Starbucks Corporation Ethical Behavior

Table of Contents

Introduction

Business ethics is a relatively new area of science, which has already attracted ample attention among scholars, directors, workers, and consumers. The main issues that business ethics deals with are building influential corporate culture, resolving ethical dilemmas and conflicts, developing leadership, and providing corporate social responsibility and sustainability in the context of moral principles and values. In this respect, Starbucks Corporation has won a prominent position by consistently implementing new strategies and approaches towards resolving ethical problems and showing excellent results in this field. Thus, the aim of this topic is to examine Starbucks’s ethical and unethical behavior considering corporate social responsibility, diversity, sustainability, and equity.

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Main body

Starbucks Corporation is an American international coffee company that presents itself as one of the largest chains of coffeehouses in the globe, with over 15,000 coffee shops in 50 countries. The company is famous for its sustainably sourced coffee and the application of the system Coffee and Farmer Equity Practices (C.A.F.E.) that implies four main ideas, namely quality, environmental leadership, economic transparency, and social responsibility (Starbucks, n.d.). The company has also repeatedly been in the ratings of reputable journals and institutes in terms of ethical conduct. For example, Ethisphere Institute ranked the companies on the list the World’s Most Ethical Companies for twelve years, from 2009 to 2018 (Starbucks). Besides, Starbucks was present in Forbes ratings, such as The World’s Most Ethical Companies 2017, Canada’s Best Employers, and The Just 100 (Forbes, 2020; Kauflin, 2017, Valet, 2020). Fortune Magazine listed the company on World’s Most Admired Company, giving it rank 6 on the list (Fortune, 2020). Finally, in the American Customer Satisfaction Index, the company score 79 points, one of the best positions among American companies (Lock, 2019).

Primarily, Starbucks Corporation is characterized by transparency, accountability, and long-standing relationships with all its stakeholders, including employees, consumers, and suppliers. The company’s values and principles aim at developing an atmosphere of a partnership between workers, a culture of inclusion and equity, and meeting the needs and wishes of a wide range of consumers. For instance, Starbucks actively hires people and provides accommodations and assistive technologies that help individuals to do their jobs appropriately (Starbucks, n.d.). According to Starbucks’s corporate policy, its employees are the most valuable asset (Starbucks, n.d.). In this aspect, the company provides its workers with the opportunity to attain their personal and professional goals, develop skills and careers. Other activities, such as interaction with communities and the environment, are also at a high level.

Corporate social responsibility is an indispensable component of Starbucks’s behavioral policy. In cooperation with Conservation International (CI), the company developed its C.A.F.E. practices that include a system of 249 indicators (Starbucks, n.d.). According to C.A.F.E., farmers achieving appropriate scores obtain higher prices compared to those who earn a lower mark. Currently, C.A.F.E. Practices contains about 400,000 coffee farmers in 28 countries, which allows for enhancing working conditions and embarrassing over a million hectares of land intended for sustainable practices (Starbucks, n.d.).

Besides, Starbucks annually pays dues of above $50,000 to Major Trade Associations (‘Starbucks Stories and News’, n.d.). Starbucks, via its Global Farmer Fund, has provided $50-million funding to coffee farmers by 2020 to support infrastructure improvements, restoration (Starbucks). Loan partners are located in 13 countries and include Honduras, Peru, Mexico, Colombia, among others. In 2015, Starbucks also joined the campaign, called the 100,000 Opportunities Initiative, and launched programs named Starbucks Work Placement Program and Starbucks Apprenticeship, which support youth employment in different countries (Starbucks, n.d.). The Starbucks Foundation also announced a new target to assist “250,000 women and girls in origin communities by 2025” (Starbucks, n.d). Finally, in 2018, Starbucks supported about 80 local organizations in the US, and 50,000 Starbucks partners participated in nearly 2800 projects across the world (Starbucks, n.d).

Starbucks has considerably contributed to environmental sustainability since its foundation. Recently, Kevin Johnson, chief executive officer of Starbucks Corporation, announced three principal targets for the next decade. The first target is reducing carbon emissions by 50 percent by 2030; the second is decreasing waste by 50 percent; the third is conserving 50 percent of the water presently being utilized for coffee production and direct operations (‘Starbucks Stories and News’, n.d).

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In addition to C.A.F.E. Practices, the company participates and invests in other sustainable practices, such as NextGen Cup Challenge and Starbucks FoodShare program, which were designed in collaboration with many organizations. In April 2017, it was announced that besides 25 million trees already donated, Starbucks Coffee Company would provide an additional 100 million healthy coffee trees for farmers by 2020 (‘Starbucks Stories and News’, n.d). Moreover, the Sustainable Coffee Challenge, the collective initiative of 60 partners, stated that 1 billion coffee trees would be replanted for improving productivity and ecological situation (‘Starbucks Stories and News’, n.d). The company also promotes waste reducing and recycling programs and reusability. For example, since 2006, Starbucks uses paper cups with 10 percent post-consumer recycled fiber and also developed a recyclable cup lid in 2016 (Starbucks, n.d). Overall, Starbucks makes ample effort to preserve the environment, developing means to reduce environmental impact in every way.

As mentioned above, Starbucks pays considerable attention to the issues of diversity and culture of inclusion, assuring that solutions to these problems are critical factors of their rapid growth. For example, the company has developed eight Partner Networks that present a full range of partnerships in the workplace and outside the company (Starbucks, n.d). Another distinctive feature of Starbucks is ensuring health care support for all groups irrespective of race, sex, and social affiliation. Moreover, in the United States, Starbucks pursues a policy of “100 percent pay equity for women and men” that fulfill the same professional duties; globally, this rate reached 98 percent (Starbucks, n.d). Lastly, it should be added that in Starbucks, women and people of color comprise 68 and 46 percent of all employees, respectively, and about half of female workers occupy senior positions (Starbucks, n.d). Thus, the development of the culture of equity and diversity is an essential component of Starbucks’s activity.

Despite Starbucks’s achievements and loyalty to fundamental principles of business ethics, there are still several concerns associated with the company’s operations. First, the main problem is connected with the tax avoidance practices that Starbucks demonstrated in different points of the world, especially in Europe. For instance, Starbucks corporation “had paid UK corporate income taxes only once” during its fifteen-years activity in the UK, “shifting taxable income to other Starbucks subsidiaries where it would be taxed at lower rates” (Campbell and Helleloid, 2016, p. 38). Similar situations were observed in other European countries, such as Ireland, Germany, and France. Moreover, in 2006, there were accusations against Starbucks of causing financial harm to Ethiopian coffee farmers by taking $88 million a year (Hunger Notes, n.d.). Besides, Starbucks had significant problems in Hong Kong in 2018, where, to protect the ocean ecosystem, particularly sharks, protestors campaigned against Maxim’s Caterers, to which Starbucks granted licenses in Vietnam, Singapore, and Hong Kong (Woodring, 2018). These cases reveal significant problems in Starbucks’s corporate behavior overall.

The recommendations will mainly relate to Starbucks’s tax and trade policies since the company has demonstrated a wide gap in this area. First, Starbucks corporation, as a multinational brand with a big name, should debar any tax avoidance actions because it damages its international reputation and value. It is recommended for the company to avoid environmental offenses, consider the opinion of relative protests by reaching a consensus. Finally, such practices put the company at a substantial risk that may result in severe financial loss in perspective. In case of need, the company should take unpleasant or even extreme measures and compensate for damage to recover its reputation and brand name.

Conclusion

In summary, despite some notable improper incidents related to the payment of taxes and the threat of the environment, generally, Starbucks is highly devoted to its business course in terms of ethical behavior. The company takes into account the interests of all stakeholders, including employees, consumers, and other important partners, providing them with reasonable offers and conditions and space for growth. A particularly prominent feature of Starbucks is its corporate social responsibility and the culture of equity and diversity, which allows it to be on the ratings of famous journals, magazines, and institutes. Altogether, Starbucks corporation has tremendous potential for self-development, which has been demonstrated since its inception.

References

Campbell, K. and Helleloid, D. (2016) ‘Starbucks: social responsibility and tax avoidance’, Journal of Accounting Education, 37, 38-60.

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Forbes (2020) ‘The just 100: companies doing right by America.’ Web.

Fortune (2020) ‘World’s Most Admired Companies’. Web.

Hunger Notes ‘Starbucks in Ethiopian coffee dispute. U.S. coffee chain Starbucks is denying Ethiopia earnings of $88 million a year, according to Oxfam’. Web.

Kauflin, J. (2017) ‘The World’s Most Ethical Companies 2017’, Forbes. Web.

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