Why doesn’t Starbucks recycle?

Shout out to Elizabeth Drivas, a student in my undergraduate business law class at the University of Central Florida, who posed this provocative question to me during office hours on 21 October. In other words, when a successful firm like Starbucks touts its commitment to “reducing waste” and “reusable cups” (see this press release, for example) how much of this shameless self-promotion is just a marketing ploy to attract high-end customers, i.e. the type of customers who are willing to pay $3, $4, or even $5 for a cup of coffee? After some preliminary research (check out this helpful article by Adam Minter on Bloomberg View), it turns out that recycling is not yet cost-effective for Starbucks. Why not? Because those paper cups aren’t just made of paper; those cups have a plastic lining that complicate the recycling process. But isn’t ethics about doing the right thing, regardless of cost? Not necessarily! In my business law class, for example, I take time to compare and contrast various theories of normative ethics (e.g. Kantian ethics, Rawls’s theory of justice, and various theories of pragmatism and consequentialism) to illuminate contemporary debates about sustainability, corporate citizenship, and corporate social responsibility. Bonus questions: If you were Howard M. Schultz, CEO of Starbucks, how much of your firm’s resources would you invest in creating a non-plastic lined cup? In the alternative, what cost-effective steps could you take to reduce the use of paper cups in your coffee shops? Is this even a problem worth solving, given the small fraction of trash Starbucks generates relative to other firms? These are hard questions. If you have any thoughts, we would be happy to pass them along to Mr Schultz.

This entry was posted in Bayesian Reasoning, Current Affairs, Economics, Law, Questions Rarely Asked. Bookmark the permalink.

4 Responses to Why doesn’t Starbucks recycle?

  1. Craig says:

    In general, no corporation spends money they aren’t legally required to spend or that does not advance the economic interest of its shareholders. In my cynical view (which is the prevailing view among business these days) voluntary recycling will be done only to the extent that it generates a return on investment — otherwise the CEO is not doing his/her fiduciary duty. Note that I’m not defending this practice, but that’s the way it is. The worse crime is to claim that one’s corporation is recycling (or providing any other public good) when in fact it isn’t, so the corp can then be accused of hypocrisy when it doesn’t follow through — and then lose (some) customers. I have no doubt that Starbucks knows very well the equation of $ spent recycling vs $ gained in customer sales.

    • It is ironic how the legal doctrine of fiduciary duties (something we cover later in my course, by the way) can hamper a firm’s commitments to “corporate social responsibility”, but to the extent CSR/sustainability/etc are used by firms as a ploy to attract higher-end consumers, there might no conflict between a firm’s pursuit of profits and its devotion to ethics…

  2. Indeed! How could we measure this?

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