Hershey



Hershey’s Unethical Venture in the World of Chocolate

In June 2011, hundreds of people gathered in Times Square to protest one of America’s favorite savory treats; chocolate. Voices and painted posters raised in unison, repeatedly pleading “Raise the Bar, Hershey!” The students, consumers, and activists who gathered in New York cried out to the largest confection company in America to change its ways and raise its standards. Underneath the deliciousness of every Kiss, every Reese’s, and every Milky Way was the tragedy of child labor, which was abundant in the West African cocoa farms that supplied the ingredients for Hershey’s famous chocolates. How could a company like Hershey, who was known for their philanthropic tendencies, allow such horrible conditions to prevail in their own chocolate farms? The ethicality of the company was suddenly and seriously thrown into question.

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Source: Flickr

            When Milton Hershey realized his true talent of chocolate making, the Hershey Company was born. In 1909, Milton, a former caramel maker, officially created the Hershey Chocolate Company and began producing milk chocolate confections that pleased consumers around the nation. Hershey prided itself on making milk chocolate an affordable good, as it was previously considered a luxury. The success of the low-cost, high-quality chocolate inspired Hershey to expand, both in terms of its product lines and its presence throughout the US. Throughout the 20th century, Hershey continued to grow, taking up more and more shelf space in American’s lives. They acquired various different candy brands, prompting the company to rebrand themselves as The Hershey Company. Today, Hershey is the leading North American manufacturer of chocolate and non-chocolate confectionary and grocery products (Hershey Company.com) and accounts for 42.5% of the US chocolate market (GreenAmerica Report). Its products have infiltrated 70 different global markets and it exceeds $6.6 billion in sales (Hershey Company.com).

500px-U-1.S._Chocolate_Market_Share

Source: Hershey Foods Stock

            Hershey prides itself on offering much more than just delicious confections. Hershey has a large focus on philanthropy and corporate social responsibility. As a company, Hershey builds on “Milton Hershey’s legacy of commitment to consumers, community and children [to] provide high quality Hershey products while conducting business in a socially responsible and environmentally sustainable manner” (The Hershey Corporate Social Responsibility Report 2009). The initial desire to combine philanthropy with business came from Milton Hershey himself. Milton believed that an individual, especially a successful one, should be willing to share their wealth with others. In the true spirit of shared wealth, Milton created the Milton Hershey School in 1909, a place where poor, orphaned children could receive an education and shelter. To fund the school, Milton donated $60 million of his own fortune and promised 40% of the Hershey Company’s stock (“Milton S. Hershey”). This financial support, coupled with Milton’s idea of an educational safe haven, propelled the Milton Hershey into success throughout the century. Today, the Milton Hershey School provides housing and an impressive curriculum for 1,800 girls and boys. With a focus on college preparation and business education, many of the school’s students have gone on to become some of the Hershey Company’s own executives. The school also serves as the Hershey Company’s largest shareholder. The Milton Hershey School stands as a powerful example of the company’s passion for service towards others.

Hershey’s concern for society and the environment publically became an issue of importance in 2009 with the company’s first Corporate Social Responsibility Report. Corporate social responsibility is a corporation’s desire to take responsibility for the company’s impact on the environment and issues of social welfare. It is often manifested in how a company goes beyond what is required to do to ensure that it has a beneficial impact on society. Many issues involved with CSR can involve costs that are not immediately returned to the organization in terms of revenue. Instead, actions are performed to directly promote or cause various positive social and environmental impacts. Throughout its existence, Hershey has slowly built a tradition of corporate social responsibility, culminating in the creation of an official department and the production of CSR Reports. In 2009, the first such report was published, organizing their CSR objectives into four pillars. The Hershey Company aimed to target the environment, their community, the marketplace, and the workplace through “minimizing impact while meeting functional requirements, positively impacting society and local communities, engaging in fair and ethical business dealings, and fostering a desirable place to work” (The Hershey Corporate Social Responsibility Report 2009). Through the report, Hershey identified areas of success, as well as areas that required improvement. After review of its sustainability efforts and targets, Hershey drew attention from the Dow Jones Sustainability Index, finding its place on the list in 2012. Hershey was one of only seven North American food and beverage companies, making a name for itself as one of the most sustainable companies in the industry (“Hershey Company Named to Dow Jones Sustainability North America Index”).

The philanthropic and sustainability oriented visions of Milton Hershey were thrown into question when the true working conditions of Hershey’s West African cocoa suppliers were revealed. Hershey sources a majority of its cocoa from small farms in West Africa, including Côte d’Ivoire, Ghana, Nigeria, Cameroon, and Liberia. Most of these areas are plagued by poverty, characterized by farmers who exert tremendous physical labor in order to produce just enough cocoa to barely feed themselves. These farmers and their children, whose livelihood depends on cocoa production, receive just “4 percent of the final price of an average UK bar of milk chocolate” (Ryan p 6). Childhood labor is extremely common as well, given that the cultivation and collection of cocoa is so labor intensive. As cocoa farmers receive little compensation, on average earning $2 per day, many result to illegal child labor and trafficking to support themselves (“Child Labor and Slavery in the Chocolate Industry”). Children handle dangerous pesticides containing various agricultural chemicals, use machetes to cut cocoa bean bods from trees, are given meager meals, and sleep on wooden planks. It is difficult to regulate these farms, as the cocoa industry has made it difficult for organizations and journalists to access farms. West African governments’ regulation efforts were small and had little effect on the reality of cocoa farming. While several international groups were set up to raise awareness and encourage companies to take action to change the status quo, they found little success in eradicating child labor and poverty.

Since 2001, the Hershey Company had been aware that the areas in West Africa from where they sourced their cocoa were plagued by poverty and child labor, yet they continued to purchase ingredients from these farms (Global Exchange). Though Hershey claimed that they had been working towards improving their supply chain in their earliest CSR report, efforts made by shareholders to push the company towards more sustainable sourcing were largely ignored. In 2006, Global Exchange submitted a proposal that called for more transparency, which Hershey rejected. The CEO at the time, Richard Lenny, stated that applying complete transparency in their supply chain could risk the company’s competitive standing (Global Exchange). At the time, few chocolate companies, including Nestlé and Cargill, were involved in lawsuits about child labor claims (Chatterjee). However, other companies had begun seeking other ways to ensure the integrity of their supply chain.

In response to the lack of action from organizations and African governments, third party certification organizations such as Fair Trade and the Rainforest Alliance moved into the cocoa industry. Fair Trade adds a premium to the purchase price of cocoa, which it uses to provide education, health services, and equipment to farmers. Additionally, the organization regularly audits their cocoa producers and holds them accountable to the strict labor standards upheld by the International Labor Organization (Cocoa). The Rainforest Alliance similarly strives to improve the livelihood of West African cocoa farmers, auditing them based on the social and environmental standards of the Sustainable Agriculture Network. These programs have contributed to an increased quality of life for many farmers. Unlike Hershey, many other chocolate companies began to partner with these organizations to offer Fair Trade Certified options. Major companies like Cadbury, Kraft, and Mars made Fair Trade cocoa available to consumers, while Hershey continued to refuse to divulge information on suppliers and skirt around shareholder’s requests for transparency and accountability. Sustainalytics, an analytics company that informs investors of various companies’ sustainable progress, compiled a list of companies and their efforts to ensure sustainable cocoa sourcing. As seen through Figure 2, Hershey fell behind in numerous categories. For an organization that prided itself on social responsibility, Hershey failed to impress its consumers, stakeholders, and shareholders.

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Source: The Real Corporate Social Responsibility Report for Hershey 

            The aversion to sustainable sourcing and the failure to immediately adopt new policies when confronted with reports of child labor and poverty in their West African suppliers certainly threw the ethics of the Hershey Company into question. This issue can best be analyzed through the lens of deontological ethics on an international level. Deontological ethics examines the morality of decisions based on whether or not they follow a certain set of rules. Immanuel Kant, an influential scholar of deontology, believed that humans are capable of making rational decisions, and that they are bound by duty to act in accordance with a set of maxims. While deontological theory can clearly be applied to individuals, examining the ethics of large, multinational corporations becomes increasingly difficult. How does one identify the morally correct choice when laws, customs, and lifestyles vary so greatly from country to country? This is precisely the challenge that Hershey faces.

Thomas Donaldson, a professor of Ethics and Law at the University of Pennsylvania’s Wharton School, set out to clarify the deontological duties a corporation must fulfill in today’s global market. Donaldson asserts that companies who move their production or procurement ventures into foreign territories shoulder some responsibility for protecting workers rights. He also developed a list of fundamental international rights, which is comprised of rights “that protects something of extreme importance, that is subject to significant, recurring threats, and who’s obligations or burdens it imposes are economically affordable and fair with respect to the distributions of burdens generally” (Donaldson p 146). These fundamental rights include the right to freedom of physical movement, ownership of property, freedom from torture, fair trial, non-discriminatory treatment, physical security, freedom of speech and association, minimal education, political participation, and subsistence. This list represents the minimal set of rights one would be morally obligated to observe. In order to observe these rights, corporations are bound to either avoid depriving citizens from deprivation, protecting citizens from deprivation, or providing aid to the deprived. The duty of multinational corporations in terms of international rights is minimal; they must avoid depriving international citizens of their fundamental rights. In some cases, the minimal duty extends beyond avoiding deprivation and requires corporations to help protect from deprivation. Those rights that fall under this category include the right to non-discriminatory treatment, physical security, freedom of speech and association, minimal education, political participation, and subsistence. The direct actions of a corporation can affect these rights, and local governments do not always have the authority to interfere. Donaldson argues that corporations, based off of their minimal duties, are not obligated to aid the deprived. The deontological perspective demonstrates the moral duty of corporations in the international market. This version of ethics implies that “no corporation can wholly neglect considerations of racism, hunger, political oppression, or freedom through appeal to its ‘commercial’ mission” (Donaldson p 159). Donaldson’s international view of deontology can help clarify the morality behind the Hershey Company’s problem with cocoa sourcing.

Despite it’s philanthropic and socially conscious beginnings, Hershey’s corrupt supply chain constitutes unethical behavior. As a corporation who is intrinsically involved with other nations, Hershey failed to ensure the basic protection of fundamental international rights on its West African cocoa farms. Through continuing to source from uncertified and unregulated farms, Hershey failed to help protect many African children and citizens from the right to physical security, freedom of speech, education, and subsistence. Children who were forcibly brought to work on the cocoa farms were not guaranteed access to education, free speech, adequate subsistence, or political participation. The meager pay that farmers received was not enough to provide subsistence. Continuing to source chocolate from farms where fundamental international rights were being deprived was an immoral decision for Hershey. As a corporation, they have a duty to avoid depriving the international citizens who provide cocoa for their company of their rights. Instead of acting to avoid deprivation or help protect Africans from deprivation, Hershey chose a path of elusiveness that they believed would aid both their profits and protect their public image.

Hershey, whose major stockholder is the Milton Hershey School for underprivileged youth, uncharacteristically and unethically let child labor into their cocoa supply chain. Through an examination of the environments on the various cocoa farms in West Africa and an application of deontological ethics, it is clear that Hershey was unethical. With opportunities like Fair Trade in reach, Hershey repeatedly chose to continue to source from unregulated cocoa farms, where child labor and poverty was the norm. While the issues with West African cocoa farms are much bigger than any one chocolate company, Hershey neglected to do its part in ensuring the fundamental international rights of its farmers. The protesters who urged Hershey to “Raise the Bar!” were right; the company does indeed need to raise its standards to a more ethical benchmark.

 

*Note this focuses on Hershey pre-2013.

Sources

Chatterjee, Pratap. “Chocolate Slavery Case Against Nestlé Allowed to Proceed.” CorpWatch. N.p., 24 Dec. 2013. Web.

“Child Labor and Slavery in the Chocolate Industry.” Food Empowerment Project. N.p., 2014. Web.

“Cocoa.” Fairtrade International. Fairtrade, 2011. Web.

Donaldson, Thomas J. Rights in the Global Market.

Global Exchange, Green America, ILRF, and Oasis for People & Community. TIME TO RAISE THE BAR: The Real Corporate Social Responsibility for the Hershey Company. Rep. N.p.: n.p., n.d. Print.

Initiative, Daniels Fund Ethics, and University Of New Mexico. The Hershey Company and West African Cocoa Communities (n.d.): n. pag. Web.

“Major Rally in Times Square Calls on Hershey Company to Stop Using Child Labor Chocolate.” Economics Week 24 June 2011: 87. Global Issues In Context. Web.

“Milton S. Hershey.” Entrepreneur. N.p., 8 Oct. 2008. Web.

Polis, Carey. “Hershey’s Child Labor: Chocolate Company To Source Independently Certified Cocoa By End Of 2012.” The Huffington Post. TheHuffingtonPost.com, 01 Feb. 2012. Web.

Ryan, Orla. Chocolate Nations: Living and Dying for Cocoa in West Africa. London: Zed, 2011. Print

“Standards for Sustainable Agriculture.” Rainforest Alliance. Rainforest Alliance, n.d. Web. 26 Nov. 2014.

“The Hershey Company Named to the Dow Jones Sustainability North America Index.” The Hershey Company Named to the Dow Jones Sustainability North America Index. N.p., 18 Oct. 2012.

The Hershey Corporate Social Responsibility Report 2009

Featured image: thehersheycompany.com 

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