US non-profit the National Consumers League (NCL) filed a consumer complaint against Starbucks for false claims and misleading marketing of its tea and coffee products. NCL alleges that Starbucks knows or should know that its ethical coffee and tea sourcing claims are inaccurate or misleading given the substantial evidence of labour and human rights abuses at its suppliers.
About the case
- On 10 January 2024, US non-profit the National Consumers League (NCL) filed a complaint against Starbucks at the Superior Court of the District of Columbia for allegedly making false claims that its tea and coffee products are “ethically sourced” and for misleading marketing practices. This is a greenwashing case based on harm caused to US consumers rather than human rights violations in the supply chain.
- NCL is bringing the case under District of Columbia consumer protection law on behalf of itself and the general public. The organisation is seeking “injunctive relief”, which would be likely to require Starbucks to stop its current marketing practices, as well as pay damages for unjustly benefiting from its branding as an industry leader in ethical sourcing and corporate responsibility.
- NCL is alleging that
- Starbucks actively markets and brands itself as a responsible, socially conscious company committed to “100% ethical sourcing of products” on its branding/packaging. It also commits to ethical sourcing in its Global Human Rights Statement. As part of its ethical sourcing efforts, Starbucks created its own verification standard Coffee and Farmer Equity (C.A.F.E.) for coffee production and states that it is committed to sourcing from farms certified by third-party verifier Rainforest Alliance for its tea production.
- Despite certification, there are repeated findings of labour exploitation and gender-based violence on cooperatives and farms from which Starbucks sources. NCL refers to investigations by journalists and prosecutors, including a 2022 complaint by Brazilian labour prosecutors alleging abusive and unsafe working conditions at Starbucks’ largest Brazilian supplier, Cooxupé cooperative, which is C.A.F.E.-certified. According to the complaint, Starbucks continues to source from this supplier. NCL also refers to allegations of sexual abuse and physical violence at Starbucks supplier James Finlay’s tea plantations in Kenya, which are Rainforest Alliance-certified. This case has been heard by the courts in Scotland (See RBC Alert of 19 November). Starbucks no longer sources from James Finlay.
- The certification schemes on which Starbucks relies are flawed. For example, C.A.F.E. verification only occurs every few years, even unannounced audits are announced 24-48 hours in advance, and the third-party verifier is paid by the farm, creating a conflict of interest. C.A.F.E. only requires the minimum wage to be paid, which is not a sufficient living wage in many countries.
- Consumers are injured by Starbucks’ misrepresentations and omissions, as they buy Starbucks products due to their ethical claims and pay higher costs than they otherwise would.
- In the past year, Starbucks has faced numerous accusations of union-busting activities before the National Labor Relations Board (NLRB), the US federal agency responsible for enforcing labour law. The complaints allege unlawful labour practices, such as the closure of unionised stores and the termination of unionised workers.
- The company is facing growing shareholder pressure. At the March 2023 AGM, shareholders approved a non-binding proposal requesting that the Board commission and oversee a third-party assessment of workers’ rights.
- In December 2023, Starbucks shared the results of its Human Rights Impact Assessment, independently conducted as part of its CSR commitments. Recommendations for Starbucks include the review and update of all relevant human rights policies and standards, including ethical sourcing standards and codes of conduct. The assessment results do not mention freedom of association but recommend that Starbucks expand “partner listening sessions to more locations”.
About the parties
- The National Consumers League is a non-profit advocacy group founded in 1899 and represents consumers on marketplace and workplace issues, focusing on topics such as fraud, safety, health, food and nutrition, and workers’ rights. It is primarily involved in advocacy efforts rather than litigation.