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Last Updated: Tuesday, 17 April 2007, 14:46 GMT 15:46 UK
Greener future in focus at Tesco
By Gavin Stamp
Business reporter, BBC News

Tesco sandwich
This kind of packaging may soon be a thing of the past

Speaking to journalists after revealing his firm made a 2.5bn profit last year, Tesco boss Sir Terry Leahy joked that there was no word for carbon footprint in Sweden.

In contrast, carbon footprint is unquestionably the buzzword for British supermarkets right now and its ubiquity is no laughing matter.

By announcing a fresh series of environmental commitments, Tesco intends to show that is in the vanguard of the rush to a more sustainable and responsible form of retailing.

Indeed, Sir Terry believes the battle for shoppers' hearts and wallets will increasingly be fought over environmental and social issues rather than just price and convenience.

"We have built our success on listening to our customers and we know this issue is growing in importance for us," he says.

Packaging purge

So how does Tesco stand on this score, at a time when Marks and Spencer has pledged to become carbon neutral by 2012 and both Sainsbury's and Asda have promised to overhaul their businesses to become more energy efficient.

Tesco's most eye-catching new pledge is a 25% cut by 2010 in the amount of packaging used in products it sells, both branded and own-label goods.

We want everyone to understand we see these things as opportunities not threats
Sir Terry Leahy, Tesco chief executive

As part of this, from next year Tesco-made products will begin to carry labels showing whether packaging can either be reused, recycled or composted.

Tesco hopes leading food manufacturers will follow suit.

On the face of it, the packaging pledge is an ambitious one - given the huge range of products that Tesco now sells - but Tesco is confident it can meet it.

"We have to work constructively with our brand owners in that but I think everyone is travelling in the same direction," Sir Terry believes.

To Sir Terry, this makes great business sense not only because it reduces waste but because it is in tune with customer thinking - the guiding principle behind the firm's growth.

"This is crucially important to us and to our customers. We want everyone to understand we see these things as opportunities not threats. It is important Tesco leads the way."

New footprint

In a further step, Tesco says it is looking at introducing a labelling scheme which would show the carbon footprint of each of its products.

It is examining ways of creating a "universally accepted and commonly understood" measure of the emissions created in the manufacture of goods and their transport to its stores.

Of course this is not new. The concept of food miles has been around for some time, while the Carbon Trust recently launched a similar footprint labelling scheme which has won the support of firms such as Walkers Crisps and Boots.

Tesco shopping bag
Tesco has handed out 400 million fewer plastic bags since August

Critics will worry that Tesco may go its own way on this issue, just as it did with the healthy food labelling scheme that it and other firms launched as an alternative to the "traffic light" system supported by the government.

Tesco disputes this, saying the new initiative has already won a lot of support elsewhere.

"We are getting a very favourable reaction from other retailers," Sir Terry says.

Besides, Tesco believes it has a responsibility to take the lead on the issue and points to the success of its nutritional signpost labels, now carried on nearly 7,000 lines.

Since these were introduced, sales of healthier versions of products have risen by 25% while demand for less healthy options has fallen by a similar amount.

"We are seeing a very dramatic effect," Sir Terry says of the scheme. "I believe it is the right way. It provides information for people and is easy to read."

Tesco's continued rapid growth in the UK and abroad - it sold more than 10bn worth of non-food products alone last year - will continue to be seen as a threat by many.

But it hopes these new commitments, on top of existing efforts to substantially reduce its energy use, cut the number of plastic bags it gives out and to make environmentally-friendly products cheaper, will allay some of these fears.

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