Sustainable Development and CSR Policy of Starbucks

The conclusion of this research report highlights the importance of sustainability monitoring systems in organizations, specifically Starbucks, to ensure effective sustainable development. It emphasizes the need for companies to take action to manage challenges such as corruption and child labor. The report also provides a comprehensive list of references from various sources, including books, journals, and online resources, related to corporate social responsibility, sustainability, and governance.

Monitoring System

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MONITORING SYSTEM COMPONENTS...................................................................................7
The enterprise (Starbucks)...........................................................................................................7
Sustainability dimensions............................................................................................................8
Specific sustainability area .........................................................................................................9
List and assessment of indicators for monitoring......................................................................10
CONCLUSION AND RECOMMENDATIONS..........................................................................13
REFERENCES..............................................................................................................................15

LIST OF TABLES
Table 1: Summery of sustainability indicators................................................................................5
Table 2: List and assessment of indicators for monitoring sustainability of Starbucks.................11

INTRODUCTION
Sustainability business can be defined as an organization that has no negative impact on
global and local environment, community, society and economy. Along with this, sustainable
business meets the triple bottom line and has advanced environmental and human rights policies.
Including this, sustainability helps in managing different financial, social and environmental risks,
obligations and opportunities (Armstrong, Blouin, Jagolinzer and Larcker, 2011). Tools, techniques
and indicators of sustainability assist in developing a monitoring system of sustainability of an
organization.
These have positive impact on profitability and people of the organization. Major dimensions
of sustainability include society, economy and environment. Determining the level of sustainability is
a very complex task but it can be measured by different quantitative tools and techniques. These
tools include sustainability matrices, triple bottom line, etc. Tools, techniques and indicators of
sustainability help in developing a monitoring system of sustainability of an organization. This system
assist in analyzing the changes, progress of the organization towards sustainability, management of
economic, social, institutional and environmental resources (Bebbington, 2007).
The current research report is based on monitoring system for sustainability of an
organization. Regarding this, research will focus on Starbucks which is an American Coffee
company and coffeehouse chain. It focuses on sustainability of the business because most of the
raw material of this organization can affect the environment in a negative manner. So, it stresses on
all three social, environmental and economic dimension of sustainability. Research will focus on
development of monitoring system for sustainable development of Starbucks which will help in
determining the level of sustainable business. Along with this, different indicators of this system will
help in determining that weather organization is following all roles and responsibility in an effective
manner or not. Indicators of sustainability aids in determining different types of issues associated
with the sustainable development of the company (Nikolopoulou, Abraham and Mirbagheri, 2010).
Major aim of sustainability indicators is to determine that weather an organization is working towards
the defined goal or not. Study will describe the current stage of sustainability and required changes
to improve.
Ayre and Callway, 2013 has concluded that “Sustainable monitoring system is a tool which
provides appropriate guidance to monitor and report sustainable performance and improvement of
the organization” (Ayre and Callway, 2013). As per the view of Bredeson, 2011, “A good monitoring
system is required to include all indicators of sustainability such as environmental, social and
economic indicators” (Bredeson, 2011). Similarly, “An effective monitoring system focuses on past,
present and future sustainability actions of the company which will helps in analyzing the actual
progress of sustainable development”. In contrast, Jucker and Mathar, 2011 has stated that “A good
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monitoring system must be relevant, easy to understand, reliable and able to access data of the
company” (Jucker and Mathar, 2011). Major indicators of sustainability monitoring system are
described as follows:
Table 1: Summery of sustainability indicators
Sustainability Indicators Types of indicators Characteristics of indicators
Environmental
Sustainability Indicators
Resource consumption rates This indicator will help in
determining the consumption of
natural, human and economic
resources by the organization.
Entrenched or embodied
carbon
Using this indicator,
organization can determine that
weather company embodied
carbon particles in environment
or not (Hopwood, Unerman and
Fries, 2010).
Effects on local ecosystem It will help in measuring impact
of business operation on
ecological environment of
Starbucks.
Direct or indirect emissions of
carbon dioxide equivalents
Emissions of carbon dioxide
equivalents can negatively
affect the environment of
Starbucks so; this indicator will
help in identifying the quantity of
carbon dioxide emission by the
organization.
Loss of energy and materials This indicator will help in
measuring how much loss has
occurred in terms of energy and
materials?
Social Sustainability
Indicators
Rate of complaints of
customers
Complain rates of customers of
Starbucks will help in
determining the social
sustainability of the company
(Sustainability indicators, 2015).
Industrial relations Relationship with existing
stakeholders
Number of corruption charges Level of corruption by company
towards society.
Safety incidents and
environmental accidents
This indicator of monitoring
system will help in determining
that weather Starbucks follow
health and safety incident or
not.
Human rights and child labor
complaints
It helps in monitoring HR
policies of Starbucks.
Human cost and employee
turnover rate
Review of labor cost and
employee turnover rate will help
in determining social
sustainability
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Satisfaction of customers It is an effective indicator for
determining the level of
customer’s satisfaction.
Charity It will help in identifying that
weather company focuses on
corporate social responsibilities
towards the society or not.
Economic Sustainability
Indicators
Value of products for
customers
This indicator helps in assessing
the value of products and
services of Starbucks for
purchasing money of customers
(Osnes, 2013).
Wastage Wastage of resources can be
easily measured by this
indicator.
Efficiency of business
operations
This indicator helps in
determining that weather
business operations of the
organization are completed
effectively or not.
Productivity Quality of products and
services, production volume can
easily be analyzed by the
economic sustainability
indicators.
Triple bottom line It will help in measuring different
dimensions of sustainability
(Purvis and Grainger, 2013).
Investment appraisal This indicator is effective for
determining the return on capital
investment as well as payback
period of whole investment.
Cost of goods sold It is an important indicator for
determining the total cost of
producing goods and services.
Inventory turnover This indicator plays important
role in determining the inventory
management system of the
organization.
Profit It is the most appropriate
indicator for determining
financial performance of the
company using net and gross
profitability of the organization
(Banerjee, 2007).
Financial position Economic financial position of
Starbucks.
Allocation of resources It helps in determining that
weather Starbucks is allocating
financial resources effectively or
not.
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MONITORING SYSTEM COMPONENTS
The enterprise (Starbucks)
Starbucks is a coffeehouse chain which has started its coffee shop in the year 1971 and
offered coffee, tea and spices with a single store. Now, it has been expanding its business at
international level in more than 50 countries and 17000 locations. Mission statement of Starbucks is
“to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”.
Major products of this company are coffee, handcrafted beverages, merchandises, fresh food,
consumer products (Coffee, tea, Ready to drink, ice-cream) and brand portfolio, etc. At present,
share of Starbucks is listed on listed on NASDAQ, under the trading symbol SBUX. This
organization focuses on being a responsible company by conducting ethical trading, responsible
growing practices, reducing environmental footprint through energy and water conservation,
recycling and green construction and increasing involvement of society (Abdullah and Valentine,
2009).
Stakeholder analysis of Starbucks has reflected that it is following appropriate responsibilities
for satisfying needs and requirements of all stakeholders. Analysis of Corporate Social
Responsibility of Starbucks towards its stakeholder is one of the important methods for analyzing
sustainability of the organization. Major stakeholders of this company include partners, customers,
employees, shareholders and investors, government, society, etc.
Maintaining fair business relationship with partners is one of the major responsibilities of
Starbucks towards them. At present, organization is following this responsibility in an effective
manner and provides appropriate respect and dignity to their partners. Company focuses on mutual
understanding and mutual trust. It helps in developing a fair relationship with the partners.
Employees are also considered as very important stakeholder of the Starbucks. Organization
shed lights on the health and safety of every employee. Along with this, company develops favorable
policies and HR practices for satisfying their needs and requirements towards job. Further, it also
focuses on providing appropriate salary, wages and incentives for increasing their level of
motivation. Including this, company makes arrangement for training and development session which
also shows that Starbucks is following effective CSR policies towards employees of the organization
(Bueble, 2009).
CSR policies towards the customers of Starbucks focus on providing qualitative coffee, tea
and other products for their purchase money. Further, organization provides products and services
as per the needs and requirements of customers. It helps in increasing the level of satisfaction of
customers.
Shareholders and investors require appropriate information about the financial position of
organization. Starbucks makes appropriate communication with stakeholder about profitability and
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economic position of the organization. Including this, organization develops suitable dividend policy
for providing suitable return to all stakeholders for their investment (Monitoring Sustainable
Development, 2004).
Appropriate financial reporting of organization is one of the major requirements of
government of the nation. Starbucks is a public listed company so; it includes all the financial
statements in financial reporting. Along with this, company follows all rules, regulations and
legislation of government which shows that company is following all responsibility towards the
government.
Society is also one of the important stakeholders for Starbucks and organization focuses on
development of whole society and environment. Along with this, company also provides appropriate
employment opportunity to different individuals of society. So, Starbucks follows appropriate CSR
policies towards society and environment.
As per the above discussion, CSR policies are very important aspect of sustainable
development and Starbucks has followed all responsibility towards stakeholders in an effective
manner.
Sustainability dimensions
It is the prime responsibility of organizations to create sustainable business strategy to
operate business activities which generate minimal pressure on environmental resources, public and
economical resources. The following point features brief explanation of relevance of sustainability
dimensions that are applied in Starbuck’s operational strategies. The current and future phases of
these dimensions are elaborated in the following headings.
Environmental dimension of Starbucks
Starbucks considers planet as the most important business partner as the company rely
largely on the agricultural products. In order to formulate sustainable business strategies, Starbucks
takes environmental dimensions into consideration. These are as follows: Water and Energy Conservation Strategy: Starbucks has been making robust efforts since
2008 to reduce the consumption of water by 25 percent in the firm by the end of the current
year (Water and Energy Conservation, 2015). The strategy is extended to conserve water in
streams and rivers in the coffee growing countries. The current phase demonstrates that
Starbucks focuses on reducing water in coffee processing. Climate Strategy: Since 2004, Starbucks has been employing a climate change strategy to
focus on renewable energy for operating its business worldwide (Climate Change, 2015).
The company is successful to a certain extent in executing this strategy but it has to go long
way to make sustainable environmental operations.
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 Waste Management and Recycling Strategy: Starbucks has set a goal to reuse or recycle
100 percent of coffee cups by the year 2015 (Recycling and Reducing Waste, 2015). LEED Certified stores: Currently, Starbucks is trying to LEED (Leadership in Energy and
Environmental Design) certify all its company operated stores (LEED® Certified Stores,
2015). The stores are designed to encourage use of recycled materials and energy efficient
lighting to save energy.
Socio-culture dimension of Starbucks:
These dimensions play major role in building a sustainable business organization. The social
sustainability indicators that are applicable for Starbucks include rate of complaints by customers,
number of corruption charges and record of human rights and child labor grievances. The company
is required to formulate strategies to address major issues related to child labor complaints which
were reported lately. However, Starbucks do not employ child labor but the suppliers of coffee have
been allegedly reported to use child labor for coffee farming. This is very fatal for sustainability of the
Starbucks business. Lately, there were number of corruption charges on the firm against online
trading fraud. It is very crucial to follow ethical business practices to gain stakeholders confidence.
The current phase of complaints by customers of Starbucks is very low.
Economic dimension of Starbucks
Starbucks has performed well on the grounds of economic sustainability indicators.
Starbucks has been able to reduce operational cost of its business activities in a very effective
manner. The current phase of economic dimension of Starbucks is quiet satisfactory. Currently, the
company is making efforts in meeting the expectations of its key stakeholders in terms of their
economic interests. Starbucks products have recorded growth in a sustainable way. The company
has pioneered a new concept of “Ethical Sourcing” with a focus to ensure long term supply of
premium quality coffee for its valued customers (What is the Role and Responsibility of a For-Profit
Public Company?, 2015). In addition to this, it is also making cumbersome efforts to benefit lives of
coffee farmers. The future phase of economic dimension of Starbucks indicates that the company
will ethically source 100 percent of high quality coffee through Fair trade, CAFE Practices and
externally monitored systems.
Specific sustainability area
The specific sustainability area for Starbucks is change in the strategies regarding Socio
cultural dimension. Starbucks is required to make strategies to increase the customer satisfaction
level to grow its business in a sustainable manner. The number of corruption charges against
company regarding online trading fraud scam can negatively impact brand image of Starbucks. The
firm needs to make sound promotional strategies to attract customers to increase sales and
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profitability. Similarly, Starbucks needs to check the child labor practices by the coffee suppliers to
abide the child labor laws set by the legislation and legal bodies of the coffee growing countries.
Further, the biggest challenge before Starbucks is to set its pricing strategies to maintain a
reasonable cost of its products (Starbucks global responsibility report, 2013). The increasing cost of
coffee production and distribution cost makes it difficult to keep the prices of its products low. This
may raise concern for consumers affecting their satisfaction levels.
Starbucks position on Dunphy Scale
The Dunphy Scale comprises of six stages which together form the Dunphy scale. currently,
Starbucks is at the efficiency phase (Dunphy, Griffith and Benn, 2003). This reflects growing
awareness of organization that sustainable practices can be undertaken by it in a proactive manner.
This organization undertakes actions in the direction of human sustainability as well as ecological
sustainability.
it can get elevated to the phase of strategic sustainability. this would make sustainability as a
important part of the strategy of organization. in order to reach to the level of strategic sustainability,
Starbucks will have to develop strategic advantage by bringing innovation in its products and
services in a purposeful manner. changes need to be done at the management level whereby the
business model is to be emphasized. these will b the changes requited with respect to the aspect of
human sustainability. In the section of ecological sustainability, product redesigning needs to be
done. another change can be introduction of environmentally friendly products.
List and assessment of indicators for monitoring
Table 2: List and assessment of indicators for monitoring sustainability of Starbucks
Social sustainability
indicators
Social
sustainabilit
y Indicator
name
Definition Measurement Key
Challenges/Limitations
Required
action for
improvement
Rate of
complaints of
customers
This indicators
provides
information
about
complains of
customers
towards the
products and
services of
Starbucks. It
will also help
in determining
Starbucks
organization
offers different
products and
services to
customers as
per their needs
and
requirements.
Along with this,
also focuses on
the quality of
Increasing cost of raw
material augments the cost
of products and services
which can affect purchase
value of coffee products. It
can increase the
complaints of customers
towards the price raise
policy.
For managing
this challenge
Starbucks needs
to start
manufacturing
and farming
coffee beans in
different
countries which
will help in
reducing the
cost of raw
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the level of
satisfaction of
customers
towards
company.
products and
services. So,
rate of
customer
complain is
very low. It has
reflected that
most of the
customers are
completely
satisfied with
the products
and services of
Starbucks
(Starbucks
global
responsibility
report, 2013).
material as well
as it will decline
customer’s
complaints.
Industrial
relations
These
indicators can
be defined as
association of
Starbucks with
its
stakeholders
which plays
important role
in analyzing
the CSR
policies of the
company
towards their
stakeholders.
As per the
stakeholder
analysis
Starbucks has
developed
strong
industrial with
all
stakeholders;
partners,
employees,
shareholders,
investors,
customers,
suppliers,
government
and society.
Along with this,
all CSR
policies are
based on
needs and
interest of
stakeholders.
Overall,
company has
developed
sustainable
relationship
with all
stakeholders
(Hess, 2013).
Inflexibility of employer of
Starbucks, Narrow thinking
and global expansion can
affect industrial relations of
company with all
stakeholders.
Appropriate
management of
stakeholders.
Number of
corruption
charges
This indicator
helps in
determining
Overall,
Starbucks has
operated its
High desire of increasing
financial performance of
the company increases the
Starbucks needs
to focus on
reducing
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corruption rate
of the
organization at
the time of
trading and
running
different
operations of
the
organization.
operations
without any
corruption but
in some times
this
organization
has caught in
some fraud and
scams. This
corruption was
related to the
tax payment,
fraud in online
gift cards, etc.
therefore, it
shows that
company faced
different
corruption
charges which
have affected
sustainable
development
and corporate
image in
national as well
as international
environment.
So, now
Starbucks
needs to focus
on resolving
all these issues
in an effective
manner (Baker,
2006).
level of corruption. financial fraud,
scam in online
trading.
Safety
incidents and
environment
al accidents
It helps in
measuring
environmental
accidents at
the workplace
of Starbucks
as well as it
also helps in
determining
that weather
company is
following
safety and
security policy
at the
workplace or
not.
All employment
policies, rules
and regulations
of Starbucks
focus on safety
and security of
every
personnel.
Lack of skills and
knowledge of new
technologies can increase
the Safety incidents and
environmental accidents.
Starbucks is
required to
make
appropriate
arrangements of
training and
development
program for
increasing skills
and knowledge
of every
individual.
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Human
rights and
child labor
complaints
This indicator
is beneficial
for assessing
different
policies of
organization
towards
human rights
and resolving
labor
complaints.
Therefore, it is
most
appropriate
indicator for
assessing
sustainability
of human
resource
management
of the
company.
Starbucks
assure about
no involvement
of child labor in
not even and
little function of
the company.
Along with this,
organization
respects rights
of every
employee as
well as
customers
(Monitoring
Progress for
Sustainable
Improvement,
2015).
In the farming session,
some supplier involves
child labor without any
entry record.
So, organization
needs to focus
on reducing the
child labor rate
in farming as
well.
Human cost
and
employee
turnover rate
Labor cost is
one of the
important
aspects of the
social
sustainability.
Along with
this, rate of
employee
turnover is
also most
appropriate
measure for
assessing the
satisfaction
level of
personnel by
organization’s
functions and
operations.
Employee
turnover is very
low as well as
company
focuses on
reducing the
unnecessary
labor cost.
Sometimes, job
dissatisfaction factors such
as low wages can increase
the employee turnover.
Starbucks needs
to take
appropriate
actions to
improve HR
policies of the
company.
Satisfaction
of customers
Satisfaction
level of
customers
helps in
analyzing the
number of
customers of
the
organization.
As per the
current position
in the market
customers of
Starbucks are
completely
satisfied with
coffee, tea and
other products
of Starbucks
(Hopwood,
Culture differences can
affect determining needs
and requirements of
customers which can
reduce the level of
satisfaction.
Organization
needs to
understand
culture of
different country.
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Unerman and
Fries, 2010).
Charity Charities of
the business
show the
responsibility
of the
company
towards
society as well
as also help in
determining
the CSR policy
of the
company for
society
(Bredeson,
2011).
Company is
using charities
in different
NGOs on
regular basis.
Misuse of charity amount
by NGO itself.
Organization
needs to assure
about the
appropriate use
of charity
amount for
required person.
CONCLUSION AND RECOMMENDATIONS
Sustainability monitoring system includes different indicators of environmental, social and
economic sustainability. Starbucks has maintained sustainable development of the organization in
an effective manner. The current research report has focused on social culture sustainability of the
organization. There are some indicators which have reflected that company has fulfilled all the
aspects of sustainable development but it needs to focus on some changes such as reducing the
level of corruption, child labor, etc. So, for improving overall, sustainability organization is required to
focus on taking appropriate actions for managing these challenges.
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REFERENCES
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Armstrong, C., Blouin, J. L., Jagolinzer, A. D. And Larcker, D. F., 2011. Corporate governance,
incentives, and tax avoidance. Rock Center for Corporate Governance at Stanford University
Working Paper. Pp.136
Ayre, G. and Callway, R., 2013. Governance for Sustainable Development: A Foundation for the
Future. Earthscan.
Baker, S., 2006. Sustainable Development. Routledge.
Banerjee, S. B., 2007. Corporate Social Responsibility: The Good, the Bad and the Ugly. Edward
Elgar.
Bebbington, J., 2007. Accounting for sustainable development performance. Butterworth-
Heinemann.
Bredeson, D., 2011. Applied Business Ethics: A Skills-Based Approach. Cengage Learning.
Bueble, E., 2009. Corporate social responsibility: CSR communication. GRIN Verlag.
Hess, N. P., 2013. Economic Growth and Sustainable Development. Routledge.
Hopwood, G. A., Unerman, J. and Fries, J., 2010. Accounting for Sustainability: Practical Insights.
Earthscan.
Jucker, R. and Mathar, R., 2011. Schooling for Sustainable Development in Europe. Springer.
Nikolopoulou, A, Abraham, T. and Mirbagheri, F., 2010. Education for Sustainable Development:
Challenges, Strategies and Practices in a Globalizing World. SAGE Publications India.
Osnes, B., 2013. Theatre for Women’s Participation in Sustainable Development. Routledge.
Purvis, M. and Grainger, A., 2013. Exploring Sustainable Development: Geographical Perspectives.
Earthscan.
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