- In recent years, major companies such as Costa and Starbucks have faced allegations of greenwashing
- A lack of shared frameworks and verifiable data makes sustainability initiatives difficult to implement across the industry
- These initiatives could also be a sign of market failure – with 5.5 million of the world’s 12.5 million smallholder coffee farmers living below the international poverty line
FOR YEARS, coffee roasters have been racing to implement sustainability initiatives. But are these strategies genuinely impactful – or just a sign of broader systemic issues across the industry?
It is important for stakeholders all across the supply chain to take accountability for their social and environmental impact. However, sustainability strategies and impact reports have proliferated to such a degree across the sector that it’s now difficult to outline whose are genuinely effective – and whose are just another form of marketing.
Often viewed as a competitive asset or a means to meet mandatory sustainability compliance, these initiatives vary in intention, commitment, accountability and effectiveness.
At best, they genuinely aim to make a positive social and environmental difference. At worst, they can be accused of “social washing” or “greenwashing”.
“They do provide some degree of accountability in the supply chain,” says Alison Streacker, a sustainability consultant who has worked for Fairtrade International and Sustainable Harvest. “They help generate awareness in the coffee sector on what the issues are and where true investment is needed. Many are doing some great work.”
However, Alison adds that a lack of consensus about common indicators or models often creates competing initiatives at origin. This makes it hard to determine which approaches have the greatest impact.
It also means that these initiatives often adopt a market-led approach rather than one genuinely tailored to what is effective at origin. Priorities are aligned with consumer demand, and decisions related to coffee pricing, farmer income and sustainability impact investment are often closely tied to the financial interests of buyer companies. This leaves coffee growers without a say on the most important factors.
“The intention often gets lost,” says Alison. “There’s often no consultation with beneficiaries. How do coffee growers define impact, and what kind of investment do they need? The sector hasn’t been able to improve impact at a larger scale because of this gap.”
Just an image?
Certifications have long since been a contentious topic in the coffee industry, including those used for sustainability. These, among other things, allow roasters to use “cause-related marketing” to differentiate their products. Especially in the early days of specialty coffee, this allowed roasters to promote their sustainable products, fulfil corporate social responsibility objectives, and ultimately remain competitive.
However, according to ITC’s Coffee Guide, “a certified product is not necessarily sustainable. In the same way, a product may be completely sustainable despite having no certifications”.
Alison identifies two fundamental issues with truly driving impact with sustainability initiatives: data and auditing systems.
“Bad practices are happening at the transaction level because of this,” she says. “When you look at sample contracts, you can’t always see if there was a combo deal or a whole set of coffee sold at a lower price.
“A buyer could have up to 500 contracts and we’re physically checking a handful. The devil is in the details. What are the procurement policies between traders and large roasters? There are so many things that nobody is ever talking about or questioning.”
Sustainability initiatives also offer consumers an assurance of a product’s environmental and social responsibility, giving brands a competitive edge. This is often called “no-worry coffee” – some companies exploit this concept for marketing purposes, capitalising on ambiguous sustainability standards and lax auditing.
“Unless these companies and organisations are checked by a third party or have clear accountability mechanisms that go beyond self-reporting, it’s hard to tell what’s real and what’s greenwashing,” says Alison.
“There are gaps. Where are the unfair practices actually taking place? Is it within procurement policies, payment terms, or negotiation between suppliers and buyers? Publicly available information is either self-reported or too vague to pinpoint.”
Is this representative of market failure?
Sustainability initiatives have largely come into play to affect change in two areas: the environmental impact of the coffee supply chain and socioeconomic outcomes in coffee-producing countries.
As far as the latter is concerned, these initiatives are often positioned as a holistic alternative to simply charging consumers more money at the end of the supply chain – and ensuring the producer gets a bigger piece of the pie down the line.
But is this really the case? Are they actually more effective, or simply a paternalistic alternative?
Questions are also raised about the conditions for investment under these initiatives. For example, under certain initiatives, funds might only be allocated towards capacity building and equipment and infrastructure improvements. While these areas can drive impact for producers, this can be examined as a lack of autonomy. There’s also the question about whether or not this targeted investment is really in buyers’ best interest rather than producers’.
More broadly, the coffee industry’s reliance on sustainability initiatives could signify wide-scale market failure. Historical and systemic problems like price volatility and unfair trade practices leave many smallholder farmers unable to sustain a livelihood from coffee.
On one hand, this calls into question the viability of coffee production for many of the world’s smallholders. On the other, it serves as another example of how some sustainability efforts fail to engage with coffee farmers to adequately understand their situation.
In July, Fair Trade USA imposed a temporary minimum price freeze. To compensate, they announced their “Innovation for Impact” initiative focused on scalability, producer impact, and sustainability issues such as addressing climate change.
Some decried this as a way to avoid addressing the root of a problem and instead deal with the symptoms – channelling funds into another sustainability initiative. Many farmers and producers spoke up, fearful for their future in the face of rising production costs as US Fair Trade prices remain the same.
“It seems like companies will do just about anything they can to not have to pay more, even if that means investing in hundreds of thousands of dollars in sustainability consultants to create internal verification schemes,” says Alison. “While these do hold some level of accountability, how far are we going to go so we don’t have to pay a higher price for coffee?”
This isn’t to say that every sustainability strategy is a failure, however. Many initiatives have made significant progress and continue to yield positive results. The important thing is to recognise that sustainability initiatives alone cannot fully address the raft of complex challenges the coffee sector faces.
In reality, the best chance we have of changing the narrative about sustainability will likely come through a combination of a more holistic, ground-up approach coupled with a long-term commitment from buyers to pay higher FOB prices. For Alison, this will only be achieved by fostering relationships through trade, and with a level of empathy not yet present in the coffee industry.
Want to read more articles like this? Sign up for our newsletter here.