COSTA RICAN NOMINATION FOR THE SECRETARY OF STATE'S

UNCLAS SAN JOSE 001375

SIPDIS

WHA/CEN

SIPDIS

E.O. 12958: N/A
TAGS: BEXP EINV ETRD ELAB SENV KSEP CS
SUBJECT: COSTA RICAN NOMINATION FOR THE SECRETARY OF STATE'S
AWARD FOR CORPORATE EXCELLENCE

REF: A) STATE 082043 B) STATE 064726


1. Embassy San Jose is pleased to nominate Starbucks for the
Secretary of State's Award for Corporate Excellence (ACE) in the

SIPDIS
Multinational Enterprise (MNE) category (refs A and B). The goal
of the ACE is to 1) highlight the good works of the winners, and
2) inspire others to follow their example. Few firms have
corporate social responsibility so intertwined with the company's
DNA, and the ability to so widely spread that message. It is
telling that almost half of their one-page "Company Fact Sheet"
(http://www.starbucks.com/aboutus/Company_Fac t_Sjeet_Feb06.pdf is
devoted to Corporate Social Responsibility. They also publish a
"Corporate Social Responsibility Annual Report" that describes
the firm's projects in great detail. It can be reviewed at
http://www.starbucks.com/aboutus/csrannualrep ort.asp. They also
take advantage of their ability to expose hundreds of thousands
of people a day to their corporate responsibility message in more
than 7,300 stores. Post nominates Starbucks specifically for
implementing new purchasing and technology assistance programs
within Costa Rica that have changed the lives of 11,000 local
coffee growers. Both programs demonstrate Starbuck's good
corporate citizenship, responsible environmental stewardship
policies, and commitment to improving the overall technical
capabilities of Costa Rican coffee growers, the company's primary
coffee-producing partner.

The Starbucks Story
--------------


2. Producing coffee beans, the second most valuable commodity in
the world, employs an estimated 25 million people worldwide.
However, the coffee market can be very volatile, often
impoverishing farmers and creating incentives for coffee
suppliers to cut costs at the expense of the environment. During
the 1990s, market trends radically lowered the price companies
were willing to pay farmers, so that in 2003 wholesale coffee
prices were at their lowest levels in 100 years. Starbucks
implemented two main programs to assist farmers hurt by erratic
coffee prices: the Starbucks Coffee Agronomy Company - Farmer
Support Center, located in Costa Rica, and the Coffee and Farmer
Equity (C.A.F.E.) Practices. Due to Starbuck's large market
position, the company can play an especially important role in
steering market decisions towards more sustainable purchasing
practices, especially in their primary supplying country, Costa
Rica.
C.A.F.E. Practices Implemented
--------------


3. The C.A.F.E. Practices aim to create a sustainable future for
coffee farmers and their communities. Significantly, they are
the result of a collaborative effort between coffee growers and
Starbucks. In 2001, Starbucks, together with Conservation
International (CI),conducted a two-year pilot project and then
applied their own experience and stakeholder feedback to develop
coffee buying standards. To receive the C.A.F.E. Practices
approval, suppliers must pass a two-part assessment. First, all
coffee farmers and suppliers participating in C.A.F.E. Practices
must meet minimum requirements of coffee quality and economic
transparency. Next, they are scored on critical social,
economic, environmental and quality criteria for growing and
processing coffee. The criteria are rigorous, quantitative,
independently verified, and can be applied to any part of the
coffee supply chain. Finally, the farmers and suppliers that
score high are offered preferred supplier status, long-term
contracts and other economic incentives.
C.A.F.E. Practices Benefit Local Communities, Receive Acclaim
-------------- --------------


4. Implementing C.A.F.E. Practices helps coffee farmers invest
in and sustain their farms for the future. By producing high-
quality coffee, farmers are better positioned to earn more and
have greater economic security, enabling them to invest in their
farms and communities. Starbucks has witnessed farmers who
benefit from C.A.F.E. Practices giving back to their communities
through projects such as health clinics and education programs.
C.A.F.E. Practices have received global recognition, winning the
2005 World Environment Center Gold Medal Award for International
Corporate Achievement in Sustainable Development and the
Specialty Coffee Association's 2005 Sustainability Award. Also,
C.A.F.E. Practices resulted in Starbuck's invitation to join the
UN Global Compact in 2004, a voluntary international network of
corporations, UN agencies, trade unions and NGOs that support
worker rights and environmental sustainability. In Costa Rica,
C.A.F.E. Practices served as a model for the government when it
created a national Sustainability Seal for local coffee producers
who use sustainable methods.
Starbucks Educates and Supports Coffee Growers
-------------- -


5. The Starbucks coffee Agronomy Center, opened in 2004,

provides coffee growers with local support. The Center houses a
team of experts in quality coffee production and sustainability
practices. This team works closely with coffee farmers and
suppliers in Central America, Mexico and South America, visiting
farms to help build long-term mutually beneficial relationships
and help farmers improve the quality of their coffee while
lessening environmental impact. Starbucks's presence in Costa
Rica allows them to engage directly with local suppliers, gain
ongoing feedback and collaborate on business best practices that
help ensure local farms will be strengthened for the future. In
Costa Rica over 11,000 farmers have been approved under C.A.F.E
Practices program; the majority of these are small holders and
members of a cooperative and all of them have received some sort
of assistance from the Farmer Support Center.

Starbucks Offers Affordable Credit and Looks to Expand Projects
-------------- --------------


6. Starbucks also provides access to affordable credit to Costa
Rican coffee farmers. This policy is invaluable to farmers who
must deal with the uncertainties of the upcoming year's coffee
yield as well as the uncertainties of the world market for
coffee. Affordable credit helps farmers weather the downswings
of the market to they can survive until market upswings, as well
as provides farmers with the ability to borrow money in order to
make technological improvements. Due to the success of the Costa
Rica Agronomy office, Starbucks is currently investigating the
expansion of the Agronomy Center model and further implementation
of C.A.F.E. Practices in other countries to spread sustainable
best practices throughout industry. Since the price of coffee
depends on the worker and environmental standards of other
countries, ensuring C.A.F.E. Practices worldwide benefits Costa
Rican farmers as well.


7. Comment: Post cannot think of another U.S. firm that has
served as a better ambassador in Costa Rica for the values
Americans hold dear. Starbucks has directly transformed the
lives of 11,000 farmers while raising social, environmental, and
technological standards. The ACE would not be Starbucks's first
recognition for the good works they do, the World Environment
Center awarded Starbucks their 2005 World Environment Center Gold
Medal for International Corporate Achievement in Sustainable
Development http://www.wec.org/docs/web/2005pressrelease. pdf.
For the reasons described above, the Embassy is pleased to
nominate Starbucks for the Secretary's Corporate Service Award in
the Multinational Enterprise (MNE) category.