4.3 Environmental Performance:
Tesco aims to reduce their impact on the environment as it sets this goal to be a priority in their actions. It asserts that being a responsible business doesn't only benefit the environment but it also plays an important role in having the control over risks, assure the consistent supply of products they provide with the same quality, and it also contribute to reducing the consumption of the non-renewable resources such as energy that might lead to saving money. Especially since environmental threats will have a huge effect on the long-term security of supply. Considering the increasing population in the world, this will lead to a higher probability of risks that would affect the whole business function.
In 2015, in order to achieve the desired goal in the environmental sector and accelerate their progress, Tesco's specialists have collaborated with external experts. The environmental goals consisted of their impact on climate, forests, farmlands, marine and freshwater environments. The plan and actions of Tesco included huge campaigns that they focused on such as reducing waste, CO2 emissions, and direct water consumption (Tesco plc, 2016).
4.3.1 Reducing waste:
Reducing waste includes food and non-food by recycling, reusing, and converting the waste to energy for the corporation.
• Recycling in the UK:
Tesco's goal by 2020 is to cut the carbon imprint by 50% by assisting their customers achieve this goal. Waste is a vital factor that contributes negatively to the environment, therefore reducing waste will succeed in meeting the goal. In accommodating this goal, Tesco have provided recycling options in their stores for customers to use. Starting from the UK, recycling stations that recycle water filter cartridges, energy saving light bulbs, and selected ink cartridges are available in stores. Additionally, electrical equipment can also be recycled by returning any electronics back to a civic amenity sites. Tesco work in partnership with leading electrical retailers to help provide this facility at several sites to be more convenient and easy for customers to find. Furthermore, Tesco provides battery-recycling points at all its stores as it is contributing to the BatteryBack agreement system. Tesco have collaborated with certain Charities to provide clothing and book recycling at more than 600 locations (Tesco, 2015).
• Reducing food waste:
Tesco declares that reducing waste is a key action to be responsible. Their strategy is not only limited to their actions but also working with suppliers and customers to minimize the waste from its source to where its consumed by the customer. The increasing concern of reducing food waste is based on many factors that affects the environment and the community as a whole which leads to undesired consequence if not fixed. It has been studied that the average food waste of a British family is worth £700 annually (Tesco plc, 2016). Looking from a business perspective, food waste increases costs significantly. Therefore, to be more efficient, it is crucial to reduce waste through the whole process. Moreover, one of the most important factors that drives Tesco to run the reducing food waste campaign is food poverty that is increasing around the world. Food waste also sets preventable difficulty on land and natural resources, which have a negative impact on the environment by rising the greenhouse gases emissions.
Taking the right steps and making decisions of communicating and associating with the right contact will lead to better outcomes, reduction of waste, and efficiency. This is the reason why Tesco have Partnered with the supplier PranFresh. They have been able to direct sourcing in Thailand which have led to improvement of the quality of vegetables delivered subsequently affecting the delivery process since rejections at farms has been reduced because of the improvement of quality achieved (Little, 2014).
The main aim of this campaign is to help reduce food waste not only in stores or during production but across the value chain which includes supplying the right quantity, distribution, storage, and at customers' households. In 2014, figures have showed that 41% of food waste was from the bakery section which necessitated Tesco to take serious actions to reduce this percentage which will contribute to the overall percentage of food waste. Reducing the volumes of production that ends up to be not used, collaborate with suppliers to extend code life on the bakery products, and create intelligent offers to assist customers in reducing the baked goods.
However, a great portion of the waste is within the operation which have led Tesco to find a solution to decrease the food waste. It sends unconsumed food to food charities not only in the UK but also applying its strategy across all their markets in Europe and Asia. Since 2012, in the UK, Tesco took an action by donating over 1,000 tones of surplus food from stores and distribution centres to food charities that provided 21.5 million meals. Tesco has also helped customers to donate the surplus food by providing food donation points in some of the UK stores. In addition, it has been adding an extra 30% to the food donations they receive from customers, which enabled them donate total of 27.5 million meals. One the other hand, Tesco's stores in Ireland, Poland, Hungary, Czech Republic, Slovakia, Thailand and Malaysia have contributed by donating surplus food to charities that provided 918,000 meals for food banks and charities. Tesco has partnered with FoodCloud in Ireland which allowed Tesco to be the pioneer retailer that made this dedication.
Since the massive majority of food waste occurs at the beginning of the supply chain and with customers, Love Food Hate Waste is one of Tesco's activities in reducing food waste campaign where it aims to assist customers to waste less and therefore save money. The attempt was by providing instructions and tips in the products packaging that would lead customers to take right actions. On the other hand, by listening to our customer's opinion and feedback, we reached a conclusion that offering “buy one, get one free” doesn't encourage eliminating waste, in fact it increases food waste. Therefore, the “buy one, get one free” promotion have been replaced by other promotions that doesn't reflect negatively to wasting food such as multi-buy promotions or reducing the price of the product (Tesco, 2015).
4.3.2 Reducing CO2 emissions:
Since 2006, Tesco have set a goal to achieve by 2050 which is to be a zero-carbon business and as mentioned earlier, their aim by 2020 is to cut the carbon imprint by 50%. Working toward this target, Tesco is having a good relationship with its suppliers that enables it to improve the environmental imprint of its production. Tesco is providing workshops for its suppliers to assist it in applying energy efficiency and carbon reduction methods in the whole process of production. In favour of becoming a zero carbon business, Tesco have partnered with the Carbon Trust to support it to create a direction map.
Recognizing that 14% of carbon footprint has resulted from distribution activities, Tesco have taken a serious action to reduce its consumption by introducing the F Plan in the UK. The F Plan is based on using fuller cages and pallets to maximize the amount of goods delivered, fuller containers to maximize the amount of goods delivered each journey, minimizing the miles driven, and increasing the distance for each litter of fuel used. Aiming to reduce the CO2 emissions, Tesco have changed the mode of transportation from road to rail performing more efficiently by utilizing inbound and outbound journeys. Likewise, it operates the largest fleet of double decker trailers in the UK to carry more load whilst choosing the right location of the distribution centres and with the needed capacity (The F Plan, 2013).
Moreover, Tesco promised to help accomplish zero net deforestation by 2020 as part of the Consumer Goods Forum. The plan is to map the raw materials supply chain for any contact to deforestation. The main raw materials contain palm oil, soya, timber and cattle goods. In collaboration with the suppliers, Tesco tries to find more sustainable substitutes to these raw materials. Looking at the bigger picture, aiming to solve the deforestation issue, it is necessary to associate with the industry as whole and the decision makers. Consequently, Tesco have become a member of the WWF's Timber Campaign and pledged that by 2020 a sustainable source alternative will be used for all the production of wood and paper (Tesco, 2015).
4.3.3 Reducing direct water consumption:
For hygiene purposes, Tesco is using water to operate the business which describes its high consumption specially when considering the huge market it is operating at. Tesco have worked to reduce the direct water consumption. Aiming to reduce the water consumption, Tesco has been involved in several of projects that includes cooperating with Cranfield University in April 2013. The collaboration intended for any of the manufacturers focusing on controlling the risks associated with water consumption. Also considering to operate an Action Group to develop and implement water resilience solutions.
4.4 Economic Performance:
Tesco's strategy focuses mainly on producing a volume-led recovery, driven by selling popular products at great prices to customers. This indicates that the concentration will not be on achieving higher financial performance and generating more profits, but creating value for customers (Tesco plc, 2016). Agreeing with the literature review discussed, the social and environmental benefits might overcome the economic performance. Tesco's case focuses on the improvement of the environment and being better to the community more than creating a financial success. The priority is being achieved as the reports shows that they succeeded in being good to the community and being more aware of the environmental impact.
Chapter 5: Results
The purpose of the study is to illustrate the performance of Tesco throughout the years to be able to analyse how effective are their actions. The results of Tesco consist of financial figures which shows how successful is Tesco in generating profits and monitoring the sales growth, however, Tesco have been producing the results of their social and environmental performances to visualize how successful are they in achieving their ambitions. It is important to note that it is not a practical possibility to connect CSR initiatives with their financial impact.
The financial report in 2014/15 shows that Tesco delivered sales of £70bn, (1.3) % below last year on a 52-week basis. Trading profit declined by (58.1) % to £1.4bn (Tesco plc, 2016). Nonetheless, Tesco made some adjustments and changed their strategy to improve their performance, therefore, the most updated results of Tesco's financial review which represent the Christmas Trading Statement 2015/16 that ended 9 January 2016 presented sales growth of +2.1%. In the UK, Customer satisfaction improved between +3% and +5% where customer transactions went up by +3.4% and volumes increased by +3.5% (Tesco plc, 2016).
The following table demonstrates the financial results of Tesco's group in 2014/15 in detail.
* Group Sales (inc. VAT) exclude the accounting impact of IFRIC 13 (Customer Loyalty Programmes).
** 52-week growth rates exclude week 53 (the 7days ended 28 February 2015) for the UK and Republic of Ireland.
Source: (Tesco, 2015)
On the other hand, the social and environmental performance is examined in different aspects as shown below.
Source: (Tesco, 2015)
It could be noticed from the results that the social and environmental performance have an impact on the financial performance. Although, as a matter of UK company law, the first priority is the interests of the shareholders, Tesco (2016) claims that its first priority is the social and environmental performance. Nonetheless, Tesco should also focus on the financial performance since facing financial challenges will lead to inefficiency of the social performance leading to not meeting its goals.
Tesco have been working toward supporting women and in recent years, they developed and made better performance. From 2006/07 the percentage of female Corporate Leaders and Directors at Tesco has increased by 149% and women in senior management report for 31% throughout the corporation as a whole (Tesco, 2015).
From the environmental aspect, in 2013/14 food waste was 56,580 tones where in 2014/15 it reduced to 55,400 tones (Tesco plc, 2016). In 2014, Tesco was the pioneer among the UK retailers in announcing data about food waste in their own operations for a whole financial year. Tesco's performance in Group carbon footprint in 2013/14 CO2 emission was 6.37 million tonnes where in 2014/15 it reduced to 5.62 million tonnes. The Reduction in CO2 emissions (stores and Distribution centres) across the Group against a 2006/7 baseline in 2013/14 the percentage was 34.7% and in 2014/15 it increased to 40.9%. Reduction in CO2 emissions (distribution) across the Group against a 2011/12 baseline in 2013/14 the percentage was 7.8% and in 2014/15 it increased to 14.47% (Tesco plc, 2016).
Along with water projects based on studies and analysis, Tesco managed to reduce water consumption by 300,000 m3. In 2013/14, direct water consumption was 32.9 million m3 where in 2014/15 it reduced to 32.6 million m3 (Tesco plc, 2016).
Chapter 6: Conclusion and Future Research
The research study has been successful in order to determine the effectiveness of CSR activities in the retail industry by the demonstration of Tesco as a case study. The outcome of the analysis indicates that the CSR initiatives in the three main aspects of social, environmental, and economic aspects have a huge impact on the overall performance of the company.
The analysis is aligned with the literature reviewed where it proves that the decision making is critical step toward efficiency. The case study of Tesco illustrates that taking the decision of prioritizing CSR thinking and activities will have a key role in attaining the cost, customer service, and ecological efficiency.
In terms of the environmental aspect, implementing studies and projects would reduce the transportation pollution, recycle the scrap metal, in addition to affecting other areas of the business such as decreasing marketing costs by having enhanced public relations, enhanced brand image, and increased customer loyalty.
Observing the findings from the social perspective, aiming to provide a healthy working place with the provision of the needed motivation, recognition, and training to the staff returns with an outcome on the staff as well as the organization's productivity and efficiency.
From the analysis of Tesco's case study and in agreement with the literature reviewed, succeeding from the economical aspect requires focusing on the management and the consideration of the financial consequences in any decision taken.
6.2 Further Research:
This research focuses on the comparison of one retail company in different years which assisted in answering the research question. However, a method to further this research is to compare two companies of a similar size in the same industry and at the same time. This will allow the research to go into more detail and give a clearer illustration of specific knowledge, as it is hard to generalise an industry based on one company within that industry.
...(download the rest of the essay above)