Sustainable Management of Nestleâ•Žs Cocoa Supply Chain in the Ivory

Improving Workers’ Lives Worldwide Sustainable Management of Nestlé’s Cocoa Supply Chain in the Ivory Coast—Focus on Labor Standards JUNE 2012 Executive Summary In November 2011, FLA commissioned a team of 20 local and international experts to conduct an assessment of Nestlé’s cocoa supply chain in the Ivory Coast. The assessment team included representatives from the Centre de Recherche et d’Action pour la Paix, Abidjan; Afrique Secours et Assistance; Human Resources Without Borders; the Sustainable Livelihoods Foundation, and the FLA. The goals of the assessment were to: map stakeholders in Nestlé’s cocoa supply chain; map Nestlé’s cocoa supply chain in the Ivory Coast; and assess the associated labor risks in Nestlé’s cocoa supply chain. FLA’s assessment of the cocoa supply chain builds on existing research and focuses not on counting the number of children working in the Discussion with farmers in a camp industry, but rather on evaluating the root causes and means available to build a robust monitoring and remediation system. The report identifies gaps in Nestlé’s internal management systems and their effect on labor risks in the supply chain. The report also provides detailed recommendations to Nestlé, the government, and other international buyers on how to mitigate risks to workers throughout the global supply chain. The field visits to the Ivory Coast were initially planned for December 2011, but due to security reasons around parliamentary elections, the visits by the assessment team were delayed until January 2012. To develop a full understanding of the risks facing workers in the sector, the assessment team consulted with a number of government institutions, civil society organizations and local associations in the Ivory Coast. They also visited seven Nestlé suppliers representing 79% of the volume of beans or cocoa products purchased by Nestlé from the Ivory Coast in 2011. The assessment gathered data through: •individual and group interviews; •on-site observations in processing facilities, buying centers, cooperatives, nurseries and farms; •documentation review of The Nestlé Cocoa Plan and at the suppliers, cooperative and farm level; and •observations in the villages and camps. In the course of three field visits, the assessment team visited 87 farms and interviewed a representative sample of 466 men, women and children on the farms. Overall more than 500 interviews were conducted during the assessment. 1 www.fairlabor.org Stakeholder Mapping Contents The assessment team developed a comprehensive map of stakeholders, including local and national actors in the Executive Summary .......................................................... 1 governmental, nongovernmental, and private sectors. I. Introduction ................................................................... 4 Most existing programs and stakeholder efforts II. Background ................................................................... 6 concentrate on the elimination of the worst forms of 1. The Cocoa Sector in the Ivory Coast ................ 6 2. Nestlé’s Strategy Related to Cocoa Sourcing child labor rather than on aspects such as forced in the Ivory Coast ................................................. 8 labor, wages and benefits, and health and safety even III. Methodology ...............................................................11 though they could have a causal effect on the 1. Assessment Team .................................................11 presence of child labor. 2. Assessment Stages ..............................................11 3. Stakeholder Engagement ..................................13 4. Data Collection ....................................................14 Supply Chain Mapping 5. Tools for Data Collection ....................................18 The assessment team mapped the cocoa supply chain IV. Findings..... ..................................................................18 in great detail, including Nestlé’s headquarters in 1. Stakeholder Mapping ..........................................18 Switzerland R&D in Abidjan and local operations in the a. Governmental Stakeholders ........................19 Ivory Coast; Tier 1 suppliers of Nestlé1; subsidiaries in b. Non-Governmental Stakeholders ...............21 c. Local Communities and Village Level West Africa of Tier 1 suppliers; processing facilities and Committees ................................................... 23 buying centers in the Ivory Coast; third-party service d. Conclusions of Stakeholder Mapping ....... 23 providers; traitants; cooperatives; pisteurs; farmers; 2. Supply Chain Mapping ....................................... 25 sharecroppers; and workers. a. Supply Chain Actors .................................... 25 b. Cocoa Bean Processing and Cocoa procurement in the Ivory Coast occurs to Procurement ................................................29 a large extent (80-85%) outside of cooperatives and c. Farm Profile and Estimated Volumes ........31 through the “unorganized” sector, involving many d. Conclusions of Supply Chain Mapping ..........31 intermediaries. The majority of the actors (pisteurs, 3. Risk Assessment ................................................. 32 3.1 Task and Risk Mapping ..................................... 32 coxers and farmers) are not registered. Cooperatives 3.2 Risks in Internal Management Systems ........34 involved in the sustainability programs of companies a. Policies ...........................................................34 exporting cocoa from the Ivory Coast make up a small b. Procedures .................................................... 35 c. Results ........................................................... 38 proportion of the cocoa market. Additionally, the d. Conclusions on Internal Management supply chains are not stable, as participants sell and buy Systems ..............................................................39 from anyone. Furthermore, competition around good 3.3 Labor Risk Assessment .................................. 40 quality suppliers is intense and cooperatives maintain a. Employment Relationship ......................... 40 b. Forced Labor .................................................41 relationships with several buyers and adjust the c. Child Labor .....................................................41 volume supplied to them depending on the terms they d. Harassment or Abuse ..................................46 are offered. This instability in the supply chain make e. Non-Discrimination ......................................46 transparency, monitoring and remediation f. Health, Safety, Environment ....................... 47 g. Freedom of Association and efforts challenging. Collective Bargaining ..................................50 h. Hours of Work ...............................................51 Risk Assessment i. Compensation ............................................... 52 j. Conclusions on Labor Standards Risks .....54 The assessment of risks in Nestlé’s cocoa supply chain focused on child labor; the presence and V. Overall Conclusions ................................................... 55 effectiveness of the internal management systems VI. Recommendations ...................................................56 a. To the Government of the Ivory Coast .....56 within Nestlé’s supply chain with regard to labor b. To Nestlé and Other Industry Members... 57 rights; and adherence to labor standards embodied in c. Future Research ........................................... 58 the FLA Workplace Code of Conduct and Compliance Annex 1: Pictorial Journey of Cocoa Beans ................59 Benchmarks. A complete analysis of the risks related Glossary ...........................................................................66 to Nestlé’s internal systems, along with an overview of associated risks with respect to the FLA Code of 2 www.fairlabor.org Conduct, can be found in Section IV.3. Children are at risk in every phase of cocoa production. Such risks include injury from machetes during the preparation of the land, maintenance of the farm and harvesting of the cocoa beans; injury from physical strain during the nursing and planting of seedlings as well as carrying heavy loads; and exposure to harmful chemicals in the application of fertilizers and pesticides. A full description of child labor risks can be found in Table 10. The Nestle Cocoa Plan (TNCP) offers a good starting point to improve labor conditions on cocoa farms in the Ivory Coast because its components could provide holistic solutions to mitigate some of the issues the cocoa sector is grappling with apart from child labor. To make TNCP a well-rounded developmental program, some improvements have to be made, followed by the scaling up of the program. Conclusions Among the main conclusions of FLA are: •Nestlé, due to its leverage and the volume of beans procured, is well positioned to make a large Suggestions box at a TNCP cooperative positive impact on the livelihoods of workers in the cocoa supply chain. •The Nestlé Cocoa Plan and participation in other other industry actors. All parties should therefore initiatives provide the building blocks for a more combine forces in enhancing supply chain mapping robust and deep reaching program. and transparency, monitoring and capacity •With some adjustments and improvements, TNCP building programs. has the makings of a well-rounded developmental •Besides efforts from the private sector, farmers program. Enhanced monitoring and increased and their communities, the

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