‘We have no choice’: how Nestlé is tackling child labour

For decades, the global chocolate industry has been dogged by claims of child labour in its supply chain. Nestlé’s Alexander von Maillot says it’s time to address the real root of the problem: poverty

Chocolate, as we all know, is one of life’s guilty pleasures. A nibble here, a cheeky bar there. Nothing excessive, just a morsel or two of sugary joy to brighten our days. Yet, the delights of chocolate are not universal. Over recent years, the multibillion-dollar chocolate industry has been rocked by reports of pervasive child labour deep within its supply chain. 

Leading brands, for once, fully accept the problem. In 2001, many of the world’s best-known confectionery companies jointly committed to eliminating the worst forms of underage working. More than 20 years on, however, the issue persists. According to a recent authoritative study, an estimated 1.56 million children are still working in the cocoa fields of West Africa – the epicentre of global supply.

Alexander von Maillot, head of confectionery at Nestlé, insists the industry has not been standing still. Mitigation measures by the Swiss-based food giant have protected nearly 150,000 vulnerable children over the past decade, he says. But he concedes: “It doesn’t deliver on the vision that children get access to a good education and a future.” 

Nestlé, which counts iconic brands such as KitKat, Smarties and Milkybar in its portfolio, has decided the time is ripe for a change of tack. In the most ambitious move of its kind, the Swiss chocolatier is embarking on a multipronged, eight-year plan to fix the scourge of child labour. The new strategy, which was unveiled in the Ivory Coast earlier this year, will see Nestlé invest CHF1.35bn (£1.1bn) between now and 2030. 

Not everything will be overhauled. Measures to monitor smallholder farms for child labour will continue, for example, as will remediation policies when cases are found. But, as von Maillot argues, such steps deal with the symptoms of the problem rather than its underlying causes.

“To tackle this holistically, we looked for the root causes of child labour,” he says, “and found the biggest is widespread rural poverty.”

The logic is straightforward. Cocoa farmers earn too little, which means they cannot employ paid workers, which leads them to pull their children out of school (assuming there is one) and oblige them to help on the farm. “It isn’t that parents are bad parents in Ivory Coast or Ghana,” Maillot reasons. “But if you can’t afford paid labour, unfortunately the family might have to help.” 

The solution seems no less straightforward: why not just pay farmers more? While higher gate prices seem a simple solution, Nestlé’s confectionery boss explains that the reality is more complicated. Hiking the price could lead to oversupply, causing a deflationary effect, he says. Also, cocoa bean-buyers in West Africa typically don’t buy direct, purchasing instead through wholesale markets where prices are state-controlled. 

The main root cause of child labour is widespread rural poverty

And what of premiums? It’s true that in Ivory Coast and Ghana, a living income differential of around $400 per tonne was introduced. Yet, critics say, the price is still too low and, either way, some buyers seek to avoid paying the top-up (Nestlé insists that it pays in full). Chocolate brands also pay farmers extra if they are certified as sustainable (by Rainforest Alliance, in Nestlé’s case). Yet, the benefit here goes mostly to large, well-organised farms, with smaller farmers falling by the wayside, admits von Maillot. 

In an attempt to leave no one behind, the Swiss confectionery giant is proposing to make direct cash transfers to individual farmers of up to CHF500. This novel approach will see cocoa-growing households remunerated for completing any one of a series of prescribed activities designed to increase their incomes. On the list are the implementation of good agricultural practices (such as pruning), the promotion of agroforestry, and steps to diversify (by planting other crops or raising livestock, for example). As a direct nod to reducing child labour, the list includes a commitment by parents to enrol any of their children aged between 6 and 16 in school. “There’s an extra CHF100 if a farming family applies changes to all four areas, so that makes up the CHF500,” explains von Maillot, who says the money will be paid half to the farmer and half to the female head of household. The scheme, which follows a successful pilot involving 1,000 farmers, will initially target 10,000 cocoa households in Ivory Coast, before expanding into neighbouring Ghana in 2024. 

Will the strategy deliver? Von Maillot doesn’t underestimate the “super complex” nature of underage working. Nor is he willing to give a definitive date on when, or if, Nestlé’s cocoa supply chain might be said to be free of abusive child labour. Where he does express confidence, however, is in the connection between better farm practices and higher household incomes. He points to Nestlé’s past efforts to train farmers in efficient farming practices. On average, participating producers have seen their yields increase from 300 to 350 kilos per hectare 10 years ago to around 600 kilos per hectare today. 

For all its good intent, Nestlé’s theory that higher incomes will translate into lower child labour remains just that: a theory. Success will as likely revolve around shifting cultural attitudes as it will on boosting farmers’ productivity – and thereby their profits. Here, Nestlé’s focus on paying farmers to change their habits and behaviours, rather than on better harvests, makes long-term sense. Much will also depend on other key players following its lead. With respect to the governments of Ivory Coast and Ghana, both are “fully aligned”, says von Maillot. As for other cocoa buyers, Nestlé is pledging to make insights from its new approach completely open source. 

While Nestlé’s move has been broadly welcomed, the company’s critics are reserving judgement. After such a long wait, and many false dawns, such caution is understandable. Nor are they the only ones anxious to see how the plan pans out. By his own admission, von Maillot didn’t sleep so well once he ran the numbers and realised the “enormous amount of money” the incentive scheme would cost.

By the same token, Maillot admits there is no turning back. Child labour is “absolutely not acceptable”, he accepts. As for the need to fix it once and for all: “We have no choice.”