Ethical Trading

Tesco with a external policy which is Tesco participates in the Ethical Trading Initiative and The Fair Trade Foundation. The company insists that suppliers respect the ILO conventions. Tesco has an official policy in relation to animal testing and GMOs. In its policy on establishing new branches, Tesco takes social aspects into account, such as the creation of employment for those with a low level of education and the regeneration of economically deprived regions

Communities especially local communities has positive attitude toward Tesco.

Tesco is committed to supporting its local communities. To underline their belief that “Every Little Helps”, they support projects and initiatives at store level which give practical benefits to children, education, people with disabilities and the elderly. After working with the Royal National Institute for the Blind (RNIB) has launched its new accessible shopping website “access”. Tesco’s regeneration schemes aim to bring together public services, employers and community groups to yield social, economic and environmental change in deprived urban areas.

As the largest supermarket chain, Tesco has good relationship with government and be support by government. However, it is also be audited by government. “Tesco shows an average sustainability performance in its industry group. Tesco management capabilities in the economic dimension are average in comparison to its industry. In the environmental dimension, Tesco scored more or less equal to the industry average. Moreover in the social dimension, Tesco performance was in the range of the industry average.” (Jonathan Refoy, Corporate Affairs Manager,2002)

For every organization, customer is very important, to Tesco, it is not exceptant.

Tesco serve over 12 million customers every week. Customer focus is key to Tesco’s CSR strategy, the resiponsibility of Tesco is to deliver safe, good quality products, the right price for all customers. Tesco also provide access to good quality fresh food at affordable prices in communities across UK, and its value line range provides everyday items at unbeatable prices and helps customers on a budget.

Tesco also for the convenience of Tesco opening time is 24 hours. As a brand – Tesco, it has been widely kwon by customers especially in the UK. Tesco’s core purpose is to create value for customers to earn their life loyalty and which is supported by its values: Understand customers better than anyone; be energetic, be innovative and be first for customers; use Tesco’s strength to deliver unbeatable value to its customers and look after its people so they can look after customers.

As the largest supermarket chain in the UK, Tesco use fair, unethical competition strategy with its competitors, regards its competitors are competitive partner. Tesco supports the work of the Fairtrade Foundation, which give a better deal for third world producers, and guarantees small producers in third world a fair price, regardless of international market condition. Suppliers Tesco has several thousand supplies in the UK and which is the biggest customer of UK suppliers.

Tesco work with its suppliers to find innovative ways of improving the way the Tesco work. In 2001, the Department of Trade and Industry (DTI) introduced a Supermarketss’ Code of Practice to regulate trading relationships between the four largest UK supermarkets and their suppliers. Tesco is a signatory to the Code and has met its obligations for implementing the code fully. Tesco and its suppliers run Producer Club for livestock farmers and produce growers to share information on customers trends and improve communication.

In 2002, Tesco gave away 273 million Computers for Schools vouchers and 1,000 new schools can spend their vouchers on ICT equipment or save them up for the following year. The Tesco Charity Trust was set up in 1987, and which aims to help local and national charities, as well as voluntary support for children, the elderly and people with disabilities. Since 1987 Tesco has raised over 21 million pounds for a variety of charities. The Tesco Charity of the Year for 2003 is Barnardo’s.

Tesco also recognizes that it has a responsibility to contribute to the capabilities of tomorrow’s work force. Tesco has a environmental policy. Tesco is certainly not a leader with respect to its environmental policy. Nevertheless, the policy is comprehensive and integrated in the general activities. The management system focuses on restricting energy consumption, the use of raw materials and the choice of Nature Choice suppliers. There are no certificated branches. Tesco is one of the few British companies which achieved the recom-mendations of the environmental summit in Kyoto in the field of rational energy consumption and the reduction of greenhouse gases. For example, the company developed a comprehensive programme to replace all its freezers with CFC and HCFC-free models.

Tesco is committed to protecting the environment by doing what they can to reduce their impact. Tesco aim to use its commercial strength to put sustainable environmental principles into practice, both within its own operations and through the sharing of good practice with its suppliers. Tesco’s environment programme saved the equivalent of 1.9 million trees and recycling. Tesco recycling scheme has succeeded in recycling 350,000 phones and 35,000 inkjet cartridges, raising over 1 million pounds for charity and they recycled over 18 million Christmas cards for the Woodland Trust.

All Tesco stakeholders are influenced by factors of CSR, especially suppliers, employees and communities. However, whether Tesco is ethical in its business activities and carry on with its code of conduct, from above discussion Tesco is suit the Stakeholder model which is ethical. The following part report will more discuss whether Tesco is really ethical in its relationship to stakeholders, and also use Stakeholders model.

Tesco squeezes overseas suppliers leading to uncertain jobs and poor conditions for workers. Recent research by Oxfam in South Africa revealed how “Tesco loads many of the costs and risks of its fresh-produce business onto farmers, who are passing them on to workers – especially women – in the form of precarious employment”. Oxfam found that women working for supermarket suppliers were struggling to make ends meet to feed their children, most got no paid sick leave or maternity leave and many had to work in poor conditions without protective clothing.

Tesco’s dominance puts smaller shops out of business. Tesco now controls 27% of the grocery market and is increasing its share of sales of non-food goods. In 2000, the Competition Commission warned that the massive buyer power of the big supermarkets made it hard for smaller shops to compete. But now Tesco has been allowed to expand further by taking over chains of high street convenience stores creating a new threat to local stores. One local trader in Withensea, North Yorkshire, called on the Office of Fair Trading to intervene when Tesco opened a store nearby and cut prices by 40%, saying that Tesco was trying to put him out of business. If Tesco’s growth continues unchecked consumers will soon be left with little choice of where to shop. (refer to appendix 2)

Tesco has been found to be selling furniture from illegally logged timber. Last year Tesco was found to be selling tropical wood garden furniture made from illegally sourced Indonesian timber. Tesco was thrown off the WWF `1995 Plus Group’ of which it had been a member for eight years, supposedly committing the company to buying timber products independently certified by the Forest Stewardship Council as legal and sustainable. Illegal logging causes major social and environmental damage, fuelling corruption and organized crime. According the code of conduct of Tesco (2002/2003) and Stakeholders model (Freeman, 1984), does Tesco suit stakeholders model and carry on its social responsibilities listed in its social responsibility report?

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