Inside the 2020 Coffee Barometer Report

2020 Coffee Barometer Report

The world’s largest coffee companies may be making commitments to sustainability, but transparent action is still needed according to the 2020 Coffee Barometer Report.

Sustainability is a topic that can no longer be ignored in the coffee sector, and many of the world’s largest roasters and traders have made commitments to reduce their impact. However, according to the 2020 Coffee Barometer, companies are doing too little and are not adequately reporting their progress.

The biennial report – the result of a collaboration between Conservation International, Hivos, Oxfam Belgium, and Solidaridad, and produced by Ethos Agriculture – provides an overview of sustainability in the sector.

Sjoerd Panhuysen, lead author of the Coffee Barometer, tells Global Coffee Report each edition approaches sustainability from a perspective relevant to the industry at the time. With 2020 marking the end of a decade and a deadline many companies had set for their commitments, he says the paper’s writers chose to use it as a chance for reflection.

2020 Coffee Barometer Report
Coffee prices have largely declined over the past decade as both production and demand rose.

“We wanted to look back at the last 10 years and figure out where we are now, what has changed, the level of maturity of the discussions, and where we are going in the next couple of years,” Panhuysen says. “We see quite a lot of talk in the sector about the [United Nations’ Sustainable Development Goals] (SDGs) and how we’ll contribute to those. But if you look into the details, most companies only scratch the surface.”

Andrea Olivar, Solidaridad’s Global Programme Manager Coffee and contributor to the Coffee Barometer, says the report shows that it’s crucial the industry leaders provide more transparency of their sustainability initiatives.

“We reached the end of the decade with great expectations of progress, but we’re not there yet. It’s clear that companies have made efforts to advance sustainability, and some of them are progressing, but there’s a lot of scattered effort with a small reach,” Olivar says.

“Another important message is that companies have made public commitments regarding sustainability, but somehow, they’re struggling to report on these commitments. They may have achieved them, but it’s not transparent or public. This creates the feeling that no one is doing enough. Is that the case, or are people just not revealing what they actually achieved?”

The report focuses on the efforts of the global industry’s 10 largest roasters – Nestlé, JDE Peets, JM Smucker, Starbucks, Strauss, Lavazza, Melitta, UCC, Tchibo, and Massimo Zanetti – and its five biggest traders – Neumann Kaffee Gruppe, Louis Dreyfus Company, ECOM, Volcafé, and Olam. Panhuysen says this cross-section represents approximately 35 per cent of all coffee roasted and 50 per cent of all coffee traded, and thus, these companies hold a large degree of influence over the market.

2020 Coffee Barometer Report
Each company mentioned in the Coffee Barometer contributes to at least one MSI.

“The industry is huge and we could highlight many different aspects of it, but we’ve chosen to focus on the top roasters and traders because they are brands quite well known to the consumers and the rest of the industry,” Panhuysen says.

“There’s also the idea behind it that, if the top roasters and traders are moving in the direction of sustainably produced coffee, the rest of the sector will follow.”

Though the ramifications of COVID-19 are yet to be clear, the Coffee Barometer depicts a clear disparity between the low prices paid to coffee producers and the profitability of coffee consumption. The report estimates this part of the industry to be worth US$55 billion in 2019.

“We still have to wait to see what will happen in the next year. If an economic crisis hits hard, out-of-home consumption might be affected, which relates to a couple of companies we mentioned in the Coffee Barometer. But overall, the coffee sector itself is doing very well on the consumption side,” Panhuysen says.

“On the other hand, the production side of the industry painted a bleak picture even before the pandemic hit, but that’s not a new story.”

For several years already, many coffee producers have struggled with coffee prices below the cost of production. This has made it more difficult to deal with other challenges, including climate change, pests and disease, or social issues like younger people leaving coffee farming areas.

“A lot of countries were already in a difficult situation and it’s only getting worse. For example, in Ethiopia, Kenya, and some Central American countries, coffee was already a poverty crop, but now it’s a last resort. You only grow it if you cannot do anything else,” Panhuysen says.

“In Kenya, you can see it around Nairobi, where coffee areas are being converted into golf courses or residential areas, because it’s more profitable to sell your land than continue growing coffee. We’re just at the beginning of it and the sector will see rapid changes in other origins if the profitability for farmers doesn’t increase.”

Olivar says this puts producers under constant pressure to cut costs, especially those related to labour and the environment, or providing for the needs of rural communities.

“You have to imagine yourself in a position where your income is too low. If your salary was suddenly cut in half, you’d try to adapt and just cover the basics,” she says.

“Producers often have to pay the costs for sustainability like certifications and voluntary standards. Whether prices are good or bad, farmers are covering those sustainable practices with their own money because they need it for market access.”

Overall, the report says the adoption of voluntary sustainability standards, like Fairtrade and Rainforest Alliance, leads to an increase of coffee price levels, though these are marginal considering the additional costs. Often, coffee produced to those voluntary sustainability standards is not purchased under those certifications, meaning the buyer has not acknowledged or supported the producer’s investment.

The Coffee Barometer says the uptake of certified coffee has only grown slowly, with many roasters and retailers developing their own sourcing standards in the hope these systems will be more efficient and effective. However, Olivar says this creates issues with accountability.

“We need greater transparency in the coffee value chain. Coffee is quite a traceable product, but we also need to be more transparent of where value is concentrated, so we can see which part of the chain needs intervention,” she says.

“The Coffee Barometer shows what’s happening in the different origins, what percentage of the export price reaches producers and if there’s efficiencies to be made at that stage. It’s not just about price, there are different variables that affect producers’ economic viability. We need to have clarity on what we want to focus on in the next couple of years.”

Many companies publish annual corporate social responsibility or sustainability reports detailing their own voluntary actions. However, Panhuysen says these are often either too shallow with little analysis, or are so complex and detailed they’re incomprehensive for the average reader. While compiling the report, the authors reached out to the companies involved for more explicit information and found further challenges to accountability.

“We asked all the companies in the report how much they are investing in their voluntary sustainability efforts. Two of the companies tried to answer, but many just didn’t give insight how much they were actually spending,” Panhuysen says.

“It could be that these costs are considered an everyday expense. The fact that nobody really knows how much money is going into specific types of initiatives is puzzling, and it makes it unclear how they’re reaching their sustainability goals in an efficient manner.”

In 2017, the Sustainable Coffee Challenge (SCC) and Global Coffee Platform (GCP) introduced a Sustainability Framework for the coffee sector, based on the SDGs. Despite a majority of the roasters and traders being members of at least one of these multi-stakeholder initiatives (MSIs), none of them referred to the Sustainability Framework in their corporate social responsibility reports.

To enhance transparency and accountability, the Coffee Barometer breaks down the performance of these 15 coffee companies, according to the 15 priority sustainability topics and related SDG goals and targets listed in the Sustainability Framework.

It evaluates the commitments of each company with grades based on reference and contribution to prioritisation and specific goals and measurement of contributions to each SDG.

“What we want to see is how the SDGs are integrated in their overall company policy framework and goals over the next couple of years,” Panhuysen says.

“A company might say ‘we’re working on SDG5 – gender equality’ but what does that mean? Often, it’s related to one small, specific project. For instance, ‘we’re doing this project in Rwanda with 40 women’, but if you’re company is buying 10 per cent of all green coffee in the world, it’s clearly not reflected in your policies or in line with your potential impact.”

According to the Coffee Barometer, Olam was the only one of the 15 companies to be adequately explaining its performance on certain SDG goals. A few others, including Nestlé and Lavazza, were found to have also prioritised specific goals related to SDGs, or integrated certain SDGs comprehensively into their strategy and investment decisions.

“Last year, Olam published a specific strategy outlining what they’re going to do in coffee. That strategy is quite well integrated with a couple of the SDGs they’ve chosen to work on, they’ve set goals that are measurable over time, and they’ve linked it to the bigger policy of the company,” Panhuysen says.

“It’s still a question if they’ll achieve those goals, but at least there’s something to go back to, and create an accountability culture.”

Outside of self-regulation, the Coffee Barometer suggests greater contributions to and support of MSIs could provide greater accountability for the coffee sector. Olivar is a board member of the GCP and is on the advisory council of the SCC. She says these MSIs, and many others, provide an opportunity for industry leaders to collaborate on initiatives.

“We have big issues we cannot resolve by ourselves and MSIs are good avenues to make progress. They create places to work together, where we can solve questions like ‘what is the global agenda?’ And ‘how can we solve these systemic issues affecting the performance of coffee?’” Olivar says. “Before these initiatives, it was rare to see the big companies come together to talk about sustainability. There’s a risk with having these big companies determining the agenda and setting the bar too low, but the role of organisations [like the MSIs]

are to push them a little bit further than their comfort zone.”
While sustainability standards are still voluntary to companies for the most part, the Coffee Barometer suggests it will only be a matter of time before this is no longer the case.

“We have to develop interventions that affect the coffee industry beyond a few producers. We have to think about how we can make our supply chains more efficient. And if we are making commitments, we have to report on our progress,” Olivar says.

“The coffee industry has beautiful examples here and there, but on a global level, we haven’t moved from the narrative to the action. That needs to happen soon.”

The European Commission has committed to proposing legislation on sustainable corporate governance in 2021, including mandatory human rights and environmental due diligence. It is also developing a legislative proposal to prevent market entry of products associated with deforestation or forest degradation.

Individual countries like France, the Netherlands, and the United Kingdom have already introduced legislation regarding human rights and deforestation of their own. Panhuysen suggests the incoming Biden government in the United States could have similar intentions  regarding human-rights-respecting and deforestation-free commodities.

“The sustainability debate is going into higher gear on the political level. And the expectations of multinationals will be huge,” Panhuysen says. “What we can do together in these MSIs is be prepared for these types of requests, not only because they are requested of us, but because they are necessary as a basis for the prosperity of the coffee sector itself.”

The full 2020 Coffee Barometer report is accessible in English, Spanish, and French at

Images: Ethos Agriculture

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