Monday Jun 27

EVERYBODY’S BUSINESS: Conflicting Goals at Starbucks

More large corporations are said to be signaling their commitment to environmental and social goals by including those targets in the incentive packages offered to their chief executives.

That’s the message of a recent article in the Financial Times, which highlighted the example of Starbucks CEO Kevin Johnson, whose $20 million compensation total in 2021 was based in part on reducing the company’s use of plastic straws and lowering methane emissions at the farms producing the milk for its lattes.

Those are laudable goals, but they may also amount to another form of greenwashing.

After all, in its proxy statement—a filing with the Securities and Exchange Commission that includes information on executive compensation—Starbucks discloses that the lion’s share of Johnson’s bonus was still determined by conventional financial benchmarks such as profitability.

There is also the question of whether the alternative metrics are all appropriate. Along with “planet-positive environmental goals,” the minority share of Johnson’s bonus was also set by “people-positive goals.” According to the proxy, that includes factors such as diversity. Yet what about other employment issues?

Starbucks is now in the midst of a widespread union drive among its baristas.  Since employees at two locations in Buffalo, New York voted for representation in December, organizing drives have sprung up at outlets around the country.   Starbucks Workers United, an affiliate of the Service Employees International Union, has reported that National Labor Relations Board petitions have been filed at more than 100 locations around the country.

These initiatives have not exactly been welcomed by Starbucks management. While claiming it will bargain in good faith with the Buffalo group, the company is employing some conventional anti-union tactics, such as mandatory meetings in which managers seek to discourage organizing. Starbucks also sought to thwart union organizing indirectly, by insisting that representation elections be held regionally rather than in individual locations. It was rebuffed by the NLRB.

Johnson set the tone for all this himself. Just before the vote in Buffalo in December, he gave an interview to the Wall Street Journal in which he trotted out the usual corporate line that unionization would destroy the rapport between workers and management: “It goes against having that direct relationship with our partners that has served us so well for decades and allowed us to build this great company.” Around the same time, the company sent a text message to workers saying: “Please vote and vote no to protect what you love about Starbucks.”

It remains to be seen whether the company will continue to rely on this guilt-tripping approach rather than hard-core unionbusting. An indication of where things may be headed was the move by the company in February to fire seven activists at a Memphis location, claiming they violated safety rules. Nonetheless, baristas at a location in Mesa, Arizona subsequently voted overwhelmingly for unionization and another three Buffalo stores have voted for the union.  Organizing momentum seems to be growing all over the country, including in Starbucks’ hometown of Seattle.

This brings us back to Johnson’s compensation package. Will his handling of the organizing drive factor into his 2022 bonus? If he succeeds in blocking widespread unionization of the chain, will that be seen as a “people-positive” achievement?

In all likelihood, next year’s proxy statement will be silent on the union campaign, regardless of how it turns out. Yet Johnson will no doubt be rewarded financially if he thwarts the effort. The same will likely be the case for the regional managers directly involved in discouraging—and perhaps intimidating—workers from voting for representation.

And that points to the problem with the employment aspects of corporate social responsibility practices. While companies have come to regard environmental goals as changes that everyone can rally around, organizing drives are another matter. Faced with the prospect of unionization, even supposedly progressive companies still act like the benighted employers of a century ago. Their tactics may be more subtle than the use of gun-toting Pinkertons, but the underlying objective is still the same.

Until corporations such as Starbucks begin respecting the right of workers to form unions and bargain collectively, they have no business presenting themselves as socially responsible.

The same goes for those calling themselves ethical investors. Many of those adopting this label ignore employment issues entirely, or pay attention only to the treatment of workers in the Global South. The union movement at Starbucks challenges this selective concern for employment rights. Workers everywhere, whether in Bangladesh or Buffalo, deserve decent working conditions and the right to organize without management interference.

Philip Mattera heads the Corporate Research Project in Washington, DC, and writes the blog Dirt Diggers Digest.

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