Morgan Stanley
  • Investment Banking
  • Sep 21, 2018

Capital Creates Coffee That Sustains

Committed to making coffee the world’s first sustainable agricultural product, Starbucks, with Morgan Stanley’s help, issued a pair of groundbreaking sustainability bonds that raised more than $1 billion to source ethically grown coffee.*

Everyone has a morning routine. Whether you rise with the alarm or keep hitting snooze, like so many of us, you’re probably not truly awake until you smell that first cup of coffee, gulping it down on the way out or savoring it while scanning the morning headlines.

Coffee is our core and we are committed to supporting the sustainability of the specialty coffee industry for future generations.
Scott Maw Starbucks Chief Financial Officer

Some of those headlines may recall the delicate balance of the world we live in—and have you wondering just how sustainable it is. So imagine if a company could root its commerce in fair trade and responsible farming, while helping local communities improve the quality of their crops and profitability—and that the cup of coffee you’re drinking can be a part of that.

What if coffee could become the world’s first sustainable agricultural product?

For Starbucks, that’s not a hypothetical question.

With help from Morgan Stanley,1 the global coffee chain has raised more than $1 billion* through bond markets to fund the purchase of ethically sourced coffee and to encourage sustainable farming through local support centers and loans for coffee farmers.1 In 2016, Starbucks raised $500 million in the first ever U.S. corporate sustainability bond,2 an issuance underwritten by Morgan Stanley1 that showed how corporate sustainability goals can inspire investors and help support positive social and environmental change.

A year later, Starbucks, with Morgan Stanley as underwriter,1 <>returned to the bond market, this time in Japan, where Starbucks opened its first international store in 1996. Today, with more than 1,2003 stores across all 47 prefectures,4 Japan is one of its biggest markets outside of the U.S.4 In 2017, Starbucks issued the first ever yen-denominated corporate sustainability bond, raising ¥85 billion  (nearly $800 million at today’s exchange rates).5

“Coffee is our core and we are committed to supporting the sustainability of the specialty coffee industry for future generations through the issuance of our second sustainability bond,” Starbucks Chief Financial Officer Scott Maw said at the time of the bond issuance.6

Indeed, Starbucks has spent decades translating its commitment to sustainability into industry standards. In 1994, it formed its first “Green Team” to identify environmental opportunities and solutions; 10 years later, having grown into a global chain, Starbucks implemented its own climate-change strategy, focused on renewable energy, and climate adaptation and mitigation efforts.

As part of that strategy, Starbucks has opened farmer support centers across the world, including in Costa Rica, Indonesia and Ethiopia,7 where its agronomists work with farmers to support traditional growing methods that help improve the quality of their crops. To support these efforts, Starbucks teamed with Conservation International to develop and launch its C.A.F.E. (Coffee and Farmer Equity) Practices verification program to source coffee from suppliers who comply with standards for ethical farming.

Why? Because Starbucks is also rooted in the social, economic and environmental health of an industry that supports some 125 million people all over the world.8 A flood in North Sumatra or drought in Ethiopia can ripple through coffee houses across the planet, but first, it devastates the farmers and others who depend on those crops.

In short: What’s good for the planet is good for growers—and it can also be good for the coffee industry and global consumers who drink some 600 billion cups9 of it every year. A great crop of beans harvested from the mountains of Costa Rica brews a mellow cup—or that pot at home to get you through the day.

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