Ethics and Corporate Social Responsibility at Tesco
written by Christian Mate
Introduction
In this essay a major UK retailer, Tesco, is assessed in respect to its CSR policies. This company's attitude towards ethical behaviour is examined against a background of ethical theories. In the first part of the essay, importance is given to the explanation of ethical theories. This analysis of the theories provides information to distinguish links with Tesco's approach and to point out the reasons that led this company to adopt CSR measures.
Business Ethics Theories
A company’s ethical behaviour depends both on the values of individuals working for a company and on the values applied by the company. Since ethics and moral differ from group to group, it is possible to affirm that different beliefs, values and morals can be found in a single company. Important to mention is that depending on place and time, different views of what is considered ethically right or wrong occur. The following ethical theories have been shaped by a western perspective:
Virtue ethics
Aristotle is commonly related to the issue of virtue ethics. This philosopher affirmed that ‘virtues are not "ends"; rather they are "means"’. (Fisher & Lovell 2003, p 71) In other words, it means that a personal good behaviour determines the happiness of a society. Thus, virtue ethics places the individual within a social context. (see Fisher & Lovell 2003, p71)
Furthermore, virtue ethics is not constrained by a system of rules and regulations. It emphasises personal characteristics, which if practiced well will lead to a correct and ethical decision. (see Fisher & Lovell 2003, p72)
Deontological Theory
Since the deontological theory has its origin on Immanuel Kant, it is also known as Kantian Ethics. This theory argues that in order to act ethically one must follow universally applicable rules. Kant's 'universal test' verifies whether a rule is an universal standard: 'If a rule can be made universal without contradiction, then it is morally good; if a rule cannot be made universal without contradiction, then it is morally bad.’ (Wallenmaier 2006, [online])
Kant pointed out one more condition for ethical behaviour: one can carry out actions correctly only if he or she does not expect any kind of reward. (see Fisher & Lovell 2003, p77)
Business rules originated from this theory. The first is based on moral permissibility for market interaction: ‘Interactions that violate the universalibility formulation of the categorical imperative are morally impermissible’. (Fisher & Lovell 2003, p 78)
The second refers to the treatment of humans ‘as ends, not means’ (Fisher & Lovell 2003, p79). It is seen as a moral obligation for a company to treat employees respectfully. (see Fisher & Lovell 2003, p79)
A third rule calls for a greater democracy for people at their workplace, which would give workers more rights and involve them in the business decision-making process. (see Fisher & Lovell 2003, p80)
Critics of this theory often mention that it lacks flexibility. (see Fisher & Lovell 2003, p77) The problem is that this theory is based on the so-called categorical imperative, which everyone must embrace.
Teleological Theory
Teleology is a theory that explains phenomena by their ends or purposes, as explained bellow:
Teleological moral systems are characterized primarily by a focus on the consequences which any action might have (for that reason, they are often referred to as consequentalist […]). Thus, in order to make correct moral choices, we have to have some understanding of what will result from our choices. When we make choices which result in the correct consequences, then we are acting morally; when we make choices which result in the incorrect consequences, then we are acting immorally. (About, Inc. 2006, [online])
This theory had its origins in Plato and Aristotle's philosophies, but it was mainly Hegel who shaped it in modern times. (see Wikipedia 2006, [online])
According to this theory, if a company achieves a greater overall outcome by implementing CSR then it is morally correct to do it. Whatever the outcome, if a company sees it as good, then all ways of achieving it are considered moral.
Utilitarianism
This theory is one of those which most influenced western businesses. Utilitarianism is mostly associated with Bentham, Mill and Hume. It combines ethical egoism and altruism and enforces ‘the greatest good for the greatest number’ (Martin 1997, p274). In other words, it maximizes usefulness or minimizes disuse. Critics say that the application of this ethical theory tends to disregard the interest of minorities and might lead to human rights violation.
According to utilitarians, happiness is a universal measurable state: ‘Utilitarianism is a calculating approach to ethics. It assumes the quantity and quality of happiness can be weighted.’ (Fisher & Lovell 2003, p95)
Ethical learning
This ethical theory 'hold[s] that policy ends should be the yardsticks against which the morality of actions should be judged, and that they can only be achieved indirectly.’ (Fisher & Lovell 2003, p88) This means that a company cannot behave ethically only by making an ethical code public. An organization has to offer different possibilities to its employees in order to put an ethical behaviour in action. Offering people the possibility to learn is the indirect way to ethical ‘correct’ behaviour; people will end up acting ethically. (see Fisher & Lovell 2003, p88)
Theorists make distinction between character and personality ethics: ‘The character ethic proposes basic principles of effective living, things like integrity, fidelity, humility, courage and so on.’ (Fisher & Lovell 2003, p88) The personality ethics focuses on ‘"quick-fix solutions" drawn from a public relations approach that aims to present a good image of oneself and easy behavioural tricks used to manipulate others.’ (Fisher & Lovell 2003, p88)
Relation between Corporate Social Responsibility and Ethics
CSR is based on ethical principles. The link between ethics and the CSR of a company is established in the following statement:
A company's core values and codes of ethical behaviour should underpin everything that the business does. How a company then chooses to interact with its global and local communities, in the light of its values and ethics, is often known as Corporate Responsibility or Corporate Social Responsibility (CSR). (Institute of Business Ethics 2006, [online])
Being so, based on the theories explained above, an assessment of Tesco's CSR characteristics is performed in the next sections:
Corporate Social Responsibility at Tesco
Tesco’s statement ‘At Tesco, we aim to make a positive contribution to society. Our CSR programme builds on this commitment and is backed by our ‘Every Little Helps’ approach’ (Tesco 2003) represents an attempt towards an ethical behaviour. Some of the social areas in which the company is involved are listed bellow:
Economic involvement
‘Tesco invests in all types of communities throughout the United Kingdom, providing jobs and careers for local people.’ (Tesco 2003, [online]) Tesco targets especially regions with high unemployment rates; workers are entitled to own shares of the company; people receive incentives to come back to work. Tesco claims to create 10,000 new jobs on average every year.
These actions can be linked to the theory of utilitarianism since the company wants to achieve the greatest good for the greatest number of people.
Equal opportunities and diversity
Tesco recognises that its employees are worth looking after: ‘Our staff are our best asset and we depend on the skills and commitment of our people’ (Tesco 2003, [online]) The company aims both at employing a diverse workforce and at providing equal opportunities to people, regardless of their ‘age, sex, disability, sexual orientation, race, colour, religion or ethnic origin’. (Tesco 2003. [online]) Furthermore, Tesco is committed to a continuous teaching of its employees so that each employee can reach his/hers own development. (see Tesco 2003 [online])
These statements have similarities with the ethical learning theory: a right ethical behaviour can be achieved by giving the stakeholders the opportunity to learn.
Social involvement
‘As part of our commitment to maximising the benefits we bring to the communities in which we operate, we have implemented a strong community strategy.’ (Tesco 2003, [online]) Tesco sponsors community-based projects and groups that bring practical benefit to local communities. It supports the ‘missing child initiative’, which tries to raise awareness of missing children by setting up posters in stores. Schools also profit from the education programme launched by Tesco: since 1992 computers worth 77 million pounds have been given to schools.
These actions bear parallels with altruism and utilitarian theories. The altruism theory asserts that it lays in human nature to pass on values to offsprings in order to provide a better well-being for them. By bringing ‘practical benefit to local communities’ (Tesco 2003 [online]) the company increases the overall happiness and bases its behaviour, therefore, on utilitarian grounds.
Environmental involvement
Regarding the environment, ‘Tesco is committed to protecting the environment by doing what we can to reduce our impact.’ (Tesco 2003, online) The company recognises its duty to the environment and acts accordingly. Tesco is dedicated to energy saving and recycling. It meets its own set targets by reducing the water consumption in it stores, through the improvement of the distribution supply chain efficiency. (see Tesco 2003, [online])
Apparently, the company sees the prevention of contaminating the environment as a universal imperative. This could be considered a link with deontological theories.
Further involvement
The above mentioned areas of involvement are the core of Tesco's CSR plan, but this company is also committed to UK farming, fair trade, health sectors and charity work.
Tesco’s Way of Corporate Social Responsibility
Since the company is involved in many areas of social issues, one could question whether these commitments can be fully implemented. The company argues that corporate responsibility ‘is an essential part of sustaining ourselves as a responsible company’. (Tesco 2003, [online]) ‘We recognise our impacts on society and on the environment.’ (Tesco 2003, [online])
However, critics say that Tesco’s engagement is a fake and that in 2004 Tesco’s ranking was as one ‘of the worst offenders on social and environmental issues’. (Friends of the Earth 2005 [online]) They further criticised Tesco’s CSR report for being ‘incomplete and inadequately verified.’ (Friends of the Earth 2005 [online]) The ‘Ethical Consumer Information Systems named it [Tesco] one of the worst offenders in a new ethical ranking of Britain […]’ (Friends of the Earth 2005, [online]).
Moreover advocates of laisser-faire argue that CSR is nothing else but ‘theft from those shareholders who can, after all, decide for themselves if they want to give to charity.’ (Mallenbaker.net 2006 [online])
Furthermore, a growing concern among farmers arose. ‘Michael Hart [chairman of the Small and Family Farms Alliance] said that the increasing gap between farm gate and retail prices is in some cases down to “clear profiteering”. (Friends of the Earth 2005b, [online]) This statement stays in clear contradiction with Tesco’s CSR statement of the ‘commitment to UK farming’ and its consistence in supporting British farmers. (see Tesco 2003, [online]) Farmers accuse Tesco of 'fleec[ing] both the farmer and the consumer' (Friends of the Earth 2005b, [online]) in a short term sighted profit. (see Friends of the Earth 2005b, [online]) Tesco drives farmers out of business systematically by using a pricing policy which is not concerned with the well being of producers and consumers. (Friends of the Earth 2005b, [online])
Regarding Fair Trade, one of Tesco’s CSR commitments, critics mention that Tesco make about one million pounds profit per week from banana sales. This, according to Friends of the Earth (2005b [online]), would be enough to employ 30,000 banana plantation workers at a living wage. This ‘living wage’ would actually be about twice what they are paid currently. (see Friends of the Earth 2005b [online])
In addition, there is a general concern about how far a company's CSR actions shape and influence society and its beliefs. They argue that companies might take over the role of government on dealing with social issues. ‘We expect governments to provide the legal framework that says what society will put up with.’ (Mallenbaker.net 2006, [online])
Conclusion
Having approached different theories regarding ethical and moral behaviour it is possible to affirm that achieving an absolute ‘correct’ ethical behaviour is not possible. Tesco, among other western companies, is under the guiding of western ethical behaviour, as preached on the theories explained hereinbefore.
Tesco seems to be strongly committed with CSR. Its statements can be linked to many ethical theories such as utilitarianism, learning and teleological theories. Thus, one could say that the company recognised the need for taking over social responsibility and tries to balance it with its economic objectives. Nevertheless, critics point to Tesco's CSR programme downsides: Tesco drives farmers out of business and takes advantage of low wages in underdeveloped countries, as the banana import case proves.
The impact of CSR on society may only be accurately determined in the future. Whether CSR involvement can change, shape and influence a society cannot still be verified.
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