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Corporate Social Responsibility Case Study: Sainsburys

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Published: Tue, 02 Jan 2018

Introduction

The concept of Corporate Social Responsibility means that organization have moral, ethical, and generous responsibility in addition to their responsibility to earn a fear return to investors and comply with law. CSR is a concept whereby organizations is consider the interest of society by taking the responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspect of their operation.

In other way CSR is the integration by companies of a social and environmental concern in their business operation and in their integration with their stakeholders on a voluntary basis. The concept of CSR means going away from the fulfillment of legal requirements by investing more in human capital, The environment, and relations with stakeholders. It is a voluntary instrument, but must be implemented consistently so that it fosters trust and confidence among stakeholders.

Definitions of Corporate Social Responsibilities

Giving a universal definition of corporate social responsibility (CSR) is bit difficult as there no common definition as such. However, there are few common threads that connect all the perspective of CSR with each other; most ideal definition of Corporate Social Responsibility (CSR) has been given by world of business council for sustained Development which says,

“Corporate Social Responsibility (CSR) is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the work force and their family as well as of the local community and society at large”.

The online encyclopedia, Wikipedia 2009 has one definition of CSR is ”Corporate Social Responsibility (CSR) is the decision-making and implementation process that guides all company activities in the protection and promotion of international human rights, labor and environmental standards and compliance with legal requirements within its operations and in its”.

On the other hand, the European Commission hedges its bets with two definitions wrapped into one:“A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.

The corporate social responsibility means that organization have moral, ethical, and generous responsibility in addition to their responsibility to earn a fear return to investors and comply with law.

Nature of Corporate Social Responsibility

Probably the most established and accepted model is the ‘Four-part Model of CSR’ as initially proposed by (Archie Carroll) in 1979, and subsequently refined later publication (Carroll and Buchhholtz 2000).

Carroll regard CSR as a multi-layer concept, which can be differentiated into four inter related aspects-Economic, Legal, Ethical and Philanthropic responsibility. He presents these responsibilities as consecutive layer within pyramid, such that “true” social responsibility required the meeting of all four level consecutively.

In 1991 Carroll first presented the Corporate Social Responsibility model as a pyramid as shown in above diagram.

Corporate social responsibility and your business

Corporate social responsibility can cut across almost everything you do and everyone you deal with. You need to think about;

  • The suppliers you choose and the way you deal with them. For example trading the suppliers who pollute the environment could be as irresponsible as doing your self.
  • How you treat with your employees? For the responsible business, this means doing more then simply complying with legal requirements.
  • How your business effect local community? And whether you should actively involved in or supports your local charity, or sponsor a local event.

Benefits of corporate social responsibility

Make the most of corporate social responsibility by publicizing them. Ensure that customers, suppliers and local community know what you are doing.

Publicity like this can be a key part of using CSR to win contracts. Peoples want to buy from businesses they respect.CSR can be particularly affective for targeting ethical companies.

At the same time you should see CSR as a part of continuing process of building long term value. Everything you do help to improve your reputation and encourage customers and other stakeholders to stay and involved with you.

Even with dozens of competitors, a real commitment to CSR lets you stand out.

As an example, John Lewis department stores are well known as a business owned by its employee. Its commitment to CSR feeds through into customer’s services, sales and profits. As well as affecting the way you behave, CSR can lead to new products and services that reflect your values and those of your stakeholders. Over time, it can all add up to a power brand and a winning business.

Introduction:-

Sainsbury’s was founded in 1869 by John Sainsbury and is today the UK’s third largest grocery retailer. The chain consists of 504 supermarkets, 319 convenience stores. Sainsbury also owns the Sainsbury Bank which offers a range of insurance and savings products The Sainsbury Archive documents the history of one of the nation’s oldest retailers, and London’s oldest. It also provides a unique illustration of the transformation that has occurred in retailing and in shopping and eating habits since the mid-19th century.

Sainsbury’s was established as a partnership in 1869 by John James Sainsbury and his wife Mary Ann opened a store at 173 Drury Lane in Holborn, London. He started as a retailer of fresh foods and later expanded into packaged groceries such as tea and sugar. His trading philosophy, as stated on a sign outside his first shop in Islington, was “Quality perfect, prices lower”.

Other important dates

  • In 1922 J Sainsbury was incorporated as a private company, as ‘J. Sainsbury Limited
  • On 12 July 1973the company went public, as J Sainsbury plc.
  • in 1979, when Sainsbury’s formed a joint venture with the Belgian retailer,
  • In 1996 the company reported its first fall in profits for 22 years.

By the time John James Sainsbury died in 1928, there were 128 shops.

His last words were said to be “Keep the shops well lit”

Current operations

  • Sainsbury’s currently operates 785 hypermarkets, supermarkets and convenience stores.
  • Split down as 509 supermarkets and 276 convenience stores.
  • also operates Sainsbury’s Bank, which sells financial services
  • Has a property portfolio worth £8.6billion.

According to Taylor Nelson Sofres rankings published in January 2008, Sainsbury’s market share was 16.4% compared to Tesco’s 31.5%, ASDA’s 16.7% and Morrison’s 11.4%.2005/06

Sainsbury ethical issues:

SAINSBURY has written to its main suppliers that the supermarket giant was embroiled in a £3m bribes investigation. Under company regulations, supermarket staff must pay for their own travel to visit suppliers’ sites and must not accept gifts. As supermarket’s most senior buyers was arrested on suspicion of accepting backhanders from a potato company.

John Maylam was arrested earlier this month over allegedly receiving irregular payments from Greenvale, which supplies nearly half of the chain’s potatoes. David Baxter, Greenvale’s operations director, was also arrested.

Sainsbury, led by Justin King, chief executive said :

“We are the victims of an alleged crime and take it very seriously. None of the payments went through our system and we believe this was limited to the one supplier.”

Greenvale has potato-packing operations in Shropshire, Cambridgeshire and the Scottish borders. The company received the Queen’s Award for Innovation, is understood to supply about 45% of Sainsbury’s potatoes.

The irregular payments up to £3m are understood to have been discovered by Produce Investments “Greenvale’s parent company” and brought to the attention of Sainsbury.

Cheap bananas on supermarket shelves threaten the livelihood and well-being of banana growers across the developing world, campaigners had told at the annual general meeting of supermarket giant Sainsbury

  1. AGM highlight the impact cheap food is having on producers, which contrasts sharply with the supermarket’s claims of ethical integrity made in its Corporate Social Responsibility report
  2. Banana growers are facing a crisis because of the low prices paid by supermarket chains in the current banana price war.
  3. Banana workers cannot adequately feed their families despite working 11-12 hour days. Working conditions on banana plantations are often very poor.
  4. The workers are also exposed to powerful pesticides to meet the cosmetic appearance requirements set by the supermarkets.

According to Sainsbury’s CSR report

“We can offer our customers excellent products but not at the expense of people in developing countries who may be working in unsafe conditions for poor wages”..

Alistair Smith of Banana Link said:

“We are looking to Sainsbury to take the lead in matching its verbal commitment to ethical trading with its practice along the banana supply chain. In following the price war led by Asda and Tesco, Sainsbury has joined the ranks of those who are now driving a ‘race to the bottom’ in the banana industry. The unsustainably low prices they are paying suppliers get passed on to producers who are squeezing their workers even harder than before.”

Friends of the Earth and Banana Link are calling on Sainsbury’s to ;

  • live up to their promises
  • Ensure that banana workers get a living wage and decent working conditions.
  • A failure to do this will indicate that the big supermarkets cannot be trusted.

The role of employer and employees:

The Sainsbury’s brand tradition of providing customers healthy, safe, fresh and tasty food. It differentiates itself by offering a broad range of great quality products at fair prices with particular emphasis on fresh food, a strong ethical approach to business and continuous leadership and innovation.

  • The company employs approximately 140,000 people in the UK.
  • Last year turnover of £17.8 billion and made an operating profit of around £530 million.
  • Sainsbury is estimated to have a 14.8% share of the £123bn UK grocery market.

Sainsbury’s CEO (Justin King) recently stated:

“Learning never stops at Sainsbury’s and every one of our colleagues can improve their skills, which not only benefits our customers but also supports our colleagues to achieve their full potential.

Sainsbury was one of the first businesses in the UK to sign up to the Government’s Skills Pledge, enabling the company to publicly define its commitment to skills training.

The company also launched its “You Can” programme in November 2008 which has brought its entire training under one umbrella.

  • Sainsbury’s has been working with the National Employer Service (NES) for the last 3.5 years and has held an NES contract for 3 years
  • The company was originally introduced to the NES by its Sector Skills Council, Skill smart.
  • The company has approximately 4,400 employees.

Report covers the corporate responsibility activities of JSainsburyplc in the fiscal year to 21 March 2009. The Report contains details of our five values, which are the guiding principles for our company as below,

Best for food and health;

Our goal is to offer our customers great quality food at fair prices and, as a leading food retailer; we are committed to being ‘Best for food and health’. Our approach is to help and inspire customers to eat a healthy balanced diet by promoting healthy eating and active lifestyles.

We work hard to make our products as healthy as possible, without compromising on quality or taste. We’re also committed to providing our customers with clear and transparent labeling, to help them make informed choices about the food and drink they buy.

Sources with integrity;

Sourcing with integrity is central to our ability to deliver great product at fair prices. In practice it means working with our suppliers to ensure the sustainability of our products in the round, taking into consideration their economic, environmental and social impacts.

We are committed to offering products that are better for customers and for the environment, in a way that is also better for the animals, farmers and producers involved in their production.

We offer around 30,000 products in our stores. Only by working closely with our suppliers can we deliver great quality products for our customers whilst ensuring our standards of integrity are upheld.

Respect for our environment;

At Sainsbury’s we take environmental issues seriously. We aim to be environmentally responsible in the way we run our business and we also want to make it easy for customers to be environmentally responsible.

Climate change represents one of the greatest challenges we face, both as a business and as a global population. We recognise that tackling the issue involves addressing both our direct and indirect impacts. We are working hard to reduce our operational footprint and we continue to develop a better understanding of the carbon embodied in our products and in the construction of our buildings.

Positive difference to our community

Our stores are at the very heart of the communities they serve. For us this is not only about providing great service and quality products. It’s also about making a positive difference to our communities and being a good neighbour.

This begins with the positive economic impact our stores have in generating local wealth, by providing employment, using local suppliers and contractors, and regenerating the local surroundings. But there’s much more to it than that.

Good place to work;

Being ‘A great place to work’ is rooted in Sainsbury’s heritage and values. It also plays a crucial role in achieving our business goals. We rely on our 150,000 colleagues to deliver great service to our customers every single day.

We are committed to championing equality, diversity, inclusion and flexible working options for our colleagues. We remain committed to recruiting, retaining and engaging the best people, from backgrounds that reflect the communities we serve. We believe that every colleague, no matter where they work or the role they perform, should be encouraged to develop and make best use of their skills.

We value the opinions of our colleagues and we communicate honestly with them. We also believe in recognising and rewarding our colleagues for the vital part they play in making Sainsbury’s a great place to work.

Sainsbury Plc Reports: 2003-2006 on CSR

J. Sainsbury plc owns Sainsbury’s Supermarkets (hereafter Sainsbury’s), the U.K.’s third largest retailer after Tesco and Asda. For many years since it opened for business in 1869, Sainsbury’s was the country’s biggest supermarket, the undisputed market leader. A series of mis-steps allowed competitor Tesco to catch up in 1995. In 2003, Asda passed Sainsbury’s, relegating the latter to third position where it stays.

Sainsbury’s is now playing catch up, regaining market share one percentage point at a Time. A publicly listed corporation since 1973, the company is on the renewal trail as it attempts to regain its leading position in the industry. Using a combination of common management tools in a wide range of areas, from stocking its shelves full with items customers want to buy to executing on a complete revamp of its information technology and supply chain management systems, a new senior management team is revitalizing the whole organization from top to bottom. This brief history helps us analyses the period 2003 to 2006, during which Sainsbury’s hit the dust with their first-ever revenues slump in history (in the year ended March 2005) and then as nimbly picked itself up and began staging a comeback. We can learn how they are doing by studying the company’s annual reports which are the “official” snapshots of the whole corporation each year. Just like any other company at the mercy of its stakeholders (Freeman, 1984), Sainsbury’s is expected to behave to satisfy everyone.

First Question

Identify significant areas of the accounts for 2006 where judgment has been used in determining the appropriate accounting policy for the company (for example depreciation of fixed assets). Critically discuss how such judgments have materially affected the accounts in terms of valuation and profitability.

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