Assignment on Burberry\'s CSR Initative\'s PDF

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A whole assignment linking the CSR initative's Burberry have put in place and how these affect the company as a whole as well as the stakeholders....

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

Introduction

The aim of this report is to investigate what Corporate Social Responsibility policies Burberry have in place and how they impact the stakeholders and the organisation. I have chosen to research Burberry as it’s a large multinational company which operates in over 400 retail locations and employs over 10,000 people. In their annual report it also states they earned a revenue of £2733 million in 2017/2018.1

CSR aims to make sure that organisations conduct their business in ways which are ethical and sustainable. Companies conduct a range of activities including working to help improve the local communities, developing relationships with employees and customers and environmental protection and sustainability. This overall can make Burberry gain better brand recognition and create a competitive advantage.

Commencing the recent climate change meeting held in Poland, David Attenborough described climate change as the “biggest threat to our civilisation”.2 Organisations such as Burberry may feel pressured to try be as environmentally responsible as they can be, so they can acquire a positive reputation and make a positive contribution to tackling climate change.

The topic is also relevant as Burberry have dedicated a page on their website to explain the initiatives they are involved in. This suggests that operating in an ethical way is important for the company. However, there has been controversy in the news about Burberry and how they “burn bags, clothes and perfume worth millions”.3 I’d like to investigate how CSR can help to repair the company’s image.

1 https://www.burberryplc.com/en/investors/annual-report.html 2 https://www.bbc.co.uk/news/science-environment-46398057 3 https://www.bbc.co.uk/news/business-44885983

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

Analysis and Evaluation

From the company’s website 4 and appendix 3 I found out that Burberry have several CSR policies in place to help benefit the communities it works within, the environment and the company’s reputation. This first policy states that Burberry have set clear standards to eliminate all chemicals by 2020. This aim could have been set due to the recent climate change issues being discussed in the news and how many consumers believe it’s extremely important for organisations to try be as environmentally responsible as possible5. They also provide training and support to employees to help the elimination process.6 This is beneficial to Burberry as it can make them more appealing to environmentalists which could hopefully give them a positive reputation, this could in turn gain them more customers who may spread good word of mouth to others, hopefully increasing customer levels. It could also encourage potential applicants to apply for roles within the company which could lead to more applicants to choose from, therefore increasing the chances of filling the vacancy with the correct person. Due to being able to find the right person for the job more ideas could be brought to the organisation therefore increasing creativity and this could give the organisation a competitive edge.

Another one of Burberry’s policies is the Global Environmental Policy which I found from appendix 1. This sets out the guidelines to try and minimise the environmental impact that the organisation has caused. They have set a goal to be carbon neutral by 2022 and they started to do this by improving their “energy efficiency, reducing consumption and switching to renewable sources before offsetting any remaining emissions”7. They have also set a new goal to find and create solutions to the endemic waste problems. This could benefit Burberry as it could improve their reputation as they will be environmentally friendly in the eyes of the public. This could attract customers to buy products from their shops therefore increasing sales which in turn would have a positive effect on profitability. This could hopefully encourage more shares to be brought from the stock market leading to more 4 https://www.burberryplc.com/en/responsibility.html 5 https://www.bbc.co.uk/news/science-environment-46398057 6 https://www.burberryplc.com/content/burberry/corporate/en/responsibility/policies-andcommitments/environment/chemical-management.html 7 https://www.burberryplc.com/content/burberry/corporate/en/responsibility/policies-andcommitments/environment/global-environmental-policy.html

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

equity being raised for the organisation. Burberry would then be able to grow for example by gaining new premises or developing new products.

The local community can benefit from policies that Burberry have implemented as Burberry invest in communities as the founder Thomas Burberry had strong principles, which are still reflected in the business today. Burberry have donated 1% of group adjusted profit before tax to charitable causes and employees are offered up to three working days per year to volunteer in their local communities.8 This can benefit the community as they can improve local facilities or schools with the finance donated, which can lead to children gaining a better education. This could benefit the young people as it could increase their chances of finding a suitable job and this could benefit Burberry as it could lead to a greater pool of skilled workers which could be potential applicants later on in life. This can overall benefit Burberry as the standard of living in certain communities can be increased making it a more pleasant place to stay or pass through. This can encourage customers to buy from Burberry as they can see first-hand the positive effects they have on communities in the surrounding area. Employees working at Burberry can also benefit from the policy as they are given three working days to do voluntary work in their local communities, which can improve job satisfaction and employee motivation. Overall this could hopefully lead to lower staff turnover which could reduce recruitment and training costs. The downside to letting staff have three working days off is that there could be slower productivity which could lead to certain departments falling behind in the achievement of their targets, reducing efficiency.

Burberry have acknowledged that having employees from different backgrounds with a wide variety of knowledge is extremely important. 40% of their executive team and board of directors are females and they are hugely proud of this. They are hoping to narrow the gap to gain more females employees to help “drive the business”.9 This could increase empowerment for women in the workplace which could encourage them to work to the best of their ability and could increase staff retention. Managers would be pleased with this as employees would be producing work to a higher standard. Burberry also pride themselves 8 https://www.burberryplc.com/content/burberry/corporate/en/responsibility/policies-andcommitments/communities/community-investment.html 9 https://www.burberryplc.com/content/burberry/corporate/en/responsibility/policies-andcommitments/people/gender-pay-gap-report.html

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

with having a zero-tolerance policy for bribery and corruption and have put many procedures in place such as training staff to a high standard to prevent this from taking place.10 This could be helpful to the company as they would be seen to be against doing business illegally which could be one of the reasons potential shareholders were attracted to the business. This could increase the amount of equity which is raised in the organisation which in turn could reduce the risk of the organisation not having enough profits to buy supplies.

Burberry have an ethical trading code of conduct and this means that they require their suppliers to agree to their business principles such as promoting fair and responsible employment. They audit new suppliers against international labour standards to make sure they’re not buying supplies which come from a business with a bad human rights record. This could increase the cost of supplies for the company which could reduce the amount of profits they retain. Burberry may have to close shops down due to not having enough finance to keep them running. However, this can safeguard Burberry from receiving negative publicity protests against them. This could also encourage other businesses to buy goods from them to sell in their stores such as House of Fraser and Harrods which could increase brand awareness. Overall this code of conduct has beneficial impacts on the company in the long run as customers may choose to shop with Burberry compared to other fashion brands with a bad human rights policy. This could help them gain more market share and could give them a competitive edge against other organisations.

The final research source that I used was a recent report which can be seen in appendix 2 which states that Burberry have burned their products such as bags and clothes almost amounting to £90 million in the past five years. Burberry have stated that “the energy generated from burning its products was captured, making it environmentally friendly”. 11 Burberry have taken this action to make the brand more exclusive, therefore making it harder for people to make counterfeit products. However, it is controversial as to why they don’t donate the unwanted products rather than burning them. This can tarnish the brand name as the public may view them as being unethical and many environmentalists are 10 https://www.burberryplc.com/content/burberry/corporate/en/responsibility/policies-andcommitments/corporate/anti-bribery-and-corruption-policy.html 11 https://www.bbc.co.uk/news/business-44885983

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

commenting on the fact they don’t respect the product, the hard work and natural resources which go into making the goods. Due to the debate whether it’s beneficial or not the head of the British School of Fashion claimed that Burberry are having to take this action only to satisfy shareholders. However, this may backfire on the company if many people start viewing it like environmentalists then they could see a fall in the level of sales which could therefore decrease shareholder satisfaction rather than the intent to increase it.

Conclusions and Recommendations

From my research through the organisation’s website I conclude Burberry implement an extensive range of policies to help benefit communities, the environment and their organisation. Employees working for the business are hugely impacted by policies as they get given 3 working days to conduct local charity work and get empowered by having a gender equal executive team. This could overall improve their motivation and job satisfaction. I recommend that Burberry try to encourage more staff to take time off to do charity work as it can help improve the reputation of the organisation. It could also benefit the communities where employees are doing charity work in e.g. litter picking in certain towns could make it seem a nicer place to live in.

I conclude that Burberry’s suppliers can be highly satisfied as they could be gaining high amounts of money from the company. They purchase their raw materials from a supplier with a good human rights record which therefore increases their expenses for the organisation however the supplies may give out discounts. I recommend Burberry increase their prices slightly to make a substantial profit but only if the public are made aware of their CSR initiatives. However, customers may be willing to pay more for their products if they are sourced from suppliers with a reliable human rights record. This could lead to higher amounts of profit coming into the organisation and they may be able to take advantage of economies of scale.

I conclude that Burberry pride themselves with their CSR initiatives and this is evident from my research that Burberry are very aware of the current climate change issues and that they try to conduct business without harming the environment for example their chemical and 5

Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

waste policy. This overall benefit’s the organisation and I recommend that Burberry stop burning their products as this has given them negative publicity when they have been capturing the emissions from the burning process. I recommend that they try to do more for the environment such as reducing packaging and plastics, and this could give them a competitive edge over other organisations which could hopefully help them gain more customers. I also recommend that they donate or recycle their products instead of burning them which could reduce any negative complaints they could receive against this issue. If my recommendations are followed this could potentially lead to an increase in sales and profit, which could encourage shareholders to invest more into the organisation.

CSR initiatives benefit the local community that Burberry work within as they donate around 1% of group adjusted profits to local communities which can help to improve the quality of life for people living there. I recommend that Burberry continue to donate a percentage of their profits to the local community as this can benefit the organisation and this may make customers see them in a more positive way. This could help them gain loyal customers who return to the organisation in the future to buy products/services. I also recommend that Burberry advertise through social media to show how they donate profits to communities as my research findings could only see them advertising it through their website and it could encourage potential customers to buy products as they understand a percentage of their money is going to help communities. If they choose to advertise through social media, it could reach a vast audience quickly and raise customers awareness.

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

Appendix 1 – Business Website: https://www.burberryplc.com/en/responsibility/policiesand-commitments.html

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

Appendix 2 – BBC Article : https://www.bbc.co.uk/news/business-44885983

Appendix 3 – Business Website : https://www.burberryplc.com/en/responsibility.html

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Explore the impact that Burberry’s CSR initiatives have on the Organisation and Stakeholders

References BBC NEWS (2018), ‘Burberry burns bags, clothes and perfume worth millions.’ [online]: Available from: https://www.bbc.co.uk/news/business-44885983 Accessed: 23 November 2018 BBC NEWS(2018), ‘Sir David Attenborough: Climate change 'our greatest threat' [online] : Available from: https://www.bbc.co.uk/news/science-environment-46398057 Accessed: 30 November 2018 BURBERRY ‘Responsibility.’ [online]: Available from: https://www.burberryplc.com/en/responsibility.html Accessed: 21 October 2018 BURBERRY ‘Policies and Commitments.’ [online]: Available from: https://www.burberryplc.com/en/responsibility/policies-and-commitments.html Accessed: 12 December 2018

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