A Bitter Sweet Enterprise- Paper 2


Below is my paper two on the Hershey company and the worst forms of child labor incorporated in the company’s supply chain.

A Bitter Sweet Enterprise

Hershey has grown to be a company that America and other nations around the world love and admire. From the delectable sweets to the family friendly amusement park children grow up knowing of the Hershey name. Behind the scenes like many other beloved companies, Hershey has a dark side to its business. Much of the cocoa used to make millions of children smile on a daily basis, is being farmed by children 12 and younger that have been stolen from their homes. They are forced to work long hours with no pay and are beaten on a regular basis. The more disturbing part of this fact is that Hershey does nothing to prevent these poor labor practices. It simply turns the cold shoulder. In this essay, I will reveal the Hershey companies supply chain and the effects it has on children of West Africa. I will then use business ethicists Donaldson and Hartman to explain how Hershey has an obligation to prevent these horrible labor practices by changing its supply chain processes.
The Hershey Company (HSY) located in Hersey, PA was started in 1900 by Milton Hershey. The company began producing chocolate bars in different shapes and sizes and has grown to produce more than 80 name brands of candy products distributed around the world. Hershey operates globally and has around 14,000 employees. It produces about $6 billion in revenues a year and has a 42.5% market share of the confectionary industry. Hershey’s main competitors consist of Nestle, Mars, Cadbury, Russell Stover, and Kraft. The company is the leading manufacturer of chocolate and other candy goods in North America and arguably the world. It went public in 1927 and has expanded rapidly since. Hershey’s has been able to dominate the industry for over 100 years because of the low cost structure of its supply chain. The company imports almost all of its materials for production, the most important being cocoa. It has proclaimed itself a leader in corporate social responsibility since 1909 when the Mr. Hershey founded the Milton Hershey School of undeserved children. This was a school for orphan boys focused on helping the needs of orphaned children. Recently however, CEO David West and the Hershey Company have tarnished this reputation due to its supply chain operations of cocoa imports.
The chocolate industry is a $13 billion industry in which 70% of the cocoa produced to make chocolate comes from West Africa (Raise the Bar). This means that almost every company in the industry, including Hershey, imports its cocoa beans from this region. The Ivory Coast nation produces nearly 43% of the cocoa that is harvested in West Africa, with Ghana, Cameroon, and Nigeria being the other main producers (Robbins). Hershey currently states that the Ivory Coast and Ghana are its main suppliers of cocoa. These countries like much of Africa are developing countries so agriculture remains a large part of the economy. For example, Cocoa farms on the Ivory Coast account for 1/3 of the nation’s entire economy (Robbins). Cocoa farming is not as rewarding as it sounds though. Most farmers live in poverty and do not receive the large revenues these products produce. This is one of the main reasons billion dollar companies like Hershey import this product. The labor and cocoa costs are cheap which create large profit margins for the industry. Because many farmers are poor labor conditions and practices tend to be harsh. Forced labor, human trafficking, and child labor are found often in the cocoa farms of the Ivory Coast and Ghana (Raise the Bar).
Forced labor, human trafficking, and child labor continues to be part of cocoa farming in West Africa. Children younger than 12 years old are put to work in the cocoa fields and paid little to nothing for years at a time. Many of these children are forced to work against their will or taken from their homes. Human trafficking in this region is a modern day slave trade for cocoa farmers. A BBC report in 2000 found that hundreds of thousands of children are being taken or sold from their home to work on these farms (Robbins). BBC reporters interviewed a child laborer on a cocoa farm. Yoa Kuoassi said “I was living in Bouake with my grandmother, but my father sent me here to work. I haven’t seen my family for three years,” (BBC News). Poverty stricken parents often will sell their child in hopes to see returns from the money they make working but in fact the children work hard manual labor with no pay, minimal amounts of food, dangerous working environments, and are beaten regularly. Many of these children are being trafficked from neighboring countries like Mali and Burkina Faso (Raise the Bar). “The U.S. Department of Labor in 2011 released a study that confirmed that nearly 2 million children, some of them under 10, worked illegally on West African cocoa farms, which supply cocoa to Hershey and other chocolate producers” (Courthouse news). Once forced to a farm the children usually experience frequent injuries from working with machetes, carrying heavy loads, or coming into contact with toxic chemicals. The International Labor Organization (ILO) labels the practices in West African cocoa farms as the Worst Forms of Child Labor (WFCL) and is actively seeking a solution (ILO.org).
In early 2000 these labor practices in West Africa on cocoa farms became a large target for investigative reports and media attacks. This was largely due to an investigative report by the BBC that revealed the horrors of the chocolate industry’s supply chain. The report investigated the severity of the labor practices in West Africa. Until this report the industry and consumers knew little of the child labor and human trafficking being used to produce the beloved product. This sparked an eruption of scrutiny from advocacy groups and consumers (Institutional Responses). Similarly to Nike, Hershey and other companies in the industry ignored the critics. The industry felt chocolate companies do not own the farms so they could not be blamed for these accusations. The chocolate industry was prepared to do nothing to stop the labor practices of its suppliers until late 2001 when the U.S. government put pressure on the industry. June 28th, 2001 the U.S. House of Representatives voted to begin a slave free labeling system for cocoa products (Tulane). The industry fought this bill for fear of completely losing the supply of West African cocoa. Instead chocolate manufacturers proposed to adopt its own legislation signed by the companies as a self-regulator to relieve the governmental pressure. This public-private agreement between the industry and the U.S. government called the Harken Engel Protocol promised to end the “worst forms of child labor” in cocoa producing countries in 4 years. Hershey’s was among the companies to sign this agreement. To assist in the elimination of WFCL the International Cocoa Initiative (ICI) was created to stimulate field projects within the countries producing the cocoa (Tulane). The agreement was set for the industry to calm the criticizing media but was the plan going to work?
10 years later and the program that was supposed to be completed in 4 years has had little effect in the countries of the Ivory Coast, and Ghana in eliminating WFCL. A Tulane University Report in 2011 stated that there is a need for government reform because the Protocol has been unfulfilled by the chocolate industry (Tulane). U.S. Government reports also came out in 2011 finding that an estimated 2 million children work illegally on West African cocoa farms (Courthouse). Additional reports found that child labor, forced labor, and human trafficking was still a part of the cocoa producing process in the Ivory Coast and Ghana. Though sufficient progress had not been made within these countries, chocolate companies around the world revised their supply chain processes to not include cocoa produced by WFCL. Almost all companies did this except Hershey. Much like Nike did in the 1990s, Hershey refused to acknowledge the problem and take steps towards fixing it. It is cheap and profitable for the company to use Ivory Coast and Ghana as its supplier of cocoa so it turns a blind eye to the ethical concerns raised by the public. The Harken Engel Protocol bought Hershey time but the allegations by labor groups and consumers heightened by 2010. The most influential Hershey critique has come from the “Raise the Bar: The Real Corporate Social Responsibility Report for the Hershey Company” campaign that pressures the company to stop using cocoa produced with the WFCL (Raise the Bar). Raise the Bar was created by Global Exchange, Green America, and International Labor Rights. The campaign explains the WFCL in West Africa, how Hershey does nothing to prevent it, and the actions Hershey needs to take. Hershey
does not have a system in place to ensure its products are not made with WFCL and continues to use Ivory Coast and Ghana as its main supplier. Another problem Raise the Bar addresses is that the company continuously refuses to name its cocoa suppliers and lags behind competitors in purchasing cocoa that has been certified by labor standards (Raise the Bar). The chart on the right shows the leaders and laggards of the chocolate industry. One can see Hershey lags behind in almost every category. Many of Hershey’s primary competitors have made strides to end the use of WFCL cocoa production by certifying products with the Fair Trade program which, “prohibits forced labor, child labor and discrimination, and protects freedom of association and collective bargaining rights,” (Raise the Bar). This certification does the most to protect laborer’s rights. Raise the Bar proposes Hershey do 4 simple things to prevent this problem.
1. Eliminate forced and child labor in Hershey’s cocoa supply chain by tracing its supply chain, sourcing from farmers verified to not use these practices, and ask suppliers to end such practices from which they source.
2. Commit to Fair Trade certified cocoa beans by 2012 for 1 of its top 5 selling chocolate bars
3. Commit 1 top selling chocolate bars to Fair Trade certification every 2 years
4. Commit that a majority of Hershey’s products will be Fair Trade certified by 2022
Hershey still refused to adhere to these desired outcomes this because they threaten its profitability. In 2012, the International Labor Rights group sparked immediate response from Hershey by threatening to air an add on Hershey’s labor practices on a jumbotron screen outside the Super Bowl stadium (Huffingtonpost). Hershey finally responded to by pledging to certify a line of chocolates with Rainforest Alliance. Rainforest Alliance certifies that only 30%of the primary ingredients in a product are produced without WFCL (Raise the Bar). Hershey still did the bare minimum to quiet the criticism.
So should Hershey have done or be doing any of these proposed actions by the Raise the Bar campaign? Hershey’s excuse is that the company does not own the cocoa farms that use the Worst Forms of Child Labor and therefore should not be held accountable. Is this true? No, Hershey should be taking measures to eliminate unethical labor practices from its supply chain to produce its products. Business ethicists Thomas Donaldson and Edwin Hartman help explain the duties of corporations in the essay “Donaldson on Rights and Corporate Obligations.” Donaldson states that duties can be divided into 3 categories. These are:
1. The duty to avoid depriving people of their rights
2. The duty to help protect people from such deprivation
3. The duty to aid those who are deprived
These duties are obligations of corporations under the condition that the corporation can afford to fulfill them and the corporation can fairly accept responsibility the obligations (Hartman). Under this condition the third duty is not an obligation of a corporation. Hartman adds another duty to Donaldson’s, which says a corporation has a duty to avoid helping to deprive (Hartman). Let’s now examine if Hershey has an obligation to fulfill these duties.
The first obligation Hershey has is to avoid depriving people of their rights. This duty may be the only defense Hershey has to not reorganize its supply chain. Hershey contests like many other companies throughout history that the suppliers are their own entity and poor labor practices do not involve the company. However if one was to say that all stakeholders of a corporation had a duty to avoid depriving people of their rights Hershey would again be obligated to do so. Stakeholders are in fact a part of the company. The second obligation is more complex. Hartman explains,
“The point then is that a corporation has an obligation to prevent a terrible wrong if in the ordinary course of corporate events an opportunity arises to ward off undeserved harm to someone without significant expenditure of corporate resources.” (Hartman)
Hershey has the ability to prevent forced labor, child labor, and human trafficking in the production of cocoa without significant expenditures but chooses not to. Tracing its supply chain to the farm level and asking these suppliers to end such practices is a normal corporate action with no costs. Hershey should be tracking its supply chain in the first place, especially it being a world renowned corporation. It takes minimal effort to inform the supplier of these demands. It is also an ordinary course of action for the company to find the best supplier possible. If Ivory Coast and Ghana suppliers are not the adhering to Hershey’s requests, the multi-billion dollar company would not have a problem obtaining a new one. With minimal effort, Hershey can protect the child laborers from deprivation so it has an obligation to do so. Hartman’s additional duty relates directly to Hershey’s involvement of WFCL. Hershey has an obligation to fulfill the duty of avoiding to help deprive people. This defines exactly what Hershey is not doing. Though the company may not directly deprive, it is certainly assisting the depriver. Hershey produces billions of dollars in revenue from its chocolate products every year. The company’s main suppliers, Ivory Coast and Ghana, would be largely impacted if this corporate giant changed its supply chain. Not to mention all of the other companies in the industry already using suppliers that does not use WFCL. These cocoa farms would need to respond to fair labor practices or suffer major losses. By Hershey still using these farms as its primary supplier, it is helping to sustain these labor practices. Hartman gives an example that is relatable to Hershey’s supply chain in West Africa,
“The reason for departure is that the company by its presence is indirectly supporting apartheid, and in that way and in that sense helping deprive black citizens of their rights.”
Similar to this example, Hershey is indirectly supporting child labor, forced labor, and human trafficking that helps deprive laborers on these cocoa farms. Hershey has a corporate responsibility and duty to change its supply chain process. If this does not happen, labor groups and consumers will continue criticizing the company which may result in the loss of profits and company reputation. Raise the Bar has presented a feasible and logical direction for Hershey to follow. Hershey has an obligation to fulfill the duty of avoiding helping to deprive children in West Africa their human rights.

Bibliography
“About Hershey.” Hershey.com. N.p., n.d. Web. 5 Nov. 2012. .
Clark, Alexandra, and Hamish Gow. “Public and Private Institutional Responses to Advocacy Attacks: The Case of the Global Cocoa Industry and Child Labour Abuse.” umn.edu. N.p., 26 July 2011. Web. 5 Nov. 2012.

FILIP , IULIA. “Courthouse News Service.” Courthouse News Service. N.p., n.d. Web. 8 Nov. 2012. .

Hawksley, Humphrey. “BBC News – Ivory Coast cocoa farms child labour: Little change.” BBC – Homepage. N.p., n.d. Web. 8 Nov. 2012. .

Polis, Carey. “Hershey’s Child Labor: Chocolate Company To Source Independently Certified Cocoa By End Of 2012.” Breaking News and Opinion on The Huffington Post. N.p., n.d. Web. 8 Nov. 2012. .

“Resources | Time to Raise The Bar.”Time to Raise The Bar. N.p., n.d. Web. 8 Nov. 2012. .

Robbins, John . “Is There Slavery in Your Chocolate?.” Village One. N.p., n.d. Web. 5 Nov. 2012. .

Tulane University, Payson Center for International Development and Technology Transfer. Oversight of Public and Private Initiatives to Eliminate the Worse Forms of Child Labor in the Cocoa Sector. New Orleans, LA: Tulane University, 2011. Print.

Ugwu, Chidi, and 27 September 2011. “allAfrica.com: Nigeria: NGOs Decry Lack of Action Against Child Labour.”allAfrica.com: Home. N.p., n.d. Web. 8 Nov. 2012. .

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