Michael Harrison's Outlook: Tesco's entrance takes the climate change campaign on to another level altogether

Nasdaq on the road to nowhere; Big bother for Carphone
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The Independent Online

My green commitment is bigger than yours. Marks & Spencer's Stuart Rose might have been first to announce his grand climate change strategy but Tesco's Sir Terry Leahy is promising to spend three times as much going green. And so perhaps he should. Tesco's sales dwarf those of M&S. One pound in every eight spent on the high street goes into its tills. What comes out of the other end of this retailing monster every year is two million tonnes of carbon dioxide.

To put that figure in context, it is equivalent to 1.3 per cent of total UK emissions and 3.3 per cent of all the carbon produced by UK business. And that is just Tesco's direct carbon footprint. It does not include the emissions generated by suppliers delivering goods to its stores or customers driving there to collect them.

The significance of last night's speech from Sir Terry - his first ever on climate change - is that when an 800lb gorilla like Tesco enters the global warming debate, you know things have got serious. Middle-class consumers with an environmental conscience can buy carbon offset credits to their heart's content. But this is a highly dubious way of combating climate change and may even encourage more carbon emissions than it prevents. Tesco, on the other hand, as Britain's biggest grocer, is in an almost unique position to do something concrete about it.

It is not, of course, altruism which is motivating either Tesco or M&S but naked business self-interest. Both have witnessed the growing power of the green pound and they have decided they want to grab as big a slice of it as possible. By acting now with their own climate change initiatives they hope to achieve two things: first, to head off more costly and draconian measures imposed by governments and regulators; and second, to appeal to the growing army of consumers for whom environmental concerns are becoming as big a part of the buying decision as price and quality.

Sir Terry has not signed up to quite as many targets as has Mr Rose and therefore will be less accountable because it will be harder to measure Tesco's progress. Most significantly, Tesco has not set a date by which it will become carbon neutral, unlike M&S.

In some areas, the two initiatives could have been dreamed up on the same word processor. Both retailers intend to label clearly products that are imported by air and both intend to use bio-diesel in half their lorry fleets.

But whereas M&S's green strategy is founded on what it can do as a company to reduce its carbon emissions, Tesco's approach relies just as heavily on consumer participation. It intends to start by halving the price of energy-saving light bulbs and offering more energy-efficient products in its low-cost Value range.

In other words, M&S believes the customer will pay to go green. Tesco reckons they will only go green if it is affordable. To some extent, they are appealing to different parts of the market, but Tesco seems to have tackled the crux of the issue.

Consumers are just as motivated by self-interest as companies and it is price which will determine how green they are prepared to go. It is one thing buying organic vegetable boxes when prosperity is rising and households have plenty of disposable income. It will be another if interest rates continue to rise and belts have to tighten.

Strip away the gimmicks from Tesco's green launch, such as its Kids' Carbon Calculator, and Sir Terry has spotted the essential truth of this. Acres of rainforest have been turned into paper pulp to demonstrate that Tesco is the incarnation of all that is evil. If Sir Terry can use its immense buying power and market dominance to make green consumerism the province of the many and not the luxury of the few, then it truly will be a force for good.

Nasdaq on the road to nowhere

The fate of the London Stock Exchange has become one of the City's longest running soap operas so you could be forgiven for forgetting quite how many times it has now been bid for, let alone where the latest tussle between the LSE and its US suitor Nasdaq stands. For the record, yesterday was Day 37. Only 23 more to go, mercifully.

The LSE chose yesterday to produce its final defence document two days earlier than it needed to. But it contained no surprises and was as predictable and as underwhelming as Nasdaq's offer. The LSE has added £250m to its share buy-back but, frankly, it could have come up empty-handed and the US offer would still fail at its current level of £12.43. Nasdaq's chief executive Bob Greifeld backed himself into a corner from the start of this contest by making the huge tactical mistake of declaring the offer full and final.

Nasdaq then tried to compensate for this by threatening shareholders with a scorched-earth strategy - accept our bid or we'll sell our 28 per cent stake and trash the share price. A Mexican stand-off has ensued with the hedge funds who perhaps hold a further 30 per cent of the LSE, but so far they show no sign of blinking first and the shares remain resolutely above £13.

Given its stated position, Nasdaq cannot now raise its bid unilaterally, unless it gets dispenation from the Takeover Panel. It can only offer a higher price with the backing of the LSE board which seems unlikely to recommend anything worth less than £14. With a wink and a nudge and a word in the right ears, the hedge funds could be encouraged to put pressure on the LSE to cave in to a lower price, but the panel is now watching this one like a hawk.

So, unless the cash-strapped Mr Greifeld can summon up some more dough from somewhere, it begins to look as though the LSE will escape again.

In all the hullabaloo it has almost been forgotten that a takeover of the LSE by Nasdaq would be a bad thing. Nasdaq is motivated by the desire to eliminate a competitor and wrest back the market for international flotations that it has lost to London since Sarbanes-Oxley made New York such an unhappy place to list. The LSE cannot of course say that publicly.

If Nasdaq's bid fails, the US raider has the choice of either sitting there in order to frustrate another bidder, which will tie up its capital, or cutting its losses and moving on. Not much of an exit strategy. Now where have we heard that before?

Big bother for Carphone

As Big Brother sinks deservedly into a cesspit of its own making, it is not only Channel 4's reputation that is being dragged through the mire. Charles Dunstone at Carphone Warehouse, which until last night sponsored the programme, has some hard questions to ask about why he allowed its good name to be associated with such trailer trash.

It is reminiscent of other disastrous commercial deals such as Nike's sponsorship of several American flops at the Barcelona Olympics. Except that BB was an accident waiting to happen.

Perhaps we should be thankful for small mercies - no one has yet killed themselves, live and on air. But Carphone will have to scrub itself hard to get rid of the smell and surely cannot resume its sponsorship even if the source of the racist bile which has seeped on to the screen is removed. There is a saying, Mr Dunstone: If you lie down with dogs...

m.harrison@independent.co.uk

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