Tesco: does every little help?

As the UK’s biggest retailer Tesco takes more than £1 of every £8 spent on the UK high street. Last year’s record profits of £2.8bn are evidence that its mission to provide “unbeatable value” has gone down well with customers.

Tesco hasn’t always been popular with environmentalists, however, and the supermarket giant has seriously greened up its image in the past couple of years. Back in January 2007 its chief executive, Sir Terry Leahy, said: “To achieve a mass movement in green consumption we must empower everyone, not just the affluent or the enlightened.” A true and admirable statement. With the release of its corporate responsibility review last month, we aim to get to the bottom of whether its climate friendly image is green fact or fiction.

Three for one

Tesco is the third largest grocery retailer in the world. It now operates in 13 countries, has over 30 million customers each week and a global carbon footprint of around 4.5 million tCO₂e. Nearly 80% of group sales and profits come from the UK business, which includes around 2,000 stores and 30 million sq ft of sales space. To limit its effect on global warming, Tesco has developed a three-part climate change strategy: to reduce its own carbon footprint, empower customers to make environmental choices and work with others to achieve a low-carbon economy.

Tesco’s total direct emissions have actually increased over the past year, although they’ve decreased by 3.7% when measured by carbon per square foot. A whopping 60% of its footprint comes from grid electricity and to reduce this Tesco has set the target to halve emissions from buildings by 2020. With Tesco Extra stores (out-of-town mega stores) comprising almost one third of its sales space, this would seem a good place to start. Research has found large superstores to be the most energy inefficient buildings in the retail/light industrial sector. They emit three times more carbon dioxide than a greengrocers (per square foot) and generate more traffic – in the UK roughly one in ten car journeys are to buy food.

Renewable gap

Improving the efficiency of buildings should reduce overall electricity demand but how about reducing the carbon intensity of the energy consumed? In its latest response to the Carbon Disclosure Project (CDP), Tesco admits to sourcing only 1% of electricity from renewable sources. Its targets for 2008 include “increase our use of renewable energy and build the largest privately funded solar facility in the Czech Republic”. This is a start, but to what extent Tesco will further roll out renewable technology will be an important measure of its climate change strategy.

Other direct emissions include logistics and distribution. Tesco aims to increase local sourcing in the UK by opening a network of regional buying offices and it expects local sales to more than double over the next few years. Greater impact, however, might come from its commitment to restrict air transport to less than 1% of its products.

Power of knowledge

The second, and potentially much more potent, part of its climate change strategy is to “empower” customers to make environmental choices. One of the main methods it will use to do this is by carbon footprinting its products. The idea is that customers can “compare emissions as easily as they can compare price or nutritional profile” and market pressures will push down the carbon content of products in the same way that nutritional labelling pushed down fat and salt content in processed foods. Due to the lack of a direct link between buying low carbon products and personal gain, some speculate that it may well go the way of Fairtrade labelling and remain a niche market in the UK.

Though perhaps counterintuitive for a food retailer, a key area in which Tesco could empower consumers further is to discourage overconsumption. Britain throws away £10bn of food every year and a recent government report found that most of this waste is made up of completely untouched food products. Replacing “buy one get one free” offers with promotions for greener (low carbon) products could have a significant impact on consumer choice.

Joint effort

The third strand in its climate change strategy is to collaborate with others towards a low-carbon economy. So far this has lead to a £100 million Sustainable Technology Fund, for large-scale carbon reduction technologies at its sites, and a new Sustainable Consumption Institute at Manchester University, which will conduct research into drivers for sustainable consumption. In addition to these initiatives is a collaboration with the CDP on influencing the supply chain. The aim is to gain a better understanding of the carbon footprint created by suppliers, identify the carbon-intensive stages and work with suppliers to address them.

Overall there are many admirable and sector-leading initiatives within Tesco’s climate change strategy and it will be interesting to see whether these will achieve the carbon savings that Tesco is aiming for. It is important that Tesco gets its own house in order and tackles its direct impact – sourcing or generating green electricity would make the biggest difference in this respect.

To achieve its aim of creating a low-carbon economy and society, however, the area in which Tesco can have the greatest impact is through encouraging greener consumerism and influencing its supply chain. With local sourcing and carbon labelling it has begun this journey but Tesco still has a long way to go to truly prove its climate change credentials.