Business Conceptual Essay #1

Question: Using a business of your choice, discuss the impact of sustainability on

a companies CSR programmes (Strategy)

ZARA is a Spanish multinational retail clothing chain founded by Amancio Ortega in

1975 and based in Galicia, Spain, it is the flagship chain store of the Inditex group, the
world's largest apparel retailer. The company operates over 2,220 stores, uses
‘high-end’ looking stores to provide the latest fashions, at a high quality, whilst at the
same time, still being affordable. The customer is at the heart of a unique business
model, which includes design, production, distribution and sales through its extensive
retail network. Impact of sustainability on Zara’s CSR programmes is strongly
correlated to the development and success of the corporate social responsibilities
embedded by Zara- a company seeks to develop a more sustainable business, to
improve the brand image, as well as benefit its key stakeholders, whilst maximising
profits. Corporate social responsibility (CSR) is a business model through which a
company achieves a balance of economic, environmental and social imperatives. CSR
is a shorter-term reporting initiative whereas sustainability focuses on the future
growth. In a business, sustainability refers to meeting the needs of the present without
compromising the ability of future generations to meet their own needs. Zara employs
their business strategy to outline the specific ways in which an organisation plans to
position itself, achieve its short-term and long-term goals, as well as grow over a
period of time.
Zara outlines social sustainability as a tool to develop and implement its main
social CSR program on human rights. The purpose of this program is to make a
positive impact on the lives of millions of people, starting with those that make up
their team, which comprises 182 nationalities. The following CSR program enables
Zara to benefit all stakeholder groups, most prominently its management. As socially
sustainable practices can help strengthen community bonds, encourage freedom of
speech and expression throughout the work. ZARA advocates respect for human rights
in all its operations, a principle that is ingrained in its business strategy and fully
integrated throughout the corporate model. A clear example of this is the Policy on
Human Rights, approved by the Board of Directors in 2016, which represents the first
pillar of the company's strategy. In addition, Zara has exceeded their target for
women's representation on the Board of Directors, reaching 45% in 2022. The impact
of social sustainability, to integrate the promotion of and respect for human rights, on
the Human rights CSR program- enables Zara to employ and consistently improve
their three pillar strategy. Thus, it is evident that sustainability affected Zara's CSR
programs
Environmental sustainability, as a cornerstone of Zara’s business model, implies
promoting responsible consumption and production programs. Environmental
sustainability refers to responsibility to conserve natural resources and protect global
ecosystems to support health and wellbeing of all stakeholder groups. Zara
implements several CSR programs to achieve it. This can be seen in the company's
recent “100 million euros commitment” with Infinited Fiber Company, to purchase
30% of the future production volume of fibre produced entirely from discarded
garments. In addition, mindful of the importance of working with suppliers in this
matter, Zara demonstrated the environmental improvement plan to promote
improvements in production processes and facilities for a better use of resources,
reducing their water and energy consumption. Implemented strategies to achieve a
development of environmental sustainability, enable Zara’s CSR programs to
concentrate on the world’s most prominent environmental issues, such as climate
change and pollution.
Zara’s contribution to sustainable development extends to all levels of the
company, considering the governing bodies- most notably, the Sustainability
Committee. Moreover, the Group has a Social Advisory Board, an external body that
advises Zara on sustainability issues. One of the implemented CSR programs,
considering CEO’s direct engagement with sustainable development, employs up to
15% of the CEO's variable remuneration to be linked to compliance with sustainability
policies. In addition, 25% of the 2021-2024 long-term incentive scheme for members of
the management team and other key employees is based on the achievement of
sustainability targets. Appliance of following CSR programs increases management
motivation and productivity, whilst contributing to sustainable development.
Zara implies all of the company’s CSR program strategies with 17 Sustainable
Development Goals (SDGs), which in return provide a powerful framework for
businesses to engage in corporate social responsibility. When the 2030 Agenda for
Sustainable Development was approved in 2015, Zara aligned its sustainability strategy
with Sustainable Development Goals (SDGs) and targets, mindful that only by achieving
all of them will it be possible to eradicate poverty in all its forms, reduce inequalities
and stop climate change. This alignment has given Zara a comprehensive view of the
impacts and the opportunities for promoting sustainable development and
collaboration in the communities in which they operate. This compromises
sustainability’s direct impact on all the company’s CSR programs, contributing to
strategies implied to improve brand reputation, as well as conserve natural resources
and protect global ecosystems.