Examination Of Witnesses (Question Numbers
127-139)
MR DAVID
NORTH
12 DECEMBER 2007
Chairman: Could I welcome you, Mr North,
and I am greatly relieved that you have not been stuck in too
much traffic before arriving here this afternoon. Thank you very
much indeed, to you and Tesco, for contributing to our inquiry.
Mark Pritchard: If I may, Chairman, I
just want to declare an interest. I actually know Mr North personally
and I wanted to put that on the record.
Q127 Chairman: Which does not mean
that you will be excused from any questioning from my colleague
on my right at all. If we could just begin by, as well as welcoming
you, asking you about the own brand products which you have in
store and asking you about the standard you have got and what
your current policy is in respect of environmental labelling.
Mr North: Thank you. In terms
of own brand products the standard we apply to our produce, that
is fruit and vegetables, is our Nature's Choice system. We have
been applying this system since the beginning of the 1990s, and
it involves a series of environmental criteria, health and safety
criteria and safety of the worker criteria. That, if you like,
is a base standard which we set across our produce ranges. Beyond
that, what you will then see in our stores is an organic brand,
Fairtrade brands on some products, and cooperation with other
bodies in respect of other products. In terms of environmental
labelling in general, we very much welcome this inquiry and the
opportunity to give evidence. Environmental labelling is an important
issue because, as you were probing with Dr Knight, it opens the
way to consider the extent to which business and the consumer
can help and contribute towards what we have called achieving
a revolution in "green" consumption, turning the "green"
movement into a mass movement in "green" consumption.
The caution I would give on that is that environmental labelling
is one of the tools in the armoury through which that can be achieved;
it is not the only tool. As again you were probing with Dr Knight,
there are those issues which a business needs to address itself
as part of that effort. There are other means of empowering consumers
apart from environmental labelling and there are things which
Government can do, including working with business to inform and
empower consumers.
Q128 Chairman: So in a nutshell what
do you hope your own range of labels will actually achieve?
Mr North: I think different things
for different labels. I think above all the labels will stand
the Tesco brand, as would be the case of any brand of any business.
What that should convey to the customer is a sense that what they
are buying is reliable, has been purchased under conditions which
are ethically sound and honest and in the case of products like
fruit and vegetables, or other agricultural commodities, are produced
to an environmental standard which we can stand by. Above that,
what we communicate to customers would be a series of rather more
defined objectives, so in the case of customers who want organic
products those should be clearly defined, labelled and then merchandised
as being organic and they should conform to organic standards.
The same for Fairtrade, et cetera.
Q129 Chairman: Okay. Thank you. Can
I ask you as well in terms of Tesco's standard what your standard
offers above and beyond the Farm Assurance schemes which are already
there like, for example, the Red Tractor?
Mr North: The Red Tractor again
I think is another attempt at a base standard. I would say that
if you looked at our Nature's Choice scheme you will see some
standards which are in common—I do not have the detailed
comparison in front of me—and some which will be different.
What they have in common, I think, is that in both cases they
define a really basic standard which we expect to be achieved
across the range. I think it is interesting that if we look at
our Nature's Choice scheme and then look at the Red Tractor, I
am not sure you would say that either of those set out as their
objective that of marketing a product to the consumer on the basis
of any specific claim. So they have that in common, but I think
they are striking at the same thing, which is a standard by which
customers can feel assured.
Q130 Chairman: When you say you have
got a standard by which customers can feel assured, if you perhaps
looked back at some of the early Trading Standards legislation,
and so on, it was very much a kind of situation whereby you were
able to verify what you bought. It was a way of actually verifying
the standards in that respect. I am really interested because
your website says that something over 12,000 producers from over
60 countries are registered with the Nature's Choice scheme and
are working towards meeting its standards. What does "working
towards" mean and how verifiable is that, and how do you
go about measuring whether or not those standards you are laying
down for Nature's Choice have actually been met by all the 12,000
producers? What kind of audit arrangements do you have within
Tesco for verifying that?
Mr North: To be clear, the audits
are not done within Tesco, they are done by independent third
party auditors on our behalf. What they have is a set of environmental
and other criteria.
Q131 Chairman: You say they are not
done by Tesco, they are done on your behalf, so is that a sort
of policy decision not to be responsible for those standards but
to outsource it, as it were?
Mr North: It is generally the
case, I think, that where you want something to be audited in
an area like this there is a virtue in having those audited independently
on behalf of the business. That would be true if we were talking
about ethical auditing or whatever. Generally speaking, people
will say that is the right approach because it avoids a conflict
of interest within the business. The number of growers we have
who are registered with Nature's Choice is around 14,000, so it
is a bit higher than the 12,000 you quoted. The audits we have
carried out, I think the latest number I have seen is about 3,400
and that is over about 60 countries supplying the Tesco business
in the UK.[16]
What they audit is a set of criteria, again which I am very happy
to send to the Sub-Committee.
Q132 Chairman: I think we would be
very interested to receive that actually.
Mr North: I would be very happy
to do that. Broadly speaking, those focus on, for example, the
rational use of pesticides, other plant protection products, fertilizers
and manures. They focus on pollution prevention and control on
the supplying farms. They focus on the protection of human health,
for example in respect of people coming into or preferably not
coming into contact with pesticides, the use of energy, water,
other natural resources in producing the product, recycling because
we want to limit and reduce the amount of waste material which
is a by-product of production, and then wildlife and landscape
conservation, but I can send the Committee the details.
Q133 Chairman: How many suppliers
would you say have met those standards? Do you know?
Mr North: Sorry, I failed to answer
the question on what we meant, and again I will give you the detailed
breakdown because I do not have that in front of me. What working
towards a standard refers to is that in some cases newer suppliers
will take time to reach the standard we have set under Nature's
Choice. There is also a judgment to be made, if somebody does
not meet a standard, as to whether you simply cut them off and
say, "You will no longer supply the business," or whether
you try and work with them to help them meet that standard, again
over a specified period of time, but I would have to give you
the detailed numbers.[17]
Q134 Chairman: That would be helpful.
Do you have a deadline as well by when you would expect all those
registered suppliers to be meeting that standard?
Mr North: The majority of our
producers will meet the standard. The question of a deadline I
think is something which has to be worked on an individual basis
because it will depend on the circumstances of the producer as
to what timescale they can meet the standard by.
Q135 Mark Pritchard: When was the
Nature's Choice scheme introduced, Mr North?
Mr North: 1991.
Q136 Mark Pritchard: Perhaps I have
missed something, but since 1991 only 20% of your suppliers have
actually been audited?
Mr North: To be honest, I would
have to check over what time limit the 3,400 figure has been applied,
so I do not think I would say that only 20 per cent have been
audited.[18]
Mark Pritchard: Okay. Thank you.
Q137 Chairman: With our previous
witness we were interested as well in how much information consumers
are actually asking for about labels. Do you, in your experience,
find that consumers have anything more than a vague idea of what
your label stands for and if they do not have that, do you see
that as a problem?
Mr North: If we are talking about
Nature's Choice, Nature's Choice is something we apply as a base
standard, so by and large that is not something we seek to market
to customers, so I do not think we would use the measurement of
Nature's Choice as a measure of customer interest in environmental
issues.
Q138 Chairman: Do you think consumers
are just satisfied by any old label?
Mr North: No. What we have been
detecting for, I think, a number of years but much more so over
the past year or two, is an enormous increase in customer interest
in environmental issues, particularly around climate change and
around waste. What customers say about that is that they want
help to exercise their desire to be more "green" in
their purchasing choice or in their behaviour. Labelling is one
aspect of trying to empower customers to exercise that choice,
but there are other ways of achieving it as well. So customers
tell us that the barrier to them exercising more "green"
choice is first of all price or the perception that the "green"
choice is more expensive. Secondly, information, of which labelling
can be one aspect but is not the only aspect because it is also
about what people are taught in schools, what they read in the
media, what information they can receive from retailers, et cetera.
Then the third aspect is a slightly more difficult one to address,
which is often a sense that the individual is powerless in the
face of very large challenges and problems like climate change
and trying to explain to consumers over time that their individual
actions can make a difference in aggregate is something we have
established as a priority.
Q139 Chairman: In looking at where
the demand for information and labelling is coming from, would
you see it coming more from the consumers or from suppliers?
Mr North: I think it is quite
a difficult question to answer because it is slightly artificial,
I think, to put a group of consumers into a room and say, "What
is your demand for labelling?" because I do not think they
tend to see it necessarily in those terms. They will say, "We
have a broader desire to lead greener lives and we need your help
to do so. You then need to help us through the various ways of
doing it." What customers say in terms of environmental labelling
is that they do not want too many different labels. They want
labels which are clear. They want them to be honest in what they
claim, but they also want to understand the claim very clearly
and readily. So if you take, for example, organics, it is a great
success because people broadly speaking understand what an organic
label means, and the same broadly is true of Fairtrade. Some other
ones, which I probably will not mention, I think struggle to communicate
what they are actually seeking to communicate.
16 Note by witness: Since April 2004 when we
began rolling out Nature's Choice internationally to all those
supplying our UK business worldwide we have conducted 8,000 audits
a year (3,400 direct farm audits and a further 4,600 audits of
co-operative farms). Back
17
Note by witness: All of our suppliers have to meet the
minimum standard but there is a five per cent tolerance in the
first year in order to enable us to take on new suppliers. These
growers must be up to standard within one year of supplying us.
We look to work with and support those smaller suppliers who fail
to meet the minimum standard. Back
18
Note by witness: See footnote 1. Since the scheme began
we have conducted in excess of 45,000 audits. Back
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