Executive summary
Sustainability has become a major in the last few decades as companies focus on becoming responsible. Sainsbury’s has used this opportunity to produce healthy foods that have made sugar intake among UK consumers to reduce by 39%. The organization has continued to make positive impacts on the community. For instance, in the financial year 2017/18, employees and customers helped raise £35m for charities. The company has invested in carbon reduction projects to help find alternative ways; an example is an initiative to install solar power on the roofs as a way to reduce the use of electricity.
Sustainability practices have positively impacted on the image of the company. To the public, Sainsbury’s is a caring firm since it provides quality brands that are harmless to their health and environment. On the government side, the company is perceived to be a responsible citizen. Sustainable practices have negatively affected Sainsbury’s, particularly due to the high costs associated with them. The society is affected by the sustainability practices of the company through economic and fiscal initiatives. The major fiscal benefits are low expenditures and increased revenue. The economy is positively impacted by the sustainability practices of Sainsbury’s since the latter has diversified its product portfolio and equitable distribution of wealth.
Within the stakeholder theory, stakeholder engagement is a key issue. The major stakeholders in an organization include customers, employees, investors, local communities, and managers. To ensure that all views of stakeholders were included in the actions of the company, value management groups were formed in 2018. These included the health management group, sourcing management group, community management group, environment conservation group, and great working place management group. As reconditions, Sainsbury’s should expand its sustainability practices by engaging in the disposal of mobile phones that are damaged and expand its sustainable practices in developing countries.
Table of Contents
The Sustainability Practice of Sainsbury’s. 5
The Implications Sustainability Practice on the Organization, Society and the Economy. 7
Stakeholder Views on the Approaches Taken By Organisations to Deal with Sustainability Practice 10
Techniques of Modelling Stakeholder’s View.. 11
Approaches to Creating a Sustainability Report 11
Sainsbury’s Principle Activities in 2018. 12
Introduction
In the last few decades, the debate regarding the responsibility of firms in society and the need to consider sustainability issues. According to the definition by the European Union, corporate social responsibility as the responsibility of an enterprise for its impact on society. With this respect, there is a need for organizations to implement a close connection with stakeholders. Such a concept is essential to stakeholder theory. The theory indicates that first, an organization should be categorized as a network of stakeholders, and secondly, an organization should integrate social responsibility within its business strategies.
Sainsbury’s is one of the biggest chains of supermarkets in the United Kingdom. The company operates in three key areas that deal with food products and financial services. The competitive edge that Sainsbury’s enjoys is based on the way it relates well with all stakeholders, especially through sustainable practices. Sustainable practices entail the processes employed by services to achieve qualities that are significantly valued within a specific physical environment. The company adopts industry-wide strategy in many areas of its business, especially packaging and food waste. For example, the company adopts the pact that has been established by WRAP’s UK Plastics that is focused on changing the plastic packaging processes in the UK. In the second section, the paper will critically analyze the sustainability practice of Sainsbury’s. In the third part, the paper will critically evaluate the implications of sustainability practice on the organization, society, and the economy. In addition, the paper will critically analyze the impacts of stakeholder views on the approaches taken by organizations to deal with sustainability practice by undertaking a theoretical review of stakeholders’ views changes Sainsbury’s has made in their actions regarding sustainability practices.
The Sustainability Practice of Sainsbury’s
The retail market is one challenging segment of the economy, and businesses have to find ways to balance the increasing demand and improve the supply. Sainsbury’s is one of the largest retail stores in the United Kingdom; it employs over 185,000 people and serves a large market, which means that its impact is felt across the entire globe. As a market-leading company, Sunbury’s has employed strategies to help in sustainability practices aimed at building its brand, sustaining its loyal customers and improving on the efficiency of the company.
The board of directors at Sainsbury’s have implemented a strategic system that ensures the company is implementing sustainable practices. Firstly, the company has laid emphasis on the value of healthy foods by ensuring that food sold and displayed on the shelves are healthier for the consumer. By encouraging healthier and nutritious foods, Sainsbury’s has improved healthier living. For example, the company has been able to minimize UKs sugar intake by reducing by 39% the amount of the sugar in soft drinks. Also, Sainsbury’s has taken up independent testing to ensure that levels of salt and calories intake meet those recommended by the government (Chiu, 2003).
The success of Sainsbury’s relies on its relationship with the community in the United Kingdom and the global community at large. The company has continued to make positive impacts on the community. For instance, in the financial year 2017/18, employees and customers helped raise £35m for charities. The company targets to raise £400m by the end of the year 2020, with £300m having already been collected. With over 1400 stores across the United Kingdom, the company’s impact has, in a big way, helped in sustainability practices (Sainsbury’s PLC Annual Report 2018).
Sainsbury’s also helps in reducing the global challenges of climate change and scarcity of resources. The company achieved a 14% reduction in carbon emissions in the financial year, 2017/18 a 6% increase from the previous year. The company has invested in carbon reduction projects to help find alternative ways; an example is an initiative to install solar power on the roofs as a way to reduce the use of electricity. Also, the company has invested in ways that help reduce food wastage by donating unsold food to a charity, thus helping feed the community (Sainsbury’s PLC Annual Report 2018). Additionally, Sainsbury’s has over 12,000 products under its brand, which are sourced from over 70 countries across the world. The company has a responsibility to the suppliers and farmers. Through the Sainsbury’s foundation programme, the company collaborates with its supply chain to help tackle any challenges with sustainability resilience, competition, and overall efficiency (Colantonio, 2009). The company support aims at ensuring that the farmers and growers supply produce meets the certification standards of the Rainforest Alliance.
Sainsbury’s has continued to support its employees by ensuring that they feel that Sainsbury’s is the best place to work. The company has invested in training and development programmes that ensure colleagues acquire new skills and are have an understanding of the company’s values and strategies. Currently, the company has over 713 people enlisted in the program. Sainsbury’s has a diverse workforce that includes a balance between gender, the disabled, and the minority groups. Further, the company has recognized the changing dynamics and emerging trends in sustainability practices (Fobbe, 2020). Based on this fact, the company has reviewed the governance of its sustainability plan by forming a sustainability committee to review strategies and align them with the company’s brand and supervise the operating board. The committee also receives inputs from colleagues and customers and also advice from stakeholders.
Overall Sainsbury’s has been leading in its sustainability practice; the company has an ambitious plan based on the core values that have helped it to sustain its standing as one of the leading retail giants in the world. The company is contributing to the United Nations sustainable goals SDGs through its sustainable plan. The SDGs are 17 goals that the United Nations published in 2015 to help end poverty across the globe, protect our environment, and foster prosperity and peace for all (Chan and Lee, 2007).
THE IMPLICATIONS SUSTAINABILITY PRACTICE ON THE ORGANIZATION, SOCIETY, AND THE ECONOMY
Many states have continued pursuing various strategies with the objective of protecting the planet and the available resources. Companies also adopt these strategies to act as environment conserving agents effectively. As organizations focus on producing greener products, they emulate sustainability. Sustainability is important due to issues such as reduction of energy application, managing wastes, and lowering the cost of production. Organizations that help the surrounding communities by adopting strategies that conserve the environment have benefited from such operations. For society, sustainability practices positively impact their social and economic factors (Nawaz and Koç, 2019). Likewise, the economy as a whole benefits from sustainability practices, for example, through a reduction of costs of treating diseases and raising the level of employment. Nonetheless, sustainability can have negative effects on organizations, societies, and economies. Most producers want to meet the standards set by the government besides increasing the number of their consumers. However, the producers may not meet their responsibilities apart from not comprehending the legislations set by the authorities. The part below provides a discussion regarding the positive and negative implications of sustainability practices on Sainsbury’s Company, society, and economy.
Organization
Sustainability practices have positively impacted on the image of the company. To the public, Sainsbury’s is a caring firm since it provides quality brands that are harmless to their health and environment. On the government side, the company is perceived to be a responsible citizen based on the various environmental conservation approaches it has adopted. The organization realizes that there are numerous risks that originate from climate change and which can have dire impacts on its local and global operations (City of Vancouver, 2005). Sainsbury’s collaborates with the London-based Carbon Trust and Imperial College to create science-linked strategies to reduce its carbon emission. As a result of lowering carbon emissions, society has experienced a lower number of health hazards. Ultimately, this has reduced the household costs of treating water-borne and air-borne illnesses. Through the extended sustainable practices adopted by Sainsbury’s, the firm has expanded its human resources, especially along the supply chain resulting in increased employment opportunities besides increasing household revenues.
Sustainability practices have negatively affected Sainsbury’s mainly due to the high costs associated with them. For example, the company allocates over £200 million to cater for its corporate green loan, energy security, and reduction of carbon emissions. The funds are also used to undertake other activities, for example, installation of solar panels in the company offices and production facilities, changing its materials to natural refrigerants, and generation of green gases using heat and power plants. Such initiatives may lower the gross profit of the firm and returns to shareholders’ investments.
Society
The society is impacted by the sustainability practices of the company through economic and fiscal initiatives. The major fiscal benefits are low expenditures and increased revenue. When Sainsbury’s invests in sustainable practices, for instance in a particular area within the developing countries, the local people incur low costs of energy, water, and infrastructure. In addition, society benefits from low long-term liabilities due to costs saved and low costs of operations. The economic benefits that society get are improved vitality and enhanced economic competitiveness characterized by increased local output. For example, the community’s savings may also be generated since they will reduce the expenditures incurred for water and energy sources. Additionally, the society will benefit from improved methods of transportation, being educated about healthy eating styles, and getting an opportunity to engage in physical exercises through the gym that is established by the Sainsbury’s.
Even though the activities of Sainsbury’s have positive effects on society, they can also create negative impacts. For example, the society is optimistic that the government will not allow any kind of activity that will harm its people, but this optimism is sometimes misplaced since the government does not know about the actions of an organization. The decisions and policies made by a government are also influenced by interested parties. For example, in the EU, it is mandatory for companies to disclose their sustainable practices. Nonetheless, many governments in the region do not criticize the corporate social responsibilities adopted by many firms or green investments. By putting pressures of firms to engage in sustainable practices, companies increase their budgetary allocations to cater to these activities, ultimately hurting society due to high prices.
Economy
The economy is positively impacted by the sustainability practices of Sainsbury’s since the latter has diversified its product portfolio and equitable distribution of wealth. Through brand diversification, Sainsbury’s has established many production facilities that have, in turn, absorbed idle but skilled human resources. In addition, the company embarks in the production of quality services and goods. This makes the consumers have improved health, resulting in higher productivity and an increase in the level of gross domestic product. Sainsbury’s production facilities are sources of employment for many people who, in turn pay taxes, thus boosting the entire economy.
Sainsbury’s sustainability practices have negative effects on the economy. For instance, when taxation laws and levies are adopted non-discriminatory, they can make some companies evade taxes, thus making the economy to suffer. Another effect of taxation is that it affects local demand, thus impacting on trade. When the government increases taxes, fees, and charges, the prices of local-produced products increases, making the demand for foreign products to increase.
Stakeholder Views on the Approaches Taken By Organisations to Deal with Sustainability Practice
Stakeholder engagement
The term stakeholder was first introduced by the Stanford Research Institute. Stakeholder refers to the groups that make an organization fail to exist if they do not provide their support. After the institute introduced the term, further researches have been conducted regarding the role of stakeholders in areas of organization theory, corporate social responsibility, corporate planning, and system theory. Other fundamental studies have done extensive examination of stakeholder legitimacy and analysis. The major stakeholders in an organization are customers, employees, investors, local communities, managers, government, banks, competitors, future generations, media, business partners, and suppliers.
Each stakeholder is required to be engaged in the activities of the organization with a clear and specific objective. Within the stakeholder theory, stakeholder engagement is a key issue. Based on the stakeholder saliency and type, the activities of an organization may relate to public relations, management accounting, customer service, and human resource management. This implies that depending on a particular activity; engagement may be treated as a process for achieving corporation or consent, creating participation and involvement, enhancing trust, ensuring disclosure to ensure fairness, or a technique of corporate governance.
Techniques of Modelling Stakeholder’s View
The multi-attribute group decision-making techniques are the ones mostly used to model the views provided by stakeholders. These techniques expand the coverage of multi-attribute decision-making techniques. The multi-attribute decision-making techniques focused on making a judgment on a specific, finite category of feasible choices over a set of decisions and attributes (Nicola, Pierpaolo, and Barbara, 2016). On the other hand, multi-attribute decision-making techniques consider the diverse opinions provided by free decision-makers for example experts or members of a group. These techniques are appropriate for stakeholder engagement since stakeholders do not have similar salience.
Approaches of Creating a Sustainability Report
While establishing a sustainability report organization should first identify the aspects required to be included in the report. According to the precautionary principle, sustainability aspects that should be considered are those impacting the environment, social live, and economy. Organization should then identify the stakeholders according to their priority. This will ensure engagement and evaluate to level to which all the sustainability aspects affect the stakeholders. This followed by adopting and calibrating verbal labels. These refer to adverbs and adjectives that will be used in the report for example little, much, too much, and extreme. Companies should then assess the aspects of sustainability (Belchior, 2018). This entails valuating the impact of aspects on social, economic, and environmental factors. The next step should be combining the assessment done by stakeholders. This ensures that the sustainability report is created using diverse opinions. Lastly, organization determine the material aspects.
Sainsbury’s Principle Activities in 2018
In 2018, the company’s committee met two times with the goal of discussing progress and strategy besides the entire sustainability plan. For instance, during the meeting, the members reviewed plans such as the integrating the sustainability activities of Home Retail Group into the Company’s whole plan. During such meeting, Sainsbury’s board members receive regular updates related to customer insights, feedback from colleagues, stakeholder views regarding the company’s sustainability strategy to ensure the organization is responding accordingly.
Sainsbury’s reviewed the sustainability report on May 2018 with Jean Tomlin chairing the meetings. This meeting focused on outlining the direction of “Live Well for Less” principle that is adopted by the company. Sainsbury’s also held a meeting chaired by Mike Coupe, the CEO with a goal of defining group-wide technique, adapting new government requirements and trends, and signing off key investments. To ensure that all views of stakeholders were included in the actions of the company, value management groups were formed. These included health management group, sourcing management group, community management group, environment conservation group, and great working place management group (Sainsbury’s PLC Annual Report, 2018).
Despite efforts by Sainsbury’s to act upon the stakeholder views, it has been criticized for various issues. For example, Manifest, a proxy voting organization and Pirc, one of the advisory groups of shareholders raised concern due to very high remuneration paid to Mike Coupe. In addition, the company paid discriminative share award that impacted on the performance of the top managers. In reference to reduction of plastic packaging, Sainsbury’s has also received criticism from companies such as Greenpeace and Oxfam.
According to Greenpeace, it is clear that pollution emanating from use of plastic is a global environmental issue. The company undertook a study about the supermarkets in the UK to establish the progress they have made regarding the reduction of plastic use. In the report that was available to the public and consumers, Greenpeace indicated Sainsbury’s performed the worst since it indicated that it will reduce plastic use by 77 tonnes (The Glocer, 2019).
Conclusion
Sainsbury’s aims at becoming the most trusted and respected supermarket in the UK market and across the world. For this reason, the supermarket has adopted five key values that are covered by its sustainability practices. These are use of integrity to source raw materials, ensuring health of its customer and quality food, respecting the environment, improving the living standards of communities, and creating a good place of work. Given the diversified sustainable practices the supermarket adopts, it has made positive and negative impacts on the society and economy. While it has benefited from strong connection the consumers and government, it has made the society to suffer from high prices of their products when governments pressurizes it to expand the corporate social responsibilities. On the positive side, the organization has created many job opportunities due to the expansion of production facilities in the UK and other regions.
Recommendations
Sainsbury’s should expand its sustainability practices by engaging in disposal of mobile phones that are damaged. Given the increasing online shopping, most of the supermarket customer use their mobile phones to purchase their brands. This means that by ensuring the damaged and no longer useful mobile phones are safely disposed, Sainsbury’s will enhance its image as a responsible citizen. Another recommendation is that the supermarket should expand its sustainable practices in developing countries. Due to lack of adequate technology and resources, developing countries have not successfully dealt with water and energy shortage. By investing in such countries, the supermarket will establish sustainable practices that will positively impact on the local economies.
References
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City of Vancouver, 2005 Social Development, Vancouver, Director of Social Planning.
Colantonio, A., 2009 Social Sustainability: A Review and Critique of Traditional versus Emerging Themes and Assessment Methods. In: H. Malcolm, et al., eds. Second International Conference on Whole Life Urban Sustainability and Its Assessment, Loughborough, Loughborough University, 85–85.
Fobbe, L., 2020 Analysing Organisational Collaboration Practices for Sustainability, Sustainability, 12(6), p.26.
Nawaz, W and Koç, M. 2019 Exploring Organizational Sustainability: Themes, Functional Areas, and Best Practices. Sustainability, 11 (16), p.37.
Nicola, B., Pierpaolo, and Barbara, S. 2016 Capturing the Stakeholders’ view in sustainability Reporting: A Novel Approach.
Sainsbury’s PLC Annual Report 2018. https://www.about.sainsburys.co.uk/~/media/Files/S/Sainsburys/documents/reports-and-presentations/annual-reports/sainsburys-ar-2018-full-report.pdf
The Glocer. 2019 Greenpeace stands by criticism of Sainsbury’s on plastic packaging. Available from https://www.thegrocer.co.uk/letters/letters-greenpeace-stands-by-criticism-of-sainsburys-on-plastic-packaging/591921.article