Corporate Social Responsibility: Tesco and Sainsburys

Corporate fond duty Tesco and SainsburysImportance of CSR Case studies of Tesco and Sainsbury administrator SummeryCorporate sociable duty which needed explanation some decades ago, is instantly embroild al almost e truly mission statement and does matter in the new-made time. It is to a rattling large extent true that with the awareness of consumer, Media, certain rules from the authorities and pressure from NGOs film slighten the harm of the corporate initiation to the ships comp all. But on the other hand it has been observed that if a conflict between profit and doing the right amour is seen profit wins.To start with, the project im breach psychoanalyze what CSR stands for in reality in the light of the definitions provided by different intellectuals. It will further highlight does corporate social responsibility matter followed by the give-and-take approximately the brilliance of CSR in the recent times. After that the project further enquires the different approa ches towards CSR as some plurality are in prefer and galore(postnominal) are against CSR encounterivities in the cable.Further more than, the project throws light on the obligation and workouts of the different institutions and authorities which includes dividing linees, G everyplacenment, Professional accountants, Non government organization and familiar public as well.The impartial conclusion has been made after enquiring the findings from previous literature, previous progress in view of CSR, corporate balls role in current situation, future priorities say by government, accountants, non- government organizations and civil society .Moreover, an analytical approach of case studies has been adopted in the project where main(prenominal)ly two companies Sainsbury and Tesco have been chosen to lay down the corporate knowledge domains current role with regards to CSR. In addition to two companies Sainsbury and Tesco, the analysis of the scores of other companies is in addition included to reach the conclusion.Finally, the projects propose some testimony with regards to CSR for Government, Professional accountant, Businesses and civil society that they need to keep back collective efforts to harbour this cosmos a better place not but for themselves but for the successors as well.Chapter 11. INTRODUCTION1.1 What is CSR?Although every organization has formed a different definition for corporate social responsibility heretofore there are vernacular grounds and connection between them. CSR is about how companies manage business concern processes to produce an overall positive impact on society. (www.mallenbaker.net)With the passage of time CSR has sound very of the essence(p) issues in the corporate world and even for other stakeh olders including media. For instance the fiscal times and guardian have special reporters for Corporate Social Responsibility of the corporate world. Social responsibility depose be found in almost every weekly new spaper. According to Mallenbaker CSR is something which like original sin mass never be escaped by corporate world. The following(a) illustration will help to explain CSR to a very large extentIn toll of the above menti geniusd illustration, to shoot down the quality of management, the organization or company has to consider all the inner and outer circle positionors which will ultimately bring about the positive effect on the society. For instance if the company tries to show its responsibility in respect of Environment it has to satisfy the government, non-government organization and civil society concerned with environment. Similarly for work place it has to keep in mind the employees rights and unions as well.1.2 Who are Stakeholders?Person, group or organization that has direct or validatory stake in an organization because it can affect or be affected by the organizations actions, objectives and policies. Key stakeholders in a business organization include creditors, cu stomers, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions and the conjunction from which the business draw its resources (www.businessdictionary.com). Businesses generally need to manage their relationship with their stakeholders for both short and long term benefits. It is considered more valuable for any company to involve the stakeholder in the whole process and communicate them through a sophisticated process. For the lasting relationship with the stakeholders, the managers need to expand role of the stakeholders by moving form on the nose informing and responding to involving them in corporate social responsibility process.1.3 BackgroundThe history of social responsibility of the corporate in the world is as old as business itself. For instance the laws to protect forest during commercial operation can be found almost 5000 years ago. In ancient Mesopotamia almost 1700 BC King Hammurabi introduced some laws for farmers, builders and innkeepers which showed that they would be prosecuted if they caused any death or major problem for the citizens. In old Rome senators grumbled about the failure of business to cave in sufficient taxes to fund their military campaigns. (www.brass.cf.ac.uk )With the advent of industrialisation the impacts of the business on society assumed a new dimension. By the 1920s the world saw a new discussion about social responsibility of the business which was actually the beginning of the modern Corporate Social Responsibility movement.In March 2006 the European commission published its latest communication on CSR which clearly defines that the companies should recognise the social and environmental concerns in their business activities. The aim for this communication was to make Europe pole of excellence on CSR.Uk government besides encouraged such activities and in the globose reporters stick tos UK companies were rated the top 3 reporters. Almost 80 % of FTSE 100 companies report on social and environmental issues. (www.corporateRegister.com)1.4 Project ObjectivesA large part of the project includes the discussion about the sizeableness of the CSR to the businesses, Government, civil society and especially for the master accountants who can play a very important role in respect of CSR report. It has been tried to achieve the following objective in the project.* What is CSR in reality with its true spirit* Importance of CSR in the current era* Stakeholders expectation from Corporate World* Role of professional Accountant* What the businesses are doing in this respect* How CSR can be developed* Is there any legislation exists or neededThe debate on CSR is outgrowth day by day but in reality a big part of the corporate world and society almost does not complete the real meaning of the this term. Some recognise it as a report for public relation. Some say it is about to improve the business war-riddenness. Some see it a good business practice. The other fee ls it is just a type of threat. CSR in reality is a framework of relations between corporate world and the rest of society both nationally and internationally. It is not the activities just for the big countries in the world but for all the companies exist in this world because people exist everywhere.CSR is good for long term business study as well as for wider society. The world has seen progress in every area and this thing has increased more concerns for the society. Thats why the partnership of society and business world is needed to do with all the concerns. Government in this aspect ha a very important role to play to bound and encourage the corporate world to recognise its social responsibility and act positively.This task is not only the responsibility of one department ,company or community but participation is needed from every field of life including Governments, Corporate world, NGOs, Professional Accountants ,Professional bodies and Civil society.1.5 Priorities So Fo rCSR has gained more attention for all including media but on the other hand the real greatness of the CSR is cosmos neglected or going behind the motion-picture show in some way or other. Many organizations are development CSR as a tool to make cash for their shareholders ignoring the other stakeholders of the business which is totally against the true spirit of CSR.The government and private bodies made some priorities in the yesteryear and started working on CSR. They precisely mentioned some principle to go alongwith these issues. For slip U.K CSR department announced publically that it will highlight the importance of social and environmental responsibility, assist the involvement of all the small and medium surface companies in this respect. They further mentioned that they will favour the transparency of CSR insurance coverage and aware the whole corporate not only in U.K but all over the world.To chew up about the professionals who are considered responsible for r eporting financial and social issues used to follow only a set of rules established by generally accepted accounting principles and other bodies. These rules and regulation do not seem to be helpful for the professional accountants to report social and environmental issues. The professional used to look into the past for reporting like historic cost, prudence etc and have treat the changing trends of the world which has become the international village. Although management accounting deals with the removal of waste which is also a part of CSR yet there are so more things which the accountants are lacking. The accountants should know the reality that the standards only provide guideline and it is accountants who by using their own moral standards ethically can make the things bit better.In terms of the firms priorities for CSR, it seems that they are claiming more than taking practical steps and their priorities to becomeher with their answer are ambiguous. Although CSR reportin g have become tradition in many companies but lull they are lacking many aspects. It seems that they are looking after their own benefits only and not giving importance to other stakeholders .They seems to follow Friedmans theme that money belongs to shareholders only and they have to decide where to invest it. They are preparedness for short term ignoring long term. They do no consider this reality that by investing in social issues like community development, employees betterment , customer care, environment issue etc not only improves the reputation of the companies but develop the companies benefits in long term.But in spite of all the claims it seems that saying something and doing something very much are two separate things. One can find hundred and thousands of press releases about CSR but less practical steps can be found. It does not mean that nothing is being done on CSR but more needs to be done.Chapter 22. Literature reviewThis Chapter will examine the academic liter ature on Corporate Social Responsibility. More specifically the review will localize upon what CSR in reality stands for, its importance, Rules and Regulation, what the companies are doing in respect of CSR, Professional Accountants Role and expectations of the stakeholders. CSR which has been used for business ethics, defined as tantamount to corporate philanthropy, and considered strictly as relating to environment policy has different meaning and importance for everyone. (McWilliams, Siegel, Wright, 2006)Through the power of collective action, the Global Compact seeks to advance responsible corporate citizenship so that business can be part of the solution to the take exceptions of globalization. In this way, the private sector in partnership with other social actors can help realize the Secretary-Generals vision a more sustainable and inclusive global economy. (www.unglobalcompact.org)2.1 The concept of CSRJCI believes that CSR is about what business can do not about what b usiness must do. It is about opportunities not about obligations or new rules. (www.davidgrayson.net). The recent CSR concept was first found in the mid-twentieth when the focus was just on social issues like charity and Labour issues. But later the area of discussion widened and covered ecological issues as well. It included how business should take account of its economic, social and environment impacts in the way it operates- maximizing the benefits and minimizing the downsides.Corporate social responsibility means that a company or business is not only accountable to its shareholders but to all its stakeholders which include its customers, suppliers, employees, local communities, investors, environment, governments etc. CSR to a very large extent has been detect a voluntary action with less legal requirements.2.2 Importance of CSRThe exploitation in the business world is as old as business world itself. Whether it was employees rights, communities inconvenience, environment, sha reholders, customers, suppliers, creditors or debtors it has been obvious everywhere. But as the CSR ha gained a sens of attention, the world has become the global village now where the comments like Profit is only responsibility can not be accepted. (Husted, B.W. and Salazar, J., 2006). Where selected stakeholders like particular suppliers, creditors or shareholders can not be favoured by managers, where twist around of power by business can not exist, employees can not be exploited and society can not ignore the damage of the environment.The main reason for the awareness for all these things is CSR. One thing is sure that the pressure on business to play its role on social issues will come on to grow in future. In the last ten years the institution which worked hard within the global sphere of operation gained more respect, power, monetary benefits and allure as well. On the other hand the institutions like police, judiciary and scores of government institutions have been fai led in doing so. But the pressure is growing day by day in this respect.The governments have admitted this thing that it can not change the whole world without the help of the people who are living in the world particularly the corporate world which is getting benefits from the society. So the government is in one way or another putting pressure on the businesses to contribute towards the social issues.On the other hand businesses have also come to known that for long term recognition and benefits, they have to be active in respect of CSR. They have to recognise the rights of their employees respect their suppliers, save the environment and contribute towards the other issues which exist in the society2.3 Intangibles and CSRThe importance of the intangibles can not be ignored as the new International Financial Reporting Standards (IFRS) stated that from 2005 all listed European companies must report acquired intangible assets. The intangible assets includes Brand jimmy, good will e tc. (www.csr.gov.uk).It is said that intangible assets are more important for a business than the tangible ones. CSR not only helps in building these assets but protects and expands them. For example the brand value of any business do not start form the beginning but retained afterwards with different CSR activities which may include Consumer specific activities, health and safety measures , Sponsoring community development programme, support for clean environment and so on.2.4CompetitivenessA business can be more competitive and successful as well by adopting CSR policies which is an edge for any company. For example a link between a business and customer give more training to the business about the needs and requirements of the customer. Ultimately this thing results in the business becoming more competitive in terms of product development. CRS also makes the businesses more efficient and competitive in respect of price by taking steps like minimizing waste .If the companies pr efer to make the recyclable products, it can help on the one hand to overturn a danger for environment and on the other hand can help a lot to reduce the cost of the product which ultimately results in low price for the customer and more benefits for the businesses.2.5 Different Approaches towards CSRCorporate social responsibility is one of those topics-like Manchester linked and the New York Yankees- that raises passions both for and against.(Simon, 2005). Different approaches can be found about CSR which are contradictory. This part will examine some of the approaches available and analyze them.For many years, Milton Friedman (1962) has been known as the villain in the business and social literature. His notion, that business are owned by their shareholders and they have to decide about their money if they deprivation to give it to the charity or not, has been criticized (Husted and Salazar, 2006).He further had an argument that CSR is indicative of self-serving Behaviour on t he part of manager and reduces shareholders wealth (Abagail , Donald and Patrick 2006).But without going into details this idea seems to be true that how legislateing more on social issues will help to maximize the benefits of the businesses . The shareholders do not have any problem to spend a moderate amount on these types of issues.On the contrary, there are others who have totally different opinions. For example Jones says in his stakeholders theory that the firms which are stanch and honest to their stakeholders ultimately create incentives for their own firms. Some say that CSR is only used by some companies to get competitive advantages. (Abagail , Donald and Patrick 2006)Some are with the bandstand that CSR is not about giving charity only but it is more than that. It is about helping the community, taking steps to save environment, taking care of the rights of employees, upward(a) relationship with customers and about contributing towards other social issues. (www.malle nbaker.net)One thing is quite sure from the previous experiences that companies cannot maintain business success and shareholder value by maximising short-term profits and the importance of the CSR can not be ignored in the recent time. (Oketch, M. 2004). The companies should, therefore, should take part in the activities which entrust them to get benefit in the long run, and contribute as much as possible to the community without making a loss. This will take them towards a win-win situation.2.6 CSR and Poverty ReductionBecause of the unfair distribution of the wealth, people in some countries do not have food to eat and water to drink sequence in some countries people have more than they need. Although poverty reduction and CSR do not seem to be connected with each other yet the social responsible business can contribute to reduce the poverty especially in developing countries. Creating Jobs, Training the people, addressing the issue of child labour, gender equality, health care , community development, higher minimum wage and better working place conditions are some of the steps under the roof of CSR which can help to reduce the poverty to a certain level. A proactive approach of corporate world, society, professionals and governments is needed towards CSR to reduce the poverty.2.7 Professional Accountants roleScores of Professional accountant have already started taking steps to adopt the concept of CSR and ready to contribute towards a contemporary issues especially environment-being the most important currently. But they have been criticised ordinarily for not unfolding the required information which the stakeholders are looking for. Their CSR reporting fails to be logical and does not produce comparable data on environmental issues, risks and uncertainties which can be relevant to the business current and future performance .The main objective of corporate reporting is to communicate economic measurement of the information about resources and performa nce that would be useful to users who have a right to this information. To fulfil this objective, corporate reports have to possess the following qualitative characteristics relevance, reliability, comparability, objectivity and opportuneness (Barry Elliot and Jamie Elliot, 2004).Accountants, who are actually considered responsible for reporting all the aspects, have been following set rules made by professional bodies and other authorities. These bodies have only provided canonical rules which do not include the ultimate guidance on social and environmental issues. Furthermore accountants have been focusing on past only quite a than dealing with present and future. For instance historic cost, prudence, representational faithfulness and so on have been their basic areas of interest. These concepts actually do not help when reporting social and environmental issues.After years of criticism both professional bodies and government worked out certain criterias about these issues. But in spite of the fact that accounting standards have some provisions and government has put some restriction, the accounting professionals need to take these new issues into consideration while reporting financial performance. The standards only provide basic guidelines to standardise the system globally and the whole world will be a better place if theory and practice is balanced for its betterment. The accounting professionals need to use their moral standards as well while reporting.2.8 Governments roleThe role of the governments is very vital to improve the division of the business to the social development. According to many intellectual the basic thing which prompts any organization to play its responsible role in society is legislation in that particular area. There are laws which cover many areas like minimum wage, Health and safety and disclosure to investors but the governments have probably need to make some amendments in laws in the areas such as social and environment. Whereas on the other hand many opine that if the legislation regarding CSR is prepared, the businesses will only make efforts which the law requires but never more. At the moment many companies are doing their best voluntarily but the legislation can effect their motivation and they may step back.The governments have been facing two challenges. First how to engage more and more companies in CSR and secondly how to make the contribution of the companies better in terms of CSR. For the first challenge the government has made a set of rules and regulation for the companies to follow CSR and reviewed it action and polices across the board and made CSR a priority. For the second challenge the governments have been encouraging the roles of the companies which are doing their bets for the social issues.The governments can make corporate social responsibility better by providing best practice guidance, intelligent regulation and incentives to the companies where needed. Some suggestions of making a separate department for CSR have also come to the surface from many critics. They think that accountants are not supposed to deal with CSR especially social and environmental issues.2.8.1 U.K GovernmentU.K business world to some extent going in the right direction as the global Reports 2006 survey shows that U.K companies were rated the top three reporters (www.csr.gov.uk).Since I became Minister for CSR in May 2002 we have seen rapid growth inInterest in the application and implications of CSR. What has impressed me most has been the level of creativity and enthusiasm brought to the subject from all quarters. Weve seen encouraging progress. Id like to highlight some significant recent developments and look at where we need to focus for the future. (www.csr.gov.uk)The government encourages companies to report on their CSR performance in different ways like* Issued guidance on environment reporting* The ACCA sustainability reporting awards* Supported the global Reporting Ini tiativeThe U.K Government has brought the regulation up to date as well. From October 2007 Quoted companies must also disclose the information about employees, environment, social and communities matters. Company act 2006 also has shown some legislation in this respect. (www.corporateRegister.com)2.8.2 European Union RoleLike UK European commission also considers Corporate Social responsibility an important area and have already started working. In 2001 the European commission developed a strategy on CSR which resulted in the establishment of a Multi-Stakeholder forum on CSR in October 2002.In march 2006 European commission published its communication on CSR which states that CSR can make a significant contribution and make Europe a pole of exellance. During its presidency of EU in 2006, Finland held a conference with the name Corporate social responsibility policies promoting innovation and competitiveness which also emphasized on the importance of the Corporate Social Responsibi lity. (www.csr.gov.uk)2.8.3 International CommitmentIn September 2006 a world summit on sustainable development was arranged in Johannesburg where all participant committed to promote corporate responsibility and made a future line of work.Some critics, however, says that the government is trying to avoid its duties because it is just dependent on the NGOs. Governments are trying to push NGOs on the front foot instead of going forward themselves. It is true that governments are making efforts for the development of CSR but the main problem is practice. It has been observed in different surveys that the non-government organizations in the world are making more efforts and taking practical steps for the solutions of social issues than the governments and the Governments are lacking the implementation of the its theory .2.9 Consumer and CSRTo talk about the role of the general public, they have also a very important role to play. erstwhile(prenominal) the companies want to be more effi cient and wishes to make CSR Central to their corporate identity. For instance the Seventh Generation who are the suppliers of the chlorine-free toilet tissues and Ben Jerrys, who are the eco-friendly ice-cream maker, have not been responded well by the consumer. It seems that only minority of people are ready to pay premium prices for these responsible products. This type of behaviour from consumer can demoralise the companies or force them to limit their CSR activities. Some critics says that only consumer can not be blamed for not supporting CSR activities as it is the duty of the government that it should aware the general public about CSR. If a common consumer does not know what CSR is or how it can be supported, how consumer can encourage such activities.2.10 NGOs and CSRNGOs and trade unions have been pointing their fingers at the international government bodies for their lack of commitment towards CSR. It is to some extent true that companies have been left alone with less guidance and little support from governments.It has been noticed that Non-government organizations have been working more actively than the governments. Whether they are social or environmental issues non- government organizations seems to be excelled. For instance in many parts of the world different charitable or non- profitable organizations are going ahead to the governments institutions, professionals, and corporate world. ActionAid , Amnesty International UK , Oxfam GB , Refugee Council , Saferworld , Save the Children UK and World Development performance are some of the examples of the NGOs which are working for social and environmental issues and putting their best efforts without making any profit.2.11 CSR in developing countriesCSR aims both to improve the contribution of the business in society and maximize the benefits out of the business activity. The more CSR activities can be found in the richest countries than in the middle and low-income countries. The docket of C SR is less visible in these countries.CSR actually offers opportunity to the governments, Private Sectors, Professional Accountants to bring changes in the current social system in these countries. Even the companies which are doing their businesses in the developed countries can do a lot in these countries by expanding their Corporate Social Responsibility practices to these countries. By doing this they can enlighten their image and get long term benefits as well.However over the past few years the governments, businesses NGOs and civil society have managed to some extent to adopt CSR agenda and have started doing something in the developing countries as well . For instance the countries like South Africa, China, India, Brazil and Philippines have started CSR movements in their respective countries. But it is the beginning and still lot to do in this regard.2.12 Consequences in the absence of CSRThe above mentioned discussion about CSR and its importance made one thing very clear that CSR has become essential both from the business an Social point of view. If the society, the accounting professionals, businesses and other academics in the financial field do not challenge these issues and stop being passive in order to meet the true purpose of their roles, the problems will continue to grow.As far as the businesses are concerned they make money while working in a society. If the society where they are working is strong enough in respect of money and can enjoy the basics needs of the life the economy will grow which will result in a prosperous Situation. If the companies are making money from the people, it is not odd to give some part of it back to the people in the form of facilitating them in different respects such as community development, helping the poor, victorious care the children, take care of the suppliers, customers, employees and contribute towards the solution of the environmental issues which is in reality their surroundings as well. It is sa id that to get love from some one you have to give it first. By doing all the efforts regarding CSR the companies actually enhance their image side by side other benefits for long term. In the absence of CSR business can make money but can not earn long term benefits and respect in the society in current situation.To talk about the professional accountant, it is obvious that they follow certain rules and regulations while reporting but they need to follow morality and ethics as well. The professional, of course, are the part of society and not the part of problems in society. As CSR has become a source of betterment for the society, they should take care of the social and environmental issues while reporting for the companies and should try to point the risks in future with regards to business side by side giving analysis of the past. If they just ignore the issues of the society, who knows they can be ignored by the society.Chapter 33. MethodologyKnowledge is a series of inventive activities which applying models to unfold the reality (Watofsky, 1983) .This type of inventive process changes time to time and homo beings observe the changes. But the models which human beings themselves recognise vary time to time.The method of case study has been adopted in the project which will itself answer many questions like How, when and why. The procedure to go for case study is more explanatory and flexible than the other methods. Case study procedure is found suitable because it helps to determine the complex issues deeply, points out the problems during the procedure and suggests remedies as well.The Case studies of Sainsbury and Tesco in this project are carried out in order to know the current situation of CSR and its importance in corporate world in U.K. The reason for selecting Sainsbury and Tesco is that the both companies are the very successful and big names in the U.K, represents other business community and rivals as well. The project aims to observe the CS R importance by analyzing their intern