{"id":11062,"date":"2016-11-04T16:06:58","date_gmt":"2016-11-04T20:06:58","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-hershey-company-americas-favorite-chocolate-bar-may-melt-as-earth-warms\/"},"modified":"2016-11-04T16:06:58","modified_gmt":"2016-11-04T20:06:58","slug":"hersheys-profits-may-melt-as-the-earth-warms","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/","title":{"rendered":"Hershey\u2019s Profits May Melt as the Earth Warms"},"content":{"rendered":"

Global climate change\u00a0is threatening the future of cocoa beans. \u00a0Although cocoa beans can withstand high temperatures, it requires humid conditions. \u00a0Temperature increases coupled with an unchanged projection in rainfall will lead to dryer climate\u00a0will lead to decreasing crop yield.\u00a0 Cocoa beans grow in a few concentrated regions \u2013 70% of the world\u2019s cocoa beans originate in C\u00f4te D\u2019Ivoire and Ghana.[i]<\/a>\u00a0 By 2050, rising temperature will render 89.5% of those regions less suitable to grow cocoa beans, and farms will need to move to higher altitude to adjust. [ii]<\/a>\u00a0 Declines in cocoa production can occur as soon as 2030, driving cocoa bean prices upward.[iii]<\/a><\/p>\n

Suitability Change for Cocoa Growing Regions by 2050<\/strong>
\n\"graph\"<\/a><\/p>\n

The Hershey Company (NYSE: HYS)<\/strong>, a US producer of chocolates and other confectionery, has been well aware of the threat of decreasing cocoa bean supply as the younger generation of farmers switch from planting cocoa beans\u00a0to less labor-intensive and more profitable crops.[iv]<\/a>\u00a0 Realizing that climate change will further exacerbate this trend, Hershey has already implemented changes in its supply chain.<\/p>\n

Raising the (Chocolate) Bar for Responsible and Sustainable Sourcing<\/strong><\/p>\n

In 2012, in response to campaigns of activist groups for ethical sourcing practices, Hershey announced a commitment to source 100% of its cocoa from certified sustainable sources by 2020.[v]<\/a>\u00a0 To achieve this goal faster, the company launched the Learn to Grow program, a three-year training program which teaches family farmers in updated methods to cultivate cocoa beans in hotter drier climate to increase productivity.\u00a0 Once those farms meet certification standards, Hershey purchases the certified sustainable cocoa beans at a premium, increasing the revenue each farm generates.[vi]<\/a>\u00a0 Thus far, the company is a year ahead of schedule as it is expected to source 50% from certified sustainable sources in 2016.\u00a0 Hershey has also partnered with local governments (especially the Ghanaian government) to launch CocoaLink, which uses cheap mobile phones as a platform to share the latest farming technology and best practices through free SMS text messages.[vii]<\/a>\u00a0 In addition to its partnership with government, the company founded CocoaAction with the World Cocoa Foundation to coordinate additional programs to help cocoa farmers in West Africa.[viii]<\/a><\/p>\n

A Farmer Uses CocoaLink to Receive Farming Technology Updates<\/strong><\/p>\n

\u00a0\"cocoalink\"<\/a><\/p>\n

Good, but Not Good Enough<\/strong><\/p>\n

The programs Hershey implemented are a good start to adapting to the changing climate; the company will need additional levers to stay competitive in the confectionery industry.<\/p>\n

    \n
  1. Hire a meteorologist: climate change will not only increase global temperatures in the long term, but also increase weather variability in the short term. A meteorologist can predict weather patterns in the short term and plan for more drastic changes in weather that may lower yield.\u00a0 Mars, a major competitor, has recently hired a meteorologist to help make sourcing decisions.[ix]<\/a><\/li>\n
  2. Diversify geographies where cocoa beans are sourced: to de-risk the impact of variable weather, Hershey should source cocoa beans from SE Asia and Latin America in addition to West Africa.<\/li>\n
  3. Show importance of sustainable chocolate to the consumer: Hershey should increase awareness of sustainable cocoa sourcing and use it as a competitive advantage. \u00a0An example could be to launch a limited edition earth-shaped chocolates once Hershey reaches the 100% certified sustainable cocoa bean target.<\/li>\n<\/ol>\n

    The Dark Side of Chocolate?<\/strong><\/p>\n

    Although Hershey\u2019s efforts toward certified sustainable sourcing are laudable, they may not result in any positive impact for the company itself or the farming community.\u00a0 The Cocoa Barometer (a report by various NGOs on sustainability issues in cocoa) sites two major challenges in the certified cocoa production process.\u00a0 First, the auditing process that ensures farmers are meeting sustainability standards are often unreliable as many control visits on farms are announced beforehand.\u00a0 Second, there is a lack of evidence of any long-term positive impact of the certified standards on the environment and on cocoa farmers.[x]<\/a>\u00a0 The chocolate industry has had a checkered past in terms of labor practices.\u00a0 Cocoa farmers are paid less than $2.50 per day even including premiums paid for sustainable cocoa.[xi]<\/a>\u00a0 There have also been ample reports of unpaid child labor and forced labor on farms.\u00a0 Although the initiatives implemented have moved Hershey in the right direction toward combating climate change, should it take more stringent approaches to measure the impact of its programs on cocoa bean yield?\u00a0 Furthermore, given the interdependence between farmers and the company, does Hershey have a responsibility to change these programs if they do not improve farmers\u2019 livelihood?\u00a0 If so, which should take priority?<\/p>\n

    Word Count: 738 words<\/p>\n

     <\/p>\n

    Sources:<\/strong><\/p>\n

    [i]<\/a> Barclay, Eliza. \u201cWhy The World Might Be Running Out of Cocoa Farmers.\u201d http:\/\/www.npr.org\/sections\/thesalt\/2015\/07\/03\/419243305\/why-the-world-might-be-running-out-of-cocoa-farmers. <\/em>Published Jul 2015, Accessed Nov 2016.<\/p>\n

    [ii]<\/a> L\u00e4derach, P., Martinez-valle, A., Schroth, G., & Castro, N. (2013). Predicting the future climatic suitability for cocoa farming of the world’s leading producer countries, ghana and c\u00f4te d’ivoire. Climatic Change, 119(3-4), 841-854. doi:http:\/\/dx.doi.org.ezp-prod1.hul.harvard.edu\/10.1007\/s10584-013-0774-8<\/p>\n

    [iii]<\/a> Stecker, Tiffany. Climate Change Could Melt Chocolate Production.\u00a0 https:\/\/www.scientificamerican.com\/article\/climate-change-could-melt-chocolate-production\/. <\/em>Published Oct 2011, Accessed Nov 2016<\/p>\n

    [iv]<\/a> Barclay, Eliza. \u201cWhy The World Might Be Running Out of Cocoa Farmers.\u201d http:\/\/www.npr.org\/sections\/thesalt\/2015\/07\/03\/419243305\/why-the-world-might-be-running-out-of-cocoa-farmers. <\/em>Published Jul 2015, Accessed Nov 2016.<\/p>\n

    [v]<\/a> Global Exchange et. Al.\u00a0 \u201cTime to Raise the Bar: The Real Corporate Social Responsibility for the Hershey Company.\u201d\u00a0 https:\/\/www.greenamerica.org\/PDF\/HersheyReport.pdf.<\/em> Published Sep 2010, Accessed Nov 2016.<\/p>\n

    [vi]<\/a> \u201cLearn to Grow Cocoa: Sustainable Cocoa Farming.\u201d https:\/\/www.thehersheycompany.com\/en_us\/responsibility\/good-business\/creating-goodness\/learn-to-grow.html. <\/em>Accessed Nov 2016.<\/p>\n

    [vii]<\/a> \u201cCocoaLink: Knowledge in the Farmer\u2019s Pocket.\u201d https:\/\/www.thehersheycompany.com\/en_us\/responsibility\/good-business\/creating-goodness\/cocoa-sustainability\/cocoa-link.html. <\/em>Accessed Nov 2016.<\/p>\n

    [viii]<\/a> \u201cCocoaAction.\u201d https:\/\/www.thehersheycompany.com\/en_us\/responsibility\/good-business\/creating-goodness\/cocoa-action.html. <\/em>Accessed Nov 2016.<\/p>\n

    [ix]<\/a> Taylor, Kate.\u00a0 \u201cThe Smart Reason the World\u2019s Largest Candy Maker is Hiring Meteorologists.\u201d http:\/\/www.businessinsider.com\/mars-chocolate-hires-meteorologists-to-deal-with-climate-change-2016-9. <\/em>Published Sep 2016, Accessed Nov 2016.<\/p>\n

    [x]<\/a> \u201cCocoa Barometer 2015.\u201d http:\/\/www.cocoabarometer.org\/Download_files\/Cocoa%20Barometer%202015%20Print%20Friendly%20Version.pdf. <\/em>Accessed Nov 2016.<\/p>\n

    [xi]<\/a> Gunther, Marc.\u00a0 \u201cHershey’s Uses More Certified Sustainable Cocoa, but Farmers May not be Seeing the Benefits.\u201d https:\/\/www.theguardian.com\/sustainable-business\/2015\/jul\/06\/hersheys-mars-ferrero-cocoa-farming-fair-trade-global-exchange.\u00a0 <\/em>Published Jul 2015, Accessed Nov 2016.<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    Climate change will reduce cocoa bean supply by 2030. Hershey will need to adapt its business practices to remain competitive.<\/p>\n","protected":false},"author":2538,"featured_media":11063,"comment_status":"open","ping_status":"closed","template":"","categories":[1320,1795,835,1796,14],"class_list":["post-11062","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-chocolate","category-cocoa","category-farming","category-labor-practices","category-sustainability"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nHershey\u2019s Profits May Melt as the Earth Warms - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hershey\u2019s Profits May Melt as the Earth Warms - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Climate change will reduce cocoa bean supply by 2030. Hershey will need to adapt its business practices to remain competitive.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Hersheys.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"900\" \/>\n\t<meta property=\"og:image:height\" content=\"533\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/\",\"name\":\"Hershey\u2019s Profits May Melt as the Earth Warms - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2016\\\/11\\\/Hersheys.jpg\",\"datePublished\":\"2016-11-04T20:06:58+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2016\\\/11\\\/Hersheys.jpg\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2016\\\/11\\\/Hersheys.jpg\",\"width\":900,\"height\":533},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/hersheys-profits-may-melt-as-the-earth-warms\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Hershey\u2019s Profits May Melt as the Earth Warms\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Hershey\u2019s Profits May Melt as the Earth Warms - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/","og_locale":"en_US","og_type":"article","og_title":"Hershey\u2019s Profits May Melt as the Earth Warms - Technology and Operations Management","og_description":"Climate change will reduce cocoa bean supply by 2030. Hershey will need to adapt its business practices to remain competitive.","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/","og_site_name":"Technology and Operations Management","og_image":[{"width":900,"height":533,"url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Hersheys.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/","name":"Hershey\u2019s Profits May Melt as the Earth Warms - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Hersheys.jpg","datePublished":"2016-11-04T20:06:58+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Hersheys.jpg","contentUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Hersheys.jpg","width":900,"height":533},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hersheys-profits-may-melt-as-the-earth-warms\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"Hershey\u2019s Profits May Melt as the Earth Warms"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/11062","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/2538"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=11062"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/11062\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media\/11063"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=11062"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=11062"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}