By Nicholas Olds and Ilana Greene
As the largest international coffeehouse company, Starbucks is one of the premier companies in the world. However, it is perhaps their record of corporate social responsibility that has earned them that reputation.
Starbucks' reputation as a corporate leader in CSR has long been acknowledged. However, this was reaffirmed in 2007 when CEO Howard Schultz submitted a now famous memo to corporate leadership discussing the need to transform the company from one based on commoditization to focus on values and the "Starbucks Experience." With this memo, and the subsequent changes made to the overall infrastructure of its store branches, Schultz focused on the future of Starbucks, looking beyond short-term profits to ensure long-term growth: "Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time."
Schultz referred to the future of his business as "Turning a Company Into a Movement." Since this 2007 memo, Schultz has led the company with a unique business strategy focused on values, community relations, and social responsibility. This is similar to most companies, but the main difference is that corporate social responsibility is more than a public relations strategy for Starbucks because it dictate the decision-making of the entire corporation.
This strategy of CSR-based operations culminated in 2011 when Starbucks created jobs rather than downsize the organization to adjust to higher prices of production materials, increased competition from lower priced and improved quality of coffee from fast food chains, and the uncertain economic climate in the U.S. According to Schultz, "we wanted to take a serious look at the state of federal politics and to focus on job creation within their own organizations rather than petty partisan arguments...so rather than implementing CSR programs solely to impact profitability, we were proactive in establishing ourselves as the forefront of CSR."
Much of Schultz' CSR strategy seems counterintuitive in that it focuses on investing in ethics and consumer experience rather than financial value. However, as he puts it, “Even during this time of change for our company, one thing that will never change is our long-standing commitment to conducting business in a responsible and ethical manner...by continuing to integrate social and environmental responsibility into every aspect of our business.” Among these aspects include their ethical sourcing strategies, which have long been a staple selling point for Starbucks.
To this point, in their 2012 CSR report, the company now purchases close to 80 percent of its coffee from Fair-Trade Certified and Coffee and Farmer Equity Practices-approved suppliers. This involves purchasing higher quality and higher priced coffee; although the company was able to purchase this coffee at reduced rates during the down economy by providing environmental incentives for suppliers. With support incentives for farmers and communities that preserve forests in coffee regions, Starbucks ensured that its suppliers were able to maintain the quality of their coffee while offering a competitive rate for sale.
In the future, Schultz plans to use environmental incentives like these to dramatically transform the company's carbon footprint. Other long-term objectives include having all company stores use energy from renewable sources, new store construction to incorporate green building standards, and ceramic serving ware to become the standard in all Starbucks stores, which is now at 55 percent. However, the company is also in the process of making their cups completely recyclable by 2015, implementing front-of-store recycling in all stores, and reducing water and electricity by 25 percent by 2015. All goals would position Starbucks as the world leader in environmental and social responsibility.
Ultimately, as Starbucks enters the 21st century, the company has responded more literally to growing public demand for businesses to take actions based on CSR than any other global company. Rather than have a separate branch for CSR initiatives, Schultz has made the company into both a movement and an experience, where consumers relate on a more intimate level with Starbucks because they are aware of the company's commitment to action and responsibility. So in the subsequent years since its release, what Schultz proved in the memo was that by investing in people, Starbucks ended up with profits.
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