Case study: Tesco Plc

Tesco plc. obtained the highest score (83%) in the 2020 TCD benchmarking assessment of large companies operating in Ireland. Tesco describes itself as a leading grocery retailer with over 400,000 staff serving millions of customers every week across its stores and online. Tesco first entered the Irish market in 1997 and today has 151 stores in towns and cities across Ireland. Tesco Ireland employs 13,000 colleagues across its head office, distribution centre and stores nationwide.

Tesco Ireland kindly provided the following responses to a series of questions on its approach to the UN Guiding Principles on Business and Human Rights:

"Overall, we believe our trade is a force for good, creating jobs and opportunities for people and communities across the world. But we also want those jobs to be good jobs. We are committed to upholding human rights and support in full the United Nations (UN) Universal Declaration of Human Rights and the International Labour Organization (ILO) Core Conventions on freedom of association and collective bargaining, forced labour, child labour and discrimination at work. We also uphold standards on working hours and health and safety for workers. As founding members of the Ethical Trading Initiative (ETI), we have been taking action on these issues since 1998. More detailed information is available."

What does the governance of human rights look like in Tesco?

"Our human rights strategy is led by the Group Responsible Sourcing Director, within our Product division who reports to our Group Quality Director and Chief Product Officer and who are responsible for product sourcing across all Tesco’s retail businesses.

Governance and progress monitoring of our human rights work, for all markets and subsidiaries, sits with the Board’s Corporate Responsibility Committee, which meets three times a year.

On a day-to-day basis, colleagues in our commercial and technical teams manage supplier and site relationships, and ethical requirements with support from a specialist responsible sourcing team, including dedicated local staff in 9 key sourcing countries."

How have you embedded your commitment to human rights into Tesco’s DNA?

"Our work on human rights is fully integrated within our operations, forming a key part of our broader strategy for responsibility and sustainability as laid out in the key commitments of our Little Helps Plan. Our Little Helps Plan is the framework through which we shape our long-term approach to sustainability. It enables us to demonstrate, monitor and improve our performance, both within our own operations and the wider supply chain.

All Tesco UK Buying Managers and Technical Managers are required to attend internal training which covers topics such as responsible sourcing, human rights and modern slavery.

Responsible sourcing criteria are also integrated into commercial reviews, when new contracts are set and throughout the tender process. Commercial reviews are based on three pillars which are weighted equally: price, quality and service. Responsible sourcing sits within the quality pillar and for priority products a member of the Responsible Sourcing Team will review each supplier and advise on supplier performance from a responsible sourcing perspective. The Responsible Sourcing Director is also required to approve any new supplier or any significant new contracts to ensure that responsible sourcing is considered.

Advice for business enterprises starting off: A robust and regularly reviewed risk assessment is key – ensure consultation with industry and expert stakeholders."

How has Tesco identified its salient human rights issues (i.e. the most severe human rights issues connected to your company)? What are those issues?

"Our human rights supply chain programme extends to everything we source for our Own Brand including Tesco-exclusive brands, services and goods not for re-sale to customers.

Our due diligence process was developed in consultation with over fifty internal and external stakeholders, including suppliers, multi-stakeholder bodies such as the Ethical Trading Initiative, trade unions, civil society groups such as Unseen and Oxfam and government bodies. Our due diligence framework has five stages:

1. Risk assessment

2. Prioritising and identifying leverage

3. Mitigating risks

4. Remediating and grievance mechanisms

5. Monitoring and communication

Our risk assessment framework for Own Brand products looks at five metrics, which have the potential to increase the vulnerability of workers:

1. Country of origin – assessing the enabling environment of the supply chain

2. Type of work – assessing whether a role requires a skilled, semi-skilled or unskilled worker

3. Type of labour – identifying whether a role is permanent, seasonal, or through an agency

4. Known industry, cultural or community issues – identifying any endemic challenges such as gender discrimination

5. Supply chain capability – assessing the knowledge and capacity suppliers have to address supply chain risks.

These risk metrics are then mapped end to end in our key supply chains, allowing us to identify the most salient supply chain risks, wherever they occur. To underpin this process, Tesco UK, Republic of Ireland and Central Europe use the country risk ratings from the Food Network of Ethical Trade (FNET) – a collaborative industry platform.

Our risk assessment enables us to identify our highest areas of risk and to work out our priorities for the next three to five years."

What actions is Tesco taking to manage these issues?

"Once we have identified our priorities, we then seek to work collaboratively with our suppliers, wider industry, civil society and, where appropriate, policy-makers to mitigate human rights risks.

Ethical auditing is predominantly focused on the ‘first tier’ of the supply chain, i.e. sites producing the final product, such as a clothing factory or food manufacturing plant. Sites in high risk countries must have an audit before supply and then on an annual basis. We also audit beyond first-tier based on the risk of the products being produced. For example, we audit down to grower level for our fresh fruit and vegetables and do this in collaboration with our first-tier suppliers who cascade our requirements along the supply chain. We also use certification standards to help us improve standards for workers and smallholders in our supply chain. Our primary certification partner for a number of key supply chains is the Rainforest Alliance."

Can you share any examples of progress against the issues?

"We recognise that in many cases we cannot address labour rights abuses without first addressing the root causes which underlie them – ethical auditing alone often does not address root causes.

• Example - forced labour - Responsible recruitment: We recognise that debt bondage caused by excessive recruitment fees charged to workers can lead to situations of forced labour. As members of the Institute of Human Rights and Business Leadership Group for Responsible Recruitment we have committed to the Employer Pays Principle that – no worker should pay for a job, the costs of recruitment should be borne not by the worker, but by the employer. Recognising the risk of excessive recruitment fees is greatest in Asia, we have launched (2020) new requirements for UK/ROI suppliers in Thailand and Malaysia to embed the Employer Pays Principle within our supply chains there.
• Example – sustainable livelihoods/living wage – bananas: In 2020 we have required all producers to complete the IDH Salary Matrix. The tool defines a consistent method to assess current wages at a site and compare this to a living wage benchmark. We are using this tool to work with our suppliers to gain greater visibility of living wage gaps so that we can jointly create timebound actions plans to improve wages. We are also working with the World Banana Forum and other key stakeholders to develop a timebound industry commitment to living wages."

Has Tesco engaged any directly affected stakeholders on these issues? If yes, which stakeholders and how?

"The due diligence process was developed in consultation with over fifty internal and external stakeholders, including suppliers, multi-stakeholder bodies such as the Ethical Trading Initiative, trade unions, civil society groups such as Unseen and Oxfam and government bodies.

• Tea – Malawi – Sustainable livelihoods: We pay a higher than market value purchase price for our Malawian tea, which is NGO verified, to generate additional value for the estate workers. To understand how best to spend this additional money we have collaborated with the Ethical Tea Partnership to undertake a survey on the ground in Malawi to gain insight into what in kind benefits tea estate workers value the most.

Top Tip: Collaborate, share learnings and discuss challenges with other businesses/industry – throughout the whole journey."

Has Tesco provided any remedy related to human rights impacts by your company? If yes, can you describe the process and outcome?

"A number of examples in our MS statement including:

One issue we monitor particularly closely in key sourcing countries is that salaries are paid on time and in full for all hours worked, including overtime premiums where relevant. We do this because we know how important it is for workers, and because ensuring workers are not in debt means they are less vulnerable to any risk of forced labour. Where we identify a shortfall in payment, we require suppliers to pay back any missed wages. In the rare occurrence that suppliers do not agree, we exit our relationship with them in a responsible manner. In 2019/20 we identified 52 cases, affecting 7,060 workers, where payments had fallen short of what should have been paid, including premiums for overtime, that were subsequently addressed as a result of Tesco’s intervention."

Through what means can Tesco receive complaints or concerns related to human rights impacts?

"All Tesco employees and workers in Tesco’s ‘first tier’ supply base have access to our confidential, independently managed Protector Line. Workers in lower tiers and communities can also use the line and all concerns will be investigated, but it is not communicated directly to these workers and communities. Protector Line is promoted in the language relevant to the location of the site. Call operators speak a variety of languages, and “in call translation” can be used to ensure that the caller can speak in the language that they choose to.

In some contexts there are potential barriers to using such grievance mechanisms – for example language, access to telecommunications, low literacy - or where there are additional vulnerabilities for women, migrant workers or small-scale farmers. That’s why our team of 45 responsible sourcing specialists based across 9 key sourcing countries increases our ability to find out about local concerns, through dialogue with a range of stakeholders. They will investigate any issues of concern and will take appropriate remedial action.

In 2019, we also entered into partnership with the charity, Unseen, who run the UK’s only fully independent and confidential Modern Slavery helpline. Helpline advisors are able to support potential victims of modern slavery as well as offer a way for businesses and the general public to raise suspicions or concerns. We strongly encourage all our primary supplying sites in the UK as well as our distribution and fulfilment centres promote the helpline, enabling us to continue to raise awareness of modern slavery."