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Tony’s Chocolonely tries to prove that ethical chocolate and sweet profits can co-exist

April 11, 2021, 4:00 PM UTC
Farmers in Ivory Coast break cocoa pods.
Ssouf Sanogo—AFP via Getty Images

The startup launched with a crime. In 2004, a Dutch journalist went on television and committed an act that theoretically carried a six-year sentence: He ate several name-brand chocolates. Those seemingly harmless sweets were made with the help of child slavery, he claimed, and consumers who indulged in them were likely breaking the Netherlands’ laws against the practice. He called the police and told them they ought to come arrest him. 

There was no arrest. Instead, in 2005, the journalist, Teun van de Keuken, cofounded one of the world’s most maverick chocolate companies, Tony’s Chocolonely, a mashup of his first name and the lonely battle against Big Chocolate, as the handful of multinationals that dominate the industry is known. The mission was clear. At a time before “ethical chocolate” was even a phrase, Tony’s aimed to prove that companies could create fine chocolate without an army of child workers—many barely in their teens and toiling for pennies. What is more, the company was determined to source its beans from Ivory Coast and Ghana, which together account for more than 60% of global supply, yet whose growers subsist on less than $1.25 a day. 

From the start, inside its wrappers, Tony’s described the inequity between giant chocolate companies and poor cocoa farmers, and later, for emphasis, molded its bars into uneven pieces. The first wrapper was fire-engine red because the situation was “alarming,” says Henk Jan Beltman, Tony’s “chief chocolate officer,” or CEO, sitting in his airy headquarters in west Amsterdam one spring morning. He says the color implied “something has to be done.”

Yet nearly two decades on, that alarm bell is still ringing.

Courtesy of Tony’s Chocolonely

For much of the chocolate industry, worth about $136 billion by one estimate, production begins amid crippling poverty and underage workers, who spend hours a day hacking away at cocoa pods with machetes for little to no pay. Child cocoa workers have steadily increased to about 1.56 million in Ghana and Ivory Coast, according to a report last October by the University of Chicago’s National Opinion Research Center (NORC); the figures have risen since Fortune last visited the cocoa farms in 2015. That is despite 20 years of promises by industry powerhouses. In 2001, Nestlé, Mars, Hershey, and five other big companies signed the Harkin-Engel Protocol, a deal with the U.S. Congress to eradicate the worst forms of child labor in cocoa by 2005. They blew that deadline, then missed three more in 2008, 2010, and 2020, and now plan to meet their commitments by 2025—two decades late. 

The delays have come at great human cost—and with a raft of legal challenges. In December, Nestlé and commodities trader Cargill argued before the U.S. Supreme Court that they could not be held liable for child slavery under the U.S. Alien Tort Statute, an 18th-century law holding companies accountable for gross violations abroad. In the 15-year-old case, six young Malian teens, now in their late twenties, described being trafficked to Ivorian cocoa farms, where they were forced to work for no pay and slept under armed guard to prevent their escape. The companies argue that their connection to the plantations is simply too tenuous to hold them responsible. (The Supreme Court is expected to rule by June.)

Then in February a separate suit was filed in Washington on behalf of a different group of Malian teenagers, this time under a law designed to protect victims of human trafficking. It too names Nestlé and Cargill, as well as Hershey, Mondelez, and chocolate-processors Barry Callebaut and Olam.

Courtesy of Tony’s Chocolonely

Triumphing in these cases would protect Big Chocolate from immediate financial damages, but it’s looking less and less possible for companies to win the moral battle over child labor. As sustainable chocolate brands like Tony’s proliferate, the major players have raced to adapt, rolling out supposedly ethical brands and certifying their beans as “fair trade.” But critics say such efforts are badly lacking and do not address the main problem: a deep schism between prosperous Western multinationals and destitute African farmers. 

In their defense, companies say they have invested tens of millions in building schools and raising awareness among farmers about the dangers of child labor and the importance of keeping kids in school. Described at length on the companies’ websites, these programs suggest that cocoa increasingly comes from stable, well-tended African communities.

Even by the companies’ own admission, the reality is hardly that simple. Their efforts face myriad complications, including opaque trading networks and farms reachable only by two-day journeys over rutted roads. Monitoring an estimated 2 million cocoa farmers is impossible. “Clearly it is a much tougher job that we thought at the time,” says Darrell High, Nestlé’s Global Cocoa Plan manager, reflecting on the protocol Big Chocolate signed 20 years ago. High oversees Nestlé’s efforts to root out child labor. He also helped create its Child Labor Monitoring and Remediation System, launched in 2012, in which local staff visit plantations to find underage workers and place them in school—a system that Tony’s also uses, and which CEO Beltman calls “fantastic.” High admits it takes days just to reach one or two farmers, but he adds, “The key is that we are working seriously to solve it.”

$135.6 billion

Estimated Annual revenues of the Chocolate industry. Source: Grand View Research

$136 million

Estimated revenue for Tony’s Chocolonely in 2021, up more than 20% from 2020. Source: Tony’s Chocolonely

1.56 million

Number of child cocoa laborers in Ghana and Ivory Coast. Source: NORC

High dismisses activists’ accusation that companies’ huge profits are in part owed to the cheap or free labor of children, whether forcibly trafficked or working for their own families. (Nestlé took in more than $7 billion in chocolate revenues last year.) He believes “almost all” the 1.56 million children cited in the NORC report are working for their families, a practice that is legal in Ivory Coast and Ghana. Many farmers use their own children as workers, since they are simply too poor to afford hired help. “About 99% of these kids are working in the family context,” High says.

Those with deep experience on the ground dispute that. They say child trafficking from poor countries like Burkina Faso and Mali began around 2000, when world cocoa prices plunged. Now there is a steady stream of child workers, who are trained to tell visitors they are family members. “The farmers do not have enough money to hire workers, so they get children,” says one Ivorian journalist specializing in cocoa farming, whose employers did not allow him to be named. “Everyone knows that.” Assata Doumbia, who manages one of the cocoa cooperatives in Ivory Coast that supplies Tony’s, says most farmers are “desperate.” (She excludes those working for Tony’s, which she says pays farmers a premium above the market price.) “At every step, we have said producers are suffering,” she says. “But it has not changed.”

Fixing the problem amid such desperation is daunting—and it raises a thorny question: Is it even possible to be both a large-scale chocolate company and truly ethical?

Shawn Askinosie faced that conundrum after quitting his career as a criminal defense lawyer and starting Askinosie Chocolate in Missouri in 2005, the same year Tony’s launched in Amsterdam. The company sources beans from the Philippines, Tanzania, and Ecuador, sharing profits with its growers. But after trying to do the same in Ivory Coast and Ghana—essential markets for any chocolate company looking to achieve scale—Askinosie concluded it was impossible, since middlemen and exporters kept buyers and farmers far apart. To begin solving child labor, he believes, world prices should rise “two, three, four times,” allowing farmers to replace children with paid labor. “It is modern slavery concentrated in two countries,” he says. “The industry’s response to it is immoral.”

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The moment you step inside Tony’s Amsterdam offices, it’s clear this is no longer a fledgling startup. A dizzying range of bars, displayed across one wall, will bring in an estimated $136 million this year, more than 20% over last year, according to CEO Beltman. Some of that growth comes from the U.S., which, at $19 billion a year, is the world’s biggest chocolate consumer. Tony’s opened U.S. offices on Manhattan’s Union Square last year and began selling in Whole Foods Market outlets. U.S. country manager Frits Snel says he expects Tony’s sales will eventually reach “a few hundred million dollars.” That would still leave Tony’s a minnow in comparison to Mars or Hershey but a sizable player among the non–Big Chocolate companies. “Americans love stories, and we have a very powerful story.”

Yet as Tony’s grows, its story becomes more complicated. Spawned by moral outrage, the company aimed to change Big Chocolate, whether or not it made money. In 2011, Beltman bought a 51% stake in Tony’s for about $422,000 from its journalist-founders. He hired food-industry professionals to turn it into a profitable business. “Instead of telling other people what to do, I wanted to show them, and set a scalable example,” he says.

Courtesy of Tony’s Chocolonely

The “scalable” solution involves tracing every kilo of beans through Tony’s Open Chain platform, which it hired Dutch tech company ChainPoint to build in 2016. One afternoon in March, Tony’s head of operations Frans Pannekoek sits me down in Tony’s chocolate café in the heart of Amsterdam’s tourist district to demonstrate the system on a laptop. Using a program called BeanTracker, the software lists every grower’s shipment, from the farm to the port in Antwerp, Belgium. Farmers and traders can track shipments and payments in real time. Last year, BeanTracker detected suppliers adding beans from farmers Tony’s had not vetted. The company cut its business with them. Tony’s invites all chocolate companies to use Open Chain, though so far only the Dutch supermarket company Albert Heijn, German discount chain Aldi, and chocolatier Jokolade have done so. Still, the Open Chain proves a point, says Pannekoek, since industry giants typically mix “fair trade” beans with regular shipments, arguing that full traceability is impossible. “I also don’t own any cocoa plantations or vessels to send to Europe,” he says. “But I have built this platform where beans can be shown.”

Even so, Tony’s has come under fire for processing beans in the world’s biggest chocolate factory in Wieze, Belgium, owned by Swiss-Belgian multinational Barry Callebaut—another signatory to the troubled 2001 protocol. In February, Tony’s was removed from the “SlaveFree Chocolate” list kept by child-labor activist Ayn Riggs. (Previously, the company had appeared on the roster every year since she started tracking companies in 2007.) Riggs said she ejected Tony’s from the list after several others questioned its involvement with Big Chocolate. 

Beltman insists the partnership gives it greater influence in the industry and notes that Tony’s beans are stored in a separate tank in the Belgian factory. “We want to prove to Hershey’s and others, if we can do it as a bunch of enthusiastic, stupid Dutch guys, you should be capable of doing it as well,” says Beltman, who envisions eventually selling Tony’s to a major company. The industry has yet to follow suit. And for that, he says, “you have to be ashamed.”

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A taste for change

It’s been 20 years since Big Chocolate first pledged to eliminate the worst forms of child labor, yet even many in the industry admit far too little has changed. So what would it take to finally end the practice for good?

Pay a lot more for chocolate 

World cocoa prices have mostly stayed below $3,000 a ton for years. Some argue that a steep price hike, with provisions that much of the increase go to farmers, would provide growers with the incentive and means to hire adults. Counterpoint: Doubters of this strategy warn that higher prices could lead to overproduction and deforestation.

Pass laws with teeth

More governments could follow the lead of the European Parliament, which in March voted to back stiff sanctions on companies that engage in child labor. “We need laws that hold the powerful accountable, rather than laws which demand that farmers change,” said the 2020 Cocoa Barometer, a biennial analysis of the industry.

Fund cocoa communities

Countries that benefit from chocolate production could invest heavily in education, health, and infrastructure in cocoa-producing regions. Simply persuading those governments to drop the rules requiring birth certificates for school admission could make a huge difference in ending child labor, say experts.

Correction, April 12, 2020: A previous version of this story stated incorrectly that Mondelez was an original signatory to the Harkin-Engel Protocol. Headlines in early versions of the story also misspelled the name of Tony’s Chocolonely.

This article appears in the April/May issue of Fortune with the headline, “The lonely quest for ethical chocolate.”