Climate Change Challenges Brewing for Starbucks
A new report from the Climate Institute predicts that climate change will halve the amount of land area suitable for coffee production by 2050 [1]. In parts of Brazil and Central America where the most popular type of coffee, Arabica, is grown, 80% of land will become unusable [2]. The biggest impact will be felt in reducing the livelihoods of crop growers in some of the poorest parts of the world, but even developed countries will take notice as prices increase for major downstream consumers of coffee beans like Starbucks. Some regions are already being affected by climate change, like Tanzania, where 2.4M people rely on coffee and are facing a decline of 50% since the 1960s [1]. Other regions aren’t sounding the alarm just yet— Brazil celebrated a record-high in coffee production in 2016 after experiencing a particularly rainy year — but trouble is headed their way, too [3].
Coffee Arabica and Coffee Robusta are the most popular coffee varieties in the world. Arabica, which represents the majority of global production, is most comfortable at temperatures ranging between 18 and 21 degrees celsius. Temperatures outside this range have a negative impact on production yield and quality. Every 1 degree increase in temperature will decrease annual yield by approximately 137 kg per hectare (60% of the average farmer’s current production in Tanzania) [4].
For their part, coffee growers essentially have no choice but to take action. Climatic monitoring equipment to measure each season’s crop could help farmers gauge performance and anticipate trends ahead of time. Farmers have several tools at their disposal to intervene — irrigation, mulching, shade management, and terracing can all provide benefits. Switching to a more drought resistant species of coffee could also strengthen farmers’ position against climate change [5]. Areas on higher ground or further away from the equator may be better suited for climate change conditions; however, coffee plants take years to reach maturity, so any transition will be difficult and producers may not be sufficiently financially equipped to cope [6].
Starbucks sees climate change as a big problem. Their website states, “We see firsthand and hear directly about the impacts of climate change. In addition to increased erosion and infestation by pests and coffee rust, coffee farmers are reporting shifts in rainfall and harvest patterns that are hurting their communities and shrinking the available usable land in coffee regions around the world.” Starbucks’ site also outlines the major initiatives they’ve launched to tackle climate-related issues, which include [7]:
- Adhering to LEED building standards in stores and purchasing renewable energy
- Working with Conservation International to improve agricultural practices.
- Partnering with other organizations to promote climate change and clean energy policy (e.g. Business for Innovative Climate and Energy Policy)
Starbucks’ farming initiatives may be making some progress. According to MIT’s Technology Review, Starbucks requires its network of farmers to grow their beans using a certain set of standards, including shade, the use of trees to protect crops, and methods to deter certain types of pests and disease that may be amplified by climate change. MIT quotes Starbucks as saying “Today 99% of [Starbucks] coffee, more than 400 million pounds each year, complies with those standards.” The company developed a special coffee varietal in Costa Rica that’s resistant to fungal infestation. In Chiapas Mexico, where farmers lost 60% of coffee production to leaf rust in 2014 following increases in temperatures and rain, Starbucks began distributing a rust-resistant coffee variety [2].
Starbucks could be doing more, though. In 2008, it set a goal of reducing energy use by 25% in company-owned stores. Emissions actually increased from 2012 to 2014, partly because of the decision to add heated food to the menu, requiring additional store equipment [2]. This is something Starbucks should quickly address if it wants to communicate that it’s serious about fighting climate change. It’s also unclear whether coffee farmers will have the necessary financial backing to adapt to this changing environment and whether Starbucks is doing anything to help them in that regard. Starbucks should be prepared to support coffee growers here, too. Innovative agrictulural solutions to climage change problems are a great start, but it won’t be enough unless growers have the support they need to implement these practices quickly.
While Starbucks is ahead of the vast majority of companies when it comes to tackling climate change, more effort will be required over the next decade to ensure the long-term sustainability of the business.
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[2]https://www.technologyreview.com/s/601404/starbucks-responds-to-climate-change-with-mixed-results/
[4]http://fortune.com/2015/06/02/coffee-snobs-this-brew-will-get-pricier-thanks-to-climate-change/
[7]http://www.starbucks.com/responsibility/environment/climate-change
I completely agree that Starbucks must do more to confront climate change. I too thought about innovation and how Starbucks could encourage farmers to become more efficient in their practices to ensure that everyone can get their Starbucks for decades to come. I think we’d have to examine the amount of land that Starbucks actually owns or if they typically buy harvested coffee from farms. Obviously as such a huge purchaser they’d have tremendous leverage but they may be limited by how they source their product.
Thanks for sharing. I also agree that Starbucks should do more, but I struggle with how to provide adequate incentives to expedite their progress. As of now, it appears that Starbucks is mainly improving to protect their investments, rather than acting to decrease their contributions to climate change. In addition to their LEED initiative, I think it would be interesting for them to take a look at their emissions created from transportation. Perhaps if this was a priority, they could adjust their delivery plan to mitigate the effects. Going back to my original point on incentives though, I’m afraid Starbucks would be hesitant to make such an investment unless it directly contributed to a decrease in costs.
Loads of interesting points here. Like x96791 I would be interested to look at what can be done to reduce emissions from transportation as well as the operating activities of the cafes. While moving to hot food increased the carbon footprint of the stores, I think it is a smart diversification move. I was also thinking about the Teavana acquisition in terms of carbon footprint and diversification.