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Ethically sourcing products for our stores.


The merchandise on our shelves, the tables and chairs in our stores, the aprons worn by our baristas and more – we care how the products manufactured for our stores are made. And just like with coffee, we want to buy from suppliers who share our values and have a commitment to social and environmental responsibility.

Our buyers work directly with suppliers, negotiating contracts for the products we need in our operations or sell to our customers. Their purchasing decisions are influenced by many factors, including how well a supplier performs against our Supplier Social Responsibility (SSR) Standards for manufactured goods and services.
Supporting economic development in enthiopia
It's a fact that local economies are strengthened when jobs are created from a diverse range of sectors, from farming to manufacturing. This is as true in the communities where our coffee is produced as any other.
So, in 2008 we worked with a factory in the Tigray region of Ethiopia, an important coffee-growing community for Starbucks, to produce aprons for our stores. Now for the first time, the factory is producing some of the black aprons worn by our Coffee Masters, our most knowledgeable coffee experts.


What we've been doing.

We originally piloted our Supplier Social Responsibility program and standards in 2006, and began implementing it in 2007. Starbucks SSR standards for manufactured goods and services address the specific expectations we have of our suppliers. These standards outline our preference for long-term and collaborative relationships with suppliers and, when needed, our commitment to help them continuously improve their practices in order to meet our high expectations for performance.











In fiscal 2008, we continued to make advances to key areas of our SSR program:
Training suppliers and buyers: For suppliers, we conducted training in factories, held one-on-one supplier meetings, and made more than 50 factory visits. We also continued to conduct in-field and classroom SSR training for Starbucks buyers to help ensure they are buying our products according to our ethical standards.
Monitoring conditions across industries: We continue to participate in the Fair Factories Clearinghouse, a nonprofit organization that helps companies across industries to share their factory assessment results and corrective action plans.
Empowering workers: Factory workers are being empowered to report abuses through Clear Voice, a communications hotline, which we piloted in 2008.


Factory Audits – Fiscal 2008

Factories assessed 94 in the following countries:
China
Colombia
Ethiopia
Italy
Japan
Mexico
Malaysia
Peru
Poland
Portugal
Rwanda
Thailand
Taiwan
USA

Factories failing zero zero-tolerance standards 24
Factories participating in Starbucks continuous improvement efforts 33
Factories that are discontinuing as a Starbucks supplier due to non-compliance with our standards 18
As of the end of fiscal 2008, our monitoring firms had conducted 94 on-site assessments, 16 more than the previous year. There were 24 instances of failure to comply with our zero-tolerance standards, mostly due to a lack of transparency, primarily related to wages and working hours. This is an improvement over last year when 41 instances of zero-tolerance violations were identified. In all cases we encourage suppliers to participate in continuous improvement plans. However, some suppliers are unwilling to do so or cannot resolve their issues even after remediation. This is why 18 factories were dropped from our supplier network in 2008.



Hurdles.

Despite the advances made in 2008, we also had some challenges.

In a factory being used by a supplier located in China that produces a key supply for our stores, we discovered that workers were being paid less than the prevailing minimum wage. This is a violation of our “zero-tolerance” standards.

Once the problem was identified through our third-party monitoring program, we began working with the supplier on a remediation plan. We asked if the price we were paying was sufficient to cover production costs and pay workers the legal minimum wage. Our supplier said no. We asked the supplier to provide us with a higher price and a complete cost breakdown, called an open-book costing approach. When this work was completed, the Starbucks buyer was able to justify the increased cost and renegotiated the contract at the higher price.

During a follow-up visit at the factory three months later, we found that factory management had never been notified of the new agreement and had not increased workers' wages. We brought in a third-party organization with experience in wage compliance to ensure the new contract terms were met and that factory workers were paid the correct wage and given full back wages. We were at the factory the day the workers were presented with their back wages.

This experience reinforced for us that our commitment to ethical sourcing brings with it the obligation to uphold our standards.

What we're working on.
Building on the progress we made in 2008, our next steps will involve conducting social responsibility verification assessments to determine the degree to which our suppliers can manage ethical sourcing themselves or need assistance in developing internal systems. Our intent is to create increased ownership and accountability among suppliers around social and environmental issues.

We will also continue to identify and assess potential new suppliers of products and merchandise in regions where we buy coffee.