Tuesday, February 5, 2008

Ethical Retailing Memo: May 'The Force' Be With You: Tesco's Sir Terry Leahy to Describe His Chain as 'A Force for Good' in Speech

In a speech tonight, Tesco plc. CEO Sir Terry Leahy will tell a group in London that Tesco, the United Kingdom's largest retailer and the third biggest in the world, is a force for social and economic good, according to a report in today's Guardian newspaper.

Giving the distinguished Sir Roland Smith lecture in London this evening, Sir Terry will offer a laundry list of economic and social goods provided by Tesco, which he will say makes the giant retailer a "force for good" in society, according to a preview of the speech obtained by the Guardian. Among the social goods Sir Terry will describe in his speech titled, "A force for good in society: supermarkets and sustainable consumption," include:

>Lower food prices and job creation: Tesco has cut prices by 30% over the past decade and created over a quarter million jobs, Sir Terry says in tonight's speech. CEO Leahy says the 30% cut in retail prices has benefited the regular Tesco shopper by 5,000 British Pounds over the last decade. Sir Terry will also say Tesco has created about 260,000 new jobs in the last decade, which he claims amounts to a new job created by the retailer every 20 minutes.

>Healthy eating choices for society: Tesco has contributed to healthy eating by now offering over 1,000 varieties of fresh fruits and vegetables in its stores, Leahy will say. This is double the retailer's amount of fresh produce items over a decade ago. Ten percent of these fresh fruit and vegetable items are in the "value range," offering shoppers an extensive variety of fresh produce at reasonable prices, he will say, according to the Guardian. "Healthier eating is now a real choice for many on low incomes, not jonly the affluent few," Sir Terry says in his speech tonight." Surely a society in which more people can afford quality food and products is a society that is progressing," he will add.

>Tesco fights urban and rural blight: Leahy will say in his speech that Tesco helps redevelop and improve urban, suburban and rural areas by building and locating it's stores in rundown neighborhoods, which improves society overall and also creates needed jobs.

>Tesco's growth helps suppliers. Sir Terry will also point out he believes Tesco's growth is a force for economic and social good because it helps strengthen its suppliers and creates new businesses and jobs in the supplier sector. He says numerous new businesses have been created because of Tesco's growth.

>Taxes: Leahy will document that Tesco has paid $3.5 billion in taxes over the past decade, adding that the company is a supporter of the economy and social good through its tax contributions.

>Tesco and the environment: Sir Terry will also argue in tonight's speech that Tesco is a leader in energy conservation and greenhouse gas reduction through its various conservation and renewable energy initiatives company and store-wide. He will announce Tesco plans to cut carbon emissions from its stores by 50% by 2020, compared with 2006 levels, along with other company sustainability goals for the future.

Tonight's speech by CEO Leahy is a full-frontal attack on Tesco's many critics in the UK. They argue the retailer has become more of a force for evil than for good by building too many stores, gaining too much market share, controlling too much of the food sector, using too much energy and emitting too much carbon; as well as generally trying to monopolize food retailing.

In fact, Sir Terry's speech sounds similar to us to a speech given in the U.S. just last week by Wal-Mart CEO Lee Scott. In his speech to over 7,000 Wal-Mart store managers, which we called Lee Scott's Social and Ethical Manifesto, he outlined similar goals and sited accomplishments in the areas of social and environmental policy for the mega-retailer from Arkansas. (Read our two pieces, January 25 and 28, about Lee Scott's social manifesto speech here.)

Both chains-- Wal-Mart and Tesco--face lots of global opposition to their respective rapid growth and all that comes with it socially and environmentally. It's clear Sir Terry, like Lee Scott, is trying to position Tesco as a force for social good by telling the chain's positive story as they see it and committing to doing much more in the social and ethical realm.

What we are seeing from both CEO's though--Scott, the head of the world's largest company and retail chain, and Leahy, chief of the world's third-largest retailer--is unprecedented. Both are moving far beyond the traditional role of a corporate CEO into the realms of social and environmental policy at large.

This fact demonstrates a changing social dynamic in which the leaders of mega-corporations can no longer focus primarily on company business. Rather, it seems they are increasingly needing to become one-part CEO and one-part social policy planner. This makes good sense to us because the impact their companies have on global society and the environment requires it. We're moving into a new era of corporate ethical and social responsibility and compnay CEO's are being held to higher social standards than ever before.

The response to tonight's speech by Sir Terry, which will likely be covered extensively by the print and broadcast media in the UK, should be interesting. And it has global implications.

Either way, Tesco, like Wal-Mart, is becoming an even more powerful force in global retailing. The valid question many will continue to ask is: Is it becoming more of a 'social force for good' or not? Tonight, CEO Leahy gets to describe why he thinks the answer is yes; and how he plans to do even more to prove he is right. After tonight's speech, the debate will continue full-force.

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