioration of basic social and economic infrastructure such as health and education. Solutions from Fair Trade Kavokiva co-operative has grown to more than 3,400 farmers hired agronomist to boost yields health insurance and medical services school fees and access Result of Nestle's Kit Kat Bar Conversion Only a case study- research needs to catch up http://www.fairtrade.org.uk/

CERTIFICATION LOOP Source: World Cocoa Foundation, An Overview

ALTERNATIVE MARKETS

SCALE COMPARISON Revenue: $5 M/year Price of chocolate bar: $1.30/oz $3800/ton for cacao beans Revenue: $6.64 B/year Price of chocolate bar: $. 005/oz $2100/ton for cacao beans

ALTERNATIVE MARKETS "Superior Beans and the Ultimate WinWin" Innovative Technologies Government Support for Cooperative Development Regional Flavor Differentiation and Valuation "Radical Mainstreaming" Farmer Networks in Ghana 45% Farmer Ownership Empowerment "People, Planet, Profit" Partnerships Philanthropy Stretches its profits to make an impact beyond just farming issues "Fully Transparent and Direct Trade" Sets their own prices Direct Trade certification Organizes with existing cooperatives and rural development enterprises

ROCOCO CHOCOLATES Source: http://blog.rococochocolates.com/category/fair-transport-2/page/2/ Source: http://thefoodiebugle.com/uploads/images/img_1224_(640x427)_thumb.jpg Produces $21 "carbonneutral" chocolate bars 60% of profits go back to the farmers 25% of electricity used is generated by solar sourced from a small cacao farm in Grenada Final beans arrive to the UK by sail 30 tons/time

OVERALL IMPACT A new standard and grade distinction Companies remove farmer volatility by giving a premium that is better than fair trade Involve farmer in chocolate process Creation of new farmer networks, cooperatives, knowledge, tools, technology and better agricultural practices Community driven development projects and investments Visible and transparent impacts

CONCLUSION: CONSUMER POWER

QUESTION Does consumer choice of chocolate matter? Does it ensure improvements in the social and environmental concerns associated with cacao production and a more responsible sourcing and supply chain?

ANSWER: PART A Does consumer choice ensure more sustainable sourcing and a fair supply chain? It's complicated and it depends Consumers can demand these things, but change and verification are difficult Little research has been done to understand change on the farmer level Example: Tony Chocolonely rescinding slavery-free label

ANSWER: PART B Does consumer choice make a difference? YES! Consumer preference for CSR has influenced corporate investments, alternative markets, & certification programs Consumers can choose the better options that are on the market right now Example: Stop the Traffick organization

Multinational vs. Local Multinational Companies + More employment Economies of scale Cheaper product Strong brand Greater social, economic, and environmental impacts Sensitive to intnl taxes, fuel costs Local Companies + Control over more aspects of supply chain Local employment Specialization More expensive for consumers Weaker brand

LIMITATIONS & NEEDS Limitations Mainly focused on West Africa, but cocoa is grown in other tropical regions Difficult to obtain data from unbiased sources Difficult to speak to chocolatiers and companies Needs More progress in research, especially efficient farming More progress in certification compliance More transparency in corporations More information and services given to the farmer

FUTURE IMPLICATIONS Injustice in cocoa industry is not limited to this industry, but points to global poverty CSR & certification are steps in the right direction, but needs to be expanded Consumers have the power to influence the cocoa industry and other industries Source: http://lgos.org/files/stt.jpg

CSR: THRIVING ECONOMY Source: http://www.idhsustainabletrade.com/cacao-sustainability

CONSUMER CHOICE Why is the market for fair trade & organic cocoa small? Consumer preferences Price tends to be more important Problems are too far away Consumer willingness to pay Decreases as price increases Example: In one study, when price increased $1.50, less than half of consumers were WTP Availability Fair trade and organic chocolate are sold at niche stores The choice is yours every day and during holidays - VOTE WITH YOUR CHOCOLATE

REFLECTION What we learned How we leveraged our ES background Personal bias in research Our critiques & solutions Difficult to contact chocolate companies Farmer knows as little as consumer does about chocolate production Research limitations Focus on policy, enforcement & collaboration A cocoa farmer trying chocolate for the first time http://nathan-palmer-royston.tumblr.com/

C H O C O L A T E QUESTIONS?

WORKS CITED CSR Wire. CSR Profile of World Cocoa Foundation. http://www.csrwire.com/members/10672-world-cocoafoundation. 2013. Fair Labor Association. Underlying Challenges of Child Labor. http://www.fairlabor.org/blog/entry/fla-highlightsunderlying-challenges-child-labor-after-extensive-investigation-nestl%c3%a9. 2012. FAO. Growing Cocoa. http://www.fao.org/docrep/006/ad220e/ad220e01.htm. 2013. Franchise Help. Chocolate Industry Analysis 2013 - Cost & Trends. <http://www.franchisehelp.com/industryreports/chocolate-industry-report>. 2013. HalogenTV. Chocolate. <http://halogentv.com/articles/happy-world-chocolate-day-infographic/>. Hershey. Hershey expands responsible cocoa community programs in West Africa. <http://www.thehersheycompany. com/social-responsibility/cocoa-sustainability/>. 2013. Hoffman, Beth. Food and Tech Connect. Infographic of the Week: Chocolate <http://www.foodandtechconnect. com/siteold/2012/02/10/infographic_of_the_week_chocolate/>. International Cocoa Organization (ICO). Who are the main manufacturers of chocolate in the world? <http://www.icco. org/about-cocoa/chocolate-industry.html>. 2012. LaBau, Elizabeth. About.com. From Bean to Bar: How Chocolate is Made. < http://candy.about. com/od/workingwithchocolate/a/beantobar.htm>. 2013. Lepisto, Christine. Treehugger. Tony s Chocolonely Chocolate wins Conscience Award. <http://www.treehugger. com/green-food/tonys-chocolonely-chocolate-wins-conscience-award.html>. February 3, 2008. Ntiamoah, Augustine; Afrane, George. Environmental Impacts of Cocoa Production and Processing in Ghana: Life Cycle Assessment Approach. November 14, 2007 Oxfam. Oxfam Media Briefing. Mars, Mondelez and Nestle and the fight for women s rights. <http://www. oxfamamerica.org:8381/oxfam/files/behind-the-brands-gender-media-briefingfinal-signedoff.pdf>. February 26, 2013.

WORKS CITED Payson Center, Tulane University. Oversight of Public and Private Initiatives to Eliminate the Worst Forms of Child Labor. http://www.childlabor-payson.org/. 2011. Plank, Elizabeth. Policy Mic. Chocolate is More Sinful Than You Think. <http://www.policymic. com/articles/28418/chocolate-is-more-sinful-than-you-think/390484>. March 2013. Stop the Traffik Organization. People Shouldn t be Bought and Sold. < http://www.stopthetraffik. org/campaign/chocolate/what-you-can-do/15>. (Accessed on March 3, 2013) World Cocoa Foundation (WCF). Cocoa: A Detailed Overview. 2010. World Cocoa Foundation (WCF). Committed to Cocoa-Growing Communities. http://www.worldcocoa.org/. 2012.