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Climate change

Climate change is one of the biggest challenges facing the world and as a result has been identified as one of our most material issues. 

The planet is currently on track to warm by almost three degrees by the end of the century1 with serious consequences for humanity. The effects of climate change have the potential to threaten our own business operations, the operations of our suppliers’ businesses and the livelihoods of the farmers and workers in our supply chains, in addition to changing the way customers shop and eat. We must all play our part to decarbonise. We are taking action and aim to have climate neutral operations by 2035 and be net zero by 2050, aligned to a 1.5-degree trajectory.

Many of the Sustainable Development Goals (SDGs) are impacted by climate change, those listed below are ones most relevant to our climate strategy and net zero ambitions.

In September 2021 we announced we will be carbon neutral in our Group operations by 2035 and extended our commitment to be net zero across our value chain, aligned to a 1.5-degree trajectory by 2050, covering all indirect Scope 3 emissions.

This builds on our leading approach to tackling climate change since 2009 when we became the first business globally to set an ambition of net zero by 2050. Our refreshed commitments are informed by updating our Group carbon footprint to align with new methodology developments and the inclusion of new data points such as deforestation and land conversion. Through this process, we have been able to identify our material emissions hotspots throughout our full value chain. Having switched to 100% renewable electricity in 2020, our own operations emissions (Scope 1 and 2) now come primarily from refrigeration, heating and transport, but the majority of our total footprint, more than 90%, is in our value chain (Scope 3) where we can influence but not directly control.

Scope 1 emissions

Our Group Scope 1 emissions account for around 1 million tonnes of CO2 equivalent (tCO2e). We are taking action to transform our processes and operations towards a low carbon future.

We are looking at reducing transport emissions associated with our entire distribution network. In the entire distribution, we use our own logistics services and thus minimize the number of empty vehicles on the roads. Some products are picked up directly from suppliers, and Tesco saves them part of the cost of transporting goods to distribution centers. We need to maximize fuel efficiency in cargo, planning and driver management. We are also testing fuel alternatives while working directly with manufacturers on even more sustainable remaining solutions.

 

Scope 2 emissions

In our baseline year 2015, grid electricity accounted for 65% of our own operations carbon footprint and so we developed our renewable electricity transition roadmap towards reducing our demand and switching to 100% renewable electricity by 2030. we achieved our goal of 100% renewable electricity across the Group ten years early, in 2020.

 

Scope 3 emissions

More than 90% of our overall footprint lies within our upstream and downstream supply chain, comprising our indirect Scope 3 emissions. Updating our total footprint and identifying our emission hotspots in order to model the impact over time of different interventions in terms of greenhouse gas emissions reduction and cost.

TCFD

In 2017, we became signatories of the Taskforce on Climate-related Financial Disclosure (TCFD) and since then we have been implementing the recommendations of the TCFD and embedding it in strategic decision making. For more detail see our Group Annual report page 41. 

 

Group Annual report

 

 

Our audited carbon footprint data in chart:

 

 

tCO2e

2015/16 baseline

2021/22

Scope 1

1,240,871◊

1,110,098◊

Scope 2 (Market-based method)

1,095,671◊

16,107◊

Scope 2 (Location-based method)

1,657,316◊

642,337◊

Scope 1 and 2 (Market-based) Total

2,336,542◊

1,126,205◊

Scope 1 and 2 carbon intensity (kg CO2e/sq. ft. of stores and DCs)

26,29

12.16◊

Selected Scope 3*

 

684 079

593,405◊

 

Sustainable Finance

In 2020 we launched the first of our sustainability-linked finance products, and we have continued to strengthen this area throughout the course of this year. Our product suite now includes:

  • Revolving Credit Facility signed in September 2020, with interest linked to the achievement of three ambitious environmental targets, comprising GHG emission reduction, renewable energy and food waste. 
  • We are the first retailer to launch a sustainability-linked bond (€750m), with the coupon linked to our Scope 1 and 2 emissions reduction performance. In October 2021, we became the 4th company to issue a Sterling sustainability-linked bond (€400m), again linked to our Scope 1 and 2 emissions reduction target. 

Sustainable Development Goals (SDGs)

SDG 7 SDG 7 Affordable and Clean Energy

The aim is to ensure access to affordable, reliable and sustainable energy for all. Achieving our climate goals depends on becoming more energy efficient and reliant on renewable energy and our actions are well aligned with the Targets within SDG 7.

SDG 13 Climate Action

The goal calls for urgent action to combat climate change and its impacts. We have a longstanding commitment to tackling climate change and our accelerated net zero ambitions recognise the urgency with which action is required.

SDG 17 Partnership for the Goals

The goal recognises the importance of collaboration. Our net zero climate strategy has been developed with the input, knowledge and expertise of our colleagues, suppliers and NGO partners including WWF.