Sustainailty for Tesco

University Degree Business and Administrative studies

1.Intoduction

Evaluation of Environmental Policies and Practices

Tesco and Morrisons have been successful over the years due to a number of different factors including the way reporting is done. Both of these supermarkets produce reports annually which gives information about what the businesses are doing and how with future targets. Along with this report both company produce a report called Corporate Social Responsibility (CSR Reporting) which for Tesco can be located on their website at and for Morrisons can also be located at . This CSR Report contains information about what the business is doing in terms of their approach to environmental and the way to deal with these issues.

In order to evaluate the effectiveness of Tesco’s report I will benchmark it using Morrions’s report. This will be done by using the UNEP (United Nations Environment Programme)/Sustainability Report Model which consist of five different stages. These stages start from Stage 1 called Green glossy which is Green glossies, newsletters video…Short statement in annual report (Kolk, 2000) to Stage 5 which is known as Government accountability that deals with...Environmental and Social tax reform…. Public procurement and investment... (Kolk, 2000). The model below shows that Tesco is at Stage 4.3 – Comparability whereas Morrisons is at Stage 3 – Descriptive. Both of these businesses can be improved in order to reach the next stage which also can be seen in the model below.

Model 1) The UNEP/Sustainability Reporting Model Applied to Supermarkets

Tesco is currently at the stage mention above because it provides a lot of detail about the financial aspects of the business and also it respect that stakeholders are important and must be listen to. “We are committed to maintaining a good dialogue with shareholders through proactively organising meetings and presentations, as well as responding to a wide range of enquiries. We want to understand shareholder views on a range of issues from strategy to corporate governance, and we recognise the importance of communicating appropriately any significant company developments.” (Tesco plc, 2005)

On the other hand Morrisons is currently at stage 3 mentioned above because the report is just text with no figures at all mentioning about the work done within the year and that a report is being produced. “We intend to publish more information on how we are meeting our corporate social responsibilities, together with details of our company policies, on our website and a further report is currently under development.” (Morrisons, 2005).

From the above mentioning of the importance of stakeholder within Tesco supermarket it can be said that Tesco are very understanding of all stakeholder. Due to this Tesco always present detailed financial information in graphs to high standards which can be easily looked at and understood. However Tesco does not meet the stage 5 criteria because it does provide a true and fair view of global and local impacts. The first thing is that Tesco mission is to deliver unbeatable prices for customers but this has an impact on the farmers which is not mentioned in the report. According to the Friends of the Earth, 2005, it state that “…unbeatable values… pushed down prices so far that some UK farmers are on the brink of bankruptcy.” (page 2). Tesco will also open about 111 stores this is a good thing on one hand but the impact of this on the local is not even considered or mentioned in the report about the impact on the other businesses. However it is said that “…there is little evidence to suggest that Tesco is cheaper across the range than local store.” Friends of the Earth, 2005,page 10. There are many other issues such as environment, suppliers, products, employees etc which are all very important but are ignored and dismissed by Tesco. The full report of these issues can be located on the Friends of the Earth website . Due to the reasons mentioned above and from the report Tesco failed to meet the next criteria which is Stage 5 Sustainability- Company Responsibility therefore Tesco must make sure that what it say in the report is what they are doing and the impacts of certain action. Similarly Morrisons who are not on this stage but also don’t think about the impact of certain things as well. For example the merger of Safeway and Morrisons would on “average 276 jobs are lost” (Friends of the Earth, 2003) and that “consumers, … will have less choice, small shops, who cannot compete against another all-powerful supermarket, and small farmers who are unable to stand up to the bully-boy tactics of the big buyers.” (friend of the earth, 2003 ).

1.2 Global Reporting Initiative

Another way which is possible to evaluate the reports is by checking which guidelines the companies follow when producing the reports. The Global Reporting Initiative (GRI) 1999 is a framework which consists of guidelines which are useful when producing report. Companies many follow these guidelines are voluntary so that businesses many use it or not.

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1.2 Global Reporting Initiative

From studying the GRI website at I have been able to come with the conclusion that Tesco does not use this guidelines because it does not mention it on this website and there is no reference of this in the report as well. On the other hand Morrisons (merged with Safeway,is known as Safeway) is mentioned on the GRI website which means that this supermarket is following this method when producing reports. By using this method Morrisons will able to gain a competitive advantage because this can help to measure and benchmark performance. Therefore it can be said that this framework “encourage employees to understand and contribute to progressively better performance.” (GRI, 2006, ). The framework is easy to use and implement even though it maybe expensive, the result of it can help increase the financial bottom line by identifying areas of waste and new business opportunity.

Tesco by not having it are at a disadvantage but will follow a different format which will enable them to gain a different advantage over their competitors in a different way.

1.3 Other methods for evaluate

According to the report of Tesco it is a member of the FTSE4Good and it is also a member of the BiTC (Business In the Community) corporate social index.

“..every year including the Business in the Community (BiTC) Corporate Responsibility Index and FTSE4Good Index Series.” (Tesco, 2005) .

The purpose of Business In The Community is to “..to inspire, engage, and support and challenge companies, to continually improve the impact they have on society” (). The BITC has a lot of members and many of the members are also members of the FSTE4Good which is an excellent thing.

Tesco have been always in the Business In the Community index every year and this year they were noted for outstanding performance in a number of different areas including management and environmental impact. However Morrisons are not in the BITC which is a disappointing.

Being a member of the FTSE4Good is an excellent thing because being part of this shows that the company Tesco are meeting the globally recognised Corporate Responsibility Standards. However Tesco about 2001 it was excluded from the FTSE4Good but it wasn’t environment friendly “Britain's biggest supermarket chain, Tesco, has been left out of a new 'ethical' stock market because it is not green enough. “ (BBC News, 2001). After a while it was included back in the FTSE4Good “ …because the company reported more transparently on its environmental policy, allowing investors to assess whether such disclosure was sufficient. ………………………………… remain on the index, they will have to continually improve their social and environmental performance as FTSE increases its threshold.”

Morrisons Supermarket is also a member of the FTSE4Good Index with a lot of other well known companies.

2. Evaluation of Ethics

Model 2) The Ethics-Morality Continuum Model Applied to Supermarkets

Ethics: The Good Life, Doing Good

Corporate Citizenship: Social Development & Caring, Social Responsibility and Supporting
Equity: Reciprocity & Fair Play, Fairness
Honesty: Truthfulness, Cheating & Selfishness
Avoiding Doing Harm: Bullying & Social Irresponsibility, Harming & Social Disengagement

Morality: Justice, Avoiding Dong Harm

After evaluating the report I conclude that Tesco fall into the Corporate Citizenship part of the Ethics-Morality Continuum which can be seen as above.

This business fall into this category because it provide information and implements certain actions relating to the different issues involved in this category. Social development which is a key part of the Corporate Citizenship and can be defined as “…actions taken by organisation ….to improve the social, economic, cultural or environmental conditions of a society” (Kolk,2003). Tesco have got a range of different policies which deals with different issues relating to the environment. Due to this I can say that the policies within Tesco cover all the basis part of the Social development issues at high standards which shows that this company is acting in a environment friendly way. So the policies for Tesco are excellent however, there are still issues relating to some policies which are of concern for both Tesco supermarkets and Morrisons supermarket. For example the policy in question is the seafood policy because according to the Greenpeace oceans campaign both Tesco and Morrisons are fairly poor at this. “In our October 2005 report into the state of supermarket seafood… with Tesco and Morrisons also faring poorly. The research revealed that Britain's biggest retailers are responsible for the destruction of fish stocks…. UK's major supermarkets are selling endangered and threatened varieties of fish.” ().

Morrison according to the table below show that Morrisons now the worst performing UK supermarket on seafood because Asda now have employed certain policies to tackle the issues of seafood. Morrisons is to stop selling conger eel following the campaign group's action. Protesters hung a banner at a Morrisons store in Bradford branding it the "UK's worst seafood retailer”.

Morrisons are the worst supermarkets due to the fact that they have the weakest policy on sustainable seafood and they sell the largest range of destructively fished species. Another reason for being the worst is that Morrisons sell poorly labelled seafood products and have failed to support any initiatives aimed at improving the environmental performance of fishing practices

Key to columns 1-3:
0 None
1 Little
2 Some
3 Moderate
4 Good
5 Extensive

Key to column 4:
0 More than 12 of the most destructively fished seafood species/groups sold (listed in Table 6.2 below)
1 10-12
2 7-9
3 4-6
4 1-3
5 None of the most destructively fished seafood sold

Tesco have tried to overcome this implementing a policy in relation to this but Morrisons have done nothing so far to counter attack this.

Many of the policies within the Tesco Supermarket show that Tesco are a caring company which cares a lot about the environment in which they work in and around them. The people working within Tesco are always made into the family and will always remain happy. If Tesco open new store somewhere then other businesses around would need to close therefore many people would be without jobs. To tackle this problem Tesco will offer work to these people. In 2002 Tesco is recruited “17,000 new employees - 5,000 permanent, and 12,000 seasonal for Christmas” (http://www.tescocorporate.com/page.aspx?theLang=001lngdef&pointerid=DD7765FB835D48918D76BD9EEBBDC4AF ) From this it can be seen that Tesco are fully generated towards social rresponsibilities.

Both Tesco are Morrions are always supporting different charity no matters which charity it is.

So overall I can say that both Morrisons and Tesco policies are very good and that both would suit the Corporate Citizenship category. For Morrisons I could find the annual report because it has been produced like I mentioned above but I believe that this category would suitable for them.

3. Evaluation of Strategy

The model below illustrates Roome’s Strategic Options Model (1992) taken from and this is used to help businesses review their past performance and help them to deal with future concerns about the environment. This model helps businesses to think about the options which are available to them and the way to do them. It states that this model outlines “..options available to business in formulating and implementing environmental management policies and systems". ()

Model 3 - Roome’s (1992) Strategic Options Model

After evaluating Tesco’s practices and policies I would say that this supermarket does not suit the number 1. Non- Compliance option because Tesco are able to react to changes in the environment standards since this supermarket has a lot of money to spend due to its success. Similarly it does it does match number 2.Compliance since Tesco always look at the environment and the standards within in it every time. Due to this Tesco would anticipate legislation changes related to the environment. However this supermarket does suit the third criterion which is Compliance Plus. This suit Tesco due to the fact that it does things which set the standards for the other companies to do like having “Britain's first fully-automated recycling machine, which sorts plastic, metal and glass, rather than expecting our customers to do so.” (Tesco, 2005) (). Another thing is that in 2004 Tesco also introduced “……. degradable plastic carrier bags in our UK stores.” (Tesco, 2005) () which is now used by many different supermarkets like Morrisons and Somerfield. By doing this Tesco have been able to gain a competitive advantage over its competitors. I would put Tesco on Compliance Plus because top management/stakeholders are fully behind the decisions made by Tesco and the management/ stakeholders are involved in the environment issues. In the report it state that “we listen to an ever wider range of stakeholders; and take practical steps in what we believe is the right direction whenever we can.” (Tesco , 2005 )). Environment management in an important thing in Tesco because the supermarkets know that a win for the supermarket is a win for the environment, “we take decisions that are unsustainable, we may harm the world we all live in….if we fail to minimise our environmental impacts, we will be inefficient and increase our costs”. (Tesco, 2005 ).

Due to the above I believe that Tesco fall into this category of Compliance Plus. Two policies which I have found on the website reinforce the reason why Tesco suites phase 3-Compliance Plus strategy:

Tesco, its directors, officers and employees will at all times comply with all applicable laws and regulations relating to the environment.
All senior management shall be responsible for ensuring compliance with the Tesco policy, including the establishment of programmes and reporting requirements throughout their organisation.
We will communicate regularly with our stakeholders, including shareholders, staff, and customers, on matters of environmental policy and practices.

Similarly Morrisons would be at the same stage as Tesco on the above model because Morrions would continually try to improve the environment to high standards by trying “to minimise waste and maximise cost effective recovery while ensuring the remainder is disposed of responsibly.” . Also by putting a greater emphasis on number of different issues like Operational Environmental Management, Community Investment and Employment Policies saw that environment is an important part of Morrisons. It is important due to the CRS strategy of Morrisons which clearly states that “Our CRS strategy aims to add value to our business by helping us minimise risks and enhance our commercial operations.” (http://www.morrisons.co.uk/CSRREPORT2.pd

4. Conclusion

Model 4) The Environmental Performance Scale-ROAST Applied to Supermarkets

R Resistance Total resistance to environmental values and rules.

(Stage 1) Organisations would be absolutely unresponsive

and reactive to environmental initiatives.

O Observe & Comply The organisation observes environmental laws but

(Stage 2) actions reflect unwilling attitude or lack of ability to

comply. Actions are being enforced through legislation or court decisions.

A Accommodate Organisation begins to adapt to change. Early

(Stage 3) indications of proactive and responsive behaviours. Actions are no longer based entirely on complying with environmental legislation; the organization begins to exhibit voluntary behaviour.

S Seize & Preempt The organisation voluntarily seizes and preempts its

(Stage 4) actions with environmental concerns. It proactively engages in setting the agenda.

It is responsive to the many external stakeholders.

The latter phrases would display the attributes of sustainable development.

T Transcend The organisation’s environmental values, attitudes,

(Stage 5) beliefs and culture exhibit a total support for the environment.

The organisation would proactively support and be responsive to all living things.

It would act in a way which is fully consistent with sustainable development.

In conclusion, BP on the environmental performance scale are currently at Stage 4: Seize and Preempt. This is because BP publishes their annual report on a voluntary basis and in their report proactively engages in setting targets and agendas related to their environmental performance.

Moreover, the report discusses the issues related to external stakeholders such as governments. “Part of our responsibility as a company is to ensure that our work is a force for social and economic progress. This involves working with host governments, NGOs and global institutions.”

The above quotation emphasises that BP have contact with stakeholders and have a rapport with them which enables both BP and the stakeholders to discuss issues related to social, economical and environmental aspects – a key criterion of Stage 4: Seize and Preempt.

However, for the future, as BP are engaged in a “highly pollutant sector” BP need to ensure that they attempt to achieve the characteristics of Stage 5: Transcend, whereby a more thorough environmental report has to be produced which includes all the details of BP’s environmental performance.

This is because currently as there is no legislation forcing BP to include all the details, BP are able to choose at will which details to enclose, which could lead to an environmentally biased report. This could in turn lead to a report which is not comprehensive and could in fact deceive the stakeholders, denying the stakeholders the opportunity to complete transparency and integrity.

For instance, in the 2004 environmental report BP has published, there is no account in the entire report of the damage to the wildlife the spills of BP have caused. Although in the report BP have mentioned the amount of spillage in the waters and how they intend to in the future to minimise the damage caused, BP have not accomplished one of the focal criterion of Stage 5: Transcend: The organisation would proactively support and be responsive to all living things.

Bibliography

Kolk,A.,( 2000) – Economics of Environment Management-Chapter 6 – Environmental Reporting , Page 137.

Tesco plc, (2005) – Investor Center- Relations with stakeholders at (accessed on 20th March 2006).

Morrisons (2005) – May 2005 Corporate Social Reporting at (accessed on 20th March 2006)