Chief executive’s introduction

A year ago, I identified a growing set of customer priorities and set out our response to them. Customers have always told us that they want us, above all, to provide a good shopping trip. Their trust in us depends on it. But we know that other things matter to them too. They want businesses – including supermarkets – to be good neighbours in the communities they serve. And they want to be assured that businesses are responsible, fair and honest.

We have therefore put community and sustainability issues at the heart of our Community Plans around the world. We have also put the Community Plan at the heart of our business through our Steering Wheel.

Across our business, internationally as well as in the UK, we have taken responsibility for tackling one of the gravest threats we all face: that of climate change. Scientists say with ever-increasing clarity that, if we fail to secure radical cuts in greenhouse gas emissions, the consequences for all of us could be severe. For each one of us this poses a challenge. I am determined that Tesco should meet this challenge by being a leader in helping to create a low-carbon economy.

By next year we will have halved the average energy use of our UK stores compared to the year 2000. We are committed to measuring and publishing our global carbon footprint as a business, including all our existing stores and distribution centres world-wide. And we will reduce emissions from these buildings by at least 50% by 2020.

To combat waste, we are also installing the world’s most advanced automated recycling machines in at least 106 of our stores this year – helping customers double the amount they recycle with us.

We are responding positively to growing customer demand for local foods. In the UK, we will soon have eight local buying offices around the country – working with local farmers to bring new, exciting products to our customers. We are moving to long-term contracts with our milk producers and are launching an exciting new brand of local choice milk from small milk producers.

Through our Green Clubcard points, we are rewarding our customers for reusing carrier bags. We are well on the way to reaching our target of cutting the number of new bags issued by 25%.

We’ve got over one million people physically active with Tesco through events like Cancer Research UK’s Race for Life and the Tesco Great School Run. Health and physical activity programmes are priorities in other countries in which we operate too.

We remain determined that everyone involved in our supply chain benefits from their relationship with Tesco. This year, for example, we stepped up our ethical training programme for buyers and suppliers, and increased our audits of employment conditions among overseas producers.

These are just some of the opportunities we have seized already. This, our sixth Corporate Responsibility Review, records what we have done in more detail. It also focuses on what we see as the main issues for Tesco in this increasingly important area of business performance.

There is more to do.

At first glance, some challenges seem dauntingly large. But we have always had confidence that, if we work together with our customers, staff and partner organisations, we can make a difference.

Our unique role is to give customers the information they need to make more sustainable choices, and extend these from a minority to the mainstream by making green options more affordable – just as we have made other products more affordable. This is not altruism. By satisfying this growing demand, we will be rewarded with more custom and more loyalty. Tesco will grow stronger as a result.

We are beginning the search for a universally accepted and commonly understood measure of the carbon footprint of every product we sell. This will enable us to label our products so that customers can compare their carbon footprint as easily as they can currently compare their price or nutritional profile.

We will be energetic on other issues too. In the UK, we have set ourselves a target of reducing our packaging by 25% by 2010.

On health and physical activity, we want to double from one to two million the number of people active with Tesco in the run-up to the 2012 London Olympics.

Social mobility, and the problems that young people from deprived backgrounds face when they try to make their way in society, is emerging as a priority in the social and community policy debate. Instead of seeing a new Tesco store as a threat to settled communities, I want people to see it as an opportunity for social mobility and social cohesion. For the truth is that our stores serve a large number of communities and our staff live and work there. By building new stores, creating new jobs and giving people new skills in some of our most deprived areas – in cities like Glasgow, Manchester, Liverpool and Leeds – we are advancing social mobility.

I believe that business itself must operate in ways that nurture and sustain community activity and enterprise. Engaging with communities must be central to the way that businesses operate.

Nowhere must this be more true than in Tesco. Tens of thousands of people come to each of our stores each week. Our staff and our customers are part of the fabric of the local community, along with their parents, children, friends, neighbours and loved ones. People shop with us for their daily needs and for their special occasions. They use our cafes to meet their friends. They collect Computers for Schools vouchers for their local schools – they’ve got so good at doing this that we have now given awaywell over £100 million of computer equipment to schools since Computers for Schools began.

Many of our stores are already used by clubs and communities as places to meet. We welcome school classes to learn from what we do – for example, on nutrition. I want to see more of this. I also want to see our stores and our staff engaging more closely in local communities.

More than 2,500 Tesco Express convenience store managers and staff will be spending a day working in their local community over the next year, getting to know the neighbourhood even better, by doing anything from running a stall at the village fete to helping to clean up a local beauty spot. We are also running a pilot staff volunteering scheme in 20 of our stores with the British Red Cross. This scheme will enable selected staff to volunteer their services to a number of British Red Cross projects within their local community for a few hours each month. And we are spending £500,000 over the coming two years to set up ‘Tesco Young Volunteers’, a new youth volunteering charity whose aim is to empower people between the ages of 16 and 25 to get involved in community projects.

The message from our customers is that they want to be empowered to make more sustainable choices and they want to see Tesco active in their community. They are ready for a revolution in green consumption and community activity. I can think of no more exciting challenge for Tesco.

Sir Terry Leahy

Chief Executive

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