Chocolate lovers are familiar with the term “death by chocolate,” but what about death to chocolate? Regions where a vast majority of cocoa powder is harvested, primarily West Africa, are expected to rise in temperature by 2 degrees Celsius by 2050 and decrease in precipitation (1). Unfortunately, cacao trees, the trees that produce cocoa powder, have a very narrow temperature range and can only grow within 20 degrees north or south of the equator (1). Cacao trees are unusually sensitive to changes in environment because of limited genetic variation, which makes them unable to adapt (2). As seen below in Exhibit 1, climate change will significantly reduce the area where cacao trees can flourish, thereby reducing overall yield for cocoa powder.
Yield is already shrinking, but demand for chocolate is rising because India and China are consuming more every year (4). In 2013, the world consumed 70,000 more metric tons of chocolate than it produced (3). Mars, Inc. believes that this gap will increase to 1,000,000 tons by 2020 if action isn’t taken. In fact, overall demand for cocoa powder is expected to rise by 30% by 2020 (5).
On Valentine’s Day alone, Americans consume over $1.7 billion in chocolate, a drop in the bucket compared to the $98 billion-dollar industry (2). U.S. confection companies have a lot to lose so they’re fighting climate change. The Hershey Company occupies a dominant market position, comprising 44% of the U.S. chocolate industry (see Exhibit 2) (6). To protect its interests and the environment, Hershey is addressing these climate change challenges by (1) ensuring cocoa farmers have the right tools and training for their farms, and 2) building aggressive sustainability programs throughout global operations.
Hershey believes that if they give farmers the right tools and training their business will be stronger going forward (7). Hershey’s “Learn to Grow” (LTG) initiative spans 31,102 farmers across 464 cocoa communities (7). The program rewards farmers who receive certification for sustainable practices with premium payments, encouraging farmers to share best practices (7). Hershey also partnered with the Rainforest Alliance to train farmers across West Africa (8). LTG’s signature feature is a mobile-phone application called CocoaLink that provides relevant information on farming techniques and uses GPS mapping to determine the appropriate spreading of fertilizer. CocoaLink informs farmers about farm safety, pest and disease prevention, crop marketing, and post-harvesting techniques (7). Farmers using CocoaLink have on average improved their cocoa production levels by 40% (7). The program also includes two research centers, a school, and four clean water projects (7). LTG will not only maximize yield long-term for cocoa farmers, but also reduce climate change by improving their health, income, schooling, and farm efficiency.
In addition to cocoa sustainability, Hershey engages in an overall environmental sustainability policy. The company was one of the first to sign on to the White House’s American Business Act on Climate Pledge (9). Hershey made a significant number of commitments, such as: reducing greenhouse gas emissions by 50%, improving recycling rate to 95%, and reducing water usage by 25%–all by 2025 (9).
In addition to those commitments, Hershey is already engaging in sustainable practices, including:
- Sourcing palm oil from socially responsible providers to fight deforestation (10)
- Refurbishing old factories into LEED-certified facilities (11)
- Water-efficiency projects through manufacturing operations (11)
- Reducing packaging by .05 grams, saving 271,800 pounds per year (11)
- Having a “zero-waste-to-landfill” policy (11)
The current practices Hershey engages in are extensive, but there are two specific things they could do to further address the cocoa sustainability challenges:
- Invest money in developing genetically modified (GMO) cacao seeds These seeds are engineered to be more resistant to drought and less sensitive to temperature change and fungi. There is a large academic-led initiative to develop GMO cacao seeds. For example, the Cocoa Research Center in Trinidad has sequenced a new seed called CNN-51 that it claims is more resistant to pests and fungi (12). Hershey has instead decided that to be GMO-free in all its chocolate–becoming more reliant on cacao seeds that are unlikely to survive long-term climate change (13). The company should realize that GMO cacao seeds are the future viability of the industry and get on board.
- Shrink the size of its average chocolate portion Hershey’s rival Cadbury has shrunk the size of its chocolate portions by 10% to address the current and future shortages in cocoa (3). Hershey should consider shrinking its portions so that it can meet current annual demand for chocolate and have a greater chance at surviving future shortages.
Despite the room for improvement, Hershey should be applauded for its aggressive response to climate change and the commitments it has undertaken. I hope this means my grandchildren will still eat Hershey kisses.