Corporate Social Responsibility (CSR) is an integral part of doing business in the marketplace for nonprofits and for profit making organizations. The absence of a CSR policy within an organization tends to send negative signs of an irresponsible business model and can profoundly affect the success of such an organization. The policy that is adopted as part of CSR is often backed by a dedicated department within an organization in order to translate the policy into action that can be quantified and audited. The policy that should be taken will ensure that the business model is sustainable. The adoption of a CSR strategy is meant to result in the stakeholders getting the maximum return on their investment while at the same time taking into consideration the interests of other stakeholders and the environment.
Before delving into looking at the sustainability of the CSR policy at Starbucks, it is important to first define what CSR is and the accepted parameters from which it operates. CSR can be defined as the actions that are voluntarily taken by a business or organization that is above the minimum requirements of the law and geared to further its own interest as well as the society at large. CSR can also be termed as Corporate Citizenship, Corporate Responsibility as well as Responsible Business. Some of the practices associated with CSR include a focus on the environment in order to mitigate against degradation as well as reducing the carbon footprint. (Lii & Lee, 2012). Another focus is on philanthropy to needing causes and charities. Ensuring that labor practices are ethical is also another part of CSR that ensures employees get fair treatment while at work.
CSR at Starbucks
The CSR policy at Starbucks can be summarized by their official statement that “We have always believed Starbucks can- and should- have appositive impact on the communities we serve. One person, one cup and one neighborhood at a time.” (FY-16 Annual Report, 2016).This is reflected in the 2016 Annual Report, it states its commitment to running its business responsibly in the communities where it operates. This is with the intention of delivering the benefit accrued back to the stakeholders, business partners, suppliers, customers, shareholders and the employees. The commitment to the CSR policy is also seen in the available programs it is currently engaged with in its dedicated website on social responsibility. (Nguyen &Cefaratti, 2016). Since it is primarily a beverages-based company, most of its CSR programs are focused on sourcing tea, coffee and cocoa that is sustainably grown and encouraging production that is ethical and sustainable. One of the strategies adopted for 2017 is to be the employer of choice and to elevate coffee which fits well within its CSR policy.
One o the principles of CSR is that of sustainability which is a core principle since it affect the other two principles of accountability and transparency. To interrogate the sustainability of the CSR practices at Starbucks will be analyzed by looking at some of the programs it is engaged in and assessing its sustainability. The three components of the CSR that will be analyzed are sourcing ethically, the environment and community programs.
Sourcing Ethically- Starbucks is committed to 100% sourcing all its tea and cocoa by 2020, having already achieved 99% of its targets in sourcing coffee. The company collaborates with farmers and activists in a program that is designed to improve the livelihoods of coffee farmers. (Aronow, Burkett, Romano & Nilles, 2016). This program known as the Coffee and Farmer Equity (C.A.F.E) works in programs that gives support to farmer centers, farmer loans and in carbon forest projects. This is aimed at making coffee the first sustainable cash crop or product. The total investment to date is more than $100 million and the company partners with several partners in this initiative such as Conservation International.
Sourcing of coffee is sustainable in the investment that the company has made with long-term goals of achieving certain benchmarks within the coffee industry. Currently the company has donated more than 25 million coffee trees to farmers and is targeting to have provided 100 million trees by 2025. This is accompanied by the financial commitment of $ 50 million in its Global Farmer Fund. The action taken that affects farmers from Rwanda in Africa, Indonesia in Asia and Oaxaca in Mexico, this initiative will improve infrastructure within the industry, support agronomy and replace aging and diseased trees. (Rimburg, 2012). The Sustainability Bond that was issued in 2016 to raise $500 million will guarantee that sustainability programs that are eligible will receive funding and thus make this initiative sustainable.( Starbucks CSR, 2017).
The Environment- The approach to the environment is by treating the environment as the most business partner that the company transacts with. The protection of the environment focuses on reducing the impact on the environment by the operations of the company in several ways. (Sharma & Kiran, 2012).The climate strategy focuses on renewable energy by becoming one of the largest purchasers of renewable energy in their sector. The company is also committed to reducing its green house gas emissions in its operations by offsetting it with investments in forest carbon projects. This is sustainable in that the trees planted in the different re-forestation projects help to mitigate against climate change by absorbing carbon another and acting as a rain catchment area.
A program started in 2008 to reduce water usage within its stores was achieved by 2015 which resulted in the water consumption falling by more than 25% in more than 4000 stores.( Starbucks CSR, 2017). This was achieved through fitting in new plumbing systems and water systems. Energy conversation was also another area of focus that the company is focusing in its stores in order to reduce energy consumption and its environmental footprint. The energy management system put in place is intended to optimize cooling and heating systems in all its stores and thus reduce its energy consumption.
The Leadership in Energy and Environmental Design (LEED) has been adopted in all new stores that are opened across the globe. The integrated green buildings in more than 1000 stores across the globe incorporate the use of materials that are environmentally friendly. The LEED design uses materials that are locally accessible as well as using materials that are low in emitting toxic gases and fumes. Table tops are made from coffee grounds that are recycled which is a sustainable practice for the company. The savings made from lighting fixtures is also sustainable as it guarantees the long-term use of energy that is renewable such as solar lighting. This makes the CSR approach of tackling environmental issues sustainable across all its stores.
Community CSR- The Company is also engaged in community programs that invest in people as well as creating opportunities for local communities as part of its CSR program. This programs range from opportunities for youth to community services that are funded by the Starbucks Foundation. (Robert & Kodua, 2012).The company in the US is committed to providing opportunities within the company to more than 10,000 military veterans and their spouses within the company. A partnership with Arizona State University is intended to give all eligible partners the chance to earn a degree with all the tuition paid by the company and that is done online. This program aims at helping the partners achieve self- actualization and improve their skill sets for the marketplace and this in turn is also beneficial to the company.
The sustainability of the RED partnership is especially sustainable and can achieve long-term benefits both to the communities affected and the company. This is the Starbucks RED initiative where every purchase of Starbuck products marked with the red color contributes to the Global Fund against HIV/AIDS. A percentage of the profit of every product sold goes towards this fund which assists in providing medication of HIV that is cost friendly in order to reduce mother to child infections as well as giving the vulnerable a new chance in life. This program is more important in Africa which is the major source of its tea, coffee and cocoa and where such communities are critical to the success of the company. Healthy local communities who have access to medication are then able to become economically productive by the new lease of life they get through the medication. This is sustainable as it creates a cycle that is self sustaining on order to ensure continued access to HIV drugs in order to live healthy and productive lives.
The CSR practices at Starbucks have contributed to improving of industry wide best practices of CSR. The partnerships that the company has formed in undertaking its CSR program show the importance of forming strategic alliances with credible stakeholders who can hold the company responsible to their commitments and can also independently audit the organizational commitment to such programs. The trend moving forward for companies undertaking CSR is to form alliances and partnerships with organizations already engaged in a particular social or communal program and come in to provide additional budgetary support. (Osagie, Wesselink, Blok, Lans & Mulder, 2016). This ensures that the money that is allocated to such partners is put properly utilized from their competency in such programs.
The approach to link sustainable sourcing as an important part of doing business is also worth emulating by other companies engaged in CSR to ensure that sustainability is achieved through ethical sourcing. This can help to eliminate unethical practices in the chain o0g production that at times tends to slave labor and inhumane working conditions. This approach can be critical in eliminating the sweatshops of Asia as well as the use of child labor in commercial plantation in South America. (Asgary & Li, 2016). Ensuring that there is a chain of ethical production from farm to fork will ensure that the success of the producer or farmer is tied to the success of the company. This will result in successful thriving communities of producers who share in the success of the company with which they are engaged with.
The practice of CSR is important in ensuring that a company maintains a competitive advantage when compared to its competitors in the marketplace. The CSR approach at Starbucks has ensured it maintains this advantage by focusing on three important components of its CSR which are the environment, the community and sourcing ethically. The environment is approached as the most important business partner while the community is an important stakeholder that affects the company operations. The sourcing of products that is ethically sourced is sustainable as it ensures that there is value addition in the supply chain with all parties concerned deriving mutual benefit from their association. The importance of the Starbucks CSR is seen in the potential in setting a new paradigm of doing business with social responsibility that other companies can emulate.
References
Aronow, S., Burkett, M., Romano, J., & Nilles, K. (2016). The 2016 supply chain TOP 25: Lessons from leaders. Supply Chain Management Review, 20(5), 10-21. Retrieved from https://search.proquest.com/docview/1820549234?accountid=45049
Asgary, N., & Li, G. (2016). Corporate social responsibility: Its economic impact and link to the bullwhip effect. Journal of Business Ethics, 135(4), 665-681. doi:https://dx.doi.org/10.1007/s10551-014-2492-1
Lii, Y., & Lee, M. (2012). Doing right leads to doing well: When the type of CSR and reputation interact to affect consumer evaluations of the firm. Journal of Business Ethics, 105(1), 69-81. doi:https://dx.doi.org/10.1007/s10551-011-0948-0
Nguyen, D., & Cefaratti, M. (2016). CORPORATE SOCIAL RESPONSIBILITY REPORTING AND CORPORATE SUSTAINABILITY REPORTING. Internal Auditing, 31(3), 10-18. Retrieved from https://search.proquest.com/docview/1812507531?accountid=45049
Osagie, E. R., Wesselink, R., Blok, V., Lans, T., & Mulder, M. (2016). Individual competencies for corporate social responsibility: A literature and practice perspective. Journal of Business Ethics, 135(2), 233-252. doi:https://dx.doi.org/10.1007/s10551-014-2469-0
Rimburg, N. (2012). Environmental and social responsibility in the coffee industry: A case for Oaxaca, Mexico (Order No. 1508893). Available from ABI/INFORM Collection. (1012103750). Retrieved from https://search.proquest.com/docview/1012103750?accountid=45049
Robert, E. H., & Kodua, P. (2012). Examining the marketing-corporate social responsibility nexus. International Journal of Law and Management, 54(5), 332-344. doi:https://dx.doi.org/10.1108/17542431211264223
Sharma, A., & Kiran, R. (2012). Corporate social responsibility in changing markets: New mechanisms and newer initiatives. African Journal of Business Management, 6(16), 5479-5490. doi:https://dx.doi.org/10.5897/AJBM11.2660
Starbucks. (2016). Fiscal 2013 Annual Report.pdf. FY16-Annual-Report. Retrieved from https://s21.q4cdn.com/369030626/files/doc_financials/2016/Annual/FY16-Annual-Report-on-Form-10-K.pdf Accessed May 26 2017
Starbucks. (2017). What is the role and responsibility of a for-profit, public company? Corporate Social Responsibility. Retrieved from https://www.starbucks.com/responsibility Accessed May 26 2017
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