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Starbucks & Coffee Plantation Sweatshops-- Estimates show that the cost of paying coffee workers a legal minimum wage would be equivalent to only 25 cents per pound of Starbucks coffee, or less than a penny a cup. But what of the promises made under the Code of Conduct to help the poorest of the world's coffee workers, workers who literally carry on their backs what has become the black gold in Starbucks coffers? As one of the organizations who originally encouraged Starbucks to adopt the code, we have been kept largely in the dark. We are often told that the situation is very complex, and that the company is moving ahead as best it can. Unfortunately, particulars are rarely forthcoming. http://web.cln.com/archives/charlotte/newsstand/c080997/metro2.htm
Did Starbucks Break Its Promise? (An article from 1997) By Bruce T. Herbert I am Director of the Northwest Coalition for Responsible Investment and president of Thomson Herbert Company, a registered investment adviser. Two years ago Starbucks Coffee Company committed to follow a course unique among agricultural companies. It adopted a Code of Conduct in a move to hold coffee growers accountable for acceptable working conditions, wages and basic rights for workers. The company's goal was to purchase coffee from people who share our commitment for treating employees "with respect and dignity." Starbucks would address wage and benefit levels, safety and health conditions, child labor, and the right of free association, all factors addressed within its code. The company's remarkable move earned it widespread acclaim and recognition. Starbucks' announcement made the front page of the Wall Street Journal. Business Ethics magazine termed it one of the five best moves by a corporation in 1995; and the Council on Economic Priorities gave Starbucks its 1996 Corporate Conscience Award for International Human Rights. All this fanfare obviously did not hurt sales, for during the last two years the company quadrupled its yearly profits to $42.1 million. The number of Starbucks stores increased by over 135 percent to 1006, and an increasingly large number of competing neighborhood coffee establishments around the country were forced out of business. Starbucks has pledged to build another 1000 stores within the next two and a half years, to meet its promise of 2000 stores by the year 2000. But what of the promises made under the Code of Conduct to help the poorest of the world's coffee workers, workers who literally carry on their backs what has become the black gold in Starbucks coffers? As one of the organizations who originally encouraged Starbucks to adopt the code, we have been kept largely in the dark. We are often told that the situation is very complex, and that the company is moving ahead as best it can. Unfortunately, particulars are rarely forthcoming. A highly anticipated on-the-ground investigation in Guatemala by George Howell, the former president of Coffee Connection (a company which was purchased by Starbucks) somehow disappeared from discussions and nothing is publicly known about his efforts. Independent offers of assistance from capable organizations (including the Roman Catholic church in Guatemala) and individuals both here and in Guatemala were pushed aside. Although the company may have attempted to fulfill its promises under the code, no public record or acknowledgment of such effort exists. So how has the company used these last two years? In these two years the company made two sizable contributions to one charity (CARE), and announced a $75,000 initiative (0.2% of 1996 profits) for 1997 to fund a program to help small coffee growers (not workers) produce gourmet quality beans. Both seem worthy programs which cannot be faulted on their own merits. But as Margaret Swedish of the Religious Task Force on Central America & Mexico has noted, "It is another example of a company that claims to pay back in charity what it does not give in justice." Indeed, Guatemalan workers still earn less than the legal minimum wage and live in horrific conditions. Were the company to help create pay equity for the workers who pick its beans, it might eliminate the need for CARE's work in the region altogether. Estimates show that the cost of paying coffee workers a legal minimum wage would be equivalent to only 25 cents per pound of Starbucks coffee, or less than a penny a cup. The company now maintains that it won't attempt to identify the growers of its coffee and won't establish programs to monitor working conditions, as indicated in the code. Clearly, real impact under the code is impossible until Starbucks identifies who its coffee growers are, and monitors and encourages their progress via the Code of Conduct. At the recent annual meeting of the company at its Kent roasting facility, I commended the company's charitable efforts, and expressed the view that the company is definitely not responsible for the problems in Guatemala, but that it can be a very great part of the solution. Although we represent religious institutional shareholders, and though the above reflections were offered quite calmly (as documented by TV broadcasts), CEO Howard Schultz reacted strongly. He exaggerated by asserting that we were asking the company to change all of Guatemala overnight, and he indicated that because Starbucks does more than other coffee companies that our questions were somehow unfair. Mr. Schultz almost seemed to express a belief that the workers' harsh reality as we described it does not exist, and he threatened to cease operations in Guatemala should a focus on the company's unfulfilled promises continue. Then the company switched off our microphone. When I raised my hand to ask a responding question, as every shareholder before had been allowed to do, Mr. Schultz threatened to have me removed from the room. The company's avoidance of its commitments under the Code of Conduct is disappointing. And what of shareholder democracy? When a company's owners are only allowed one instance a year to discuss among themselves matters of importance, thwarting that opportunity in any way is contrary to public policy concerning corporate governance, even more so when time allowed to many is unequally denied to one. Nevertheless, we maintain an open posture toward our company and a willingness to help it follow a path toward increased equity for foreign workers. Codes of conduct are proven as significant tools that improve the lives of workers. As John Boonstra, Executive Minister of the Washington Association of Churches has said: "many profit-making corporations, particularly those like Starbucks, have the capacity to enter into agreements with coffee exporters...Corporate responsibility means using economic power to secure just relationships and the dignity of workers." Starbucks advertises itself as being purveyors of coffee, tea and hope. For the workers of Guatemala, two years seems a long time to hope for these promises to be acted upon. Starbucks Replies Starbucks spokesperson Alan Gulick says that the company's Code of Conduct drafted in 1995 was "a first step in putting our aspirations into practice," but that monitoring the living and working conditions of Guatemalan farmworkers is "presently beyond our capabilities." He maintains that many of the aspirations expressed in the code have been met. In response to Bruce Herbert's complaints of being denied a follow-up question at the Starbucks shareholders' meeting, Gulick claims that the official format of the meeting was to "limit everybody to one question .... Everybody was treated the same." http://www.citinv.it/associazioni/CNMS/archivio/strategie/starbucks_ren.html Update & Analysis of Starbucks Progress Toward Implementing a Code of Conduct STARBUCKS RENEGES ON CODE - CAMPAIGN FOR COFFEE WORKERS TO RESUME (U.S./GLEP n. 18 - April 1997) The U.S./Guatemala Labor Education Project is launching a new Starbucks campaign because the company has failed to take credible steps to implement its code of conduct in Guatemala. Over two years ago, in response to a USIGLEP campaign, Starbucks announced at its February 1995 shareholders meeting that.it would adopt the first-ever code of conduct for a U.S. coffee company in an effort to improve working conditions for those who produce the coffee the company buys. In October, 1995, the company is sued its "framework for a code of conduct," entitled "Starbucks Commitment...To Do Our Part", with Guidelines for Coffee Selection that state it is Starbucks goal to purchase coffee from growers who share Starbucks values. Starbucks defined these values to in clude a commitment to treating employees with respect and dignity, fair wages, safe and healthy work conditions, decent hous ing and freedom of association. Guatemala was selected as the first country in which the code would be implemented. For this path-breaking code, Starbucks received significant positive press coverage and awards, including the "1996 Corporate Conscience Award for International Human Rights" from the Council on Economic Priorities. Starbucks 1997 Action Plan However, the Starbucks 1997 Action Plan issued February 28,1997(five months afterthe start of Starbucks 1997 fiscal year) fails to demonstrate any credible effort by Starbucks to implement its code for the growers of its coffee in Guatemala or any where else. On the contrary, the Plan represents an apparent effort by Starbucks to renege on its "Commitment" and redefine what it said it would do. The center piece of the Starbucks 1997 Action Plan is a new initiative that consists of a $75,000 donation to a developement aid project run by Appropriate Tech nology International (ATI) that is intended to help small family farmers increase their production of gourmet coffee beans. Starbucks portrays its contribution to the ATI project as constituting its major step in 1997 toward implementing its code. US/GLEP's position is that the ATI project may be fine for small-scale family farmers but it has nothing to do with implementing the company's code of conduct that seeks to improve conditions for coffee workers. The vast majority of the estimated 700,000 Guatemalan coffee workers are employed on plantations, source of most Guatemalan coffee, including Starbucks. Less than 15% of Guatemalan coffee comes from the small-scale family farms targeted by the ATl project, most of which are too small to employ workers. No Monitoring=No Code Even more problematically, Starbucks has told US/GLEP that it does not see a need to identify the growers of its coffee or to set up a system to monitor conditions on coffee plantations from which it buys. Obviously, it is impossible for Starbucks to hold coffee growers to any minimum social or environmental standards unless it monitors conditions on the farms from which the company buys. Over the past two years, Starbucks has consistently cited obstacles to implementing the code. First, Starbucks said it doesn't know the identity of its growers since the company buys primarily through coffee export houses. But Guatemalan coffee export houses are required by law to know the farms of origin, so US/GLEP has proposed to Starbucks that it simply require coffee exports houses to tell Starbucks from where its coffee comes. Starbucks has not responded to this proposal. Then, Starbucks said it doesn't have the capacity to monitor the hundreds if not thousands of farms from which its coffee comes. But the Catholic Church has offered to work with Starbucks to use its extensive network to develop a pilot monitoring system. Starbucks has failed to pursue this offer. While US/GLEP has worked to identify ways to overcome these obstacles, Starbucks has now back-tracked completely on taking the two steps without which any code for suppliers is meaningless: identify the suppliers and monitor their conditions. The excuses offered by Starbucks are very similar to those put forth by U.S. clothing companies a few years ago when they were asked to adopt and implement codes of conduct for their suppliers abroad. Thanks to public pressure, many U.S. retailers now require suppliers to identify every factory and subcontractor where their clothing is made and to allow for monitoring and inspections. US/GLEP believes Starbucks can set the pace in the coffee industly, just as Levi's, the Gap and Liz Claiborne are doing in the apparel sector. Seattle Press Conference A broad range of religious, environmental and social justice groups joined USI GLEP at a March 5, 1997 press confer ence in Starbucks home base of Seattle, Washington, that called on Starbucks to move forward. Hosting the press conference was Rev. John Boonstra, Executive Minister of the Washington Association of Churches. Other participants in the press conference included Aaron Ostrom, Vice President of the Washington Environmen tal Council, Roberta Ray of the Coalition for Justice for Coffee Workers, Bruce Herbert of the Northwest Coalition for Responsible Investment, and Armando Paxtor of the Guatemalan Mayan Organization of Seattle and a former coffee worker in Guatemala. Representatives from the Washington State Labor Council and the King County (Seattle) Labor Council were unable to attend but expressed similar concerns in a letter to Starbucks the previous week. The press conference was covered by most of the Seattle media, including four TV stations, the three local daily newspapers, radio stations, local alternative press outlets, and the "Journal of Commerce". The media attention prompted a defensive reaction the following day from Starbucks Chief Executive Officer Howard Schultz who, at the company's annual sharehold ers meeting, threatened that Starbucks would pull out of Guatemala if activists continued to "hound" the company. Latin American Working Group Letter Pressure on Starbucks built up in February with dozens of organizations contacting the company urging it to move forward on implementation. The Latin American Working Group with the assistance of the Alliance for Responsible Trade in Washington, DC circulated a letter that was signed by 50 religious, consumer, human rights and trade union organizations calling on the company to move forward on implementation. Among the groups signing the February 19, 1997 letter to Starbucks were the Consumer Federation of America, Bread for the World, the AFLCIO, the United Church of Christ, the United Methodist Church Board of Global Ministries, UNITE! and the Teamsters. Plantation Conditions Surveyed At the Seattle press conference, US/GLEP released a set of February, 1997 in terviews on a Guatemalan plantation from which Starbucks has purchased coffee for years. Workers report earning as little as $l.25 a day for an entire family's work, far less than the $10-a-day needed for a family to meet its essential needs. Other abuses uncovered include child labor, no protection for workers using pesticides, not enough latrines for workers, and lean-to housing made of plastic sheeting and sticks. Starbucks has previously said that this plantation is one of the better plantations in Guatemala. In March 1997, Starbucks told reporters that the company has stopped buying from the plantation. (So, Starbucks does know from where its cof fee comes!). Campaign Goal The goal ofthe campaign is to persuade Starbucks to fulfill the promises it made in 1995 and take the initial steps necessary to implement its code: identify the growers of its Guatemalan coffee, survey conditions on their farms, and put in place a plan intended to achieve Starbucks stated goal of buying coffee from growers who treat their employees with respect and dignity. The campaign is not asking Starbucks to do anymore than what the company said it would do in its 1995 "Commitment...To Do Our Part". http://www.citinv.it/associazioni/CNMS/archivio/strategie/starbucks_update.h tml (U.S. Guatemala Labor Education Campaign Update n. 1/2 April 1998) I. INTRODUCTION In response to a campaign initiated by the U.S./Guatemala Labor Education Project, the Starbucks Coffee Company committed itself in February 1995 to adopting a code of conduct for its suppliers, with Guatemala as its pilot project. In October 1995, Starbucks issued its "framework for a code of conduct," entitled "Doing Our Part, " representing the first effort by a U.S. commercial coffee company to set forth standards for its coffee suppliers with respect to working conditions and worker rights. At the Starbucks February 5, 1998 shareholders meeting, the company released its 1998-99 Framework for Action for Improving the lives of People Who Grow, Harvest and Process Coffee. This Framework for Action' represents the company's progress report to date on adopting and implementing its code of conduct and describes its future plans. It also represents a significant advancement over Starbucks previous efforts, which in March 1997 prompted US/GLEP to accuse Starbucks of reneging on its commitment. While the 1998-99 action plan falls short of fully implementing a code of conduct for Starbucks suppliers, it takes major steps toward laying the groundwork for doing so in the future. In the 1998-99 Framework for Action, Starbucks describes four major areas in which it is trying to improve the lives of coffee workers, their families, and small producers. The four areas cover large farms, industry advocacy, community development, and small producers. Starbucks also says it will support a study of coffee farms in Guatemala this year. II. DESCRIPTION AND ANALYSIS A. Large farms: An Incentives Project Starbucks most concrete new initiative is an "incentives" project to pay growers an extra premium to improve working and living conditions of its workers. At its shareholders meeting, Starbucks estimated that this premium would total approximately $500,000 in the first year of the program. This pilot project has begun to provide tangible benefits to workers, primarily in the areas of education, housing and health care. The project is not limited to Guatemala but includes "incentive" arrangements with growers in several other countries in the Central American region and could become a model for Starbucks efforts in other regions. The incentive project is a very significant step forward, and Starbucks should be congratulated for initiating it. However, US/GLEP is concerned that Starbucks has not yet designed a way to verify that the premiums are being used as promised and, perhaps more importantly from US/GLEP's view, being used by growers who are not engaged in egregious worker rights violations. It is clear that at this stage, most of the premiums will be used for health, housing, and education purposes but not, say, for increasing the wages of workers. As US/GLEP has pointed out to Starbucks, growers who provide additional education or health benefits to workers while simultaneously paying subminimum wages or violently intimidating workers trying to organize a union would not meet the standards set out by Starbucks in its 1995 "framework" for a code. Starbucks agrees that there is a need to resolve what is it calls the "transparency" issue, and has pledged to try to resolve this issue over the coming months. US/GLEP believes doing so is essential to the integrity of the incentives project. Nevertheless, the incentives project represents a very significant advance in efforts to persuade U.S. coffee companies to take responsibility for the conditions under which their coffee is grown because it: acknowledges that Starbucks has direct business relationships with at least some of its suppliers (a matter of some debate previously), establishes the principle of taking direct responsibility for the conditions of workers on plantations from which the company buys, and takes credible and substantial steps to concretely improve working conditions on plantations from which it buys. These developments are important not only with respect to Starbucks own efforts but as an achievable goal that other U.S. coffee companies can and should follow. B. Industry Advocacy Starbucks reports it has been active in pushing the issue of treatment of coffee workers both within the Specialty Coffee Association of America (SCAA) and the National Coffee Association (NCA). The SCAA includes not only gourmet retailers but also growers (e.g. ANACAFE, the Guatemalan coffee growers and exporters association). The NCA is dominated by the large-scale coffee retailers (e g. Folgers, Maxwell House, etc.). Starbucks Vice President Dave Olsen co-chairs the SCAA sustainability committee and worked successfully in 1997 to include respect for worker rights in the SCAA's definition of sustainability. Starbucks says it will continue to be an advocate for worker concerns within both the SCAA and NCA, and will work with groups like the Council on Economic Priorities and Business for Social Responsibility to examine how to apply codes of conduct to the agricultural commodities sector. Starbucks argues that the company is a relatively small purchaser with limited economic clout with coffee growers but acknowledges that its high visibility in the market gives it an opportunity to provide leadership on coffee worker issues. US/GLEP essentially agrees with this analysis. The demand for gourmet coffee in particular is rising rapidly. Coffee growers in countries like Guatemala are not dependent on selling to Starbucks and have the option of rejecting any effort by Starbucks to impose a code of conduct. We are persuaded that from a commodities standpoint, Starbucks needs Guatemalan coffee growers more than they need Starbucks. However, we believe Starbucks has considerable political leverage, especially in Guatemala in this post-peace process era. Both the Guatemalan and U.S. governments would like to be able to say that Starbucks is working with coffee growers to improve conditions of workers, and neither would want to face the threat of Starbucks pulling out of Guatemala due to lack of sufficient cooperation from coffee growers. More broadly, US/GLEP has always seen the Starbucks initiative as the first step in a very long process of bringing consumer pressure to bear on coffee retailers to adopt and enforce sourcing codes. It is absolutely essential that other coffee companies adopt and apply codes of conduct if coffee buyers are going to have any significant economic influence with producers. Consequently, we are very supportive of any advocacy work that Starbucks can do within the coffee industry to encourage other companies to begin taking responsibility. Starbucks internal advocacy, coupled with external campaigns and pressure, could prove to be the company's most important contribution to improving conditions and respect for basic rights of coffee workers. C. Guatemala Survey Not surprisingly, Guatemalan coffee growers are the most resistant ones in Central America to the idea of improving conditions for their workers, to the concept of a code of conduct, and to any independent monitoring of conditions on plantations. Starbucks argues that it will take time to move forward in Guatemala, although a number of Guatemala growers have signed on to the incentives project. As an additional step, Starbucks will provide support for a study this year of coffee farms in a region from which it currently buys coffee. The purpose of the study is to document working conditions and the status of worker rights, to develop ways to obtain sensitive and often controversial information about conditions on farms, and to use the findings to help Starbucks move forward on further implementation of a code of conduct and to encourage other members of the coffee industry to take positive steps. US/GLEP's view is that no one needs to do a study to know that working conditions are abysmal and that rights are constantly violated on most Guatemalan coffee plantations. However, it is true that there are no solid, "scientific" studies of conditions on coffee plantations and consequently one is always encountering the response from Guatemalan growers and the government that descriptions of poor conditions are merely anecdotes, not representative of the coffee sector. Were a study the only thing Starbucks was doing in Guatemala, it would obviously not be a sufficient response to our concerns. However, as part of an overall strategy, and as long as it is clear that this study is not intended to gather dust on a shelf or be a delaying tactic, we are supportive. Critical to our support for study is the fact that we expect it to be contracted with non-governmental organizations in Guatemala in whom we have confidence and trust . D. Small Producers As announced shortly before last year's shareholders meeting, Starbucks is providing financial assistance to a project by Appropriate Technology International (ATI) to assist small producers grow and market gourmet coffee. Starbucks report says that two new processing facilities have been built in Jalapa, Guatemala for use by 200 small coffee farmers. Starbucks says a similar project in El Salvador increased family incomes by 40%. US/GLEP is certainly supportive of efforts to improve incomes of small coffee producers, and especially welcomes Starbucks pledge "to investigate fair trade cooperatives as potential suppliers." However, the vast majority of coffee workers in Guatemala labor on large and medium-sized coffee farms. As US/GLEP argued last year, helping small producers it Guatemala grow gourmet coffee does not fulfill Starbucks pledge to hold suppliers accountable for their treatment of workers. E. Community Development Starbucks has long been a major contributor to CARE, and in recent years the largest corporate giver to CARE. Previously, CARE projects supported by Starbucks were not necessarily directed at coffee workers but rural development more broadly. In 1998-99 Starbucks will work with CARE to develop a new project that directly benefits families of coffee workers. US/GLEP's position is that soundly-designed development projects can be quite important but if workers were paid a living wage, there wouldn't be near as much need for aid projects. F. Consultative Process Starbucks reports that it has established a working relationship with representatives of Guatemalan non-governmental organizations and that in the coming year it will meet regularly with human rights organizations to review Starbucks plans and maintain regular communication with individuals and organizations concerned about Starbucks buying practices. One of US/GLEP's criticisms in the past has been that Starbucks had failed to take advantage of offers by the Catholic Church and others in Guatemala to work with them in implementing a code of conduct. Starbucks is now working and consulting with leading religious and human rights organizations in Guatemala. US/ GLEP's recent experience is that Starbucks has been committed to dialogue and problem-solving in a way that does not characterize the behavior of most corporations, and encourages Starbucks to continue and deepen these efforts. III. OVERALL ASSESSMENT An overall assessment of Starbucks current plans depends a great deal on one's perspective. From the point of view of coffee plantation owners like most of those in Guatemala, Starbucks initiatives are no doubt viewed with some apprehen sion and some opposition (and perhaps laughter at Starbucks "naivete"). From the point of view of coffee workers, only some are beginning to reap any concrete benefits. Most problematically, Starbucks has not yet taken any steps that ensure that the workers on large and medium-sized farms from which Starbucks buys are paid even the legal minimum wage (let alone a living wage) or that their basic rights, especially the right to organize, are respected. These are the fundamental goals of US/GLEP' s coffee worker economic justice initiative, and have not been met. US/GLEP also has significant concerns with Starbucks 1998-99 plan, most especially the need to monitor its incentive program to ensure that some minimum standards are being met across the board. Finally, the pace of progress is agonisingly slow. If Starbucks were moving on its code of conduct half as fast as it is expanding its business ventures and opening new stores, the company would be much further along (although it is no doubt true that it is easier to open new stores than apply a code of conduct to Guatemalan coffee growers). On the other hand, Starbucks is far ahead of other commercial coffee companies in taking responsibility for the conditions of coffee workers abroad. It is also far ahead of most U.S. apparel companies that have much more detailed codes of conduct but have done virtually nothing to implement them. Starbucks has made a 150 or 160 degree turn from where it was a year ago, when its only plan was limited to working with CARE and supporting the ATI project to enable small producers grow and market gourmet coffee. US/GLEP is persuaded that Starbucks is now seriously engaged in the issue and has begun to commit significant resources to moving forward in developing and implementing a code of conduct. Vie therefore applaud and vigorously support Starbucks current directions, with some important caveats, and believe that the basic message to the company should be strongly affirmative but conditional. The company should be encouraged to deal with the concerns outlined above and to move faster. We recognize that others may take a more critical view but US/GLEP currently has no plans to resume its Starbucks campaign work and will not as long as we are persuaded that the company is continuing to move forward in a significant way towards fully implementing a code of conduct. Overall, US/GLEP believes that COlpOrate responsibility advocacy in the coffee industry can be more effectively used at this point to persuade other coffee companies to follow the lead Starbucks has taken. IV. NEXT STEPS US/GLEP will begin to explore which other coffee companies to approach in an effort to develop and implement a code of conduct for coffee growers.3 We will also seek to ensure that Starbucks resolves the "transparency" issue with respect to its incentives project. 1. Copies are available from Jeannie MacKay StarbucksCoffeeCompany P.O. Box 34067 Seattle WX 98134. 2. Starbucks 1998-99 plan notes that the company issued a framework for a code of conduct in October 1995 and said previously that it sees itself as still moving towards a code of conduct. The October 1995 Framework includes what most other observers have described as a code of conduct as it contains a commitment that Starbucks will seek to buy coffee from growers who abide bv certain minimal standards with respect tc their treatment of workers. As long as Starbucks continues to take concrete steps that explicitly acknowledge the company s responsibility for the working conditions and basic rights of worker. who produce its coffee this will remain mostly a dispute about semantics. 3. It is US/GLEP s experience that C odes of conduct in othersectors especially the apparel sector by themselves have no usually translated into concrete benefits for workers unless workers organise to respect their basic rights. Codes have proven very helpful in developing political space for workers to 07gani-e tar their own rights and can be a usefidl tool in efforts of workers to empolver themselves. The fundamental changes that are needed in the coffee sector where powerful growers are even more entrenches than in the maquila sector will prohahl? not be accomplished unless coffee workers are able to advocate for themselves. v1 long-term objective of US/GLEP s effort to push coffee companies toward taking responsibility for the working conditions and basic rights unde which their coffee is produced abroad is therefore to help develop the political space for workers in countries like Guatemala to exercise their basic right to organize. |