Can we litigate our way to ethical business models in the cocoa industry?

November 2, 2015 Posted by Irit Tamir

Chocolate companies are protesting a recent child labor lawsuit against them, saying the suit itself will discourage investment and corporate human rights efforts. We don’t buy it.

Last year, I wrote about John Doe v. Nestle et al, the 9^th Circuit Court case which held that former child laborers were able to bring an action under the US Alien Tort Statute against Nestlé, ADM and Cargill for aiding and abetting enslavement in their cocoa supply chains – following the companies’ attempt to have the case dismissed. And even though they lost that case, the companies are at it again with the US Chamber of Commerce standing with other industry groups to urge the Supreme Court to undo the ruling, under the argument that such litigation discourages investment and corporate human rights efforts.

It’s ironic the Chamber has argued that such efforts would discourage investment, since at a gathering following the Rana Plaza disaster, a representative from the US Chamber passionately suggested that companies would more than welcome regulation in Bangladesh to avert such disasters in the future. This doesn’t seem entirely realistic though. After all, companies bring their businesses to countries like Bangladesh and the Ivory Coast because of the low cost of doing business – which are low precisely due to the lack or low enforcement of laws and regulations.

The reality for the cocoa industry, whether this suit goes forward or not, is that it will hardly discourage companies from sourcing cocoa in the Ivory Coast. The world’s appetite for chocolate is not waning, cocoa supplies are at risk, and since cocoa can only be grown in particular tropical climates (which are found primarily in developing countries), companies will continue to source cocoa there because, frankly, they have little choice in the matter.

But even as demand rises, and the chocolate industry rakes in $80 billion per year, farmers in places like West Africa have never been able to capture their fair share of the value chain—leaving communities impoverished and vulnerable to issues like child labor and trafficking.

While lawsuits can help move things forward, they are costly, ad hoc and time-consuming. The most complete and sustainable way to remedy the injustices we see, is through regulation and enforcement of laws that ensure companies fairly compensate farmers, prevent human rights abuses, and face real consequences when they don’t. To make this transformation real, companies will have to reform their procurement practices, change their business models to allow for profits to be shared more equally – which may mean that CEOs and investors will see their salaries and investments decrease to allow farmers and workers get their fair share.

And while this is the ideal, if a fear of lawsuits can help externalize costs in a way that pushes companies to think about more equitable business models, then I hope the Supreme Court will give the cocoa laborers their day in court.

Author bio

Irit Tamir

Irit Tamir is the Director of Oxfam America's Private Sector Department. In her role, she is focused on working with companies to ensure that their business practices result in positive social and environmental impacts for vulnerable communities throughout the world. She leads a team of advisors that engage the private sector on tax, business and human rights, vaccine equity, legal advocacy, supply chain and labor relations, climate change and gender and racial equity. She oversees the private sector engagement from campaigns and advocacy to collaborations and programs focused on corporate behavior along with a work focused on investors and shareholder advocacy.

Prior to working at Oxfam, Ms. Tamir was the Director of Government Relations at the Jewish Community Relations Council of Greater Boston, where she successfully lobbied for an extensive federal and state legislative agenda. She co-led the effort to pass the Sudan Divestment Bill in Massachusetts, which required the state pension funds to divest from companies doing business with the Government of Sudan in an effort to halt its human rights violations in Darfur. Ms. Tamir is an attorney with a masters in international law and has taught Business and Human Rights as an adjunct at Boston College Law School. She sits on the Board of the Fair Labor Association and co-chaired the Working Group on Business and Human Rights for the New York City Bar Association. A devoted human rights activist, she has spoken publicly about inequality, human rights, climate resilience, and the food system. Ms. Tamir has had years of experience in government relations and is a former prosecutor who supervised civil rights prosecutions and hate crimes.

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Politics of Poverty