CORPORATE RESPONSIBILITY

1.0 Introduction

This report critically evaluates the ethical issue in the context of Tesco. To critically assess the moral issue, two questions have been considered. The first question focuses on Corporate Social Responsibility (CSR), while the second question focuses on sustainability. As per the Commission of the European Communities (2001), CSR is defined as a concept that creates the need for business organizations to integrate social and environmental concerns in their operations and their interactions with their various stakeholders. As per Carroll’s CSR model pyramid, the four blocks that include economic, legal, ethical, and philanthropic expectations serve as the foundation of CSR. Concerning the second question related to sustainability Triple Bottom Line approach has been applied, which is a sustainability framework that involves three main dimensions, including social (people), environmental (planet), and economic (profit) (Hammer & Pivo, 2016).

2.0 Company Information

The company that has been considered in this report is Tesco Plc. Tesco Plc is traded in the London Stock exchange (LSE) as TSCO. Tesco Plc has been considered in this report because it is the biggest supermarket in the UK and one of the leading supermarket chains in the world. Apart from its domestic market in the UK, the company operates in several other markets in Central Europe, Asia, and North America (Tesco Plc, 2021). In 2020, the Company's total sales revenue was estimated to be £56.5 billion, while operating profit amounted £2,518 million (Tesco Plc, 2020).

3.0 Ethical issues

3.1 Corporate Social Responsibility (CSR)

3.1.1 Theory- Carroll’s Pyramid Model and Its Application

Carroll’s CSR pyramid presents a simple framework that sets four critical responsibilities towards the society that include economic duties, legal obligations, ethical responsibilities, and philanthropic responsibilities (Carroll, 2016). These four responsibilities of the companies are categorized into four building blocks, as shown in figure 1.0 below.

Economic Responsibilities: Economic responsibilities are the primary requirement of any business organization. From an ordinary lens, it is unusual to think of financial necessity as social responsibility. However, without economic conditions, no business can sustain or survive, and thus the needs and desires of the society cannot meet (Carroll, 2016). Hence, economic interest is also an important social responsibility. In the context of Tesco, it has been identified that Tesco offers a wide variety of grocery products and items for daily usage by society. The profit generated from the selling of grocery products and items are used to reward investors, owners as well as for business growth (Tesco, 2019).

Legal Responsibilities: Business organisations are not only considered as economic entities that re allowed to earn profit from their activities and operations, but there are also certain established rules and regulations that these business organisations are expected to follow when operating their business, which is termed as legal responsibilities (Carroll, 2016). With respect to Tesco, it has been noted that the company lays considerable importance on complying with the laws and regulations enacted by the government across all markets of its operations. Notably, the company has shown its strong commitment towards abiding labour laws and environmental laws and standards, tax legislation as well as it has emphasised on protecting human rights across its supply chain (Tesco Plc, 2019).

Ethical responsibilities: In addition to the economic and legal responsibilities, society often expects the businesses to operate and function in the ethical manner. The ethical responsibilities thus deal with the expectation of the society that the business will engage in those activities and practices that are based on societal mores and ethical norms (Carroll, 2016). Considering the ethical responsibilities in the context of Tesco, it has been observed that Tesco has shown high degree of commitment in maintaining the highest standards of ethics and integrity. For example, it has been noted that Tesco has adopted zero tolerance policy towards any form of bribery and corruption (Tesco Plc, 2016).

Philanthropic Responsibilities: Philanthropic responsibilities basically deal with all form of corporate giving. Philanthropy involves businesses’ discretionary activities which are not mandated by the law but are expected by the society (Carroll, 2016). Accordingly, it has been noted that Tesco has been engaged in a variety of philanthropic such as it has partnered with several charity organisations to help underprivileged section of the society as well as contribute tow their well-being. In this regard, the company has actively engaged in fund raising activities to support health research as well as launched several health campaigns to generate health awareness among the weak and vulnerable section of the society (Tesco Plc, 2020).

3.1.2 Analysis

Tesco CST activities focus on issues such as community, health, human rights, environment, supplier relationship and business ethics. Accordingly, it has been analysed that Tesco has demonstrated its strong commitment towards addressing these issues. For example, Tesco in the recent COVID 19 pandemic has provided grants of up to £1000 to support projects focused on local children and young people. In addition Tesco has also offered help in the distribution of COVIF 19 vaccine to ensure good health and well-being of the people in the society. However, not all activities of Tesco can be argued to be socially responsible. In this regard, Tesco has failed to demonstrate its commitment towards certain issues and values. Accordingly, environmental protection agencies such as Friends of the Earth have claimed that the way Tesco operates its business has been causing a significant damage to local communities, smaller retailers, as well as suppliers. Accordingly, Tesco has been accused of paying low prices to suppliers which can be claimed to be against its value of promoting supplier relationship (Vandevelde & Thomas, 2016). However, it is worth to mention that this not the first time that Tesco has been alleged for non-0payment to Suppliers and partners but in 2004 Tesco has to face similar criticism (Dresser, 2004)

3.2 Sustainability

3.2.1 Theory- Triple Bottom Line Model and Its Application

TBL is a sustainability framework that involves three main dimensions including social (people), environmental (planet) and economic (profit) as shown is figure 2.0. The term TBL was first coined by Elkington in mid 1990s (Elkington, 1994). The purpose of the TBL approach is to more accurately value assets and leverage resources in order to ensure that the capital are invested efficiently and effectively (Hammer & Pivo, 2016).

Economic (Profit): The supreme objective of any business organisations to is to earn profit. However, some business organisations often focus on profit maximisation goals while ignoring the social and environmental impact. However, in the contemporary scenario it is difficult for such businesses to survive profitably while focusing solely on profit maximisation while ignoring other dimension. Notwithstanding, Tesco is one of the most successful supermarket retail chain in the world and one of the key factors that have contribute to its success is that the company conducts its business in ethical and socially responsible manner (Tesco Plc, 2020). In this regard, the company not only focuses on earning substantial profit but also ensures that the customers are offered with quality products and services. It also supports the suppliers such as farmers through training education and knowledge to improve the farmer’s skills as well as deliver quality products to the customers (Tesco Plc, 2021a).

Environmental (Planet): Every business organisations are involved in the use of the natural resources. However, the exploitation of the natural resources by the human beings and the activities of the business organisation have severe environmental impact. Accordingly, it has become essential for all individuals and the business organisations to protect environment. Accordingly, it has been noted that Tesco places considerable importance on the environmental protection. In this regard, it has been noted that Tesco has cut the use of plastic in fresh chicken packaging. In fact, more recently Tesco has implemented 4Rs strategy – Remove, Reduce, Reuse, Recycle (Tesco Plc, 2021b).

Social (People): Social development is one of the major elements of the TBL approach. The social dimension of the TBL framework has the potential to influence environmental and economic dimensions. Accordingly, it has been identified that that Tesco treats its suppliers and partners as good as its customers. Moreover, Tesco has been actively engaged in the well-being and welfare of the community. In this regard, it has demonstrates strong commitment in improving the education and health of the underprivileged section of the society. Besides, Tesco donates as well as encourages others to donate food at local food banks (Tesco Plc, 2019).

3.2.2 Analysis

The analysis of Tesco approach to sustainability, demonstrated that the company has made significant progress in attaining sustainability of its business operations. However, an in-depth analysis of Tesco’s approach to sustainability postulated that there are certain loopholes and gaps in its approach to sustainability. It is evident from the fact that Tesco in the recent past have been ordered to pay over £8million in fines in a case where the company was found to be guilty of pollution incidents (Environment Agency, 2017). Moreover, Tesco has been called out for delayed payment of the suppliers because to improve its financial position. Even though Tesco has apologised for its action but it has harmed its suppliers (Simpson, 2016)

4.0 Conclusion

In conclusion, this report evaluates the ethical issue in the context of Tesco using relevant theories and models that include Carroll’s Pyramid of CSR and TBL. Accordingly, the application of these theories and their analysis postulated that the Tesco has laid strong commitment towards demonstrated socially responsible behaviour and have been engaged in several CSR activities such as community and health welfare and development programmes. Moreover, it has also place immense important on attaining sustainability by focusing on social, environmental and economic sustainability criteria. However, an in-depth analysis of the company illustrated that though the company has been actively engaged in meeting its social responsibilities and attaining sustainability of its business operation but there are certain areas and cases in the past which demonstrates that the company has not be serious in its action when it comes to CSR and sustainability. For example, it has been criticised for not making payment to its suppliers which has severe implication of the suppliers. Similarly, it has been pleaded guilty in the pollution case and was even imposed a huge mine of 80 million.

5.0 Recommendations

It has been identified from the analysis of Tesco that there are gaps in terms of its policies and actions in terms of CSR and sustainability. Hence, following actions are recommended to the company.

First, it is recommended to the company to develop long terms vision as well as commitment from the top executive level of the company regarding sustainability and CSR programme.

Second, it is recommended to the company to the company to align its sustainability goals with the overall business goals so that it is able to achieve sustainability objectives and business goals simultaneously.

References

Carroll, A. B. (2016). Carroll’s pyramid of CSR: taking another look. International Journal of Corporate Social Responsibility, 1(3), 1-8.

Commission of the European Communities. (2001). Promoting a European Framework for Corporate Social Responsibilities. [Online] Available at: file:///C:/Users/SGC/Downloads/DOC-01-9_EN.pdf [Accessed 29 January 2021].

Dresser, G. (2004). Tesco branded 'unfair and unethical'. [Online] Available at: https://www.standard.co.uk/hp/front/tesco-branded-unfair-and-unethical-6949514.html [Accessed 29 January 2021].

Elkington, J. (1994). Towards the sustainable corporation: Win-win-win business strategies for Sustainable Corporationable Development. Calif. Manage. Rev., 36, 90–100.

Environment Agency. (2017). Tesco hit with major £8million fine for pollution incident. [Online] Available at: https://www.gov.uk/government/news/tesco-hit-with-major-8million-fine-for-pollution-incident [Accessed 29 January 2021].

Hammer, J. & Pivo, G. (2016). The Triple Bottom Line and Sustainable Economic Development Theory and Practice. Economic Development Quarterly, 1-12.

Simpson, E. (2016). Tesco knowingly delayed payments to suppliers. [Online] Available at: https://www.bbc.com/news/business-35408064#:~:text=Tesco%20%22knowingly%20delayed%20paying%20money,conduct%20to%20protect%20grocery%20suppliers. [Accessed 29 January 2021].

Tesco Plc. (2016). An update on our Corporate Responsibility commitments. [Online] Available at: https://www.tescoplc.com/media/391787/corporate-responsibility-update_nov-2016-final.pdf [Accessed 29 January 2021].

Tesco Plc. (2019). Annual Report and Financial Statements 2019. [Online] Available at: https://www.annualreports.com/HostedData/AnnualReports/PDF/LSE_TSCO_2019.pdf [Accessed 29 January 2021].

Tesco Plc. (2020). Annual Report and Financial Statements 2020. [Online] Available at: https://www.tescoplc.com/media/755761/tes006_ar2020_web_updated_200505.pdf [Accessed 29 January 2021].

Tesco Plc. (2021). Our Businesses. [Online] Available at: https://www.tescoplc.com/about/our-businesses/ [Accessed 29 January 2021].

Tesco Plc. (2021a). Tesco: Future Farmer Foundation. [Online] Available at: https://www.tescofuturefarmerfoundation.com/ [Accessed 29 January 2021].

Tesco Plc. (2021b). Tesco to cut plastic in fresh chicken packaging. [Online] Available at: https://www.tescoplc.com/news/2020/tesco-to-cut-plastic-in-fresh-chicken-packaging/ [Accessed 29 January 2021].

Vandevelde, M. & Thomas, N. (2016). Tesco ‘acted unreasonably’ towards suppliers. [Online] Available at: https://www.ft.com/content/e4ff6ea4-c416-11e5-b3b1-7b2481276e45 [Accessed 29 January 2021].

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