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LOBLAW COMPANIES LIMITED: ANALYSIS OF ETHICS & CORPORATE SOCIAL

RESPONSIBILITY STRATEGY

OZOEMENA IKENNA OKORO (2105480)

University Canada West

Busi 601: Ethics, CSR, and Business Environment (BON-FALL-33)

Dr. Eric Zvaniga

21/11/2021
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LOBLAW COMPANIES LIMITED: ANALYSIS OF ETHICS & CORPORATE SOCIAL

RESPONSIBILITY STRATEGY

BRIEF COMPANY OVERVIEW

Loblaw Company Limited, a subsidiary of George Weston Limited, is a Canadian integrated

conglomerate and retail behemoth that employs a multichannel strategy for sales and marketing. It is a

retailer of groceries, pharmaceuticals, cosmetics, apparel, general merchandise, financial and wireless

mobile products, and services (Canada Newswire, 2017).

The headquarter of the corporation is in Brampton, Ontario, Canada. Some of the company's

subsidiaries that operate in Canada include Joe Fresh, Shopper's Drug Mart, Market, Discount, and other

divisions. Customers can shop for groceries, use in-store pharmacies, or get telecommunications and credit

card services at any of its outlets (Loblaw SWOT Report, 2021). It also plays strongly in the ecommerce and

online shopping space, having formed partnerships with logistics and software development firms to make

this possible (Loblaw SWOT Report, 2021).

INDUSTRY ANALYSIS

In Canada, the grocery and retailing industries are mature, with well-positioned and well-capitalized

competitors. This makes it nearly impossible for new entrants to succeed, particularly those with low

resources and capabilities (Fitch Solutions, 2019).

Apart from Loblaw, other significant competitors include Sobeys, Tim Horton's, Subway, Metro,

Food Stores, Whole Food, Hello Fresh, Maple Leaf Foods, Maputo, Diary Crest, and others. In Canada's

grocery retailing business, global brands such as Walmart and Miniso are equally present and fiercely

battling for market share.

Notwithstanding the issues that grocery and retailing operators in Canada confront, such as rising

commodity prices, inflation, greater customer knowledge of healthier food options, and trade tensions, the

sector has been recovering at a gradual pace following the covid lockdown. This indicates that the sector's

prospects and investment opportunities are still promising and attractive (Fitch Solution, 2019).
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According to Fitch Solution (2019), a leading global market research firm, headline food and grocery

consumption in Canada will reach an all-time high of USD $148 billion by the end of 2023, up from USD

$128 billion in 2018, with a CAGR of 2.9 percent from 2018 to 2023. Similarly, revenue for the Canadian

apparel retail market is expected to reach USD 26 billion in 2023, up from USD 23 billion in 2018, with a

CAGR of 2.3 percent from 2018 to 2023. This supports industry expert’s projection of a positive outlook for

the grocery and pharmaceuticals retailing industry (Fitch Solutions, 2019).

SCOPE AND SIZE OF LOBLAW’S OPERATION

Loblaw is Canada's largest retailer of groceries and pharmaceuticals (MMR. May 24, 2021, p80).

They have deliberately engineered a robust network and coverage of stores across Canada over the years,

which would be difficult for any competition to match. As a result, with 2,431 stores strategically positioned

across the country as of 2020 year-end, they take satisfaction in the fact that at least 90% of Canadians live

within 10 kilometres of one of their store locations (loblaw.ca, 2021).

Loblaw is equally proud to be ranked among the top 100 employers in Canada (loblaw.ca, 2021). As

a backdrop, it's not surprising that they employ over 200,000 direct and indirect employees who oversee

operations in their 2,431 locations across Canada (loblaw.ca, 2021).

Additionally, they have built solid portfolios of private-label brands, products, and services over the

years, which are sold or made available throughout their store network and are only made available to other

independent food retailers on a limited basis. This has helped the company's image, long-term growth, and

financial success (Loblaw SWOT Report, 2021).

Loblaw reported a record revenue of CAD 48 billion in fiscal year 2019, up from CAD 6.7 billion in

fiscal year 2018, representing a 2.9 percent annual growth rate. Similarly, operating margin increased from

4.1 percent in FY2018 to 4.7 percent in FY2019, while net profit margin increased from 1.9 percent in

FY2018 to 2.3 percent in FY2019 (Loblaw SWOT Report, 2021).

Again, Loblaw has grown and acquired capabilities both organically and via purposeful mergers and

acquisitions. The 2014 acquisition of Shopper's Drug Mart was one of the company's most significant

acquisitions. With over a thousand locations across Canada, Shopper's Drug Mart had strong brand equity
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and reputation at the time of the deal. As a result of the deal, Loblaw became the undisputed grocery retailer

with Canada's largest store network, providing customers with choice, value, and convenience (loblaw.ca,

2021).

LOBLAW’S STAKEHOLDERS AND THEIR VARRYING INTERESTS

Stakeholder engagement refers to a company's commitment to understanding and involving

important people, groups, or organisations in their strategic and operational initiatives by taking their moral

concerns into account (Sexty, 2020).

Stakeholders at Loblaw are defined as people who are influenced by the company's activities, as well

as business partners, significant individuals, and organisations interested in exploring how they can improve

their operations (Loblaw CSR Report, 2020).

Loblaw has a wide and diverse set of stakeholders, all of whom are vital to the company's success.

Because they contribute to their materiality evaluation and provide guidance on their main operations, they

see them as supportive of their CSR efforts (Loblaw's CSR Report, 2020).

In addition, the Freeman General Stakeholder Strategy describes stakeholder management capability

as managers' ability to recognise stakeholders and their influence, build organisational procedures to

understand stakeholders, and engage in direct contact with their stakeholders (Sexty, 2020).

Using the stakeholder matrix mapping approach, the table below summarises Loblaw's stakeholders,

their corresponding channels of engagement, points of interest, and the categorization of their levels of

influence:

LOBLAW STAKEHOLDERS’ MAP MATRIX

Stakeholders Channels of Engagement Points of Interest Category of Influence (Matrix
Identified Mapping)
Customers &  In-store customer  Food Waste. Loblaw’s customers rank highly
Communities experience.  Plastic & as stakeholders with great
 Consumer surveys and packaging. importance and high support for
focus groups.  Animal the business.
 Social Media monitoring welfare. Some host communities may
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& engagement.  Food access oppose certain practices of

Loblaw, but concerns are
considered highly as Loblaw
continues to explore a better way
of doing business and CSR.
Colleagues,  Annual ‘tell it all as it is’  Labor Employees and their unions rank
employees, engagement survey. practices. highly as stakeholders with great
franchises,  Intranet, emails,  Engagement, importance and high support for
associates, and meetings, and Compensation, the business.
labor unions negotiations with labor and HSE.
unions.  Professional
development
Vendors and  Vendor portal.  Locally Vendors rank highly as
suppliers  Supply chain compliance sourced food. stakeholders with great
agreements.  Human rights importance and high support for
 Integrity action line  Supply chain the business.
disruption
Shareholders  Direct investor  Climate risks Shareholders and investors rank
& Investors engagements & & action. highly as stakeholders with great
meetings.  Cybersecurity. importance and high support for
 Conferences, AGM, &  Plant-based the business.
earnings calls. products.
 Questionnaires and  ESG
surveys. transparency
Charities,  Public relations,  GMOs. Some charities and NGOs may
NGOs & government relations, &  Diversity, oppose certain practices of
Activists CSR equity, and Loblaw, but concerns are
inclusion. considered highly as Loblaw
 Corporate continues to explore a better way
philanthropy. of doing business and CSR.

 Human rights.
 Climate
action.
SOURCE: Loblaw Company Limited CSR Report, 2020, p8.

ETHICS/CSR ISSUES AND APPROACH TO ETHICS CSR MANAGEMENT

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The environmental, social, and governance (ESG) landscape is being impacted by a variety of issues

around the world. Due to a lack of resources, limited expertise, and other considerations, no single

corporation or government may ever be able to address all these challenges on its own.

As a result, most companies create a framework to identify ESG areas that are essential to their

stakeholders and focus on making a difference in those areas. Loblaw follows this same approach.

Loblaw conducts assessments to determine which CSR goals to pursue, including benchmarking

against peers to identify existing and emerging ESG priorities and an examination of global ESG trends and

regulatory regimes. They also look at recommendations from reporting frameworks, such as the

Sustainability Accounting Standards Board's (SASB) Food Retailers and Distributors Standard, the United

Nations Sustainable Development Goals (SDGs), and the Task Force for Climate-related Financial

Disclosures' (TCFD) recommendations, to figure out which ESG factors are most important for their

industry (Loblaw CSR Report, 2020).

In 2018, Loblaw conducted their initial materiality assessment based on guidance from the Global

Reporting Initiative (GRI) Standards (2016). As part of the initial 2018 materiality assessment, a preliminary

list of sustainability topics was established based on industry-specific guidance, peer analysis and prior

assessments. To prioritize these topics, they also engaged 39 stakeholders, including investors, suppliers,

peers, and NGOs, through surveys and interviews (Loblaw CSR Report, 2020).

The results of this assessment were compiled and reviewed to help them understand the importance

of those sustainability topics to their stakeholders, which helped inform their ESG priorities (Loblaw CSR

Report, 2020).

CSR TARGETS RESULTS RANK ON

STAEKEHOLDERS’
SCALE OF
IMPORTANCE
To reduce operational carbon Target Achieved. Carbon footprint Ranked highly important by
footprint by 30% in 2030, against reduced by 30.9% as of 2020. stakeholders on the
a 2011 baseline materiality assessment
survey.
To reduce food waste by 50% in Target achieved. Food waste sent to Ranked highly important by
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their corporate retail operations, the landfill has been reduced by stakeholders on the
against a 2016 baseline. 86% vis-à-vis the baseline. materiality assessment
survey.
To invest $1million in plastic Target in progress. $353,000 Ranked highly important by
research and community cleanup already invested for plastic research stakeholders on the
by 2025. and community clean up. materiality assessment
survey.
By 2024, they want to have 40% Target in progress. 34% of Ranked highly important by
of women on their board of executives and 40% of management stakeholders on the
directors, 40% of women on their staffs identify as women. materiality assessment
executive management team, and survey.
43% of women in senior
management positions.
Purchase $150 million extra in Target in progress. More Ranked highly important by
Canadian goods that would agreements being reached with stakeholders on the
otherwise be imported, by 2025. local vendors and framework of materiality assessment
responsible sourcing being survey.
established.
SOURCE: Loblaw Company Limited CSR Report, 2020, p11.

CONCLUSION

Loblaw aims to achieve good environmental and social impact as Canada's food and pharmacy leaders

by concentrating on the topics that matter most to their stakeholders. Their efforts are concentrated on three

areas where they believe they can have the greatest impact:

 Respect for the environment: They want to limit their operations' environmental impact and invest in

the protection and restoration of Canadian biodiversity. To have an effect and combat climate

change, they focus on food and plastic waste reduction, energy use, transportation, and refrigerant

efficiency. They are proud of their accomplishments and recognise that there are more ways to help.
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 Responsible Sourcing: They provide Canadians with a selection of and access to responsibly sourced

goods. They can produce products and services that reflect the company's and customers' values

thanks to a continual growth in innovation and collaboration across their businesses, supply chains,

and suppliers. They are primarily committed to procuring from Canadian suppliers and those who are

committed to a long-term future.

 Making a good effect in the community: They make a difference in the lives of Canadians by

ensuring that their colleagues, customers, and communities have equitable opportunities. They

promote health and wellbeing, as well as diversity, equity, and inclusion ("DEI") across their

business and through their philanthropic initiatives. To have a significant influence in their

communities, they must address childhood hunger, prioritise women's health, and fund research that

develops sustainable food solutions.

REFERENCES
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Canada Newswire, 12/27/2017. 201712270800CANADANWCANADAPR.C1822

Fitch Solutions, 2019. Canada Food & Drink Report: 5-year forecasts to 2023.www.fitchsolutions.com.

ISSN: 1753-3376.

Loblaw Companies, Ltd. Corporate Social Responsibility 2020. Environmental, Social and Governance.

2020, p1-55.

Loblaw Companies, Ltd. SWOT Analysis. 4/21/2021, p1-7.

Loblaw Companies Limited: Who we are. https://www.loblaw.ca

MMR, Daily (May 24, 2021). Racher Press Incorporation, p80.

Sexty, R. (2020). Canadian Business & Society: Ethics, Responsibilities, and Sustainability (5th Ed).

McGraw-Hill Education Limited.