Cocoa Coalition welcomes the EU Directive on Corporate Sustainability Due Diligence, calls for improvements, releases position paper.

The Cocoa Coalition welcome the publication of the proposed EU Directive on Corporate Sustainability Due Diligence (CSDD). In earlier position papers from 2019 and 2021, we have been calling for robust and effective policy action, including EU-wide harmonised regulation,  to drive the necessary transformation of the cocoa and chocolate sector. In this regard, we find that the proposed EU Directive represents an important step forward.

For example, we welcome the detailed description in the proposal of the steps companies are to take in implementing their due diligence obligation, the many references to the need for support for SMEs affected by the EU Directive (which should encompass SMEs outside the EU as well as inside), and provisions to enable access to effective remedy, including civil liability, particularly as no such proposals were included in the Deforestation Regulation. However, we find important shortcomings in the proposal that need urgent attention. These shortcomings can be found in this position paper released today, September 19th 2022.

The main weakness of the proposal in our view is insufficient alignment with international standards set out in the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Due Diligence Guidance for Responsible Business Conduct. We believe that the restriction of the due diligence obligation to ‘established business relationships’ should either be removed or reworded to make it clear that companies are obliged to conduct due diligence across their entire supply chain.

The Directive should also reflect the UNGPs in that companies should be expected to take appropriate action to identify, prevent, mitigate, and account for their adverse human rights and environmental impacts depending on whether the companies caused, contributed, or were linked to an impact through a business relationship (we prefer this term to ‘established business relationship’), as well as the extent of their leverage on their suppliers and business partners. Similarly, the extent of civil liability should also take into account the extent of a company’s involvement in an adverse impact.

Partnership agreements: We welcome the recent announcement of the ‘Alliance for Sustainable Cocoa’ between the EU and cocoa-producing countries and the mention of partnership agreements in the Directive’s recitals. Given the importance of the enabling environment required to address the root causes of human rights abuses and environmental harms in global supply chains, we believe that partnership agreements should also be addressed in the Directive’s text itself.

Material scope: With reference in particular to land use and forests, and the production of agricultural commodities such as cocoa, we believe that this should be strengthened by the addition of references to the following two elements. First, the list of the rights of land tenure and access, which are critical to sustainable land governance and management, must be completed to include all relevant conventions and documents (including the UN Declaration on the Rights of Indigenous Peoples, ILO Convention 169). Second, it must include the right to an adequate standard of living including a living income, as a fundamental human right.

Engagement with stakeholders: We believe that the Directive should more clearly recognise the need for meaningful and continuous engagement with affected stakeholders or their legitimate representatives: A stronger requirement for meaningful and continuous engagement should be written into the Directive as part of each stage of the due diligence process. Special efforts should be made to engage with particularly vulnerable groups, including smallholders and indigenous peoples and local communities, and engagement strategies should be gender sensitive.

We look forward to a revised and improved version of the EU Directive on CSDD and will continue to engage with EU policy-makers and other stakeholders in the next stages of the legislative process.

Enquiries should be addressed to: Paolo Giro (Paolo.Giro@be.nestle.com)

The Cocoa Coalition is composed of a group of companies (Ferrero, the Hershey Company, Mars Wrigley, Mondelēz International, Nestlé, Tony’s Chocolonely, Toms Group), certification organisations (Fairtrade International, Rainforest Alliance), NGOs (Fair Trade Advocacy Office, VOICE Network) and multi-stakeholder organisations (International Cocoa Initiative).

The VOICE Network – at the request of key civil society organisations (CSOs) throughout Europe – are setting up a CSO alignment platform across the various national multi-stakeholder Initiatives for Sustainable Cocoa (ISCOs). We are looking for a Coordinator to function as a flexible and lightweight secretariat that supports content-based engagement at national and cross-national level by individual CSOs.
More information in the document attached. Please respond by June 21st 2021

https://voicenetwork.cc/wp-content/uploads/2022/06/220608-Job-Description-V2.pdf

The Cocoa Coalition believes that the European Commission’s proposed Regulation on Deforestation represents an important step forward in driving the necessary transformation of the cocoa and chocolate sector.

As a coalition of companies, certification organisations, NGOs and multi-stakeholder organisations operating in the cocoa and chocolate sector, we have consistently called for the EU to introduce mandatory obligations of due diligence extending throughout the supply chain.

We welcome many elements of the regulation, including the application of the due diligence requirements throughout the cocoa and chocolate supply chain within the EU, and the inclusion of the requirement for full geolocation information on the origin of the products covered by the regulation.

We believe it could be further strengthened through the following steps, explained in more detail in the attached position statement:

– A strengthening of the requirements on the Commission to develop partnerships with producer countries, recognising that effectiveness of the legislation will be limited unless it is coupled with the creation of the enabling environment required to address the root causes of deforestation.
– The Commission should conduct a comprehensive needs assessment of the challenges that will be faced by smallholder farmers in complying with the regulation; this should not wait for the regulation to enter into force. 
– The scope of the regulation should be extended to other natural ecosystems as well as forests.
– The threshold company size should be changed to from SMEs to micro-enterprises.
– Operators should be obliged to engage with relevant stakeholders, including smallholder farmers, as part of the due diligence procedure, and measures should be required to ensure that the ownership of the geolocation data provided as part of the information requirements remains with the farmers.
– The benchmarking analysis should be extended to include a wider range of elements in the producer country.

The Cocoa Coalition welcomes the European Commission’s proposed Directive on Corporate Sustainability Due Diligence published on 23 February; we regard it as a genuinely ground-breaking legislative proposal. As a coalition of companies, certification organisations, NGOs and multi-stakeholder organisations operating in the cocoa and chocolate sector, we have consistently called for the EU to introduce mandatory obligations of due diligence extending throughout the supply chain. (See our detailed proposals published in 2019 and 2021.) 

Requiring companies to work together with their suppliers, supply-chain partners and other stakeholders throughout their supply chains to identify, address and communicate on human rights and environmental risks in their operations and supply chains is essential to achieving the transformation of the cocoa and chocolate sector. In line with the UN Guiding Principles for Business and Human Rights, which have largely inspired the proposed legislation, we believe that all companies in the cocoa and chocolate sector, regardless of their size, must implement such due diligence obligations; they are well-placed to generate and protect social and environmental benefits through their due diligence efforts.
We recognise that smaller companies may possess simpler supply chains. We do not believe, however, that these companies should be exempted from the due diligence obligation. In a very fragmented end market, the inclusion of smaller players is critical to establish a level playing field and to ensure that all companies do their part and work closer together to improve the sustainability of the cocoa sector.

For the legislation to be fully effective it needs to be coupled with the strengthening of the enabling environment for sustainable cocoa farming, and we therefore also call on the European Commission to make greater efforts to engage in stakeholder dialogue – notably, in the cocoa-sector context, with smallholder farmers and their communities – and to pursue the establishment of bilateral partnership agreements between the EU and cocoa-producing countries. One major objective of this combination of elements – this corporate sustainability due diligence directive, the proposed regulation on deforestation and action on the ground in producer countries – should be to aim to deliver living incomes for cocoa farmers, an essential step in achieving a sustainable cocoa sector.

We look forward to engaging with Members of the European Parliament and representatives of member-state governments in further improving and implementing the proposed directive.

[Note: the Cocoa Coalition comprises companies (Ferrero, Hershey, Mars Wrigley, Mondelēz International, Nestle, Tony’s Chocolonely), certification organisations (Fairtrade International, Rainforest Alliance), NGOs (Fair Trade Advocacy Office, Fern, Solidaridad, VOICE Network) and multi-stakeholder organisations (International Cocoa Initiative).]

The VOICE Network – at the request of key civil society organisations (CSOs) throughout Europe – are setting up a CSO alignment platform across the various national multi-stakeholder Initiatives for Sustainable Cocoa (ISCOs).

We are looking for a Coordinator to function as a flexible and lightweight secretariat that supports content-based engagement at national and cross-national level by individual CSOs.

More information in the document attached. Please respond by December 31st 2021.

ISCO CSO Alignment Platform for ISCOs – Coordinator Job Description

A group of companies, NGOs, certification organisations and multistakeholder organisations has furthered its calls to the EU, demanding ambitious human rights and environmental due diligence legislation.

The legislation should apply to all companies, without exclusions, should allow for a broad mix of means of enforcement including the option for civil liability, and should cover a wide range of rights including the right to a living income.

The call for regulation can be found here, and a full press release can be read here.

To mark Juneteenth 2021, NGOs across the Global North and South published this open letter, calling on all of us to stamp out any residual elements of racism within the chocolate industry and throughout our food production systems. As a result of co-signing this letter, we have now started an internal process reviewing our own internal processes around racial justice, and how we can better be anti-racist in our advocacy towards the cocoa sector.

We, a group of companies (Ferrero, Mars Wrigley, Mondelēz International, Nestle, Tony’s Chocolonely, Unilever), certification organisations (Fairtrade International, Rainforest Alliance), NGOs (Fair Trade Advocacy Office, VOICE Network) and multi-stakeholder organisations (International Cocoa Initiative), call on the European Commission to pursue the establishment of bilateral agreements between the European Union and cocoa-producing countries to contribute to establishing a fully sustainable cocoa supply chain, complementing other policy frameworks such as the upcoming Sustainable Corporate Governance Directive and Deforestation Regulation.

We believe that a combination of policy measures is needed for cocoa-farming households to earn a living income, to reduce and eventually eliminate human rights abuses, including child labour, and to put an end to environmental degradation. While the two new legislative proposals will create an obligation for companies to address these issues in their value chains, these efforts must be supported by the right enabling environment, addressing the root causes of the prevalent human rights and environmental issues in the cocoa sector.

To this end, we believe that it is essential for the EU to pursue the establishment of long-term partnership agreements with the governments of cocoa-producing countries, ensuring that all relevant stakeholders are involved, including local community representatives, farmers, industry, and civil society. These partnership agreements should include time-bound frameworks for action for all parties involved.

In 2019, we called on the EU to take action in two respects: to develop mandatory human rights and environmental due diligence legislation, and to negotiate bilateral partnership agreements with cocoa origin governments. We welcome the progress the European Commission has made to date in developing proposals for due diligence legislation, and we hope that proposals will be submitted in the course of the year, thus allowing for proper continuation of the process and harmonisation across the EU. At the same time, we stress the importance of developing partnership agreements in parallel to this regulatory framework.

We welcome the efforts made by the European Commission so far in promoting responsible business conduct and sustainable cocoa, including through establishing the EU multi-stakeholder dialogue for sustainable cocoa both at EU and at national level in Côte d’Ivoire and Ghana. As the first round of these dialogues are coming to an end, we call on the Commission to consider the negotiation of specific partnership agreements as a logical and necessary next step.

Our joint position paper outlining the importance and potential contents of such partnership agreements is available here, and is summarised below.

We look forward pursuing an effective dialogue with EU and national authorities as well as other stakeholders in the cocoa sector. We invite others to endorse our joint position paper.

Enquiries should be addressed to: Paolo Giro, Paolo.Giro@be.nestle.com.

Joint position paper on partnership agreements for cocoa: summary

All signatories to this position paper aim to achieve a fully sustainable cocoa sector.

A crucial element of an EU strategy to achieve this aim is the introduction of two new legislative instruments: a directive on human rights and environmental due diligence and a regulation to ensure imported products have not caused deforestation. This legislation would help to create frameworks for responsible business conduct and the sustainable and responsible consumption of cocoa and derived products within the EU, the world’s largest consumer of cocoa and chocolate.

At the same time, we believe that the effectiveness of such due diligence legislation will also depend on the creation of a supportive enabling environment in origin countries.

We believe that a critical means of delivering such a supportive environment is through the establishment of long-term partnership agreements with the governments of cocoa-producing countries, ensuring that all relevant stakeholders are involved, including local community representatives, industry and civil society.

These partnership agreements should set out clear and time-bound frameworks for action and measures that need to be taken by all concerned parties. They should place a particular emphasis on actions at the policy level by producer governments, and include technical and financial support mechanisms from the EU and its member states to ensure that the necessary actions can be implemented successfully.

Accordingly, we call for partnership agreements between the EU and the governments of cocoa-producing countries that establish clear responsibilities for each partner. Their aim should be to:

1. Clarify what is needed to establish a sustainable cocoa sector within the producer-country partner and what different actors in the supply chain need to do to achieve it (which should also feed into sector-specific guidelines for due diligence legislation).
2. Set out the policy changes, and/or improved enforcement of existing policies, that would be needed to produce cocoa sustainably.
3. Put in place incentive and support mechanisms, including funding and capacity-building, to ensure that the required policy changes and measures are implemented.
4. Establish monitoring systems to assess the impacts of the policy changes and measures and ensure that any unintended negative consequences for people or the environment are avoided.for people or the environment are avoided.

On the International Day for the Elimination of Child Labour, dozens of civil society organisations from across the world – in both consuming and producing nations – are calling cocoa companies and governments to start living up to decades-old promises to tackle child labour in the cocoa sector.

This year should have been a landmark in the fight against child labour in cocoa. Instead, the cocoa sector as a whole has been conspicuously quiet on this topic.

It is time that the cocoa sector lived up to its promises and started to deliver on a sector wide and ambitious plan to tackle child labour and poverty. The industry’s collective silence this year is shameful and inappropriate.

Read the full statement here (in English and in French).

In the past weeks, the governments of Ghana and Cote d’Ivoire have accused three companies – Hershey, Olam and Mars – of trying to avoid the payment of the LID (a premium on top of the world market price for cocoa, aimed to increase the income of cocoa farmers, announced a year ago). Though details are unclear, there are three principles in this discussion that the VOICE Network would like to underline.

First, in order to achieve a Living Income – which is a human right – the payment of higher prices to farmers is going to be essential. The prices that farmers receive for their cocoa should be going up, not down, and the LID has been a crucial first step. Any company that claims to pursue sustainable cocoa should be demonstrably involved in processes to raise the farm gate price, with the goal to achieve a living income. Any company attempting to lower prices is not pursuing sustainability.

That farm gate prices (i.e. the price farmers get) need to go up has been true for the last two decades, but is even more important now because of the impacts of COVID-19 on the cocoa market, with farmers losing income and seeing costs of living rise.

Second, the discussion shows the need for much more transparency and accountability for the cocoa sector, especially around supply chains and prices. It raises serious questions about the untraceable nature of cocoa bought and sold at the terminal markets, and brings new urgency to the need to make such markets fully traceable. Worldwide, it should always be clear where cocoa is sourced from, whether fair prices are paid to farmers, and whether environmental and social concerns are being addressed in this sourcing. Without traceability, it is simply not possible to ensure cocoa is free of deforestation, child labor, or other abuses. Without transparency it is impossible to hold actors accountable for their actions.

Third, we are concerned that farmers have been made the bargaining chips in this conflict. When the Ivorian and Ghanaian governments suspended Hershey’s sustainability programmes, necessary support to farmers and farmer organisations was put at risk – including child labour intervention systems, the payments of premiums, and input support from certification systems. There must be ways to challenge multinationals without further putting pressure on the already vulnerable position of farmers. Furthermore, farmers and local civil society should be consulted in an inclusive and deliberative manner prior to the introduction of measures that significantly affect farmers. 

The bottom line must be: governments and industry should maintain farmer’s rights and wellbeing as a top priority in all considerations of cocoa prices. Companies should stop shortchanging farmers, locking them into dire poverty, and authorities should not punish companies in a way that jeopardizes farmers. At minimum the chocolate industry should pay the LID price to farmers, and in fact should be paying each and every cocoa farmer a living income price for West African cocoa of $3,166 or more.