The Association of the Chocolate, Biscuits & Confectionery Industries of Europe (Caobisco) hosted the roundtable “Raw materials in the confectionery industry: How we support sustainable development goals in our supply chain” in Berlin on June 13.
At the event, it set out a five-step approach for its members to enhance sustainability efforts (see box below).
‘Big time’ reputational damage for those who don’t commit
Speaking to ConfectioneryNews, Caobisco president Alessandro Cagli said the trade body is also encouraging members "to ensure as soon as possible a certified sustainable supply chain for [cocoa and palm oil*]".
"The idea is to set a deadline and to report annually on where they are with respect to their deadline. That is the transparent approach. We don’t have any legal instrument to force people to do it, but we recommend it," he said.
The Caobisco president said recognised certification programs such as RSPO for palm or Fairtrade, Rainforest Alliance for UTZ as well as company programs fit Caobisco's definition of certified sustainable sources.
"All these sources can be acceptable, if they are based on credible standards and foresee clear and transparent forms of monitoring," he said.
Cagli – who is also public affairs director at Ferrero - added that companies failing to regularly report sustainable raw material goals against a set deadline may face reputational damage.
"If you don't set a goal in terms of reputation, you are going to suffer big time - that's something really all companies need to consider."
He said reputation was a major sales driver in today’s marketplace. "People don’t just want to buy products, they want to buy products from companies they trust and a big part of building trust is knowing where your raw materials come from."
Nestlé's response
A Nestlé spokesperson told us the company is continuing to roll out the Nestlé Cocoa Plan. "Certification is an important part of our responsible sourcing activities and the Nestlé Cocoa Plan. However, on their own, these schemes do not give a guarantee of addressing many sustainability challenges given that the underlying causes are complex and require collective action. This is why we favour approaches that bring all actors, industry, NGO, governments, local authorities and communities together," they said.
Cagli said it will be at a company's discretion to set its own deadline.
Which companies have already made commitments?
Caobisco members such as Ferrero, Mars and Olam have already committed to 100% sustainable cocoa by 2020.
Barry Callebaut has promised fully sustainable cocoa to its definition by 2025, while Lindt has set a 2020 deadline to move to a fully traceable and verifiable cocoa supply. Swedish confectioner Cloetta has sourced 100% UTZ certified cocoa since 2014.
Other Caobisco members such as Nestlé and Mondelēz are committed to scaling up their own sustainable cocoa programs, but have yet to set a date to move toward 100% certified sustainable sources.
The world’s second largest cocoa processor Cargill has also yet to commit to a date.
Mondelēz did not reply to our request for comment, but has previously said setting deadlines on sustainable cocoa are not realistic.
Cagli said Caobisco was also pushing smaller and medium sized companies to make pledges.
"It's a bit more difficult to bring them on board," he said, due to the added cost of certified sustainable cocoa.
Five-step approach
Caobisco has established five criteria for its members to follow when implementing any sustainability program:
- Understand: Assess the situation, understand the supply chain, identify the different actors
- Engage: Gather the different actors (including local authorities) and seek way forward to create a Public Private Partnership (PPP)
- Empower: Stimulate local resources, communities and farmers to enforce the project
- Act: Implement actions where we are able to make the difference
- Monitor: Regularly check progress and provide necessary readjustments
Cagli said the five-step approach comes amid heightened interest in sustainable raw materials from consumers and regulatory authorities.
"We see an increasing trend from some public authorities to include sustainability requisites in public procurement," he said. "I wouldn’t call it regulation, but it is something that has an impact on our business."
How much do cocoa farmers earn?
A recent study funded by Barry Calllebaut found farmers in Côte D’Ivoire typically earn less than $1 a day – below the World Bank’s threshold of extreme poverty for the country ($2.40).
Poverty alleviation
Asked why eliminating poverty was not a component of Caobisco's approach, Cagli said:"We cannot guarantee the aim that no-one will be in absolute poverty. This is not the role of private industry.
“We cannot go there with a magic wand and put in money to solve the problem because you'd never know where the money would end up."
He said private industry can guarantee investment and commitments to help reach that goal, but cannot make promises on zero poverty without governments and other supply chain stakeholders because industry tends to work via intermediaries.
However, Caobisco member Barry Callebaut has promised to lift 500,000 cocoa farmers out of the World Bank’s definition for extreme poverty ($1.90 per day) by 2025.
What about palm oil?
Cagli said Caobisco members are expected to sign up to no deforestation agreements in palm oil. Thereby "Signing up to the fact we and our members do not buy palm oil from companies that are involved in deforestation". He added that Caobisco is promoting the use of certified, segregated palm oil. "This has a higher price, which requires a certain level of investment. Of course it's not an obligation, it's a recommendation."
Transparency
Cagli said the current state of reporting in sustainability has progressed and is now "quite good", but urged Caobisco members to also be transparent about bad news.
"I think we have to be honest and also report when and where we are not able to achieve what we would have liked to achieve,” he said.
Asked if CSR reports should also include pricing information, volumes and list suppliers for each raw material, Cagli said: "Many of these components are confidential. The volumes are something we could be reporting, but I have some doubts about the price," mainly due to anti-trust concerns.
A group of NGOs, including the VOICE Network, Solidaridad and Oxfam NGOs have previously said competition authorities are likely to permit pricing conversations that combat poverty and protect human rights and say nothing stops individual companies unilaterally deciding to pay farmers more.
* CLARIFICATION: This article previously said Caobisco was urging deadlines for sustainable sugar and hazelnuts, but Caobisco has since confirmed it is encouraging deadlines for cocoa and palm oil only.
[Background reading: ConfectioneryNews editorial 25-Jun-2012, Setting certified cocoa goals makes ethical and business sense]
Declining cocoa prices
Caobisco will next month meet with the International Cocoa Organization (ICCO) in Brussels to discuss possible actions to tackle declining cocoa prices. Caobisco president Alessandro Cagli said this may mean supporting crop diversification for cocoa farmers or increased investment from the World Bank. He added the industry needed to collaborate with the governments of Ghana and Côte D'Ivoire, which set farm gate prices.