Tesco embarks on a difficult path to a greener future
LONDON, Oct. 5 (Reuters) – Customers and investors want supermarkets to improve their environmental performance, but are not ready to accept higher prices or lower returns as a compromise, the director of the largest retailer said British Tesco at the Reuters Impact conference.
Addressing the challenge of how the industry can navigate toward a shift to net zero emissions, Ken Murphy said he needs to find a balance, for example by reducing the use of plastic packaging without increasing food waste that could result.
When asked if customers are willing to pay higher prices for more durable products, Murphy replied, “I think there is still a small proportion of very engaged customers who are willing to pay extra. , but in fact the vast majority are not, that’s the truth.
“What our customers expect from us is to find ways to innovate, to make products that are sustainable for them.”
Investors, he said, are also insisting that supermarkets are increasingly focusing on environmental goals, but don’t want to see a lower return on investment as a result.
“So we are constantly juggling these priorities and hopefully doing a decent job,” he said.
NET ZERO GOAL
Tesco (TSCO.L), the 102-year-old supermarket that dominates UK retail, has established plans for its operations to reach a net zero carbon goal by 2035 by using renewables, cutting plastic and encouraging more sustainable diets.
Many environmental activists are skeptical of the willingness of big companies to cut emissions, seeing it more as a public relations exercise. But big companies that have recently set goals, like fast-fashion chain Primark (ABF.L), say they can make a difference because of their size. Read more
For Tesco, a company with global supply chains and 360,000 employees, this requires changes in many parts of the business.
It has turned to upright cultivation of strawberries to reduce water consumption, introduced unwashed potatoes that have a longer shelf life, and launched reusable packaging. It has also increased recycling of flexible plastic packaging that often ends up in landfill and electrifies its fleet of door-to-door delivery vehicles.
Murphy said that in Britain the decision to use less plastic suffered a setback during the pandemic, when consumers searched for plastic packaging in hopes it would increase safety.
As the shift to greater consumption of plant-based products and less red meat, Murphy said Tesco couldn’t dictate what its customers should do, but he said the group, the industry at large and the government could help educate people on the benefits.
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Reporting by Kate Holton James Davey; Editing by Alex Richardson
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