Starbucks pledges $ 100 million to assist small companies and communities
Kevin Johnson, CEO of Starbucks
Scott Mlyn | CNBC
Starbucks launches a $ 100 million fund that aims to invest in community development projects and small businesses in areas populated by blacks, indigenous peoples and colored people.
The company’s Community Resilience Fund is part of a broader plan to strengthen its commitment to racial and social justice, particularly in the communities where it operates cafes. In June, when Black Lives Matter protesters took to the streets to urge an end to racism and police brutality, Starbucks pledged $ 1 million in grants from its inception and joined numerous companies that said they did would give money to fight racism. Starbucks eventually issued an additional $ 500,000 in grants.
The coffee chain has also looked inward to make its workforce more diverse by setting goals for their management roles and tying executive compensation to those benchmarks.
Starbucks plans to use the new fund to invest $ 100 million in 12 US cities that are home to black, indigenous or colored people over the next four years.
The cities are Atlanta, Detroit, Houston, Los Angeles, Miami, Minneapolis, New Orleans, New York, Philadelphia, the San Francisco Bay Area, Seattle, and Washington, DC. In Philadelphia in 2018 police arrested two black men waiting for a business meeting to begin before coffee is ordered, boycotts are triggered and Starbucks is forced to shut down its company-owned cafes nationwide for a day of racist bias training.
The money goes to impact financial institutions, such as community development financial institutions, that provide financial services to low-income people. Small business and neighborhood development projects are ultimately intended to be the beneficiaries of the program.
The aim is to bridge the gap between the public and private sectors. Over the past year, many small businesses missed federal funding from the paycheck protection program, which should help them stay afloat during the coronavirus pandemic.
“We know these communities. These are some of our business partners, and in some cases they are even a small supplier to Starbucks,” said Roz Brewer, chief operating officer. “And when you think about it and you can’t help but have empathy for them, you want them to thrive too, but we also understand what they’re going through.”
In 2019, Starbucks pledged to invest $ 10 million in CFDIs based in Chicago. Brewer said the company is working with Chicago Mayor Lori Lightfoot to make sure the money goes to essentials. Starbucks is already talking to local governments in the areas that will benefit from the new fund.
Starbucks’ commitment to social causes, including racial justice and climate change, has popularized the company with investors who consider environmental, social, and corporate governance considerations when choosing stocks. An analysis by RBC Capital Markets found that Starbucks is the most popular restaurant stock in the S&P 500, with actively managed funds dedicated to ESG investing.
Starbucks shares were up 16% last year as the market closed on Monday, giving the company a market value of $ 123 billion.