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Power Sheet – March 2, 2016

Sometimes – oftentimes – leaders face no good alternatives. An excellent example of how they cope is Brian O’Keefe’s extraordinary portrait of the world cocoa trade, which I urge you to read. It’s more than just a revealing look at a business you may not have known you cared about; it’s also a case study of leaders who want to do some good in the world and learn how extremely difficult that can be.

Imagine that you’re Mars chief Grant Reid or Mondelez CEO Irene Rosenfeld or Nestlé CEO Paul Bulcke. Your company sold between $12.5 billion and $14.7 billion of chocolate candy last year, and most of the cocoa you need comes from West Africa. Some 2.1 million children there do the exhausting, dangerous, machete-wielding work of harvesting it. Some of them – no one knows how many, but thousands – are “forced labor,” meaning slaves. You obviously don’t want your company to be supporting any of this. But how do you stop it?

As Brian reports, the big chocolate makers long ago agreed, after some prodding, to eradicate the worst forms of child labor by mid-2005. They missed that deadline, which got pushed back to 2008, then 2010. They missed those too. Now the industry has pledged to reduce child labor in Ivory Coast and Ghana, the world’s largest cocoa producers, by 70% by 2020.

Why on earth can’t the leaders of the world’s biggest cocoa-buying firms influence their suppliers? Because cocoa isn’t produced by big agri-business companies with which the major buyers could negotiate. It’s produced by nearly two million cocoa-growing households in Ivory Coast and Ghana on tiny farms (average size: less than ten acres). Those farmers are desperately poor; the average cocoa farmer in Ghana made 84¢ a day in the 2013-14 growing season, and in Ivory Coast 50¢. Which means that while many children in the industry are forced labor, far more are not. As Brian explains, “Hundreds of thousands of children are used as free labor by their own families and often asked to take on dangerous tasks like harvesting with machetes or hauling 100-pound bags of beans.” If those farmers didn’t employ their children, their families would be even poorer.

Ivory Coast has laws forbidding forced labor and last year enacted a law requiring all children age 6 to 16 to go to school. But if you’re President Alassane Ouattara, a Ph.D. economist from the University of Pennsylvania and a former senior official at the IMF, how can you defy your constituents’ unforgiving financial reality?

The big cocoa buyers have realized they can reduce child labor only by changing the basic economics of cocoa farming, which they’re trying to do by helping the farmers be more productive. That’s a very long-term project. For now, those unfortunate children are surrounded by at least some leaders who want to do the right thing. But each can manage only part of the solution. Sona Ebai, former chief of the Alliance of Cocoa Producing Countries, observes that the problem will be solved only when all sectors of the society work on it together. “And there,” he tells Brian, “you really need leadership.”

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What We’re Reading Today

FBI’s mistake led to Apple request 

FBI director James Comey admitted at a House hearing yesterday that his agents made a mistake when they found an iPhone that belonged to one of the San Bernardino shooters. Since it was locked, they asked the San Bernardino County government, which owns the phone, to reset the iCloud password. But that eliminated the auto-backup feature, which could have been used to obtain much of the information the FBI now seeks. Comey says that even without that error the FBI still would have needed Tim Cook and Apple’s help to retrieve the information, because not everything backs up to iCloud. ABC News

J&J and Bayer accused of deceiving top medical journal 

Lawyers for patients suing the companies over the anti-clotting drug Xarelto claim the companies didn’t warn Duke University researchers working with The New England Journal of Medicine that important lab data was missing. Though they provided the data to regulators in Europe and the U.S., Alex Gorsky‘s Johnson & Johnson and Marijn Dekkers‘s Bayer didn’t provide the same data to the NEJM, claims the suit. NYT

Facebook under privacy investigation by Germany’s competition authority

The regulator says the terms and conditions that outline use of personal data for ad targeting are too difficult to understand. Germany contends further that the confusion could contribute to Facebook’s further market dominance. If it finds Mark Zuckerberg‘s company guilty of an abusive practice, Facebook could be in violation of antitrust laws. Facebook denies any wrongdoing. Fortune

New Jersey papers call for Christie’s resignation

Governor Chris Christie‘s presidential campaign kept him outside of New Jersey for 261 full or partial days last year. Constituents may have thought that after he suspended his campaign he would refocus on the state. But as he stumps for Trump, six newspapers have called for his resignation. They cite his unwillingness to answer questions about his leadership, his continued use of public funds for Trump campaigning, and his lack of attention to the state.  USA Today

Building a Better Leader

Co-founder of Medium says his biggest mistake…

…was thinking management was a necessary evil. Now Evan Williams views employees as his most important customers. Inc.

A different pay gap

About 73% of employers say they think their employees are paid fairly. But only 36% of employees agree. Fortune

When guiding change in your department… 

…explain the business reasons behind it. That can spark ideas on how to implement the change.  Art Petty

Super Tuesday Fallout

Trump’s victories don’t bring unity for Republicans

Despite his winning seven races last night, the GOP has shown little willingness to fall behind the leading candidate. Concerns are that if Donald Trump becomes the nominee, the party will lose not just the general election but also large numbers of voters for years to come. He argues that he’s bringing new people into the party. NYT

Hillary unites Democrats 

On the other hand, after winning seven primaries of her own, Hillary Clinton has become the resounding favorite in the Democratic race. Despite Bernie Sanders‘s recent rise and winning four states, Clinton has become the candidate that the party is more than willing to support. It’s an easy decision for Democratic leaders, since Clinton is the established candidate while Sanders is the outsider. Vice

Cruz and Rubio battle for unity 

After Ted Cruz won three states – Texas, Oklahoma, and Alaska – he called for the GOP to rally behind him as the candidate who can beat Trump. He also said Marco Rubio and the other candidates should step away so he can consolidate opposition to the Donald. Rubio made a similar plea, but his poor showing, winning only Minnesota, left party leaders concerned about his ability to overtake Trump. Fortune

Up or Out

Starbucks former COO Troy Alstead has resigned from the company. He has been on a year-long leave. During that time, former Juniper CEO Kevin Johnson has filled the COO role. Fortune

Zynga founder Mark Pincus has resigned as CEO. He will remain as executive chairman. Board member Frank Gibeau will succeed Pincus. The Verge

Government contractor Engility Holdings has named Lynn Dugle CEO. Fortune

Fortune Reads and Videos

Donald Trump’s net worth may not be as large as we think  

He may be blurring the difference between revenue and net income. Fortune

Sports Authority files for bankruptcy 

It will close or sell 140 stores. Fortune

Former CEO of Chesapeake Energy indicted

Aubrey McClendon rigged oil and natural gas bids in Oklahoma, the Justice Department alleges.  Fortune

These companies should benefit as FAST Act money…

…flows to states, leading to more road construction.  Fortune

Quote of the Day

We have expanded the Republican Party…I am a unifier. Our party is expanding, and all you have to do is take a look at the primary states where I’ve won. … I think we’re going to be more inclusive. I think we’re going to be more unified.” — Donald Trump during his victory speech on Super Tuesday.  Time

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Produced by Ryan Derousseau
@ryanderous
powersheet@newsletters.fortune.com