Abstract
This case analysis discusses the Tesco’s CSR strategy by explaining how Tesco is creating value for all stakeholders, what challenges it is currently facing, and what are its key responsibilities as a responsible corporate citizen. The article could provide useful information to the companies trying to build their CSR reputation. Article is also useful for business management researchers, students, teachers, and anyone interested in studying the CSR concept, and its application in real world.
1. Introduction
In 2022, CHRB placed Tesco among top 30% companies with strong CSR performance. Previously in 2020, Tesco scored 76% in sustainable retailer scorecard, and became #1 sustainability retailer in Malaysia.
This article presents the corporate social responsibility Tesco case study. The article discusses the Tesco’s CSR policies, strategies, current initiatives, challenges and objectives to be achieved in future.
To get basic company information, click here.
2. Corporate Social Responsibility
Corporate social responsibility (CSR) is a management concept that guides companies to integrate the environmental and social concerns in business operations. Socially responsible corporations tend to operate in a manner that creates sustainable value for all stakeholders.
3. Corporate Social Responsibility of Tesco
Tesco performs strongly on sustainability grounds. The company is ranked 1st among food retailers based on environmental performance, and ranked 9th in food processors list. In 2022 and 2023, Tesco took various CSR initiatives that reflect the company’s commitment to sustainable business performance.
• Like, in 2022, Tesco launched £150,000 worth pilot program to fast-track sustainability innovation in its supply chain.
• In 2023, Tesco announced that it will include minimum 30% of the recycled trays in the new packaging
Tesco’s ‘Better Basket Campaign’ is an example of how company is encouraging its customers to make healthy choices. The stakeholder engagement for sustainable business development is a key part of Tesco 2023 CSR strategy.
Tesco CSR policy is- “To maximize the benefits that Tesco brings to all stakeholders, and minimize any negative impact”.
Tesco CSR policy focuses on three areas:
The CSR policy reflects the Tesco’s commitment to create a positive environment and social impact, while handling business operations in a responsible and ethical manner.
Tesco publishes corporate social responsibility reports to communicate the key CSR initiatives, achievements, and progress to achieving the sustainability objectives.
Here is the timeline of Tesco’s major CSR initiatives:
The analysis of above timeline suggests that Tesco mainly focuses more on environmental than social side to achieve the sustainability objectives.
Corporate social responsibility Tesco report outlines following objectives:
3.4.1. Emission reduction
• Achieve net-zero carbon objective by 2050.
• Run 100% business operations on renewable electricity by 2030
Following graph shows the Tesco’s emission distribution:
Source: Statista
Above graph shows that production and supply make 50% of total emissions, and customer consumption makes 39%, while stores activity generates only 2% emissions. So, Tesco has set ambitious sustainable production targets to cut the emissions.
Click here to know about the sustainability challenges of Walmart- a close competitor of Tesco.
3.4.2. Sustainable food production
• Sustainably source 100% cocoa, palm oil and soy by 2025
• Reduce use of chemical pesticides by 2030 to encourage sustainable agriculture
3.4.3. Waste reduction
• Reduce food waste through operations and supply chain by 2030
• Entirely eliminate plastic packaging by 2025
Taking an example of Hungary, following graph shows the volume of food that Tesco rescued from getting wasted:
Source: Statista
3.4.4. Shift to electric transport
• Support the shift to electric transport by installing 75kW rapid charges across all Tesco stores by 2023
• Have fully electric delivery vehicle feet by 2028
Overall, the Tesco CSR objectives outline the company’s commitment to encourage the sustainable business practices in global retail industry.
3.5. Stakeholder approach to CSR
Tesco adopts the Stakeholder Approach to fulfil its corporate social responsibility. Following table shows how Tesco fulfils its responsibility towards all key stakeholders:
| Stakeholders | Responsibilities |
| Customers | Offering high quality services through sustainable and ethical product sourcing |
| Investors/shareholders | Making operating profits and taking steps to increase the share value |
| Employees | Offering market competitive salaries, and encouraging diversity and inclusion at workplace |
| Suppliers | Helping suppliers in meeting the sustainability standards |
| Community | Actively engaging in community development programs |
| Environment | Taking environment protection initiatives like cutting emissions, and supporting shift to electric transport system |
| Government | Creating job opportunities to reduce the unemployment rate |
The Tesco corporate social responsibility strategy can be more effectively explained in light of Carroll CSR theory.
As per Carroll CSR Theory, a responsible business organization fulfills all its economic, legal, ethical and philanthropic responsibilities.
3.6.1. Tesco Economic responsibilities
Tesco is primarily responsible to generate profit for the shareholders, and offer viable return on investment. Tesco is fulfilling its economic responsibility by consistently making an operating profit over last seven years, as depicted in following graph:
Source: Statista
The company expects to deliver an operating profit of £1.4bn to £1.8bn by the end of 2023. However, as per Reuters, Tesco’s profit stalls as fight with inflation lingers. In 2022, Tesco operating profit reduced by 6.3%, while its share price rose up by 1.8%.
The overall analysis shows challenging economic environment is making it difficult for Tesco to fulfil its economic responsibilities.
3.6.2. Tesco Legal responsibilities
Tesco is responsible to operate within the legal boundaries. Tesco strictly adheres to the environmental regulations, and tries to abide by the labor law. However, at often, Tesco faces the reputation damaging lawsuits due to its inability to accurately understand and abide by various business regulations. For instance,
• In 2023, Tesco lost a lawsuit against Lidl over logo- BBC reported.
• In same year, Guardian reported how Tesco mistreated its workers in Thailand, and then faced criminal charges.
• Tesco’s failure to protect online customer information resulted into £16.4 million fine in 2018.
Although, Tesco strives to be a law abiding enterprise that stays within regulatory boundaries, but still, it struggles to effectively fulfil its legal responsibility towards different stakeholders.
3.6.3. Tesco Ethical responsibilities
Tesco is responsible to conduct business in an ethical manner. The company fulfills its ethical responsibilities by taking various actions. For instance,
• Tesco encourages inclusion and diversity to build positive employer brand image. In 2021 diversity report, Tesco revealed women fill 48% of top management positions.
• Tesco takes care of animal welfare. The 2021 animal welfare report shared only less than 1% animals require secondary stunning.
However, Tesco also faces criticism for its inability to ensure the fair labor practices. For instance:
• In 2022, Tesco faced lawsuit over the cycle of forced labor. Over 130 workers sued Tesco for keeping them in insanitary and dangerous work conditions.
3.6.4. Tesco Philanthropic responsibilities
Tesco is responsible to give back to the community. Tesco fulfills its philanthropic responsibility through charity partnerships, anti-poverty donations, volunteer programs, and community development programs. Some famous charity programs include- long running support for British heart foundation, Diabetes and Cancer Research center.
• In 2022, Tesco broke its food donation record, as Tesco customers gave 12.5 million meals as food donations.
• Tesco donated more than £20 million to help people affected by pandemic.
The overall analysis suggests that although, Tesco tries to fulfil its responsibilities at all four levels, but it do faces some challenges, particularly at ethical and legal grounds.
Tesco Carroll CSR pyramid
Based on overall analysis of Tesco corporate social responsibility, we propose following recommendations:
4. Recommendations
• Widely integrate circular economy principles to reduce cost, and enhance operating income.
• Gain a better understanding of labor law, and ensure strict compliance to avoid lawsuits
• Conduct supply chain audit to highlight the possible violations of labor law.
• Take strict action against the forced labor.
• Collaborate more closely with supply chain partners, and help them in achieving the sustainability objectives.
• Invest on PR to respond to the allegations that portray Tesco as an unethical brand.
5. Conclusion
The review of corporate social responsibility of Tesco suggests that Tesco recognizes its responsibility towards a wider set of stakeholders. However, Tesco needs to improve its performance on ethical and legal grounds to achieve business objectives in more ethical and sustainable manner.
At international stage, Walmart is the closest competitor of Tesco. Click here to know about the Walmart’s key business strategies.
To know more about Tesco, read Tesco PESTLE analysis and Tesco SWOT analysis.
6. References
WWF Ranks Malaysia’s Most Sustainable Retailers, With Tesco Emerging at the Top. (n.d.).
foodmanufacture.co.uk. (2022, May 11). Tesco opens up supply chain to sustainability start-ups.
Mace, M. (2023, April 11). Tesco moves to close the loop on plastic ready meal trays. Edie.
Parr, J. (2022, May 18). Tesco Better Baskets campaign highlights ‘healthy zones’ instore. Grocery Gazette – Latest Grocery Industry News.
Statista. (2022f, June 24). Distribution of emissions released by Tesco 2019-2020.
Admin, & Admin. (2023n, January 13). Walmart SWOT Analysis 2022 | In-depth SWOT Study of Walmart. Strategy Finders.
Admin, & Admin. (2023d, January 11). A Detailed PESTEL Analysis of Microsoft. Strategy Finders.
Statista. (2020, March 19). Amount of food rescued by Tesco in Hungary 2014-2019.
Tesco: statutory operating profits UK & ROI 2022 | Statista. (2022, May 17). Statista.
Davey, J. (2023, April 13). Profits at Britain’s Tesco to stall as inflation fight lingers. Reuters.
Espiner, B. T. (2023, April 19). Lidl wins logo lawsuit against Tesco. BBC News.
Dugan, E. (2023, March 3). Thai factory used by Tesco faces criminal charges over treatment of workers. The Guardian.
Jones, H. (2018, October 1). UK watchdog fines Tesco £16.4 million for bank cyber failings. U.S.
Admin, & Admin. (2023p, January 13). Walmart SWOT Analysis 2022 | In-depth SWOT Study of Walmart. Strategy Finders.
Tesco faces lawsuit over “cycle of forced labour” in supplier factory. (2022, December 19). Supply Management.
New Food. (2023, January 3). 2022: A record breaking year for Tesco customer food donations. New Food Magazine.
Admin, & Admin. (2023q, January 13). Walmart SWOT Analysis 2022 | In-depth SWOT Study of Walmart. Strategy Finders.
