Starbucks and Conservation International

How New Wave Consulting can help Starbucks create a strong brand entailing the three P’s: People, Profits, Planet In reading the case, “Starbucks and Conservation International”, we have learned that in initiating corporate social responsibility into a company’s mission, one must not jeopardize quality and customer perception as a byproduct of giving in to social demands. Your partnership with Conservation International and the Chiapas project was a great example of how two perceived different organizations can find fundamental communalities in ethical standards and do great things for a community, landscape and profits. Although your company has always viewed the environment and the producers of coffee as important stakeholders in your companies mission, it wasn’t until your partnership with Conservation International that your focus went from cash and kind donations to a more hands on approach to making a difference in the lives, society and environment of the coffee growers. The Chiapas project had very notable success, especially in increasing profits of small farmers, usually faced by extreme poverty at times when they need capital to harvest their coffee beans.

This was also a great example of letting a NPO take the reigns of your CSR initiatives and even help you in your quality control standards. Some of the farmers doubled their sales, and their average incomes jumped by 40 percent. At the same time, U.S. consumers enthusiastically embraced a new Starbucks brand: Shade Grown Mexico. We also learned that financing is very important and finding loans in countries with predatory lending systems is a great start to ensure quality standards are met with the funds to harvest a mature and preferable crop. On the other hand, we learned that other organizations will put what seems unfair pressure on your company to abide by a separate code of ethics and conduct that may not meet the quality standards of your product. In dealing with Global Exchange and the Fair Trade Movement, their intentions were pure in that Starbucks should purchase the majority of its coffee from fair trade certified producers, however the supply of high quality fair trade coffee is well below the current demand that Starbucks has for selling gourmet coffees worldwide.

While Starbucks has slowly bought more certified Fair Trade coffee, it represents only a very small percentage of their total coffee (about 3.7%) (www.organicconsumers.org/starbucks/index.cfm). It is clear that you business strategy is aligned with a strong CSR notion that it all starts with the education and expertise of the farmers who deliver your top quality products. The cooperatives in the Chiapas project proved successful and the questions of a sustainable business and CSR model can be put to rest if you focus on penetrating the Vietnam and Brazil farms where even more poverty and unethical business practices are in place. Since these two countries are the highest exporters of coffee beans in the world and that 70 percent of the 25 million coffee growers in the world are small family farms on two to four acres of land. (www.goshen.edu/fairtradecoffee/blog/), you can increase the supply of fair trade coffee by attacking these markets.

Your partnership with CI will prove strong once again and their driver seat position can take the load from your backs in propelling this cause. One of the largest concerns of sustainability of these cooperatives was leadership turnover. Getting the local government involved in regulating democratically long-term leadership can continue to increase productivity, education and growth. To align your CSR notions with those of the Global Exchange and Fair Trade Movement, you must meet and find common grounds in your Coffee and Farmers Equity program and the standards required from Fair Trade practices. In your C.A.F.E program you stress product quality, economic accountability, social responsibility and environmental leadership.

 There is however a clear distinction in ethical coffee growing as you see a 60% purchasing of C.A.F.E coffee and Fair trade only sees roughly 4% of ethically grown coffee purchased. An alignment of your ethical standards must be met with those of Fair Trade to ensure a correct view of CSR initiatives are displayed and boycotts are averted. Your model of CSR seems to have been adopted easily from day one by your shareholders and organization. This being said, it shouldn’t be hard to move forward with continuing the expansion of your cooperation farming projects. It is clear that your company if profitable and has been for several years. Your organization will see improved profits through sourcing higher quality coffees from around the world that are grown organically and they will find that the more sustainable these projects are, the more external financing will be pumped into the system. It would greatly benefit to have more employees and executives in the organization have more of a presence at these farms so that the farmers could put faces to the clients they produce these finer products for.

Once a sense of personalization has occurred between the farmers and clientele, productivity and quality could increase even more. It would behoove the Starbucks shareholders to empathize with the plight of the impoverished farmer and realize the direct threats of over farming lands at the cost of deforestation. There are several ways we can help you initiate these CSR initiatives into fully functioning, sustainable and fair trade acceptable farming of only the highest of quality coffee. First, in order to penetrate the Brazil and Vietnam markets and set up cooperatives, we would assist in the education and showing of the benefits of fair prices of goods to the local farmers. Just as Conservation International did for you in Chiapas, we would be able to not only set up the educating and communicating model, we would also have our own quality control people there to ensure that not only are the farmers getting financially rewarded, but they continue to perfect and improve their coffee growing techniques. Second, we would be able to promote and brand these new grown coffees in your stores and create strong recognition through positive PR campaigns.

The success your Chiapas project coffee had in the market (sales) will be an example of how you can promote your good environmental works in a much needed society and achieving higher financial rewards at the same time. Third we will work with local governments and financial institutions as you already do all over the world to help secure low interest loans for these poor farmers in order to not cut corners and produce environmentally detrimental, low quality coffees. This will help you attain your goal of nearly doubling your investment in farmer loans from $12.5 million to $20 million by 2015 (www.starbucks.com/responsibility/sourcing/farmer-support). Lastly we would be able to coordinate summits between all Non Profit organizations involved in Fair trade and farming to set across the board guidelines as to what is and isn’t acceptable farming and financial guidelines. Once there is a clear vision of the future of socially responsible farming, organizations like the Organic Consumers Association will no longer negatively publicize your company and boycott Starbucks products due to differing points of view on ethical farming. Let New Wave consulting help you source only the finest coffees around the world while lifting tens of thousands of farmers out of poverty and exploitation.