Corporate Social Responsibility & Sustainable Development factsheet

Corporate Social Responsibility (CSR) is a term for business activities addressing goals that are not purely commercial. Almost all food and grocery companies incorporate a CSR dimension.

CSR activities may be divided into two broad areas:

Proactive – This includes all activities intended to deliver socially-desirable ends. Examples include making charitable contributions, giving work to those usually overlooked by employers and paying better-than-market prices to producers of certain goods
Defensive – This describes activities that minimise negative social impacts of business activities, going beyond the minimum standards required by law. This could include voluntarily avoiding certain additives, enhanced standards of animal welfare and environment friendly policies such as minimising packaging

The UK Government promotes CSR values to business, emphasising both the social benefits and the potential business benefits of participation whilst also providing a number of incentives. The business community has also taken a strong interest in developing CSR programmes and most major UK grocery businesses now publish reports of their activities in this area.

Whilst the term “CSR” is relatively new, the principles which it describes are not. Some of the UK’s largest grocery companies have had CSR programmes in place for many decades and the social work done by Cadbury’s, Rowntrees and Northern Foods (all, coincidentally, founded by Quakers) is well-known. The Co-operative Movement, now over 160 years old, has always placed CSR at the centre of its operations.

What Is Sustainability?

The breadth of sustainability means that one single definition is challenging. We believe that businesses in the grocery sector need to understand the key parameters for our industry and identify their individual 'hotspots'.

‘Sustainable’ means maintainable or viable in the long term. Thus for instance, ‘harvesting’ timber by replacing every tree chopped down with a new one planted.

Sustainable Development (SD) is captured in the concept of the “triple bottom line” – the economic, environmental and social effects of a company’s activities. It recognises that a business must be financially successful to be sustainable.

The term ‘sustainable development’ has been in use for around 20 years, having first entered the consciousness of business leaders with the publication of Our Common Future, the report of the World Commission on Environment and Development. The Commission’s definition, since widely adopted, was: "Development which meets the needs of the present without compromising the ability of future generations to meet their own needs."

The definition of sustainability varies depending with whom you are working or speaking with. What we mean as an industry by sustainability should be clarified as consumers are confused, and the whole issue is led by NGOs and CSR teams rather than consumers

IGD International Sustainability Respondents, May 2008

The grocery industry is heavily reliant upon the natural environment for the production of basic agricultural commodities. The industry is therefore heavily engaged in sustainability issues, attempting to meet consumer demands whilst simultaneously preserving and improving the environment.

For many, SD is primarily concerned with the environmental protection because economic viability is always on the company agenda. However, SD policies also touch upon social issues such as the viability of town centres and the wage rates paid to workers in developing countries.

Grocery Industry Involvement

Of the UK’s ten leading grocery suppliers, all have now established programmes embracing various aspects of CSR. Similarly, of the UK’s nine leading grocery retailers, all are active in this area in some way.

Businesses need to take a holistic approach to sustainable development as many of the parameters are closely linked. Retailers and suppliers should note that addressing one area may enable them to tackle a number of issues at the same time.

All of these companies publish information on this subject and CSR has become a regular part of corporate reporting. Some companies have now appointed specialist staff dedicated to the co-ordination of CSR activities. See each company’s website and report and accounts for more details.

Reporting standards remain rather variable however, and making direct comparisons between companies is not always easy.

The need for consistency and for impartial measurement has led to the development of a number of voluntary standards, including AA1000 (from the Institute for Social and Ethical Accountability) and ISO14001 (from International Standards Organisation).

AA1000 is in use by a number of UK grocery companies including BAT, the Co-op Group, Diageo, M&S, Musgrave and Unilever.

Financial Indices

Growing interest in CSR issues has led to the development of new financial measures, intended to inform investors of company performance in areas that are not measurable in purely financial terms. A number of award and recognition programmes have also been created.

These have the advantage of providing impartial and independent assessment of company performance, going beyond any suspicion of ‘corporate spin’. UK grocery companies feature prominently on several of the leading schemes, as shown below:

The Global 100 Most Sustainable Corporations, 2008 (NB: Companies not ranked)