Corporate coffee

Certifications / Corporate coffee

4C-certified coffee: miniscule amount under minimum standards

In order to provide context and perspective, I update a table on this site to reflect the amount of coffee out there that is produced and/or sold under some sort of eco-sustainability standard. The amount of coffee produced under these standards (Bird-Friendly, Rainforest Alliance, organic, plus Starbucks CAFE Practices and UTZ Certified) has grown substantially over the last decade.

One standard/certification scheme I leave off is 4C certification. This is the “entry level” set of standards often used by large commodity coffee companies.  To the unsuspecting consumer: this certification really only verifies that the coffee was produced under conditions weren’t illegal (violating basic human rights, environmental laws, and business ethics). Overall, 4C standards are very basic.  You can read all about what 4C certification is and isn’t right here.

It’s a (needed) starting point, but frankly hardly something to brag about or (worse) convey to consumers as being a meaningful sustainability certification. Nonetheless, the growth in 4C certified coffee is driven by big players like Nestlé and Mondelez International. Mondelez, for instance, is using 4C certified coffee to reach it’s 2015 goal to  “sustainably source” all its coffee for western Europe.

Last year, Daily Coffee News reported that the amount of 4C certified coffee tripled, to 7.5 million bags in 2012-2013 (at 60 kg a bag, that’s 450,000 metric tons).

That sounds like a lot, until you look at 2013 world coffee production: nearly 147 million bags (or 8.8 million metric tons).

Bottom line: 5.1% of world coffee production is sold as 4C certified, the weakest, lowest-bar standard available. On the bright side (?) the amount of 4C certified coffee produced is 2.28 million metric tons, or about 26% of world production. I’m not sure what it says about large coffee buyers that the supply of “sustainably” grown 4C coffee so widely outstrips demand, with less than 20% of 4C coffee being sold as such.

The 4C Code of Conduct is in the process of being reviewed and revised. We’ll see what that brings.

 

Corporate coffee / Smucker's

2014 JM Smucker’s Corporate Responsibility Report

groundhog

Groundhog Day would be an appropriate release time for Smucker’s sustainability reports.

JM Smucker’s, owner of Folgers, Millstone, Café Bustelo, Café Pilon, and Dunkin Donuts retail coffee, has released its 2014 Corporate Responsibility Report, its fourth after being dragged unwillingly into developing a coffee sustainabilty plan by shareholders.

Once again, there isn’t much to say about the report’s coffee sustainability section. The coffee sections from the last two years have been nearly identical, much of it word-for-word — take a look at my posts on the 2013 and 2012 reports. This year, they have at least done some rephrasing, but follow the same theme as previous reports — restating their goal for certified coffee purchases to reach 10% of its total retail purchases by 2016, and highlighting organizations that they support: TechnoServe, the Hanns R. Neumann Stiftung Foundation, and World Coffee Research.

The most notable difference this year is that they have finally stated their progress towards the 10% certified goal: in 2014 they indicate that 6% of the coffee they purchased was certified. Caveats: First, we don’t know the total amount of coffee the company purchases; the last figures available from 2008 and 2010 put it at an average of 265,000 tons. Second, the company is careful to specify the goal is 10% of retail purchases. Not sure how this is defined, or what proportion of total purchases this represents.

So in a strict sense, this report does indicate some progress in the company sourcing third-party certified coffee. However, we can’t really quantify it, and the certification they are using is primarily UTZ Certified, which doesn’t have strong ecological criteria.

One also has to wonder what happens when the 10% certified purchases goal is reached. The company states it believes this will represent the “highest level of certified purchasing by any mainstream coffee roaster in North America.”  This may or may not be true, depending on their definitions, but I can certainly argue that buying a higher volume of UTZ Certified coffee (at best less than 30,000 tons using a generous estimate) does not have the ecological impact of, for example, Starbucks sourcing 180,000 tons of coffee under its CAFE Practices standards, which have stronger environmental criteria than UTZ.

I don’t give a huge amount of weight to their “partnerships” with organizations that help coffee growers. It’s not that these organizations don’t do substantial important work (they do), it’s mostly because the company’s level of support and involvement is difficult to evaluate. Their support to TechnoServe is apparently financial. In the past it has been a very small fraction of Smucker’s profits; no details have appeared in recent TechnoServe annual reports. There is an entire page in the Smucker’s 2014 report about the company’s “on the ground” partnership with the Neumann Foundation in Sumatra — yet curiously nothing about this project (or Smucker’s) appears on the Foundation’s web site.  The relationship with World Coffee Research also appears to be monetary, but again, no details on the level of support. For a company that in 2014 made $642 million in profit on over $2 billion in net sales in their U.S. retail coffee division alone, I’m not sure we can give Smucker’s much credit for meaningful sustainability efforts from these apparently modest contributions.

Overall, this report is a slight improvement over the past 2 years, but this powerhouse coffee buyer has a long way to go to improve transparency and prove their commitment to purchasing sustainable coffee.

Illustration adapted from photos by Cornelia Kopp/AlicePopkorn and Ken Fager/kenfagerdotcom at Flickr under Creative Commons Licenses.

Corporate coffee / Nestlé/Nespresso

Nestlé 2013 sustainability report: the kitchen sink

nestle-sinkSome corporate sustainability reports are underwhelming. The JM Smucker Co. (owner of Folgers, among other brands) is a great example. Not much to it, and whole swaths are repeated word-for-word from year to year.

Food mega-giant Nestlé, on the other hand, produces phone-book sized sustainability reports. Granted, Nestlé is a larger company with more products. Still, their 2013 Creating Shared Value report is a whopping 404 pages, overwhelming in its scope. Any reader would get lost in its facts, figures, and examples. Let’s call it the everything-including-the-kitchen-sink approach.

I know I’m cynical, but as I grudgingly sat down to read over Nestlé’s latest report, I couldn’t help but wonder if this was an intentional effort to swamp people with data or just impress them with size, all to obscure a so-so sustainability record.  I will restrict my critique here to just what pertains to coffee.

There are two things to note about Nestlé’s coffee business. First, there are at least two coffee supply chains in the company. Nespresso is responsible for its own supply chain, separate from the rest of Nestlé’s green coffee purchasing1. The rest goes to Nestlé’s other brands, primarily instant under the Nescafé label.

Second, on page 150, Nestlé states it buys 10% of the world’s coffee production; thus, in 2013 Nestlé bought 870,000 tons of green coffee2. It’s unclear if this includes Nespresso, but since the figure right in line with previous estimates of Nestlé purchases, we will assume that it does.

How Nestlé’s defines sustainable coffee

In their Responsible Sourcing Guideline (PDF), Nestlé defines responsibly sourced green coffee as that which is verified against the 4C Code of Conduct or standards such as their own Nespresso AAA Sustainable Quality Program.

What does this mean? 4C compliant coffee is not certified, but indicates meeting a basic, entry-level standard. There are no meaningful, quantifiable eco-criteria, and the 4C Code addresses only the most egregious, illegal, unsustainable practices in the industry. The Nespresso AAA program uses criteria that are based on the Sustainable Agriculture Network (SAN) standards used for Rainforest Alliance certification, but which criteria and how they are scored or evaluated is not publicly disclosed. [Update 2015: here is a post on the environmental and social requirements for producers in the AAA program. Note the low bar for entrance into the program.]

So how much of Nestlé’s coffee is “responsibly sourced”?

The majority of Nestlé’s coffee goes to their non-Nespresso brands. Of this, the company states (page 152) that 71,493 tons, or 8.2% of their annual purchases, was 4C compliant, reaching just the most basic level of “sustainability” standards.

Meanwhile, 84% of their Nespresso purchases were made under their AAA program. Nestlé considers volume data proprietary, but in 2010 Nespresso stated3 it purchased 49,020 tons of coffee (5.6% of Nestlé’s total purchases). Nespresso has experienced considerable growth. If we guess that it purchased 60,000 tons, then 84% of that would be 50,400 tons under their AAA program, or 5.7% of Nestlé’s annual purchases. It’s probably safe to say that around 6-7% of Nestlé’s total purchases were sourced under the Nespresso AAA program.

So, less than 135,000 tons is sourced under some sort of standard, leaving nearly three-quarters of a million tons of coffee not meeting any sort of basic sustainability requirements at all!

Even less than meets the eye?

On page 125, Nestlé states a goal to source 90,000 tons of coffee that complies with the Sustainable Agriculture Standard by 2020.  That sounds like a volume that would be around 10% of Nestlé’s annual purchases. However, a footnote explains that this is an “aggregate figure from 2010 to 2020”. In other words, 90,000 tons over 10 years, or 1% of Nestlé’s total green coffee purchases.

A similar footnote is not given for their goal of sourcing 180,000 tons of 4C-compliant coffee by 2015, but later in the report when these figures are provided, the language seems to indicate that this is also a cumulative amount. For instance, on page 152, the report says (my emphasis added) “By 2015, we aim to source 180,000 tonnes…” and “By the end of 2013, we had sourced 148,198 tonnes…” On page 157, it says “…we will have bought 180,000 tonnes…by 2015…” If this were an annual amount, wouldn’t the wording be, for example, “In 2013, we sourced…”?

Other tidbits:

  • They tout that an independent study found that Colombian farms in their Nespresso AAA program had “52% better environmental conditions” than non-AAA farms. Examining the actual report (link here) shows that this figure included farms with Rainforest Alliance certification. It did not say how many of the farms had the certification, or how the conditions on these certified farms drove up the environmental index.
  • The percentage of their suppliers that comply with the company’s supplier code has declined from 96% in 2011, to 74% in 2013.

In a similar vein, the company’s strategy for biodiversity impacts of coffee states: “Biodiversity issues are managed primarily through the use of the 4C Coffee Code, the Nespresso AAA Sustainability Quality Program and the Nescafé Plan, which, in partnership with Rainforest Action Network, has developed better farming practices.”

In a nutshell

Remember, Nestlé has no interest in investing in or marketing third-party certified coffee, so it’s worth repeating we get from Nestlé:

  • around 50,000 tons of coffee sourced under their Nespresso AAA guidelines, with a low bar for inclusion
  • plus 71,493 tons sourced under the dubiously-meaningful 4C code of conduct,
  • leaving more than 740,000 tons of coffee sourced from farms following no sustainability standards, or at least none known or being disclosed to the public.

Footnotes:

1Alvarez, G., C. Pilbeam, and R. Wilding. 2010.Nestlé Nespresso AAA sustainable quality program: an investigation into the governance dynamics in a multi-stakeholder supply chain network. Supply Chain Management 15(2):165 – 182. DOI: 10.1108/13598541011028769

2Data converted from world production statistics, International Coffee Organization. 

3Nestlé Nespresso Ecolaboration Progress Report, June 2011.

Corporate coffee / Smucker's

Update on JM Smucker’s coffee sustainability

rusty-folgersIn 2011, I profiled JM Smucker’s (lack of) approach to coffee sustainability issues. Since the company acquired Folger’s and some other brands, coffee has become the company’s biggest profit-maker. For two years, major investors pressed the company to develop and report on a coffee sustainability plan.

Last year, Smucker’s began to outline small steps toward a green coffee sustainability vision. In their 2012 Corporate Sustainability Report, they offered,

  • A goal for certified coffee purchases to reach 10% of its total retail purchases by 2016. This would be primarily UTZ Certified coffees, which don’t have strong ecological criteria (it’s the most popular certification for the big commodity coffee buyers), but will greatly improve transparency.
  • Partnerships with organizations that offer smallholder support: TechnoServe, the Hanns R. Neumann Stiftung Foundation, and World Coffee Research.

You can read my whole recap and analysis of the 2012 report here. As for the current 2013 Corporate Sustainability Report (PDF), it’s pretty much a rehash of the points above.

There are no further data on what progress they are making on reaching their 10% goal, e.g., how much certified coffee they are currently buying.

Regarding their partnerships, there is also no new information. The report does go into some detail discussing the goals and achievements of the organizations they support. While the company makes no claims about their specific role in these good deeds, I find this overall approach misleading.

Let’s put it this way:  I do some volunteer work and make an annual donation to a local environmental non-profit. While my contribution may be valuable to the whole, I would be called a fraud if I tried to pad my resme with this organization’s accomplishments.

Two new items are largely symbolic, in my opinion. First is their $50,000 a year membership in The Sustainability Consortium, originally established with funds from WalMart. Many very large corporations are now touting their association with TSC, who states that their mission is “to design and implement credible, transparent and scalable science-based measurement and reporting systems accessible for all producers, retailers, and users of consumer products.” Indeed, transparency is mentioned a lot on their website. For instance, they state that consumers desire “…product transparency” and are confused about “…what constitutes a sustainable product” — and that these were major motivations behind the formation of the organization. Alas, when I try to access the Key Performance Indicators and Category Sustainability Profile for coffee, I find it requires member login. I confirmed with TSC that these data are not available to the public. TSC could very well be doing fantastic work but although their website is extensive, I could not find or access any specific material to help me as a consumer determine whether member coffee companies are taking meaningful steps to improve their supply chain sustainability.

(For more background on TSC, see a couple of Joel Makower’s great pieces at GreenBiz, Inside Walmart’s Sustainability Consortium, and Driving the Sustainability Consortium’s ambitious agenda.)

Finally, Smucker’s is producing “Life is Good” branded coffee, which is is UTZ Certified.  You may know Life is Good for their t-shirts and stickers, etc., whose raison d’être is to spread the power of optimism, with 10% of its net profits going to their own foundation for children.  At $6.99 to $7.99 per 11-ounce bag, the coffee won’t fill the foundation’s coffers (or those of the farmers it was sourced from). While promoted as a premium coffee, it’s safe to be suspicious of the quality of a brand that sells banana bread-flavored and s’more flavored varieties.

I also believe in the power of optimism, but I am not optimistic that JM Smucker will ever be a significant purchaser/purveyor of truly ecologically-sustainable coffee.

Coffee can photo by Travis S. under a Creative Commons license.