Starbucks, CSR and its Job Creation Plan
by Derek Linsell on 14/10/2011
Starbucks’ CEO Howard Schultz isn’t afraid to describe the “crisis of leadership” he sees in Washington. In August, Shultz controversially urged fellow CEOs to boycott campaign contributions and instead focus on creating jobs. “We need to literally put our feet in the shoes of the American people. They’re not worried about ideology,” he explained in a recent interview with CBS news anchor Scott Pelley. “They’re worried about schools for their kids, jobs, housing. This is a problem that is not based on partisanship. This is based on citizenship.”
Schultz’s point of view resonates at a time when the nationalunemployment rate is at 9.1%, and the underemployment rate, at 16.2%. Americans are facing tough times and a frustrating dearth of leadership in Washington.
Shultz is a CEO who has embraced corporate responsibility as his company has grown. More than ten years ago, Starbucks entered a partnership with TransFair USA, where the coffee giant agreed to market Fair Trade Certified coffee in more than 2,000 retail locations across the United States. In 2009, Starbucks agreed to double its purchases to 40 million pounds, making it the largest purchaser of fair trade coffee in the world. More recently, Schultz refused to cut health benefits for his employees, even as the company restructured.
Last week, Starbucks announced a new innovative partnership with theOpportunity Finance Network (OFN) to create and sustain jobs at home. OFN is a 27-year-old national network of Community Development Financial Institutions (CDFIs). CDFIs are private financial institutions whose purpose is to deliver responsible, affordable lending to help low-income and other disadvantaged people and communities join the economic mainstream. CDFIs target small businesses and individuals who lack access to banks and mainstream financial services. CDFIs have become an incredibly important engine of economic growth in the recent credit crisis, providing more than $23.2 billion in financing and generating nearly 300,000 jobs in urban, rural, and Native communities through 2009.
With vision, market presence, and a dedicated customer base, Shultz believes Starbucks is uniquely positioned to jump start economic growth. The new program, called Create Jobs for USA, is seeded by the Starbucks Foundation, and will be sustained by donations from 6,800 Starbucks stores (customers can donate spare change from their lattes or make a $5 donation in exchange for a wristband). Donations flow directly into the OFN’s Create Jobs for USA Fund; member CDFIs will then find and finance community businesses they deem ready to succeed, and local community residents will get or keep jobs.
CDFIs will loan roughly $35 for every $5 in donations they receive, Opportunity Finance Network’s Mark Pinsky told the Daily Beast. Pinsky stresses how helpful it is to work with an existing network of lenders. His member-lenders already have a backlog of worthy small businesses and nonprofits that he says could start hiring now, if only they had access to a loan. Starbucks will start accepting donations on November 1. Describing the program, Pinsky explains, “virtually every $1 donated will be re-loaned indefinitely, compounding the job-creation impact.”
The growing role of private industry in facilitating large-scale change is an important one. The power of corporations in our society is somewhat of a paradox – they have become the villains targeted by occupy Wall Street activists, but also the caretakers of communities and local economies in a time of gridlocked Congressional movement around jobs. Realizing the importance of economic growth in a robust corporate social responsibility strategy marks huge strides in a field that was once dominated by arms-length philanthropic donations. The Create Jobs for USA initiative is an important model, as it places direct financing and stakeholder engagement in the hands of experienced CDFIs, yet actively engages its consumer base in one of the most important domestic issues of our time.
Schultz says he feels a personal responsibility to do something to stimulate the economy. “I feel very strongly I have to take on a deeper responsibility to do all that I can to use the scale of my company for good,” he told the Daily Beast last week, “I don’t want to blame anybody. I just want to stand up and make a firstname.lastname@example.org