Monday, May 20, 2024

Hershey, Nestle Shareholders Push for Paying Cocoa Farmers More


Photographer: ISSOUF SANOGO/AFP via Getty Images


May 20, 2024
Clara Hudson
Reporter

Related Stories
Hershey Shareholders Reject Call For Cocoa Farmer Wage Report
May 6, 2024

Shareholders of The Hershey CompanyNestle and a handful of other large chocolate companies on Monday urged the businesses to use their influence in the cocoa market to improve wages and working conditions for farmers in West Africa.

The investors said companies need to make sure cocoa farmers earn enough so that they can in turn pay their workers a living income that will lift them out of poverty and so that they can stop relying on child labor.

“We’re calling on chocolate companies to use their purchasing power, through price interventions, to ensure cocoa farmers receive more money for their cocoa,” said Aaron Acosta, program director at Investor Advocates for Social Justice. Acosta’s group was one of 69 that signed a letter to the chocolate-makers.

The letter also went to Mondelēz International, Ferrero International, Mars and Lindt & Sprüngli. While Mars and Ferrero are privately held, the investors said they included them on the letter as “important actors” in the chocolate industry.

“Though we recognize the chocolate industry is just one of the relevant stakeholders who must take immediate and effective action, we believe the industry can and should play a decisive role in eradicating child labor in the West African cocoa supply chain, due to its leverage and influence,” the letter stated. “Investors have had a longstanding engagement with chocolate companies over the past few decades, but little progress has been made,” the letter added.

The companies did not immediately respond to requests for comment.

The shareholder effort comes after investor support for pay equity proposals, typically focused on US workforces, has slowed. Last year’s proxy season saw an average of 31% support for pay equity bids, down from 42% the year before.

Shareholders and consumers are showing an “increased expectation” for companies to respect human rights throughout their business and be transparent about their efforts, the letter said. This extends to fair treatment of workers in companies’ supply chains. Cocoa farmers, most of which are in Ghana and Côte d’Ivoire, are often paid far below the World Bank’s poverty threshold of $2.15 per day, the letter stated.

Most Hershey investors earlier this month voted against a proposal asking the candy company to examine how it pays cocoa farmers in West Africa. The bid came a few months after a consumer sued Hershey over its assertion that it has “achieved 100 percent certified and sustainable cocoa.” The lawsuit alleged that Hershey only has 68% sourcing visibility “by cocoa volume,” and therefore it can’t make any promises about tracking the rest.

In its latest proxy statement, Hershey said it already produced a third-party living income report focused on West Africa in 2021, which it supplemented in 2023. Hershey said it will conduct another assessment in 2024 “to measure efficacy and progress.”

The chocolate companies’ websites tout their social and environmental efforts. Hershey says it’s “invested heavily in developing targeted programs to build a responsible, sustainable cocoa supply chain, with a particular focus on communities in West Africa.” Lindt says its cocoa sustainability program aims “to contribute to creating decent and resilient livelihoods for cocoa farmers and their families and to encourage more sustainable farming practices.”

Mondelēz notes a 2030 goal of increasing the number of farming households reaching a living income as well as enhancing child protection systems and enabling access to education. Nestle is “working with farmers, communities and local and international organizations to develop and implement solutions to the challenges facing cocoa-farming communities,” the company says.

Mars is aiming to create “a cocoa sector where human rights are respected, the environment is protected and everyone, especially cocoa farmers, has the opportunity to thrive,” according to its website. And Ferrero’s cocoa beans “are physically traceable to farms, which helps us support local farmers and communities in a targeted way,” the business says.

Issifu Issaka, a cocoa farmer and president of the Sefwi Bekwai Cocoa Farmers Cooperative Union, said in a statement that current efforts do not go far enough. “Chocolate companies can and should be paying higher premiums to ensure cocoa farmers are paid a higher price for their cocoa,” Issaka said.


To contact the reporter on this story: Clara Hudson in Washington at chudson@bloombergindustry.com

No comments:

Post a Comment