Case Study

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THE HERSHEY COMPANY: BROKEN PLEDGE TO STOP USING CHILD

LABOUR1
Bertrand Guillotin wrote this case solely to provide material for class discussion.
The author does not intend to illustrate either effective
or ineffective handling of a managerial situation. The author may have disguised
certain names and other identifying information to
protect confidentiality.
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This publication may not be transmitted, photocopied, digitized, or otherwise

reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered
under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact
Ivey Publishing, Ivey Business School, Western
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i1v2e5y5pubs
Copyright © 2021, Ivey Business School Foundation
Version: 2021-10-20
tC
In 2017, Michele Buck made history: she became the first woman president and chief
executive officer
(CEO) of the Hershey Company (Hershey),2 a leading chocolate manufacturer in the
US$98.2-billion3
global chocolate confectionery market.4 Two years later, she added “chairman” to
her title.5 The company’s
website, however, emphasized that as the chairman of the board and the 12th
president and CEO, Buck had
“two important roles—mom and business leader.”6 Indeed, she had three children,7
and she was one of a
clear minority of women leaders of Fortune 500 companies—41 out of 500 leaders were
women in 2021.8
Altogether, Buck had a notably impressive professional track record.
No
The company’s record was not as sterling. Hershey ranked fourth-to-last behind Mars
Incorporated (Mars),
Nestlé SA, and Lindt & Sprüngli AG on Green America’s 2019 Chocolate Company
Scorecard (see Exhibit
1).9 Although Hershey’s quest was “to bring goodness to the world,”10 the company
had broken its 2001
pledge to eradicate “the worst forms of child labour” and “uproot child labor from
its cocoa supply chain,”
according to a 2019 article in The Washington Post.11
Do
Child labour was considered a global human rights challenge affecting 152 million
children. The United
Nations had set a Sustainable Development Goal (goal 8.7) to eradicate child labour
“in all its forms” by
2025.12 Pressure for greater supply-chain transparency and compliance with human
rights had also
increased in Europe and the United States in 2020 when with the Slave-Free Business
Certification Act was
introduced to US Congress.13 If passed, companies in violation of the Act could be
liable for $500 million
in punitive damages.14 In addition, on February 12, 2021, Hershey became one of
seven defendants in an
unprecedented US federal class-action lawsuit filed by International Rights
Advocates on behalf of eight
Malians “trafficked as children and forced to harvest cocoa in Côte d’Ivoire.”15
An annual shareholders’ meeting was set for May 17, 2021,16 and Buck had to decide
how to address these
challenges since they pertained to the company’s reputation, its core business
model, and its corporate
social responsibility.
This document is authorized for educator review use only by ASIF KHURSHID, Bahria
University until Mar 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
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COMPANY ORIGINS
The origins of Hershey dated back to the 1880s, when Milton S. Hershey founded the
Lancaster Caramel
Company in Lancaster, Pennsylvania (PA), United States. Inspired by the German
chocolate-making
machines featured at the 1893 World’s Columbian Exposition in Chicago, Milton
decided to enter the
chocolate business the following year and founded the Hershey Company. By 1900, the
chocolate business
was doing so well that Milton sold his caramel company to focus on the mass
manufacture of chocolate
bars, building a plant in 1903 in Derry Township, PA (later renamed Hershey, PA),
which became the
largest chocolate manufacturing facility in the world at that time. Under his
leadership, several innovative
products were marketed, including Kisses (1907); Milk Chocolate with Almonds
(1908); Mr. Goodbar,
made with peanuts (1925); Krackel, made with crisped rice (1938); and Field Ration
D, an emergency
nutrition bar, which did not melt in tropical heat, to support the efforts of World
War II.17
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Following the war and Milton’s death, the company grew through strategic
acquisitions. For example, it
acquired the manufacturer of Reese’s Peanut Butter Cups and two pasta companies in
the 1960s. Strategic
acquisitions continued throughout the 1980s, including the purchase of the American
operations of Cadbury
Schweppes, which made Hershey the US manufacturer of Cadbury and Peter Paul
products. Its
diversification into the non-chocolate business also continued, albeit slowly and
over a period of almost 25
years. For example, in 1996, Hershey acquired Leaf Brand’s North American
operation, which owned the
Jolly Rancher and Payday brands, and in 2018, it acquired other healthy snack
companies, including
Amplify Snack Brands, which made SkinnyPop popcorn. Diversification was, however,
limited, and
Hershey later divested of its pasta business unit.18
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In 1970, increased competition, particularly from Mars, forced Hershey to advertise

to consumers for the
first time.19 This major shift ushered in an era of systematic reputation- and
brand-building for Hershey. It
was a necessary and notable departure from one of Milton’s founding business
principles: “Give them
quality. That’s the best kind of advertising in the world.”20 But implicit
advertising through quality and
word of mouth ran its course amid the competitive landscape of the early 1970s. In
1973, another shift took
place: Hershey stopped the company tours that had started in 1915 and opened
Chocolate World, a museum
about chocolate with interactive exhibits, in Hershey, PA. Chocolate World expanded
domestically into
other US cities and internationally in Singapore.21
No
THE FOUNDER AND HIS VALUES
Among the American business titans of his time, Milton stood out as an anomaly.
According to Michael
D’Antonio, a Pulitzer-prize winning journalist who in his autobiography of Milton
wrote, “He was toughminded but fair. He wanted his workers and their families to
live in dignity.”22
Do
Milton’s generosity was grounded in the hard work and skills he had learned as a
teenage apprentice of Joseph
H. Royer, a confectioner in Lancaster, PA. Equipped with new skills and armed with
a $100 loan from his
aunt, Milton made the jump to entrepreneur status in 1876, opening his first candy
store in Philadelphia, PA.
After six years of working day and night to make the candies he was selling
himself, Milton became ill and
experienced increased debt, forcing him to sell this business.23 He headed west,
learned in Denver the
importance of adding fresh milk to candies (it improved their quality and gave them
a longer shelf life), opened
a candy shop in Chicago (another failure), and then tried his luck in New
Orleans⎯to no avail. Back on the
East Coast, in New York, he opened another candy shop, which also failed.24
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Returning to Lancaster, Milton’s relatives refused to take him in or lend him yet
more money to start another
business. It was an old friend and former employee by the name of Henry Lebkicher,
who had briefly
worked for Milton in the Philadelphia store, who gave Milton a place to live and
paid for him to bring his
candy-making equipment back from New York to start Lancaster Caramel Co. Applying
the fresh-milk
innovation to caramels that he had learned in Denver, Milton created the unique
Hershey Crystal A
caramels. The quality and shipping stability of these new chewy caramels impressed
an English importer
so much that he placed an order large enough to enable Hershey to secure a $250,000
loan to build several
plants. This was a major turning point, enabling the Lancaster Caramel Co. to
spread across the United
States and hire 1,300 workers by 1893. The next turning point was Milton’s visit to
the World’s Columbian
Exposition in Chicago. His insatiable entrepreneurial spirit combined with the
engineering capabilities to
mass produce helped him launch Hershey the following year.25
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Milton died at age 88 in 1945 in Hershey, PA. He had built his business on solid
corporate values and a unique
corporate structure that included a trust to carry out philanthropic efforts after
his death.26 More than a century
after its establishment, the Hershey Trust Company still served as the trustee for
the Milton Hershey School
(established in 1909), the M.S. Hershey Foundation, and the Hershey Cemetery.27 The
Hershey Trust
Company was clear proof of Milton’s generosity toward children. Also noteworthy was
that the trust kept a
minority stake in the company with a majority of the voting rights. While the trust
only controlled 9 per cent
of the shares, it controlled 80 per cent of Hershey’s voting rights.28 Among
Milton’s famous quotes, the
following epitomized the values on which he had built his legacy: “If we had helped
a hundred children it
would have all been worthwhile,” and “One is only happy in proportion as he makes
others feel happy.”29
THE HERSHEY COMPANY TODAY
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Values
Even after two world wars and more than a century later, Milton’s values were still
present in the fabric of
the company’s culture⎯in its DNA—as offered on the corporate website:
Rooted in Our Values
No
Our founder, Milton Hershey, had a vision to make chocolate accessible to everyone.
His dedication
to creating a better world continues to inspire our mission statement or as we call
it, our purpose,
of making more moments of goodness.
Our brands and values create a unique place in people’s hearts and minds,
differentiates our
business and inspires our future growth.
Do
We are inspired by our long-standing values of togetherness, integrity, making a

difference and
excellence. These values make our company a special place to work and can be seen
in the daily
actions of each of our employees around the world.
Caring for our people and communities, taking care of the planet, helping children
succeed and
making the best quality, affordable snacks for people everywhere to enjoy have
driven us for more
than 125 years and will continue to do so.30
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Portfolio
With a portfolio of more than 80 global brands, Hershey was the number-one
chocolate producer in North
America. This portfolio included well-known chocolate and candy brands such as
Hershey’s Kisses,
Reese’s Peanut Butter Cups, Twizzlers, Mounds and Almond Joy candy bars, York
peppermint patties, and
Kit Kat wafer bars.31 Hershey also made grocery goods⎯including baking products,
toppings, sundae
syrup, cocoa mix, cookies, snack nuts, breath mints, and bubble gum—and had
expanded into popcorn and
other savoury snacks.32
Marketing Strategy
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Hershey’s products were sold to a wide range of retail outlets and wholesale
distributors in North America
and overseas. Approximately one-third of Hershey’s products were sold to McLane
Company Inc., one of
the largest wholesale distributors in the United States. McLane, in turn,
distributed Hershey’s products to
retailers throughout North America, including Walmart Inc. Only about 10 per cent
of sales were overseas.
Hershey was centered on the US market and enjoyed a 76.4 per cent household
penetration rate in the US
with 45.2 million people consuming Reese’s peanut butter cups. In international
markets, the company
added regional brands such as Pelon Pelo Rico confectionery products in Mexico, IO-
IO snack products in
Brazil, and Maha Lacto confectionery products and Jumpin and Sofit beverage
products in India.33
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Hershey’s marketing strategy was anchored on strong and valuable brands; product
innovation, derived
from considerable corporate resources; and the consistently superior quality of its
products. The company
used a range of advertising and a variety of promotional programs directed toward
its customers to stimulate
sales of certain products at various times throughout the year.34 In 2020, the
company spent $517 million
on advertising expenses.35
No
Overall, the company’s vision was “anchored in four interconnected strategies: 1)
driving growth by
capturing more snacking occasions, 2) profitable and sustainable international
expansion, 3) operating with
best-in-class capabilities and partnerships, and 4) investing in people and
communities.36 To protect its
brands and overall reputation⎯a key element of its marketing strategy⎯the company
had signed the Cocoa
Forest Initiative against deforestation, invested in Cocoa For Good, and earned
several fair trade
certifications (see Exhibit 1).37
Financial Performance
Hershey’s marketing strategy had led to solid financial performance. From the time
Buck became president
and CEO in 2017, Hershey’s revenue increased from $7,515 million to $8,149 million
in 2020 and net
income grew from $782 million to $1,278 million in 2020 (see Exhibit 2).
Do
Hershey’s research and development expenses were marginal for the period (see
Exhibit 2), but the
company did “a lot of consumer research” and innovated with packaging, according to
Susanna Zhu, vicepresident of the US supply chain operations for Hershey.38 This
lack of spending on research and
development confirmed Hershey’s reliance on marketing and strategic acquisitions to
remain competitive.
Hershey also innovated through its digital transformation, according to Doug
Straton, chief digital
commerce officer for Hershey, capitalizing on digital consumer insights and
increasing the efficiency of
both its merchandising ecosystem and overall supply chain.39 According to Buck, in
addition to increased
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efficiencies, Hershey’s focus on digital sales was generating “higher average

selling prices in the ecommerce channel rather than in physical retail stores.”
This phenomenon had led her to conclude that, “for
Hershey, search is the new shelf.”40
The digital transformation, among other factors, had contributed to an increase in

cash⎯from $380 million in 2017
to $1,143 million in 2020 (see Exhibit 3). Such financial performance would have
pleased just about any CEO.
THE CEO
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Born into a working-class family with a father who had started working at age 14,
Buck was characterized
by one of her favourite recruiters as a “bootstrapper”—someone who was ambitious
and eagerly pursued
what she desired. She started working at age 12 as a babysitter and continued to
work her way through
college and graduate school, earning a master of business administration degree
from the University of
North Carolina. During that program, she discovered “a career that combined my
analytic abilities,
creativity, and strong interpersonal skills—a career in marketing and brand
management.”41
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Buck joined Hershey in 2005 as the company’s chief marketing officer, then worked
her way up in the
hierarchy.42 Between 2017 and 2020, as CEO, Buck maintained or enhanced the power,
value, and
reputation of Hershey’s brands, which were among the brands most loved by both kids
and their parents
(see Exhibit 4). Her brand management performance had also contributed to the
expansion of the balance
sheet’s intangible assets category, which more than tripled from $369 million in
2017 to $1,295 million in
2020 (see Exhibit 3). As chairman of the board, president, and CEO, Buck was among
five women and ten
men who had come from different industries to govern Hershey.43 She could tap into
the bright minds of
these seasoned executives, especially in tough situations where the probability of
a disaster might have been
low but certainly not inexistent.
From the start, as an astute marketer and brand manager, Buck had focused on the
importance of reputation
through brands, people, and purpose. In her blog relating to corporate priorities
and Hershey’s 2018 plan,
Buck stated the following regarding iconic brands:
No
We are fortunate to work on some of the most beloved brands in the marketplace. Our
brand
strength is one of the key pillars of our company’s reputation [see Exhibit 4]. …
We have one of
the most trusted and respected corporate brands in America.44
On company purpose, she said,

Sharing Hershey goodness has recently taken a notable new path with last month’s
launch of Cocoa
For Good, a new cocoa sustainability strategy supported with a $500 million
investment. Our work
in cocoa-growing communities is critical to the long-term health of the cocoa
sector and will help
bring positive change for cocoa growers, their families and communities.
Do
Additionally, we look forward to updating our environmental strategy and human

rights policies
this year. We will be working on these important initiatives in partnership with
The Ceres Company
Network, to improve the sustainability and resiliency in our operations and supply
chain.
We have an aggressive business plan in 2018.45
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SUPPLY CHAIN, SOCIETAL, AND LEGAL CHALLENGES
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As it turned out, Buck was prescient: implementing those priorities and an

“aggressive business plan” would
be challenging, especially regarding Hershey’s global supply chain.
Hershey was ranked near the very bottom of Green America’s Chocolate Company
Scorecard (see Exhibit
1). Its supply chain-related challenges not only included issues with labour
certification and efforts to stop
deforestation but also included social expectations and beliefs captured in the
institutionalized
environmental, social, and corporate governance (ESG) initiatives.
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In 2020, Hershey did not even make the top-50 list of best ESG companies. In
fairness, no other chocolate
manufacturer made that list either. However, Procter & Gamble Co., another company
with a household
name, like Hershey, but one focused on personal care, was ranked 33rd out of 50
companies for its
performance against ESG expectations.46 In 2018, the Edelman Earned Brand study
revealed that “64 per
cent of consumers around the world now buy on belief, a remarkable increase of
thirteen points since 2017.
These Belief-Driven Buyers will choose, switch, avoid or boycott a brand based on
where it stands on the
political or social issues they care about.”47
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Exacerbated by the 2020 worldwide economic shutdowns and higher shipping costs
resulting from the
COVID-19 pandemic, supply chain challenges were becoming bigger and global. In
addition, legal
pressures to improve supply chains and to source responsibly had also been
increasing. In 2016, the US
Congress had “finally made it illegal to buy products made by slaves,” closing a
loophole that had been in
place since the Tariff Act of 1930—a loophole that many had conveniently ignored
for generations. This
landmark piece of legislation, signed by President Barack Obama, was expected to
“give enforcement
agencies more latitude to investigate companies that operate in industries known
for forced and child labor,
like the seafood or cocoa industries.”48 This regulatory pressure continued to
increase in 2020 as a result of
a number of measures: the United Kingdom had its published new guidance on the
Modern Slavery Act
2015; the European Union introduced mandatory human rights and environmental due
diligence legislation;
and the United States introduction its Slave-Free Business Certification Act,49 a
bipartisan effort intended
to impose liabilities of up to $500 million for deliberate violations.50
Do
No
With these legal efforts as a backdrop, Hershey, Mars, and Mondelēz International
Inc., three of the top
five chocolate manufacturers in the world, imported $437 million worth of cocoa
beans from Côte d’Ivoire
and $192 million worth from Ghana in 2018.51 These two countries, known for
providing cocoa, the key
ingredient for chocolate, accounted for 70 per cent of the world’s cocoa
production, with leading exports
worth $3.6 billion for Côte d’Ivoire and $1.9 billion for Ghana. However, these
numbers came at “a steep
human cost” for these countries. In Côte d’Ivoire, 600,000 cocoa farmers made
approximately $1 each per
day and 891,500 children worked in cocoa agriculture. In the same year, Ghana had
800,000 farmers and
708,400 children working in cocoa agriculture.52 These numbers suggested that the
cocoa farms system
producing most of the cocoa beans in the world was highly fragmented, with each
farmer free to run their
farm as desired. Such fragmentation would logically make it costly and difficult to
track its participants
(the farm workers) in terms of their age, salary, and origin across all farms in a
region of the world where
many people had been displaced due to war in the region (e.g., Mali).53
In addition, the industry had become more secretive in response to reports from
organizations like the Food
Empowerment Project, a US non-profit organization, about the industry’s reliance on
child labour, and in
some cases, slavery, on West African cocoa farms. The Food Empowerment Project’s
report described the
horrible working conditions and perils for children as young as 10 years of age,
who earned less than $2
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dollars per day in West Africa. While recognizing that “child slavery on cocoa
farms is a difficult issue to
fully address because the most serious abuses take place across the world,” the
report also acknowledged
the responsibility of consumers in reducing some of the food industry injustices.
Considering chocolate to
be a luxury as opposed to a necessity such as fruits and vegetables, the Food
Empowerment Project created
a list of recommended vegan chocolates that did not source cocoa, and it
“encouraged people not to purchase
chocolate that is sourced from Western Africa.”54
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Hershey had also become more secretive about how it was obtaining its cocoa beans,
according to NBC
News—a report in the context of Hershey’s dispute with the Coffee and Cocoa Council
and the Ghana Cocoa
Board. In their letter of November 30, 2020, Hershey was accused of “abuse of the
derivatives market to
impoverish the West African farmer.” That abuse was characterized as “a clear
indication of your [Hershey’s]
intent to avoid the payment of the Living Income Differential [LID].” The LID
forced chocolate companies
to pay an extra $400 per ton of cocoa beans to alleviate the poverty of three
million West African farmers.55
Ivorian and Ghanaian cocoa regulators also accused Hershey of being “highly
unethical and in conflict with
the concept of sustainability,” in reference to Hershey’s sustainability programs,
which aimed to resolve
industry problems such as child labour abuses. Further, these regulators threatened
to bar Hershey’s
sustainability programs, which had been a source of pride for Hershey in both
countries. Responding to the
letter the following day, the company’s spokesperson, Jeff Beckman, wrote,
We don’t discuss our cocoa buying strategy. … That said, we have also bought cocoa
from other
origins around the world as part of our particular bean blend to achieve our unique
Hershey’s
chocolate flavor profile. And we will continue to do so. This long-time practice of
sourcing cocoa
from around the world should not be conflated with avoiding paying the LID.56
tC
Beckman added a warning that if West Africa cut ties with Hershey, the company
would no longer be able
to help the region’s farmers. Beckman also described the company’s programs that
were geared toward
“child labor monitoring and remediation, farmer training, [and] environmental
protection” as well as other
issues that Hershey had been tackling in earnest.57
By December 4, 2020, Hershey had agreed with West African regulators that it would
buy beans from West
Africa and pay the LID. NBC News concluded,
No
The battle sheds light on a decades long problem in an industry riddled with child
labor violations. A
widely acclaimed documentary the BBC aired in 2000 first revealed just how
prevalent the use of
child labor had become. Nearly two decades later, a 2018 report about the cocoa
industry in Ghana
and Ivory Coast, published by the U.S. Labor Department, found that nearly 45 per
cent of children
living in agricultural households worked in cocoa fields, a total of at least 1.6
million children.58
Do
In 2020, US cocoa bean imports increased by 1.2 per cent from 2019 and totalled
$5.18 billion. 59 These
cocoa beans, coming through the ports of Philadelphia, PA, and Camden, New
Jersey⎯which together
accounted for at least 70 per cent of US imports from Côte d’Ivoire and Ghana⎯were
destined for 80 per
cent of the processing plants strategically located within a 160-kilometre radius
of the Delaware River.
These manufacturing facilities would “grind these raw beans into cocoa powder,
cocoa butter, and chocolate
ingredients to make candy, ice cream, cookies and cakes.”60
However sweet this process was, supply chain challenges persisted and legal
pressures increased, while
Hershey still had not honoured its 2001 pledge to stop using child labour. This
apparent violation of
corporate values was leaving Buck and her company exposed to major risks, such as
litigation and
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reputational damage that could materialize from a boycott of its products on social
media. Such a boycott
could be devastating, cost Hershey hundreds of millions of dollars, and give an
immediate advantage to
several of its competitors. A boycott could also force Walmart, Hershey’s single
largest retailer, to distance
itself from the chocolatier.
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With a shareholders’ meeting pending, Buck, as Hershey’s chairman and 12th

president and CEO, had to
consider how to address the mounting pressures and daunting supply chain
challenges. Indeed, these
challenges were multi-faceted and impacted the core business model of this 127-
year-old iconic American
company. Her predecessors had failed in honouring a public–private partnership
pledge made in 2001,
officially known as the Harkin−Engel Protocol, to combat child labour in cocoa-
growing communities.61
The pledge was renewed on September 13, 2010, with government officials from Ghana
and Côte d’Ivoire
recommitting to the effort with $10 million in new funding from the United States
and $7 million (with
potential increases of an additional $3 million) from the chocolate and cocoa
industry.62 But still, in 2021,
Hershey seemed to be missing the target.
Do
No
tC
What options were available to Buck to turn the tide and demonstrate not just
Hershey’s commitment to
change, but its ability to make real change? The children in West Africa were
dependent on choices made
by leading corporate figures like Buck.
B+
C+
C+
Alter Eco Americas

Inc.
Divine Chocolate Ltd.
Endangered Species
Chocolate LLC
Equal Exchange Coop
Shaman Organic
Chocolates
Theo Chocolate Inc.
Tony's Chocolonely
The Guittard
Chocolate Company
Mars Inc.
Nestlé SA
Company
100
Fair for Life-Fair Trade

Certified by IMO
42
47
Fair Trade and
Rainforest Alliance
Certified
UTZ Certified
100
Fair Trade Certified
100
100

and Rainforest Alliance
Certified
Fair Trade
100
100
100
tC
100
Achieved
Achieved
100 Per Cent

by 2020
Investing in cocoa farms in

Sierra Leone so the farms
become climate-friendly and
do not hurt the rainforest
Through certification
44 per cent owned by the

Kuapa Kokoo
co-operative
Not pledged
Pledged
Achieved
Achieved
Achieved
Achieved
Achieved
Achieved
Fully traceable; donates 10

per cent of profits to animals,
habitat, and humanity
CLMRS/cocoa plan
Cocoa Forest Initiative

Signatory; no deforestation by
2020 commitment

Signatory

Signatory; investing in
agroforestry projects
Investing in the World Cocoa

Foundation's Cocoa
Livelihoods Foundation
Income diversifying program
Traceable cocoa; pays higher

price for cocoa; agricultural
training; CLMRS
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Investing in reforestation
initiative
Negotiates higher prices to be

paid to farmers
100 per cent of profits

donated
Pre-harvest financing program
Matches fair trade and organic

requirements; supporting
farmers through building land
resiliency
Palm oil-free; through

certification; investing in
agroforestry
Efforts to End Deforestation

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Targeted assistance for

farmers
Beyond Certification
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Percentage of
Cocoa Certified
Authentic Fair Trade
Fair Trade
Fair Trade
Labour Certification
EXHIBIT 1: GREEN AMERICA’S CHOCOLATE COMPANY SCORECARD (2019)
No
Grade
Do
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The Hershey
Company
Mondelēz
International Inc.
Ferrero International
SA
Godiva
N/A
75
Fair Trade, UTZ, and

Rainforest Alliance
Certified
N/A
43
80
Fair Trade Certified,

UTZ Certified,
Rainforest Alliance
Certified
Cocoa Life Certified
86
Self-verified
tC
Pledged
Pledged
100 Per Cent

by 2020
Pledged but no
update
Pledged
Not pledged by
2020 but by
2025
N/A
Child labour education

program
CLMRS
Cocoa and Forest Initiative

Signatory
Cocoa and Forest Initiative

Signatory

Signatory; mapped 63 per
cent of farms, which are all
not in priority protected area

Signatory; 72 per cent of
farms mapped

Signatory; commitment to no
deforestation by 2025
Traceability and verification;

CLMRS
Cocoa for Good: Investing in
cocoa communities; CLMRS
Efforts to End
Deforestation
Beyond Certification
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Percentage of
Cocoa Certified
EXHIBIT 1 (CONTINUED)
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Note: CLMRS = Child Labour Monitoring and Remediation System; IMO = Institute for
Marketecology. On a scale from A to F, A+ indicates the highest grade, while F
indicates failure.
Source: Compiled by the case author from “Child Labor in Your Chocolate? Check Our
Chocolate Scorecard,” Green America, accessed February 20, 2021,
https://www.greenamerica.org/end-child-labor-cocoa/chocolate-scorecard.
Labour Certification
No
Grade
Lindt & Sprüngli AG
Company
Page 10
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2019-12-31
2018-12-31
2017-12-31
7,986,252
7,791,069
7,515,426
4,363,774
4,215,744
4,060,050
3,622,478
3,575,325
3,455,376
1,905,929
1,874,829
1,885,492
1,149,692
1,177,562
782,981
op
yo
Period Ending
2020-12-31
rP
os
EXHIBIT 2: THE HERSHEY COMPANY NET INCOME (IN US$ ‘000)

1,177,562
782,981
Total Revenue
8,149,719
Cost of Revenue
4,448,450
Gross Profit
3,701,269
Selected Expenses
Research and Development
Sales, General, and Administrative
1,890,925
Net Income
1,278,708
Net Income Applicable to Common Shareholders
1,278,708
1,149,692
Do
No
tC
Source: Compiled and summarized by the case author from “HSY Financials,” Nasdaq,
accessed March 5, 2021,
https://www.nasdaq.com/market-activity/stocks/hsy/financials.
W25254
Period Ending
2020-12-31
Current Assets
Cash and Cash Equivalents
1,143,987
Short-Term Investments
Net Receivables
615,233
Inventory
964,207
Total Current Assets
2,977,905
Long-Term Investments
2019-12-31
2018-12-31
2017-12-31
493,262
587,998
380,179
568,509
594,145
588,262
815,251
784,879
752,836
2,117,102
2,239,181
2,001,910
op
yo
Long-Term Assets
rP
os
EXHIBIT 3: THE HERSHEY COMPANY BALANCE SHEET (IN US$ ‘000)
Page 12
2,285,255
2,153,139
2,130,294
2,106,697
1,988,215
1,985,955
1,801,103
821,061
1,295,214
1,341,166
1,278,292
369,156
9,131,845
8,140,395
7,703,020
5,553,726
1,378,875
1,273,121
1,215,250
1,217,086
512,870
735,672
1,203,316
859,457
1,891,745
2,008,793
2,418,566
2,076,543
4,089,755
3,530,813
3,254,280
2,061,023
683,434
655,777
446,048
438,939
229,028
200,018
176,860
45,656
3,531
5,772
8,545
16,227
6,897,493
6,401,173
6,304,299
4,638,388
Total Equity
2,234,352
1,739,222
1,398,721
915,338
Total Liabilities and Equity
9,131,845
8,140,395
7,703,020
5,553,726
Fixed Assets
Goodwill
Intangible Assets
Total Assets
Current Liabilities
Accounts Payable
Short-Term Debt / Current Portion of Long-Term Debt

Other Current Liabilities
Long-Term Debt
Other Liabilities
tC
Total Current Liabilities

Deferred Liability Charges
Miscellaneous Stocks
No
Minority Interest
Total Liabilities
Stockholders’ Equity
Do
Source: Compiled and summarized by the case author from “HSY Financials,” Nasdaq,
https://www.nasdaq.com/market-activity/stocks/hsy/financials.
W25254
Page 13
Publisher
2020
2019
2018
2017
Average
100-Top Most Powerful Brands
Tenet Partners,
CoreBrand Index
Top 50 Most Valuable Food

Brands
Brand Finance
21
22
21
21
Global RepTrak 100
Reputation Institute
46
55
67
62
58
The Brand Footprint Global

Ranking Top 50
Kantar Worldpanel
41
39
44
41
Top 50 Prophet Brand Relevance

Index US
Prophet
40
43
39
41
US RepTrak 100
Reputation Institute
Smarty Pants
12
7
Smarty Pants
Kids’ Most Loved Brands

Parents’ Most Loved Brands
op
yo
Ranking Name
rP
os
EXHIBIT 4: HERSHEY’S BRAND RANKINGS
Do
No
tC
Note: x = not ranked for that year.

Source: Compiled and summarized by the case author from “Rankings per Brand:
Hershey’s,” RankingTheBrands.com,
accessed March 5, 2021, https://www.rankingthebrands.com/Brand-detail.aspx?
brandID=600.
W25254
Page 14
rP
os
ENDNOTES
1
Do
No
tC
op
yo
This case was written on the basis of published sources only. The interpretations
and perspectives presented in this case
may not represent those of the Hershey Company or any of its affiliates or any of
its employees.
2
Alicia Richards, “Women in History: Meet Michele Buck First Female CEO of Hershey,”
PA Homepage, March 27, 2019,
https://www.pahomepage.com/news/women-in-history-meet-michele-buck-first-female-
ceo-of-hershey.
3
All dollar amounts are in US dollars unless otherwise stated.
4
Nils-Geritt Wunsch, “The Hershey Company—Statistics & Facts,” Statista, December 1,
2020,
https://www.statista.com/topics/2342/the-hershey-company.
5
Hershey Company, “CEO Michele Buck Elected Chairman of The Hershey Company,” press
release, Globe Newswire,
October 14, 2019,
https://www.globenewswire.com/news-release/2019/10/14/1929134/0/en/CEO-Michele-
Buck-ElectedChairman-of-The-Hershey-Company.html.
6
“Our Leadership: Michelle Buck,” Hershey, accessed February 15, 2021,
https://www.thehersheycompany.com/en_us/ourstory/remarkable-people/leadership.html.
7
“People: Michelle Buck,” Committee for Economic Development, accessed February 15,
2021,
https://www.ced.org/people/single/michele-buck.
8
Courtney Connley, “A Record 41 Women are Fortune 500 CEOs—and For the First Time
Two Black Women Made the List,”
CNBC,
January
22,
2021,
https://www.cnbc.com/2021/06/02/fortune-500-now-has-a-record-41-women-
runningcompanies.html.
9
“Child Labor in Your Chocolate? Check Our Chocolate Scorecard,” Green America,
accessed February 20, 2021,
10
“Our Leadership: Michelle Buck.”
11
Peter Whoriskey and Rachel Siegel, “Cocoa’s Child Laborers,” Washington Post, June
5, 2019,
https://www.washingtonpost.com/graphics/2019/business/hershey-nestle-mars-
chocolate-child-labor-west-africa.
12
“Child Labor,” GoodWeave, accessed April 16, 2021, https://goodweave.org/the-issue.
13
Vera Cherepanova, “Supply Chains under Scrutiny: Targeting Human Rights and Forced
Labor Risks,” JD Supra, October
13, 2020, https://www.jdsupra.com/legalnews/supply-chains-under-scrutiny-targeting-
65407.
14
Aleesha Fowler, Reagan R. Demas, Inez Asante, Maxine Jacobson, Doriane Nguenang,
and John M. Foote, “The SlaveFree Business Certification Act: Bipartisanship Grows
in Congress around Aggressive Corporate Legal Obligations on Supply
Chain
Responsible
Sourcing,”
Global
Supply
Chain
Compliance,
July
31,
2020,
https://supplychaincompliance.bakermckenzie.com/2020/07/31/the-slave-free-business-
certification-act-bipartisanshipgrows-in-congress-around-aggressive-corporate-
legal-obligations-on-supply-chain-responsible-sourcing.
15
International Rights Advocates, “Child Slaves Who Were Trafficked and Forced to
Harvest Cocoa in Cote D’Ivoire Sue the
Cocoa Companies that Enslaved Them,” press release, February 12, 2021,
www.iradvocates.org/press-release/nestle/pressrelease-child-slaves-who-were-
trafficked-and-forced-harvest-cocoa-cote-d.
16
“Calendar
of
Events,”
Hershey
Investors,
accessed
April
15,
2021,
https://www.thehersheycompany.com/en_us/investors/events-reports-releases/calendar-
of-events.html.
17
Robert Lewis, “Hershey Company,” Britannica, May 8, 2020,
https://www.britannica.com/topic/Hershey-ChocolateCorporation.
18
Lewis, “Hershey Company.”
19
Lewis, “Hershey Company.”
20
Biography.com Editors, “Milton Hershey: 1857–1945,” Biography, last updated October
10, 2019,
https://www.biography.com/business-figure/milton-hershey.
21
Lewis, “Hershey Company”; and Hershey’s Chocolate World (website), accessed
November 23, 2021,
https://www.chocolateworld.com/en_us/home.html.
22
Jonathan Yardley, “How a Tough-Minded Businessman and Philanthropist Catered to the
Nation’s Sweet Tooth,”
Washington Post, January 15, 2006,
https://www.washingtonpost.com/archive/entertainment/books/2006/01/15/how-a-
toughminded-businessman-and-philanthropist-catered-to-the-nations-sweet-tooth-span-
classbankheadhow-a-tough-mindedbusinessman-and-philanthropist-catered-to-the-
nations-sweet-toothspan/bb31ed27-8671-40a5-86ef-1595d9fe9d54.
23
Yardley, “How a Tough-Minded Businessman.”
24
25
26
Editors of Encyclopaedia Britannica, “Milton Snavely Hershey: American
Manufacturer,” Britannica, October 9, 2021,
https://www.britannica.com/biography/Milton-Snavely-Hershey.
27
“Over 100 Years of Strength, Heritage, and Stability,” Hershey Trust, accessed
February 22, 2021, https://hersheytrust.com.
28
Andrew Hoffman, The Hershey Trust: Managing Conflicts of Interest in Corporate
Governance (Boston, MA: Harvard
Business Publishing, 2017). Available from Ivey Publishing, product no. W05C05.
29
“Milton S. Hershey Quotes,” A-A Quotes, accessed April 16, 2021,
https://www.azquotes.com/author/20186Milton_S_Hershey.
30
“The Company,” Hershey, accessed August 26, 2021,
https://www.thehersheycompany.com/en_us/home/about-us/thecompany.html.
W25254
rP
os
Page 15
“Hershey Company,” Firsthand, accessed March 5, 2021, https://firsthand.co/company-

profiles/food-beverage/the-hersheycompany.
32
Hershey
Company,
The
Hershey
Company:
Factbook,
September
2021,
39,
https://investors.thehersheycompany.com/content/dam/hershey-corporate/documents/
investors/2020-factbook.pdf.
33
Hershey Company, The Hershey Company, 39.
34
Hershey Company, The Hershey Company, 39.
35
Nils Gerrit-Wunsch, “The Hershey Company—Statistics & Facts.”
36
“Company Vision & Strategy,” accessed December 1, 2021,
www.thehersheycompany.com/en_us/home/about-us/thecompany/strategy.html.
37
“Child Labor in Your Chocolate? Check Our Chocolate Scorecard,” Green America,
accessed February 20, 2021,
38
Crystal Lindell, “How the 125-Year-Old Hershey Company Continues to Innovate,”
Candy Industry, May 14, 2019,
https://www.candyindustry.com/articles/88674-how-the-125-year-old-hershey-company-
continues-to-innovate.
39
Lindell, “How the 125-Year-Old Hershey Company.”
40
“Buck: ‘For Hershey, Search is the New Shelf,’” September 5, 2018, SmartBrief,
https://www.smartbrief.com/s/2018/09/buck-hershey-search-new-shelf.
41
“Michele Buck: Hershey, Senior Vice President, President U.S. Snacks,” Women Worth
Watching, accessed March 5, 2021,
https://womenworthwatching.com/michele-buck.
42
Christopher Doering, “How Hershey CEO Michele Buck Came to Create a ‘Snacking
Powerhouse,’” Food Dive, June 23,
2020, https://www.fooddive.com/news/how-hershey-ceo-michele-buck-came-to-create-a-
snacking-powerhouse/572347.
43
“Committees
&
Charters,”
Hershey,
accessed
April
16,
2021,
https://www.thehersheycompany.com/en_us/investors/management-charters/board-of-
directors.html.
44
Michele Buck, “Social Impact: Succeeding through People and Purpose,” Hershey
(blog), accessed April 15, 2021,
https://www.thehersheycompany.com/en_us/blog/succeeding-through-people-and-
purpose.html.
45
Buck, “Social Impact.”
46
IBD Staff, “Best ESG Companies: Top 50 Stocks for Environmental, Social and
Governance Values,” Investor’s Business
Daily, October 26, 2020, https://www.investors.com/news/esg-companies-list-best-
esg-stocks-environmental-socialgovernance-values.
47
“Earned Brand 2018,” Edelman, October 2, 2018, https://www.edelman.com/earned-
brand.
48
Claire Groden, “Congress Finally Made It Illegal to Buy Products Made by Slaves,”
Yahoo Finance, February 12, 2016,
https://finance.yahoo.com/news/congress-finally-made-illegal-buy-195545642.html.
49
Cherepanova, “Supply Chains under Scrutiny.”
50
Fowler et al., “The Slave-Free Business Certification Act.”
51
Govin Bhutada, “Cocoa: A Bittersweet Supply Chain—Top 5 Exporters and Their Total
Export Value,” Visual Capitalist,
accessed April 15, 2021,
https://www.visualcapitalist.com/wp-content/uploads/2020/10/cocoa-supply-chain-
1500px.html.
52
Bhutada, “Cocoa.”
53
Kathryn Reid, “Mali Conflict Explained: Facts, FAQs, and How to Help,” World Vison,
August 19, 2020,
https://www.worldvision.org/disaster-relief-news-stories/mali-conflict-facts.
54
“Child Labor and Slavery in the Chocolate Industry,” Food Empowerment Project,
accessed July 21, 2021,
https://foodispower.org/human-labor-slavery/slavery-chocolate.
55
Christian Peña, “The War on Cocoa: Hershey Co. Accused of Not Upholding
Sustainability Efforts in West Africa,” NBC
News, December 12, 2020, https://www.nbcnews.com/business/business-news/war-cocoa-
hershey-co-accused-notupholding-sustainability-efforts-west-n1250798.
56
Peña, “The War on Cocoa.”
57
58
59
“Annual International Trade Statistics by Country (HS02): USA Imports and Exports |
World | Cocoa and Cocoa
Preparations,”
Trend
Economy,
reporting
period
2002−2020,
accessed
April
15,
2021,
https://trendeconomy.com/data/h2/UnitedStatesOfAmerica/18.
60
Linda Loyd, “Chocolate Port; Cocoa Ship Unloads in Camden,” Philadelphia Inquirer,
January 24, 2011,
https://www.inquirer.com/philly/business/
20110124_Chocolate_port__cocoa_ship_unloads_in_Camden.html.
61
“Africa: Child Labor in Cocoa Fields/Harkin-Engel Protocol,” International Labor
Organization, accessed August 27, 2021,
https://www.ilo.org/africa/technical-cooperation/accel-africa/WCMS_159486.
62
“Africa: Child Labor in Cocoa Fields.”
Do
No
tC
op
yo
31

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t

THE HERSHEY COMPANY: BROKEN PLEDGE TO STOP USING CHILD

This publication may not be transmitted, photocopied, digitized, or otherwise

In 1970, increased competition, particularly from Mars, forced Hershey to advertise

THE FOUNDER AND HIS VALUES

THE HERSHEY COMPANY TODAY

We are inspired by our long-standing values of togetherness, integrity, making a

efficiencies, Hershey’s focus on digital sales was generating “higher average

The digital transformation, among other factors, had contributed to an increase in

On company purpose, she said,

Additionally, we look forward to updating our environmental strategy and human

SUPPLY CHAIN, SOCIETAL, AND LEGAL CHALLENGES

As it turned out, Buck was prescient: implementing those priorities and an

With a shareholders’ meeting pending, Buck, as Hershey’s chairman and 12th

Alter Eco Americas

Divine Chocolate Ltd.

Equal Exchange Coop

Theo Chocolate Inc.

Fair for Life-Fair Trade

Fair Trade Certified

Fair Trade Certified

100 Per Cent

Investing in cocoa farms in

44 per cent owned by the

Fully traceable; donates 10

Cocoa Forest Initiative

Cocoa Forest Initiative

Cocoa Forest Initiative

Investing in the World Cocoa

Income diversifying program

Traceable cocoa; pays higher

Negotiates higher prices to be

100 per cent of profits

Pre-harvest financing program

Matches fair trade and organic

Palm oil-free; through

Efforts to End Deforestation

Targeted assistance for

Authentic Fair Trade

Fair Trade Certified

EXHIBIT 1: GREEN AMERICA’S CHOCOLATE COMPANY SCORECARD (2019)

Fair Trade, UTZ, and

Fair Trade Certified,

Cocoa Life Certified

100 Per Cent

Child labour education

Cocoa and Forest Initiative

Cocoa and Forest Initiative

Cocoa Forest Initiative

Cocoa Forest Initiative

Cocoa Forest Initiative

Traceability and verification;

Lindt & Sprüngli AG

EXHIBIT 2: THE HERSHEY COMPANY NET INCOME (IN US$ ‘000)

Sales, General, and Administrative

Net Income Applicable to Common Shareholders

Total Current Assets

EXHIBIT 3: THE HERSHEY COMPANY BALANCE SHEET (IN US$ ‘000)

Total Liabilities and Equity