Coincidentally I am sitting in Starbucks writing our very first ENVOLV Intel, sipping a chai latte  whilst I share how Starbucks’ sustainability action has driven profits. 

Did sustainability really play a role building Starbucks back from their lowest record performance?

The answer is yes. Don’t take my word for it, look at the data and listen to their leaders.

As the 2008 financial crisis impacted, Starbucks shares dropped by 50%. They weren’t alone, I was working with some of the UK’s biggest banks and it was a very tough time. The market was in trouble and lets face it, sustainability wasn’t firmly on the agenda before the crash, it was unlikely to be prioritised during it.

So when the new CEO of Starbucks, Howard Schultz, firmly put sustainability on to the agenda critics raised an eyebrow. Schultz focus was of course on short-term profitability however he knew the importance of building resilience longer term. His long-term resilience plan came in the format of a 13-point Shared Planet Initiative.

The plan incorporated sustainable business objectives informed by materiality. The plan included:

• 100% ethically sourced and responsibly grown coffee by 2015.
• Reduce emissions and improve efficiency by committing to all new stores being LEED (Leadership in Energy and Environmental Design) certified.
• Providing 400,000 small-holder coffee farmers with access to financial support and extended contract terms.
• Double procurement of fair-trade certified coffee from 6% to 12% within one year.

The aims were met. Many were exceeded. But other than doing the right thing, how did this impact the business?

Within one year of implementing the plan Starbucks saw their share price improve by 134%, outperforming peers as well as the wider market. Within 10 years their share price grew by 651% outperforming the whole sector. But was this sustainability or something else?

Through the Shared Planet Initiative Starbucks were seen to be doing the right thing. They completely aligned with consumers values as the market saw an unprecedented growth in environmentally conscious buying. That emotional attachment can still be seen today – I see it now as I sit in an empty shopping centre with a Starbucks that is almost full. The sustainable marketing, fair trade branding, reusable cup discount and human centred marketing is hard to miss.

But what Schultz was also doing was building long-term resilience in their supply-chain that futureproofs their supply-chain from economic and environmental shocks. Excellent foresight given the geo-political uncertainty we face today.

Through paying fairer prices, committing to longer term contracts of work and investing in biodiversity, Starbucks futureproofed their supply-chain and reduced revenue risk. Whilst doing this they also strengthened their brand position and customer loyalty. This was what grew their share price by 651% in a decade. And this is the business case for sustainable strategies designed based on material risks and opportunities.

In the words of Howard Schultz, “Companies should not have a singular view of profitability. There needs to be a balance between commerce and social responsibility. The companies that are authentic about it will wind up as the companies that make more money.”