Global Development Institute Blog

By Dr Judith Krauss, Post-doctoral Associate, Global Development Institute 

Cadbury’s decision to shift its sustainability focus away from Fairtrade towards its parent-company’s ‘Cocoa Life’ scheme has sent shivers down the spine of many Fairtrade supporters. The BBC (among others) has asked whether this may mean the end for Fairtrade. While it is certainly difficult news, I would argue that firstly, this is not an entirely new development, and secondly, we have to further investigate the implications of the move for cocoa sustainability and for Fairtrade, as they will only become clear over time and are subject to on-going negotiation.

The first observation is that this switch is only the latest example of companies replacing third-party oversight with first-party assurances. Gereffi et al.’s (2001) categorisation of certification schemes depending on who sets the rules, ranging from the company itself (first party) to trade associations (second party) to the third-party independent monitoring Fairtrade has prided itself on, is helpful in understanding the implications of this shift. First-party certification means that in future, Cadbury/Mondeléz essentially will vouch for its compliance with the rules it has largely set itself. As Professor Bob Doherty emphasises in his great The Conversation piece, Cadbury’s switch from the international social movement to a private scheme is disappointing, but not very surprising. Its parent company, Mondeléz, is by no means the only chocolate brand name manufacturer to rely on first-party initiatives. As much as Cadbury’s commitment to Fairtrade in 2009 paved the way for other sector heavyweights such as Ferrero or Mars to pledge 100% sustainable cocoa (cf. Professor Stephanie Barrientos’s paper for more details), increasingly more companies interpret ‘sustainable cocoa’ less in terms of independently certified supplies, and more in terms of their own programmes and understandings of sustainability. Nestlé’s Cocoa Plan uses UTZ and Fairtrade, but akin to Cadbury’s move, places an emphasis on increasing the volumes produced on Nestlé Cocoa Plan farms. Swiss chocolatier Lindt has unwaveringly pursued their own farming programme in combination with a Lindt Cocoa Foundation.

The implications of these shifts require further research. Firstly, it would be worth exploring what this increasing reliance on the company itself as a source of credibility means regarding what stakeholder priorities are paramount and how stakeholders justify their actions internally and externally. In particular, the question is to what degree market-based rationales prioritising prices and control win out vis-à-vis civic-based rationalisations emphasising value-driven, ethics-based philosophies (cf. Boltanski and Thévenot’s sources of justification, and Sylvander’s and Renard’s convention theory). Another question, drawing on Global Production Networks, is to what extent companies perceive their own corporate power to yield greater effectiveness and credibility than a pairing with the collective power of a non-governmental, independent certifier. Increasingly, businesses do not seem to consider Fairtrade or other certification schemes as a prerequisite to establish embeddedness within farmers’ territories. Equally, safeguarding their own position appears to win out over the benefit of having a certifier act as a ‘steward of virtue’ (Blowfield and Dolan, 2008) which would bestow their own credibility onto them.

In my PhD fieldwork investigating cocoa sustainability, a private-sector interviewee flat-out told me, much to my surprise: ‘Fairtrade is not sustainable.’ What the person meant was that the company did not consider the social movement to offer answers to the pressing concerns the business was battling.

Projections of cocoa demand outstripping supply by 2020 have caused rampant concerns in the industry. Declining cocoa prices and the livelihood’s lacking attractiveness to young generations, climate change and the environmentally degrading effects of productivity maximisation, as well as the concentrated cocoa marketplace have fuelled worries. Fairtrade in particular, having started out as a social movement, has had to reconcile commercial interests with its socio-political origins as a result of its growing popularity.

In cocoa sustainability, given the sector’s extreme situation, the trajectory appears to point rather clearly in the direction of companies assuming ever more control: in evidence are e.g. Mondeléz/Cadbury, Nestlé, Lindt and also Cargill and its ‘Cocoa Promise’ as an example among traders and processors. Of course, this also means that the hope of wresting control away from heavyweights in the Global North grows fainter by the day: it remains to be seen to what extent  growers in the Global South can contribute their own priorities to cocoa sustainability initiatives in the absence of non-governmental oversight.

In terms of the implications for Fairtrade, it remains to be seen to what extent cocoa’s extreme case has broader ripple effects. The optimists, in keeping with Fairtrade’s own somewhat unexpected validation of Cadbury’s move, may argue that the presence or absence of a seal is less material than the presence of livelihood improvements and genuine ‘sustainability’ for cocoa farmers. The pessimists may ask: if companies can successfully convince consumers that their own ‘cocoa promise’ or ‘cocoa plan’ are as good as or better than a Fairtrade seal, what is to stop them from entering into coffee pledges or banana programmes, ridding themselves of third-party monitoring and support? And: who is going to watch the watchers, who in this case are the same people who set the rules and need to gain profit and supplies from the supply chains that they monitor? In a pessimistic view, there is a real risk that any semblance of altruism is dissipating, with companies judging Fairtrade’s ‘value-added’ to be replaceable by their own assurances.

As these shifts continue to unfold, they will be subject to on-going discussion and negotiation between diverse stakeholders. However, it is fair to assume that we will remember 2016 as a seminal year for Fairtrade chocolate – although what precisely it means will only become clear over time.

Note: This article gives the views of the author/academic featured and does not represent the views of the Global Development Institute as a whole.