Reference no: EM131517515

Chapter Review

Management at WorkThe Canary in the Coal Mine

"If the only reason you're invested in sustainability is because it's the 'right thing to do,' you're in trouble."

-JIM HANNA, DIRECTOR OF ENVIRONMENTAL AFFAIRS, STARBUCKS

According to Starbucks VP of Global Responsibility Ben Packard, the company's efforts to establish itself as a leading sustainable brand start with its mission-the statement of its organizational purpose (see Chapter 6). "We aim to take care of the communities that we depend on for our retail business by ... finding meaningful ways to be engaged with those communities," says Packard. "And we aim to take care of those communities where we source our core products, like coffee, tea, and cocoa." It's a matter of "nurturing the human spirit," explains Packard, who adds that incorporating that value into the firm's culture has allowed Starbucks to set and meet "very bold standards" in sustainability.

Starbucks sells hot and cold beverages out of more than 23,000 stores in 64 countries, and those stores account for about 80 percent of the company's carbon footprint-the total of its greenhouse gas emissions (primarily carbon dioxide). In order to reduce its footprint, Starbucks has set a series of realistic goals to be met by 2015, including the widespread recycling of the disposable cups that it hands out with almost every beverage sold-about 4 billion per year. Actually, those cups constitute only a miniscule fraction of Starbucks' carbon footprint, but according to Jim Hanna, the company's director of environmental affairs, "perception is reality" when it comes to disposable cups: What most people see is the litter strewn about the streets or tumbling out of overflowing trash cans. By 2015, Starbucks intends to have front-of-store recycling bins in every North American store.

Before we go any further, we should point out that although Starbucks has incorporated sustainability practices into its operations since 1990, it hasn't always been as sensitive to environmental issues as some people would like. If you were hooked on your daily Starbucks latte or cappuccino before 2008, you might have noticed, next to the giant espresso machine, a sink called a "dipper well." Baristas used it to quick-rinse equipment, and the water was kept running to ensure that pipes stayed clean. Unfortunately, leaving the water running in 10,000 stores worldwide used up more than 6 million gallons of water per day-enough to fill an Olympic-size swimming pool every 83 minutes. The company had been warned that the dipper-well system wasn't good for its environmental reputation, but only after a blitz of bad PR in the global press did Starbucks finally turn off the water. Today, says Ben Packard, "we look at water on the supply side of coffee"-as a resource to be protected-and Starbucks has plans to cut in-store water consumption by 25 percent.

That goal is part of the company's Shared Planet Program, which was launched in 2008. A year later, Starbucks announced that, as part of the same initiative, all of its new stores would satisfy certification requirements for LEED (Leadership in Energy & Environmental Design), a rating system for the construction and operation of environment-friendly buildings. Because the guidelines were developed for office buildings, Starbucks helped to create programs for both new and renovated retail spaces, and 75 percent of all Starbucks locations opening in 2014 attained LEED certification. "My dream," says Jim Hanna, "is that we solve the cup issue and a customer walks into a store and says, 'Look at that ultra-efficient air conditioning unit.'"

By 2015, Starbucks also plans to "ethically source" 100 percent of the coffee that it buys from producers. Over the past 40 years, Starbucks has invested more than $70 million in programs to support sustainable and socially sound agricultural practices among the roughly 1 million people-most of them in Latin America-who represent its coffee supply chain. Programs include loans to help farmers develop not only sustainable growing practices but forest-conservation practices as well.

Since 2008, Starbucks has partnered with Conservation International (CI), a U.S.-based nonprofit environmental organization, to implement C.A.F.E. (Coffee and Farmer Equity) Practices-a set of independently developed guidelines for monitoring the economic, social, and environmental impact of coffee-production programs and practices. By 2012, 98 percent of the small coffee farms operating according to Starbucks-promoted C.A.F.E. practices had managed to improve soil fertility, and 100 percent of the school-age children on those farms were able to attend school.

CI chairman and CEO Peter Seligmann points out that Starbucks' sustainability efforts are motivated in large part by the need to deal with a major issue in the company's environment, both business and natural: namely, climate change-"figuring out how to ensure that coffee farming can be a part of the climate solution," as Ben Packard puts it. "The convergence of climate change and ecosystem deterioration," explains Seligmann, "is what creates stress on the ability of coffee farmers to produce crops." The coffee bean grows only in specific climates, and those climates are particularly vulnerable to rising global temperatures. Thus if Starbucks intends to survive over the long term, it makes good business sense to ensure that it has access to its most important ingredient. "We're the canary in the coal mine," quips Hanna, likening the fate of the first victim of unbreathable air to the company's potential fate as one of the first victims of climate change.

Starbucks, then, sees sustainability as a matter of business survival, and if business isn't the operative word, at least it's at the top of the list. "If the only reason you're invested in sustainability is because it's the 'right thing to do,'" says Hanna, "you're in trouble." A business enterprise needs to see some return on investment, and as Clarice Turner, Starbucks VP of U.S. business, puts it, that return "can manifest itself in many ways." Front-of-store recycling, for example, saves thousands of dollars annually in trash-hauling costs." Of course, says Turner, working to reduce the company's environmental impact "is the right thing to do," but she hastens to add that highly visible sustainability efforts also "put a halo on your brand and business, which is very real to both consumers and employees. If done right, those efforts have a tangible bottom-line impact."

Case Questions

1. The term sustainability refers generally to the maintenance and preservation of systems and processes. At what types of systems and processes are Starbucks' sustainability efforts directed?
2. In what ways might Starbucks' sustainability efforts be affected by events in each dimension of its general external environment-economic, technological, sociocultural, political-legal, and international? In which dimensions can the company be most proactive in taking steps toward its sustainability goals? In which dimensions are events most likely to necessitate reactive steps?
3. In what ways might each group in Starbucks' task environment-competitors, customers, suppliers, strategic partners, and regulators-be involved in its sustainability efforts? Be sure to include competitors in your answer. List each group in order of its importance to Starbucks' sustainability efforts; explain your ranking.
4. According to Ben Packard, "One of the strengths of Starbucks' culture is treating the people and places where our products come from and are served in a better way. Not delivering on that vision and mission would be a problem in the culture of this company."
5. Why is the management of its culture important to the success of the company's sustainability efforts? In what ways can Starbucks work to ensure that the values reflected in its sustainability commitment are embraced by members of the organization?