Corporate coffee

Corporate coffee / Nestlé/Nespresso

Greenwash alert: Nespresso capsule recycling

(Revised and updated throughout as of January 2022)

Nespresso, the single-serve espresso machine/pod division of giant conglomerate Nestlé, has received accolades for its “Ecolaboration” sustainability project. Nespresso accounts for only 5% of Nestlé’s sales, but Ecolaboration provides the majority of the company’s public green image. I’ve written about the coffee sourcing aspect of this project in the past, revealing what a tiny fraction of Nestlé’s coffee is to be sourced sustainably under this initiative. Here, we’ll take a look at Nespresso’s coffee capsule/pod recycling efforts, which are frequently misrepresented in the media — unfortunately, in Nespresso’s favor.

Nespresso will put in place the capacity to recycle 75% of its capsules. They never claim this many will be recycled, and don’t reveal how many have been recycled in the past. Nespresso’s proprietary coffee capsules, used in their single-serve espresso machines, are made of aluminum, a metal that is entirely recyclable. But just because the capsules are made of a recyclable material doesn’t mean they are being recycled.

What Nespresso is actually doing – increasing capacity

Nespresso encourages recycling by establishing “collection points” (big bins) for the capsules in their boutiques and local communities; in a few areas Nespresso Club customers can return them via courier when new capsules are delivered. Nespresso has never set actual recycling goals, they have only claimed they would increase capacity to recycle the capsules. The current goal is 75% by 2013, up from the current 60%. This means establishing enough collection systems to collect 75% of the capsules — it says absolutely nothing about how many capsules are actually recycled.

What Nespresso is not doing – revealing recycling rates

In their June 2011 progress report, Nespresso repeats their capacity goals, and despite listing all kinds of metrics, never once mentions the true recycling rate for the capsules, only the number of collection points in various countries.

I don’t care if Nespresso’s capacity is 200% of the capsules sold. It means nothing unless the capacity is being used. Nespresso states that 12,300 capsules are used PER MINUTE. That’s 6.4 billion a year*. Even if half are being recycled that means over 3200 metric tons of aluminum is being sent to landfills annually. This is just another example of convenience and profit (the coffee works out to $60/pound, generating an estimated 30% profit margin) trumping environmental responsibility.

As of 2020, it was estimated that *14 billion capsules are sold per year, but as the linked article notes, as the criticism of the company’s environmental impact has increased, the less they’ve reported regarding sales and recycling rates. Experts have said the rate is as low as 5%, with Nespresso claiming about 30%. Even at 30%, the remaining capsules represent 12,600 tons of aluminum being landfilled annually (enough to create 60 Statues of Liberty, according to the article in the Guardian).

What the media is doing – ignoring the above

What is really discouraging is that the media frequently overlooks that Nespresso is talking about capacity and not actual recycling rates. Examples of articles that mistakenly say Nespresso will be recycling 75% of its capsules are here, here, and here, just to show a few. Careless media outlets either miss the distinction, or are unmotivated or don’t care to question the effectiveness and results. As a result is that consumers are left thinking Nespresso is recycling large numbers of capsules instead of distributing tons of waste.

Barriers to recycling Nespresso capsules

I’m not sure if people who already find preparing a cup of coffee from whole beans too much effort are the best candidates to recycle the capsules.  For the most part, they’ll have to collect the capsules at home and schlep them into a Nespresso retail outlet. In the U.S., as I noted in my post about Keurig’s K-Cup recovery program, American consumers don’t always recycle even when it’s easy for them; voluntary residential curbside recycling without incentives in the U.S. averages around 68%.

And why can’t Nespresso capsules just be tossed in recycling bin, like other aluminum? As with K-Cups, the coffee grounds have to be separated from the capsules by the consumer. This leads to the second problem: many recycling programs cannot process items as small as the Nespresso capsule because they fall through the holes used for weeding out debris, or jam the sorting machines. Therefore, well-meaning consumers may very well just be sending them to someone else to toss in the garbage.

An update in 2019, verifes that 1) most recycling systems cannot handle these little pods and 2) only 33% of U.S. Nespresso customers send back their pods to the company, even though it’s free. Yes, the company has spent some money in New York City so that the pods (as well as similar metal items) can be recycled at their facilities. But that’s one city in the entire country. Piffle.

A final insult

For years, Nespresso produced many billions of capsules made entirely of new aluminum. This even though they repeatedly touted the recyclability of aluminum on their websites and promotional materials, as if they utilized it themselves. It wasn’t until 2021 that Nespresso introduced (some) recycled aluminum content in (some) of their capsules. The company’s use of new aluminum contributes to the environmental hazards of mining the raw products and producing aluminum. And for the icing on the cake, Nespresso states that their aluminum supplier is the mining giant Rio Tinto, a company with an incredibly long list of environmental degradation, cultural desecration, human and labor rights abuses, and corporate corruption, the linked examples just to name a few!

Greenwash

Strictly speaking, greenwashing is the use of marketing to imply that a company’s products are environmentally friendly. Nestlé’s  statements are clear in what they are (and are not) doing when it comes to their Nespresso capsule recycling, and even their green coffee sourcing. They can’t be entirely blamed for the lack of critical examination of their efforts. However, Nespresso’s very heavily promoted Ecolaboration campaign says nothing about the sustainability of the rest of Nestlé’s coffee division — the other 94% of the coffee they buy.  Or about the lack of genuine corporate citizenship by the entire company itself. I think it’s fair to categorize Nespresso’s capsule recycling initiative, and Ecolaboration itself, as a greenwashing tool for Nestlé, don’t you?

P.S. As they have with Keurig K-Cups, enterprising people have come up with refillable replacement pods for some Nespresso machines. As of 2021, several have gone out of business. The three most popular still available are Sealpod, Capmesso, and RECAPS.

Nespresso capsule photos by Sarah Deforche and Jean-Yves Romanetti.

Corporate coffee / Smucker's

Folgers owner: not waking up to sustainability

Since acquiring Folgers from Procter & Gamble in 2008, Smucker’s has balked at providing meaningful sustainability reporting. Pressure from corporate investors prompted a first-ever corporate sustainability report. The single page on coffee was disconcertingly deficient in details. The Smucker’s board opposed a second shareholder proposal to produce a sustainability report specific to coffee.

Only a tiny fraction — half a percent — of the coffee purchased by Smucker’s is certified Fair Trade or organic.

Background

J. M. Smucker’s, the jam and jelly folks, now owns some of the best-known coffee brands in the world. In 2008, Smucker’s took over Proctor & Gamble’s (P&G) coffee division — Folgers and Millstone coffee brands and Dunkin Donuts retail distribution. When it took over P&G’s coffees (in a cleverly constructed piece of corporate tax avoidance) Smucker’s became one of the corporate Big Four coffee companies. Even prior to their recent acquisition of Café Bustelo, Café Pilon, and other brands from Rowland Coffee Roasters, coffee made up 44% of Smucker’s product sales.

P&G did not score high grades in corporate responsibility among its peers. So I have been waiting to find out if Smucker’s would be more transparent about coffee sourcing than P&G, and do more to promote sustainability in their coffee supply chain. Looks like I’ll have to keep waiting.

First CSR report – vague and lacking details

In 2010, large investors Trillium Asset Management and Calvert Investments put forth a shareholder proposal requesting that Smucker’s prepare a sustainability report. The previous year, Smucker’s sustainability reporting efforts amounted to a single page in their annual report, described later by Trillium and Calvert as “grossly inadequate.”

When Smucker’s pledged to begin substantive and meaningful annual sustainability reporting, the proposal was withdrawn. In the ensuing months, Trillium and Calvert met several times with Smucker’s. The company provided no details on what would be included in the promised first report, which was released in late July, and the company denied Trillium and Calvert’s request to review it prior to publication. When it was released, the CSR had only one page is devoted to green coffee sustainability. It says very little. Smucker’s describes their two areas of focus:

1. “We have set goals to substantially increase the purchase of certified green coffee over the next five years.”

They provide no specific goals, no timeline, no roadmap or strategy. The other members of the Big Four at least provide actual numbers, however modest they may be (see my posts on the latest from Kraft, Sara Lee, and Nestlé). Smucker’s coffees span nearly 75 varieties and flavors. A mere four are Fair Trade certified, with three (formerly five) of those also certified organic. In 2007, one was Rainforest Alliance certified, but that was discontinued. As of 2009, Smucker’s purchased the smallest amount of certified coffee — 0.05% of their 280,000 metric tons — of any of the major coffee companies.

2. “Our plan’s second area of focus supports Technoserve…” Smucker’s commits to five more years of support.

Most of the rest of the page describes the work Technoserve performs relating to coffee. These are not specific partnerships with Smucker’s, which is one of many donors to the organization. While technically true, it is misleading for them to say “Our coffee brands’ commitment to Technoserve began nearly 10 years ago.”  P&G was a donor, pledging $150,000 a year for ten years starting in 2002. Smucker’s has only donated the last two years, since they became owner of the P&G coffee brands, honoring P&G’s previous commitment.

For some perspective, their $150,000 (tax-deductible, I assume) annual donation is less than 0.03% of Smucker’s profit from their U.S. Retail Coffee segment alone.  Presumably, their continuation for the next five years will be at or near the same level.

Board fights 2011 Shareholder Proposal for coffee sustainability report

It’s time to wake up to the need for sustainability in your supply chain.

Based on their unsatisfactory discussions with Smucker’s, Trillium and Calvert anticipated that the CSR might not meet expectations. When it was evident the CSR would probably not be released prior to the deadline for filing proposals for the 2011 annual meeting, Trillium and Calvert filed another shareholder proposal in March.

This request was more specific. It pointed out that coffee represents a large percentage of Smucker’s profits (48%) and net sales (40%). The request emphasized the risk of climate change to the coffee supply chain. This was entirely appropriate. Last year the U.S. Securities and Exchange Commission (SEC) issued a guidance document outlining instances when corporations may be required, under existing rules, to disclose to investors business risks to due to climate change.

The entire text is of the proposal here. The bottom line was that

“…within six months of the 2011 annual meeting, the Board of Directors provide a report to shareholders … describing how the company will manage the social and environmental risks and opportunities connected to the company’s coffee business and supply chain. We recommend the Board include in the report a concise discussion of how it will address temperature changes, changes in rainfall patterns, and the company’s responsibility for its impact on the coffee farming families in its supply chain.”

Upon receipt of this proposal, the Smucker’s board petitioned the SEC to allow them to exclude the proposal from the proxy materials, in part because a CSR would be forthcoming. The SEC denied their request, stating “it does not appear that Smucker’s  public disclosures compare favorably with the guidelines of the proposal.”

In their letter to shareholders, the Smucker’s Board unanimously recommended that shareholders vote against this proposal, stating that they felt the forthcoming CSR was adequate. In contrast, Trillium and Calvert’s letter to shareholders, recommending a “yes” vote, called the CSR “a significant disappointment.”

Results of the voting on the sustainability proposal

At the annual meeting on August 17, roughly 20% of shareholders voted in favor of the proposal. Combined with the 13% abstaining, a third of Smucker’s shareholders did not agree with the company position. This is actually a strong showing for a first-time environmental proxy issue. Given that the CSR was published less than three weeks prior to the meeting, many shareholders probably did not even get a chance to read and digest it.

Shareholder proposals are not legally binding, but used to send a message to corporate boards that their investors want change.

Maybe the younger generation of the Smucker’s family will adopt a more modern view of sustainability efforts, and the vintage outlook can be shelved.

What’s next?

Smucker’s is a company that manufactures and markets agricultural-based products. Coffee makes up a huge portion of their business. Should their coffee division continue to grow at the rate of the last few years (in 2011, coffee profit increased 11% over 2010), aided by the Rowland brands, Smucker’s could find itself primarily a coffee company. Their supply chain is clearly vulnerable to the impacts of climate change. Further, since companies are required to disclose information that influence investment decisions, and the SEC has indicated climate change is a risk factor that must be considered, Smucker’s may eventually need to get off the dime.

As noted, Smucker’s main competitors, Kraft, Nestlé, and Sara Lee, each have well-defined, very public sustainability initiatives (however miserly they may be relative to the size of their overall businesses). Smucker’s lags far behind them, and that is really saying something. Perhaps the only good news is that they have nowhere to go but up.

To take a look at the report and financials yourself, download these PDF documents, which should also be linked at their web site:

  • J. M. Smucker Co. 2011 Annual Report (see page 50 for coffee sales, pages 24-25 for profits, page 50 for product sales)
  • J. M. Smucker Co. 2011 Corporate Sustainability Report (see page 18 for coffee)

Coffee news and miscellany / Corporate coffee

Sips: Latest corporate coffee news

Some tidbits from the big four:

  • J.M. Smucker Completes Acquisition of Rowland Coffee. Smucker will now own Cafè Bustelo and Cafè Pilon as well as Folgers. Yippee.

    Love the old school can.

  • Sara Lee in talks for Brazil coffee brand. Sara Lee aiming to acquire or merge with Marata. Sara Lee already controls 22% of Brazil’s retail coffee market, and purchased Brazil’s Cafè Damasco last year.
  • How Kraft sells sustainability. Marc Gunther is a fellow member of the Society of Environmental Journalists, and has written a piece on how Kraft is trying to find ways that sustainability can drive growth. The company has determined that over 60% of its environmental impact comes from its supply chain, from the growing of agricultural products, including coffee. Gunther gleans the thoughts of Kraft’s VP of global sustainability (wait for it…) Steve Yucknut. This comes as Kraft announces that they are increasing their sustainability goals for the next few years. These goals include sourcing 100% of European coffee brands sustainably. The latter article again mentioned the 50,000 tons of Rainforest Alliance coffee Kraft purchased in 2010, which I will again remind you represents less than 7% of their total coffee purchases. They have a long way to go.
  • In an effort not to leave out the last, and largest, of the big four corporate coffee roasters, I took a look at Nestlè USA’s 2010 corporate responsibility report. Coffee was not mentioned. I did dig up a a piece on the reduction of the carbon footprint of Nescafè single-serve machines. You can just talk amongst yourselves on this one.

Coffee news and miscellany / Corporate coffee

After the Harvest

When discussing the problems associated with commodity coffee, and why you need to pay a little more to make sure people and the environment are protected, I’ve actually had people tell me they have a “right” to cheap coffee. I often hear that certified coffees are too hard to find, and people tell me they’d buy sustainable coffee if only it were at the grocery store.

At least you have access to a grocery store.

There is no such thing as “cheap” coffee.

Please visit the After the Harvest web site to learn more about the large percentage of coffee farmers than do not have enough to eat for a portion of the year, and the organizations that are working on food security in the coffee lands.