keurig strategic sustainability audit mba team report
Post on 09-Feb-2017
166 Views
Preview:
TRANSCRIPT
Running head: KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig Green Mountain Inc. Sustainability Audit
Group 2
William Allen, Alicia Anderson, Brandi Borman, Patrick Dupuis, Ariel Jackson, Steven Morton,
Melissa Strle
University of Fredericton
MBA 6000
November 16, 2015
2
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Table of Contents
Introduction 3
Corporate Governance Dimension 4
Environmental Dimension 8
Social & Cultural Dimension 17
Economic Dimension 30
Technology Dimension 33
Community Engagement Dimension 36
Conclusion 38
References 41
Appendix A: Checklist Rating and Rationale By Dimension 45
3
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig Green Mountain Inc. Sustainability Audit
Keurig Green Mountain Inc. has come a long way from its humble beginnings in 1981 as
a small specialty coffee store in Vermont, USA. The company was originally called Green
Mountain Coffee but then transitioned into Green Mountain Coffee Roasters Inc. In 1993, two
engineers approached Green Mountain Coffee Roasters to invest in a single cup brewing system,
and Keurig was born (Green Mountain Coffee Roasters, n.d.). An initial public offering was
completed in September of 1993. In 1997, Keurig became the first to offer coffee in a K-Cup
portion pack for the Keurig Single-Cup Brewing System. In 1998, the first single cup coffee
brewer for offices was delivered (Green Mountain Coffee Roasters, n.d.). Since then, the
company has experienced tremendous growth.
In 1995, net sales were $34 million but increased to $84 million in 2000 and then to $224
million in 2006 (Keurig Green Mountain Sustainability Report, 2014). In 2010, net sales further
grew to $1.36 billion and went on to reach enormous volumes with net sales of $4.71 billion in
2014 (Keurig Green Mountain Sustainability Report, 2014). To reach this level of growth,
Keurig utilizes strategic partnerships with 80 coffee brands allowing for 575 hot and cold
beverage varieties for its brewing system (Keurig Green Mountain Sustainability Report, 2014).
Keurig primarily operates within North America and has established facilities in six U.S.
states. Its principle Canadian office is in Montreal, Quebec where Keurig’s management team,
coffee roasters, and packaging plants are located (“Keurig Green Mountain,” 2015). As the
company has expanded in sales and profit, Keurig’s commitment to sustainability increased as
well.
4
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Interestingly, two of Keurig’s corporate values are “We play to win” and “We brew a
better world” (“Keurig Green Mountain,”2015). It is important for major companies to recognize
the importance and value of a strong business case for sustainability. Berns et al. (2009)
determined after reviewing facts and identifying a strong business case, leading companies will
publicly commit to ambitious sustainability goals, demonstrating that investment in sustainability
leads to strong business results. Keurig’s website indicates it is using the power of business to
brew a better world through building resilient supply chains, sustainable products, thriving
communities, and a water-secure world (“Keurig Green Mountain,” 2015). Keurig identifies both
a solid business foundation in combination with sustainable values to justify its goal of having a
positive impact on the world.
An analysis of six sustainability dimensions at Keurig Green Mountain Inc. was audited
to provide an overview of the strengths and weaknesses of current sustainability practices at the
company. The sustainability dimensions analyzed include corporate governance, environment,
social and cultural, economic, technology, and community engagement. To determine Keurig’s
overall sustainability rating, the individual dimension ratings and rationale of sustainability
practices at Keurig’s are also provided.
Corporate Governance Dimension
Keurig Green Mountain Inc. demonstrates a commitment to the communities in which it
operates and provides leadership for other companies to follow its dedication to sustainability
efforts. Keurig requires compliance and governance in every aspect of its business. Keurig
utilizes supplier guidelines; protocols for conflict minerals; California Transparency in Supply
Chain Act (CA); water, environmental, and climate change policies; protocols on fair trade; and
health and wellness reporting (Keurig Green Mountain Sustainability Report, 2014).
5
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig Green Mountain Inc. has been reporting on its sustainability initiatives since 2005
however, in 2013 Keurig changed its values to better suit its expanding enterprise and the impact
it was having on the world. Listed below are Keurig’s current purpose, mission, vision, and
values.
Purpose. We create the ultimate beverage experience in every life we touch from source
to cup – transforming the way the world understands business.
Mission. A Keurig brewer on every counter and a beverage for every occasion.
Vision. Become the world’s leading personal beverage systems company.
Values. We partner for mutual success; we innovate with passion; we play to win; and
we brew a better world (Keurig Green Mountain Sustainability Report, 2014).
In its Sustainability Report (2014), it was indicated that Keurig is “Recognized for its
award-winning beverages, innovative brewing technology, and socially responsible business
practices” which demonstrates its commitment to being sustainable and also provides a solid
business case. The recognition includes:
Best Companies for Leaders List 2014, (#28) — Chief Executive Magazine
2014 Natural Capital Leaders Index, Efficiency Leader for Food & Beverage — Trucost
Plc.
Gold Winner: Best Company for Sustainability (Regional) - 2014 — IAIR Magazine
America’s Greenest Companies for Green Rankings 2014 (#123) — Newsweek
National Top 100 List of Green Power Users (#71) — United States Environmental
Protection Agency
The World’s Most Innovative Companies 2014 - (#44) — Forbes (Keurig Green
Mountain Sustainability Report, 2014).
6
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig supports local and global communities by investing in sustainably-grown coffee and by
its active involvement in a variety of social and environmental projects (Keurig Green Mountain
Sustainability Report, 2014). Keurig also identifies seven sustainability goals to be met by 2020
which include three governance initiatives:
1. “Engage 1 million people in our supply chains to significantly improve their
livelihoods including water security and climate resilience.”
In 2014 over 383,000 people were impacted through Keurig Green Mountain funded partner
projects (Keurig Green Mountain Sustainability Report 2014, p. 14).
2. “Source 100% of primary agricultural and manufactured products according to
established Keurig Green Mountain responsible sourcing guidelines.”
In 2014, 64% of coffee was traceable to source and responsible sourcing supplier guidelines
were established and published (Keurig Green Mountain Sustainability Report 2014, p. 14).
3. “Engage 100% of employees to understand our vision and values and present
opportunities that allow them to contribute to our targets.”
In 2014 72% of surveyed employees who affirmed they are “able to bring our Company’s values
to life in my everyday work” (Keurig Green Mountain Sustainability Report 2014, p. 14).
In order to demonstrate its high commitment to sustainability, Keurig created a
sustainability committee that provides a board-level oversight of strategy, goals, policies, and
programs that consist of a Chief Sustainability Officer and three board members. The committee
sets company sustainability goals, reviews and provides guidance on its sustainability programs,
and identifies external political and public policy issues. Furthermore, the committee also
reviews and approves the annual sustainability report, determines the effectiveness of the
7
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
company’s communication of its sustainability strategy, and reviews performance of the
committee (Keurig Green Mountain Sustainability Charter, 2014).
In 2008 Keurig added the sustainability leadership committee to its governance model,
indicated in Figure 1 below:
Figure 1: Keurig’s governance model. (Keurig Green Mountain Sustainability Report 2014,
p.10).
The committee was established to support sustainability initiatives, educate all stakeholders on
sustainability, and help the executive align decision making with its sustainability strategy.
Keurig Green Mountain Inc. also has a comprehensive code of conduct for staff which
includes following topics:
1. Integrity and lead by example;
2. Promote sustainability;
3. That they train, confirm, and disclose, our commitment to each other, we treat
everyone with dignity and respect;
4. Human rights; (Keurig Green Mountain Sustainability Report, 2014).
8
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
In December 2014 before the holiday sales rush, Keurig Green Mountain Inc. issued a
voluntary recall of 7.2 million single serve brewers after it received 200 complaints about hot
liquid escaping and burning customers. Management at Keurig was quick to respond to the
complaints and immediately notified the U.S. Consumer Product Safety Commission and Health
Canada. The estimated cost of the recall was $10 million in insurance costs and a 2.2% decrease
in stock price (Athavaley, 2014).
Keurig Green Mountain Inc. not only has high expectations of its employee's actions in
the workplace, but it also gives full-time employees opportunities for paid volunteer time and
makes monetary donations to charities of employees that have volunteered 25 hours or more.
Keurig has an employee community grant program, which will match employee charitable
donations up to $1,000 a year and an employee trip program to learn how coffee is grown as part
of its commitment to sustainability (Keurig Green Mountain Sustainability Report, 2014).
Overall, Governance of Keurig’s sustainability practices is demonstrated throughout
company business practices, commitment to its community, communication procedures, its code
of conduct, and the requirements of suppliers. It is also emphasized by its encouragement of
employees to work ethically, give back to the community, and its understanding of how business
actions and its employees can affect profit, society, and the planet. As a result, Keurig scores
4.92 in the Governance section of the five point audit scale based on its current practices.
Environmental Dimension
The environmental sustainability practices at Keurig were then analyzed which
demonstrated although the company heavily promotes its environmental sustainability efforts,
there are significant gaps that need to be addressed. It was determined that as a result of
consumers increasingly constricting schedules, products such a single cup brewing systems have
9
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
increased in demand. Approximately 20 million U.S. households contain a Keurig beverage
system, therefore it is crucial for a company the size of Keurig to take all possible steps to lessen
its environmental footprint (Brush, 2015). Keurig does have a rigorous, detailed annual
sustainability report that clearly outlines the company’s environmental priorities, targets,
successes, and weaknesses.
The primary focus of the environmental sustainability plan is through Keurig’s water
stewardship program. In early 2014, the company underwent a value chain assessment of its
water footprint in order to better understand the impact of Keurig processes and expose
opportunities for improvement (Keurig Green Mountain Sustainability Report, 2014). The
assessment demonstrated that Keurig is not a large direct consumer of water, with 99% or 479
billion gallons of water use coming from rainwater and 1% or 4 billion gallons of ground or
surface water used. The biggest use of water within the value chain cycle is through coffee
cultivation and processing. This is where 99.5% of green water or rainwater and 57% of blue
water or surface water is consumed (Keurig Green Mountain Sustainability Report, 2014). The
assessment also found the brewing systems actually help consumers create less water waste
through allowing the consumer to brew the exact amount of coffee needed, producing 15% less
waste than if coffee is brewed per pot (Keurig Green Mountain Sustainability Report, 2014). A
2014 update to the company’s water policy re-confirmed Keurig’s commitment to and
recognition of the value of this natural resource. Expectations within this policy includes (Keurig
Green Mountain, 2014):
Expanding access to clean water;
Protecting water resources;
Fostering innovation;
10
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Raising awareness of its collective impact;
Collaborating with others to amplify the positive contributions made.
Keurig Green Mountain’s Sustainability Report (2014, p. 32) set a specific sustainability
target which commits the organization, “To balance the water used in our 2020 brewed beverage
volume of all our beverages, ounce for ounce.” This ambitious target suggests that for every cup
brewed, Keurig will restore the same amount of water for natural and community uses. To ensure
a commitment to this target, the company also recognizes the value of networks and partnerships
as demonstrated through its key corporate value, “We partner for mutual success” (“Keurig
Green Mountain,” 2015). Keurig management recognizes the involvement and insights of many
individuals is required in order to address the long-term challenges of the water crisis (Keurig
Green Mountain Sustainability Report, 2014).
In addition, Keurig understands the financial investment that must be made in order to create
a positive impact. As a result of this commitment, over $11 million dollars was contributed in the
2014 fiscal year through partnerships with non-profit organizations. Each is devoted to water
security, conservation, and ensuring access to clean water for communities in North America and
throughout the globe. $3.4 million went to the charity “Water,” an organization devoted to
bringing clean drinking water to those in developing countries. This investment resulted in 8,000
people in Rwanda and 75,000 people in Ethiopia having access to clean water (Keurig Green
Mountain Sustainability Report, 2014). Furthermore, The Global Water Initiative received $2.7
million towards their projects focused on the efficient and equitable use of water for agricultural
purposes to improve food security and resiliency (Keurig Green Mountain Sustainability Report,
2014). Raise the River, a group of NGO’s working towards the restoration of the Colorado River
Delta by reconnecting the Colorado River to the Gulf of California, received $4.8 million
11
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
(Keurig Green Mountain Sustainability Report, 2014). This investment allowed the purchase of
land along the Colorado River and supports Keurig in its water target of returning an ounce of
clean water back to the environment for each ounce the company uses. It was demonstrated that
“The restoration of the flow of water through the Delta will result in water restoration benefits
that we intend to include in our water balance efforts” (Keurig Green Mountain Sustainability
Report, 2014).
A long-standing partner of Keurig is American Rivers, which received $750,000 in fiscal
year 2014 to support the clean-up of five rivers in areas where Keurig operates. This allowed for
three volunteer-based water restoration events in Miami, New York City, and Los Angeles. This
investment is in addition to the $170,000 that American Rivers has already received from Keurig
since 2006 (Keurig Green Mountain Sustainability Report, 2014). In 2015 a new partnership
between Keurig Green Mountain and Vermont was created with the intention to focus on state-
wide water quality with Keurig investing up to $5 million (Keurig Green Mountain
Sustainability Report, 2014).
In 2014, Keurig took initiative and hosted the first annual Current Water Summit which
focused on ways to create a more water secure world. More than 130 leaders from a variety of
private and public industry’s as well as NGO experts were invited in order to stimulate
discussions and “overcome barriers and identify opportunities for collaborative solutions,
generating conversations at the intersection of water, innovation, and learning” (Keurig Green
Mountain Sustainability Report, 2014). Key takeaways from the conference as described by
Keurig include: acknowledgment that there is no one-size-fits-all solution; innovation is key in
developing solutions for water security; and recognition that water is undervalued in the
marketplace due to a lack of economic drivers to save water. This poses a challenge to
12
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
stewardship and therefore it is essential that cleaner ways to power the future be found as climate
change is adding uncertainty to this already complex challenge (Keurig Green Mountain
Sustainability Report, 2014).
Using only 100% Arabica beans in their coffee also supports Keurig’s commitment to water
conservation as Arabica beans are, “Primarily a rain-fed crop, requiring little irrigation” (Keurig
Green Mountain Sustainability Report, 2014, p. 30). The rainwater consumed in growing these
coffee cherries is also the largest component of the green water utilized (Keurig Green Mountain
Sustainability Report, 2014).
Despite the large detail within the water stewardship program and the 2020 water
restoration target, the concept of water quality was not considered by Keurig. In its report,
Keurig acknowledges that water quality was not taken into account during the assessment, which
unfortunately means that the company’s water stewardship program has a gap. Although it plans
to restore an equal amount of water to what is used by the company, it has failed to take into
account how much waste water is released by the company. The company also appears to have
missed the opportunity to assess how polluted the waste water is that is being re-released back
into the environment. If these two factors were taken into account when creating its 2020 goal,
Keurig would have had a complete goal.
In addition to water stewardship, Keurig has also implemented many other initiatives and
set a variety of other targets to be reached by 2020. One of the most well-known environmental
challenges facing Keurig is its inability to recycle its K-Cup coffee pods. Journalist Murray
Carpenter calculated that 8.3 billion K-Cup’s went to landfill in 2013 (Counter, 2015). As a
result of this significant amount of waste, Keurig has made a commitment that by 2020, 100% of
all products will be recyclable. This includes the actual K-Cup pods as well as all packaging
13
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
materials. As they work towards this target, many other steps are being taken in order to lessen
the amount of waste ending up in landfills. All new products such as the K-Carafe, Vue, and Bolt
packs are all recyclable as they were designed in a way that the materials can be separated and
recycled easily. Keurig has committed to using polypropylene #5 plastic as this product is
recyclable in roughly 60% of the United States and 93% of communities in Canada (Keurig
Green Mountain Sustainability Report, 2014). In addition to these efforts, Keurig has
implemented measures to assist consumers in those areas that do not have the capability to
recycle plastic type #5. In the United States Keurig has partnered with Preserve, a household
recycling company that uses plastic #5 to make their own products. Consumers can send back
used K-Carafe, Vue, or Bolt packs to this company for recycling. As there is a cost to the
consumer for shipping the materials, Keurig sends consumers a discount coupon once they have
returned a certain number of pods. Unfortunately, this service is only available in the U.S. right
now and is not available for K-Cup pods (Recycle Your Keurig Vue Packs, n.d.).
Canadian’s living in Kamloops, Montreal, Toronto, and Vancouver who wish to recycle
used K-Cups can do so if they join Keurig’s coffee delivery service program. Used K-Cups can
be returned to the delivery drivers who return the products to the distribution centers. Those K-
Cups are then sent to local waste-to-energy facilities and cement kilns for processing to be used
as an alternate fuel source. For example, Holcim cement plant in Joliette, Quebec utilized used
K-Cups as an alternate to coal leading to a 30% reduction in the plant's emissions (Keurig Green
Mountain Sustainability Report, 2014).
Despite Keurig’s attempt at taking all necessary steps to reduce the amount of products
that end up in the landfill, the new Keurig 2.0 brewer was designed in a way that only Keurig
pods could be used with the machine. This decision meant those consumers who chose to use
14
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
refillable pods in order to produce less waste would no longer be able to pursue this option. As a
result, Keurig brewer sales decreased and Keurig became a “focus for environmentalists who
decry the company for pitching coffee pods that aren't currently recyclable” (McDermid, 2015).
Keurig’s CEO has since committed to bringing the original machine back.
While recognizing the company has serious work to do and despite the hefty target
Keurig has committed to reaching by 2020, the Chief Sustainability Officer is possibly trying to
downplay the environmental toll that the K-Cups are having. As indicated by Oxender (2014),
“Used K-Cup pack disposal represents only a small portion of the total environmental impact of
a K-Cup pack—around five percent” with the most significant impacts relating to brewer use,
coffee cultivation, and the material used in product packaging. It is particularly concerning that
by 2014 there were enough used K-Cups discarded to circle the globe 11 times, yet Keurig did
not even set its 100% recyclable goal until 2014 (Counter, 2015).
By 2020, Keurig aims to achieve a zero waste-to-landfill ratio at it's owned and operated
manufacturing and distribution facilities (Keurig Green Mountain Sustainability Report, 2014).
As of 2014 two plants were already at a 90% diversion rate or higher, manufacturing waste
diversion rate had increased from 73% in 2013 to 86% in 2014, and facility waste diversion rates
had increased from 79% to 86% from 2012 to 2014 (Keurig Green Mountain Sustainability
Report, 2014). Keurig also works with retailers to collect returned brewers for refurbishment to
be used at store displays or sent for recycling. It has also developed a program called Grounds to
Grow On whereby workplaces in the United States can have their used brew pods collected
where they are returned for composting and waste-to-energy processing. In the fiscal year 2014,
165,000 lbs of grounds were composted and 270-kilowatt hours of energy were generated
through this program (Keurig Green Mountain Sustainability Report, 2014).
15
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Further steps taken to reduce Keurig’s environmental footprint also include efforts to
make new buildings more environmentally friendly. Currently, five buildings at Keurig are
Leadership in Energy & Environmental Design (LEED) Gold certified through development and
use of green roofs, rain harvesting systems, LED lighting, recycled materials, renewable energy
through solar panels, and low-flow plumbing fixtures. A sixth location is currently being
considered for LEED Gold status as well (Keurig Green Mountain Sustainability Report, 2014).
In 2013, Keurig added a GPS to all vehicles in order to track data such as route patterns and idle
times to find efficiencies as well as ensuring all new vehicles purchased are smaller and more
fuel efficient (Keurig Green Mountain Sustainability Report, 2014). In addition, Keurig has
begun the process of converting its fleet to propane, leading to a 24% reduction in greenhouse
gas emissions (GHG) per vehicle. As a result of these efforts, Keurig has already reached its
2020 energy target of reducing GHG emissions by 25% of the 2012 baseline (Keurig Green
Mountain Sustainability Report, 2014).
In addition to its water policy, Keurig’s environmental policy updated in 2012 is designed
to “protect and preserve human health and the environment from potential impacts of its
activities, products, and services” (Keurig Green Mountain Sustainability Report, 2012).
Additionally, a 2014 climate change policy acknowledges Keurig’s recognition of the impact
businesses have on climate and lists plans on how to address climate change through adaptation,
mitigation, and engagement (Keurig Green Mountain Sustainability Report, 2014).
Furthermore, Keurig has partnered with eight suppliers to co-fund projects devoted to
creating organic fertilizers. This partnership reduces the use of harmful chemicals, increases farm
yields, improves coffee quality, promotes soil and human health, and reduces farmer costs. One
Peruvian coffee cooperative experienced an “average productivity increase of 23% with the use
16
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
of organic fertilizer, while their fertilizer costs were reduced by 31%” (Keurig Green Mountain
Sustainability Report, 2014).
Management at Keurig understands the importance of solid communication practices
with employees, has high CEO and executive level commitment, and involves stakeholders in
the development and evaluation of its sustainability initiatives. It appears that the CEO and Chief
Sustainability Officer heavily promote Keurig’s environmental sustainability goals through
interviews, blogs, partner organizations, and employee programs. In 2013 an external advisory
panel was created and includes external stakeholders from a variety of organizations. The group
meets a minimum of three times per year with the purpose of providing guidance, advice, and
holding the executive team and sustainable leadership committee accountable. Keurig also holds
quarterly town hall meetings to engage and consult with additional stakeholders to improve
agricultural conditions, such as a partnership between NGO’s, government, and farmers to
support growers experiencing coffee rust within their plants (Keurig Green Mountain
Sustainability Report, 2014).
Keurig is committed to engaging its employees more through programs like the
Employee Community Grantmaking Program where employees are empowered and have the
responsibility to allocate grant money to organizations and projects that meet specific targets
regarding water stewardship and food sustainability (Workplace Excellence and Sustainability,
n.d). A clear understanding of sustainability measures and Keurig expectations of employees is a
must for success within the program.
Keurig has a clear environmental sustainability plan and has been given an overall score
of 3.15 out of 5. Despite the significant contributions towards water conservation, recycling, and
17
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
employee engagement, Keurig did not assess water quality and wastewater pollution and failed
to consider this when developing its 2020 goal. As a result, the 2020 target of returning one
ounce of clean water back to the environment for each ounce removed will not be as effective or
impactful as originally hoped as they have not compensated for the polluted waste water that the
company is returning to the environment. Also, Keurig could do more to support recycling
initiatives as they work towards their 2020 recycling target. For example, the Grounds to Grow
On composting initiative should be expanded to allow for the collection of used K-cups from
households rather than just from workplaces. Keurig also needs to expand some of these
initiatives to countries outside of the United States. Through a partnership with Canadian
recycling companies that collect #5 plastic, Keurig would reduce the waste-to-landfill ratio of
Canadian households. Finally, they should continue to look for alternatives to #5 plastic as this
type of material is not yet fully accepted at all recycling facilities across the U. S. and Canada.
Despite the environmental challenge and scrutiny currently facing Keurig, they have made some
significant progress within their social and cultural sustainability efforts.
Social & Cultural Dimension
Keurig Green Mountain is well positioned to help strengthen the communities in which it
operates. As one of its highlighted objectives, Keurig is in the middle of developing talent and
culture to achieve strategic objectives and this will help ensure a sustainably-focused company.
Infrastructure needs to be present to help support projects from a cultural and social perspective.
Keurig embraces a boundary-less approach to collaboration and has set a 2020 target of engaging
100% of employees in understanding company vision and values so they can contribute to targets
(Keurig Green Mountain Sustainability Report, 2014).
18
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig has received numerous accolades including the title of one of the 100 Best
Corporate Citizens in 2010 and 2013 (Keurig Green Mountain Sustainability Report, 2014). The
social and environmental responsibility committee oversees the company’s social
responsibilities, with the vice president of corporate social responsibility reporting directly to the
CEO. The company has been one of the largest purchasers of fair trade coffee in the world and
has a strong reputation for fair dealings with coffee-growing suppliers (Keurig Green Mountain
Sustainability Report, 2014).
Keurig focuses on developing a responsible supply chain. Along with this, the company
has a goal of engaging 1 million people within its supply chains to significantly improve
livelihoods, and the company has a goal of sourcing 100% of primary agriculture and
manufactured products according to Keurig Green Mountain Responsible Sourcing Supplier
Guidelines (Keurig Green Mountain Sustainability Report, 2014).
Keurig operates under the premise that employee engagement will help foster a culture of
health and wellness. Engaged employees lead to happier employees that are more successful in
their careers and make more meaningful contributions to the company and society (Biro, 2014).
Regular employee feedback surveys at Keurig have revealed that employees are
passionate about the workplace and the communities in which they operate. The fiscal year 2014
marked the second year that Keurig used the Organizational Health Index (OHI) to help the
company improve its performance. A total of 68% of employees responded and results indicated
that progress was made in a variety of key areas (Keurig Green Mountain Sustainability Report,
2014).
19
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
In particular, employee volunteerism efforts and company-sponsored employee “source
trips” to visit coffee-growing and brewer manufacturing communities were deemed areas that
employees consider highly advantageous in furthering sustainable company objectives. The
company sent 97 employees to eight different countries, and visits to manufacturing facilities in
Asia were included for the first time (Keurig Green Mountain Sustainability Report, 2014).
Source trips help build strong relationships within the company and with suppliers and enable the
sharing of first-hand coffee knowledge. As a result, Keurig is able to develop superior beverage
products.
Health and wellness are viewed in many different aspects at Keurig, and compensation
and benefits contribute to the overall health and wellness of employees. Keurig offers a
competitive compensation and benefits package for employees and their families, and incentive
pay is linked to individual and team performance. This package is critical in attracting and
retaining a talented workforce. There is a focus on programs that improve personal, professional,
physical, and financial wellness which enables the company to strive towards providing
improved health for the entire company (Keurig Green Mountain Sustainability Report, 2014).
The compensation and benefits program is reviewed annually to determine if the
program meets overall company strategic directives. In 2014, the company announced its
intention to increase the amount of retirement savings plan matches within the Unites States.
Subsequently, in January 2015, the 401(k) increased to 4% over the 3% offered in prior years
(Keurig Green Mountain Sustainability Report, 2014). Also, efforts to provide a strategic
wellness platform in the United States have led to increased employee knowledge of health and
wellness issues.
20
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
In 2013, Keurig developed an internal website encouraging employees to complete
wellness assessments, develop health targets, and participate in challenges. The company went a
step further to encourage participation by awarding points to employees for completing health
screenings for blood pressure, cholesterol, and other health and wellness measurements.
Incentive awards further encouraged participation and in 2014 over 50 employees earned over
$1,000 each for participating (Keurig Green Mountain Sustainability Report, 2014).
The health and wellness component of sustainability is not static and the company is
dedicated to continually analyzing and improving processes. For example, the company
promotes employees completing annual physicals, however, it will also analyze whether or not
these visits lead to reduced complications and hence demands for benefits from employees
(Keurig Green Mountain Sustainability Report, 2014). Moreover, employee health and wellness
have a direct link to absenteeism rates which have a direct impact on company-wide financial
performance.
Safety at Keurig is a top priority and safety rates are well documented while the company
undertakes significant efforts to reduce injury and accident rates. Preventative safety programs
are a top priority and Keurig emphasizes a three-pronged approach that analyzes behavioral
improvements, engineering solutions, and compliance. Management at Keurig believes that
fostering an organizational culture of preventive safety practices has had the biggest impact to
date (Keurig Green Mountain Sustainability Report, 2014).
A safety council sets the strategy for Keurig’s safety programs and is comprised of 50
members from throughout the entire organization. The council meets on a quarterly basis and
employs a team of 24 safety professionals who work closely with all manufacturing sites. Safety
is tied to performance management goals for all manufacturing employees and new employees
21
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
receive safety training. Supervisors are expected to provide constant safety feedback to
employees. In 2015, the company started a new peer-to-peer safety observation program at all
sites which did not formerly incorporate the program. The company also started a new program
that offers a library of more than 250 safety courses for the United States and Canadian
employees (Keurig Green Mountain Sustainability Report, 2014).
The company employs observational training programs that provide guidance and
feedback on important safety protocols such as hourly employee record safety observations to
help improve accountability and leadership on safety issues. Safety committees oversee targeted
numbers of safety observations each week and quarterly safety committee meetings are held to
share ideas and offer improvements (Keurig Green Mountain Sustainability Report, 2014).
Employees logged over 110,000 hours of safety training in 2014. This was up from
95,000 hours in 2013 and was accomplished through a dynamic safety training platform. In
particular, the Alchemy System provides classroom and online training. Highlights include an
iPad-based tool designed to provide an interactive way to observe and address safety issues
(Keurig Green Mountain Sustainability Report, 2014).
Safety initiatives focused on ergonomics and engineering in 2014 and included such areas
as reducing repetitive motions. The company has invested approximately $12 million on safety
projects in portion pack manufacturing plants over the last three years. All manufacturing sites
and some offices employ mandatory work readiness stretches designed to help reduce injury
rates (Keurig Green Mountain Sustainability Report, 2014).
The overall company injury severity rate, measured by Days Away Restricted or
Transferred (DART), was 1.93 in 2014 and 2.64 in 2013, down 38% in 2014. Comparatively, the
22
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
overall coffee and tea industry recorded a DART rate of 1.80 in 2013, which was well below
Keurig’s rate. However, North American DART rates registered at 2.84 in 2014 and 4.04 in
2013, which were well above Keurig DART rates (Keurig Green Mountain Sustainability
Report, 2014). This suggests that Keurig performs significantly better than North American
DART rates, but still has DART rates above the overall coffee and tea industry. Keurig must
strive for DART rates that are similar to or better than the entire coffee and tea industry.
The incidence frequency, Total Recordable Incidence (TRI), the rate was 2.58 in 2014
and 3.31 in 2013, a decrease of 22% in 2014. The overall coffee and tea industry recorded a TRI
rate of 3.10 in 2013, which was marginally below Keurig’s rate. However, North American TRI
rates registered at 3.51 in 2014 and 4.76 in 2013, which were well above Keurig TRI rates
(Keurig Green Mountain Sustainability Report, 2014). This suggests that Keurig performs
significantly better than North American TRI rates, but registers slightly worse rates than the
overall coffee and tea industry TRI rates. Therefore, Keurig should strive to decrease TRI rates
to coffee and tea industry standards or lower. No occupational fatalities were recorded.
North American manufacturing sites have seen a 48% reduction in the TRI rate since
2011. There has also been a 38% decrease in the DART rate during this time. Keurig has set new
world class safety targets with injury rates of 1.0 for TRI and 0.5 for DART by 2020 (Keurig
Green Mountain Sustainability Report, 2014).
Keurig has also segmented out TRI and DART rates by type. For example, types are
segmented out by struck against, slip, trips and falls, lift/lower, push, pull and twist, and
repetition (Keurig Green Mountain Sustainability Report, 2014). No significant stand-out exists
in these statistics with the exception of repetition constituting lower overall percentages.
23
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig employs a high degree of effective safety training and statistics, and effectively
utilizes the Organizational Health Index (OHI). For this reason, Keurig scores five out of five on
the audit checklist for safety.
Keurig provides a variety of learning and development programs that facilitate personal
and professional growth for all employees. In addition, these training programs lead to the
identification of key employees sought for succession planning. Training plays an integral part in
the company retention rate, which has hovered around 90% since fiscal 2007 (Keurig Green
Mountain Sustainability Report, 2014).
Keurig offers continuous training opportunities, tuition for education, profit-sharing,
financial education, and career development. In addition, employees are paid for up to 52 hours
of volunteer work in their community per year (Keurig Canada, 2015).
Leadership is a key corporate strategy at Keurig and supervisors and managers are taught
to lead by example as a form of mentorship (Keurig Green Mountain Code of Conduct, 2014).
The company encourages the movement of employees across the organization to help understand
different aspects of the business. Keurig has developed new leadership programs designed to
develop necessary business acumen, leadership capabilities, enhance marketplace expertise, and
boost technical competence. There is a new multi-day leadership program for all employees that
immerses employees in all aspects of the business (Keurig Green Mountain Sustainability
Report, 2014).
The new manufacturing leadership program developed in 2014 places new engineering
college graduates into 14-month rotational assignments that allow participants to learn about all
aspects of the product lifecycle from coffee bean harvesting through to roasting, production,
24
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
manufacturing, and distribution (Keurig Green Mountain Sustainability Report, 2014).
Participants are also able to participate in special projects and learning activities. Keurig is
currently assessing the viability of expanding these rotational assignments to other areas of its
business.
Employees are rewarded and recognized throughout the organization. The Ambassador
program was implemented in 2014 and enables high-performing employees the opportunity to
engage directly with consumers. Specifically, this program enabled 50 employees from
Massachusetts and Vermont to follow a series of special training sessions in the only Keurig
retail store located in Burlington, Massachusetts (Keurig Green Mountain Sustainability Report,
2014). Essentially, this program is utilized to reward talented employees.
Keurig is given a five out of five on the audit checklist for its training efforts. The
company’s training programs guide employees throughout the organization and aid in providing
mentorship and succession planning.
Central to Keurig’s sustainability strategy is its philanthropy efforts where the company
strives to help solve problems. Total employee volunteer hours were 57,755 in 2014, 64,250 in
2013, and 71,610 in 2012. Furthermore, the total percent of employees that volunteered included
51.2% in 2014, 62% in 2013, and 64.9% in 2012 (Keurig Green Mountain Sustainability Report,
2014). Employee hours volunteered and the percent of employees that have volunteered have
been trending downwards and Keurig must determine the cause of this and help generate
increased employee volunteerism.
In spite of this, Keurig demonstrates strong philanthropic initiatives to alleviate poverty
and hunger in coffee-growing communities. Its investment in Coffee Kids helps improve the
25
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
lives of children and families in remote coffee-growing villages. Additionally, FomCafe helps
farmers earn higher profits for coffee (Keurig Green Mountain Sustainability Report, 2014).
Another philanthropy effort that Keurig is involved in is called the Coffee Farmer
Resilience Initiative (CFRI). In this initiative, Keurig partners with Root Capital, the Inter-
American Development Bank, and the Skoll Foundation to provide millions of dollars in loans to
cash-strapped farmers (Keurig Green Mountain Sustainability Report, 2014).
Keurig is also involved in the Coffee Farmer Resilience Fund that will leverage $23
million in financial assistance for more than 40,000 coffee farmers. These farmers have been
combating the coffee leaf rust outbreak in Latin America and the Caribbean. In particular, Keurig
funds resilience investments such as training practices in a climate controlled agricultural
practices. Under the CFRI, over 70% of coffee renovation and rehabilitation loans will make
their way to Keurig Green Mountain suppliers (Keurig Green Mountain Sustainability Report,
2014).
Keurig Green Mountain continually finds new ways to improve the communities in
which it operates. It is a founding member of the Coffeelands Food Security Coalition (Keurig
Green Mountain Sustainability Report, 2014). This coalition is made up of six members that
strive to strengthen coffee communities through collaboration.
Keurig rates high in the audit checklist for its philanthropic initiatives and giving back to
the community. Specifically, the company rates five out of five on this dimension.
As referred to in the environmental dimension, Keurig has an External Advisory Panel
(EAP), that in addition to providing guidance on environmental sustainability initiatives, also
helps to ensure high standards on human rights, labor conditions, and other vital supply chain
26
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
aspects. Keurig conducted 21 supplier workplace assessments in 2014 and a total of $8,980,000
of total grant donation dollars were given to supply chain communities. Further, 383,600 people
were impacted through Keurig Green Mountain funded partner projects (Keurig Green Mountain
Sustainability Report, 2014).
In 2007, Keurig developed its Responsible Sourcing Supplier Guidelines. These
guidelines help promote social and environmental responsibility, quality, safety, and respectful
working conditions (Keurig Green Mountain Sustainability Report, 2014). Essentially, suppliers
are held to high standards as set out by Keurig and this enables suppliers and communities to
benefit.
In 2014, Keurig released an updated version of the guidelines that included expanded
definitions of working with migrant workers, child labor, business integrity, the rights of
indigenous people, and raw material sourcing (including conflict minerals). The new guidelines
are in accordance with international standards. Keurig also dedicated significant resources to
communicating the guidelines across the supplier chain, and going forward, suppliers will be
required to read, acknowledge, and agree to adhere to the guidelines on an annual basis (Keurig
Green Mountain Sustainability Report, 2014).
The intention of supplier guidelines is to create an environment in which all people are
treated with fairness, dignity, and respect; the environment is protected and restored; and all
suppliers comply with all applicable laws and regulations. The guidelines include the following
areas: “Business integrity and legal compliance, grievance mechanisms, rights of indigenous
people, freely chosen employment, child labor, wages and benefits, hours of work, freedom of
association and collective bargaining, freedom from discrimination and abuse, health and safety,
27
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
environmental responsibility, raw material sourcing and conflict minerals, and animal testing”
(Keurig Green Mountain Sustainability Report, 2014, p. 43).
Keurig endeavors to “Support ending the violence and human rights violations in the
mining of certain minerals from… the Conflict region, which is situated in the eastern portion of
the Democratic Republic of the Congo (DRC) and surrounding countries” (Keurig Green
Mountain Sustainability Report, 2014, p. 44). In essence, the company strives to ensure its
products do not come from an area of armed conflict.
Keurig performs on-site supplier assessments, its supplier’s complete self-assessments,
and further assessments are performed by third-party auditors to help set the tone for a respectful
workplace that sets human rights issues at the forefront (Keurig Green Mountain Sustainability
Report, 2014).
In fiscal 2015, Keurig plans a significant increase in its supplier assessments. The
company states assessments have already resulted in supply chain improvements including:
“Improved workers’ awareness of their rights, heightened protection for migrant workers,
reimbursement of money owed to workers, elimination of discriminatory employment practices,
and the provision of benefits entitled to workers by law” (Keurig Green Mountain Sustainability
Report, 2014, p. 46). In fiscal 2015, Keurig will begin the first assessments with agricultural
suppliers, initially focusing on coffee farms (Keurig Green Mountain Sustainability Report,
2014).
In 2014 and 2015, Keurig hosted three Intercambio gatherings in Sumatra, Columbia, and
Guatemala. Intercambio is defined as “exchange” in Spanish, and these events provide a
meeting place for the exchange of information and ideas across Keurig’s coffee supply chains
28
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
(Keurig Green Mountain Sustainability Report, 2014). These gatherings were designed to bring
various stakeholders together and promote “Business reviews, coffee quality standards,
calibration training, and financial and risk management training” (Keurig Green Mountain
Sustainability Report, 2014, p. 49). These gatherings revealed the company’s commitment to
sustainable global operations.
Keurig is a member of industry group AIM Progress that helps build mutual recognition
of social and environmental audits and provides a collaboration platform for supplier working
conditions and environmental management. For example, Keurig plans to continue to build a
strong relationship with AIM Progress throughout 2015 (Keurig Green Mountain Sustainability
Report, 2014).
Keurig has developed a code of conduct easily accessible by all employees, external
stakeholders, and the general public. The code sets the tone for an “open door policy,” providing
several provisions that create a formalized approach to voicing all questions and concerns
relating to the work environment (Keurig Green Mountain Code of Conduct, 2014). The business
conduct line is available 24 hours a day, seven days a week and allows for confidential and
anonymous reporting.
Keurig fosters and promotes a diverse and inclusive environment that is free from
harassment. Accepting differences in individuals helps to provide the framework for a vibrant
and successful work environment (Keurig Green Mountain Code of Conduct, 2014). Diversity is
recognized as leading to a more tolerant and positive workplace where everyone’s strengths,
views, and talents can be utilized (Keurig Green Mountain Code of Conduct, 2014).
29
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
The code of conduct lays out the framework for a respect for human rights and maintains
that there is a commitment to ensure that products are made under conditions that demonstrate
respect for the people that created them (Keurig Green Mountain Code of Conduct, 2014). As
such, reasonable working hours and fair wages are an integral component of this philosophy.
In addition, Keurig is opposed to forced labor and human trafficking and will suspend
partnership with any supplier or partner that proves to violate human rights (Keurig Green
Mountain Code of Conduct, 2014). The company “Provides equal employment opportunities to
all people and respects ethnicity, religion, gender, age, marital/civil union status, sexual
orientation, veteran status, and disability” (Keurig Green Mountain Sustainability Report, 2014,
p. 93). Keurig strives to ensure there is no discrimination in its workplaces. The company
adheres to the Respectful Workplace and Anti-Harassment Policy (Keurig Green Mountain Code
of Conduct, 2014).
Overall, Keurig has done a very good job in promoting a diverse work environment that
respects human rights and equal employment opportunities. It also has certain codes, such as the
Responsible Sourcing Supplier Guidelines, that are in place and designed to support these
policies. For these reasons, Keurig scores 5 on the audit rating scores across these dimensions.
Keurig creates preferential opportunities for women and youth along the supply chain. In
2014, minority persons in the United States constituted 9% of management and 20% of the total
workforce. Women constituted 36% of management and 37% of the total workforce. In
addition, three women are on the eleven-member board of directors and four women represent
the 16 executive officers within the company (Keurig Green Mountain Sustainability Report,
2014). Keurig should strive to increase the presence of visible minorities and those with
disabilities in its workforce and on its board of directors. Keurig can do a better job of
30
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
increasing the presence of minorities within the company and on the board of directors. For this
reason, the company only scored three out of five on the audit rating scale for minority
representation on the board of directors.
Overall, Keurig scored 4.15 on the social and cultural dimension of the audit checklist. The
company is performing very well on this dimension but can improve upon encouraging increased
employee volunteer hours and increasing minority representation on the board of directors.
Economic Dimension
In fiscal 2013, Keurig’s sustainability practices took a direct turn from “greenwashing” to
a strategic and integrated system of initiatives affecting all aspects of the company. The previous
year, Keurig had conducted a systemic, “Review and analysis of material sustainability
opportunities informed by external stakeholder feedback and competitive benchmarking” (Green
Mountain Coffee Roasters Inc, 2013). This review provided the required data to move forward to
creating a more sustainable company. To subsidize the new sustainability initiatives, they
increased Sustainability funding by $18.1M. Although there was a significant increase
in sustainability allocations, the actual amount as a percentage of net sales only increased 0.4%
from 0.7% in 2012 to 1.1% in 2014. Considering that net sales increased almost 20% in two
years, this investment is not significant even though it does bring Keurig’s investment in
sustainability initiatives to over 1%.
Although Keurig does demonstrate a level of transparency and full disclosure by the
submission to stakeholders of both an Annual Report and a Sustainability Report, the two are
very separate and distinct. The Annual Report is very numbers driven and provides stakeholders
31
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
with a great deal of information about the economic soundness of the company. The
Sustainability Report, on the other hand, provides information about the initiatives being
developed as part of the new direction, but there is little connecting the two. For instance, the
Key Data Summary section of the Sustainability Report does discuss the Key Performance
Indicators (KPIs) of the Supplier Guidelines, Sustainable Products and Thriving People and
Communities but does not draw the purpose of these measures back to the triple-bottom line. It
may be the current direction has not resulted in a measurable return on investment (ROI) but that
is unlikely. Instead, Keurig needs to develop clear key cost metrics that are actively reviewed as
part of any economic forecasting related sustainability initiatives to determine the ROI.
Methodologies for minimizing costs and maximizing profit must demonstrate progress or the
initiative will be considered a loss by shareholders.
By not being clear on the ROI, it is difficult to determine whether sustainability
initiatives are being considered when approving major financial decisions. Certainly, with a
$55.7 million invested, the strategic sustainability targets to 2020 clearly outlined in the
Sustainability Report, and the CEO statement of commitment in the front pages of the Annual
Report, it would appear that sustainability initiatives are considered whilst other financial
decisions are being assessed. However, the report offered no direct discussion of the integration.
Keurig also commits to responsible sourcing and provides supplier guidelines, but again, these
are not clearly tied back to the economic well-being of the company. Nevertheless, the
Sustainability Report references a newly developed, centralized data management tool to
measure and track progress towards sustainability targets. If this new system is to be successful
it will need to include economic measurements to track ROI (Keurig Green Mountain
Sustainability Report, 2014).
32
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig Green Mountain is an active economic contributor in the communities in which it
participates. Both the Annual Report and the Sustainability Report proclaim that Keurig’s
employees are their number one priority. The Sustainability Report also indicated significant
investment in staff training with employees logging more than 168,000 hours of training (an
average of 27 hours per person). However, this training was not cost specifically to
sustainability, nor was an ROI completed.
Significant investment in the coffee farming communities where Keurig sources its
product are also key indicators in both the Annual Report and the Sustainability Report. For
instance, in the fight against “coffee rust” (a fungal disease of the coffee trees), Keurig invested
$7M in 2013 towards, “Resilience investments and financial management training to 50
agricultural enterprises representing 40,000 farmers, reaching approximately 200,000 family
members in farming communities in Latin America” (Keurig Green Mountain Sustainability
Report, 2013). This investment is important as “coffee rust” is currently at its highest levels in
40 years in Central America and results in the losses of more than $1B to the local economy
(Keurig Green Mountain Sustainability Report, 2013). By making this investment, Keurig is
attempting to mitigate future supply chain and sourcing catastrophes.
Keurig also makes investments in its sourcing of fair trade coffee. Although only 28% of
Keurig Green Mountain Coffee is fair trade, it is currently the second largest purchaser of fair
trade coffee. In 2010, Keurig Green Mountain purchased 23.5M pounds of coffee, slightly more
than Starbucks 21M and three times as much as the biggest 100% fair trade coffee competitor
Equal Exchange (Howard & Jaffee, 2013).
Keurig Green Mountain’s investments and commitments to sustainability initiatives
demonstrate that it does understand the sustainability risks of its business. However, they have
33
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
not outwardly examined those risks in the context of the economic environment. There are
currently no clear connections between sustainability initiatives and cash flow or return on
investment, and very little on operational/financial risk. In future, Keurig could engage its
investment managers to plainly integrate sustainability initiatives into investment decisions.
Keurig Green Mountain does align its fiscal reports with the Global Reporting Initiative
(GRI), which is a set of sustainability reporting guidelines that demonstrates the company's
values and governance model, and illustrates linkages between its strategy and its commitment to
a sustainable global economy. However, the economic performance section is weak in
comparison to other sections audited. Overall, as part of this assessment, Keurig is rated 3.5 out
of 5 on its economic indicators leaving plenty of room for improvement.
Technology Dimension
In moving from Keurig’s Economic sustainability, the fifth dimension to be audited
surrounded Keurig’s Technological sustainability. Since 2012 Keurig has understood its
importance of looking towards the future and becoming more sustainable. Keurig’s fiscal reports
up to 2011 were of the corporate responsibility type which discussed very little in terms of
sustainability (Keurig Green Mountain Sustainability Reports, 2015). Since 2012 Keurig’s fiscal
reporting switched to a sustainable report. This is one of the indicators that Keurig understood
the need to be more sustainable. Another great example of Keurig’s commitment to sustainability
is its approach to research and development (R&D). The technology Keurig utilizes include both
technologies surrounding the design and production of Keurig coffee as well as information
technology. The technology Keurig utilizes and continues to research includes items such as:
Equipment
34
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
K-cups
Packaging
Recipes
Data collection
Data analysis (Keurig Green Mountain Sustainability Reports, 2015).
Some of the most important technology for sustainability includes information
technology. Without the proper utilization of this technology the company would not know
where it is in terms of resource usage, waste production, and what needs to be done to achieve its
set goals.
From the sustainability reports over the last several years, it is evident Keurig reports on
data it has collected internally. However, to what extent it is transparent is not evident in the
reports published (Keurig Green Mountain Sustainability Reports, 2015). The Keurig website
offers some insight to what its technology departments entails, (“Keurig Green Mountain,”
2015). Both the IT department and technology department work hard to propel the business
forward, and, “Position the organization for future growth and long-term stability” (Keurig
Green Mountain Sustainability Report, 2014).
Keurig currently has eleven locations in the United States, two of which are dedicated to
only R&D (Keurig Green Mountain Sustainability Report, 2014). In figure 2 it can easily be seen
that the R&D investment made by Keurig Green Mountain Coffee Inc. has steadily increased
from 2010 through 2012, which equates to an increase in R&D of 226%. This indicates a
commitment to continued growth. According to the presentation by Kimberley (2014), Keurig
35
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
maintained this percentage of increase in 2013. This puts its R&D expense for 2013 at over a
$130 million.
Figure 2: R&D expenses of three leading companies in the coffee industry (Goulding, Bonafé,
Bertrand, 2015).
A poor result on the sustainability checklist involved the World Summit on Sustainable
Development (WSSD). It is important for organizations to report on resource usage to the WSSD
because, “The achievement of sustainable development, in its environmental, social, and
economic dimensions, is fundamental to improving health and well-being, and requires new
levels of cooperation between health and various development sectors” (WSSD, 2015). Without
this collaborative approach to sustainability, organizations miss out on networking. If Keurig
36
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
reported to the WSSD, it would demonstrate its increased transparency, as well as improve
global networking.
Keurig not only employs new technology for its products, it also incorporates technology
into its facilities. Some of this technology helps to reduce its carbon footprint, as well as reduce
energy usage and waste from going to the landfills. For example, in 2014 Keurig conducted an
analysis of its, “Corporate water and GHG footprint to help identify the areas where it can make
the biggest improvements in its value chain” (Keurig Green Mountain Sustainability Report,
2014 pg 76). The technology which has allowed Keurig to reduce energy and resource usage in
its facilities include:
Installing a green roof
Collecting rain water
Reduced water plumbing fixtures
LED lighting
Solar panels
All of the technologies above allow Keurig to reduce the purchase of energy to zero in a couple
of its facilities. The sustainability audit performed as seen in Appendix A, scored Keurig at 4.00
out of a possible 5.00 on its technology initiative. This demonstrates a great commitment to its
sustainability program.
Community Engagement Dimension
In contrast to Technology which involves the material aspects at Keurig, Community
Engagement is about the power of relationships. When people come together, it is possible to
create positive, significant, and lasting differences in communities. Keurig’s vision and values
37
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
are at the heart of its sustainability program. Community engagement brings together the
combination of Keurig’s employee experiences, expertise, and skills of its workforce. In
mentioning Keurig’s community engagement initiatives it was stated that “Our people are the
reason for our success, and we focus on developing them to their full potential and engaging
each individual in meaningful ways both at work and within his or her broader communities”
(Keurig Green Mountain Sustainability Report, 2014). Keurig acknowledges the importance of
its workforce in broadening its community engagement efforts.
Keurig hosts a number of engagement and outreach events throughout the year, including
product donations, partnerships, and grants. An overview of its initiatives to give back to the
communities in which they operate includes food drive participation, education on water
preservation, and community gardening. Keurig not only focuses on the community in which it
operates but also looks at the community surrounding its total supply chain. Keurig utilizes
supply chain outreach efforts to provide its suppliers, its employees and families, and its
communities with the skills and tools to meet the challenges that face the company (Keurig
Green Mountain Sustainability Report, 2014). Keurig engages in open conversation on a
continual basis with community partners about planning and development as well as community
programs.
Keurig does a great job at recognizing its internal strength in the employees which drive
its sustainability efforts. Channeling the energy from employee eagerness to participate and be
involved in initiatives like its water management of coffee farms and community river cleanups
is remarkable. Moreover, Keurig is transforming its internal culture by bringing in external
experts to assist with the water problem the company and the world are facing (Keurig Green
38
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Mountain Sustainability Report, 2014). All of these initiatives led to a community engagement
audit rating of 3.66.
Conclusion
With the increasing population of the globe and the desire to exploit natural resources
wherever possible, the grave reality is that in order to ensure resources are not depleted,
sustainable methods and practices must be improved and implemented. Keurig recognizes the
need to integrate sustainable practices throughout all facets of the company within its overall
corporate governance, economic responsibilities, use of technology, environmental practices,
social and cultural policies, and by engaging its community. Keurig is, therefore, contributing to
reducing its wastage and carbon footprint for the benefit of employees and customers. Overall,
through its efforts, Keurig is providing an example for other organizations to improve
sustainability protocols to benefit society as a whole.
Keurig has designed its corporate organizational structure and overall governance with
sustainability in mind. The creation of a sustainability committee and the goal to achieve
sustainability targets by 2020 aid in increasing efficiencies throughout the company. Keurig
communicates its vision to all levels of staff through its orientation program, employee website,
employee committees, and employee programs. Senior management at Keurig value
sustainability which sets an example for all employees at the company to complete daily tasks as
sustainably as possible. The governance analysis of the audit at Keurig was very positive,
achieving an overall rating of 4.92.
As indicated above, Keurig has implemented significant environmental policies and set
specific goals to help mitigate its impact on the environment. Through its water conservation
efforts, reduction in greenhouse gas emissions, LEED gold certified infrastructure, and goal to
39
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
have a zero waste-to-landfill ratio by 2020, it would appear Keurig is on the right track.
Unfortunately, Keurig still has room to improve in areas such as, reducing the polluted waste
water it's releasing into the environment and its slow conversion to recyclable or biodegradable
K-Cup pods, which have been piling up in landfills. All of these factors led to the lower
environment audit score of 3.15.
The social and cultural dimension for Keurig was generally positive. Management at
Keurig understands that employee engagement helps foster a culture of health and wellness and
that engaged employees are happier - leading to a more successful workplace. Safety at Keurig is
also a top priority and training programs are available for employees to properly complete tasks
and hone skills. Keurig’s use of supplier guidelines indicates its desire to improve sustainability
initiatives along its supply chain as well. Despite the number of employee volunteer hours
trending downwards, Keurig’s inclusion of a code of conduct and employment equity all
contributed to its social and cultural audit score being a favorable 4.15.
Economically, Keurig is moving in the right direction by transitioning from its
“greenwashing” past. As indicated above, the company has increased sustainability funding
significantly but compared to net sales, the increase in funding is minor for what Keurig could
financially contribute. Another area where Keurig has room to improve is to create clear cost
metrics that are reviewed to determine the effect on ROI. Keurig needs to engage management to
clearly integrate sustainability initiatives into investment decisions. By making the changes
above, Keurig will improve from its economic audit rating of 3.50.
Keurig is making inroads to improve product efficiencies by developing advanced
information technology, carbon footprint reducing technology, and resource reducing
technology. It is constantly re-engineering its packaging, machinery, and coffee pod products to
40
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
be more sustainable. The company could improve its design of the coffee pod system to use
more sustainable materials, such as plastic #5. Generally, Keurig ranked higher with a score of
4.00 in the technology sustainability dimension.
Lastly, Keurig engages and invests in the local and broader community in which it
operates, wherever possible. Programs such as the sustainable food system grant and CAFE
program help engage employees to give back to the community and become more involved. The
community engagement audit score for Keurig was rated at 3.66.
As a result of the information gathered and analyzed within the audit process, Keurig
Green Mountain Inc. received an overall sustainability audit score of 3.97. Considering the
amount of waste typically associated with the Keurig brewing system, this is a higher number
than expected. Fortunately, Keurig’s integrated approach and commitment to sustainability
efforts cannot be denied, despite its reputation for K-Cup waste. If Keurig implements its 2020
goal to design sustainable K-Cup brew pods, the company will position itself to be a major
leader of sustainability initiatives in North America.
41
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
References
Athavaley, A. (2014, December 23). Keurig recalls 7.2 mln single-serve brewers. Retrieved
November 3, 2015, from http://www.reuters.com/article/2014/12/23/keurig-green-recall-
idUSL3N0U72YP20141223#jTtpreImjOsYUlUY.97
Berns, M., Townend, A., Khayat, Z., Balagopal, B., Reeves, M., Hopkins, M., & Kruschwitz, N.
(2009). The business of sustainability. The Boston Consulting Group Inc. Retrieved
November 6, 2015, from
http://login.ufred.ca/pluginfile.php/83892/mod_page/content/24/The%20Business%20of
%20Sustainability%20-%20report%20including%20audit.pdf
Biro, M. (2014, January 19). Happy employees = hefty profits. Forbes. Retrieved November 5,
2015 from http://www.forbes.com/sites/meghanbiro/2014/01/19/happy-employees-hefty-
profits/
Brush, M. (2015, February 3). Insider buys signal Keurig is on to something big. Retrieved
November 2, 2015, from http://www.marketwatch.com/story/join-keurig-executives-and-
buy-the-coffee-machine-makers-stock-2015-02-03
Counter, R. (2015, January 27). Coffee pods: The new eco-villain. Macleans. Retrieved
November 5, 2015, from http://www.macleans.ca/society/life/coffee-pods-the-new-eco-
villain/
Goulding, C. Bonafé, A. Bertrand, L. (2015). The R&D Tax Credit Aspects of Coffee. Retrieved
November 4, 2015, from http://www.rdtaxsavers.com/articles/Coffee
Green Mountain Coffee Roasters. (n.d.). Retrieved November 2, 2015, from
http://www.cdccoffee.com/green-mountain-coffee-roasters-history.html
42
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Green Mountain Coffee Roasters Inc. (14 Jan 2013). Green Mountain Coffee Roasters, Inc.
Evolves Corporate Sustainability Strategy. Press Release. Retrieved from:
http://investor.gmcr.com/common/mobile/iphone/releasedetail.cfm?ReleaseID=733327&
CompanyID=GMCR&mobileid=
Howard, P., & Jaffee, D. (2013). Tensions between firm size and sustainability goals: Fair trade
coffee in the united states. Sustainability, 5(1), 72-89. doi:10.3390/su5010072
Keurig Canada (2015). Promoting Employee Engagement. Retrieved November 15, 2015,
from,
http://corp.keurig.ca/en-CA/Sustainability/canada/ThrivingPeopleAndCommunities
PromoteEmployeeEngagement.aspx
“Keurig Green Mountain.” (2015). Retrieved November 6, 2015, from
http://www.keuriggreenmountain.com/
Keurig Green Mountain Annual Report. (2014). Retrieved November 5, 2015, from
http://files.shareholder.com/downloads/GMCR/1015109623x0x800137/17B2E475-5C40-
47AE-A563-C65C86B282DF/2014_Keurig_Annual_Report.pdf
Keurig Green Mountain Code of Conduct. (2014). Retrieved November 2, 2015, from
http://files.shareholder.com/downloads/GMCR/1015109623x0x383775/36DBB352-
934F-4E7B-9001-9D0C581A6410/GMCR_WebDoc_7206.pdf
Keurig Green Mountain Sustainability Charter. (2014). Retrieved October 26, 2015 from
43
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
http://files.shareholder.com/downloads/GMCR/1015109623x0x367363/755AAA31-
C469-4D85-816D-F356D1F51D9F/GMCR_WebDoc_6985.pdf
Keurig Green Mountain Sustainability Report. (2012). Retrieved November 3, 2015, from
http://www.keuriggreenmountain.com/~/media/Sustainability/PDF/ReportsDisclosures/S
ustainabilityReportFY12.ashx
Keurig Green Mountain Sustainability Report. (2013). Retrieved November 3, 2015, from
http://www.keuriggreenmountain.com/en/Sustainability/ReportsAndDisclosures/Reports.
aspx
Keurig Green Mountain Sustainability Report. (2014). Retrieved November 3, 2015, from
http://www.keuriggreenmountain.com/~/media/Sustainability/PDF/ReportsDisclosures/Fi
scal2013SustainabilityReportPDF.ashx
Keurig Green Mountain Sustainability Reports. (2015). Retrieved November 5, 2015, from
http://www.keuriggreenmountain.com/en/Sustainability/ReportsAndDisclosures/Reports.
aspx
Kimberley, N. (2014). Green Mountain Coffee Strategy 2014. Retrieved November 3, 2015,
from http://www.slideshare.net/Foodsfluidsandbeyond/gmcr-cagny-2014
McDermid, B. (2015, May 8). Keurig backs down on K-Cup coffee pod strategy. CBC News.
Retrieved November 8, 2015, from http://www.cbc.ca/news/business/keurig-backs-down-
on-k-cup-coffee-pod-strategy-1.3066326
Oxender, M. (2014, April 3). CSRwire Talkback. Retrieved November 2, 2015, from
http://www.csrwire.com/blog/posts/1289-sustainability-ambitions-keurig-green-
mountain-commits-to-a-recyclable-k-cup-reg-pack-by-2020
Recycle your Keurig Vue packs with Preserve Gimme 5. (n.d.). Retrieved November 3, 2015,
44
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
from http://vuerecycling.preserveproducts.com/site/program/home
Supplier Guidelines. (n.d.). Keurig green mountain. Retrieved November 2, 2015, from
http://www.keuriggreenmountain.com/en/Sustainability/ResilientSupplyChain/SupplierG
uidelines.aspx
Workplace Excellence and Sustainability. (n.d.). Keurig Green Mountain. Retrieved November
4, 2015 from http://corp.keurig.ca/en-CA/JobSeekers/WhyWorkHere
/WorkplaceExcellenceAndSustainability.aspx
WSSD. (2015). Key Resources. Retrieved November 3, 2015, from
http://www.who.int/wssd/resources/en/
45
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Appendix A
KEURIG AUDIT ANALYSIS - RATINGS AND RATIONALE BY DIMENSION
1 Governance
Sustainability
Dimension
Never Rarely Sometimes Often Always Rationale
1-1 Does the
organization
have a business
case for its
sustainability
approach?
1 2 3 4 5
Keurig requires all facets of the
company to comply with its
sustainability plan. The company
uses the sustainability plan to set
itself apart from other companies.
The company exams the costs and
benefits through its audits.
1-2 The
organization has
defined
sustainability
targets or goals
1 2 3 4 5
Keurig has clearly defined
sustainability targets and updates
yearly on the progress made.
1-3 Organizational
management
communicates
its vision to all
levels of staff
through
different forms
of
communication
1 2 3 4 5
Keurig holds quarterly town hall
meetings, CEO visits, and updates its
website regularly for all levels of
staff.
1-4 Is an updated
vision and
results of
sustainability
communicated
to the entire
workforce on an
annual basis?
1 2 3 4 5
Keurig updates its vision and results
annually to communicate with staff.
1-5 There is a
requirement for
suppliers to have
a sustainability
policy in place 1 2 3 4 5
Keurig encourages suppliers to have
a sustainability policy, however only
sets suppliers’ guidelines in place.
The company will not purchase from
suppliers if the guidelines are not
followed.
46
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
1-6 The
organization
measures its
goals for
sustainability
and reports its
progress to all
stakeholders
1 2 3 4 5
Each year Keurig publishes its goals
and the progress of the company in
its sustainability report.
1-7 The
organization's
code of conduct
for purchasing
incorporates
sustainable
practices
required by
suppliers
1 2 3 4 5
The Code of Conduct is 33 pages in
length and highlights the
sustainability practices that the
company believes and requires
suppliers to follow.
1-8 The
organization
established a
sustainability
committee to
champion its
vision
1 2 3 4 5
The organization has a sustainability
committee to champion its vision to
all stakeholders.
1-9 Does the
organization
network with
other industry
experts, schools,
and enterprises
in sustainability
practices?
1 2 3 4 5
Keurig works with NGOs,
governments, other companies, and
experts in the field of sustainability
to increase awareness and develop
sustainability practices.
1-10 An independent
audit of the
issues and
concerns related
to sustainability
is completed
1 2 3 4 5
Keurig uses a registered accounting
firm to audit its sustainability report.
The company also submits it reports
to the United Nation for review.
1-11 Does the
organization
voluntarily
publish its
sustainability
activities and
1 2 3 4 5
Keurig voluntary publishes its
sustainability activities and progress
in its annual sustainability report.
47
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
progress
publically?
1-12 Does the
organization
provide
sustainability
education to all
stakeholders as
part of ongoing
development
and
understanding?
1 2 3 4 5
Keurig promotes sustainability
education to all stakeholders through
its report, employee activities,
hosting meetings, and grant
initiatives.
1-13 The
organization
reviews its
sustainability
plan annually
1 2 3 4 5
Each year Keurig reviews and
updates its sustainability plan.
Keurig publishes the plan as well.
48
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
2
Environmental
Sustainability
Dimension
Never Rarely Sometimes Often Always Rationale
2-1 Stakeholders are
consulted and
actively
participate in the
creation of the
sustainability
plan.
1 2 3 4 5
Consults internal and
external stakeholders on an
ongoing basis regarding
sustainability measures and
initiatives.
2-2 Commitment
from the CEO
that
environmental
sustainability is a
priority –
through
promotion,
financial
backing, and
general
involvement.
1 2 3 4 5
Both the CEO and CSO are
highly committed and
engaged and provide
financial support to meet
targets.
2-3 Environmental
sustainability
measures
appropriately
communicated to
stakeholders.
1 2 3 4 5
Targets and initiatives are
communicated to all levels of
the organization with
opportunities for the
feedback provided.
2-4 The
sustainability
plan includes
long-term goals.
1 2 3 4 5
Goals are set no further than
six years in the future.
2-5 The organization
is committed to
improving water
efficiency and
usage.
1 2 3 4 5
Keurig has a very detailed
water stewardship program
with targets, measurements
and clearly communicated
expectations for all.
2-6 The organization
is committed to
improving water
quality.
1 2 3 4 5
The organization has not
conducted a water quality
assessment and has not
considered this in their
targets.
49
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
2-7 The organization
promotes the re-
use of materials.
1 2 3 4 5
There is evidence they are
working towards the re-use
of materials and products.
2-8 The organization
demonstrates
efforts to reduce
packaging.
1 2 3 4 5
Keurig is working towards
reduced packaging and more
recyclable alternatives.
2-9 There is a
commitment to
recycling
through internal
recycling
programs and the
usage of
recyclable
products.
1 2 3 4 5
Keurig is taking significant
steps towards the creation of
recyclable products and
working towards removing
recycling barriers.
2-10 The organization
is committed to
improving air
quality and
reducing its
carbon footprint.
1 2 3 4 5
The company has
implemented many
initiatives to reduce air
pollution and find
efficiencies and has already
reached their set target.
2-11 Demonstrated
commitment
towards the
reduction of
solid waste.
1 2 3 4 5
Evidence of significant gains
towards the goal of zero-
waste-to-landfill in many
plants.
2-12 There is an
active effort
towards reducing
energy
consumption and
increasing
efficiency.
1 2 3 4 5
New programs have been
developed to generate energy
from used materials as well
as renewal energy generation
systems have been put in
place.
2-13 There is a
commitment to
the preservation
of land and
habitat.
1 2 3 4 5
There is evidence that Keurig
does focus on land
preservation through water
security in their coffee
growing regions.
50
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
2-14 Environmental
impact is
considered when
renovating or
building new
facilities.
1 2 3 4 5
A number of buildings have
become LEED gold certified
as a result of sustainable
initiatives implemented.
2-15 There are formal
policies in place
for
environmental
initiatives.
1 2 3 4 5
Keurig has a variety of
formal policies outlining the
recognition of a business’s
environmental impact and
the company’s commitment
to reducing that impact.
2-16 There is a
sustainability
committee with
membership
from all levels of
the organization.
1 2 3 4 5
There is a variety of
committee’s at each level,
however, no evidence of one
that contains all levels.
2-17 Employees are
aware of why
environmental
stewardship is
important to the
company.
1 2 3 4 5
Employees are given
significant communication
and information on
initiatives. They are also
empowered in their decision
making.
2-18 The organization
works with
suppliers who
also have
sustainability
programs.
1 2 3 4 5
There is evidence of a
required level of expectation
for suppliers through a
written agreement and formal
assessments.
2-19 Initiatives are
implemented on
a global basis. 1 2 3 4 5
Keurig recognizes the global
reach and involvement of the
company and attempts to
ensure initiatives are
implemented globally.
51
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
3 Social & Cultural
Sustainability Dimension Never Rarely Sometimes Often Always Rationale
3-1 Does the organization
build a workforce that
embraces diversity and
helps to strengthen the
whole?
1 2 3 4 5
Keurig's Code of
Conduct ensures equal
employment
opportunities are
provided to all people
regardless of race,
religion, age and other
factors. The company
also creates preferential
opportunities for women
and youth in the supply
chain.
3-2 Is diversity displayed
through the composition
of the board of directors? 1 2 3 4 5
Three women are on the
eleven-member board of
directors and four women
represent the 16
executive officers within
the company.
3-3 Does the organization
contain a health and
safety network that
provides measurable
results? 1 2 3 4 5
The Organizational
Health Index (OHI)
tracks and helps the
company improve its
health performance. The
company adheres to a
well-defined safety
network by tracking and
publishing injury types
and rates.
3-4 Does the organization
demonstrate that it
gives back to the
community?
1 2 3 4 5
Keurig is committed to
alleviating poverty and
hunger in coffee-growing
communities. Its
involvement in programs
such as Coffee Kids,
FomCafe, the Coffee
Farmer Resilience
Initiative (CFRI), and the
Coffee Farmer Resilience
Fund aid in this initiative.
52
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
3-5 Does the organization
support employee
involvement in
volunteerism?.
1 2 3 4 5
Keurig supports employee
involvement in
volunteerism. But,
employee involvement has
been experiencing a
downward trend in recent
years so this is designated
as an area that needs
improvement.
3-6 Does the organization
assist in building leaders
for tomorrow?
1 2 3 4 5
Mentorship and
leadership programs are
designed to develop
necessary business
acumen, leadership
capabilities, enhance
marketplace expertise,
and boost technical
competence. A multi-day
leadership program and a
manufacturing leadership
program aid in
developing leaders for
tomorrow.
3-7 Does the organization
screen suppliers using
labor practices criteria?
1 2 3 4 5
Responsible Sourcing
Supplier Guidelines
provide a framework for
working with migrant
workers, child labor,
business integrity, the
rights of indigenous
people, and raw material
sourcing. The guidelines
are in accordance with
international standards.
3-8 The organization
complies with labor laws.
1 2 3 4 5
Keurig complies with
labor laws as set out by
the Responsible Sourcing
Supplier Guidelines.
Child labor, wages and
benefits are some key
areas that are covered.
53
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
3-9 Conducts regular
performance reviews.
1 2 3 4 5
Keurig provides detailed
job descriptions and
conducts regular employee
performance reviews as a
means for measuring,
evaluating and providing
feedback on performance.
3-10 Stakeholders are
regularly consulted to
discover legitimate
concerns and interests.
1 2 3 4 5
The External Advisory
Panel (EAP) is designed
to engage a wide range of
stakeholders. The group
is comprised of eight
stakeholders and
convenes three times per
year to provide
perspective and
challenges to the
Sustainability Leadership
Committee and
Executive Leadership
team.
54
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
4 Economic Sustainability
Dimensions
Never Rarely Sometimes Often Always Rationale
4-1 Are sustainability initiatives
considered when approving
major financial decisions?
1 2 3 4 5 Keurig does consider
sustainability targets when
approving major financial
decisions.
4-2 Does the organization’s
infrastructure investment
extend into the community?
1 2 3 4 5 There is evidence that the
Keurig’s infrastructure
investment does extend into the
community.
4-3 Does the investment
management policy
incorporate sustainability
risk factors?
1 2 3 4 5 There is some evidence that
Keurig’s investment
management policy incorporates
sustainability risk.
4-4 Does the organization invest
in the economic well-being
of employees?
1 2 3 4 5 There is evidence that Keurig
invests in the economic well-
being of its employees.
4-5 Are sustainability initiatives
quantified as to their ROI?
1 2 3 4 5 There is little evidence that the
corporation assesses initiatives as
to their return.
4-6 Is there a procurement best
practices document
reflecting sustainability
initiatives?
1 2 3 4 5 There is evidence that Keurig
uses a best practices document
for procurement
4-7 Does the company and
product brand include
sustainability initiatives that
align with customer values?
1 2 3 4 5 Some evidence is available that
demonstrates alignment between
the company and product brand
and customer values.
4-8 Does the organization seek
economic profit in its
operations (supply chain)
through sustainability
initiatives?
1 2 3 4 5 There is little evidence that
Keurig looks to improve supply
chain management to seek
economic profit.
55
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
5 Technological Sustainability
Dimension Never Rarely Sometimes Often Always Rationale
5-1 The organization utilizes
effective information
systems to collect and
analyze data. 1 2 3 4 5
Keurig does have a large IT
department which includes an
information system. Their
annual and sustainability
report contain plenty of
information
5-2 The organization reports
its science and technology
mechanisms to the World
Summit on Sustainable
Development (WSSD).
1 2 3 4 5 No reports located with the
WSSD.
5-3 There is an established
research and development
(R & D) department for
continual improvement.
1 2 3 4 5
A total of nine facilities in the
US, including two dedicated
to the only R&D.
5-4 The R&D department has
an adequate budget to
enable the development of
new technology.
1 2 3 4 5
Always looking for
improvement, hired new
technology manager. Increase
annual budgets.
5-5 The organization
introduces energy saving
technology as new
technologies become
available.
1 2 3 4 5
Yes, see the energy usage and
improvement in 2014.
5-6 The organization uses
research manufacturing
processes which would
reduce environmental
impact.
1 2 3 4 5
Single cups utilize less water
than the standard full pot
brewers which tend to result
in more wastage. Looking to
improve the manufacturing.
56
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
6 Community
Engagement
Dimension
Never Rarely Sometimes Often Always Rationale
6-1
(a)
Does the
organization
address the
carrying capacity
of the
community's
human capital –
The skills of
people in the
community?
1 2 3 4 5
Keurig
provides grants
which touch on
educating the
low-income
community
members.
(b) The abilities of
people in the
community?
1 2 3 4 5
Keurig
provides grants
that help the
community in
sustaining
themselves.
Example
creation of
community
gardens.
(c) The health of
people in the
community? 1 2 3 4 5
Keurig
provides
access to clean
water for the
community.
(d) The education of
people in the
community? 1 2 3 4 5
Keurig invests
in awareness
and education,
and
collaboration.
57
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
6-2
(a)
Does the
organization
address the
carrying capacity
of a community's
social capital -
The connections
between people in
a community: the
relationships of
friends, families,
neighborhoods,
social groups,
businesses,
governments?
1 2 3 4 5
Keurig created
a new
relationship
with Citizens
through a
program such
as a Healthy
Bay.
(b) The connections
between people in
a community: the
ability to
cooperate, work
together and
interact in
positive,
meaningful ways?
1 2 3 4 5
Keurig
encourages
employees to
volunteer,
interact and
strengthen the
connection
with local
community
members.
6-3 Does the
organization
address the
carrying capacity
of a community's
built capital The
human-made
materials
(buildings, parks,
playgrounds,
infrastructure, and
information) that
are needed for
quality of life and
the community's
ability to maintain
and enhance those
materials with
1 2 3 4 5
Keurig
provides grants
that help built
community
gardens.
58
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
existing
resources?
6-4 Does the
organization
provide a long-
term view of the
community?
1 2 3 4 5
Keurig has an
ambitious 2020
sustainability
targets.
6-5
(a)
Does the
organization
address the issue
of equity or
fairness –
Between current
community
residents (intra-
generational
equity)?
1 2 3 4 5
Keurig wants
to improve the
livelihoods of
the supply
chain
members.
(b) Between current
and future
residents (inter-
generational
equity)?
1 2 3 4 5
Keurig has
recently
launched a
leadership
program
targeting
youth.
6-6 Are sustainability
indicators
understood and
used by the
intended
audience?
1 2 3 4 5
Keurig
monitors it
employee
knowledge
and
understanding
of the company
sustainability
plan.
59
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
6-7 Does
organizational
sustainability
indicators
measure
sustainability at
the expense of
another
community or at
the expense of
global
sustainability?
1 2 3 4 5
Keurig
integrates
sustainability
into everything
they do.
60
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Analysis of Audit
KEURIG AUDIT RATINGS AND RATIONALE BY DIMENSION
Corporate Governance
Dimension: 1-1 Does the organization have a business case for its sustainability approach?
Ranking: 5
Keurig Green Mountain Inc. includes a SWOT analysis in its annual report to provide an
overview of market conditions, costs of sustainability, weather risks, competitor’s actions, and
political conditions. The company highlights the importance of sustainability to its brand name,
employee relations, and customers. The annual report also includes the specific focus of the
company’s sustainability efforts.
Dimension: 1-2 The organization has defined sustainability targets or goals?
Ranking: 5
Since 2005 Keurig has provided a separate report on its sustainability targets and goals. In 2013
the company updated its values and commitment to sustainability. The 2014 sustainability report
included Keurig’s 2020 goals and the progress made to date in reaching the goals.
Dimension: 1-3 Organizational management communicates its vision to all levels of staff
through different forms of communication.
Ranking: 5
Keurig Green Mountain Inc. communicates it vision to all levels of staff through its orientation
program, employee website, employee committees, and employee programs.
61
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Dimension: 1-4 Is an updated vision and results of sustainability communicated to the
entire workforce on an annual basis?
Ranking: 5
Keurig Green Mountain holds quarterly town hall meetings with all staff (four times a year).
Dimension: 1-5 There is a requirement for suppliers to have a sustainability policy in
place.
Ranking: 4
Keurig Green Mountain Inc. has Supplier Guidelines which cover business integrity and legal
compliance, grievance mechanisms, rights of indigenous people, freely chosen employment,
child labor, wages and benefits, hours of work, freedom of association and collective bargaining,
freedom from discrimination and abuse, health and safety, environmental responsibility, raw
material sourcing and conflict minerals, and animal testing. The objective of this is to promote
social and environmental responsibility and respectful supplier working conditions. While this is
not a sustainability policy, it contains many of the requirements that a sustainability policy would
contain.
Dimension: 1-6 The organization measures its goals for sustainability and reports its
progress to all stakeholders.
Ranking: 5
In the 2014 sustainability report, the company listed its 2020 goals and the progress that it had
made to date in reaching its goals.
62
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Dimension: 1-7 The organization's code of conduct for purchasing incorporates sustainable
practices required by suppliers.
Ranking: 5
Keurig’s code of conduct incorporates sustainable practices required by suppliers through its
supplier guidelines. Suppliers are required to use the code of conduct to guide practices and
policies. The company will not do business with suppliers who violate the code of conduct.
Dimension: 1-8 The organization established a sustainability committee to champion its
vision.
Ranking: 5
The company has a sustainability committee that provides a board-level oversight of strategy,
goals, policies, and program and consists of Chief Sustainability Officer and at least three board
members. The committee sets the sustainability goals, reviews and provides guidance on the
sustainability programs, looks at external political and public policies issues, reviews and
approves the annual sustainability report, reviews the effectiveness of the company’s
communication on sustainability, and completes a self-evaluation on the performance of the
committee (Keurig Green Mountain , 2015).
Dimension: 1-9 Does the organization network with other industry experts, schools, and
enterprises in sustainability practices?
Ranking: 5
Keurig Green Mountain Inc. works with NGOs, customers, suppliers, governments, industry
groups, growers, shareholders, and employees for its sustainability practices. In 2014 it held an
63
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Asian Manufacturing Summit, held Intercambio events with agricultural suppliers, and hosted its
first water summit with private, public, and NGO sectors.
Dimension: 1-10 An independent audit of the issues and concerns related to sustainability is
completed.
Ranking: 5
Keurig uses independent registered public accounting firm, PricewaterhouseCoopers, LLP, to
perform an independent audit of its financial statements. The audit committee oversees and
monitors Keurig’s management and the independent registered public accounting firm
throughout the financial reporting process. This includes the internal audit of the sustainability
report.
Dimension: 1-11 Does the organization voluntarily publish their sustainability activities and
progress publically?
Ranking: 5
Through its annual sustainability report, Keurig publically publishes its sustainability activities
and progress. The sustainability report also serves as its annual communication on its progress to
the United Nations Global Compact (UNGC). Keurig also provides updates on its website.
Dimension: 1-12 Does the organization provides sustainability education to all stakeholders
as part of ongoing development and understanding?
Ranking: 5
64
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig conducts employee satisfaction surveys, hold quarterly town hall meetings, offers
employees “Source trips” to coffee-growing and brewer-manufacturing communities, and CEO
location visits, and encourages employee volunteerism. The company also offers education
incentives to its employees through its benefits program. Keurig provides suppliers with
guidelines, assessments, and follow-up. For customers, it directs engagement with consumers for
education and awareness-raising on sustainability issues, holds fundraising campaigns that
encourage consumers to support important causes and share them with their communities, and
conducts regular consumer surveys. The shareholders have quarterly earnings announcements
and press releases, analyst/investor presentations and meetings, webcasts and conference calls,
annual meetings, participate in investor conferences and road shows, one-on-one meetings and
investor visits to Keurig Green Mountain. Keurig also conducts socially responsible investment
surveys. Furthermore, Keurig offers regular consultations with NGOs and gathers feedback
through their monitoring and evaluation guide for funded projects. With industry groups, Keurig
collaborates to hold summits and form partnerships to tackle complex issues.
Dimension: 1-13 The organization reviews its sustainability plan annually.
Ranking: 5
Keurig Green Mountain established a sustainability committee that annually reviews and revises
its sustainability plan. The committee sets sustainability goals, reviews and provides guidance on
sustainability programs, looks at external political and public policies issues, and reviews and
approves the annual sustainability report. It also reviews the effectiveness of Keurig’s
communication on sustainability, and reviews and conducts a self-evaluation on the performance
of the committee.
65
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Environment
Dimension 2.1 Stakeholders are consulted and actively participate in the creation of the
sustainability plan.
Rating: 4
In 2013, the External Advisory Panel was created and includes the membership of external
stakeholders from a variety of organizations. The purpose is for the group to provide guidance,
advice and challenge the Executive Team and Sustainable Leadership Committee. The group
meets a minimum of three times per year. The company also holds quarterly Town Hall meetings
to engage other stakeholders. NGO’s are actively consulted and partnered with to improve
agricultural conditions. An example is a partnership between NGO’s, government, and farmers
to support growers experiencing coffee rust within their plants.
Dimension 2.2 Commitment from the CEO that environmental sustainability is a priority
through promotion, financial backing, and general involvement.
Rating: 5
The CEO demonstrates commitment through the voluntary production of a detailed annual
sustainability report. The report includes measurements and includes three years’ worth of data
for easy comparison of progress or weaknesses. The report is also written and presented in a way
that it is easily comprehended by the general public. A dedicated, permanent Chief Sustainability
Officer position exists and the Board of Directors includes a Sustainability Committee which
oversees the company’s targets and activities. Keurig also hosted the first annual conference on
66
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
water - CURRENT: Collaborating for a Water-Secure World. Keurig is developing a centralized
data management tool to monitor the progress of initiatives.
Dimension 2.3 Environmental sustainability measures appropriately communicated to
stakeholders.
Rating: 5
Keurig publishes an annual sustainability report that is easily found on its website. The CEO and
Chief Sustainability Officer heavily promote these goals at every opportunity in interviews,
through blogs, partner organizations, and employee programs. These organizations include
recycling companies, water conservation partners, and employee programs such as the Employee
Community Grant Making Program. In this program, employees have the responsibility to
allocate grant money to organizations and projects that meet specific targets regarding water
stewardship and food sustainability.
Dimension 2.4 The sustainability plan includes long-term goals.
Rating: 1
Goals developed in 2014 set only to 2020.
Dimension 2.5 The organization is committed to improving water efficiency and usage.
Rating: 4
67
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
A goal is set to balance the water used in Keurig’s 2020 brewed beverage volume of all
beverages, ounce for ounce. For each ounce used, an ounce of clean water will be returned. In
2014, an update to its water policy was completed surrounding the organization's commitments
to water conservation. The largest proportion of water usage is the rainwater used in Arabica
bean growth. All beans used are Arabica, which is a type of bean that does not require irrigation,
lessening the environmental impact.
Dimension 2.6 The organization is committed to improving water quality.
Rating: 1
The company has not completed an assessment of its own water quality and waste water quality
and/or amount. Keurig has made a commitment that by 2020, it will restore an equal amount of
water for each one used. However, it has not considered the amount of waste water reintroduced
into the environment in this 2020 calculation.
Dimension 2.7 The organization promotes the re-use of materials.
Rating: 2
Creation of the Grounds to Grow Program for workplaces in the United States where used K-
cups are collected and the grounds are composted. Brewing machines returned to retailers are
refurbished for display or store models.
Dimension 2.8 The organization demonstrates efforts to reduce packaging.
68
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Rating: 2
Keurig belongs to the Sustainable Packaging Coalition and works with other companies on
packaging issues related to recycling and end-of-use. It also belongs to the Product Sustainability
Round Table, which brings together businesses to share and learn from each other about
developing more sustainable products.
Dimension 2.9 There is a commitment to recycling through internal recycling programs
and the usage of recyclable products.
Rating: 4
By 2020 Keurig has committed that all of its products will be 100% recyclable. It is a part of the
Closed Loop Fund and has committed to invest $5 million over five years to support the
development of recycling infrastructures. Keurig actively works with groups to solve problems
and understand issues related to plastics recycling. All new products must consider the resources
used and the environmental impact before developing. All new products created are more
recyclable. Keurig works with retailers to utilize returned Keurig machines and send those that
cannot be fixed to recyclers that are certified by sustainable electronics recycling international
and have a zero waste to landfill policy.
Dimension 2.10 The organization is committed to improving air quality and reducing its
carbon footprint.
Rating: 3
69
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Packaging foam used in inserts was changed to one that is smaller, resulting in fewer trucks
needed to transport materials. Driving habits have also improved as a result of GPS tracking
added to each vehicle in 2013. Route tracking provides data on factors such as speed, idle time,
and route efficiency. By the end of fiscal 2015, 21% of the fleet will be converted to propane,
further reducing emissions produced by each vehicle by 24%. New vehicles purchased are also
smaller and more fuel efficient models. Keurig has already met its 2020 target of reducing GHG
emissions by 25% of its 2012 baseline.
Dimension 2.11 Demonstrated commitments towards the reduction of solid waste.
Rating: 4
A 2020 target of zero waste-to-landfill at Keurig’s owned and operated manufacturing and
distribution facilities was developed. Two plants are already at 90% diversion or higher.
Manufacturing and facility diversion rates also increased from 2012 to 2014.
Dimension 2.12 There is an active effort towards reducing energy consumption and
increasing efficiency.
Rating: 3
Overall estimated emissions are down and Keurig has already met the 2020 goal of reducing
GHG emission by 25% over its 2012 baseline. The Grounds to Grow on Program also
successfully produces waste to energy. New buildings contain solar panels and LED lighting to
reduce energy usage. Excess solar energy generated is sold back to the grid.
70
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Dimension 2.13 There is a commitment to the preservation of land and habitat.
Rating: 1
Preservation is focused mainly on water conservation in order to support communities and to
ensure adequate crop growth.
Dimension 2.14 Environmental impact is considered when renovating or building
new facilities.
Rating: 4
Office spaces are energy efficient and six buildings in the United States are LEED Gold certified.
The newest building includes a green roof with solar panels, a rainwater harvesting system, low-
flow plumbing, LED lighting, and the use of recycled materials.
Dimension 2.15 There are formal policies in place for environmental initiatives.
Rating: 3
There are formal policies dedicated to water conservation, the environment and climate change
that specify Keurig’s expectations and commitment.
Dimension 2.16 There is a sustainability committee with membership from all levels of the
organization.
Rating: 2
71
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
There is a dedicated sustainability committee at the board level and an internal leadership level
committee. Employees can also participate in sustainability programs such as the Employee
Grant Making Committee. There does not appear to be one committee that includes all level of
employees.
Dimension 2.17 Employees are aware of why environmental stewardship is important to the
company.
Rating: 4
Keurig set a 2020 target to engage 100% of its employees in understanding the company's vision
and values so it can help contribute to set targets. In addition, Keurig has implemented an annual
employee satisfaction survey and asked the question, “Are you able to bring our Company’s
values to life in your everyday work,” to which they received a 72% positive response rate
(Keurig Green Mountain Sustainability Report, 2014). Employees are also afforded the
opportunity to go on “Source trips” to coffee growing and brewer manufacturing communities.
Employee volunteerism is also encouraged both during work and personal time. Unfortunately,
from 2012 to 2014 there has been a decrease in the number of volunteer hours by 13.7% (Keurig
Green Mountain Sustainability Reports, 2015).
Dimension 2.18 The organization works with suppliers who also have sustainability
programs.
Rating: 4
72
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig Green Mountain created a Responsible Sourcing Supplier Guideline in 2007 to promote
social and environmental responsibility through its suppliers. It was updated in 2014 to be clearer
and include a greater expectation around raw materials and conflict minerals. Direct suppliers are
required to read and sign the document on an annual basis to ensure adherence. Since 2012,
Keurig has also hosted an annual international manufacturing summit to share best practices,
ensure quality, and heightened understanding of responsible sourcing guidelines (Keurig Green
Mountain Sustainability Reports, 2015).
Dimension 2.19 Initiatives are implemented on a global basis.
Rating: 4
The Farm ID program allows Keurig to know exactly who produces its coffee so it can get a
better understanding of how it is produced. The 2020 target is set at 100% and by fiscal 2014
Keurig was at a 64% compliance rate in knowing exactly which supplies their coffee originates
(Keurig Green Mountain Sustainability Report, 2014). A related 2020 goal is to significantly
improve the livelihoods of one million people within Keurig’s supply chain through water
resiliency and water security. This information is discussed in the Social/Cultural section.
Social Cultural
Dimension 3-1 Does the organization build a workforce that embraces diversity and helps
to strengthen the whole?
Rating: 5
73
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Keurig adheres to a special code of conduct that states that the company provides equal
employment opportunities to all people and respects ethnicity, religion, gender, age, marital/civil
union status, sexual orientation, veteran status, and disability. Keurig strives to ensure there is
no discrimination in its workplaces. The company adheres to the Respectful Workplace and
Anti-Harassment Policy. The company also creates preferential opportunities for women and
youth in the supply chain. In 2014, minority persons working at Keurig in the United States
constituted 9% of management and 20% of the total workforce. Women constituted 36% of
management and 37% of the total workforce (Keurig Green Mountain Sustainability Report,
2014). These percentages suggest that Keurig should strive to create a more diverse workforce.
Dimension 3-2 Is diversity displayed through the composition of the board of directors?
Rating: 3
Three women are on the eleven-member board of directors and four women represent the 16
executive officers within the company (Keurig Green Mountain Sustainability Report, 2014).
Keurig should strive to increase the presence of visible minorities and those with disabilities in
its workforce and on its board of directors.
Dimension 3-3 Does the organization contain a health and safety network that provides
measurable results?
Rating: 5
Keurig uses the Organizational Health Index (OHI) to track and help the company improve its
health performance. The company provides incentives for employees to complete health
screenings for common diseases and health concerns and undertakes safety training. The
74
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
company adheres to a well-defined safety network by tracking and publishing injury types and
rates.
Dimension 3-4 Does the organization demonstrate that it gives back to the community?
Rating: 5
Keurig demonstrates strong philanthropic initiatives to alleviate poverty and hunger in coffee-
growing communities. Its investment in Coffee Kids helps improve the lives of children and
families in remote coffee-growing villages. Other philanthropic initiatives the company
undertakes include FomCafe, the Coffee Farmer Resilience Initiative (CFRI), and the Coffee
Farmer Resilience Fund. There is a focus on providing loans to help cash-strapped farmers.
Dimension 3-5 Does the organization support employee involvement in volunteerism?
Rating: 3
Keurig encourages and tracks employee volunteerism efforts, however, employee volunteerism
has been trending downwards. Total employee volunteer hours were 57,755 in 2014, 64,250 in
2013, and 71,610 in 2012. Further, the total percent of employees that volunteered were 51.2% in
2014, 62% in 2013, and 64.9% in 2012 (Keurig Green Mountain Sustainability Reports, 2015).
These results suggest the company needs to encourage and support increased rates of employee
volunteerism.
Dimension 3-6 Does the organization assist in building leaders for tomorrow?
Rating: 5
75
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Leadership is a key corporate strategy at Keurig and supervisors and managers are taught to lead
by example as a form of mentorship. Keurig has developed new leadership programs designed to
develop necessary business acumen, leadership capabilities, enhance marketplace expertise, and
boost technical competence. A new multi-day leadership program immerses’ employees in all
aspects of the business. The new manufacturing leadership program developed in 2014 places
new engineering college graduates into 14-month rotational assignments that allow participants
to learn about all aspects of the product lifecycle (Keurig Green Mountain Sustainability Reports,
2015).
Dimension 3-7 Does the organization screen suppliers using labor practices criteria?
Rating: 5
Keurig released an updated version of the Responsible Sourcing Supplier Guidelines that
includes expanded definitions of working with migrant workers, child labor, business integrity,
the rights of indigenous people, and raw material sourcing (including conflict minerals). The new
guidelines are in accordance with international standards. In 2014, Keurig dedicated significant
resources to communicating the guidelines across the supplier chain and going forward suppliers
will be required to read, acknowledge, and agree to adhere to the guidelines on an annual basis
(Keurig Green Mountain Sustainability Report, 201).
Dimension 3-8 The organization complies with labor laws.
Rating: 5
Keurig complies with labor laws and the Responsible Sourcing Supplier Guidelines follow:
business integrity and legal compliance, grievance mechanisms, rights of indigenous people,
freely chosen employment, child labor, wages and benefits, hours of work, freedom of
76
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
association and collective bargaining, freedom from discrimination and abuse, health and safety,
environmental responsibility, raw material sourcing and conflict minerals, and animal testing.
Dimension 3-9 Conducts regular performance reviews.
Rating: 5
Keurig provides detailed job descriptions and conducts regular employee performance reviews as
a means for measuring, evaluating, and providing feedback on performance.
Dimension 3-10 Stakeholders are regularly consulted to discover legitimate concerns and
interests.
Rating: 5
In 2013, Keurig formed an External Advisory Panel (EAP) designed to engage a wide range of
stakeholders. The group is comprised of eight stakeholders and convenes three times per year to
provide perspective and challenges to the Sustainability Leadership Committee and Executive
Leadership team. Stakeholders have voiced that they prefer all environmental and social
sustainability targets to be clearly articulated to all investors.
Economic Dimension
Dimension 4-1 Are sustainability initiatives considered when approving major financial
decisions?
Rating: 4
The Keurig Green Mountain Integrated Sustainability Model demonstrates how all major
financial decisions are evaluated through the sustainability lens. Keurig’s annual report indicates
77
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
that more than $55.7M has been allocated to sustainability programming and projects in the past
year. This illuminates an increase of more than $18.7M over the previous fiscal year (Keurig
Green Mountain Sustainability Report, 2014). The report references integration of the 2020
targets into the plans and objectives of the business unit and a newly developed, centralized data
management tool to measure and track progress towards those targets. Areas for improvement
might include a direct report for the data management tool once it is in place so that public and
private stakeholders can respond (Keurig Green Mountain Sustainability Report, 2014).
Dimension 4-2 Does the organization’s infrastructure investment extend into the
community?
Rating: 5
In 2014, Keurig’s product donations program which had accounted for $1.6M in 2013, shifted its
focus on communities to align with the new strategic priorities. As part of Keurig’s sustainability
strategy, it plans to engage more than one million people as participants along its supply chain
and significantly improve their livelihoods. To do this, Keurig has included initiatives in the
areas of water security and climate protection. In fiscal 2014, Keurig’s community investment
program focused on water stewardship and sustainable food systems because this is also
important to its operating and global supply chain communities. In its sustainability report,
Keurig notes investment in four partner organizations: the charity - Water (Rwanda); Global
Water Initiative (GWI), Raise the River, and American Rivers where it has invested almost
$12M in the 2014 fiscal year. Due to the active engagement in this area, there are no
recommendations for improvement at this time.
78
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Dimension 4-3 Does the investment management policy incorporate sustainability risk
factors?
Rating: 3
The Annual Report does include sustainability risk factors, however; they appear towards the end
of the list and do not indicate a priority for Keurig. In the sustainability report, however, the
Supply Chain Outreach section goes into great detail about Keurig’s understanding of the risk
but little information is given about the investment policy that surrounds it. Areas for
improvement would include the collating of risk factors into segments and clearer identification
of how it will directly impact financial policy.
Dimension 4-4 Does the organization invest in the economic well-being of employees?
Rating: 4
The Keurig Green Mountain Fiscal 2014 Stakeholder Engagement Table was developed as part
of the sustainability report. Within the table, employees are listed as the number one stakeholder.
The annual report illuminates the offerings of Employee Retirement Plans, Canadian Group
Registered Retirement Savings Plans (GRRSP) and a Deferred Profit Sharing Plan (DPSP).
There is also an Employee Stock Purchase Plan and a robust Employee Retention and
Development plan. Areas for development would be to collate the information regarding the
economic well-being of employees into one document that employees and outside stakeholders
can review (Keurig Green Mountain Sustainability Reports, 2015).
Dimension 4-5 Are sustainability initiatives quantified as to their ROI?
Rating: 2
79
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Although a great deal of information exists on the Keurig Green Mountain sustainability
initiatives, research did not yield any clear quantification of resulting ROI. As the company only
recently shifted its initiatives from more “greenwashing” type activities to more clearly
connected practices, it may be that ROI has not yet been fully drawn.
Dimension 4-6 Is there a procurement best practices document reflecting sustainability
initiatives?
Rating: 5
Keurig published its original Supplier Source Guidelines in 2007. After Chief Sustainability
Officer, Oxender, was hired in 2014 one of her first tasks was to update the guidelines. The
guidelines are applicable to all aspects of Keurig’s supply chain and fully align with eight
international standards (Supplier Guidelines, n.d.). The Supplier Source Guidelines are very
comprehensive and include: Keurig’s expectations in the areas of business integrity and legal
compliance; grievance mechanisms; rights of indigenous people; freely chosen employment;
child labor; wages and benefits; hours of work; freedom of association and collective bargaining;
freedom from discrimination and abuse; health and safety; environmental responsibility; raw
material sourcing; conflict minerals; and animal testing (Supplier Guidelines, n.d.).
Dimension 4-7 Does the company and brand include sustainability initiatives that align
with customer values?
Rating: 3
As part of the Keurig Stakeholder Engagement Table, Keurig notes that it engages customers by
providing direct education on sustainability issues, by creating fundraising campaigns that
80
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
encourage consumers to support important causes and share them with their communities, and by
regular consumer surveys (Keurig Green Mountain Sustainability Reports, 2015). Both
customers and non-customers have criticized the company for the non-recyclability of K-cups
almost since its inception. Although the creation of a recyclable K-cup is a 2020 target, Keurig is
a laggard in this regard.
Dimension 4-8 Does the organization seek profit in its operations (supply chain) through
sustainability initiatives?
Rating: 2
Investment into sustainable supply chain management practices is clear from the Sustainability
Report. However, research indicated that there appear to be no connections between the
initiatives and profit.
Technology Dimension
Dimension 5-1 The organization utilizes effective information systems to collect and
analyze data.
Rating: 4
Keurig does have a large IT department which includes an information system. Its annual and
sustainability reports contain plenty of information, however, there is no way to determine if
Keurig is being completely transparent.
Dimension 5-2 The organization reports its science and technology mechanisms to the
World Summit on Sustainable Development (WSSD).
81
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Rating: 1
There is no mention of Keurig on the World Health Organization website or in Keurig’s annual
or sustainability reports. No reports are located in the World Summit on Sustainable
Development (WSSD). The WSSD reports do not mention any data received from Keurig.
Dimension 5-3 There is an established research and development (R & D) department for
continual improvement
Rating: 5
Keurig has a large budget for R&D. Out of eleven locations in the United States, two are for
R&D activities.
Dimension 5-4 The R&D department has an adequate budget to enable the
development of new technology.
Rating: 5
From 2010 to 2012, Keurig increased spending on R&D by 226%. In 2013 alone, they spent
over $130 million on R&D (Keurig Green Mountain Sustainability Reports, 2015).
Dimension 5-5 The organization introduces energy saving technology as new
technologies become available.
Rating: 5
As can be seen in the 2014 sustainability report, Keurig is committed to reducing greenhouse
gasses and running its organization with less impact on the environment.
82
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Dimension 5-6 The organization uses research-manufacturing processes which would
reduce environmental impact.
Rating: 4
New technology is utilized to reduce the amount of water wasted in the brewing process. Water
to coffee ratio is optimized to reduce waste of both water and coffee.
Community Engagement
Dimension 6-1(a) Does the organization address the carrying capacity of the community's
human capital – the skills of people in the community?
Rating: 3
Sustainable food systems investment grants included programs such as food donations to low-
income populations, community gardens, and education (Keurig Green Mountain Sustainability
Report, 2014).
Dimension 6-1(b) Does the organization address the carrying capacity of the community's
human capital – the abilities of people in the community?
Rating: 3
Sustainable food systems investment grants included programs such as food donations to low-
income populations, community gardens, and education (Keurig Green Mountain Sustainability
Report, 2014).
Dimension 6-1(c) Does the organization address the carrying capacity of the community's
human capital – the health of people in the community?
83
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Rating: 5
Water stewardship investments focused on areas including access to clean water (Keurig Green
Mountain Sustainability Report, 2014).
Dimension 6-1(d) Does the organization address the carrying capacity of the community's
human capital – the education of people in the community?
Rating: 4
Water stewardship investments focused on areas including awareness and education, and
collaboration (Keurig Green Mountain Sustainability Report, 2014). Sustainable food systems
investment grants included programs such as community gardens, and education (Keurig Green
Mountain Sustainability Report, 2014).
Dimension 6-2 (a) Does the organization address the carrying capacity of a community's
social capital – The connections between people in a community: the
relationships of friends, families, neighborhoods, social groups,
businesses, governments?
Rating: 3
Keurig created a new relationship with Citizens for a Healthy Bay to support middle-school
water education and sampling (Keurig Green Mountain Sustainability Report, 2014).
Dimension 6-2(b) Does the organization address carrying capacity of a community's social
capital – The connections between people in a community: the ability to
cooperate, work together and interact in positive, meaningful ways?
84
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Rating: 4
Employees at Keurig volunteer to provide avenues to apply skills and deepen connections with
local non-profit organizations. It is currently working to expand the CAFE program to include
more skills-based volunteerism and to strengthen connections to water projects (Keurig Green
Mountain Sustainability Report, 2014).
Dimension 6-3 Does the organization address the carrying capacity of a community's built
capital, the human-made materials (buildings, parks, playgrounds,
infrastructure, and information) that are needed for quality of life and the
community's ability to maintain and enhance those materials with existing
resources?
Rating: 3
Sustainable food systems investment grants included programs such as food donations to low-
income populations, community gardens, and education (Keurig Green Mountain Sustainability
Report, 2014).
Dimension 6-4 Does the organization provide a long-term view of the community?
Rating: 5
Ambitious 2020 sustainability targets include encouraging employees to connect more deeply to
these issues and within their communities (Keurig Green Mountain Sustainability Report, 2014).
Dimension 6-5(a) Does the organization address the issue of equity or fairness – between
current community residents (intra-generational equity)?
85
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
Rating: 4
Keurig has set a target to engage one million people in its supply chain to improve their
livelihoods including water security and climate resilience (Keurig Green Mountain
Sustainability Report, 2014).
Dimension 6-5(b) Does the organization address the issue of equity or fairness – between
current and future residents (inter-generational equity)?
Rating: 2
Keurig recently launched a new manufacturing leadership program that places new engineering
college graduates into rotational assignments over a 14-month period at the company (Keurig
Green Mountain Sustainability Report, 2014).
Dimension 6-6 Are sustainability indicators understood and used by the intended
audience?
Rating: 4
In Keurig’s 2014 OHI survey, 72% of employees affirmed they are “able to bring Keurig’s
company’s values to life in everyday work” (Keurig Green Mountain Sustainability Report,
2014).
Dimension 6-7 Does organizational sustainability indicators measure sustainability at the
expense of another community or at the expense of global sustainability?
Rating: 4
86
KEURIG GREEN MOUNTAIN INC. SUSTAINABILITY AUDIT
In addition to supporting coffee farmers, Keurig is looking internally and integrating
sustainability into everything it does, from operations to business planning. In addition, Keurig is
looking externally and focusing directly on the areas of interest and overlap between benefits for
society, the environment, and the company (Keurig Green Mountain Sustainability Report,
2014).
top related