The Importance of CSR and the Issue of Child Labor in the Cocoa Industry - Research Paper Example

The Importance of CSR and the Issue of Child Labor in the Cocoa Industry - "Africa" Child labor is considered as a significant commercial issue for several organizations which are associated with cocoa industry. Significant level of forced child labor has gained considerable media attention with respect to cocoa production particularly in the African region. The use of child labor in cocoa production has been regarded as a significant labor issue in the cocoa supply chain process. Nowadays, several industry players have acknowledged the issue of child labor in their production of cocoa and have engaged in certain activities to address this issue. The experience of child labor issue in cocoa industry delivers significant lessons to the stakeholders who are related with the supply chain procedure of cocoa. It has been recognized that every stakeholder is liable for the issue of child labor in cocoa production and appropriate CSR initiatives must be applied for overcoming this issue. Table of Contents Abstract 2 Introduction 4 Literature Review 5 Cocoa Industry 5 Child Labor in African Cocoa Industry 7 CSR Implementation for Eradicating Child Labor in Cocoa Industry 9 Methodology 11 Theory 12 References 16 Bibliography 20 Introduction Child labor is considered as a sensitive issue in the international commercial practices. Child labor has existed since log time. In several nations, many children are used to suffering every day due to the bane of child labor and they grow with grueling memories which not only destruct their future, but the future of the nation as well. Among other industries, cocoa industry has been considered as one of the most vital sectors, which involves child labor by a considerable extent. During 2000 to 2001, a study of International Labor Office (ILO) reported that in West African region, children were being marketed and engaged in harmful and slave-like situations in cocoa businesses. Reviews were also conducted in the year 2002 in order to illuminate the occurrence of child labor in cocoa industry in several West African nations. From the review, it has been found that about 284,000 children were employed in cocoa firms with unsafe working situations. In a number of cocoa firms, it has been found that children perform for in excess of 12 hours in a day. These child laborers are less likely to take school education (International Labour Office, 2005). Children are considered as the future of a nation. However, it is apparent that a number of children are used for cocoa production in order to minimize the manufacturing expenses and make higher revenue. It can be observed that the key cultivators of cocoa are less concerned regarding this unethical trade practice. All stakeholders who are related with the long and complex supply chain of cocoa industry are responsible for the issue of child labor. It has also been identified that Corporate Social Responsibility (CSR) initiatives taken by the major players in the cocoa industry is inadequate to deal with the issue of child labor. Considering this aspect, the report is based on the issue of child labor in the cocoa industry. The objective of the report is to discuss if the CSR activities performed by the chocolate manufacturing organizations provide enough support for the eradication of child labor. Literature Review Cocoa Industry Cocoa is essentially used in the production of chocolate products. Cocoa is acquired from processed beans of fruit shells which are derived from cacao tree (Salaam-Blyther & et. al., 2005). According to Boas & Huser (2006), child labor has become an increasingly vital subject in the cocoa industry. The idea of chocolate production has been significantly challenged due to the image of cocoa that it is being produced by children and they are severally abused by the famers and cocoa procurers. Children have been found to be working for long periods in cocoa firms without much attention from the outside world. After the publication an article titled ‘bonded labour’ by New York Times, the issue of child labor has attracted the trade unions, consumer and Non-Governmental Organizations (NGOs) (Boas & Huser, 2006). According to Griek (2010), cocoa industry has gained major negative publicities towards labor right issues. From the year 2011, media had started to cover offensive labor activities especially activities related to forced child labor in cocoa industry. Several NGOs have criticized the major industry players for their suspected involvement in child labor. Although the major players which are a part of the cocoa industry are not directly associated to child abuses at the firm level, it is assumed that they are linked to child labor to a certain degree (Griek, 2010). Sackett (2008) stated that cocoa industry has benefitted from the utilization of forced labor in West African region. Presently, cocoa segment has developed into a multi-billion dollar industry however it cannot alleviate the unpleasant labor issues. Cocoa firms employ thousands of children. In poverty afflicted developing nations, the decision for a child to work is developed from financial requirements (Sackett, 2008). From the stage of production to sales, cocoa products go through a long and complex supply chain. The following figure will show the general supply chain process of cocoa product: Source: (Griek, 2010) From the above figure, it can be observed that cocoa supply chain comprises several intermediaries between producers and final consumers. The middlemen perform under contract for the local traders and exporters who sequentially sell cocoa to the international chocolate production companies. With respect to cocoa consumption, North America and Western Europe consume about two-thirds of international cocoa production (Schrage & Ewing, 2005). Child Labor in African Cocoa Industry According to Schrage & Ewing (2005), child labor is a common issue in the farming segment and is widespread in those nations which represent most of the cocoa supply. The cocoa bean is usually produced by small firms which apply labor-intensive methods. According to the assessment of International Cocoa Organization (ICCO), about 90% of world’s cocoa is harvested by 3 million small firms. In the international context, Western African region alone represents 10.5 million cocoa producers. Four West African nations namely Ghana, Nigeria, Cote d’Ivoire and Cameroon rule the international supply chain of harvesting almost 70% of cocoa beans globally (Griek, 2010). The study of International Institute of Tropical Agriculture (IITA) in the year 2002 projected that about 625,000 children were involved in minimum one activity of cocoa production. Among these children about 12,000 had no relationship with the family members. Sackett (2008) stated that children in cocoa production are significantly involved in harmful activities and subjected to maltreatment. Children in cocoa firms are typically engaged in several difficult jobs and perform their work for similar time periods as adult workers with lower pay. Their jobs range from transportation of heavy loads to the use of dangerous tools. According to a survey of US Department of Labor in the year 2005, it has been found that about 92% children who were engaged in cocoa production in Guinea carry heavy load which often resulted in injuries. The report also stated that farmers hold back the meals or physically misuse the children for not satisfying the required expectations or for making any effort to escape from work. Apart from physical effect, child labor has also been discovered to hamper education of the affected children which in turn leads to poor lifestyle (Sackett, 2008). A report of Tropical Commodity Coalition depicted that in the year 2007 and 2008 almost 3.7 million tonnes of cocoa beans were produced. It was also estimated that the production will increase due to high demand of cocoa. In order to meet the growing demand of cocoa around the world, child labor is used for cocoa cultivation. In accordance with the study of International Labour Rights Forum, it can be observed that in pursuit of inexpensive labor, cocoa farmers use children for production purposes. According to a report of Payson Center for International Development for the year 2007 and 2008, it has been found that approximately 819,921 and 997,357 children were employed on cocoa production in Cote d’Ivoire and Ghana respectively. Moreover, US Congressional Research Service had estimated that approximately 284,000 children in four major cocoa production regions of West African area were performing under hazardous conditions. It was also described that above 60% of children employed in cocoa production practices are younger than 14 years age. They are regularly forced to work for long periods by utilizing unsafe tools which are vulnerable to pesticides and even they are bounded by physical exploitation (Griek, 2010). A report of Schrage & Ewing (2005) stated that in West Africa, children were not only enforced to work and abused in cocoa firms but also were marketed by cocoa farmers and their representatives. An assessment of The United Nations Childrens Fund (UNICEF) depicted that several children are sold as slaves every year in the West and Central African region. The UNICEF’s report also stated that during the year 2002 about 200,000 children were marketed in these regions through deliberate settlements of children by the parents for a specific rate or for a specific time period through which the arbitrator collected the earnings paid by the firm (Schrage & Ewing, 2005). CSR Implementation for Eradicating Child Labor in Cocoa Industry The global cocoa industry had invited ILO to play advisory roles in order to address the child labor problem. The cocoa industry is also interested in CSR activities to deal with child labor for the production of cocoa. Though the stimulus of NGOs who are involved in child labor related issues of cocoa industry, several reputed chocolate manufacturing companies have started CSR activities to solve the problem of child labor (International Labour Office, 2005). The CSR activities of three famous chocolate manufacturing companies are described below: Kraft/Cadbury Cadbury, a famous chocolate manufacturing brand, had acknowledged the use child labor in the cocoa industry. In the year 2010, Kraft had acquired Cadbury and started to grow into one of the largest chocolate manufacturing organizations internationally. Cadbury’s products such as ‘Cadbury Dairy Milk’, ‘Milk Chocolate Block’ and ‘Dairy Milk Easter’ are Fairtrade Certified (Fairtrade forbids involuntary labor, child labor, employee discrimination and safeguards ‘freedom of association’ and collective bargaining rights) (GreenAmerica, 2010). Most of the cocoa of Cadbury are acquired from Ghana. In the year 2011, Cadbury had agreed to acquire about 3900 tonnes of Fairtrade Certified beans from Ghana. Cadbury also paid cocoa agribusiness associations in Ghana a Fairtrade Premium of US$ 150 per tonne of cocoa in 2010 and US$ 200 per tonne of cocoa in the year 2011 for cocoa. Cadbury had organized programs in liaison with local administrations, agriculturalists and communities to secure financial, social and ecological sustainability to around millions of cocoa farmers in India, Ghana, Caribbean and Indonesia (World Vision Australia, 2012). Unilever Unilever is also involved in ethical trading and sourcing of cocoa. In the year 2011, about 37% of cocoa of Unilever was sourced through Rainforest Alliance certification (Rainforest Alliance certification forbids the utilization of involuntary labor, child labor and employee discrimination) (GreenAmerica, 2010). In the year 2012, Unilever signed a long-run partnership agreement with a high quality cocoa supplier in order to enhance the capability to source cocoa from socially responsible sources (Unilever, 2013). Unilever had committed that by 2020, it will source all of the agricultural products though sustainable ways (Unilever, 2013). Nestle Nestle, the other famous chocolate manufacturing brand, also accepted the use of child labor in the cocoa industry. Most of the cocoa of Nestle are procured from Cote d’Ivoire. In the year 2011, Nestle had declared an agreement with Fair Labor Association in order to address the child labor issue in case of supply of cocoa from Cote d’Ivoire region. In the year 2009, Nestle had organized a program for investing about £65 million to address financial, social and ecological concerns which are faced by cocoa firms. In the year 2012, Nestle had promised to source cocoa by ethical ways (World Vision Australia, 2012). Methodology Considering the above issues, the report is based on analyzing the child labor issue in cocoa industry by focusing on African region. Furthermore, the report also develops thoughts for eliminating the child labor practices in cocoa industry. In this context, various CSR activities that can be taken by organizations as well as government to overcome the child labor issue have been discussed in the report. In this report, qualitative approach has been followed. The major reason for using qualitative approach is that the subject is concerned with non-numerical elements relating to labor right issues and unethical labor practices along with other relevant norms in the field of labor. Notably, only secondary data has been used in the report in order to discuss the subject. The data has been collected from various journals, articles and academic sources. In this report, CSR activities taken by multiple organizations have been used for analyzing the subject. Furthermore, detailed study regarding cocoa industry has also been made for understanding the breadth of the child labor issue in this segment (Williams, 2007). Theory From the above literature review, it can be observed that most of the chocolate manufacturers consider the elimination of child labor can only be possible through developing partnerships with government, NGOs, cocoa farmers and other communities. Although there has been a considerable progress made due to these efforts of different chocolate manufacturing organizations, but child labor in cocoa production still persists to a certain extent. It verifies that the efforts of chocolate manufacturing organizations to deal with child labor are not sufficient. Thus, more effort is required for gaining success in elimination of child labor from cocoa production. It can be observed that the complex supply chain procedure of cocoa industry is a big challenge for organizations to deal with the child labor issue. From this point of view, it can be stated that no member who is involved in the supply chain procedure i.e. from producers to final consumers want to take the responsibility of the child labor problem. Since the supply chain system is long-drawn and complicated, no individual or entity has any potential control over the cocoa plantation activities. Due to this reason, they cannot be directly held liable for the child labor issue. From the above review, the major issues that have been identified for child labor in the cocoa industry are as follows: Breach of Human Rights In cocoa industry, forced child labor and child marketing are considered as breach of human rights which require active involvement from government and industry players. The different industry players cannot secure human rights in cocoa industry without the active contribution of government. In cocoa industry, certain major factors which result in child labor are difference between international and national regulations, poverty, lack of education and weak laws. The existing differences between international and national regulations of labor related practices generate a conflict among administrators to abolish the child labor issue. Furthermore, poverty also makes people to traffic children in order to gain monetary gains. Besides, it can also be observed that a lack of awareness among people to recognize the negative impact of child labor also contributes towards the violation of human rights. There are no strong laws in the area of trafficking which make it quite challenging for industry players to stop the critical issue of child labor (Casely-Hayford, 2004). Participation of Industry Players in Child Labor Issue From the above review, it is apparent that the industry players did not taken proper initiatives against child labor until media had highlighted the issue in front of the public. CSR practices in cocoa industry came into effect though the collection of information regarding the actual situation of child labor. Although different industry players have attempted to address child labor issue in the cocoa segment, only a few organizations have set clear targets and deadlines for eliminating child labor. Besides, it can also be observed that consumer pressure on the issue of child labor in cocoa industry is not much high. Only a loss of reputation drives the industry players to involve in CSR activities for dealing with child labor (Abbott & et. al., 2005). As specified by numerous studies, the major reason for child labor in the cocoa industry can be stated as the complex supply chain procedure comprising numerous intermediaries between consumers and producers. Thus, every stakeholder who is involved in the supply chain procedure is accountable for child labor in cocoa industry. Every stakeholder must fulfill their responsibility to minimize child labor in cocoa industry. On the basis of the evaluation of child labor situation, the following ideas can be made for reducing child labor in cocoa industry: Government Involvement Government involvement is the most vital aspect for reducing child labor in the cocoa industry. Since an industry cannot directly develop or maintain laws and principles, government must involve in the cocoa segment to establish certain policies in order to fight the issue of child labor. Ethical leadership and honesty is considered as the most vital factor with respect to the child labor problem. Since poverty and low education are among the key social aspects which support child labor, enhancing the awareness of parents and delivering support to them can help to mitigate child abuse. Furthermore, initiatives of governments to provide financial support to the poor families can also help to reduce child labor by a considerable extent (Robson, 2010). Comprehensive Examination of Cocoa Supply Chain Comprehensive examination can be conducted on cocoa supply chain which can help to recognize the most accountable groups for the issue of child labor. Thus, after recognizing the most responsible groups, measures can be taken for violating human rights. For instance, it is known factor that child labor occurs at the firm level, because cocoa producers want to generate more profit by minimizing labor expenses. Thus, changes in the price setting of cocoa can help to solve the child labor issue (Phillips & Tallontire, 2007). Management System Finally, organizations must develop policies in such a way which proscribe providers from utilizing child labor in order to produce cocoa. Strict management systems should be developed to monitor the compliance of organizational objectives with the policies. With respect to the procurement of cocoa, organizations must set specific targets for increasing the proportion of certified cocoa and developing long-term obligations to raise assurance. Organizations also require enhancing their capability at the manufacturer level by instituting programs which can train farmers regarding labor and human rights related aspects along with sustainable agricultural practices. Such programs must be incorporated into organizational policies to enhance the procurement of sustainable cocoa. Ultimately, organizations must enhance overall transparency of supply chain procedure by revealing procurement promises, observing and reviewing activities and performance consequences (Abbott, 2003). References Abbott, P., 2003. Toward More Socially Responsible Cocoa Trade. International Agricultural Trade Research Consortium. [Online] Available at: http://ageconsearch.umn.edu/bitstream/14603/1/wp03-03.pdf [Accessed February 08, 2013]. Abbott, P. C. & et. al., 2005. Corporate Social Responsibility in International Cocoa Trade. Purdue University. [Online] Available at: https://ifama.org/events/conferences/2005/cmsdocs/1035_Paper_Final.PDF [Accessed February 08, 2013]. Boas, M. & Huser, A., 2006. Child Labour and Cocoa Production in West Africa. FAFO. [Online] Available at: http://www.fafo.no/pub/rapp/522/522.pdf [Accessed February 08, 2013]. Casely-Hayford, L., 2004. Situational Analysis of Child Labour in the Cocoa Sector of Ghana. The International Cocoa Initiative. [Online] Available at: http://www.web.net/~afc/download3/Education%20Research/ICI%20Cocoa%20Studies/Final%20Report%20on%20Sit%20Analysis%20of%20Child%20Labour%20in%20Cocoa.pdf [Accessed February 08, 2013]. Griek, L., 2010. Bitter Harvest: Child Labour in the Cocoa Supply Chain. A Global Leader in Sustainability Analysis. [Online] Available at: http://ussif.org/resources/research/documents/Childlabourinthecocoasupplychain_Jantzi.pdf[Accessed February 08, 2013]. GreenAmerica, 2010. Get Child Labor Out Of Your Chocolates For Halloween. Chocolate Scorecard. [Online] Available at: http://www.greenamerica.org/PDF/2010chocolatescorecard.pdf [Accessed February 08, 2013]. International Labour Office, 2005. Combating Child Labour in Cocoa Growing. International Program on Elimination of Child Labour. [Online] Available at: http://www.ilo.org/public//english/standards/ipec/themes/cocoa/download/2005_02_cl_cocoa.pdf[Accessed February 08, 2013]. Phillips, D. & Tallontire, A., 2007. Drivers and Barriers to Sustainable Purchasing Practices in the Cocoa Sector. Natural Resources Institute. [Online] Available at: http://www.nri.org/projects/nret/responsible_cocoa.pdf [Accessed February 08, 2013]. Robson, P., 2010. Ending Child Trafficking in West Africa Lessons from the Ivorian Cocoa Sector. Anti-Slavery International. [Online] Available at: http://www.antislavery.org/includes/documents/cm_docs/2011/c/cocoa_report_for_website.pdf [Accessed February 08, 2013]. Salaam-Blyther, T. & et. al., 2005. Child Labor in West African Cocoa Production: Issues and U.S. Policy. CRS Report for Congress. [Online] Available at: http://www.nationalaglawcenter.org/assets/crs/RL32990.pdf [Accessed February 08, 2013]. Schrage, E. J. & Ewing, A. P., 2005. The Cocoa Industry and Child Labour. JCC, vol. 18, pp. 99-112. Sackett, M., 2008. Forced Child Labor and Cocoa Production in West Africa. Topical Research Digest: Human Rights and Contemporary Slavery, pp. 84-99. Unilever, 2013. Sustainable Cocoa & Sugar. Sustainable Living. [Online] Available at: http://www.unilever.com/sustainable-living/sustainablesourcing/cocoa-sugar/ [Accessed February 08, 2013]. Unilever, 2013. Sustainable Sourcing. Sustainable Living. [Online] Available at: http://www.unilever.co.uk/sustainable-living/sustainablesourcing/ [Accessed February 08, 2013]. Williams, C., 2007. Research Methods. Journal of Business & Economic Research, Vol. 5, No. 3, pp. 65-72. World Vision Australia, 2012. Chocolate Scorecard. Libraries. [Online] Available at: http://www.worldvision.com.au/Libraries/DTL_fact_sheets/ChocolateScorecard_Revised_Dec_2012_FINAL.pdf [Accessed February 08, 2013]. Bibliography Alongi, T., 2011. Côte d’Cocoa The Political and Social Effects of Côte d’Ivoire’s Cocoa Sector. Jackson School Focus, Vol. 2, No. 2, pp. 62-73. Harkin, T., 2012. The Child Labor Cocoa Coordinating Group. 2011 Annual Report. [Online] Available at: http://www.dol.gov/ilab/2012CLCCGAnnualReport.pdf [Accessed February 08, 2013]. International Labour Rights Forum, 2012. Chocolate Company Commitments to Ending Abuses in Cocoa Production in West Africa. Justice & International Mission. [Online] Available at: http://www.laborrights.org/sites/default/files/publications-andresources/Chocolate%20Company%20Commitments.pdf [Accessed February 08, 2013]. Mondelēz International, 2011. Creating a More Delicious World. Kraft Foods. [Online] Available at: http://www.mondelezinternational.com/SiteCollectionDocuments/pdf/KraftFoods_DeliciousWorld2011.pdf [Accessed February 08, 2013]. Read More