Starbucks
The challenge posed by ethical supply chain management is one Starbucks have taken very seriously over the past decade. They have developed a concept recognised as the Shared Planet Ethical Sourcing Principles (EPESP). Any coffee which is sourced ethically is packaged and sold under the Shared Planet label. The diagram below illustrates the concept:
All suppliers are required to have high product quality and provide evidence of payments made along the supply chain so that Starbucks knows how much of the money they pay reaches famers - this is called economic accountability. The evaluated components - social responsibility and environmental leadership - are assessed by an independent third party to ensure strict standards are adhered to.
The evaluation is based on the Coffee and Farmer Equity (C.A.F.E.) principles for ethical sourcing which was launched in 2004. Starbucks appointed a team of agronomy experts to work on the ground with the farmers with South America to help them understand the benefits of adopting the standards. This helped increase the farmers' yields as well as improve the quality of the beans.
The guidelines were developed in conjunction with Conservation International and are aligned with Starbucks' principles. All the coffee Starbucks purchases are assessed against a comprehensive set of standards comprising of 24 criteria and more than 200 environmental and social indicators. To be approved, suppliers have to undertake third party evaluations to ensure compliance with the standards. The company has recently started publishing on their website the average compliance rates across the criteria, reflecting their commitment to transparency and continual improvement in this area.
The relationship with Fair Trade was initiated in 2000 when Starbucks first started offering Fair Trade certified coffee. In 2008 Starbucks committed to have 100% of coffee responsibly grown and ethically traded by 2015. Through this partnership, the two parties are working towards having an integrated audit system and a single reporting and payment structure. They are also developing marketing and communications in order to achieve their goals of expanding Fair Trade purchasing and encouraging third parties to endorse and adopt the certification making it a best in class standard.
Starbucks has committed $20m to date to organisations that will go on to make loans to small farmers who would otherwise not be able to afford equipment or undertake pre-harvesting activities. In addition, they have developed a programme to recognise rarer types of coffee by offering funding to the farming communities who produced it. The funding can be used towards a specific project that serves to improve the substantiality of the local community.
Although Starbucks has attracted criticism for some of its activities in other areas, the approach they have towards ethical sourcing has shown it can succeed in playing an important and positive role for both a company and its suppliers.
