It is thought two billion cups of coffee are drunk daily. Here, an employee checks robusta coffee beans during the roasting process at a factory in Vietnam. Photo: Bloomberg
It is thought two billion cups of coffee are drunk daily. Here, an employee checks robusta coffee beans during the roasting process at a factory in Vietnam. Photo: Bloomberg
It is thought two billion cups of coffee are drunk daily. Here, an employee checks robusta coffee beans during the roasting process at a factory in Vietnam. Photo: Bloomberg
It is thought two billion cups of coffee are drunk daily. Here, an employee checks robusta coffee beans during the roasting process at a factory in Vietnam. Photo: Bloomberg

Does our love of coffee have to be bad for the planet?


Daniel Bardsley
  • English
  • Arabic

Coffee consumption around the world is estimated at about 173 million 60kg bags a year, or roughly two billion cups a day.

The International Coffee Organisation forecasts that in 2023-2024, consumption will rise to 177 million bags.

But just what does the world’s seemingly insatiable demand for coffee mean for the environment, and in particular biodiversity, given that the crop is often grown on land that was once forested?

The speciality coffee brands, they like to talk a lot about sustainability, but they do very little on the ground
Sander Reuderink,
founder and CEO of Carble

According to the Coffee Barometer 2023 report, produced by an initiative supported by Conservation International, over the past two decades an average of 130,000 hectares of forested land a year has been converted to coffee production.

Aside from the impact this has on biodiversity, this deforestation has also released the equivalent of about 45 million tonnes of carbon dioxide each year.

A big issue for sustainability is whether the coffee plants are grown as a single crop or are mixed in with trees that provide shade, a practice known as agroforestry.

According to the Coffee Barometer, agroforestry can, among other things, store carbon and promote biodiversity, and so replicates, at least to a limited extent, the benefits that forests bring.

Agroforestry, thanks to the shading and the microclimates it creates, is also more resilient than single crop plantations to temperature increases.

Growing in harmony

Few have looked into the sustainability of coffee more closely than Sander Reuderink, a Dutch former coffee roaster and trader who is the founder and chief executive of Carble, which analyses land-use changes – such as the conversion of forests to plantations – and develops incentives to encourage farmers to grow more sustainably.

Mr Reuderink said coffee “can be grown in perfect harmony with nature”.

“That’s what we see in Ethiopia,” he said. “The first time I visited a coffee farm in Ethiopia, I didn’t know what I was looking at, because I had expected to see neat rows of trees like on a coffee farm in Brazil, but I was looking at a forest.

“I asked the farmer to explain to me what was going on, what I was looking at. He explained, ‘This is how we’ve been growing coffee for generations. This is how coffee should be grown.’

“But in other countries coffee is grown in a monoculture without the use of shade. Especially the transition from forests to new plantations is hugely problematic from an environmental perspective. That land-use change is one of the biggest components.

“Another really big component is the use of fertilisers and pesticides, which have a very large carbon footprint.”

A widespread perception might be that smallholders, who account for an estimated 80 to 90 per cent of coffee production, grow their coffee more sustainably than large-scale producers.

Mr Reuderink said, however, that the opposite is often the case, while adding the caveat that smallholders are “a very diverse group”, so practices vary widely.

“The assumption that I always had was that industrial farms or larger farms would produce in a monoculture, while smallholders would do more agroforestry. Surprisingly this was not always true,” he said.

“For example, in Ethiopia, we’ve actually seen much healthier shade cover with the larger plantations than with the smallholders.”

Sustainability is also influenced by the extent to which native forests were felled to allow for the growing of coffee and, if so, how long ago this happened.

While indicating that efforts to achieve sustainability vary between coffee companies – Nestle and Starbucks tend to come out better than most in its surveys – Coffee Barometer said many companies did not address the issue themselves, but instead “placed the responsibility on suppliers to ensure deforestation-free coffee”.

“Very few roasters have policies that meet best-practice requirements,” the 2023 report said. “While some individual companies may be performing better than others, our Coffee Brew Index reveals that most companies are not yet taking the action necessary to fulfil the existing sector commitments in addressing social and environmental risks.”

Primary forest loss by nation from 2022 to 2023. World Resources Institute
Primary forest loss by nation from 2022 to 2023. World Resources Institute

The larger, the better?

Mr Reuderink said that, in general, larger coffee companies were more focused on achieving environmental producers than their smaller counterparts.

“The mainstream companies, the larger companies, they typically have a much more advanced climate strategy than the small-scale speciality segment. The speciality coffee brands, they like to talk a lot about sustainability, but they do very little on the ground,” he said.

Commercial coffee production largely originated in Ethiopia, but one of the other early producers was Yemen, which has grown coffee commercially since the 15th century.

Coffee is also grown in Saudi Arabia, which has more than 400,000 Arabica coffee plants, according to reports, and plans for big increases.

In 2022, the Saudi Coffee Company was founded to help develop the sector in the country. Its production, mostly by smallholders and local farmers, is concentrated in the south-west of the country.

Dr Abdullah Bokhari, the sustainability and quality, health, safety, security and environment director, said that the company was currently assessing its overall sustainability, including efforts to reduce deforestation and deal with carbon dioxide emissions.

Scheduled to take about two years, this work will cover farming, manufacturing and distribution.

Current measures include having irrigation systems that rely on solar power instead of diesel pumps, while a factory will be solar powered and designed to achieve green building certification.

“Additionally, we have used green materials in compliance with regulatory requirements, and have adopted waste-reduction practices for our farming and factory operations,” Dr Bokhari said.

On the ground

For consumers, selecting a coffee on environmental grounds may not be easy. One approach is to look for certifications.

“There’s lots of different certifications out there – fair trade or sustainable coffee – but these are very patchy,” said Mark Maslin, a professor of earth system science at University College London.

He recommends that consumers purchase “quality coffee” because with this, he said, it is more likely that farmers will have been paid a fairer price.

“It won’t make much difference to [the price of] your coffee, but it will make a huge difference to the farmer and the industry,” he said.

Mr Reuderink said not all environmentally sustainable coffee was certified as such and, when looking for more sustainable coffee, he said he made his selection based on geography.

The Coffee Barometer 2023 report does not have figures for Ethiopia, but for Brazil it states that five per cent of coffee-growing hectares are shaded, while in Vietnam the figure is 25 per cent, in Colombia, 39 per cent, in Indonesia, 60 per cent, and in Honduras, 80 per cent.

“I choose based on countries, such as Ethiopia, that I know grow more of their coffee in agroforestry, because that’s more sustainable,” he said.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: June 09, 2024, 7:12 AM