Words by Martha Bytof
As a company that takes our coffee sourcing as well as our social and environmental responsibility seriously, we also want to ensure that we are measuring and reporting on our impact in the best way possible. We regularly reach out to industry professionals to inform our learning journey. Recently we connected with Luiza Pereira Furquim from Algrano, which in turn inspired this blog post.
We asked Luiza some questions on impact reporting. To get a third party perspective and gain insights on what we can learn from others and also what you can learn about the coffee industry and its impact. Luiza is in charge of Algrano's educational content, a direct sourcing marketplace that is dedicated “to democratise the global coffee supply chain by connecting coffee producers directly with roasters online.” Originally from Brazil, she worked as a journalist in Sāo Paulo until 2016 when she embraced coffee as a career. She started as a barista, moved to the UK and soon got involved in roasting. Having visited producers in Africa and Latin America, Luiza is passionate about sharing their stories and bringing coffee farmers into the spotlight.” from Algrano
Here’s what Luiza had to say:
What sort of responsibility do you think roasters and cafe importers have on reporting (their commitment)?
Overall, I would say the coffee industry is already doing more on sustainability than what I can see in other commodities, especially when it comes to certifications, people working in coffee are in general very aware and willing to change.
On one hand, roasters and importers have a very similar responsibility to final consumers that goes beyond reporting. Their purchases drive demand. Demand drives production practices. On the other hand, roasters and importers are closer to production than consumers, so they have a better understanding of what affects the sustainability of the coffees they sell. It’s not the job of consumers to deeply understand that. In my view, reporting is an educational tool. It helps consumers understand the sustainability challenges of a given industry and what a sustainable product means. That’s a big responsibility because it can guide consumers towards sustainable consumption by making it easier to understand what it is. It can be used to drive demand, which is super positive.
What would you recommend customers look out for when it comes to roasters reporting on their environmental and social impact then?
For specialty coffee, it is quite different compared to commodity coffee. For commercial coffee you have no traceability, so certifications - and how much of a company’s coffee is certified - are the only thing consumers can use to know how a coffee was produced. Certifications are less relevant in specialty because the price driver is quality - and because the industry is aware that certifications are limited when it comes to ensuring sustainability. I love when reports from roasters share a thinking process and learnings. First of all, reporting is a way to learn more about the work you’re doing and if you actually are having the impact you intended. It’s not - or it shouldn’t be - just a self-congratulatory box ticking exercise to promote one’s great work.A cohesive report will bring elements of data into future strategy, which shows the company reflects on their practices and looks for ways to improve. I also like when companies talk about their core activities as well as their projects. Many companies spend pages and pages talking about projects when that’s not their main activity. Adding value through projects is important and it’s necessary for an industry with centuries of inequality but it shouldn’t be used as a way to offset or compensate for other practices. I like when companies focus on the core of what they do because that’s where the bulk of their impact (and that of any company) really comes from.
Reports will also have an element of marketing to them. They are promotional tools. That’s not wrong in itself, but it can create a pressure to look good. Companies can be tempted to inflate their achievements or give more weight to certain types of data that are only indicative (inputs rather than outcomes) and further complicate things in consumers' minds. So there is a balancing act to do when reporting. Marketing should be done to help communicate the key messages you want to share and to create engagement with a piece of work that’s really hard to put together, but it shouldn’t be the main driver.
What do you think might be the biggest challenge for coffee roasters currently when looking at the intersection of economics, social and environmental aspects?
Though there is a lot of work that can be done at the roastery level, looking into use of energy, transport and packaging, a lot of the environmental impact of coffee happens upstream in the supply chain. There are studies that calculate that cultivation can be responsible for nearly 80% of a coffee’s carbon footprint, a lot of it coming from pesticides and fertilisers. So engaging with the supply chain is something roasters’ can’t overlook.I like the example of Ecuador. The Ecuadorian government has increased minimum wages in 2015 to provide social security for workers, so coffee production in the country is more expensive than its neighbours. The quality is great and the flavour is unique but they struggle to sell because the coffee ends up being more expensive. I think you can’t escape paying more for coffee if you want to make it sustainable. And there is no one size fits all price, so you have to engage with your supply chain to figure out what that price is. That’s why having relationships is so important.
However you approach sustainability - social or environmental - you have to consider the prices paid for coffee and the financial security of coffee producers. That is a big challenge in itself. Communicating that to consumers in a way that won’t put them off buying the coffee is another challenge, perhaps as big as the first one.
When it comes to prices, a lot of what I hear is about consumers' willingness to pay. Most roasters I talk to say consumers don’t want to pay more for coffee. I think one of the biggest challenges is changing that. But I don’t think that’s just for specialty or high-end coffees. That’s for all coffees. Commodity coffee will undergo an interesting period now with the traceability requirements coming from regulations around deforestation (once and if they’re approved). There will be a lot more exposure to where the coffee comes from, but consumers need to be engaged. I think roasters and even baristas, who are the front-facing side of the industry, have a key role to play here.
What would you like to see more of when it comes to impact reporting?
I’d like to see companies being more thoughtful about what kind of data they are sharing to help consumers understand what it means and, hopefully, see that not everything is greenwashing.Companies base their impact on inputs (what they do) rather than on outcomes (what they achieve). That’s confusing people. And that doesn’t help companies themselves understand where to put their money because they can’t tell what really pays off.
Better price benchmarking. I’m guilty of not doing this very well myself on my first attempt, comparing the prices on Algrano to C-price and FT minimums because it’s the standard and because the data is widely available. But we can use the specialty coffee transaction guide. And smaller companies that don’t have that many partners can try to understand the production costs of their suppliers. Even if they can’t give you an accurate spreadsheet with all their costs, they’ll be able to give you a good idea of how much it costs to produce the coffee you’re buying. Doing this on a smaller scale is easier than at a larger scale. Whether you choose to share the actual data is another thing as it can be detrimental to the producer to share their numbers publicly, but you can always use averages, percentages or ranges to indicate what you pay without exposing a supplier. You could calculate what the FOB to farmgate ratio on all your coffees is on average.
Finally, I’d like to see more acknowledgement of shortcomings, like Oatly does. A lot of people are sceptical about reports because they’re so rose-y that it's hard to trust them. Everyone that has worked in a company knows that things are difficult, not all projects go as planned etc. Being upfront about it helps to erode that scepticism.
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