Andrea Gaudiomonte

Matr. N. 0213940
Management and Organization
Academic Year 2015/2016

Corporate Social Responsibility- Woolworths Limited

People, planet and profit

Responsibility is the Price of Greatness

-Winston Churchill

Introduction
One of the topics studied in depth during the course Management and
Organization, held in the University of Roma Tor Vergata by Professor Gianpaolo
Abatecola, that most interested me, is Social Corporate Responsibility (CSR). I
personally find CSRs principles and purposes essential in order to establish a better
social environment and to consider, and therefore reducing, the impact of both
products and production processes on the ecological environment allowing current
stakeholders of this planet and future generations to benefit of both the innate
favourable conditions and the natural resources as a whole provided by the Earth.
Therefore, I decided to analyse the CSR activities led by one of the companies
that has been most successful in satisfying both my expectations regarding social
and environmental implications in relation to business and profit and needs as a
customer: Woolworths Limited.

Corporate Social Responsibility (CSR)

CSR refers to operating a business in a manner that accounts for the social and
environmental impact created by the business. CSR means a commitment to
developing policies that integrate responsible practices into daily business
operations, and to reporting on progress made toward implementing these practices 1.
CSRs policies can be defined as a self-regulatory mechanism whereby a business
monitors and ensures its active compliance with the spirit of the law, ethical
standards and national or international norms 2.
Since all the organizations have an impact on both the external and the internal
environment, CSR is present in several dimensions, such as the environmental
dimension (the natural environment), the social dimension (relationship between the
business and the society), the economic dimension (socio-economic or financial
aspects) and the stakeholders dimension. Thus, CSR aims to embrace responsibility
for corporate actions and to encourage a positive impact on the environment and
stakeholders including consumers, employees, investors, communities, and others.
Community involvement, environmental action and economic growth are therefore
the main 3 spheres of CSR.
Furthermore the basic principles that together comprise all CSR activities are
sustainability, accountability and transparency:
- Environmental sustainability includes several actions such as recycling, waste
management, water management, renewable energy, reusable materials, 'greener'
supply chains and reducing paper use.
- Social accounting is the process of communicating the social and environmental
effects of organizations' economic actions to particular interest groups within society
and to society at large3.
- Corporate transparency describes the extent to which a corporation's actions are
observable by outsiders. This is a consequence of regulation, local norms, and the
set of information, privacy, and business policies concerning corporate decisionmaking and operations openness to employees, stakeholders, shareholders and the
general public. From the perspective of outsiders, transparency can be defined
simply as the perceived quality of intentionally shared information from the
corporation4. Corporate transparency includes the concept of ethical marketing. A

company that follows the principles of ethical marketing does not try in any way to
manipulate or falsely advertise its products to potential consumers.
CSR may be based within the human resources, business development or public
relations departments of an organisation, or may be a separate unit reporting to the
CEO or the board of directors. Moreover, some companies approach CSR without a
clearly defined team or programme. Initially, CSR emphasized the official behaviour
of individual firms. Later, it expanded to include supplier behaviour and the uses to
which products were put and how they were disposed of after they lost value.
Nowadays companies consider how the behaviour of their suppliers influenced their
overall impact on society. Irresponsible behaviour reflected on both the misbehaving
firm, but also on its corporate customers. Supply chain management therefore
expanded to consider the CSR context2.
CSR is increasingly important to the competitiveness of enterprises as forwardthinking companies embed sustainability into the core of their business operations to
create shared value for business and society. Creating shared value (CSV) is a
business concept intended to encourage business to create economic and social
value simultaneously by focusing on the social issue that they are capable of
addressing6. CSR can bring benefits in terms of risk management, cost savings,
access to capital, customer relationships, human resource management, and
innovation capacity. For example consumers are loyal and willing to spend more on
retailers that follow CSRs principles: firms with better CSR reputation have, in fact, a
much higher ability to foster desired supportive behaviours among consumers,
including buying their products, recommending their company, or trusting the
company to do the right thing when faced with difficulties or disruptions.
Heightened corporate attention to CSR has not been entirely voluntary. Many
companies awoke to it only after being surprised by public responses to issues they
had not previously thought were part of their business responsibilities. Nike, for
example, faced an extensive consumer boycott after the New York Times and other
media outlets reported abusive labor practices at some of its Indonesian suppliers in
the early 1990s. Shell Oils decision to sink the Brent Spar, an obsolete oil rig, in the
North Sea led to Greenpeace protests in 1995 and to international headlines.
Pharmaceutical companies discovered that they were expected to respond to the
AIDS pandemic in Africa even though it was far removed from their primary product
lines and markets. Fast-food and packaged food companies are now being held
responsible for obesity and poor nutrition.
The concept of CSR has been the subject of debates; as a matter of facts
arguments for and against Social Involvement of Business have been moved recently
and during the past years. Proponents of the CSR argue that socially responsible
practices can have a positive impact on the organization by improving employee
recruitment and retention, managing environmental risks by reducing harmful
accidents, and differentiating brands to achieve greater consumer loyalty 5. Since the
community is the source of the business workforce and the consumer of the
business products and services, supporters of CSR strongly believe that the creation
of a better social environment benefits the business and consequently that the power
of the business itself should be accompanied by an equal amount of responsibility 7.
Following Bernsteins thought, businesses should be responsible to their workers,
communities and other stakeholders, even if making things better for them requires
companies to sacrifice some profits. On the other hand, the case against the concept

of CSR typically begins with the classical economic argument articulated most
forcefully by the late Milton Friedman (1962). Friedman held that management has
one responsibility and that is to maximize the profits of its owners or shareholders.
Friedman argued that social issues are not the concern of business people and that
these problems should be resolved by the unfettered workings of the free market
system. Further, this view holds that, if the free market cannot solve the social
problems, it falls not upon business, but upon government and legislation to do the
job. Such argument finds its basis on the fact the businesses are not equipped to
handle social activities because managers are oriented towards finance and
operations and do not have the necessary expertise (social skills), to make socially
oriented decisions (Davis 1973)8.
In conclusion, to formulate a successful CSR strategy firms must understand that
the benefits of CSR are dependent on mediating variables and situational
contingencies. A decision as to wether companies should extend their social
involvement requires careful examination of such variables and situational
contingencies. Certainly, societys expectations are changing, and the trend seems to
be toward greater social responsiveness7.

Analysis of data
The data were firstly collected by attending and reviewing the lesson presented by
Dajana Grandic on February 24th 2015, which was sequentially developed through
careful researches on the web.

Woolworths Limited
Woolworths Limited is a major Australian company with extensive retail interest
throughout Australia and New Zealand. It is the largest retail company in Australia
and New Zealand by market capitalisation and sales, and the largest food retailer in
Australia and the second largest in New Zealand. In addition, Woolworths Limited is
the largest takeaway liquor retailer in Australia, the largest hotel and gaming poker
machine operator in Australia, and was the 19th largest retailer in the world in 2008 9.
Woolworths Limited operates almost 3,000 stores, petrol sites, support offices
and distribution centres in Australia and New Zealand, hotels in Australia, and is
involved in a consumer electronics joint retail venture with the Tata Group in India
employing over 180,000 workers. Woolworth has approximately 320,000
shareholders, plus about 40,000 employee shareholders, that makes Woolworth one
of the largest employee ownership corporations in Australia 11. The Woolworths first
single basement store was opened in Sydneys Pitt Street in 1924, while nowadays
Woolworths stores are present in almost every metropolitan and regional centre in
Australia and New Zealand.
Only in 2014 Woolworths Limiteds sales generated AU$ 60.8 billion providing
AU$ 2,451.7 billion of net profit after tax, with an increase of 4.2% on the precedent
year. Moreover the Board announced dividends of 137 cents per share for financial
year 2014, up from 133 cents in financial year 2013 10 (Fig. 1).

Fig. 1. Results from Woolworths Limited Annual Report 2014

Corporate Social Responsibility- Woolworths Limited

Woolworths Limited is a diverse and complex organisation that touches the lives of
millions of people either as customers, investors, suppliers, employees or members
of the communities in which it operates. Given its size, the company have recognized
that its actions and operations do have an impact beyond its immediate interactions
with customers, shareholders and staff. In recognition of this fact, in 2007
Woolworths set a range of targets and commitments for the business to be achieved
in 2015 in order to improve its sustainability and reduce its impact on the
environment. Both domestically and globally, Woolworths is quietly earning respect
and recognition for the integrity and depth of its corporate responsibility programs. In
2013 and 2014, in fact, Woolworths Limited was recognised as the global leader of
the food and staples retailing sector (first Australian retailer) in the Dow Jones
Sustainability Indices (DJSI).
Recently, Woolworth formed a Sustainability Advisory Group comprised of
leaders in the fields of environment, sustainability and corporate responsibility in
order to achieve best practice in sustainability and corporate responsibility through an
independent group that provides a diverse range of views to Woolworths CEO and
senior management group. As shown in the Woolworths Limited Sustainability
Strategy 20072015, many of the social initiatives have been developed as a result
of ideas from employees. In such matter Woolworths developed the Eco Ambassador
Program aimed at developing sustainability expertise at the store and distribution
centre level by increasing employee awareness and knowledge of broad
environmental issues and empowering all employees to take appropriate actions to
make a difference at work and at home. Woolworths Limited Sustainability Strategy
20072015 identifies the key areas of focus to improve environmental sustainability
for Woolworths: climate change, water, sourcing, packaging, waste and Green
Stores.

Climate change and its impact on fresh food production is without doubts the
most critical environmental issue facing Woolworths and the sustainability of its
business. As a consequence, Woolworth is constantly seeking ways to reduce its
electricity and fuel use and support the development of renewable energy and
alternative fuels. Minimising carbon footprint is essential in the process of business
growth as it will strengthen Woolworths ability in supplying low price fresh products
to its customers. In fact, by using electricity and fuel more efficiently, investigating
alternative energy and minimising the waste, Woolworth is not only able to reduce its
impact on the environment but also to provide a better service to its customers and
deliver a healthier financial return, creating therefore shared value. Woolworths most
significant targets is reducing carbon emissions from its stores by 40% by 2015
through the implementation of innovation in both new and existing stores in the key
areas of refrigeration, lighting and air-conditioning 11. New supermarkets built in 2014
have carbon emission per square-metre which are, on average, 25.1% lower that
baseline stores12.
As a retailer of Australian fresh food, 96% of which is grown in Australia,
Woolworth is involved to make sure that its farmers and producers are using water as
sustainably as possible and that its stores and facilities also use water efficiently
through improved fittings, equipment and infrastructure. During the years Woolworth
have implemented several water saving initiatives such as The South East
Queensland Water Wise project, Every Drop Counts and in addition the installation
of a one million litre capacity rainwater tank to collect stormwater for landscaping
irrigation, toilet flushing, car washing and washing of concreted areas 11. Despite this,
in contrast with the flow of previous years, in 2014, Woolworths stores have
increased water use; the company is currently investigating what is causing this 12.
As a retailer, developing and maintaining sustainable means of sourcing products
to meet its customers changing needs is a key issue for Woolworth. As in almost all
the organizations, relationships with suppliers are critical for the business; Woolworth
developed and implemented policies for ethical and sustainable sourcing. Woolworth
strives to develop genuine partnerships with the suppliers in order to develop mutual
benefits whilst providing quality, affordable products to its customers. Moreover,
Woolworth is aware of its responsibility to ensure that the items on its stores shelves
are produced in a manner that respects the human rights of workers, and that the
environmental impacts of production are managed in line with relevant Australian and
international standards.
Woolworth supports the Australian growers and farmers who supply 97% of its
fresh fruit and vegetables and remains, therefore, committed to its long-standing
policy of giving preference to Australian vendors who can meet its supply
requirements. Furthermore, the firm is also involved in lower waste and in recycling
and packaging materials efficiently. As both a retailer and brand owner, Woolworth is
committed to improvement by finding cost-effective ways to reduce packaging and
minimise waste from private label products, whilst continuing to deliver quality
products to customers at low prices. Initiatives already undertaken include the
implementation of 30% recycled content in Woolworths supermarket bags and the
presence of plastic checkout bag recycling facilities available at all supermarkets.
Woolworths is one of the largest recyclers of materials in Australia, diverting more
than 252,000 tonne of material from landfill. In 2006, Woolworth recycled 147,189
tonnes of cardboard and 6,055 tonnes of plastic. The Board of the company strongly

believes that reducing the amount of waste that is sent to landfill is not only better for
the environment but is also more cost-effective. In 2014 waste sent to landll has
fallen by 18.4% and the amount of waste materials diverted to recycling and reuse
has increased by 10.5%. Such brilliant results were achieved through increasing staff
awareness, monitoring waste and introducing clear recycling hubs in the back of
stores.
Woolworths is also committed with its local community, supporting a range of
causes through fundraising and charitable partnerships; the company has state
charity partners as well as supporting a greater range of smaller and local
organisations through fundraising. Woolworths National Charity Partners include The
Salvation Army, Jamies Ministry of Food and Foodbank, while Woolworths State
Charity Partners include Childrens Hospital Foundation (QLD), Variety the
Childrens Charity (NSW & ACT), Good Friday Appeal (VIC), Give Me 5 For Kids
(TAS), Starlight Childrens Foundation (SA & NT) and Channel 7 Telethon Trust (WA).

Conclusion
This work was meant to elucidate by means of a specific example why it is in a
company's interest to make corporate responsibility a priority in today's competitive
world of instant communication in which stakeholders have access to a wealth of
information and enjoy an abundance of choices. While this is now an accepted
concept, the prevailing approaches to CSR are so fragmented and so disconnected
from business and strategy as to obscure many of the greatest opportunities for
companies to benefit society.
Woolworth Limited is, in my view, an excellent example of how a company should
operate taking responsibility for its impact on both society and environment. While
many companies now practice some form of social responsibility, some are making it
a core of their operations. Woolworths CSR activities certainly helped the company
in strengthening legitimacy and reputation, reducing costs and risks and creating
competitive advantage whilst satisfying stakeholders and respecting the environment,
creating therefore shared value.
As stated by the CEO of the company, Grant OBrien, one of Woolworths sixcore value is we always do the right thing for our customers, our suppliers, our staff,
our communities and our stakeholders 13; such statement highlights Woolworths
strong values and how the company is committed in creating a better social,
ecological and working environment.
This example should encourage corporations to analyze their prospects for social
responsibility using the same frameworks that guide their core business choices; only
in this way they would discover that CSR can be much more than a cost, a
constraint, or a charitable deed - it can be a source of opportunity, innovation, and
competitive advantage.

References
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http://www.asyousow.org/about-us/theory-of-change/corporate-social-responsibility/

2.

https://en.wikipedia.org/wiki/Corporate_social_responsibility

3.

https://en.wikipedia.org/wiki/Social_accounting

4.

https://en.wikipedia.org/wiki/Corporate_transparency

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https://www.boundless.com/management/textbooks/boundless-management-textbook/ethics-in-business-13/corporate-socialresponsibility-98/arguments-for-and-against-corporate-social-responsibility-459-10563/

6.

Lesson: Dajana Grandic. Corporate Social Responsibility - February, 24th, 2015

7.

Harold Koontz and Heinz Weihrich Essential Of Management- an International Perspective, 8th ed. (New Delhi: McGraw-Hill), chap. 2.

8.

Archie B. Carroll and Kareem M. Shabana, The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and
Practice, 2010 Blackwell Publishing Ltd and British Academy of Management.

9.

https://en.wikipedia.org/wiki/Woolworths_Limited

10.

http://www.woolworthslimited.com.au/annualreport/2014/index.html

11.

http://www.woolworthslimited.com.au/icms_docs/130514_Doing_the_Right_Thing.pdf

12.

http://woolworthslimited2014.csr-report.com.au/metrics-and-progress/sustainability-metrics-and-progress

13.

http://woolworthslimited2014.csr-report.com.au/ceos-statement