Importance of Corporate Social Responsibility and Ethics: A Case Study of Wesfarmers

This report discusses the importance of corporate social responsibility and ethics, with a case study of Wesfarmers. It covers the company's CSR activities, governance structure, and response to stakeholder expectations. Analytical frameworks such as Carroll's pyramid and Wartick and Cochrane's typology are also explored.

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Corporate Social Responsibility
Report
6/17/2018
Student Name

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Executive Summary
The paper discusses about the importance of the corporate social responsibility and ethics.
The corporate governance structure and CSR of Wesfarmers have been explained in the task.
The company is providing the chemicals, fertilizers, coals and other safe products to its
customers. Carroll’s pyramid and Wartick and Cochranne’s typology also have been
discussed in the task. These models play an important role in the CSR and ethics. The
company responses to stakeholder’s expectations are fulfilled and have been discussed in the
report.

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Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Company CSR activities and governance structure...................................................................3
Governance structure of Wesfarmers.........................................................................................5
Analytical framework:...............................................................................................................6
Carroll Pyramid......................................................................................................................7
Wartick and Cochrane’s typology..........................................................................................8
Company response to stakeholder’s expectation.......................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
The primary objective of the report is to outline the activities of the Wesfarmers. The CSR
activities, corporate governance, and the stakeholder’s expectations are taken into
consideration by the report. Wesfarmers is famous for dealing in trade, fertilizers, coal
mining, chemicals, safety and industrialized products. Wesfarmers is considered to be the
highest earning revenue company in Australia due to performance and improvement done by
them in the products and services offered. The company has issued the concern related to the
product safety which includes the Coles and Kmart. These concepts are introduced by the
company in 2017 with the aim to provide the safety in the products and services offered by
the Wesfarmers (Wesfarmers, 2018a). The company is increasing the supply chain
transparency in the business so that each and every stakeholder will be informed about the
company performance. Wesfarmers is committed to minimizing their own footprints and
delivering the solution which will help the customer and the community to do the same. The
company always tries to improve the performance and progress of the company. All these
activities performed by the company show the CSR activities and governance is followed in
the organization (Wesfarmers, 2015).
Company CSR activities and governance structure
In Wesfarmers, the top level management of the company is aiming to protect the interest of
shareholders and other members by protecting the environment. The company is continuously
working towards achieving the sustainability in the industry. The main purpose of the
industry is to carry the business with effectiveness in the long run. Corporate Social
Responsibility is the responsibility which has to be performed by each and every organization
irrespective of its size and nature of the business (Jones, Comfort and Hillier, 2014).

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CSR activities are done by the organization to have the good company image in the mind of
people which are affected by the decision taken by the company.
• Wesfarmers is focusing on providing the safe work environment to its employees,
customers, suppliers and visitors on the highest priority.
• Providing and improving the protection to all the core actions whether it is for retail store
or for a built-up site. Wesfarmers is focusing for improvement in the leadership welfare, to
target strategy for the reduction in the risk faced by the company and improving the physical
and mental health (Wesfarmers, 2018a).
• The contribution towards the society by the Wesfarmers is to decrease the emission
intensity of our productions and to improve the elasticity to the climatic transformation.
Company is providing the way to reduce the waste which is produced during the time of
production of goods. It will help in filling the land and water where possible.
• Company is focusing on enhancing the individual career and performance. Wesfarmers is
striving to make a comprehensive work environment with specific attention to the gender
diversity so that equality will be there in the organization (Wesfarmers, 2018b).
• Wesfarmers is sourcing to commit a strong and respectful relationship with the suppliers
of the company and try to delivers the best products in the responsible manner.
• The development of the community is also done by Wesfarmers by giving the positive
contribution and committed to provide the safety of products. For this company has used the
two concepts which are Cole and Kmart which are developed to ensure the safety in the
products (Hur, Kim and Woo, 2014).

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• The company is maintaining the robust corporate governance policies in the business. In
this each business is able to identifies the key issues relevant to the operations (Wesfarmers,
2015)
Governance structure of Wesfarmers
The corporate governance can be defined as the mechanisms, processes and relation by which
the corporations are controlled and directed effectively. The governance structure of the
company depicts the principles followed in the organisation, the responsibilities given to the
different members in the participants. These different members include the board of directors,
employees, shareholders, managers, creditors, auditors and other stakeholders. The corporate
governance also tells about the Wesfarmers policies and procedures followed in the company
(Baur and Miyakawa, 2014).
Wesfarmers are using the robust governance policies in the business. Robust governance is
nothing but giving the importance and views of all the operations done in the business.
Wesfarmers makes the rules, processes and policies which are showing the governance used
in the business activities. The framework of corporate governance has been established in the
year 2016 by the Wesfarmers board using the corporate Governance statement (Wesfarmers,
2017).
Wesfarmers governance structure is focusing on defining the roles and responsibilities for
the board and management. The role of the board is to support the strategic course of the
group, control them and monitor the management of the company. It also helps in attaining
the strategic plans and oversees decent governance practice in the business. The Board
purpose is to protect and improve the interest of the people who are affected by the decision
taken by the company these people include the stakeholders of the company. Wesfarmers
governance is focussing on improving the culture of compliance that values the moral

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behaviour, individual and company integrity, responsibility and respect for other
(Wesfarmers, 2018b).
In corporate governance structure of Wesfarmers the following issues are also into the
consideration:
• There should be followed of conflict of interest policy in the business
• A proper code of conduct should be followed in the business in which all the rules,
policies and procedures are operated.
• Promoting the whistle-blower that means to support a culture of honesty, integrity and
moral behaviour of the business.
• Use of securities trading policy. It includes setting out the rules designed to ensure
compliance with insider trading laws and helps in protecting the reputation in relation to
trading securities by its directors and employees for Wes farmers (Wesfarmers, 2018c).
• Developing the investor policy in which proper meeting and communication with
Wesfarmers shareholder are there through the conduct of Annual General Meeting.
• Set out the minimum level of control and standards required across the group to ensure the
compliance with environmental law, environmental license conditions and regulatory
framework.
Analytical framework:
The concept of corporate social responsibility performed by the company can also be
understood using the models. To study in detail the ethical practices and model adopted by
the company, there are models named Carroll Pyramid model and Wartick and Cochrane’s
model are discussed:

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Carroll Pyramid
Carroll has introduced this theory in the year 1991 to organized different corporate
responsibility. In this diagram, a company has four types of errands which have to be
accomplished. The four different responsibilities include:
(Source: Linked In, 2018)
Economic Responsibility
The first and most obvious is the economic responsibility. In this responsibility, Wesfarmers
is trying to achieve the maximum profits from the business done by them. To enable the
profitability in the business, minimization of cost and maximizing the sales should be
achieved by the company (Wesfarmers, 2018d).
Legal Responsibilities

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The legal responsibilities include all the responsibility which are related to the obeying the
law to operate the business successfully in the market. Obeying the law is the need of the
society as it works as a mirror to the society (Linnenluecke, 2015).
Ethical responsibilities
This responsibility in the business is expected by the society and company do this
responsibility with due care to have the good image in the minds of the consumer.
Wesfarmers is doing this responsibility to assert the ethical leadership to operate above the
minimum standard of the law (Wesfarmers, 2018).
Philanthropic Responsibility
This responsibility is staying at the top of the pyramid as it considered being a good company
resident and tries to improve the lives of an individual and improve the quality of life for the
society. Wesfarmers is doing so by giving the good quality of products and services to the
society (Sullivan and Gouldson, 2017).
Wartick and Cochrane’s typology
As per the Wartick and Cochran’s, the CSR responsibilities are divided into the three
segments that are principles, process, policies and these sectors are stated below:
Principles can be defined as the fundamental truth or proposition. The Corporate Social
Responsibility can be divided into the four parts which include the legal, ethical, and
economical and philanthropists. All these sectors depict that the business is a moral and
economic agent. In this context, Wesfarmers is fulfilling all the responsibilities and details of
this responsibility with the due care as these responsibilities are already explained in the
Carroll’s Pyramid Model (Shengtian, Weihui and Xiaosong, 2010).

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A process can be defined as the way of doing the work in the organization. This can also be
divided into the four parts which include defensive, reactive, proactive and accommodative.
This sector or portion defines the capability of the business to react and respond in the
environment according to the changes occurred. It also develops the feeling of managers to
be responsible in nature as the changes affect the performance as well as the preference of
society. In case of Wesfarmers, they are proactive in nature as this company scan the business
environment time to time to have the changes regulated in the company strategies which are
done in the environment (Wesfarmers, 2018e).
Policies can be defined as the basic rules and regulations which are followed in the
organization. It can also be subdivided into three measures which include issues
identification, response development and issues analysis. This area is made to reduce the
shocks and surprises which are faced by the company at the time of operating the activity.
Wesfarmers also determines their policies and strategies related to CSR in an effective
manner. Wesfarmers are focusing on the identification of the issues using the policies and
plans in developing the response (Shengtian, Weihui and Xiaosong, 2010).
Company response to stakeholder’s expectation
While conducting the operations, the company wants to have the direct communication with
the stakeholders. The views and expectation of the stakeholders are taken into consideration
by the company as it is the aim of the company to satisfy its stakeholders at its best capacity
and capability. The most important stakeholders include the shareholders, creditors,
customer’s government etc. the aim of the company is to strengthen its stakeholders and
company related people (Akbar and Ahsan, 2014).
Wesfarmers is trying to find out the difference between the actual and potential performance
done by the company for the stakeholders. If there is any gap between these two then the

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following measures will be taken by the company to reduce it and will try to meet the
expectation of the stakeholders. Wesfarmers tries to consider the interest of a wide cross-
section of the stakeholders in a variety of ways. These ways include a stakeholder
engagement survey by the company to have the communication on sustainability issues of the
company (Byrne and Daymon, 2014).
Stakeholder's also identified some issues which are related to the climate and environmental
change, relationship with the suppliers, investment patterns followed by the company and
many other factors (Wesfarmers, 2018). The company is earning huge profits, from the
financial report of the year 2017. The company is giving the part of the profit to the
shareholders also which satisfies the shareholders the most. From this fact, it can be said that
the company is performing the CSR and stakeholders are satisfied with the performance and
social responsibility performed by Wesfarmers (Wesfarmers, 2018e).
Conclusion
From the above discussion, it can be concluded that Corporate Social Responsibility is the
most important aspect of the business and every business should have to perform this to
remain competitive in the market. The company like Wesfarmers is also following the CSR
and corporate governance activity in the organization. The company is introducing the Cole
and Kmart for the safety in offering the industrial products and services, providing the safe
environment for the stakeholders and other related people. The transparency in the accounts
and supply chain is also maintained by the company. The CSR activities of the company are
explained by using the two models also in which the stages are explained that which target to
be achieved by the company on priority. For ensuring the long-term growth and profitability
in the business, the company is giving back to the society through this framework.

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References
Akbar, S. and Ahsan, K. (2014) Analysis of corporate social disclosure practices of
Australian retail firms. International Journal of Managerial and Financial Accounting, 6(4),
pp.375-396.
Baur, D.G. and Miyakawa, I. (2014) No puzzle: The foreign exchange exposure of Australian
firms. International Review of Financial Analysis, 32, pp.13-22.
Hur, W.M., Kim, H. and Woo, J. (2014) How CSR leads to corporate brand equity:
Mediating mechanisms of corporate brand credibility and reputation. Journal of Business
Ethics, 125(1), pp.75-86.
Jones, P., Comfort, D. and Hillier, D. (2014) Environmental and Social Programmes and
Rapidly Growing Retailers. Economia Seria Management, 17(1), pp.5-17.
Linked In. (2014) Carroll’s Pyramid of Corporate Social Responsibility [online] Available
from: https://www.linkedin.com/pulse/20140905115337-70750023-carroll-s-pyramid-of-
corporate-social-responsibility [Accessed on 13th June 2018]
Linnenluecke, M.K., Meath, C., Rekker, S., Sidhu, B.K. and Smith, T. (2015) Divestment
from fossil fuel companies: Confluence between policy and strategic viewpoints. Australian
Journal of Management, 40(3), pp.478-487.
O'Byrne, S. and Daymon, C. (2014) Irresponsible engagement and the citizen
investor. Journal of Public Relations Research, 26(5), pp.455-473.
Shengtian, H., Weihui, F. and Xiaosong, L. (2010) Achieving sustainability with a
stakeholder-based CSR assessment model for FIEs in China. Journal of International
Business Ethics, 3(1), p.41.

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Sullivan, R. and Gouldson, A. (2017) The governance of corporate responses to climate
change: an international comparison. Business Strategy and the Environment, 26(4), pp.413-
425.
Wesfarmers. (2015) Stakeholder Engagement [online] Available from:
http://2015.sustainability.wesfarmers.com.au/our-approach/stakeholder-engagement/
[Accessed on 13th June 2018]
Wesfarmers. (2017) 2017 Sustainability report [online] Available from:
https://sustainability.wesfarmers.com.au/media/1835/edited-extract-of-wesfarmers-2017-
sustainability-report.pdf [Accessed on 13th June 2018]
Wesfarmers. (2018a) 2017 Corporate Governnace Statement [online] Available from
http://www.wesfarmers.com.au/docs/default-source/corporate-governance/2017-corporate-
governance-statement.pdf?sfvrsn=2 [Accessed on 13th June 2018]
Wesfarmers. (2018b) Corporate Governance [online] Available from
http://www.wesfarmers.com.au/who-we-are/corporate-governance [Accessed on 13th June
2018]
Wesfarmers. (2018c) Our approach to sustainability [online] Available from:
http://www.wesfarmers.com.au/investor-centre/company-performance-news/our-approach-
to-sustainability [Accessed on 13th June 2018]
Wesfarmers. (2018d) Shareholders [online] Available from:
https://sustainability.wesfarmers.com.au/our-report/stakeholder-engagement/shareholders/
[Accessed on 13th June 2018]

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Wesfarmers. (2018e) People [online] Available from:
https://sustainability.wesfarmers.com.au/our-principles/people/safety/ [Accessed on 13th June
2018]