Coffee Shops

When it comes to ethics, the cup your coffee comes in has become as big an issue as the coffee itself.

This guide will take a look at the problem of single-use coffee cups and analyse some of the solutions. We also give you the low-down on who offers what in terms of Fairtrade, organic, dairy free, reusable cup discounts and more. We also discuss how a number of coffee shop chains are paying little to no corporation tax in the UK.

Mintel recently surveyed consumers on their coffee purchasing, asking where they had bought a coffee in the last three months. Of the people surveyed, 48% had bought a coffee in Costa, 29% in Starbucks, 27% at an independent coffee shop and 24% at a fast food outlet. 

Two companies from our list of the five most unethical companies made moves into this industry in January 2019: Coca-Cola with its takeover of Costa Coffee, and Nestlé with its new licensing deal to sell Starbucks-branded coffee.

Table highlights

Tax avoidance

In 2018, AMT Coffee became the first high street coffee chain to be awarded the Fair Tax Mark – a real badge of distinction in an industry which has long been seen as a prime example of tax avoidance. While there have been claims from some of the high street shops that they are improving their act, is that really the case?

Caffè Nero is one of the prime examples of tax avoidance – it has not paid corporation tax in the UK since 2007. Owner Gerry Ford took the company off the stock exchange in 2007, borrowing substantially to do so, and loading the company with debts – currently around £300 million. The interest payments on these loans are higher than the profits of the company, meaning that no part of it has had to pay corporation tax since.

How does this compare with some of the other players? Starbucks paid $5.9 million in tax in the year ending October 2017, which does contrast with its previous contributions – in 14 years to 2015, it paid just over $8 million for all those years combined – despite taking over £3 billion in sales. On the face of it, that’s a definite improvement.

However, the sheer complexity of Starbucks’ filings means that it is nearly impossible to tell whether its approach to tax has actually improved. With staggered filings at Companies House, and an absence of country-by-country reporting, showing exactly where profits have been made, it is very difficult to say.

Pret a Manger is another company to have offset its UK profits against losses from other parts of its business. In 2016, the pre-tax profit for the company in the UK was £86 million. In theory, that would have resulted in it paying around £17 million in corporation tax. Instead, it offset losses elsewhere to result in a payment of just £5 million. Pret was bought earlier this year by Luxembourg-based JAB, which holds Ethical Consumer’s worst rating for likely tax avoidance.

It is difficult to know what will happen to Costa Coffee following its recent takeover by Coca Cola –although its record on tax prior to the takeover was good. Last year it paid £24.7 million in taxes on profits of £103 million – over the headline rate of corporation tax. However, in the same period, Coca Cola in the US was paying 15% below the corporate rate of 35% (admittedly a tax rate above that of the UK’s). Time will tell whether the takeover will move Costa towards the tax avoidance practices seen elsewhere in the industry.

As is always the case, the likes of Starbucks and Caffe Nero will point out that they pay all the tax that they are legally required to in the UK. However, the difference is between aiming to pay the right amount of tax in the right place at the right time – such as AMT Coffee – and having a clear strategy of minimising corporation tax.

How the companies rated

Workers’ Rights

As hospitality and catering are industries with traditionally low wages, we marked down companies that were not publicly committing to paying the Real Living Wage. Every company lost half a mark for this.

Controversial Technologies

Every company also lost half a mark under Controversial Technologies for a lack of a clear company wide policy of sourcing entirely GMO free (including animal feed).

Habitats and Resources

Every company except Boston Tea Party lost half a mark here for selling fish that was not certified sustainable.

Climate change

See our carbon management and reporting ranking of nine coffee shops to see how they compare on climate change.

Here is a summary:

Franchises 

You may think that the sign above a coffee shop tells you what company you’re about to spend money with, but the reality is often different. Many of the major coffee companies featured in this guide operate franchise models, handing over their branding to other companies (effectively wholesale customers) in exchange for fees.

Brand owners often retain a great deal of control over franchisees whilst shirking any requirements to maintain ethical (or indeed legal) standards on the ground. Crucially, workers are employed by franchisees, which determine pay and conditions.

Sometimes the franchisee companies are small independent businesses. But not always.

Service stations host an array of different shop fronts but all of the outlets in one service station are usually owned by the same company, operating multiple franchises. The choice about which company you buy from therefore happens at the slip road junction. But your ethical choice is not completely limited as the supply chains of the different outlets will be different. Franchise arrangements do vary but the coffee sold will be likely to have come through the supply chains of the company that owns the brand name (for example, Costa).

Motorway service areas are dominated by three companies: Moto (45 locations), Welcome Break (27 locations) and Roadchef (21 locations). When Extra (10 locations) opened their first services in 2001, they pledged not to operate franchises, but now other companies lease units from them which are run as franchises. We can also see a similar pattern in train stations and airports where SSP Group, who own Ritazza, also own many of the other outlets found in the same locations, for example Upper Crust.
 

Certifications and vegan options – who does what?

We take a closer look at how each of our brands is performing when it comes to providing an ethical product.

If you want your hot drinks to align with your values, then certification can be very useful. The main certifications you are likely to see in relation to your coffee, tea or hot chocolate are Fairtrade and Rainforest Alliance. 

Organic is especially important when it comes to having dairy milk in your coffee. Organic certification ensures that the cows the milk came from are not fed with genetically modified animal feed. This is usually in the form of GMO soya beans. GMO products are linked to a multitude of issues such as seed patenting and an increased use of mono-crops and harmful chemicals, as well as being invariably linked to large, and very powerful, multinationals. For example, Bayer, which since the £47 billion acquisition is the new name for all things Monsanto – complete with a rather unsettling slogan of “Bayer and Monsanto: advancing together as one”.

The Organic Consumers Association has a long-standing boycott call against Starbucks until it switches to organic milk. This is, in part, related to the fact that Starbucks is a member of the Grocery Manufacturers Association (GMA). In 2014, the GMA tried to sue the state of Vermont to get it to overturn its GMO labelling laws. It is probably not surprising that Monsanto was also a member of the GMA and was instrumental in this case.

See our feature on coffee and tea certification schemes for profiles on each one. 

Disposable coffee cups

What’s the problem?

Along with plastic straws, water bottles and carrier bags, the take-away coffee cup has become a poster child for our plastic problem. It is not surprising considering that, in the UK alone, we throw away between 2.5 and 3.75 billion coffee cups each year, and that fewer than 1 in 400 cups are actually recycled.

Each coffee cup can take up to 30 years to degrade – and by degrade we really mean break down into parts too small to be easily detectable, rather than too small to do any damage. The plastic parts of the cup can also leach toxins into the environment as they break down. We have already got to the stage where micro-plastics are being found in our drinking water.

Why don’t more get recycled?

The term ‘paper cup’ is rather a misleading one. To stop your drink soaking through the cup they are lined with polyethylene – a non-biodegradable plastic. The plastic layer is fused to the paper at high temperature which makes it difficult to separate the two materials at the recycling stage.

What are the solutions?

With plastic pollution being such a hot topic right now, most of the coffee shops are discussing the issue. There are three main solutions proposed.

1. Improve recycling infrastructure

One solution is to keep the cups as they are but ensure that more of them are recycled. Currently, the coffee cup does not have much value as an item to recycle as there is very little return on the effort and cost of recycling them. This is because materials created from recycling simpler items will be cheaper. This explains why, despite so many cups being used, there are only three centres in the UK that actually recycle them.

Costa is attempting to double the value of cups as recycled items by paying waste collectors £70 per tonne as part of its scheme to recycle as many cups as it sells. “We believe that by creating a market for cups as a valuable recyclable material, we can transform the UK’s ineffective and inconsistent ‘binfrastructure’ and have made it commercially and financially attractive for waste collectors to put in place the infrastructure and processes to collect, sort and transport coffee cups to recycling plants”.

Unfortunately, this does not appear to have been very successful as it has only managed to recycle 14 million, compared to the 500million that they sell each year! It has been argued that the scheme was started as an attempt to persuade ministers that there was no need to introduce the ‘Latte Levy’. Caffe Nero, Coffee Republic and Greggs are also all making commitments to increase the proportion of cups that are recycled.

2. Redesign the take-away cup

Many within the industry are attempting to address this issue through a redesign of the take-away cup into ‘recyclable’, ‘biodegradable’ or ‘compostable’ versions. Esquires Coffee House, Harris + Hoole and Coffee#1 have all switched to compostable or biodegradable cups.

However, there are some significant problems with this approach. Firstly, the lack of consistency in what coffee cups are made of makes it difficult for consumers or recycling centres to differentiate between them. If a plastic-lined coffee cup ends up in the paper recycling the whole load can be contaminated – this means incorrect attempts to recycle coffee cups can actually lead to more recyclable material ending up in the landfill. 

Secondly, ones that are labelled ‘compostable’ cannot just be thrown onto your garden compost and need to be sent to a special plant to be composted. Many councils are not yet accepting them on the kerbside meaning that they can be just as difficult to recycle as the paper-polyethylene cups.

Thirdly, the plant starch used to replace the plastic also has the potential to do harm to the environment. As George Monbiot pointed out in reaction to a call for Starbucks and Costa to replace their plastic with corn starch: “Those who supported this call failed to ask themselves where the corn starch would come from, how much land would be needed to grow it, or how much food production it would displace. They overlooked the damage this cultivation would inflict: growing corn (maize) is notorious for causing soil erosion, and often requires heavy doses of pesticides and fertilisers.” The better solution will be one that addresses the whole culture of disposability instead of just exchanging one problem for another.

3. Reusable coffee cups

It’s not hard to guess where we are going with this –  switching to a reusable cup reduces impacts at both ends as it not only means fewer cups being thrown away, it also means fewer cups have to be created in the first place.

Hot drinks are also a particularly easy place to remove single-use packaging because there are no trade-offs about preventing them going off as there is with some fresh food items.

There is now a huge range of reusable cups on the market made from all sorts of materials including glass, bamboo and rice husks. The lids tend to be made of food-grade silicon which can also be recycled. There is even one made out of recycled coffee cups, which has the added bonus of increasing the value of recycled coffee cups which, aptly, links back, in a closed loop kind of way, to the first solution.

The main problem with this solution is that it relies on all consumers bringing their clean reusable cup with them everywhere.

The charge on plastics bags had a huge impact on making people bring their own bags but, unfortunately, MPs decided against the introduction of a similar 25p charge on single-use cups – although Starbucks has been trialling a 5p charge in some stores.

Boston Tea Party, our Best Buy in this guide, has made a bold move and eradicated take-away cups altogether. Customers can either bring their own reusable cup, buy one at the counter or borrow one using the deposit scheme.

France is the first country to completely ban single-use cups, as well as other disposable items. This will be taking effect in 2020. It would be great to see more businesses follow in the footsteps of Boston Tea Party, and our government to follow in the footsteps of France.