European countries are the world’s largest importers of the cocoa beans whose production is devastating rainforests in West Africa and driving millions of children into child labour. To prevent this, chocolate companies and NGOs are calling on the EU to regulate the cocoa supply chain, and momentum is growing. The EU should seize this opportunity to step up action against deforestation.
The sweet taste and pleasure-inducing chemicals released by chocolate make it enormously popular as a lockdown treat! Western Europeans are particularly drawn to it, but the Swiss, Germans, Irish and British head the charts. The average German eats 8.5 kilogrammes of chocolate a year: about a tenth of their body weight. European chocolate is loved all over the world, from Belgian truffles to French pain au chocolat. This makes the European Union (EU) the world’s number one importer, manufacturer and consumer of cocoa, importing over 60 per cent of global cocoa beans.
But most Europeans are unaware of the extraordinary cost of their chocolate habit.
Cocoa is devastating tropical rainforests, including some of the last habitats of the threatened chimpanzee. Ivory Coast estimates about 40 percent its cocoa is illegally grown in protected areas. It is also responsible for driving millions into child labour, and keeping cocoa farmers and their families in a state of destitute poverty. In Ivory Coast and Ghana, some 2.1 million children work on cocoa plantations.
This injustice is compounded by how little of the chocolate industry’s US$100 billion global annual profit finds its way into the farmers’ hands: on average a cocoa farmer receives 6% of the final sale price of a chocolate bar, while retailers and chocolate makers get 80%.
Voluntary pledges have failed
Following public pressure, chocolate companies, governments and the EU – have tried to tackle the problem through voluntary schemes, pledging for decades to halt deforestation by cleaning up their supply chains. However, change has been slow and small-scale. Commitments are generally weak and companies still struggle to even know where their products were grown. They have not succeeded in tackling low prices and poverty, child labour, deforestation and illegality across the cocoa sector. In fact, although companies that buy cocoa beans directly from farms may be able to improve standards, it is much more difficult in the widespread indirect supply chains featuring traders and middlemen. National traceability systems are also inadequate or lacking.
Our recommendations: The European Union must act
There has been increasing acknowledgement that to have a significant impact, voluntary commitments are not enough and governments must step in and regulate. Since the EU is the world’s largest importer of cocoa, any standard it would impose would have repercussions on the whole sector.
But there is no single solution to a complex problem: only a mix of demand and supply side measures will work.
Fern’s report proposes different forms this regulatory action could take, drawing on the experience of supply chain regulation in other sectors.
It recommends that the EU negotiates bilateral agreements with the main cocoa-producing countries, providing financial and capacity-building assistance to improve governance and law enforcement where necessary. This option could learn from the Voluntary Partnership Agreements (VPAs) between the EU and timber-exporting countries that are part of the Forest Law Enforcement Governance and Trade (FLEGT) Action Plan.
The report also recommends putting in place a Due Diligence Regulation requiring enterprises placing cocoa or cocoa products on the EU market to be fully transparent about their supply chains and to monitor, prevent and mitigate any risk of handling illegally produced cocoa, or cocoa not produced to high social and environmental standards.
These supply and demand side would complement each other. Bilateral agreements would help trigger essential action by producer-country governments. Regulation would directly affect the behaviour of chocolate companies, and encourage producer-country governments to sign a bilateral agreement.
This would substantially increase transparency and create a level-playing field between sustainability leaders and laggards.
Momentum is growing
On 2 December 2019, Mars Wrigley, Mondelez and Barry Callebaut, three of the main cocoa companies, released a joint position paper together with the Voice NGO network, calling on the EU to regulate their supply chains. This statement, also supported by Nestlé , Hershey, and Tony’s Chocolonely, specifically calls for a due diligence regulation. Chocolate companies also call on the EU to negotiate bilateral agreements. Whilst the statement focuses on regulating the cocoa sector, it also states that the signatories would support regulation for other commodities.
The onus is now on the EU to take forward these proposals. In 2020, the European Commission will carry out an impact assessment of a new Regulation and accompanying policy measures to implement the Commission’s Communication to Protect & Restore the World’s Forests. The new measures will cover cocoa and forest risk commodities like soy, beef and palm oil. As part of this impact assessment, a public consultation will take place in summer 2020 and the Commission will present a new regulatory proposal in 2021.
The European Parliament is also proposing new measures on deforestation (including potential regulation and partnership agreements on specific commodities). The first report (2019/2156(INI) Stepping up EU Action to Protect and Restore the World’s Forests) is the European Parliament’s general response to the Commission’s Communication on Deforestation, led by rapporteur Stanislav Polcak MEP. The second report (2020/2006(INL), An EU legal framework to halt and reverse EU-driven global deforestation), will focus on the form of new regulation, and is being led by rapporteur Delara Burckhardt MEP. The two reports will be voted on by the Parliament in summer and autumn 2020 respectively.