just-food’s contributing editor Ben Cooper sets out his opposition to Nestlé’s decision to end Fairtrade certification for its flagship KitKat chocolate brand in the UK and Ireland.
Being described as “thoughtless” or “betraying a lack of thought” can be synonymous or convey subtly different meanings. Last week, Nestlé provided a perfect illustration of how this is so and, in a further semantic twist, did so through a single act. Showing how wonderfully nuanced language can be is, so far, probably the best thing that can be said about the Swiss food giant’s tone-deaf decision to end its Fairtrade certification of KitKat in the UK and Ireland.
Nestlé’s statement detailed a number of factors relating to its sourcing strategy, notably its desire to “harmonise” certification for its confectionery under a single programme, Rainforest Alliance. Sustainable sourcing is a highly complex area so other factors are also mentioned, and more might have been.
And yet, even as a recipient of the statement who has spent the last two decades writing and analysing those very factors and issues, reporting on Nestlé’s first and pioneering foray into the ethically sourced sector as far back as 2005, your correspondent was left baffled.
Nestlé provides some context to its decision that purports to explain why it has done what it has done but entirely absent is the most critical context of all at the current time. That needs repeating. Entirely absent. The company doesn’t play down the significance of Covid-19, doesn’t put forward a thesis arguing its decision will somehow help some of its most impoverished suppliers cope with a global crisis that will bankrupt nations and billionaires. It doesn’t even mention it.
In short, while Nestlé may believe it has set out reasons for this decision, the world’s largest food company fails to explain why on earth it is doing this now. Reason has nothing to do with it.
There are other contemporary contexts to its decision Nestlé appears blind to, but the announcement speaks to fundamental questions corporations, development agencies and NGOs, academics and policymakers are wrestling with on how to balance the rewards of enterprise with its impacts.
The fundamental precepts of organisations like the Fairtrade Foundation, the Ethical Trading Initiative and the Rainforest Alliance do more than break conventions. They challenge the received wisdom and rules, the assumptions, and presumptions, on which corporations such as Nestlé are founded. There was always therefore an inherent tension, a disconnect or even conflict in such companies joining with the Fairtrade movement.
However, thanks to a convergence of interests, pragmatism and plenty of goodwill and good people, on both sides, the incorporation of major brands into the Fairtrade certification system made a significant and beneficial contribution to the pursuit of a more equitable and ethical global trading system for agricultural commodities.
Nestlé deserves credit for the lead it took as the first major food corporation to certify a product through the Fairtrade system. That does make the manner of its departure all the more poignant, of course, as does the name it gave that first product, Partners Blend.
Following on from a similar decision by Mondelez International in 2016, albeit approached and executed very differently, last week’s move provides further evidence Fairtrade certification of major brands may have run its course, at least as an engine of growth for the movement and a means of adding significant scale. It also underlines what experts in this field have been saying for years, that certification can only be one part of the story. To achieve the transformation and build the sustainable future, which sadly in spite of so much hard work and achievement remains a distant prospect at best, will require going beyond certification.
Nestlé protests it is addressing and mitigating the impact on farmers, but falls a long way short of the commitments Mondelez made to the farmers supplying Fairtrade cocoa for Dairy Milk in the UK when it ceased certification. Like Nestlé, Mondelez did present Fairtrade with something of a fait accompli. However, the new partnership Mondelez formed with Fairtrade was a consolation prize the organisation pragmatically accepted, fundamentally because it offered the potential for those farmers to take their collaboration with the Dairy Milk maker forward, and so it has proved.
One can only hope, as the relationship of certification organisations and big business continues to evolve, there will be more partnerships of this kind and fewer announcements of the sort seen last week.
Fairtrade insists the change will save Nestlé money and the cocoa farmers, and most certainly the sugar farmers, who it seems will lose their market altogether, will be poorer. Nestlé believes it has adequately addressed concerns about the impact on the farmers.
While not offering the same as Mondelez, Nestlé has offered to support the affected farmers, though precisely how this will be done will require a good deal more elucidation from the company, and hopefully this will come. What independent certification offers is a gold standard of transparency, and it would be a worthy undertaking for Nestlé, at the very least, to report publicly on how those farmers are faring over the coming period.
Specifically, Nestlé says it wants to support them in achieving Rainforest Alliance certification, which differs from Fairtrade certification. If Nestlé were to report in the not too distant future that every farmer had, with the company’s help, achieved that certification, the response from consumers and other stakeholders would contrast with the discontent and anger widely expressed over the past week, which has included an online petition.
Both Mondelez and Nestlé have commitments to certify all their cocoa through their respective sustainability platforms, Cocoa Life and the Nestlé Cocoa Plan, by 2025. A distinction here is Nestlé’s decision to part company with Fairtrade has been accompanied by a more comprehensive alignment with Rainforest Alliance. Given how the relationship between major corporations and certification bodies has evolved, Rainforest Alliance might be advised to ring 2025 in its five-year diary.
Regarding the two systems, there are differences between the history, priorities and processes of the Fairtrade and Rainforest Alliance systems. As its priority has always been achieving a fairer return and guaranteeing a sustainable livelihood for farmers, Fairtrade’s terms – a minimum price and the Fairtrade Premium farmers can spend collectively on projects to improve living standards across their communities – have always been more generous than other certification schemes.
On the other hand, Rainforest Alliance, which merged with Netherlands-based certifier UTZ in 2018, has a defining environmental priority. The distinctions are complicated and both systems have evolved over time. Indeed, Rainforest Alliance launched its new standard only yesterday, and one of the aspirations of this new iteration of its certification programme is to build a more robust sustainable livelihoods component.
The challenges relating to environmental degradation, deforestation and climate change are all inextricably linked to farmer poverty, the pressing need to offer farmers a route out of that poverty and the many social issues faced by rural communities in the developing world. So, over time, it would be beneficial for all organisations, and companies for that matter, to better integrate social and planetary priorities.
The changes Rainforest Alliance has just made may offer more mitigation, or even benefits, to the affected farmers in due course. One key distinction will remain, however. Fairtrade is 50% owned by the farmers. Empowering farmers is a key tenet. Empowerment is naturally important to Rainforest Alliance but it also has a defining responsibility to the land those farmers are cultivating and its future. It may, with that justification, prioritise accordingly.
So, leaving to one side for now how farmers may fare in the medium to long term, the two key questions that can and should be addressed now are the overarching rationale for Nestlé making this change, the “why harmonise” question, and its timing at this moment of global crisis.
It should be stressed this is not, nor should it be, about a contest between Rainforest Alliance and the Fairtrade Foundation. The idea of Nestlé rewarding one scheme by giving it all its business would be a flawed way to approach whatever the question was the KitKat maker asked itself, and answered through last week’s announcement.
It speaks in part to the greater attention companies give to environmental sustainability because of the intrinsic risks these factors pose to security of supply. It is a weakness in the development agenda being too reliant on companies which, even if acting on enlightened self-interest, will not have identical priorities to farmers, NGOs or origin governments. Given the diversity of commodities, geographies and communities a major food company sources from, there are surely at least as compelling arguments not to harmonise, and have some flexibility to reflect those differences.
There may be administrative and organisational benefits for Nestlé to harmonise under one certifier but these will have far less to do with the challenges those certification bodies have set out to address, or the priorities of farmers. It has been done for reasons Nestlé itself has identified. The power relationship at play here is of an order that is hard to express.
The farmers asked the company to negotiate, to reconsider and they were not heard. Just as worryingly, it seems Nestlé was reluctant to engage with them directly. Nestlé decided to do this, and did it. If it weren’t for the fact the company has done many contrastingly positive things in the sustainability field, it might be as if the last fifteen years, and all the discussion about partners and stakeholders and “creating shared value”, simply hadn’t happened. That critical difference Fairtrade embodies in relation to farmer empowerment could not be more clearly underlined.
As to the “why now” question, it seems almost to be insulting the intelligence of Nestlé’s leadership to explain. The Fairtrade Foundation pointed out to the company farmers are spending Fairtrade Premiums on dealing with the pandemic. Should this not end the argument and at the very least prompt the company to put a hold on its plans until this unprecedented disruption is at an end? Like communities the world over, these farmers have enough to worry about at the moment.
Nestlé, by the way, announced in April that its first-quarter performance was better than anticipated, and it remains on track to achieve its targets for the full year. Well, thank goodness for that. At least there is some good news around.
Very lastly, not only does Nestlé appear to have forgotten some things it has said over the past 15 years, and the events of the last six months but also events in the last few weeks.
The unprecedented global resurgence of the Black Lives Matter campaign after the killing of George Floyd is being heralded as a seminal moment. Food companies, including Nestlé, have had to change brand names and respond in other unprecedented ways. The exposure they face in their supply chains is, quite simply, as nothing in comparison with what they have had to do over the past week or two.
To believe the Black Lives Matter movement will not sooner or later, and quite probably sooner, turn its powerful spotlight on the plight of people of colour doing backbreaking work for which they are paid a pittance in comparison with the value it ultimately produces for food companies, would suggest a staggering blindness to events.
Food companies should be treading very carefully. One hopes many are aware of the sensitivities and the risks. However, the world’s largest food company last week made what appears to be a rather arbitrary decision concerning its activities in the sugar trade and in west Africa, despite being implored not to by its African suppliers, and seemingly failed to notice some deeply troubling, but glaringly obvious, resonances.