By Albert A. ARHIN(PhD)
On 25 July 2024, the European Union’s Corporate Sustainability Due Diligence Directive (CS3D – Directive 2024/1760) officially entered into force, signaling a major shift in how global businesses must address human rights and environmental harms across their value chains.
The Directive applies to: EU Companies with over 1,000 employees and a net turnover of over EUR 450 million worldwide; on-EU Companies with a net turnover of over EUR 450 million in the EU.
Although small and medium-sized enterprises (SMEs) are not directly targeted, they are indirectly impacted as business partners within the supply chain.
While much attention has been paid to the obligations of large European corporations, the real ripple effects will be felt far beyond the EU—particularly by small and medium-sized enterprises (SMEs) in producing countries like Ghana, especially those in the cocoa sector seeking to export processed or artisanal chocolate products to Europe or partner with EU-based clients.
CS3D requires EU companies—and non-EU companies operating in the EU market—to identify, prevent, mitigate, and remedy adverse human rights and environmental impacts in their operations, subsidiaries, and value chains. For Ghana’s growing ecosystem of cocoa SMEs, this is both a challenge and an opportunity.
The Compliance Burden
Artisanal chocolate makers and cocoa-based SMEs in Ghana often lack the technical and financial capacity to meet stringent due diligence requirements.
These include documenting child labour prevention measures, ensuring fair working conditions, proving traceability of cocoa beans, and demonstrating compliance with environmental standards. Many small businesses operate informally or semi-formally and may struggle with the documentation and audits now demanded by European clients.
What’s more, CS3D introduces legal liability for EU companies that fail to adequately monitor their suppliers. This has a knock-on effect: European buyers are likely to scrutinize their suppliers even more intensely, favouring those with demonstrable compliance frameworks.
For cocoa SMEs in Ghana, being unable to meet these requirements could mean losing market access, contracts, or investor interest.
Risk of Exclusion or Consolidation
One major concern is that CS3D could unintentionally accelerate exclusion within the cocoa value chain. Large multinationals and well-resourced suppliers will adapt more quickly, potentially consolidating their hold on the market.
Meanwhile, smaller producers and processors, despite their sustainability efforts and local knowledge, may be sidelined simply because they cannot navigate the bureaucracy.
In a sector already plagued by inequalities—where smallholder farmers and SME processors receive a fraction of the cocoa value—it would be a grave injustice if sustainability policies further entrenched this disparity. This directive must not become a gatekeeper that only the wealthy can pass.
Turning Compliance into Competitive Advantage
However, with the right support mechanisms, Ghanaian cocoa SMEs can turn CS3D into a tool for competitiveness.
Artisanal chocolate makers that already focus on ethical sourcing, traceability, organic ingredients, and fair labour practices are well-placed to leverage these values as compliance assets.
Transparent sourcing, direct trade relationships, and farmer partnerships can be marketed not just as ethical choices but as legal necessities under CS3D.
There is also a strong case for Ghanaian stakeholders—government, trade associations, and civil society—to invest in collective compliance infrastructure. This could include shared due diligence platforms, template policies, training modules, and audit support services tailored to cocoa SMEs.
Digital traceability tools and certification partnerships can also help bridge the gap between artisanal production and EU market requirements.
A Wake-Up Call with Global Implications
CS3D is more than a European policy; it is a wake-up call for global value chain actors. For cocoa-producing countries like Ghana, it presents a unique opportunity to reimagine export strategies, strengthen supply chain integrity, and center SMEs in sustainability transitions.
If harnessed wisely, the Directive could catalyze a new era of inclusive trade—where small-scale chocolate producers aren’t just compliant but competitive. But for this to happen, EU policy implementation must be coupled with fair support for suppliers, and Ghana must step up with enabling systems that ensure no enterprise is left behind.
The future of cocoa exports lies not only in the quality of beans or bars but in the quality of our commitments to people and the planet.
The writer is a Development Consultant, Sustainability Researcher and Research Fellow of the Bureau of Integrated Rural Development (BIRD), Kwame Nkrumah University of Science and Technology. Ghana. His email address is: [email protected]
