Norges Bank Investment Management and APG Asset Management, the managers of Europe’s two largest pension funds with more than half a trillion euros in combined assets, have called for further action on child labour in cocoa production.
The plea follows last month’s meeting of the World Cocoa Foundation trade body in Utrecht, which the funds say “failed to meet our expectations that companies should agree on a common systematic action plan with clear targets for eliminating child labour in the cocoa supply chain”.
The funds say that despite repeating pledges on sustainable production, the industry is still well short of meeting a pledge made in 2001 – the Cocoa Industry Protocol – to eliminate child labour in the sector. They said: “It has been nearly 10 years since the industry vowed to eliminate child labour. It needs to make good on that promise.”
NBIM, the manager of the NOK2.7trn (€347bn) Norwegian Global Pension Fund and APG, which runs the €208bn assets of Dutch civil service fund ABP, began talks with cocoa suppliers and chocolate producers in 2008 to find out how they monitor the risk of child labour in West Africa, source of about 70% of the world’s cocoa. They asked companies to develop and disclose action plans to monitor and combat childlabour in their operations and supply chains. “The response so far has been varied,” the duo stated. Although some companies have increased their efforts, “more needs to be done as the overall risk of child labour in cocoa production remains high”.
Rabobank, which hosted the Utrecht meeting, said certification of cocoa famers is one option but not “the silver bullet to sustainability”. It would like to see cocoa farmers organised into cooperatives with capitalisation structures.
Despite the disappointments, the funds see a “notable shift” in what companies focus on in talks with investors. From emphasising the difficulties at the start of the dialogue, the companies are now showing “more willingness” to take direct responsibility for child labour issues. They do this in part by buying more cocoa directly from farmers, working to improve social conditions and taking more measures to monitor risk.
The cocoa industry would point to projects such as the International Cocoa Initiative. Nestle, for example, has a supplier code on child labour and supports the United Nations Global Compact’s labour principles.
The funds note that the European Commission is preparing policy options on how products made by children could be banned from the European market. Link to NBIM article