Keurig Strategic Sustainability Audit MBA Team Report

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

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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

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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.

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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).

http://www.keuriggreenmountain.com/en/Sustainability/ResilientSupplyChain/Overview.aspx

http://www.keuriggreenmountain.com/en/Sustainability/SustainableProducts/Overview.aspx

http://www.keuriggreenmountain.com/en/Sustainability/ThrivingPeopleandCommunities/Overview.aspx

http://www.keuriggreenmountain.com/en/Sustainability/ThrivingPeopleandCommunities/Overview.aspx

http://www.keuriggreenmountain.com/en/Sustainability/WaterStewardship/Overview.aspx

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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).

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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

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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).

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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

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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;

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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

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(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

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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


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


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

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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


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

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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).

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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


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

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of organic fertilizer, while their fertilizer costs were reduced by 31%” (Keurig Green Mountain


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


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

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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).

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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


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).

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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.

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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

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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


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


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


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 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


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


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


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


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


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


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


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 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


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


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


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


32


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


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


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


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


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


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


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


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


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


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.

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44


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http://www.who.int/wssd/resources/en/

45


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


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


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


2

Environmental

Sustainability

Dimension


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.


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



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.


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.


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


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.


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


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.


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.


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



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.


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.


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.


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


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


4 Economic Sustainability

Dimensions


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


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.


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


6 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?

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


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


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


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


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


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


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

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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

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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.

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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

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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

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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.

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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

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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.

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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

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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

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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

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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

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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

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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


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

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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

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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.

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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

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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

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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).

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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.

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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



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?

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Rating: 5

Water stewardship investments focused on areas including access to clean water (Keurig Green


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


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?

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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


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



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)?

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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


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


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

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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).

Keurig Strategic Sustainability Audit MBA Team Report

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