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Sue Mecklenburgvp sustainableprocurement
Starbucks Coffee Company
UNGC US NetworkOctober 22, 2007
Business Case for Responsible Procurement
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OUR COMPANY
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OUR WORLD OF PRODUCTS
TEA/BOTANICALS COCOA WATERCOFFEE
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Starbucks Approach to Responsible Procurement
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AVENUES FOR RESPONSIBLE PROCUREMENT
Manufactured goods
CoffeeCocoa
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COFFEE
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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
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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
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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
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C.A.F.E. PRACTICES FUTURE GOALS
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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
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COCOA
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SOCIALLY RESPONSIBLE COCOA SOURCING
• Starbucks purchases cocoa from 12 countries including Ivory Coast, West Africa
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ISSUES FOR COCOA INDUSTRY
Labor issues
Financial transparency
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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
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MANUFACTUREDGOODS
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SUPPLIER SOCIAL RESPONSIBILITY OBJECTIVE
To integrate socially responsible procurement practices throughout Starbucks global supply chain
for manufactured goods and services
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STANDARDS FOR MANUFACTURED GOODS
Management Systems
Compensation
Labor Practices
Human Resource Policies
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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
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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
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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
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THANK YOU