KitKats in question: Nestlé’s ethical alternative fails to convince Fairtrade fans

When food giant Nestlé announced it would stop sourcing some Fairtrade ingredients, it sparked much dismay. But, since the company was actually shifting to a different form of certification, was the move justified – and what does it mean for the Fairtrade mark? Cass Hebron explores.

Does your mid-morning chocolate bar undermine fair trade? Nestlé UK and Ireland sparked controversy in June this year with its decision to stop sourcing Fairtrade cocoa and sugar for its popular chocolate bar KitKat, currently sold in 16 countries. The corporation announced it would instead use Rainforest Alliance certification under its own Nestlé Cocoa Plan from October, with the ultimate aim to shift all their products to this scheme. 

Nestlé says this ‘in-house’ certification would help guarantee one unified certification for responsible cocoa sourcing across all its products (the Cocoa Plan is already in use for its Nesquik and Milkybar brands), and it has pointed out that Rainforest Alliance has a particular emphasis on good agricultural practices. But advocates of Fairtrade – the most widely-recognised ethical mark in the UK, which sets a minimum price requirement for produce – have decried the decision, saying that the move will damage the livelihoods of 27,000 Fairtrade cocoa and sugar farmers in Africa. Unlike Fairtrade, Rainforest Alliance has no minimum price: farmers must follow a set of sustainable agricultural practices, but the price at which they sell their produce can fluctuate.

 

Schools and water pumps

Dr Nyagoy Nyong’o, director of Fairtrade Africa, which builds a network of producers in Africa and supports them in accessing the Fairtrade market, says that the KitKat decision will cause farmers in the Ivory Coast, Fiji and Malawi to lose nearly £2m in 'Fairtrade premium'. This additional sum, paid on top of the selling price of products, is used by farmers and producers to invest in local community projects. 

At a time when Covid-19 makes international trade particularly unstable and unpredictable, farmers have used the premium to protect themselves and their community from the risks of the pandemic, both health and economic. “Farmers decide as a cooperative how to use the premium based on their local needs, such as water, schools, classrooms,” Nyong’o says. “This premium is part of the Fairtrade model of empowerment that allows producers to make democratic choices about their future.” 

That Nestlé chose this period of global crisis to break the relationship between KitKat and Fairtrade is hard to hear

A cooperative of Ivorian Fairtrade farmers expressed their dismay at Nestlé’s news in a joint letter back in June. “The decision to stop buying cocoa and sugar on Fairtrade terms means fewer schools, water pumps, health centres and the end of many other essential services,” they wrote. “That Nestlé chose this period of global crisis to break the relationship between KitKat and Fairtrade is hard to hear.” 

 

The new cocoa plan on the block

So if small producers are in critical need of support, why did Nestlé choose to leave? In a statement, the corporation said it aimed to ‘harmonise’ its cocoa sourcing schemes through its own Nestlé Cocoa Plan by 2025, and that it will continue to pay financial assistance to farmers. 

A Nestlé spokesperson told Pioneers Post this month that both the mission of the Rainforest Alliance and its Nestlé Cocoa Plan demonstrated “that we want to help further improve the lives of cocoa farmers through a number of different initiatives and by increasing our overall investment in sustainable cocoa”. Before making the decision to leave and throughout its notice period with Fairtrade, Nestlé had “listened carefully to farmers” and “used their input to create a comprehensive package to support their needs through the transition”.

We want to help further improve the lives of cocoa farmers through a number of different initiatives and by increasing our overall investment in sustainable cocoa

According to its website, the corporation’s Cocoa Plan aims to help farmers through three pillars – better farming, better lives and better cocoa. Actions include training in better agricultural practices, a plan to tackle deforestation, and promotion of gender equality in the cocoa farming communities. The 2019 Nestle Cocoa Plan progress report reveals some of the work being done, including identifying children at risk of child labour in their supply chains and helping to integrate them into schools instead. This year, Nestlé donated 10m Swiss francs [£81.9m] to the Red Cross for Covid-19 work, “including cocoa farming communities”. 

 

 

However, the strategy mentions nothing of a current price premium for farmers similar to that offered by Fairtrade, although among its 2020 plans it lists an intention to pay a ‘living income differential’ on top of the price of the cocoa. In the ‘challenges’ the Nestlé site lists in implementing its Cocoa Plan, it states: “How do we help farmers to achieve a living income? There is a lot of debate and work going on, and some very helpful reports, but no clear answers yet.”

 

Transparency crucial to a green recovery

Nestlé’s move comes at a critical time for the global economy: the UK, UN and EU have all committed to a ‘green recovery’ from Covid-19, and research suggests there’s increasing public demand for products which support a green future

As more developed countries gear up to rebuild the post-Covid economy, people working in food supply chains remain in a fragile situation, facing delays in selling their produce, the threat of the virus, and an unstable global market. “This crisis has shown us how fragile our food supply chains are,” says Nyong’o. “Businesses and consumers really have to reassess what Fairtrade has argued for many years, about how poverty, human rights, environmental damage are linked to the food that they buy.” 

This crisis has shown us how fragile our food supply chains are

But there’s a concern that Nestlé’s move could undermine this progress towards a sustainable recovery. The NGO Friends of the Earth UK, for example, has named sustainable consumption, and trade deals that safeguard from environmental and human rights violations, as crucial elements for a truly sustainable economy

This is because the exploitation of food producers and unsustainable agricultural techniques threaten the resilience of the food system against future shocks like pandemics and climate-related disruptions. When farmers are unable to afford healthcare or tools to develop more eco-friendly farming methods, it can fuel extreme deforestation and damage the health of the planet and that of the farmers.

With businesses and consumers also feeling the economic toll of Covid-19, some may be tempted to value price over justice in the supermarket, especially when a lack of corporate transparency makes it difficult for people to know which sustainability claims to believe.

However, Tim Aldred, head of policy at the Fairtrade Foundation, the UK non-profit that licenses the use of the Fairtrade mark on UK products and promotes awareness of fair trade practices, has a more optimistic outlook. Although Nestlé’s decision came at an unfortunate time, he points to the overwhelming public support for Fairtrade in response to the decision, including celebrities speaking out and petitions to reverse the move, on top of climbing public sales and donations to Fairtrade each year. “We can see that there are a large number of people who really care about the food that they eat. This is a moment for citizens to be clear about the kind of recovery we’d like to see.” 

But for a green future, some argue that sustainability needs to start in the supply chain, not the supermarket. “It’s up to [all] businesses, not just social impact companies, to change,” says Ben Greensmith, UK country manager at Tony’s Chocolonely, a Dutch confectionery company that campaigns to make all chocolate 100% slave-free. “There are companies, and then there are ‘antisocial’ companies.” 

While transparency from corporations may be one vital element, surely it’s also crucial to give the farmers a say in their future? “What better way to bring the farmer to the table than to give them some control on the certification scheme?” Nyong’o says. “If [Nestlé] are really committed to support farmers and workers on the ground, they should listen to the appeal and let the people decide their future.” 

 

The changing face of sustainable labels

The shift to an own-brand scheme echoes recent predictions of a proliferation of new own-brand sustainability labels replacing the current global certifications. Is it the beginning of the end of the well-known Fairtrade mark?

Aldred rejects this view. “Rumours of our imminent demise are certainly overstated,” he says. Brands have “become more sophisticated in their approach to sustainable and ethical trade and built up better in-house capacity”, he says, but argues that the best deal for farmers still comes from Fairtrade sourcing. 

However, Fairtrade isn’t the only mark of a fairly traded product. The team behind Tony’s Chocolonely “like Fairtrade”, says Greensmith, because it’s the only accreditation that guarantees a premium. But Tony’s adds a further premium on the products, so that farmers can earn “a living income”. 

Meanwhile, the proliferation of certification schemes – many of which have been accused of failing to prevent unethical business practices – means conscious shoppers may face more confusion than clarity.

“We should welcome the fact that businesses have more capacity to take on ethical responsibilities, but there is a real challenge in how the consumer can have a clear sense of how they can vote with their wallet,” says Aldred. 

This task of ethical consumption shouldn’t be on the consumer. It’s up to the big companies to take responsibility for their sourcing actions

Greensmith is more critical of in-house schemes. “Self-certification doesn’t work. It means nobody is holding them to account.” He also echoes the confusion it causes for shoppers. “This task of ethical consumption shouldn’t be on the consumer. It’s up to the big chocolate companies to take responsibility for their sourcing actions.”

Nestlé's spokesperson points out that the company has not moved to self-certification, but to Rainforest Alliance certification through the Nestlé Cocoa Plan. “We now have a solid and consistent platform to make cocoa more sustainable and, ultimately, that’s what everybody wants to achieve. Meanwhile, we continue to work closely with Fairtrade elsewhere in our portfolio where we believe the partnership helps us reach the right outcomes.”

So does Nestlé’s move mark a new era for fair trade – as a concept? The corporation’s commitment to ‘better lives, better farming, better cocoa’ displays the array of work being done to improve the lives of their cocoa producers. But as it moves away from Fairtrade – as a certification system – the company will have work to do to convince critics that its in-house scheme can ever bridge that gap.

Header image by Abi Schreider on Unsplash

Thanks for reading our stories. As an entrepreneur or investor yourself, you'll know that producing quality work doesn't come free. We rely on our subscribers to sustain our journalism – so if you think it's worth having an independent, specialist media platform that covers social enterprise stories, please consider subscribing. You'll also be buying social: Pioneers Post is a social enterprise itself, reinvesting all our profits into helping you do good business, better.