Report raises EUDR concerns over cocoa sector’s lack of progress tackling child labour and poverty

An industry study on the incoming EUDR deforestation regulations has found it is influencing sustainability improvements in cocoa supply chains – but also highlights a lack of progress on addressing child labour and tackling underlying poverty, reports Neill Barston.

The analysis from the Retailer Cocoa Collaboration (RCC), consisting of 11 groups from across the UK and Europe, including Aldi, Carrefour, Lidl, M&S, Tesco and Waitrose, identified areas where human rights and environmental challenges were most prevalent.

As the collective revealed, its report is based on a questionnaire sent to nine global cocoa traders prevalent in RCC Member supply chains, assessing their performance during 2023 against a range of social and environmental metrics.

According to its findings, indirect supply chains were most at risk as hotspots for key issues of deforestation and child labour. This relates to situations where traders do not buy directly from the cocoa farmer, which can comprise the majority of a trader’s cocoa supply. Nearly all commitments and initiatives cover just the direct portion of a trader’s supply chain (i.e. when the trader buys directly from a cocoa farmer), leaving risks of unchecked human rights abuses and deforestation in a significant proportion of supply chains.

Notably, the average proportion of a trader’s direct supply of cocoa traceable to farm has jumped from 52% in 2022 to 71% in 2023- an increase of 19 percentage points. Three traders were able to report near-full traceability of their direct supply chain.

“This is welcome news,” said Holly Cooper, the report’s lead author. “However, it’s a different story when it comes to cocoa from indirect sources.”

In 2022, the average proportion of a trader’s indirect supply of cocoa traceable to farm was just 9%. In 2023, this increased to 22%. “This increase in traceability is a step in the right direction,” said Holly “But traders source as much as 97% of their cocoa indirectly, so this means that overall, the sector is not yet ready for the EUDR. More fundamentally, this lack of traceability means the sector has significant blind spots in its ability to understand and address sustainability risks in the cocoa supply chain”

Furthermore, the report highlights some progress in tackling cocoa-linked deforestation. Overall, while most traders now have a zero deforestation commitment and policies in place, these are nearly always limited in scope by geography and/or exclude land conversion.

Another significant issue emerged in that the report noted there is a distinct lag when it comes to paying farmers a living wage and eradicating child labour – against a backdrop of cocoa prices rising on Futures markets reaching $12,000 at tonne last month, against farm gate prices paid direct to farmers being about a fifth of that at $2,470 a tonne.

Furthermore, the report observed that only five traders in its study group reported data on the use of Child Labour Monitoring and Remediation Systems (CLMRS), which remain a key tool for traders to tackle child labour. Significantly, none of the traders reported CLMRS use within indirect supply chains, creating a very significant risk of child labour occuring.