To what extent has corporate social responsibility boosted

Starbucks' business?
The topic of business ethics has been gaining popularity over the decades. Apart from the apparent
business objectives of profit maximization for shareholders, ethical behaviour and corporate social
responsibility are becoming the other objectives of businesses in the modern society. Firstly,
corporate social responsibility is defined as a business approach that contributes to sustainable
development by delivering economical, social and environmental benefits for all stakeholders.1
The goodwill of a company can be enhanced by its ethical behaviour and its strategies on social
responsibility. Starbucks is an example of a socially ethical firm that has demonstrated corporate
social responsibility through fair trade and its environmental policies.

Starbucks - the most ethical firm in the world

Starbucks Corporation(Starbucks afterwards) is an American coffee firm and the largest

coffeehouse chain worldwide. The company was founded in Washington in 1971, with a history of
46 years. Starbucks operates in 23,768 locations worldwide and has over 250852 stores around the
world. This large-chained company has used various strategies to expand its market, such as
introducing different programs, expansion packs in the Asia Pacific Region. Despite using expansion
strategies, Starbucks ethical behaviour have also significantly helped its business too. As seen from
the firms mission statement - inspire and nurture the human spirit one person, one cup and one
neighborhood at a time, the company has put a significant weight on social responsibility with the
concept of neighbourhood.3 According to CEO Howard Schultz, Starbucks commitment to social
responsibility has played a significant role in producing this phenomenal growth.4 As a result,
Starbucks has been on the list of the worlds most ethical company for six consecutive years
according to Ethisphere Institute. The company have been committed to fair trade by ethically
sourcing coffee beans and milk.

Coffee Beans Fair Trade

1
"Lexicon." Corporate Social Responsibility (Csr) Definition from Financial Times Lexicon. Financial
Times, n.d. Web. 30 May 2017. <http://lexicon.ft.com/Term?term=corporate-social-responsibility--
%28CSR%29>.
2
All Products Require an Annual Contract. Prices Do Not Include Sales Tax (New York
Residents Only). "Number of Starbucks Stores Worldwide 2016." Statista. The Statistics Portal, n.d.
Web. 29 May 2017. <https://www.statista.com/statistics/266465/number-of-starbucks-stores-
worldwide/>.
3
"Mission Statement." Starbucks Coffee Company. Starbucks, n.d. Web. 29 May 2017.
<http://www.starbucks.com.hk/about-us/company-information/mission-statement>.
4
Callejon, Me Llamo. "Starbucks: How Ethical Behavior Can Boost Business." Business, Society, and
Government 4. N.p., 24 Nov. 2012. Web. 28 Apr. 2017.
<https://bizgovsoc4.wordpress.com/2012/11/11/starbucks-how-ethical-behavior-can-boost-
business/>.
Starbucks has been promoting Fair Trade Certified coffee through ethically sourcing coffee and
increasing farmer loans. According to the Starbucks Global Responsibility Report, 86% of
Starbucks coffee is ethically sourced under C.A.F.E(Coffee and Farmer Equity) practices. (figure.1)
By supporting purchasing practices, the company hopes to enhance the working and living
conditions of the coffee farmers as well as improving their lives, maintaining a long term
relationship between them. In addition, the company increased farmer loans through making
investments in small-scale farmers as well as their communities. According to Starbucks Global
Responsibility Report, the company has made nearly 14.7 million in loan commitments to their
local partners in 2011, while exploring new and innovative opportunities. (figure.1) As a result,
this could increase the farmers motivation in producing coffee, cocoa and other crops, as well as
maintain a healthy supply of top quality coffee to multinational buyers. Therefore, supporting fair
trade could help the company build long-lasting and fair partnerships between producers,
businessmen and consumers. By fully practicing social responsibility, Starbucks could keep its
market position, which significantly boosted its business.

(Figure.1 : Starbucks Global Responsibility Report)

(Figure.2: Goodwill and Intangible Assets Disclosure)

Furthermore, by maintaining social responsibility, Starbucks has gained wider respect and better
reputation in the society. According to the Goodwill and Intangible Assets Disclosure, the goodwill
of Starbucks continued increasing from 2011 to 2016.(figure 2) This revealed that Starbucks
corporate social responsibility enhanced the firms credibility and also largely increased its
business.

Starbucks - a role of environment leadership

Starbucks is one of the companies which has explicitly stated its environment mission statement.
Starbucks itself stated that the company is committed to a role of environmental leadership in all
facets of our business. In fact, the firm has put much effort in becoming an environmentally friendly
company, as it has involved in a large numbers of sustainability initiatives, such as recycling and
waste reduction and energy conservation. Firstly, in order to reduce and recycle waste, Starbucks
developed comprehensive solutions for paper and plastic cups. In order to reduce the effects of
paper cups, the company has worked with the local communities. For instance, starting in 2008,
Starbucks offered a discount to people who brings in their own reusable cups rather than using the
provided paper ones. As a result, in 2009, 4.4 million more beverages in reusable cups than in the
year before.5This could reveal the great effort that Starbucks has paid towards the environment
and also proved the viability of the companys cup recycling solution. Hence, this solution has not
only improved the major waste issue nowadays, but even rapidly increased the number of
Starbucks beverages sold, which significantly increased the companys businesses. In addition to
reduction waste, the firm has also payed much attention towards energy conservation. According to
the Starbucks Global Responsibility Report, the percentage of renewable energy used in Starbucks
stores rapidly increased from 2008 to 2015. By 2015, the company purchased renewable energy
equivalent to 100% of the electricity used in global company owned store.6 As a result, this
conserved energy even reduced the companys cost process at the same time. Starbucks
environmental efforts have gone noticed as the firm ranked third on the EPAs National Top 20
Retail list of largest green power purchasers.7 The companys involvement in environmental
initiatives not only raised awareness on the environmental issues around the world, but also built
up a better image for the company as well, largely improving its business.

(Figure.3 : Starbucks Global Responsibility Report)

The suspect of greenwashing

Starbucks is known as one of the most ethical company in the world. Yet, some environmentalists
claimed the firm as a greenwasher. Greenwashing is referred to the practice of making an

5
Chief. "Starbucks and the Environment." MNN - Mother Nature Network. Mother Nature Network,
31 May 2017. Web. 13 June 2017. <https://www.mnn.com/money/sustainable-business-
practices/stories/starbucks-and-the-environment>.
6
Callejon, Me Llamo. "Starbucks: How Ethical Behavior Can Boost Business." Business, Society, and
Government 4. N.p., 24 Nov. 2012. Web. 28 Apr. 2017.
<https://bizgovsoc4.wordpress.com/2012/11/11/starbucks-how-ethical-behavior-can-boost-
business/>.
7
Chief. "Starbucks and the Environment." MNN - Mother Nature Network. Mother Nature Network,
31 May 2017. Web. 31 May 2017. <http://www.mnn.com/money/sustainable-business-
practices/stories/starbucks-and-the-environment>.
unsubstantiated or misleading claim about the environmental benefits of a product, service,
technology or company practice.8 In fact, many criticized on the way how the company treats
waste and its lack of recycling. According to a news article, 4 billion Starbucks disposable cups
were thrown away each year. This revealed that Starbucks did not recycle any of the single used
items and have made a misleading claim about waste reduction. In addition to this environmental
issue, the company was often criticized for its wasteful water practices, as the water continuously
ran into dipper wells, which caused an estimated 6.2 million gallons of water wasted every day.9
On the other hand, in terms of free trade, although Starbucks has been continuously promoting fair
trade certified coffee, the company is not completely ethical. Though Starbucks itself had claimed
that 95.3 % of its coffee is ethically sourced, yet, only 8.4 percent of the companys coffee
purchases in 2013 were certified fair trade, according to the Starbucks 2013 Annual Report. This
reflected that Starbucks is only making up its own fair trade standards and is not an entirely
ethical firm. Therefore, Starbucks is often accused as greenwashing and is also criticized by
environmentalists.

Conclusion

As proved by many statistics, Starbucks ethical behaviour and social responsibility have enhanced
its goodwill and significantly improved its business. Although there are some criticism towards the
company, Starbucks has been addressing these issues and strived its best in becoming an ethical
company. By bringing environmental, social and economical benefits to its stakeholders, the firm
largely participated in maintaining sustainable development. In terms of economy, Starbucks has
explored new job opportunities and ensured the supply of coffee beans for multinational buyers. In
the the environmental point of view, the firm has involved in a wide variety of sustainability
initiatives. In the social aspect, Starbucks have been supporting free trade through ethically
sourcing coffee. Since customers value corporate social responsibility activities, Starbucks
investment in social responsibility has largely affected the companys performance positively. By
demonstrating its ethical behaviour, Starbucks improved its brand awareness and gained respect
and credibility in the modern society, significantly boosting its business to the top.

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