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Tesco attempts to allay fears on ethical trading

September 2003

The UK’s largest food retailer is seeking to dispel fears that it is reducing its commitment to ethical trading.

Tesco says concerns that it has scaled down the resources it devotes to ethical trade are unfounded, even though it recently scrapped the senior post of ethical trading manager.

It says Martin Cook, who held the job, is doing consultancy work for the company, and that his responsibilities have been handed over to Terry Babbs, whose job title has been changed from trading law and technical controller to head of international and ethical trading.

Babbs declined to talk to EP, but Tesco said: ‘It’s just a slight internal restructuring. The ethical trading manager has gone, but this is better because there is a more senior manager taking on the role and we have more resources.’ It claimed there were now ‘more people devoted to ethical trading than before,’ but could not say how many staff in Babbs’s team would be working on the issue.

One SRI investment manager, Insight Investment, arranged a meeting with Tesco directors last month specifically to discuss the issue, and the Ethical Trading Initiative (ETI) has also queried the changes with the company, which is a founding member of the coalition of trade unions, non-governmental bodies and others.

Insight would not divulge the content of the meeting. Director of investor responsibility Rachel Crossley said: ‘We are worried generally about the possibility of cost-cutting on supply chain management among retailers, and particularly supermarkets.

‘We’re concerned that the very aggressive focus on cost-cutting in the sector at the moment may lead to ethical trading or CSR programmes being cut back. We want to intervene to make sure that doesn’t happen, because we believe those programmes are an important part of risk management. That’s the context in which we spoke to Tesco.’

Concerns about Tesco’s commitment to ethical trade have been circulating in NGO and socially responsible investment circles over the summer, partly fuelled by the loss of the ethical trading manager post, but also by suggestions that it has begun to pass on the costs of inspections carried out under the ETI to suppliers.

Tesco did not comment specifically on the allegation, but said: ‘If anyone has any concerns about our ethical trading they should go and ask the ETI, because they know our commitment.’

Crossley said Insight was concerned ‘about what we think may be a trend of companies trying to displace risks and costs on to suppliers, which we don’t think is the right approach.’

She added: ‘I believe there is a lot of disquiet among key stakeholders about Tesco’s whole approach to CSR and ethical trading.’

One CSR specialist who works with a number of retailers said: ‘One or two of the SRI funds are getting increasingly animated about Tesco.’

Fears that the retail sector might begin to pull back on ethical trading have been heightened since Littlewoods disbanded its ethical trading department earlier this year (EP4, issue 10).




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