“Due diligence” crucial for sustainable supply chains free from human rights issues and environmental impacts

26 Jan 2023 --- A Fairtrade risk map identifying salient sustainability concerns intrinsically linked to key commodities and ingredients like coffee, cocoa, bananas, and honey, has been developed. It helps inform companies and brands to reinforce their supply chains and improve human rights and ethical and environmental credentials – critical aspects for today’s conscious consumer.

FoodIngredientsFirst takes a deep dive into the new map, speaking to Alice Lucas, policy advisor at the Fairtrade Foundation.

Human rights violations and environmental harm are widespread in global supply chains. One in five workers globally lives in poverty, agricultural production is responsible for 70% of global freshwater withdrawals, and child labor is increasing.

Currently, the risk map covers coffee, cocoa, bananas, honey, and wine grapes, as well as the most common countries of origin of these products. It spotlights the environmental risks of climate change, water, and biodiversity.

“Alice Lucas, policy advisor at the Fairtrade Foundation.The reason consumers want to know where their products come from is that they want to know that human rights conditions and environment are being taken care of and that there is no harm being caused. Companies need to do their due diligence to make sure they are not breaching the rights of producers in the supply chain and take necessary steps to prevent, mitigate and remediate the greatest risks in their supply chains,” Lucas explains. 

She stresses how consumers are highly motivated by messages on human rights, with “no child labor” topping the list of concerns. Consumers also demand more significant levels of sustainability from brands and retailers and are acutely aware of greenwashing tactics. 

“The map is a product of Fairtrade’s ongoing risk and impact assessment work, which is unique in bringing together external data, direct inputs from Fairtrade farmers and workers, Fairtrade staff from six continents, and external experts. It allows users to search by country, commodity, or salient issue and read about the root causes behind human rights and environmental risks,” Lucas continues.

Fairtrade doesn’t name “highest risk countries” because risk levels vary widely within each country. 

“They depend on the measures taken by each individual producer and their business partners, all the way to retailers. Traffic lights can also harm responsible businesses in “red countries” if buyers start avoiding these countries,” Lucas flags.

The map is based on dialogue with Fairtrade producers, workers and Fairtrade producer network staff in all stages of the process. Information on the map will be updated regularly, and more commodities like cereals, fruit, vegetables, and sugar will be added in the months ahead.

Cataloged risks
While companies face growing consumer scrutiny, there are also increasing legal obligations to carry out meaningful risk assessments and to prevent, mitigate and remediate the greatest risks in their supply chains. 

Human rights breaches, child labor, deforestation, unfair earnings and inequality are some routinely reported issues connected to cocoa and coffee supply chains. Lucas notes that this is well publicized and that the media often bring these matters to the consumer’s attention. 

Here is a breakdown of Fairtrade’s commodities and the root causes and prominent issues in each sector and supply chain. 

Cocoa: An estimated 5-6 million smallholder households produce 90% of the world’s global cocoa and 50 million people worldwide depend on the cocoa supply chain for their income or employment.Fairtrade says that just nine traders and processors handle 75% of the world’s cocoa trade and have a large influence on cocoa prices and the sustainability of the industry. Described as an hourglass supply chain, cocoa production has a large farmer base (labor-intensive with low financial rewards), with few exporters, processors, and millions of consumers. Fairtrade says that just nine traders and processors handle 75% of the world’s cocoa trade and have a large influence on cocoa prices and the sustainability of the industry. 

Of course, cocoa production is vital for the confectionery and chocolate industries but is very often associated with a plethora of human rights and environmental issues. 

Coffee: The coffee “bean belt” includes around 12.5 million farms across 50 countries, growing the commodity where there are suitable climate and soil conditions. Roughly 95% of coffee farms are smaller than five hectares and often farmers have very little negotiating power. They produce about three-quarters of the world’s coffee. Large coffee estates produce the remaining quarter. Fairtrade works with smallholder coffee but says large roasters and traders dominate the coffee supply chain.

Honey: As honey’s demand increases, fraud is being fueled, with around a third of all “honey” being adulterated.

The distribution of value within honey supply chains is often very inequitable, with fraudsters, international traders, and local buyers collecting the lion’s share, according to Fairtrade. Meanwhile, the bee population (a vital honey pollinator) has declined dramatically. 

Alongside growing other crops, farmers are encouraged to take up beekeeping to diversify income, improve nutrition, and increase pollination, increasing local crop yields.

Bananas: “Retailers often rely on the appeal of cheap bananas to draw shoppers to the store,” flags Fairtrade. This results in price pressure on banana suppliers and producers, contributing to low income for banana farmers and low wages for the 600,000 banana workers in global supply chains. Bananas are cultivated on small-scale farms and large plantations; Fairtrade works with both. Smallholders produce just 5% of internationally traded bananas but play a large role in rural development.

Facilitating a transparent dialogue
Performing thorough risk assessments and maintaining close ties with farmers on the ground are the cornerstones of sustainable supply chains and crucial if companies and brands want to be seen as good stewards of the planet and people while being committed to due diligence.

Being transparent about systemic human and environmental issues can also be risky for farmers and workers in itself, flags Fairtrade. If companies are not ready to shoulder their part of the responsibility, they might opt to cut all ties rather than go through the process of mitigating and remediating risks together with farmers and workers.

Fairtrade encourages companies not to ignore risks but rather to use the new map as an opportunity to start a dialogue with farmers and workers and take concrete steps to make global supply chains more sustainable. Because many risks are deeply rooted in poverty, inequality, and exploitation, it takes the collective effort of companies, farmers, workers, governments, and civil society to tackle them in the long run effectively, they say. 

By Gaynor Selby