No More Chocolate For You: Global Warming and Cacao Trees
How Global Warming will likely force us to give up our favorite treat.
CACAO – A DELICATE BALANCE
Cacao trees only grow within a narrow band 10 degrees either side of the equator, with 70% of global production coming from a handful of countries spread around the Gulf of Guinea and known as the West African Cacao Belt [1]. To thrive, these trees require stable temperatures along with high humidity and rainfall. As global temperatures have risen, rainfall in the region has fallen down -30% in the last 50 years, causing a negative knock-on effect for humidity too [2].
The environmental outlook in the region is not optimistic, with climate forecasters predicting a warming of 3.8 F (2.1 degrees C) in across the region by 2050 (1) which is projected to drastically reduce the areas currently suitable for cocoa tree cultivation (see Fig. 1). Overall, areas currently with a suitability >50% are forecast to halve by 2050, thus potentially wiping out almost a third of global cacao bean production in the process.
Projected Level of Suitability of West Africa for Cacao Cultivation
HIGHER TEMPERATURES, LOWER PROFITS
It is therefore unsurprising that Mars Inc., the world’s largest chocolate manufacturer, is visibly stepping up efforts to combat climate change, given that the “extreme concentration of the production of a commodity in one geographical region makes the global industry highly vulnerable to a regional decline in climatic suitability” [2].
In unveiling their “Sustainable in a Generation Plan” [3], Mars Inc. are planting their stake in the ground to ensure that their sweet, billion dollar empire, built over the last 106 years, continues to bear fruit. The question of whether their public commitment, opposing withdrawal from the Paris Climate Agreement [4] and declaring that “as a food business, [their] supply chain and those who work in it are threatened by [climate change’s] impacts”, exceeds their private intent, is yet to be answered but steps in the right direction are visible.
TAKING ACTION
In its 2015 Climate Action Position Statement, Mars estimated that Greenhouse Gas (GHG) Emissions in its value chain were equivalent to 26.2 million tons of Carbon Dioxide. Aiming to reduce this in the long term, Mars committed set out the following goals [5]:
- Reducing Total GHG emissions by -27% (vs. 2015 levels) by 2025
- Reducing GHG emissions linked to operations to zero by 2025
- Reducing Total GHG emissions by -67% (vs. 2015 levels) by 2050
Mars Inc. Glidepath Towards 2050 Goals
- Achieve stronger water stewardship and more efficient land management
- Increase income to improve the lives of 1 million people in their supply chain
- Advance science, innovation and research into food production
GOING FURTHER
The issue remains to be seen whether these long term goals will be achieved, and the vagueness with which Mars has set out its short term plans begs for a much more detailed roadmap of clear actions.
There are several concrete steps which Mars could take to further their efforts immediately:
- Achieving the highest LEED certification [6] across all of their production plants and office across the US and achieving similar credential in production sites outside of the US
- Promote conservation practices across the agricultural segment of their supply chain which accounts for 46% of their GHG emissions [5]
- Move away from sourcing certain raw materials in tropical countries under risk of deforestation, by investing in synthetic or local replacements
- Declare the split of emissions by country in which it operates in and report annually on progress made to cut local production emissions
TESTING SCALEABILITY AND LONG TERM COMMITMENT
For Mars, the future of Cacao trees in West Africa, and therefore the future of their entire chocolate business is on the line. Having understood what is at stake, they are taking action, and this should be applauded.
However, it must be noted that while Mars’ promises are certainly a move in the right direction, their total GHG emissions are equivalent to those of a small central American country like Panama [7]. Thus their pledge will remain largely insignificant unless entire industries step up to combat climate change to the same extent.
Furthermore, one might also wonder if these goals will retain their important to Mars regardless of economic conditions. A downward shift in their business in the next 35 years could truly test Mars’ commitment to what they have set out to achieve. If tougher times arrives, will they continue to invest in reducing GHG out of their supply chain, or will they fold under shareholder pressure to deliver bottom line growth regardless of future consequences?
(754 Words)
[1] Michon Scott, “Climate and Chocolate” National Climate and Atmospheric Administration, February 10, 2016, https://www.climate.gov/news-features/climate-and/climate-chocolate, accessed November 2017
[2] Götz Schroth, Peter Läderach, Armando Isaac, Martinez Valle, Christian Bunn, Laurence Jassognec, “Vulnerability to climate change of cocoa in West Africa: Patterns, opportunities and limits to adaptation” Science of the Total Environment, Vol. 556, June 15, 2016, http://www.sciencedirect.com/science/article/pii/S0048969716304508, accessed November 2017
[3] Mars Inc. Corporate Communications, “Unveiling our Sustainable in A Generation Plan” Mars Inc. website, September 5, 2017, http://www.mars.com/global/press-center/newsroom/unveiling-our-sustainable-in-a-generation-plan, accessed November 2017
[4] Jamiles Lartey, “’Climate change is real’: companies challenge Trump’s reversal of policy”, The Guardian, March 29, 2017, https://www.theguardian.com/environment/2017/mar/29/climate-change-companies-challenge-trump-mars-staples-gap, accessed November 2017
[5] Mars Inc. Corporate Communications, “CLIMATE ACTION POSITION STATEMENT” Mars Inc. website, 2015, http://www.mars.com/global/about-us/policies-and-practices/climate-action-position-statement, accessed November 2017
[6] Corporate Communications LEED Organization, “How LEED Works” https://new.usgbc.org/leed#how-leed-works, accessed November 2017
[7] World Bank IBRD-IDA, “CO2 Emissions (metric tons per capita)” 2014, https://data.worldbank.org/indicator/EN.ATM.CO2E.PC?view=map, accessed November 2017
Very informative read!
It is nice to know that Mars is taking real steps towards reducing their greenhouse gas emissions. Although they and other companies are being more environmentally conscious, it is unlikely that these steps will have a quick enough impact on the sustainability of the cacao belt from now to 2050. I wonder what other steps Mars is taking in terms of shorter term business planning to mitigate the impact of a reduced cacao supply on their business. Which chocolate companies will survive once a third of the global cacao bean production is wiped out? Is it those that closer relationships to these cultivation sites, those with more efficient methods of cultivation, those who are able to find and incorporate cacao substitutes into their products, etc?
The future of chocolate made me panic a bit. I think it’s great that Mars is taking the lead on combating this issue. Unfortunately, I’m not confident that this impact will be significant enough given the severity of the situation and the timeline – 2050 isn’t that far away! I’m curious to see how this industry will play out. I anticipate a lot of movement in terms of consolidations and aggregation of firms as they try to hedge the effects climate change will have on the supply of cocao beans and consolidate resources to pursue the initiatives that we see Mars doing here. It seems like the concentration of the beans is what makes this business so vulnerable. I’d be curious to see if any future innovations find a way around this.
With the changes in global temperature, is there a possibility that new regions will become zones where cocoa beans can thrive? If so, this makes me wonder if Mars also has the opportunity to anticipate where these regions may be and either acquire land to support their own cocoa bean operations or partner with suppliers who are willing to take the risk on investing in potential areas that could be key to future supply. Doing this may actually give them a competitive advantage as they gain a leg up on supply. Mar’s efforts in reducing CO2 emmissions are to be commended, but as alluded to this may not be enough. Additional creative strategic plans may need put into the pipeline.
Very interesting read and sad reality. My TOM challenge also talks about global warming related impacts and I was negatively surprised when doing my research about how many companies mention global warming as a challenge going forward and say they are doing actions to mitigate it, however don’t pose a more clear action plan on how they plan to achieve this. It made me question how many of them are just doing it for the PR. Therefore, I would be very interested to hear how Mars plans to achieve such significant greenhouse gas emissions in the future.
Another trend in the agriculture industry is the use of biologics and/or chemicals to improve the yield. Are companies like Mars considering going down this path? Would it be the right path, considering they are selling edible products? I would be very cautious with this.
I love chocolate so this article is the first I commented on.
My questions is: can a company like Mars actually have enough of an impact to make a significant difference to the impact of global warming?
I believe their efforts are honorable and could encourage other companies to do the same if the market responds well. However, would it not be more profitable to invest this money in genetic engineering to develop a cocoa crop that can adapt to the changing weather conditions? $1B could go a long way invested with a partner like Monsanto.
This is such an interesting and relevant topic (who doesn’t love chocolate?) Sadly, I am not convinced that Mars will honor this commitment in an economic downturn. One of the common themes across classes thus far has been the the role of business to maximize value for shareholders. Although I am not convinced that this is the sole role of a corporation, I do believe there is more pressure to maximize profits during downturns. In order to accomplish substantial change and hedge against broken commitments, an accountability system must be implemented. This system of accountability could be as simple as establishing social pressure.
Similar to the other people commenting on this article, reading about a potential future without chocolate is alarming to me. This is an interesting case given the limited production area for cacao trees. For me, the most interesting questions raised here are whether there are alternative ways that chocolate growers can either adapt cacao trees to grow in other conditions and if it’s possible to genetically engineer substitutes for cacao. Given that some food technology companies are already creating meat in labs, I’m curious how difficult it it to produce alternatives for chocolate. I’d be curious to know how Mars prioritizes their research and development and how far away some of these potential solutions are from coming to fruition.
I’m optimistic that Mars will be consistent in their efforts to increase their own sustainability both from a greenhouse gas and a local community standpoint. While their individual efforts likely won’t have a substantive effort on global climate change, the importance of having industrial leaders as beacons in the fight against climate change is hugely important. Having Mars and other influential companies hold themselves accountable to their targets can influence whole industries and have a tangible impact on climate change. Given the current global attention on climate change, many companies are making these promises and I believe that sustainable business practices will become the norm as more companies publicly commit to measurable sustainability goals.
Thanks, Max! It’s definitely scary to think about the peril the chocolate industry is in. I think you raise a lot of valid points around whether Mars is doing enough in the short term to address climate change versus only taking a long-term view. From my point of view, I feel as if Mars could be working harder to advocate for stricter standards for cacao farming across the entire industry. Shifting focus on how the industry as a whole can improve their farming standards will increase the impact of any measures taken immensely. It would also benefit Mars to advocate more aggressively in this way, because by doing so, it shares the responsibility of sustainability with its competitors, thereby maintaining a level playing field with others in this industry.
Thank you for pulling this together – very interesting. Mars should certainly be credited for recognizing the severity of the problem at hand, but like many other comments I find the long-term nature and lack of detail regarding the solutions troubling. $1B is a large sum of money, but only a drop in the bucket when it comes to the size and scale of the forces at play to create this situation. Thinking through the lens of a potential shareholder, I would be more satisfied if there were also plans to explore alternate sources of the input. This could serve a dual purpose – 1) creating a sound backup plan that inspires investor confidence and 2) providing pressure on impacted governments to increase their own efforts to combat climate change. Governments are not very responsive to the issue of climate change, largely sue to a lack of interest from constituents, so any effort to frame up the threat of climate change in a more tangible and direct way could be incredibly valuable toward making real progress.
Great read! While Mars’ efforts to reduce carbon emissions are commendable, I wonder if the impact of its efforts will be strong enough in its own right to halt climate change. It could be that even in the absence of all human effects, climate change will proceed, albeit at a slower pace. As such, I would advise a strategy of buying land that may become warm enough to support cacao trees as climate change proceeds. This could be a nice hedge against climate change effects, particularly if these effects are inevitable.
Great article! This is one good example of a business that tries to focus on a double bottom line (one being the financial return and the other being the environmental return). I was impressed by Mar’s attempt to tackle this World-class issue of climate change but I do have real doubt that they would be able to effectively carry this out. Of course, Mar’s investors will not all get on board at this because, I believe, many of them are concerned about getting more money back to justify their investment. I was wondering how a company whose mission shifts to caring more about the world will be able to convince their investors to follow through with the same logics.
Very interesting article on the supply chain of Mars chocolates! It is sad to learn how climate change negatively affects the living environment of thousands of Cacao trees. It is definitely very important to encourage everyone to reduce the GHG emissions globally. At the same time, it is also very important for Mars to take actions to redesign its supply chain system and strategy to adapt to the climate change and to reduce the effects of global warming on its chocolate productions. I wonder if Mars could leverage innovative and disruptive technologies to eliminate the impact of climate change on its chocolate productions. For example, improve the adaption ability of cacao trees to various living environment.