Climate change

Progress 2007

Our climate change plan will be refined as we learn from experience. Our progress so far is reported below.

Setting an example

In 2007 our Group carbon emissions were calculated as 4.47 million tonnes* of CO2e (carbon dioxide and equivalent greenhouse gases). This was an increase of 8.6% on the previous year, while our floor space grew by 14% over the same period. We have therefore reduced the overall Group carbon intensity per square foot of net sales area by 4.7%.

Our 2006 footprint was also recalculated to take account of improved data collection systems. As a result, the figure for 2006 has been reassessed from 4.13 million to 4.11 million tonnes of CO2e.

During 2007, we have improved processes to collect and check carbon footprint data at country level and to calculate our emissions for our global operations. Relevant Key Performance Indicators (KPIs) have been developed and these are tracked by country and Group environmental managers. There are clear lines of responsibility for carbon reporting across the business, with training and guidance provided to country representatives and at Group level. Our total CO2e emissions, and the percentage split of these emissions by country and by emissions source, have been independently assured by Environmental Resources Management Limited (ERM) to ensure that they have been appropriately reported. The full assurance statement from ERM can be found at www.tesco.com/crreview08/erm/ERM_assurance_statement_Tesco_2007.pdf

The footprint shows that the key causes of our emissions are:

• heating and lighting in our stores;
• chilling or refrigerating products; and
• transporting goods to our stores.

The UK business currently accounts for 53% of the total, emitting 2.3 million tonnes of CO2e. As our international businesses become more established and continue to grow, they will have a bigger impact on our footprint so we have set common targets across the Group.

Our targets on climate change, set in 2007, reflect these priorities:

• to halve the carbon emissions from all new stores we build worldwide between now and 2020 compared with an equivalent store built in 2006;
• to halve emissions from our existing stores and distribution centres worldwide by 2020; and
• to halve the CO2e created per case of goods delivered worldwide by 2012, compared with 2006.

Performance in our stores 2007

We are investing significantly in energy efficiency in our stores as our footprint shows that emissions from electricity use and natural gas account for our biggest impacts: 67% of our total carbon footprint.

By the end of 2008, our UK energy use per square foot will be half what it was in 2000. The carbon intensity, or carbon emissions per square foot, of new stores opened in the UK after 1 March 2007 has been reduced by 22% compared with the previous year.

This year we have invested £86 million in energy-saving technology for our stores, including low-energy lighting, energy-efficient bakery ovens, wind turbines, combined heat and power (CHP), trigeneration and hanging curtains on freezer doors. In 2007, these investments saved 66,000 tonnes of CO2e in our stores alone and resulted in a like-for-like reduction in emissions of 5.8%, which exceeded our internal annual progress target of 5.5%.

We have also invested significantly in energy-saving technology in China, the Czech Republic, Hungary, Ireland, Poland, Slovakia, South Korea, Turkey, Thailand and the US.

In the US, Fresh & Easy is a pilot member of the Leadership in Energy and Environmental Design (LEED) Volume Certification Program, demonstrating the company's commitment to design more energy-efficient and sustainable buildings. Through LEED, Fresh & Easy stores focus on reducing energy use, conserving water, using environmentally friendly materials, appropriate site selection and indoor environmental quality.

Fresh & Easy buildings include skylights on new buildings with overhead lighting that dims automatically, increased insulation to reduce heating and air conditioning, night shades on refrigeration cases to keep cool air from escaping, parking spaces for hybrid vehicles, bike racks for employees and customers, in-store recycling, secondary-loop systems on refrigeration cases to capture and reuse cool air, and low-energy LED lighting in external signage and freezer cases.

Across our Hungarian stores we are installing over 10,000 sq ft of solar panels. At three of our distribution centres we are installing rotating solar panels that track the sun and maximise the amount of solar energy captured. At other locations we are using heat from a district CHP plant and planting a green flora roof.

Following a UK innovation, energy Champions were appointed in all our stores in Ireland and all 11,000 store staff attended a series of energy awareness briefings. Our Nutgrove store installed Tesco Ireland's first CHP unit.

In Turkey, Tesco-Kipa opened two new stores using solar power for their checkouts, reducing annual CO2e emissions by 66 tonnes. These stores also utilise natural light, saving a further 114 tonnes CO2e per year.

An important part of our plan is to trial new leading-edge technology at environmental stores. We use these to demonstrate and test what is possible. Many of the technologies tested are not currently economically viable but may become so in the near future as carbon and fuel prices rise. We have now built environmental stores in seven countries.

In the UK, our fourth model environmental store opened in Shrewsbury and is achieving a carbon footprint 60% less than an equivalent standard store. The previous three model stores achieved reductions of 29%, 36% and 50%. Features being tested at Shrewsbury include a sustainable timber frame, natural lighting through the roof, rainwater harvesting, a ground source heat pump and battery-powered delivery vans.

Performance in refrigeration

19% of our carbon footprint is caused by the release of gases we use in our refrigeration systems in stores and trucks. Rigorous maintenance and monitoring procedures for our systems minimise leaks but these can occur during use and maintenance. We currently have to estimate the footprint from refrigeration by measuring the amount of refrigerant we put into our systems and we are trialling a method of directly measuring leaks to ensure we can assess our impact as accurately as possible.

The vast majority of large refrigerators in the food industry currently use HFC refrigeration gases - introduced as a replacement for ozone depleting CFCs and HCFCs but which are now known to be extremely potent greenhouse gases.

Tesco is forging ahead with a programme to phase out HFC-based refrigeration in the UK and overseas. In Hungary we are introducing CO2 refrigeration systems and our store in Várpalota switched to part CO2 refrigeration in 2007. In 2008 we will install full CO2 systems at two further stores and begin our first trial at a large store.

In the UK, we installed our first large CO2 system at Shrewsbury. This adds to the experience from earlier trials of small CO2 systems at Wick and Swansea and a water-cooled system at Wick.

We are sharing what we learn with all interested parties to speed up and promote the use of natural refrigerants (using CO2 or water).

Performance in distribution

Distribution contributes 12% of our carbon footprint. Our target is to achieve a 50% cut in CO2 created per case of goods delivered worldwide by 2012 (compared with 2006).

In 2007 we reduced carbon emissions from our distribution systems across our global operations by 4.7% per case delivered. This is below our target of a 10% reduction but we believe that by building on the range of programmes, such as better space utilisation on our vehicles, working with suppliers to reduce the number of empty trips that our fleets make, and changing our distribution network in the UK by opening depots in Livingston, Lichfield and Goole, we can meet our commitment of a 50% reduction by 2012. This figure excludes any benefit from using biofuels (see Environment - Helping customers).

The distribution data included in this Review does not include emissions from freight contracted by Tesco to be distributed internationally between our suppliers and Tesco depots. However, we are working to enhance our monitoring and reporting activities so that we can report this data in the future. We will also continue to reduce the amount of our primary distribution (from suppliers to our depots) emissions data which is based on estimates by continuing to build our capacity to obtain more direct measurements and so improve the quality of our data.

We are using alternatives to road transport in the UK. For example, we are saving 6,500 tonnes of CO2e a year by increasing the space available to suppliers on the Tesco Train, operating between Daventry in the Midlands and Livingston in Scotland. Working with Kingsland Wines, we now transport their wines and spirits by canal from Liverpool to Manchester, cutting emissions by 80%.

We are also making our distribution depots more efficient. Fresh & Easy now has California's largest solar installation at its distribution centre and a similar large installation is planned in the Czech Republic.

We opened our first UK green distribution centre this year in Livingston. The roofs have been designed with clear panels to allow much more natural light into the building, we have used sensors to regulate lighting, and we are looking into installing a biomass plant so that the site can generate some of its own electricity.