The International Labour Organisation (ILO) has estimated that on any given day, on average, 152 million children are being exploited in the labour market. This equates to more than double the UK’s population. Child labour is defined as ‘work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development’.

Although freeing the international workforce of (the worst forms of) child labour has been written into the Sustainable Development Goals it continues, often hidden from sight. Child labour remains in complex supply chains, where cheap labour plays a pivotal role in a ‘race to the bottom’ – a race where international production standards and universal human rights are subverted for the competitive advantage of lowered production costs.

SDG 8.7 states that ‘immediate and effective measures need to be taken to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms’, while 16.2 refers to the ending of ‘abuse, exploitation, trafficking and all forms of violence and torture against children’.

The impacts of COVID-19 have blurred and delayed commitments to many of the SDGs, and in some cases may have exacerbated the problems they aim to address. With many daily wage workers losing their pay over the course of the pandemic, due to cancelled orders, supply chain disruptions and the shutdown of businesses, child labour has become a necessity for many families who have fallen into debt or poverty.

Based on data published by the ILO and FAOSTAT, Route2 can assess and evaluate the human, social and environmental impacts of any product. In the instance of chocolate, surfacing the (human impact) costs of child labour within the supply chain, permits a more representative cost of production to be calculated.

Take a 200g bar of your favourite chocolate, containing approximately 56g of cocoa. Route2 estimates, for every tonne of cocoa produced, 3 children are exploited through child labour. Accordingly, the cost of child labour per bar of chocolate equals £4.04 or 10p per square segment. You can buy a 200g chocolate bar for £2.

This means the market price of a chocolate bar is roughly one third of the real cost of production, once child labour is accounted for.

So, what is a possible solution? Firstly, the human, social and environmental costs associated with production need to be calculated. Secondly, these previously ‘external costs’ require reflection in the price of products. Thirdly, any price increase requires clear explanation, such that consumers understand the rationale for the increase. Lastly, the revenues generated by these ‘impact premiums’ require full (re) distribution back to the previously unrecognised factors of production – in this instance, child labour. What this means, in practical and simple terms, is a chocolate bar now costs £6, and £4 of the revenue is directed to addressing and compensating the costs of child labour.

Over time, producers (e.g. Tony’s Chocolonely) and standards (e.g. Fair Trade) will ensure the full costs of production are reflected in product prices. Route2, through its Total Capital Accounting framework, is uniquely positioned to help producers determine the full costs of their production and, further, help efficiently allocate ‘impact premium’ revenues to the previously ignored factors of production e.g. child labour, vulnerable labour, the natural environment etc. If you knew your chocolate bar incurred a societal cost of £4 in terms of child labour would you still buy it?

Route2 delivers unique insights into the total impact of business activities. We offer businesses expert advice and analysis about historical and future performance. Our services (coined Value2Society) strengthen decision making, establish competitive advantage and enhance the value business delivers to society. 

To find out more, email us at info@route2.com or phone +44 (0) 208 878 3941  

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