Starbucks · A Report to Starbucks 2 Contents I. Executive Summary 4 II. A Message from Former U.S....

A Report to

StarbucksAn Examination of Starbucks Commitment to Civil Rights,

Equity, Diversity, and Inclusion

January 23, 2019

A Report to Starbucks

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Contents

I. Executive Summary 4

II. A Message from Former U.S. Attorney General Eric Holder 6

Extraordinary Responses Inspire Hope 6

Listening Sessions 7

The Way Forward 7

III. About Starbucks and This Report 9

IV. Engagement with the Civil Rights Community 12

V. Methodology 15

VI. StarbucksEffortstoPromoteCivilRights,Equity,Diversity,andInclusion 16

SustainingtheThirdPlace 17

An Empowered Workforce Striving to Provide an Exceptional Customer Experience 18

ImplementationofNewThirdPlacePolicies 18

May29,2018,ImplicitBiasTraining 21

Post-May29,2018,ThirdPlaceTrainingsandAnti-BiasCurriculum 21

Manuals and Onboarding Material 23

AddressingChallengestoCreatingtheThirdPlace 24

EngagementwithLawEnforcementtoSupporttheThirdPlace 25

ListeningtoPartners 25

Customer Complaints 28

FosteringanInternalCultureofEquityandInclusion 30

Valuing Diversity 31

PartnerBase 31

SeniorLeadershipandBoardofDirectors 31

Hiring,Promotion,andDevelopment 32

InclusionandDiversityLeader 34

ExpandingthePipeline:DiverseHiringandRecruitment 34

PayEquity 35

PartnerNetworks 36

AccessibilityOffice 38


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Anti-Discrimination Policy and Training 40

PoliciesRegardingDiscriminationandHarassment 40

OtherPartnerGuideUpdates 41

HarassmentPreventionTrainings 41

PartnerComplaints 41

Partner Benefits and Initiatives 43

PartnerBenefits 43

Health and Wellness 43

PartnerandFamilySupport 44

Education and Opportunity 44

Finances and Investments 46

PartnerWages 46

IncreasingAwarenessofBenefits 47

Community Engagement 49

Community Stores 49

Military Family Stores 50

First U.S. Signing Store 50

SupplierDiversityandInclusionProgram 51

Supplier Social Responsibility 52

CreatingEconomicImpactBeyondtheSupplyChain 52

Community Service 53

Using Their Voice 53

The Importance of Leadership 55

APPENDIXA 57

APPENDIXB 61


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I. Executive Summary

Starbucksaspirestobeadifferentkindofcompany,onethatservesitscustomersgreatcoffeeinawelcomingthirdplace,wheremembersofthecommunitiesthatsurrounditscafscangather,feelwelcomed,andexperienceadeepsenseofconnection.InApril2018,anincidentataPhiladelphiaStarbuckschallengedStarbucksvisionofitself,andraisedseriousquestionsabouttheeffectsofimplicitbiasinretail.TwoAfrican-Americanmen,DonteRobinsonandRashonNelson,werewaitingforabusinessmeetingtostartwhenaStore Manager called the police because they had not made a purchase and refused to leave thestore.ThepolicewhorespondedarrestedMr.RobinsonandMr.Nelson,whowereheldfor several hours before they were released. Starbucks CEO Kevin Johnson took immediate stepstoapologizetoMr.RobinsonandMr.NelsonandtheCompanyimplementedanti-biastrainingfor175,000oftheCompanyspartners(thetermStarbucksusestorefertoitsemployees);however,Starbucksleadershiprecognizedthatthosestepswerejust the beginning.

AspartofStarbucksongoingeffortstounderstandwhytheincidentinPhiladelphiaoccurredandwhatmoreStarbuckscoulddotoadvancecivilrights,equity,diversity,andinclusioninternallyandinthecommunitiesitserves,theCompanyengagedformerU.S.AttorneyGeneralEricH.Holder,Jr.andCovington&Burling,LLPtoconductanassessmentofStarbuckspolicies,procedures,andinitiatives.Covingtonworkedcloselywith Starbucks over several months to understand the broad range of the Companys current andanticipatedeffortsintheseareas,assesshowStarbuckspoliciesoperatedinpractice,and identify areas for potential improvement.

Covingtonorganizeditsanalysisintofourcategories,eachofwhichreflectsanimportantaspectofStarbuckscommitmenttocivilrightsandequaltreatment:(1)SustainingtheThirdPlace;(2)FosteringanInternalCultureofEquityandInclusion;(3)CommunityEngagement;and(4)TheImportanceofLeadership.CovingtondeterminedthattheStarbucks policies and procedures it reviewed were consistent with Starbucks Mission and Valuesandthattheywerewelldesignedandimplementedtopromoteequity,diversity,and inclusion. Covington made several recommendations related to each category of its analysis,someofwhichStarbuckshasalreadyadopted.Covingtonsrecommendationsaresummarizedbelow:

Sustaining the Third Place: Starbucks conception of a third place in which everyone feelswelcomecannotexistifsomecustomersaretreatedunequallybecauseofbias.BehaviorsthatmakeothersfeelunwelcomeorunsafelikewiseunderminethesenseofcommunitythatStarbucksstrivestocreate.WorkingwithCovington,Starbuckshascraftedapublicstatement,StarbucksPrinciplesForUpholdingtheThirdPlace,thatdescribesthe key principles and responsibilities that make the third place possible. In addition to this importantstep,CovingtonrecommendedthatStarbucksincorporateanti-biastrainingintoits onboarding process and continue monitoring the implementation of its policies related to customers to ensure that they are applied without bias.


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Fostering an Internal Culture of Equity and Inclusion: Starbucks has committed to implementing diverse candidate slates and interview panels for key positions and to hiring an inclusion and diversity leader to strengthen workplace diversity and inclusion. Starbucks hasalsocommittedtoimplementrevisionstoitspoliciesondiscrimination,harassment,andretaliationrecommendedbyCovington,designedtostrengthenlanguageregardingdiscrimination,anchorthepoliciesintheCompanysMissionandValues,andmakeiteasier for partners to locate relevant information regarding these policies. Covington also recommendedthatStarbucksexpanditsharassment-preventiontraining,lookforadditionalopportunitiestosupporttheCompanysPartnerNetworks,andcontinuedevelopingbenefitstomeettheneedsidentifiedbypartnersthroughStarbuckssurveysandotherpartnerengagement tools.

Community Engagement:Starbuckshasalonghistoryofcommunityengagement,acommitmentreflectedintheCompanysMissionandValues.CovingtonrecommendedthatStarbuckscontinuethisworkbyopeninganadditionalthreeCommunityStores,and by expanding the number of smaller diverse suppliers used by Starbucks. Covington alsorecommendedthatStarbucksdeepentiesbetweenitsstores,itspartners,andthecommunities Starbucks serves by identifying opportunities to partner with community organizations,andbyworkingwithotherretailersoncommunity-engagementinitiativesbeyond hiring.

The Importance of Leadership: Starbuckshasdevelopedsignificantexperienceregardingtheriskspresentedbyimplicitbiasand,moreimportant,thewaysthatglobalconsumercompaniescanmitigatethoserisksmosteffectively.CovingtonrecommendedthatStarbuckssharewhatithaslearnedwithotherleadersinthebusinesscommunity,government,andthepublicsectortodevelopandimplementbestpracticesforeliminatingbias,particularlyasitaffectstheretailindustry.

Starbuckshasalreadyundertakensignificantworktoimplementtheserecommendationsandotherscontainedinthisreport.Starbucksseniorleadership,includingCEOKevinJohnson,arecommittedtocontinuingthatworkandtoachievingStarbucksgoalofcreatingpublicspaceswhereeveryonefeelsliketheybelong.


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II. A Message from Former U.S. Attorney General Eric Holder

WhenthenewsbrokeonApril12,2018,thatDonteRobinsonandRashonNelsonhadbeenarrestedinaPhiladelphiaStarbuckswhilewaitingforabusinessmeetingtobegin,Iwasheartbroken,butnotentirelysurprised.Thisincident,capturedonvideoandpostedonlinefortheentireworldtosee,wasalltoofamiliarforbrownandblackpeopleinAmerica.Itwas another reminder that racial biasexplicit and implicitremains a pernicious part of our society.

Our history is rife with instances in which people of color have been denied service or made tofeelunwelcomeinpublicspaces.In1950,Dr.MartinLutherKing,Jr.wasturnedawayatarestaurantnearPhiladelphiabecauseofhisrace.Almost70yearslater,Mr.RobinsonandMr.NelsonwerearrestedbecausetheyrefusedtoleaveaPhiladelphiaStarbucks.Andwhile Mr. Robinson and Mr. Nelsons arrests may not have been the result of explicit racial animus,thearrestsdemonstratedpowerfullythatunaddressedimplicitbiascansometimesproduceoutcomesthataredifficulttodistinguishfromthosemotivatedbyconsciousracism.

Extraordinary Responses Inspire Hope

Againstthisbackdrop,Mr.RobinsonandMr.Nelsonsarrestsremindusofhowmuchworkremainsinthefightforequality.ButStarbucksresponsegivesmehope.

Immediatelyfollowingthearrests,StarbucksCEO,KevinJohnson,andothersinseniorleadership,traveledtoPhiladelphiatounderstandwhathappened.Tohiscredit,Mr.Johnsonrightlycharacterizedthearrestsasreprehensible,apologizedtoMr.RobinsonandMr.Nelson,andpubliclyunderscoredthatStarbucksstoodfirmlyagainstracialprofilingordiscrimination.1Mostimportant,hecommittedtomakinganynecessarychangestopreventdiscriminationorracialprofilinginStarbucksstores.2

OnApril17,2018,Starbucksannouncedthatitwouldcloseall8,000storesinNorthAmericatoconductahalfdayofimplicit-biastrainingfor175,000partners.3 Starbucks also beganreviewingitspoliciesthatdirectlyrelatedtoMr.RobinsonandMr.Nelsonsarrests,includingitspolicydefiningwhoisacustomer,itsrestroom-usepolicy,andwhenpartnersshouldcall911.Evenmoreimpressive,Starbucksembarkedonajourneytoholisticallyexamine all aspects of its operations to understand what more it could do to address implicit biasandpromoteequityandinclusion.ThisReportispartoftheseefforts.

Duringthisproject,ImetwithMr.JohnsontodiscussStarbucksjourneysinceApril2018,whichhehasled,hisassessmentoftheCompanysworktodate,andthenextstepsheenvisions.Heassuredmethatthisworkwillcontinue,andthatwhilethisReportisanimportantsteponthisjourney,itcannotandwillnotbethelastone.


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Listening Sessions

IalsohadthepleasureofmeetingwithmorethanfiftyStoreManagersduringmyworkonthisproject.IwantedtoheardirectlyfromthemaboutwhytheychosetoworkatStarbucks,howtheyreactedtothearrestsinPhiladelphia,andwhatfactorscausedtheincident.IalsowantedtounderstandhowStarbuckscouldmosteffectivelysupporttheirwork.Tosaythatthe partners I met with were impressive is an understatement. Each of them was committed toStarbucks,itsMissionandValues,andthegoalofcreatingathirdplaceinwhichall are welcome.

Ineachofmylisteningsessions,partnerssharedhowdifficultitistoachievethisgoalincommunitiesthataredeeplyaffectedbyaddiction,mentalillness,orhomelessness.Thepartners I met with confront these issues every day in their stores. Many of the challenges they described were stunning. One group of partners had to call for emergency medical aidafterawomangavebirthintheirstoresbathroom.Otherpartnerssharedequallydisturbing,iflessdramatic,examplesofhavingtonavigatehighlycharged,orpotentiallyviolent,interactions.TheseconversationshighlightedapowerfultensionbetweenStarbuckseffortstocreateawelcomingthirdplaceontheonehand,andtherealitiesoflifeinourmostvulnerablecommunitiesontheother.Forsome,thelocalStarbucksmaybeoneoftheonlyplaceswheretheycangotofeelsafeandwarm,muchlesswelcomed.

ManyoftheanecdotesthatpartnerssharedwithmearereflectedinthisReport,asaremanyof their recommendations for addressing these challenges. Starbucks cannot mend our countryssafetynetonitsown.Butitcanleadbyexample,challengingthoseinpositionsofpublicleadershipandinthebusinesssectortojoinStarbuckseffortstobuildcommunitiesand ultimately a nationin which all are welcome.

The Way Forward

In1963PresidentKennedystated,ItoughttobepossibleforAmericanconsumersofanycolortoreceiveequalserviceinplacesofpublicaccommodation.Americaisbetterthanitwasin1963,butisstillaworkinprogress.Thenationhasshownitselftobeatitsbestwhenitseriouslygrappleswiththoseissuesandpracticesthatdenyequalopportunitytoallitscitizens.Buildingcommunitiesofinclusionandequalityrequireseachofustoexamine ourownbiasesandtoquestionourunconsciousassumptionsaboutothers.This isuncomfortablepainful,evenbutnecessary.

Starbucks commitment to creating a welcoming third place for alla commitment reflectedintheCompanysdecisiontotreatallwhoenteroneofitscafsasacustomerisan important ambition against the backdrop of our nations history of discrimination in public accommodations and the limited number of truly welcoming public spaces that exist today. Mr. Robinson and Mr. Nelsons arrests stimulated public discourse about the nature ofracismandracialprofilinginpublicspaces.Starbuckseffortsfollowingtheirarrestsdemonstrate that companies can play an important leadership role in addressing racial bias


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and,indoingso,helprealizeequalityinpublicspacesforallAmericans.

Tobeclear,racialbiasinpublicaccommodationsisnotsimplyStarbucksproblem.ItisanAmericanproblem.Creatinglastingchangewillrequireacommitmentfromtheentirebusinesscommunity,thegovernmentandothersinthepublicsector,andeveryoneofusas individuals to recognize and address the socioeconomic and racial challenges facing our communities,andtoexamineandconfrontourownbiases,regardlessofthecolorof our skin.

EricH.Holder,Jr.


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III. About Starbucks and This Report

Foundedin1971inSeattle,Washington,StarbucksCoffeeCompany(ortheCompany)hasgrown from a single roaster and retailer into an iconic global brand.4 Starbucks operates storesonsixcontinentsandinmorethanseventy-fivecountries,withover29,000storesserving millions of customers every day.

FormerChiefExecutiveOfficer,Chairman,andPresidentHowardSchultzjoinedStarbucksin1982asDirectorofRetailOperationsandMarketing.5 While on a business trip to Italythefollowingyear,Schultzwasinspiredbythesenseofcommunityheexperiencedat traditional Italian espresso cafs. Schultz returned to Seattle with a vision to create anAmericancoffeebarthatofferedcustomersanexperiencelikehehadinItaly:coffeecraftedwithcare,andservedinawelcomingthirdplace,asocialyetpersonalenvironmentbetweenoneshouseandjob,wherepeoplecanconnectwithothersandreconnectwiththemselves.6

Sincethen,Starbucksambitionhasbeentocreatepublicspaceswhereeveryonefeelsliketheybelong.SchultzdeliberatelywoveastrongsocialconsciousnessintothefabricofStarbucksculture:

[F]romdayone,Ireallywantedtobuildthekindofcompanymyfathernevergotachancetoworkfor. A company that honors and respects the dignity of work and the dignity of all men and all women. And that is why we became the first company in all of America to provide comprehensive healthinsurance30yearsaheadoftheaffordablecareact,aswellasownershipintheformofstockoptionsforallofouremployees,includingpart-timepeoplebecauseitismyfirmbeliefthatsuccessin business and in life is best when its shared.7

Graphic:Map of countries with Starbucks Stores


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ThisvisionisreflectedinStarbucksMissionandValues,whichinformseveryaspectoftheCompanys workplace and operations.

OnApril12,2018,StarbucksfacedachallengethatstruckatthecoreoftheCompanysdecades-longefforttocreateawelcomingthirdplace.Thatday,aStoreManagerattheRittenhouseSquareStarbucksinPhiladelphiacalledthepolicebecauseDonteRobinson andRashonNelson,twoAfrican-Americanmenwhowerethereforameeting,hadnot yetmadeapurchase.Whilewaitingforabusinessassociatetoarrive,Mr.Nelsonasked a store employee to use the restroom and was told that the restroom was for paying customers only.8

Minuteslater,theStoreManagercalledthepoliceandsaidthatMr.RobinsonandMr.Nelson were refusing to make a purchase or leave the store.9 Policeresponded,briefly

Graphic:Starbucks Mission and Values


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spokewithMr.RobinsonandMr.Nelson,andarrestedthem.Mr.RobinsonandMr.Nelsonwerehandcuffed,escortedfromthestore,fingerprinted,photographed,andheldforapproximately eight hours.10

A video of the arrests went viral on social media and sparked a public outcry criticizing Starbucks. The incident made headlines across the country and prompted protests at some Starbucksstores.Twohashtags,#BoycottStarbucksand#WaitingWhileBlack,begantrending on Twitter and other social media platforms.

The arrests thrust Starbucks into the center of Americas national conversation about racismandimplicitbias,particularlyinthecontextofretailandpublicaccommodations.Inresponse,Starbucksembarkedonaprocessofreflection,consultation,andassessmenttounderstandhowandwhytheincidentinPhiladelphiahadoccurred,givenStarbucksdeep-rootedcommitmentstoequaltreatmentandthecreationofawelcomingthirdplace.Starbucksresolvedtoidentifyhowitcouldbetterequipitspartners11 to understand and addressimplicitbias,andtheCompanyredoubleditsinternalandexternaleffortsarounddiversity and inclusion.

Aspartofthiswork,StarbucksretainedCovington&Burling,LLP(Covington),undertheleadershipofformerU.S.AttorneyGeneralEricHolder,12 to review and evaluate Starbucks multifacetedapproachtocreatinganinclusiveandequitableworkenvironmentforpartnersandawelcomingthirdplaceforcustomers.ThisReport,theresultofathoroughandobjectiveevaluationconductedbyCovington,describesandexaminesStarbucksongoingeffortstopromotecivilrights,equity,diversity,andinclusionbothwithintheCompanyand the communities it serves.


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IV. Engagement with the Civil Rights Community

FollowingthearrestsinPhiladelphia,Starbucksconductedananti-biastrainingthatbeganonMay29,2018,intheUnitedStates,andcontinuedoneweeklaterinCanadafor175,000ofitspartnersinNorthAmerica.Inpreparation,StarbucksengagedHeatherMcGhee,formerPresidentandDistinguishedSeniorFellowofDemos,BryanStevenson,founderandExecutiveDirectoroftheEqualJusticeInitiative,andSherrilynIfill,PresidentandDirector-CounseloftheNAACPLegalDefenseandEducationalFund,Inc.,asadvisorstoalignthetraining with best practices.13WiththeguidanceofMs.McGheeandMs.Ifill,Starbucksspokewithandreceivedinputfromdozensofanti-biasexpertswhoarewell-respectedbythe civil rights community.14Thecurriculumwasco-createdbySYPartnersalongwithAlexisMcGillJohnsonandRachelGodsilofthePerceptionInstitute.15Inaddition,Starbucksworkedinternallytoreceiveinputonthecreationofthetrainingfromcross-functionalteams,includingthePartnerResourcesOrganization(PRO),LearningTeam,TechnologyServices,Operations,PublicAffairs,StarbucksPartnerNetworks,fieldpartners,andotherStarbucks leaders.

InJuly2018,Ms.McGheeandMs.Ifillissuedareport,Toward a Vision for Racial Equity & Inclusion at Starbucks: Review and Recommendations (theMcGhee/IfillReport).TheMcGhee/IfillReportexaminedthePhiladelphiaincidentwithinthebroaderhistoryofracialdiscrimination in public accommodations and proposed several recommendations designed topromoteequity,diversity,andinclusionatStarbucks.TheMcGhee/IfillReportalsostatedtheauthorshopethatthewillingnessofStarbuckstoengagethisdifficultrealitywillinspireotherpublic-facingcorporateactorstodosoaswell.16

TherecommendationsintheMcGhee/IfillReportfallwithinfourcategories:assessment,leadershipandmanagement,implementation,andevaluation.SincethearrestsinPhiladelphia,Starbuckshasimplementedseveraloperationalchangesthatareconsistentwiththeserecommendations.Forexample,Starbucksissuedanewdefinitionofwhoisacustomer,specifiedthat911shouldbecalledonlyinemergencies,trainedpartnersonhowtoaddressdisruptivebehaviorsinstores,revampedStarbucksStoreOperationsManualtoreflectpost-Philadelphiapoliciesandpractices,androlledoutanewMaintainingtheThirdPlacetrainingprogramforitsStoreManagersandotherstorepartners.Mr.RobinsonandMr.NelsonalsoproposedrecommendationstoStarbucks,whichwereincludedintheMcGhee/IfillReport.17

TheMcGhee/IfillReportalsocalledonStarbucks,aspartoftheassessmentprocess,toconductabroadCivilRightsAudit,similartoeffortsundertakeninrecentyearsbyAirbnbandFacebook.Aspartofitsnextsteps,Starbuckshascommitteditselftoaholistic,long-termreviewofallaspectsofitsoperationswithrespecttoitspartners,customers,communities,andsuppliers.Consistentwiththiscommitment,andwiththerecommendationsintheMcGhee/IfillReport,StarbucksengagedCovingtontoevaluatethestrengthoftheCompanyspolicies,procedures,andinitiativesagainsttheobjectivesofcivilrights,equity,diversity,andinclusion.ThisReportistheresultofthateffort.18


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OnOctober3,2018,theLeadershipConferenceonCivilandHumanRights(LeadershipConference),acoalitionofmorethan200nationalnongovernmentalorganizationsdedicatedtocivilandhumanrightsissues,agreedtohostStarbucksforacandidroundtable.StarbucksCEOKevinJohnson,COORozBrewer,andotherseniorleadersjoinedtheroundtabletodiscussStarbuckseffortstodateandtheirworkgoingforward.StarbuckshasnowjoinedtheLeadershipConferencesBusinessCouncilandiscommittedtofurtherdevelopingitsrelationshipwiththeseimportantvoicesforcivilrights,equity,diversity, and inclusion.


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Starbucks Post-April 12 Timeline

April 12, 2018 RashonNelsonandDonteRobinsonarrestedinaStarbucksPhiladephiastore

April 14, 2018 CEOKevinJohnsonreleasesastatementcallingtheoutcomereprehensible

April and May 2018 LeadershipconductslisteningsessionswithPhiladelphiacommunity,civic, and corporate leaders

May 18, 2018 StarbucksannouncesitsnewUseoftheThirdPlacePolicyanddistributesanew AddressingDisruptiveBehaviorspartnerguide Publishing customer use expectations for Starbucks spaces DefiningacustomerasanyonewhoentersaStarbucksspace, regardless of whether they make a purchase Directingpartnerstocall911onlyifasituationpresentsanimmediate dangerorthreattopartnerorcustomersafety

May 29, 2018 Starbuckscloses8,000storesforCompany-wideimplicitbiasTheThirdPlace:OurCommitmentRenewed,Training,andmakesthecurriculumpubliclyavailable

June 2018 RolloutoftheMaintainingtheThirdPlacetraining

July 2, 2018 McGhee/IfillReportpublished

July 30, 2018 RolloutoffirstThirdPlaceDevelopmentSeriesfirsttrainingmodule, Mindful Decision Making Includes twelve training modules covering six topics

August 20, 2018 RolloutofsecondThirdPlaceDevelopmentSeriestrainingmodule, Leaning Into Discomfort

September 10, 2018 StarbucksannouncespartnershipwithASU,todevelopToBeWelcoming,a publiclyavailablecurriculumtoaddressspecificformsofbias

September 24, 2018 RolloutofthirdThirdPlaceDevelopmentSeriestrainingmodule, Courageous Leadership

October 3, 2018 StarbucksExecutiveLeadershipmeetswithnationalcivilrightsleaders, hosted by the Leadership Conference on Civil and Human Rights

October 4, 2018 LaunchofHire!Phillycoalitionwithjobandresourcefair

January 28, 2019 RolloutoffourthThirdPlaceDevelopmentSeriestrainingmodule, Being a Community Builder

January 23, 2019 ReleaseofCovingtonreport,An Examination of Starbucks Commitment to Civil Rights, Equity, Diversity, and Inclusion

November 29, 2018 Starbucksopens12thCommunityStoreinSouthernDallas,followingrecentopeningsinBirmingham,ALandBrooklyn,NY


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V. Methodology

InpreparingthisReportourgoalwastoprovideanobjectivereviewofStarbuckscurrentpolicies,practices,andinitiativesandtorecommend,aswarrantedeitherrevisionstothemornewpoliciesorinitiativestopromotecivilrights,equity,diversity,andinclusionatStarbucks.Specifically,wesoughttoanswerthreekeyquestions:

1. WhetherStarbuckspolicies,procedures,andinitiativesincludingtheirimplementationaresufficienttoprovideanequitable,nondiscriminatoryworkplaceforpartnersandthirdplaceforcustomers,consistentwithapplicablelaws and regulations;

2. Whetheranyrefinementstoexistingprogramsornewmeasuresorinitiatives,includingthoseproposedintheMcGhee/IfillReport,wouldhelpStarbucksbecomeamoreequitableandinclusivecompany,forthepartnersandcommunitiesitserves,consistent with its Mission and Values; and

3. WhethertheCompanyhassufficientmechanismsinplacetomonitoreffectivenessgoing forward.

Toanswerthesequestions,we:

Reviewedtrainings,policies,andinitiativesrelatedtocustomerrelations,storeoperations,partnerresources,partnerbenefits,leadershipdiversity,communityandsocialimpactinitiatives,andsupplierdiversity.

HeldmorethantwentyroundtableswithoverfiftyoftheCompanyspartnersandseniorleaders,duringwhichwelearnedabouttheCompanysoperations,partnercommunications,diversityeffortswithrespecttohiringandpromotions,communityimpact,supplierdiversity,partnertraining,partnernetworks,globalsecurity,andmore.WealsoheardadiverserangeofperspectivesonwhatStarbucksisdoingwellwithrespecttoequity,diversity,accessibility,andinclusion,and where additional opportunities for progress exist.

ConvenedlisteningsessionsinWashington,D.C.;Atlanta,Georgia;Seattle,Washington;andLosAngeles,CaliforniatoprovideanopportunityforStoreManagers to share their views directly with former U.S. Attorney General Eric Holder.MorethanfiftyStoreManagersprovidedtheircandidperspectivesontheCompanysresponsetothearrestsinPhiladelphia,StarbucksMissionandValues,theMay29training,andobstaclestocreatingawelcomingthirdplace.


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VI. StarbucksEffortstoPromoteCivilRights,Equity,Diversity, and Inclusion

This Report organizes the results of our assessment and our recommendations for change aroundfourkeyareas:

1. SustainingtheThirdPlace

2. FosteringanInternalCultureofEquityandInclusion

3. Community Engagement

4. The Importance of Leadership


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Sustaining the Third Place

The concept of a third place is at the heart of Starbucks Mission and Values. Starbucks ambitionistocreatepublicspaceswhereeveryonefeelsliketheybelong.StarbucksOpsExcellenceFieldGuidestates:

Everyday,aswesharegreatcoffee,wecanhelpmaketheworldalittlebetter.Thethirdplaceismorethanjustphysicalspace;itisanemotion.ItsaboutcreatingasoulfulrespitefromthepressuresofworkandhomethiswastruewhenthefirstStarbucksopenedin1971anditsjustastrue today.

Fromthebeginning,Starbuckssetouttobeadifferentkindofcompanyonethatbroughtafeelingofconnectiontothecommunitiesweserve.Nowmorethanever,theworldneedsplacestocometogetherwithcompassionandwithlove.Providingawarmandwelcomingthirdplaceisourmostimportantroleandresponsibility,todayandalways.

Starbucksconceptofthethirdplaceisunique.Fewcompanieswelcomeanyonetogather,work,read,andotherwiseoccupyretailspaceinthesamewaythatStarbucksdoes. This idea is important in light of the United States history of racial discrimination inpublicaccommodations.ImplementingitpresentssignificantchallengesforStarbucks,particularly in cafs where partners have to balance creating a welcoming third place against their responsibility to maintain a safe environment for all. It became clear during our assessment that the key to striking this balance was an empowered workforce striving to provide an exceptional customer experience.


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An Empowered Workforce Striving to Provide an Exceptional Customer Experience

AsformerStarbucksPresidentHowardBeharoncesaid,Werenotinthecoffeebusinessservingpeople;wereinthepeoplebusinessservingcoffee.Theconnectionbetweencustomers and partners sets the tone in stores and must be rooted in mutual respect and understanding.

Toitscredit,StarbucksunderstoodthatthearrestsofMr.RobinsonandMr.Nelsondemonstrated that the Company needed to examine and address the role of implicit bias in itsoperationsandtoclarifycertaincustomer-facingpoliciesandpartnerguidelines.Theneedtoequippartnerswiththeknowledgeandskillstoidentifygenuineemergencies,asopposedtosimplypotentiallydisruptiveconduct,wasparticularlyimportant.Tothisend,StarbucksreevaluatedhowtheCompanydefinedcustomers,whenpartnersshouldcall911,and how partners should respond to disruptive customer behaviors.

Implementation of New Third Place Policies

OnMay19,2018,roughlyonemonthafterthearrestsonApril12,StarbucksannouncedanewUseoftheThirdPlacePolicy,(seeAppendixA)whichtheCompanyintendedtoenhance patron and community cooperation in creating and maintaining a welcoming third place for all.19ThepolicystatesthatanyonewhoentersStarbucksisacustomer,regardlessofwhethertheymakeapurchase,andthatallcustomersmayuseStarbucksrestrooms,cafs,andpatios.20ItalsosetsforthStarbucksexpectationsforcustomers,whichincludethatallcustomers:(1)useStarbucksspacesasintended,(2)beconsiderateofothers,(3)communicatewithrespect,and(4)actresponsibly.21TheclarifieddefinitionofacustomerandtheuseexpectationscontainedintheUseoftheThirdPlacePolicyreflectStarbucksbelief that everyone who works in or visits a Starbucks storepartners and customers alikeshares a responsibility for creating and maintaining a space that is genuinely welcoming to all,oneinwhicheveryoneistreatedwithdignityandrespect.

Starbucksalsorecognized,however,thatitspartnersneededclearguidanceabouthowtoaddressdisruptiveorpotentiallydangerousbehaviorsinstores,sotheCompanycreatedanddistributedareferenceguideforaddressingdisruptivebehavior(seeAppendixA). TheguidedirectspartnerstofollowanACTModel,whichstandsforAssess,Consider,andTakeAction.Thismodelteachespartnerstoobservetheparticularfeaturesofthedisruptivebehaviortheyareevaluating,contemplatethebestcourseofactionbasedonthebehavior,andthenredirectthosebehaviorsappropriately,dependingonthesituation.Importantlyinourview,theguideclarifiedthatpartnersshouldcall911onlywhenthereisanimmediatedangerorthreattopartnerorcustomersafety.Italsoprovidedpartnerswithexamplesofwhencalling911wasappropriate.


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Starbucks issued the reference guide for addressing disruptive behavior to store partners. The Company also incorporated this content into the Companys Maintaining the Third Placetraining,whichwasprovidedtoShiftSupervisors,ShiftManagers,AssistantStoreManagers,andStoreManagers.ItlikewiseincorporatedtheconceptsunderlyingStarbucksapproachtoaddressingdisruptivebehaviorintoitsStoreOperationsManual,whichisavailable to all store partners.

Additionally,Starbucksissuedeachstoreinstructionsforcalling211,orasimilarresource,so partners can contact local social services as an alternative to emergency services. This documentalsoprovidesachecklistofsituationswhencalling911wouldbeappropriate.Starbucks is working with United Way to identify contact information for relevant service providers,includinghomelessshelters,mentalhealthservices,substanceabuseservices,and more.

Starbucksdefinitionofacustomer,itsexpectationsofhowcustomerswillusethethirdplace,anditsproceduresforaddressingdisruptivebehaviorplaycritical,andinterlocking,roles in creating and maintaining a welcoming third place. The third place cannot exist as Starbucksintendsifsomecustomersaretreatedunequallybecauseofbias.Butneithercanitexistifpartnersandcustomersaremadetofeelunwelcome,orunsafe,bydisruptiveorpotentiallydangerousbehaviors.Duringthisproject,weworkedwithStarbuckstocraftapublic commitment that demonstrates how these principles build upon each other to create apublicspaceconsistentwithStarbucksMissiontoinspireandnurturethehumanspirit,onecup,onepersonandoneneighborhoodattime.


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Starbucks Principles For Upholding the Third Place: For Our Partners, Our Customers and Our Communities

Sinceourfoundingin1971,Starbuckshassetouttobeadifferentkindofcompany,onethatputspeoplefirst:ourpartners,ourcustomersandourcommunities.OurMissionandValuescometolifeinthepromotionofequitable,diverseandinclusivecultures:inourworkplace,ourcommunities,andinourstores,athirdplacewhereeveryoneiswelcomeandwecangather, asacommunity,tosharegreatcoffeeanddeepenhumanconnection.

StarbuckscommitmenttoliveOurMissionandValuesisreflectedinthefollowingprinciples:

Everyone should feel welcomed at Starbucks. Every person who visits a Starbucksstoreisacustomer,whethertheymakeapurchaseornot.Ourcustomersarewelcometousethespacesweprovideappropriately,includingourcafs,patios and restrooms.

The existence of a welcoming public space is a shared responsibility. We expect everyone who uses the third place to promote a sense of community and treat eachotherwithrespectanddignity.BehaviorsthatmakeothersfeelunwelcomeorunsafeunderminethesenseofcommunitythatStarbuckstriestopromote,andtheyhavenoplaceinourstores.Whenthishappens,wetrustourpartnerstomakethebestdecisionabouthowtoaddressthem,guidedbyourexistingAddressingDisruptiveBehaviorsprocedureandThirdPlacetrainings.Whencustomersvisitoneofourstores,we respectfully requestthattheycommitto:

Use our spaces as intended

Beconsiderateofourpartnersandothercustomers

Communicate with respect

Act responsibly

DiscriminationisinconsistentwithOurMissionandValues. We strive to eliminatediscriminationandimplicitbiasfromeveryaspectofourbusiness,includingthe experiences of our partners and customers at Starbucks. We do not tolerate discriminationonanybasisprohibitedbylocal,stateorfederallaw.Weopposeanypublic policy that would have a discriminatory impact. If you experience or see conduct thatyoubelieveisdiscriminatory,harassingorinconsistentwiththiscommitment,pleasecontactourCustomerServiceteamat(800)782-7282or https://customerservice.starbucks.com.

Creatingatrulywelcomingspace,wherepeoplecancometogetherwithunderstanding,respectandcompassion,andwherediversebackgroundsandlifeexperiencesareembraced,isfundamental to our role and responsibility as a company. These principles will continue to guide Starbucksandwewillholdourselvesaccountabletothem.Together,wecancreateandmaintainawelcomingthirdplace,whereeveryindividualistreatedwithhumanity,dignityandrespect.

https://customerservice.starbucks.com


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May 29, 2018, Implicit Bias Training

Starbuckstooktheextraordinarymeasureofclosing8,000storesonMay29,2018,toconductanimplicit-biastraining,titledTheThirdPlace:OurCommitment,Renewed,for175,000partners.22 The training was also made available on May 29 at all manufacturing plantsandsupportcenters,andtopartnersoutsidetheU.S.andCanada.AllCompany-ownedstoresintheU.S.andCanada,aswellasthecorporatesupportcenter,participatedinthisvoluntarytraining.Thetraining,whichwasunprecedentedinscaleforStarbucks,wasdesignedtoeducatepartnersaboutimplicitbias,race,andtheCompanyscommitmenttocreatingawelcomingthirdplaceforall,andtoprovidepartnerswithtoolsforrecognizingand addressing bias.23Thetrainingwasfourhours,andpartnerswerepaidtheirregularwages while attending.24 The training was also made available at all stores for three months after May 29 for partners who were unable to participate and remains publicly available for other retailers to use as a model for their own training programs.

Asnotedabove,Starbucksconsultednumerousexpertstohelpdesignthetraining.Award-winningfilmmakerStanleyNelsonproducedadocumentaryforthetraining,focusingonthe history of race discrimination in spaces of public accommodation.25Partnersweregivenbothaguidebookandapersonaljournaltoworkthroughastheywatchedthedocumentaryand other video and audio lessons featuring leaders from the Company and civil rights community.26 The lessons examining implicit bias all followed the same patternsome formofinspiration(afilm,alookintomindscience,aleadersharingastory)followedbyself-orgroupreflectionandachancetopractice.27

Survey data collected after the May 29 training indicated that the training resonated with manypartners.Morethanhalfofpartnerscompletelyagree[d]thattheyfeltinspiredtousewhattheylearnedtomakeadifference.StoreManagersandhourlypartnersshowedsignificantincreasesinself-reportedunderstandingofimplicitbias.Beforethetraining,64percentofStoreManagersand67percentofhourlypartnerscompletelyagreedthattheyunderstoodwhatimplicitbiaswas.Afewweeksafterthetraining,thosenumbershadincreasedto82percentand83percentcompleteagreement,respectively.StoreManagersalsoshowedsignificantincreases(from38percentcompleteagreement)inbelievingtheyhadthetoolsnecessarytohandledifficultsituationswithoutbias,yettheoverallscore(49percentcompleteagreement)forthismetriccanstillbeimproved.Similarly,only51percentofhourlypartnerswereincompleteagreementthattheyfeltequippedtohandledifficultsituationswithoutbias.

Post-May 29, 2018, Third Place Trainings and Anti-Bias Curriculum

Basedonconsultationswithexpertsandthesurveyresultsdiscussedabove,Starbucksunderstandsthatonetrainingisinsufficienttoempowerpartnerstobeginidentifyingandrespondingdifferentlytoimplicitbiases.Asthen-ChairmanHowardSchultzmadeclear,theMay29,2018,trainingwasjustthebeginningofwhatwewilldototransformthewaywedobusinessandeducateourpeople.28AmongotheractionsdiscussedinthisReport,the


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Companyhasalreadyimplementedsupplementaltrainingsthatareongoing.Forexample,inJune2018,theCompanyrolledoutanewtrainingprogram,MaintainingtheThirdPlace,designedtoprovideStoreManagers,AssistantStoreManagers,ShiftManagers,and Shift Supervisors with clear guidance on how to ensure a warm and welcoming store environment for everyone and how to handle disruptive behaviors by employing the ACT model.

Further,Starbucksdesignedapersonaldevelopmentseriesforpartnersthatfocusesonthethird place.29Topicsincludeempathy,community,courage,andinclusion.30 The Company hasdevelopedeightofthesetrainings,organizedaroundthreethemes:

Mindful Decision Making:Identifiestoolsandstrategiestohelppartnersmakeunbiased decisions.

Leaning Into Discomfort: Providesguidanceonhowtodevelopempathytowardspeoplewithdifferentexperiencesandbackgroundsandhighlightsthechallengesfacing transgender individuals.

Courageous Leadership: Providesguidancetopartnersonsettingboundariesrelatedtodisruptivebehaviors,highlightingupdatedpoliciesandguidelines.

Being a Community Builder: Focusesontheimportanceofpartnerself-caresothattheycanbeeffectivebuildersintheircommunities.ThismodulewillbereleasedattheendofJanuary2019.

Twomodulesaddresseachtheme,andpartnershaveonemonthtocompleteeachmodule.

Thefirstmoduleforeachtheme,whichisdesignedforStoreManagers,DistrictManagers,RegionalDirectorsandallnon-retailpartners,iscalledaPourOverSession.PartnersviewthesePourOverSessionsinthestyleofaTEDTalk,followedbymoderatedquestion-and-answersessionsfilmedwithaliveaudienceofpartners.ThePourOverSessionsincludean optional discussion guide for groups of leaders to use in regional and team meetings.

Thesecondmoduleisdesignedforallpartners(retailandnon-retail)asastructuredgroupdiscussion,whichincludessegmentsfromthePourOverSession,neuroscienceresearchonthebehavioraltopiccovered,andrecommendedquestionsforteamstodiscuss.Timeisallotted for each partner to participate in this group learning. The Company is in the process ofcompletingthefinaltwothemesofsixtopics.

Starbucks is also planning additional training for executive leadership and new curriculum forallpartners.StarbucksplansforallSeniorVicePresidents+positions,aswellasPRO(humanresource)generalistsandrecruiters,toengageinadditionalexperientiallearningto further instill the Companys ethic around conscious inclusion. Starbucks is also collaboratingwithArizonaStateUniversity(theUniversityorASU)andotherexternalexperts to develop an innovative curriculum on how individual and systemic biases impact dailyinteractionsinpublicspaces.TheToBeWelcomingcurriculumisintendedtoassistretailers and others who make public space available to better navigate these issues. A


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foundational course will introduce key concepts that will be used throughout the series. Thecourseaimstoequipparticipantswiththetoolsneededtoengageinconstructiveconversationsaboutimplicitbias,understandhowbiasaffectsothers,andexploretheroleofsympathy,empathy,andcompassionwhenengagingincriticaldialogueaboutsocialdifferences.Thecurriculumwillbepubliclyavailableforpartners,customers,andothercompanies.

Starbucks is piloting a new training this spring to help Store Managers practice handling disruptivecustomersituations.Leveragingnewtechnology,StoreManagerscanpracticereal-timescenarios,reviewtheirresponses,andlearnwhatadjustmentstheyneedtomakewhenconfrontingsimilarin-storesituations.Pendingfeedbackfromthepilot,Starbucksintendstoexpandthetrainingtoincludeotherscenariosandofferthetrainingtoabroaderpartner population.

Manuals and Onboarding Material

In addition to implementing trainings designed to empower partners to recognize implicit biases,StarbucksalsoembarkedonanefforttoupdateitspolicyandtrainingmanualsandotheronboardingmaterialstoreflectupdatedpoliciesandemphasizetheCompanyscommitmenttodiversityandinclusion.Wereviewedthemanualsandguidesspecifiedbelowtoassesstheireffectivenessastoolstopromoteequity,diversity,andinclusion.Mostofthesedocumentsrangeinlengthbetween30and130pages,totalingnearly300pagesofmaterial partners are expected to be familiar with.31

Store Operations Manual: This manual provides store partners with key informationregardingstoreoperations,fromhigh-levelconcepts,likeStarbucksMissionandValuesandcommunityengagement,togranulardetailslikehowtorefund a customers purchase.

Safety and Security Manual: This manual describes Starbucks procedures for maintainingasafeworkenvironment,reportingsafetyissues,preventingworkplaceinjuries,respondingtoworkplaceinjuriesandincidentssuchasworkplaceviolence.

Ops Excellence Field Guide: This guide details how partners can create the thirdplaceforcustomersandeachother,includingempoweringretailleadersandmanagers to support and encourage partners to reach their full potential. The guide presents leadership skills in the context of Starbucks Mission and Values.

Retail Partner Guide: This guide provides partners with an overview ofStarbucksemploymentpoliciesandstandards,resourcesforreportingworkplaceconcerns,andinformationregardingStarbuckstotalrewardspackage(compensation,benefits,savings,stockandpartnerperks).32


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Partner Resources Manual: This manual serves as a Store Managers primary resourceformostPartnerResources-relatedquestions.

Standards of Business Conduct: This guide is designed to give all Starbucks partnersguidanceonhowtomakeethicaldecisionsatwork.

Global Human Rights Standard: This standard discusses Starbucks commitment to treat its employees with respect and dignity and support and upholdtheprovisionofbasichumanrightsandeliminatediscriminatorypractices.The Standard also notes that Starbucks expects any parties who do business on Starbucks behalf to conduct business in ways that uphold the principles of thisPolicy.

ThesedocumentsreflectStarbucksMissionandValuesandtheCompanyscommitmenttopromotingequity,diversity,andinclusionforitspartnersandcustomers.Starbucksrecognizes,however,thatthesedocumentscanbeimproved.Forexample,thecurrentversion of the Store Operations Manual was updated recently to incorporate several recommendationsconsistentwiththeMcGhee/IfillReport.TheManualcontains Starbucksnewcustomerdefinitionandincludeslanguageonotherrecentlyupdated policiesandguidelines,suchasthoseaddressingrestroomuseandhowtorespondtodisruptive behaviors.

Addressing Challenges to Creating the Third Place

Inmanyrespects,Starbucksstoresreflectthecommunitiestheyserve.Andincommunitiesaffecteddisproportionatelybyaddiction,mentalillness,orhomelessness,therearechallenges to creating a third place in which everyone feels welcomed. Starbucks recently launched an initiative to study these challenges in several urban markets and to assess howtobettersupporteffortstocreateawelcomingthirdplaceinthem.Aspartofthisefforttheyhavecreatedacross-functionaltaskforcethatwilldeterminehowtobestutilizelocalresources,includingnonprofitorganizationsandothersserviceproviders,tosupportstore partners and local communities. Starbucks is also consulting with other institutions thatprovideaccesstopublicspaces,likepubliclibraries,tolearnaboutbestpracticesforaddressing disruptive behavior.

Starbucksistestinganewstore-incidentreportingprocessthatallowspartnerstoreportincidentselectronically,insteadofbytelephone.Severalpartnerswhoparticipatedinlistening sessions with Mr. Holder recommended that Starbucks implement a streamlined incident-reportingprocess.Starbucksestimatesthatthiswillreducethetimeittakestoreport an incident from up to twelve minutes to approximately two minutes. This will save partners valuable time and generate data that will enable Starbucks leadership to identify stores that may need additional support.


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Starbucks is also working to begin tracking calls from its stores for assistance from law enforcementaspartofitsstore-incidentreporting.Thisadditionalinformationcouldalsoserveasanimportantmethodofidentifyingstoresthatmightrequiremoresupport.

Engagement with Law Enforcement to Support the Third Place

Since2011,StarbuckshasengagedlawenforcementthroughitsCoffeewithaCopprogram,whichbeganasapartner-ledprogramtofosterdirectcommunicationbetweenstorepartnersandpoliceofficers.33 The sessions aim to build trust between law enforcement and the communities they serve while providing Store Managers an opportunity to discuss the challenges they face in their stores with local law enforcement.34Sinceitsinception,Starbuckshasfurtherdevelopedtheprogram,includingthroughtheuseoftoolkitsinstorestofacilitateconversations.Starbuckshashostedapproximately800eventsacrossthe country in collaboration with law enforcement organizations such as the National OrganizationofBlackLawEnforcementExecutives(NOBLE),InternationalAssociationofChiefsofPolice(IACP),andothers.

Starbucksgoalistopromotebias-freepracticesforallthirdplaceandpublicspaces. Across-functionalteamledbyStarbucksGlobalPublicPolicyandGovernmentAffairsgroupisleadingacollaborationwiththeNOBLEtohelpbuildpartnershipswithlocallaw enforcement and identify best practices intended to assist retailers and others who providespacetothepublic.Forexample,StarbucksandNOBLEwillbeginworktodevelopprotocolsthatprovideretailorganizations,lawenforcement,andotherrelevantinstitutionsthe tools to help create more welcoming public spaces and mitigate racial bias in public spaces.StarbucksandNOBLEplantomeetwithotherstakeholdersbeginningin2019tocreateaplaybookofbestpracticesforusebypublicandrelevantprivate-sectoractors.

Listening to Partners

Starbuckssolicitsfeedbackfromallitspartners,encouragingthemtoexpresstheircandidviewsthroughformalandinformalchannels.StarbucksconductsPartnerExperienceSurveysquarterlyandprovidespartnersanopportunitytosharefeedbackonavarietyofareasthatimpacttheirpartnerexperience.PartnerscanalsoprovidefeedbackthroughweeklyStarbucksExperiencePulseSurveys,whichaskpartnershowwellStarbucksliveduptoitsvaluesduringthepartnerslastshift.Inadditiontotheseongoingsurveys,partnerfeedback is collected on an ad hoc basis to inform new and ongoing programs and initiatives. There are also informal opportunities where partners can share their feedback in groups acrossstoresonWorkplace,adigitalcollaborationtool.PartnerscanalsocallthePartnerResourceSupportCenter.Further,Starbucksleadershiphasacultureofconveninglisteningsessions with partners across the organization.


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TogaininsightintothechallengescurrentlyfacedbyStarbuckspartners,Mr.Holderandthe team from Covington conducted four listening sessions with Store Managers in key markets,includingWashington,D.C.;Atlanta;Seattle;andLosAngeles.Weidentifiedseveral themes from partners comments in the listening sessions.

First,thepartnersexpressedextraordinarydevotiontotheCompanyandtheirwork.ManyofthepartnersinattendancestartedasBaristasandworkedtheirwayuptoStoreManagers,several having served ten or more years with the Company. Numerous partners expressed their plans to retire with Starbucks. Many reported that their dedication to Starbucks was tieddirectlytotheCompanysMissionandValues,whichasexplainedbythepartnerscreatesanenvironmentwheretheycanshowupforworkauthentically.Almostallofthepartners agreed that they considered their coworkers to be like family.

Second,partnerssharedtheirhonestviewsabouttheMay29,2018,trainingandthechallenges they face today in view of the revised policies implemented after the arrests of Mr. Robinson and Mr. Nelson. Several partners said that while they were initially skeptical ofthetraining,andquestionedwhetheritwasanythingmorethanaresponsetocriticismafterthearrestsinPhiladelphia,aftertakingittheyfoundthetrainingtobeuseful.

Manypartnerssharedstoriesabouthowtheyapproacheddisruptivebehaviorsdifferentlyafterthetraining.Forexample,oneStoreManagersaidthatshenoticedayoungmanwalkingbackandforthfromhisseattothepackagedfoodareaofthestore,andthatsheanticipated he might be considering stealing something. She explained that before the training,shewouldhavequicklyaskedtheyoungmantoleavethestore.Applyingwhatshelearnedinthetraining,however,sheinsteadsatwiththeyoungmanandhisfriendand began a conversation with them. They told her that they were residents in a nearby homelessshelter,andthatwhiletheyweregratefultohavetakenabaththatday,they were hungry. The Store Manager gave the young men a hot breakfast and told them that theycouldstayaslongastheywanted,aslongastheywererespectfulinthecaf.Otherpartnerstoldsimilarstories,notingthatthetrainingtaughtthemtheimportanceof focusingonacustomersbehavior,andwhetheritwastrulydisruptiveorinappropriate,rather than on a customers appearance or other characteristics. Several partners also saidthattheyappreciatedthePourOverSessionsandhopedthatStarbuckswould develop additional modules.

ManyparticipantsofferedrecommendationsforStarbucksconsideration,severalofwhichwehavehighlightedbelow.Severalpartnersnotedthatthefrequencyofdisruptivebehaviorsvariedwidelyamongstoresandthatspecificbehaviorsoccurredmorefrequentlyin some stores than in others. These partners encouraged Starbucks to develop trainings on themosteffectiveresponsestospecificdisruptivebehaviorsandtooffertheminthemarketswheretheyoccurredmostfrequently.Generally,partnersexpressedtheviewthattailoredtrainingswouldbemoreeffectivethanaone-size-fits-allapproach.


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Key Recommendations from Listening Sessions

Considerprovidingadditionalstaffortraininginstoreswheredisruptivebehaviorsoccurmostfrequently.Starbucksiscurrentlyconductingapilotprogram regarding this recommendation.

Designtrainingsforaddressingdisruptivebehaviors,tailoredtolow-,medium-,andhigh-incidentstores.Thesetrainingsshouldusereal-worldexamplesofthe challenges faced by Starbucks partners and should reinforce the principles underlying Starbucks current approach to addressing disruptive behavior. Starbucks is currently conducting a pilot program regarding this recommendation.

Raise public awareness of Starbucks goal of creating a welcoming third place and emphasize to customers that they share responsibility for maintaining it. Regional ManagersandDistrictManagersshouldemphasizethatmaintainingawelcomingthird place is as important as the Companys business metrics.

Take advantage of opportunities to feature additional people of color and individualsfromunderrepresentedbackgroundsinthePourOverSessions.


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Customer Complaints

We reviewed Starbucks procedures and processes for intake and handling of customer complaints. Customers can submit complaints directly to any store partner or can lodge complaintswiththeCustomerContactCenter(CCC)viatelephoneoremail.Contactinformation for the CCC is located on the Starbucks website. Starbucks also has a team dedicatedtomonitoringcustomercomplaintsonsocialmedia,whichisthechannelthroughwhichStarbucksfirstlearnedaboutthearrestsofMr.RobinsonandMr.Nelson.

DuringourmeetingswithStarbucks,welearnedthattheCCCreceivesaroundsixmillioncontactsperyearintheU.S.,Canada,andtheU.K.TheCCCteamiscomprisedofanexecutiveteamthathandlesescalatedorlevel3incidentssuchasthearrestsofMr.RobinsonandMr.Nelson,escalatedfromateamthathandleslevel1andlevel2incidents,andathirdteamthatreceivescustomercontactsthroughsocialmedia.Starbucksalsooutsourcessomecustomer-carecalls.

The most common customer complaints relate to beverages or the placement of money on a Starbucks card. Complaints of racial discrimination are rare and number in the low hundredsannually,asmallfractionofthemillionsofinteractionsbetweencustomersandpartnersinagivenyear.AfterthearrestsonApril12,2018,therewasaspikeincustomercomplaintsgenerallyuntilapproximatelyJune2018.Asimilarspikefollowedthereleaseofthe new policies regarding the use of the third place and who is a customer.

Overall,wefoundthattheCCCprocessesarethorough,withclearguidelinestoensurethatcomplaintsareescalatedasneeded.Asindicatedinourrecommendations,weencourageStarbucks to perform spot audits of the system to determine whether there are any gaps in the routing and resolution of customer complaints.


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Recommendations to Sustain the Third Place

The following recommendations are intended to supplement the important work that the Company has already undertaken to reinforce that the responsibility for maintaining a welcoming third place is shared by Starbucks partners and customers alike. We recommendthatStarbucks:

Promote,asdescribedabove,StarbucksPrinciplesforUpholdingtheThirdPlaceanduseittoincreasecustomerawarenessofStarbucksconceptofthethird place and the values and shared responsibilities underlying it. As part of thiseffort,StarbucksshouldconsideraskingcustomerstoacknowledgetheThirdPlacePrinciplesandStarbuckscustomer-useexpectationswhenaccessingastoresWiFinetwork.Starbucksshouldalsoconsiderexpandingitsuseofin-storeartwork,featuringlocalartistsandinfluencerswherepossible,topromotetheThirdPlacePrinciples,andtheconceptofathirdplacewhereeveryoneistreatedwith dignity and respect.

Provideanti-biastrainingtonewpartnersduringtheonboardingprocess.

Revise Starbucks existing policy and training manuals to feature the sections describingStarbuckscustomerdefinitionandapproachtoaddressingdisruptivebehavioratthefrontofeachdocument,andupdateStarbucksSafetyandSecurityManual to incorporate this new policy and guidance. Starbucks should also revise its policy and training manuals to reduce redundancies and cross references among the manuals. Starbucks has committed to revise its existing policy and trainingmanualstoreflecttheserecommendations.

ContinuemonitoringandevaluatingimplementationoftheUseoftheThirdPlacePolicyandaddressingdisruptivebehaviorproceduretodeterminewhetherstoresor partners in some markets need additional support to create and maintain a welcoming and safe third place.

Conduct spot audits of the CCC reporting and routing systems to ensure that all callsarebeingproperlyroutedandresolved.Inaddition,considerconductingspotaudits,assuggestedintheMcGhee/IfillReport,toevaluateanypotentialvariancesincustomerserviceexperiencebasedonrace,andtoensurethatStarbuckscustomerdefinitionisbeingimplementedwithoutbias.35

Continue convening working groups composed of partners who work in stores whereseriousdisruptivebehaviorsoccurmorefrequently,todevelopbestpracticesforrespondingtodisruptivebehavior,andforpreservingawelcomingthirdplace,despitethesebehaviors.


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Fostering an Internal Culture of Equity and Inclusion

Starbucksiscommittedtofosteringadiverseandinclusiveworkplacethatreflectsthecommunities Starbucks serves. Starbucks recognizes that diversity is about taking steps toemploypartnersfromabroadarrayofbackgroundsandexperiences,andthatequityisabout ensuring all partners are empowered to succeed. Starbucks has already implemented awidevarietyofpolicies,programs,andinitiativesaimedatstrengtheningworkplacediversityandinclusion,manyofwhichhavebeeneffective.

Toidentifypotentialgapsandopportunitiesforimprovement,weevaluatedseveralaspectsoftheCompanysapproachtoequityandinclusionintheworkplace.Specifically,wereviewedtheworkcurrentlybeingdonethroughtheCompanysInclusion,Diversity,Equity,andAccessibility(IDEA)programs.WereviewedtheCompanysPartnerGuides(employeehandbooks),alongwithitsEqualEmploymentOpportunity(EEO)policyandharassment-prevention training. We also assessed Starbucks policies and procedures encompassing recruitment,hiring,promotions,pay,benefits,partnercommunicationsandengagement.Withineacharea,weevaluatedwhetherexistingprogramscompliedwithapplicablelawsandwhethertheyweresufficienttofosterequity,diversity,andinclusionforpartners.Wealsodeterminedwhatrefinements,revisions,ornewpoliciesandprogramswouldboostinternalprogresstowardequity,diversity,andinclusion.Furthermore,recognizingthattheworkforce,socialvalues,andcomplianceandregulatoryrequirementsarealwaysevolving,we reviewed whether Starbucks has appropriate mechanisms in place to measure progress andeffectiveness.


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Valuing Diversity

Thebusinesscaseforworkplacediversityiswellestablished.Diversityimprovesdecisionmaking,36increasesemployeeengagement,37unlocksinnovation,38 and spurs economic growth.39Starbuckshaslongrecognizedthevalueofadiverseworkforce,andmanyof Starbucks diversity and inclusion commitments have earned the Company public recognition.Forexample:

Starbucksachievedascoreof100ontheHumanRightsCampaignsCorporateEqualityIndexforLGBTQinclusioneachyearfrom2015through2018.40

Starbucksachieveda100percentscoreontheDisabilityEqualityIndexeachyearfrom2015through2017.41

AfterthearrestsofMr.RobinsonandMr.Nelson,StarbuckscommittedtoincreasingandmaintainingdiversitythroughouttheCompany,includingatthehighestlevelsofitsleadership.Aspartofourreview,weconsideredtheCompanyshistoric,ongoing,andplanned initiatives to increase diversity.

Partner Base

Starbucks provides its diversity statistics publicly on its website.42 Women and minority representation in the Starbucks partner base is strong compared to the national average forretailcompanies.Forty-sixpercentofStarbucksstorepartnersareminorities,and68percent are women.43 The national industry average is approximately 33 percent minorities and48percentwomen.

PerceptionsofoveralldiversityamongStarbuckspartnersarehigh.Ninety-onepercentofpartners surveyed agreed that Starbucks has a diverse and inclusive workforce.

Senior Leadership and Board of Directors

DiversityamongStarbucksBoardofDirectorsandseniorleadershipcomparesfavorablytootherlargeU.S.companies.Women,twoofwhomareAfrican-American,makeup40percentofStarbucksBoardofDirectors,placingStarbucksintheninety-seventhpercentileamongS&P500companiesintermsofboarddiversity.44ForC-suite,SeniorVicePresident,andVicePresidentpositions,Starbucksnumbersforend-of-year2017exceededinmostcategoriestheaverageforallU.S.companies,asreflectedintheMcKinsey2018WomenintheWorkplacestudy(seechartbelow).45Starbucks2018numbersweresimilarlyimpressiveagainsttheMcKinseystudyfigures,showingyear-over-yearimprovementinsomecategories,includingwomenintheC-suiteandVicePresidentroles.


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Thesedataalsoreveal,however,thatthereisroomforStarbuckstoimprovetherepresentationofwomenandpeopleofcoloramongitsleadership,afactthattheCompanyacknowledges. Starbucks has made strides toward increasing diverse representation in leadershipinrecentyears,particularlyforwomen.In2015,Starbuckscommittedtoa 50percentincreaseintherepresentationofwomenandminoritiesinseniorleadership by2020.46Starbucksachieveditsgoalforwomenin2018andraisedthebartogenderparity,aimingforwomentohold50percentoftheCompanysseniorleadershiprolesby theendof2020.47Starbuckscontinuestoprogresstowardsthe2020goalforminorities,havingincreasedminorityrepresentationinsomeleadershipcategories,including among VicePresidentandDirectorrolesthroughouttheCompany.

Hiring, Promotion, and Development

Starbucks is considering several initiatives to increase diversity throughout its partner base.Specifically,theCompanyisdesigningimprovementstoitshiringandpromotionprocesses that will include guidance regarding role expectations and how to assess candidate qualifications.Starbuckswillalsoimproveitshiringpracticestoincreasediversityduringthe interview process.

Thefollowinginitiativesareunderway:

Promotion targets: Starbucks has a comprehensive executive workforce goals program,knownasIDEAInsights&Opportunities,thatsetsdiversitygoalsforallU.S.leadershippositionsfromDistrictManagerandabove.Thisprogramis

All Companies (%) 2017 End of Year

(McKinsey)

Starbucks (%) 2017 End of Year

(McKinsey)

Starbucks (%) As of 11/25/2018

C-Suite 4 19 9 68 6 19 13 63 13 20 13 53

SVP 4 19 9 67 5 34 15 46 0 41 16 44

VP 6 24 12 59 11 34 11 45 17 31 11 41

Women of Color White Women Men of Color White Men

Graphic: Chart depicting McKinsey 2018 Women in the Workplace study


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the primary driver of leader accountability in the inclusion and diversity space. Starbucks is in the process of expanding its program and will soon set targets for everyStoreManager+position.

Internalcandidateprofiles:Starbucksisworkingtoenhanceitsapplicanttracking platform for internal talent movements in U.S. Retail. Internal candidate profileswillbedevelopedandenhancedtoallowpartners,fromBaristasuptoStoreManagers,toviewpromotionopportunitiesandexpressinterestinopenroles.StoreManagers,DistrictManagers,andRegionalDirectorswillhaveaccesstoawider talent pool based on who is interested. The Company will provide training for partnersonhowtocreateaprofile,expressinterest,andreportconcerns.

Management training: Starbucksisworkingtoequipitsmanagerswiththeknowledge and tools to identify values of inclusion and building diverse teams. In 2018,theCompanylaunchedatwo-and-a-half-hourtrainingforallretailandnon-retailhiringmanagerscalledBuildingGreatTeams.

Ops Excellence Field Guide: As noted in the An Empowered Workforce Striving to Provide an Exceptional Customer Experiencesection,thisguideprovidesbaselineoperationalandleadershipexpectationsforallrolesfromBaristatoRegionalVicePresident.Theguideisintendedtobeusedbypartnerstoassesstheirownperformanceandcareer-developmentneeds,andbyleaderstoassesspartner performance and provide performance and development coaching. The guidewasupdatedfollowingthearrestsinPhiladelphiatoreinforceexpectationsondiversity and inclusion.

Diverseinterviewslates:Thesuccessofdiverseslatesisdocumented,withresearch showing a noticeable increase in the number of minorities hired in roles for which the practice was adopted. Starbucks plans to implement diverse slates and interview panels for key positions. Each pool of candidates interviewed for anidentifiedpositionwillincludeatleastonewomanandonememberofanunderrepresented minority group. Starbucks will also include at least one woman and one member of an underrepresented minority group on each applicants interview panel to encourage diverse perspectives in the feedback and evaluation of candidates. Starbucks is committed to implementing diverse slates and interviewpanelsforallSVP+rolesacrosstheorganization.Inaddition,PRO(humanresources)leadershipispilotingdiversecandidateslatesandinterviewpanelsbeginningin2019forallDirector+roles.Theorganizationwillthen considerwhethertoextendthisbeyondPRO.Thisapproachwillensurethatmembers of the populations currently underrepresented are interviewed with appropriate consistency.


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Inclusion and Diversity Leader

Starbucksintendstohireaninclusionanddiversityleader,whowillserveintheCompanysPROorganizationasaVicePresident.WeconsiderthisanimportantrolethatreflectsStarbucks interest in a sustained commitment to promoting diversity and inclusion. Inourexperience,sustainedeffortstopromotediversityandinclusionrequireregularconsultationwithseniorleadershipandtheBoardofDirectorsandamechanismtodesignand implement changes across the business. We understand that Starbucks expects that the leaderwillreportregularlytoStarbucksExecutiveLeadershipTeam,includingtheCEOandCOO,aswellastotheCompanysBoardofDirectors.

Expanding the Pipeline: Diverse Hiring and Recruitment

Starbuckscurrenthiringeffortsseektoexpandthepipelineofdiversecandidatesandbuilda more diverse workforce and strengthen local communities by providing employment and transferableskillstopopulationsfacingbarriers.Thisworkisreflectedinthefollowinghiringandrecruitmentinitiatives:

Since2013,Starbuckshashiredover21,000veteransandmilitaryspousesandhascommittedtohiring25,000veteransandmilitaryspousesby2025.48

In2017,Starbuckscommittedtohiring10,000refugeesgloballyby2022.49

Starbuckshascommittedtohiring100,000OpportunityYouthby2020,andtheCompany is on track to meet this goal.50OpportunityYoutharetheroughlyfivemillionAmericansagessixteentotwenty-fourwhoarenotworkingorinschool,and who face systemic barriers to both.51Since2015,Starbuckshashiredmorethan65,000OpportunityYouth,themajorityofwhomarepeopleofcolor.Inaddition,Starbuckslaunchedacoalition,the100,000OpportunitiesInitiative.ThecoalitionhascommittedtohiringonemillionOpportunityYouthby2021.Inaddition,StarbuckscurrentlyservesontheboardofLeadersUp,aninitiativetoprovidejobsforOpportunityYouthacrosssupplychainsinmanufacturing,logistics,andotherfields.52

Overthepastfewyears,manystates,cities,andcountieshaveenactedbantheboxorfairchancelegislation,barringbusinessesfromaskinganapplicantabouthis or her criminal history until after an interview has taken place or a conditional jobofferhasbeenextended.Recognizingtheimportanceofsecondchancehiring,Starbucksisoneofthefewpubliccompaniesthathasadvocatedpubliclyfor expansion of ban the box legislation.53 The Company also has adopted a fair chancepolicyforallU.S.hiringandlocations.54 This means that Starbucks does notaskaboutcriminalhistoryonjobapplicationsandconductsbackgroundchecksonlyafteranapplicanthasbeengivenaconditionalofferofemployment.55 The policy also allows individuals to appeal adverse hiring decisions based on criminal


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history. This provides these individuals with the chance to be evaluated as a whole personbyhavingtheircircumstancesconsideredonacase-by-casebasis.56 The majorityofappealsareaccepted.

Pay Equity

BasedonaCompany-widecompensationstudyconductedin2008,Starbuckscommittedtoensuringthatwomen,men,andpeopleofallraces,werepaidfairly.57 The Company developedpayequityprinciplesfocusedonthebehaviorsthatleadtoequity.58 The Companyalsoimplementedseveralstepstoachievepayequity,includingregularcompensationanalyses,usinganofferstandardscalculatortodeterminestartingpayrangesforcertainpositions,changingpromotionprocedures,andtransparencyregardingtheCompanysprogresstowardspayequity.59

In2018,Starbucksachieved100percentpayequityintheU.S.forwomenandmenandpeople of all races for partners performing similar work.60 This work was built on the foundationofStarbuckspayequityprinciples,whichincludeendingthepracticeofaskingapplicantsaboutsalaryhistoryandprovidingsalaryrangestoanycandidatewhorequestsit.StarbucksunderstandsthatitisnotenoughtoachievepayequitytheCompanymustmaintain it. Starbucks has committed to continually monitoring partner compensation to ensure that disparities do not occur.

Everyone agrees with the idea of equal pay, but its putting it into practice that is the hard work.

Starbucks developed a set of principles and best practices designed to address systemic barriers impeding equal pay for equal work. We believe it is important for others to join us in adopting these principles and best practices, not just at Starbucks, but at companies around the globe.

Do not ask candidates about their salary history.

Remove any caps on promotional increases.

Provide a positions pay range upon a candidates request.

EQU

AL

FOO

TIN

G

Publish pay equity progress annually.

Use an offer standards calculator to determine starting pay range for roles.

Do not retaliate or discriminate against employees for asking about or discussing wages.

TR

AN

SP

AR

ENC

Y

Set a goal to achieve and maintain 100% gender pay equity globally and maintain 100% pay equity in the United States.

Conduct comprehensive compensation analyses.

Analyze all compensation decisions before they are final.

Address any unexplained difference in pay between men and women performing similar duties.A

CC

OU

NTA

BIL

ITY

PRINCIPLES to

EQUAL PAY

Graphic:The Path to Equal Pay infographic by Starbucks


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Starbucksisalsocommittedtohelpingothermultinationalcompaniesachievepayequity.61 StarbuckshaspartneredwithBillieJeanKingandherLeadershipInitiative,theNationalPartnershipforWomen&Families,andtheAmericanAssociationofUniversityWomen(AAUW)toencourageothermultinationalcompaniestoachieveglobalgenderpayequity.Inaddition,StarbuckshasposteditsPayEquityPrinciples&BestPracticesonitswebsiteasaresourceforotherorganizationsthatalsoseektoachievepayequity.62

Partner Networks

TheStarbucksPartnerNetworks,whicharesupportedbytheCompanysIDEAteam,areavaluablecomponentofStarbucksdiversityandinclusionefforts.PartnerNetworksaregroupsformedaroundhumanperspective(i.e.,age,ethnicity,gender,disability,race,orsexualorientation)orculturalperspective(i.e.,economicclass,education,geographiclocation,language,lifeexperience,militaryexperience).Allpartnernetworkshavea leadership presence in the Starbucks Support Center and chapters within the retail organization.

PartnerNetworksareintendedto:(1)connect,engage,anddeveloppartners;(2)shareknowledge,experiences,andculturalinsights;(3)buildrelationshipswithexternalcommunities;and(4)providediverseinsightandperspectivestotheorganization.EachPartnerNetworkhasatleastthreeexecutivechampionsattheVicePresidentlevelandabove,includingatleastoneSeniorVicePresident.Executivechampionsarechargedwithusing their functional expertise and leadership to advocate for their network.

Aspartofourassessment,wemetwithleadersfromeachPartnerNetworktodiscusstheirperspectivesonhowStarbuckscouldbettersupportPartnerNetworksand,inturn,underscoretheCompanyscommitmenttodiversityandinclusion.Keysuggestionsofferedinclude:(1)whiletheengagementofexecutivechampionshasbeenanimportantsourceofsupport,opportunityremainsforadditionalsupportorcommitmentfromalllevelsofleadershipwithafocusondirectlinesupervisors,(2)improvecommunicationchannelsandtechnologytomoreeasilyreachpartnersattheSeattleSupportCenter(SSC),regionaloffices,andretaillocationsandcollaborateacrossnetworksandchapters,and(3)supporttheNetworksastheyworktoexpandtheirprogramofferingsacrossboththeSSCandfieldchapters. We address these ideas in our recommendations.


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Starbucks Partner Networks

Access Alliance Advance a culture of accessibility and disability inclusion at Starbucks

Armed Forces Network Welcome, engage, and empower Starbucks veteran, military spouse, and advocate partners in cultivating a strong community that embraces veterans in the workplace and enriches the Starbucks Experience

Black Partner Network Share the heritage of the African diaspora to develop partners, advise our business and enrich Starbucks contribution to our customers and communities

Hora del Caf Celebrates the Latino culture, develops partners and positively impacts our customers and communities

India Partner Network Develops a global community contributing to the growth of the India market, celebrates Indian culture and supports the growth of partners from the region

NEXT at Starbucks Support and empower the next generation of Starbucks leadership

Pan-Asian Partner Network Foster meaningful connections and elevate the impact of Pan-Asian partners and allies within Starbucks and the community

Pride Alliance Network Strives to cultivate an equitable, dynamic and supportive environment for LGBTQ partners, allies, and customers

Welcoming Refugees Alliance Welcome and support our refugee partners, and help us advance our commitment to supporting refugee communities in the U.S. and around the world

Womens Impact Network Ignite the power of women to make an impact through partners, allies and community


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Accessibility Office

Starbucks commitment to accessibility integration and disability inclusion led the Company tolaunchitsAccessibilityOfficein2017.TheAccessibilityOfficeisworkingtoimproveStarbucksculture,hiring,andinfrastructureforpeoplewithdisabilities.TheAccessibilityOfficehasbegunmeetingwithStarbucksdepartmentstodiscusshowtheycancreateacultureofbelongingandintegrateaccessibilityintotheirinternalproducts,suchasStarbucks intranet.

TheAccessibilityOffice,whichincludespartnerswithdisabilitiesonitsstaff,alsosupportstheCompanysexistingandplannedeffortsregardingequity,diversity,andinclusion. Forexample,itwillreviewtheanti-biastrainingmodulesandplatformdevelopedby ASU(describedabove)toensurethatthetrainingisaccessible,anditsupportsthe PROorganizationinprovidingpartnerswithreasonableaccommodations.


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Recommendations for Fostering an Internal Culture of Equity and Inclusion

Inclusion and Diversity Leader

Asdiscussedabove,asStarbucksimplementstheroleofinclusionanddiversityleader,thispositionshouldhaveopportunitiestoreportdirectlytoStarbucksExecutiveLeadershipTeam,includingtheCEO,andtheBoardofDirectors.

Partner Networks

Encourage all levels of leadership to explore ways to provide greater support forPartnerNetworksinordertoraisethevisibilityandimportanceofthePartnerNetworksinternallythroughoutthebusinessanddrivegreaterpartnerparticipation.

IncorporateanopportunityfornewpartnerstojoinPartnerNetworksduringtheonboarding process.

Createasingle,internalresource,perhapsarevisedPartnerHubontheCompanysintranet,tohostresourcesregardingthePartnerNetworksandtoallowpartnerswhowishtolearnmoreaboutthePartnerNetworkstofindinformation about them easily.

ConsideradditionalwaystosupportthePartnerNetworks.Specificexamplesbasedonpartnerfeedbackincludesponsoringevents,programs,orinitiativesandtheimplementationofadditionalavenuesforcommunication,suchasadiversitycouncil.

Partner Engagement

Continue to survey partners periodically to assess partner perceptions of the Companyscultureforequity,diversity,andinclusion.


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Anti-DiscriminationPolicyandTraining

Policies Regarding Discrimination and Harassment

A strong EEO statement along with a comprehensive policy against workplace discriminationandharassmentarekeyelementsinanycompanysefforttocreateandmaintainaculturethatpromotesequity,diversity,andinclusion.Aneffectivepolicysets the right tone and communicates the organizations commitment to creating a respectful andsafeenvironmentforallemployeesregardlessofrace,gender,ormembershipinanotherprotectedclass.Aneffectivepolicyalsowillclearlycommunicatewhatisprohibited,makeiteasyforworkerstoreportproblemswithoutfearofreprisal,andpresentanorganizedprocessforpromptlyandimpartiallyreviewing,investigating,andresolvingconduct that may violate the policy.

WereviewedStarbucksEEOstatement,itsHarassmentandDiscriminationProhibitedpolicy,andrelatedsectionsofthePartnerGuidewiththesepointsinmind.WhileStarbucksEEOstatementandHarassmentandDiscriminationProhibitedpolicybothcomplywiththelaw,webelievethattheycouldbestrengthened.Starbuckshascommittedtorevisingthesepolicies,aswellasitsPartnerGuide,consistentwithCovingtonsrecommendations.

Currently,theHarassmentandDiscriminationProhibitedpolicyislistedalphabeticallyinasectionofthePartnerGuidecontainingStarbucksGeneralPoliciesandStandards.Its placement risks obscuring the importance that Starbucks places on creating an inclusive workplace. We recommend grouping all of Starbucks policies related to preventingdiscrimination,harassment,andretaliation,aswellaspoliciesonworkplaceaccommodations,intooneseparatesectioninthePartnerGuide,tosimplifylocatingand referring to them. We further recommend that Starbucks prominently include in the same section information regarding the resources available to partners who wish to reportdiscrimination,harassment,orretaliation.WerecognizethattherelevantcontactinformationalreadyexistsinanothersectionofthePartnerGuide,titledHowWeCommunicate.However,tostreamlinethestepsneededtoreportpotentialmisconduct, we recommend including the relevant contact information with the policy itself.

TheHarassmentandDiscriminationProhibitedpolicycouldbeimprovedbydefining,describing,andcommunicatinghowtoreportprohibiteddiscrimination.Currently,itcontainsrelativelylittlelanguagespecificallydefiningordescribingprohibiteddiscrimination,andthesectionofthepolicythatexplainshowtoreportviolationsrefers toinstancesofharassment,retaliation,andoffensiveconduct,butnottodiscrimination.


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Other Partner Guide Updates

ThereisanothersectionofthePartnerGuide,titledStarbucks:TheStory,thatcouldbestrengthenedbyincludingadirectreferencetoStarbuckscustomerdefinition.ThisshortsectionexplainsthereasoningbehindtheCompanysnameandlogoandidentifiesseveralofStarbucksmostimportantvalues,includingtheCompanyscommitmentstoitspartnersand to creating a welcoming third place. We think that this section presents another opportunity for Starbucks to emphasize to its partners two important points related to this assessment:theCompanysdefinitionofacustomer,anditscommitmentstopreventingdiscrimination and promoting diversity.

Harassment Prevention Trainings

Certainstatesrequirethatemployersprovidespecificworkplaceharassmentpreventiontrainingtosupervisoryemployeesor,insomecases,toallemployees.OurreviewofStarbuckstrainingprotocolsfoundthatStarbucksisincompliancewithapplicablestate-specificrequirements.Starbucksalsoextendsharassmentpreventiontrainingbeyondthoserequirementstostorepartnersinmanagerialroles(generally,AssistantStoreManagersandStoreManagers)intheU.S.andCanada,aswellastoallnon-storepartnersglobally.Inparticular,Starbucksprovidesworkplaceharassmentpreventiontrainingtopartnersduringnew-hireonboardingandprovidesrefreshertrainingsonaregularbasis.

Partner Complaints

Animportantcomponentofanycompanyseffortstoensurediversity,equity,and inclusion is a clear employee complaint process for reporting workplace concerns without fear of reprisal. Our assessment included a review of Starbucks procedures and processes forintakeandhandlingofpartnercomplaintsregardingdiscrimination,harassment, and retaliation.

Wefoundthatpartnershavemultipleavenuestoreportconcerns,includingcallingoremailingthePartnerContactCenter(PCC),whichincludesthePartnerResourcesSupportCenter(PRSC),andtheEthicsandComplianceHelpline.ContactinformationispublishedinmultipleplacesinthePartnerGuidesandispostedatthebackofeachstore.TheCompanyalsohasclearproceduresforhowcomplaintsaretobehandledandastronganti-retaliationprovisioninthePartnerGuides.

DuringourmeetingswithStarbucks,welearnedthatthePCCreceivescallsonavastrangeofissues,suchaspaychecks,policyclarification,benefits,andclaimsofwrongdoing.AsmallpercentageofthecallsreceivedbythePCCinvolvediscriminationorharassment,andthoseareroutedtotheEthicsandComplianceteam,whichisprincipallyresponsiblefor conducting investigations and recommending remedial action in cases involving allegationsofdiscrimination,harassment,orretaliation.TheEthicsandCompliance


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teamsinvestigativeprocessincludesthoroughdocumentationofallinvestigationsteps,includingwitnessinterviews,keydocumentsreviewed,conclusions,andrecommendationsfor corrective action. We reviewed several investigative reports and found them to be comprehensive.

Recommendations for Fostering an Internal Culture of Equity and Inclusion

Revisions to Starbucks Partner Guides

Starbucks has committed to incorporating the following recommendations into the next versionsofitsPartnerGuides,whichStarbucksexpectstopublishin2019.

CreateanewsectioninthePartnerGuides,immediatelyfollowingthePaysection,tosetforthallofStarbuckspoliciesforpreventingdiscrimination,harassment,andretaliationandforprovidingreasonableaccommodations,aswellas all contact information needed to report potential misconduct.

RevisethesectionofthePartnerGuidestitledStarbucks:TheStory,toincludeanOurCustomerssectionthatwouldcontainStarbucksupdatedcustomerdefinition,andreflecttheCompanyscommitmentstopreventingdiscriminationand to creating an inclusive workplace.

RevisetheHarassmentandDiscriminationProhibitedPolicyandEEOstatementtoanchortheCompanyseffortstopreventdiscrimination,harassment,and retaliation in Starbucks Mission and Values. Consistent with this recommendation,StarbuckshasadoptedanewEEOstatement,whichisincludedinAppendixB.

Training

Expandharassmentpreventiontrainingduringonboardingtoincludeallstore-levelpartnersintheU.S.,andexpandrefreshertrainingtoincludeallU.S.partnersnotlessfrequentlythaneverytwoyears.

Update Starbucks onboarding and training materials to educate new partners about the avenues available for submitting complaints.


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PartnerBenefitsandInitiatives

Partner Benefits

Starbuckshasbeenaleaderinprovidingitspartners,includingpart-timepartners,withcomprehensiveandvaluableemployeebenefits.In1988,Starbuckslaunchedabenefitspackagethatincludedaffordablehealthcareforpartnerswhoworkedatleasttwentyhoursaweek,BeanStock(Starbucksshares)forpartnerswhowereeighteenyearsoldandhadbeenworkingatleastninetydays,anda401(k)planwithmatchingcontributionstoattractandretaintalent.Thenandnow,Starbuckswasanoutlierinthefoodandbeveragechainindustryforitsgenerouspartnerbenefits.63

Inlate2017,consultingfirmAonHewittcompletedabenefitsbenchmarkingreportthatcomparedStarbucksbenefitspackagetothirty-nineothermajorretailcompanies.ThereportconcludedthatStarbucksprovidedhighervaluebenefitstoretailhourlyemployeesthananyothercompanymeasured.ThereportplacedStarbucksfirstamongallcompaniesincludedinthebenchmarkingcomparisonforpart-timeemployeebenefits.Aspartofourassessment,wereviewedtheStarbucksTotalRewardsbenefitspackage.Weexaminedwhetherthebenefitswerewell-designedforall partners and determined that Starbucks employeebenefitsofferingsaregenerousandcomprehensive.Ourrecommendationsarelargelygearedtowardmonitoringutilizationandcontinuingtoscrutinizenewbenefitofferingsforpotentialdisparitiesinutilization.

Health and Wellness

Healthcare

Starbucks healthcare coverage is an important part of its total rewards package and reflectiveoftheCompanysMissionandValues.TheCompanyoffershealthcoveragethatextendstofamily,includingdependentsandsame-sexpartners,tobothfull-andpart-timepartners,regardlessofthepositiontheyholdatStarbucks.64 Eligible partners can select fromacatalogofmedical,dental,andvisionplansthatvarybygeography.Costandlevelof care vary by plan.65 Starbucks covers seventy percent of the premium cost for eligible employees. Starbucks reports that the coverage provided is fully comprehensive for all healthcareneedsandincludes100percentofthecostofpreventivecareservices,includingwomens preventive health services.66

Notably,Starbuckshealthinsuranceplanscovertransgenderhealth,whichisbroadercoveragethanistypicallyofferedundermosthealthplans.67 Starbucks worked with the WorldProfessionalAssociationforTransgenderHealth(WPATH)toensurecoverageforproceduresencompassedinWPATHclinicalguidelinesfortransgenderhealth.68 This includes coverage for gender reassignment surgerywhich is the only transgender healthbenefitcoveredundermostemployerplansandformanyothergender-affirmingprocedures that are typically not covered by insurance because they are considered


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cosmetic,suchasbreastreductionoraugmentation,facialfeminization,hair transplants,andmore.69

Partner and Family Support

ParentalLeave

In2017,Starbucksexpandeditsparentalleaveprogram.70Now,allpartnershaveaccess toparentalleave,withvaryinglengthsandpayreplacement,asfollows:

Birth mothers:Benefits-eligiblebirthmothers(thoseworkingatleasttwentyhours a week) receive at least six weeks of fully paid leave for medical recovery;

All new parents, for birth, adoption, or foster placement: Benefits-eligiblenewparentsreceivesixweeksoffullypaidleave,regardlessoffederalFamilyandMedicalLeaveActeligibility,andmaytakeanadditionaltwelveweeksofunpaidleave.Eligiblenon-storepartnersreceiveatleasttwelveweeksoffullypaidleave.71

PartnerandFamilySickTime

TheStarbucksPartnerandFamilySickTimeprogramallowsallU.S.partnerstoaccruepaidsick time based on hours worked and use that time for themselves or a family member that needscare.Partnersaccruethistimeatarateofonehourforeverythirtyhoursworked,thusapartnerworkingtwenty-threehoursaweekcanexpecttoaccrueapproximatelyfivedays of sick time over the course of one year.

Care@Work

In2018,StarbucksimplementedtheCare@Work initiative to provide additional support beyond the existing parental leave and partner and family sick time policies. Care@Work providesallStarbuckspartnerswithtensubsidizedbackup-caredaysperyear.72Partnerspay$1perhourforin-homebackupcareor$5perdayforin-centerchildcare.73PartnersalsoreceiveafreepremiummembershiptoCare.com,valuedat$150,andaccesstoCare.coms platform of caregivers.74 The program also provides free access to a Senior Care Advisorforprofessionalguidanceonlong-termcaregiveroptions,housingalternatives, andfinancialandlegalconcerns.75

Education and Opportunity

StarbucksCollegeAchievementPlan(SCAP)

In2015,inresponsetoPartnerfeedback,StarbucksbeganapartnershipwithASUtooffereligibleU.S.partnerswhoworkatleasttwentyhoursaweek100percenttuitioncoverageforafirsttimebachelorsdegreefromASU.Onegoalofthispartnershipwastoexpandaccesstohighereducationtothosewhowouldbethefirstintheirfamiliestoattendcollege.This


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advanced-educationbenefitcomeswithaUniversity-basedsuccesscoachtoassistpartnersontheireducationaljourneyaswellasanacademicadvisorandaccesstoASUfinancialaid advisors.76Partnersarefreetopursueanydegreethatintereststhem.Onceenrolled,partnersreceiveaforty-twopercentscholarship,completetheirFreeApplicationforFederalStudentAid(FAFSA),andapplyanyaidtheyreceivetotheirtuitionbill.Anyremainingtuition costs paid are fully reimbursed directly into a partners paycheck at the end of each semester,withoutanyadditionalpaperwork.Importantly,Starbucksdoesnotrequireaparticipating partner to remain at Starbucks after graduation.

Inaddition,partnerswhoaremilitaryveteranscanextendanadditionalSCAPbenefittoaqualifyingfamilymemberoftheirchoice.BelowarethefeaturesoftheSCAPprogram:

100percenttuitioncoverage

Over2,400graduatesoftheprogramtodate

AsofJanuary2019,over11,000partnerscurrentlyparticipatingintheprogram

Starbucksgoalistograduate25,000partnersby2025

Sixty-fourpercentofstoreshaveatleastonepartnerparticipating.Therearepartners in the program from every state. Seventy percent of current participants arewomen,andthirty-sixpercentarepeopleofcolor.Starbucksalsotracksenrollmentoffirst-generationcollegeattendeestoassesswhethertheprogramissucceeding at expanding opportunity for these individuals.

StarbuckshasstructuredtheSCAPreimbursementmodelsuchthatitcouldoffertheprogramonanationalscale,andtheCompanycontinuestoconsideroptions,suchasup-fronttuitioncoverage,thatwouldlowerbarrierstoentry.

PathwaytoAdmission

AfterlaunchingSCAP,Starbucksfoundthatoneofthebiggestbarrierstoadmissionwaspreviousacademichistoryabouttwentypercentofpartnersdidnotqualifyforadmission.TofurtherexpandthescopeofprovidingeducationtomoreStarbuckspartners,StarbucksworkedwithASUtodevelopPathwaytoAdmission.Partnerscannowreceiveanindividualized set of courses created for them by ASU to work toward admission based on eachpartnersuniquesituationandacademichistory,with100percenttuitioncoverage.


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DACAFeeReimbursementandImmigrationAdvisoryProgram

StarbuckshaspubliclyadvocatedforapermanentsolutionforDeferredActionforChildhoodArrivals(DACA)recipients,commonlyknownasDREAMers,andiscommittedtostandwithDreamersincludingthoseweareproudtocallStarbuckspartners.77 Todemonstratethiscommitment,StarbucksreimbursespartnersDACAfilingfees.78 StarbucksalsoprovidesafreeImmigrationAdvisorProgramforpartnersandtheirfamiliesso they have support navigating immigration issues.79

Finances and Investments

Starbucksfinancialbenefitsareuniqueinthattheyarestructuredforincreasedpartnerparticipationandtorewardpartnerretention,includingamonghourlypartners.Eligiblepartnersmayenrollina401(k)orRothsavingsplan,receivegrantedBeanStock,andbuydiscountedsharesofStarbucksstock.PartnersareeligibleforBeanStock(RestrictedStockUnits)iftheyareemployedbyStarbucksasofMay1ofthefiscalyearbeforethegrantdateandworkinaCompany-ownedmarket(notalicensedorfranchisestore).80 Restricted StockUnitsconverttosharesofStarbucksstockoveratwo-yearvestingperiod,inwhichthe recipient must be continuously employed by Starbucks.81 This program thus rewards partner retention and gives a broad base of partners the opportunity to own Starbucks stock.

Partner Wages

StarbuckspaysaboveminimumwageforallpositionsacrosstheUnitedStates,andinApril2018,theCompanyannouncedapayincreasefor

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