Starbucks (NASDAQ:SBUX) accounts for about 6 billion of the 600 billion paper and plastic cups used globally each year. That's a small percentage, but still a stunning amount of cups being thrown away at the coffee chain.

Now, the company has taken a major step toward fixing the issue. Starbucks has committed $10 million to a partnership with Closed Loop Partners and its Center for the Circular Economy launch of what it's calling the "NextGen Cup Challenge." That's a fancy title for an effort designed to create a cup that can be fully recycled. 

"This is the first step in the development of a global end-to-end solution that would allow cups around the world to be diverted from landfills and composted or given a second life as another cup, napkin, or even a chair -- anything that can use recycled material," the company explained in a press release.

A Starbucks cup sits on a table with blurred background.

Starbucks wants to keep its cups out of landfills. Image source: Starbucks.

How will it work?

The consortium will award grants to entrepreneurs working on ideas that could lead to sustainable cup solutions. NextGen Cup Challenge will also invite industry participation and partnership on the way to identifying a global solution.

"Through this partnership, the Challenge will enable leading innovators and entrepreneurs with financial, technical, and expert resources to fast-track global solutions, help get those solutions to shelf, through the recovery system and back into the supply chain" said Closed Loop Managing Director Rob Kaplan.

Any solutions that are developed will be kept open source. That means that any company, not just Starbucks, can benefit from them.

"The idea of environmental sustainability in packaging is not just a Starbucks issue. It's a global issue," said Starbucks Director of Packaging Andy Corlett. "Anything that gets us closer to that goal is not something we want to keep to ourselves."

Why is this important?

Obviously, there are clear benefits to the planet in eliminating a source of waste. Aside from that, Starbucks is also conscious of the impact its business has on the planet. That has largely helped it avoid the environmental backlash its rival Keurig (which is in the process of merging with Dr. Pepper Snapple) has experienced over the pollution caused by its K-cup coffee pods.

Starbucks uses sustainably sourced coffee at its restaurants around the world. It already uses 10% post-consumer recycled fiber in its cups which are recyclable in some markets including Seattle, San Francisco, Washington, D.C. and New York City. Still, Starbucks Vice President of Global Social Impact Colleen Chapman believes more can be done.

"No one is satisfied with the incremental industry progress made to date, it's just not moving fast enough," she said. "So today, we are declaring a moon shot for sustainability to work together as an industry to bring a fully recyclable and compostable cup to the market, with a three-year ambition."

This sends a message

Starbucks is essentially setting a benchmark for the entire industry, but is also willing to have its rivals along for the ride. This is a case where the company can do the right thing while also benefiting from the good publicity it generates by getting ahead of something consumers likely would have eventually demanded.

These efforts build the Starbucks brand, but that does not mean the company is merely thinking in terms of its image. The company has shown a steady commitment to recycling and sustainability and this move simply takes that to the next logical level.