Sir Terry Leahy, chief executive of Tesco, took the opportunity of last week’s Sustainable Consumption Institute Conference, to set out the retailer’s environmental commitments and trumpet some of its achievements.
The first major conference held by the Sustainable Consumption Institute (SCI) gave Tesco CEO Sir Terry Leahy an opportunity to articulate the company’s environmental achievements, its aspirations and its commitments for the future.
The Sustainable Consumption Institute (SCI) was established at the University of Manchester in 2007 on the back of a GBP25m investment from Tesco, with the aim of conducting research into low-carbon consumption.
The conference was timed to coincide with the publication of the SCI’s first major report, ‘Consumers, business and climate change’, and the SCI had clearly pulled out all the stops, one imagines with the help of its benefactor. Conservative Party leader David Cameron MP gave the keynote speech, while a discussion panel comprised the CEOS of several major global companies, including Paul Polman of Unilever, Muhtar Kent of Coca-Cola, Bart Becht of Reckitt Benckiser and Fisk Johnson of SC Johnson, along with Terry Leahy himself.
Other speakers included David Nussbaum, CEO of WWF, and academics such as Harvard-based political scientist Prof Robert Putnam and SCI director general Prof Mohan Munasinghe. Nevertheless, even with all these luminaries present the occasion seemed somewhat tailored for Tesco to make some significant announcements.
Arguably the key announcement was Sir Terry’s commitment to Tesco becoming a zero-carbon business by 2050 without purchasing offsets. Tesco has already committed to a 50% reduction in emissions by 2020, from 2006 levels. He reported that the retailer had achieved a 13% reduction after two years.
In addition to reporting on the opening of its first LEED Gold-rated store in the US last month, Sir Terry also reminded the audience that the retailer will open its first ‘zero-carbon’ store in Ramsey in Cambridgeshire next month. He flagged up a 53% reduction in carrier bag usage and Tesco’s achievement of diverting 100% of its UK waste away from landfill.
The Tesco CEO also announced an agreement with 18 major corporations, with a combined turnover of US$700bn, to “work together to empower consumers on climate change”.
Sir Terry detailed a number of undertakings the companies have made on climate change strategy including a pledge to “seek a common position wherever we can on metrics and methodology – so that we use the same language and measure the same things when we communicate with consumers”.
He also announced that Tesco would set itself the goal of achieving a 30% reduction in the carbon impact of the products in its supply chain by 2020.
Anxious to avoid the accusation that Tesco would be bullying its suppliers on this matter, Sir Terry added: “Let me emphasise to our suppliers that we are neither imposing nor seeking to impose this target on you. That would be entirely the wrong approach. Our contribution is to do everything in our power to enable our supply chain to make these reductions.”
He continued: “Only if we work closely with our suppliers can we identify and understand the carbon hotspots, and reduce or eliminate them.”
But it was on changing consumer behaviour that Sir Terry’s speech centred. He said he recognised the “important role” that government can play through “smart regulation and green taxation” but on their own “neither technology nor governments can deliver on climate change”.
Consumers, he said, are the solution. “Too often this challenge has been turned into a demand for retreat. Consumers are told that they must accept ever-greater limits on their ambitions, a reduction in what they can desire, all so that their emissions may be cut. This is not only totally unrealistic. It fails to see the enormous potential that consumers offer. The answer to climate change lies in this and succeeding generations finding ways of living that are satisfying, rewarding, and exciting, but that do not degrade life for our children and our grandchildren.”
To that end, Sir Terry trumpeted various consumer initiatives, such as carbon labelling which now extends to 114 products, with plans to bring this up to 500 this year. He also affirmed Tesco’s commitment to break down “the barrier of price” on greener products. “We will bring more low carbon products to our customers at affordable prices,” he said, adding that the retailer will use green Clubcard points to encourage environmentally friendly, carbon-conscious purchasing.
The company’s first electric car charging points will open to customers in three London stores before the end of November. Another initiative, and possibly the one that grabbed most media attention, was the launch of a ‘buy one and get one free – later’ offer on salad, vegetables and yoghurt, so customers can take advantage of the free product “when they want it and when it will be used”.
While Sir Terry naturally concluded by reiterating Tesco’s commitment to these issues “because it is the right thing to do”, he acknowledged the importance from a business point of view.
“For Tesco a revolution in green consumption is a fantastic opportunity: once and for all to break the link between consumption and emissions, and in doing so to satisfy a new consumer need, and grow our business,” he said. “That is the goal of a sustainable business.”
A low-carbon strategy was also vital, Sir Terry said, in minimising risks to the business including the physical threat of climate damage to supply chains and the resulting economic damage. Interestingly, and perhaps particularly for the benefit of David Cameron who has made green issues a priority for most of his time in Opposition and barring an extraordinary turnaround will be Prime Minister next year, Sir Terry added a third risk: “the serious effects of rushed and inefficient regulation if we fail to act in time and governments are forced to take draconian action”.