Supply Chain
Cocoa Will Never Be Sustainable Without Living Wages for Farmers; New Action Guide Helps Companies Get There

Pervasive environmental and social problems in global cocoa supply chains will persist unless companies pay farmers substantially more for their beans, according to a major report on cocoa sustainability published earlier this month.

Families in cocoa communities face a wide range of challenges — including forced and child labor; gender inequality; (infant) malnutrition; lack of access to education; insufficient healthcare facilities and sanitation; and a variety of labor-rights violations for smallholders, workers and tenants. Environmental issues including deforestation and climate change remain a growing concern.

The VOICE Network’s Cocoa Barometer found farmer poverty to be the underlining driver of all of these issues. Current approaches to tackle this problem are failing, because they are not taking into account a key issue: Commodity prices remain far too low (and higher prices present their own set of unsustainable challenges for farmers). Colonial-era dynamics in cocoa supply chains, which saw vast wealth extracted from cocoa-producing regions, continue to influence corporate and political attitudes to the problem.

As Antonie Fountain, director of the VOICE Network, told Reuters: “We've got new data that shows you cannot have sustainable cocoa without higher prices for farmers. It's just not going to work."

In order for living incomes to become a reality for cocoa farmers, VOICE Network says action is needed on three separate fronts:

• good governance policies by public bodies;

• good purchasing practices by the private sector;

• and good agricultural practices by farmers.

For the past two decades, however, almost all of the cocoa sector efforts have been focused on farmers themselves, ignoring the necessary changes in government policy and purchasing practices needed to tackle systemic sustainability issues such as poverty.

Shortly after the Cocoa Barometer's release, IDH — The Sustainable Trade Initiative launched a new, free resource called the Living Wage Action Guide to support companies working to close the living wage gap.

Part of IDH’s Roadmap on Living Wages, the free Living Wage Action Guide helps companies find the path to the best interventions for their situation. Browsing freely through the Guide, identifying potential challenges and solutions is also possible. For each intervention, practical tips and examples are provided.

The items in the Living Wage Action Guide and the linkages between the items are based on a thorough assessment of international frameworks, guidelines and publications in the living wage domain.

The Living Wage Action Guide aims to guide buyers, their suppliers and other relevant actors towards the most appropriate actions they can take to close living-wage gaps. Companies can use the Guide to navigate the challenges inherent in efforts to achieve living wages in supply chains, and discover specific steps they can take to address these challenges and create the enabling conditions for living wages to be paid. The Guide was created by IDH; in cooperation and consultation with a broad range of experts including NewForesight, Ergon, Schuttelaar & Partners, and all partners of the IDH Roadmap on Living Wages.

“We developed the Living Wage Action Guide with the aim to keep supporting companies to progress living wages in their supply chains,” said Carla Romeu Dalmau, senior innovation manager of better jobs at IDH. “Using the IDH Living Wage Roadmap as a guideline, the Action Guide is linked to step 4 of the Roadmap: taking action to close living wage gaps in supply chains. The online Action Guide offers practical tips, case studies, sectoral information and much more to support companies on their journey towards a living wage. We hope the Living Wage Action Guide will help companies make more informed decisions on how to close their living wage gaps and support the efforts of creating a living wage economy worldwide.”

The Guide is easy to use: By selecting the type of actor, companies can then choose the impact area — which then links to the challenges that complicate paying living wages. For each challenge, an intervention is recommended. Under these interventions, companies can find suggested solutions, practical tips (divided per changemaker, as each actor has a role to play), case studies and more resources that can help to succeed this intervention.

There are 12 interventions listed — including improving procurement practices (a buyer-led intervention), enhancing social dialogue (a supplier-led intervention, with support of buyers), and improving policies in producing and consumer countries. The practical tips come from real-world experiences from the partners of the IDH Roadmap on Living Wages and from other companies; which IDH has collected, systemized and conceptualized into actions. Supply chain actors can visit www.livingwageguide.org to explore what they can do on their own and where they need to collaborate with others.

IDH says it will continue to update and strengthen the guide and include data and evidence where possible.

The Living Wage Action Guide is the latest component of IDH’s ever-expanding work to enable a living-wage economy for smallholder farmers worldwide. In 2021, the NGO joined forces with 10 global companies — Aldi Nord, Aldi Sud, Eosta, Fyffes, Fairphone, L’Oréal, Schijvens, Superunie, Taylors of Harrogate and Unilever — all actively working towards ensuring living wages for workers throughout their supply chains, and calling on other companies to do the same. Then, in July of this year, B Corp certifier B Lab launched new guidance for companies on implementing a living wage that aligns its approach with that of IDH’s Roadmap on Living Wages to find living-wage benchmarks from quality-assessed methodologies — making it easier for B Lab to increase the number of benchmarks accepted, which means more companies can have their living-wage work reflected in the B Impact Assessment.