Starbucks Environmental Sustainability Case Study

External Environmental Analysis of Starbucks and the Coffee Industry Harold Brown Strategic Management March 3, 2011

Why do you think Starbucks has been so concerned with social responsibility in its overall corporate strategy?

Looking at this table you can see that Dunkin Donuts and Chipotle has more green applications inside their stores that reduce more water and energy consumption. Starbucks needs to add more of these attributes to help their store to help them reduce their consumption. Even though Starbucks have more green stores than Chipotle and Dunkin Donuts, even a international present with over 750 stores that are LEED certified. These stores do not have sufficient applications inside them as compared to Chipotle and Dunkin Donuts and Starbucks so strive to add more of these applications inside their green stores. Using wind power in their Gurnee, IL store, Chipotle has reduced electricity usage by 10% (Austin Energy) , which is more than Starbucks 7.5%

Starbucks partnered with Conservation International in 1999 to work on having one hundred percent ethically sourced coffee. With that, in 2004 Starbucks created Coffee and Farmer Equity (C.A.F.E.) and purchased 43 million pounds of green coffee in the first year. C.A.F.E. was expanded to include agricultural methods that focus on areas such as reducing emissions. Starbucks also strives to grow coffee in countries with evolving economies and create an impact with loans and investments. Those investments include investments in farmer loans, which have grown from $150,000 in 2000 to $3 million in 2014. Our company is devoted to decreasing our environmental footprint with purposeful and sustained change. In 2014 the 500th LEED-certified Starbucks store opened and our company continues to integrate environmental building strategies into stores.

Internationally, Starbucks has a good reputation with working conditions. In Hong Kong, managers treat their partners with respect. Also, some store managers remain employed for 10 to 15 years. In order to improve the environment, Starbucks’ waste management program involves policies that convert unused coffee grounds and bakery food into household products, such as laundry detergent. This helps the environment because waste is not being dumped into rivers, oceans, landfills, etc.

Starbucks has been around for more than four decades, and from the very beginning it has worked hard to operate in an ethical manner. Starbucks ranked as Fortune Magazine’s fifth most socially responsible company in 2012. There are a number of good reasons for the high ranking. The company looks for better ways to develop sustainable production of its coffee. It has set in place some guidelines it calls C.A.F.E Practices, ensuring environmental leadership, economic accountability, and product quality. Starbucks also supports Ethos Water, which provides clean water to more than a billion people

In this current economic Era, it has become more evident with time, that being someone who is ruthless and unmoral is more popular, moral, profitable and more essential to being successful. This is the known motto of many of the big cooperate heads, they do this so they can far exceed their goals. Goals of making the highest profit by any means. But not all Big corporations are like this. We now have companies like Starbucks that are setting a new standard towards being Socially Responsible and globally conscious. Starbucks has been known to make huge amounts of profits over something as simple but yet so complicate as a cup of coffee. Starbucks is hugely involved towards bring social justice into its supply chain and while doing so also want to have a positive impact in the communities they enter. Starbucks isn’t the only company that’s doing something different, then the set path of “success” all ready drawn out by others.

Starbucks answers this demand for social responsibility through what they call a “global responsibility” report which addresses what the role and responsibility of a public for-profit company should be (Starbucks.com, Global Responsibility). It is structured in a point by point 20 page report detailing their stance on issues at home and abroad. Some of the pages in the report links to some of their other web pages that explain the topic in question in more detail. Their report follows GRI standards relatively well. Aspects such as strategy/analysis, organizational profile, report parameters, and governance/commitments/engagements are well covered. Their economic, human rights, society, and environmental performance

Starbucks is working to decrease the energy use and water use in it 's store by using more efficient practices, appliances, and lighting.8 Installing LED lighting in it stores, Starbucks is conserving and average of 7% of the energy used before the change.8 They are working to convert their outdoor signage to LED as well, which would further reduce their electricity use.8 Although the use of water in their products can 't be minimized they are working to minimize the water filtered from their intake by using higher efficiency filter, as well as installing dishwashers and washroom fixtures that are utilize less water.8 Starbucks is also taking a smaller step by landscaping with draught resistant plants to reduce the need for irrigation.8

Perhaps the most telling of the core differences between Wal-Mart and Starbucks’ sustainability agendas relates to their motivation for sustainability measures to begin with. Wal-Mart seems to pursue sustainability measures for purely selfish reasons, utilizing sustainability measures more as a tool for their Public Relations department than out of any real attempt at social responsibility. Starbucks however shows by the company’s actions that they are in fact genuinely concerned with operating sustainably. Starbucks makes realistic sustainability goals, then actively strives to meet them, publicly reporting on their progress annually (Timm 2005).

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

As Starbucks is going to expand its customer base by including the middle and lower class customers so, it has to face a Socio Cultural challenge as it has to lower down the prices by not compromising on the quality of its products. The trend for CSR and green related concepts are increasing among the consumers so, it needs to consider these factors while operating in the modern business environment. Lastly, the baby boomers are retiring which means their spending habit will also shift so, to overcome this issue the company should have to look out on how to tap the generation X and the Millennials to make them the part of its strategy (Anon,

Starbucks is renowned for its morality due to their innovative sustainability and environmental policies and operations. They strive to go beyond mandated regulations by implementing ethics as part of their core practices. However, no matter how flawless their code of ethics is; they, too, face ethical issues and commit unethical acts. First, they are responsible for putting small, local coffee shops out of business which creates a uniform retail culture throughout cities. Second, they advertise to provide 100% fair trade coffee when it is not truly 100% fairly traded. Third, they use hormone added milk that is detrimental to the human body as well as the environment. Fourth, they set unrealistic, unattainable recycling goals, so they were unachievable; in turn, their trustworthiness is hindered and their reputation is tarnished. Lastly, it was revealed that Starbucks discovered ways to avoid paying taxes in the UK. To this day, Starbucks continues to be recognized as an ethical company. Although sometimes controversial, they are innovatively striving to positively change the ways of society and business operations.

According to Starbucks (2013), Starbucks had solidified net revenue of $13. 3 billion, an approximately 14 percent growth, (Appendix B) shows the financial returns are consistently increasing over the years, Starbucks (2013). This net increase shows the good economic performance of Starbucks. Solely economic performance is not sustainable, Starbuck understood the importance of emphasize on corporate social responsibility. Starbucks Global Responsibility business strategy are synthesize with their culture and overall strategy. They focus on ethical sourcing that they see these plants as an agricultural sustainability, whereby C.A.F.E (Coffee And Farmer Equity) are practiced for continuous improvement on productivity, social and environmental aspects, Starbucks (2013). Other than positive corporate image, Starbucks is exposed to more business opportunity, for example one of the world largest populations, India. Recently, Starbucks and Tata Coffee invested in a new plant in India, whereby the company sees it as an

This case assignment discusses the history of Starbuck’s accomplishments as they entered the American coffee culture heritage. In 1983, The chairman and CEO Howard Schultz traveled to Italy and had a dream to carry the Italy coffeehouse ritual back to the United States. Schultz was focused on creating an environment meeting company that makes good coffee but also be a social experiment. Starbucks today opened more than 19,000 stores functioning in 62 countries. Starbucks has numerous rewards that globalization has offered and they have significantly benefited from it, while in the coffee industry. Starbucks has a wide-range in marketing strategies to benefit the customers. During the different obstacles that Starbucks has encountered, they must stay reliable in quality and uphold to adjust to different customer values.