Sustainability Pillars: People, Planet, and Profit for Tesco

The assignment emphasizes the importance of corporate governance (CG) and sustainability for Tesco, a leading retail company. The three pillars of sustainability are defined as economic, social, and environmental responsibilities. The CG committee plays a crucial role in ensuring that business operates responsibly, making ethical decisions, and identifying key stakeholders to participate in decision-making. To achieve desired targets, Tesco must define its corporate and social obligations, develop appropriate policies, monitor external developments, engage with stakeholders, and ensure effective communication. Following the UK Corporate Governance Code helps businesses like Tesco analyze changes and attain best results.

CORPORATE
RESPONSIBILITY

EXECUTIVE SUMMARY
For carrying out the present research based on corporate responsibility it can be analyzed
that business is required to regulate and control the firm based on different ethical grounds.
Further, it can be evaluated that the main purpose of establishing CSR is to take the
responsibility for all the business activities and to develop a positive impact on the environment
and all the stakeholders. Also, corporate governance is a very crucial element of CSR. With the
help of such type of process business activities of the company can be controlled and directed. In
order to analyze the corporate governance subject matter Tesco has been adopted so that it helps
scholars to understand the ethical issues faced by the firm. Furthermore, different issues have
been identified so that board committee members can assess different ways to overcome it so
that results can be attained. The main reason to choose Tesco organization is that different ethical
grounds can be analyzed and business can carry out its main responsibility in the form of fair
trade practices etc.
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Corporate Responsibility, also regarded as responsible business is a kind of corporate self
regulation which is engraved into a business model. In other words, it is a self regulatory
mechanism wherein a business confirms its active compliance with the spirit of law and ethical
standards (Fernando, 2009). The purpose of establishing CSR is to take the responsibility for all
the business activities and to develop a positive impact on the environment and all the
stakeholders. Corporate governance is a very crucial element of CSR. It is a process through
which business activities of the company are controlled and directed (Tricker and Tricker, 2012).
The purpose of this report is to conduct an ethical analysis of a critical business situation,
decision or activity for organization named Tesco. It will examine the current approach of the
company to its Corporate Governance. The report will find out whether good business practices
are being followed by the company using the UK’s existing CG guide. Herein different ethical
issues have been analyzed in order to overcome it by carrying out ethical audit so that fair
trading can be executed.
Corporate Governance Framework of Tesco
The above figure shows the corporate governance structure of the Tesco. The Executive
Committee is organized around three core capabilities which include customers, channels and
products. The Board is of the belief that methods of doing business are very important for them.
The work is supported by five key committees which are the Audit, Corporate Responsibility,
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Nominations, Remunerations and Disclosure. Each committee plays its own role and they are of
utmost importance (Tesco, Annual Report, 2015).
They are committed towards delivering a high standard of corporate governance. The aim
is to ensure that they carry a right approach to the governance. The Board of Tesco has witnessed
significant changes in some last years. The company claims that it recognizes and supports the
principles of the UK CG code. Hence, it will be interesting to know how Tesco is making
justification for its claim. It can be analyzed that the corporate governance report is intended to
provide a clear view to the shareholders about the position of firm in market. Thus, management
of Tesco is required to maintain a proper system of checks and balances without affecting the
operations of firm (Porter and Kramer, 2006). Also, the CG approach should remain unchanged
and for that they can set rules but the framework supporting the core values should not be
influenced. Further, it has also been analyzed that Tesco's ethical trading programme helps firm
to promise that they will buy and sell the products with due responsibility. Carrying out ethical
trade is a part of corporate responsibility. Business also undertakes ethical trading team such as
supporting employees so that corporate governance can be maintained. It is as follows-
 Values- It is essential for Tesco to ensure that they work according to the views of
their supplies because they share their values effectively.
 Monitoring- Further, Tesco is required to monitor the truth in regard to the conditions
for employees in the supply chains (McWilliams and Siegel, 2001).
 Enhancement- It is crucial for business to support their suppliers in order to enhance
their services.
 Transparency- They need to be open, honest and helpful so that best results can be
attained (Luo and Bhattacharya, 2006).
There are varied issues such as social, cultural and ethical are faced by Tesco. It states
that business found issues in investigating the social attitudes of clients and also analyzing the
trends of consumers that affect the business social policies. Therefore, in regard to overcome
such issues business needs to implement effectual policies and solve the social policies of
business. Further, the ethical issues found within Tesco states that waste packaging from
supermarkets creates an environmental issue which turns into ethical issues (Aguinis and Glavas,
2012). It is occurring because business is opening more and more stores across the country and
thus it increases packaging waste from the products. Thus, it is an unethical behavior in the
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consumers and communities point of view. Therefore, in order to overcome it varied policies
have been introduced so that corporate governance activities can be enhanced.
However, business is required to involve its varied stakeholders within firm and develop
different solutions so that ethical issues faced can be overcome. For instance, reducing packaging
waste and provide efficient supply chain system helps in providing effective solutions to clients.
Following are the corporate governance highlights which are need to be focused by the board
during the whole year (Chin, Hambrick and Treviño, 2013). These are as follows-
 Financial statements and announcements
 Corporate and social responsibility
 Reviewing different reports from committees
 Health and safety
 Risk management
 Delegating authorities
 Pensions
 Shareholders feedback
Furthermore, in order to ensure an appropriate balance and succession potential in the
corporate governance committee it is essential to provide a varied number of changes in the
policies. However, the ethical issues faced within Tesco have been dealt within board meetings
and suitable solutions have been assessed. Board focuses on strategic and long term issues and
also ensures proper focus on monitoring the issues so that results can be attained (Cheng,
Ioannou and Serafeim, 2014). Further, it is essential for business to overcome the issues by
implementing different conceptual models and theories related to ethical dilemmas and
associated governance so that problems can be overcome.
Here, Tesco is required to undertake effectual framework so that ethical dilemmas can be
reduced and thus business can attain desired actions. Business needs to follow triple bottom line
framework that states that it involves three different parts such as social, environmental and
financial which are further divided into three different parts i.e. people, planet and profit. It is
also called as three pillars of sustainability (Hopkins, 2012). It is essential for Tesco to follow
such effect in order to follow the best corporate governance practices and attain desired targets.
Corporate governance is the part of corporate social responsibility which requires corporate
leaders to act responsibly and make ethical decisions so that communities and individual can
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attain interests. However, through undertaking such decisions individual within firm are
encouraged so that best results can be attained.
The committee involved in CG is required to analyze that business is involved in good
practices or not. It also helps them to receive updates from internet audit so that findings can be
considered through an internal audit program. However, the effectiveness of internal audit
function can be assessed as it involves key stakeholders to be involved in decision making so that
roles and responsibilities can be analyzed effectively (Ioannou and Serafeim, 2014). The
committee identifies varied ethical issues so that it needs to be overcome by analyzing ethical
dilemmas and management risks. It has been analyzed that corporate responsibility is the integral
part of that how the business operates. Further, it can be reflected that it is inescapable reality
that if the values of business fail to resonate with the values of society business endanger long
term prosperity. Tesco is required to identify and live the values that are crucial to their
colleagues and clients and thus the corporate responsibility committee provides a forum to
ensure that the corporate governance board pays proper attention to it (Zadek, Evans and Pruzan,
2013).
Thus, Tesco carries out proper ethical audit in order to key responsibilities of the
corporate responsibility committee. It is as follows-
 It is essential for business to define the group's corporate and social obligations as a
responsible citizen in order to oversee its conduct in regard to different obligations
(Crane, Matten and Spence, 2013).
 Also, viewing the development of appropriate policies and supporting measures.
 Identifying and monitoring the external developments that are likely to have significant
influence on individual's ability to conduct and protect the reputation of business.
 Also, monitoring the group's engagement with external stakeholders and other interested
groups (Porter and Kramer, 2006).
 Ensuing appropriate communication policies in order to work ethically both internally
and externally.
Furthermore, it can be assessed that the UK Corporate Governance Code is required to
set out principles and specific provisions in order to direct and control so that set standards can
be attained (Cheng, Ioannou and Serafeim, 2014). Thus, through following the CG code it helps
business to analyze the changes so that best results can be attained. Thus, following the corporate
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governance guidelines in order to overcome the ethical issues so that each and every stakeholder
can participate in decision making and thus best results can be achieved (Aguinis and Glavas,
2012).
Tesco is required to use the best approach in order to contribute towards the local
community so that they could effectively follow the principle and overcome the ethical practices
in order to attain desired goals. Thus, through carrying out ethical analysis it assists firm to make
effectual decisions so that best outcomes can be gained. Tesco follows a wide range of ethical
policies in order to cover different areas such as ethical trading, supporting local community and
environment in order to protect them from unethical practices (Hopkins, 2012).
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REFERENCES
Books and Journals
Aguinis, H. and Glavas, A., 2012. What we know and don’t know about corporate social
responsibility a review and research agenda. Journal of management. 38(4). pp. 932-968.
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to
finance. Strategic Management Journal. 35(1). pp. 1-23.
Chin, M. K., Hambrick, D. C. and Treviño, L. K., 2013. Political Ideologies of CEOs The
Influence of Executives’ Values on Corporate Social Responsibility. Administrative
Science Quarterly. 58(2). pp. 197-232.
Crane, A., Matten, D. and Spence, L. J., 2013. Corporate social responsibility in a global context.
Chapter in: Crane, A., Matten, D., and Spence, LJ,'Corporate Social Responsibility:
Readings and Cases in a Global Context. 2. pp. 3-26.
Fernando, C., 2009. Corporate Governance: Principles, Policies and Practices, Pearson
Education India
Hopkins, M., 2012. Corporate social responsibility and international development: is business
the solution?. Earthscan.
Ioannou, I. and Serafeim, G., 2014. The impact of corporate social responsibility on investment
recommendations: Analysts' perceptions and shifting institutional logics. Strategic Man.
Luo, X. and Bhattacharya, C. B., 2006. Corporate social responsibility, customer satisfaction,
and market value. Journal of marketing. 70(4). pp. 1-18.
McWilliams, A. and Siegel, D., 2001. Corporate social responsibility: A theory of the firm
perspective. Academy of management review. 26(1). pp. 117-127.
Porter, M. E. and Kramer, M. R., 2006. The link between competitive advantage and corporate
social responsibility. Harvard business review. 84(12). pp. 78-92.
Tricker, B. and Tricker, I. R., 2012. Corporate Governance: Principles, Policies and Practices.
Oxford University Press.
Zadek, S., Evans, R. and Pruzan, P., 2013. Building corporate accountability: Emerging practice
in social and ethical accounting and auditing. Routledge.
Online
Tesco, Annual Report. 2015. [Online]. Available through: <
http://www.tescoplc.com/assets/files/cms/Tesco_Annual_Report_2015___Governance.pdf
>. [Accessed on 27th October 2015].
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