The environment and labor issues may seem like unrelated topics. But workers are people, people are animals, and animals are an important part of the environment.
Okay, maybe that's a bit of a stretch. The real reason I'm lumping these two issues together is that coffee retailers often do the same thing. But they're (mostly) two separate issues so I'm going to address them separately anyhow.
Like all farming, there are environmental problems associated with growing coffee on a large-scale farm. Pesticides, fertilizers, and to some extent genetic modification may increase profits, but only at the long term expense of damaging our little planet.
But with coffee in particular, there is another issue — coffee has to be grown in tropical areas, which often (but not always) means using rainforests as farms. While coffee has been grown in the shade of the rainforest for generations, there was a period in which it was thought (mostly by the US) that sun grown coffee would be a better idea.
In the 70s and 80s, the United States Agency for International Development (USAID) paid coffee farmers to technify their farms. This meant cutting down large areas of the rainforest, planting only coffee trees (this is known as monocropping) and using pesticides and fertilizers. Not only does this ruin the rainforest, but it's also not a sustainable farming technique. This means that coffee can be grown in a location until the soil is ruined by a lack of nutrients or pesticide pollution.
Most brand-name coffee is still made this way, but some brands are now returning to old fashioned, sustainable shade-grown coffee farming. It can actually be cheaper for the farmer in some cases and it's always better for the environment.
If you want to help protect what's left of the rainforest, ask about the coffee you buy, whether it be in a cafe or the grocery store or the internet. If you've tried both "modern" and organic coffee, it's not just your imagination: old fashion, organic coffee farming results in much better tasting coffee.
Coffee is a very labor-intensive crop, and most of the farming is done in "developing" countries. I don't think I need to tell you what that means in terms of worker conditions or worker's paychecks.
The term "fair trade" (or "fairtrade") is thrown around a lot, but what does it mean? There are multiple fair trade organizations, which could have made this all very confusing. Fortunately, there is a standard labeling organization. TransFair operates in many coffee-consuming countries and roasters who meet certain criteria (and pay a fee) can use the TransFair logo on fair trade coffees. In some countries, this logo is a black and white person holding two bowls. In others, the logo is a blue and green ying-yangish thing with a green leaf and a person in the middle.
To be considered fair trade, coffee has to be imported directly from a farm run as a co-op (or similar organization) rather than through a middleman. There are also base prices that have to be paid to the farmers which vary according to market pricing. Also, financial has to be made available to the farmers if they need it.
Now if you're the typical capitalist sitting at your oversized desk, marking your next shoe-shine appointment on your calendar, you're probably thinking, "Hey wait! If we pay these farmers more than we have to, how will this benefit me? Won't it just cost more?"
Well think about it — what if you were a farmer living on a couple bucks a day? Would you want to work hard? Would you even be able to work very well if you were starving? Fair trade coffee can be quite a bit better tasting (but isn't always) because it's made by farmers who are able to care about what they're doing instead of praying for their next paycheck.
As for the price, fair trade coffee doesn't always cost more than "unfair" trade coffee. Since the coffee has to be imported directly from a co-op, there are no middlemen who cost you money but contribute nothing.
Besides, don't you want to be able to sleep at night knowing you're not needlessly oppressing farmers in developing countries?