Introduction
Starbucks is a global coffee company that has become an iconic brand in the coffee industry. The Starbucks Family Farmer program was established to support small-scale farmers who are critical to the company’s success. However, there have been criticisms of this program, as well as other aspects of the company’s operations, in terms of how it impacts the environment and local communities. As the demand for their products has grown, the company has become increasingly reliant on the global supply chain, including sourcing coffee beans from farmers worldwide.
Unfortunately, this has led to several ethical and environmental sustainability issues, such as the exploitation of family farmers, the outsourcing of labor, and the environmental impacts of deforestation and water pollution caused by the production of coffee beans (Areiza-Padilla & Manzi Puertas, 2021). These issues have led to criticism of the company and have spurred calls for greater transparency and accountability.
Starbucks’ efforts to source and produce coffee ethically and sustainably have had a positive effect on both the environment and local communities, but the company must do more to ensure that its practices are truly fair and equitable for all involved. The Starbucks Family Farmer Outsourcing and Environmental Sustainability case is a reminder of the importance of ethical business practices and corporate social responsibility in the 21st century.
Legal, Ethical, and Industry Related Concerns
The ethical issues about the Starbucks Family Farmer Outsourcing and Environmental Sustainability case are primarily related to whether or not the company is using ethical business practices in its sourcing and production of coffee (Cordes et al., 2021). Criticism has been leveled at Starbucks for their use of coffee beans from small-scale agriculturalists in developing nations, which involves outsourcing the product.
The company has been accused of exploiting farmers by paying them far below fair market value for their labor and resources. In 2019, a group of coffee farmers in Guatemala filed a lawsuit against Starbucks for poor returns for their goods and services (Cordes et al., 2021). They complained of being given a living wage rather than being compensated for the amount worth of their supplies. This led to questions about the fairness of the company’s practices and whether they align with ethical standards.
Additionally, legal issues arise in this case as well. It is possible that Starbucks’ sourcing practices could be considered illegal in certain countries, depending on local laws. If a country’s laws require that all employers pay a fair wage to their workers, then it is possible that Starbucks’ sourcing practices could be seen as illegal in that country. Furthermore, it is possible that Starbucks’ practices could violate international labor laws as well (Cordes et al., 2021). For instance, the firm was accused of sourcing coffee beans from farms in Guatemala that did not comply with labor and environmental regulations.
The farmers also complained of exploitative working conditions due to the company’s reliance on third-party suppliers. According to reports, the farms were not registered with the country’s Ministry of Labor and were not paying their workers a fair wage, leading to exploitation complaints (Cordes et al., 2021). The company has been associated with a lack of sufficient transparency about where its coffee beans are sourced from and not providing enough information about the environmental and labor practices of its suppliers. This has caused concern among consumers, who want to know that their purchases are not contributing to unethical or unsustainable practices.
In terms of industry-related business issues, one of the main points of contention, in this case, is the fact that Starbucks is attempting to reduce its environmental impact through its sourcing and production practices. The company has implemented various sustainability initiatives, such as eliminating plastic straws from its stores and investing in renewable energy sources.
The company has also committed to reducing its water usage and carbon emissions, as well as investing in more sustainable farming practices (Areiza-Padilla & Manzi Puertas, 2021). Some people have praised these efforts, but others have argued that the company has much to accomplish to ensure its practices are truly sustainable and ethical. For instance, in 2018, the company was sued by the International Labor Rights Forum for failing to comply with the Fair Labor Standards Act and the International Labor Organization’s Minimum Wage Convention
Another industry-related issue of controversy, in this case, is the question of whether or not Starbucks’ sourcing practices are fair and equitable. While the company has implemented some measures to ensure that its coffee is sourced from more sustainable sources, many have argued that the company should go further in ensuring that its sourcing practices are fair for all involved (Cordes et al., 2021). Additionally, questions have been raised about the company’s use of fair-trade practices, as some have argued that the company should be doing more to ensure that its sourcing practices align with fair trade standards.
Moreover, there is concern about how the company is handling its environmental sustainability initiatives. Although the firm has taken several steps to curb environmental degradation, it could be doing more to ensure that its sustainability efforts are effective and that the company is doing all it can to reduce its environmental footprint (Delabre et al., 2019). Concerns have also been expressed over the company’s use of “greenwashing,” which is the practice of inflating or falsifying statements about its environmental initiatives in order to improve its reputation.
Finally, there is concern about how the company is dealing with the public outcry over its sourcing and environmental sustainability practices. While the company has attempted to address the issue through its public statements and initiatives, they have not effectively curbed public criticism. The company has been accused of outsourcing its coffee beans to areas of the world that have limited labor and environmental regulations (Delabre et al., 2019). This has led to farmers’ exploitation and destroyed natural habitats and ecosystems.
In addition, the company has been accused of not doing enough to reduce its carbon and energy footprints, as well as failing to reduce its reliance on single-use plastics. However, some people believe that more must be done to ensure the company is truly committed to environmental sustainability and ethical sourcing.
Action Toward the Concerns
In response to the outcry over its sourcing and environmental sustainability practices, Starbucks has implemented a number of changes. The firm pledged to obtain all its coffee from accredited and suitable sources by 2020 and eliminate plastic straws from its stores (Delabre et al., 2019). In addition, Starbucks has also committed to engaging with stakeholders to ensure that its practices are ethical and sustainable and has committed to providing more information about its sourcing and environmental policies (Delabre et al., 2019). Furthermore, the company made a commitment to investing in research and development to improve the sustainability of its operations and reduce its carbon footprint.
Additionally, Starbucks has also taken steps to improve its labor practices. The company has committed to paying its farmers a fair wage, and it has also committed to working with local suppliers to ensure that labor and environmental standards are being met (Salum, 2020). The company is committed to investing in training and education for its farmers and to providing small farmers with access to financial services. These initiatives have been met with praise from the public and have helped improve the company’s public perception.
Furthermore, the company has created a website and social media accounts that provide information about its sourcing and environmental practices, and it has committed to providing more information about its suppliers.
In addition, the business has pledged to interact with stakeholders in order to guarantee that its operations are morally and environmentally sound. This has been in an attempt to be more transparent to involved stakeholders to ensure that proper compensation and required health, safety, and legal standards are adequately upheld in all regions (Delabre et al., 2019). This includes providing more information to consumers about where their coffee beans come from and how they were produced. Starbucks invested in technology that allows them to track the supply chain from farm to cup, ensuring that consumers know exactly where their coffee comes from.
Starbucks has made significant investments in research and development to increase the sustainability of its operations in order to promote environmental safety. Starbucks also developed a comprehensive sustainability strategy, which included a commitment to achieve a 50% reduction in greenhouse gas emissions by 2030 (Gozdan & Sudolska, 2021). The company has invested in renewable energy projects, such as solar and wind power, to help offset its energy use. Additionally, Starbucks has invested in water conservation measures and implemented several initiatives to reduce waste and conserve resources.
Starbucks has also implemented a range of initiatives to support family farmers. This includes initiatives such as grants, training programs, and technical assistance for farmers. These initiatives are designed to help farmers increase their productivity and improve their environmental sustainability practices.
Starbucks has also created a “Coffee and Farmer Equity” (C.A.F.E.) Practices program, which is a set of standards that assesses the environmental and social performance of the farmers that supply their coffee beans (Gozdan & Sudolska, 2021). Another program is the Farmer Support Center, which provides resources and training to farmers. This includes providing farmers with access to agricultural technologies and tools and educational opportunities (Salum, 2020).
Additionally, Starbucks has partnered with organizations, such as the United Nations Food and Agriculture Organization, to create sustainable agricultural programs (Nguyen, 2020). This includes programs to promote organic farming and support farmers in accessing markets. Starbucks also works with local communities to ensure that farmers are able to access the resources they need to succeed.
Personal Opinion
The investments in renewable energy, water conservation, and waste reduction initiatives have allowed Starbucks to reduce its carbon footprint and create a more sustainable supply chain. By investing in renewable energy, Starbucks has been able to reduce its reliance on fossil fuels, thereby reducing its greenhouse gas emissions.
Additionally, by investing in water conservation initiatives, Starbucks has been able to reduce its water consumption and help to protect local water sources (Grabs & Carodenuto, 2021). Finally, by investing in waste reduction initiatives, Starbucks has been able to reduce the amount of waste it produces. All of these efforts have contributed to the company’s overall sustainability goals and have had far-reaching positive impacts on the environment.
At the same time, these investments have also had positive impacts on Starbucks’ financial performance. By reducing its operating costs, Starbucks has been able to become more competitive in terms of pricing and product quality. This, in turn, has helped the company to attract and retain more customers.
Additionally, by improving its relationships with family farmers, Starbucks has ensured a steady supply of quality ingredients for its products (Grabs & Carodenuto, 2021). This has allowed the company to maintain a consistent level of product quality, which has been beneficial to both the company and its customers.
Starbucks’ initiatives have helped improve the economic well-being of family farmers and have had positive social impacts. For example, the company has provided resources and support to help farmers become more efficient and environmentally responsible (Jacoba, 2022). This has enabled them to produce higher-quality products and increase their yields, which in turn has improved their financial stability.
Additionally, the improved access to markets for their products has provided family farmers with more opportunities to make a living (Grabs & Carodenuto, 2021). This has improved their quality of life and enabled them to engage better in their local communities. This has positively impacted the social development of the local communities in which family farmers live, as well as the region’s economic development as a whole.
The social implications of Starbucks’ outsourcing of ingredients are also essential to consider. By sourcing ingredients from small-scale farmers, Starbucks is providing these farmers with a steady income. This income is essential for these farmers to remain in business, enabling them to stay afloat during difficult economic times (Nguyen, 2020). Additionally, Starbucks has also been able to provide jobs to local communities. This has enabled them to create economic stability and the communities to flourish.
Conclusion
The Starbucks Family Farmer Outsourcing and Environmental Sustainability case raises ethical and environmental sustainability problems that highlight the significance of moral business conduct and corporate social responsibility in the twenty-first century. The case also highlights the need for companies to be transparent and accountable when it comes to their sourcing and environmental practices, as well as the need for strong corporate leadership to ensure that these practices are upheld.
The actions taken by Starbucks in response to the public outcry have been met with some praise, but there is still room for improvement. Companies must continue to work to ensure their practices are ethical and sustainable and minimize their environmental and social impact. The case of Starbucks serves as a reminder that companies must take responsibility for their actions and strive to ensure that their practices are ethical and sustainable in order to protect the environment and their customers.
References
Areiza-Padilla, J. A., & Manzi Puertas, M. A. (2021). Conspicuous consumption in emerging markets: The case of Starbucks in Colombia as a global and sustainable brand. Frontiers in Psychology, 12. Web.
Cordes, K., Sagan, M., & Kennedy, S. (2021). Responsible coffee sourcing: Towards a living income for producers. SSRN Electronic Journal. Web.
Delabre, I., Alexander, A., & Rodrigues, C. (2019). Strategies for tropical forest protection and sustainable supply chains: Challenges and opportunities for alignment with the UN sustainable development goals. Sustainability Science, 15(6), 1637–1651. Web.
Gozdan, E., & Sudolska, A. (2021). Exploring company’s activities in the field of CSR: The case of Starbucks. Journal of Corporate Responsibility and Leadership, 6(2), 29. Web.
Grabs, J., & Carodenuto, S. L. (2021). Traders as sustainability governance actors in global food supply chains: A research agenda. Business Strategy and the Environment, 30(2), 1314–1332. Web.
Jacoba, J. (2022). Starbucks strategic analysis. Web.
Nguyen, C. (2020). Sustainability marketing concept: Case Starbucks. Web.
Salum, S. A. L. U. M. (2020). Coffee growers’ knowledge, attitude, and practice of Starbucks coffee and farmers equity certification scheme in Mbinga district (Doctoral dissertation, Sokoine University of Agriculture). Web.