Sir Terry Leahy plans to win over consumers with carbon labelling, charging points in car parks and zero-emission stores
The picturesque town of Ramsey, on the edge of the Fens in Cambridgeshire, is an unusual setting for a ground-breaking project.

Ramsey’s history, which dates back to 969AD, is dominated by an abbey. Today all that remains is its ruins, but the town is about to be given a new landmark - and it could have an even greater significance for generations to come.

Tesco is to build the world’s first zero-carbon store in the town, and the company hopes the building will act as a template that can be rolled out internationally.

From the outside it will look much the same as other Tesco stores. Inside, though, it will be quite different. The single biggest addition at the wood-built store will be a combined heat and power plant that will create surplus energy to sell back to the grid. It is 25% more expensive than a conventional system, but the payback in energy savings more than justifies the premium. For Sir Terry Leahy, chief executive of Tesco, one of the world’s biggest retailers, the new zero-carbon store is another sign that his firm is championing the green cause to cut the world’s carbon emissions.

Leahy is adamant that change can be achieved quicker through better information and greater consumer choice, than by tax and regulation. He believes government intervention could be the worst thing.

“The danger is people are so taxed already that every time green is mentioned it is with a new tax that just switches people off the whole subject. How can you contemplate the future if the promise is tax and regulation? Who is going to buy into that?”

He believes business must lead the way, but society has to understand that going green does not mean low growth. “You are only going to grow your way to it. To do it any other ways runs counter to how economies work,” he said.

It is a theme Leahy will address in a keynote speech this week at the London School of Economics. Ahead of that lecture he told The Sunday Times: “It is the same as anything else in a modern economy. It starts with the consumer getting interested in the subject. As Arnie Schwarzenegger [governor of California] has said, ‘you have got to make it cool to be green’ and not make it worthy. You have to encourage people to want to consume the same as other people.

“The history of periods when governments have tried to plan an economy is not encouraging. When regulation seeks to dictate the direction an economy takes - however noble a goal climate change is - it is not going to work,” he said.

“You have to find a way of getting economies to grow in a green way. I think too much of this debate is about how much growth should we give up to be green. This is the wrong approach because the risk you run in the West as a result is low growth or no growth. The bigger risk is [that going green] will be ignored by China or India because they are simply not going to adopt any policies that are no-growth.”

The new store in Ramsey is one of several initiatives by Tesco, which was the highest scoring supermarket in this year’s Sunday Times Best Green Companies awards. Its intention is for all stores now being built to emit half the carbon of an equivalent one in 2006.

Tesco is also planning to provide top-up charging facilities for electric cars in its car parks - it is currently studying two pilot schemes in London, one in Kensington, the other in Vauxhall. The plan is to build a network of charging points and the group is already holding talks with a number of local councils.

And it is extending its carbon labelling. At present Tesco labels 100 products with information on their carbon footprint but this will now be extended to milk, bread and recycled paper. The ambitious goal is for all products to eventually be labelled so that consumers know how much carbon was emitted in their production. In the case of milk, the company is aiming to work with the Sustainable Consumption Institute to find new types of animal feed that would help reduce the vast emissions of the dairy industry.

Leahy said: “One of the miracles of modern society is that products can be made all over the world with lots of different raw materials and yet there is a process [cost accounting] by which each product can be correctly priced for the consumer.

“We have to create similar things for carbon accounting - so, wherever it is made, we know the cost. This allows customers to make choices . . . If products are carbon priced and accounted, consumers can adjust their behaviour.

“Food retailers are right in the centre of the main process of consumption in society. Consumers account for 60% of carbon emissions. It is not about denying that, it is about what are we going to do about it. You can’t have less consumption. You need a different consumption. You can’t have less growth. It has to be green growth.”

Leahy said carbon labelling should not be seen as carbon rationing: “If the whole thing is taking something away without providing an incentive for something else, it is not going to work. But if you say to someone ‘here is a better life, a low carbon life’, you will get more consumption and a growing economy.”

Leahy has already seen how quickly behaviour can be changed. In a single week this year Tesco sold more low-ener-gy light bulbs than it did in the whole of 2006. This was achieved through promotion and pricing. Similarly, its new recycling centres have tripled the amount left by customers.

Leahy also refers to the success his group has had with carrier bags. In Ireland, the government imposed a tax of 15 cents on a bag to reduce the amount used by customers, whereas in Britain Tesco simply offered an incentive of one Clubcard green point - equivalent to one penny - for every reused bag. The success rate, said Leahy, proves that an incentive is ten times more effective. So far more than 9.5m customers have benefited from the scheme.

“You can’t tax petrol more than we have already but people are still driving around in great big gas guzzlers. It is not until you incentivise and motivate them through information and choice that you get them to say it is cool to drive a small car or it is cool to drive a low-carbon one.”

In the green race, Britain lags countries such as Denmark and Sweden but Leahy believes that this country can catch up and needs to set an example for the developing world to follow.

“If we are only able to demonstrate that there is a future of tax and regulation and limited growth in order to achieve sus-tainability, China and India won’t buy into it. We have to show how modern economics, modern marketing and distribution and competition actually encourage people to consume the same.”

Tesco is not alone among the food retailers in trying to lead the green agenda. Because of its international reach, though, if it can make people rethink their approach it will touch a lot of consumers and have a real impact. What Leahy wants to do is harness that influence.

“Whenever there is big coming change you need to be at the forefront to make it work for you. I am a marketing man by background and that is what marketing is. When people have new needs there is an opportunity.”

At Tesco, the company is already using double-decker lorries to cut delivery journeys and, like other food retailers, is also using other approaches - biofuels, rail transport, even the canal network.

Marks & Spencer, J Sainsbury and Asda, meanwhile, are all pioneering their own green projects. These have been well received by customers but Leahy’s comments that green must not be at the expense of growth will strike a chord.

The consumer will drive demand and that in turn will create competition between companies to come up with greener goods. The CBI, the employers’ organisation, is a supporter of this approach - but the government must buy into it as well.

In the end, though, it comes down to information: “If people don’t know the carbon content of their lifestyle,” said Leahy, “how can they make a difference?”

EASY TO DIGEST
MARKS & SPENCER has agreed a three-year contract with Shanks to convert its food waste into electricity. The deal, to be unveiled shortly, is part of the store group’s drive to eliminate landfill by 2012.

M&S produces some 116,000 tonnes of waste per year. Under the deal with Shanks, the waste-management group will process food waste in anaerobic digesters, which break it down into methane gas and solid material. The methane can be used as fuel for power plants.

All the big supermarkets have announced initiatives to slash waste amid growing customer concern over climate change. Sainsbury has pledged to be landfill-free by July. Source: Timesonline London