Global Corporate Social Responsibility of Tesco (Grocery Retailer, UK)

Table of Contents

Abstract

Introduction

Corporate Social Responsibility

The Triple Bottom Line

The leading food retailers in the UK

Tesco PLC: Commitment to CSR

Operations and Activities of Tesco PLC and CSR
Reduction in energy consumption and emissions
Employees
Customers and communities
Key performance indicators of CSR
Products

"Horse Meat scandal" in the UK

Discussion

Conclusion and Recommendations

References

Abstract

The companies are the integral part of the society and they have both, the potential and obligations to the society and their obligations to the society is called corporate social responsibility. CSR is practiced by all the companies including SMEs. The CSR practices of the food retail sector of the UK have been a matter of prime concern as they are the major contributors to the UK economy. Tesco PLC is the largest food retailer in the UK and its CSR practices need to be examined with respect to its operations, activities and products. Generally, large companies claim their concern and commitment to CSR and announce it elaborately in their reports. The claims made by Tesco are different from the ground realities. The company claimed to reduce energy consumption and emission of greenhouse gases but could not achieve it for some or other reasons. Similarly, Tesco claimed to adapt to a compatible process of sourcing of its food products to be sold in its stores. The process claimed to investigate and monitor different stages of sourcing sincerely, but the recent horse-meat scandal revealed that there is a wide gap between the claims and the ground realities. The CSR is practiced by most of the companies for building reputation and the objective of the CSR to create value for the society is left behind.

Introduction

Corporate social responsibility (CSR) is being practiced by the companies for past several decades, but it gained momentum within the last decade only. Corporate social responsibility (CSR) has got the top preference on the agendas of the board meetings of the companies in the last decade. The performance and the reputation of a company are judged by its strategies of corporate social responsibility (CSR). In this age of globalisation, corporate social responsibility has crossed borders and the businesses have obligations to international corporate social responsibility (ICSR).

Brammer and Pavelin (2004) said that the retail sector of the UK is the major contributor to its economy and it is also the major employer. Among the retail sector, the food retail companies are the major players. The food retail sector of the UK has a cutting edge competition and their strategies are made to gain competitive advantage through development and innovation. These developments and innovations have significant impacts on the society, economy and the environment and they are expected to address to these impacts appropriately. The obligation of the company to address appropriately to the impacts of their activities on the society, economy and the environment is called corporate social responsibility. They are also expected to communicate their obligation to CSR to their stakeholders which includes the public at large, their employees, their customers, their shareholders and the government. The paper explores the corporate social responsibility (CSR) issues and the international corporate social responsibilities (ICSR) issues addressed by Tesco PLC which is one of the leading food retailers in the UK (Burton, Farh and Hegarty, 2000).

Corporate Social Responsibility

Corporate social responsibility is defined by different authors differently and Norman and MacDonald (2004; 248) said CSR “analyses economic, legal, moral, social and physical aspects of environmental” and European Commission (2002) defined it as “… CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. Brammer and Pavelin (2004; 32) further added that the core principles of corporate social responsibility are accountability, sustainability and transparency and the responsibilities include philanthropic, ethical, legal and economic responsibilities. The companies have their responsibilities towards their stakeholders which include its employees, customers, dealers, suppliers, communities where they operate, the public at large, the government, the host country as well as the shareholders (European companies, 2002). The stakeholder concept came into existence by the end of 1980s and companies need to address to more responsibilities than they usually did before that. It has been noticed that there is a wide gap between the rhetoric and reality in CSR for human resource management (HRM) and the following table exhibits the difference in brief (Commission of the European Communities, 2001).

(Source; Prepared by the author)

illustration not visible in this excerpt

On the basis of the above table it is obvious that the international CSR has many challenges with respect to the international human resource management (HRM) and the most important challenges which the ICSR needs to address are intimidation, favouritism, job security, work design, anti-union activity, psychological testing and discrimination (Commission of the European Communities, 2002).

Fombrun and Shanley (1990) said that CSR is based on the principle that the businesses which are the integral part of the society, have the potential and the obligation to contribute positively to the society to meet the aspirations of the society. This principle is too ideal to be realistic and the fact is that the term CSR does not have even a universally accepted definition. Frankenal (2001) said that “CSR is a vague and intangible term which can mean anything to anybody, and therefore is effectively without meaning” and this view was supported by the UK’s Confederation of British Industry (2001) which said that “CSR is highly subjective and therefore does not allow for a universally applicable definition”.

The definition of the CSR varies with organisations and the definition of CSR provided by the World Bank can be considered as widely accepted definition and the World Bank (2004) defines CSR as: . . .”the commitment of businesses to contribute to sustainable economic development-working with employees, their families, the local community, and society at large to improve the quality of life, in ways that are good for business and good for development.”

Before a couple of decades, the corporate social responsibility of a company was limited to making charitable donations to social organisations which were engaged in socially useful activities, but now, the companies are expected to operate their businesses in a manner that is socially responsible. They are expected to focus not only on enhancing the business but also on creating value for the society. According to the Commission for the European Communities (2001), there are two dimensions of the CSR approach of a company – internal and external. Internal dimension refers to the CSR practices within the boundaries of the company while external dimension extends to outside the boundaries of the company. The internal dimension embraces HRM, safety and health measures at the work place, management of natural resources, management of the environmental issues, approach to adapt changes, etc. The external dimension of the CSR includes the public at large, the community, the government and the stakeholders and the external dimension embraces ensuring delivery of quality products and services in an ethical, efficient and the environment friendly manner, obligations to human rights issues, concerns for global environment (Fox and Vorley, 2004).

According to Whooley (2004) the key issues of the CSR can be summed up under the headings such as “Community, Environment, Workplace and Marketplace”. She argued that among all the four issues, the marketplace is the most risky and nebulous issue for the companies and it is the biggest challenge for the companies as it may damage the reputation of the company, if the CSR management of the company failed to address the issue appropriately. She further added that the marketplace is concerned with costs and benefits of the products or the services provided by the company and the economic and social impacts of those products or services. It also includes the way company promotes the product or the service and how the company takes into account the direct or indirect impact of the product or the service (Frankental, 2001).

The Triple Bottom Line

The triple bottom line (TBL) theory or 3BL theory of corporate social responsibility came into existence in 1994 which suggests the compliance of environmental, social and economic responsibilities by the companies. The TBL aims to replace the CSR to shareholders with stakeholders and expects the companies to comply with responsibilities beyond the general obligation to legal, regulatory and environmental responsibilities. Burton, Farh and Hegarty (2000) conceptualised corporate social responsibilities as philanthropic (discretionary), ethical, legal and economic responsibilities were as Brammer and Pavelin (2004) conceptualised it as economic, social and environmental responsibilities of companies towards the society. The triple bottom line theory or triple dimension theory captures the entire set of processes, issues and values which companies are expected to comply with in order to reduce the harms caused by their business practices and activities and to create environmental, social and economic value for the society. Compliance with CSR also provides a competitive edge to the companies which address to their obligations sincerely and the TBL describes the social, economic and environmental obligations. (Ho and Taylor, 2007) argued that the stakeholders (e.g. Shareholders, customers, employees, governments, community and the general public) must be concerned with the environmental and social issues along with the economic performance of an organisation in order to ensure CSR of the organisation (Waddock, Bodwell and Graves, 2002).

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