Climate Change & Your Morning Java<\/b><\/p>\n
\u00a0\u00a0\u00a0\u00a0Starbucks, the world\u2019s leader in specialty coffee operating in 68 countries with net revenues of 19.2B [1],<\/span>\u00a0finds itself facing unknown territory: the very real threat of global climate change. With growing consensus within the scientific community that the Earth is retaining excess heat from greenhouse gas emissions [2],<\/span> rising temperatures and the environmental symptoms of that warmth will have a noticeable impact on Starbucks\u2019 existing raw materials inputs and global supply chain. Relying heavily on a global network of small-scale farmers for raw material supply, Starbucks\u2019 bottom line is directly tied to the success of farmer output. That output is feeling the heat as changing weather patterns and increased temperatures from climate change reduce farmers\u2019 viable coffee bean yields.[3]<\/span>\u00a0Climate change is infringing on Starbucks\u2019 future ability to grow as <\/span>the<\/span><\/i> leader in the specialty coffee space. The next steps Starbucks takes beyond initial efforts to mitigate and adapt to climate change will determine the fate of your morning java.<\/span><\/p>\n Feeling the Heat: Coffee Bean Scarcity & Supply Chain Challenges<\/b><\/p>\n \u00a0\u00a0\u00a0\u00a0The $100 billion world coffee market is primarily driven by the production and purchase of <\/span>arabica<\/span><\/i> beans and other varietals. Starbucks only buys <\/span>arabica<\/span><\/i> beans at the magnitude of half a billion pounds a year from a network of 300,000 small-scale growers, a majority\u00a0of which are based in Latin America.[4]<\/span> The issue here is that <\/span>arabica<\/span><\/i> yield is extremely susceptible to climate change, with little tolerance for higher temperatures and erratic rainfall. These climate change effects make coffee-growing geographies breeding grounds for coffee diseases like leaf-killing rust, and hotspots for devastating landslides. As a result, 80% of the regions where <\/span>arabica<\/span><\/i> coffee beans are grown \u2013 Brazil and Central America \u2013 are predicted to become unsuitable for\u00a0<\/span>arabica<\/span><\/i>\u00a0crop growth by 2050.[5]<\/span> Depleted access to an affordable population of high-quality beans inherently limits the company\u2019s ability to expand product offerings and move into international markets successfully.[6]<\/span><\/p>\n \u00a0\u00a0\u00a0\u00a0As the premier roaster and seller of specialty coffee globally [7],<\/span> Starbucks maintains a highly complex and networked supply chain. To that end, the UNEP asserts that extreme weather events associated with climate change directly affect\u00a0food and beverage company distribution networks.[8]<\/span>\u00a0Starbucks is already witnessing these effects on its transportation network. In Colombia, a region where Starbucks sources <\/span>arabica<\/span><\/i> beans, landslides from extreme rainfall have destroyed homes and roads. Interruptions like landslides have domino effects on Starbucks\u2019 ability to scale their supply chain infrastructure.[9]<\/span> By leaving product stranded in the delivery chain from destroyed transport paths, Starbucks\u2019 business goals to grow product offerings and expand geographically are jeopardized.<\/span><\/p>\n Addressing Climate Change Creates a Latte of Opportunity<\/b><\/p>\n \u00a0\u00a0\u00a0\u00a0With the goals of insuring a future supply of high-quality coffee and reinforcing their industry leader position [10],<\/span> Starbucks is investing in its climate change pain points, starting on the farm level.[11]<\/span> Such investments have included building an agronomy center in Costa Rica to work with small-scale producers and coffee farming communities in developing sustainable farming practices.[12]<\/span> Additionally, Starbucks is priming its farmers to prioritize crop development adaptation through measurement standards that reward quality <\/span>and<\/span><\/i> good environmental practices (e.g. shade trees, soil management).[13]<\/span> Finally, Starbucks plans to invest $50M in by 2020 in a Global Farmer Fund, promoting farmer education and supply chain resilience techniques, as well as lower interest loans for farmers investing in sustainable infrastructure.[14]<\/span> Here, Starbucks is generating a wealth of opportunity to establish a supply chain armed against future climate change shocks. By educating farmers about the threats of climate change and providing monetary\/agronomist resources to thrive, Starbucks creates a more sustainable and less vulnerable global supply chain.<\/span><\/p>\n Grounds for Improving Climate Change Practices<\/b><\/p>\n \u00a0\u00a0\u00a0\u00a0Starbucks definitely has climate change on mind, but there is room for growth. Development of coffee bean varietals resistant to climate change effects will be critical to Starbucks\u2019 long-term raw material supply. Starbucks is gradually starting to experiment with developing hardier <\/span>arabica<\/span><\/i> strains, but are not equipped to work at the speed at which climate change is affecting small-scale farmers’ usable land. This is where World Coffee Research (WCR) comes in \u2013 a non-profit group of coffee companies, growers, and scientists presently focused on genetically sequencing Ethiopian <\/span>arabica<\/span><\/i> beans. WCR brings a lot to the table for Starbucks: Ethiopian <\/span>arabica<\/span><\/i> beans are considered to be the base genetic diversity of the <\/span>arabica<\/span><\/i> plant, but these beans can no longer be collected from the country. With access to this finite agricultural resource, WCR is working to reliably identify 20-30 strains resistant to rust and other climate elements while maintaining yield.[15]\u00a0<\/span><\/span>In research partnership with WCR, Starbucks can more effectively arm its farmer network with resilient beans, and equip itself to prevent your morning brew from becoming a luxury of the past.<\/span><\/p>\n Word Count<\/strong>: 787\u00a0<\/strong>(without citations)<\/p>\n [1]\u00a0Starbucks Corporation, 2015 Fiscal Annual Report, pg. 1, 22,\u00a0<\/span>http:\/\/investor.starbucks.com\/phoenix.zhtml?c=99518&p=irol-reportsAnnual<\/span><\/a>, accessed October 2016.<\/span><\/p>\n [2]\u00a0Rebecca A. Henderson et al., “Climate Change in 2016: Implications for Business,” HBS No.\u00a02-317-032 (Boston: 性视界 Business School Publishing, 2016), pg. 1-2.<\/span><\/p>\n [3]\u00a0Bryan Gruley and Leslie Patton, \u201cTo Stop the Coffee Apocalypse, Starbucks Buys a Farm,\u201d Bloomberg, February 13, 2014, <\/span>http:\/\/www.bloomberg.com\/news\/articles\/2014-02-13\/to-stop-the-coffee-apocalypse-starbucks-buys-a-farm<\/span><\/a>, accessed November 2016. <\/span><\/p>\n [4] Ibid.<\/p>\n [5]\u00a0Nanette Byrnes, \u201cStarbucks Responds to Climate Change, with Mixed Results,\u201d MIT Technology Review, May 9, 2016, <\/span>https:\/\/www.technologyreview.com\/s\/601404\/starbucks-responds-to-climate-change-with-mixed-results\/<\/span><\/a>, accessed October 2016.<\/span><\/p>\n [6]\u00a0Starbucks Corporation, 2015 Fiscal Annual Report, pg. 1,\u00a0<\/span>http:\/\/investor.starbucks.com\/phoenix.zhtml?c=99518&p=irol-reportsAnnual<\/span><\/a>, accessed October 2016.<\/span><\/p>\n [7] Ibid.<\/p>\n [8]\u00a0United Nations Environment Programme, \u201cGeo-5 for Business: Impacts of a Changing Environment on the Corporate Sector,\u201d 2013, p. 29-30.<\/span><\/p>\n [9]\u00a0Jodie Thorpe and Shelly Fennell, \u201cClimate Change Risks and Supply Chain Responsibility,\u201d <\/span>Oxfam Discussion Papers<\/span><\/i>, June 2012, ABI\/INFORM via ProQuest, accessed October 2016.<\/span><\/p>\n [10]\u00a0Starbucks Corporation, 2015 Fiscal Annual Report, pg. 7,\u00a0<\/span>http:\/\/investor.starbucks.com\/phoenix.zhtml?c=99518&p=irol-reportsAnnual<\/span><\/a>, accessed October 2016.<\/span><\/p>\n [11]\u00a0Starbucks Corporation, 2015 Global Responsibility Report, p. 1-3, http:\/\/www.starbucks.com\/responsibility\/global-report, accessed November 2016.<\/span><\/p>\n [12]\u00a0\u201cStarbucks Expands $70 Million Ethical Sourcing Program With New Global Agronomy Center,\u201d <\/span>Business Wire<\/span><\/i> 2013<\/span><\/i>, March 19, 2013, ABI\/INFORM via ProQuest, accessed October 2016.<\/span><\/p>\n [13]\u00a0Jodie Thorpe and Shelly Fennell, \u201cClimate Change Risks and Supply Chain Responsibility,\u201d <\/span>Oxfam Discussion Papers<\/span><\/i>, June 2012, ABI\/INFORM via ProQuest, accessed October 2016.<\/span><\/p>\n [14]\u00a0Starbucks Company (Newsroom), \u201c<\/span>Starbucks More Than Doubles Global Farmer Loan Commitment to $50 Million,\u201d June 22, 2015, <\/span>https:\/\/news.starbucks.com\/news\/starbucks-more-than-doubles-global-farmer-loan-commitment<\/span><\/a>, accessed November 2016.<\/span><\/p>\n