The European Commission released its proposal for a corporate sustainability due-diligence Directive, on 23 February 2022. The EC’s proposal details plans for holding businesses accountable, for environmental harm and human rights abuse throughout their entire supply chain. It puts forward that any cocoa or chocolate company, regardless of size, must comply with the due diligence requirements set out.
A Directive differs from Regulation, in that it is a set of rules the EU members should enshrine into local laws, thus allowing flexibility for each member country to modify as they think is appropriate for their region. A Regulation is more rigid in its application across all member states.
The proposal was commended by the Cocoa Coalition, a name behind which a large group of stakeholders can communicate with a single voice. Members of the coalition include Mondelēz International, Tony’s Chocolonley, and Ferrero, as well as organisations like the Rainforest Alliance and Solidaridad. The group released a statement in response to the news, saying, “we have consistently called for the EU to introduce mandatory obligations of due diligence extending throughout the supply chain.”
While the Cocoa Coalition has said they regard it as “a genuinely ground-breaking legislative proposal”, they also identified key areas of weakness that need to be addressed for the proposal to be effective, in their eyes.
Firstly, they believe that ensuring that cocoa farmers receive a living income is “an essential step in achieving a sustainable cocoa sector.” Looking to take a more holistic approach to sustainable cocoa farming.
While the legislation has a wholly laudable objective, the current draft has serious weaknesses that will leave it sluggish and unresponsive to changing supply chain. First, to future proof this law, it is vital that grassroots groups, citizens, and others are able to raise the alarm on environmental and human rights abuse directly with the European Commission. This first-hand knowledge is irreplaceable, and yet there is currently no channel for it.Steve Trent, CEO and founder of the Environmental Justice Foundation
There is of course, a foundation the EU has laid to support this, in the form of the Whistleblower Directive that is also supported by the privacy regulation in the GDPR. The Whistleblower Directive had to be adopted by EU Member states by 17 December 2021, so this is relatively new. I’m not sure actually if this will provide the mechanism that Trent was suggesting, but it’s worth exploring.
A controversial topic is whether this Directive will have a disproportionate effect on smaller companies. However, the Cocoa Coalition believes that smaller companies should not be exempt from the proposed due diligence implementations, despite potentially possessing simpler supply-chains than their larger competitors. “In a very fragmented end market, the inclusion of smaller players is critical to establish a level playing field and to ensure that all companies do their part and work closer together to improve the sustainability of the cocoa sector.”
Moving forward, the Cocoa Coalition has said it was “looking forward to engaging with Members of the European Parliament, and representatives of member-state governments, in further improving and implementing the proposed directive.”
As always, the issue of sustainability has many moving parts, and to truly begin to solve the wider problem, there are many tangential issues that first need addressing, and these may not always be so obvious.