Tesco plays Wal-Mart’s eco game

Tesco is not everyone’s favourite supermarket. The company has been accused by NGOs, dedicated to its break up, of building stores irresponsibly in order to drown out retail competitors. The groups, many of which concentrate their efforts via the website Tescopoly, say the company is maintaining a strangle hold on the UK grocery market.

Mirroring the efforts of Wal-Mart in the US, another supermarket on the receiving end of bad press, Tesco has adopted a new green image. One look at Tesco’s website and you are inundated with healthy eating or charity support ads.

Tesco’s latest corporate responsibility review outlines the key aims of the born-again supermarket. These include adopting a number of measures to become climate-friendly. They have landmark plans, such as building renewables on-site, launching a £100 million climate technologies fund, and carbon labelling goods in store.

Tesco’s new climate friendly policies not only give the supermarket a new look, they also fall neatly in line with recently announced plans by the UK government to include supermarkets in the emissions trading scheme and encourage a carbon labelling scheme into place, which may one day be mandatory. Alongside this sits planned EU legislation to ban HFC fridges.

Tesco’s promises

Tesco has pledged to cut energy usage per square foot by 50% by the beginning of next year compared to 2000 levels, to cut emissions in half by 2020, triple its recycling, and improve in-store climate communications for customers.

It backs up these pledges by putting money into new environmentally friendly refits for their stores, costing an estimated total of £500 million, as well as into research.

A separate investment of £100 million will go into developing low carbon technologies and £5 million into Tesco’s new Institute for Sustainable Consumption that has been set up with the help of Oxford University. The institute will be working out how consumer information initiatives such as carbon labelling and recycling information are going to work.

Tesco has suggested it will roll out a carbon-labelling scheme in a few years time. Meanwhile the UK government recently announced plans to develop a carbon labelling methodology within 18 months in conjunction with the major supermarkets and the Carbon Trust.

The first environmental labelling scheme initiated by Tesco has been putting aeroplane symbols on all airfreighted products in stores. However, recent research in this area indicates the future climate change debate will be less about where something is made than how.

Ready for Trading

No deadlines have been set for the development of new climate technologies from Tesco’s £100 million investment. On a practical level the company is working on installing ten combined heat and power systems this year, looking into gasification – the process of turning food waste into clean, sustainable power – and installing a straw-fired generator at one of its sites. This promises to deliver biomass combustion and steam turbine power.

Tesco’s efforts to cut its emissions coincide with the UK plans (announced in May’s UK energy white paper) to include supermarkets in the emissions trading scheme.

Although the details of the trading scheme have not yet been released it seems likely, from the way the current EU emissions trading scheme works, that emissions caps per company would be dependent on the size and nature of the business.

More stores

Whilst cutting emissions, Tesco is simultaneously building a new store almost every week.

This is potentially a win-win for Tesco if its emissions caps increase with its size whilst emissions from stores decrease. Tesco calculates its energy and carbon cuts per square foot of Tesco building space. Tesco store space alone accounts for a massive 26.7 million sq ft. By August 2006 they owned 1,426 stores worldwide.

Tesco’s out of town stores are particularly open to criticism. Whilst these stores are pioneering on-site renewable technologies, there is no effort to offset the car emissions of customers travelling to the stores. Tesco estimates that customers make 20 million car journeys to Tesco stores every week.

The supermarket is making moves to achieve its direct emissions targets, having commissioned a carbon footprint to be independently audited, by Environmental Resources Management, a consultancy. The recent audit revealed that the Tesco Group has a direct annual carbon footprint of 4.13 million tones of CO2 equivalent.

Green freezers

If Tesco manages to halve its energy usage, and therefore its reliance on electricity from national grids by 50%, then it will have already achieved a 27% cut in emissions. The remaining cut in emissions, is likely to come from cutting out HFC refrigerant gases, potent greenhouse gases, by replacing conventional store fridges with low carbon alternatives.

Replacing HFC fridges is a move Tesco and all other European supermarkets will have to make soon anyway.

Supermarkets anticipate an EU-wide ban of HFC fridges by 2011 on environmental grounds. A number of UK supermarkets have joined forces to work on a solution, including Tesco, Sainsbury’s, Somerfield, Waitrose, Marks & Spencer and Asda.

According to Dr Doug Parr from Greenpeace, there are currently technical and cost problems with producing HFC-free store fridges because of the bespoke nature of the shop fits. But these are not insurmountable problems. Parr says that the supermarkets are “serious” about implementing these aims.

Tesco named Coca Cola and Unilever as two of its partners working to cut supply chain emissions. Greenpeace has lobbied both these companies in the past to use climate friendly fridges. And Unilever has now deployed 100,000 green fridges worldwide and plans replace another two million.

Undoubtedly fridges will be high on the Tesco partnership’s working agenda. Tesco has already pushed Coke to put climate-friendly drinks cabinets in Tesco stores.

No choice editing

One of Tesco’s UK rivals, Marks & Spencer wants to “choice edit” the products it sells in future. This includes plans to stop selling incandescent light bulbs in stores by 2008.

Tesco, however, subscribes to a more laissez-faire attitude. It is not phasing out incandescent light bulbs, but instead providing cheaper energy saving alternatives in stores. Similarly it does not intend to take carbon intensive goods off the shelves, before or after carbon labelling comes into force.

In its recently released corporate responsibility report Tesco claims to be “working with others to develop new low-carbon technology throughout the supply chain”. Despite this there have been murmurs in the supermarket industry that the company is confused about how it will achieve supply chain emissions cuts, a source of emissions far greater than Tesco’s direct footprint.

The company is reticent about its plans in this area, as are many companies. This is in spite of investor concerns highlighted by the Association of British Insurers.

A waiting game

Lucy Neville-Rolf, group corporate affairs director at Tesco, indicates that Tesco may be waiting for carbon labelling to trigger lowering supply chain emissions. She says she is confident that once carbon labelling is in place, market pressures will naturally push down the carbon content of products in the same way that nutritional labelling pushed down the average fat and salt content of processed foods.

“Nutritional labelling radically changed behaviour in customers, buying low fat, low salt foods,” she said at Ethical Corporation’s Responsible Business Summit in May. “At the time”, she said, “we didn’t expect the scale of recipe change within the supply chain as a result of customer choice.”

She believes that carbon labelling will have a similar revolutionising effect on the supply chain, as consumers opt for lower carbon products.

But carbon labelling could also be likened to Fairtrade labelling, which remains a niche market in the UK despite years of saturation consumer marketing. Some commentators, such as Mike Mason, CEO of offsetting company Climate Care, feel the carbon label should be used sparingly, where it can make most impact.

Two birds, one stone

Tesco is using its green aims to grab some welcome good public relations, whilst reforming the business to position itself as well as possible for new low carbon regulations.

Even the store’s renewables technology scheme is coming at exactly the right time, when the UK government has just announced in its energy white paper, a massive shake up of planning regulations for renewables as well as government investment in decentralised power generation schemes.

Tesco sees a huge market in green consumerism opening up. As well shifting millions of cheap green goods, such as low-cost energy saving light bulbs, Tesco stands to make large profits with its more expensive goods, such as green electricals, if the market takes off.

Serious about pioneering low carbon consumerism, Tesco has already pledged to work with suppliers to develop an energy-efficient equivalent for every standard light bulb. The question remains over whether low carbon goods will have enough consumer appeal.

Neville-Rolf says the market for attracting customers away from rival supermarkets is worth £10 billion. Providing goods for green shoppers will only widen Tesco’s consumer appeal.

Being the UK’s largest retail chain, Tesco has an obvious chance to lead the consumer market on tackling climate change, and reap the financial rewards for doing so. How far and how fast the company moves on supply chain carbon may prove to be a bellwether for the rest of UK plc.


How Tesco has cut its energy usage

· More energy-efficient ovens, refrigeration and air-conditioning – the big users of energy in stores.
· More efficient lighting, and timers and motion detectors that switch off the lights when they are not needed
· Redesigned fridges to keep more of the cold air in – cutting energy use by 10%.
· Equipment that retrieves cold air from chiller cabinets to use as an energy-efficient alternative to air-conditioning on the sales floor.
· Heat recovered from machinery to use as heating when needed.

Tesco group’s emissions



source: www.Tesco.com