Rural development

The cocoa sector faces a multitude of challenges related to human rights and environmental protection in rural areas, including child labor, deforestation, and persistent low incomes and poverty among cocoa farmers. We are committed to advancing effective solutions and strengthening our own contributions to address these issues by partnering with relevant stakeholders.

Cocoa sustainability approach

Our commitment to the responsible sourcing of cocoa is based on five principles (see graphic), based on which we aim to address the most pressing challenges and highest salient sustainability risks in the cocoa supply chain: increasing the resilience of farming households, reducing the risk of child labor, and conserving biodiversity and natural ecosystems.

For more information on reducing the risk of child labor, see the Child labor section in the Business integrity and human rights chapter. For more information on conservation of biodiversity and natural ecosystems, see the Contributing to an intact environment chapter.

1. Pursuing long-term supplier partnerships

Our cocoa sustainability approach is based on long-term agreements with strategic suppliers who are committed to partnering and collaborating with Lindt & Sprüngli to deliver on our sustainability commitments. These sourcing agreements regulate commercial and quality parameters and include a detailed description of how the Lindt & Sprüngli Farming Program will be implemented in the specific supply chain.

2. Deploying our own sustainability program

Our own cocoa sustainability program, the Lindt & Sprüngli Farming Program, is at the heart of our rural development focus area in the Lindt & Sprüngli Sustainability Plan. Through this Program we aim to contribute to creating decent and resilient livelihoods for cocoa farmers and their families and to encourage more sustainable farming practices (see Farming Program website). The Lindt & Sprüngli Farming Program is based on an overarching Theory of Change which is aligned with the salient sustainability risks in the cocoa supply chain and outlines our intervention logic, including the activities and the desired outcomes and impact. Based on the generic Theory of Change, the specific Farming Program content is co-designed and developed with suppliers. This allows us to adapt the Farming Program to the local context and address the needs of farmers and their communities in a particular region, while keeping a global Farming Program standard.

We initiated the Farming Program in 2008 and it is now active in seven origin countries, with a total of 131,000 farmers participating in the Program. These countries are Ghana, Côte d’Ivoire, Ecuador, the Dominican Republic, Peru, Madagascar, and Papua New Guinea. After achieving our goal to source 100% of our cocoa beans through the Farming Program in 2020, we extended the Program to include cocoa butter in 2021 and cocoa powder in 2022. Since then, we have continuously included new suppliers in the program, leading to increasing numbers of farmers, hectares, and scale of activities again in 2023.

In the reporting year 20231, we sourced a total of 68.2% of cocoa bean equivalents through our Farming Program.

3. Establishing traceable and transparent supply chains

Since the introduction of our Farming Program in 2008, physical traceability of cocoa has been the starting point of our responsible cocoa supply chain. Traceability is a key principle of our cocoa sourcing strategy.

Traceability from farm to first point of purchase (first mile traceability)

Establishing traceability from farm to first point of purchase is the initial step when we deploy our Farming Program. As part of the Program, all farmers are registered, farm GPS point coordinates are taken, and baseline data about the farm and household is collected. When registering a new farmer, we require at least GPS points of all farm plots under four hectares, as well as GPS polygons of the same plots six months after registration. For farm plots over four hectares, we require GPS polygons before the first cocoa delivery. Additionally, suppliers put in place externally verified or certified processes and systems to establish traceability from farm to first point of purchase. In 2023, 99.7% of the farmers participating in the Lindt & Sprüngli Farming Program had their farms mapped. At the same time, first mile traceability was achieved for 72.3% of the total volumes sourced. 

A challenge to keeping all farms mapped is the lack of national databases with unique farmer IDs. This would allow farmers to register and map their farms once only, and make use of this data even if they change their buyer and supply chain. Such databases are currently being developed by the governments of Côte d’Ivoire and Ghana as part of their new national traceability systems. In the absence of national traceability systems, double mapping occurs, and farmers are re-mapped by their new buyer whenever they switch to another buying company. Further, the boundaries of individual farmers may also change over time. It is therefore an ongoing effort to keep the supply chain fully mapped and mapping data updated.

Cocoa supply chain steps

Traceability along the supply chain up to our factory doors (supply chain traceability or “traceability level of cocoa sourced”2)

We believe that the physical traceability of cocoa is a key requirement towards sustainability. We take a differentiated approach for the traceability of cocoa beans and cocoa butter, due to their different supply chain characteristics.

For cocoa beans, Lindt & Sprüngli has a traceable supply chain based on identity preservation (see Traceability models). This means our cocoa beans are traceable from the farm, where we work directly with long-term dedicated farmer groups, to our factory doors. For cocoa beans, we conduct in-house traceability checks to ensure the volumes delivered come from the farmers of our own Farming Program. This is facilitated by our bean-to-bar approach to chocolate production, allowing us to oversee the production process – from the sourcing of cocoa beans to the production of cocoa mass (also called cocoa liquor) and the finished product. Based on bean equivalents, 50.8% of all cocoa products are sourced identity preserved.

For our responsibly sourced cocoa butter, we aim for a physical traceability approach based on “segregation” (see Traceability models). Conventional and sustainable cocoa are strictly separated and the origin of delivered butter batches are known when delivered to Lindt & Sprüngli. In the “segregation” model, beans delivered by the Lindt & Sprüngli farmer groups to the suppliers get mixed, at supplier level, with other beans originating from farmer groups who also participate in a verified sustainability program. This mixing is due to processing limitations. It means that while all the cocoa butter delivered to Lindt & Sprüngli from a sustainability program under the “segregation” model originates from farmers participating in a sustainability program, we have no guarantee that the cocoa beans delivered by our own farmer groups to the suppliers will end up in the cocoa butter we receive. We promote increased use of physical traceability models because it is a precondition to assess compliance with sustainability criteria, including for example compliance with no deforestation requirements. Based on bean equivalents, 15.9% of all cocoa products are sourced through the segregated traceability approach.

For cocoa powder, “segregation” is more difficult to achieve due to product complexity and quality specifications. Therefore, we aim to source all volumes with a Rainforest Alliance “mass balance” certification at a minimum. In 2023, the first volumes of Rainforest Alliance certified cocoa powder were sourced. Once all of our subsidiaries hold the Rainforest Alliance certification, we will switch to this new minimum requirement.

4. Continuous improvement based on monitoring and external verification

Our Farming Program builds on the principle of continuous improvement. Our monitoring and evaluation approach is based on multiple complementary elements including monitoring of outputs, a review of Program quality and verification of Program implementation, and periodic impact assessments. We assess these elements related to both the farm and implementation partner, and carry out checks to verify traceability documents.

As defined in our Farming Program Verification Guidance, monitoring begins with systematic annual internal monitoring of the cocoa farmers to assess their compliance with Farming Program requirements and evaluate their progress. Results from this monitoring differ between origin and supplier, and challenges are addressed for each supply chain individually.

Our cocoa sourcing under our Farming Program and other sustainability programs is subject to external verification annually by an independent third party. For cocoa beans, external verification is conducted by the Earthworm Foundation, based on the Farming Program External Assessment Methodology, which enables a mutual learning process. The methodology also includes direct engagement of the Earthworm Foundation with farmers through individual meetings and focus-group discussions to gather feedback on the support provided as part of the Program. Results from the annual assessments are transformed into an annual action plan with measures for improvement identified at supplier level.

For cocoa butter, we are currently in the process of transitioning different sustainability programs to Rainforest Alliance certification. Where long-term agreements are in place and our Program is being implemented, certification is not intended to replace our Program, but serves as a basis and external verification scheme. The first Lindt & Sprüngli subsidiaries became Rainforest Alliance certified in 2023. However, while the majority of the volumes we sourced during the year came through long-term agreements and from certified farmer groups, these volumes were not yet formally sourced as certified under the Rainforest Alliance chain of custody rules. 

Impact assessments become increasingly important as the sector aims to design effective programs and comply with upcoming regulations. In 2019, we did a first impact assessment of our Farming Program in Ghana with the KIT Royal Tropical Institute, which included a review of topics such as living income. In 2023, jointly with KIT, we conducted a second evaluation of our Farming Program in Ghana, including a comparison with the 2019 data.

Over the coming years, we aim to strengthen our monitoring and evaluation approach to improve transparency in our reporting and provide a better understanding of our achievements and challenges. This will include a more systematic process to engage with farmers, farmer groups, and communities to gather their feedback and inform Farming Program design. The approach will focus on data analysis and learning, and on making more data-driven decisions. We aim to measure the effectiveness of our Farming Program in a way that informs its overall design, while assessing our impact on the ground more systematically. For example, we will collaborate with academic experts and civil society representatives on project evaluations and impact assessments, intervention design and state-of-the-art implementation.

5. Working in partnerships and engaging in collective action through sector initiatives

We are aware that individual stakeholders’ ability to drive systemic change is limited. That is why we collaborate with a wide range of partners from different sectors and actively engage in multi-stakeholder initiatives such as the Sustainable Cocoa Platforms (ISCOs) or the Cocoa & Forests Initiative (CFI). We further engage in collective action at landscape level (see Conservation of biodiversity and natural ecosystems). To strengthen our collective action on child labor prevention, we belong to the Child Learning and Education Facility (CLEF). CLEF is a coalition dedicated to enhancing access to and the quality of education in cocoa-growing regions of Côte d'Ivoire by constructing school infrastructure, training teachers in effective educational practices, and engaging parents in their children’s learning. The coalition is led by the Ivorian Government in collaboration with the cocoa and chocolate industry and philanthropic foundations. Joining CLEF entails a financial commitment to invest CHF 1.25 million in the initiative.

Beyond collective action, we work with a range of strategic and technical partners to help us continuously improve our Farming Program. These include the Earthworm Foundation, Helvetas, Ecotop, and the KIT Royal Tropical Institute. Our suppliers collaborate with additional third parties on the implementation of the Farming Program, for example for farm mapping or the creation of Village Savings and Loan Associations (VSLAs).

Over the coming years, we plan to strengthen our participation in multi-stakeholder initiatives and establish new strategic partnerships with expert third parties in recognition of the increasing importance of mutual learning and the exchange of best practices, sector alignment, and innovation.

Cocoa sustainability investments

In 2023, we invested a total of CHF 29.8 million into cocoa sustainability, of which CHF 26.8 million was paid to cocoa suppliers for operating our Farming Program. Sustainability program costs include operational costs for staff, equipment, farm investments, community development, and volume-based cash and in-kind premiums for farmers and farmer groups. The Lindt Cocoa Foundation (not part of the Lindt & Sprüngli Group) contributes an additional CHF 2-3 million annually in investments for farmers and communities in line with its mission to achieve social and ecological sustainability in the cultivation and processing of cocoa products used in chocolate production. In one supply chain in Ghana, the Farming Program is additionally co-funded by the State Secretariat for Economic Affairs in Switzerland (SECO), with a payment of CHF 100,000 in the reporting year (SECO fact sheet). We invest in other third-party projects beyond our Farming Program. These include engagements for collective action through landscape projects, collaborating with expert organizations to build the capacity of our suppliers on technical subjects, piloting new solutions with third parties to be scaled in the Farming Program at a later stage, and research projects to learn more about Program impact and possible improvements.

Increasing the resilience of farming households

Our Farming Program aims to contribute to building resilient livelihoods for farmers, their families, and farming communities by taking a holistic approach to increasing farming household incomes. We are addressing this through a combination of measures, with the aim of improving the income situation overall, recognizing that poverty among cocoa households is one of the underlying root causes of the cocoa sector’s sustainability challenges.

Increasing productivity

The Farming Program provides training to farmers to improve their adoption of good agricultural, social, environmental, and business practices. Training includes group training, as well as individual coaching. In 2023, 990 field staff working for the Farming Program delivered group training to 104,000 farmers. During individual coaching sessions based on farm development plans (FDPs), farmers receive tailored advice and recommendations, with the objective of increasing adoption rates for good agricultural practices. A total of 19,400 farmers received individual coaching in the reporting year.

Additionally, we invest in farm inputs and farm services. Farmers are supported with access to productive and disease-resistant cocoa seedlings, shade trees, and farming equipment. In 2023, 397,000 cocoa seedlings were distributed for farm rehabilitation. A collaboration with Cocobod to distribute cocoa seedlings has created synergies that have reduced the number of seedlings distributed by the Farming Program in Ghana. After an intensive cocoa seedling distribution campaign in Papua New Guinea in the past year, the need for seedlings was lower in 2023 than in previous years.

Farmer premiums

We recognize that the price of cocoa is an important element of a sustainable cocoa sector. The price we pay for cocoa is determined by the market price. The farmgate price, i.e., the price a farmer receives for the cocoa, is determined either by the local market price, or, in Ghana and Côte d’Ivoire, by the government. In addition to paying the market price, through suppliers we provide farmers in the Lindt & Sprüngli Farming Program with cash or in-kind premiums as part of our cocoa sustainability investments. Furthermore, we pay the local supply chain actors – cooperatives, local intermediaries, or buying company, depending on origin – a management fee for traceability and to support their development. These volume-based premiums are paid in addition to the funds covering operational costs for Program implementation (see Cocoa sustainability investments). We also support the efforts of the governments in Côte d’Ivoire and Ghana to improve the livelihoods of cocoa farmers with a Living Income Differential (LID) of USD 400 per metric ton of cocoa beans. We have purchased our cocoa from Ghana and Côte d’ Ivoire with LID pricing since its introduction and will continue to do so.

Income diversification

Income diversification is key to promoting women’s empowerment and reducing the living income gap of smallholder cocoa households. Our suppliers’ staff train Farming Program households in on-farm and off-farm diversification activities, and selected farmers benefit through a start-up capital fund, as well as savings and loan opportunities.

In 2023, our suppliers’ field staff trained 15,500 individuals in additional Income Generating Activities (IGA). A third of the trained individuals are women. These trainings include cultivating food crops and vegetable gardens, pig or poultry farming, as well as bee keeping, depending on the local context. The aim is to help farming families to build additional income sources that are less seasonal than the cocoa income. 

VSLAs (Village Savings and Loan Associations) were identified by farmers and suppliers as one of the most popular intervention. They create a safety net and savings culture, and in combination with income generating activities, they can have a positive effect on the number of income sources and resilience, and reduced cocoa dependency. In 2023, we made progress in the creation of VSLAs in Farming Program communities. The number of functioning VSLAs established through the Program increased from 460 in 2022 to 640 in 2023, including 15,700 members.

Community development and infrastructure investments

Our goal is to create conditions for improved livelihoods for farming families and community members, thereby increasing their resilience. Through our Farming Program investments, three schools were built and two refurbished in 2023, bringing the total number of new or refurbished schools to 50 across all origin countries. The number of water systems and boreholes constructed and maintained since the start of the Program was 250 in 2023. In total, approximately 158,000 community members now benefit from these investments in water infrastructure.

Women’s empowerment

Women play a vital role in rural development, yet gender inequality is a reality in the cocoa sector. Women’s empowerment is key to addressing different challenges in the sector, including child labor. At the moment we do not implement female-only program activities, but several activities specifically target increased female participation including VSLAs and additional livelihood activities. We also promote female participation among staff and farmers. Today, 22.8% of Farming Program participants are female farmers, down from 25.5% in 2022. The reduction is due to the extension of the program to butter in Côte d’Ivoire, where today significantly fewer female farmers participate than in other origins.

Reducing the risk of child labor

Lindt & Sprüngli strongly condemns all forms of child labor. In agricultural value chains, especially in the cocoa sector in West African countries, child labor is a persistent and complex challenge. It requires intense, continuous, and collaborative efforts from all stakeholders active in the sector. At Lindt & Sprüngli, addressing child labor is a priority and we are firmly committed to avoiding it whenever possible. Lindt & Sprüngli’s cocoa suppliers, in countries of origin with a risk of child labor, are expected to effectively protect children’s rights along our supply chain.

The Farming Program defines clear guidelines and actions on addressing child labor, including the implementation of Child Labor Monitoring and Remediation Systems (CLMRS) by our suppliers. For more information on our commitment to help protect the rights of children in our supply chain, see the Child labor section in the Respecting human rights chapter.

Conserving biodiversity and natural ecosystems

Cocoa cultivation poses a high risk of biodiversity loss through deforestation or harmful farming practices.

As part of our Farming Program, we have committed to contributing to ending cocoa-driven deforestation and forest degradation, and implemented our Lindt & Sprüngli Cocoa No-Deforestation & Agroforestry Action Plan as well as our Deforestation Policy. Our target is to ensure that we do not source any cocoa from protected areas and avoid conversion of valuable forest land for cocoa production in our supply chain by 2025.

For more information on the conservation of biodiversity, see our Conservation of biodiversity and natural ecosystems chapter.

Outlook

We are currently further refining our cocoa sustainability strategy. In the coming years, we will continue to strengthen the resilience of farming households with a holistic set of interventions. We plan to strengthen our work on household income and community empowerment by implementing new projects. With regard to environmental aspects, we will continue engaging in key priority landscapes with the aim of protecting and restoring forests and biodiversity. As we gain a better understanding of what approaches and interventions are effective across different supply chains, through impact assessments and monitoring, we will scale best practices across our Farming Program.