‘Governments are not doing their share’: Starbucks chairman says business must fill the void

By Katy Askew

- Last updated on GMT

Starbucks chairman sees transparency and plant-based foods as driving innovation
Starbucks chairman sees transparency and plant-based foods as driving innovation
Big business needs to “step up” and develop value-led strategies in order to fill the void left by governments who are “having difficulty taking care of their citizens”, Starbucks executive chairman Howard Schultz argues.

Corporations are operating at an “unfortunately very volatile time​”, Schultz told an audience of food industry innovators at the Seeds and Chips conference in Milan this week.

“It is a volatile time in America. It is a volatile time in Europe. It is a volatile time in the Middle East… We have lost something. We have lost our sense of humanity, we have lost our sense of conscience, we have lost our sense of citizenship,”​ the executive said during a speech that received a standing ovation.

“Governments across the world are having difficulty taking care of their citizens. I believe we have an individual and collective responsibility [as businesses to our] employees, communities and the planet,” ​Schultz argued. “We can’t wait for the government [to act]. The role and responsibility for business today has changed dramatically. We must step up and do more for our people and the communities we serve.”

Schultz, whose vision helped transform Starbucks from a Seattle-based coffee trading company into a global coffee chain with more than 27,000 retail outlets globally, insisted that for a business to succeed it should factor the interests of its employees and a broader social responsibility agenda into its strategic planning.

“Starbucks is trying to build the type of company… that achieves the balance between profit and social conscience,”​ he suggested.

Social initiatives cited by Schultz range from providing free healthcare, share options and college education to its employees in the US, to running an annual parents’ convention for the parents of Chinese employees and extending its healthcare provision in China to include employees parents.

“Success is best when it is shared. Many decisions in business don’t necessarily have to be economically positive to the bottom line.”

However, Schultz admitted that these decisions can also cause friction with investors, particularly with a public company. Starbucks went public in 1992 and during the 2008 financial crash, when the group's financial performance took a hit, Schultz said that he came under direct investor pressure to cut the group's healthcare commitments. 

"We needed the money. It was one of those moments of a real test of leadership," ​Schultz recalled. Starbucks maintained its healthcare provision - to do otherwise "would have fractured trust in the company". 

Howard Schultz speaks at the Seeds & Chips food innovation conference in Milan, 7 May
Howard Schultz speaks at the Seeds & Chips food innovation conference in Milan, 7 May

Food trend forecasts: transparency and plant-based

Schultz insisted that a company’s “values”​ and “ethos”​ are more important than ever because brands must win consumers over at a time when they have more access to information than ever before. In this environment, “truth, trust and transparency”​ is key.

“If you want to build a great brand, it’s not just about the product, marketing, brand, social media. It is about the values,”​ he suggested. “The consumer has thousands of choices today… The marketplace is an open source environment in which the consumer knows every aspect of our companies. The consumer is going to support the business whose values are aligned with their own.”

The expectation for companies to deliver transparency will shape the future of food innovation, Schultz suggested. “There is no doubt that people are looking for 100% transparency. If that transparency on any level is not truthful it is game over.”

Elsewhere, Schultz stressed that there is a “significant opportunity”​ to expand by providing plant-based alternatives that have gained traction with consumers.

The coffee chain plans to roll out a line of plant-based beverages in the US market this summer, with trials already performing well.

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