Responsible Business

Coffee

As one of the world’s favorite drinks, some two billion cups of coffee are consumed every day; and yet the farming communities who grow this popular crop face considerable and increasing challenges.

It is estimated that approximately 60% of the world’s coffee is produced by 12.5 million smallholder farmers in remote tropical regions, many of whom struggle to secure a living.

Increasingly, climate change threatens to reduce the land area suitable for production and increases the spread of pests and disease. Inefficient farming techniques can exacerbate the situation, leading to deforestation, soil erosion and the subsequent sedimentation of waterways. As a result, the size and quality of coffee harvests are becoming much less reliable. At the same time, smallholders are subject to price fluctuations caused by market trends over which they have no control.

All these factors combine to make their livelihoods precarious, leading to socio-economic vulnerability and declining food security, with the risk that farmers leave coffee cultivation and seek more profitable occupations in urban areas.

LDC is one of the world’s top five green coffee merchants, with a strong presence in 11 coffee-producing countries that cover 85% of global production. As an industry leader, we are well-placed to support smallholders in addressing the challenges they face through more efficient, sustainable and ultimately profitable, production practices.

By doing so, we help to advance the United Nations’ Sustainable Development Goals (SDGs) on several fronts:

  • No Poverty (SDG1), Zero Hunger (SDG2), Quality Education (SDG4), Decent Work and Economic Growth (SDG8): We contribute to economic empowerment by partnering with local suppliers; we support the communities we touch through local initiatives; we train smallholder farmers in more sustainable practices to improve their income.
  • Gender Equality (SDG5): We work to empower women coffee farmers in Kenya, Ethiopia and Indonesia.
  • Responsible Consumption and Production (SDG12), Climate Action (SDG13), Life on Land (SDG15), Partnerships for the Goals (SDG17): We work through many and varied collaborative initiatives to advance sustainable coffee production, some of which are detailed in this report.
“We believe that sustainable agriculture is closely linked with farmers’ wellbeing. Where possible, we therefore choose to work directly with coffee growers in the field, supporting them through initiatives that aim to increase their productivity and incomes through the adoption of more sustainable farming practices.”

Ben Clarkson

Head of Coffee

Three Pillars of Sustainable Sourcing

Since 2018, we have adopted an approach to sustainable coffee production based on three complementary pillars.

1. Certification

Boosting production of certified and verified coffee

As consumer demand for sustainable coffee has increased, especially among millennials in North America and Western Europe, so too has the number of certification and verification schemes. As more consumers choose to buy coffee that complies with such schemes, so roasters are setting increasingly ambitious responsible sourcing targets and driving growing demand for sustainably grown and sourced coffee.

While working with certification / verification programs is only one of a number of measures we take to increase our production of sustainable coffee, we recognize that such schemes offer assurances to consumers and help increase transparency in supply chains. They remain one of the most powerful indicators of sustainability within the coffee industry.

The main certification / verification programs we work with are 4C, C.A.F.E. Practices, UTZ/Rainforest Alliance, Fair Trade and Organic.

In 2020 we supported the production of more than 1.4 million 60kg-bags of certified or verified coffee across our main origins: Brazil, Colombia, Honduras, Indonesia, Mexico and Vietnam.

This brought LDC’s total certified/verified volume produced to 84,738 MT1.

Certification Statistics

1. This figure excludes multi-certified coffee (coffee that has been certified by at least two different programs).

2. Volume figures by certificate do not add up to LDC’s total certified/verified volume figure, as some coffee volumes are multi-certified.

3. Volume figures by origin do not add up to LDC’s total certified/verified volume figure, as some coffee volumes are multi-certified.

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2. Projects

Supporting farmers in the field

We currently manage a diversified portfolio of collaborative sustainability projects in our coffee supply chains across seven different countries: Brazil, Colombia, Ethiopia, Indonesia, Mexico, Uganda and Vietnam.

These have reached more than 30,000 beneficiaries so far, with the following impacts in 2020:

Case Study:
Agroforestry in Indonesia, Ethiopia and Uganda

We run many of our projects in collaboration with value chain participants or third party organizations such as PUR Projet, with whom our collaboration focuses on regenerating coffee ecosystems through agroforestry.

Farmers are trained in techniques to regenerate soils and groundwater supply, and encouraged to plant native trees in and around their coffee fields to protect the crops. This helps them improve the quality of their coffee and so generate additional income, while preserving regional ecosystems and increasing their resilience to climate change.

Indonesia, Ethiopia and Uganda are among the world’s main coffee producers, where farmers have been facing increasing challenges in terms of yields, food security and livelihoods. Climate change has had a major impact on crop production due to irregular rainfall, rising temperatures and droughts.

To increase farmers’ resilience to climate change, LDC, the Louis Dreyfus Foundation and PUR Projet joined forces to promote coffee community agroforestry in these countries. Taking a general and systematic approach, we seek to bring about widespread regeneration of coffee ecosystems by restoring forest cover and empowering coffee-growing communities through knowledge transmission and adoption of more sustainable practices.

This work started in Indonesia in 2014, and was later extended to Ethiopia and Uganda. Since then, some 900,000 trees have been planted, and we estimate that these trees will sequester some 145,100 metric tons of carbon dioxide equivalent (tCO2eq) from the atmosphere over their 30-year lifetime, helping to mitigate global warming.

Key Achievements to Date

Carbon Study

Alongside our extensive collaboration with PUR Projet, we are also working with like-minded partners to investigate how to reduce carbon intensity in coffee production. In 2020, LDC participated in a study funded by Jacobs Douwe Egberts, The Sustainable Trade Initiative (IDH) and Green Invest Asia, on carbon and farm profitability in Vietnam’s Robusta coffee sector.

To make coffee production more sustainable, reducing associated carbon emissions is essential. Without relevant data, however, supply chain actors cannot make informed decisions about production management or communicate progress in reducing emissions.

Vietnam is the world’s largest Robusta coffee producer and the second-largest exporter of all coffee varieties. The study we participated in assessed the carbon footprint of coffee production in the country’s Central Highlands region, the world’s most intensive coffee production area, with a goal to identify business strategies most likely to incentivize farmers to adopt more sustainable agriculture methods, while also reducing carbon emissions.

LDC collected data from thousands of farmers over a period of three years, the results of which show that carbon-neutral coffee production is possible. Optimal use of fertilizers and nutrients, as well as crop diversification, are both key to reducing a farm’s carbon footprint.

The study showed that 32% of highly diversified farms had a negative carbon footprint (with sequestration exceeding emissions), compared to 15% of medium-diversified farms and only 8% of monoculture farms.

CO2e Emission, Sequestration & Footprint per hectare and Level of Diversification

Nevertheless, a reduced carbon footprint does not always correlate with higher profits for the farmer. Relationships between carbon intensity and profitability are complex, and more detailed understanding of specific intercropping and production models is needed.

In 2021, LDC will continue to work with partners to collect data for the study, with the aim to contribute to improving the sector’s sustainability – in the region and beyond.

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3. Sourcing Responsibly

Spreading sustainable practices throughout the value chain

Spreading sustainable practices throughout the coffee value chain, without excluding any farmer or supplier, remains a key aim for LDC.

To this end, in 2015 we produced a dedicated Code of Conduct for coffee suppliers, to encourage them to commit to a long-term and continuous improvement process, supported by LDC and its partners.

In 2020, we updated this code to comply with changing industry requirements, with the input of our partners – including independent certification organizations, customers and suppliers.

Our 2020 Code of Conduct was revised by LDC in consultation with Des Enjeux et Des Hommes (Group EcoCert), experts in strategy, change management and corporate social responsibility, to be more comprehensive and based on an ‘assess and address’ approach that focuses on prevention, engagement, improvement and incentives to tackle sustainability issues.

It is backed by Ethics Point, our comprehensive and confidential reporting tool, and is available in English, Vietnamese, Bahasa, Spanish, Portuguese and French.

Code of Conduct Based on Six Pillars

LABOR & HUMAN RIGHTSHEALTH & SAFETYENVIRONMENTAL PROTECTIONBUSINESS INTEGRITY & FAIRNESSCOMPLIANCE & GOVERNANCE
Minimum age and child labor

Forced labor

Equality and discrimination

Collective bargaining and freedom of association

Regular employment

Coffee farm workers, coffee farmers and local communities
Work environment

Occupational health and safety management system
Environmental management

Natural resources and biodiversity

Pollution and waste

Agricultural practices
Corruption and bribery

Time and reliable payments

Origin and traceability

Privacy and intellectual property
Legal requirements and standards

System and documentation

Communication and confidential reporting

Conformance, transparency & verification
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Looking Ahead

The roll-out campaign for our new Code of Conduct began in March 2021 and includes training to support suppliers in its implementation.

As targeted in our 2019 Sustainability Report, our updated Code of Conduct is now also accompanied by a method to verify supplier compliance. We will begin to audit suppliers in two countries in 2021, and will begin reporting on this in 2022.

Our 2020 Code of Conduct serves as the basis for our 2025 targets to purchase and trace coffee from suppliers who have agreed to the 2020 version of this code.

Building on the revision of our Code of Conduct, LDC is now working to develop its own Responsibly Sourced Verified Program, from which roasters should be able to begin buying volumes in 2022.

Targets

Publish updated coffee supplier Code of Conduct

Completion: 2020

Status: Complete

Produce methodology to verify supplier compliance with Code of Conduct

Completion: 2020

Status: Complete

Design training to support supplier compliance with Code of Conduct

Completion: 2021

Status: Ongoing*

*Training designed, roll-out begins 2021

Develop and launch LDC Responsibly Sourced Verified program

Status: 2022

Deadline: Ongoing

New Targets

70% of all coffee purchased from Code of Conduct compliant suppliers

Completion: 2025*

Status: Ongoing

*Reporting begins 2022

20% of coffee traced to farm through Code of Conduct compliant suppliers

Completion: 2025

Status: Ongoing

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