Nestlé announces innovative plan to tackle child labor risks, increase farmer income and achieve full traceability in cocoa

Nestlé today announced a new plan to tackle child labor risks in cocoa
production. At the center is an innovative income accelerator program, which
aims to improve the livelihoods of cocoa-farming families, while also advancing
regenerative agriculture practices and gender equality. A cash incentive will be
paid directly to cocoa-farming households for certain activities such as
enrollment of children in school and pruning among several others. Nestlé’s new
plan also supports the company’s work to transform its global sourcing of cocoa
to achieve full traceability and segregation for its cocoa products. As Nestlé
continues to expand its cocoa sustainability efforts, the company plans to invest
a total of CHF 1.3 billion by 2030, more than tripling its current annual
investment.
According to Mauricio Alarcon, Market Head of Nestlé Central and West Africa,
“Child Labor is inacceptable. We are committed to working closely with key
stakeholders to ensure that this novel approach will help address its root causes
and support farmers and their families to transition to more sustainable cocoa
farming in communities where we operate. Through this new plan, we will extend
our cocoa sustainability initiatives to other parts of Central and West Africa”.
The incentives will encourage behaviors and agricultural practices that are
designed to steadily build social and economic resilience over time. With Nestlé’s
new approach, cocoa-farming families will now be rewarded not only for the
quantity and quality of cocoa beans they produce but also for the benefits they
provide to the environment and local communities. These incentives are on top
of the premium introduced by the governments of Côte d’Ivoire and Ghana that
Nestlé pays and the premiums Nestlé offers for certified cocoa. This cocoa is
independently audited against the Rainforest Alliance Sustainable Agriculture
Standard, promoting the social, economic and environmental well-being of
farmers and local communities.

Cocoa-farming communities face immense challenges, including widespread
rural poverty, increasing climate risks and a lack of access to financial services
and basic infrastructure like water, health care and education. These complex
factors contribute to the risk of child labor on family farms. Together with
partners, including governments, and building on a promising pilot program,
Nestlé’s new initiative sharpens focus on these root causes of child labor.
“Our goal is to have an additional tangible, positive impact on a growing number
of cocoa-farming families, especially in areas where poverty is widespread and
resources are scarce, and to help close the living income gap they face over
time,” said Mark Schneider, Nestlé CEO. “Building on our longstanding efforts
to source cocoa sustainably, we will continue to help children go to school,
empower women, improve farming methods and facilitate financial resources.
We believe that, together with governments, NGOs and others in the cocoa
industry, we can help improve the lives of cocoa-farming families and give
children the chance to learn and grow in the safe and healthy environment they
deserve.”
Creating cash incentives to grow income substantially
The program rewards practices that increase crop productivity and help secure
additional sources of income, which aim to close the gap to living income and
help protect children. By engaging in these practices, families can additionally
earn up to CHF 500 annually for the first two years of the program. The higher
incentive at the start will help accelerate the implementation of good agricultural
practices to build future impact. This incentive will then be leveled at CHF 250
thereafter as the program starts delivering tangible results. It is not paid based
on the volume of cocoa sold and is inclusive to provide smaller farmers
meaningful support, leaving no one behind. In a departure from normal practice,
the program also offers financial incentives for the farmer’s spouse, who is
typically responsible for household expenses and childcare. By dividing the
payments between the farmer and the spouse, the program helps empower
women and improve gender equality. Examples of practices that Nestlé is
incentivizing include:
▪ School enrollment for all children in the household ages 6-16;
▪ Implementing good agricultural practices, such as pruning, which increase
crop productivity;
▪ Performing agroforestry activities to increase climate resilience, like
planting shade trees;

Generating diversified incomes, for example through growing other crops,
raising livestock such as chickens, beekeeping or processing other
products like cassava.
Payments will be delivered via a secure mobile service transfer that will ensure
traceability directly from Nestlé suppliers to the intended recipient. Because cash
flow throughout the year is often a challenge, cash incentives will be distributed
when they are needed most. Based on feedback from farmers, this includes the
back-to-school period and before the rainy season. Third parties, including
International Cocoa Initiative and Rainforest Alliance, will work with Nestlé to
monitor participation.
Helping farmers implement sustainable, scalable practices
Building on the positive results of an initial pilot in 2020 with 1,000 farmers in
Côte d’Ivoire, in 2022 Nestlé will expand the program to include 10,000 families
in the country, before extending it to Ghana in 2024. It will then assess the results
of that test phase and adapt where necessary, before moving to reach all cocoafarming families in its global cocoa supply chain by 2030.
Nestlé will help ensure farmers have the resources, training and social and
financial structures to make lasting changes by:
▪ Enhancing the existing monitoring and remediation system to help
identify, prevent and address child labor risk and increase school
enrollment;
▪ Offering families training through the Gender Action Learning System and
on household financial planning and entrepreneurship;
▪ Organizing and training local groups to perform pruning and other
beneficial agricultural tasks within a given cooperative each year;
▪ Providing income diversification opportunities for farmers and their
spouses;
▪ Helping set up Village Savings and Loans Associations (VSLA), focused on
women, to encourage savings and provide loans for small business
opportunities.
Feedback and input from farmers and farmer cooperatives, as well as ongoing
data collection and evaluation by third parties, will be used to inform, modify and
improve the program as it scales up to more communities. In addition,
independent oversight will be provided by a multistakeholder strategic advisory

committee managed by IDH-The Sustainable Trade Initiative, a leading
foundation that works to improve the sustainability of international supply chains.
Tracing all cocoa from origin to factory
As part of the program, Nestlé will transform the global sourcing of cocoa to
achieve full traceability and segregation of its cocoa products from origin to
factory. This new effort will help transform the supply chain of Nestlé and the
broader industry. Nestlé will introduce a range of products with cocoa sourced
from this innovative program, offering consumers the opportunity to support the
improvement of the families’ livelihoods and the protection of children. This will
start with a selection of KitKat products in 2023.
“Our actions can help catalyze change on an important topic that is so close to
our hearts. They will drive accountability and transparency across the industry, at
a time when customers, employees and communities increasingly expect
companies to deliver on their shared values,” said Magdi Batato, Executive Vice
President and Head of Operations. “By increasing traceability at scale, we will
help build consumer trust in our products and respond to the growing demand
for responsibly and sustainably sourced cocoa.”
Today’s announcement builds on Nestle’s longstanding efforts to tackle child
labor risks in cocoa production. The company has invested in sustainability
through the Nestlé Cocoa Plan since 2009. Through a robust monitoring and
remediation system (pdf, 3Mb) instituted since 2012, 149,443 children have
been assisted to protect them against the risk of child labor, and 53 schools have
been built or refurbished. This system is now the industry standard by which
companies monitor their supply chains.