Chocolate Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in Chocolate Industry

Chocolates are also associated with a token of appreciation, love, and happiness, which are given as gifts during the festive season, thereby propelling the product demand. Single-origin and single-estate chocolates, as well as high-quality fine flavor cocoa, are becoming increasingly popular. International companies are increasingly looking for strategies to expand their influence in this key area. The market for chocolate is simultaneously becoming more concerned with sustainability, which has an impact on both specialty and bulk cocoa. As a result, sustainability initiatives are becoming popular among enterprises that trade cocoa and customers who are interested in learning more about how cocoa is produced and impact of their buying.

Growing consumer interest in healthy living is fueling the demand for quality chocolate products. Concerns over how food affects consumers health and wellbeing are growing. The demand for healthy and organic foods has increased due to the COVID-19, which has made customers even more quality and health-conscious. Rising awareness about dark chocolate’s beneficial fats and flavonoids, which are believed to lower blood pressure, bad cholesterol levels and, lowers the risk of cardiovascular diseases is expected to promote the market growth over the next few years. Consuming chocolate lowers the risk of cardiovascular diseases, according to several observational studies which will help the chocolate sector expand soon.

ESG Trends

To better understand the environmental and human rights concerns connected to their supply chain, major industry players have recently pledged to source at least 80% of cocoa-containing products from sustainable sources by 2025. the industry announced voluntary agreements to abolish child trafficking in supply networks, after examining for unethical production practices continued from decades. Manufacturers are taking their sustainability strategies more seriously as consumer demand for sustainably produced food and corporate climate change action has increased. Many food technology companies are creating cell-based production techniques to generate environmentally friendly substitutes for traditionally produced food and related items. A few examples of sustainable food production techniques are lab-grown leather, which is more ethical and sustainable; the creation of both human and animal milk from mammary cells, which yields a product that is entirely farm-free; etc.

Recently, a major chocolate manufacturer planned to invest $500 million by 2030 in four interrelated main areas of impact: feeding children, empowering youth, prospering communities, and protecting ecosystems. This investment will focus on improving farmer livelihoods in cocoa-growing regions.

ESG Challenges

Deforestation and climate change threatens the sustainability of the cocoa business in these countries. Companies and investors alike perceive a promising future for sustainable food production because of the effects that climate change is having on cocoa harvests and the pressure that chocolate manufacturers are under to address ESG issues in traditional farming. Three-quarters of the world's supply of cocoa is produced in four countries: Côte d'Ivoire, Ghana, Nigeria, and Cameroon, with smallholder farmers accounting for 95% of production. The average farmer of cocoa earns only 7% of the final revenue. In addition, major suppliers frequently engage in child labor and even slavery, a long-standing issue in the chocolate industry which covers the social part in the ESG.

Growth of Chocolate Market

The global chocolate market size was valued at USD 46.61 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 4.98% from 2022-2029. The Indian market is expected to grow to USD 3.8 billion by 2027 from USD 2.2 billion as of 2021, exhibiting a CAGR of 9.1% during 2022-2027. Over the coming years, market expansion is anticipated to be fueled by growing consumer awareness of dark chocolate as a healthy confectionary product that contains antioxidants that shield the skin from damaging UV radiation. Additionally, the growing exposure of confectionery firms on social media and via satellite television channels among millennials and young people is anticipated to have a favorable effect on the industry's growth.

Key Companies in this theme

    • Barry Callebaut

    • Lindt & Sprüngli AG

    • Mondelez International

    • Nestle and The Hershey Company

Scope of The Chocolate Market ESG thematic Report:

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits The Chocolate Industry ESG thematic Report:

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the market globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the market

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment