Sue Mecklenburgvp sustainableprocurement

Starbucks Coffee Company

UNGC US NetworkOctober 22, 2007

Business Case for Responsible Procurement

OUR COMPANY

OUR WORLD OF PRODUCTS

TEA/BOTANICALS COCOA WATERCOFFEE

Starbucks Approach to Responsible Procurement

AVENUES FOR RESPONSIBLE PROCUREMENT

Manufactured goods

CoffeeCocoa

COFFEE

ISSUES FOR COFFEE SUPPLY CHAIN

1. Commodity prices

2. Lack of farming and management skills

3. Lack of access to credit

4. Lack of infrastructure

STRENGTHENING THE COFFEE SUPPLY CHAIN

1. Rewarding quality

2. Conservation/Certified Coffees

3. Access to Credit

4. Social Development Projects

5. Farmer Support Center

6. C.A.F.E. Practices

C.A.F.E. PRACTICESPrerequisites:

1. High-quality coffee2. Economic Accountability –

documentation of payments through supply chain

Independently Verified Criteria:

1. Social Responsibility• Employment practices• Worker conditions

2. Environmental Leadership• Coffee growing• Coffee processing

C.A.F.E. PRACTICES FUTURE GOALS

0

10

20

30

40

50

60

70

80

FY'04 FY'05 FY'06 FY'07 FY'08 Future

C.A.F.E. Practices Goal C.A.F.E. Practices Actual

• In FY06, 155MM lbs or 53% coffee was C.A.F.E. Practices verified• Future goal: 80% C.A.F.E. Practices verified

COCOA

SOCIALLY RESPONSIBLE COCOA SOURCING

• Starbucks purchases cocoa from 12 countries including Ivory Coast, West Africa

ISSUES FOR COCOA INDUSTRY

Labor issues

Financial transparency

DEVELOPING COCOA PRACTICES1. Stakeholder engagements

2. Origin country research

3. Pilot program

4. Pilot audit

5. Develop & test guidelines

6. Share with Industry

7. Select verifiers

8. Measure performance

9. Report results

MANUFACTUREDGOODS

SUPPLIER SOCIAL RESPONSIBILITY OBJECTIVE

To integrate socially responsible procurement practices throughout Starbucks global supply chain

for manufactured goods and services

STANDARDS FOR MANUFACTURED GOODS

Management Systems

Compensation

Labor Practices

Human Resource Policies

SUPPLIER SOCIAL RESPONSIBILITY

TrainPerformanceImprovementProcess

Policy Assess Grade

The cornerstone of the Starbucks SSR Initiative is sustainable remediation and

factory performance improvement through training and development

COSTS OF RESPONSIBLE PROCUREMENT

1. Program development and implementation2. Training – buyers and suppliers3. Verification and auditing4. Higher prices for products5. Travel to countries of origin6. Investments in communities7. Loss of interest income8. Agronomy office/field support

BUSINESS CASE FOR RESPONSIBLE PROCUREMENT

1. Strengthen supply chain2. Help ensure sustainability of producers3. Help ensure quality of products4. Increase customer loyalty5. Attract and retain employees 6. Meet consumer expectations7. Manage reputational risks8. Demonstrate leadership in the industry

THANK YOU