~CSR at Walmart~
Corporate Social Responsibility commonly denoted as CSR is a type of corporate self-regulation that is usually fused into a company’s business model. CSR is also referred to as corporate citizenship or corporate conscience and includes actions taken by a corporation to “cleanse” its effects in the environment and contribute to social welfare, beyond what is required for profit maximization (Hill, Ronald, and Karen L Becker-Olsen). The policies of CSR usually act as a mechanism to regulate the activities of a firm through monitoring if they comply with ethical standards, law, and national or even international norms. As indicated by history, both practitioners and scholars have different interpretations of CSR. Whereas scholars have actively debated if CSR is legitimate, most investors and consumers have shown they prefer socially responsible firms. Industry leaders such as Walmart are at the frontline of practicing CSR thus making it a significant element of strategic management. The beginning of CSR might have been controversial, but the contemporary society has accepted it as a legitimate business function alongside its deliverables including global corporate citizenship and socially responsible investing.
Companies are part of the society hence there are plenty of unavoidable social consequences in business decisions they make. Therefore, they’re tasked with an obligation to furnish the community with goods and services in a legal and efficient yet profitable way. In fact, Organizations have a social responsibility to make as much dividends to its stakeholder as possible (Friedman Milton). In the recent past, there has been pressure from suppliers, governments, customers, community groups, employees, and some shareholders for firms to invest more in CSR. Some organizations including Walmart have responded positively to these concerns by allocating more funds or resources to CSR. Walmart continues to lead not only in revenue generation in the retail industry but also in employment opportunities, sustainability, and corporate philanthropy. Through initiatives such as the Walmart Foundation, the company has significantly contributed to fighting hunger, the creation of jobs, strengthening local communities, earthquake relief, Tornado relief, hurricane relief, and supporting women and people with disabilities.
Whereas Walmart engages in all these activities that cost them money, other corporations are opposed to CSR citing inconsistency with their efforts to increase profits. Despite all these, Walmart still leads in generating revenue in the retail sector worldwide. Such controversies have prompted researchers to look into the relationship between CSR and their financial performance. The benefits and costs of engaging in sustainability or corporate social responsibility program will be analyzed in this paper through a keen review of Walmart CSR reports in the recent past.
Background of Walmart and its CSR program
Walmart is an American multinational company that functions as a chain of grocery stores, hypermarkets and discount department stores. The founding father of the corporation is Sam Walton who established it in 1962 alongside his brother James Walton. Sam is more credited because he solely financed 95 percent of the startup capital. The company was not incorporated until October 1969. Although it’s popularly known as Walmart, the official name of the corporation is Walmart Inc. Before the name was changed, it went by the name Wal-Mart Stores Inc. The brothers started small with only one discount store and had a brilliant idea to sell more for less. The company has tremendously grown over the last 50 years to become the largest retailer on earth, especially regarding revenue. In the Financial year 2017, Walmart recorded an outstanding revenue of a whopping $485.9 billion. The company boasts of 11,695 stores under 59 banners that operate in 28 countries across the globe. Walmart also operates e-commerce websites in 11 countries and estimates that over 260 million customers and members visit these stores every week. The Sam’s Club retail warehouses also belong to Walmart ("Performance Highlights").
The corporation has employed about 2.3 million associates in the world. Walmart is undoubtedly a leader in employment opportunities, corporate philanthropy, and sustainability. It takes great pride in adding value and creating opportunities not only to their customers but also to communities across the globe (“Walmart.com). The corporation achieves this mission through different ways as evidenced in recent years. In January 2011, it announced a program that would increase the value of nutrition offered by its store brands over five years that would follow. The program saw trans-fat eliminated from the firm’s products while the amount of sugar and salt were gradually reduced. Such elements are known to cause deadly diseases that cost millions of lives annually. In fact, consumption of trans fat is known to increase one’s chances of acquiring coronary artery disease which is a leading killer in western nations. Walmart also spearheaded talks with suppliers about nutritional issues and cutting prices for vegetables and whole foods. The organization also planned to open stores in “food deserts” (places lacking supermarkets) and low-income areas ("Performance Highlights").
Walmart also planned to double up the efficiency of their truck fleet that traverses over millions of miles annually. The plan was to convert these trucks to use biofuel made from reclaimed cooking grease that comes from food preparation at their stores. The plan was slated to take place between years 2005 and 2015. In 2015, the organization was recognized as the largest solar power commercial producer in the United States, having 17 energy storage projects and producing 142 MW capacity. The solar was tapped from rooftops since the company’s parking lot had an additional 20,000m2 of solar canopies.
Although the company has had its fair shares of troubles that led to a shutdown of some retail stores, its currently planning to focus on optimizing neighborhood markets and strengthen supercenters thus create more jobs. Plans are also underway to grow the e-commerce sector and expand pickup services for consumers. By the close of the fiscal year 2016, the company had opened 69 Neighborhood Markets, opened 173 international locations, opened 38 supercenters, opened 8 Sam’s Clubs, expanded 21 discount stores into Supercenters, and converted or expanded four international locations. In the financial year 2017, Walmart plans to open over 90 Neighborhood Markets, Over 200 international locations, over 50 Supercenters, and around 10 Sam’s Clubs. Moreover, Walmart has been of great benefit to fighting hanger, supporting women and helping victims of hurricanes, Tornados, and earthquakes through the Walmart Foundation (Walmart.com).
Company and Employee Benefits of CSR and Sustainability Initiatives
The era we live in has people who want to vote with their money and hold organizations responsible for their actions in the world. The pressure has compelled companies to be responsive. As a result, companies are engaging in various initiatives such as philanthropic efforts (includes donations and fundraising for charity), environmental programs (includes efforts to curb the carbon footprint of the organization), volunteer programs (includes paid time for employees to volunteer in the community), and ethical labor practices (includes shunning to exploit free or cheap labor). However, it’s not only the community that benefits at the end of the day. The company’s employees also get to benefit through the following ways (Galbreath, Jeremy);
Improved organizational commitment and retention – Most employees who feel positive about the CSR initiatives of their organizations are not likely to quit their jobs. Their overall commitment to the firm also improves significantly. The dedication may include a positive attitude, willingness to make personal sacrifices for the organization, and being optimistic about their success and that of the organization.
Improved performance and employee engagement – Most employees are likely to perform better and become more engaged when they feel positive about their organization's involvement in CSR. Workers tend to be more actively engaged in their duties when they realize that efforts have to be made to give back.
Enhanced sense of identification with the company – Employees will have an improved identification with their workplace if they feel that the organization is socially responsible.
Increased creativity – The creative involvement of employees can be enhanced through CSR and may include creative problem solving and developing new practical ideas among others. Employees become more motivated to generate new and better ways to perform their work when companies illustrate their values and passions through CSR.
Improved employee relationships – CSR can enhance the organizational citizenship behaviors of employees and fortify the relationships between them since it inculcates closer relationships among employees. Employees are more likely to follow in the footsteps of their employers and do the right thing. If the organization incorporates the best practices in CSR, then workers will cooperate more and work as a team
The advantages of CSR can apply any company or business irrespective of their sector or size. In fact, most corporations deem CSR as good for business. Some of the advantages of CSR include (Asemah, Ezekiel, et al.);
Cost savings – CSR helps save on operational costs and lessens utility bills through reducing resource use alongside emissions and waste.
Builds a responsible business reputation – a business can gain competitive advantage through building a good reputation as a responsible firm. This explains why businesses favor suppliers with responsible policies that reflect how customers perceive them. Some customers even insist on dealing with only responsible organizations.
Attracts prospective employees and keeps them – We’re living in an era where millennials are looking to work for “high impact” companies. Recent surveys indicate that over 70 percent of students about to enter the job market would prefer to work where they can “make an impact” and be happy about it. Therefore, a responsible and sustainable company is more likely to attract talented staff thus making it easier to recruit new and qualified employees. Current employees will also be committed and motivated to stay longer thus reducing the costs ad the hassles of a recruitment and retraining process.
Other potential benefits of CSR to a business include easier access to capital, better brand recognition, increased sales, organizational growth, enhanced customer loyalty, and better financial performance (Asemah, Ezekiel, et al.).
How CSR strategy needs to fit a firm’s management culture
A company culture can be described as a set of beliefs, values, and rules that are shared among the members of a firm, and which affects their behaviors and influences how the identity and image of the company are configured in relation to its environment. If the management culture is rightly aligned to CSR, then it will be more likely for such initiatives to be accepted and institutionalized. In cases where this alignment happens, it's also very crucial for a clear leadership to exist to propel employees into achieving goals. A firm’s management culture can be affected by changes that CSR practices introduce to the company. A CSR strategy can fit into the overall firm’s strategy through the following stages;
Introduction – The primary issue in this stage is the transmission of ethical principles and how they can be integrated into the culture being shared by the organizational members. This might not be easy to accomplish since the company has to consider the strategic objectives that are significantly influenced by the power, legitimacy, and needs of the stakeholders and the ethical posture of the manager. Formal plans are clearly elaborated at this point to attain substantial goals. An effective communication plan is also essential at this stage so that stakeholders including employees have a clear understanding that CSR is of strategic importance to the organization.
Implementation of the plan – Several factors arise when implementing the formal plans of CSR. Most of these factors are related to human resource practices. Certain changes have to be considered before adapting the organizational structure to the new situation. The organizational structure and knowledge management systems also have to be considered at this stage.
Generalization of CSR – This part is necessary during CSR into the company strategy and cannot be achieved if the other stages have not been completed. It implies a global change for the organization since CSR will be integrated into the company’s mission, values, and culture. This third and final stage is completed with reports to facilitate measuring advances in CSR and its merits to the stakeholders.
Emerging opportunities and strategies in the evolving “green market.”
Green marketing refers to the marketing of commodities that are assumed to be safe to the environment (Singal, Rahul, et al.). There has been a step by step development of the concept “green market” over the recent past due to increased awareness of environmental conservation and global warming. There has been need therefore for businesses and industrialists to incorporate the concept of green marketing when coming up with products. Regarding opportunities, there could be a rise in demand for “green products and services” in the market. Such commodities could be interpreted in the market regarding the substantial advantages consumers could realize such as replacing electric geysers with products like a solar heater. The initiative is also a good opportunity for customers to move to cheaper and greener products for their daily use. Due to a rising awareness of non-toxic food products, organic foods are gradually becoming popular in the market for their health benefits. Green products are therefore becoming more accepted by consumers and are a significant opportunity for the markets.
Regarding strategies, we can choose an industry and illustrate the strategies that could be used for the Greenmarket concept. Take, for instance, the energy industry that insists on consumers to utilize renewable sources of energy and firms to reduce carbon emissions. The industry resolves to use sustainable tools to achieve the most sustainable and cost-effective outcomes. The following can be done to achieve the set objectives;
i. Providing a suitable background on how sustainable tools could be developed and implemented
ii. Designing a sustainable tool (that addresses the concerns) in the planning process and providing grounds for a deliberation on the means of implementing the viable tools. A framework to evaluate the primary performance indicators or a process for strategic review is also provided
Summary of Clorox case and how they successfully developed green brands
The Clorox company may be generating billions in revenue, but they’ve gradually evolved with their consumers to provide green or safer brands. Before the company became successful in developing green brands, the environmental sustainability officials at the company described their in-depth research on what motivates the interest of the consumers in the environment. Their findings were as follows;
• Consumers wanted to save on costs through reducing consumption or reusing
• Customers wanted their families protected (personal and family wellness and health)
• They wanted to let others know they care about the environment
• They wanted to do the right thing
The first green brand developed by Clorox was creating anti-plastic water bottles through their brand, Brita water filters. Their marketing approach to the water also incorporated an eco-twist. The Brita brand made a strong case people would use one Brita filter rather than the equivalent 300 standard bottles of water. The move would have an environmental impact considering over 60 million plastic bottles are disposed of in the United States alone. The company also planned to commence a take-back program for used Brita filters like Germany. Ever since Clorox took this sustainable marketing effort, their brand realized a double-digit growth from previously declining sales ("Timeline | The Clorox Company").
Another Clorox brand; Burt bees that was acquired towards the end of 2007 was also a green brand considering it focused on a high level of social responsibility through considering humanitarian and environmental concerns into their product processes and natural ingredients ("Timeline | The Clorox Company"). The brand embraces the “greater good business model” and lived up to its mission of making people lives better in natural ways. The most recent Clorox product in the sustainable market is the Green Works natural cleaners, its first new brand in 20 years. The brand concerns the “Around Me” environment whose products are described as 99 percent natural and are also plant-based, non-allergenic, biodegradable, recyclable packaging, transparent ingredients, and are harmless to aquatic life and animals. It’s reported that Clorox performs as well if not better than the leading conventional cleaners. In the first three months, the product generated over $6 million. Clorox lets their products sell themselves since “sustainable products reap sustainable results,” which translates to extensive growth.
Summary of Walmart Sustainability Report
Walmart is without a doubt a leader in corporate philanthropy, employment opportunities, and sustainability. According to Walmart’s past report, the company’s approach to social responsibility is as follows (Walmart.com);
Lead through the enterprise – Walmart seeks to incorporate its social and environmental priorities into its daily business activities including sourcing, technology, logistics, merchandising, store operations, and human resources among others. The company works to achieve this through organizational roles, operational processes, and leadership practices.
Using philanthropy to complement business initiatives – The company seeks to extend and complement its environmental and social initiatives through philanthropic efforts. Walmart and the Walmart Foundation have given over $1 billion yearly to projects strengthening communities, enhancing sustainability, and creating opportunities.
Developing shared value for society and business – Walmart seeks to create value for stakeholders in the business and the society as well to enhance the viability and quality of solutions. Walmart believes that its environmental and social initiatives strengthen its systems as a retailer and are of interest to long-term stakeholders.
Concentrating on action’s that fortify its strengths – Such strengths include Walmart’s supplier relationships, marketing, 2.3 million associates worldwide, operations and merchandising among others.
Whole-system change – involves working with others with similar aspirations to reshape systems and attain significant improvements in environmental, economic, and social outcomes. Walmart emphasizes on social issues such as promoting worker safety and empowering women.
Collaborating with others – Walmart believes that collective action is necessary when transforming systems and therefore involves other leaders and stakeholders
The performance highlights in Walmart’s 2017 report includes the following;
The company seeks to increase economic opportunities in retail through inclusion and economic mobility. In the Financial year 2017, Walmart helped over 500,00 people grow and succeed, completed its $2.7 billion project on training and higher wages in the United States. The company also supported local and small businesses through fulfilling a commitment in which it pledged $20 billion to finance businesses owned by women in 5 years. Walmart is also committed to supporting American jobs between 2013 to 2023 and therefore purchased American products worth $250 billion. Walmart also helped strengthen communities by supporting communities in 30 disasters and donating $6.8 million for relief and disaster preparedness. The total amount donated for meals to relief hunger amounts to $2.4 billion. The company also helped develop local communities by investing $100 million through its foundation and paying for 1.2 million associate volunteer hours (Walmart.com).
Walmart also ensured it enhanced the sustainability of its value chains and operations. It provided about 26 percent renewable energy worldwide and thus reduced energy emissions in its operations. It also engaged in reducing environmental impact through committing about 76 million acres to fertilizer optimization initiatives. It also tried to eliminate waste in its operations by diverting from landfill 77 percent of worldwide waste. Walmart also engaged in providing healthier and more affordable products and food since 2014 by directing 96% of suppliers to lessen high priority chemicals in their stores. The company also supported the dignity of workers by joining the Leadership Group for Responsible Recruitment. It also supported transparency in its supply chain by evaluating $200 billion worth of goods for sustainability. Lastly, in global giving, the company gave $1.4 billion in total including $299.9 million in cash giving and $1.1 billion in kind giving. The company might be doing fine, but much can still be done especially in areas where other companies have not fully tapped into when solving global problems.
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