Thursday 23 September 2010

Corporate Social Responsibility-Tesco

1.      Introduction:
Corporate social responsibility (CSR) is about, understanding the effect of a business and its policies and strategies on the outer world along with its consequences. According to Kaler and Chryssides (2001:230), Corporation’s social responsibilities indicate the moral responsibilities of the corporation towards the society in which they operate. It means that irrespective of the size, a business should take a responsible attitude towards the society. However, it is more than that of a semantic interest to define corporate social responsibility (Hay et al, :145).
“Our corporate responsibility demonstrates our progress in our community and environmental performance across the Group.”                            - CEO Tesco, Leahy
Tesco is the leading supermarket chain in UK which has now extended into other countries as well. It has always shown a great concern regarding the social and environmental welfare. Tesco’s corporate structure reflects its online corporate social responsibilities. It shows long term growth of the company.  Its strategy is mainly focussed on “creating value for customers, to earn their lifetime loyalty” (Tesco Official Website).
Tesco’s Internet CSR Overview:
The company’s online CSR policy is similar to the general CSR policy and involves two main objectives:
1.      Don’t force customers.
  1. Treat people how we like to be treated.                                  (Official Website)
These objectives reflect Tesco’s responsible behaviour towards the society as well as to the employees. In order to achieve these objectives, Tesco undertakes several reformation projects and community responsibilities. Tesco's website states that “Tesco is committed to conducting business in an ethically and socially responsible manner” (Tesco environmental policy).  It follows an environment friendly approach involving recycling of the used material, organics usage, eco-friendly packaging of some products, etc. These are evident from the daily activities. Tesco comes with the CSR report every year in which it speaks about the online CSR as well. In this report, Tesco also gives an outline of its CSR initiatives which it has undertaken in that year and the ones on which it is going to concentrate in the next year.
3.      Tesco Online for Society:
Tesco online provides its customers vouchers on every purchase which they can give to the schools and clubs they wish and the schools are provided with the different equipment in exchange for these vouchers. They have a separate website for this cause (http://www.tescoforschoolsandclubs.co.uk/). They are communicating this cause online which makes their attitude clear. This initiative won the cause-related marketing award in 1998. This scheme has already provided the computers and other related equipments of worth millions to the schools. Towards the end of 2006, about 2900 more schools joined this scheme which was made possible by the joint efforts of the staff and customers. According to Leahy, “CSR is a journey: whatever we have achieved, there is always more that can be done and that needs to be done. That is why we have adopted an ‘Every Little Helps’ approach.”
Tesco also enables schools as well as clubs to buy the useful items by the vouchers given on each purchase. Under this scheme it provides the sports equipment, computers, softwares, compost bins, wind turbines, skill improvement tools, etc to the schools and clubs. This is a great step for the improvement of schools and clubs in UK.   
Tesco was ranked first in the food and drugs category in 2004 BITC awards, CSR – The Tesco Way.  It sells healthy and hygienic food online and encourages customers to buy it by creating special colourful icons on its website. This award by a renowned agency led to recognition of Tesco as the socially most responsible company of UK. It was also credited for its strategy, integration and environmental concerns.
·         Tesco doesn’t sell tobacco online. It demands ID verification to confirm the age (18 years & above) for sale of tobacco and alcohol items except wine.
  • Tesco weight loss goals online because it is cares very much about the customer health.
  • Tesco’s greener living initiative and recycling of wastes. (http://www.tesco.com/greenerliving/)
  • Selling of religiously permitted food items online i.e. Halal for Muslims at some stores, and ‘Suitable for Vegetarians’ note for Hindus, Jains and other vegetarians.                                                                                (Tesco Online)
  • Largest online retailer of organic foods in UK.
  • Non-GM (genetically modified) product options.                             
  • Rewards and benefits to the employees.                                       (CSR report)
According to Weiss :140, the most important stakeholders of a business are its customers so a business should be concerned with the consumer interests. The initiative of Tesco to give vouchers on every purchase indicates its concern towards the customers. If we apply Free Market Theory to the Tesco’s approach, Tesco’s primary aim is to make profit. It has a wide range of products to meet the varied customer needs. Organics food, Halal food, calorie less food, etc is basically a strategy to meet needs of different types of customers and make profit. But the company doesn’t opt for the unethical ways to earn profits. This can be explained on the basis of social contract view (Edison, 1999:247):
Tesco online is truthful about its products and services. It doesn’t give any wrong information regarding its products and their composition and application. For example, Tesco online gives a description of the product related allergies preservative information on all self-made products. It doesn’t hinder customer free choice though it gives different club-card points on different products to attract customers for their self-made products. It doesn’t also force customers to buy a particular product.
4.      Advertisement Ethics:
According to Weiss (1998:143), “A corporation’s ethical responsibility in advertising is to inform and persuade consumer stakeholders in ways that do not lie, deceive, conceal or withhold the truth.” The company is very ethical in its advertising. It not only gives a clear description (online) of its products through advertising but also comes out with advertisement based on the social and environmental initiatives on other websites (http://www.adbrands.net/uk/tesco_uk.htm). So, Tesco can be called as a corporation with social and economic consciousness which is not only concerned with the profits but also concerned with the social welfare. But a lot of advertising is done on the alcohol based products which shows less concern about health of the consumers. Tesco online advertises and encourages the use of vegetables like the celebration of the veggie month.
5.      Environmental Ethics:

According to Frederick (2002:280), there is a strong agreement that business has a ethical responsibility concerning the environment. According to CEO Tesco Ireland, "The key to success is to turn green consumption into a mass movement." www.independent.co.uk. Tesco has shown a great concern regarding the environment conservation and maintaining a healthy environment over the years. Its website reflects the same concern.

The launch of eco fashion online was yet another significant step towards environmental conservation. Tesco has launched an environment awareness campaign in 1996 which led the managers at all stores to reduce the energy usage and the waste products (Rao, 2008:36). Tesco aims to halve the energy consumption by the end of 2010.                                                                                               (Guardian Online)

In order to cut the carbon emissions, Tesco took the decision of investment for the reduction of carbon emissions. Through its ‘Tesco for schools and clubs’ website which has a separate segment for the environment, Tesco keeps people updated with this decision. This seems a good attempt to save the planet from global warming. Tesco has also planned to reduce the CO2 emissions from its stores to half by 2020. To make folk aware of the products obtained by transportation Tesco has put aeroplane symbols on them so that people will opt for the pollution free ones.
Tesco is given a separate column on the green awards website which indicates its responsible behaviour towards the environment. Tesco Online sells brands like velvet tissues which are presently on an afforestration campaign, Tesco Environmental Policies.
6.      Tesco Employment:
Tesco has played a vital role in economic growth in the times of economic downturn by generating employment opportunities through the opening of new stores and selling goods at cheap prices. It has one of the best e-recruitment processes. There is a separate section on the website for the employment in newly opening stores, www.shawtrust.com. Tesco has also launched regeneration partnerships to open the new stores and help the economy grow. For example, with its beginning in Slovakia in late 1996 Tesco has provided jobs to about 8,000 people in the country (CSR Europe).
7.      Tesco’s ETI :
Tesco online seems very much concerned regarding the social welfare and good relationship maintenance with its staff. It is evident from its ethical trade initiatives.
  • Employment is freely chosen.
  • Freedom of association and the right to collective bargaining are respected.
  • Working conditions are safe and hygienic.
  • Child labour shall not be used.
  • Living wages are paid.
  • Working hours are not excessive.
  • No discrimination is practiced.
  • Regular employment is provided.
  • No harsh or inhumane treatment is allowed.                         (Tesco Plc Online)
8.      CSR Management and Implementation:
According to Edison (1999:151), “Management of social responsibilities in the corporations is equivalent to the management of other strategic marketing issues. Management should be aware of the risk and harmful effects of immoral behaviour towards the stakeholders else it may result in corporate failure.” So it is important for a business like Tesco to manage its CSR initiatives for the successful integration and implementation of the issues. Tesco online has a code of ethics and uses its commercial strength to put principles into practice, Tesco CSR.
Let us assess Tesco online on the basis of Caroll’s 4-level model. Tesco online is concerned to earn profit but it doesn’t go for the unethical means to earn it like it doesn’t sell the illicit products. On the legal side, Tesco online is surely very ethical. It doesn’t even sell tobacco and alcohol online avoiding children indulging. On the ethical level, it is very ethical coming with a separate social responsibility report every year. On the philanthropic level, Tesco online provides resources to the school and clubs which points towards its ethical behaviour. Moreover, these CSR initiatives have led to an increase in profit which is in agreement with Freeman’s Stakeholder Model, CSR-ONLINE-CZ.
Tesco’s structure enables it to implement the various ethical decisions efficiently where the higher officials formulate new CSR strategies every year and the low level managers and workers integrate it into the organisational culture. Tesco even provides training to the staff for the implementation new ethical policies.() The CSR of a company depend very much on its leader and his skills (Rao, 2008:359). Terry Leahy is a professional leader (Weiss, 1998:115) whose policies are based on social contract ethic.                             
9.      Conclusions:
Tesco is ethically very sound yet it needs to go a long way. It has taken and continues to take several initiatives for the social welfare. Tesco was named the worst offender in the ethical rankings of 2005 (Guardian Online). But according to DJ sustainability index, In case of environmental and social dimension, Tesco is satisfactory. Tesco is constantly extending its ethical policies and is approaching towards a perfect moral internet business.
Tesco follows Utilitarianism approach and organisational as well as extra-organisational ethics. Tesco’s economic and social conscious view seems more focussed on economy which is replacing the social paradigm. The company is needed to have a look at this.
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