Governance and Sustainability - Essay Example

?Governance and Sustainability Executive Summary The notion of Corporate Social Responsibility (CSR) has become quite popular in the current businesscontext. Notably, CSR activities have been perceived to be one of the vital aspects for the success of business in this competitive business scenario. Notably, CSR activities not only deal with increasing the overall profitability of the companies, but it also significantly contributes towards the advancement of the communities at large. In this regard, Tesco, the UK retail giant that operates its business globally, has been viewed to practice significant CSR activities in order to increase its revenue generation capability. Thus, this paper would deal with postulating the CSR activities that conducts by Tesco. Moreover, the CSR activities that performs by one of the chief competitors of Tesco i.e. J Sainsbury plc will also be taken into concern. Table of Contents 1 Executive Summary 2 Introduction 4 Tesco PLC 4 Sustainability in Practice 6 Conclusion 10 References 11 Bibliography 13 Introduction The perception of corporate social responsibility (CSR) is crucial for community development as well as businesses. Owing to the importance of CSR activities to business, most of the companies viewed this particular aspect as one of the effective business strategies for successfully sustaining in the dynamic market environment. However, it can be argued that importance of CSR activities are not limited to business, rather it has much broader implications. In other words, CSR activities comprise certain wider commitment towards building healthy and prosperous society instead of making money only (Musafer, 2012; Servaes & Tamayo, 2012). It is worth mentioning that the notion of CSR not only implies monetary assistance or considerable investment for the betterment of the society, rather it involves ‘extracurricular’ activities along with performing actual business operations. Despite the growing importance of CSR activities, many ardent trades capitalist have criticised CSR activities depicting that such activities can create obstacles for the attainment of organisational success (Shah, 2007). Contextually, this paper will discuss about a company i.e. Tesco PLC and its approach towards sustainability along with ephemeral evaluation, analysis and implications of CSR activities undertaken by them. Tesco PLC Tesco is the leading food retailer in the UK and operates globally in excess of 2318 stores located in different countries across the globe. It is worth mentioning that Tesco operates in more than 1878 stores alone in the UK. Apparently, it can be stated that the UK is the largest market of the company. At the same time, the company engages more than 326,000 people globally. Primarily, the company has been viewed to operate under four operating divisions namely Superstore, Metro, Extra and Express that does not deal only in selling food products but also involved in selling of various non- food products (Dataminotor, 2004). Additionally, Tesco’s envisages establishing itself as greatly valued company by its customers and the communities where it operates. The company intends to be highly valued not only by its customers but also from its employees and shareholders perspective. Furthermore, it is expected that the market share of Tesco shall expand at a significant rate in the UK and other parts of the world (Tesco, 2013). Hence, due to the steady growth in its international business, it has been estimated that the company will significantly strive to increase its overall profitability as well as consolidate its strengths in Asian and European nations (Datamonitor, 2004). Moreover, the company constitute the world’s biggest online market with the total annual sales of over ?577million. On the other hand, the profit of the company has also viewed to be increased steadily over the years. Evidently, during the fiscal year 2010-11, the profit before taxation of Tesco stood at 12.3%, which is quite greater as compared to the previous year i.e. 2009-2010. At the same time, its profit before tax for the fiscal year 2011-2012 appeared to be 1.6%, which is much more in comparison with the fiscal year 2010-11 (Tesco PLC, 2012). Despite the continuous increase in the profitability, several issues related with CSR have been raised against Tesco. On one end, Tesco claims to support local communities through providing jobs to local people, while on the other hand, Tesco’s activities such as opening of new super stores had led towards joblessness of many small retailers. Moreover, the company claims to reduce its impact on the environment by reducing waste in the internal business or operational system. However, it has been apparently observed that the company still generates large volume of packaging that is deposited as landfill by its customers (Friends of the Earth Limited, 2004). By considering the aforesaid issues, it has been viewed that Tesco has generally followed the Global Reporting Initiative’s (GRI) sustainability guidelines (Tesco PLC, 2006). It is worth mentioning that GRI guidelines are regarded as the vision to improve corporate accountability by seeking the commitment of every stakeholder for promoting and ensuring sustainable business practices. Moreover, the preparation of sustainability report based on the guidelines of GRI is often argued to ensure high quality of CSR report (Brown & et. al., 2007). Sustainability in Practice Tesco admits that the company operates in different parts of the world in collaboration with thousands of suppliers, customers and local community in order to meet its responsibility and promises towards the communities it serve. The company further argues that despite numerous challenges linked with CSR, the company has been attempting hard to make significant differences from its customers, environment, people and most importantly competitors. Additionally, the company realises that its different business strategies set clear goals for its businesses in order to ensure sustainable growth by duly fulfilling its responsibility towards the communities where it operates (Tesco PLC, 2011). Correspondingly, the CSR activities of Tesco generally lie on five major values that have been portrayed hereunder. Buying and selling of products responsibly, Caring for the environment, Supporting local communities, Offering customers with healthy choices and Generating better jobs and career opportunities. The company, by means of purchasing and selling of its broad array of products intends to convey that everyone who is directly or indirectly related with its supply chain is fairly and honestly treated. The company also intends to protect the natural environment by effectively tackling with the factors that comprise climate change, lessening the emissions generating from greenhouse gases and making maximum use of scarce products through upgrading operational channels. Furthermore, the company aims at providing the customers with healthy choices by providing accurate and clear information about the nutritional value of the products as well as offering healthy products at reasonable price. Additionally, the company also intends to work for the betterment of the community for making local communities much stronger. Notably, the company considers its workforce to be the most important assets aiming at providing healthy workplace environment along with providing ample scope for growth and improving their living standards. The company has been for a long time to provide its customers with superior quality product to its customers at reasonable prices. While assessing the CSR activities, it has been viewed that Tesco played a significant role in supporting various ethical programs in different regions across the globe. For instance, the company has substantially aided in improving standards in the clothing industry of Bangladesh through performing ethical audits and engaging the stakeholders to conduct CSR related initiatives. Additionally, the company also involves in recognizing the carbon ‘hotspots’ in its supply chain procedure for lessening the impact of carbon on the environment (Tesco PLC, 2012). Apart from the above stated different CSR activities, Tesco has also been engaged in reducing the impact of its business operations to environment through conducting various practices like effective recycling, reducing emissions, making efficient use of energy and eliminating any wastage. The company has dramatically reduced the impact of carbon footprint associated with its transport fleet. The initiatives of the company towards green environment have resulted in the reduction of more than 10% carbon emission in the recent years. At the same time, the company also ensures ethical sourcing of all its products that are intended to offer to its discriminating customers (Tesco PLC, 2012; Kornum, 2007). On the other hand, it has been apparently observed that one of the chief business market contenders of Tesco i.e. Sainsbury PLC has also been radically involved in performing various CSR activities. In this regard, Sainsbury has shown its concern towards animal welfare. The company contributed nearly ?1 million for the campaign of Woodland Trust, a non-profit organisation in order to support planting initiative of Woodland across the UK. The company has also been noted to be extensively involved in the notion of water management aiming towards reducing excessive usage of water. Most significantly, the company has been viewed to be radically involved in the reduction of packaging of materials along with reducing the wastage of the resources. Hence, the company has executed recycled and sustainable materials for preventing wastage of the resources. Additionally, the company has also developed carbon foot printing tools that are primarily designed especially for the farmers. The tool has the potential to reduce the energy costs of its farmers as well as carbon foot print up to 10% annually (J Sainsbury PLC, 2011). Thus, it can be identified that Tesco along with its competitors like Sainsbury are duly engaged in conducting various important CSR activities. Additionally, the analysis of CSR activities of Tesco and Sainsbury illustrates that the involvement and the accountability of all the stakeholders like customers, suppliers, communities, shareholders, investors and environmentalists towards ensuring sustainable business performance are crucial for the success of an effective CSR strategy. Conclusion Currently, CSR activities are considered to be one of the important factors for the success of the businesses of different organisations. Evidently, CSR activities are not associated with earning substantial profit from the business operations; rather it deals with ensuring healthy environment and steady community development as well. In relation to CSR activities, Tesco, the UK based leading retail company has undertaken significant approaches towards improving and facilitating enhanced social and environmental development. It is worth mentioning that the business operations of Tesco is not limited within the UK only but scattered throughout the globe. The company strictly follows GRI framework for the preparation of its sustainability reports. Furthermore, the company has shown its firm commitment towards diminishing carbon footprint and other measure relating to CSR. Similarly, the efforts of its one of the major competitors like Sainsbury cannot be overlooked. Nonetheless, it can be argued that the involvement of all the stakeholders is crucial for the successful outcome of the CSR strategy adopted by the company. References Brown, H. S. & et. al., 2007. The Rise of Global Reporting Initiative (GRI) As a Case of Institutional Entrepreneurship. Corporate Social Responsibility Initiatives, pp. 1-45. Datamonitor, 2004. Tesco PLC. Business Description, pp. 1-34. Friends of the Earth Limited, 2004. Every Little Hurts: Why Tesco Needs To Be Tamed. MPs Briefing, pp. 1-6 J Sainsbury PLC, 2011. Sainsbury’s Corporate Responsibility Report. Commitments and Progress, pp. 1-90. Kornum, N., 2007. Company Stakeholder Responsibility. Working paper, pp. 1-65. Musafer, S., 2012. Corporate Social Responsibility: Measuring its Value. BBC. [Online] Available at: http://www.bbc.co.uk/news/business-19876138 [Accessed March 19, 2013]. Servaes, H. & Tamayo, A., 2012. The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness. Management Science, pp. 1-32. Shah, A., 2007. Corporate Social Responsibility. Global Issue. [Online] Available at: http://www.globalissues.org/article/723/corporate-social-responsibility [Accessed March 19, 2013]. Tesco PLC, 2012. Annual Report and Financial Statements 2012. Tesco at a Glance 2011/12, pp. 1-152. Tesco PLC, 2006. Corporate Responsibility Review 2006. Every Little Helps, pp. 1-72. Tesco PLC, 2011. Annual Report and Financial Statements 2011. Creating Value for Customers Across All Our Businesses, pp. 1-156. Tesco PLC, 2012. It’s At the Heart of What We Do. Being a Responsible Business, pp. 1-32. Tesco, 2013. Our Vision. About Us. [Online] Available at: http://www.tescoplc.com/index.asp?pageid=13 [Accessed March 19, 2013]. Bibliography Asongu, J. J., 2007. Strategic Corporate Social Responsibility in Practice. Greenview Publishing Co. Horrigan, B., 2010. Corporate Social Responsibility in the 21st Century: Debates, Models and Practices across Government, Law and Business. Edward Elgar Publishing. Read More