This Paper is part of
Corporate Responsibility and Ethical Reflection
What do coffee, bananas, sugar and chocolate have in common? Look beyond the kitchen. These are some of the most consumed products in the Western world and each is imported to us from developing nations. Unfortunately, the pressures of such global markets (namely the pressure of profitability) are often passed on to the world’s most vulnerable population: its poorest children. Whether it is coffee beans from Kenya, bananas from Ecuador, sugar from El Salvador, or chocolate from Ivory Coast, child labor is acceptable, if not standard, in order to keep costs low, and forced and abusive child labor practices run rampant in each industry.
Why do we tolerate such abuse? Who is responsible? What are the options for solving these issues? These are the questions posed by media, consumers, government, and non-governmental organizations. However, although there is a lot of finger pointing, there is no clear answer. Despite actions on behalf of every industry, there is no collective action plan, no definitive solution, and no benchmark example that can be reapplied to end forced and abusive child labor practices completely. Each industry relies on voluntary protocols and codes of conduct agreed to by producing nations and (largely Western) exporters and manufacturers. The chocolate industry is no different.
This paper examines the issue of forced and abusive labor practices in the chocolate industry, based on the case, “Ethical Chocolates: A Bittersweet Dilemma,” by Anu Karunakaran and Chiradeep Chatterjee (2008). We analyze this case using Kenneth Goodpaster’s Case Analysis Template model, also known as the “C.A.T. Scan” (2002). Using this model we are able to identify the factual elements (“Describe”), derive the ethical issues (“Discern”), display the main options available for addressing these issues (“Display”), decide among the options (“Decide”), and defend our decision using a moral framework (“Defend”) (Goodpaster, 2002). The structure of the paper follows these “5 D’s.”
The BBC aired a documentary in 2000 exposing the plight of children working on West African cocoa farms, bringing the issue of child trafficking and forced and abusive labor practices in this industry to the attention of the general public. The documentary fueled immediate action. There were several ensuing efforts by governments, the chocolate industry, and non-governmental organizations (NGOs) to eliminate child trafficking and forced and abusive child labor in cocoa farming. For example, in the same year the Ivory Coast signed an agreement with Mali in response to the problem of child trafficking from Mali to Ivorian cocoa farms, the UN’s Global Program against Trafficking in Human Beings was established in Ivory Coast to address the issue. In 2001, two US congressmen added a requirement to an agricultural bill proposing a federal system to certify and label chocolate products as “slave free.” This legislation was not passed, but the chocolate industry did agree to a voluntary initiative, the Harkin-Engel Protocol, to develop and implement voluntary standards to certify cocoa produced without the “worst forms of child labor” by 2005 (Karunakaran and Chatterjee, 2008). In compliance with the protocol, several date-specific actions proceeded. These included establishment of a joint foundation to address the issue and implementation of standards certifying how the cocoa had been grown.
The immediate response at the beginning of the decade looked promising, but in 2009 the issue shows little improvement. Cocoa farm children continue to be the victims of trafficking and forced and abusive labor practices. Most notably, the Harkin-Engel Protocol has failed to deliver on its commitments. Its joint foundation (the International Cocoa Initiative) made some headway in improving conditions, but resource commitment to this program has been very limited. Further, no monitoring and certification system has yet been implemented. The chocolate industry received a three-year extension in 2005, giving them until July 2008 to implement the protocol completely, but the extension deadline has passed without further action. As Senator Harkin states, “Eight years later should be long enough for the industry to turn its words into deeds. It is time for them to act on their promises and have in place adequate transparency and credible verification systems as called for in the protocol” (as cited in Karunakaran and Chatterjee, 2008).
While advancement of the Harkin-Engel Protocol stagnates, “there have been some significant developments in this regard completely outside of the protocol process, as major corporations begin to experiment with voluntary certification initiatives, principally in the environmental and fair trade sectors” (ILRF, 2008). This includes Kraft Food’s use of Rainforest Alliance Certified cocoa beans in their premium chocolate brands Cote d’Or and Marabou (Good and Green, 2009) and Cadbury Dairy Milk’s recent achievement of Fairtrade Foundation certification. Cadbury’s top-selling product, together with its hot-beverage division, was awarded the certification this summer (Charles, 2009).
A decade that started full of promise is coming to an end with no real improvement regarding this issue and a protocol on the brink of collapse. The chocolate industry has made it clear that they view child trafficking and forced and abusive labor practices as unethical, yet they have resisted acting on an agreement that supports ending these issues. Why this discrepancy? We identify the most relevant issues and potential sources of conflict in the remainder of this section.
Key Presenting Issues
Below are the key issues identified in the case.
Abusive Child Labor
Child trafficking and forced and abusive child labor practices are still prevalent in cocoa farming, despite initiatives from governments, the chocolate industry, and non-profit foundations to eliminate its worst forms. Children laborers regularly miss school, perform dangerous tasks, and suffer injury, and the need for cheap labor keeps trafficking active. Currently, there is no good way to check if child workers are slave laborers or if they are children of families living on the farm.
Throughout the cocoa industry, everyone is trying to protect profits. Higher farm gate prices, the price of the cocoa at which the cocoa farm sells it, are essential if the Harkin-Engel protocol is to be implemented; but exporters and manufacturers, who have considerable control over the farm-gate price, continue to keep the price low to avoid a decline in their profits. If they were fully committed to the protocol, the cost of cocoa would increase significantly. Further, exploitative middlemen make sure to take more than their fair share, paying cocoa farmers only approximately half the world price and leaving them living in or near poverty. In turn, the farmers rely on cheap child labor (often forced and abusive). Finally, cocoa producing nations are significantly reliant on cocoa exports and thus very wary of issues threatening the cocoa and chocolate market.
Lack of Ownership
Activists argue that the chocolate industry has the ultimate responsibility in resolving child trafficking and labor issues, as they essentially set the farm gate price. Exporters shrug off this responsibility with an easy excuse: they do not own plantations and they buy from middlemen, not directly from the farmers. Therefore, they do not directly engage in abusive child labor practices. Further, they deny any obligation to pay higher farm gate prices on the excuse that they are only intermediaries between the farmers and the international market.
Popularity of Ethical Consumerism
There is rising demand for ethical and fair trade products. In 2007, consumption of ethical and fair trade chocolates rose to an all-time high and experts predict that fair trade chocolates will continue to grow in market share. Recent fair trade actions from Cadbury and Kraft confirm this prediction and prove that “Big Chocolate” brands can go ethical without hurting their profit. Cadbury Dairy Milk’s Fairtrade certification cost the company £1.5m, but they raised prices in 2008 to absorb the cost (Charles, 2009). It would seem that using fair-trade certified beans for only one or two products allows manufacturers to “test the water” to see if adoption of protocol requirements, and the resulting increase in the retail cost of chocolate, are palatable to the market. But will the industry shift from its commitment to the protocol if consumers don’t accept the costlier chocolates or if the sales of ethical chocolates decline?
There are several stakeholders involved this case, from the children in the cocoa farms to the end consumer, with several players in between, including government agencies, non-governmental organizations, and the media. Reviewing each stakeholder in detail would be too lengthy, so below we summarize only the key stakeholders that we refer to directly in the course of this paper.
The Children of Cocoa Farming
It is estimated that 40-50% of a cocoa farm’s workforce consists of child labor; mostly boys age 5 to 14 years of age (Karunakaran and Chatterjee, 2008). These children are at the core of this ethical issue and are directly affected by the decisions made. They are also those stakeholders with the least decision authority and the least ability to protect their own rights.
Cocoa Farmers and Producing Nations
On the ground level of the cocoa industry are the local farmers, primarily located in developing nations. Ninety percent of the world cocoa production comes from the Ivory Coast, Ghana, Indonesia, Nigeria, Cameroon, Brazil, Ecuador, Dominican Republic, and Malaysia (Karunakaran and Chatterjee, 2008). The economies of these countries, notably the Ivory Coast and Ghana, are highly reliant on cocoa exports.
The Chocolate Industry
The chocolate industry includes cocoa exporters, such as Cargill and Archer Daniels Midland, and chocolate manufactures, including “Big Chocolate” brands Nestle, Mars, Cadbury, and Hershey’s. These companies do not own cocoa farms or directly purchase cocoa beans from farmers; instead they purchase beans from middlemen in the producing countries. Labor and human rights activists claim they “exert considerable control over the world cocoa markets” because they essentially set the farm gate price (Karunakaran and Chatterjee, 2008).
Industrialized countries of the Western world are top consumers of chocolate, accounting for nearly 70 percent of worldwide chocolate profits (Karunakaran and Chatterjee, 2008). Consumers play a key role in this case because their buying habits directly influence the practices of the chocolate industry. Consumers make the final decision on what product they buy, fair trade or otherwise. Their decisions account for the current growth in demand for fair trade products. However, there is doubt as to how much they are willing to pay to completely “go ethical”.
United States Government
The Harkin-Engel protocol is an initiative of the US government, sponsored by Senator Tom Harkin and Representative Eliot Engel.
Interests, Rights, and Duties Involved
Linked closely with the stakeholders are the interests, rights, and duties of each.
The Children of Cocoa Farming
Most Westerners find it intolerable that children should work at all, but this is the reality of growing up in a developing nation. Culturally, child labor is acceptable in most of the producing countries and children may even have the duty to help support their families financially in these countries. However, these children should have the right to humane working conditions.
Cocoa Farmers and Producing Nations
Everyone involved with cocoa bean production has the interest to make a profitable business, including the local farmers, middlemen, and exporting nations. These players have the right to conduct their businesses within the scope of their own legal system, however, not without respect to their individual duties. Local farmers have the duty to take care of their employees, irrespective of age. Middlemen have the duty to pay farmers their fair share of the farm gate price. Nations have the duty to protect the rights of all citizens, as well as citizens of neighboring countries who might be impacted by their actions and industries.
The Chocolate Industry
The primary interest of the chocolate industry, like any corporation, is profit. Not only is it an interest, it is a duty to their shareholders. These companies have the right to conduct their businesses within the legal parameters of their home country and they have the right to join voluntary protocols. However, they have the duty to implement protocols that they have signed onto and they have the duty to ensure that their products do not hurt people, directly or indirectly.
Consumers have the interest to buy the best quality product for the lowest possible price. They also have the right to transparent information; to know everything there is about a product they are buying.
United States Government
The US government has the interest and the duty to enforce the Harkin-Engel protocol.
Identifying the Central Issue
The issue of child trafficking and forced and abusive labor practices continues to exist in cocoa farming. The chocolate industry claims they view these practices as unethical, yet they have resisted acting on a protocol that supports ending this issue. Why? In the previous section we identified several issues and the interests, rights, and duties that could provide explanation. But identifying the key conflict – the core ethical issue – is critical to answering this question. In the following section we seek to identify the most central conflict and how this relates to the core ethical issue.
The Harkin-Engel Protocol is an agreement by the chocolate industry to end the worst forms of child labor, but it has a critical flaw. As a critique from the International Labor Rights Foundation points out, it “fails to call for concrete steps to ensure that farmers are getting a fair price for their product, which significantly impacts the use of child labor, as farmers are forced to reduce production costs and rely on the cheap labor of children” (ILRF, 2006). We’ve established that exporters and manufacturers have considerable control over the farm gate price and that raising this price is critical to enable farmers to improve conditions. We’ve also established that the chocolate industry profits by keeping the price low. Thus, the core conflict over implementing the protocol becomes very clear: it is a matter of costs.
Cost-benefit analysis is central to corporate decision-making. Corporations have the interest, the right, and the duty to serve their own financial interests (or the interests of their shareholders) so long as they do not break the law in doing so. Even from an ethical standpoint, such actions can be supported. According to the ethical principle of economic efficiency, one must “always act to maximize profits subject to legal and market constraints, for maximum profits are evidence of the most efficient production” (Hosmer, 1994: 22). But does this argument provide substantial defense of the chocolate industry’s actions (or inaction as it may be) as being “right”? In the next section we examine the case from three ethical perspectives to determine if the neglect in implementing the Harkin-Engel protocol is as morally sound as it is financially.
The ethical principle of economic efficiency states that one must “always act to maximize profits subject to legal and market constraints, for maximum profits are evidence of the most efficient production” (Hosmer, 1994: 22). However, there is a problem using this argument in defense of the chocolate industry. The underlying rationale of the economic theory is that the firm is connected to the market of the society and individuals within the society decide what they want to buy; therefore, personal decisions aggregate into market decisions as to what is best for the society (Hosmer, 2008: 98). In the case of chocolate, the majority of cocoa comes from developing West African countries, but it is primarily consumed in the industrialized Western world. Are the individuals who, in aggregate, “choose” what is best for society by buying this chocolate even aware of how their choices affect a society thousands of miles away? NGOs and the media have certainly raised attention to issues in cocoa production, and there is evidence that this awareness translates into ethical decisions on the consumer level (based on the increase in sales of fair trade products). But should it really be up to the Western consumer to decide, through their aggregate spending decisions, what is best for African children working on cocoa farms? What happens if the majority of consumers don’t want (or simply can’t afford) to pay a higher cost for “ethical” chocolate, or if the fair trade movement is merely a marketing fad that loses steam when consumers move on to the next social movement? Who, or what company, with any ounce of ethical reasoning would let consumer purchase decisions tell them whether or not child slavery and abuse is ethical? In summary, economic theory argumentation in this case is not applicable.
There is a clear self-interest on the part of the chocolate industry to keep costs low. The principle of universal rules allows us to consider the case in a way that eliminates the self-interest of all parties involved. The principle is summarized as “never take any action that you would not be willing to see others, faced with the same or a closely similar situation, also be free or even encouraged to take” (Hosmer, 1994: 21). The principle is based on the concept of universality, in that ethical principles must apply to everyone, but taking into account those selective violations that society considers acceptable. For example, lying is considered universally wrong, but lying in some situations can be necessary and even right. Consequently, morality cannot be judged by a list of absolute rules, but by patterns of ethically responsible behavior that can be used as benchmarks for deciding if a specific action is morally sound. There is a caveat to this principle that should also be noted. Immanuel Kant (1724-1804), the major proponent of this concept, attempted “to tie moral actions to rational decisions” (Hosmer, 2008: 109). Therefore, under this principle, the moral worth of an action is dependent on the intentions of the person making the decision or performing the act, not the outcome of that decision or action (Hosmer, 2008: 108). Morally “right” actions are those in which an individual’s determination to act in accordance with duty overcomes his or her evident self-interest to do otherwise.
Thus, in the case of cocoa production, we can have to examine the dilemma from two sides. First, although child labor is acceptable practice in some countries, slavery, forced labor, and abuse are not openly acceptable in any culture. Therefore, inaction on behalf of the chocolate industry, resulting in continued slavery and abuse, is not morally right. However, the industry’s agreement to the Harkin-Engel protocol could be argued as morally right based on the intention to end the worst forms of child labor, even if the outcome is not yet fulfilling expectations. But again, this defense is flimsy, as the protocol does not have the purest intentions. The protocol was lobbied strongly for by the chocolate industry in order to avoid major legislation that would require labeling certified chocolates with “no slave labor” labels, an action which many major chocolate manufactures wouldn’t qualify for. Therefore, the protocol is not an agreement the chocolate industry committed to purely out of duty. They committed to it in order to avoid legally binding legislation.
We’ve now considered the chocolate industry’s delay in implementing the Harkin-Engel Protocol through the lens of two ethical principles. Based on these examinations, any defense of the chocolate industry’s actions as morally right is weak and without merit. However, in order to provide final confirmation as to whether the industry’s inaction is right or wrong, we examine the issue through an ethical perspective that favors those who are most harmed as a result of this inaction: the children on the cocoa farms.
The principle of distributive justice states, “never take any action that would harm the least among us, those with the least income, education, wealth, competence, influence or power” (Hosmer, 2008: 110). In this case, the facts are clear. Cocoa production harms children, specifically uneducated and poverty-stricken children that have no power to defend themselves. They are sold into slave labor, forced to work twelve to fourteen hour days with no pay, little food and sleep, and frequent beatings. Agreement and implementation of the Harkin-Engel Protocol could put an end to abusive and forced child labor, assuming farmers would receive the sufficient farm-gate prices needed to correct the issue. Continued procrastination in implementing the protocol means continued trafficking and abuse of children.
The examination above provided substantial evidence that although the chocolate industry’s delay in implementing the Harkin-Engel protocol is financially responsible, it is not morally right. The industry’s lust for profit cannot be an excuse that keeps them from addressing the injustices of child trafficking and forced and abusive labor practices in cocoa farming. A solution must be found, but is the Harkin-Engel protocol the best option to improve the situation? We discuss this and other options in the following section.
Although the Harkin-Engel protocol is intended to serve a noble objective, it appears to be impossible to implement. Agreement to raise the farm gate price has been called out as a key challenge, as the chocolate industry has an inherent self-interest in keeping costs low. After nine years of letting the chocolate industry do things “their way,” should government step in to cancel the protocol and enforce labeling legislation? Although it seems fair, this option does not make an immediate impact on the children at risk. At best, this option maintains public awareness of the issue and could further press chocolate manufactures to include or increase the ethical offerings in their product mix. At worst, it results in a boycott of non-labeled chocolate, which could ultimately “do more harm than good to children on cocoa farms” (Karunakaran and Chatterjee, 2008). Either way, it doesn’t solve the issue; it only minimizes it.
Another option is to let the current protocol proceed as-is, providing the industry with yet another extension. 2010 could be the “year of ethical chocolate,” judging by the recent fair trade actions by Cadbury and Kraft. Perhaps as manufacturers grow confident that a market for ethical chocolate exists, they will put more resources behind implementation of the protocol. But on the other hand, are the companies just exploring these initiatives because they are easier to implement and more advantageous to leverage through marketing? Putting more resources behind corporate responsibility projects is not the same as implementing the protocol, nor does it directly address the issue.
Outright cancellation of the protocol would result in significant backlash. Although it has not delivered on its promises, it does serve as a collective acknowledgment by the industry that child trafficking and forced and abusive labor practices are wrong and need to be addressed. But modification of the protocol is needed. From the beginning, the issue should have been approached in terms of its root cause: poverty resulting from low farm gate prices. In reality, the protocol has left the discussion of cocoa as a commodity out of the picture entirely. The key to solving the issue is to raise the farm gate price. The last option provided then is to keep the Harkin-Engel protocol, but modify it so that it its first priority is to ensure that farmers are getting a fair price for their product.
The current protocol, with no discussion of farm gate price, is merely a voluntary agreement of corporate responsibility, not one of sound ethical action. Yet, the protocol should not be cancelled outright. Therefore, our decision is to keep the protocol, but with the sole focus of raising the farm gate price. This solution addresses the core ethical issue of child trafficking and forced and abusive labor practices by addressing the critical role of farm gate prices in improving these conditions. We are not experts in commodity policies so detailed actions will need to be addressed by a qualified advisor. However, it is obvious that any price increase will require the support of the chocolate industry, government, NGOs, cocoa farmers, and the middlemen to ensure the prices for cocoa are fair, the supply is well managed, and verification processes exist to ensure that the farmers receive their fair share of the benefits and that this fair share is used to improve labor conditions on their farms.
Requirements for additional action programs or certification standards are intentionally left out of the new protocol, because, ultimately, these do not address the central ethical issue. The chocolate industry is free to create partnerships with fair trade or other community agencies to meet market demand for “ethical” chocolates. However, such initiatives will be considered voluntary actions of corporate responsibility, not fulfillment of their ethical duty to end child trafficking and abusive labor practices.
We defend this decision based on ethical duties and a rational thought process, a belief that “you should always act in accordance with a set of objective norms of behavior or universal statements of belief that are ‘right’ and ‘just’ and ‘fair’ in, of and by themselves” despite cultural and personal differences (Hosmer, 2008: 98). In this case, we call forth a universal belief that we should not harm any child, who is identified by the principle of distributive justice as the least among us. However, while the principle of distributive justice advises us to “never take any action that would harm the least among us, those with the least income, education, wealth, competence, influence or power” (Hosmer, 2008: 110), it is not a principle of charity. It does not require that we help those less fortunate. Increasing the farm gate price is the best way to address the harm created by child trafficking and forced and abusive labor practices in cocoa production. Activities such as improving local communities, providing education to child workers, working with fair trade agencies, or setting certification standards, are of course “right” from certain perspectives, but participating in such activities should not allow the industry to deny or negate a responsibility to addressing the core issue in a more sustainable way. Such “charitable activities” result from a desire to act with corporate responsibility. Raising the farm gate price, on the other hand, is required out of ethical duty.
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