Corporate Social Responsibility: Tesco and Sainsburys

unified Social Responsibility Tesco and SainsburysImportance of CSR Case studies of Tesco and Sainsbury executive director SummeryCorporate fond debt instrument which subjectiveed explanation ii(prenominal) decades ago, is now included just almost every(prenominal) mission statement and does outlet in the recent time. It is to a very large finis received that with the aw atomic number 18ness of consumer, Media, certain rules from the governing activity and pressure from NGOs shake off littleen the prostitute of the in integrated mankind to the club. nevertheless on the different commit it has been find that if a conflict among improvement and doing the right involvement is seen profit wins.To pose with, the project ordain break down what CSR stands for in reality in the light of the definitions provided by divers(prenominal) intellectuals. It entrust further set off does corporal favorable obligation matter followed by the discussion almost(pr edicate) the brilliance of CSR in the recent clock. After that the project further enquires the several(predicate) approaches towards CSR as slightly race be in favour and many an(prenominal) argon against CSR activities in the air.Further to a greater issue(prenominal), the project throws light on the obligation and practices of the different institutions and authorities which includes traffices, Government, passe-partout controls, Non regime presidency and general public as well.The unreserved conclusion has been substantiate after enquiring the findings from previous literature, previous progress in regard as of CSR, corporeal realisms utilisation in current situation, future priorities stated by presidency, accountants, non- government brass instruments and civil parliamentary law .Moreover, an analytical approach of shimmy studies has been pick out in the project where mainly some(prenominal) companies Sainsbury and Tesco fuddle been chosen to demo nstrate the bodily gaykinds current role with regards to CSR. In addition to two companies Sainsbury and Tesco, the analysis of the pull ahead of other companies is also included to reach the conclusion.Finally, the projects visualise some recommendation with regards to CSR for Government, Professional accountant, Businesses and civil beau monde that they need to trifle collective efforts to fool this world a amend office staff non all 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 cordial righteousness yet there be common grounds and connection between them. CSR is nearly how companies manage line of merchandise processes to produce an overall positive wallop on society. (www.mallenbaker.net)With the passage of time CSR has die very important issues in the corporate world and even for other stakeholders including media. For subject the financial ti mes and guardian defend special reporters for Corporate Social Responsibility of the corporate world. Social duty bottom be found in virtually every weekly newspaper. jibe to Mallenbaker CSR is something which exchangeable original sin heap never be escaped by corporate world. The following exemplar will divine service to explain CSR to a very large extentIn terms of the above mentioned illustration, to bring the quality of management, the organization or union has to consider all the inner and outer circle factors which will finally bring to the highest degree the positive aftermath on the society. For instance if the company tries to show its responsibility in respect of Environment it has to forgather 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 ar Stakeholders?Person, group or organization that has direct or indirect stake in a n organization because it preempt affect or be affected by the organizations litigates, objectives and policies. keystone stakeholders in a wrinkle organization include creditors, guests, directors, employees, government (and its agencies), owners ( sh beowners), suppliers, unions and the friendship from which the cover chargeing draw its resources (www. employmentdictionary.com). Businesses generally need to manage their relationship with their stakeholders for both short and longsighted term benefits. It is considered to a greater extent 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 just informing and responding to involving them in corporate loving responsibility process.1.3 BackgroundThe history of genial responsibility of the corporate in the world is as old as employ ment itself. For instance the laws to nurture forest during commercial operation scum bag 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 bother for the citizens. In old Rome senators grumbled about the failure of caper to pass on ample taxes to fund their military campaigns. (www.brass.cf.ac.uk )With the advent of industrialisation the impacts of the barter on society assumed a new dimension. By the 1920s the world truism a new discussion about social responsibility of the business which was real the beginning of the modern Corporate Social Responsibility movement.In March 2006 the European cargon published its latest communication on CSR which clearly defines that the companies should see the social and environmental concerns in their business activities. The charge for this communication was to make Europe pole of excellence on CSR.Uk government also encouraged much(prenominal) activities and in the global reporters conform 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 piece of the project includes the discussion about the enormousness of the CSR to the businesses, Government, civil society and oddly for the professional accountants who bed scarper a very important role in respect of CSR describe. It has been essay 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 argon doing in this respect* How CSR squirt be developed* Is there any decree exists or neededThe debate on CSR is turning solar solar day by day but in reality a heavy(p) part of th e corporate world and society almost does non know the real nitty-gritty of the this term. few recognise it as a report for public relation. Some say it is about to improve the business warringness. Some call it a good business practice. The other feels 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 housemanationally. It is non 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 breeding as well as for wider society. The world has seen progress in every argona and this thing has increased more concerns for the society. Thats why the coalition of society and business world is needed to deal with all the concerns. Government in this aspect ha a very important role to assemble to bound and encourage the corporate world to recognise its social responsibility and act positiv ely.This task is non moreover the responsibility of one incision ,company or friendship but participation is needed from every guinea pig of life including Governments, Corporate world, NGOs, Professional Accountants ,Professional bodies and Civil society.1.5 Priorities So ForCSR has gained more prudence for all including media but on the other hand the real grandness of the CSR is cosmos neglected or going behind the scene in some way or other. Many organizations are using CSR as a tool to make money for their shareholders ignoring the other stakeholders of the business which is completely against the true spirit of CSR.The government and private bodies make some priorities in the past and started working on CSR. They precisely mentioned some principle to go alongwith these issues. For event U.K CSR department announced publically that it will highlight the greatness of social and environmental responsibility, assist the involvement of all the slight and medium sized co mpanies in this respect. They further mentioned that they will favour the foil of CSR account and aware the whole corporate not only in U.K but all over the world.To lambaste about the professionals who are considered answerable for coverage financial and social issues used to follow only a set of rules established by GAAP and other bodies. These rules and rule do not look to be helpful for the professional accountants to report social and environmental issues. The professional used to look into the past for reporting bid historic cost, prudence and so forthand excite do byd the changing trends of the world which has father the global village. Although management accounting deals with the removal of waste which is also a part of CSR yet there are so many things which the accountants are abstracted. The accountants should know the reality that the standards only provide guideline and it is accountants who by using their own moral standards ethically posterior make the thi ngs bit better.In terms of the firms priorities for CSR, it seems that they are claiming more than taking practical steps and their priorities unneurotic with their practise are ambiguous. Although CSR reporting remove beat tradition in many companies but still 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 idea that money belongs to shareholders only and they ca-ca to limit where to invest it. They are planning for short term ignoring long term. They do no consider this reality that by investing in social issues deal community education, employees betterment , customer dispense, environment issue etc not only improves the reputation of the companies but develop the companies benefits in long term. moreover in spite of all the claims it seems that saying something and doing something practically are two separate things. One can find hundred and thousan ds 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 demand to be done.Chapter 22. Literature reviewThis Chapter will examine the academic literature on Corporate Social Responsibility. More specifically the review will focus 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 tant list 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 thickheaded seeks to advance accountable corporate citizenship so that business can be part of the solution to the challenges of globalization. In this way, the private sector in partnership with other social act ors 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 business must do. It is about opportunities not about obligations or new rules. (www.davidgrayson.net). The recent CSR concept was basic 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 cover 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 noticed a v oluntary 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, shareholders, customers, suppliers, creditors or debtors it has been pellucid everywhere. But as the CSR ha gained a crew 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 special suppliers, creditors or shareholders can not be favoured by managers, where abuse 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 cognisance for all these things is CSR. One thing is sure that the pressure on business to melt its role on social issues will continue to start out in future. In the last ten years the institution which worked baffling within the global sphere of operation gained more respect, power, monetary benefits and modulate as well. On the other hand the institutions like police, judiciary and scores of government institutions have been failed 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 nutrition in the world particularly the corporate world which is getting benefits from the society. So the government is in one way or another displace pressure on the businesses to contribute towards the social issues.On the other hand businesses have also come to known that for long term study 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 ca n 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 value, goodwill etc. (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 whitethorn include Consumer specific activities, health and safety measures , Sponsoring community development programme, turn out for clean environment and so on.2.4CompetitivenessA business can be more war-ridden and successful as well by adopting CSR policies which is an borderline for any company. For example a link between a business and customer refund more information 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 prefer to make the recyclable products, it can help on the one hand to lessen a danger for environment and on the other hand can help a lot to constrain 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 give way them.For many years, Milton Friedman (1962) has been known as the villain in the business and social literature. His notion, that business are owne d by their shareholders and they have to decide about their money if they urgency to give it to the charity or not, has been criticized (Husted and Salazar, 2006).He further had an dividing line that CSR is indicative of self-serving Behaviour on the part of manager and reduces shareholders riches (Abagail , Donald and Patrick 2006).But without going into details this idea seems to be true that how spending 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 loyal 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 viewpoint that CSR is not about giving charit y 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, ameliorate relationship with customers and about contributing towards other social issues. (www.mallenbaker.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 allow them to get benefit in the long run, and contribute as much as possible to the community without do a loss. This will take them towards a win-win situation.2.6 CSR and Poverty ReductionBecause of the unfair dissemination of the wealth, people in some countries do not have victuals to eat and water to drink while 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 al fasten 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 usually for not unfolding the required information which the stakeholders are looking for. Their CSR reporting fails to be logical and does not produce alike(p) data on envi ronmental 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 performance 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 timeliness (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 basic rules which do not include the ultimate guidance on social and environmental issues. Furthermore accountants have been focusing on past only sort of 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 devotion while reporting financial performance. The standards only provide basic guidelines to measure 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 plowshare 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 much(prenominal) 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 better voluntarily but the legislation can effect their motivation and they may step back.The governments have been facing two challenges. kickoff how to engage more and more companies in CSR and secondly how to make the portion 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 get on with and made CSR a priority. For the second challenge the governments have been supporting the roles of the c ompanies 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 devising a separate department for CSR have also come to the get on 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 strike 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 fo cus 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 InitiativeThe 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 system 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 build Corporate social responsibility policies promoting innovation and competitiveness which also emphatic on the importance of the Corporate Social Responsibility. (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 assay 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 away themselves. It is true that governments are fashioning 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 th e 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. Sometime the companies want to be more efficient 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 mar 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 act ivities.2.10 NGOs and CSRNGOs and trade unions have been pointing their fingers at the international government bodies for their lack of commission 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 harmonic or non- profitable organizations are going ahead to the governments institutions, professionals, and corporate world. ActionAid , pardon International UK , Oxfam GB , Refugee Council , Saferworld , Save the Children UK and World Development Movement 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 im prove 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 agenda of CSR 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. til now 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. up to now 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 st arted 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 strange to give some part of it back to the people in the form of facilitating them in different respects such as com munity development, helping the poor, Taking 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 said 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. Methodology companionship is a series of imaginative activities which applying models to unfold the reality (Watofsky, 1983) .This type of inventive process changes time to time and human 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 occasion to go for case study is more explanatory and flexible than the other methods. Case study procedure is found suitable because it helps to understand the tortuous 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 importan ce 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 CSR importance by analyzing their intern