VZCZCXYZ0001
OO RUEHWEB

DE RUEHSJ #1952/01 2432305
ZNR UUUUU ZZH
O 312305Z AUG 06
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5990
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SAN JOSE 001952 
 
SIPDIS 
 
WHA/CEN 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: BEXP ECON ETRD ELAB SENV KSEP CS
SUBJECT: DUE DILIGENCE FOR THE SECRETARY OF STATE'S 2006 AWARD FOR 
CORPORATE EXCELLENCE-EMBASSY SAN JOSE NOMINATION 
 
REF:  A. STATE 133146  B. STATE 082043  C. STATE 064726 
 
¶1.  Embassy San Jos is pleased to respond to Ref. A questions 
regarding our nomination of Starbucks for the Secretary of State's 
Award for Corporate Excellence (ACE) in the Multinational Enterprise 
(MNE) category (refs b and c), as follows: 
 
A)  Could there possibly be any downside or embarrassment caused by 
the selection of your post's nominee? 
 
Post is not aware of any derogatory information about the company's 
operations in Costa Rica, where the company is well and favorably 
known.  There is nothing in Starbucks's Costa Rican operations of 
which Post is aware that is anything but exemplary. 
 
We would note that Starbucks operates in many other countries and 
that there have been U.S. domestic critics who claimed Starbucks is 
anti-union, (http://biz.yahoo.com/ap/060807/ 
starbucks_union_organizer.html). 
In addition, Starbucks has settled several cases in the National 
Labor Relations Board, without admitting wrongdoing. 
(http://www.okimc.org/newswire.php?story_id=1 512). 
 
However this seems to be contradicted by the fact that in 2006 
Starbucks was voted the 29th best company to work for in the U.S. 
and in 2005 they were voted 11th best according to 
http://en.wikipedia.org/wiki/Starbucks. 
 
B)  Do you have any information concerning job creation in the 
United States resulting from the operations of the company you 
nominated? 
 
Starbuck's had approximately 97,500 employees in the U.S. in 2005. 
During their FY 2005 the company created 15,900 net new jobs in the 
U.S. according to http://www.starbucks.com/aboutus/csrannualrep ort. 
asp?cookie%5Ftest=1.  The premium coffee supplied from Starbucks's 
Costa Rican operations represents more than one third of all the 
coffee they sell and is critical in maintaining the firm's positive 
reputation and fueling the growth of their brand. 
 
Starbucks says its customers wanted and now demand that the firm 
operates in a socially responsible way.  It therefore encourages 
social responsibility, especially in the countries that produce its 
coffee, which is now an important consideration for their patrons 
when justifying why they should pay premium prices for what was a 
commodity. 
 
Starbucks is not selling just premium coffee; it has staked its 
growth and future on selling a socially responsible product.  If the 
firm were to be recognized, it would no doubt use such recognition 
to emphasize that acting socially responsible makes good economic 
sense and can therefore lead to the creation of more jobs in the 
U.S., by far their primary consumer market. 
 
C)  What is your assessment of the company's trade and investment 
activities with regard to helping stimulate economic growth in the 
U.S. and increasing American exports (what is the U.S. content of 
its products)? 
 
According to this press release 
(http://investor.starbucks.com/phoenix.zhtml? c=99518 
&p=irol-newsArticle_print&ID=891207&highlight ): 
"Starbucks now expects to open at least 2,000 net new stores on a 
global basis in fiscal 2006, an increase of 200 new stores from the 
Company's previous target of 1,800. 
Starbucks is now targeting capital expenditures of approximately 
$800 million in fiscal 2006, an increase from the previous target of 
$750 million-$775 million, primarily driven by the acceleration in 
new store development." 
D)  What is the state of labor conditions in the company's 
facilities and are workers unionized? 
 
Starbucks's Costa Rican suppliers are primarily small family owned 
estates and cooperatives that work with them through Starbucks's 
Coffee and Farmer Equity (C.A.F.E.) Practices Initiative.  This 
initiative includes a component to encourage high labor standards. 
There is not a single example of unionized agricultural workers in 
Costa Rica, but the Costa Rican government believes they police 
rural working conditions well and effectively enforce their rules 
against child labor.  Starbucks verifies that its suppliers exceed 
local labor standards. 
 
In the U.S., Starbucks strives to promote partner (employee) 
satisfaction by ensuring an excellent benefit package.  Workers In 
the U.S. are not unionized. 
 
More extensive corporate responsibility information is available 
from their 2005 report: 
http://www.starbucks.com/aboutus/ 
csrannualreport.asp?cookie%5Ftest=1 
 
 
E)  Are you aware of any litigation pending in local courts 
involving the company? 
 
Post is unaware of any pending legal actions.  According to a 
database of legal actions filed in Costa Rica, there are no legal 
actions of record against Starbucks. 
 
F)  Please confirm that the Chief of Mission and others involved in 
the nominating process do not hold shares of stock or have other 
financial interest in the company. 
 
No one at post involved in this nomination holds shares or has any 
other financial interest in Starbucks. 
 
LANGDALE