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Confidential The Greening of Home Brands A comparison of the CSR policies of four European Retailers and the influence of these policies on the procurement process of their joint sourcing alliance CONFIDENTIAL Elke W.A.M. Huisman, 5958016 January 2011 Master Thesis Business Studies University of Amsterdam- Faculty of Economics and Business Supervisor UvA: dhr. dr. M.L. van der Veen Second supervisor UvA: dhr. dr. J.M. Pinkse The Greening of Home Brands – Elke W.A.M. Huisman ACKNOWLEDGEMENTS I would like to thank AMS for giving me the opportunity to conduct my master thesis research within their company. In particular from the Fresh & Frozen Team I would like to thank; Magnus Bergendahl, Rémy Medina, Petri Mikkelä and Magdalena Asthana for supporting me directly or indirectly with my thesis. Furthermore, I would like to express my gratitude to Ms. Hertzberger of Albert Heijn, Ms. Martins Ramalho of Jerónimo Martins, Mr. Päällysaho of Kesko and Mr. Züblin of Migros for participating in the interviews. The interviews have been an important contribution to this thesis. Besides, I would to thank Mr. van der Veen for supervising my thesis. For the suggestions he gave during this process, which helped to evolve this thesis. Elke Huisman Amsterdam, January 2011 2 The Greening of Home Brands – Elke W.A.M. Huisman ABSTRACT Corporate Social Responsibility (CSR) has been gaining momentum across the business community within the last decade; furthermore the topic is seen increasingly high on boardroom agendas (Jones et al., 2005a). At AMS Sourcing, a company that is sourcing for an alliance of retailers, some major changes were in sight. Albert Heijn, one of the co-founders of AMS, decided that by January 2015 the supply chain of all its private label products should be sustainable and responsible. AMS is purchasing a vast majority of Albert Heijn’s private label products and therefore this decision could have significant influence on the way AMS has to source in the future. However aside from Albert Heijn, AMS has nine other partners, which all have different CSR policies and guidelines. This thesis presents an outline of AMS’ partners adopting and managing CSR. Four European retailers; Albert Heijn, Kesko, Migros and Jerónimo Martins have been exhaustively examined through interviews, participant observation and desk research. Desk research is based on information published by retailers, like Annual and CSR reports, in addition to what has been published about the retailers in several media like newspapers and retail magazines. This study discusses the partners’ view on CSR and highlights practices that the partners have adopted or are currently adopting. Differences and commonalities between the partners are assessed and influence of these CSR policies on AMS is estimated. Results show that the procurement process of AMS is influenced by the CSR policies of the partners because the CSR policies differ thanks to different situations in the home market. Due to influences of home country competitive position, home country stakeholder demands and the company’s ethical motivation, a CSR policy is set up and specific standards or certificates are required. In the past the CSR policies of the partners influenced AMS to a lesser extent because often certificates were required for a niche product group. In the future the different CSR policies have a stronger influence on AMS as standards and certificates will be required for all private label products. The larger the differences between partners, the more difficult it is for AMS to join volumes and to create synergies. A solution is to set up a list of common minimum requirements which allows AMS to pool volumes again. This list should be expanded gradually, so that overtime more and more environmental and social responsible products can be sourced together and at possibly lower prices than today. Please see Appendix A for the list of abbreviations. 3 The Greening of Home Brands – Elke W.A.M. Huisman TABLE OF CONTENTS 1. INTRODUCTION .............................................................................................................................. 6 1.1 The increasing role of social and environmental responsiveness .................................................. 6 1.2 Ten European Retailers in one Sourcing Alliance ......................................................................... 7 1.3 Problem definition ......................................................................................................................... 9 1.4 Contribution ................................................................................................................................. 10 1.5 Structure ....................................................................................................................................... 11 2. CONTEXT OF STUDY - AMS ....................................................................................................... 12 3. THEORECTICAL FRAMEWORK ................................................................................................. 14 3.1 Introduction.................................................................................................................................. 14 3.2 Why CSR plays are role in business. ........................................................................................... 15 3.3 The role of CSR in retail management ........................................................................................ 20 3.4 The role of CSR when sourcing goods in the food retail industry ............................................... 27 3.5 Differences in CSR policy ........................................................................................................... 29 3.6 Overview and conceptual model .................................................................................................. 34 4. METHODOLOGY ........................................................................................................................... 38 4.1 Introduction.................................................................................................................................. 38 4.2 Research ....................................................................................................................................... 38 4.3 Case selection .............................................................................................................................. 39 4.4 Data collection ............................................................................................................................. 40 4.5 Data analysis ................................................................................................................................ 43 5. CROSS-CASES ANALYSIS OF CSR POLICY OF 4 PARTNERS............................................... 44 5.1 Introduction.................................................................................................................................. 44 5.2 General description of CSR of the four partners ......................................................................... 44 5.3 Commonalities and differences in PSR policies of the four partners .......................................... 48 5.3.1 Environmental issues at product level and transportation requirements to supplier ............. 48 5.3.2 Product safety food & non-food (Marketplace) .................................................................... 50 5.3.3 Nutrition & Health (Marketplace) ........................................................................................ 52 5.3.4 Sustainable Trade & Social Compliance (Marketplace) ....................................................... 54 5.3.5 Local sourcing (Marketplace) ............................................................................................... 57 5.3.6. Conclusion PSR policies of the partners .............................................................................. 58 5.4 Influence of elements; corporate strategy, market position, stakeholders and motivation. ......... 59 5.4.1 CSR reporting ....................................................................................................................... 59 5.4.2 Attitude towards environmental and social pressures ........................................................... 68 5.4.3 Conclusion influence of four elements ................................................................................. 76 5.5 Results cross-case analysis of CSR policy of four partners ......................................................... 78 6. INFLUENCE ON AMS .................................................................................................................... 83 6.1 Introduction.................................................................................................................................. 83 6.2 Influence of the CSR policies on sourcing of AMS .................................................................... 83 6.3 Conclusion ................................................................................................................................... 86 CONCLUSION...................................................................................................................................... 87 REFERENCE LIST ............................................................................................................................... 94 APPENDICES 4 The Greening of Home Brands – Elke W.A.M. Huisman
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