Transparency & Accountability
A Consultation Paper for the Cocoa Barometer. October 2017
Many efforts have been made to map parts of thechallenges surrounding sustainability i in the cocoa
sector. Nonetheless, there is very little clarity in thecocoa sector about the scope of the challenges we face,
the size of current efforts being undertaken, or about
the effectiveness – and impact – of these efforts. To put it
bluntly: we don’t really know who is doing what, wedon’t really know whether what is being done is actuallyworking, and, therefore, we cannot know how close weare to achieving sustainability. For this, transparency
and accountability (T&A) are essential.
Better understanding
T&A will lead to a better understanding of the size of the
problems still facing the sector, and to an approach
where the size of the solutions is equal to the size of thechallenges, both in terms of investments needed to rollout improvements at community level, as well as in the
additional impacts needed to achieve living income,foster reforestation, and other pressing challenges. Thisin turn should make it possible to identify what shared
responsibility really should look like for all the actors inthe sector, and will bring to light available synergies andopportunities among different stakeholders
A Necessary Step
Transparency is never an end-goal, but a necessary step
towards accountability. It is a prerequisite for
implementing sustainability, as well as a necessarybuilding block for delivering on human rights
requirements set in national and international laws andconventions. Without transparency, human rights
violations cannot be prevented, mitigated, remediatedor reported on.
UNGPs demand Transparency
The UN Guiding Principles on Business and Human
Rights (UNGPs) demand from States and companies thatthey prevent, address, and remedy human rights abuses
committed in business operations. The UNGPs
emphasise the need for companies to understand anddisclose risks in a timely and regular manner. As such,transparency
andaccountabilityarecrucialpreconditions for and integrally part of the UNGPs.
Advantages
Transparency and accountability together allow for
better managing and accelerating progress, identifying
gaps in current approaches, preventing transgressions

from taking place, and facilitating mitigation of effects oftransgressions for farmers and cocoa growing
communities. They also provide several important
advantages to all actors in the cocoa supply chain.
- For the private sector, T&A creates a level playing
field and knowledge about their supply chain (e.g.
where their products come from, and under which
conditions they were cultivated and/or produced). T&A
allows for companies to analyse, prevent, mitigate,
remediate and report on risks in their supply chain. T&A
helps clarify risks and responsibilities along the supply
chain, not only for themselves but also for other actors
involved. Moreover, T&A builds trust towards investors
and their customers, increases compliance, shows
company confidence in their own human rights due
diligence mechanisms, etc.
- For producing as well as consuming countries, T&A
allows for the implem2entation of measures to regulate
private actors, protect their industries and communities,
and to establish grievance and remedy mechanisms.
- For producing countries, T&A will help create
enabling environments for cocoa growing communities.
Key elements of this include: strengthening governancecapacity; improving the coordination of ministries anddepartments to ensure effective implementation andenforcement; and improving data quality and availability
so ministries and other stakeholders can make informed
decisions.
- For civil society organizations, T&A provides
information needed to facilitate advocacy on humanrights and environmental sustainability in the supply
chain.
- For consumers, T&A allows for information to know
under which conditions the goods they consume areproduced and to hold actors to account.
- For farmers, T&A can lead to increased information,organization and thus increased bargaining power on
the side of the farmers, the opportunity to influence
local and national policies, and thus increased
government investments in local communities.
Access to Grievance Mechanisms
Transparency can also help victims of human. rights
violations in a supply chain to find access to grievancemechanisms for the remedy of these violations, ranging
from forced labour to paying below the minimum wage.
This ‘access to remedy’ is the third pillar of the UNGPs,besides the government’s duty to protect, and thecompany’s responsibility to respect. Grievancemechanisms can be in the form of judicial,administrative, legislative or other appropriate means.
Individuals, trade unions and NGOs should be able tofile complaints in case of company or government
noncompliance.
Governments and Companies
Both governments and companies play a critical role inestablishing transparency & accountability. If they work
together, the sector will be in a much better position toaddress challenges in cocoa more effectively.

GovernmentsAtagovernmental
level,
transparency
andaccountability should be directed at helping address
what the Open Government Partnership (OGP) calls “thefive grand challenges” – improving public services,increasing public integrity, effectively managing publicresources, creating safer communities and increasing
corporate accountability.ii
Public Services
The provision of social, educational and health services as well as the development of local communities - ismainly the responsibility of national governments andlocal authorities. Cocoa growing communities sufferfrom a lack of schools and teaching material, haveinsufficient access to health care and clean drinking
water, bad roads, no electricity, and other insufficientpublic infrastructure. T&A should lead to an increased
understanding of the size of this infrastructural gap.
In countries such as in Ghana and Côte d’Ivoire,transparency about the financing of Cocoa Stabilisation
Funds, as well as the bufferstocks currently being set up,
is essential to ensure public trust. The current unrest
around Ghana’s Stabilisation Fund and the medium
term effects it will have on prices for farmers is a primeexample.
For national and local governments to improve thesepublic services, extensive financial investments are
required. While recognising that governments havesovereignty on expenditure choices of tax revenues,
there is a real need for financial transparency and theensuing accountability of the delivery of these public
services. T&A on the level of revenues from various
forms of cocoa taxes and export tariffs is an essential
ingredient. This includes both the cocoa bean trade as
well as the growing national processing industries,
including the level of taxes multinationals pay in country
for their processing activities.

Public Integrity
Recently, a statement was issued by Ghana’s
COCOBOD on their ‘cocoa roads’ project; many
contracts had been awarded by public servants at costs
higher than the organisation could afford, and at least
30 of the 230 awarded projects cannot be traced to any
town or community. iii Though this particular case isbeing redressed, it is symptomatic for a broader
problem, where public funds seem to be misused.
Whilst the previous example comes from Ghana,Transparency International ranks the other major cocoa
producing nations all even lower on their annual
Corruption Perceptions Index iv . For the West Africancocoa producing nations, the percentage of public
service users that paid a bribe in the past year varies
between a third (Côte d’Ivoire at 34% and Ghana at36%) and almost half (Nigeria at 43% and Cameroon at48%). This is far above the regional average of 22%.v
The poor are affected the hardest by bribery. They are
twice as likely to have paid a bribe, and are much lesslikely to report corruption out of fear of theconsequences. vi At the same time, anti-corruption
measures are only implemented piecemeal, usually after
a change of power due to elections, such as the
Ghanaian example above. Whistle-blower protection islargely absent, and in Nigeria changes in anti-corruption
legislation are making it easier for top officials to‘continue with corrupt practices’.vii Additionally, there isvery little transparency or accountability on how
contracts are awarded to manufacturers and processors,
as well as whether local traders are paying the farm gate
price.
While cocoa specific data is scarce, experts estimate thatfor African nations in general, the sum total of illicit
financial flows - whether in bribes at local level,
misappropriation of funds designated for public services
or through other illicit financial streams – is estimated to
be far larger than the official development assistancethat these nations receive.
Public Resources and Local Communities
T&A are also necessary prerequisites to a decent
management of public resources, such as protectedareas, schools, hospitals, and to address a selection of
threats, including a decline of biodiversity, a threat tothe sector by gold mining, and climate change affecting
the land still suitable for growing cocoa.
The current double catastrophe of deforestation and thepricing crisis is an important case in point. The past
years have seen a vast increase of cocoa production,
especially in Côte d’Ivoire. Reports are starting towww.cocoabarometer.org

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indicate that this is due to a staggering amount of
deforestation in regions that are classified as protected
forests. With no supply chain traceability, for years,
companies have been willingly (and often knowingly)
purchasing vast amounts of cocoa from areas thatshould have been protected natural parks. Governments
have not been enforcing the protection of classified
areas. T&A in sourcing, as well as effectiveness ofenforcement efforts, form the foundation of any
functional protection of public resources.
Additionally, local civil society, farmers and farmerbased organisations, as well as individual citizens, areable to play a more involved role when governments
and companies operate in a transparent andaccountable manner. They are empowered to demand
improvements in local infrastructure and provisions,have stronger bargaining positions towards largecommercial entities, and are more informed to makedecisions on collective steps forward.
Corporate Accountability
Governments have obligations in regards to corporate
accountability, at a global and/or collective level, suchas the UNGPs, or legal obligations under for example
national anti-bribery laws. Additionally, there is anincreasing body of legislation in consuming nations on
supply chain integrity and Human Rights Due Diligence.
T&A within these frameworks of national or regional
legislation and the UNGPs cover a wide range of issues,
including transparency of efforts, of payments togovernments and to cooperatives, of due diligence risk
analyses of supply chains, etc.
Legislative Requirements
In addition, there are various developments at national
level of consuming nations, increasingly requiring due
diligence in supply chains, including the French Duty of
Vigilance Law, the Dutch Child Labour Due Diligence
Law, or at least reporting requirements as under the
California Supply Chain Transparency Act, the United
Kingdom’s Modern Slavery Bill, or the EU Non-Financial
Reporting Directive. Pressure is also mounting todevelop EU-wide legislation on mandatory due
diligence.viii Legislation should also be put in place tostart tackling tax evasion, an issue with major
multinationals, primarily at consuming country level
where multinationals’ tax avoidance reduces national tax
revenues.
Necessary Areas for T&A for Governments
Governments should increase T&A in at least;• Taxes received and taxes reinvested in local
communities, the impacts of these (re)investments

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(including a specification of size of direct investments
to support farmers);
Size and viability of price stabilisation funds;
Public procurement, including open bidding &open budgeting processes;
Decision making processes on cocoa policies, i.e.
who is involved, how can farmers and civil society be
consulted;
Development, implementation, and regular andopen communication of anti-corruption policies;
Strengthening and enforcement of transparency anddue diligence laws and enforcement of legislation;
Publicprocurement
provisions,
includingmandatory due diligence obligations for relevantpublic bodies; inclusion of modern slavery provisions
in social clauses of public procurement; and inclusionof mandatory exclusion provisions for certain
suppliers.

Companies
By now, every chocolate and cocoa company worth theirsalt has at least one cocoa sustainability programme,
most have several, whether in collaboration with others
or on their own. But are companies doing what theyshould be doing? This question can only be answered
when efforts and impacts are communicatedtransparently and openly.
There is no way of holding companies to account totheir own commitments if they are not transparent about
their achievements. The risk of human rights violations in
the cocoa supply chain, in combination with a highly
concentrated market, means that even more than inmost other sectors, transparency and accountability are
essential – and largely missing – ingredients.
Increased T&A would also allow other actors with sharedinterests (such as development actors) to support
companies’ efforts, making them more effective.
Shared Data and Lessons Learned
Currently, corporate reporting on cocoa sustainability
and human rights is often based on a principle of only
communicating successes. Lessons learned are seldom
made public, resulting in many companies trying thesame unsuccessful approaches. Additionally, mostcommunication is based solely on outcomes andnumbers in absolute terms, and not on the impact thatthese expenditures might have on achieving impact, nor
on how they relate to the size of the challenge.
Collaborative efforts such as Cocoa Action are
struggling to find reliable data, and when they do,report on a highly aggregated level. Data from projects

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is kept proprietary, even when they are (co)-funded withpublicly financed development support from consuming
governments, such as through financial support fromthe IDH Sustainable Trade Initiative or other similar
initiatives.
Indicators need to be measurable, and results need tobe publicly available for measuring progress. Careshould be taken to ensure data is comparable, e.g.
through collaborating on indicators and coordination ofreporting periods. For all shared data projects,
baselines studies should be carried out, and living
income benchmarks should be an integral part of thedesign. Lastly, data should be based on impact, noteffort; for example, it is not the building of a school thatis the relevant data, but whether school attendance rates
went up and illiteracy went down.
Standards
For standards such as UTZ, Rainforest and Fairtrade,
T&A should also include reporting on impact on
livelihoods and labour conditions, not just on efforts ofremediation. Additionally, standards must be moretransparent on payments of premiums and farm gate
price, both to cooperatives as to farmers. When specificpartnerships are made, such as the Cadbury/Mondelēz
and Fairtrade partnership, financial and impact
transparency is essential.
Human Rights Due Diligence (HRDD)
Under the UNGPs, corporations are required toundertake human rights due diligence. A key ingredientof such HRDD is a significant level of transparency inorder to account for the companies’ impacts, both withincountry, as well as abroad, and with sub-contractors andsupplier. Multinationals should be required to reportannually on the implementation of their due diligenceplan, including identified risks and effectiveness ofmeasures taken. Companies reporting on HRDD shouldrefer to HRDD standards set forth in ILO Protocols, theUNGPs and OECD Guidelines.
Necessary Areas for T&A for Corporations
Companies should increase T&A in at least;• Investments in sustainability projects and ruralcommunities;• Scopeofprojects,
includingnumberoffarmers/communities targeted, overlap with otherprojects;• Impact of projects (what was effectively achieved
with these activities, e.g. how was farmer net income
increased, including disclosure on instances andremediation of child labour and trafficking);

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Payments to governments, as part of anticorruption measures, including taxes paid anddeclared profits, disaggregated per nation;
Payments to farmers and cooperatives, including
premiums and farm gate prices paid, living income
calculations;
Supply chain traceability including sourcing
locations.

Colofon

About this paper
This consultation paper is a first attempt to find new
vocabulary, spark a debate, and effect necessary change
on a sensitive topic.
Feedback
We call on stakeholders to provide their perspectives tothis paper, which will be used for the upcoming Cocoa
Barometer, to be released early 2018. The deadline forsubmitting feedback is November 30th, 2017, toantonie@voicenetwork.eu.
Citation: Fountain, A.C. (2017); Transparency andAccountability in the Cocoa Sector. Cocoa Barometer
Consultation Paper.
Cocoa Barometer Consortium• VOICE Network;o ABVV-FGTB Horval (Belgium)o FNV (Netherlands)o Inkota Netzwerk (Germany)o Green America (USA)o Oxfam (Netherlands, Belgium)o Public Eye (Switzerland)o Stop The Traffik (Netherlands, Australia)o Südwind Institut (Germany)• Hivos (Netherlands)• International Labor Rights Forum (USA)• Mondiaal FNV (Netherlands)• Oxfam America (USA)• Solidaridad (Netherlands)• UNICEF National Committee Netherlands
This paper was co-funded by theHamburger Stiftung für Wirtschaftsethiki

A sustainable cocoa sector is one in which all stakeholders are able to earn a living
income under decent working conditions, where child rights are respected, within athriving and healthy environment.
ii
Open Government Partnership: http://bit.ly/2bgpKlM
iii
Ghana Web http://bit.ly/2gluds9iv
Out of 176 countries, Ghana ranks 70th, Brazil 79, Indonesia 90, Peru 101, Côte
d’Ivoire 108, Ecuador 120, Nigeria 136, and Cameroon 145.
v
People & Corruption Survey 2015, Transparency International, p. 16
vi
Corruption Perceptions Index, Transparency International, 2016, p. 18, p. 25
vii
Transparency International http://bit.ly/2gunjnU
viii
Business and Human Rights Research Centre p. 4

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