We have received a lot of comments and questions following our decision to move KitKat from Fairtrade to Rainforest Alliance certification. We are grateful for the opportunity to talk to the Fairtrade All-Party Parliamentary Group today about the reasons behind the move, as well as the comprehensive range of measures we are putting in place to support the Ivory Coast farming communities who supply us with cocoa for KitKat.
Read our opening statement in full below.
Introduction
Thank you for the invitation to meet today.
We all very much appreciate this opportunity to talk to the group about the decision to transition to the Rainforest Alliance certification for our two finger and four finger KitKats in the UK. We acknowledge that the reasons we are doing this may not be widely understood, and we recognise that people have concerns.
And we are pleased to have the opportunity to talk about something, that I know we all share a passion for: the responsible sourcing of cocoa.
We want you to know that we have not taken this decision in haste, or without due consideration of the impacts. We value the relationship we have with the cocoa cooperatives and farmers we work with, and we want this to continue.
We are changing our certification model, we are not changing our commitment to farmers. The hardest thing to accept, following the announcement, is the widespread perception that we no longer care about farmers or responsible sourcing. That could not be further from the truth.
What we are doing and why
A decade ago, Nestle demonstrated its commitment to fair and responsible sourcing of cocoa when we inaugurated our collaboration with Fairtrade. In the intervening years it has delivered real benefits and improvement. And we believe our two organisations can be proud of what we have achieved together.
The decision we have now made to move our certification for the two and 4 finger KitKat to Rainforest Alliance is in no way a step back from that commitment to fair and sustainable sourcing. We are moving KitKat certification from one highly respected scheme to another, this is about harmonising to one certification scheme across our confectionery products.
In fact, through our cocoa plan, we are deepening our commitment and delivery in the years ahead. And I will say a bit more about the plan shortly.
The Rainforest Alliance may not be as well known to you as Fairtrade. And that is why we are pleased Alex Morgan from Rainforest Alliance has joined us today to introduce to you to their work and answer your questions. And hopefully start a continuing conversation for the future.
There are differences between the Fairtrade and Rainforest Alliance schemes, of course – and so we have a strong plan to support and protect farmers through the transition. We have worked very hard to put in place a detailed and comprehensive plan to support those affected. And I will also say more about this.
Rainforest Alliance is a global partner with Nestle. The Alliance’s mission and aims align closely with Nestle’s approach. We, like Rainforest Alliance, believe that building farmer resilience and tackling key social and environmental issues such as child labour and deforestation are fundamental to the long-term sustainability of the sector, in addition to growing farmer income.
And here in the UK, in fact, the Alliance already provides a strong certification programme for our other well-known, UK-made Nestle chocolate products including KitKat Chunky, Aero, Rolo, Matchmakers, Quality Street and After Eight.
Crucially for us, extending the partnership with the Rainforest Alliance to KitKat products is part of how we can deliver most effectively and coherently our Cocoa Plan.
We should be clear: our overall commitment is increasing, not decreasing – it’s very important to understand the full picture.
The Cocoa Plan
I think it’s important to outline some of the industry leading work that Nestlé has undertaken in the past decade to support cocoa farmers, and to improve their livelihoods under the Nestle Cocoa Plan. We spend a lot of time at Nestlé looking at ways to improve our cocoa sourcing with the clear aim of improving the lives of cocoa farmers for the long term.
The Plan’s vision is to improve the lives of farmers in our cocoa supply chain by operating across three key pillars:
- Better farming, addressing challenges such as agricultural practices, rejuvenation of plantations and tackling deforestation.
- Better lives, which seeks to empower women and eliminate child labour.
- Better cocoa, which covers certification, and building long-term relationships in our supply chain.
We are joined today by one the architects of this work, Darrell High, who has spent more than a decade working on this issue as the global lead for the Nestlé Cocoa Plan.
Darrell is based in Switzerland, but he spends huge amounts of his time on the ground in the Cote D’Ivoire, Ghana and other countries covered by the Plan. He meets with the cocoa cooperatives we source from and works to understand what more Nestlé can do to support the farming community.
Everybody at Nestlé is proud of the considerable achievements of the Nestlé Cocoa Plan in the last 10 years.
Nestlé has already invested the equivalent of £191 million. Let me give some concrete examples of what that means in terms of real improvements.
We trained more than 114,000 farmers and distributed more than 15 million young, disease resistant cocoa plantlets to help improve yields. Additionally, to tackle child labour, Nestlé has built its own Child Labour Monitoring and Remediation System.
Which by the end of 2019, had identified more than 18,000 children performing hazardous activities on the family farm and therefore in child labour. And, since 2012, Nestlé has assisted more than 87,000 children who were in child labour or at risk of it both inside and outside its own supply chain.
And we have built or refurbished 49 schools in these communities to provide quality education to help children avoid child labour.
And Nestlé has worked with more than 6,500 women in Cote D’Ivoire as part of a gender balance awareness programme which provides training, help with savings and loans for small business opportunities. This has led to an increase in the percentage of land ownership among women and increased representation of women in decision-making positions in co-ops.
While certification is one part of our efforts to improve the lives of cocoa farmers, this is all work that Nestlé undertakes above and beyond certification. We hope it serves to underline just how seriously we take our commitments to the farmers we work with.
We regret that our decision to move the certification of these two KitKat products to Rainforest Alliance has called that commitment into question.
As I mentioned before, our overall commitment is increasing, not decreasing. For the future, we are increasing our investment through the Cocoa Plan from £34m to £60m a year as we work towards sourcing 100% certified sustainable cocoa worldwide by 2025.
The impact of the switch to the Rainforest Alliance
There have been media reports suggesting that farmers stand to lose £1.8 million per year from the switch to Rainforest Alliance.
This simply isn’t correct.
The fact is this figure does not take into account the money that farmers will receive through the Rainforest Alliance premium, nor does it recognise the investment we are making to support farmers during and beyond the transition period to support long-term improvements.
For a start we will pay for any farmers who currently only have Fairtrade certification to get to the level required by the Rainforest Alliance certification programme.
If, for reasons beyond their control, they are not able to do this in time for the next crop, we will further provide them with financial support for the coming year.
We are investing £1 million over two years to develop a living income pilot designed to support farmers to grow their income. It will address some of the long-term systemic problems that farmers face.
We will work in partnership with others to encourage, incentivise and accelerate change at farm, cooperative and household level. We want to close the gap on living income.
This approach will involve direct cash transfers to farming households when they achieve targets in the areas of good agricultural practices, re-forestation, child labour and alternative incomes.
The pilot is being developed in consultation with farmers and farming communities and will be regularly reviewed over the next two years. If it does not deliver the expected results, we will find other solutions.
A further £500,000 is being invested in community projects with the majority already allocated to a diverse range of activities, including building schools, equipping a health centre and providing motorbikes to transport lead farmers so they can deliver valuable training at other farms.
In total, over the coming year, what we spend on cocoa premiums and our investments beyond that will significantly exceed what we would have paid in Fairtrade premiums.
Our support package amounts to at least £2.2 million including £1 million in premiums for Rainforest Alliance certified cocoa, £500,000 for projects with farmer cooperatives, £500,000 for the living income pilot and £250,000 to support the certification of farmers.
Looking to the future
We know, as the Nestlé Cocoa Plan develops further, that our approach can make an even more positive and constructive difference in these communities in the future. Our teams across the world are dedicated to seeing that happen. And we are ready to be held to account in making sure we do.
Thank you again for allowing us the time to explain the background to how we source our cocoa and we welcome any questions you have.