Keurig Green Mountain has a history of disrupting the market for growth. Can it disrupt its own success to grow sustainably?
You know the saying – you can’t make an omelette without breaking eggs. Well you can’t make a cup of coffee without grinding beans. But does good coffee also have to create a mountain of non-recyclable, non-biodegradable waste? That’s the question Keurig Green Mountain (KGM) is facing.
Before buying Keurig back in 2006, Green Mountain was known for disruption. It drove specialty coffee into the US mainstream, was an early promoter of Fair Trade coffee (under the Newman’s Own Organics label), and worked to improve the livelihood of coffee growers. With the acquisition of Keurig – inventor of the capsule coffee machine – company growth spiralled upwards.
In its 2014 report, KGM’s sustainability goals and its targets for 2020 are clear. The company is focusing on building a resilient supply chain, innovating sustainable products and supporting “thriving people and communities”. Progress is being made. For example, in 2014 it achieved an 86% diversion of waste from landfill (up from 2013’s 73%) moving towards it target of zero waste to landfill by 2020. The company also traced 64% of its coffee to source, with the aim of 100% within five years. On the flip side, there was a decrease in company purchases of organically certified, Rainforest Alliance-certified and Fair Trade-certified coffee.
KGM has added water stewardship to its targets – a welcome addition in light of the world’s worsening water woes. By 2020, KGM’s goal (in North America) is to restore, for every cup of coffee customers brew, the same amount of water for natural and community use. The report says the company is also planning to reduce the lifecycle greenhouse gas (GHG) emissions of its brewed drinks by 25% by 2020 (compared with a 2012 baseline) and last year, it achieved a 4% reduction. After a GHG lifecycle analysis on its coffee “value chain” found that its brewing machines’ energy use accounted for more than half of emissions, KGM is also working on brewer energy reduction plans.
High notes include KGM’s Sustainability Committee of its board of directors, its external advisory panel on sustainability issues, and its 6% spend of pre-tax income on environmental and social initiatives. Prominent too in the report is KGM’s materiality matrix.
The company plans to update the matrix in 2015 – it is currently based on 2012 data – but it’s already clear that end-of-life waste from the company’s products is of high concern both internally and among stakeholders.
KGM says it is striving for 100% of Keurig K-cups, its disposable coffee capsules, to be recyclable by 2020. While its Vue, Bolt, and K-Carafe cups (about 5% of total cups) can be separated into paper, plastic, and metal components for recycling, the K-cup is the company’s Achilles heel when it comes to product sustainability. In 2014, by one estimate, enough K-cups were sold to circle the planet at least 10 times – 9.8bn of them – and K-cup’s inventor recently voiced regret over the product’s wastefulness.
Some 17.4m cups have been “recovered” to date, but K-cups are a “#7” plastic blend, hardly recycled in the US. A possible change to polypropylene design (#5) would improve recyclability potential and, to Keurig’s credit, it plans to invest $5m to finance recycling infrastructure.
Can KGM learn from other companies’ efforts to recycle quick-use products? Lessons from Starbucks’ coffee cup and the Coca-Cola plastic bottle prove it’s enormously difficult to do, making consumer-waste recycling efforts a somewhat optimistic sustainability goal. What’s more, given KGM’s past and forecast growth, these sustainability efforts risk being quite simply dwarfed by growth.
So what can Keurig do? Well, increase transparency on this issue, first and foremost. Second, it needs to scale up its level of ambition to keep pace with growth. As a company that prides itself on innovation and disruption, KGM now needs to disrupt its own success with resource-lean, non-waste-generating cups.
- Follows GRI? Uses G3.1 guidelines. Started to migrate to G4
- Assurance? Not mentioned in the report
- Materiality analysis? Yes
- Goals? Yes
- Targets? Yes
- Seeks feedback? Through an email address in the report
- Key strength: Well written, thorough
- Chief weakness: Doesn’t fully address recyclability of its K-cups
- Pleasant surprise: Adoption of water use goals
April Streeter is an associate with One Stone.coffee cr report CR report review Keurig