ABOUT THIS REPORTThe information in this Report
is for fiscal year 2001 (October 2,
2000, through September 30, 2001)
and covers Starbucks companyoperated retail and distribution
operations in North America andsourcing activities in coffee-origin
countries. Other than somecompany-wide financial
information, Starbucks specialty
operations and international retailmarkets are not included in thisReport. Starbucks North American
operations include Canada and the
U.S., excluding Hawaii.

Howard Schultz

At Starbucks, the choices we make and actions we take area reflection of our core values. To become what Starbucks istoday—the leading retailer, roaster and brand of specialty coffee—
took the vision to create a values-driven coffee company inspiredby passion, dedicated to quality and guided by exceptionallystrong principles.
Starbucks aspires to be recognized as much for our commitment
to social responsibility as we are for the quality of our coffee.
We’ve focused our efforts on improving social and economic
conditions for coffee farmers; minimizing our environmental
impact; making a positive contribution in the communities where
we do business; and providing a great work environment for ourpartners (employees).
Throughout our 30-year history, we have been committed to social
responsibility. Today, with the strength of our brand in themarketplace, Starbucks has an opportunity to lead by example.
Our responsibility starts with being accountable to Starbucks
stakeholders—our partners, customers, shareholders, suppliers,
community members and others—and communicating openly
about our business practices and performance. We are, therefore,publishing our first annual Corporate Social Responsibility Reportto communicate the way we do business.
Our goal throughout this Report is to provide information to ourstakeholders about our policies and practices, and to provide,
when possible, measures of our performance. By publishing thisReport, Starbucks joins a small but growing number of companies
that are assessing their corporate citizenship, taking measures
to provide transparency on performance and being accountable
to stakeholders. We realize that every day we must conduct ourbusiness in ways that earn your admiration and trust. We hope
this Report helps us to do just that.

Alan Abramowitz Photography

Warm regards,

Orin Smith

Howard Schultz
chairman andchief global strategist

Orin C. Smith
president andchief executive officer

Table of ContentsRESPONSIBLE BUSINESS PRACTICESStarbucks Mission Statement

3

The Business Case for Social Responsibility

3

Sustainability is Essential to Our Success4

Sourcing in Origin Countries

To establish Starbucks as the premierpurveyor of the finest coffee in the world
while maintaining our uncompromisingprinciples as we grow.

5

Social Investments in Origin Countries

6

Commitment to Origins

8

Minimizing Our Environmental Impact

11

Working with Our Suppliers

13

Listening to Our Stakeholders

INVESTING IN OUR COMMUNITIES
17Part of the Neighborhood

18

Community Investments

21

The Starbucks Foundation

INVESTING IN OUR PARTNERS
23

Creating a Strong Workplace Environment

The following six guiding principles will
help us measure the appropriateness ofour decisions:• Provide a great work environment
and treat each other with respectand dignity.
• Embrace diversity as an essential
component in the way we do business.
• Apply the highest standards of
excellence to the purchasing, roasting
and fresh delivery of our coffee.
• Develop enthusiastically satisfied
customers all of the time.
• Contribute positively to ourcommunities and our environment.
• Recognize that profitability isessential to our future success.

CSR Fiscal 2001 Report3

Responsible
Business Practices
THE BUSINESS CASE FOR SOCIAL RESPONSIBILITYCOMPANY PROFILE

Starbucks defines corporate social responsibility as conducting our business in waysthat produce social, environmental and economic benefits to the communities inwhich we operate. In the end, it means being responsible to our stakeholders.

Fiscal 2001—October 2, 2000 to
September 30, 2001:

Given that there are positive returns for being a socially responsible company,
Starbucks believes it makes sense to view our actions in terms of investments. By
investing in sustainable business practices and the origin countries that provide ourcoffees, we encourage a continued high-quality supply. In the communities where we
do business, we invest in local organizations to improve the quality of life. And byinvesting in our partners, through competitive wage and benefit structures, andopportunity for stock ownership, we have an edge in attracting and retaining
qualified, productive employees—and that helps reduce our hiring, training andother turnover costs.
In the end, there is no conflict between doing good and doing well.At Starbucks, we
believe the two go together.

(Information below represents totalcompany unless noted)
Total net revenues: $2.6 billion
Net earnings: $181 million
Earnings per share: $0.46
Total income taxes: $108 million
Stock price (high/low): $25/$14
Number of company-operated
locations: 2,971 (North America)
Number of partners (employees):
54,000 (North America)
Location of Starbucks corporate
headquarters: Seattle
Responsible Business Practices

There is growing recognition of the need for corporate accountability. Consumers
are demanding more than “product” from their favorite brands. Employees arechoosing to work for companies with strong values. Shareholders are more inclined
to invest in businesses with outstanding corporate reputations. Quite simply, beingsocially responsible is not only the right thing to do; it can distinguish a company
from its industry peers.

SUSTAINABILITY IS ESSENTIAL TO OUR SUCCESS
Coffee is second only to water as the world’s most popular drink, with more than
400 billion cups consumed every year. Coffee is a giant industry employing 20
million people globally, and ranks as the second most traded commodity on theplanet after petroleum.
Traditionally, Starbucks has purchased our coffees at premiums over the world’scommodity market prices (or the “New York C,” which is the worldwide reference
used by coffee traders for commodity-grade coffee).The premiums we pay vary by
the type of coffee, as well as the overall quality of that particular coffee, relative tothe quality of “New York C” commodity-grade.
During the past year, a worldwide surplus of coffee has dramatically reduced
wholesale prices. At the end of fiscal 2001, prices paid for coffee on the “New YorkC” had dipped to $0.48/lb—a level not seen in nearly 30 years.

Opposite page (top)—Starbucks Coffee
Company worldwide headquarters, known
within the company as the Starbucks
Support Center, located in Seattle.
Opposite page (bottom)—El Triunfo
Biosphere Reserve, Chiapas, Mexico,
where Starbucks Shade Grown Mexicocoffee is produced.

This price drop affects all growers, particularly those with small family farms that
produce nearly three-fourths of the world’s coffee supply. Starbucks purchases ourcoffee from many of these small, multigeneration farms, paying premium prices thatenable farmers to provide for their families and maintain their family farms. As
Starbucks business expands, so does our need for the coffee they grow.

Mary Williams, Starbucks senior vicepresident of coffee, meets with Hector
Cortez in the Atitlan region of
Guatemala while on one of her manycoffee buying trips.

SOURCING

Percentage of Total Coffee Purchased

Outright Long-term Direct
prices* contracts* purchases*
80%
70%
60%
50%
40%
30%
20%
10%
0%

Fiscal 2001
Fiscal 2002

* Not mutually exclusive

While Starbucks purchases about one percent of the global coffee supply, ourpurchases are for only the highest quality arabica coffee beans grown in the world.
Because of Starbucks exceptionally high standards for quality coffee, one of our mostcritical needs is to secure a long-term supply of unroasted “green” coffee from thefarmers we know and trust.The sustainability of their farms is intrinsically linked toour success.
Starbucks recognizes the importance of helping to ensure that coffee farmers have asustainable livelihood. To address this challenge, we have moved away from “NewYork C”-based formula pricing, focusing on several strategies including:
•
•
•
•
•

Securing more contracts based on outright, negotiated prices.
Negotiating more long-term contracts.
Increasing the amount of coffee purchased directly from farms and cooperatives.
Assisting coffee farmers in gaining access to affordable credit.
Introducing new coffee sourcing guidelines that reward farmers for using
sustainable growing practices.
• Offering financial support for health and educational projects that directly benefit
farmers and their communities.
• Expanding our sustainable coffee category, “Commitment to Origins,” including
Shade Grown Mexico and Fair Trade Certified coffees.

SOURCING IN ORIGIN COUNTRIESStarbucks helps farmers improve their standard of living while ensuring a sustainablesupply of high-quality coffee by purchasing at outright prices, signing long-term
contracts and buying directly from farms and cooperatives (co-ops). For the coffee
Starbucks purchased in fiscal 2001 and the contracts that Starbucks has negotiatedfor coffee purchases in fiscal 2002, Starbucks pays an average price of $1.20 per
pound, excluding freight, for green coffee purchased in these ways.
Outright Prices
Coffee prices can be negotiated either at outright prices or in relationship to theprevailing wholesale price. Starbucks preference today is to source coffee at outrightprices.This provides stability and predictability for both buyers and sellers. In fiscal
2001, 12 percent of Starbucks coffee supply was purchased at outright prices. For
the orders we placed in fiscal 2001 that will be delivered in fiscal 2002, 74 percent
of our green coffee will be purchased at outright prices.
Long-Term Contracts
Long-term contracts with suppliers benefit both producers and Starbucks. Farmers
are guaranteed attractive prices over multiple crop years, and Starbucks is able tosecure future coffee supplies at predictable costs. During fiscal 2001, nearly three
percent of Starbucks total supply of coffee was delivered through long-term
contracts. For fiscal 2002 delivery, Starbucks has been able to increase the amountof coffee purchased under long-term contracts, negotiated at outright prices, to31 percent.

CSR Fiscal 2001 Report5

Direct Purchasing
Small to midsize farms and co-ops provide most of the coffee beans for Starbucks
coffees.We have visited many of these farms and built relationships with the growers.
In fiscal 2001, nine percent of our total coffee supply was purchased directly fromfarms and co-ops, which ensured that more of the purchase price went to thefarmers. Of the orders we’ve placed for fiscal 2002 delivery, 59 percent will be
supplied directly from farms and co-ops and negotiated at outright prices.
Access to Credit
Cash flow is a critical issue for small farms. Farmers have little access to credit atcompetitive rates and are often forced to sell their crops prior to harvest. In fiscal
2001, Starbucks made $150,000 available through Ecologic Enterprise Ventures andthe Conservation International (CI) Foundation to help sustain Mexican coffee
farmers with pre- and post-harvest loans. This was augmented with $250,000 in
post-harvest capital from CI’s Conservation Enterprise Fund.

In fiscal 2001, Starbucks helped toprovide loans to 516 small family
farmers in Chiapas, Mexico.This
financing enabled these farmers to sellmore than 350,000 pounds of coffee atfavorable prices.

In fiscal 2002, Starbucks will help make $500,000 available to farmers through
Ecologic Enterprise Ventures and the CI Foundation. An additional $1 million will
be directed through Calvert Community Investments to provide credit at favorable
rates to coffee farmers for their use in quality improvements and capital investments.
Coffee Sourcing Guidelines
At the end of fiscal 2001, Starbucks introduced new coffee sourcing guidelines developedin partnership with The Center for Environmental Leadership in Business, a newdivision of Conservation International.This represents a first for the coffee industry.
The guidelines involve a flexible point system coupled with financial incentives,
rewarding coffee suppliers who meet strict environmental, social, economic andquality standards. Ultimately, coffee suppliers can earn preferred status with ourcoffee buyers. Because significant changes in origin countries require flexibility andpatience, the guidelines are being introduced as a pilot program for the 2002 and2003 crop years.
Responsible Business Practices

SOCIAL INVESTMENTS IN ORIGIN COUNTRIESOne of the guiding principles in Starbucks mission statement is that the company
will “contribute positively to our communities and our environment.” We’recommitted to addressing social and environmental issues that affect the people andplaces that produce our coffees.
Through partnerships with organizations that share our concerns, we’re able to makea difference in coffee-origin countries. We make long-term investments, suchas building schools, health clinics, and coffee processing facilities to improve thewell-being of families in coffee farming communities.
CARE
Our alliance with CARE, a nonprofit international relief and development
organization, began in 1991. CARE connects us to parts of the world where our help
can directly impact communities and provide needed relief in coffee- and tea-origin
countries. In fiscal 2001, Starbucks contributed $120,000 to CARE. Over the years,
Starbucks has contributed or helped raise more than $1.8 million for CARE
programs, and touched the lives of approximately 2.7 million people in Africa, Latin
America, and Southeast Asia. Starbucks continues to be one of CARE’s largest North
American corporate contributors.

In fiscal 2001, Starbucks provided$43,500 toward building a health clinicand school in Guatemala and a healthclinic in East Timor. Here a local
Guatemalan doctor examines her patient.

COMMITMENT TO ORIGINSOne method to help ensure the social, economic and environmental sustainability of
the farms that produce coffee is to purchase organic, Shade Grown Mexico and Fair
Trade Certified coffees. These special coffees, which are independently certified orverified as such, are included in Starbucks Commitment to Origins category.
Starbucks Organic Costa Rica is certified and labeled as organic by Eco-Logica, an
independent organic certification organization. Organic certification ensuresconsumers that the coffee has been grown without the use of synthetic chemicals forthe prior three years. Due to the lengthy process and the cost of certification, many
farmers from whom we purchase don’t pursue certification, although their coffee isgrown using traditional methods and without the use of herbicides and pesticides.
Starbucks retail partner Mathias Eichler
stands behind our promotion of Starbucks
Shade Grown Mexico coffee.

AMOUNT PURCHASEDOF SHADE GROWN MEXICO

2000

2001

2002
1.5 Million*

Ordered and Delivered(lbs)

Starbucks offers Shade Grown Mexico coffee through a partnership with
Conservation International and offers Fair Trade Certified coffee as part of ouralliance with TransFair USA.
Shade Grown Mexico Coffee
Starbucks and Conservation International (CI) formed a partnership in 1998 toencourage the production of shade-grown coffee using ecologically sound growing
practices that help protect biodiversity, and provide economic opportunities forsmall farmers.
CI has been a tremendous resource in this effort, enabling Starbucks to purchase
Shade Grown Mexico coffee through CI’s Conservation Coffee Program. In 2000,
Starbucks and CI renewed this partnership for another three years at a commitment
of at least $200,000 annually.

723,000

Although this is the only coffee that Starbucks identifies as “shade-grown,” our coffee
buyers estimate that roughly one-third of all Starbucks coffee is traditionally grownunder the canopy of shade trees in tropical forests.

(lbs)

As a result of the Starbucks/CI partnership:

304,000(lbs)* Estimated for 2002 delivery

In fiscal 2001, Starbucks invested$327,500 in CI’s Conservation Coffee
program.These funds will help CI develop
five new model projects in Latin America,
Asia and Africa.This commitment of funds
builds on the success Starbucks and CI
achieved in Chiapas, Mexico, in preserving
areas of high biodiversity and providing
economic opportunities for small-scale
farmers. In addition, Starbucks president
and CEO Orin Smith provides hisleadership and expertise to CI as amember of CI’s Board of Directors.

• Starbucks offered Shade Grown Mexico coffee through our U.S. companyoperated stores and on www.starbucks.com for the third year in a row.
• Farmers supplying Shade Grown Mexico received a 60 percent price premium
over local prices for their coffee.
• The amount of shade-grown coffee being exported in 2001 has increased by 50
percent over the previous year.
• Since 1998, coffee-growing land preserved as tropical forests has increased by
220 percent.
Future Starbucks/CI goals include:• Developing new CI Conservation Coffee projects in places where biodiversity isunder severe threat. These include locations in Guatemala and Colombia, andlater other coffee-growing regions around the world.
• Expanding the supply of shade-grown coffee to meet consumer demand andensure year-round availability.
• Engaging leaders from the coffee world to collaborate on industry-wide
guidelines for environmental and social quality.

CSR Fiscal 2001 Report

7

Fair Trade Certified Coffee
In the Fair Trade system, farmers form and participate in democratically run
cooperatives that, in turn, may sell their beans directly to importers, roasters andretailers at favorable guaranteed prices. The minimum fair trade price the buyer
currently pays for non-organic green coffee is $1.26/lb and $1.41/lb for organic
green coffee. Consumers are assured when they purchase Fair Trade Certified coffee
that the farmers received a guaranteed minimum price for their coffee that helps
support a better life for family farmers.
In April 2000, Starbucks signed a historic agreement with TransFair USA, a nonprofit
organization that provides independent certification for all Fair Trade coffee in the
U.S. Since that time, the number of companies offering Fair Trade coffee has morethan tripled. As a result of our partnership with TransFair USA:

• More colleges and universities brewing Fair Trade Certified coffee as their coreoffering.
• Starbucks U.S. company-operated stores brewing Fair Trade Certified coffee as
the “Coffee of the Day” once a month beginning in spring 2002.
• The introduction of Fair Trade Certified coffee in Canada and the international
markets where we do business.

Starbucks packaged Fair Trade Coffee,
which can be purchased in our companyoperated U.S. stores and on
www.starbucks.com.

Responsible Business Practices• Starbucks agreed to purchase Fair Trade Certified coffee, which meets our quality
standards, to fulfill consumer demand.
• Starbucks introduced Fair Trade Certified coffee to our product line on
October 4, 2000, with a promotional campaign that included custom packaging,in-store signage, brochures, and information on www.starbucks.com.
• Shortly thereafter, Starbucks expanded the availability of Fair Trade Certified
coffee by making it available to our university, hotel and restaurant accounts.
Demand tripled for Fair Trade Certified coffee in the university market segment
in fiscal 2001.
• In April 2001, Starbucks launched a second five-week promotional campaign tobuild awareness for Fair Trade Certified coffee and offered it as our “Coffee of theDay” on May 18, 2001, for the first time.
• In fiscal 2001, Starbucks purchased 653,000 pounds of Fair Trade Certified
coffee and sold 186,000 pounds of this coffee to our customers under the Fair
Trade label.
In September 2001, Starbucks announced the expansion of Starbucks Fair Trade
Certified coffee program, with plans to purchase one million pounds of Fair Trade
Certified coffee during the next 12 to 18 months that will result in:Starbucks Environmental
Mission Statement
Starbucks is committed to a role ofenvironmental leadership in all facets ofour business.
We will fulfill this mission by acommitment to:• Understanding environmental issues
and sharing information with ourpartners.
• Developing innovative and flexible
solutions to bring about change.
• Striving to buy, sell and use
environmentally friendly products.
• Recognizing that fiscal responsibility
is essential to our environmental
future.
• Instilling environmental responsibility
as a corporate value.
• Measuring and monitoring ourprogress for each project.
• Encouraging all partners to share in
our mission.

COFFEE PURCHASED

Fiscal
2000

Fiscal2001
1.8 million(lbs)

MINIMIZING OUR ENVIRONMENTAL IMPACTIn 1992, Starbucks became a publicly traded company. Shortly thereafter, a crossfunctional team of Starbucks partners adopted an environmental mission statement.
What evolved was an Environmental Affairs team that seeks to develop environmentally
responsible policies and procedures. As new environmental issues arise, this groupexamines our current measures and identifies opportunities for improvement.
Environmental Footprint Analysis
To determine our environmental impact, or “footprint,” as a company, in fiscal 2001
Starbucks worked with The Natural Step, a nonprofit consulting and education grouphelping organizations take steps toward sustainability.We analyzed Starbucks supply
chain—from coffee bean to coffee cup—looking for opportunities to make ourfootprint smaller.
Throughout the process, we focused on achievable measures that could significantly
reduce our footprint or environmental impact. Some solutions were obvious, suchas addressing packaging, energy, waste, and recycling issues. Other measures are
more challenging but necessary if we are serious about demonstrating
environmental leadership.
Thus, our efforts are focused on four areas:• Coffee, tea and paper sourcing• Transportation impacts (people and goods)• Electricity, gas and water use• Store design and operations
Starbucks identified ways to measure our performance for each focus area anddeveloped specific initiatives to improve our resource efficiency. The data captured
at the end of fiscal 2000 serves as our baseline.
Sourcing
Environmental impacts associated with sourcing coffee, tea and paper include
damage to forests caused by growing coffee, the use of pesticides and herbicides incoffee and tea production, and the waste generated from paper production, just to
name a few. For coffee, the performance metric we use is expressed in the numberof pounds we purchase of sustainable coffees—Starbucks Organic Certified Costa
Rica, Shade Grown Mexico and Fair Trade Certified. For tea, the performance

TEA PURCHASED

550,000

Fiscal2000(lbs)

PAPER FIBERPURCHASED

Fiscal
2000

Fiscal
2001

27.6%

27.7%

14.0%
Shade Grown Mexico,
Fair Trade Certified, andStarbucks Organic Costa Rica
Coffees

5.0%
Certified Organic (Black)
Certified Organic (Green)

Post-consumer and unbleachedfiber content in paper

CSR Fiscal 2001 Report9

metric we use is the percentage of organic tea we purchase of our total tea purchases.
And for paper, we measure the amount of post-consumer and unbleached fiber
content in paper as a percentage of all the paper fiber we purchase.
Transportation
The burning of fossil fuels while transporting raw materials, products and people
is a significant contributor to global warming and other environmental concerns.
Our present focus is on improving fuel efficiency for the modest fleet of shuttlevans, trucks and other vehicles Starbucks owns and operates. The metric used isthe average miles per gallon (mpg) for our company-owned fleet. Our baseline is
17.48 mpg.
Several years ago we established the Transportation Options Program (TOP) to help
our partners find commuting alternatives to and from Starbucks headquarters. The
program provides subsidies to partners who use commuting alternatives in an effort
to reduce traffic congestion, air pollution and minimize other environmental impacts
associated with driving cars. Approximately 500 of our 2000 corporate Starbucks
partners used alternative commuting options such as biking, carpooling or public
transit in fiscal 2001. Starbucks received King County’s local Commuter Challenge
Diamond Award for our efforts to promote carpooling to work at our Seattle-based
headquarters in January 2001.
Energy and Water Consumption
Our North American company-operated retail stores represent the majority of ourenergy and water use, so that’s where we are directing most of our conservation
efforts. To measure the efficiency of our energy and water usage, we gathered
information from a sample of stores where data was available. After gathering thedata, we used several performance metrics that, collectively, gave us reliable
feedback and control for other factors. In the graph below, our consumption isreported using just one of these metrics—average retail square footage.
GAS

WATER

348.76

69.35
67.16

0.67
0.58

Kilowatt-hours

ThermsFiscal 2000
Fiscal 2001
Consumption measured per average square foot of retail space

N/A

Gallons

Responsible Business Practices

ELECTRICITY

It is difficult to draw conclusions from data that was just collected over two years.We
plan to track our consumption levels annually and in fiscal 2002, we will investigate
opportunities to improve the efficiency of our energy and water usage by reviewing
our store design specifications. We expect that systemic changes to our mechanicaland equipment design specifications will improve energy and water efficiency.
Store Design and Operations
It is not only how Starbucks operates our stores that determines our environmental
impact, but also how we build them—and the materials we use in the interior
construction. In 2000, we joined the U.S. Green Building Council (USGBC).
Currently, we are evaluating specifications for materials used to build our store
interiors against the USGBC’s Leadership in Energy and Environmental Design(LEED) standards. In the meantime, our footprint analysis targeted two wastereduction tactics: store recycling and use of commuter mugs in place of paper cups.

In fiscal 2001, Starbucks customers usedcommuter mugs nearly 12 million times,
conserving enough paper cups that, when
lined up, would stretch nearly 1,000
miles, from Chicago to Dallas. By notusing paper cups, it also eliminated508,000 pounds of landfill waste.

STORE RECYCLING

Fiscal
2000

Fiscal2001

COMMUTER MUGSFiscal
2000

Fiscal
2001

65.0%
60.0%

2.2%
1.9%

Percent of stores recycling

Commuter mug usage as a percentage
of total beverage transactions

Our store recycling metric measures the percentage of stores with establishedrecycling programs. Starbucks goal is to offer recycling in all of our companyoperated stores. Achieving this goal is determined by the availability of commercial
recycling services in each community, and the support of our property managers. In
fiscal 2002, we will collaborate with other like-minded retailers to encourage ourmutual property managers’ participation in recycling programs. For commuter mug
usage, we measured the percentage of beverages served in reusable commuter mugs
against fiscal 2000. Although Starbucks provides a $0.10 commuter mug incentive
discount to customers, our data indicated a decline in usage. In fiscal 2002, we willtake measures to raise awareness of this waste reduction opportunity to our partners
and customers.
Embracing Change
The key to fulfilling our environmental mission rests on our ability to make changes
within our operations.With the commitment of Starbucks senior leadership team tomake meaningful progress, and the adoption of an action plan that is communicatedthroughout our organization, Starbucks is moving in a direction that will minimize
our environmental footprint.

CSR Fiscal 2001 Report

11

Another important step Starbucks has taken is to cultivate an active “Green Team,”which consists of retail store managers across North America.The Team was createdin 1994 and has been instrumental in identifying environmental opportunities,
creating solutions, and communicating those solutions to our retail partners. The
Green Team’s efforts have been critical to our efforts to conserve energy, reduce
waste and involve our partners.
Some of our initiatives for fiscal 2001 included the following:
Energy Conservation
Starbucks established a Utility Task Force in fiscal 1999 to identify conservation
measures, such as modified lighting and adjusted thermostats. In fiscal 2001, theUtility Task Force piloted several measures aimed at conserving energy whileproviding cost savings.We rolled out the Utility Task Force’s recommendations in our
North American company-operated stores at the end of fiscal 2001.
Waste Reduction
Starbucks Green Team first promoted the idea of offering coffee grounds ascompost in spring 1998, and now it is an annual event. This initiative has helped
reduce waste in our stores and provided many customers with nitrogen-richmaterial for their gardens.

WORKING WITH OUR SUPPLIERS
We seek suppliers who share our values, as stated in our mission statement andguiding principles, and who operate their businesses accordingly.
Environmental Guidelines
Key suppliers receive the Starbucks Supplier Handbook, which encourages them toadhere to Starbucks environmental mission statement and environmental purchasing
policy. Moreover, we ask our suppliers to:
•
•
•
•
•

Provide products “fit for use” and avoid over-engineered products.
Provide the most energy-efficient products within their category.
Eliminate excessive packaging.
Incorporate paperless administration systems whenever possible.
Adopt techniques that maximize the efficiency of wood use in product design orbuilding construction.
Starbucks requests that suppliers submit information pertaining to our expectations
and requirements as stated in our handbook. Starbucks staff or a designated third
party may also conduct a plant audit of a supplier’s facilities.

Starbucks Environmental
Purchasing Policy• Meet all relevant regulatory
standards.
• Seek to purchase environmentallyfriendly products in use andmanufacture.
• Seek to purchase products that areeasily recyclable in most communities.
• Seek to purchase products that containthe highest percentage of postconsumer recycled materials. Paper
should have a minimum of 20% postconsumer recycled content.
• Seek to maximize our use of wood andpaper products derived from certified,well-managed forests as determined bystandards endorsed by the Forest
Stewardship Council.

Responsible Business Practices

Earth DayTo celebrate Earth Day 2001, last April more than 600 Starbucks partners
contributed nearly 3,000 volunteer hours helping to improve the environment. For
Earth Day 2002, Starbucks will support the Earth Day Network(www.earthday.net), an on-line resource for environmental information andopportunities to get involved on a local level around the world. We will raiseawareness about this valuable resource to our partners and customers who seek to
get involved in their communities.

Building a Diverse Network of Suppliers
Starbucks embraces diversity as one of our core values. Since 1996, we have engaged
in supplier diversity efforts to actively build a broad, efficient supplier network ofbusinesses owned by minorities and women. During fiscal 2001, Starbucks servedon the Northwest Minority Business Council, which is the local chapter of the
National Minority Supplier Development Council.
For fiscal 2001, Starbucks estimates it spent $50 million with certified and noncertified businesses owned by minorities or women. This number represents a 32
percent increase over fiscal 2000 estimated spending. Suppliers can be certified
through the National Minority Supplier Development Council and the National
Women Business Owners Corporation. Certification ensures their status as diverse
suppliers and improves our tracking and reporting on the amount of business we aredoing with companies owned by minorities and women.
STARBUCKS SPENDING
WITH DIVERSE SUPPLIERS$50 Million
2001$38 Million
2000

Initiatives for Fiscal 2002
For the next fiscal year, Starbucks is pursuing three initiatives regarding suppliers.
These are:• Updating our “non-coffee” sourcing guidelines, including introducing a supplier
Code of Conduct.
• Assigning accountability for supplier diversity to one of Starbucks procurement
leaders.
• Encouraging all of our suppliers that are owned by minorities and women to
become certified.

CSR Fiscal 2001 Report

13

LISTENING TO OUR STAKEHOLDERS
During fiscal 2001, we heard concerns from our customers and shareholders about
two particular issues: the presence of genetically modified material in our products,
and the ubiquity of our stores.
Genetically Modified Material
In March 2001, activists and some customers raised questions regarding the presenceof genetically modified (GM) material in some of the products we sell, including
synthetic hormones in the milk we purchase from local dairies. As a company
committed to providing the highest quality coffees, teas and foods, we take theseissues seriously.

Starbucks has confirmed that our core products, coffee and tea, are not geneticallymodified, and we have no intention to buy or sell genetically engineered coffees orteas. Regarding the current research on genetic modification of coffee to increase
crop yields, we see no reason to pursue this technology and do not plan to support
its development. In addition, the soy milk we purchase for our stores is certified as
GM material-free.And we have reviewed our other products and found the majority
are GM material-free as well.
Starbucks maintains the position that if our customers are concerned about
genetically modified material, we will act responsibly to address our customers’
needs by developing feasible alternatives. In Seattle and Portland,Oregon, at the endof fiscal 2001, Starbucks launched a test of baked goods made with organic
ingredients.The results of this test will be evaluated.
The issue involving milk is the use of the synthetic hormone, rBST (recombinantbovine somatotropin), to increase milk production in cows. Because milk is notlabeled to indicate the presence of rBST, Starbucks believes the best way to address
customer concerns is to provide an alternative. In July 2001, Starbucks beganoffering certified organic milk, which is rBST-free, upon request in our companyowned U.S. stores.
Starbucks Growth
Starbucks opened 525 of our 2,971 company-operated stores in North America infiscal 2001. Many of these locations were opened in areas previously not served byStarbucks.We opened other locations in communities where Starbucks already has astrong presence. And it may seem curious, but sometimes we opened new storeswithin close proximity to other Starbucks locations.
Our decisions about where to site our stores depend on reaching our potential
customers and providing better service to our existing customers. Like every
successful retailer, we take a straightforward approach to store siting, basing ourdecisions on demographics and traffic measures.When we open a new store near an
established Starbucks, it is generally intended to relieve long customer lines andimprove service.
It takes more than just a prime location to be successful.Attracting customers to ourstores, we believe, happens by providing high-quality coffee as well as creating
inviting, comfortable places that are conveniently located. When we enter newneighborhoods or communities, we do so with care and consideration, striving tocreate places that add to the spirit of each community.

The U.S. does not require labeling of thepresence of genetically modified
ingredients where the changes brought
about by biotechnology result in a
product that is substantially equivalent
to the non-bioengineered product. In the
U.S., the use of genetically modified
seeds is significant. It is estimated that
26 percent of the corn and 68 percent of
the soybeans presently grown in thiscountry are from genetically engineered
seeds. (Source: National Agricultural
Statistics Service of the USDA)

rBST is used in only about one-third of
U.S. dairy herds, but because milk frommany herds is combined in the processof storage and distribution, less than
five percent of all milk can be verified as
coming from cows not treated with rBST.
Milk from herds not treated with rBST
must be segregated throughout thecollection and processing system to beguaranteed rBST-free. Moreover, ananalytical test to screen for the presenceof rBST does not exist, making
verification of rBST-free dairy products
almost impossible.

Responsible Business Practices

Although there is a great deal of controversy regarding genetic modification of food,our company does not possess the scientific expertise required to establish credible
opinions regarding GM materials in products.

After selecting a new site and negotiating the lease for the best possible terms, ourarchitects study the local neighborhood and try to reflect its character into thestore’s design. Before the store opens, our new manager relies on Starbucks
Community Tool Kit as a guide in reaching out to community leaders to learn
about important neighborhood issues and providing support for local charitablecauses. These measures have helped make Starbucks a welcome neighborthroughout North America.

The outside view of Starbucks Belltown
store in downtown Seattle is an exampleof creating a Starbucks store while
maintaining the architectural elements
reflected in this neighborhood.

For some communities, like Columbia-Tusculum’s business district in Cincinnati,
Ohio, the opening of a new Starbucks store is seen as a positive sign when an area isundergoing revitalization. Starbucks presence is perceived as a signal that otherbusinesses will follow our lead. As John Van Volkenburgh, a management consultant
and former director of the Columbia-Tusculum Economic Development Corp.
stated in the Cincinnati Post on March 30, 2000, “A new Starbucks is evidence the area
is ripe for redevelopment. It’s yet another step in the right direction.”

In 1998, basketball great Earvin “Magic”
Johnson’s company, Johnson Development
Corporation, and Starbucks formed ajoint venture partnership called Urban
Coffee Opportunities, LLC (UCO) toplace Starbucks Coffee locations inunderserved urban communities
throughout the U.S.The joint venture
has not only helped Starbucks reach morecustomers, it has provided employment tolocal residents, as well as helped tostrengthen the economies of thecommunities in which the UCO storesoperate. By the end of fiscal 2001, 28
UCO stores were operating in the U.S.

In addition, while many national retailers avoid underserved urban neighborhoods(thus denying local residents potential jobs and services), Starbucks formed a joint
venture with Johnson Development Corporation, a company formed by Earvin“Magic” Johnson, to specifically serve these areas.

CSR Fiscal 2001 Report

15

GROWTH OF THE SPECIALTY
COFFEE INDUSTRY IN THE U.S.

1980

1990

2000
13,830

2,208

275
75
4
Number of Starbucks company-operated U.S. stores
Number of specialty coffee stores in the U.S.
Source: Starbucks Coffee Company and Specialty Coffee Association of America

We believe the growth of Starbucks has created employment and business
opportunities within the specialty coffee industry. According to the Specialty Coffee
Association of America, 275 coffee cafes and bean retailers existed in 1980, of which
a few belonged to Starbucks. Twenty years later, the specialty coffee industry has
created tens of thousands of jobs in nearly 14,000 coffee cafes and bean retailers, ofwhich 16 percent belong to Starbucks.

Responsible Business Practices

1200

CSR Fiscal 2001 Report17

Investing in Our
Communities
PART OF THE NEIGHBORHOODAt the end of fiscal 2001, Starbucks was serving nearly 16 million customers weekly
in 23 countries. Many people use our coffeehouses to get together with friends orcolleagues, or host meetings with local organizations and book clubs, or just to sit
and relax. We are proud and honored to welcome them as our guests. Providing a
comfortable, relaxed environment that serves as a neighborhood gathering place isjust one way Starbucks enriches the quality of life in our communities.
At all levels within our organization, Starbucks partners strive to be good neighbors
and active contributors in the communities where we live and work. It’s part of the
Starbucks culture.
We recognize the relationship between the success of our company and the strengthand vitality of the communities where we operate. Investing in our communities is
not only the right thing to do; it also creates better places for all of us.

To Starbucks Store Manager Kelli Caires,
creating a community-gathering placein Orange, California means making
everyone feel welcome.When Kellinoticed her store’s clientele included
a small group of hearing-impaired
customers, she enlisted help from twopartners familiar with American Sign
Language (ASL).Together, they deviseda customer service system to meet theircustomers’ needs.As word spread of thisservice, the 25 to 30 hearing-impaired
regular customers grew to hundreds.
Later, Kelli set up an eight-week ASL
course for approximately 30 interested
customers and Starbucks partners.

We make community investments through:Investing in Our Communities• Corporate cash contributions• In-kind donations• The Starbucks Foundation

STARBUCKS COFFEE COMPANY’S TOTALCHARITABLE CONTRIBUTIONSStarbucks Coffee Company’sContribution to
The Starbucks Foundation

In-kind
Donations

Corporate Cash
Contributions$1.3
Million$2.9
Million$3.4
MillionOpposite page (top)—Customers cometo Starbucks to enjoy their favorite coffee
beverages and to take a moment to visit
with others or just relax.
(bottom)—Literature for All of Us
participants read samplings of their
original poetry at a Starbucks store in
Evanston, Illinois.The Starbucks
Foundation provided funding to
Literature for All of Us, a nonprofit
organization promoting literature as atool for expression to girls and women inunderserved communities.

COMMUNITY INVESTMENTS
In fiscal 2001, Starbucks corporate cash contributions to nonprofit organizations
totaled $3.4 million, plus an additional $1.3 million that Starbucks contributed to
The Starbucks Foundation. Our corporate contributions are focused on a number ofcompany-wide initiatives, as well as supporting our partners’ involvement in theircommunities, enriching community life in regions across North America, andcreating special community stores.All of the contributions made by Starbucks reflect
our commitment to our partners, communities and business practices.
Company-wide Initiatives
Starbucks has developed partnerships with organizations that support the people andplaces that grow our coffee and tea, such as Conservation International and CARE.
We have launched initiatives to collect books and toys for children, and to help thevictims of September 11th. We have also created programs to encourage ourpartners to be involved in their communities.A few examples of Starbucks companywide initiatives include:
Conservation International (CI)CI shares our commitment to preserve environmentally sensitive areas and provide
economic opportunities for small family farmers in coffee-origin countries. In fiscal
2001, Starbucks invested $327,500 in CI as part of a three-year investment toprovide a minimum of $600,000.
CARE
Our 10-year alliance with CARE enables us to support coffee- and tea-origin
countries where our help is used to improve the quality of life for local residents. In
fiscal 2001, Starbucks invested $120,000 in CARE for ongoing programs.
Starbucks Cares
Starbucks Cares is a special fund that was created in response to the terrorist attacks
on September 11, 2001. Starbucks donated $1 million to Starbucks Cares in fiscal
2001. In the weeks following September 11, an additional $1.7 million was
contributed by our partners, customers and business partners, mostly through drop
boxes in Starbucks company-operated stores in North America. The funds raised
through Starbucks Cares were donated to The September 11th Fund, created by
The New York Community Trust and United Way of New York.
In addition to our cash contribution, Starbucks also contributed coffee and related
products to support the rescue and relief efforts in New York, Washington, D.C.,
and Pennsylvania.
Calvert Community Investments
Starbucks launched a new partnership with Calvert Community Investments in fiscal
2001 to manage a $150,000 initial investment that will support various community
projects in North America.

Howard Schultz, Starbucks chairman andchief global strategist, showed his support
for literacy by participating in an All
Books for Children event in Chicago.

All Books for Children
To support our literacy efforts, Starbucks collects books through our annual
All Books for Children drive and distributes them to more than 180 literacyorganizations across North America. Since 1997, nearly 1.5 million books, including
416,000 in fiscal 2001, have been collected in our stores from partners andcommunity members.

CSR Fiscal 2001 Report

19

Starbucks Holiday Angels Toy Drive
During fiscal 2001, Starbucks launched our first annual North American holiday
giving program in which customers and partners generously donated approximately
87,000 toys for needy children.
Partner Community Involvement
We believe one of the most important ways we can have a positive impact on ourcommunities is to foster the value of community involvement in our partners.That
is why we encourage Starbucks partners to volunteer their time and make charitable
gifts to organizations in their own communities.
Make Your MarkMakeYour Mark is our way of educating and inspiring our partners to volunteer theirtime.The Make Your Mark program launched in fiscal 2000. It rewards the efforts ofpartners by making cash contributions to the nonprofit organizations where they
volunteer. In fiscal 2001, partners volunteered 12,700 hours for local organizations
through Make Your Mark. To match their volunteer hours, Starbucks contributed
more than $70,000 to these organizations.
Choose to Give!
Starbucks encourages charitable giving through our gift matching program, Choose
to Give!—which matches partners’ charitable gifts up to $1,000 annually. In fiscal
2001, Starbucks partners contributed more than $400,000 to organizations of theirchoice, and Choose to Give! provided $175,000 through the corporate match.
Executive Involvement
Starbucks believes our senior executives can set great examples for our partners bylending their expertise and experience to community organizations.When they serve
as board members of nonprofit organizations, Starbucks makes financial contributions
to the organizations in support of their efforts. In fiscal 2001, one-third of Starbucks
executives served as board members of various nonprofit organizations.

The launch of Starbucks fiscal 2002
Holiday Angels Toy Drive, benefiting theStarlight Children’s Foundation, got off
to a great start in Washington, D.C.
when it was featured on the popularradio show, DC101’s Elliot in theMorning. Local D.C. Starbucks stores
donated a portion of the proceeds fromseasonal sales of Gingerbread Lattes
each Wednesday during the holiday
season. From left, Laurie Crosley and“Star” of the Starlight Children’sFoundation; Flounder from DC101’s
Elliot in the Morning; Starbucks
partner Catherine Gherardi.

Investing in Our Communities

Regional Donations
Starbucks encourages our stores to engage with their local communities inmeaningful ways. Store managers have the flexibility to support neighborhood
nonprofit organizations through cash contributions and volunteering. Our regional
offices also seek ways to support community organizations through sponsorships andproduct donations for special events.
In fiscal 2001, Starbucks launched several focused initiatives in local communities
where we have a strong retail presence and a large workforce. Examples include:
Neighborhood Park Grants
In fiscal 2001, Starbucks Neighborhood Park Grants program made 10 grants,
totaling $100,000, to grassroots volunteer organizations working to create safe andwelcoming gathering places for members of the Seattle community.
San Francisco Bay Area Grants for Giving
In spring 2001, Starbucks established the San Francisco Bay Area Grants for Giving
program, which enlisted community members to help Starbucks direct $420,000 to
the local community for youth, literacy, AIDS and homeless initiatives.

Starbucks partner Kelly Hewitt joined
her fellow co-workers to help beautify anarea of Seattle during United Way’s
annual Day of Caring.

Special Community StoresStarbucks has several stores that are aligned with specific causes or charitablepartners, and plans are underway to initiate more community stores in fiscal 2003.
Examples of our community stores include:
Georgetown StoreA memorial fund was established in Washington, D.C. in 1997 in honor of three
Starbucks partners who were killed in a robbery at the Starbucks Georgetown store.
The annual gift to the Starbucks Memorial Fund is based on the net profits from theGeorgetown store, or a minimum of $75,000. The fund is managed by
The Community Foundation for the National Capital Region, and all contributions
made from this fund are designated for violence prevention and victim assistanceprograms in the Washington, D.C. area.
Seattle Rainier Avenue Store
Zion Preparatory Academy is a private elementary and secondary school primarily
serving the African-American community in Seattle. Since 1995, Starbucks has
contributed $50,000 annually to help the school meet the needs of its students.This
contribution is funded primarily through profits of the Rainier Avenue Starbucks,
located in a multiracial neighborhood not far from the school. Our present
commitment extends through 2003.
In-Kind Donations
The estimated value of our in-kind product donations was $2.9 million for fiscal
2001. Our in-kind donations include the support we provide to many nonprofit
community organizations with product donations for their fundraising auctions,luncheons, dinners and special events.
We also encourage our stores to donate unsold baked goods on a daily basis andperishable whole bean coffee on a weekly basis to local charities. We donate
overstocks of perishable and non-perishable goods to local and national organizations
that, in turn, provide these products to community groups.

CSR Fiscal 2001 Report

Starbucks chairman and chief global strategist Howard Schultz has made literacy
a top philanthropic priority. His commitment to provide educational
opportunities to traditionally underserved communities inspired the creation of
The Starbucks Foundation in 1997. The goal of the Foundation is to support thepower of literacy to change lives, foster hope and involve parents in creating abetter future for their children.
The Starbucks Foundation is a separate entity from Starbucks Coffee Company.
Funding for the Foundation has come mostly from Starbucks Coffee Company, andalso from individual donations and Howard Schultz’s royalties from his book, PourYour Heart Into It: How Starbucks Built a Company One Cup at a Time. In fiscal 2001,
Starbucks Coffee Company donated $1.3 million to the Foundation.
Making Grants
The Foundation provides funding to nonprofit literacy organizations located incommunities across North America where Starbucks has stores. Since 1997, theFoundation made 485 grants totaling $4.3 million; more than one-third of thisamount ($1.6 million) was donated in fiscal 2001.
The Foundation makes “Opportunity Grants” of up to $10,000 to organizations that:••••

Serve low-income, at-risk children and youth.
Involve the parents of children receiving services in the process.
Utilize significant volunteer resources.
Demonstrate an established relationship with a Starbucks store or our partners.

Jumpstart
In April 2001, The Starbucks Foundation announced a partnership with Jumpstart,a nonprofit organization that pairs AmeriCorps college student tutors with
HeadStart preschoolers who need extra help. Jumpstart’s program has demonstrated
that early intervention with at-risk children is very effective at preparing futurekindergartners for reading and learning.
The Foundation contributed $250,000 in fiscal 2001 to Jumpstart, part of a
$1 million, four-year pledge to help Jumpstart expand to serve more children in
more U.S. communities.
Involving Starbucks Partners
When Starbucks partners volunteer their time with literacy organizations,
The Starbucks Foundation will often provide funding to those organizations.
That’s why the Foundation works closely with Starbucks Coffee Company toencourage partners to apply for Opportunity Grants on behalf of literacyorganizations where they volunteer. All Opportunity Grants are made toorganizations with partner involvement.

BookPALS is a national volunteer
literacy program of the Screen Actors
Guild Foundation. BookPALS promotes
the love of reading and learning by
engaging professional actors and othervolunteers to read to young students inhigh-risk, disadvantaged schools. Last
year, Starbucks partners in Phoenix
volunteered as BookPALS readers, adding
to the $34,600 support BookPALS
received from The Starbucks Foundation.

AMERICA SCORES was founded in
1994 in Washington, D.C. by Julie
Kennedy, a public school teacher who
also worked as a Starbucks barista. Julie
saw her students needed a safe, structured
after-school environment, which led her
to teach them soccer and creative
writing. In total,AMERICA SCORES
programs in D.C., Boston, NewYork,
Denver and Seattle received $136,000
from The Starbucks Foundation, as well
as volunteer support from Starbucks
partners in those communities.

The Seattle Public Library Foundation
received $125,000 from The Starbucks
Foundation in fiscal 2001 as part ofour four-year $500,000 commitment
to fund the Literacy Outreach Program.
Starbucks chairman and chief global
strategist Howard Schultz is also
assisting in the Library’s fundraisingefforts by serving as the co-chair of theCommunity Campaign for Neighborhood
Libraries. Seattle Public Library is
working to improve or replace 22
neighborhood libraries, build fivenew libraries in neighborhoods thatcurrently don’t have one, and build
a new Central Library.

Investing in Our Communities

THE STARBUCKS FOUNDATION

21

CSR Fiscal 2001 Report

23

Investing in
Our Partners
The story behind Starbucks is more than just phenomenal growth. It’s also a
testament to what can happen when a company is led by strong values. We place ourgreatest emphasis on creating a workplace environment that engages, inspires andrewards our partners. The commitment to do this begins with our leaders at
Starbucks and extends throughout our organization.
Being committed to creating a strong workplace environment is the first step.
However, we know that to be competitive we must continually strive to improve ourworkplace environment and how we reward our partners. In fiscal 2001, Starbucks
developed new strategies to enable us to maintain a competitive edge in themarketplace.These strategies are focused on:• Strengthening our position as an “Employer of Choice” by actively researching,planning and developing programs, projects and initiatives that help attract andretain top talent.
• Re-inventing our approach to human resources so we can better support
Starbucks growth and our business objectives by supporting our partners;
developing stronger internal communications; upholding our culture and values;
and functioning in a cost-effective manner.
Through our Employer of Choice and re-invention process, we have evaluated andanalyzed many current and potential programs for our partners. We have alreadymade some changes, and continue to find ways that enable us to meet our partners’
needs. Our efforts to create a positive workplace environment that inspires andrewards Starbucks partners include:••••

Providing benefits to eligible part-time and full-time partners.
Treating partners with respect.
Expanding the diversity of our workforce.
Supporting partners in times of need.

“Looking back now, I have a lot of respectfor my dad. He never finished highschool, but he was an honest man who
worked hard. He sometimes had to takeon two or three jobs just to put food on
the table. He cared a lot about his threekids, and played ball with us on
weekends. He loved theYankees.
“But he was a beaten man. In a series ofblue-collar jobs – truck driver, factory
worker, cab driver – he never made as
much as $20,000 a year, never could
afford to own his own home.
“I tried to make Starbucks the kind ofcompany I wish my dad had worked for.
Without even a high school diploma, heprobably could never have been an
executive. But if he had landed a job in
one of our stores or roasting plants, hewouldn’t have quit in frustration because
the company didn’t value him. He would
have had good health benefits, stock
options, and an atmosphere in which hissuggestions or complaints would receive aprompt, respectful response.”—Starbucks chairman and chief
global strategist Howard Schultz,
Pour Your Heart Into It:
How Starbucks Built a Company
One Cup at a Time

Opposite page (top)—Starbucks retailpartner Stacy Gallagher prepares hercustomer’s beverage and tops it with adrizzle of caramel.
(bottom)—Fumi Watanabe, a designer
for Starbucks, approaches her creative
work with enthusiasm and passion.

Investing in Our Partners

CREATING A STRONG WORKPLACE ENVIRONMENTStarbucks Benefits
Starbucks provides health, dental and vision insurance and other benefits to all
eligible full-time and part-time (20 hours per week) partners. Some of ourbenefits include:• Future Roast 401(k) and RRSP, our savings plans.
• Health care coverage for alternative health services.
• Health care coverage for domestic partners.
• Income protection when a partner is unable to work due to illness or injury.
• Adoption assistance of up to $3,000 for partners who choose to adopt children.
• Bean Stock, our company-wide stock option plan.
• S.I.P. (Stock Investment Plan), our discounted employee stock purchase plan.

A customer transaction elicits a smilefrom Starbucks retail partner
Tyneshia Broussard.

Treating Partners with Respect
Starbucks emphasizes an inclusive workplace with a variety of opportunities forpartners to share ideas and concerns with senior management. Periodically,
Starbucks president and CEO Orin Smith and other Starbucks leaders conduct Open
Forums where partners can share ideas or ask questions. Our regional markets also
conduct their own local meetings between management and partners. In addition,
all partners who have concerns about how the company is living up to our mission
statement can voice their questions or suggestions to management in writing throughStarbucks “Mission Review” process. All submissions to Mission Review areevaluated and receive follow-up responses.
Partners wishing to voice concerns about actions of their co-workers or the business
policies and practices of Starbucks can call our 24-hour Starbucks Helpline. Partners
who call the Helpline, anonymously if they wish, are interviewed by non-company
personnel, and a confidential report is then prepared and forwarded for investigationand executive attention. The Starbucks Helpline is part of our general Compliance
Program, designed to implement and assure compliance with our Standards ofBusiness Conduct.
Partners are recognized for their achievements. Starbucks has more than 30 award
programs in place, such as the “Manager of the Year,” which recognizes outstanding
performance on the retail level, and the “Spirit of Starbucks,” which specificallyrecognizes outstanding partners who exemplify Starbucks mission statement.

One of the many events Starbucks
attended in fiscal 2001 was the NAACP
Diversity Job Fair, held on February 5,
2001 at the World Congress Center inAtlanta, Georgia. More than 1,000 job
seekers were in attendance.

Embracing Diversity
At Starbucks, diversity is an essential component of the way we do business.
Attracting and retaining a work force that reflects the communities where we dobusiness is key to our success. Starbucks believes so strongly in embracing diversitythat it appears as one of our six guiding principles in our mission statement.
To find outstanding partners, Starbucks directs some of our retail recruitment
efforts at the regional level, where we can participate in local job fairs and work
directly with particular communities to ensure a diverse candidate pool.
Starbucks has been progressive in supporting our gay and lesbian partners. Our
diversity training pays special attention to sexual orientation issues, and our written
policy specifically bars discrimination based on sexual orientation.
Caring for Partners in Times of Need
Starbucks has a fund dedicated to helping our partners in time of need that is inaddition to disability coverage and personal leave allowances.The CUP Fund (Caring
Unites Partners) is a financial assistance program funded by partners primarily
through payroll deductions. All partners are eligible upon hire. For fiscal 2001, the
CUP Fund made 129 awards, for more than $78,000.

In fiscal 2001, Starbucks received some special commendations andawards. Here are some highlights:
In the March/April 2001 issue of Business Ethics, Starbucks was named
as one of the 100 Best Corporate Citizens. The honor was based ondata gathered by Kinder, Lydenberg, Domini & Co. (KLD) from six
stakeholder groups: community, minority groups, employees, suppliers,
customers and environmental stakeholders.
Starbucks was named the most admired brand in the food services
category by FORTUNE magazine in 2001, FORTUNE’s own definitive
report card on corporate reputations. This distinction recognizes ourcommitment to outstanding products and customer care, as well ouradherence to socially responsible business practices.
Starbucks was included in the 2002 Dow Jones Sustainability World
Index (DJSI World). This assessment of the 2,500 largest companies
in the Dow Jones Global Index focuses on economic, environmental
and social performance. Starbucks was one of 312 companies that
met the sustainability criteria to merit inclusion in the Index.
The U.S. Department of Justice recognized Starbucks withthe “Justice for Victims of Crimes Award.” Starbucks earned theaward for establishing the Starbucks Memorial Fund. This fundsupports violence prevention and victim assistance programs inmetropolitan Washington, D.C. The fund is a memorial to three
Starbucks partners who were killed in a robbery at the Georgetown
Starbucks location in 1997.
Starbucks was included on FORTUNE’s list of the 100 Best Companies
to Work For, announced in January 2002. Two-thirds of the score isbased on how randomly selected employees respond to the Great Place
to Work Trust Index, a survey instrument measuring the quality of
workplace culture. The remainder of the score is based on FORTUNE’s
evaluation of the company.
Starbucks earned inclusion in the 2001 Calvert Social Index, which
consists of 600 exemplary companies that meet Calvert’s strict social
responsibility criteria. Calvert is the leading provider of the largest
family of socially responsible mutual funds.

© 2002 Starbucks Coffee Company. All rights reserved. Printed in the USA.

FOR ADDITIONAL INFORMATION:
The Report is available on-line atwww.starbucks.com/aboutus/investor.asp.
To request a printed copy of the Report, call
1-800-STARBUC (1-800-782-7282), or fax
your request to 1-800-782-7286.
This Report is printed on 100% recycled fiber,
100% post-consumer material.
For additional information about Starbucks,
please visit www.starbucks.com.

®