Executive Summary
This CSR report is based on Kellogg’s CSR practices and their impact on the company’s success in the market. Kellogg is adhering to sustainability and social responsibility referring to all aspects of its business. It is found to be faced with some issues when it comes to food safety identified by Greenpeace, but they are negligible while seen its level of compliance with other areas. Furthermore, CSR also contributes to the Kellogg’s financial gains while measured by sales revenue, profit margin, and the growth of business (Kellogg’s, 2014; Kellogg’s Annual Report, 2015). This report mainly consists of three parts where initial section outlines and discusses its CSR activities, which is followed by the evaluation of success for each of its core activities. In the final section, the writer has recommended an appropriate CSR perspective for Kellogg’s based on his understanding of the nature and objectives of its business.
1.0. Introduction
Business has undergone several revolutionary changes and transitions over past couple of decades under the strong influence of globalization, technological advancement, and radical changes in consumer buying habits. As a matter of fact, growing literacy rate coupled with efforts from media is largely at the bottom of rising awareness among people. Today’s consumer is much more judgmental as compared its older counterpart. Now consumer’s attention is not limited to quality and price tag, but he also digs into ways utilized to manufacture or produce, and market a product or service. Therefore, trends in ethical consumption are at rise around the world. Ethical consumption refers to avoiding products and services which are likely to have a negative impact on environment or society (In Carrier & In Luetchford, 2012; Kirchhoff, 2013). Corporate social responsibility (CSR) is the response to ethical consumption on the part of the business which involves ensuring economic, social, and environmental benefits and considerations to serve as evidence of sustainable development (In Carrier & In Luetchford, 2012). This paper sets out to analyze and discuss Kellogg’s adherence to CSR in an explorative manner to give coverage to the company’s all important activities in this connection.
2.0. Kellogg’s and Corporate Social Responsibility
2.1. An Introduction of Kellogg’s
Founded in 1906, Kellogg’s is one of the most renowned food manufacturing companies headquartered in the United States. The company enjoys worldwide presence with its branches in several parts of the world and having more than 33000 individuals employed at different levels. It deals with a variety of food items mainly including crackers, cookies, cereals, cereal bars, toaster pastries, vegetarian foods, frozen waffles, and fruit-flavored snakes. Kellogg’s total revenue is exceeding $14 billion as of 2014 with immensely positive outlook (Kellogg’s Annual Report, 2015).
2.2. Kellogg’s CSR Activities
Kellogg’s CSR activities can be divided into five broad categories including marketplace activities, workplace activities, environment-related activities, community, and responsible sourcing. There is a detailed discussion on each of these five categories of business practices as follows: 2.2.1. Marketplace activities
It refers to the company’s approach to CSR with a special focus on customers. In other words, it provides a scale to evaluate the company’s CSR status by analyzing as to how it understands and satisfies its customer needs; what strategies it utilizes to attract the attention of its target audience; how it synergizes its operations with the organizational mission and vision; and how it deals with different categories of its customers (In Carrier & In Luetchford, 2012).
In the very beginning of its statement directed towards customers, it is stated that today’s customers want to learn about the processes involved in sourcing and manufacturing the food that they consume. And, the company utilizes every possible means within its capacity to achieve this purpose of ascertaining its target audience of its compliance with social responsibility. Through its annually published corporate sustainability updates, the company brings everything to the customers’ knowledge that they want to know. It includes recipes, ingredients used in its foods, sources to obtain material, and any other piece of information falling into this category (Kellogg’s 2016).
2.2.2. Workplace
As for the workplace, the company’s statement can be divided into different components. First of all, it aims at “growth culture”, which implies that it endeavors to blend its approach to growth with the organizational culture. Secondly, it encourages diversity in the workplace by promoting the culture wherein each individual holds respect for another regardless of differences in terms of religion, caste, color, nationality, or any other ethnic aspect. In addition to that, Kellogg’s also retains appropriate focus on the safety and welfare of its workers. Furthermore, it is also stated in the CSR annual update that the leadership style at Kellogg’s also complies with established ethical standards. In other words, the CSR framework followed by Kellogg’s ensures the socially responsible approach to its workforce, which, it considers, a big source of innovation, employee motivation, and productivity (Kellogg’s, 2014).
2.2.3. Environment
In its annual report, the company repeatedly expresses its interest in environmental protection and betterment considering it an important pillar of sustainable development. It conveys its message with regard to the environment by an example of the minimal use of natural resources for its own needs of energy. Furthermore, it also expresses its intention to contribute to global efforts to combat the climate change (global warming). The underlying food manufacturer also strives to reduce the waste sent to landfill consistently. It shows that Kellogg’s adopts a sustainable approach to the environment (Kellogg’s, 2014). Not only does it aim to make sure that it brings no damage to the environment through its operations, but also strives to contribute positively.
2.2.4. Community
Social benefit is one of three integral components of sustainable growth, so a company’s approach to its community or society largely determines its status of social responsibility. Kellogg’s declares that it aims to serve each community wherein it operates in the most beneficial ways within its capacity. Kellogg’s is a giant philanthropist with its large contribution to different charity and social welfare programs. Furthermore, the company spends millions of dollars at regular intervals to serve breakfast and refreshment to needy people. Some of its most significant activities in this connection include Advocating for Breakfast, School Breakfast, and World Food Day (Kellogg’s, 2014).
2.3. Success of Kellogg’s CSR Activities
In the previous section, Kellogg’s different CSR activities are discussed, while this part as a sequel to that sets out to assess and evaluate the level of success of the company’s CSR plan.
2.3.1. Ethical Sourcing
It is clearly stated in the company’s corporate social responsibility update that it firmly believes in ethical sourcing. Here, it is worth mentioning that the word “ethics” has the vast background and is perceived differently in different contexts (Graham, 2004; Foot, 1967). Therefore, the management also bothers to define ‘ethical sourcing’ from its own specific perspective. For example, the company believes that ethical sourcing is one that is good for all including the company, its customers, and the community from where the ingredients are sourced (Kellogg’s, 2014).
It is found that Kellogg’s utilizes its core strength i.e. brand identity to attract potential bidders to the tenders. Standard contracts with contractors contain terms and conditions centered on their compliance with social responsibility and sustainability. In other words, suppliers are under an obligation to follow ways defined by Kellogg’s to ensure their eligibility. They are bound to provide sustainable ingredients and not to indulge in any unethical activity (such as child labor) with regard to picking and supplying these ingredients (Kellogg’s Annual Report, 2015). Hence, the company’s claims of sustainability relating to sourcing are also supported by the legal process in procurement. It is indicative of Kellogg’s success in achieving its objectives relating to responsible and ethical sourcing.
2.3.2. Food Safety
Food safety being an important social consideration is an essential part of the corporate social responsibility. It refers to producing, handling, and storing foods in a way that guarantees prevention of food-borne diseases (In Carrier & In Luetchford, 2012). As discussed, today consumers are much more health conscious than ever before. Therefore, it is important for any food manufacturer to ensure adherence to the high standards of food safety.
Kellogg claims to have state of the art mechanism to ensure food safety. As discussed, it legally obligates its suppliers to follow ethical ways of producing and supplying the ingredients. Then, it has teams to supervise the process of manufacturing, handling, and storage. Hence, the processes and systems of the organization are implemented in the most appropriate ways to guarantee safe manufacturing and handling of food. And, to a great extent, it has also been successful in winning the trust of large consumer-base on the basis of its refined approach to food safety (Kellogg’s Annual Report, 2015).
Despite all its efforts, Greenpeace could identify serious issues regarding food safety by Kellogg’s. The company has been at the hit-list of Greenpeace since it first spotted the case of genetically engineered food items used in breakfast served to people. The underlying non-government organization (Greenpeace) holds that Kellogg’s need to bring reforms to avoid genetically engineered food products, as this practice may tell upon the health of its customers. Greenpeace has further ensured to tighten its monitoring of Kellogg’s to make sure that it does not repeat these unethical practices (Greenpeace, 2016).
2.3.3. Transparent Marketing
Kellogg’s realizes the importance of growing trends of transparent marketing. Gone the days when the majority of consumers were attracted by big claims. Today’s consumers (as also mentioned earlier) belong to the rational category and looks into every dimension before making a purchase decision. Claims play a crucial role, but they need to be backed by proper justification and rationale (In Carrier & In Luetchford, 2012).
Kellogg’s marketing efforts are mainly focused on keeping the customers updated on the ways that the company utilizes to source its ingredients. The company believes that it would not only be able to attract new customers but will also retain the old ones in a better way by nurturing trust among them. Therefore, it uses all possible means including website, electronic and press media, and social media to achieve the stated purposes in the most effective ways (Kellogg’s Annual Report, 2015). And, consistent growth along with a positive outlook of the company in terms of sales revenue, profit margin, and market share serve as evidence of the success of its marketing efforts.
2.3.4. Environmental Impact
As discussed, the food manufacturer in question is avoiding the use of fossil fuels and minimizing the waste sent to the landfill. It sets its goals relating to environmental protection on regular intervals with proper evaluation of the same. For example, the findings below indicate as to how it has been successful towards achieving its objectives relating to the landfills:
(Kellogg’s, 2014)
2.4. The Most Befitting CSR Framework for Kellogg’s
Corporate Social Responsibility has always been a controversial subject matter, as scholars and theorists are divided when it comes to its necessity and outcomes. The underlying controversies led to the models or perspectives relating to corporate social responsibility (Geva, 2008). Three of the widely practiced frameworks include CSR Pyramid, Intersecting Circles, and Concentric Circles as also shown in the figure below:
(Geva, 2008)
In Pyramid, it is believed that CSR should be followed, because it pays (with no or least focus on economic gains of business), while concentric circles make it look like an obligation that a company follows unwillingly. Kellogg’s is recommended to follow the midway approach i.e. intersecting circles, which is a strategic approach allowing the company to integrate economic benefits with other aspects of social responsibility. It is dually beneficial, as it serves as a good marketing tool being indicative of voluntary compliance with ethics. On the other hand, it also ensures excellent growth due to increased exposure resulting from increasing attraction for consumers.
3.0. Conclusion
List of References
Foot, P. (1967). Theories of ethics. London: Oxford U.P.
Geva, A. (2008). Three Models of Corporate Social Responsibility: Interrelationships between Theory, Research, and Practice. Willey Online Library. Available from http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8594.2008.00311.x/full [Accessed 17 January 2017]
Graham, G. (2004). Eight theories of ethics. London: Routledge/Taylor and Francis Group.
Greenpeace. (2016). Greenpeace Targets Kellogg’s for Double Standards on Food Safety. Available from http://www.greenpeace.org/usa/news/greenpeace-targets-kellogg-s-f/ [Accessed 17 January 2017]
In Carrier, J. G., & In Luetchford, P. (2012). Ethical consumption: Social value and economic practice.
Kellogg’s Annual Report. (2015). Annual Report 2015. Available from http://investor.kelloggs.com/~/media/Files/K/Kellogg-IR/Annual%20Reports/kellogg-2015-AR-10-K-v3.pdf [Accessed 17 January 2017]
Kellogg’s. (2014). Corporate Social Responsibility. Available from http://www.kelloggcompany.com/en_US/corporate-responsibility.html [Accessed 17 January 2017]
Kirchhoff, C. (2013). Ethical Consumerism. Encyclopedia of Governance. doi:10.4135/9781412952613.n169
