Case Study: Starbucks Coffee:

Shared Planet and C.A.F.E. Practices

Starbucks buys its coffee in a way that respects the people and places that produce it. Starbucks has established specific social, environmental, economic, and coffee quality principles that provide the foundation for the companys ethical sourcing of coffee under its Shared Planet program. Conservation International and other Non-Governmental Organizations (NGOs) helped Starbucks to develop a set of guidelines for ethical sourcing. Known as Coffee and Farmer Equity Practices (C.A.F.E. Practices), these guidelines help coffee farmers and suppliers to fulfill the Shared Planet principles. C.A.F.E. Practices is a comprehensive set of measurable standards, including 24 criteria supported by more than 200 environmental and social indicators. What has brought about the Starbucks Shared Planet program? In part, it was the state of the coffee industry itself. In part, it was Starbucks commitment to sustainability. During the past decade or so, the coffee industry has become mired in crisis with many coffee farmers going out of business. Coffee is grown in some 70 different countries that are located between the Tropics of Capricorn and Cancer, and the number of coffee-producing nations has been expanding. For example, over a 15 year period, Vietnam, which had not been a coffee grower, became the fifth-largest coffee producer worldwide. And Brazil, a long-time coffee-growing nation, has nearly doubled its production. Vietnam and Brazil vividly illustrate the crisis of overproduction that affects global supply and demand dynamics of coffee growing nations in general and contributes to concerns about sustainability in the coffee industry. Starbucks buys coffee from only 20-25 countries, and it goes back to the same farms year after year because it knows the farmers and builds a relationship with them. To help counter the impact of the supply-demand dynamics in the coffee industry, Starbucks instituted its Shared Planet program supported by the C.A.F.E. Practices guidelines. Dub Hay, Starbucks Senior V.P. Coffee, says, the company worked to help create what we felt was a way of buying coffee that would be sustainable for the future so that the farmers could stay in business. Among other features, the C.A.F.E. Practices involve paying a fair even premium price for coffee beans; economic transparency so that Starbucks knows that farmers are actually paid what they should be paid; and ensuring that migrant farmworkers are treated humanely, paid a fair wage, and have access to hot meals, health, and dental care. From an environmental perspective, Starbucks does not want farmers cutting down trees just to plant more coffee; instead, Starbucks encourages the retention of shade trees. Starbucks also encourages buffer zones between streams and the locations where wastewater is used, and it encourages the minimization of chemical usage. The success of the Shared Planet initiative and C.A.F.E. Practices depends in large part on Starbucks success in building and maintaining relationships with the coffee farmers. In 2008, Starbucks purchased 77% (or 295 million pounds) of its coffee beans from farmers who had been verified and approved under C.A.F.E Practices guidelines.

Critical Thinking Questions Using information from the case and the video, answer the following critical thinking questions:

1. What is the Starbucks Shared Planet program, and what caused Starbucks to initiate this program?

2. What is sustainability and how do the C.A.F.E. Practices guidelines help promote sustainability in the coffee industry?

3. Why is sustainability important to businesses?