Daraga Supermart (DAMART) has a full offering of groceries and general merchandise in a single store. DAMART offers to its customers a one-stop shopping experience and is the largest private employer in the island province of ALBAY as well as being the province’s largest retailer. It has more than 8 retail units under 6 different banners in 7 municipalities. They all share a common goal: “Providing cheap but quality products to save the Probinsiyanos’ money so they can live better”. DAMART employs 2,000 associates provincewide and generated net sales of PhP 44 billion during the fiscal year of 2020.

DAMART was founded in 2010, with the opening of the first DAMART store in Barangay Maroroy,Daraga, Catanduanes. The company was incorporated as DAMART Stores, Inc. on November 16, 2010 The company’s shares began public in 2015 and was listed on the PSE five years later.

The Company’s CSR Policies and Reporting

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Several academicians from the local University have pointed to DAMART as an important emerging private actor in the transformation of law making in the CSR field. They highlight how DAMART is able to use its contractual relationships to regulate behaviour among its suppliers around the globe with respect to product quality, working conditions for the suppliers’ employees, and ethical conduct. Since 2012 DAMART publishes its annual report on its website. It was called the “Responsibility Report”. The purpose of this action is their belief that it reflects the new social and environmental dimension. They believe in transparency and accountability as part of being a good and responsible company. DAMART’s annual report publishes its constant and progressive work towards social responsibility issues. The report is divided into three main reporting parameters: Environment, Social and Goals.

DAMART’s current performance, policies and financial figures at first sight portray DAMART as a role model company on CSR.

The Company’s Conflicts

Even with its very young age, DAMART has faced many obstacles over the years. It seems that legal and social challenges have acted as important reasons for the development of its code of conduct and annual reporting. This statement can be illustrated in two relevant cases: DAMART vs. CHR and the press reports accusing DAMART of using child labor.

DAMART vs. CHR. The case started a few years after DAMART’s initial operation and is still being heard by the local Court in the province. It commenced as a national class action against DAMART’s Plaintiffs, the CHR, on behalf of employees and others similarly situated, allege that female employees in DAMART were discriminated against based on their gender. They stated that these employees were discriminated against regarding pay and promotion to top management positions, thereby violating existing Philippine laws. DAMART argues that the complainants were not typical or common of the class. DAMART brought the matter to the Supreme Court after they lost in the lower courts. Finally, the situation changed when the Supreme Court reversed the decision.

Despite the Supreme Court resolution, time, money and efforts invested up to this point, the case did not end there. The following year, the plaintiffs’ lawyers filed an amended lawsuit limiting the class to female DAMART employees in one of its outlet in the northern municipality of Albay. This case is expected to be the first of many additional cases against the business. The new case alleges discriminatory practices against more than 75 women regarding pay and job promotion as well as requiring non-discriminatory pay and promotion criteria.

DAMART caught hiring child labor in its branch in the Northern Town in Albay

On it’s 5th year of operation, a local broadcast media in the province made public the news that DAMART was using child labor at one of its branches in the Northern Town of the province. These children were aged 10-14 years old and were found to be working and being paid below the legal minimum wage rate.

Referring to DAMART’s policy at that time consisting of cutting ties with the local management of DAMART’s branch and dismissing the laborer because of the situation, when violations occurred, a non-government organization said that ‘cutting and running is the worst possible response to reports of child labor. Critiques said that it only discourages workers from telling the truth to investigators for fear of losing their jobs and encourages local branch management to hide abuses or to subcontract work to other stores that will escape inspection.

Nevertheless, DAMART ceased business with that specific store outlet in the Northern part of Albay DAMART alleges that despite its effort to inspect all branches, it is difficult to enforce its own corporate code of conduct with so many branches and employees around the province.

DAMART’s CSR Policies as an outcome of the complaints received

DAMART developed its first Code of Conduct (COC) “Standard for Branch Operations” which mainly focuses on quality standards for branch operations only. However, DAMART’s first general report (‘Report on Ethical Sourcing’), which includes suppliers, customers and associates, was generated in the ensuing year. This report was elaborated after the filing of the lawsuit by the female employees and the damaging campaigns and press publications accusing DAMART of using child labor. DAMART ‘s reporting culture was imitated by the rest of the companies in the market.

The Report on Ethical Sourcing reported that DAMART had ceased to do business with at least two of its branches, primarily because of underage labor violations.The Report also contains a chart with the main violations found during the audits. Gender discrimination was not mentioned at any stage throughout the whole document. DAMART’s OC “Standard for Branch Operations” explicitly establish that DAMART would not tolerate the use of child labor. The COC sets the age of 18 as the minimum age for branches and subcontractors to hire workers. It also specifies non-discrimination on the basis of gender and other personal characteristics or beliefs. It is important to highlight that gender discrimination was not given any special treatment in the COC or in the general report.

DAMART ‘s zero tolerance policy for underage workers was changed. If a single underage
worker will be found in a branch, DAMART ceased business ipso facto. If two underage workers will to be found, the branch would receive a warning and had to change and correct in the follow-up audit. If more than two underage workers are to be found or the branch did not make corrections, the branch will be permanently banned from DAMART‘s operations. This decision was based on an NGO advice as well as the local religious-linked NGO. If DAMART cuts business with these branches, many workers could be laid off for lack of operations, suppliers will hide abuses and workers will not tell the truth to auditors in order not to lose their jobs. DAMART has a strict corporate code of conduct in the industry but according to investigations DAMART is not able to enforce its code in far flung municipalities in the province.

Currently, DAMART publishes a full and complete report on CSR issues This report covers the three dimensions of “People, Planet, Profit”. It emphasizes gender equality and a diverse workforce. DAMART has a Gender Equality and Diversity gender policy which they duly announce through local publications and newspapers as well as tarpaulins.

DAMART has also committed itself to achieving its three goals using 100% renewable energy, creating zero waste, and selling products that sustain people and the environment.
These criteria are established and measured by DAMART. The company indicates every year its completed goals and the progress in the ones that have not yet been achieved. An example of quantifiable measures is creating a zero waste DAMART by eliminating solid waste.

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