Starbucks Steps Up Its Racial Justice Outreach With $100 Million Pledge

CBx Vibe:Black Coffee” Sarah Vaughan

  • Starbucks pledges $100M to Black community and their small businesses
  • In its fiscal Q4 2020, the coffee conglomerate brought in $6.2 billion in revenues

Starbucks’ (SBUX +0.50%) new Resilience Fund aims to invest $100 million over the next four years to “advance racial equity and environmental resilience” in communities with a lack of access to capital required to grow businesses. The coffee chain will partner with local Community Development Finance Institutions (CDFIs) to distribute capital, as they typically have a special interest in banking throughout minority communities, reviving struggling neighborhoods, and increasing local economic activity, with hopes of ultimately seeing the Black and brown entrepreneur thrive. Some people are left wondering whether or not the company is actually doing enough to step up its commitment to racial and social equity, particularly in the communities where it operates?

Why This Matters: Following the Black Lives Matter protests during the summer of 2020, Starbucks was one of the slew of companies that pledged to invest millions of dollars into supporting racially maligned and socioeconomically disadvantaged communities. The $100 million investment represents a small fraction of the company’s revenues. Case and point, in its fiscal Q4 2020, the coffee conglomerate brought in $6.2 billion in revenues, meaning that its $100 million social justice commitment represents just 1.61% of sales.

Its $100 million social justice commitment represents just 1.61% of sales

Making bold promises for greater diversity is not new territory for Starbucks following the arrest of two Black men at a Philadelphia location. Three years ago, the business began increasing their DEI programs after losing $12 million in profits when they closed the Seattle corporate office and 8,000 company-owned stores for an afternoon dedicated to anti-bias training.

Interestingly enough, RBC Capital Markets found Starbucks is the most popular restaurant stock on the S&P 500 with actively managed funds that are dedicated to ESG investing. Shares are up 58 over the past two years.

What’s Next: Whether Starbucks’ initiative brings meaningful change remains to be seen but it is a positive step in broader social justice outreach and creating a culture of equality. Initial rounds of money from the Resilience Fund are slated to hit cities including Atlanta, Detroit, Houston, Los Angeles, Miami, Minneapolis, New Orleans, New York City, Philadelphia, the San Francisco Bay Area, Seattle and Washington D.C.

CBx Vibe:Black Coffee” Sarah Vaughan

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