Chocolate Reports

Unpacking Deforestation and Climate Change within Chocolate Scorecard

Dr Stephanie Perkiss

Stephanie Perkiss is a Senior Lecturer in Accounting at the University of Wollongong and explores social and environmental accounting and accountability in her research.

This blog post is one of a series linked to the publication of the 2022 Chocolate Scorecard company sustainability rankings. To view the 2022 Chocolate Scorecard please go to https://beslaveryfree.com/chocolate

When biting into a crunchy chocolate candy, many consumers don’t realise where the cocoa ingredients in their favourite treats come from, nor the costs that their production can have for nature and the climate.

West Africa produces 75% of the world’s cocoa, with Côte d’Ivoire and Ghana producing the lion’s share. In the last 60 years, these two African countries have lost around 94% and 80% of their forests respectively, with approximately one-third of that forest loss to make way for growing cocoa. Research published by Mighty Earth revealed that, in the period between January 2019 and January 2022 alone, Côte d’Ivoire lost 19,421 hectares (194.21 km2) of forest within cocoa-growing regions, while Ghana lost 39,497 hectares (394.97 km2) in cocoa regions. This amounts to a combined area equivalent to the size of the cities of Madrid, Seoul, or Chicago.

Many of the remaining tropical forests under threat in these two countries are within legally protected areas, providing critical habitat to endangered species like chimpanzees and pygmy hippos. They also contain vast stores of carbon, which if released could exacerbate global climate change. Forests absorb carbon, and when they die, they release carbon and no longer serve as a sink.

Amongst other indicators, the 2022 Chocolate Scorecard focuses on the extent to which individual companies are taking concrete steps to ensure that forests are not being cut down to provide them with cocoa. We analysed the responses to deforestation and climate change in the following areas based on best-in-class guidance (see AFI box)

Application of no-deforestation policy to global sourcing, and percentage of cocoa purchased through a deforestation-free monitoring system;
Percentage of cocoa sourced from deforested areas since 2010 when satellite monitoring systems became widely available;
Percentage of cocoa sourced from actors who have been deforesting since the launch of the CFI in 2017;
Detailed plans for how to respond to evidence of suppliers sourcing cocoa from recently deforested land; and
5. Policy to achieve net-zero carbon emissions company-wide; or using science-based targets.

Chocolate Scorecard survey results

The highest score of the deforestation and climate change theme went to Alter Eco and Beyond Good. There were several others in the ‘green’ or top scoring category: Chocolats Halba, ECOM, Ferrero, Nestlé, and Olam. All these companies have undertaken efforts that put them at the top of the pack, relative to their peers. The lowest scores for deforestation and climate change went to Daito Cacao, Glico and Morinaga. These companies did, however, respond to the survey and have endeavoured to engage on deforestation and climate. This sets them apart from General Mills, Starbucks, and Storck who did not participate in the survey – and who appear (based on a review of their publicly available material) to be worryingly behind on many sustainability metrics including those for their cocoa when it comes to forests/climate – remain at the rock bottom.

Grading for the deforestation and climate change theme was tough. For many questions we were looking for specific and verifiable data – usually figures and percentages with links so they can be publicly verified. While many of our companies were great at narrative accounts, some key figures were missing.

We will start with what was done not so well:

Satellite monitoring – We would like to see more companies purchasing cocoa from locations that are verified deforestation-free, using a satellite monitoring system. Even better, if companies started using the available technology that forecasts (quite accurately) where deforestation will happen, this could stop deforestation in their cocoa supply chains before it takes place. While many companies are starting to do monitoring, imagine how good it would be if all companies reached 100%, and then actually used the monitoring to curb forest destruction in their supply chains!

Deforestation mapping - We gave special attention to deforestation and purchasing from the two largest cocoa producing countries, Côte d’Ivoire and Ghana. Many companies could not provide details on cocoa they had sourced from areas deforested since 2010 (at which point, accurate and free satellite mapping of forests was easily accessible to all); or again after November 2017 (at which point Cocoa & Forests Initiative (CFI) was signed, wherein all major companies and the governments of Côte d’Ivoire and Ghana pledged to end deforestation and start mapping). We appreciate that this data can feel confusing at first, especially if companies have only recently begun mapping. But, without mapping and understanding one’s deforestation, pledges will remain empty words.
Verifiability - In the survey, we awarded points where respondents provided reference to their data/figures, which can be independently checked. In several instances, citations and URLs were not provided and grades were not given, such as for a few companies who failed to provide evidence of a time-bound plan for working with suppliers and smallholders to map farms using GPS.
Transparency is important - Public transparency in relation to deforestation and climate change is important, so we have urged participating companies to keep publicly sharing their sustainability initiatives and achievements. This allows civil society to follow the old adage: trust, but verify.

Now, onto what was done well:

Monitoring systems - Most of the companies we surveyed have some form of monitoring system. However, most of these remain incomplete or even deeply flawed. For example, satellite mapping is rarely connected to an alert system that trigger field investigations in the places identified as having deforestation. It also seems almost no company is using deforestation forecasting, although this now exists for Côte d’Ivoire and for many geographies with a variety of tools. There were some standouts: Beyond Good used both satellite imagery as well as on-the-ground monitoring and went further than its peers. Beyond Good established a high-quality Deforestation Dashboard as a deforestation monitoring system.

Source: Beyond Good’s mapping tool.

Collaboration to eradicate deforestation - Many of the participating companies have joined the ‘Cocoa & Forest Initiative’ (CFI) and/or Initiatives for Sustainable Cocoa (ISCOs). ISCOs refer to public-private platforms for sustainable cocoa now existing in a number of countries including Germany, Switzerland, Belgium, The Netherlands, France and Japan. Most ISCOs include a focus on deforestation in cocoa, and help shape collaborative efforts to eradicate deforestation from consumer countries, as CFI does in producer countries. While it is great to see a lot of companies joining CFI and ISCOs, we are finding similar themes - that there is still a lot to making these collaborative efforts truly work. Joining is only one step. Collaborating for robust group efforts to promote change, is key. Merely joining does not obviate a need for companies to continue their individual work on deforestation and climate change, nor their need to invest in conservation and restoration.
Deforestation-free policies - It was great to see that most of our participants had gone beyond CFIs to embrace a global deforestation-free cocoa policy, or even a cross-commodity deforestation-free policy (for some or all regions they source from). It shows that companies in this industry are trying to take seriously the issues of deforestation and climate change in their supply chains.
Public grievance systems and noncompliance policies - Most Scorecard participants have established both public grievance mechanisms, and noncompliance policies. In most cases these are not deforestation-specific, but cover the entire supply chain, including social and environmental indicators. However, full points on this front were only given when public grievance mechanisms were easily accessible and user-friendly, and where non-compliance policies establish clear consequences for deforestation, including suspension.

Net-Zero carbon emission - We see major positive change with some key cocoa/chocolate companies embracing the SBTi’s Corporate Net-Zero Standard. Points were awarded for joining SBTi’s race to zero. While some of the commitments show a low-ambition target of 2050, others have better timetables focused on 2030. In future grading of deforestation and climate change, we will be looking specifically at the actions companies are taking to reach these targets and whether companies have signed up for SBTi.

A note on CDP, which some cocoa/chocolate companies flagged. We think CDP is providing a valuable service in promoting transparency for investors and nudging companies to be more explicit with the types of data and analysis they report. However, there is uneven public access to CDP disclosures. Best practice in the cocoa space could mean that companies opt to submit forest disclosures to CDP, and also post a copy of their disclosures to their company website so it can be verified.

A tip for next year’s Chocolate Scorecard!

Despite progress, some companies are still at risk from sourcing cocoa associated with legal and illegal deforestation. Legislation has been proposed by the European Union to regulate deforestation in high-risk commodities such as cocoa, and similar regulation is also proposed for other jurisdictions such as the United Kingdom, United States of America, New York State, the State of California, and more. It is worth noting that many chocolate companies have spoken out courageously to support due diligence and deforestation-free regulations in recent years. A public statement supporting regulation in your home country or regions where you sell chocolate will help gain you a better score in future years.

There are many different roads that lead to better policy and action on deforestation and climate change. For example, Ferrero scored a ‘Green’ because it has now joined others in purchasing 100% certified volumes, and this comes on top of its considerable company-specific efforts around deforestation and climate. However, taking a different path, Mars scored well with only about half of its cocoa being certified, but performing far better when it comes to a serious company-wide, commodity-wide approach to slashing overall emissions with a time-bound implementation plan.

Another pathway to points was, for example, clear criteria on what it takes to suspend a non-compliant supplier caught with deforestation problems (as opposed to wishy washy criteria or no criteria). Yet another pathway consists of rapid and largescale improvement, with the key to points being speed and scale of change. So, we tried to recognize that what is “good” in the case of deforestation and climate change can be very different. We’re agonistic so long as companies are on a meaningful road, and not a bridge to nowhere.

Overall, we see lots of potential for continued growth in policy, monitoring, and action in relation to deforestation and climate change, but this is not a bad place to be, at least for the higher-performing companies in this category!

by Mighty Earth

2022 Easter Chocolate Scorecard Lists Starbucks Among “Broken Eggs”

To download the full Scorecard click here:
English
Japanese
French

Coalition encourages industry to break the links between chocolate products, deforestation, child labor, and environmental degradation

April 7, 2022 – What’s really going into our Easter chocolate? A global coalition of environmental and social justice advocates today released The Chocolate Scorecard, an annual survey that examines the chocolate industry’s progress, or lack thereof, in addressing social and environmental concerns stemming from cocoa industry practices and the chocolate products they sell. The 29-member coalition includes Be Slavery Free, Mighty Earth, and National Wildlife Federation, among others.

The Chocolate Scorecard focuses on the production and supply chains that start in West Africa, where around 75% of the world’s cocoa is produced. Many industry players are rising to the challenge, but others continue to ignore consumer demand for chocolate that’s free of child labor, poverty, deforestation. General Mills, Starbucks, and Storck received the researchers’ “Broken Egg” for their refusal to provide information for The Chocolate Scorecard, while Storck was given an additional "Rotten Egg" for ongoing lack of transparency about its policies and practices in their cocoa supply chain, and in light of civil society complaints about the company.

“It’s disappointing to see companies like Starbucks, which claim to be a leader on sustainability and confronting the climate crisis, refuse to answer straightforward questions about their performance on cocoa sustainability. It’s a real shame in an era of growing transparency that Starbucks refuses to be straight with its customers,” said Glenn Hurowitz, founder and CEO of Mighty Earth. “Mighty Earth will continue to demand transparency and true supply chain sustainability, both for our climate and for the local communities that produce these key commodities.”

This year Ferrero joins the list of “Good Eggs” that includes Hershey’s, Unilever and Ritter, whose cocoa is close to 100% certified by the Rainforest Alliance or Fairtrade.

“While certification is not perfect, it is often a positive first step in a company’s sustainability journey,” said Fuzz Kitto, of Be Slavery Free, the Australia-based charity which coordinated The Chocolate Scorecard. “If companies are making progress on increasing the sustainability of their chocolate supply chains then we and their customers and investors would like to hear about it.”

Special mentions for leadership go to:

Previous Scorecard “Good Eggs” Alter Eco, Tony’s Chocolonely, and Whittaker‘s for continuing to be among the best in class overall
Nestlé for taking huge steps in innovation for addressing farmers’ income with additional payments and with their commitment to plant 2.8 million shade trees by the end of 2022
Ferrero for now joining other companies whose cocoa is overwhelmingly certified such as Hershey’s, Unilever, Fazer and others.

The Scorecard is an accountability measure that rates companies on the six most pressing sustainability issues facing the chocolate industry: human rights due diligence; transparency and traceability; deforestation and climate change; agroforestry; living income policies; and child labor. As Christians around the world celebrate Easter by enjoying chocolate products, the coalition urges consumers to use the Scorecard to make smarter, more sustainable purchases that reward good business behavior rather than reinforcing irresponsible practices.

Previous Mighty Earth data analysis has revealed that more than four years after the high-profile launch of the Cocoa and Forests Initiative (CFI), Africa’s top cocoa-producing nations continue to see huge areas of precious forest being destroyed in West Africa to make room for cocoa production. The loss of these precious forests is often driven by the fact that small farmers in the region do not make a living income from their cocoa, forcing them to expand.

"We are now starting to see many companies make commitments to address farmer poverty and improve cocoa farming livelihoods,” said Sam Mawutor, Policy and Advocacy at Mighty Earth. “This shows chocolate brands are increasingly aware of the problem, which is progress. However, since farmer household poverty drives child labor, chemical use, and forest conversion, we need to see improved collaboration amongst companies at a landscape level. The time for small pet projects is over”.

To download the full report click here: Full Report
To read the methodology used to create the company scores you can find out more here: Methodology

About Mighty Earth

Mighty Earth (www.mightyearth.org) is a global advocacy organization working to defend a living planet.  Our goal is to protect half of Earth for Nature and secure a climate that allows life to flourish.  We are obsessed with impact and aspire to be the most effective environmental advocacy organization in the world. Our team has achieved transformative change by persuading leading industries to dramatically reduce deforestation and  climate pollution throughout their global supply chains in palm oil, rubber, cocoa, and animal feed while improving livelihoods for Indigenous and local communities across the tropics.

Press Contacts:

For general press enquiries contact: Miles Grant, [email protected], (+1) 703-864-9599 (m)
For regional press enquiries, pictures, and expert quotes, contact:

Australia - Fuzz Kitto (Australian Eastern Time) +61 (0) 407 931 115 [email protected] (English)
Europe (Eastern) - Kadri Org (Eastern European Summer Time) Tel: +372 56 489 584 [email protected] (Estonian, English)
Europe (Western) - Esta Steyn (Central European Time) +31 6 3457 1595 [email protected] (Dutch, Afrikaans)
Japan - Roger Smith (USA Eastern Time) [email protected] (English, Japanese), Hajime Enomoto (Japan Standard Time), [email protected] (Japanese)
United Kingdom - Dominic Murphy (UK Time) +44 (0)7943 498239 [email protected] (English)
United States - Etelle Higonnet (USA Eastern Time), +1 202 848 7792. [email protected] (English, French, Spanish, Portuguese, Italian, German)
West Africa - Fofana Mansah Souleymane (West Africa Time) +225 22 42 21 42 [email protected] (French, English)

by Mighty Earth

U.S. Cocoa Imports: Secretive mega-traders get the lion’s share.

Mighty Earth and Stand.Earth partnered together to undertake preliminary cocoa supply chain research to improve our understanding of how cocoa enters the U.S.—the biggest chocolate market in the world. Though the results confirm a lot we know already, some new revelations are stunning. Our findings uncovered a damning story of the action of a few dominant traders, the secrecy in cocoa/chocolate imports, an international web of opaque cocoa-laundering, and a cover-up of corporate value captured from poor producer countries.

These results are from the analysis of vessel tracking and American vessel manifest data from January to October 2020, using various algorithms to clarify the data. We focused on American imports of cocoa from four major cocoa-producing countries: Ghana, Cote d’Ivoire, Ecuador, and Peru.

Patterns of exploiting cocoa farmers continue: Our research exposes the extent to which cocoa-producing countries are losing substantial revenue by not exporting directly to consumers, and by exporting raw materials rather than processed cocoa products. This is due to post-colonial models of exploitation of the Global South by predatory Western corporations, unfair trade deals dictated by former colonial powers, and a failure of governance, commitment, and development by cocoa-producing governments. Large volumes of Ivorian and Ghanaian cocoa beans are sold to the U.S. via Belgium and Spain, meaning that revenue and profits that could go to farmers are diverted to foreign traders instead.

This also extends to grinding capacity ownership. Cote d’Ivoire's grinding capacity is considerably large—16 percent in 2019—but much of its installed grinding capacity is owned by foreign companies. Although grinding cocoa beans brings more value to the country, capital flight drains most of this revenue from the country. Ghana mostly sells cocoa beans, but comparatively, gains more from the trade due to its less liberalized market where the regulators action reduces the negative market shocks.

The EU exports cocoa into the U.S.: 43 percent of cocoa beans from Ghana and Cote d’Ivoire pass through Europe—specifically Spain and Belgium—often re-exported without any value addition. This tells us that whatever the EU decides on cocoa sustainability will have a massive impact on American cocoa trade policy, and vice versa.

Other cocoa laundering countries - Panama and Columbia: Large amounts of Peruvian and Ecuadorian cocoa funnel through Panama and Colombia into the U.S. Yet Panama has never made any sustainable cocoa commitments, has no traceability or transparency goals for cocoa, and is not yet appropriately scrutinized as a major cocoa player. The sustainability of Panama's cocoa industry must be re-examined, and a “Cocoa & Forests Initiative” (CFI) for Panama would be a good start. Colombia has already taken steps with its own “Cocoa, Forests and Peace Initiative” to reform its sector. Our research points to one clear conclusion: this initiative should now cover all cocoa that passes through, not just what Colombians grow.

The irony of traceability: Traceability sheds light on where cocoa comes from to address problems at the farm level, but it also needs to show where cocoa products go. Besides the murkiness of traceability or re-exported cocoa from Europe, there are widespread omissions and normalized errors in American import data. What should be seen in vessel manifest data is often missing or difficult to trace, because shipper and consignee information is removed. Our research shows such a pattern and practice of obfuscation that we must now ask, "What are the importers hiding?" In 2020, 40 million kilos of untraceable chocolate products entered the U.S. The U.S. government must revise its systems to ensure that cocoa becomes traceable to the companies involved in the actual transaction, not just forwarding companies. This means that American data on imports and exports must dramatically improve, and chocolate companies should be obligated by the U.S. authorities to disclose their entire global supply chains at both ends, not just their suppliers.

The EU is far behind on importer-side traceability: While U.S. customs manifest data needs to greatly improve, the EU has a long way to go. Currently, the data ends at the EU ports. The EU’s opaque systems of customs manifest data facilitate concealment of crimes, thus there is no way to trace cocoa from producer countries to processors or manufacturers. This lack of transparency is unacceptable for a major cocoa consumer block like Europe. The EU must urgently reform its customs data to bring it in line with best practices on commodity transparency. France has recently set a new model with reforms for transparency around customs data, which the rest of the EU ought to emulate.

The trader's trick to hide: While beans get sold in vast bulk shipments through integrated supply chains like Olam and Cargill, finished chocolate goes from a wide variety of manufacturers to what seems at first glance to be a wide variety of consignees. A closer look reveals, however, that these are often different iterations of the company name. For instance, we found 35 versions of the name of the world’s largest cocoa trader called ‘Barry Callebaut’ — breaking up the volume across a variety of businesses so that the full size of its monopolies or value of its trade is hidden. After delving into all the versions of names, our research clearly shows how the biggest cocoa traders—Barry Callebaut, Olam, ECOM, Sucden, and Cargill—are running the show. We were even able to pierce through the fog to show how ECOM is the biggest trader of cocoa beans into the U.S., though it masquerades amongst other things behind the name Atlantic Specialty Coffee. If Barry Callebaut, Cargill, Olam, Sucden, ECOM, and other cocoa trading companies are serious about traceability, they should solve this data challenge of nomenclature immediately, with or without American regulatory action. America's largest grinder, Blommer, is conspicuously absent from the consignee space and delivers little or no data on its website to guarantee traceability. If they have nothing to hide, they should publish their names properly on all their transactions–no more games.

Where do we go: Our research underscores how the Biden administration must act decisively to advance cocoa sustainability and bring together chaotic, siloed, and disparate engagement various government agencies. The U.S. should also seriously consider establishing an "ISCO." The multi-stakeholder platform could bring together the appropriate federal government agencies, NGOs, chocolate manufactures, and cocoa traders together to strengthen the cocoa industry's traceability, transparency, and sustainability. Legislatively, regulation to restrict imported deforestation is long overdue for chocolate and other commodities. And beyond passing legislation, the U.S. must regularly engage with cocoa-producing countries to improve governance and strengthen the voices of farmers and local civil society in cocoa discussions.

by Mighty Earth

Retailer Scorecard 2021

Easter is one of the biggest chocolate buying seasons. Mighty Earth and the National Wildlife Federation in the USA and Be Slavery Free in the Netherlands and Australia; assessed retailers from around the world on their contribution to driving positive change in the chocolate and cocoa industry. Brands and processors were ranked separately in an earlier release.

The retailers selected, 36 in all, are some of the largest and most influential in Europe and the UK, the US, Brazil, Australia/New Zealand, and other chocolate consuming countries. Those retailers selected for this ranking have a choice: they can either take a large toll on the farmers and ecosystems in cocoa growing regions around the world or make a big positive impact for people and the planet.

Retailers and supermarkets make the most money in the chocolate value chain-- taking at least 40% of the price consumers pay for a bar of chocolate. These super beneficiaries need to own their responsibility for the cocoa sector and not just for their own branded products but also for the procurement policies for the other chocolates products they stock. The potential for a truly industry wide, farmer to consumer, sustainability movement exists.

But many of these retailers have thus far refused to engage in relevant ethical trade platforms such as the Retailer Cocoa Coalition or the Cocoa and Forest Initiative or opened up to engage more broadly with civil society on their cocoa supply chains.

Some of these same retailers have made progress with their commitment to sustainability in other commodities-- albeit spotty, but have been slow to extend such measures to cocoa.

Retailers like Rewe, Ahold Delhaize, Coop Switzerland, Sainsbury’s, Woolworths (Australia) Aldi Süd and Aldi Nord stand out when compared to their colleagues. Supermarkets in the US need to do much more to ensure the sustainability of their cocoa products they sell.

You can find the full methodology on the Retailer’s Easter Scorecard here.

by Jackson Harris

The report finds that a large amount of the cocoa used in chocolate produced by Mars, Nestle, Hershey’s, Godiva, and other major chocolate companies was grown illegally in national parks and other protected areas in Ivory Coast and Ghana.

Download

by Mighty Earth