For more than 10 years, Praxis Mutual Funds® has conducted shareholder advocacy around the topic of cocoa farming supply chains, with a particular focus on forced child labor and human trafficking in West Africa.
As we look back to 2009, one point of encouragement is vastly greater public awareness today about the plight of children and families caught in a system of modern slavery. And even when specific awareness is lacking, we believe many more U.S. consumers are attuned to the values represented by, among others, the Fairtrade labeling program and various ethical-sourcing certifications.
We remain encouraged, too, about certain changes in the industry. For almost a decade, one aspect of Praxis’ shareholder advocacy work has been to encourage chocolate companies to collaborate. Five years ago, major chocolate companies joined together to form CocoaAction, an industrywide initiative to develop meaningful partnerships among governments, cocoa farmers and the cocoa industry to boost productivity and strengthen community development in Ghana and the Ivory Coast.
Praxis pushed for a coordinated approach in part because we recognized that establishing common standards could significantly improve the effectiveness of fragmented, company-specific programs. We brought to this work lessons from our longstanding shareholder engagements with Hershey and Mondelez.
We believe CocoaAction, among other initiatives – including continuing direct shareholder advocacy – has and is making meaningful positive change in the cocoa industry.
Unfortunately, “change” does not always mean “success” in the sense of eradicating the worst forms of child labor practices in the cocoa industry. Estimates of the number of child laborers working on farms in West Africa vary. In some cases, their parents own the farms; the U.S. Department of Labor estimates some 2 million children are in this category. In others, the children are trafficked from desperately poor neighboring countries; many of these are promised education and instead find themselves forced to perform heavy labor. An estimated 30,000 children are subject to modern slavery as defined by the International Labour Organization.
But positive systemic change is, of course, “success” when compared with the state of the industry just two decades ago. At that time, the world’s major chocolate companies knew relatively little about the farms from which their cocoa supplies originated. Then, and now, several supply-chain layers separate the large buyers from their ultimate suppliers in what is a commodity market. The buyers are, however, rightly regarded as best equipped to lead the movement for change.
Many chocolate companies have turned to certified cocoa to address child slavery in their supply chains – including Hershey, with which Praxis engaged heavily. Though no major company has yet reached 100% certification across its purchases, the percentages have been increasing, and we are pleased that Hershey is on track to use 100% certified cocoa by the end of this year. Certifications’ effectiveness can improve further as those figures rise, and, we believe, as the certification processes themselves improve. Here again, there’s a need for collaboration – across buyers, certifiers, governments, farmers and others in the supply chain.
Though a strong positive trend, certification’s impact is limited in part due to the cocoa market’s breadth. The largest chocolate companies in the world – those that we and others have worked with and have, in our view, good sustainability policies – only account for about half of the cocoa purchased out of West Africa. Much of other half is, unfortunately, subject to effectively zero standards. It’s clear in this commodity industry that neither certification nor other efforts by the major buyers can completely eradicate slavery in a complex, commodified industry with many hundreds of thousands of tiny farms.
So although we are encouraged by outcomes stemming from our work with Hershey, along with Mondelez and other food manufacturers, much progress remains to be made. We believe the work of Praxis and other concerned shareholders has made a tangible difference to the lives of thousands of people. Yet there are thousands more people struggling in a state of modern slavery – and much more work to do.