How the biggest chocolate makers and sellers in the UK fare on sustainability

It’s expected that the UK will sell between 80 and 90 million Easter eggs this year. (Pexels Photo)

Estimates indicate that the UK ranks seventh worldwide and fourth in Europe for chocolate consumption. Each person in the UK consumes on average about 8.1kg of chocolate annually, with around 56% of adults enjoying chocolate at least weekly.

It’s expected that the UK will sell between 80 and 90 million Easter eggs this year. This is even though Easter chocolate prices in the UK have risen by 12.6%.

The surge to record prices is being blamed on a decline in worldwide supply, a consequence of climate change impacts, alongside heightened production and living costs for farmers driven by inflation.

But that is not the whole story. Retailers make more value (41.6%) and profit (9.5%) from a block of chocolate, than the poor farmer who gets little value (8.8%) and almost zero profit.

British consumers are increasingly demanding assurance that their products are ethically produced by businesses that source ingredients from suppliers committed to fair labour practices and the prevention of deforestation and harmful environmental processes.

The fifth edition of the Chocolate Scorecard, created by Be Slavery Free, the Open University, two Australian universities and various sustainability groups, indicates that certain retailers are falling behind in offering sustainable products on their shelves.

The scorecard evaluates the policies and practices of chocolate traders, manufacturers, brands and retailers, analysing 63 companies across six criteria. These criteria include traceability and transparency, living income, child and forced labour, climate change and deforestation, agroforestry, and the use of agrochemicals. The report card for next year will introduce a rating for gender equality, expanding the evaluation to include this as a seventh criterion.

This evaluation assigns a green rating (or “egg”) to companies recognised as leaders in sustainable policies and practices. Companies categorised as “progressing” or “needing improvement” receive yellow and orange ratings, respectively. A red rating is awarded to those seen as “trailing in policy and practice”, while a grey rating points to an absence of transparency.

This year, the German brand Ritter Sport received a Good Egg Award in the Medium and Large Company category for its progress, highlighting that larger companies have the capacity to improve significantly. The Dutch brand Tony’s Chocolonely received a special achievement award in the same category for consistently receiving a green rating.

Mars Wrigley (known for Mars bars, Snickers, Milky Way, and Twix), Nestlé (producer of Kit Kat and Smarties), Hershey’s and Ferrero (maker of Nutella, Kinder and Ferrero Rocher) all received yellow accolades. Lindt and Mondelēz, the latter known for Cadbury, Toblerone and Green & Black’s, were given an orange rating, signalling a need for enhancements.

The chocolate industry is expanding rapidly

It is projected that global chocolate confectionery revenue will hit US$254 billion (£202 billion) this year. In the UK, around US$18.28 billion (£14.5 billion) is generated, with an anticipated volume growth of almost 0.9% in 2025.

According to the guiding principles on business and human rights established by the United Nations, businesses bear responsibility for adverse human rights impacts linked to their operations or those of their supply chains. The responsibility cannot be transferred to another entity within the supply chain.

Research on retail outlets show that confectionery is frequently an impulse buy. Retailers strategically place sweet treats near checkouts, capitalising on high profit margins. The success or failure of a retailer can hinge on the sales of these products. Hence, when a retailer offers chocolate for sale, they have a duty to consider and tackle human rights and environmental concerns.

Certain retailers are lagging behind in sustainable sourcing practices

None of the retailers received a green rating worldwide. Also, not every UK retailer participated in this year’s chocolate scorecard. Among stores operating in the UK, Lidl and Co-op achieved a yellow rating. Marks & Spencer declined to take part in our survey, raising doubts about their transparency and accountability.

Interestingly, many retailers lack comprehensive data on their supply chains. While they establish guidelines for their manufacturers and suppliers to achieve chocolate certification, verification is often lacking. Where suppliers fail to comply, the burden is often placed on the farmers

The largest retailers in the world are based in the US and have the capacity to lead the industry. Despite this, all US retailers received “grey” ratings in the latest scorecard for non-participation. This includes key revenue giants like Walmart, Costco and Kroger.

A probable factor contributing to the US chocolate industry’s lag is the absence of regulations to halt deforestation. The European Union has enforced deforestation regulation to ensure that commodities like cocoa imported to the EU are not linked to deforested areas. Similarly, the UK Environment Act 2021 mandates due diligence for critical forest-risk commodities. While the US has introduced the Forest Act, it is yet to be passed into law.

Engaging in conscientious decision-making

Retailers must recognise the growing consumer demand for ethically produced and
sustainable products, chocolate included.

They will have to integrate ethically produced cocoa as a fundamental aspect of their corporate responsibility and business approach. By collaborating with their suppliers and manufacturers to monitor their cocoa supply chains meticulously, retailers can enhance their practices to guarantee they are free from human rights violations and environmental harm.

Consumers can leverage the fifth edition of the Chocolate Scorecard to guide their sustainable buying choices regarding the brands they support and the retailers they choose.

Cristiana Bernardi, Senior Lecturer in Accounting and Financial Management, The Open University; John Dumay, Professor in Department of Accounting and Corporate Governance, Macquarie University, and Stephanie Perkiss, Associate professor in accounting, University of Wollongong

This article is republished from The Conversation under a Creative Commons license. Read the original article.