The Corporate Knights Dark Red Flag Database consists of more than 2,500 companies from developed and emerging economies that have been identified as so-called ‘red flag companies’ due to their involvement in ethically or environmentally questionable industries and/or practices. These companies have been identified through a rigorous process including theme selection, source reliability analysis, and company identification processes. The list is updated monthly to reflect changes in source material. Sources include methodologically-sound reports by non-profits, bottom-up research by Corporate Knights, and the public and derived exclusions of two significant funds (Norges Bank Investment Management and NZ Super Fund).

The dark red flag themes are as following: Access to medicine laggards; Access to nutrition laggards; Adult entertainment; Blocking climate policy; Cement carbon laggards; Civilian firearms; Controversial weapons; Conventional weapons; Deforestation & Palm oil laggards; Energy (Fossil Fuels); Farm animal welfare laggards; For-profit prisons; Gambling; Gross corruption violations; Harmful pesticides; Illegal activity; Oil sands laggards; Severe environmental damage; Severe human rights violations; Thermal coal; and Tobacco.

In addition to the dark red flags, Corporate Knights also maintains a database of “light red flag” companies for the following themes: Alcohol; Blocking climate resolutions; Financing misleading media; Industrial meat; and Nuclear energy.

Please e-mail research@corporateknights.com for more information.

The post Corporate Knights Radar: Sustainable solutions and red flag database appeared first on Corporate Knights.

The brawny marketing stunts carried a simple message: electric cars aren’t just for tree-hugging Leaf, Prius and Bolt lovers anymore. The message is timely, with global leaders (including Prime Minister Justin Trudeau) committing to carbon pollution targets of “net zero” by 2050, tough new emissions standards coming out of Europe, and a smattering of governments following Norway’s early lead on banning gas-powered-car sales as soon as 2025. For the vast majority of automakers that have cautiously dipped their toes in the EV market, the race to net zero is officially on. But environmental and human rights advocates, along with international heavyweights at the World Bank and World Economic Forum, say there’s an elephant in the showroom. The EV revolution has been racking up a whole supply chain of trouble around the globe (including a recent lawsuit) related to an onslaught of often-contentious new mines opening to meet surging battery-metal demand, not to mention the coming tide of e-waste from old batteries.

If we want to fix this before e-cars take over the roads (30% of car sales should be electric across the EU and North America by 2030, analysts forecast), the time to ensure it’s done right is now. A handful of companies are trying to get out ahead of looming environmental and social risks. So who will be the first to develop a fully ethical battery, and can car companies ensure the EV revolution is green from end to end?

Lithium mines in Chile, Open Commons

The clean-energy mining boom

The transport sector is currently the fastest-growing contributor to the climate crisis, according to the World Resources Institute (with road, rail, air and marine transport accounting for 24% of global CO2 emissions in 2016). Electrified transport – powered by low-carbon grids – could help clear deadly air pollution and cut millions of tonnes of greenhouse gas emissions per year. In the shift from burning planet-cooking fossil fuels to generating and storing clean energy in batteries for our cars and, increasingly, our homes, one thing is certain: batteries are driving demand for more minerals in the low-carbon transition.

Bloomberg New Energy Finance predicts that by decade’s end the battery market will be worth $116 billion annually (not including investments in supply chains), up from $14.6 billion in 2017. Trailblazing EV manufacturer Tesla and others have warned that underinvestment in the mineral supply chain will lead to a shortage of nickel and other EV battery minerals down the road. In its 2017 report The Growing Role of Minerals and Metals for a Low Carbon Future, the World Bank forecasted that global demand for low-carbon-economy minerals such as lithium, graphite and nickel will skyrocket by 965%, 383% and 108% respectively by 2050. But two years later, as the World Bank noted that growing demand for minerals offers an “opportunity for mineral-rich developing countries to develop,” it cautioned that “significant challenges will likely emerge if the climate-driven clean energy transition is not managed responsibly and sustainably.”
But those challenges were already lurking.

Cobalt mining, Congo. Image courtesy of Amnesty International

The dark side of green minerals

Amnesty International first thrust the dark side of mining for car- and smartphone-battery minerals into the spotlight in 2016 with a damning investigation into the child labour-plagued cobalt mines of war-torn Congo (home to 60% of global cobalt reserves). Then in late 2019, the issue hit the front pages again when a landmark lawsuit was launched against Tesla and a handful of tech giants on behalf of 14 Congolese families who say their children were seriously injured or killed working in cobalt mines earlier in the year.

With cobalt dubbed the “blood diamond of batteries,” Tesla and others have been slashing their use of the controversial mineral and replacing it with nickel in a move that’s said to prolong range per change. Not that cutting and running from the Congo will help those mining in poverty, say activists, and without tough responsible mining standards in place, other EV minerals end up being called out for bad behaviour, too. The Washington Post recently reported that nickel mines in Indonesia are turning the oceans there red. The draining of water reserves for vast lithium mines in the salt plains of Latin America has been fingered for fuelling water wars, social unrest and mine strikes in Chile, Bolivia and Argentina. And a new frontier of destructive deep-sea mining for several green economy minerals has prompted the nation of Fiji, along with Greenpeace and others, to call for an immediate moratorium on the nascent practice.

At a MiningWatch conference in Ottawa in November, the human and environmental implications of this new extractive rush were front and centre. Representatives from Chile, Peru, Papua New Guinea, Congo and northern Canada took the stage one by one, concerned about the green transition being used as justification for running roughshod over their ecosystems and human rights. “The floor is dropping on standards in Peru,” said Ana Leyva Valera, executive director of CooperAcción, through a translator. With increased demand for green technology minerals, she said, “we have to make sure there are not more sacrifice zones.”

The International Institute for Sustainable Development (IISD) has studied what it calls “green conflict minerals” (cobalt, nickel, lithium, rare earths and aluminum). The problem with green economy minerals, says IISD analyst Clare Church, is that they’re often found in countries with fragile governments, making their extraction prone to violence, conflict and human rights abuses. But like nearly every other speaker at the conference, Church goes out of her way to make one point clear: “This is not to say the transition [to a clean economy] can’t happen – it must happen.”

The question, say the IISD and others, is whether green economy minerals – and the companies that source them – can help fuel thriving, peaceful and sustainable development in communities with key mineral reserves – rather than exacerbating local unrest.

It’s a challenge Amnesty threw at carmakers at an EV summit in Norway last spring: can the auto industry develop the world’s first fully ethical battery within five years? In a statement, Amnesty’s secretary general, Kumi Naidoo, said car companies “have the resources and expertise to create energy solutions that are truly clean and fair.”

Perhaps because cars need such a large volume of minerals compared to, say, a smartphone (EV batteries weigh in at roughly 500 kilos per car), and perhaps because EV owners tend to be a fairly conscientious bunch, EVs – and the companies that make them – are now driving demand for more ethical mineral sources.

CAR COMPANIES (FINALLY) BET BIG ON EVS

A Reuters analysis found that global automakers plan to spend a combined US$300 billion on EVs over the next decade. In the last year, carmakers made some major cash commitments:

Audi is accelerating EV spending to €12 billion by 2024 and plans to offer 30 electrified (20 fully electric) vehicles by 2025.

BMW is funnelling €10 billion into new battery-cell contracts for its upcoming electric cars. It hadn’t launched a new all-electric car in seven years, but three new ones are coming online by 2021.

Hyundai just committed US$17 billion for electric and driverless cars by 2025 (less than half of that will go to EVs, so roughly US$8 billion).

Fiat Chrysler has committed to investing €9 billion to launch more than 30 electrified cars by 2022.

Volkswagen plans to spend €60 billion on rolling out 75 fully electric models and 60 hybrid vehicles over the next five years.

GM announced a US$2.3 billion joint venture with South Korea’s LG Chem to build an EV battery factory, in addition to spending US$3 billion to build an electric pickup factory in Detroit as part of its plan to add 20 new battery-electric and fuel-cell vehicles by 2023.

Ford in 2018, said it plans to spend US$11 billion by 2022 to produce 40 new electrified cars.

Nissan is pumping US$9 billion into China alone to bring more EVs to that country and plans to introduce more than 20 electric models by 2022.

Toyota earlier in 2019, said that by 2025 all models will have electrified versions. It’s spending US$2 billion on developing EVs in Indonesia alone through 2023.

Daimler in 2018, announced plans to buy €20 billion worth of battery cells for its EVs by 2030. Its entire Mercedes product range will be electrified by 2022.

Volvo will launch a new electric car every year through 2025, when it will phase out gas-only car sales entirely. Volvo told Corporate Knights it doesn’t disclose its spending on EVs.

So, which car companies are coming clean?

One route to cleaner EVs involves boosting transparency. A few leading car companies – BMW, Daimler and Renault, as well as Samsung and Apple – have started publishing supply chain data. (While Tesla doesn’t disclose cobalt suppliers, it does publish lists of its tungsten, tantalum and tin suppliers, as mandated by California law regarding officially designated conflict minerals.)

Supplier disclosure is an important first step in shedding light on shadowy supply chains – something leading sneaker and clothing brands started doing years ago in response to sweatshop scandals.

Following the unveiling of Volvo’s first fully electric car, the XC40 Recharge, this past fall, the Swedish carmaker announced that it will begin using a blockchain platform (essentially a decentralized digital ledger) to trace its cobalt. Volvo Canada’s Matt Girgis tells Corporate Knights that while Volvo has long been marketed as the safest car in the world, it’s now trying to position itself as the safest car for the planet. Making sure its minerals are “clear and safe from unethical issues,” as its blockchain partner put it, is particularly pressing now that, as of 2020, all new Volvo models will be hybrids or plug-ins, with gas-only vehicles phased out by 2025.

It’s a sign of the times that the world’s largest cobalt miner, Glencore, announced in December that it too will start using blockchain for better traceability (days before it was named as the main supplier in the Congolese lawsuit). Glencore and Fiat Chrysler are now the newest members of the Responsible Sourcing Blockchain Network, joining Volvo, VW and Ford.

Not that blockchain alone will solve human rights or environmental violations. “Blockchain is a powerful tool for tracking,” says Aimee Boulanger, executive director of the Initiative for Responsible Mining Assurance (IRMA), “but only if the information going in is quality” – that is, independently verified so that responsible practices are met throughout the supply chain.

There’s a hustle right now to show we can do this right, with mines that better respect communities and the environment near those mines.

–Aimee Boulanger, IRMA

Up-and-coming IRMA positions itself as the most rigorous third-party mining standard to emerge. It aims to do for mining what Forest Stewardship Council certification has done for forestry by creating a trusted standard for sustainable paper and wood products. Microsoft, Tiffany and Anglo American are already IRMA members; BMW is the first carmaker to sign up. To date, most mine certifiers have been industry-run and/or lacked teeth. Case in point: the World Bank’s recently launched Climate-Smart Mining Facility fund was slammed by a coalition of more than 50 NGOs (including Earthworks, Greenpeace and IndustriALL Global Union) for having weak performance standards and minimal oversight.

IRMA is just coming online, so don’t expect to see a car with 100% IRMA-certified battery minerals any time soon, says Boulanger. “There’s a backlog of demand for responsible mining materials,” she says. “There’s a hustle right now to show we can do this right, with mines that better respect communities and the environment near those mines.”

First world problems: bringing battery production home

In the race to ramp up EV production, a growing number of companies are looking to lock down a steady and sustainable battery supply by wresting production away from coal-heavy China – which currently dominates global battery manufacturing – and bringing production home. Literally.

Swedish battery developer Northvolt’s ambition has been to build a battery industry on European turf – from mining and refining to manufacturing and recycling. “Our mission,” it says, “is to build the greenest battery in the world with a minimal carbon footprint and the highest ambitions for recycling to enable the European transition to renewable energy.” Northvolt has teamed with Volkswagen to create the European Battery Union (EBU). BMW is also an investor.

They’re not alone. A separate 200-member European Battery Alliance (EBA) just announced that its seven EU states would contribute €3.2 billion to finance a supra-national farm-to-fork-style initiative – but for minerals – with new pilot plants to be built in each country. Estimates by the European Institute of Innovation and Technology suggest the entire battery value chain in Europe – mining, refining, cell manufacturing, battery packs and recycling – will be worth €250 billion by 2025. Northvolt predicts that by 2030 Europe will be home to at least 10 gigawatt-scale battery production plants.

Industry players say Natural Resources Canada has been aggressively laying the groundwork for a comparable boom on Canadian soil. Last summer, the feds launched a $4.5 million Impact Canada challenge aimed at accelerating made-in-Canada battery innovation. The Canadian CEO of one leading cathode supplier to EV battery producers around the world, BASF Canada’s Marcelo Lu, says that Canada has all the right ingredients to become a major battery hub: “Canada is one of the few countries that has all the elements to produce a lithium-ion battery for electric vehicles.” For instance, he says, Canadian nickel, like that found in Sudbury, is naturally rich in cobalt (Canada has 3% of known cobalt reserves).

Refining those minerals locally in provinces with low-carbon grids and shifting more mining, refining, manufacturing and recycling to Canada is on the vision board for many. But activists are quick to point out that Canadian mines aren’t beyond reproach. At the MiningWatch conference, residents and Indigenous leaders flagged water contamination and concerns about Indigenous consent in regard to various proposals in northern Quebec and around the country.

Which is why the secret to unlocking the EV revolution’s greenest potential may lie not in mine shafts but under the floorboards of aging cars.

Tesla launching closed-loop battery recycling at its Gigafactory in Nevada. Photo: Planet Labs, Inc.

Can the transition economy join the circular economy?

The International Energy Agency, which has perennially underestimated the march of green technology, estimates that annual EV sales will reach 23 to 43 million by 2030, and there should be up to 250 million electric passenger vehicles on the road, up from just five million today. As millions of EVs near retirement age, with that will come a flood of e-waste. As little as 5% of lithium-ion batteries are currently recycled, but tapping into the half tonne of metals and minerals in each and every EV battery will be key to breaking away from a linear (mine it, make it, trash it) value chain to a greener and, ideally, cheaper circular one. Refurbishing and reusing aging car batteries as energy storage packs for solar panels is one exciting innovation (after eight to 10 years of use, most batteries retain 80% of their capacity), and some are finding new life providing off-grid power to homes, businesses, streetlamps, stadiums, factories – you name it.

Recycling insiders say they’d rather see old batteries increasingly recycled into new batteries. Though, at this point, Nissan has been refurbishing its LEAF batteries rather than recycling them because it’s just plain cheaper.

A recent study in the journal Nature, by researchers at the University of Birmingham, says that car companies need to start designing batteries for easy disassembly, reuse and recycling. The EU and China already require battery makers to finance the costs of collecting, treating and recycling used batteries. Ontario is finalizing similar regulations.

So far, Tesla, Toyota and European car companies have taken an early lead on recycling. In its 2019 environmental-impact statement, Tesla announced that it will stop outsourcing recycling and will soon launch a closed-loop battery recycling process at its Gigafactory 1 in Nevada.

Keeping battery recycling close to home is one way to minimize the human rights and environmental hazards that have dogged e-waste recycling overseas. One Canadian start-up co-founded by a University of Toronto engineering grad has figured out a way to recover 80 to 100% of all lithium-ion battery components. After a $2.7 million injection from the Canadian government, Li-Cycle is now recycling batteries for several major car companies at its plant just outside Toronto. Lithion Recycling, a Quebec start-up with $3.8 million in federal backing, says it will be able to recycle 95% of a battery’s components at its Montreal pilot factory by early 2020.

However, even if recycling and reuse are mandated, academics say, there won’t be enough minerals above ground in old EVs to make fully recycled batteries for years to come.

NGOs say that we can take pressure off the planet’s scarce mineral resources if we prioritize investments in electric-powered public-transit infrastructure over pushing everyone to buy a new electric car.

Regardless, stringent standards ensuring that batteries are socially and environmentally responsible – from mining to manufacturing to end of life – need to be nailed down. The World Economic Forum’s Global Battery Alliance – a coalition of car companies, battery makers such as BASF and organizations such as the World Bank and UNICEF – is meeting in Davos in January to firm up strategies. BASF’s chair, Martin Brudermüller, issued a statement ahead of the meeting: “The time to change the trajectory of the value chain is now.”

In 20 years, will fair-certified cars with recycled-content logos be as commonplace as fair-trade coffee and Forest Stewardship Council–certified paper, scrutinized by third-party auditors and stamped with sustainable seals of approval? With so many batteries driving the clean energy transition, it’s hard to see how we can have a sustainable electric future unless it’s ethical to its core.

The post The EV revolution will take batteries, but are they ethical? appeared first on Corporate Knights.

The truth is, most people didn’t even notice. Of the ten or so shoppers who showed interest in the “Product may contain slave labour” shirt at the front of the H&M, only two actually read the sign. Sitting on the sidelines, I listened to a shocked mother and daughter examine the shirt marked as potentially being created by slaves and yet they still entered the store, continuing their shopping as usual. Meanwhile, the “Product has been certified to be slave labour free” sign received even less attention.

When I repeated the process at the Gap and put the stickers on men’s jeans and women’s t-shirts, only 20% of people acknowledged the signs. Considering that labels act as powerful tools to warn consumers about allergens like peanuts, my stickers seemed hopeless in aiding consumers’ purchasing decisions as so many people overlooked them.

This lack of attentiveness doesn’t necessarily mean that consumers don’t want to buy more ethically. In 2016, Morgan Stanley surveyed 1,000 customers in the U.K. regarding their views on leading clothing retailers. 51% of respondents said that ethical credentials were somewhat or very important when deciding among apparel retailers. The same study also found that 62% of respondents valued good ethics as a key spending criterion. Good ethics landed in the middle of a list of 12 factors; good value for money was first at 84% and good advertising last at 36%.

To shop ethically, it’s critical for consumers to understand that slavery is not an idea of the past. An estimated 25 million people, the majority of which are in Asia Pacific, are victims of forced labour and subject to slavery, debt bondage and human trafficking. They’re found in the supply chains of global industries from canned tuna to British spring onions. Forced labour is also woven into the production of cotton, leather, textiles and garments at the world’s largest clothing retailers. According to the Global Slavery Index, the clothing industry is the second largest supporter of modern slavery after electronics.

Ethical sticker experiment seemed hopeless in aiding consumer purchasing decisions as so many people overlooked them. But lack of attentiveness doesn’t necessarily mean that consumers don’t want to lobal sla more ethically.

Last month, an Australian ABC television investigation uncovered that Target and H&M were among the brands sourcing cotton from China’s troubled Xinjiang province, where detained Muslim Uyghurs are reportedly forced to work in textile factories. The brands said they are investigating their relationship with suppliers.

Patricia Carrier, a program manager at Modern Slavery Registry, told Ethical Corporation that “given the prevalence of modern slavery in global supply chains, we know that most global companies will have it somewhere in their supply chains, very far down where they don’t have much visibility or leverage.”

The International Labour Organization values profits from slavery at $150 billion a year, making it more fruitful than Apple. Essentially, these victims are part of the reason why we can walk into our favourite fashion retailers, snag a great deal on a pair of jeans and feel economically satisfied because we found our size before it sold out.

The 2015 documentary The True Cost highlighted several of the gruesome aspects of fast fashion. It delved into the lives of low wage workers in developing countries and featured a 23-year-old Bangladeshi garment factory worker named Shima Akhter. It’s Akhter’s plea to consumers at the end of the film that is most chilling. “I don’t want anyone wearing anything,” she says, “that is produced with our blood.”

After hearing Akhter’s teary-eyed message, I assured myself that I would never again buy from a fast fashion retailer until later that week when I found the perfect summer dress at Zara. Could I consider myself an ethical consumer or was I some sort of monster?

A possible explanation for the lack of practice in ethical consumerism is that people often have different goals in different contexts. For instance, in the long run someone may want to lose weight but in the short term they’ll eat an entire chocolate cake.

A study called “The Socially Conscious Consumer? Field Experimental Tests of Consumer Support for Fair Labor Standards” tested this idea in 111 Banana Republic Factory stores across the U.S. by arranging two different signs around the stores. One highlighted the fashion attributes of products while the other explained the company’s commitment to promoting fair and safe working conditions. The labels with information about labour standards on low priced men’s and women’s items had no statistical impact on sales in outlet malls. Notably, the labour signs did have a positive effect on female shoppers looking at higher priced items.

Notably, the labour signs did have a positive effect on female shoppers looking at higher priced items.

 

The blinkered mindset, which many consumers maintain while shopping, makes it difficult to consider the ethical implications of a purchase. I liken this to going to a rib fest with my vegetarian best friend and having her try to convince me to eat salad instead. Of course, I love animals but I’ve come with the intent to buy ribs and that is what I will eat.

People may also engage in unethical behaviour and defend their desired perception through motivated reasoning. One study title sums it up concisely: “Sweatshop Labour is Wrong Unless the Shoes are Cute: Cognition Can Both Help and Hurt Motivated Moral Reasoning.” Georgetown University researchers found that a great sale or exclusive offer can justify labour practices, as can assumptions that sweatshops are the only realistic source of income for workers in poorer countries. The study also found that consumers that were stressed, distracted or preoccupied were less likely to justify sweatshop labor “due to a lack of mental capacity to convince themselves of something that isn’t true.”

A recent report by the San Francisco-based supply chain benchmarkers at KnowTheChain ranked global companies on the steps they took to eliminate forced labour throughout their supply chains. Gap (which scored 75/100), and H&M (65/100) were among the leaders, which is why I chose to target them for my experiment. The stickers, evidently, received little attention, but is it right to put the onus on consumers whose goals lead them to shy away from considering the use of slave labour in products?

In Canada, many of the most vigilant shoppers have trouble arriving at informed decisions. World Vision found that 80% of Canadians have no insight into whether their purchases assist in the exploitation of children. The study also noted that 90% of Canadians agree that the government should obligate companies to publicly report on their suppliers as well as their efforts to curtail slave labour in their supply chains.

90% of Canadians agree that the government should obligate companies to publicly report on their suppliers

 

Engaged citizens and advocates are encouraging Canada to follow in the steps of the U.K., California, the Netherlands and France in passing legislation to address modern slavery. The U.K.’s Modern Slavery Act guarantees that companies who operate at least part of their business in the U.K. and have approximately $73 million in annual gross global turnover are held liable for actions in their supply chains.

Kevin Thomas, the CEO of the Shareholder Association for Research and Education (SHARE) explains that “Canada needs the type of regulation that would empower private sector companies to report on their due diligence efforts to restrain and eliminate the use of modern slavery in their supply chains.”

Last December, a private member’s bill calling for a modern slavery act in Canada was tabled by Liberal MP John McKay. The proposed act would ask companies doing business in Canada (with at least $40 million in annual revenue) to submit public annual reports on the steps taken to prevent and reduce the risk of forced and child labour in their supply chain. In June, Employment and Social Development Canada held consultations on how the federal government should address labour exploitation in supply chains. Any further work on this has been suspended until after the federal election in October.

Would a modern slavery act survive the next federal election if there’s a change in government? SHARE’s manager of engagement and policy, Delaney Greig, is hopeful, “We believe this is a cross-party issue and does not depend on the same government being re-elected. Modern Slavery Acts in the U.K. and Australia have come in under conservative governments.”

Either way, the more pressure put on government and companies to root out modern slavery, the more likely they are to provide better working conditions for those whose anguish is on the clothing we wear daily.

The post Warning: garment may contain slave labour appeared first on Corporate Knights.

His new goal?

Helping companies build a better chocolate bar.

Global cocoa demand is on the rise and its market value is expected to double by 2025 compared to 2015 levels. Over half of the world’s supply comes from West African countries like Ivory Coast and Ghana, where cocoa isn’t just one of the hardest supply chains to monitor and track, it’s also one of the most destructive.

For as long as there’s been chocolate bars, the cocoa supply chain has been rife with illegal deforestation, human rights violations and child labour. Just last month, The Washington Post reported that two decades after candy makers like Mars, Nestlé and Hershey pledged to stop using cocoa harvested by children, it’s still likely that a chocolate bar purchased in the United States was the product of child labour.

Major cocoa companies use a few different methods to find out how the beans they put on store shelves were grown, picked, traded and processed. Audits and monitoring are one approach. Certification is another. Still another is legislation.

So far, the system isn’t working.

One reason is size. There are 4 to 6 million smallholder cocoa farms around the world. Three of the largest brands, Mondelez, Mars and Nestlé, have a chain of nearly half a million farms. They usually have a direct relationship with over half of the suppliers that source and sell beans from those farms. This leaves millions of suppliers with whom they have no direct relationship, which is where problems arise.

“Cocoa can’t be sustainable unless it’s traceable,” says Juliette Barre of Sourcemap.

Implementing Sourcemap’s app in the field in Ghana

Another is the paper trail. Low tech commodities like cocoa beans exist in a low tech chain. Transactions are tracked on paper and transported on bicycles and trucks, leaving room for social and environmental corruption that isn’t recorded or subject to regulation. Often there’s no digital tracking or paper trail to verify that payroll was made, or taxes paid, or to ensure that the cocoa being sold by one farm wasn’t smuggled in from another.

Bonanni wanted to build a platform to address these challenges directly. But timing was key. In the last few years, Android phones have become better and cheaper. Mobile phone use in Sub-Saharan Africa is growing faster than in any other part of the world. This laid the groundwork for increased traceability even in parts of the continent where electricity can be sparse, and at the end of last year, Sourcemap launched its Responsible Cocoa Platform.

Today, if a farmer has a smartphone, the platform can trace the cocoa he or she produces down to the size, shape and location of the farm as well as its yields, income and workforce.

Suppliers are registered with an online network (the first of its kind), data is captured and scores on sustainability, social compliance, risk and performance are calculated using web or mobile apps. Everything gets stored in the cloud.

Sourcemap’s app used to outline farms in West Africa

Mapping beans—and communities—can mean addressing the system’s inherent inequality. Knowing whether or not a farmer has enough electricity to turn on the lights, confirming the farm’s proximity to drinking water and useable roads and understanding the availability of health care, schools and access to credit is critical.

“That constellation of support,” says Bonanni, “is what powers a sustainable supply chain.”

Technology has a large role to play: in the search for a solution to cocoa’s ills, political will has often come up short. Agreements meant to reduce child labour, like the Harkin-Engel Protocol from 2001, floundered when the chocolate industry failed to meet its goals. Etelle Higonnet of Mighty Earth, a D.C.-based non-profit that works on environmental protection, says that a recent agreement designed to address deforestation, the World Cocoa Foundation’s Cocoa & Forests Initiative, is important—its 34 company signatories account for 85% of the world’s cocoa use—but still needs to deliver real monitoring and traceability.

While certification accounts for a small portion of the market, approximately 20%, it’s received a large amount of attention. In the last three years, two companies, Cadbury (a subsidiary of Mondelez) and Mars, distanced themselves from the Fairtrade and Rainforest Alliance certification standards they had committed to a decade ago and replaced them with their own programs, a move many consider problematic because of a lack of third-party oversight and international consistency.

While Mars had committed to selling 100% certified sustainable beans by 2020 and 50% of its beans were already certified by 2018, that year the company’s global VP of cocoa told Reuters that “certification isn’t enough.” Said John Ament, “Our belief is that we need to set more demanding standards than certification sets today.”

Ament isn’t alone in his critique of certifications. Mighty Earth’s Higonnet says that certification bodies such as Fairtrade and Rainforest Alliance need to commit to a higher price floor to address extreme poverty and implement more rigorous monitoring and intervention at every stage of production.

All of which makes traceability and transparency pivotal. To Higonnet this means “you know where your cocoa comes from, so you can discover all the problems in the chain, then start fixing them.”

Bonanni agrees. “There’s no excuse for a chain not to be traceable.”

On the platform today, 250,000 cocoa farms are mapped and traceable and thousands are being added each month for clients like Hershey and Mars. Sourcemap is working on a 100% traceable supply chain, including non-certified cocoa, by 2025—the first time non-certified cocoa has been mapped at scale and an important first step.

The post Fixing chocolate’s troubled supply chain appeared first on Corporate Knights.