Corporate Responsibility In The United Kingdom Licence Trade Commerce Essay

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Purpose - It is the intention of this article to provide a study of the Corporate Social Responsibility (CSR) policy taken on board by UK pub giant JD Wetherspoon plc (JDW), what areas they have targeted and what the next developments will be.

Design/methodology/approach - The article begins with a brief introduction to CSR followed by an overview of its uptake by JDW and similar organisations within the UK hospitality industry. The body of the article centres on the JDW plc CSR policy then leading into a short discussion and conclusion. Information required for the drafting of the article has been mainly sourced by use of internet resources, much of which comes directly from JDW, though any claims by the organisation have been checked for substantiation.

Findings - The findings will show that JDW has committed resources towards CSR, as demonstrated in its ethical business practices, environmental policy and charitable work and whether or not that the company has a genuine positive and proactive attitude towards its social and ethical responsibilities. Furthermore a short study on how JDW continues to investigate new or as yet unchallenged issues has been included along with recommendations and thoughts on its practices.

Research implications/limitations - CSR is normally associated with sectors such as the energy, (oil, gas, coal) and the pharmaceutical and manufacturing industries, areas of the hospitality industries such as pubs and restaurants are not generally recognized to have such responsibilities. In a recent survey conducted for the benefit of this article, the majority of people were unaware that JDW had a CSR policy. JDW along with Marstons and Whitbread as stated by Sustainable Investment (2009) are the only pub chains to make it into the FTSE4GOOD list for 2009 which is an indication that companies in this sector are in terms of CSR in their infancy. However, the survey also revealed that the majority of people thought that JDW would indeed be listed in the FTSE4GOOD list (for FTSE4GOOD information see FTSE (2010)).

Originality/value - This article covers the CSR issues that JDW has undertaken and may be have some interest to other companies within the same sector who intend to or have embarked on establishing a CSR policy of their own and are in need of guidance towards setting out an achievable CSR agenda.

Keywords - Corporate social responsibility, Licence trade, Hospitality industry, Drinks industry, Business ethics.

Introduction

Corporate social responsibility (CSR) can be described as an ideology taken on by businesses and organisations to counter act their effects on the environment and to produce a positive impact on society. The European Commission (2010) defines CSR as:

"A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis."

CSR places the importance of society high on the company agenda, it is a realisation of the impact the company has on its employees, suppliers and communities; the stakeholders. Business Link (2010) advises that a business is not just a way of making money, there is much more to it. The knock on effect of a company's activities can be catastrophic. Products and the way they are made and marketed will always have an effect on the environment, CSR will grow the understanding of the wider impact on the world and how this can be changed to achieve positive results regarding people, culture, poverty and sustainability. With a responsible attitude and going the extra mile beyond what is a legal obligation towards CSR can also be beneficial for the company financially, with careful management and establishing strong links with communities, suppliers and employees can not only be good for the corporate image, but also have a positive effect on the bottom line.

JD Wetherspoon CSR overview

JD Wetherspoon (2010) has a company policy regarding CSR. By recognizing the importance of CSR the board established a steering committee under the guidance of the commercial director. The company states that:

"Environmental and social issues are important to us and, throughout our commercial activities and operations, we are committed to fostering the preservation and protection of the environment, while recognising its wider social responsibility"

JDW says that its people are its greatest asset and believes that they have the best people providing the best service with this being reflected by recognition and awards from many independent organisations. The company says it will continually invest in training and development of its staff to fit in with its CSR policies. JDW has an environmental policy and is committed to continuous improvement of the policy in respect of its business undertakings within the business of owning and managing hotels and public houses within the United Kingdom. Within the continuous improvement of the policy any significant risks to which the company may be exposed to are reviewed and assessed and the policy adapted to address any issues that may arise. Areas that JDW has concentrated heavily on within the policy are the environmental impact of company operations and to minimise the effects as far as is reasonably practicable, this includes energy conservation, use of materials harmful to the environment kept to a minimum and minimising emissions and harmful effluents. Furthermore, the policy addresses issues such as efficient waste management strategies, effective recycling of waste and promotion of the use of recycled materials. Also, to introduce efficient purchasing methods to minimise waste and to raise awareness through appropriate training methods of environmental issues to all of its employees. The company also has a policy to raise the awareness of its suppliers and partners on environmental issues.

JD Wetherspoon CSR in detail

Energy

Taking the main points of the JDW environmental policy, firstly the issue to discuss is the subject of energy conservation. In the company's most recent annual report, Down (2009), there is recognition that use of energy within its business is unavoidable, however the responsibility for the use of energy resources has been acknowledged and that good environmental management is necessary for a responsible business. They have introduced an energy group so that there is a continuous scrutiny of the company energy usage so that energy efficiency in its pubs can be improved. In 2008 they introduced a programme of installing smart meters in nearly all of its pubs which has assisted the energy group in forming accurate reports on the specific areas where energy consumption is high, acceptable or even below the estimated figures thus helping the company to target specific areas for improvement by comparison with areas that are doing well. This has produced an 11% reduction in energy consumption in some areas of the business. The company communicates initiatives and ideas down to its employees through weekly reports to its pubs on how they can contribute towards energy saving, the reports also contain the energy usage figures for the previous week and provides an efficiency rating. A 'top tips' scheme has been introduced which gets many of its ideas from the company suggestion scheme which staff are encouraged to participate in. As with many other businesses employees are reminded to take up the 'Save it' campaign that prompts the switching off of unnecessary lighting and equipment. For any new developments or refurbishments the company installs equipment that have better greener efficiency ratings to minimise energy consumption, an example of this can be seen in the pub the Kettleby Cross.

What makes the Kettleby Cross in Melton Mowbray different to most other JDW pubs is that most are conversions from old businesses such as banks, cinemas and shops. The Kettleby Cross was built from the ground in 2007 up at a cost of £3.6m, and has been dubbed the 'eco pub' due to the amount of energy efficient equipment and fittings that have been built in or installed, equipment such as rainwater harvesting, solar panels and condensing boilers. There is even a large electricity generating wind turbine on the roof. When the pub opened JDW announced that it was expected to use 50% less energy than a company pub of a similar size and having a similar profile, however, through their website JD Wetherspoon plc (2009) they have been quite honest and reported that in the two years since the pub opened energy usage has been disappointing in that it has been virtually the same as a comparable pubs energy usage.

"Producing enough self-generated energy to power a pub is currently a long way away; while much of the available technology can make a difference, we have not been able to show significant savings".

However, it has been useful as it allowed for testing eco friendly equipment within the pub environment and the Kettleby Cross still manages to achieve an A energy efficiency rating, which begs the question of how much energy would it have consumed if all of the eco friendly and energy efficient gadgets and gizmos were replaced with traditional items?

For 2010 the company aims to achieve a target reduction in energy usage in all of its pubs by 15% which as they state will:

"Result in 21,200 fewer tonnes of CO2 emissions"

Given that the Kettleby Cross has flopped with regards to saving energy, a 15% saving across the board may sound a bit optimistic, but one of their pubs in Scotland managed to achieve an energy usage reduction of 25% in only 10 months!

Waste management and recycling

JDW is eager to promote its policies on waste management and recycling, the Department for Environment, Food and Rural Affairs, DEFRA (2010) reports that for the past five years, logistics specialists DHL have been a service partner for JDW managing its supply chain. This includes not only the distribution of products to its pubs and hotels, but also returning items destined for waste, recycling and re-use. At each pub, items that are identified for reuse and recycling are sorted and placed into cages, these cages are collected the following day when the next stock delivery takes place. Re-use items are separated from the recyclable ones on receipt at the JDW distribution centre in Daventry and the recyclable ones are then segregated into their own categories, for example, aluminium, plastic, cardboard, cooking oil and steel. The cooking oil is processed into bio diesel which is then used in the DHL delivery vehicles as a proportion of the fuel thus mitigating the environmental impact on fuel usage and exhaust emissions. JDW uses a "Reduce, Re-Use and Recycle" ethic when dealing with its waste, reducing packaging has managed to achieve a saving of 78 tonnes of cardboard and plastic, reusing items such as trays and crates to deliver stock has prevented 30 tonnes of plastic from entering landfill in 2009 alone and recycled items helped achieve a further landfill reduction of 17%. What is interesting about these facts is that the JDW Empire in respect of the number of pubs has actually grown during this period.

DEFRA (2010) further reports that the benefits of the JDW recycling scheme have been to:

Reducing waste to landfill - in 2009 over 14,000 tonnes of packaging and used cooking oil was re-used or recycled;

Maximising recycling - a process of continuous improvement and process innovation has led to an increase in recycling from 43% in 2008 to 64% in 2009;

Reducing waste costs - in 2009 landfill tax saving alone was in the order of £500,000;

Minimising CO2 - the carbon saving from recycled packaging was more than 10,000 tonnes.

JDW has also been credited by the Scottish Environment Protection Agency, (SEPA) 2007, in its Used Cooking Oils (UCO) National Best Practice Project Status Report, April 2007; JDW was identified as an exemplar of best practice of UCO management & collection on a national scale.

People

Down (2009) further writes that to provide a great service to the customers then people need to be trained to the highest industry standards. Over 700 training courses were held in 2008 resulting in more than 600 ground floor staff promoted to management positions and in conjunction with Leeds Metropolitan University JDW now run an advanced diploma in leisure retail. The JDW training policy has led to numerous awards from several bodies including the 'Best Training Programme in Managed Estates' from the British Institute of Inn keeping. Equal opportunities and the elimination of victimisation, harassment and discrimination are high on the company agenda so that employees receive fair treatment. At the time of writing the annual report, Down (2009), the male to female split within JDW was 50/50. The Department for Work and Pensions, DWP (2010) recognises JDW as an age positive company, they have removed the retirement age so as to retain valuable experience and skills, plus staff are given the choice to retire or work on. The DWP states:

"Wetherspoon has found it beneficial to attract diverse age ranges by offering flexible hours. This enables the employee to strike a balance between work and family or other commitments and the business to cover its core hours. For example, lunchtime is a particularly busy period for the company's outlets and it has found that some older workers - who might be looking to work for a few hours a week - are adaptable and happy to work at this time. The company reports that staff retention levels are well above the industry norms".

Furthermore, the Corporate Research Association, CRF (2010) has accredited JDW as one of Britain's top employers for the seventh year in succession. CRF have commented that JDW has outstanding HR policies and offer excellent working conditions. In order to maintain what it believes to be its industry leading qualities, the company regularly benchmarks its remuneration package and has a share and bonus scheme available for all of its employees. The annual report, Down (2009) states that in the year 2008/2009 it awarded shares and bonuses of £20.5m and 91% were made to staff below board level, 79% of which to pub staff.

Responsible drinks retailing

The UK government for many years have had serious concerns over the effects of misuse of alcohol and its availability. In the government's public health white paper (Cm 6374), House of Commons Health Committee (2005), it lays out the issues that contribute towards these concerns, some of these being:

The consumption of Alcohol has more than doubled in the UK since 1960

Alcohol is second only to tobacco as the main cause of preventable premature death (the increase in deaths due to cirrhosis has increased 10 fold since 1960

Drinking and harm is most marked in the young

The cost to the NHS is about £1.7 billion

A third Accident and Emergency (A&E) attendances are due to alcohol (more notable at night)

The drinks industry has been identified by the government as a key partner in the prevention of alcohol related problems, but what is the drinks industry perspective on the issues? The drinks industry hasn't ignored the problems caused by alcohol, but it has focused heavily on individual responsibility. Research and education are seen as important factors. The industry accepts that commitments to CSR must become stronger, Baggott (2006).

Baggott (2006) argues that:

"Critics view much of the drink industry's efforts as tokenism. Even so, most acknowledge that the industry has a role to play in reducing alcohol problems and could do more, especially in changing marketing practices, improving product development and shaping the drinking environment".

As an alcoholic drinks retailer, JDW supports practices that promote responsible drinking and have policies in place to make sure that it acts appropriately and responsibly. The company says that it doesn't participate in irresponsible retailing practices and avoids encouraging irresponsible drinking. The company has established a code of conduct that includes such things as not serving alcohol to anybody who appears to be intoxicated, not offering any promotions to encourage irresponsible drinking, preventing those under the legal drinking age of 18 from purchasing alcoholic drinks by employing the Challenge 21 policy in all of its pubs. Research has shown that 90% of 18 to 24 year olds are aware of the scheme and that nationally across all pubs there are over one million people each month turned away for failing to produce proof of age. This indicates that the Challenge 21 policy contributes greatly towards enforcing the law and with CSR in drinks trading, Beer & Pub (2009).

JDW is an associate member of the Portman Group, Poley (2010) and a member of National Pubwatch (2010). David Poley of the Portman Group stated:

"Just as people should show personal responsibility when drinking alcohol, companies must demonstrate responsibility in the way that they conduct their business...We challenge companies to be socially responsible and inspire them to achieve best practice."

The Portman Group has a code of practice surrounding the packaging, naming and promotion of alcohol. The code seeks to ensure that organisations market drinks responsibly and only to the adult population. JDW are one of over 140 code signatories and under the code have agreed to; be bound by its provisions, support the decisions (not stock any item that has been deemed to have fallen foul of the code) and accept that any complaints will be published and available to the general public.

A representative from the company has a seat on the National Pubwatch committee in order to both seek and provide good advice on best practices on setting up and running pubwatch schemes to achieve a safe and secure drinking environment and to reduce alcohol related crime. JDW efforts in this area have lead it to win the Responsible Drinks Retailing Award, RDR (2010) and several Best Bar None awards, BBN (2010) for promoting a secure and safe environment in its pubs.

Community and charity

It is a well known fact that traditionally pubs are and have been a focal point of many communities and even though JDW states that it is the company's aim is to keep up with tradition, Down (2009), there doesn't appear to be much publicised outside of the JDW network to show that they are seeking to build relationships with local communities apart from providing employment. However, regarding charitable work and charity giving things are different on a much larger scale. The company have been actively involved with children's cancer charity CLIC Sargent since 2002 and are the charity's longest running corporate partner, CLIC Sargent (2010). JDW has organised thousands of charitable events annually, such as five-a- side football tournaments, half marathons and even head shavings. In 2009 alone the company organised events that raised £190k and in March of this year the CLIC Sargent partnership beat the £3m mark.

Ethical working and suppliers

JDW state that they conduct an ethical and honest business and they expect their business partners and suppliers to uphold the JDW standards in order to ensure that both its activities and those of partners and suppliers remains socially and environmentally responsible JD Wetherspoon (2010). According to Cateresearch (2007) JDW dumped one Welsh supplier and was forced to remove five dishes from its menu after trading standards uncovered that the supplier was using product that did not originate in Wales.

The company also markets itself as a coffee shop, and given that they now open at 7am for breakfast it is proving to be extremely popular. The Publican, Porter (2008), JDW serves Rainforest Alliance certified coffee in all of its pubs, a sustainable blend of beans from coffee giant Lavazza. The company sells over 16 million cups of coffee a year and it moved to the sustainable brand as consumers have an ever growing demand for ethically sourced products.

Lavazza UK sales and marketing manager, Barry Kither, said:

"JD Wetherspoon is committed to quality coffee, having already invested heavily in high quality machines, maintenance and an extensive staff training programme. The move to Tierra shows in addition to serving quality coffee, the company wants to offer its customers an ethically sourced, sustainable product that also delivers on taste."

Health and safety

Though the JDW annual report, Down (2009) states that health and safety of both its customers and employees is critical and that throughout the business the highest standards of health and safety are promoted the company does have recent incidents of health and safety breaches, the Nottingham Post (2009) reported that the JDW had been fined £27,500 in 2009 after a customer fell through an open hatch and the Caerphilly Observer (2010) reported that the company had been fined more than £8,400 after an accident at its pub in Blackwood, Wales. JDW state that employees attend training to help ensure that their pubs are operating within the law and that they are regularly assessed to identify risks. It also says that JDW pubs have regular safety audits.

Discussion

Looking back at the CSR profile that has been reported in this article it can be clearly identified what are the JD Wetherspoon strong points, what needs some work and what needs to be addressed from the ground upwards. Waste management and recycling are topics that the company excels in, which is probably where the company could make its biggest impact on the CSR scene and in its environmental management policy. Another strong area is within its people policy. JDW ticks all the right boxes regarding development of its employees through training and promotion prospects and being age positive coupled with a sound equal opportunities policy sets a good example for other companies to follow. This can also be said for the JDW attitude towards responsible drinking, the company puts a strong case together to show its commitment to this issue, however, by not showing willingness to take some sort of measures to promote responsible drinking would probably be extremely detrimental towards the success and continuation of the business as local authority permission to open any new premises or renewal of alcohol licences may be very hard to come by. The company's charity commitments can be commended, but regarding local communities there appears to be a bit missing, evidence of JDW investing in any local community projects is pretty much non-existent and as far as health and safety are concerned, well that can easily be assessed by what has already been mentioned in this article.

JDW do their very best to promote that they are a good company, but there is still work to be done if they want to step into the realms of the Co-operative Group. A survey of 25 people was carried out to contribute towards this article, when asked if they were aware that JDW had a CSR policy three people said yes whereas twenty two said no, however JDW must be on the right track because when asked if they thought JDW was a company listed in the FTSE4GOOD Index Series, twelve said yes whereas thirteen said no.

Conclusion

As with many UK corporations, pub and hotel chains tend to have some sort of commitment to CSR and this article has shown that JDW definitely does and continues to develop its CSR and environmental policies; however, to gain credibility there needs to be further work and investment. In the survey carried out for this article, the majority of people survey felt that the top CSR driver that a company should concentrate on was firstly a responsibility towards the environment, and secondly to act responsibly / ethically. JDW have already shown an ever growing commitment towards the environment, this can be seen through its waste and recycling work. However, JDW should not just use coffee as a way of demonstrating its business ethics, to gain recognition by the public of their CSR position more needs to be demonstrated in terms of who and where they are supplied from and the impact that JDW has on these communities and their livelihoods. Other companies are managing to do this pretty well, without mentioning any names, but for a start JDW could take a few tips from the UK supermarkets or even the energy companies.

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