Starbucks Corporate Citizens of the World sample essay
There is currently a robust and ongoing debate about whether a companies, especially a publicly traded companies, only goal should be profit. Making money for the shareholders used to be what business was about. Now, more and more people are starting to believe that companies should pay more attention to social and environmental concerns that effect not just the shareholders, but the stakeholders and even society as a whole. The practice of Corporate Social Responsibility, or CSR, believes that everything cannot be left up to the market. The market exists to make profits at all costs. So, there needs to be a mechanism in place where social causes and the environment are taken care of. In the age of social media, watchdog groups and the green movement, businesses and corporations have become extremely transparent. There are, and have been, superficial attempts by businesses to employ CSR as a way of mitigating the terrible effects that their business may have on the environment.
The practice of CSR by industrial companies is in vogue these days because of the fact that they have contributed to polluting the environment. With growing public awareness and demand for true socially responsible businesses, it is little wonder that companies of today take CSR into account when planning future business operations. When you look at the research and metrics, it is becoming clear to most companies that CSR can also improve profits. They understand that CSR can promote respect for the company in the marketplace which can result in higher sales, enhance employee loyalty and attract better personnel to the business. Also, CSR activities focusing on sustainability issues may lower costs and improve the efficiency of the company. Substantiating some of these beliefs is a study, Corporate Citizenship: Profiting from a sustainable business, by the Economist Intelligence Unit (EIU). “Corporate citizenship”, in this case, is another term equivalent to CSR. The EIU study said that, “Corporate citizenship is becoming increasingly important for the long-term health of companies… 74 per cent of respondents to the survey say corporate citizenship can help increase profits at their company…
Survey respondents who say effective corporate citizenship can help to improve the bottom line are also more likely to say their strategy is ‘very important’ to their business (33 per cent) compared with other survey respondents(8 per cent).”(Robins). One company that is pillar of modern day corporate responsibility is the Starbucks Corporation. Starbucks is the leading retailer, roaster and brand of specialty coffee in the world with more than 7,500 retail locations around the world (Kerin 92). Starbucks has embraced corporate responsibility like few other companies. In a recent Corporate Social Responsibility Annual Report, Starbucks defines corporate responsibility as, “…conducting our business in a way that produces social, environmental and economic benefits to the communities in which we operate…In the end, it means responsibility to our stakeholders.”(Kerin 92). Starbucks responsibility to its stakeholders starts with its employees.
The company calls its employees its “partners”. Starbucks has given each partner a stock option plan and believes that having them sharing in the financial successes of the company has made the sense of partnership real. According to Howard Schultz, CEO of Starbucks, “We built the Starbucks brand first with our people, not with consumers. Because we believe the best way to meet and exceed expectations of our customers was to hire and train great people. We invested in our employees.”(Moore). It seems to have worked. According to Fortune Magazine, Starbucks consistently ranks in the Top 100 Companies To Work For, and has one of the lowest employee turnover rate within the restaurant and fast-food industry (Fortune 2012). However, stakeholder responsibility goes well beyond your investors and people on your payroll. It also constitutes your suppliers and distributers (Kerin 87). Starbucks recognizes this and as a result has supply chains and distribution networks of “fair trade” products.
Fair trade is an attempt to fix some of the problems associated with regulating factory and workplace conditions of companies that produce goods and services in foreign countries and import their products into their home countries (Bilson). Fair Trade standards are meant to ensure that employees have safe working conditions, work reasonable hours and are paid a fair amount for their work. According to the Starbucks website, in order to purchase Fair Trade certified coffee as part of its supply chain, Starbucks pays a, “…minimum of $1.26 (U.S.) per pound for Fair Trade certified ingredients such as non-organic green Arabica coffee and $1.41 per pound for organic green Arabica coffee.” (Starbucks). This is substantially over and above the prevailing commodity-grade coffee price. On top of that, an even broader concept of CSR has emerged in recent years.
“Societal responsibility”. Societal responsibility refers to obligations that organizations have to the preservation of the ecological environment and to the general public. (Kerin 87). Starbucks has shown itself as a leader in societal responsibility. They have strived to help the communities in which they operate. One example is the Community Stores Program. These are Starbucks stores that share a portion of their profits with the local community. Currently, Starbucks operates two Community Stores: one in Harlem, in New York City, and the other in Los Angeles.(Grgurich). Starbucks and its partners have been recognized for their volunteer support and financial contributions to a wide variety of local, national, and international social, economic and environmental initiatives. (Kerin 93). The company is also a leader in environmental conservation and sustainability. As the company itself puts it, “Being reliant as it is on an agricultural product — coffee — for its continuing success, it makes sense to care for the planet and to encourage others to do the same.” (Starbucks).
Because of this, Starbucks has internal programs that address energy usage, water usage, recycling, and green building. According to the 2010 Starbucks CSR report, “Starbucks energy use accounts for 80 percent of the company’s overall carbon footprint” – keep in mind that doesn’t just include the stores, but the roasting plants and offices, too. “This makes energy use”, according to the company, “our greatest opportunity for improvement.” (Dawson). These improvements include LED lighting initiatives, purchasing renewable energy and reducing water. In 2010 Starbucks installed hand-meter facets to all company-owned stores conserving approximately 100 gallons of water per store per day (Dawson). Starbucks stores have also been incorporating many green building and design elements.
This can mean anything from using reclaimed wood at the coffee bar to a completely LEED certified building. In 2010 six new or renovated company-owned stores achieve LEED certification in the United States and Canada (Dawson). Starbucks has also sets green goals for the future. One being, the goal of serving 25 percent of its beverages in reusable cups by 2015. (Dawson). Starbucks also engages the community is serves directly through corporate philanthropy. Starbucks donates a portion of its pre-tax profits to philanthropy as part of its efforts to be more socially responsible. Starbucks makes charitable contributions through the Starbucks Foundation, created in 1997, with a direct giving program in communities in which it operates and in countries where its coffee is sourced. (Grgurich).
Of course, if a company isn’t performing as a business, it doesn’t matter what it’s doing when it comes to CSR, because it will likely be insolvent soon anyway. In its most recent quarter, Starbucks grew its revenue by a very healthy 11% year over year. (Grgurich). Starbucks continually strives for what is referred to as the “triple-bottom line”, which is the recognition of the need for an organization to improve the state of the people, the planet and profitability simultaneously if they are to achieve sustainable, long-term growth (Kerin 87). Starbucks’ efforts in being responsible for its stakeholders, society and the environment can be a major inspiration for many small businesses. Starbucks is an example of how a business can take a huge part in making changes for the better in the world today, as well as effectively use CSR to benefit the business.
Bilson, Jo – Corporate Social Responsibility at Starbucks, Mar 10 2012, www.suite101.com Dawson, Gloria – Starbucks Exec Dishes on New Corporate Social Responsibility Plan, April 18th 2011, www.earth911.com Fortune Magazine – 100 Best Companies to Work For, 2012/e
Grgurich, John – Why I Just Bought Shares of Starbuck, November 27th 2012, www.motleyfool.com Robins, Ron – Does Corporate Social Responsibility Increase Profit?, Environmental Leader, May 22 2011. Kerin, Roger A, Hartley Steven W., Rudelius, William – Marketing the Core 4th/e, 2011, McGraw-Hill Irwin. Chapter 4 – Ethical and Social Responsibility in Marketing. Moore, John – The Starbucks “Employee First” Philosophy, January 15th 2007, www.brandautopsy.com Starbucks Corporation – www.starbucks.com, 2013
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