Company Description
Starbucks is arguably the world’s largest coffee house company with thousands of locations around the world and possessing one of the most internationally recognized names and logos to date (Drinks, 2010). They specialize in selling brewed coffee, hot drinks, cold drinks, various espresso drinks, desserts, sandwiches and various other snacks.
Their business platform is based off the traditional coffee house concept popularized in France during the late 18th to early 19th century and also basing itself off similar recent concepts seen in Manhattan’s Upper East Side during the early 1990’s.
Ever since its creation on March 30, 1971 the company has meticulously and aggressively expanded into numerous global markets, which led to the creation of the ubiquitous pop culture statement “there’s a Starbucks on every corner”.
While the chain continues to be popular to this very day various consumer rights advocates have criticized the company for its supposed “wal-marting” tactics in obtaining consumers and driving out competitors.
“Wal-marting”, connected to the U.S. based retail company Wal-Mart, is a term used to describe a process wherein a large retail chain sets up a store in a certain location and operates at a loss in order to drive away competition, after which it subsequently raises prices back to their normal levels (Goetz & Shrestha, 2009).
Aside from this Starbucks has had a generally well-accepted global reputation and continues to be an ubiquitous part of pop culture today (Gonzalez, 2010).
Ethical Sourcing of Products
Product sourcing has been a topic of contention for many companies with several being justly vilified for supporting practices that create profit yet at the cost of highly questionable ethical practices. Such methods can consist of knowingly buying products that are the result of sweatshops, child labor, or business practices that abuse farmers.
In the case of Starbucks they set a goal where by 2015 100 percent of the coffee they purchase is to be from ethically traded coffee. This consists of responsible growing practices where the coffee being grown has been certified under C.A.F.E. (Coffee and Farmer Equity), which supports practices related to fair trade and ethical business practices (Renard, 2010).
Another aspect to take note of is that besides paying fair and equitable prices for the coffee purchased Starbucks also endeavors to support the farmers who grow the coffee by providing support to various programs that extend lines of credit to farmers (Argenti, 2004).
Not only does this enable farmers to cover the initial cost of export but it helps them to finance various pre-harvest activities which results in highly efficient operational improvements that not only help farmers by increasing the yield of their products but the company as well since it creates an effective and reliable system of product sourcing (Belone, 2004).
On the other hand, it must be stated that despite these initiatives seeming to comply with the highest tenets of C.S.R. (Corporate Social Responsibility) the additional costs related to these activities are actually passed along to consumers and are not absorbed by the company itself C.A.R.E. grown coffee is more expensive than other sources of coffee beans and as such is more expensive to utilize (Starbucks Promotes Green Beans 2004).
With the goal of the company to source 100% of its coffee from ethically responsible suppliers the resulting price of a standard cup of coffee at Starbucks also happens to increase, which indicates that even though the company is practicing corporate social responsibility consumers are the ones paying for it.
Community Involvement
Compared to other companies in the same line of business Starbucks is actually one of largest contributors to community relations and support. On average Starbucks sponsors various community-driven initiatives on a local level through various non-profit organizations, civic societies and in cooperation with other businesses.
While this usually consists of slight financial support there are instances where the company does send out employees to aid with community activities in order to show a certain level of community pro-activeness on the part of the company. It must be noted though that such actions are usually accompanied by a large amount of product placement activities which drives up consumer demand for the product due to brand name visibility.
Environmental Stewardship
One of the inherent problems with Starbucks is that at its core it is heavily reliant on an agricultural product, namely coffee, in order to sustain operations. Abnormal weather patterns and conditions which come as a result of global climate change brought about by pollution in the air adversely affects the ability of farmers to properly grow their crops, which in effect reduces the ability of Starbucks to operate.
Since 2009 Starbucks has partnered with various N.G.O.s, local municipal governments as well as a variety of experts from the environmental sector in order to address the issue of climate change and help to promote ways in order to resolve it (Reavis & Austin, 2002. At the store level Starbucks attempts to employ various means of reducing its environmental footprint such as using energy conserving bulbs, fixtures and water savers.
It is a founding member for B.I.C.E.P., which is an acronym for “Business for Innovative Climate and Energy Policy. By engaging in these practices with its employees, customers and business partners Starbucks is attempting to facilitate practices which are in conjunction with environmental sustainability and corporate social responsibility.
Recycling
With more than 16,000 retail locations around the world serving hundreds of cups of coffee per store a day this translates into several hundred thousand used paper and plastic cups within a given day and possible millions within a month (Starbucks outlines Shared goals, 2008).
In an effort to reduce the environmental impact of the sheer amount of resources wasted on a daily basis Starbucks initially planned in 2008 to make the paper and plastic cups used for their drinks more recyclable (Johnson, 2010). In May 2009, the company arranged a cup summit inviting various experts, suppliers and raw material providers to give their input on what could be done in order to resolve this issue.
What occurred as a result was an enhanced method of collaboration between the various people gathered towards more meaningful and collaborative actions towards creating more environmentally sustainable products (Johnson, 2010).
This resulted in the creation of numerous spin off projects such as the Coalition for Resource Recovery by Global Green, which tested the recyclability of the paper used in Starbucks cups similar to the method employed to recycle cardboard. Other initiatives in going green can be seen in data collected in 2009 which indicates nearly 70% of the Starbuck’s locations in U.S. practiced responsible recycling techniques.
The one problem with this initiative is the fact that while it is prevalent in Starbucks locations in the U.S. its international locations rarely if ever actually practice recycling. With a large percentage of its store locations being located in various countries around the world this represents millions of paper and plastic cups as well as various other store bought items being needlessly thrown away.
Energy Usage
It has been estimated by the company that despite its usage of nearly several billion papers and plastic cups within a given year its energy use in its stores actually accounts for 80 percent of its total carbon footprint (Company Spotlight Starbucks, 2010).
The reasoning behind this is rather simple, on average a single Starbucks outlet has air-conditioning, intensive lighting, music blaring in the background as well as the various machines used to make drinks. Multiply this by the sheer amount of outlets and the amount of customers per day results in significant electrical consumption.
To resolve this the company launched two energy goals for 2008, which entailed reducing the overall consumption of electricity by 25% and aiming to source electricity from renewable energy resources for up to 50% of its current rate of consumption.
Its attempt to reduce its electricity consumption primarily focused on its usage of energy-saving L.E.D. bulbs in lighting system combined with purchasing renewable energy certificates from companies such as NextEra, the company’s U.S. operations were able to successfully implement a certain degree of environmental stewardship.
Unfortunately, similar to the problem with recycling a large percentage of the company’s international operations do not utilize the same environmental stewardship practices of the U.S. branches and as such the company still continues to waste thousands of kilowatt-hours per year.
Water Usage
Based on data released from the company its total water usage has been pegged at the equivalent of 92.3 million liters of water a year. This is equivalent to the usage of several small countries combined. Considering the fact that the company only has 16,000 global branches this means that each branch utilizes hundreds of thousands of liters of water on a daily basis in order to stay in operation.
While it may be true that a vast majority of the water consumed does go into the drinks sold by the company its maintenance procedures which indicate that there must be a tap with continuously running water in order to properly wash dishes and other items shows a distinct degree of wastefulness on the part of the company.
In order to resolve this issue the company seeks to reduce its overall water consumption by 25% by 2015 and to control its use of water by utilizing hand-meter faucets as means of controlling water consumption.
Conclusion
While the commitment of Starbucks to corporate social responsibility is unquestionable the fact remains that its international operations should be a definite concern for the company (Starbucks tracks its global responsibilities, 2010). While the company is able to adhere to sustainable practices within its U.S. markets its foreign locations are continuing to do the exact opposite.
What is needed in such a case is for the company to start focusing on instilling proper environmental stewardship with its international branches so as to create a more even rate of responsible corporate behavior for the company.
References
Argenti, P. A. 2004, ‘Collaborating with Activists: How starbucks works with NGO’s’, California Management Review, 47, 1, pp. 91-116, Business Source Premier, EBSCOhost.
Belone, A. 2004, ‘Bean Dreams’, Latin Trade (English), 12, 3, p. 16, Business Source Premier, EBSCOhost.
‘Company Spotlight Starbucks’ 2010, MarketWatch: Drinks, 9, 3, pp. 29-34, Business Source Premier, EBSCOhost.
‘Drinks: Company Spotlight: Starbucks’ 2010, MarketWatch: Global Round-up, 9, 3, pp. 52-57, Business Source Premier, EBSCOhost.
Goetz, S., & Shrestha, S. 2009, ‘Explaining Self-Employment Success and Failure: Wal-Mart Versus Starbucks, or Schumpeter Versus Putnam’, Social Science Quarterly (Blackwell Publishing Limited), 90, 1, pp. 22-38, Business Source Premier, EBSCOhost.
Gonzales, T. 2010, ‘Best Green Companies for America’s Children’, Working Mother, 33, 3, p. 42, MasterFILE Premier, EBSCOhost.
Johnson, J. 2010, ‘Starbucks expands cup recycling project’, Waste & Recycling News, 16, 11, p. 21, MasterFILE Premier, EBSCOhost.
Renard, M. 2010, ‘In the Name of Conservation: CAFE Practices and Fair Trade in Mexico’, Journal of Business Ethics, 92, pp. 287-299, Business Source Premier, EBSCOhost.
Reavis, C., & Austin, J. 2002, ‘Starbucks and Conservation International’, Harvard Business School Cases, p. 1, Business Source Premier, EBSCOhost.
‘Starbucks outlines ‘Shared’ goals’ 2008, Beverage Industry, 99, 12, p. 9, Vocational and Career Collection, EBSCOhost.
‘Starbucks Promotes “Green” Beans’ 2004, Global Environmental Change Report, 16, 10, pp. 7-8, Academic Search Premier, EBSCOhost.
‘Starbucks tracks its global responsibilities’ 2010, Beverage Industry, 101, 5, p. 14, Vocational and Career Collection, EBSCOhost.