Managing environmental sustainability through various activities of companies within food industry: A case study of Nespresso and Starbucks Master thesis written by Linda Falberova MSc in International Business Economics Aalborg University November 2016 Supervisor: Li Thuy Dao Word count: 18,739 Table of contents Summary ......................................................................................................................................... 3 Introduction ..................................................................................................................................... 5 Problem formulation ................................................................................................................... 6 Structure of the work .................................................................................................................. 7 1. Philosophy of science ............................................................................................................. 9 1.1 Paradigm .......................................................................................................................... 9 1.2 Classification of paradigms .......................................................................................... 10 1.3 Own methodology ......................................................................................................... 12 2. Introduction to sustainability and sustainable development ............................................... 15 2.1 Three dimensions of sustainability ............................................................................... 17 2.2 The concept of value chain and its relation to sustainability ...................................... 18 3. Literature review ................................................................................................................... 21 3.1 Various approaches and practices to applying environmental sustainability ............ 22 3.2 Review of selected LCA studies ................................................................................... 25 4. Empirical research................................................................................................................. 30 4.1 Nespresso ....................................................................................................................... 30 4.2 Starbucks ........................................................................................................................ 31 4.3 Sustainability programmes and initiatives of selected companies ............................. 32 4.3.1 Nespresso programmes and initiatives ................................................................. 33 4.3.2 Starbucks programmes and initiatives .................................................................. 37 4.3.3 Starbucks C.A.F.E. Practices ................................................................................ 41 4.4 The importance of coffee certifications ....................................................................... 42 5. Discussion .............................................................................................................................. 46 6. Conclusion ............................................................................................................................. 50 6.1 Limitations and suggestions for future research .......................................................... 53 References ..................................................................................................................................... 55 Appendix ....................................................................................................................................... 61 Environmental sustainability .................................................................................................... 61 Social sustainability .................................................................................................................. 61 Benefits of sustainability approach .......................................................................................... 62 Lifecycle assessment ................................................................................................................ 63 Summary The purpose of this master thesis is to analyze the ability of selected food companies to manage effectively their environmental sustainability efforts and activities. The focus on the companies within food industry was chosen because of the large impact which consumed food has on both human welfare and the planet's environment. This thesis is composed of six chapters, each of them dealing with different aspects of selected topic. Chapter one provides a brief look at philosophy of science as it explains the terminology related to paradigms and its classification. Apart from that, this chapter also presents the selected approaches and methods. The case study method with exploratory purpose was adopted as method for this work as it is considered to be one of a preferred method for a research dealing with questions “how” and “why” (Kuada, 2010). In relation to the international business area two large multinational companies operating within food industry – Nestlé Nespresso SA and Starbucks Corporation – were selected for the case study. Besides that, this work is based on both primary and secondary data collection while primary data were gathered from websites of selected companies and their documents available online. Whereas for the secondary data collection, mainly academic journal articles related to environmental sustainability and studies conducted with food companies were searched through various online databases such as Scopus, Springer and Google scholar. Chapter two is introductory as it outlines the concept of sustainability and sustainable development together with the value chain concept and its relation to sustainability. Chapter three contains a review of academic literature and it is subdivided into two subchapters. The first one is dealing with different approaches and practices to applying environmental sustainability and the second one contains a review on articles which used life cycle analysis as a methodology for conducting studies within food industry. In Chapter four, the empirical research using the case study of Nespresso and Starbucks is done. This part of the work consists of four subchapters. First the brief overview of both companies is presented, then in the next subchapter focus shifts to sustainability programmes and initiatives of the selected companies. In this subchapter companies goals and achievements are presented as well. In the last part of empirical research, the importance of coffee certifications is stressed as they are implying both environmental and social sustainability standards for coffee producers and suppliers. Chapter five is more analytical as it provides the discussion over the data gathered 3 in the empirical research. Conclusions and limitations of this work together with the suggestions for the future research are drawn in Chapter six. This chapter tries to reflect on findings from both theoretical and empirical parts of this work. In this work the main aim is to find out how food companies can effectively manage environmental sustainability through the activities across the value chain. Apart from that, this work is also focused on the effects of the environmental sustainability activities of food firms on local communities on different value chain levels. It was concluded that from the findings presented in empirical part that both Nespresso and Starbucks manage effectively environmental sustainability through their activities. Besides that, it was found out that both selected companies positively affect the livelihoods of coffee farmers and suppliers by their environmental sustainability activities. For the future research, it was suggested to conduct a study with selecting more companies ideally within different food sectors in order to compare their both environmental and social sustainability activities. 4 Introduction One of the biggest problems of today's world is the growing population of mankind together with rising consumption. This causes the pressure on firms which are forced to use more and more of our planet's limited resources (Schröder, Holbach and Müller-Kirschbaum, 2015). Moreover, nowadays the business is oriented only one way – to make perpetual growth, thus constantly generate higher profits. However, many studies have already proved that the way how companies develop their businesses is not sustainable in the long run (Porter and Kramer, 2011; D'heur, 2015). Humanity has already done some significant and irreversible damages to our planet's ecosystem. It is especially noticeable in deterioration of air and water quality together with decrease of water sources, as well as degradation of land and biodiversity decline (Goodland, 1995; Moldan, Janouskova and Hak, 2011). Therefore it is crucial for mankind to reduce waste and pollution, learn how to manage the renewable resources and use especially new alternative sources of energy efficiently as well as to invest in repairing the already made damages (Goodland and Daly, 1996). That is why the topic of sustainability and sustainable development is more crucial in these days than ever. Sustainability is usually referred as containing three interconnected pillars – social, economic and environmental (Moldan, Janouskova and Hak, 2011). Some authors