Starbucks' socially responsible image cuts both ways
At Starbucks' annual shareholders meeting Wednesday, one big focus is expected to center on how a corporation, in pursuit of profits, can also be socially responsible.
Seattle Times business reporter
Starbucks has long touted its role as a provider of health insurance to employees, as well as tasty coffee to the masses. But at Wednesday's annual shareholders meeting, CEO Howard Schultz is expected to crystallize the connection between Starbucks' profits and the societal role it plays.
"The value of your company is driven by your company's values," he plans to say, according to acolumn by Joe Nocera in The New York Times.
Nocera contrasted the much vilified Goldman Sachs with Starbucks' Schultz, who, he says, "has been practicing a kind of moral capitalism."
Whatever their origins, companies assume a socially responsible posture in order to sell products, said John Boatright, professor of business ethics at Loyola University Chicago.
"The key question [for Starbucks] is, how do we sell high-priced coffee in a crowded market?" he said. "The downside is that it makes you very vulnerable to pressure, in part because you have a valuable brand name to defend. NGOs around the world have discovered it gives them a great deal of power against companies with strong brand images, including Nike, Levi Strauss and the like."
As one Greenpeace activist said, discovering the power of protests against brand-name retailers "was like discovering gunpowder for environmentalists," according to a 2001 article in Foreign Policy magazine.
The article's first example: the movement that led to Starbucks' decision to buy coffee beans from importers who pay above-market prices to small farmers.
Bruce Herbert of Newground Social Investment in Seattle, which invested in Starbucks' initial public offering, remembers the battle to get Starbucks to improve its coffee-buying standards.
"All they would say is, 'It's tremendously complex.' For several years, that was it," Herbert said. His organization and others exerted more pressure, and as a result Starbucks adopted stricter standards about coffee buying.
"They're a lot more open and accountable and transparent than they used to be," said Herbert.
Still, he continues to push Starbucks for more, and on Wednesday will carry the shareholder proposal of another activist shareholder, John Harrington of California, to Starbucks' meeting. It encourages the company's board to create a committee on environmental sustainability.
Starbucks recommends shareholders vote against the measure, saying it's not necessary.
That's the same reasoning Starbucks uses for demanding arbitration and banning class-action lawsuits from its loyalty-card customers. In February, the nonprofit Public Citizen delivered more than 15,000 signatures to Starbucks' headquarters calling for those restrictions to be removed.
The group targeted Starbucks partly "because the company puts forward an image of being socially responsible and a good corporate citizen. Using these clauses to squash customers' legal rights is not an indication of being a good corporate citizen," said Christine Hines, Public Citizen's consumer and civil-justice counsel.
The clauses have been there since at least 2003, spokesman Jim Olson says, and have never been used, because all complaints are resolved before arbitration would be necessary.
Another nonprofit, the National Gun Victims Action Council, recently called for a boycott of Starbucks for allowing people to carry guns in stores, including those in Washington.
"Imagine if Starbucks was really a socially responsible company, what power they could bring to stop this senseless killing and to help effect sane gun laws," the group said this week in a news release, which said 2,000 people have signed up for the boycott in five weeks.
Starbucks says it respects customers' views on guns and will abide by the varying gun laws in each state.
"Despite recent attempts from advocacy groups to use Starbucks as a way to draw attention to their positions, we have not seen any impact," Olson said.
Melissa Allison: 206-464-3312 or email@example.com. On Twitter @AllisonSeattle.