Corporate coffee

Corporate coffee

Smucker’s 2015 sustainability report

JM Smucker Company, one of the largest coffee buyers in the world, has issued their 2015 corporate responsibility report. Smucker’s is the owner of Folger’s, Millstone, Café Bustelo, Café Pilon, and Dunkin Donuts retail brands; coffee represents the largest portion of the company’s sales and a 2015 profit of $549 million. This is their fifth CRR, and is as tiresome and uninformative regarding efforts to source sustainably-grown coffee as the four previous versions. Here are the previous posts:

The reports tend to lack relevant, quantitative data. Thus, an update in the 2015 report on their goal to have 10% of their retail coffee purchases be third-party certified (primarily UTZ Certified) by 2016 was a welcome tidbit. Smucker’s stated that in fiscal year 2015, they had reached 8%, up 2% from 2014. As I’ve previously noted, we don’t know the total amount of coffee the company purchases. The last figures available from 2013  estimate it at 300,000 tons. Nor do we know what proportion of total purchases consists of retail purchases.

In last year’s report, Smucker’s announced a show of their commitment to certified, sustainable coffee with their introduction of an UTZ Certifed brand, Life is Good. It has already been discontinued, although that fact was not included in this year’s report.

Once again, large sections of the green coffee sustainability portion of the report are copied wholesale, with little or no rewording, from previous years.

My favorite part of the report was the table on page 44, intended to highlight company activities in some coffee-sourcing countries. There were a few generic facts about coffee production, but the table said nothing about the company’s “direct global engagement.” Each spot in the table where that information was apparently supposed to appear was filled in with the words Type of Activities.

smucker-2015-chart

I think this is the equivalent of the “Hello World! This is your first post” placeholder.

What does it say when a company can’t be bothered to properly complete a report, or competently proofread it? This kind of indifference combined with the perennial lack of originality in the Smucker CRRs is insulting to stakeholders. It demonstrates a shortfall of sincerity in the company’s desire to inform the public about their coffee sustainability efforts in a transparent, thorough, and meaningful way.

Corporate coffee / Nestlé/Nespresso

Nespresso AAA quality program guidelines

Updated in April 2016

In 2009, Nespresso, the premium capsule coffee unit of the giant Swiss multinational food corporation Nestlé, announced a sustainability initiative they called Ecolaboration. I covered the goals in this post.

One major focus has been Nespresso’s AAA Sustainable Quality Program (“AAA program” for short). The goal in 2009 was to source 80% of Nespresso’s coffee from this program by 2013. They reached that goal, and in 2015 they were at 85%, with a goal of 100% by 2020. It is important to note that parent company Nestlé buys around 850,000 tons of green coffee annually, of which only about 0.2% is eco-certified (via Fair trade/organic).  Nespresso, which has a separate supply chain, sourced 55,000 tons of coffee through the AAA program in 2013, which represented 84% of their purchases. Thus, Nespresso buys about 65,500 tons of coffee, a small fraction of the total purchased by the company.

The AAA program’s three “A’s” are Quality, Productivity, and Sustainability. Once a farm meets the quality requirements (about 50 criteria) and is accepted into the AAA program, they enter a process to evaluate their social and environmental sustainability efforts. This aspect of the program was developed in partnership with Rainforest Alliance. For many years, the criteria or guidelines were not available to the public.  The Generic Tool for the Assessment of Sustainable Quality (TASQ) is now available online. What follows is an overview of the requirements for producers to be included in the AAA program under this TASQ, with an emphasis on the environment. Many of the statistics providing context for the guidelines come from Nespresso’s Ecolaboration Full-term Report, 2009-2013, published September 2014 (PDF), or the Coffee Barometer 2014 (PDF).

Criteria and scoring

The TASQ is based on the 2010 Sustainable Agriculture Network (SAN) standards used for Rainforest Alliance farm certification.  Nespresso has divvied up and tweaked the 10 principals and 99 criteria in the 2010 SAN standard into 42 principals and 296 criteria. Of those, 36 are classified as “critical” (12% of total). They include prohibitions on such things as hunting endangered species, paying below the minimum wage, or not documenting coffee transactions, and are considered “internationally accepted minimum standards for sustainability.”

If a farm does not meet all the critical criteria, they are designated as Under-performing but allowed time to resolve the shortcomings. Once a farm meets all the critical criteria, they are then considered compliant and at the Basic performance level. Thus, there is a low bar (especially regarding environmental standards) for inclusion in the program.

There are three more performance levels in the AAA program, reached by complying with increasing percentages of criteria on top of the critical ones: Emerging (at least 33% of non-critical), High Performing (66%) and Certified (80% or greater and at least 50% per principal).

“Certified” here does not mean that a farm automatically receives Rainforest Alliance (or any other) certification. If a farm chooses to apply for RA certification, Nespresso pays for the first year of certification audits. This is encouraged because at the farm level, only 30% of each harvest from participating farmers meets Nespresso’s quality requirements. Nespresso maintains that due to overall quality improvements and/or certification, farmers are able to sell the rejected portion of their crop at a higher price to other buyers.

As of 2015, according to the company Creating Shared Value Report, there are 75,000 farmers in the AAA program, but Nespresso does not disclose the percentages of farms at each performance level. The progress report stated that as of 2013, overall compliance of participating farms with the AAA standards reached 79.8%.  I took this to mean that 79.8% of farms in the program were in compliance (i.e., at least at the Basic level). It could mean that on average farms were compliant with 79.8% of criteria, but I’m not sure why it would not have been worded that way. Also unclear was whether “overall compliance” included quality criteria, or just TASQ criteria. No further similar reports have been published as of early 2016.

On a positive note, the report also noted that 30% of Nespresso coffee was Rainforest Alliance certified1.

The level of documentation required for various criteria varies depending on the size of the farm — 10 ha or less or greater than 10 ha. Nespresso doesn’t indicate how many of their producers are smallholders.

Inspections are done by Nespresso agronomists, and verified by SAN partner auditors. These include Rainforest Alliance’s own auditing division in many of the countries where Nespresso sources coffee2.

Ecological criteria

Nespresso states that 30% of their criteria fall under the umbrella of the environment. These include topics such as waste disposal and soil preservation.

More narrowly, there are 5 principals covering ecosystem management and wildlife conservation: Protection of Natural Areas, Reforestation, Shade Management, Conservation of Biodiversity, and Susceptible Species Protection. There are 37 criteria in these principals (12.5% of total).

The four shade criteria are fairly general, e.g., one is “There is a shade planting program with records.” One is very similar to the shade guideline from the 2010 SAN standard — this is the one that has been proposed to be watered down in the upcoming revision of the SAN standards. Overall, the ecological criteria tend to be quite generic and many are not quantifiable. Further examples include “Farms provide support to the conservation of nearby protected areas and conform to the management plans of those areas” and “Wild animals bred in the farms are supervised by a competent professional.”

Of the 37 ecological criteria, 7 are critical (none of the shade criteria nor any of the reforestation criteria), which represents 19% of the 36 overall critical criteria, and 2% of all criteria. Some of the critical criteria also seem open to interpretation, such as “The ecosystems conservation program takes into account natural ecosystems restoration and the reforestation of on-farm areas that are not appropriate for agriculture.” However, there are supporting documents to the TASQ that are not available publicly that may clarify some of these criteria.

Bottom line

  • Nespresso is sourcing a small fraction of the total coffee purchased by parent company Nestlé under guidelines that are similar to those used by Rainforest Alliance or UTZ.
  • The bar for inclusion in this program is much lower than other true certifications, with producers being allowed in the program (at least temporarily) even if they do not meet all critical criteria representing baseline sustainability standards.
  • A small percentage of the criteria are related to the ecology of farms, many are generic and without quantifiable goals.
  • Nespresso does not disclose a breakdown of the percentage of farms at each performance level.

Future plans

The next iteration of Ecolaboration is dubbed The Positive Cup by Nespresso. Their new coffee sourcing goal is to source 100% of its permanent Grand Cru range through the AAA program by 2020. There are now there are 45 Grand Cru coffees of which 19 are in the permanent range. These numbers seem to change as limited editions come and go; we don’t know if the new goal will translate to an amount that is more or less than the 80% of Nespresso’s total tonnage it is currently sourcing under the program.

You can read more about the various aspects of sustainability efforts at Nespresso, including those beyond coffee sourcing, at their web site.

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1It is not known how many of these producers obtained Rainforest Alliance certification as a result of going through the AAA program, or if they already had it. Many producers carry multiple certifications or affiliations. For example, according to their Mid-term Report Coffee Target 2011, about 25% of Nespresso’s coffee came from Colombia. The same year, Starbucks published a report on over 200 of their farmers in Colombia (PDF). Forty-two percent of them were also Nespresso suppliers, but nearly all were already in Starbucks CAFE Practices program (with its more stringent environmental requirements) first.

These overlaps make it difficult to assess any single program without accounting for producers that participate in multiple schemes because the credit for improvements might be due to the pre-existing affiliation.

2This arrangement is a little cozy. As noted in Table 15.7 of the chapter cited below, the Nespresso AAA standards are defined by RA, RA controls the accreditation process, and RA auditors controls compliance standards (certification). These authors do not consider Rainforest Alliance certification itself as third party accredited.

Soto, G., and J.-F. Le Coq. 2011. Certification process in the coffee value chain. Chapter 15 in Ecosystem Services from Agriculture and Agroforestry: Measurement and Payment. Rapidel, B., et al., eds. London, Earthscan.

Certifications / Corporate coffee

Corporate money and pseudo-certifications

Destroying consumer trust and undermining the value of certifications

In return for financial support that represents a tiny fraction of profits, large corporations are receiving “endorsements” in the form of product badges promoting health benefits or sustainability efforts — despite the fact that many of these corporations have rotten sustainability records. This includes purveyors of corporate coffee, including Nestlé and JM Smuckers (Folgers).

It isn’t apparent from the badges or labels what they truly represent, nor in some cases is it even possible to figure out from viewing the websites of the organizations, corporations, or sponsors.

“Made by Sustainability Leaders” badges on Walmart products, backed by The Sustainability Consortium (TSC)

The Sustainability Consortium was originally established with funds from Walmart, and is “dedicated to improving the sustainability of consumer products” through “implementation of credible, transparent and scalable tools” that are “accessible for all producers, retailers, and users.” However, the only publicly-available documents are the “sustainability insights” for various products and sectors. These brief, very general overviews aren’t particularly insightful (e.g., for coffee, “clearing land for agriculture can lead to deforestation.”). The “toolkits” containing Key Performance Indicators, presumably the guidelines or criteria for sustainability assessment, are only available to members; annual memberships cost between $5000-$100,000. Thus, consumers do not know how corporations are evaluating sustainability. The FAQs, however, indicate that companies are using a self-administered survey and state that “TSC does not verify Key Performance Indicator responses.”

walmart-leaders-badgeNow Walmart is putting a “Made by Sustainability Leaders” badge on many products. While this gives the appearance that these are products are good for the environment, the badge really represents any product made by a company determined to be a sustainability leader based on the (self-administered, unverified) TSC survey. Not only do we not know the TSC criteria, the badge does not pertain to the actual sustainability of the individual product, and none of this is apparent to the consumer.

Are these corporations truly “sustainability leaders”? One probably needn’t go much further than noting paper products by Georgia Pacific are badged by Walmart. Georgia Pacific is a TSC member that is owned by the Koch brothers, and its products are boycott targets.  Other Walmart suppliers that are not TSC members (e.g., Nestlé) can also display the badge; Walmart uses the toolkits developed by TSC to rank its suppliers and hand out badges.

Other TSC members include JM Smuckers, Monsanto, Dow Chemical, Dupont, and BASF. Following Walmart’s lead, other retailers or the corporations themselves could label their own products with some similar sort of badge or claim. I can’t get behind a mystery badge that puts money in the pockets of companies that are often so egregiously anti-environment.

For more details, read this excellent article by The Grist about this greenwashing initiative.

The Academy of Nutrition and Dietetics (AND) has allowed Kraft to put it’s “Kids Eat Right” badge on their pasteurized prepared cheese product.  This seems dubious on the face of it, and more so when you learn Kraft is a major sponsor of AND. The New York Times has a report on this initiative, noting that other nutrition scientists are so uncomfortable with the Academy’s funding by big food corporate sponsorships that they have formed their own group, Dietitians for Professional Integrity, that calls for better transparency and ethical sponsorship. There are more resources on their website regarding the conflict of interest generated by corporate sponsorships.

What this has to do with coffee

The proliferation of different types of certifications, labels, endorsements, badges, etc. is confusing to a public that is already suspicious about them. We can debate the legitimacy and ethics of TSC, AND, and similar organizations all day, it really doesn’t matter. What does matter is that the basis for the badges, endorsements, and labels must be honest, transparent, and easily accessible and understood by the public.

Same goes for genuine certifications. People need to be able to understand what (and who) is behind the certification. When they do not, it leaves consumers to be duped into purchasing products that are not sustainably produced, or so distrustful of certifications or other claims that they disregard them all and just buy what is cheap and convenient. Either way, it’s a win for the profits of these companies (which in turn increases their power and influence) and a loss for the environment.

Corporate coffee / Jacobs Douwe Egberts/KraftHeinz

More corporate coffee consolidation

Two of the giants in the corporate coffee world want to merge in an attempt to rival the world’s current biggest coffee buyer, Nestlé I’ve been waiting for the merger to go through to write about this deal, but it is being investigated by European anti-trust regulators, so I’ll go ahead and provide some background now.

The proposed merger is between the #2 and #3 coffee companies in the world: Mondelēz International and D.E. Master Blenders 1753.

mondelez-logoMondelēz International was the name given to the Kraft Foods division that spun off from the company’s grocery segment in 2012. Coffee brands include Gevalia, Tassimo, and Kenco. (Kraft Food Group and Kraft Foodservice control Maxwell House, Yuban, General Foods International and the Gevalia and Tassimo brands in North America. Although I’ve not read that Kraft brands are part of this deal, Maxwell House is shown as an included coffee brand in this fact sheet put out by Mondelēz.)

master-blenders-logoD.E. Master Blenders 1753 is owned by JAB Holding Company (Joh. A. Benckiser) — the private firm that recently purchased Caribou Coffee and Peet’s Coffee.  Their main coffee brand, though, is Douwe Egberts (once owned by Sara Lee Corporation). There are other coffee brands owned by D.E. Master Blenders, mainly European; the most familiar to Americans is probably Senseo.

A merger between these two companies was agreed upon in mid-2014. If approved, the new company will be called Jacobs Douwe Egberts. Mondelēz will own 49% of the new company, and JAB will have controlling interest at 51%.

Mondelēz International purchases about 500,000 tons of coffee annually. D.E. Master Blenders purchases 300,000 tons, according to Coffee Barometer 2014 (PDF). Combined, their purchases equal Nestlé’s 860,000 tons. Thus, if the merger proceeds, Nestlé and the new Jacobs Douwe Egberts will be purchasing around 20% of the entire world production of coffee.

In my table describing Corporate Coffee: How much is eco-certified, you can see how little of this coffee is falls under any of the meaningful eco-certifications (Smithsonian Bird-Friendly, Rainforest Alliance, or organic). A mere 57,000 tons — 3.3% — of the coffee purchased by Nestlé, Mondelēz International, and D.E. Master Blenders* falls under these three certifications!

I can fall back on my usual advice: avoid inexpensive, mass-produced, commodity traded, grocery store coffee. The largest coffee companies in the world control this category, and do little, if anything, to make sure the coffee they buy is produced under conditions that protect farmland, natural habitat, biodiversity, or the farmers that grow it.

*I’ve not historically included D.E. Master Blenders in my table as I have concentrated on North American brands, but I will do so if the merger goes through. D.E. Master Blenders mainly purchases UTZ Certified coffee, which does not have strong, specific, or meaningful ecological criteria; Coffee Barometer 2014 indicates the company has plans to procure more organic and Rainforest Alliance certified coffee in the future. Even adding in UTZ and Nestlé’s own self-certified, mystery Nespresso AAA Sustainable Quality program purchases, the total only amounts to 202,000 tons, or 12% of what these three companies buy each year.