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Starbucks Increasing Its Environmental Commitment

By Daniel B. Kline – Updated Apr 15, 2019 at 2:41PM

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The company plans to test new cups and offer more straw-free lids.

Sell a lot of coffee and you will produce a lot of trash. That's a problem that Starbucks (SBUX 3.38%) has to contend with. The company also has to deal with making sure its products remain sustainable, and that coffee farmers can maintain their livelihoods.

The chain has been aggressive in attempting to reduce, eliminate or counteract the environmental damage its cups, straws, and other items do to the planet. At its 2019 shareholders meeting last week, CEO Kevin Johnson updated investors on those efforts.

"It was at our shareholders meeting one year ago that we launched multiyear initiatives around greener cups and digitally traceable coffee," he said. "Today thanks to many valuable collaborations, we're seeing significant, tangible progress toward a greener future."

The new Starbucks lid

Starbucks will roll out its new lid this year. Image source: Getty Images.

What is Starbucks doing?

Throughout the rest of 2019, Starbucks plans to test what it called "greener" cups in a press release. Tests have already begun in New York, San Francisco, Seattle, Vancouver, and London on cups that "will be both recyclable and compostable in those municipalities' facilities," according to the company.

The cups being tested come from technologies created as part of the NextGen Cup Challenge, a project undertaken by the NextGen Consortium. Starbucks created the Consortium, which includes McDonald's as a founding partner and Coca-Cola, Nestlé, Yum! Brands, and Wendy's as supporting partners. The Consortium is part of Starbucks' 2016 promise to double the recycled content, recyclability, and reusability of its cups by 2022.

"It is with great intention that we move forward with highly collaborative and innovative work to bring both recyclable and compostable cups to scale around the world," Johnson said. "We are reimagining the future for Starbucks, and for the more than 30,000 communities we serve each day, with a great sense of responsibility for a more sustainable planet."

Starbucks also plans to roll out new strawless lids to its U.S. and Canada stores by early 2020. That supports the company's goal of eliminating plastic straws at all its stores by 2020, an effort it hopes to tackle by eliminating 1 billion straws per year. The rollout of the new lids, which have 9% less plastic than the chain's current lids, will begin in Los Angeles, San Francisco, Seattle, Washington, D.C., Indianapolis, and Toronto this summer.

Starbucks is also testing alternative straws for its Frappuccinos and other beverages, including some options from the NextGen challenge. Plastic straws remain available by request for customers who want them.

In addition to updating the materials used in its cups and straws, Starbucks wants to show consumers where its coffee comes from. To do that, it will be adding a feature to its app that lets users track the coffee from bean to cup. Senior vice president of Global Coffee & Tea, Michelle Burns, showed how that works at the shareholders meeting.

As the audience will sip their Pike Place from one of the new greener cups the company will trial, they'll learn that 80% of their cup's coffee beans came from Colombia and 20% came from Brazil," according to the press release. "They'll see the beans are verified as 100% ethically and sustainably sourced; information about Starbucks responsible sourcing standards and open-source Farmer Support Center in Colombia; where the beans were roasted, (in Kent, Wash.); and brewing tips for a perfect cup.

Check out the latest earnings call transcript for Starbucks.

It's a smart business move

Starbucks isn't doing this for the environment, though that may be a side benefit. It's making these move to protect its business from a consumer backlash. Keurig, another major player in the coffee space, received a lot of negative attention due to the waste created by its K-cups not being recyclable.

This is Starbucks getting ahead of the problem. That's commendable, on both the financial and the environmental levels. The chain is doing the right thing for its business, and that's good for its shareholders and the environment.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends Nestle. The Motley Fool has a disclosure policy.

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