Starbucks Corporation CORPORATE SOCIAL RESPONSIBILITY ...

Procurement Practices for SustainableAgricultureIn addition to C.A.F.E. Practices, our coffee buyingguidelines, Starbucks is working to develop sustainablepurchasing guidelines for cocoa and may also developguidelines for other products such as tea, paper and dairy.Responsible Cocoa Sourcing ProgramCocoa continues to be an important ingredient in many ofthe beverages and products we sell in our stores, includingcoffee beverages, bakery items and chocolate bars. We seek toensure that the cocoa we buy has been produced and tradedin an ethical, transparent and sustainable manner, and we aretaking significant steps to ensure our supply chain is in linewith our company’s values.Worldwide cocoa production for the 2005/2006 crop yearwas 7.7 billion pounds (3.5 billion kilograms), of whichapproximately 70 percent was produced in West Africa. Infiscal 2006, Starbucks purchased just over 15 million pounds(6.8 million kilograms) of processed cocoa from our suppliers,sourced primarily from the Ivory Coast.In fiscal 2006 we launched Starbucks Socially ResponsibleCocoa Sourcing (SSRC) Pilot Program in the Ivory Coast,with two established cocoa suppliers that included ninefarmer cooperatives and hundreds of farmers. An initial setof general guidelines for transparency, working conditionsand price premiums for cocoa farmers were developed for thispilot program.During the first year of the pilot, Starbucks sourced 11million pounds (5 million kilograms) of cocoa beans, inwhich we expect to have full price transparency throughoutthe supply chain – from the cocoa farm to Starbucks. Thistransparency data will be audited and validated by anindependent third party to ensure farmers are receiving anequitable share of the sustainability premiums we pay.Cocoa Practices Sourcing GuidelinesBuilding upon the initial Socially Responsible CocoaSourcing Pilot, in September 2006 we completed a newdraft of our Cocoa Practices Sourcing Guidelines (CocoaPractices). Similar to C.A.F.E. Practices for coffee, CocoaPractices provide guidelines for the cultivation and processingof cocoa in a manner that is environmentally sustainable,socially responsible, and promotes equitable relationships withfarmers, workers and communities. We plan to launch CocoaPractices in fiscal 2007 as a two-year pilot program, and movetoward our longer-term plan to utilize the guidelines for all ofour cocoa purchases.Access to Credit & Social Development ProjectsIn fiscal 2006, EcoLogic Finance provided $400,000 in loansto three cocoa farming cooperatives. Starbucks provided thecapital funds used for the loans. To further support cocoagrowing communities in the future, Starbucks has authorizedEcoLogic Finance to provide up to $500,000 in affordableloans to cocoa farmers, drawing off the $6 million in loancapital Starbucks already provided. We also amended our loanagreement with Conservation International’s Verde Ventures,which will now allow up to 25 percent of the $2.5 million incapital we provided to be loaned to cocoa farmers.Stakeholder EngagementIn September 2006 we hosted a stakeholder engagementsession with suppliers, government agencies, nongovernmentalorganizations (NGOs) and chocolatemanufacturers to review the initial draft of the guidelinesand obtain feedback. This feedback will be incorporated intoCocoa Practices prior to the pilot launch in 2007, and we willcontinue to consult with stakeholders as we move forward.F U T U R E G O A L SOur goals for fiscal 2007 include:• Purchasing 22 million pounds (10 million kilograms)of cocoa beans from the Starbucks SociallyResponsible Cocoa Sourcing Program.• Completing independent audits and sharing resultsof the fiscal 2006 pilot.• Rolling out Cocoa Practices Guidelines for use in thenext crop year (2007-08)• Delivering quarterly updates to cocoa stakeholders.• Providing financial support for social developmentprojects in cocoa growing communities in theIvory Coast.P R O D U C T S 30