Enabling a sustainable future for the cocoa industry

TRY FOR a moment to imagine a world without chocolate. It’s hard to do so because cocoa has been part of the diet for centuries whether as a flavour, comfort food or source of antioxidants. And chocolate is decisively the most-loved indulgence among the young and old. In recent times however, cacao trees, the source of cocoa, have come under threat from climate change, so much so that experts have cautioned of a possible extinction.

 Cacao (Photo: dimarik16 I Dreamstime.com)

Cacao crops, require high rainfall and consistent temperature, humidity and protection from wind and light to grow. This means it is only able to grow in a small strip of rainforested land, around 20 degrees north and south of the equator making it vulnerable to changing weather patterns. The cocoa industry is looking for ways to take action to reduce the impact of climate change across the supply chain.

In this report, we focus on the sustainability solutions of Olam Food Ingredients (ofi), a global provider of cocoa beans and cocoa ingredients. We asked Susanne Folkerts, Global Operations Head of Sustainability & Environment, on the company’s efforts in addressing the social and environmental impacts to cocoa production.

Cocoa bean production has been under pressure on many levels in farming to marketing, etc., and this impacts the chocolate industry. How is ofi facing this situation?

Cocoa is part of a complex supply chain involving thousands of smallholder farmers, mainly in West Africa, producing a small number of beans from individual plots of land with a lack of infrastructure and connectivity. This makes it challenging to track cocoa through the supply chain, which is critical for creating a more environmentally positive future for the industry.

To achieve 100% traceability in our direct cocoa supply chain, we collect data via our ofi Farmers Information System (OFIS) across our managed sustainability programs in nine countries. These insights are available to our customers through AtSource, our sustainability management system.

We are proud to have had 100% traceability and 100% deforestation monitoring in our direct supply chain and child labour monitoring in all managed programs, since 2020.  This level of data and insight helps us to identify how and where to act with our partners and customers to achieve our longer-term ambition of a professionalised and quality-focused cocoa supply chain, one where farmers are earning a living income, child labor is eliminated, and the natural world is protected.

ofi’s has achieved much for its stakeholders through the Cocoa Compass. Most recently it set its circular biomass boilers in motion in Germany and the Netherlands. How is this project working so far?

Let me answer that with the following data:

·        Cocoa ingredients crafted for our premium cocoa brand, deZaan, are powered by steam created from our own residual cocoa shells at several of our factories worldwide.

·        In our factory in Koog aan deZaan, we used 8,000 tons of residual cocoa shells to generate green energy, equivalent to using 3.4 million cubic meters of natural gas in 2022 alone.  This helped us to cut absolute CO₂ emissions at the factory by 23%. This is the equivalent of heating over 3,000 Dutch houses per year.

·        Another shell boiler, at our factory in Mannheim, Germany, has been developed through a joint venture with energy company MVV. It has the potential to provide up to 90% of the steam needed to power the factory, saving approximately 8,000 tons of CO₂ annually.

·        The new roll-out adds to the circular biomass shell boilers used in ofi cocoa factories in Brazil, Côte d’Ivoire, Indonesia, and Singapore.

·        One of our Cocoa Compass goals is a 30% reduction in natural capital costs[i] by 2030. In 2021, we reduced these costs in our global cocoa processing operations by 11% per metric ton of product output from processing, partly thanks to our network of biomass shell boilers and other initiatives such as green electricity and solar panels.

Does the company have similar boilers in its locations in Asia?

Yes, in our cocoa factories in Indonesia and Singapore and our coffee factory in Vietnam.

Under the Cocoa Compass, are there highlights from Asia?

In June this year, we announced a new USD$8.2m partnership projectⁱⁱ  with USAID, The Hershey Company, Rikolto, and the Indonesian government. It aims to assist 6,500 cocoa and coffee farmers in Indonesia to increase their yields by 25% while conserving 14,000 hectares of the watershed and riparian buffers by 2025.

In 2021, we collaborated with our partner Mondelēz International in Indonesia to create the world’s single-largest sustainable commercial cocoa farmⁱⁱⁱ. The project aims to advance climate-smart agriculture and plant science to create a blueprint for best-practice cocoa farming.

Has ofi already been an advocate of sustainability even before Cocoa Compass was created in 2019? What has changed since then?

We have been working to support farmers and cocoa-growing communities worldwide for nearly two decades. In 2004, we launched our first sustainability initiative, and our ambitions have grown, launching our Cocoa Compass ambition in 2019.

It sets challenging goals for 2030, with milestones for action in 2020, which we’ve achieved, and in 2024, which we’re progressing towards. To help us reach our ambition and make a difference at scale, we’ve developed global partnerships with customers, NGOs, governments, and cocoa communities in nine countries.

In 2022, the programs we ran in collaboration with customers and partners supported over 275,000 cocoa farmers and their communities.

For example, we helped more children access education by providing school supplies, sourcing birth certificates needed for enrolment, and rehabilitating or building schools. We also helped farmers in our programs to increase their yields by 6% from 2020, a critical ingredient for achieving a living income.

What will we be seeing from ofi in the coming years on this initiative?

We are continually exploring new ways to improve our processing factories and reduce our emissions further, in line with our Cocoa Compass goals.

As well as in our cocoa business, ofi is planning to install biomass boilers in our global network for is coffee and dairy businesses in Brazil and New Zealand.

[i]Natural capital costs/accounting follows a holistic systems approach to understanding the true value of nature, people, and society for humans. The economy must be recognised as parts within a deeply interconnected global system and addressed together to deliver value across the capitals. It is an approach to measure the changes in the stock of natural capital at a variety of scales and to integrate the value of ecosystem services into accounting and reporting systems.

ⁱⁱ USAID, ofi, The Hershey Company and Rikolto launch new partnership. https://www.ofi.com/news-and-events/press-release/climate-proofing-cocoa-and-coffee-usiad.html

iii Mondelēz International and Olam Food Ingredients Announce Partnership in Asia to Create World’s Largest Sustainable Commercial Cocoa Farm. https://www.ofi.com/news-and-events/press-release/mondelez-international-and-olam-food-ingredients-announce-partnership-in-asia.html