Smucker’s

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.

In 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.

JM Smucker’s, owner of Folgers and other grocery and convenience coffee brands, is one of the world’s largest coffee buyers. Yet only a fraction of a percent of that coffee is certified in any way, and the company has a lousy sustainability record.

Since 2010, two large investors have been trying to get Smucker’s to work on substantive and meaningful annual sustainability reporting and address risks associated with climate change, with marginal success. The investors planned on trying again with a shareholder proposal for the 2012 annual meeting. They have withdrawn the proposal based on some positive signs in Smucker’s 2012 corporate responsibility report.

The Smucker’s 2012 CSR report (PDF) does have more meat than the previous effort (PDF).  Among the coffee-related highlights, some of which led to the withdrawal of the proposal, are:

• A goal for certified coffee purchases to reach 10% of its total retail purchases by 2016. Not surprisingly, they are focusing on UTZ Certified coffees, which don’t have strong ecological criteria; this is the most popular certification for the big commodity coffee buyers. It will greatly improve transparency, however, and UTZ standards have been evolving over time to include more and better-defined environmental criteria. Not sure what specifying “retail” purchases means. Does it not include coffee going toward the wholesale or food service segments?
• Various partnerships with organizations that offer smallholder support.
  • First, there is their existing relationship with TechnoServe. As I’ve pointed out before, this particular “partnership” is a continuation of a donor/sponsorship started by Folgers’ previous owner, P&G. Both companies offered support at $150,000 (tax-deductible, I assume) annually — less than 0.03% of Smucker’s profit from their U.S. Retail Coffee segment alone. Presumably, their commitment is at or near the same level.
  • A partnership with the Hanns R. Neumann Stiftung Foundation to focus on agronomy training, organizational development, and climate change adaptation strategies in order to improve the farming conditions, yields, and incomes of small-scale coffee farming families. The language in the CSR report (“our work with…”) indicates that this may be a more substantive relationship, but I can’t find any details on the Neumann website.
  • Similar wording introduces their new partnership with World Coffee Research which will focus on developing hybrid varieties using classic breeding techniques. But then the report says Smucker’s is a “platinum sponsor” and I see that they are listed as donor members and not listed as partners on the WCR site.

However, there is this item in a featured box, which I consider a deceptive bit of greenwashing:

“Folgers was the first buyer of coffee from the Rainforest Allaince Certified Fazenda Modena farm in 2011, the inagural year of its certification. This Robusta coffee farm in Espirito Santo, Brazil, designates more than 30 percent of the farm as protected forest and borders a large natural lake.”

Fazenda Modena is the first robusta farm in Brazil to be Rainforest Alliance certified. But the entire production of this farm is 600 metric tons (or 0.24% of Smuckers annual coffee purchases). Further, Brazilian law requires preservation of a minimum of 20% of forested land by rural landowners. The 2012 revision of this law allows landowners to use non-native species — including coffee — to meet their legal requirement. Ergo, trumpeting this move doesn’t impress me.

I don’t have major objections to companies working on sustainability efforts by supporting worthwhile outside organizations, at least to begin with. But really, if you are going to throw money at something, make it an amount that will have impact that matches the magnitude of impact you have from your lack of sustainability efforts, and commensurate with your huge profits.

Smucker’s noises about producing their original sustainability report also resulted in a similar proposal by Trillium and Calvert in 2010 to be withdrawn, but the resulting report was short on substance. We’ll have to see how serious the company is about making real progress.

Shareholders will again propose that Smucker’s develop a coffee sustainability plan

JM Smucker Co., owner of coffee brands including Folgers, Millstone, Kava, and Café Bustelo, is the fourth largest buyer of coffee in the world. In 2010, they purchased over 250,000 tons of coffee, and only a fraction of a percent was certified in any way. A recent analysis by the Tropical Commodity Coalition notes that the company “does not provide verifiable procurement figures of certified coffees, has no specific goals for a more sustainable coffee sector, and its future commitment is extremely vague.”

Readers will recall that last year two major investors, Trillium Asset Management and Calvert Investments, put forth a shareholder proposal requesting that Smucker’s prepare a sustainability report.  The Smucker’s Board unanimously recommended that shareholders vote against this proposal. Nonetheless, at the August 2011 meeting,  roughly 20% of shareholders voted in favor of the proposal, with another 10% abstaining, for about a third not agreeing with the board*. (You can read the whole story with background here.)

This year, a similar shareholder proposal will be presented. The resolution, filed recently by Trillium Asset Management, requests that Smucker’s, within six months of the annual meeting, develops and publishes a coffee sustainability plan that goes beyond the insipid 2011 “plan.” This proposal will specifically ask that the plan include:

(1) quantitative goals for quantities of certified coffee purchases; (2) a method for evaluating the success of the plan in addressing the challenges of climate change to the Company and the farmers and ecosystems in its coffee supply chain.

American consumers continue to reward Smucker’s. The U.S. retail coffee segment contributed 49% of the total profit for the company in the quarter ending in January 2012; this segment reported a profit margin of 21.7%.

From their nostalgic ads featuring a bygone era, to their honoring of centenarians via Willard Scott, to their antediluvian view of sustainability and transparency, Smucker’s is stuck in the past. Hopefully this proposal will meet with some success at the annual meeting this summer and move Smucker’s into the present day.

*Another interesting proposal has been filed by a different group, asking that Smucker’s follow the Security and Exchange Commissions standard for proxy vote counting. Currently, Smucker’s counts all abstaining votes as votes in favor of management. Abstentions, where shareholders want their vote noted but not counted, are not figured into the SEC  formula. Counting these as in favor of the management seems to clearly be against the wishes of the abstaining voters.