INTERNATIONAL. Nestlé has announced an innovative plan to tackle child labour risks in cocoa production, at the same time as increasing farmer income and achieving full traceability.
Its plan is based on an income accelerator programme which aims to improve the livelihoods of cocoa-farming families, while also advancing regenerative agriculture practices and gender equality. A cash incentive will be paid directly to cocoa-farming households for certain activities such as enrolment of children in school, Nestlé said in a statement.
Today’s announcement builds on Nestle’s longstanding efforts to tackle child labour risks in cocoa production.
The company has invested in sustainability through the Nestlé Cocoa Plan since 2009. Through a monitoring and remediation system instituted since 2012, 149,443 children have been assisted to protect them against the risk of child labour, and 53 schools have been built or refurbished.
According to Nestlé, this system is now the industry standard by which companies monitor their supply chains.
The income accelerator programme underlines the company’s commitment to achieving full traceability and segregation for its cocoa products. As Nestlé continues to expand its cocoa sustainability efforts, the company plans to invest CHF1.3 billion (US$1.4 billion) by 2030, more than tripling its annual investment.
Nestlé CEO Mark Schneider commented: “Nestlé’s efforts over many years have helped, but more is needed. We are launching a holistic approach to getting kids in school, accelerating farmer income and supporting families.
“We believe that, together with governments, NGOs and others in the cocoa industry, we can help improve the lives of cocoa-farming families and give children the chance to learn and grow in the safe and healthy environment they deserve.”
“Our goal is to have an additional tangible, positive impact on a growing number of cocoa-farming families, especially in areas where poverty is widespread and resources are scarce, and to help close the living income gap they face over time.
“Building on our longstanding efforts to source cocoa sustainably, we will continue to help children go to school, empower women, improve farming methods and facilitate financial resources. We believe that, together with governments, NGOs and others in the cocoa industry, we can help improve the lives of cocoa-farming families and give children the chance to learn and grow in the safe and healthy environment they deserve,” Schneider added.
Nestlé will introduce a range of products with cocoa sourced from this new programme, offering consumers the opportunity to support the improvement of the families’ livelihoods and the protection of children. This will start with a selection of KitKat products in 2023.
Nestlé Executive Vice President and Head of Operations Magdi Batao said: “Our actions can help catalyse change on an important topic that is so close to our hearts. They will drive accountability and transparency across the industry, at a time when customers, employees and communities increasingly expect companies to deliver on their shared values.
“By increasing traceability at scale, we will help build consumer trust in our products and respond to the growing demand for responsibly and sustainably sourced cocoa.”
Nestlé said its new programme offers a “novel approach to help support farmers and their families in their transition to more sustainable cocoa farming”. “The incentives will encourage behaviours and agricultural practices that are designed to steadily build social and economic resilience over time,” the company added.
Cocoa-farming families will be rewarded not only for the quantity and quality of cocoa beans they produce but also for the benefits they provide to the environment and local communities. These incentives complement the premium introduced by the governments of Côte d’Ivoire and Ghana that Nestlé pays and premiums Nestlé offers for certified cocoa. The cocoa is independently audited against the Rainforest Alliance Sustainable Agriculture Standard, promoting the social, economic and environmental well-being of farmers and local communities.
Nestlé pointed out that cocoa-farming communities “face immense challenges, including widespread rural poverty, increasing climate risks and a lack of access to financial services and basic infrastructure like water, health care and education”.
“These complex factors contribute to the risk of child labour on family farms. Together with partners, including governments, and building on a promising pilot program, Nestlé’s new initiative sharpens focus on these root causes of child labour,” the company stated.
Creating cash incentives to grow income
The programme rewards practices that increase crop productivity and help secure additional sources of income, with the aim of closing the gap to living income and protecting children.
Families can additionally earn up to CHF500 (US$540) annually for the first two years of the programme. Nestlé said that the higher incentive at the start will help accelerate the implementation of good agricultural practices to build future impact.
The financial incentive will level at CHF250 (US$270) as the programme starts to deliver tangible results. It is not paid based on the volume of cocoa sold and is inclusive to provide smaller farmers meaningful support.
The programme also offers financial incentives for spouses, empowering women and improving gender equality.
Examples of practices that Nestlé is incentivising include:
- School enrolment for all children in the household ages six to 16
- Implementing good agricultural practices, such as pruning, which increase crop productivity
- Performing agroforestry activities to increase climate resilience, like planting shade trees
- Generating diversified incomes, through growing other crops, raising livestock such as chickens, beekeeping or processing other products like cassava.
Payments will be delivered via a secure mobile service transfer to ensure traceability and cash incentives will be distributed when they are needed most, primarily during the back-to-school period and before the rainy season. Third parties, including International Cocoa Initiative and Rainforest Alliance, will work with Nestlé to monitor participation.
Helping farmers implement sustainable practices
Building on the results of an initial pilot in 2020 with 1,000 farmers in Côte d’Ivoire, Nestlé will expand the programme this year to include 10,000 families, before extending it to Ghana in 2024. The project will be assessed and adapted where necessary before its roll-out to all cocoa-farming families in Nestlé’s global cocoa supply chain by 2030.
The company will ensure farmers have the resources, training and social and financial structures to make lasting changes by:
- Enhancing the existing monitoring and remediation system to help identify, prevent and address child labour risk and increase school enrolment
- Offering families training through the Gender Action Learning System and on household financial planning and entrepreneurship
- Organising and training local groups to perform pruning and other beneficial agricultural tasks within a given cooperative each year
- Providing income diversification opportunities for farmers and their spouses
- Helping set up Village Savings and Loans Associations (VSLA), focused on women, to encourage savings and provide loans for small business opportunities.
Independent oversight will be provided by an advisory committee managed by IDH-The Sustainable Trade Initiative, which works to improve the sustainability of international supply chains.
Tracing cocoa from origin to factory
Nestlé said it will transform the global sourcing of cocoa to achieve full traceability and segregation of its cocoa products from origin to factory. “This new effort will help transform the supply chain of Nestlé and the broader industry,” the company added.
