Consider your favourite cup of Starbucks coffee: it is a sum of multiple parts, each with a different origin. Let us follow the path of the coffee itself, tracing backwards from when you get the coffee itself. When you order a cup of vanilla latte at the counter, the barista prepares an espresso shot using ground beans. While the beans are ground in-house, perhaps prior to that they are roasted in a roastery located within the city. Even before that, the beans are sourced from the most exotic of locations, farmed in the outskirts of Brazil. This path that the beans take from crop to cup is known as a supply chain. Everything that you buy consists of multiple such pathways, with modern supply chains being more like complex networks rather than linear chains. It consists of everything the company needs to get you the product you are purchasing.
As we move forward into an era of sustainability, considering the impacts of supply chains becomes even more important. They form the basis of modern capitalism and achieving supply chain sustainability is a key step to a better future. Every product that arrives in your hands is made through a supply chain, from books to computers. By creating sustainable chains, we can improve the overall sustainability of our consumption. However, this is a huge challenge that would be nigh impossible to tackle. As products become more complex and difficult to manufacture, supply chains become less traceable and more opaque, complicating their management process. This leads to companies facing sustainability issues on multiple fronts. CDP found that companies’ supply chains produce more than five times the emissions of their own direct operations. They also face social problems such as the most recent Xinjiang forced labour scandal, involving major players like Nike and Adidas. Furthermore, sustainability is all encompassing and includes environmental, social and governance issues. Thus not all goals would be achievable due to the breadth of problems that have to be tackled.
What is supply chain sustainability?
According to the UN Global Compact, supply chain sustainability can be broken down into 4 main categories: environmental, social, economic and governance. Specifically, its objective is to “create, protect and grow long-term environmental, social and economic value for all stakeholders involved”. By doing so, companies ensure the longevity of their business operations and obtain social acknowledgement. There are four broad steps that companies can take towards supply chain sustainability:
Source: UN Global Compact
Firstly, companies must establish their overall vision and goals for sustainability. Then, they must also establish sustainability expectations for the supply chain.
Often using a risk assessment approach, the companies then scope their efforts and decide which areas implementing measures would have the greatest impact on.
- Define and Implement
Here, companies engage their supplies to apply measures in mitigating risks identified above. Some types of measures might include audits, capacity building, and creating sustainability indexes to measure supplier performance. To establish greater impact beyond direct suppliers, some companies even opt to establish industry wide collaborations and partnerships.
- Measure and Communicate
Using the expectations for the supply chain, they can then create metrics to assess the performances of the implemented measures. Companies should continuously measure and improve on the sustainability of their supply chain, creating a process of constant improvement.
Sustainable Starbucks Coffee
Going back to the cup of coffee at the beginning, we look at Starbucks’ supply chain sustainability practices. They have created a metric to measure the ESG performance of their coffee bean suppliers. This approach is called Coffee and Farmer Equity (C.A.F.E) Practices, which was developed in cooperation with Conservation International. It evaluates and encourages suppliers who can support their mission to improve working conditions for farmers and develop sustainable growing practices.
Primarily, they require these suppliers to have quality and economic transparency, to ensure that farmers are paid a fair price for the produce. Then, they use third parties to verify the social responsibility and environmental leadership of the supplier. These include criteria such as minimum-wage compliance, prohibition of child labour, waste management, water quality protection and conservation and many others. In 2020, through audits, they managed to ensure that 98.6% of their coffee was ethically sourced (as measured by C.A.F.E) and hope to maintain 100% ethically sourced coffee as much as possible. They also subscribe to the process of continuous improvement and plan to implement increased inspection frequencies and sample sizes. Hopefully through these practices, Starbucks would be able to continue serving up a sustainable cup of coffee for the foreseeable future.
As consumers, we often do not consider the full impacts of our purchases and choices. However, it is through these supply chains that we may indirectly impact someone or something far away, in space or in time. when we choose to purchase from a company that lacks such sustainability practices, we could be unwittingly supporting child labour or planet degrading practices. Simple online research could, perhaps, help us make better choices and support companies that are committed to a more sustainable future. Nonetheless, consumers only have limited ability to impact the sustainability of supply chains. Companies need to create an environment where sustainability is the norm. Hopefully, a day will come where the default choice for the consumer is always a sustainable one.