1.
0 Introduction
Business ethics are a set of principles that a company adheres to. Any business organisation
has the right to refuse to uphold ethical standards because no one can be forced to do so. This
paper focuses on how business stakeholders—customers, the government, employees,
society, investors, etc.—are impacted by ethical practises. The overall impact of ethical
behaviour on these related business groups has been positive. We should look at companies
like Enron, Satyam, Lehman Brothers, Infosys, Berkshire Hathaway, and Google to better
understand the value of ethical behaviour. Enron, Satyam, and Lehman Brothers are a few
examples of business organisations that, despite their sizeable operations and quick
expansion, failed due to unethical practises. Business ethics establish the benchmark for how
your company should operate.
2.0 Case organisation
Tesco, the top grocery, and food retailer in Britain. It also sells non-food items in retail.
Additionally, it runs stores that sell general merchandise, groceries, and other non-food items
like electrical goods. At the end of FY2014, the company had 3,146 stores operating in the
UK. When 2011, Tesco became the third largest retailer in the world that measured by gross
revenue. Besides, Tesco is the 9th largest in the world that measured by revenues. Besides,
Tesco also generated strong non-food sales and used e-commerce trading successfully.
The main factors behind Tesco`s success in recent years have been the shift to "higher profit"
non-food products, the expansion of international branches, and the creation of a strong UK
core business. The company primarily achieved success by maintaining low prices,
encouraging client loyalty, providing a wide range of original shop ideas, and improving
retailing services like insurance and banking to compete with rivals both locally and
internationally.
Tesco had faced some ethical problem about people and environment such as Modern
Slavery and Dumping illegal toxic substances into the river and sewers. Due to Modern
Slavery, Tesco had employed the employees from the farms, rubbish recycling and poultry
factories worked as little as 50p a day. Besides, the employees who works in the farms had
been gang-controlled. Lastly, were the mistreated and employment of the worker.
Due to environment, Tesco had involved about dumping illegal toxic substances into the river
and sewers. As an illustration, Tesco was fined 8 million pounds in June 2017 for breaking
safety and environmental laws. 23,500 litres of gasoline got into the sewers and the River
Irwell because they neglected to fix their fuel delivery system. Because the area was unsafe to
continue living in due to pollution, the residents were unable to stay.
3.0 Sustainable Development Goals
The Sustainable Development Goals (SDGs) of the United Nations are a global call to action
to achieve a sustainable future and advance justice, equality, and human rights for all by the
year 2030. The Sustainable Development Goals (SDGs) are a set of 17 interconnected
objectives intended to inspire reflection and action on the most urgent issues and
opportunities facing humanity and the environment, such as inequality (SDG 10), climate
change (SDG 13), peace and justice (SDG 16), and international cooperation to achieve
global goals (SDG 17).
These objectives and their targets recognise that combating poverty and other forms of
deprivation requires policies that also address social inequalities, economic disparities, and
health and education issues, all while addressing climate change and preserving our natural
environment.
Tesco had fail to follow the Goal 8 - decent work and economic growth and Goal 12 -
responsible, consumption and production. First, Tesco had fail to follow goal 8.5 - FULL
EMPLOYMENT AND DECENT WORK WITH EQUAL PAY, Due to [Link],
posted by Monica Sharma on 7th Oct 2020. She had spoke out that the legal action had been
first brought against Tesco in 2018, as estimates suggest that 25,000 or so female workers
were underpaid and may have been in violation of the Equality Act of 2010, which could
have made them liable for compensation.
Tesco Action Group asserts that the wages of female store employees were up to £3 per hour
less than those of employees who worked in the warehouse and distribution centre, the
majority of whom were men. According to a 2014 Tesco study, the 22 store roles were
equivalent to the roles in distribution centres, so these workers ought to have received the
same pay regardless of gender. According to Leigh Day, the legal team defending Tesco
employees, each employee may be entitled to more than £10,000 each for the six-year
backlog if the Equality Act has been violated.
When we looked at the following documents on Tesco`s website in September 2019, they
received the highest rating from Ethical Consumer for their supply chain management: "Our
Approach to Human Rights" dated 11/4/19, "Modern Slavery Statement 2018/19," and
"Supplier Code of Conduct." This exposed the largest modern slavery ring to ever exist in the
UK, with 400 victims working on farms, in garbage recycling facilities, and in poultry
factories for as little as 50p per day. Tesco and other supermarkets, including Waitrose,
Marks & Spencer, Sainsbury's, and Asda, were supplied by farms where gang-controlled men
and women worked.
For Goal 8.8 - Protect labour rights and promote safe and secure working environments .
Tesco employees were recently asked by Business Insider to share their advice for fixing the
failing grocery giant with us. Although you could dismiss these sources as unsatisfied
workers, the tone of their emails was the exact opposite: They loved working for Tesco, had
been with the company for years, and wanted to see Tesco reclaim its position as the top
grocery brand. Additionally, managers frequently put in 12- to 13-hour days, but our contract
states that we must work "36 hours and any additional hours that are reasonably required to
fulfil your role," so the issue is moot.
For Goal 12.8 - promote universal understanding of sustainable lifestyles. One of Tesco's
chicken suppliers was put on leave after an undercover investigation revealed that workers
had mistreated the animals before slaughter. Farmers at Trees Farm and Brome Grange in
Suffolk were caught on camera during a three-month investigation by animal welfare group
Animal Just Project kicking, screaming, and snapping the necks of chickens. The allegedly
mistreated animals were categorised as "slow-growing" meat or "broiler" chickens and were
allegedly raised in "high welfare" environments. Nearly 500 chicks are said to have perished
in their first week at one of the farms, according to investigators who worked undercover
between February and May. Many of them were allegedly kicked, thrown, or had their necks
snapped.
The RSPCA standards, as well as EU laws like Council Directive 2007/43/CE and Council
Regulation 1/2005 on the Protection of Animals during Transport and Related Operations, are
allegedly violated by workers' actions, according to the Animal Justice Project. According to
a Tesco spokesperson, "We expect all our suppliers to meet both our own strict, industry-
leading requirements on animal welfare and the recognised farm assurance standards,
including Red Tractor certification. At the RSPCA-certified farm, teams were allegedly
frequently observed cursing, throwing, kicking, and slamming birds into crates while
catching them for slaughter. "We visited the farm and suspended it from the programme,
along with the catching team, for not upholding our standards.
4.0 Ethical Infrastructure
Amit Soni, a senior accountant, testified in court that he personally ordered a detailed
analysis of the scope of the alleged profit manipulation at the retailer. Soni brought up the
scandal regarding the 250 million pound fraud in 2017. He informed the grocery store's
highest-ranking management in 2014 of a 250 million pound false statement.
In October 2014, the Serious Fraud Office opened a criminal investigation into Tesco's
accounting procedures. In relation to Tesco's 2014 profit misstatement scandal, Sir John
Royce dismissed the SFO's case against two senior Tesco executives who were accused of
fraud and false accounting.
Sir John Royce's ruling puts an end to the Tesco case, more than four years after Amit Soni,
an internal senior accountant who ordered a thorough investigation into the £250 million
profit hole, discovered accounting irregularities for the first time. Tesco entered and agreed to
the SFO's fourth Deferred Prosecution Agreement (DPA), paying a fine of £129 million, to
resolve the matter of corporate liability. It reached a settlement with the Financial Conduct
Authority for market abuse in connection with its trading update from August 2014 during
concurrent proceedings. In accordance with that arrangement, Tesco was required to pay back
£85 million to investors who had bought Tesco bonds and shares in response to the
announcement.
5.0 Additional analysis
First, Tesco had involved in Displacement of Responsibility. Refer to BBC News wrote by
Emma Simpson on 26th January 2016, Tesco had been known as delayed making payment to
suppliers to improve its own financial position. Refer to Christine Tacon, the Grocery Code
Adjudicator, she said that Tesco seriously breached the industry’s code to protect grocery
supplies. She also extensive the evdinece that Tesco had acted unreasonable when delaying
the payments to supplies. Tesco had apologised about this practices. Because their had
harmed their suppliers. The Serious Fraud Office (SFO) is still looking into possible
accounting irregularities at Tesco. Following the disclosure of a Tesco accounting scandal in
February 2015, the grocery ombudsman's investigation got under way.
Due to the way Tesco recorded income from its suppliers, a £250 million hole was discovered
in the company's accounts in September 2014, which was later revised up to £326 million. "I
received internal Tesco emails that encouraged Tesco staff to ask suppliers for permission to
defer payments due to them in order to temporarily help Tesco margins," claimed Ms. Tacon.
In order to avoid underperformance compared to a forecasted margin, payments to suppliers
should not be made before a specific date, according to internal Tesco emails that I saw. In
October 2014, the SFO investigation got under way.
Tesco would likely receive a sizable fine from the SFO, according to stockbrokers, according
to Laith Khalaf, senior analyst at Hargreaves Lansdown. Prior to the release of the upcoming
Serious Fraud Office investigation, "Cantor Fitzgerald are suggesting Tesco could face
financial penalties in excess of £500m for its accounting misdeeds," he said. The company
has at least begun the long road to recovery, even though it is not yet out of the woods.
"Damaging repercussions" Tesco's CEO, Dave Lewis, claimed that the company had
undergone significant change: "Over the last year, we have worked hard to make Tesco a
very different company from that which was described in the GCA report.
"The business and our relationship with suppliers suffered as a result of the sole focus on
operating margin. Now, this has undergone a significant change." Most of the historic
practises mentioned in the report, according to Mr. Lewis, were addressed by significant
changes that were made in January 2015: "We have changed the way we work by
reorganising, refocusing, and retraining our teams, and we will continue to work in a way that
is consistent with the recommendations." Tesco's stock rose 2.3% to close at 159.3p in
London. Over the previous 12 months, the stock's decline was almost 32%. Even when a debt
had been acknowledged by Tesco, the money was occasionally not paid for more than 12
months, with some amounts taking two years to be repaid, according to Ms. Tacon's
investigation.
One case involved a supplier who was owed millions of pounds because Tesco's systems over
a long period of time had incorrectly applied price changes. More than two years after the
incorrect charging had started, Tesco finally paid this back."I discovered that payment delays
were a pervasive problem that significantly impacted a wide range of Tesco suppliers," Ms.
Tacon said.
"The payment delay had a financial impact on suppliers, was a burden to resolve
administratively, took away from the time available to develop customer-focused business,
and had a negative impact on some suppliers' relationships with Tesco," according to the
[Link] taking on the responsibilities of a Grocery Code Adjudicator, Ms. Tacon has
only conducted one investigation. Her investigation spans the months of June 2013 and
February 2014. Tesco gave her team the results of its own investigation, which was
conducted with the express purpose of identifying potential code-violating procedures.
Ms. Tacon is unable to fine Tesco because she just got this authority after the investigation
[Link] adjudicator looked at three important factors: the length of time it took to pay
suppliers what was owed to them, unilateral deductions from suppliers, and, in some cases, an
intentional delay in paying suppliers.
Ms. Tacon found no proof that Tesco violated this section of the grocery code regarding
payment for better shelf positions or product [Link] did discover proof of a number of
practises, though, that she would like to have looked into. One of her five suggestions is to
prevent Tesco from unilaterally taking money from accounts owed for goods supplied.
Suppliers will have 30 days to contest any proposed deductions, and if Tesco is challenged,
the deduction cannot be made.
Tesco has been given a four-week deadline by Ms. Tacon to explain how it intends to put her
suggestions into practise. She will then demand that the business give her regular updates on
its development. The adjudicator, according to business minister Anna Soubry, investigated a
"scandalous situation" with rigour and courage.
"Tesco claims to have modified their procedures, and I sincerely hope they have. Smaller
suppliers should be paid promptly and treated fairly to conduct ethical business. Late
payments can threaten these suppliers' viability and impede their ability to grow and produce
"She spoke. Numerous institutions and other Tesco investors have filed lawsuits in response
to the accounting scandal's sharp decline in the retailer's share price.
Stewarts Law announced on Tuesday that it will get in touch with Tesco before launching
formal legal action for the company, which had suffered losses totaling tens of millions of
pounds as a result of the accounting scandal's exposure.
Second, Tesco also had involved in Consequences of Reprehensible Acts. Tesco and other
supermarkets, such as Waitrose, Marks & Spencer, Sainsbury's, and Asda, received their food
from farms where gang-controlled men and women worked, but the chains and businesses
involved in the supply chain claim they were unaware that the workers were being exploited;
in fact, a number of them claim they learned of the mistreatment only after being contacted
by journalists.
If a defendant can demonstrate that he exercised the necessary level of diligence, he may
avoid conviction. The "due diligence" defence is the name for this line of defence. The
defence must typically demonstrate additional elements as well, chief among them being that
they took all necessary precautions or measures to prevent the offence. Tesco successfully
appealed its conviction for providing false price indications to the House of Lords. Tesco
argued that all employees who performed managerial or supervisory duties were subject to
the same standards of care as the store manager.
In accordance with s. 24(1)(b), the company would not be held liable if it took all necessary
precautions to prevent the employee from committing a crime. Ignoring the subsection would
make the company automatically liable for any wrongdoing by him. It was necessary for the
defendant to have established an effective system and made sure that it was followed in order
to prove this. In Tesco v. Nattrass, all five Law Lords agreed to allow Tesco's appeal and to
explain why they did so. In his speech, Lord Diplock included a passage that has been taken
to mean that the defendant can demonstrate a lack of mens rea or negligence in order to
satisfy the requirement of "due diligence."
If used as a standard for the statutory defence of negligence, Lord Diplock's words were
superfluous and unclear. He didn't want to change the way the due diligence defence worked
or say that it could be successful if the defendant could show that he was not in "a
reprehensible state of mind." The defendant must also demonstrate for the defence that he
took all necessary precautions. To distinguish between those who are partially at fault must
have been the main goal of these provisions. and those who can avoid punishment by
demonstrating that they were not at fault In Bilon v. WH Smith Trading Ltd (2001) 165 JP
701 , which was decided 30 years later, Lord Diplock provided the definition of diligence.
