Case study, Corporate Social responsibility case study, Tesco's Corporate Social Responsibility Initiatives

 

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In 2007, Tesco became the first supermarket chain to assign 'carbon rating' to everything it sells; the latest attempt by a retailer to cash in on consumers' environmental concerns. Tesco promised to halve emissions from its stores and distribution centers by 2020. It planned to spend up to £500million during the next 5 years in reducing energy use. The 'carbon footprint' of a product includes the energy required for its manufacture, its packaging and transportation of the product to supermarket shelves. Labels showing energy content might encourage shoppers to opt for lower carbon goods. This could boost local suppliers also to Tesco stores and encourage manufacturers to cut carbon emissions in order to attract shoppers to their brands.

CSR Committee and Measurement Every year, Tesco's board members discuss the company's CSR strategy. Every quarter, the performance is reviewed and the board and the executives receive quarterly updates on the CSR performance, using which, future risks and opportunities are assessed. A CSR committee was established in 2001 comprising executives from different functions and headed by the director, Group Corporate Affairs. The committee meets at least four times a year to review its CSR efforts. In addition to the regular meetings, the committee holds 2 away-days each year. Experts and speakers are invited to comment on Tesco's CR performance, strategy and reporting, and to provide insight on key issues. Tesco's SteeringWheel19 framework is used to measure its CSR achievements. Tesco introduced KPIs, which formed a part of the operations quadrant, in the 'responsible and safe' segment. KPIs define the key deliverables to achieve goals in each segment.

Tesco's KPIs were chosen basing on one or four of the four criteria namely customer priority, staff priority, business critical and compliance with legislation or public policy. In 2003-2004, Tesco employed around 18 CSR KPIs. Every year, Tesco set new KPIs. In March 2005, Tesco introduced new KPIs on healthy living, inclusivity and diversity. In 2007-2008, the KPIs increased to 23. This enables the business operation and monitor on a balanced basis with due regard for all stakeholders. The KPIs progress is monitored by managers using traffic light approach, in which, green indicates success in a target and red denotes a problem area. When KPIs are not on track, corrective action is taken.

Husted and de Jesus Salazar, argue that by taking a CSR strategic approach, corporates would increase shareholder's value, at the same time they comply with responsibilities/commitments to society and other stakeholders. Some reviews say that CSR contributes to a firm's reputation and profitability.

Based on regression analysis of profits and contribution for community projects, it is found that the contribution for community plans has high positive correlation with profit and market share. Tesco's CSR initiatives have a strong positive impact on its bottom line.

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19]Tesco's business planning strategy is carried out using Tesco's 'steering wheel.' The wheel has four quadrants - people, finance, operations and Customer quadrants. Each quadrant is divided into segments. The customer quadrant is guided by 'delivering every little help for the customers,' the policy for the people quadrant is 'delivering every little help for our people,' the aim of the operations quadrant is 'better, simpler, cheaper - how we'll free up time and resources for customers and people' and the finance quadrant is guided by 'we will deliver results if the other quadrants meet their targets.' Each of the segments sets its own business priorities for the coming year.

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