Corporate Social responsibility, Tesco's Corporate Social Responsibility Initiatives

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Case Code: CSR0056
Themes: Corporate Social responsibility

Pub Date : 2009
Country : UK


Tesco's Corporate Social Responsibility Initiatives


Introduction

Corporate Social Responsibility (CSR), which started voluntarily in some companies, caught on with the corporate world over the last few decades. CSR became a norm as per few countries' corporate governance codes. Many other countries are also contemplating inclusion of CSR initiatives as a standard corporate governance practice. It has become a competitive necessity rather than a nicety, which it used to be. Companies saw the benefit. Shareholders supported the initiatives. Stakeholders appreciated the initiatives. However, as Adam Smith observed, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." The intriguing question however is, why a retailer should support CSR blowing up millions of pounds. After all, it is not manufacturing anything to justify the shareholders' money allocated for CSR initiatives. This case study illustrates the issue with Tesco, UK's top retailer.

Corporate scandals at Enron, WorldCom and others made people distrust big businesses and this increased government regulations. This apart, Non-Governmental Organisations (NGOs) started criticising and battling with MNCs. The trend of rankings and ratings also pressurised companies to report their non-financial performance along with financial results. And, of late, media is observing companies closely. Embarrassing news anywhere in the world - say, a child sewing a cloth with a company's brand on it - can be broadcasted across the world instantly. Relatively, customers are increasingly concerned about the companies' impact on society including that on the physical environment, impact of products on the consumers, etc., as customers have become more aware of these issues through mass media.

Hence, society's demands and expectations on companies' responsibilities have increasedmuchmore than before. CSRwas always concernedwith how companies conduct themselves in relation to stakeholders (employees, consumers, shareholders and the society in which firms operate). Thus, CSR has gained huge momentum within the business community in the recent past andmany companies emphasise their commitment to environmental, social, and economic goals.

Global Retailing and CSR Initiatives

The retailing industry consists of companies engaged in catalogue retailing, owners and operators of department stores, stores offering diversified general merchandise, apparel retailing, consumer electronic retail stores, food and drug retailing, and specialty retail stores like toy, office supply, furniture and automotive retail stores. It is one of the largest industries worldwide. Over the last 20 years, the retail industry, regarded as a sector with little concern for environmental impacts, has undergone drastic changes.

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