Globalisation and CSR essay


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Globalisation and CSR essay

  1. 1. Department of Marketing Assignment Corporate Social Responsibility a bright idea? HEMPLE, James Grant Professor Heiner Evanschitzky | Globalisation and CSR | MK 924 | Elective Individual Essay | Session 2009/2010 | Semester B | Submission Date 02/03/2010 | Msc International Marketing
  2. 2. Contents 1.0 Introduction ................................................................................................ 3 2.0 Measuring CSR Activities ............................................................................... 4 3.0 CSR Conceptual Framework ........................................................................... 6 4.0 Four CSR Strategies ..................................................................................... 8 4.1 Marks and Spencer’s CSR Strategies ............................................................... 8 4.2 Tesco CSR Strategies .................................................................................. 10 4.3 Sainsbury CSR Strategies ............................................................................ 11 4.4 The Co-operative Group CSR Strategies ........................................................ 12 5.0 Impact of CSR Activities .............................................................................. 15 5.1 Marks and Spencer’s ................................................................................... 16 5.2 Tesco ........................................................................................................ 16 5.3 Sainsbury’s................................................................................................ 17 5.4 The Co-Op ................................................................................................. 17 6.0 Conclusions ............................................................................................... 19 References ......................................................................................................... 20 Bibliography ....................................................................................................... 23 Appendix i – Principles of CSR ............................................................................... 24 Appendix ii – Marks & Spencer and Tesco ............................................................... 25 Appendix iii – Sainsbury’s and The Co-Op ............................................................... 27 2
  3. 3. 1.0 Introduction Corporate Social Responsibility (CSR) goes beyond the name and symbol of the brand and encompasses a much deeper understanding. de Chernatony (2006) offers the brand iceberg to permit a holistic view of the organisation. Figure 1: Brand Iceberg Source: adapted from de Chernatony (2006) CSR has created a concentrated discussion among academics (Carroll, 1999; Pearce and Doh, 2005). Luo and Bhattacharya (2006, pg 2) highlight the importance of CSR by stating that: “CSR has quickly become an inescapable fact in corporate environments. As many as 90 percent of Fortune 500 companies have strategic social responsibility plans and initiatives in place.” Robins (2008) states that CSR is the concept of what comprises “good” or “attractive” business behaviour and relates to what can be judged “morally” or “ethically” good. Waddock (2004, pg 6) defines CSR as: “The subset of corporate responsibilities that deals with a company's voluntary/discretionary relationships with its societal and community stakeholders.” Companies view integrating a dynamic CSR existence as a device to increase their competitive advantage with interior and exterior stakeholders (Branco and Rodrigues, 2006). 3
  4. 4. This essay will briefly discuss the different approaches for measuring CSR and develop a set of objective and subjective criteria to analyse CSR activities. Additionally, this essay will describe and evaluate the CSR strategies, initiatives and actions of four British retailers: Marks and Spencer, Tesco, Sainsbury’s and The Co-Operative. Finally, the essay will conclude by evaluating the impact of these CSR activities based on observable evidence. 2.0 Measuring CSR Activities This section briefly discusses the various approaches to measuring Corporate Social Responsibility. Walsh and Beatty (2007, pg 128) argue that: “Corporate reputation may be viewed as a customer’s evaluation that results from either a personal interaction experience with the service firm, as well as from reputation- relevant information received about the firm.” Brammer and Millington (2005) suggest that existing literature portrays a correlation between corporate reputation and social responsibility this viewpoint is underpinned by Fombrun and Shanley (1990) and Gregory (1991). Brammer and Millington (2005, pg 30) suggest that: “Philanthropic spending may play a significant role in stakeholder management and lead to stakeholders holding philanthropic corporations with higher esteem.” Bhattacharya and Sen (2003) state that some of the strongest consumer–company relationships are based on consumers’ identification with the companies that help them satisfy one or more key self-definitional needs. Shuili et al (2007) argue that there is a quantifiable link between consumers CSR awareness and CSR beliefs. Furthermore, Shuili et al (2007) state that consumers' awareness of a brand's CSR activities leads to a more favourable decisions when consumers make decisions regarding how much they believe the CSR activities. 4
  5. 5. Figure 2.0 highlights Lee et al (2009) conceptual framework which proposes that CSR and Corporate Reputation are closely correlated when measuring the impact of CSR activities. Figure 2.0: CSR and Reputation Principles of CSR Economic Legal Ethical Philanthropic Processes of CSR Environmental Economic Program Social Program Educational Program Program Outcomes of CSR Corporate Reputation Source: adapted from Lee et al (2009) Walsh and Beatty (2007) proposed the five ) five-dimensional Customer-based C based Corporate Reputation (CBR) scale which was further developed by Fombrun et al (2000) who proposed the six-dimensional Reputation Quotient (RQ) as a tool to measure CSR dimensional CSR. Figure 2.1: Reputation Quotient (RQ) : Workplace Vision & Financial Environment -> > Social Emotional Appeal Leadership Performance Products & Responsibility Services Source: adapted from Fombrun et al (2000) 5
  6. 6. 3.0 CSR Conceptual Framework The criteria used to analyse CSR activities is underpinned by three main theories; the Stakeholder Theory (Carroll, 1999) Porter’s (1985) Value Chain and the Pyramid of CSR (Carroll, 1999). The stakeholder theory states that organisations have responsibilities to a range of stakeholders, including those internal and external to the organisation (Freeman, 1984; Clarkson, 1995; Donaldson and Preston, 1995). The main stakeholder groups identified by Carroll (1991) include: consumers, employees, suppliers, community, social activist groups. The first stage of the conceptual framework assesses the CSR activities of the selected organisation ranking the organisations performance against each of these key groups by considering their role in the company mission statement. Additionally, Porter’s (1985) Value Chain has been utilised to assess the CSR activities. The value chain highlights the activities within a company that add value to the goods or services produced. The principal idea is that the value added at each stage of the chain exceeds the cost of the activities. The conceptual framework rates the organisations based upon its initiatives in the Primary and support activities of the value chain. Figure 3.0: Value Chain 6 Source: Porter and Kramer (2006)
  7. 7. Furthermore, the conceptual framework is underpinned by Carroll’s (1991) pyramid theory of CSR. Carroll (1991) puts forward four kinds of social responsibilities that constitute total CSR: economic, legal, ethical, and philanthropic. The conceptual e framework ranks the organisations based upon these responsibilities. Figure 3.1: Pyramid of CSR Philantropic Responsibilities: be a good corporate citizen Ethical Responsibilities: be ethical. The obligation to to what is right and fair. Avoid Harm Legal Responsibilities: obey the law. The law is society's codification of right and wrong Economic Responsibilities: the foundation upon which all others rest Source: Adapted from Carroll (1991) e: The conceptual framework concludes by analysing if the CSR activities of the organisation are: Proactive or reactive, Short term or long term, Local or geographic, and a strategic fit or not. The conceptual framework encompasses the theories above and rates the organisations CSR score on a scale of one to five (one being the lowest and 5 being the highest). The lowest conceptual model concludes by rating the organisations overall impression of the organisation CSR activities and a ten point scale. It is important to note that although rigorously based upon the three theories above the analysis of the CSR activities is objective and subjective in its nature. 7
  8. 8. 4.0 Four CSR Strategies This section will now describe and evaluat the key CSR strategies, initiatives and evaluate actions of Marks and Spencer, Tesco, Sainsbury and The Co Co-Op based on the conceptual model that has been developed. Figure 4.0 highlights the numerous different forms of CSR activities. Figure 4.0: CSR Activities CSR Activities Social Activism/ Environmental/ Green Community Corporate Philantropy Corporate Ethically Marketing Involvemnet Source: adapted from McWilliams and Siegel (2001) 4.1 Marks and Spencer’s CSR Strategies Utilising the conceptual framework portrays Marks and Spencer in positive light when considering their overall impression of CSR. Central to the organisations core values is its plan A programme. The company’s dedication to this programme is the prin principal reason it scores highly in the conceptual framework. Mintel (2008) state that M&S has intel committed itself to the Plan A strategy despite the current economic downturn. Plan A was launched in 2007, setting out 100 commitments to achieve in 5 years. Plan A incorporates the company’s customers and suppliers to “combat climate change, reduce to: combat waste, use sustainable raw materials, trade ethically, and help customers to lead trade healthier lifestyles.” (Marks and Spencer, 2010). The company has even appointed a ” director of Plan A to ensure the company stays focused on it. Marks and Spencer outline five key elements of Plan A that will be ac achieved by 2012: “Become carbon ecome carbon-neutral, Send no waste to landfill, Extend sustainable sourcing Set new standards in ethical xtend sourcing, et trading and Help customers and employees live a healthier lifestyle.” (Marks and elp lifestyle.” Spencer, 2010). 8
  9. 9. Marks and Spencer’s commitment to environmental strategies is a key consideration for ranking the companies score highly. Marks and Spencer’s have indicated their intention to reduce their carbon footprint throughout its supply chain. The company has created two state of the art eco factories in Sri Lanka that are at the forefront of energy management and onsite energy production highlighting the companies long term and global commitment to CSR. Additionally, Marks and Spencer’s had utilised its waste from 38 food stores to power stores in November 2007, following the development of its first anaerobic digestion plant this action again highlights its long term commitment to CSR while also suggesting a perfect strategic fit. Furthermore, Marks and Spencer’s can be credited with revolutionising consumers’ revolt against the use of plastic bags. The introduction of carrier bag charging in May 2008 to reduce usage where 5p is now levied on single-use carrier bags with profits directed to an environmental charity. This strategy has been replicated by many competitors within the retail environment and caused the rise of several ‘bag for life’ programmes. Marks and Spencer’s have also opened three next generation eco stores in October 2007 with features that result in the store emitting 95% less CO2 and using 55% less energy than other M&S stores. The company announced in June 2008 that about half the initiatives tested in these stores will be rolled out to all stores and that other initiatives will be tested further before being developed across the whole estate again emphasising their long term commitment to CSR activities. Marks and Spencer launched a clothing recycling programme in Partnership with Oxfam where customers could return unwanted clothing and get a £5 M&S voucher. Industry experts Mintel (2008) reported that the scheme attracted 234,000 participants between November 2007 and May 2008 with donated clothes sold by Oxfam topping £1 million in August 2008. This CSR activity is a perfect strategic fit with the company’s core 9
  10. 10. competences while highlighting the company’s commitment to its customers and community. 4.2 Tesco CSR Strategies Tesco represents a truly globalised company that operates in 12 countries throughout the world with global sales of nearly £50 billion (Mintel, 2008). Tesco’s multi-format retail offering accounts for 12% of all UK retail sales which equates to £1 in every £8 being spent in a Tesco store (Mintel, 2008). Analysing Tesco in regards to the conceptual framework sees the retailer receive a high positive score when assessing its overall CSR activities. Tesco highlights the key elements of its CSR Strategy as: 1. Helping its customers by making green choices more affordable. 2. Claims to be setting an example by committing to measuring and making big cuts in its greenhouse gas emissions around the world. 3. Working with others to develop new low-carbon technology throughout the supply chain. Tesco score highly on their CSR activities that look to combat environmental issues. This is underpinned by their concerted research programme to develop a universally accepted and commonly understood measure of the carbon footprint of its products from manufacture to use and disposal. This focus has allowed Tesco to reduce its energy usage by 50% compared to 2000 this action demonstrates the company’s long term strategy towards CSR. Tesco have halved the cost of energy-efficient light bulbs in stores to encourage consumer take up of the product. Tesco have also successfully recruited employees to become ‘energy champions’ who have been extensively trained in environmental issues and are found in its superstore format in the United Kingdom and Republic of Ireland. This CSR activity further emphasise the company’s commitment to its stakeholders mainly its employees but also allows employees to educate its consumers. 10
  11. 11. Tesco also scores highly for its ethical sourcing practices within the conceptual framework. Tesco failed to achieve its target of independently auditing 100% of its high-risk supplier sites in 2007 (Mintel, 2008). However, it directed increased resources to the task in 2008 to raise auditing levels from 73% to 100% showing the company’s long term commitment and focus towards CSR. Tesco also scores highly within the conceptual framework for its sourcing practices. In 2008, local produce accounted for £ 2.2% of UK sales, compared with 1.7% the previous year (Tesco, 2010). Tesco’s long term commitment to sourcing local produces has benefited local suppliers for example a local watercress producer in Hampshire saw its sales grow 93% due to this strategy (Tesco, 2010). 4.3 Sainsbury CSR Strategies Sainsbury’s operates within the UK and is striving to create and maintain a point of difference over Tesco and other rivals by focusing on the quality of its offer. However, Sainsbury’s achieves an identical score to Tesco when considering the overall impression of their CSR Strategies in the conceptual framework. Sainsbury’s main CSR aims are as follows: 1. Improve energy efficiency. 2. Raise colleague awareness of energy costs and environmental impact. 3. Transporting products more efficiently by reducing miles travelled by its delivery fleet and using electric vehicles in its home delivery fleet. Within the conceptual framework Sainsbury’s rank highly for its CSR activities especially in regards environmental issues. Sainsbury’s has invested in energy efficiency projects, including lighting, refrigeration, heating and ventilation showing the company’s long term financial commitment to CSR activities. Sainsbury’s have also developed a five-site energy and waste study with the Carbon Trust to improve current practice in energy and waste management. Furthermore, they announced plans to convert 20% of its home delivery fleet to electric vehicles by 2010 (Mintel, 2008) this justifies the company’s high score within the conceptual framework for its inbound logistics. 11
  12. 12. In August 2008, Sainsbury’s launched what it claims to be the first monitoring scheme to help dairy farmers reduce their carbon emissions. The scheme is certified by the Carbon Trust and aims to reduce CO2 emissions by 10% among 325 participating dairy farms. This CSR activity underscores the company’s long term commitment to CSR activities and highlights the strategic fit of its operations. Sainsbury’s has also invested significantly in its store design with the latest concept stores built from timber and heated by a bio-mass boiler, the store also features rainwater harvesting for flushing toilets; minimised heat loss from draughts; lower lighting levels; and quiet wind turbines (Sainsbury’s, 2010). Sainsbury’s ethical strategy is also an important consideration for the company scoring highly in the conceptual framework. Sainsbury’s aims to source with integrity in the way it does business and sells products to ensure that ethical, social and environmental considerations are built into its processes. It is the UK leading fair trade retailer and sells only fair trade bananas this emphasises the company’s global reach of its CSR activities and its desire to protect its suppliers. Sainsbury’s emphasis on sourcing specific types of products exclusively from British producers, including all rotisserie chickens, all potatoes used in its own-label potato crisps and all deli counter hams and cooked meats is another consideration for it high scores within the conceptual framework. Furthermore, Sainsbury’s appointed a regional sourcing team to strengthen its sourcing programme underlining the company’s commitment to its local suppliers and the community. 4.4 The Co-operative Group CSR Strategies The Co-op has an extensive custom of ethical and Fairtrade supported by its mutual ownership arrangement and values. The Co-Op’s values are detailed as “of self-help, self-responsibility and democracy, equality, equity and solidarity.” (Co-OP, 2010). Utilising the conceptual framework to analyse the company sees them score highly in regards to the overall impression of their CSR activities. 12
  13. 13. The Co-op re-launched its brand in 2009 utilising the strapline ‘Good for everyone’ and focused on its ethical position and ownership by its members. The Co-Ops ethical strategy also ensures they score highly within the conceptual framework. The company are dedicated to ethical sourcing and trading as a component of sustainable development which extends beyond legislative compliance. The Co-Op is committed to increasing the amount of MSC-certified fish available to UK retailers and consumers and is part of the Co-op’s Responsible Fish Sourcing Policy. Within its ethical sourcing policies they run a Responsible Fish Sourcing Policy covering canned to fresh fish and from ready meals to sandwiches to ensure it doesn’t use any fish from the MSC’s vulnerable stocks list. The Co-Op committed £200,000 over two years to support Marine Stewardship certification process of UK fisheries. This CSR activity emphasises the company’s dedication to various stakeholders such as suppliers and consumers. The Co-Op launched a new ethical policy in 2008 based on a six-month consultation with members that found that ethical business and animal wellbeing were the most significant topics. It immediately switched all its own-brand tea to fair trade product and banned the sale of eggs from caged hens. Ongoing review of food supply chain to ensure compliance with sound sourcing criteria that are embodied into trading agreements. Within the conceptual framework The Co-Op scores highly for its ethical production process this is due to its emphasis on moving its supply base to the adoption of SEDEX (Supplier Ethical Data Exchange) guidelines on assessing supplier compliance with ETI standards to define its annual auditing programme. The above CSR activities bring to light the company’s long term commitment to its various stakeholder groups while ensuring the scheme is a perfect strategic fit. The Co-Op has supported the fair-trade movement since its inception in 1994 with the company launching its long-term plan to ‘mainstream’ Fairtrade in 1998. This long term commitment is also a major factor for the company scoring well in the conceptual framework. The Co-Ops partnership with Supreme Creations (the world leading ethical 13
  14. 14. manufacturer of reusable bags) has made the cotton bag on of its most successful CSR activities. Furthermore, the Co-Op has lobbied to protect the environment and continue their support for Fairtrade. The Co-Ops stance on Fairtrade has created over 2000 jobs with the average employee earning thirty three percent above the minimum salary which has had an encouraging result on the neighbouring area. Fairtrade price premiums have earned over £360,000 which has been used to educate communities and provide unsoiled water (Co-Op, 2010). The Co-Op also philanthropically donated £75,000 to orphaned children in Malawi and India which has funded over two hundred years of schooling. This CSR activity is justification for the company scoring highly within the conceptual framework for its geographical focus and support of communities. 14
  15. 15. 5.0 Impact of CSR Activities This section evaluates the successful impact of the selected retailers CSR activities. Industry analysts Mintel (2008) suggest state that Tesco, Sainsbury’s, Marks and Spencer and The Co-Op are amongst the most successful retailers by Turnover. These figures suggest that there may be a positive relationship between the companies CSR activities and its performance within the market. Table 5.1: Leading Retailers by Turnover Retailer 2004/05 2005/06 2006/07 2007/08 £m £m £m £m 1. Tesco 27,146.0 29,990.0 32,665.0 34,874.0 2. J Sainsbury 14,914.0 15,731.0 16,860.0 17,837.0 3. Asda 14,225.9 14,786.2 15,657.1 nya 4. Morrisons 12,103.7 12,114.8 12,461.5 12,969.0 5. Marks & Spencer 7,034.7 7,275.0 7,977.5 8,309.1 6. Somerfield 4,676.8 4,554.8 4,369.5 nya 7. Co-operative Group 3,016.1 2,983.4 3,037.8 3,676.8 8. Total Co- 7,692.9 7,538.2 7,407.3 3,676.8 op/Somerfield 9. Alliance Boots 4,651.1 5,731.0 5,956.0 nya 10. John Lewis 4,757.5 5,149.3 5,698.4 6,052.2 Partnership 11. Home Retail Group 5,232.0 5,455.0 5,519.1 5,889.4 12. DSG International 4,368.0 4,495.2 4,659.7 nya 13. Kingfisher 4,277.2 4,172.2 4,409.0 4,395.0 14. Next 2,660.2 2,901.8 3,029.5 3,054.9 Source: Adapted from Mintel (2008) Table 5.2 highlights the Top four most trusted retailers in the UK according to Mintel’s (2008) consumer research. Table 5.2: Consumer trust in retailers, 2007 and 2008 March 2007 June 2008 % point change Base: adults aged 15+ 2,068 1,007 2007-08 1. Marks and Spencer 22 22 - 2. Sainsbury’s 23 19 -4 3. Tesco 28 18 -10 4. Co-op - 18 - Source: Adapted from Mintel (2008) Table 5.3 highlights consumers trust in retailers and compares this figure to the frequency that they shop with the retailer (Mintel, 2008). 15
  16. 16. Table 5.3: Consumer trust in retailers compared to usage, June 2008 Base: 1,007 adults aged 15+ Used store in last Trust retailer Trust:Use ratio 12 months % % 1. Co-op 34 18 1.9 2. John Lewis/Waitrose 25 12 2.1 3. M&S 52 22 2.4 4. Sainsbury’s 55 19 2.9 5. Asda 52 15 3.5 6. Tesco 74 18 4.1 7. Morrisons 45 10 4.5 8. IKEA 20 4 5.0 9. Amazon 16 2 8.0 10. Boots 58 7 8.3 Source: Adapted from Mintel (2008) The above tables can be utilised to suggest the effectiveness and success of the retailer CSR activities. 5.1 Marks and Spencer’s Marks and Spencer receives global recognition for its CSR activities by ranking in Ethisphere’s 2009 World’s Most Ethical Companies. Furthermore, research by Mintel (2008) states that Marks and Spencer’s have a considerable gap between itself and the other clothing companies. This suggests that all its competitors need to be doing a lot more to convince customers that ethical sourcing is being tackled properly. Mintel (2008) further concludes that Marks and Spencer’s has one of the highest consumer ratios regarding trust versus usage (see table 4.3). Suggesting that Marks and Spencer consumers are very receptive to the company’s strong corporate commitment to it plan A. British Branding Group (2010) reports that Marks and Spencer’s Plan initiative has seen consumers use 70% less carrier bags with three quarters of M&S customers using a substitute product. 5.2 Tesco Tesco scores highly in the conceptual framework and holds the position as the most successful retailer in terms of turnover (see table 4.1). However, Tesco has suffered a significant worsening of its trust ratio (see table 4.2) implying that it is not delivering 16
  17. 17. against expectations or is seen as not doing enough. Mintel’s (2008) research shows that most consumers have purchased goods in Tesco more than any other retailer and still holds a decent trust versus usage score (see Table 4.3). 5.3 Sainsbury’s The Global 100 Most Sustainable Corporations in the World annual report see Sainsbury’s rank 49th. The company scores highly in CO2 productivity and waste productivity suggesting the broad success of its CSR activities (Global 100, 2010). Furthermore, Sainsbury’s place second in Mintel’s (2008) most trusted retailers survey (see table 4.2). Additionally, the retailer scores highly in Mintel’s (2008) trust versus usage question further underpinning the success of its CSR activities (see Table 4.3). 5.4 The Co-Op Similarly to Marks and Spencer’s, the Co-op, has positive ratios of trust versus usage ratio again suggesting that the Co-Op’s consumers are highly receptive to the organisations CSR activities (see table 4.3). The Co-op is the most trusted company by its shoppers to ‘make a real difference’. However, Mintel (2008) reports that food retailing and distribution is where the most of its energy use and waste originates, figures indicate that its performance is no better than median, which suggests that it has considerably more to do to live up to its stakeholders’ expectations. The Co-Op is the most decorated retailer in terms of their CSR activities accumulating various awards from independent sources: 1. “Retail Week's Responsible Retailer of the Year was awarded to The Co-operative Food in both 2008 and 2009 (Retail Week, 2009).” 2. “The Co-operative Group was awarded the Renewable Energy Association's Pioneer Award 2009 (REA, 2009).” 3. “The Co-operative Group is ranked within the UK's 50 Best Workplaces 2009 (Greatplacetowork, 2009).” 17
  18. 18. 4. “In March 2009, The Co-operative Food was rated the number one supermarket for addressing social and environmental issues, for the second consecutive year, in the Concerned Consumer Index (Populus, 2009).” However, an important consideration on future awards must be given to The Co-Op’s acquisition of Somerfield. The acquisition will involve extensive integration in terms of environmental measurement and management, as Somerfield placed very little importance to these issues (Mintel, 2008). 18
  19. 19. 6.0 Conclusions In conclusion, this essay has briefly discussed the different approaches for measuring CSR through the Lee et al’s (2009) corporate reputation theory. Additionally, Fombrun et al (2000) six-dimensional Reputation Quotient (RQ) was discussed. Furthermore, this essay has developed a conceptual framework to analyse CSR activities. The conceptual framework is primarily underpinned by Carroll’s (1999) Stakeholder Theory, The Pyramid of CSR (Carroll, 1999) and Porter’s (1985) Value Chain. This essay has successfully described and evaluated the CSR strategies, initiatives and actions of four British retailers: Marks and Spencer, Tesco, Sainsbury’s and The Co- Operative based upon the conceptual framework developed. Finally, the essay has concluded by evaluating the impact of these CSR activities based on observable evidence. Research by industry experts Mintel (2008) highlights the success that the selected retailers have had in their CSR activities. Marks and Spencer receives global recognition for its CSR activities by ranking in Ethisphere’s 2009 World’s Most Ethical Companies. Tesco has suffered a significant worsening of its trust ratio (see table 4.2) implying that it is not delivering against expectations or is seen as not doing enough. The Global 100 Most Sustainable Corporations in the World annual report see Sainsbury’s rank 49th. Co-Op is the most decorated retailer for its CSR activities winning copious awards such as Retail Week's Responsible Retailer of the Year was awarded in both 2008 and 2009 (Retail Week, 2009). 19
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  24. 24. Appendix i – Principles of CSR Carroll (1991) Principles of CSR: Level Main Components: It is important… Economic To perform in a manner consistent with maximising earnings per share To be committed to being as profitable as possible To maintain a strong competitive position To maintain a high level of operational efficiency That a successful firm be defined as one that is consistently profitable. Legal To perform in a manner consistent with expectations of government and the law. To comply with various national and supra-national laws and regulations. To be a law-abiding corporate citizen. That a successful firm be defines as one that fulfils its legal obligations. To provide goods and services that at least meet the minimal legal requirements. Ethical To perform in a manner that is consistent with the expectations of societal mores and ethical norms. To recognise and respect new or evolving ethical/moral norms adopted by society. To prevent ethical norms from being compromised in order to achieve corporate goals. That good corporate citizenship is defined as doing what is expected morally or ethically. To recognise that corporate integrity and ethical behaviour go beyond mere compliance with laws and regulations. Philanthropic To perform in a manner consistent with the philanthropic and charitable expectations of society. To assist the fine and performing arts. That managers and employees participate in voluntary and charitable activities within their local communities. To provide assistance to public and private educational institutions. To assist voluntarily those projects that enhance a community’s ‘quality of life’. Source: Adapted from Carroll (1991) 24
  25. 25. Appendix ii – Marks & Spencer and Tesco Company 1 Company 2 Marks and Name of company Spencer Tesco (rate all item on 5-point scales, 1 being the lowest) Useful Benefit 5 5 Mission Statement 5 5 Stakeholders (overall assessment) 4 Employees 4 5 Customers 4 4 Suppliers 5 3 Shareholders 4 5 Environment 5 4 Community 5 5 Government 4 3 Social Activist Groups 3 3 Primary Activities (overall assessment) 3 4 Transport (Inbound Logistics) 4 4 Materials 5 5 Parts from Suppliers 4 3 Ethical Practice Towards Suppliers 5 3 Energy 5 3 Efficiency 5 5 Waste Management 5 4 Ethical Production Practice 5 4 Transport (Outbound Logistics - Distribution) 3 4 Packaging 3 4 PR / Advertising 3 3 Privacy, Confidentiality, Ethics in Market Research 2 4 Pricing Practice 3 3 Ethical Selling Practice 3 4 Consumer Information 3 5 Feedback 3 4 Lifecycle Management of Products 4 4 Support Activities (overall assessment) 3 5 R&D - Product / Service Innovation (If the product itself as well as the process of making & disposing the product is Eco-friendly) 4 4 External Links (Universities, Research Institutes) 2 2 Ethical Research Practice / Product Testing 3 5 Transparency, Code of Conduct 5 4 Financial Reporting, Accounting Standards 5 5 Lobbying 1 4 Governance 2 4 Employee Welfare & Benefits (e.g. Insurance, Social Benefits, etc.) 3 5 Health & Safety Issues 3 5 Training Opportunities 3 5 Policy towards Lay-Offs 4 5 Diversity 4 5 Economic Responsibility 4 5 Legal Responsibility 5 5 Ethical & Environmental Responsibility 5 4 Philanthropy 4 3 25
  26. 26. (1) Proactive … (5) Reactive CSR Strategy 2 2 Time Horizon (1) Short Term … (5) Long Term 5 5 Geographic Focus: (1) Local … (5) Global 5 5 Strategic Fit: 1=perfect fit … 5=total misfit 1 1 (rate on 10-point scales, 1 being the lowest) Overall Impression of CSR Activities 9 8 Annual Sales (2008 year) 712.9M 58,588 Annual Sales (2009 year) 897.8M 59,426 EBIT 2008 (=earnings before interest and tax) 1007.1M 2,803 EBIT 2009 604.4M 2,954 Stock Price (1.1.2009) 221.00P 365.20p Stock Price (1.1.2010) 412.40p 412.05p Stock Price (1.3.2010) 330.10p 419.70p 26
  27. 27. Appendix iii – Sainsbury’s and The Co-Op Company 3 Company 4 Name of company Sainsbury The Co-Op (rate all item on 5-point scales, 1 being the lowest) Useful Benefit 4 4 Mission Statement 5 5 Stakeholders (overall assessment) 5 Employees 4 5 Customers 5 4 Suppliers 4 5 Shareholders 5 5 Environment 5 5 Community 4 5 Government 4 5 Social Activist Groups 3 4 Primary Activities (overall assessment) 4 5 Transport (Inbound Logistics) 4 4 Materials 5 5 Parts from Suppliers 5 5 Ethical Practice Towards Suppliers 4 5 Energy 3 4 Efficiency 4 5 Waste Management 4 5 Ethical Production Practice 5 5 Transport (Outbound Logistics - Distribution) 4 4 Packaging 5 5 PR / Advertising 4 4 Privacy, Confidentiality, Ethics in Market Research 3 4 Pricing Practice 4 4 Ethical Selling Practice 4 5 Consumer Information 5 5 Feedback 4 4 Lifecycle Management of Products 4 5 Support Activities (overall assessment) 4 4 R&D - Product / Service Innovation (If the product itself as well as the process of making & disposing the product is Eco-friendly) 3 4 External Links (Universities, Research Institutes) 2 2 Ethical Research Practice / Product Testing 3 5 Transparency, Code of Conduct 3 5 Financial Reporting, Accounting Standards 4 5 Lobbying 2 5 Governance 3 5 Employee Welfare & Benefits (e.g. Insurance, Social Benefits, etc.) 4 5 Health & Safety Issues 4 5 Training Opportunities 4 4 Policy towards Lay-Offs 4 4 Diversity 5 4 Economic Responsibility 4 5 Legal Responsibility 5 5 Ethical & Environmental Responsibility 5 5 Philanthropy 3 4 (1) Proactive … (5) Reactive CSR Strategy 2 1 27
  28. 28. Time Horizon (1) Short Term … (5) Long Term 5 5 Geographic Focus: (1) Local … (5) Global 4 5 Strategic Fit: 1=perfect fit … 5=total misfit 1 1 (rate on 10-point scales, 1 being the lowest) Overall Impression of CSR Activities 8 10 Annual Sales (2008 year) 19287M 5079.5M Annual Sales (2009 year) 20383M 6655.5M EBIT 2008 (=earnings before interest and tax) 17837M 3953.9M EBIT 2009 18911M 5720.4M Stock Price (1.1.2009) 336.50p 118.00p Stock Price (1.1.2010) 324.20p 131.75p Stock Price (1.3.2010) 330.40p 128.25p 28