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Corporate Sustainability
Corporate sustainability is an approach that entails creating a long term value of stakeholders in an organisation through the implementation of different business strategies (Khan et al. 1698). In assessing the corporate sustainability of an organisation, there are three pillars required, for instance, economic, social, and environmental corporate sustainability. In the past few decades, corporate sustainability has grown in terms of the sustainable business strategies used in various aspects of a company. Most companies in the world have an increasing demand for corporate sustainability to enable them to cope up with the first changing industrialised world. This increased demand for corporate sustainability is also an aim to increase transparency and accountability in the financial section of an organisation. Other reasons why corporate sustainability is in high order in most organisations, is to create a long-term value of consumers and employees and taking into consideration of all the aspects of the pillars of corporate sustainability (Khan et al. 1698). In most instances, organisations strive for transparency to make the activities of various stakeholders in an organisation diversify their operations.
One of the most crucial things in tracking the corporate sustainability of an organisation is stakeholder communication. This communication is essential because it aids to performance of an organisation, which is involved in establishing the feedback in sustainability development of an organisation (Khan et al. 1698). The best way of communication between a company and its stakeholders is reporting. Communication by reporting expresses the openness of values, objectives, principles, and performance of an organisation concerning sustainable development. Research studies show that approximately 80% of the leading corporations in the world engage in sustainable reporting.
There are two ways in which an organisation (Tesco) can reach or achieve corporate sustainability, for instance, business model adjustment and result reporting (Caputo et al. 45). The models to be used in this paper in evaluating corporate sustainability are Sustainability Balanced Scorecard (SBSC) and Global Reporting (GR) as far as reporting by stakeholders is concerned (Caputo et al. 45). The motive to this issue in assessing corporate sustainability in organisations is to evaluate how the social part of an organisation is affected. There have been many activities that do not address the protection of human rights in many organisations. Lobby activities and evasion of taxes is also a motive behind this study. This paper aims to assess the corporate sustainability of the chosen firm (Tesco) is embedded within their corporate systems, policies, goals and practices.
Literature review
Corporate Sustainability Evolution
Historically, the corporate sustainability of different organisations has been shifting depending on the rate of development in early 1970s research studies mainly referred to corporate sustainability as social reporting. The term evolved, and in the 1990s, the name now was called environmental reporting (Engert et al. 2833). As changes were witnessed in the business world, the term soon changed to Corporate Social Responsibility (CSR) or sometimes it was referred to as sustainability reporting. Research studies address that different stages can be used to explain the maturity of corporate sustainability and the adoption of CSR.
The first stage to explain this is that in the firms at the beginning used window-dressing activities to change the wording of CSR and not interfere with the actual meaning (Engert et al. 2833). The second stage is the containment of costs whereby the processes of an organisation were reengineered to reduce water and energy consumption to pull the production costs down. The third stage in explaining the maturity of corporate sustainability is the engagement of stakeholders, whereby organisations could keep the needs of customers and employees on the forefront. The firms ensured that there were customer and employee satisfaction. The fourth stage involved communicating about the initiatives taken by an organisation through the development of CSR reports (Engert et al. 2833). The last and mature step is the sustainability of an organisation which involved the radical changes in the activities of the firm and low-cost production processes. It, therefore, shows that corporate sustainability has a bright future because it mainly focuses on the needs of customers and will continue to evolve for the best interests of the company.
Current research on corporate sustainability
Current research studies have increased their focus on addressing corporate sustainability on many organisations even though these organisations impose lethal threats to the social and economic ecosystem (Seele, Peter, and Marc Chesney 139). The increase in the number of corporate sustainability reports is summarised by the Environment, Society, and Governance (ESG) concept. However, the ECG does not address the financial crises that put many organisations at risk of collapsing are not addressed. The ideas that are addressed in the ESG cannot put an organisation anywhere when the entire social and economic system is at risk (Seele, Peter, and Marc Chesney 139). Corporate sustainability mainly dwells on the non-financial activities’ character and self-regulation so that regulatory gaps in business organisations are filled. The experts in public health are against self-regulation because corporations undermine or affect the contributions on public health. (Seele, Peter, and Marc Chesney 139) and other scholars question the perceptions of public health experts.
Current research mainly deals with shared values in CSR activities, the tendency to pay in the production of sustainable products, and the financial performance of sustainable organisations. This kind of research is of less value if it cannot address the harmful environmental activities are driven by many organisations (Seele, Peter, and Marc Chesney 139). The research is less important if it cannot address the lobby practices that these organisations are involved in, the labour standards, tax evasion and human rights protection. It is fair to state that the fundamental critique of corporate sustainability of organisations is not recommendable. This is because it would assume the progress and developments of those companies that address ethics in its operations. These kinds of companies contribute to sustainability in both sectors (social and economic) by encouraging stakeholder dialogue and reporting. Companies should, therefore, succeed in promoting sustainability to avoid the criticism of their corporate sustainability (Seele, Peter, and Marc Chesney 139). The criticism of the practices in research concerning corporate sustainability is essential when assessing Tesco’s structure in CSR because it helps to understand how to preserve the ecosystem. The criticism is also crucial to evaluate how Tesco engages with its stakeholders and the method of communication used.
Analysis of Corporate Sustainability Program of Tesco
The corporate sustainability programs in Tesco are developed and implemented by a committee on this subject whose chairman is John Allan (Morgan et al. 227). The company takes corporate sustainability in its services as very important because of the previous ethics-related scandals in its supermarkets. Some of the current reported ethics-related scandals in the supermarkets include reporting of profits inappropriately and treatment of suppliers in an unfriendly manner. The corporate sustainability team has done enough to restore the trust of customers on the brands of the company. The company releases a corporate sustainability report regularly to indicate the progress it has made in various departments. Currently, Tesco has joined the UN in programs in Environmental protection. The company does this by use of environmentally friendly production mechanisms; this means that little or no emissions to the environment. Another current policy by Tesco as far as corporate sustainability is concerned is the protection of human rights (Morgan et al. 227). This human protection of human rights is done per the acts of the United Nations Human Rights Commission (UNHRC) and the International Labor Organization (ILO). The company has also upheld standards of the UN in business to tackle any kind of discrimination, for instance, racism, gender, and sexual discrimination.
The company clarifies that as an international retailer, it is the responsibility of the company to observe every aspect of corporate sustainability to enable the company to move forward (Pulker et al. 25). The company also states that to demonstrate high levels of transparency among its key stakeholders (customers, employees, suppliers) it must practice or show recommended levels of corporate sustainability. The company also says that corporate sustainability helps or drives the company to run its many activities as well as cushioning stakeholders. For example, concerning food wastes, the company uses corporate sustainability to improve the freshness of food so that they can stop their “good food” going to waste. It is pertinent to say that Tesco engages in measures to ensure corporate sustainability to ensure efficient communication between stakeholders and the company (Pulker et al. 25). This dynamic and constant communication is relevant in creating a long-term stakeholder relationship. The company also aims in halve the per capita global food waste in both at the consumer level and retailer level and also reduce wastage food in the production and supply chains in the next decade. This reduction of food wastage is also an environmental conservation measure of corporate sustainability.
In the CSR report of 2016, Tesco received an award of being the best retailer in practising corporate sustainability activities in the Global CSR Excellence and Leadership Awards (Naidoo, and Gasparatos 125). In 2019, Tesco was awarded the Marine Stewardship Council (MSC) supermarket of the year. In its award-winning statement, the company said that oceans receive many challenges, for example, pollution, overfishing, and acidification. The company has played an essential role in managing global fish stocks and sustainable sourcing of wild fish. This sustainable sourcing of wild fish helps to its goal 14 of sustainable development of conserving oceans. In 2014, Tesco had worn the sustainability award as being the forefront retailers in cutting carbon emissions to the atmosphere (Naidoo, and Gasparatos 125). The company by 2014 had diverted its transport uses through rail and water, and when using a lorry, the company made sure that it is full before departure. Apart from winning awards as evidence in the efforts taken by Tesco in promoting corporate sustainability, the company has enrolled in partnerships. In 2018, Tesco and the World Wildlife Fund (WWF) partnered to pledge on sustainable food program (Naidoo, and Gasparatos 125). The partnership aimed to halve the impact of food wastage on the environment within 12 months. The deal was for four years, and as stated in the agreement, it was to help customers eat sustainably.
SWOT analysis in the corporate sustainability program of the company identifies that external factors undermine the activities and policies of the company in carrying out successful programs. One of the external threats is the competitors of Tesco, such as HBO. These competitors affect the plans in two ways. One of the methods is that they want to outshine Tesco in its operations to conserve the environment and other social conservation activities. All these activities by the competitors are to try to capture the attention of customers and the related stakeholders. The second way is that when the company is trying to conserve the ecosystem, its competitors may not be trying to do the same; instead, they pollute the ecosystem, which pulls back its goals (Naidoo, and Gasparatos 125). Another external threat in the corporate sustainability policies of Tesco is the government regulations in various countries where Tesco stores are located. The host nation may have policies that restrict foreign content. These restrictions have made Tesco reluctant in promoting corporate sustainability in its stores to adhere to the regulations of the host nation.
When the board of directors is making decisions in the company, various conflicting interests arise among the stakeholders. Some of the groups of conflicting interests include satisfying shareholders v satisfying suppliers, satisfying shareholders v satisfying employees and satisfying shareholders v satisfying pressure groups. One of the ways through which Tesco addresses this type of conflicting interests is through ensuring every stakeholder adheres to the behavior of the company. Another way of reconciling the conflicting interests of stakeholders that Tesco uses is that it comes up with measures to ensure that all interested groups benefit. Tesco Company uses stakeholder management to solve or reconcile two groups of stakeholders with conflicting interests. Stakeholder management involves maintaining a better relationship with people around an organisation (Ninan et al. 625). It requires the use of better communication mechanisms that encourage or motivate different groups. Stakeholder management involves several procedures before reconciling groups of conflicting interests in an organisation (Ninan et al. 625). The first step is to summarise the opinion of the stakeholders, decisions on each stakeholder, identification of the main message to the stakeholders, identification of their ways of communication, and implementation of the plan.
Works cited
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Khan, Mozaffar, George Serafeim, and Aaron Yoon. “Corporate sustainability: First evidence on materiality.” The accounting review 91.6 (2016): 1697-1724.
Morgan, Elizabeth et al. “Large UK Retailers’ Initiatives To Reduce Consumers’ Emissions: A Systematic Assessment”. Journal Of Cleaner Production, vol 140, 2017, pp. 227-238. Elsevier BV, doi:10.1016/j.jclepro.2015.08.069.
Naidoo, Merle, and Alexandros Gasparatos. “Corporate Environmental Sustainability In The Retail Sector: Drivers, Strategies And Performance Measurement”. Journal Of Cleaner Production, vol 203, 2018, pp. 125-142. Elsevier BV, doi:10.1016/j.jclepro.2018.08.253.
Ninan, Johan et al. “External Stakeholder Management Strategies And Resources In Megaprojects: An Organizational Power Perspective”. Project Management Journal, vol 50, no. 6, 2019, pp. 625-640. SAGE Publications, doi:10.1177/8756972819847045.
Pulker, Claire Elizabeth et al. “Global Supermarkets’ Corporate Social Responsibility Commitments To Public Health: A Content Analysis”. Globalisation And health, vol 14, no. 1, 2018. Springer Science And Business Media LLC, doi:10.1186/s12992-018-0440-z.
Seele, Peter, and Marc Chesney. “Toxic, sustainable companies: a critique of the shortcomings of current corporate sustainability ratings and a definition of ‘financial toxicity’.” Journal of Sustainable Finance & Investment 7.2 (2017): 139-146.