Sustainable Management Future - Assignment Example

? Sustainable Management Futures inserts his/her Inserts Traditionally, the U.K retail supermarkets have been accused of being part of a rat race whereby no concern is shown to those down the supply chain, including the economic and social development of farmers and standards in the labor industry, the conservation of wildlife as well as the road congestions (due to ill planning of retail outlets) and dumping of waste. This has brought to attention the significance of CSR and sustainability in recent times. Sustainability is defined as encompassing all three foundations including the people, economy and the environment (Sastry, 2012). The relation between these three foundations suggests that there exist limitations on the development of people and the economy; that is, development of individuals and the economy comes at the cost of development of the environment. Sustainability, however, attempts to achieve all three elements simultaneously. Sustainability is increasingly becoming popular amongst consumers who are now demanding retailers to adhere to sustainable principles. Further insight reveals that the proportion of ethical consumers has risen over the years in the U.K. To this end, the proportion has risen from 36% in 2004 to 40% in 2007 (Ipsos MORI, 2007). However, a significant factor that hinders ethical purchases is that of price. Increasingly, consumers have suggested that highly sustainable products come at a price premium. Therefore, consumers prefer sustainable products, only if they are not sold at a premium price. John Lewis has incorporated sustainability into every aspect of its operations, particularly its partnerships. The company has a well developed framework for CSR and sustainability under which it operates which includes its compliance with all regulatory measures, the maintenance of a transparent governance structure, keeping all stakeholders on board as well as mitigation of risk. As far as CSR is concerned, there are three major schools of thought. John Lewis applies neither the classical Bowen nor the Friedman view solely. The Bowen’s school states that giving back to the society ought to be the aim of a business’s existence (Bowd et al., 2006). Albert Carr took this view to its extreme by stating that businesses ought to achieve profits at any cost (Bowd et al., 2006).John Lewis does not follow this view since doing so would leave little incentive for running the business; that is, “profits”. The company is certainly not a charity or a non-profit concern; it is very much a profit making entity catering to various product offerings while differentiating itself from its competitors. The other view is Friedman’s view which states that the sole purpose of businesses is to generate profits and that organizations are best run by the interests of its owners (Bowd et al., 2006). Friedman indicated that social responsibility is not the arena of businesses and is the sole domain of the government, NGOs and the individuals. John Lewis does not adhere to Friedman’s principles in isolation because it engages in extensive CSR activities; “green sourcing”, 15% reduction in carbon footprint over 10 years, ? 8.8 million donation to charities to name a few. The perspective followed by John Lewis is the CSR’s theory that has been set in stark contrast to Milton Friedman’s view that the only objective that an organization should have is maximisation of profits. This view states that CSR is best achieved by switching from a purely altruistic view of relationships with stakeholders to one where the CSR activities are tied to organizational performance (Bowd et al., 2006). This is reflected in the stringent long term targets set by John Lewis. For instance, 98% of its current energy consumption is from renewable sources (John Lewis Partnership, 2011). The company has also targeted the elimination of use of non-renewable plastics in packaging along with sustainable interiors in construction by applying the BREEAM standard (John Lewis Partnership, 2011). The John Lewis Partnership presents a case of being owned by a group of employees, hence, the investors enjoy little leverage in sacrificing sustainability for short term goals. According to one author, when organizations are owned and controlled by the community rather than financers from Wall Street, the concern for sustainability is far more. The John Lewis partnership presents an excellent case of fairness. The founder built the company on democratic foundations and gave employees a much higher stake than shareholders simply because it was believed that the shareholders received dividends for putting in no effort, whereas, workers traditionally have earned barely subsistence level of wages (Storey, 2007). Therefore, it is no surprise that the employees were labeled as partners. The company has incorporated the needs of its employees to an extent such that if employees face an emergency in the family they can seek financial assistance from a fund specially created for them (Storey, 2007). Also, the company has an annual pension fund for employees the amount for which is not deducted from employees’ accounts (Storey, 2007). Hence, John Lewis presents a classic case of the modern CSR theory whereby CSR is tied to the organization’s core functions and where profits are enhanced (and not reduced) by CSR activities. Furthermore, it is crucial to delineate on the fact that the notion of CSR draws from the stakeholder concept framed by Donaldson and Preston. According to them the stakeholder was defined as any individual who has a direct or an indirect interest in the workings of the organization. Therefore, the notions of distributive justice were incorporated into the stakeholder theory by Donaldson and Preston as well as the principles defined by Kant (Fisher & Lovell, 2009). When analyzing the CSR of Waitrose- a high performing division of John Lewis, it is evident that the company has gone at lengths to incorporate this principle as it offers advice on healthy nutrition rather than just marketing its food offerings. Such advices concern various areas, encompassing healthy diet during pregnancy as well as healthy diets for children. John Lewis currently uses the Business in the Community’s (BITC) index pertaining to CSR as a benchmark for its sustainability and CSR practices (John Lewis Partnership, 2011). It has divided its sustainability efforts into four major chunks: the people/employees, the environment, the customers and supply chain and finally the communities. The company has set ambitious targets of up to 15% reduction in carbon footprint by 2020 (John Lewis Partnership, 2011). As of now, it has been successful at reducing landfill by 81% (John Lewis Partnership, 2011). Packaging was also reengineered and created from light weight material. Another significant area has been that of waste management- the company has employed latest technology in order to increase its recycling efforts including the recycling of waste. For instance, Waitrose is utilizing latest technology in order to reduce waste from plastic and recycle it as much as possible (John Lewis Partnership, 2011). Furthermore, Waitrose, under the umbrella of the John Lewis group, has projected itself as a socially ethical and responsible entity by sponsoring events such as “Fair-trade Bananas” and “Bag for life” (Cohen, 2010). Also, Waitrose acquired the status of being the first retailer in the U.K to have offered the line-caught fish instead of one that involves trawlers. However, it is simplistic to assume a one-sided view of John Lewis’s CSR. An article by Higgins has revealed that a “responsive” business is not necessarily a responsible business (Higgins, 2010). A critical analysis reveals that John Lewis’s CSR efforts are not sufficient keeping in view the lead that its competitors have taken, the leader being Marks & Spencer and ASDA. Leading in the line are stores such as Tesco, Marks and Spencer and Sainsbury’s. Taking the example of Marks and Spencer, the recent ‘green initiatives’ are part of the new CEO’s strategy to associate the brand with a “greener” image through ‘Plan A’ (Marks & Spencer, 2011). By doing so the company is sure on its way to acquire loyalty with its environment conscious, affluent customers who strongly link their image with the company’s. ASDA’s new mantra is that any kind of waste is necessarily bad and must be done away with. Its green initiatives have already saved it ?70 Million and are projected to enable further savings worth ?800 Million in future (Wal-Mart, 2012). Furthermore, research has revealed that most retailers, including John Lewis, are following a weak model of sustainable consumption because the theory of sustainability contradicts with these retailers’ goals to market their consumption in a way that stimulates consumption (Jones et al., 2011). Therefore this inherent fundamental conflict in the company’s goals results in the dissemination of messages that are genuine enough to promote sustainability but are largely backfired by the company’s commercial goals. Hence, it is argued that the focus of John Lewis as a retailer is not on mere preservation and sustainability of the environment but on the efficiency gains that they can realize through promoting sustainability. Thus, the idea of sustainable consumption rests on the cushion of aggressive growth that becomes a self-defeating idea. Information promoting sustainability in John Lewis’s stores inherently carries the promotional element of the marketing mix. Another significant issue is that consumers don’t often receive a holistic, coherent set of messages as far as sustainability is concerned; rather, they receive messages in isolation which dilutes the effectiveness of sustainability promotions (Jones et al., 2011). Another criticism of the CSR practiced by John Lewis and the like is that this CSR is forced by government regulations such as the European Union’s Restriction of Hazardous Substances (RoHS), E.U. Cosmetics directive, E.U. Packaging Directive, Waste Electrical and Electronic Equipment (WEEE) and REACH along with International Standards such as WRAP, FLA, ICTI CARE, ISO 14000 and ISO 26000 for addressing environmental causes (Business for Social Responsibility). A major problem facing John Lewis is its approach/culture towards CSR. The culture is such that, unless there are stringent regulations that require the company to conform to green initiatives, there is little incentive to pursue sustainability because the costs of doing so are high and often translate to lower profits than otherwise. The internal culture at John Lewis is such that “Cost” is ingrained as the fundamental value all employees aim at minimizing. The problem exacerbates when competitors do not move in similar direction. According to an employee at John Lewis, if the company ends of purchasing environmentally friendly light bulbs whereas its rivals do not, it ends up losing a share of its profits. In light of the above analysis, several key recommendations are offered. Firstly, the company should go beyond the notion of corporate citizenship and engage in a holistic approach towards CSR. The fact the company’s internal cost-driven culture conflicts with its policy of employees running the business needs to be resolved. It can engage in greater affiliations and partnerships with CSR agencies and NGOs and not be restricted to the confines of their company. Secondly, the company’s initiatives do not compare with those of its competitors such as M&S and Wal-Mart. John Lewis has not devoted sufficient investment for the purpose of CSR and there is no formal framework for addressing the notion of CSR (such as Plan A in case of M&S). Also, the company needs to move beyond the confines of promoting of the welfare of its “employees” to a wider range of community, including the wildlife, sustainable supply chain, disabled/ special children etc. To conclude, there is no doubt that the notion of corporate social responsibility has come under great scrutiny in recent years. Retailers such as John Lewis have been heavily criticized for mere compliance with legislations rather than taking pro-active approaches. For one thing, one cannot deny that the ‘profit’ motive cannot vanish under the veil of CSR. 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