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Tasty profits - investing in chocolate

Tasty profits, investing in chocolate, with chocolate bar in background, cardon emmisions, fair labor and ethical sourcing

Cocoa beans being cupped in two hands
 As part of our work to understand our exposure to biodiversity risk, we are focussing on the key drivers of biodiversity loss, as defined by IPBES (the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services). 

One of these areas is land and sea use change, and a key factor here is deforestation.  We are also looking at high-impact sectors in terms of our holdings, one of which is food & drink.

To help us understand our exposure to deforestation, we explored the fantastic data set provided by Forest IQ.  This data set investigates >2,000 major companies to see which commodities they are reliant on, their links to deforestation, and how well the companies are addressing this issue.

With such a large data set, we needed to focus, so we began by investigating our exposure to something appetising that we can all relate to - chocolate!

Chocolate and ESG - what is important?

When looking at companies which manufacture or distribute chocolate-related products, a huge range of ESG risks and issues emerge. 

Examples of issues to consider are as follows:

  • Carbon emissions, water useage and pollution, deforestation, sustainable farming practices

  • Fair labour practices and living wages (including child labour), community impact, supply chain transparency

  • Ethical sourcing and supplier relationships, reporting and accountability

Three columns in pastel colours, containing text of carbon emissions, water usage, sustainable farming, fair labour, community impact, transparency, ethical sourcing, reporting and accountability.

WPF exposure

Nestle £10m, Unilever £2.5m, 7 other passively held companies £4.1m
 We examined the Forest IQ data to identify the companies which we are invested in where the highest risks lie.  We found that we have exposure to 9 companies, including household names such as Lindt and Hershey.  Of these 9 companies, 2 are held in our active portfolios (i.e. portfolios which don't simply track a benchmark index, but contain companies that have been actively selected by the investment managers). 

These companies are Nestlé (£10m) and Unilever (£2.5m), both of which own a huge number of household name brands.  Forest IQ data indicates that both these companies have a high exposure to deforestation risk from cocoa, but that they are managing this moderately well. 

This contrasts with the other 7 companies (combined value of £4.1m), which range from high to critical exposure, of which all but one is deemed to have weak risk management in this area.  Therefore, we can take some reassurance that the companies that have been actively selected for our portfolios are dealing with deforestation risk better than their peers.

Broader sustainability issues

As mentioned above, chocolate production touches on more ESG issues than just deforestation.  In order to see how the sustainability of Nestlé and Unilever stack up against their peers, we looked at the most relevant benchmarks published by the World Benchmarking Alliance, which assess how companies are performing on nature-related and human rights criteria, and compared to other companies in the food & agriculture sector.

CompanyNature benchmark 2023 ranking/243*Human Rights benchmark 2022 ranking/127*Food & Agriculture benchmark 2023 ranking/350*


This information provides reassurance that the two largest holdings in our portfolio which are exposed to deforestation risk from their chocolate production are showing strong sustainability credentials and are working to manage the risks and impacts of deforestation.


In conclusion, our investigation into the chocolate industry's impact on biodiversity, particularly through deforestation, has revealed both challenges and leaders in the journey towards sustainability. The examination of Forest IQ data and case studies of Nestlé and Unilever showcases the complex web of ESG issues that chocolate production entails. While there are significant hurdles, such as achieving deforestation-free supply chains and ensuring ethical labour practices, our focus on companies like Nestlé and Unilever, which demonstrate a commitment to tackling these challenges head-on, offers a hopeful perspective.

_9 Safeguard assets, 10 strong risk adjusted returns, 12 positive impact, 15 transparency and information sharing,


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