There’s a danger that the significance of both what the Tories and Tesco are saying about corporate responsibility is being lost by ‘dogmatic swiping’ David Grayson argues.
On May 9, the Conservative Party leader David Cameron made a major speech about corporate responsibility at the Business in the Community (BITC) annual conference, mentioning Tesco by name four times. A day later, Tesco boss Sir Terry Leahy spoke at the Work Foundation, setting out a new Tesco CR strategy. Both speeches have rightly excited considerable interest and comment.
In the interests of transparency, I should immediately declare an interest (two actually). First, I will – in a personal capacity – be part of a working group advising the Tories on CR. Like all the other Tory policy commissions, members of the CR group include some of us who are party supporters and some of us who are not. Second, Tesco is a prominent and very committed member of BITC, with which I have a long-standing association.
In his speech Cameron set out his approach to CR emphasising the Tory belief in the importance of business and long-standing commitment to CR. He offered what the Financial Times grudgingly conceded, in an otherwise very hostile editorial comment, was “interesting (if not fully thought-through) ideas on regulation.”
“I want,” said David Cameron in his speech, “to explore the potential for a new understanding between business and government. Meanwhile, Leahy’s set out to explain how Tesco’s long-term core purpose – to earn customers’ “lifetime loyalty” – and Tesco’s interpretation of marketplace changes, informed its evolving approach to CR. Leahy announced a series of new Tesco CR commitments including a promise to spend £100m in the business on sustainable environmental technology and to double the amount that customers bring back to stores for recycling by 2008.
GOOD NEIGHBOURS
Cameron equated CR with being a “good neighbour.” Leahy used the same “neighbour” language in his speech. This, the accident of timing and the overlap of subject matter has fuelled an already lively debate, given added urgency by the Competition Commission Inquiry into the supermarkets. It will – no doubt, be further heightened by the release of the new, anti- Wal-Mart movie in the UK, Wal-Mart: The High Cost of Low Price.
Much of the comment on both speeches has focussed on when business might be perceived as being a bad neighbour: “If a supermarket opens a convenience store on the high street and uses its financial muscle to drive down prices until small shops are forced out of business – and then immediately puts prices up again – we need to complain,” Cameron says, while Leahy promises: “We will improve the way we consult local communities before building new stores so that we can be sure that we have understood local issues and concerns.”
MISSING THE POINT
There is a danger that the significance of both speeches and the ideas they contain will be missed in dogmatic swiping. On the one side from Friedmanite free-marketers who refuse to accept that in a modern business world, stakeholders and not just shareholders matter.
The other is based on a deep-rooted hostility to enterprise and an automatic attribution of the worst of motives to business actions, while failing to understand the incredible pressures of running a business in today’s highly competitive, global, connected economy.
Tesco in my book is trying to be a responsible business. Years ago, as a young Procter & Gamble brand manager on my compulsory assignment with the P&G salesforce, I used to detest my run-ins with some of the local Tesco store managers because of their bullying and corner-cutting. But since then, Tesco has transformed its approach to training and management and made retail a respected career with good pay and prospects at all levels.
THE CUSTOMERS IS KING
Tesco has been creative in using business-public-community partnerships in urban regeneration areas to train and then employ local staff, often making the entire project viable because of the partnership. Similarly, Tesco has won market leadership because of their strong customer-focus.
Meeting the needs of customers profitably over the long-time, providing rewarding employment and thereby regenerating sometime run-down communities is all a crucial part of being a responsible business.
The long-running Computers for Schools programme has won many plaudits. Tesco is the retail sector leader in this year’s BITC Corporate Responsibility Index announced on May 7. The new initiatives around food content and labelling; promoting exercise, balanced lifestyles and healthy eating; and extending efforts to reduce negative environmental impacts and maximise positive ones, are further steps on their journey.
But it is a journey. No sensible business leader would claim that all parts of their business are always getting absolutely everything right. Besides, with improving performance, growing knowledge and increasing affluence, the bar of expectations of business behaviour is constantly rising. Pointing out areas for improvement, raising questions about aspects of corporate behaviour does not automatically mean that a business is not being responsible.
If the recent Independent newspaper campaign on “how green is your lettuce” (highlighting the impact on drought in East Africa of the amount of water needed to grow and wash lettuces there, destined for Western consumers), is anything to go by, all the supermarket chains will face increasing pressure on ‘food miles’ and sustainability. Similarly, debates about the expansion of the supermarkets’ convenience stores’ and fair treatment of suppliers are likely to intensify.
CONFLICTING DEMANDS
We have to recognise that different stakeholders may genuinely hold conflicting views. Supermarket suppliers want higher profit margins, faster payment and more warning of impending changes in purchasing. Consumers want lower prices, a wider range of products and easy access.
For every recent press article I have read about supermarkets driving small independents to the wall, I have read another about a community without a supermarket where residents drive miles to their nearest and bemoan the high prices that they otherwise have to pay locally. Even the same stakeholders may simultaneously hold contradictory concerns: “I am worried about food miles but I also want those out of (European) season raspberries!” Or: “I want to do all my shopping under one roof and cheap prices but I don’t want to lose those independents.” We cannot reasonably expect business alone to work out our conflicting expectations for us.
It seems to me, perfectly legitimate for a business genuinely committed to CR to say: “we still need answers on some aspects of CR even as we are making good progress on many other aspects.” Some will openly discuss these quandaries; others – perhaps for reasons of market sensitivity – may prefer to keep their ongoing discussion of such dilemmas below the surface until they have something concrete to announce.
VOLUNTARISM AND REGULATION
Some critics of both speeches have suggested, that CR is all about avoiding regulation. Bit it is an old-fashioned and false distinction to suggest it is either voluntary CR or regulation. Maybe that is how some policy makers and some NGOs (and maybe some business folk too) see it – but not, in my experience, how responsible business people approach the topic.
Rather for them, well-conceived and intelligently enforced regulation is part of the context in which they operate. There will be occasions where the responsible business position is to support current or new regulation. Arguably Tesco has just done this by making clear it will not lobby for changes to Sunday trading laws – changes which many think would further disadvantage small, independent retailers. Similarly, in the highly competitive situation today between the major supermarkets, the competition laws may need to be used to avoid over-concentration and CR may lead businesses to argue for that.
Overall, I always prefer to see the glass as half-full rather than as half-empty. On the Cameron speech, we surely want more politicians in all parties to think creatively and intelligently about the place of business in modern society. That includes, as David Cameron has done, discussing what are the range of tools open to governments to influence business behaviour – of which regulation is one – but where influence, force of argument and negotiation in cross-sectoral for are others. On the Leahy speech, surely praising the initiatives that are being taken and the progress made, does not require Trappist silence on issues still to be tackled.
David Grayson writes, speaks and advises on responsible business and global trends. He is a contributing editor to Corporate Citizenship Briefing and a director of Business in the Community. He writes here in a personal capacity.
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