ALDI has committed to carry out detailed human rights impact assessments (HRIAs) in selected high-priority food and non-food supply chains. These studies follow a stringent methodological approach, including extensive background research and engagement with rightsholders. They help us to identify, understand and assess the potential and actual adverse impacts of our business activities on workers and other affected rightsholders, such as community members, smallholder farmers and women. Coffee is one of ALDI’s high-priority raw materials in terms of profile and volume bought, with a high risk of adverse impacts on human rights.

Producing around one-third of the world’s coffee, Brazil holds the paramount position within the global coffee market. As a result, this sector is highly important to the country’s rural economy – sustaining livelihoods for millions of people. According to official statistics, more than 8.4 million workers are engaged in the Brazilian coffee sector directly and indirectly. It is also one of the top three countries of origin for ALDI coffee suppliers.

Another reason Brazil was selected is due to the diversity of its production base – including large plantations and a significant smallholder sector. This allowed for a broad selection of rightsholders to be included in the assessment.

Through this project, we gained in-depth knowledge of the coffee supply chain. We identified impacts potentially linked to ALDI’s business activities and where ALDI can initiate change. The HRIA has been valuable not only to shed light on the supply chain but also to offer market and business perspectives on human rights in the coffee sector. Its findings help to strengthen ALDI standards and due diligence.

• Price volatility, environmental challenges, labour shortages and informality are the biggest challenges in coffee production.
• Women and smallholders were identified as most vulnerable to negative impacts.
• The most negative impacts are felt at the level of crop development, farm maintenance and harvesting operations.
• Many impacts have more than one root cause. There are sectoral and commercial drivers, government and regulatory framework drivers, and contextual drivers (such as climate change, lack of childcare facilities and education etc.).
• ALDI has no direct contractual or investment relationships to lower supply chain activities where the most salient human rights impacts have been identified. However, key areas in which we can make a difference are supplier selection, purchasing practices and pricing.

In this HRIA, “Smallholders” are defined as a grower with less than 10 hectares. They often produce within their families, relying on manual labour or small hand-held machines for harvesting. While the smallholder coffee sector in Brazil is reported to be profitable and professionalised, this is not the case for other crops or coffee production in other countries. Nevertheless, many Brazilian smallholders struggle to make a decent standard of living for themselves and their families. Low global coffee prices, as well as fluctuations in supply and demand, affect their incomes.

Climate change is increasingly impacting coffee production: Weather extremes like droughts and frosts make growing conditions more challenging and unpredictable. Additionally, more and more diseases affect fields and facilitate the necessity for agrochemicals. These smallholder-specific issues are taken into consideration by certification standards, which ALDI actively engages with, and also aims to increase share of certified volumes in our supply chains. Both points were embedded in ALDI’s Human Rights Action Plan.

Based on the recommendations of this study, ALDI has developed a coffee supply chain-specific Human Rights Action Plan. It focuses on areas where we have potential leverage to address negative and enhance positive impacts for rightsholders. These are mainly within supplier selection and requirements, purchasing practices and pricing.

• Continuing and intensifying stakeholder engagement: The HRIA key findings and Action Plan were translated to Portuguese and shared with involved stakeholders. After reviewing the results collaboratively, the action plan was refined. Results have been verified in in-person field trips to sourcing regions.

• Strengthening gender equality activities: We published a group-wide international gender policy for supply chains. This policy focuses on expectations regarding gender equality, non-discrimination and gender-based violence and harassment. Along our ALDI supply chains, we want to raise more awareness among suppliers on gender issues.

• Strengthening supplier screening and monitoring: The findings of this HRIA have been taken into consideration for our Sustainability Supplier Evaluation roadmap.

• Enhancing long-term relationships: The findings of this HRIA were included in our sustainable purchasing practices at ALDI.

• Increasing cost transparency: We intensified our engagement with Rainforest Alliance, e.g. for the living income/living wage component and monitoring improvements in farmer incomes. At the same time, we engage in other living wage initiatives within the coffee sector - through suppliers or multi-stakeholder initiatives.

• Scaling up certified coffee: The number of certified coffee products needs to be increased. Therefore, we try to understand the barriers for certified and uncertified producers to access markets. By benchmarking different certification standards, we assess if they fit ALDI’s sourcing requirements and our sustainability vision and values.