Op/Ed: Excuse me waiter, there are no ethics in my coffee

Starbucks has come under fire over the years for being part of a global empire of capitalism, greed, corruption and predatory business practices.

And the coffee isn’t even that great.

Dylan Moran jokes that Americans expand their empire by “slowly, and very carefully, building a Starbucks around” the poor of the world.

So with all that, what has Starbucks actually managed to achieve in terms of ethical business practices? Here’s an extract from the Corporate Social Responsibility Report from 2007, listing out Starbucks’ priorities and goals by group.

Source: Corporate Social Responsibility Report, 2007

In its own words: “We always figured that putting people before products just made good common sense. So far, it’s been working out for us. Our relationships with farmers yield the highest quality coffees. The connections we make in communities create a loyal following. And the support we provide our barristas pays off everyday.”

Their mission is to “inspire and nurture the human spirit— one person, one cup, and one neighborhood at a time… It [their coffee] has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done.

“Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action— bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility—and our potential for good—is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.”

Bold, ambitious and a touch over-zealous perhaps. Everything a solid mission statement should be, motivating its employees to do better and assuring its clientele of the quality of its output.

They’ve emphasised their “Business Ethics & Compliance” and are keen to talk about their sourcing and the ethical means by which they conduct their business. But what about their actual business practices? Going through the annual reports and their annual Corporate Social Responsibility Report (CSR), there are some glaring discrepancies between the image they want everyone to have of the company and the reality.

Starbucks has 31 coffees available on the ‘menu’.

Of them, 15 have specified countries of origin.

That leaves 16 unspecified points – these are found in Starbucks’ blends.

Some digging reveals that these blends come from anywhere between two and six different communities. Let’s say that there are 4 communities which each of these blends come from.

The countries and areas mentioned as sources are Rwanda, Kenya and Ethiopia in Africa; Sumatra, Java and Sulawesi in Asia; Yemen in the Middle East; Guatemala, Brasil, Mexico and Colombia in Latin America; and Italy and France in Europe.

Even if we allow for just one farm per country listed above – highly improbable, as there are likely to be dozens of cooperatives involved in supplying Starbucks globally -, that leaves us with a bare minimum of 75 different farms, cooperatives and communities around the world.

Research shows the real figure is closer to around 900 farms supplying Starbucks with its coffee, around the globe.

Starbucks gives $1.32 per bag of coffee powder or beans to the farmer.

A bag of coffee costs anything from $8.95 to $14.95.

Source: Corporate Social Responsibility Report, 2007

A handful of Starbucks coffees are Fairtrade-certified. This means that only a few of these farming communities have direct access to Starbucks buyers.

Let’s consider the point above, that it’s impossible to have one farmer per coffee brand. So let’s assume that there are 4 farms.

Fairtrade-certified products aim for a better deal for producers by cutting out middlemen.

Source: Corporate Social Responsibility Report, 2007

6% of Starbucks coffee is Fairtrade-certified.

That’s around 1.86 coffee brands, out of 31.

From that $1.32, for that small percentage, it’s entirely possible that all of it will go to Starbucks’ Fairtrade-certified farmers.

But what about the remaining 29.14 brands of coffee?

If we apply the same calculation that Starbucks gives us of $1.32, the amount that actually reaches producers is shockingly low.

According to the Fairtrade website, the middlemen involved in the production route of a non-Fairtrade product are at least 10 times that of Fairtrade products.

Assuming that there are 10 middlemen in this process and that each of them gets the same cut of profits (once again unlikely as those who are most involved in its processing, shipping, packaging, etc get paid more), let’s see what the figures amount to.

$1.32 “per farmer”

________________________

11 [10 middlemen and the farmer]

= 0.12¢ per middleman and for the farmer.

The Starbucks Foundation is the ‘global responsibility’ chapter of the company. That’s where you go to find out whatever you need to know about their ethical sourcing and production as well as the community building work.

Source: CSR 2007

The Foundation’s website lists these projects as its focus:

Supporting young people as they create change in their local communities. In 2008, The Starbucks Foundation began supporting young people as they strived to create change in their local communities through the Starbucks™ Shared Planet Youth Action Grants.

Collaborating on projects that support social investments in coffee-, tea- and cocoa-producing communities. Starbucks supports sustainable programs that meet these communities’ specific needs. Projects have included improving access to education and agricultural training, microfinance and microcredit services, improving biodiversity conservation, and increasing levels of health, nutrition and water sanitation.

Helping children around the world get clean water, and raising awareness of the world water crisis through Ethos Water. Starbucks acquired Ethos Water in 2005. For each bottle of Ethos™ water sold, a contribution of $0.05 in the U.S. and C$0.10 in Canada is made to the Ethos Water Fund within The Starbucks Foundation. These funds are invested in sustainable, integrated programs in partnership with carefully selected NGO partners. Starbucks has set a goal of contributing $10 million by 2010.

In 2005, the Starbucks Foundation pledged $5 million to establish the Starbucks China Education Project atGive2Asia, an organization that facilitates and encourages charitable giving to meet needs in Asia.

Gulf Coast Recovery After hurricanes Rita and Katrina, the Foundation and Starbucks Coffee Company pledged $5 million over five years to assist in the recovery and rebuilding of the Gulf Coast.

While these may sound noble and grand, investigations have revealed that while Starbucks boasts large profits and revenue, little of this money ever reaches the communities they aim to support. You need only browse the plethora of articles on Starbucks’ CSR to see others’ research on this.

Not enough money is channeled to these communities for them to benefit from them – in fact, the China Education Project is just an office with a telephone.

Source: Corporate Social Responsibility Report, 2007

These goals are further expanded below. Their progress is charted using the circular symbol. A fully shaded circle means that all those goals were achieved, while a white circle means they weren’t. Goals are broken down into categories like products, society, environment, workplace and diversity.

CSR, 2007

These initiatives give Starbucks the appearance of one of the most ethical companies in the world. Solid, concrete aims and goals, and if nothing else, the will to do good by their suppliers. They seem to have a desire to make their company an example to others, and to bring positive change to farmers in the developing world.

However, by their own admission, they have failed to achieve between 70% and 85% of their ethical goals.

On top of that, between 3 and 5 million pounds of their annual coffee purchases are Fairtrade-certified.

When Starbucks buys over 67,000,000 pounds of coffee a year, that is a shockingly small amount of ethical coffee.

 

Of their Fairtrade coffees, a handful pay their suppliers according to this model.

This doesn’t mean Starbucks doesn’t aspire to be an ethical company. The Corporate Responsibility department is massive.

However, 6% of your coffees being Fairtrade, whilst boasting of the company’s largesse, is grossly misleading.

Go into your local Starbucks, and ask your barrista whether the coffee he/she uses on a daily basis is fairly traded. Chances are it won’t be.

The only coffees that are, are the handful available to purchase as grounds or whole beans.

Starbucks’ most commonly-used coffees, and what goes into their daily soy latte frappuccino mocha with whipped cream, is just your average, run-of-the-mill coffee.

Their range of Fairtrade coffees needs expanding. They need a real engagement with their communities and a greater volume of coffees following the supplier payment method above. Their figures show that this wouldn’t adversely affect their sales – it’s more a question of initiative and shifting business practices.

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