Starbucks Faces Shareholder Pressure Over Xinjiang Ties

Free Enterprise Project Demands Coffee Giant Close New Xinjiang Stores Days After Filing Forced-Labor Shareholder Proposal

Washington, D.C. - Just days after the National Center for Public Policy Research filed a shareholder proposal pressing Starbucks to disclose its exposure to forced labor in Chinese solar supply chains, the coffee giant opened its first stores in Xinjiang, the region at the center of longstanding allegations of forced labor and human rights abuses against the Uyghur population.

Now the National Center's Free Enterprise Project (FEP) is demanding that Starbucks close the stores and explain to shareholders why company management chose to expand into Xinjiang.

"It is appalling that Starbucks is now selling coffee to Chinese Communist Party elites as they commit crimes against humanity and ethnic genocide," said FEP Executive Director Steve Milloy in an October 2 letter to Starbucks.

Milloy called on Starbucks to "immediately close its stores in the Xinjiang region" and asked the company's board of directors to investigate and report to shareholders why management opened stores there. He requested a board response within 30 days.

The controversy erupted after Starbucks opened two locations in Urumqi, the capital of Xinjiang, one at the Grand Bazaar and another at the city's international airport. Rep. John Moolenaar, chairman of the House Select Committee on the Chinese Communist Party, called Starbucks' expansion a "shocking and morally bankrupt decision " and urged the company to immediately close the stores.

The timing is particularly striking because FEP had already put Starbucks on notice about its potential exposure to forced labor in China.

On September 28, FEP filed a shareholder proposal for Starbucks' 2027 annual meeting requesting an annual report detailing how the company verifies that solar equipment used in its renewable-energy projects is free of inputs from Xinjiang and state-imposed labor-transfer programs elsewhere in China.

The proposal focuses on Starbucks' solar supply chain, including solar modules, cells, wafers, polysilicon and metallurgical-grade silicon. It asks Starbucks to disclose whether it can trace those materials through the supply chain and identify gaps it cannot close.

"If the Company cannot verify origin, it should say so," the proposal states. "Climate targets that depend on opaque silicon are not a complete account of risk."

The proposal also challenges Starbucks to weigh the human-rights risks associated with its climate agenda against the extraordinarily small potential climate benefit the company claims from renewable electricity.

"Those increments are trivial," the proposal states. "Forced-labor and UFLPA exposure in silicon used to support '100% renewable' claims is not."

Then, just days after FEP submitted that proposal, Starbucks opened the two Xinjiang stores.

"Last week we asked Starbucks whether its solar panels could be tainted by forced labor in Xinjiang. Before the week was over, Starbucks went a step further and opened coffee shops in Xinjiang itself," said Milloy. "Starbucks shareholders deserve to know why a company that sells itself on social responsibility is willing to expose its brand to these risks."

FEP is also taking the fight to Starbucks' major institutional shareholders.

Milloy sent requests to Morgan Stanley, BlackRock and State Street asking them to use their influence as Starbucks shareholders to support FEP's demand that the company close the Xinjiang stores. In his letter to Morgan Stanley, Milloy asked its board to "add your voice as a shareholder and to support our request of Starbucks."

Although China has denied accusations of genocide and widespread human rights abuses in Xinjiang, the question for Starbucks' board is increasingly difficult to avoid: How can the company reconcile its highly publicized commitments to human rights and corporate responsibility with both its sourcing risks and its decision to do business in Xinjiang?

"Starbucks cannot have it both ways," Milloy said. "It cannot market itself as a champion of human rights and sustainability while refusing to tell shareholders whether its green-energy supply chain is connected to forced labor - and then turn around and open stores in Xinjiang."