Cocoa may have been the "best-performing commodity of 2018," but the shadow of climate change looms over the industry's long-term prospects. Alarming headlines like "Chocolate is on track to go extinct in 40 years" and "M&Ms maker fears chocolate shortage by 2050" illustrate how concerned industry watchers are about the long-term risks of climate change.
Our research suggests that a key to ensuring the industry's future is catalyzing what we call "ambition loops" — a term for a virtuous cycle by which governments and the private sector mutually escalate ambitions for sustainability with regard to topics such as climate action and net-zero deforestation.
The future of cocoa production depends on pairing this escalation with business strategy. And the industry has signaled it is on its way to an ambition loop. However, if companies and governments of cocoa-producing countries want to achieve real progress, they will need to be more specific in their commitments. Otherwise, they risk stalling out the ambition loop in its infancy and endangering the future of production.
Cocoa Producers Take Note of Sustainability
Ensuring that cocoa is sustainably produced is now as much an economic concern to major chocolate producers as it is an ethical one. Companies increasingly understand that they ignore sustainability at their own peril and at the risk of higher prices, scarcer production and adverse supply shocks in the years to come.
To address these concerns, the Cocoa and Forests Initiative (CFI) was created in November 2017 by the World Cocoa Foundation (WCF), IDH – The Sustainable Trade Initiative, and the Prince of Wales International Sustainability Unit (ISU), in partnership with the governments of Côte d’Ivoire and Ghana. The CFI made commitments to achieve two interdependent goals: 1) ending deforestation while 2) using new technology to “grow more cocoa on less land,” thereby ensuring long-term environmental sustainability across the cocoa supply chain.
In March 2019, the CFI announced major steps towards improving transparency and sustainability in the cocoa industry. Thirty-four member companies — comprising roughly 85% of cocoa usage worldwide—released individual action plans. These detail how each company will more sustainably produce cocoa, including by protecting and restoring forests, promoting farmers’ livelihoods, and improving community engagement and social inclusion.
These companies will implement their action plans in accordance with the National Implementation Plans developed by Côte d’Ivoire and Ghana, the world’s two largest cocoa producers, and Colombia, the first Latin American country to sign on to CFI’s principles. In doing so, companies responded to the signal sent by several major cocoa-producing countries.
The initial plans released by the governments of Côte d’Ivoire, Ghana and Colombia are important first steps, but, as ambition loops in other sectors have demonstrated, it is essential for the private and public sectors to substantively engage with one another to advance the climate agenda (in other words, it takes two to tango). The involvement of both private and public sectors allows each side to set ambitious targets, and to discuss ways their counterparts can help them meet those goals. Such feedback loops have the potential to rebound off each other, spiraling ambition upward in pursuit of more aggressive targets.
The Ball Is in the Private Sector's Court
CFI is encouraging evidence of such a relationship: these 34 companies and three governments in March committed to "no further conversion of forest land for cocoa production, and...to the phased elimination of illegal cocoa production and sourcing in protected areas." The national government action plans provide clear spheres of responsibility and targets.
Some company action plans were drafted in response to the government ones and have very specific, measurable targets. Cargill aims to map 100% of its farmers (more than 82,000 farms) in its direct supply chain in Ghana and Côte d'Ivoire by 2022. Unilever will train 12,000 farmers in "Good Agricultural Principles" by the same date. Mondelēz will distribute over 2,000,000 "multipurpose trees" to promote income diversification and agroforestry. 1 The impact of these targets remains to be determined.
Lamentably, however, both Ghana and Côte d'Ivoire are waiting for many companies to submit their targets according to each country's "Summary of Company Initial Action Plans." This lack of clarity could spell trouble for the initiative unless companies and governments work together meaningfully and pressure one another to be accountable.
Sweet and Sour
The opacity of the cocoa industry's supply chain has led to unfulfilled promises before. A recent investigation notes that "the world's chocolate companies have missed deadlines to uproot child labor from their cocoa supply chains in 2005, 2008 and 2010. Next year, they face another target date and, industry officials indicate, they probably will miss that, too."
Some of the biggest challenges to this sector seem to have resulted from the opposite of an ambition loop: a lack of clear signals and enforcement from both government and business led to uncertainty for the other, making achieving ambitious goals difficult. To avoid repeating the same mistakes, decision-makers in both the private and public sectors should commit to aggressively pursuing an ambition loop. Doing so will help ensure that metrics like this one, stated as a key commitment to the CFI, "an effective national framework for traceability encompassing all traders in the supply chain," are steps that are both bold enough to address the problem and are grounded in the reality of what is achievable. (And after committing to these steps, they need to follow through on them!)
As a director at the World Cocoa Foundation urged, "The potential for collective action is significant and the time is now. It will be neither fast nor easy, but let's be steadfast in a shared commitment to finally bend the curve on deforestation."
1Mars Inc., manufacturer of M&Ms, is a member of WRI’s Corporate Consultative Group, as is Cargill, Incorporated. Unilever and Mondelēz have provided financial support to WRI. This blog post solely reflects the views of the authors.