Tesco's Corporate Social Responsibility Initiatives

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Case Details:

Case Code : BECG059
Case Length : 21 Pages
Period : 1995-2005
Pub. Date : 2006
Teaching Note :Not Available
Organization : Tesco
Industry : Retail
Countries : UK

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"CSR is a journey: whatever we have achieved, there is always more that can be done and that needs to be done. That is why we have adopted an 'Every Little Helps' approach."¹

- Terry Leahy, Group Chief Executive, Tesco in 2003.

CSR - The Tesco Way

In January 2005, UK based retailer Tesco Plc. (Tesco) made it into the list of FTSE4 Good Index,² indicating the company's adherence to certain globally accepted corporate responsibility standards (Refer Exhibit I for other companies on the FTSE4 Good Index 2005).

Earlier, in 2004, Tesco was ranked 26th in the annual 'Business in the Community' (BITC)³ corporate responsibility index. The company was ranked 1st in the category of Food and Drug retailers and was placed among the most socially responsible companies in the UK. BITC credited Tesco for outstanding performance in corporate strategy, integration, community management, marketplace management and environmental impact. In 1998, Tesco's 'Computers for Schools'⁴ initiative won the cause-related marketing⁵ award for excellence from BITC. Tesco was the largest retailer in the UK with annual revenues of £33.97 billion and profit of £2 billion in the year 2005. It had a market share of 29% in the UK grocery market.

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Tesco had a presence in several European and Asian countries⁶ and by 2004, the amount of floor space Tesco operated outside the UK had exceeded the floor space in the UK. In order to minimize costs, Tesco procured products from various countries across the world.

Tesco considered CSR to be an integral part of its corporate framework and its CSR was spread across several internal and external activities, which included local regeneration projects, being environmentally conscious, and community issues. Tesco's corporate responsibility efforts were reflected in its day to day activities, with its focus on recycling, use of organics, use of energy and water, as well as its charity and community initiatives. Tesco's CSR strategy was "to earn the trust of our customers by acting responsibly in the communities where we operate, by maximizing the benefits we bring and working to minimize any negative impacts."The company published 'Corporate Social Responsibility Review' every year, with details of the company's CSR approach, implementation and policies.

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1] "Tesco Corporate Social Responsibility Review," 2002-03.

2] Launched in 2001, FTSE4Good is an innovative series of real-time indices designed to reflect the performance of socially responsible equities. The series, created and managed by global index provider FTSE Group, covers five markets - UK, Europe, US, Japan and Global. Five benchmark and four tradable indices make up the FTSE4Good index series.

3] Business in the Community's Awards for Excellence are one of the most prestigious UK awards recognizing companies for integrating responsible business practice into their mainstream operations resulting in a positive impact in the workplace, the marketplace, the environment or the community.

4] Customers of Tesco were given 'Tesco Computers for Schools' vouchers for every £10 spent in a single transaction at Tesco. The customers could donate the vouchers to the school of their choice and the schools were provided with computers and other related equipment in exchange for the vouchers.

5] Cause-related marketing is defined as the public association of a for-profit company with a non-profit organization, with the intention of promoting the company's product/service to raise money for the non-profit organization.

6] Tesco's operations were spread across France, Hungary, Poland, Czech Republic, Slovakia, Ireland, Thailand, South Korea, Taiwan, Malaysia, Japan, Turkey and China.