When masks of “Corporate Social Responsibility” (CSR) accidentally fall off, the true nature of globalization is revealed. Thanks to The Forbes, CSR now stands for , at least to me, Continuing Slavery at a Remote (because slavery is illegal in the constitutions governing the business laws.) In my view, the following article concludes, the price Starbucks pays for the specialty coffees - under the C.A.F.E. practices - in the amount of $1.28/lp should be enough for Ethiopian farmers. If not, the CSR, along with its C.A.F.E. program, should be taken away because people are not thankful anyways! The magazine goes on to discourse that we should be happy (and probably proud of the “smart”, read unethical, business strategies the company followed because) Starbucks is good to its employees. The poor farmers would admire such neo-colonialist rhetoric since they do not know that Starbucks sells Shirkina Sun Dried Sidamo Coffee for $27/lp. [The Forbes article is posted below to provoke healthy thoughts and also to show contrasts.]When Is Being Good Not Good Enough?
Mary Crane, 11.28.06, 12:20 PM ET
Being good, it seems, is never good enough. Companies like Starbucks are renowned for doing well by their employees and for trading fairly with coffee farmers around the world. So why is the coffee chain hitting a bitter note with the anti-poverty and human rights group Oxfam International?
According to Oxfam, Starbucks (nasdaq: SBUX - news - people ) had a hand in the Ethiopian government's recently failed attempt to trademark two of the nation's coffee bean names, Harar and Sidamo. The government believes that trademarking those names could help the country's coffee industry take home an extra $88 million a year. Oxfam International, on behalf of the Ethiopian government, has accused Starbucks of blocking Addis Abbaba's trademark applications with the U.S. Patent and Trademark Office.
That doesn't quite square with the image Starbucks has worked hard to earn. The company has developed its own set of socially responsible coffee-buying guidelines, for example, called CAFE (Coffee and Farmer Equity) Practices. It has also partnered with environmental organizations along its coffee supply chain to minimize Starbucks' environmental impact. The company is also known for how it treats its employees: Health benefits are available to anyone who works 20 hours a week or more and has been with the company for at least 90 days.
But sometimes, doing good is like painting a target on your back. Because Starbucks is one of the biggest names in coffee, "activists hold us to an even higher standard," says company spokeswoman Audrey Lincoff.
That's true for a lot of companies that develop socially responsible brands, says Herman B. "Dutch" Leonard, who teaches business administration and public-sector management at the Harvard Business School. "If Starbucks says, 'We're bringing you environmentally conscious coffee grown by happy farmers, and you can feel good about this when you drink our coffee,' they can be sure folks like Oxfam are going to be taking a look at what they're doing."
Seth Petchers, the coffee lead for Oxfam's Make Trade Fair campaign, admits Starbucks has made some progress in its supply-chain practices, but it should do more to help its suppliers who come from the poorest of poor countries. "This [trademarking plan] isn't about Ethiopia trying to strengthen its grip on these coffees and impose pricing requirements," he says. "It is about looking to control and protect the way these brands are built up in the market and make sure what Ethiopians get reflects [the country's] true value in the marketplace."
Oxfam's campaign has been a real headache for Starbucks, whose corporate social responsibility (CSR) program is a major part of its brand. Starbucks isn't keen on Ethiopia's trademarking plan, but it denies interfering with Ethiopia's patent applications. The coffee company has shot back with its own battery of press releases and a full-page ad in The New York Times on Nov. 5 that highlighted Starbucks' CAFE Practices, which include paying above-market prices for its coffee.
So when your social responsibility agenda makes your company a target, is continuing your CSR program worth the headache?
Yes. "I don't know a company that can afford not to," says Bradley Googins, director of the Center for Corporate Citizenship at Boston College. Since the 1970s, when corporate social responsibility was the battle cry of a select few-- The Body Shop and Ben & Jerry's, for example--CSR has gone mainstream. Corporate misdeeds (as in the case of Enron) have dragged social responsibility into the spotlight, while concerns about resource constraints and the availability of information over the Internet have brought the concept of corporate social responsibility home. Companies are taking note: Nine hundred companies have signed onto the United Nations' Global Compact, which promotes ten universal principles on responsible corporate citizenship, since it was founded in 2000.
Pressuring companies to be more socially responsible has done some real good. Just look at Nike (nyse: NKE - news - people ) and Gap (nyse: GPS - news - people ). Both came under serious attack for their labor practices and have, over the last four or five years, implemented anti-sweatshop social responsibility programs. Nike has even implemented a code of conduct that advocates industry-wide best-practices standards. Royal Dutch Shell (nyse: RDS - news - people ) has also done well by doing good: By the end of 2005, it had invested more than $1 billion in renewable energy and voluntarily lowered its greenhouse-gas emissions from operations by 15% compared with emissions levels in 1990. Another big CSR spender is General Electric (nyse: GE - news - people ), which has pledged to spend $1.5 billion on cleaner technologies by 2010 as part of its GE Ecoimagination initiative.
But not everyone thinks going above and beyond is such a good idea, and it's difficult to come up with a way to quantify the payoff for investing in CSR programs.
Russell Roberts, an economist at George Mason University, goes as far as to say it is "immoral" for companies to use shareholders' money to pay for corporate social responsibility programs. He, like most critics of CSR, takes his cue from a 1970 article published by the late economist Milton Friedman in the New York Times. Its title says it all: "The Social Responsibility of Business Is to Increase Its Profits."
First off, the term "socially responsible," Friedman says, is indefinable; it means different things to different people. More important, though, is that an executive's sole purpose in a public company should be to serve his or her employers--the shareholders. Anything that detracts from delivering dividends is wrong.
But Roberts concedes that everyone in today's post-Enron world feels pressured to appear socially responsible. It should be enough that Starbucks has created unprecedented demand for Ethiopian coffee through its coffee business, he says, and corporations should be able to leave it to organizations like Oxfam and governments to figure out how to lift the world's poorest people out of poverty.
The reality, though, is that if a company backs away from CSR, it risks doing itself even more harm than the criticism it was trying to avoid.
BP (nyse: BP - news - people ), for example, can't back off its promise to be "Beyond Petroleum," even despite the public lashings it received after shutting down its oilfields in Prudhoe Bay and after last year's explosion at its Texas City refinery. Reneging on its brand promise to be more environmentally conscious--a campaign the company's executives initiated in 2000--could do more harm than good. In fact, the company is taking an even "more intense approach" now, says BP spokesman Roddy Kennedy from London. "Our view is you should always--if you are a decent company--learn from your mistakes."
BP's mistakes at its Texas City facility claimed the lives of 15 workers, while a corroded transit pipeline led to the spillage of 200,000 gallons of crude oil in Prudhoe Bay last August, which helped push the price of crude oil to a record $78 per barrel. After that, says Harvard's Leonard, "BP doesn't see it as an option to give up" on its CSR program. But to avoid falling on its own CSR sword, companies like BP and Starbucks have to be able to live up to their promises, he says. "You either have to make sure that you are going to be better than the average company, or you should keep a low profile."
It should be enough that Starbucks has created unprecedented demand for Ethiopian coffee through its coffee business, he says, and corporations should be able to leave it to organizations like Oxfam and governments to figure out how to lift the world's poorest people out of poverty.
Wondwossen -
ReplyDeleteYou beat me to it - I was going to send you the link for Mary Crane's article yesterday.
More later.
While I understand that Starbucks has built up their business over the years and invested heavily to create flagship brands the likes of Sidamo it's probably high time to shift the tide towards a struggling Ethiopian economy and the small farmer.
ReplyDeleteWhich brings me to my next question - Has Yirgachefee been approved for trademarking? If yes, then is this whole thing just about Sidamo and Harar? And why was one approved and not the other two? Is it because of the higher branding, recognition and revenue of Sidamo, or some other reason?
As far as the Forbes article is concerned, I think it is self evident that perceptions of Africans by Westerners as equal economic/trade partners has a long way to go. However, I think we need to be cautious about laying the blame at the foot of the colonialists or neo-colonialists. Africa - in this case, Ethiopia, needs to start taking responsibility for herself and changing the way things have been done for a long time.
I hate to venture down this lane but it's part of the whole package - Perception or for that matter in reality, Ethiopia doesn't possess half, or even a quarter of the CSR image (for lack of a better term) that Starbucks has. This doesn't help her look good when she sits down and negotiates with the big whigs.
Yes, Starbucks might be contributing to the imbalance of economic power/market share but I am not sure they can be held liable for the source of poverty and stagnation that we see in Ethiopia today. That said I think everyone realizes that it's time to change the way we conduct our business not just with the outside world but also from within our own.
Hi Mariam,
ReplyDeleteYirgacheffe has been registered in the US mainly because, as SCAA said, to a lack of research on their part to convince the judge presided over the case. The issue is now over Sidamo and Harar.
True, the reasons for Africa’s (and Ethiopia in particular) lagging behind in development lays exclusively over the shoulders of their citizens though external factors also have exerted negative influences. Mismanagement is responsible for Ethiopia’s current state more than anything else. The people are deceived by their children as much as they are forgotten and used by the rest of the world. The governments’ lack of vision as reflected in their public policies has left the people helpless and destitute. If there is anything that can bring Ethiopia out of poverty, it is in our hands – not in the West.
Starbucks will not make the country rich; neither is it liable (in my view) for Ethiopia’s poverty. This does not mean that they are not responsible for the unethical business practices. The question is that the company should not continue to ignore our call to pay a fair price for the raw material it uses to raise its profitability graph. We hold the company and the mentality reflected in the Forbes article responsible for this. We are not asking for aid or a favor where Starbucks’ is showing off as “good”.
The most important point is, by asking Starbucks and other companies (and governments for that matter) to recognize the producers’ share in their markets, we will help the poor to win their daily lives. The buzz word “empowerment” comes into play here. This is a creative way of helping the people to reclaim their identity. If the people is guaranteed a pay for its labor, I believe, its dependence on the government decreases over time. That is also a means to cultivate indigenous investment. I think this is a sound approach to poverty eradication (and the only way in the absence of responsible governments.)
Let’s keep these great questions coming. You may also contact me by email: poorfarmer@gmail.com
I applaud you for promoting a healthy dialogue and posting some interesting articles on this issue.
ReplyDeleteI am tempted to write an article entitled, “When Is Being Rich Not Rich Enough?” in response to Mary Crane’s article, but I refuse to get suckered into the either/or debate that she is instigating. She inserts so many substantive points that reflect and reinforce inequalities found elsewhere in the global society, entertaining a response to such a condescending and irresponsible article will only simplify a complex problem and veer the discussion off to an unhealthy track.
The article is not only misleading, but it also elicits negative reactions from both sides of the debate. It has successfully painted a picture of Starbucks as a victim caught between two distasteful options: be a socially responsible corporation and “paint a target on your back,” or forget about Corporate Social Responsibility (CSR) and appear non-caring. On the opposing end, Ethiopia is described as ungrateful to Starbucks for creating “unprecedented demand for Ethiopian coffee through its coffee business.” (As if it is good enough for Ethiopian farmers to identify themselves with the fortunes of Starbucks.) Neither picture depicts an accurate account of these two entities and the problems they are having with each other.
CSR is not part of the equation in the Starbucks vs. Ethiopia drama. Ethiopia did not start out by accusing Starbucks of anything, it is not blaming Starbucks for its poverty, and it did not approach Starbucks for help. Ethiopia merely came up with an innovative way to increase its coffee farmers’ incomes by trademarking its specialty coffees, and found Starbucks squarely standing in its way of those efforts. End of story.
Why is CSR being linked with these events? The only logical reason I can conjure up is management’s fondness of wanting to use cookie-cutter solutions to problems that, on the surface, appear similar. In the mid 90’s, Starbucks was accused of being indifferent to the plight of farmers in Guatemala. It reacted angrily, pointing to its corporate giving programs with CARE. But after its initial defensive posture, Starbucks did come to the table to address the problem. It eventually worked with growers, human rights workers, and others and came up with its “Framework for Action” to help small Central American cooperatives market their beans. This change made Starbucks stronger, and is among the reasons it sees itself as a positive community force.
Starbucks is now playing a rerun of those times. However, the situation is obviously different this time. This is not a charity issue but requires a fundamental change in its way of doing business. Starbucks wants to continue the approach of viewing producer concerns as charity issues. Pointing towards its CAFÉ practices and hiding behind its CSR image might have been the solution to yesteryear’s accusations, but in this case, it is a diversionary attempt to cover its misdeeds.
As angry as I am about the article’s use of rabble-rousing metaphors: - “falling on its own CSR sword” – “painting a target on your back”- “coffee company has shot back” etc… I do agree with the article on one point; and that is the acknowledgement that, “corporations should be able to leave it to organizations like Oxfam and governments to figure out how to lift the world's poorest people out of poverty.” That is exactly what Ethiopia's trademarking plan is trying to do. I wonder why Mary Crane did not ask Starbucks the reason it isn't “keen on the idea”?
Having said all that, I would now like us all to focus on a reconciling thought. John Dewey said, “The self is not something ready-made, but something in continuous formation through choice of action.” Starbucks has a track record that leads me to believe that it is capable of making an about-face and doing the right thing. For a company that prides itself on the treatment of its partners, it is inevitable that it will eventually come around to not ignoring the necessary shift in doing business that respects all stakeholders.
To paraphrase President Clinton’s words, “What is wrong with Starbucks can be fixed with what is right with Starbucks.”
Menkeli
Yes, I agree that Mary Crane’s article is fanning the flames. But it does create a good backdrop for bringing some key points to the forefront of our conversations.
ReplyDeleteAt the same time I am not so sure I agree with the point made by Menkeli that “CSR is not part of the equation in the Starbucks vs. Ethiopia drama. Ethiopia did not start out by accusing Starbucks of anything, it is not blaming Starbucks for its poverty, and it did not approach Starbucks for help.” While this may be true on one level, the other way you can approach this issue is by examining what actually happened.
Once Ethiopia realized (by the way at the advice of Ron Layton (sp?), of Oxfam) that trade marking was a “brilliant idea” – the Eth govt tried hard to convince Starbucks of their position and failed miserably. As we all know, Starbucks simply ignored their requests because, as I said earlier, large multi-nationals corps don’t talk to small, insignificant third world countries. Especially nations with a long history of poverty and dependence on outside aid. That’s where “they should be grateful, what’s the matter with these people, haven’t we done enough for them already?” attitude comes into play! It was only after the public intervention of the non-profit Oxfam, the big ads it secured in national newspapers and the ground swell of public support that followed the grass root petitions that the public started to pay attention.
I am not proud that we need the likes of Oxfam to make our case. However, that is the sad truth of the matter. Furthermore, the argument that Starbucks is responsible for the fate of the poor farmer, directly linking the economic future of the poor Ethiopian grower (for that matter the economic welfare of the poor nation, Ethiopia) to past and present actions of Starbucks is exactly how Oxfam was able to make this link. In doing so, this allowed Oxfam (subsequently Ethiopia govt) a powerful political and social positioning tool that forced Starbucks to the negotiation table. Starbucks could have continued to “turn a blind eye” but once it was obvious that this was something that would “hurt the bottom line” then Starbucks did a turn about.
In this case, and so many others (Nike sweat shops, child labor etc.) it doesn’t take a lot to put a dent in the image of a company. I am sure you’ve heard of the saying “perception is reality.” Even if Starbucks thinks it is right to oppose Ethiopia’s trademarking and even if it continues to argue that it is already done enough, at the end of the day it doesn’t make a lot of difference. The specific arguments and positionings started by Oxfam are now sticking and will not go away that easily. I think from Oxfam’s perspective its primary goal was have the two main parties, Eth govt and Starbucks, meet face-to-face. This objective has been met. The rest remains to be seen.
Mind you, SBUX is trying to keep low profile leaving the talk to the biased mainstream media and few accadamics, such as Sean O'cconer of UW. It wants us to believe that everything is ok during this busy holiday season. The statement "we've agreed with the gov't to work for Ethiopia's IP protection" is a calculated move to distruct the issue.
ReplyDeleteCertainly, there are several issues to sort through and the problems are too complex to confine them to the SBUX-Eth dialogue. Doing so will only help SBUX drag its foot.
The company is responsible for the income disparity between the poor farmer and SBUX' multi-billion $ biz. SBUX can and should do better to elevate the living standards of the farmers. That is a legitimate question raised by Fair Trade activists and anti-poverty orgs whoare still waiting for SBUX' genuine response.
But now, ecpecially for Ethiopia, the question is for SBUX not to stand on the way its development plans regardless of how good or bad it may be. The company has to do what it should if it is against exploitation (another name for CSR). Standing on the way of a powerless people and attempting to dictate the courses of their development strategy so it is aligned with the company's business plan is totally unacceptable. A company CEO attempting to influence (corrupt) govts to make decitions unfavorable to the people is the disgusting feature of this corporate world. Shame! Now that the attempt by SBUX has failed, we are asking the company to come to its senses, and enjoy another chance.
One thing is clear: this trademark issue will not end without an important economical repurcussion on SBUX. It may have an effect on the farmers as well but don't forget the dispute is over the specialty - not commodity - coffee. On the other hand, whether this issue is resolved - in Ethiopia's favor - today or late in December, the gate for the IP flood is now open. SBUX and others must learn how to swim as long as they remain in the business.
I wish you a great weekend and a happy reading on this page through the weekend.