Some insights about the social contribution of big business, after a talk by the former CEO of the UK’s largest supermarket chain, Tesco.
This evening I went to listen to Sir Terry Leahy, former CEO of Tesco supermarket chain speak about the role of big business in society. Though he recently retired, during his 14 years as CEO he led huge growth in the company. I think it’s important for conservationists to listen to what people like him are saying so that we can understand how to work with the forces of business – because for better or worse, they have a big influence on what we are trying to achieve.
I also wanted to see what a Fortune ‘European businessman of the year’ (2004) and a winner of the European Business Leader Award (2005) would be like – especially considering the controversy about him and Tesco.
Let’s start with some quick background: Tesco is the largest supermarket chain in the UK and has stores worldwide. It employs 500,000 people; it holds 30% of the UK supermarket share; Leahy earned over £5 million last year; it has ambitious carbon reduction targets; many speak of the Tesco-ization of the UK. What does that last point mean? When Tesco arrives, other small shops are put out of business, the high street loses its diversity, customers lose options, local grocers go out of business. (More on this later.)
Well, in spite of my preconceptions about terrible Tesco, it turns out Mr Leahy was a good speaker and very thoughtful and reasonable in his approach to the social responsibility of business. I was impressed. I hope they can meet their targets and that his successor remains committed to them.
A few points he made that should give conservationists some insight:
Business’ role is to make profit, but it is guided by three forces: the market, laws and government regulation for the comon good, and by its own conscience and moral judgement.
Big business drives productive innovation and delivers net benefits. However, along the way there are costs and benefits, and if your on the losing side it can be hard to see that there are net benefits. [Harsh, but hard to disagree.]
Businesses have values in addition to profit-maximization. This is not just to satisfy customers, but to satisfy employees who want to work for a company they can be proud of. [All the more reason to share environmental values with members of the public.]
Tesco’s four issues for community engagement are: local community, education, diet and health, and climate change.
On climate change: “We have to have a second revolution in consumption. We need to decouple the supply chains from fossil fuels.” Their targets: 50% emissions reduction by 2020; 0 emissions by 2050; 30% emissions reductions in their supply chains by 2020.
Reasons he gave for environmental problems (related to his sector): inefficiencies, market failures, absence of better economic alternatives, and some gaps in scientific knowledge.
His views on the future of business: the future social contribution of business will be more than it is today [phew!]. The current era of greenwash will be shortlived because the companies that don’t make genuine changes won’t last, and sustainable practices are becoming standard. In the future companies will have to ‘be green to grow’ (and yes, it’s all about growth).
And finally, he doesn’t think that Tesco reduces consumer choices. If, as some say, 70-80% of the locals didn’t want Tesco, then they would have gone out of business, and that’s not the case. All monopoly inquiries have shown Tesco is not one. [I’m not sure I agree about the consumers really having a choice, and I also think that we shouldn’t rely so much on consumers to make the right choices.]
What I would have liked to know:
In addition to the impacts of climate change that Tesco is right to address, agriculture is arguably the biggest threat to biodiversity. What role can big business play in having a positive influence on land-use decisions? What specifically can we expect to see from Tesco and other in the next 20 years in terms of leading biodiversity-friendly land-use policy? (e.g. through their influence of supply chains relating to palm oil production).