TESCO's Corporate Social Responsibility

   Corporate Social Responsibility (CSR) is something that companies are obliged to do to fill out the check list required by society--- this is what I have believed. After I joined the breakfast meeting with Andrew Hill, Climate Change Manager at Tesco this week, I realised that companies could not continue their business if they don’t take CSR seriously.

   Why does TESCO do climate change? “Our business has been successful. We want sustainable growth. We want to be there in 2020”, Andrew explains the background clearly. In order to tackle the issues, TESCO has to take the responsibility of supply chains and customers who emit 10-100 times as much carbon as the company. While working with supplier and customers, the company aims to reduce CO2 by one third by 2020 and become zero carbon footprint by 2050. So far, TESCO has saved ₤150 million a year for energy efficiency in the buildings.

   As the CSR Report declares that “We aim to build long-term relationships with suppliers, so getting regular feedback from them is a high priority”, TESCO created “Knowledge Hub”, an electronic platform where the company and the suppliers share information about carbon reduction. Now it has got more than 400 members from different countries. “It helped move suppliers’ relationship more into collaboration”, Andrew added.
   In contrast, it still seems hard to connect customers with sustainability which has become a cliché when we talk about CSR or environmental issues, although the London Olympics really likes the jargon. TESCO carbon footprinted over 1,000 and labelled over 500 everyday products in the UK, but how many customers understand the complicated logic? Carbon is produced in agriculture and transportation as well as packaging. Some process may produce more carbon than it looks.
   So, how do you get the message across? It is complex, nuance, based on detailed science. The PR consultants from PRCA who gathered at Burson-Marsteller’s London office, formed a group of 5-6 and had a mini discussion. My idea is profiling different types of customer families based on their life style and values, so that the newspapers and TVs can feature the story of the family to show what the kind of activities could give an impact on earth.
   The questions suggested here can never be answered because what people expect for CSR and what companies have to do for CSR will change year after year. However, there should be better solutions one of which I hopefully can suggest in my master dissertation.

HSBC reacts to scandal proactively

   The scandal of mis-selling long-term care bonds cost a lot for the executives of HSBC who faced cuts of their bonus. On the other hand, the PR team of HSBC seems to have mitigated the damage of the bank’s reputation while public opinion is still fuelled by the media. Especially after the scandal was exposed, they did a good job in media relations.

   In December last year HSBC announced that it received ₤10.5m fine over inappropriate investment advice by NHFA, the UK’s leading adviser on long-term care funding, which joined HSBC group in 2005. The sales persons from NHFA sold financial products to elderly customers expected to die before the bond period was over. The amount of compensation to be paid to the 2,485 victims sums up to ₤29.3m in addition to the fine. After the Financial Services Authority (FSA) and HSBC issued press releases, major news agencies reported it as HSBC’s scandal although NHFA had not been audited or regulated as HSBC UK Bank operations until 2010.

   In terms of crisis management, HSBC did it right. Brian Robertson, Chief Executive of HSBC Bank, fully accepted the failure and said “I am profoundly sorry that it did. We have high values here at HSBC and this runs contrary to everything that we stand for. That is why when we suspected something was not right at NHFA, we took action.” He seems to try to protect HSBC’s brand by cutting NHFA quickly and succeed in drawing the line between HSBC and NHFA. In addition, he promised to deal with the issue sincerely by saying “We will be contacting them (the customers) directly --- with the aim of putting things right as quickly as possible.” It was good for HSBC to address key stakeholders exclusively.

   Moreover, after three day, HSBC stated that it will accept complaints going back to 1991 although it took over NHFA in 2005. For those who are already dead, the bank allowed their families to make a claim. The rhetoric of Robertson was excellent in saying, “We will certainly look at each complaint individually and sympathetically” which again showed apology about what happened. The releases from HSBC included full set of trust, logic and emotion which are vital to convey a strong message. Since HSBC has decided to take all responsibility, there has not been extremely hostile coverage of the media. HSBC had gone ahead of the media which might have required the bank to take wider responsibility.

   However, the bank will also have to keep the investors updated because it has lost the credibility after a breakdown in the computer system which stopped the ATMs and internet banking in November 2011. It would be challenging for the PR team to recover the damaged reputation of the giant bank and communicate with other marginal organisations in the HSBC group like NHFA.