Tuesday, April 19, 2011

Starbucks sustainability reporting challenges

Starbucks 2010  Year in Review  tenth Corporate Responsibility update is now online and downloadable, complete with separate scorecard (PDF).   2 out of 12 goals achieved, 6 on track, 3 needing improvement and one not achieved (reduce energy consumption in company-owned stores by 25% by 2010 using 2008 as a baseline - only 1.6% was achieved in 2010 - the target has now been pushed back to 2015). Not a totally bad picture, indicating the challenges of a continuing journey against measurable sustainability goals. The clarity of presentation and the honesty of the update against targets is positive. Also, I still love those little icons on the Starbucks online report site, which jump and wiggle about when you click on them. The report claims to conform to the GRI Framework at application level B+ with a downloadable index  and a (brief and rather limited)  assurance statement from Moss Adams Accounting firm, covering only coffee purchasing practices.  

Starbucks new report is exactly what it says it is - an update of the 2009 online report which I blogged about last year. Same format, roughly the same overall content, specific updates. A reference to stakeholder engagement, which was lacking in 2009, is still lacking in 2010. In fact, the three GRI profile disclosures which require a full response at GRI B level are not covered, because "there is no information available" or they are "not applicable". These indicators are:
4.15:   Basis for identification and selection of stakeholders with whom to engage.
4.16: Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.
4.17:  Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

In addition, according to Starbucks GRI Index, the report responds in full to only 14 Performance Indicators, and not the minimum of 20 required for a B level report. This report does not appear to conform to Application Level B of the GRI. I find this rather startling, for a company who works hard to build trust and advance sustainable development. Integrity in reporting also includes representing your report in an appropriate way.  I may not know my Frappucino from my Macchiato but I do know how to analyze a GRI report.  

Some of you may accuse me of a tick-boxing approach to reporting by honing in on Starbucks adherence to the GRI framework, rather than focus on the material issues and sustainability performance. You may be right. In all the reports I read, write and review, I look for clues of honest representation of what we can expect to find and this includes whether the report meets its own declared standard. No apologies for that.

Anyway, moving on to look at Starbucks sustainability program, I started with coffee sourcing. Starbucks is not surprisingly one of the largest users of specialty coffee in the world purchasing 269 million pounds of coffee in fiscal 2010. 84% of that was from C.A.F.E sources (Coffee and Farmer Equity Practices) which are Starbucks guidelines for ethically sourced coffee.  This is a great achievement, shows commitment to an ethical supply chain, and progress is evident. Starbucks target is to reach 100%  C.A.F.E sourced coffee by 2015. Since 2008, Starbucks has moved from 77% C.A.F.E sourced coffee to 84% in 2010. That's 16% in 5 years to go,  (over 3% per year) after an achievement of 7% in 3 years (just over 2% per year). I am wondering how Starbucks plans to achieve this stretching target and the implications for Starbucks coffee sourcing and the cost of an espresso. I would have liked to have read more about this in the Starbucks report.

Similarly, in another major area, highly material for the Starbucks business - recycling and reusable cups - Starbucks is way behind the goals it set. For example, the Starbucks goal is to serve 25% of beverages in reusable cups by 2015. Today, in 2010, this stands at only 1.8%, up only by 0.5% in the past three years. I would have liked to have read more about how Starbucks believes it can meet this target in just over 4 years' time. In an interview with Starbucks VP for Global Responsibility, Ben Packard, posted on Triple Pundit, Ben says that the cup is "not the most significant environmental impact" that Starbucks faces - he stresses overall energy reduction and use of renewable energy as the key areas of impact. 58% of energy used in Starbucks owned stores comes from renewable energy, more than double last year, making Starbucks one of the "top five green power purchasers in the country". Starbucks now plans to have all 100% renewable energy at company owned stores by 2015.

Starbucks is clearly serious about sustainability and doing much more than many. Starbucks has set ambitious targets and does not hide the complexities of meeting them. The massive potential to influence consumer practices through the billions of customers who visit Starbucks all over the globe each year is both a responsibility and an opportunity for Starbucks and it's squarely on the agenda. The far-reaching impact Starbucks has on coffee-growing communities is also a central element of Starbucks sustainability and the Company is active in this area too.

Overall, I think the Starbucks 2010 Report is evidence of the challenges any company faces when setting ambitious targets and aligning the organization, as well as external stakeholders, to meet them. It shows that Starbucks is making progress, though I feel the Company's reporting could be more forward looking and disclose more specific plans to achieve tough targets. In addition, I would recommend that Starbucks be more comprehensive in terms of the level of transparency of its reporting and more rigorous in terms of the way the GRI framework is applied.

And now, time for coffee. Or should that be a caramel frappucino? Or a gingerbread latte ? Or an espresso con panna? Or a peppermint mocha? Or a pumpkin spice latte? Or even a Tazo® Green Tea Crème Frappuccino® Blended Beverage? Hmm. Seems like choosing what to drink at Starbucks is no less challenging than implementing a sustainability program.

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen  on Twitter or via my business website www.b-yond.biz/en  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)


eccemarco said...

Very nice review Elaine. I find that the issue of materiality with GRI has a huge potential to bring about real progress towards sustainability. Starbucks is doing some good progress, again as you say there is a long way to go and its challenges are quite common. One thing that I find a good way to make the most of GRI and add a strategic perspective is through a framework for strategic sustainable development, which helps select priorities, manage trade-offs, and choose stepping stones towards long term goals.

elaine said...

thanks for reading Marco and for your comment. I completely agree with you about materiality. Starbucks has selected some issues which may fit the materiality bill for them, but it is not clear in their report if their selection is in response to any form of structured stakeholder engagement.
warm regards

Unknown said...

Hello Elaine! Very nice article.
We are two Danish students writing an exam assignment about Starbucks and their CSR initiatives.
We are having difficulties with finding the application level of G3 guidelines which Starbucks has employed.
You write that "The report claims to conform to the GRI Framework at application level B+ with a downloadable index" and we wondering where you have found this information?
We hope to hear from you.
Kind regards and thanks in advance for your help
Natalie & Cathrine

elaine said...

Hi Catherine and Natalie
It's a little hard to find but you can download it here

If you have trouble, just search GRI Index on the reporting website and it will get to to the above link.

Good luck with your assignment

Anonymous said...

Hello Elaine,
We're group of students writing some notes about Starbucks economic and environmental indicators in GRI(Starbucks) versus Starbucks financial statements and CSR.
Would please write to us what you've found in these indicators of Econ and Enviro'parts.
Thank you Elaine,

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