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Starbucks as fairtrade-lite and Nestlé on the blacklist

At a girls night last week, the conversation turned to McDonalds. My friend Carolyn, an American who’s also married to a Spaniard, was joking about how when she was pregnant and desperate for food one day, her husband bought her McDonald’s. I’m not sure whether he thought she might need American “comfort food” or it was simply fast and easy, but it was her first McDonalds’ burger in 15 years. “The funny thing, it tasted exactly the same as the one I ate 15 years ago on another continent.”

Most of us ex-pats were quick to say we never go to McDonalds. I’ve never met anyone who proudly claimed allegiance to the chain, but in a liberal, and simply European, city like Barcelona, it’s better to keep your distance from everything it represents: multinationals, processed food and hamburgers.

A friend from England interrupted our denials to say, “Aren’t they all pretty bad. I mean, McDonald’s, Coke, Microsoft… they’re all businesses,” as if to dismiss discussion of something that could only lead to “don’t buy anything”.

Nothing like just calling wine a drug, but I didn’t have that analogy handy, and I wasn’t sure she’d know the brand Patagonia so I settled for saying I’d rather go to a Starbucks than a McDonalds. I’ll admit they’re not as clean an example as Patagonia, but I’d argue the Seattle-roaster-turned-multinational is better than McDonald’s or say, Nestlé (more on the latter in a moment).

Of course, mention of Starbucks immediately leads to discussion about how they’re everywhere. In New York and in many US cities, they’re on nearly every other street corner and here, they’re everywhere that tourists frequent (yes, there’s a Starbucks in front of Barcelona’s most famous monument, the Sagrada Familia, for all its 2 million annual vistors).

Carolyn said that when her mother came to visit she only went to Starbucks until she explained that “the coffee in those little shops is better and cheaper” (In Spain, where you have to ask for an “americano” in order to get our watered-down brew, Starbucks isn’t gourmet.)

While neither I, nor anyone else, launched into discussion on the ethical merits of Starbucks, no one fought to deny association. Instead we all started praising their furniture.

Their comfortable couches closed the discussion, but the next day an email from a French graduate student prompted me to take the issue a bit further.

Do Nestlé and Starbucks belong together?

A few days ago, an email arrived from a faircompanies reader asking us what we thought of “the new engagement of Starbucks or Nestlé (to name only the biggest) in favor of Fair Trade products, and their will to try to be more responsible”.

I could have made this guy up- his question is such a perfect way to look at the issue- because I would argue that Starbucks and Nestlé represent two very different approaches to ethical, or unethical, business. While Starbucks is not as “good” as a Patagonia- I’m not prepared to insist that all businesses immediately adopt a mission statement as noble as: “build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” (I have Patagonia on the mind after visiting their headquarters recently to shoot videos on their eco-fabrics, recycled fabrics, eco-history and eco-campus)- they are not in the same league as Nestlé. 

The most boycotted company

Nestlé is not a “do no evil” company. In 2005, the year they decided to launch their first fair trade product, Nestlé was named the UK’s “most boycotted company” and the world’s most irresponsible company (they won the “Public Eye” award for the “most blatant case of corporate irresponsibility”, beating out Monsanto and Dow Chemicals by a landslide).

Nestlé’s PR problems began in the 1970s when they began their aggressive, and unethical, marketing of baby formula in developing countries, despite the evidence that breastfeeding saves more lives (The baby milk campaign is still going strong: according to babymilkaction.org, despite marketing requirements for baby foods put in place by the World Health Assembly, “Nestlé is singled out for boycott action as monitoring shows it to be responsible for more violations of the requirements than any other company.”)

Since then, Nestlé has continued to get into trouble. They’ve been blacklisted by parts of the Chinese government. They’ve been targeted, along with Coke and Pepsi, for their “misleading promotion of their bottled water brands” and for “interfering in policies that protect our water“. They’ve been implicated as part of the problem with forced labor on West African cacao plantations and have been sued by the International Labor Rights Forum for their involvement with child labor there.

The UK’s Ethical Consumer Research Association gave the company an ethical rating- ethiscore- of 0.5 (out of 20) with footnotes that are enough to scare anyone into swearing off Nescafé and Nesquik for life. They include: “link to slavery & child labour, palm oil supplier accused of rainforest destruction, dispute over Brazilian water extraction, member of industry association barred from WHO, demanding money from war torn Iraq, perpetuation of Ethiopian debt.”

The world’s least responsible company tries on a bit of fair trade

So, to get to our Frenchman’s question, when Nestlé announced- in 2005 (the same year they earned both the titles of least responsible and most boycotted company)- that they were going to source fair trade coffee, critics cried greenwashing.

The fair trade movement was set up to challenge the practices of companies like Nestlé,” explained the policy director for War on Want, John Hilary, to the Guardian newspaper. “How can such a company deserve the fair trade mark?”

Pre-2005, not only did Nestlé have a history of arguing that fair trade was bad for the industry, but they were held partly responsible for driving down prices paid to coffee growers by encouraging overproduction.

Nestlé argued that their decision, as the world’s largest coffee supplier, to market their Fairtrade Partner’s Blend could help reach thousands of consumers not yet introduced to fair trade. But analysts say Nestlé made their move into the sustainable market because of it’s popularity and because they were anxious to score some good PR.

Baby Milk Action’s Mike Brady explained: “the truth is only about 200 farmers in El Salvador supply coffee for Partners’ Blend and over 3 million farmers globally who are dependent on Nestlé remain outside the Fairtrade system.”

Starbucks is no Nestlé

While it’s easy to criticize Starbucks for taking over small towns, city corners or mom and pop coffee shops- in 2006, they opened 25 new stores every week in the US alone-, let me be clear, Starbucks is no Nestlé.

Granted, they’ve gotten bad press recently for fighting Ethiopian coffee growers’ push to trademark their brands (though they finally settled the dispute) and it took a consumer boycott before they began purchasing fair trade coffee in 2000, but rather following the Nestlé model of price-gouging suppliers, Starbucks is doing a better job than most multinational coffee companies.

Last month Starbucks launched a similar, and very timely, ethical scheme for the espresso sold in their stores in Europe, the Middle East and Africa. Besides ensuring that the beans are “ethically sourced” regarding labor laws, the Shared Planet label guarantees the coffee crops are “responsibly grown”, that farmers have been encouraged to use less pesticides and to preserve biodiversity.

At a time when even Dunkin Donuts and McDonalds have gone fairtrade, the C.A.F.E. and Shared Planet schemes have been mocked as “fairtrade-lite”. And the fact that just 6% of their coffee is fair trade certified (something that subjects them to continued campaigning by groups like Global Exchange) has been criticized as just not enough.

Dean Cyron, founder of the fair trade coffee roaster Dean’s Beans, argues “if you’re going to do any fair trade, you have to do 100 percent fair trade, because there’s no ethical justification for anything less”.

Those at Starbucks say it’s not that easy. Here’s why:

  • They are big. So they don’t just buy from cooperative farms: a requirement of fair trade certification (Dagoba Chocolate founder Frederick Schilling also talked about the cooperative dilemna when I asked him why he doesn’t buy all fair trade cacao).
  • Fair trade doesn’t monitor quality. Since Starbucks is a “specialty/gourmet” roaster fair trade beans are not always up to their standards.
  • Starbucks says they’re just keeping up with consumer demand for fair trade. So if more people start to ask for it in their stores, they’ll buy more.

C.A.F.E. Standards

Instead, Starbucks offers their own ethical certification- the Coffee and Farmer Equity (C.A.F.E.) standards– for 65% of their coffee (their goal is to reach 80% by 2013). C.A.F.E. suppliers have to offer their worker’s social protection: pay minimum wage, provide safe working conditions and access to health care. They’re also required to be environmentally responsible: waste management, protection of water supply and energy conservation, as well as shade growth and limiting pesticides.

Starbucks has been criticized for their lack of transparency regarding their C.A.F.E. purchasing contracts: they don’t reveal what they pay to every supplier under the program, but the average price paid in 2006 was $1.43 per pound, 29 cents more than the commodity market price and 16 cents more than the Fair Trade minimum (though there’s no guarantee that money makes it to farmers and not middlemen, something Starbucks says it is working on).

Unlike fair trade, C.A.F.E. standards are enforced by a third party certification service that contracts out the verifying of the individual farms in each country, and this process has been abused. Tom Knudson of the Sacramento Bee uncovered a C.A.F.E. supplier in Ethiopia who was paying workers just 66 cents per day (there is no national minimum wage). That verifier has since been fired. Of course, the Fairtrade is not exempt from these type of verification problems (in 2006, the Financial Times revealed Fairtrade workers in Peru making below minimum wage).

How “good” is Starbucks?

So how effective are the C.A.F.E. standards at improving quality of life for farmers? Sacramento Bee reporter Knudson, who spent four months investigating his story on Starbucks suppliers (he spent 3 weeks in Ethiopia), says in some places Starbucks delivers on their advertising promises to pay premium prices, protect tropical forests and enhance the lives of farmers. “In parts of Latin America, for instance, its work has helped improve water quality, educate children and protect biodiversity.” Of course, his answer is not so positive for the farm he visited in Ethiopia.

Erik Perkunder, who was a Starbucks environmental manager in the 1980s and ’90s (I’ll give them points for having an environmental manager before “green” went mainstream) gives the same half-hearted response. “It’s very comfortable to believe Starbucks is doing the right thing — and to some degree, they are… but there’s more to the story.”

While Starbucks is having some growing pains with their C.A.F.E. standards- launched in 2004-, it does seem to be making a difference for some farmers and some regions. Starbucks VP Dub Hay told the Sacramento Bee that the results of their good deeds in Latin America- where they purchase 70% of their beans- is called “the Starbucks effect”.

It’s obviously too simplistic to assume that one company, especially a large, public company like Starbucks, is doing only good. With their thousands of supply contracts worldwide, it’s likely those running the company aren’t even aware of all that is not working right (they claimed to have been unaware of the problems on Ethiopia’s Gemadro Estate and subsequently raised wages to between 77 cents and $1.10 per day).

So maybe instead of trying to label Starbucks either “good” or “bad”, it may be a question of labeling each individual product as such. I don’t generally frequent Starbucks, but if for some reason I’m in need of a nice couch and a free paper (the Starbucks in Barcelona carry all the daily papers), I plan on avoiding their Black Apron Exclusive Ethiopia Gemadro Estate beans and opting for the Columbian Nariño Supremo or the Fair Trade certified Café Estima blend.

As for Nestlé, I- like parts of the Chinese government- have put them on my blacklist. Though given how many brands they own, that might intimidate my British friend.

(* A note: I hope I haven’t given the impression that Starbucks is a model “green” business. They’re simply better than most multinationals, but they are still a big company with some corporate policies that contradict their more sustainable efforts.

Just this week, the Sun newpaper broke a story about how Starbucks’ policy to leave a cold tap running permanently in every branch means that the chain wastes 23.4 million liters of water per day (6 million gallons): enough to provide “daily water for the entire two million-strong population of drought-hit Namibia”.

In this context, Starbucks’ boasting of their 10% post consumer recycled cups or the 10 cent discount they give for using your own mug seems a bit like greenwashing.)