The recent class action lawsuit against Lindt for lead contamination in its chocolate bars has sent shockwaves through the confectionery world. While the presence of lead in chocolate is undoubtedly alarming, it highlights deeper systemic challenges facing the chocolate industry. These challenges go beyond heavy metals and into the very fabric of the cocoa supply chain, where inefficiencies and social injustices have persisted for decades. Addressing these issues requires a renewed focus on transparency, sustainability, and equitable practices.

“Heavy metals can be absorbed by cocoa trees from the soil, but lead contamination often originates from the supply chain, such as drying beans on tarmac near roads with traffic using leaded fuels,” explains Eduardo Tugendhat, Palladium Senior Advisor for Inclusive Growth and Nature. “This problem is a challenge for all chocolate makers, largely because of the lack of transparency all the way back to growers. If the scandal isn’t heavy metals, it’s deforestation, social injustices, or impoverished farmers. But the real issue isn’t just these symptoms—it’s the structural problems in the system that allow them to persist.”

The global cocoa supply chain faces a host of challenges. Many cocoa farmers live below the poverty line, struggling to make ends meet in an industry worth billions. According to the 2018 Cocoa Barometer report, many farmers even lose money growing cocoa. Certification systems and other initiatives have often failed to address these root problems, leaving much of the industry’s “last mile” informal and unstructured.

“Right now, the biggest problem in West Africa, for instance, isn’t the chocolate companies—it’s the low prices farmers receive compared to world market prices,” Tugendhat continues.

While chocolate companies like Lindt are committed to sustainability, their efforts are hindered by a system that’s difficult to navigate. “Just beating up on Lindt over lead contamination isn’t going to solve anything,” Tugendhat says. “Their problem—and it’s shared by the entire industry—is how to create full transparency over a supply chain that starts with poor farmers drying cocoa on the side of the road. It’s about visibility, addressing the underlying systemic issues, and attracting external capital to scale the solutions.”

This lack of transparency, particularly in the “last mile” between aggregators and farmers, perpetuates inefficiency and inequality. “Unless we address the structural barriers—helping farmers expand their farms, improve productivity, and get higher prices per unit—we’ll just be treating symptoms, not the disease.”

One promising model for systemic change is the Peru Cocoa Alliance (PCA), a public-private partnership supported by USAID and implemented by Palladium. PCA transformed Peru into the world’s second-largest producer of fine-flavor cacao by aligning stakeholders and investing in long-term solutions.

“PCA was a proof of concept for trying something different,” says Tugendhat. “It didn’t solve all the problems, but it illustrated pathways for real change—how aligning solutions and building trust can deliver results. Farmers were able to expand their farms, increase productivity, and access financing to modernize their operations. This is the kind of systemic approach we need to replicate.”

A key innovation in the PCA model was the use of a GIS-based traceability system that geo-mapped every farm plot with detailed information on trees, activities, and household socio-economic data. This enabled tracking cocoa back to its source, facilitating controls for heavy metals, monitoring carbon emissions, and ensuring fair incomes for farm owners and workers.

“By building long-term trust between producers and buyers, and introducing efficiencies, the system raised farm gate prices while also incentivizing farmers to adopt sustainable agroforestry practices,” says Tugendhat. “It wasn’t perfect, but it showed how we can begin addressing the root causes.”

The PCA model also highlights the importance of collaboration. By mobilizing public and private stakeholders, the Alliance demonstrated that sustainability is achievable when the entire value chain works together. “What we’ve tried with certifications and sustainability initiatives hasn’t yet come to fruition,” Tugendhat notes. “But PCA showed that when you create alignment between all participants, you can make progress.”

Despite increasing focus on sustainability, the lawsuit against Lindt serves as another reminder of the systemic problems facing the chocolate industry. “We have to be somewhat sympathetic to the industry,” Tugendhat says. “It’s not that companies like Lindt haven’t been trying—it’s just a really vexing problem. To transform the system, we need bold solutions, and sometimes the industry’s caution gets in the way of being truly transformative.”

Heavy metals are just one of many issues in the sector’s complex supply chain. By prioritizing transparency, building trust, and aligning incentives across the value chain, the chocolate industry can create a future that benefits farmers, consumers, and the environment alike.

For more, contact info@thepalladiumgroup.com.