Sustainable Coffee Supply Chain Compliance

• The need for sustainable coffee is becoming more and more crucial to the future of people and the planet
• As consumers become more conscious (and consume more and more coffee), coffee brands that prioritize sustainability will be able to meet demands
• With EU due diligence deforestation-free supply chain requirements, coffee brands cannot afford sourcing non-compliance

What is sustainable coffee and why does it matter? Coffee is a multi-billion-dollar industry, with increasing demand for coffee rising around the globe. In fact, the compound annual growth rate is projected to be 4.65% for the next few years. More people drinking coffee daily requires higher coffee production to meet demand. But climate change, volatile market prices, supply chain disruptions, and compliance regulations have put coffee production – including quality and sustainability – at risk. Without changes to ensure sustainability, we could be facing a coffee shortage that would impact millions.

The picture isn’t completely bleak, however. Sourcing sustainable, compliant coffee for your brand is possible. As more people work together toward coffee sustainability, we’ll be able to protect the livelihoods of coffee farmers and the ecosystems where coffee is grown. In essence, sustainability – connected to your supply chain and procurement – is the key to the future of coffee around the world.

Read on to learn everything you need to know about sustainable coffee and how your brand can achieve both coffee-sourcing compliance and sustainability.

The State of Coffee & Sustainable Coffee Today

In order to understand what sustainable coffee is, it’s important to take a look at traditional coffee and some of the issues with the coffee industry. According to estimates, 125 million people worldwide depend on coffee for their livelihood. Around 50 countries produce and export coffee, most of which are developing nations. Price volatility has a major impact on coffee farmers, leading to poverty and food insecurity.

Coffee is a tropical plant, requiring cooler tropical climates with temperatures between 64 to 70 degrees F. The fruit develops much faster at higher temperatures, creating lower-quality coffee beans. Additionally, higher temperatures allow coffee pests to flourish. Unfortunately, rising temperatures, over-farming, and deforestation have all reduced the cropland where coffee can be grown. Some coffee farmers are abandoning coffee as a crop altogether in favor of more reliable crops. Others continue to clear precious rainforests in order to access fresh, suitable soil and more sun. 

Supply chain regulations such as the EU due diligence deforestation-free updates put coffee companies at risk of enormous fines if they are unable to prove the origins and sustainability of their coffee.

What is Sustainable Coffee?

Although the urgency of producing coffee sustainability may be increasing, some existing groups have been working toward sustainability in the industry for years.. The Sustainable Coffee Challenge is one of the biggest initiatives looking to increase sustainability. According to the Sustainable Coffee Challenge, the four goals of sustainable coffee include:

• Improving livelihoods of coffee farmers
• Strengthening market demand for sustainable coffee
• Reforestation, regenerative agriculture, and conservation
• Sustaining quality coffee supply

So what exactly does coffee sustainability look like in practice? Coffee growing practices use environmentally friendly and regenerative methods instead of intensive practices that are unsustainable and lead to a growing need for more land to farm and deforestation. Growing coffee in shaded areas, or agroforestry systems, leads to cooler growing temperatures and more biodiversity. Maintaining a diverse canopy is important because it provides a habitat for bats and birds that eat pests. Shade-grown coffee also allows farmers to stick with their current coffee farms, rather than clearing more forests in higher elevations, thus reducing deforestation.

Additionally, sustainable coffee also ensures that coffee farmers are receiving fair wages to alleviate poverty. This means that prices aren’t kept artificially low. When farmers are paid fairly for their crops, they can pay laborers fairly, rather than exploiting workers or child labor. 

How to Spot Sustainable Coffee

There’s a lot of flashy lingo out there when it comes to sustainability. Sometimes, it’s hard to differentiate between greenwashed coffee products versus coffee products that are sustainable. It can also be hard to know what to prioritize to achieve true sustainability as a brand that sources coffee, especially when the coffee industry contributes to so much deforestation worldwide. 

When it comes to sustainable coffee, here’s what to look for (consumers) and prioritize (brand):

Proof of provenance

Proof of provenance – i.e., proof that one knows the exact origins of a product, ingredient, or material – is crucial in truly sustainable coffee. A typical coffee supply chain includes (at least) farms, cooperatives, collectors, processing plants, shippers, importers/exporters, traders, roasters, labelers, distributors, and coffee shops or grocery stores. This means that a single coffee bean will pass through at least 11 steps before making its way to a shelf. Being able to prove where that coffee bean originated, ideally through geo-located, real-time transactions down to the farm location, is critical to ensuring that sustainability claims are trustworthy. Even more importantly, critical to compliance (for regulations such as EU due diligence deforestation-free law).

Clear, actionable goals

True sustainability and sourcing won’t happen in a day, especially in the case of larger enterprise brands with multiple global supply chains. Leading (and trustworthy) sustainable coffee brands will have clear, specific sustainability goals in place that go beyond the generic “full supply chain visibility by 2025.”

For example, “by 2025 we will be able to track and trace X% of our coffee beans, end-to-end through implementing visibility software across a supply chain, with an increase of X per year.” As you set or evaluate your goals, avoid relying too heavily on terms like “organic” and get as specific as possible on what organic or sustainable will mean – qualitatively and/or quantitatively.

Transparency about progress

Even better than a clear end goal is having yearly or quarterly goals outlined that enable brands to show how they plan to make progress. As a company, internal quarterly reports and end-of-year public reports are a fantastic way to remain honest and transparent with your stakeholders and customers. 

Progress transparency also helps you ensure that you’re making the strides necessary to achieve any sustainability or compliance goals and you have qualitative/quantitative data to support them.

End-to-end supply chain visibility

Up until now, many coffee brands have relied on third-party certifications such as Fairtrade or Rainforest Alliance and spot audits that don’t require verified geo-located transactions or real-time data for verification. However, these tactics are no longer enough to prove sustainability or compliance. A spot audit may happen once a year or every few years with little regard to real-time feedback. And satellite data alone means little without verified geo-located data and boots on the ground.

Thus, end-to-end supply chain visibility is required for true sustainability and compliance. Luckily, traceability solutions exist that can give you real-time visibility and data into your sourcing to support you.

How to Ensure that Your Coffee is Compliant & Sustainable

If you’re a brand looking to improve your sustainability, you might be wondering how to ensure that your coffee is compliant. Sustainability as a goal can be intimidating because it has many factors–environmental, social, and economic sustainability. Failure to do so, particularly in light of recent EU due diligence regulations, could also mean both reputation and financial costs for non-compliant coffee. The best way to work toward coffee sustainability is to take one intentional step at a time.

Here are a few ways you can kickstart your sustainable, compliant coffee journey:

1. Map out your supply chain to help you identify the exact geo-coordinates of the commodity journey. 

Understanding your coffee’s journey from farm to shelf is an essential first step in visibility, sustainability, and compliance. Start from your last few tiers and go as close to the farm as possible. If there are gaps in your knowledge, don’t stress! Few companies know their supply chains end-to-end, but getting a handle on what you already have visibility on versus not will help set you up for success. 

Because most regulations, including the recent EU due diligence updates, require exact geo-coordinates to prove sustainability and compliance, this exercise will also help you get a feel for whether or not you know where your supply chain goes, and the exact location of suppliers, cooperatives, and farms.

2. Define what compliance means with consideration to the laws of the countries where your commodities are produced.

Once you’ve outlined your coffee’s journey and mapped your supply chain, it’s time to look at regulatory compliance. Every country (and commodity) will have various compliance laws in place. 

Top of mind for most manufacturers and brands in 2023 is complying with the EU Due Diligence Regulations on deforestation-free supply chains. The recent deforestation regulations impact companies sourcing beef, wood, palm oil, soya, and - you guessed it - coffee and cocoa. 

3. Choose a traceability partner & solution to help you with all of the above, and to support your long-term sourcing compliance.

Digital traceability solutions are being deemed the next supply chain revolution. Choosing the right traceability partner and solution will help you multi-solve sustainability and business pain points. Leading traceability partners/solutions, such as BanQu, allow companies to trace and track their commodities end-to-end with real-time data, custom implementations, and ongoing support. So you can protect your business, achieve regulatory compliance, and do good for people and the planet.

The Bottom Line on Sustainable, Compliant Coffee

From the destruction of rainforests to increasing regulations, fines, and risk of reputational damage, coffee can have a major environmental - and business impact. If something isn’t done, the very future of coffee – and your coffee business – could be at risk.

Sourcing sustainable, compliant coffee is one way you as a brand can have a positive impact on the world and forests around you while protecting and growing your business. BanQu can help. With its powerful supply chain software, BanQu can help you track and trace your coffee all the way down to farms that use sustainable, regenerative agriculture methods and fair labor practices. 

Through data and real-time reporting, all on a single platform, BanQu can also help you verify certifications and prove sourcing compliance every step of the way. So you can make – and prove – your difference while making delicious coffee. Schedule a time to chat with us today!

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