RESPONSIBLE BUSINESS PRACTICES

1 At Starbucks, the choices we make and actions we take area reflection of our core values. To become what Starbucks istoday the leading retailer, roaster and brand of specialty coffee took the vision to create a values-driven coffee company inspiredby passion, dedicated to quality and guided by exceptionallystrong aspires to be recognized as much for our commitmentto social responsibility as we are for the quality of our ve focused our efforts on improving social and economicconditions for coffee farmers; minimizing our environmentalimpact.

2 Making a positive contribution in the communities wherewe do BUSINESS ; and providing a great work environment for ourpartners (employees).Throughout our 30-year history, we have been committed to socialresponsibility. Today, with the strength of our brand in themarketplace, Starbucks has an opportunity to lead by responsibility starts with being accountable to Starbucksstakeholders our partners, customers, shareholders, suppliers,community members and others and communicating openlyabout our BUSINESS PRACTICES and performance.

3 We are, therefore,publishing our first annual Corporate Social Responsibility Reportto communicate the way we do goal throughout this Report is to provide information to ourstakeholders about our policies and PRACTICES , and to provide,when possible, measures of our performance. By publishing thisReport, Starbucks joins a small but growing number of companiesthat are assessing their corporate citizenship, taking measuresto provide transparency on performance and being accountableto stakeholders. We realize that every day we must conduct ourbusiness in ways that earn your admiration and trust.

4 We hopethis Report helps us to do just regards,ABOUT THIS REPORTThe information in this Reportis for fiscal year 2001 (October 2,2000, through September 30, 2001)and covers Starbucks company-operated retail and distributionoperations in North America andsourcing activities in coffee-origincountries. Other than somecompany-wide financialinformation, Starbucks specialtyoperations and international retailmarkets are not included in thisReport. Starbucks North Americanoperations include Canada and , excluding Abramowitz PhotographyHoward Schultzchairman andchief global strategistOrin C.

5 Smithpresident andchief executive officerOrin SmithHoward SchultzRESPONSIBLE BUSINESS PRACTICES3 The BUSINESS Case for Social Responsibility3 Sustainability is Essential to Our Success 4 Sourcing in Origin Countries 5 Social Investments in Origin Countries6 Commitment to Origins8 Minimizing Our Environmental Impact 11 Working with Our Suppliers13 Listening to Our Stakeholders INVESTING IN OUR COMMUNITIES17 Part of the Neighborhood18 Community Investments21 The Starbucks FoundationINVESTING IN OUR PARTNERS23 Creating a Strong Workplace EnvironmentTa b l e o f C o n t e n t sStarbucks Mission StatementTo establish Starbucks as the premierpurveyor of the finest coffee in the worldwhile maintaining our uncompromisingprinciples as we following six guiding principles willhelp us measure the appropriateness ofour decisions: Provide a great work environment and treat each other with respect and dignity.

6 Embrace diversity as an essentialcomponent in the way we do BUSINESS . Apply the highest standards ofexcellence to the purchasing, roastingand fresh delivery of our coffee. Develop enthusiastically satisfiedcustomers all of the time. Contribute positively to ourcommunities and our environment. Recognize that profitability isessential to our future Fiscal 2001 Report3 THE BUSINESS CASE FOR SOCIAL RESPONSIBILITYS tarbucks defines corporate social responsibility as conducting our BUSINESS in waysthat produce social, environmental and economic benefits to the communities inwhich we operate.

7 In the end, it means being RESPONSIBLE to our is growing recognition of the need for corporate accountability. Consumersare demanding more than product from their favorite brands. Employees arechoosing to work for companies with strong values. Shareholders are more inclinedto invest in businesses with outstanding corporate reputations. Quite simply, beingsocially RESPONSIBLE is not only the right thing to do; it can distinguish a companyfrom its industry that there are positive returns for being a socially RESPONSIBLE company,Starbucks believes it makes sense to view our actions in terms of investments.

8 Byinvesting in sustainable BUSINESS PRACTICES and the origin countries that provide ourcoffees, we encourage a continued high-quality supply. In the communities where wedo BUSINESS , we invest in local organizations to improve the quality of life. And byinvesting in our partners, through competitive wage and benefit structures, andopportunity for stock ownership, we have an edge in attracting and retainingqualified, productive employees and that helps reduce our hiring, training andother turnover the end, there is no conflict between doing good and doing well.

9 At Starbucks, webelieve the two go IS ESSENTIAL TO OUR SUCCESSC offee is second only to water as the world s most popular drink, with more than400 billion cups consumed every year. Coffee is a giant industry employing 20million people globally, and ranks as the second most traded commodity on theplanet after , Starbucks has purchased our coffees at premiums over the world scommodity market prices (or the New York C, which is the worldwide referenceused by coffee traders for commodity-grade coffee).

10 The premiums we pay vary bythe type of coffee, as well as the overall quality of that particular coffee, relative tothe quality of New York C the past year, a worldwide surplus of coffee has dramatically reducedwholesale prices. At the end of fiscal 2001, prices paid for coffee on the New YorkC had dipped to $ a level not seen in nearly 30 BUSINESS PracticesResponsible BUSINESS PracticesCOMPANY PROFILEF iscal 2001 October 2, 2000 toSeptember 30, 2001:(Information below represents totalcompany unless noted)Total net revenues: $ billion Net earnings: $181 million Earnings per share: $ Total income taxes: $108 millionStock price (high/low): $25/$14 Number of company-operated locations: 2,971 (North America)Number of partners (employees).