Does every little help?

The major retailers are introducing eco- friendly initiatives across their portfolios to cater for consumers' new found ethical concerns. But is the focus on sustainability anything more than well-timed lip service that allows the big four to pursue their expansion strategies unquestioned? Elizabeth Donevan asks Tesco's James Dorling.

IT’S a difficult time for anyone in Tesco’s top ranks. The latest results from the Competition Commission’s probe suggest a clampdown of sorts on the supermarkets’ landbanks and the aggressive techniques that are used to win planning applications.
Tesco, along with most other major retailers, is publicising its efforts to become more carbon neutral because it claims its customers are becoming more concerned with environmental issues.

Of course, a good reputation in sustainability will do Tesco no harm when it comes to its planning concerns either, but what effect will its initiatives really have on the environment?

According to some estimates, the construction industry and commercial real estate is responsible for about half of all emissions. Only relatively recently has the threat of climate change become a hot topic. Now sustainably sourced materials and smart energy can contribute to clever and flexible design, but for supermarkets, becoming carbon neutral is still a long way off.

Consumers are still driving to their local all-under-one-roof superstores to pick up over packaged goods that have been transported hundreds of miles instead of walking to the local high street to buy locally farmed goods. And the supermarkets’ expansion strategies are fierce. Tesco already controls over 30% of the grocery market and has just announced over £2.55bn in profits.

Rather typically it is currently facing opposition from residents in Cambridge over plans for a new store in an area where three Express stores, three supermarkets and an Extra superstore already exist. All that considered, it’s only right that Tesco should offer some compensation to the planet.

A green revolution
Tesco’s Shrewsbury store opened earlier this year and is the latest of the company’s “green” stores that are intended to act as test beds for pieces of environmental kit that could be rolled out across the portfolio. James Dorling, Tesco’s project manager for environmental stores, says, “We have been working for over two years on developing environmental stores as test beds so that we can understand the kit that works best within our environment and to increase its recyclability.”

The Shrewsbury store follows other energy efficient stores in Diss where energy consumption was reduced by 29% compared to a standard Tesco store of its size, in Swansea where it dropped by 36% and in Wick, where the carbon footprint is 50% lower than the average Tesco store.

Tesco’s aim for the Shrewsbury store is to reduce carbon emissions by 60% compared to a standard store. That will contribute to the retailer’s overall target to cut its carbon footprint by half by 2020. According to Dorling, achieving that target depends on two things. He says, “We need to cut the carbon footprint of the existing estate by half by 2020 and we need to make sure every store we build from now on maintains an average output 50% lower than the average Tesco store in 2006. And we need to monitor performance on an initiative by initiative basis.”

Tesco’s flagship green stores have a frame constructed of timber, and use wind turbines, a system to gather and use rainwater, energysaving cooling and cooking equipment, and low energy lighting.

The stores are designed to have a 50% smaller carbon footprint than a conventional supermarket of comparable size. But despite the good intentions of the supermarkets to contribute to the sustainable prevention of the planet, there is no escaping the fact that building of any sort, never mind a 30,000 Tesco superstore with all of its paraphernalia, uses a lot of energy and raw materials and the environment would be better off without it.

But Dorling insists Tesco has an obligation to use its position of power to build the most advanced stores that are fit for the future. He says, “Of course you could argue that we just shouldn’t build any more stores at all. But across the retail industry overall, that wouldn’t be an advantage to the climate in the long run. Someone will build the store anyway but if we do it, the carbon footprint is dramatically lower than average so it makes sense.

“We are aiming for recyclability and recyclable content. Timber frame, recycled plastics, and new ways of lighting, heating and cooling the building - we are either testing initiatives for implementation in the existing estates or to improve our new
stores in the long run.”

Tesco has pledged to halve its energy use by investing in renewable energy technologies, including solar energy and geothermal power. Energy-efficient ovens, new refrigeration and air conditioning methods, more efficient lighting, and timers and motion detectors that switch off the lights when they’re not needed are all becoming standard in Tesco stores.

Naturally, while these advanced environmental initiatives are rare, they are also costly. So does Dorling expect this dedication to sustainability to make business sense in the long term?

He says, “When we replicate these schemes in the new estate there won’t be that much of a premium. However, with these stores at the moment, the premium is higher because we are testing new kit. It’s like buying a DVD player 10 years ago, or a plasma screen TV. We are expecting to add a premium of between 10% and 20% compared to the normal stores.

“I’m not sure whether they will ever bring financial profit, but it does make great business sense.”

This is not necessarily a contradiction, he adds. Tesco is one of the companies that has recognised that a “green profile” can enhance its corporate reputation amongst consumers and therefore bring commercial advantages.

Dorling explains, “We know we should be taking a leadership role with this. We value customer satisfaction and loyalty. We find that our customers are looking for information on how to reduce their carbon footprint. Feedback in the Shrewsbury store has been very good. Customers are very interested in the store, they are delighted that they have it in their area. But the initial reaction is always very strong, but then it becomes more day to day.”

Moral shoppers
Given Tesco’s reputation as a price-conscious retailer, some observers have wondered why the company is making the stance on going green considering its customers’ ethical concerns may be secondary to their focus on value. But Dorling says Tesco is committed to making a “green lifestyle” available to everyone without compromising on value for money.

“Our customers have said that they want us to answer certain questions for them on lifestyle,” he says. “So we will do that but we will remain committed to our value offer. The idea is to converse with the customers about the topic, to start a conversation about the environment. We have also tried to involve the staff in our commitment to the environment.

We have provided shower facilities and cycling facilities for staff and they have gone down really well. The more we can encourage staff to cycle the more they will converse with the customers.”

Indeed, many sustainable design features have a positive impact on employee satisfaction, translating into increased productivity. Features such as natural lighting, air quality, worker-controlled temperature and ventilation can have positive effects, leading to reduced illness, absenteeism and increased productivity of the workforce.

“There is a significant amount of natural light in the store,” Dorling says. “We have put north facing windows in because if you just have a normal south facing window, the glare from the sun can increase the heat in the building unnecessarily. Increasing the need to use air conditioning is detrimental to the carbon footprint. If you make all windows north facing, you get the natural light without the heat.”

Early this year, Tesco’s direct carbon footprint in the UK stood at approximately two million tonnes of carbon dioxide a year, with mass refrigeration of produce accounting for roughly a third of emissions. The Shrewsbury store now boasts the UK’s largest natural refrigerant installation. This system uses CO2 as an environmentally friendly cooling agent, instead of traditional synthetic refrigerants harmful to the environment used in traditional refrigeration systems.

Tesco head of refrigeration, Andy Campbell, helped develop the energy saving system with his team in Tesco Property. Dorling says, “This is a totally new way of doing refrigeration. It’s great to be working with such a pioneering company to be able to influence the industry.”

Other technology in the store includes a cold air retrieval system, which extracts and pumps the excess cold air generated by the refrigeration into other areas of the stores and reduces the need for air conditioning to recycle the already cooled air. There are also boreholes underground so that natural heat can be used to heat water and also aid cooling in the summer.

The retailer has spent £6m on energy saving schemes, and the investment has contributed to a reduction in energy consumption. “We will achieve the target that we set ourselves in 2006, to reduce the amount of energy used by 50% by 2010, two years early in 2008,” Dorling says. “That’s good progress.”

Given that buildings are responsible for around 50% of total UK carbon emissions, the property industry will clearly have to take the lead if the government stands any chance of reaching its ambitious target of cutting carbon dioxide emissions by some 60% by 2050.

What’s more, the concept of sustainable development provides an ideal and tangible vehicle for companies to show support of corporate social responsibility. Tesco has clearly realised this. With its expansion regime showing no sign of slowing, it has no option but to take the lead in working towards sustainable property.