Strategy for Sustainability: Case of British Airways - Essay Example

?Strategy for Sustainability Inserts His/Her Inserts Grade Inserts 29 Nov, Table of ContentsTitle page …………………………………………………………………………………………1 Table of contents…………………………………………………………………………………..2 Strategy for Sustainability: Case of British Airways…………………………..………………….3 Intro-profile of the company……………………………………………………..………………..3 Company’s Profile………………………………...………………………………………………3 Workplace issues and respect for human rights…………………………….……………….……4 Marketplace, supply chain and the environment……………………………………………….…5 Cleaner aircrafts……………………………………………………….………………………….6 Quieter aircraft………………………………………………………………..…………………...6 Behaves as a caring neighbor in their communities……………………………………………….7 Reporting and communication…………………………………………………………………….8 Strategy and governance issues………………………………………………...…………………8 Special focus…………………………………………………………….…….………….……...10 Conclusion …………………………………………………………..………………..…………10 References ……………………………………………………………………………………….12 Strategy for Sustainability: Case of British Airways Intro-profile of the company This is a report on the Corporate Social Responsibility strategy employed by British Airways. It provides an analysis of the CSR in line with the latest Annual Report available from the company’s website. The report centers on five major areas of interest; workplace issues and respect for human rights, marketplace, supply chain and the environment, behaving as a caring neighbor in the community, reporting and communication and finally, strategy and governance issues. The report then identifies an area of weakness and draws recommendations to improve the area. It then concludes with a summary of the introduction and the main body. CSR is taken to mean the aspect of a corporation carrying out its business operations in consideration of the interests of all it stakeholders (Baker, 2004; Carrilo, 2007; Dahlsrud, 2007). Company’s Profile. British Airways in one of the leading international airlines in the world, with an annual passenger turnover of about 40 million. It is the national carrier of the United Kingdom with a workforce of over 50,000 people, a majority who are based at the company’s two main operating bases- London’s Heathrow and Gatwick airports (British Airways, 2011). Others are spread in the company’s offices in areas of operations around the world. British Airways is a member of the royal family of European airlines. It carries both cargo and passengers to over 150 destinations in about 70 countries around the world. It is able to extend its network to over 400 destinations through joint business agreements with members of the Oneworld alliance and the AMR’s American Airline. It has a fleet of about 200 aircrafts consisting of mainly the Airbus and the Boeing jets. One of its event achievements was the merger with Spain’s leading airline Iberia, to form the International Airlines Group (IAG). Workplace issues and respect for human rights British Airways is a reputable airline company that complies with the set international principles for managing specific issues such as those of labor, environment, advertising, sustainable development and charity work. The company has put in place a labor policy that complies with International Labor Organization’s standards. The staff welfare in British company is well looked into. For instance, the company is on record for supporting its employees who engage in voluntary charity work (British Airways, 2010). On top of this, British Airways employees are entitled to an unlimited number of discounted standby tickets. For instance, it would cost a British Airways employee $100 less for a return ticket to New York, compared with the cheapest ticket to a non-employee (Millward, 2010). These are clear indications of a company committed to enhancing the staff welfare (Bio, 2010). The company has embraced a clear policy that enables it to be sensitive to the environment (Blamey, 2006). For instance, it is in the process of replacing its old fleet of airplanes with new ones that emits minimal amounts of carbon dioxide and nitrogen oxides. According to the company’s 2009/2010 Annual Report and Accounts (2010), the company has sets aside a budget for an external audit on top of the internal audit. The work of the external auditor is to provide an independent audit of the company’s overall performance (Annual Report, 2010). In terms of treatment of employees, British Airways has endeavored to maintain a robust and well motivated workforce. Its employees are among those with the highest salaries within the industry. The company has a labor policy that ensures that it compensates its employees to enable them cater for their basic needs. This has enabled them to improve their skill and competencies in raising their social and economic capacities and opportunities. The company provides safe and healthy workplace for its employees in line with the set UK and international labor standards (Article13, 2004, 2013). However, in terms of its respect for human rights, the company has not fared well. For instance, in the British Airways v Unite the Union, the union won an appeal against a High Injunction sought and won by British Airways that had successfully blocked the employees’ right to strike ad free assembly.1 Previously, the Union had conducted the ballot and majorities were in support of the strike (Wagner, 2010). The company, as was the norm successfully obtained an injunction to stop the union members from striking. This contravened Article 11 of the European Convention on Human Rights. According to Millward (2011), the decision by British Airways to remove travel perks for striking cabin crew in 2010 was a breach of European human rights legislation. The move reached between 2,000 -3,000 cabin- crew who were involved in the strike. Marketplace, supply chain and the environment British Airways has made a mark in the global airline market as among the best companies in terms of providing quality airline services to passengers. The same has been translated in its CRS on environment. As part of becoming the world’s most responsible airline, the UK airliner has put in place a comprehensive environment strategy, aimed at ensuring that it manages and minimize environmental impact. The company recognizes that in pursuit of provision of economical and social sensitive services in the air industry, it impacts on the environment. The company became the first airliner in the air industry to report its environment performance (British Airways, 2011). As part of its strategy, British Airways focus on minimizing environmental impact by employing the latest technology such as airframes, engines and alternative fuels. As part of its future plans, the company hopes to reduce by 50% in its net carbon dioxide emission by 2050 as well as reducing the average noise per flight by 15% come the year 2015. It hopes to improve its carbon efficiency to international standards-reduce the grams of carbon dioxide emitted per passenger per kilometer from 111 to 83 grams. To achieve this, the company employed the following two strategies; Cleaner aircrafts British Airways has been replacing its old fleet of aircrafts with new ones, that is, Airbus A380 and Boeing 787’s. On top of improving service delivery to its customers, the new aircrafts are cleaner, thus, environment friendly. The company was guided by the need to protect the environment in acquiring the new aircrafts. For instance, the Boeing 787 has a 30% lower fuel burn than its predecessor Boeing 767, and its NOx emissions are about 46% less per aircraft than the 767. The Airbus A 380 has a 17 %fuel burn per seat that its predecessor and it emits 10% less NOx per aircraft than the Boeing 747-400 (British Airways, 2011). Carbon dioxide reduction goals have been incorporated into the company’s five corporate business goals. This has led to the adoption of a robust methodology of calculating the airline’s carbon footprint. It also led to the company being instrumental in the campaign for the inclusion of aviation in the Kyoto framework. Quieter aircraft The night noise rating system at Heathrow airport is measured according to the ‘Quota Count’/ QC scale. Both types of aircrafts acquired by British Airways records a QC of 0.5 on this scale when landing. Their noise impact is only a quarter of what the old fleet has been making. The incorporation of the new fleet has been a landmark achievement for the company in terms of its environment performance. The company image as a good neighbor has been boosted by the lower emission of CO2, NOx and less noise when landing and taking off. It has made progress in supporting the engagement of aviation in finely designed emissions - trading systems, implementing the first UK program where passengers support low carbon community projects across UK, as well as working with manufacturers in coming up environmental friendly inventions and innovations (British Airways, 2011). Behaves as a caring neighbor in their communities The corporate world is facing the notion of corporate social responsibility, and British Airways in no exception. The company has a clear community engagement strategy which has enabled it to support community based projects centering on education, health, child welfare. The company is on record for supporting special projects in over 100 counties in which they fly in. These projects are of no commercial value to the company but are meant as an act of social corporate responsibility. For instance corporate social responsibility entails being sensitive to the social-economic needs of the community in which a company operates in (Freeman, 1984; Harrison and Freeman, 1999). British Airways has carved a niche for itself as a leading airliner that strongly believes in supporting local communities in countries of operation. According to information in the company’s website (2011), the company is in support of over one hundred community and conservation projects in both the mother country and others where it flies. This program began in 1984 and renders support in the form of free flights, excess baggage waiver, complementary carriage of cargo and donation in the form of merchandise. Beneficiaries of this CSR gesture by British Airways ranges from orphanages, hospices, animal sanctuaries and old people’s homes. For example, the airliner donated over 460 computers to a community project in Kenya’s Mukuru Slum in the capital city of Nairobi (British Airways, 2011). There have also been numerous community investment projects across UK focusing on heritage, environment, sustainable tourism, education and youth development. The company has also endeavored to behave as a good neighbor through acquisition of aircrafts that are less noisy. Reporting and communication The company has a clear reporting framework to its stakeholder. Every year, it holds its Annual General Meeting where the shareholders and other stakeholders are briefed in details on the overall performance of the company for the last one financial year. The company has made strides through its Carbon Disclosure Project where it makes public the level of carbon and other wastes emitted by each aircraft. This is done through a range of communication tools such as printed /pdf reports, press releases, newspaper updates and postings on its official company website. The company has put in place a mechanism known as whistle blowing where the employee can raise concerns to the management (British Airways, 2011). Strategy and governance issues The company operates in a way that it puts into consideration the acceptable international principles of operation. For instance, it has incorporated in its CSR strategy both the Sullivan and OECD principles for Multinational Corporations. This in itself makes the strategy modern with features of a good strategy. The Sullivan principles urges companies to support programs that seeks to uplift the quality of life for communities, workers and children with dignity and equality (Sullivan, 2006; Lashgari and Gant, 1989).The company has an innovative CSR approach that promote equal opportunity for its workers at every level of the corporation with respect to color, race, gender, age, ethnicity and religious beliefs. It operate devoid of unacceptable employee mistreatment such as child labor, female abuse, involuntary servitude and other forms of abuse, all in line with respect for universal human rights.. The CSR approach employed by British Airways Ltd is a new approach of strategic opportunity. The overarching strategic approach has a concern for placing the company ahead of the rest in the competitive airline industry. The company is one of the best in the word and this has been enabled by the good strategies it has put in place. One of the strategies employed by British Airways is the Socially Anchored Competencies (SAC). These are a set of competencies that have a social conscience and have the potential of increasing the company’s competitive advantage, more so in an airline markets that is sensitive to impacts on society and the environment (O’Brien, 2001). These SCAs are building blocks that British Airways has employed to drive its CSR programs. For instance, the company has been involved in community projects aimed towards uplifting the educational standards of target communities. These people form a part of its current and future markets for its products (Stanwick, n.d). British Airways has engaged in cooperative relationships with other organizations ranging from shared information and research to joint ventures (Porter, 1980). These strategic alliances are beneficial to the organization as they help the company to come up with new competencies and become more competitive in the airline market (Prahalad & Hamel, 1989; 2000). The company has been awarding grants to non-profit organization in order to fulfill its corporate social responsibility. British Airways has a special focus on all of its stakeholders. According to O’Brien, (2001), the success of any company’s CSR strategy depends on the knowledge it has on its diverse stakeholders and their specific concerns. He says that traditionally, most companies have confined stakeholders as being only the shareholders, employees, customers, and, to an extent community in areas they operate. However, just as he advises, British Airways has come to appreciate the importance of special interest groups due to the power that they yield. Hence, it has not been left behind in consulting with them on social issues. Special focus A measurement of the business and social impact of the company’s CSR program reveals that the company has a contribution programs that consist of both cash and product donations. However, there is little hard evidence that can link the company investment in CSR initiatives with improved financial performance, not even increase in passengers/ clients. Understanding the core competencies and the need to consider the special interest group calls for competent CSR managers. These should be people who are able to think outside the traditional approach, and begin to think in terms of how the company can invest the scarce cash, and use is competencies to make social investments that can generate significant economic return on top of the social impact (As you Sow Foundation, 2011: Bhagwati, 1995. They should be globally competent so as to help the company achieve its objectives in the global market (Harvey, Novicevic & Speier, 1999; Johnson and Greening, 1999). Moreover, the company should endeavor to improve it CSR so as to appeal to the emerging markets in the China, India couple by the increase in global population (Weber and Yunus n.d, 1999; Sentance, 2006). Conclusion There has been a lot of pressure from stakeholders throwing many corporations in different directions. For instance, passengers are demanding high quality services from British Airways at lower prices and the investors/shareholders requires competitive returns on their investments. On the other hand, there is growing pressure from activist and special interest groups calling for companies, British Airways inclusive, to adhere to strict international and labor standards. At the same time, governments in areas that the company operates and the development NGOs are pressing on the company to inject money and resources into local socio-economic development agenda. This has forced the company to put in place a strategic CSR approach that will try strike a perfect balance between all the stakeholders (FAITC, 2011). References Article 13, 2011. British Airways: Environment. Accessed 25 November 2011, http://www.article13.com/csr/about/us.asp. Article13, 2004. CSR Best Practice. Accessed 25 November http://www.article13.com/csr/about/us.asp. As you Sow Foundation, 2011. Corporate Social Responsibility. Accessed 25 November 2011 http://www.asyousow.org/ Baker, M 2004. Corporate Social Responsibility-What Does it Mean. Accessed 24 November 2011, http://www.mallenbaker.net. Bhagwati, J, 1995. Trade Liberalization and Fair Trade Demands: Addressing the Environmental and Labor Standards Issues. The World Economy. Vol. 18. No 18 pp745-759. Bio, L.B. 2010. From Methods to Tom Shoes, These Markets Focus on Improving Lives and Their business at the Same Time. Accessed 25 November 2011, http://adage.com. Blamey, C 2006. 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