Starbucks Coffee Company response regarding “Starbucks ...

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Ethical Consumer rejoinder re “Starbucks bottom of ethical rating despite going Fairtrade”, Ethical Consumer Magazine, 18 Feb 2011

[DOC] Starbucks Coffee Company response regarding “Starbucks bottom of ethical rating despite going Fairtrade” [UK]

Ben Packard, Starbucks, 4 Mar 2011

Response to Starbucks Coffee Company comments of 4th March 2011 by Dan Welch, Co-editor of Ethical Consumer magazine.

18 Mar 2011

Ethical Consumer welcomes Ben Packard’s (Starbucks Coffee Company’s vice president global responsibility) statement that he is committed to listening to critics of the company and those who have advice on how to improve its ethical performance. Ethical Consumer’s raison d’etre is to provide citizen-consumers and campaigners with systematic assessments of the ethical performance of companies in order to drive positive social, economic, environmental and ethical change. Such critics have played a key role in bringing Starbucks to a number of the positive policies it now practices. Examples include: the US Organic Consumers Association, in their six years campaign to get Starbucks to ban the genetically engineered artificial ‘Recombinant Bovine Growth Hormone’ from its dairy supply chain in the US and their long running campaign to demand Starbucks US, firstly offer Fairtrade coffee, a breakthrough finally achieved in 2000, subsequently to hold the company to its promise of brewing Fairtrade on request, and continue to pressure Starbucks to increase its Fairtrade offering in the US; and Oxfam, in raising over 100,000 signatures in protest against Starbuck’s role in opposing Ethiopia’s attempts to trademark its traditional coffee varieties and thus repatriate increased value for its impoverished farmers.

Consumer brands, after many years of campaigners inflicting serious reputational damage and loss of brand equity on them, have begun to realise that they have to get ahead of this curve. By shining a light on the discrepancy between carefully manufactured corporate brand images and the social and economic reality of their business practices, particularly as these apply to the least able to defend themselves, such as workers in the supply chain, non-unionised labour, animals and the environment, campaigners are increasing forcing brands to take positive action. Starbucks move to go 100% Fairtrade in its coffee in Europe is a welcome example of such a move, clearly part of the company’s wider re-branding efforts in the face of the erosion of consumer faith its original brand offering of ‘artisanal coffee in an authentic coffee shop’.

In response to Mr. Packard’s claim that I ignored Starbuck’s ‘industry-leading ethical buying guidelines’ on coffee sourcing and positive environmental standards I am afraid it is he who has not done his homework. Tim McCoy, Head of Communications for Starbucks UK made the same claim in response to the ‘Green Living’ blog published on Guardian.co.uk, which was based on my report. I responded to Mr. McCoy on Guardian.co.uk on the day of publication, 28th February. Clearly neither Mr. Packard nor Mr. McCoy read Ethical Consumer’s Coffee Shops report. Both Supply Chain Management and Environmental Reporting are important criteria in Ethical Consumer’s rating system and both were assessed from publicly available material using a rigorous set of criteria applied equally and systematically to all the companies in the report.

In the case of Supply Chain Management, Ethical Consumer recently updated these criteria after reviewing the latest developments in best practice as represented in multi-stakeholder processes such as the UK’s Ethical Trading Initiative. Details of the reviewed criteria were published in the same issue of Ethical Consumer magazine (EC130) as the Coffee Shops report, available in PDF format from .

By ‘industry-leading ethical buying guidelines’ I assume Mr. Packard refers to Starbuck’s own standard, C.A.F.E. certification. C.A.F.E launched in 2004 and has measurable standards for: how much of the price Starbucks pays reaches the farmer; some minimal workers’ rights; and environmental criteria. It earns a ‘Worst’ in our Supply Chain Management category (a more detailed analysis can be found in the ‘Stories behind the Scores’ at the end of the PDF version of the report available on ). In 2009, when at the time of writing the report Starbucks last reported, the company had still only applied C.A.F.E to 81% of its coffee purchases – with a target of 100% by 2015 - a very considerable time to roll out a supply chain monitoring programme.

My report also says: “Of course coffee isn’t the only thing the biggest coffee shop chain in the world buys. With a turnover around £6.8bn it could be a significant force in pushing up standards. Instead, its “Social Responsibility Standards,” applied to all the goods and services it sources, is rudimentary, offering even weaker protection of workers than its C.A.F.E. standards.” Starbucks “Social Responsibility Standards” also rate ‘Worst’ in our Supply Chain Management category.

Nor do I ignore Starbucks environmental performance, acknowledging that the company narrowly misses our Best Rating for the category of Environmental Reporting, to give credit where credit is due.

Mr. Packard accuses the report of two inaccuracies – firstly, regarding the Ethiopian issue and secondly, a US class action regarding tip sharing practices.

With reference to the first, whatever the welcome improvement in relations between Starbucks and the Ethiopian coffee industry, Starbucks role in lobbying against Ethiopia’s US trade mark applications and Oxfam’s campaign against it is a matter of public record: .

Secondly, regarding US class action suits against Starbuck’s tip sharing policies, while the reporting of the California legal ruling was not factually inaccurate - the case succeeded in the Superior Court of California - I acknowledge that the case was subsequently overturned on appeal at the California Court of Appeal. The plaintiffs argued that shift supervisors are "agents" of the company under California law because they "supervise and direct" baristas' work, and as de facto management, should not be legally entitled to share in the same tip pool. The moral case behind this, one of other similar class action suits on the same point of law pursued against Starbucks in the US, was that the tips of baristas were being used to subsidise the low wages of shift supervisors to the economic cost of the baristas. While the Superior Court ruled in favour of the plaintiffs, the Court of Appeal ruled against them – accepting the company’s argument that shift supervisors should not be considered under law 'managers' and therefore could legally take a share of tips (cf: ).

Ethical Consumer's ratings are based on stories remaining active on our database for five years unless specifically negated for reasons of policy. We do not regard the California Court of Appeal's decision negates the workers' rights issue raised in the case. Moreover, subsequent to the publication of my report, a Massachusetts' court has ruled against Starbucks on exactly the same issue – the point of law being at State not Federal level. Starbucks is again appealing the verdict .

As regards Starbucks rating by other organisations, different agencies of course use different criteria in their assessments. Ethical Consumer is confident of its own. Our own criteria are developed through monitoring the key demands of progressive civil society groups, as well as best practice. Our data is gathered from monitoring international media, NGO reports, corporate communications and primary research. Our criteria do not include consumer perception of brands, nor employee perception of companies. We do of course, however, monitor issues of worker’s rights.

Thus a key criticism of Starbucks is that while enthusiastically pushing its Fairtrade credentials in the UK, in the US the company continues to aggressively fight a rearguard action against workers fighting poverty wages, exploitative working hours and worse health insurance coverage than Wal Mart – what the US National Lawyers Guild called its “relentless and illegal anti-union campaign” and “retaliatory firing” of union organisers. There were six settlements against the company by the US National Labor Relations Board in the three years to 2009 in favour of the Starbucks Workers Union (SWU). It is a pattern which continues, with the SWU filing a complaint about the violation of US Labour Law over the sacking of a union member on December 30, 2010, who organised a walk out over “increasing wages above poverty rates”.

A flavour of the struggle between the SWU and Starbucks can be garnered from the notice that the company agreed, as part of a labour dispute settlement, to post on the bulletin boards of some its Manhatten stores. Here are two items of the five page notice:

“WE [Starbucks] WILL NOT solicit employee complaints and grievances...in order to discourage employees from supporting [the SWU], or any other labor organization.

WE WILL NOT post notices threatening employees with losses of wages and benefits if they support [the SWU], or any other labor organization.”

The whole notice is available here: node/712

As a strong supporter of Fairtrade, Ethical Consumer welcomes Starbucks move to become the biggest buyer of Fairtrade coffee in the world. We applaud its positive environmental record, its important commitment to renewable energy in the US, its improved relations with the Ethiopian coffee industry and a number of positive projects relating to development.

Companies are however often willing to exploit ethical claims in one area for the value of their brand, whilst pursuing egregious behaviour where and when they think this is unlikely to reflect ill upon them. Thus, as Human Rights Watch recent report “A Strange Case” demonstrated, some European companies with good records of labour relations in Europe are all too happy to exploit weaker US labour laws to suppress union activity.

Whilst giving credit where credit is due, it is the role of holistic ethical reviews of company behaviour, such as Ethical Consumer’s, to rigorously shed light on such activities as a counterweight to the enormous resources available to corporations for marketing, lobbying and litigation in order to shape public perception of the ethical credentials of their brands.

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