What is Corporate Social Responsibility?
Corporate Social Responsibility (CSR) is a self-regulated system that companies use to ensure that their operations are in line with ethical standards, the law and the norms of society. CSR aids companies in taking responsibility for their actions and “encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere (WIKIPEDIA, 2012)” The company that has been selected for analysis is Burberry. Burberry was established in 1856 by Thomas Burberry and is now an ‘internationally recognised luxury brand with a worldwide distribution network (Burberry PLC, 2012)’. They have 473 stores worldwide and employ approximately 6,681 people.
This company claims that they are in compliance with CSR and have on their website listed the ways in which they achieve this. “One of Burberry’s five strategic themes is pursuing operational excellence. Operational excellence in CR has five key areas of focus: * Healthy business partnerships: based on shared values and high ethical standards * Excellent products and service: quality, craftsmanship, heritage and service standards * Environmental excellence: operating efficiently with minimum waste and maximum control * Excellence in people management: attracting and retaining talented employees * Contributing to society: investing and engaging in the communities where Burberry operates (Burberry, 2011)’
When it comes to employment, it is important for a company to be extremely diverse and offer equal opportunities. Not only are they required to do this by law (under acts such as the Equality Act 2010), but they should also choose to be diverse. A company that chooses to be diverse is well respected by societies in which they operate, and will find that increasing numbers people/other companies are seeking them out to work for/with them.
In the long run, embracing equality & diversity could also benefit the company as it will enable them to gain new ideas and look at things from a different perspective. Burberry claims that they are a diverse company when it comes to employment and says that their diverse work force strengthens and drives their success as a luxury brand. The brand now ‘employs nationals of 95 countries across all continents’ (Burberry PLC, 2011). They state that gender equality is promoted within the organisation and equal opportunities are offered at every level of employment.
Health, safety and well being
Organisations need to genuinely care about the health and safeties of those who are working for them because once they are on their premises the employees become their responsibility. Procedures should be put into place to ensure that the working environment is safe and comfortable enough for their employees to operate in.
In order to provide safe and healthy working conditions for their employees and third party contractors, the company sate that they use third party auditors in its locations all of the world to ensure that standards are being met. Stores and offices are said to be audited once every 3 years, and distribution & manufacturing sites annually. In 2010/11, a well-being programme was launched within the company designed to ‘encourage staff to lead healthier lifestyles (IBID, 2011)’. According to the company’s research, the numbers of sick days were reduced by roughly 0.8% per employee.
There has been much controversy around the world in regards to workers in places in third world countries being exploited by companies who simply want cheap labour and have no regards for those producing their products or merely fail to have procedures in place that ensure that these workers are not being treated any differently to for instance a factory worker in the United Kingdom. Burberry believes that ‘to be a great brand u need to be a great company (IBID, 2011)’. They are members of the UN global impact and use its ten principles to guide their CSR activities. The company have a committee of 16 which is solely dedicated to CSR. In the years 2010/11 three meetings were held.
“Burberry believes that its products should be made only in factories that comply with local labour and environmental laws and by workers who work fair but not excessive hours, are provided with a safe, hygienic work environment, and who can exercise their right to freedom of association as well as collective bargaining (IBID, 2011)”. The group have an Ethical Trading Policy, under which clear rules/expectations are said to be set concerning the management of labour standards. Burberry added four new policies to the existing rules that cover bribery and corruption, foreign contract labour, unauthorised sub-contracting and animal welfare. The CRS team deliver training to suppliers where they are made aware of the company’s trading expectations, management systems and counsel on transparency standards for sub-contractors.
Stake holder engagement
Corporate responsibility should not just be practised with the walls of the organisation. Companies should aim to work together and encourage one and other to do what is morally right and socially acceptable in order to better the supply chain process. By working together, it will increase the chances of change occurring. “Burberry understands that it cannot solve supply chain labour issues alone and maintains an open dialogue with suppliers, other brands, NGOs and trade unions to bring collective action to bear across the supply chain” The organisation joined the Ethical Trading initiative in June 2010. Ethical trade define the ETI as being “a sound breaking alliance of companies and trade unions…that work in partnership to improve the lives of poor and vulnerable workers across the globe who make or grow consumer goods (2010)
When discussing what is ethical and socially acceptable, it is not only human beings that should be discussed. Animal cruelty is a big issue in the especially within high end fashion industry as many of them implement real animal fur and skin into their products. It is a matter of opinion as to whether or not animal fur should be used, however if a company do decided to utilise it, then it should be executed in the most ethical way possible. Burberry openly admits to using real animal fur in the designs. However they state that they only source animal fur from furriers that uphold high standards when it comes to the ethical treatment of animals & share the company’s concerns regarding animal welfare.
Helping the environment
Global warming is a major concern within the world today. People are being encouraged to reduce their carbon footprints whether it is by taking a greener form of transportation or using less electricity. Organisations more than anyone should be making big changes to the ways in which they operate, as through their production and distribution channels emit more carbon emissions than a normal household. Although it may cost them more money, or even lengthen the time frame of certain processes and procedures, it is an important factor that cannot be overlooked.
Recycling is also very important and companies must learn to utilise all of their resources to the fullest. When it comes to trying to assist in sustaining the environment, Burberry’s website make a number of claims as to what they actively do to make a difference. They state that they are dedicated to finding new and innovative ways to reduce their carbon footprint and throughout their global operation. Their performance report for the years 2010/11 is as follows;
* Committed to purchasing solar energy to power our distribution centre in Vineland, USA * Inductive motor optimisation panels were trialled in all UK manufacturing sites to reduce energy consumption
* Due in part to executing the Group’s under-penetrated markets strategy, air travel for UK employees increased by 52% per £1,000 of turnover
* There was a renewed focus on diverting waste from landfill. In Horseferry House there was a 54% increase in waste recycled during the year * The closed loop textile recycling system launched in the UK last year has been expanded to Europe. Since April 2010, Burberry’s recycling partner has converted over 130 tonnes of sample and raw material waste into car door insulation
Logistics transport emissions:
* An unprecedented rise in sales coupled with the shift from seasonal to monthly deliveries impacted the Group’s ability to ship goods by sea. To address this, a number of key initiatives have been introduced, including centralised logistics decision making, shortening of critical path and increasing strategic raw materials pre-buys in order to accommodate sea transportation lead times. (Burberry PLC, 2011)”
Giving back the community is an extremely huge part of CSR as it helps to build relationships between the organisation and the community in which it operates.
Burberry has its own foundation which came into establishment in 2008. This foundation aims to help young and disadvantaged people with reaching their full potential and realising & accomplishing their dreams. The company encourage their employees to dedicate up to four hours of paid leave per month to help and support the foundation. They provide the youths with one-to-one mentoring, and weekly help with school homework.
* “In 2010/11 over 25% of employees located in cities where the Foundation is active offered their personal talents and business skills to help disadvantaged young people work towards realising their full potential. In total, over 3,700 hours or 490 working days were dedicated to volunteering (IBID, 2011)”.
Is Burberry as ethical as it portrays itself to be?
Burberry makes a large number of claims on its website in regards to how seriously they take Corporate Social responsibility. However not all companies that present themselves to be good and ethical practice what they advertise. Carelessness and/or neglect can lead to a company’s image being tarnished, even if they have had a good reputation in the past. There have been a number of incidents where Burberry has been seen not to be fulfilling their Corporate Social Responsibility. In 2007, it was exposed that a Chinese factory that manufactured Burberry goods were mistreating members of staff (Appendix 1). Staff were working long hours, with no unions and earning approximately £15 per week. “Workers at Tai Yi Sheng Fashion factory, just across the border from Hong Kong in Guangdong province, claim they work 12-hour shifts through the night, in breach of even China’s lax labour laws (The Mirror, 2007)”.
In China the law states that no worker should work more than eleven hours per day, however staff claimed that over time is a regular thing and that “8pm to 8am and Saturday is a full working day(IBID, 2007)”. The Mirror reported that not only were the factory workers working over-time with very little payment, but they were also being docked large sums money from their monthly wage if any mistakes were made. As many of the staff were migrants, they lived in shared accommodation provided by the factory, with up to eight people in one room.
Although the factory did not belong to Burberry and was not responsible for manufacturing solely Burberry goods, the company still should have made efforts to inspect the production on a regular basis as the supplier is indirectly representing them. As time has gone by, the company have increased the number of visits made to factories (Appendix 2). In 2008, there were 314 CR visits to factories, 2009 saw 487 visits and in 2010 637; which is approximately a 51% increase within the space of two years. The company have also provided all their supplier’s factories with worker hotlines where they can whistle blow on any unethical activities that may be occurring. This shows that they have responded to incidents such as these and are aspiring to be more ethical.
Burberry has also been given a number of awards and recognition for various aspects of Corporate Social responsibility. * In 2010 they were awarded the Female FTSE 100 Award which is given to a company that has the most women on their board. In the same year Burberry were awarded the FTSE Executive Women Award. To earn this award you are required to employ the most female executives in the FTSE 100. “Thirty-seven companies have multiple women directors, but one quarter of all boards in the FTSE 100 still have no women at all… 43% of their [Burberry] boards are women(BitcDiversity, 2010)”
* The company again in 2010 were awarded The Carbon Trust Award. This award recognises a company’s efforts in reducing carbon emissions and it also provides proof to the public that they are committed to making a change.
On Primark’s website, they state that they take their Corporate Responsibility seriously when it comes to their employees, supporting the community and packaging and waste regulations. The company, just like Burberry are part of the Ethical Trading Initiative which to an extent does provide evidence that they practice good ethics. This is an improvement for them as in 2005, the company came under fire after evidence of them using child labour and exploiting workers in India came to light. In regards to recycling, the company in 2008 recycled ‘8863 tonnes of cardboard and 1194 tonnes of polythene packaging (MRW 2010)’. Primark are yet to win any awards in relation to being eco-friendly and ethical.
* Louis Vuitton
Following research it is clear that Louis Vuitton strives to be an ethical organisation and is very concerned about the environment. In 2009 the company donated 15% of all sales made through their online store to The Climate Project. “The company now favours transport of products by ship, far more environmentally friendly than transport by air (as of today, 60% of all leather goods are transported by ship) (Purseblog, 2009)” However, just like their competitor, Louis Vuitton is fond of implementing animal furs and skins into their designs.
* Burberry should publish all of their emissions in greater detail as they do not provide insufficient information on the emissions that come from their operations. Carbon emissions are based on air travel and global building energy; however all of the figures that Burberry provides are based on their turnover. The company have not made clear its future goals when it comes to reducing carbon emissions within the supply chain and have not shown the public their total carbon footprint.
* Remove fur from their production
Although Burberry does state that they only deal with furriers that are ethical, there is still great concern around the fact that even some of the higher end furriers are not using ethical procedures and are ignoring animal welfare laws. If Burberry were to completely remove fur from their products it would greatly increase how it is perceived ethically. Other designer brands have taken the plunge in banning fur from their product lines such as Polo Ralph Lauren and Ann Taylor. Alternative materials should be sourced to replace the fur.
* Eco friendly factories
By winning a Carbon Trust Award, it shows that Burberry is moving forward when it comes to trying to help the environment, yet there is still more than can be done. Eco-friendly factories can help to pave the way to bettering the environment. In an eco-friendly factory, renewable energy can be used such as solar panels. It may not be able to run the whole factory however it will reduce the amount of electricity that is utilised. The factories will incorporate;
* Eco-friendly bricks
* Plants around the factory as this will create a cooler microclimate
* Natural lighting indoors for the staff, via sunroofs
* Open their own factories
Burberry claim that the majority of their products are made in Europe, however for the remaining locations around the world, the company should open their own factories. This will better enable them to keep an eye on operations and to ensure that workers are being allowed to exercise their rights. When leaving the production in the hands of another organisation, it is very likely that they will operate as they please and could eventually tarnish the brand’s reputation.
* Currently, Burberry is using too much air freight. To be greener they should look into using ships to transport their products and materials.
In conclusion, Burberry is a company that has been able to fulfil their Corporate and Social Responsibility to the fullest. They have been able to react quickly to any areas within the organisation that they may have intentionally or unintentionally overlooked in the past and put regulations in place to ensure that those things do not re-occur in the future. Corporate Social responsibility is not about simply ‘portraying’ the organisation in a good light, it is about going above and beyond away from the eyes of the public and trying to make genuine change.
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