{"id":21959,"date":"2017-11-13T21:14:27","date_gmt":"2017-11-14T02:14:27","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-tip-of-the-iceberg-climate-change-lettuce-shortages-and-tescos-efforts-to-adapt-its-supply-chain\/"},"modified":"2017-11-14T17:14:42","modified_gmt":"2017-11-14T22:14:42","slug":"the-tip-of-the-iceberg-climate-change-lettuce-shortages-and-tescos-efforts-to-adapt-its-supply-chain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-tip-of-the-iceberg-climate-change-lettuce-shortages-and-tescos-efforts-to-adapt-its-supply-chain\/","title":{"rendered":"The Tip of the Iceberg: Climate Change, Lettuce Shortages, and Tesco\u2019s Efforts to Adapt its Supply Chain"},"content":{"rendered":"

The sKale of the issue \u2013 supply chain exposure to extreme weather<\/strong><\/h3>\n

One of the more unusual news-stories in the UK this year was Tesco\u2019s announcement that it was going to ration sales of lettuce and other veggies to British consumers [1] (Figure 1). This action by the world\u2019s fifth-largest grocer and retailer prompted a plethora of puns in the media. But behind the headlines was a more serious story. The vegetable shortage was caused by poor growing conditions in Spain and Italy, which experienced record levels of rainfall \u2013 the type of extreme weather increasingly common due to climate change [2].<\/p>\n

Tesco has cause for concern. With 6,809 stores located in 12 countries in Asia and Europe [3], it imports produce from across the world to satisfy customers that have come to expect year-round availability of groceries, regardless of seasonality. But as the \u2018courgette crisis\u2019 this year highlighted, Tesco\u2019s core operations are exposed to the impact of global warming and extreme weather. As a huge global business that produced 3.89 million tonnes of CO2e last year [4], Tesco cannot ignore its contributions to the issue.<\/p>\n

Figure 1: Social media hysteria at lettuce shortage [5]<\/h4>\n

\"\"<\/a><\/p>\n

\u2018Lettuce Romaine calm\u2019 \u2013 responding to the challenge<\/strong><\/h3>\n

Tesco\u2019s response has focused on a long-term strategy to reduce its carbon footprint. The first move has been to drive accountability and transparency. Earlier this year, the retailer developed targets through the Science-Based Targets Initiative (SBTI) [6] to reduce scope 1 and 2 Green House Gas (GHG) emissions 60% by 2025 and scope 3 GHG emissions 17% by 2030 as compared to a 2015 baseline (see Figure 2 for current levels). These targets are designed to set emissions reductions on the course needed to limit global warming at or below a 1.5 degrees centigrade increase.<\/p>\n

Tesco must now turn these commitments into results. It aims to run on 100% renewable energy by 2030 [7], which it plans to achieve by buying more renewable energy in the short term and by investing in on-site solar power generation and storage capacity in the medium term. It is also striving to half the carbon intensity of stores and distribution centres by 2020 compared to 2006 through initiatives such as energy efficient vans and more efficient logistics management [4]. Whilst Tesco has already invested a hefty \u00a3700m in energy and refrigeration efficiency measures since 2007, this isn\u2019t without benefit \u2013 it has generated \u00a3200m of electricity savings per year as a result [7].<\/p>\n

Working with its 15,000 suppliers is also critical. Tesco has announced plans to encourage suppliers to set their own science-based targets, helping them to share best practice through a knowledge hub and reducing the cost of investments in energy saving measures through collaborative purchasing schemes [8]. It appears to be on the right track \u2013 out of 300+ companies which have signed up to the SBTI, Tesco is one of only three major corporates currently on target [9].<\/p>\n

Figure 2: Tesco\u2019s carbon footprint for 2016\/17<\/strong> [4]<\/h4>\n

\"\"<\/a><\/p>\n

\u2022 Scope 1 emissions, or Direct GHG: \u2018emissions from sources that are owned or controlled by the organization\u2019
\n\u2022 Scope 2 emissions, or Energy Indirect GHG: \u2018emissions from the consumption of purchased electricity, steam, or other sources of energy (e.g. chilled water) generated upstream from the organization\u2019
\n\u2022 Scope 3 emissions, or Other Indirect GHG: \u2018emissions that are a consequence of the operations of an organization, but are not directly owned or controlled by the organization\u2019<\/p>\n

 <\/p>\n

 <\/p>\n

Turning a new Leaf \u2013 opportunities for further progress<\/strong><\/h3>\n

Tesco has gone further than most in its efforts to mitigate further global warming. But given climate change is already underway, management appears to have put less emphasis on how to improve the resilience of its supply chain to the inevitable future shocks from extreme weather. In the short term, management should consider how to diversify where produce is sourced from (the Murcia region in Spain, which was hit during the lettuce crisis, provides 80% of Europe\u2019s fresh produce in winter months). In the longer-term, Tesco should support greater self-sufficiency of British food production by increasing the use and capacity of local suppliers: the UK has a \u00a321 billion trade deficit in food and agricultural produce, and only 23% of fruit and vegetables come from home soil [10] (Figure 3). With supply chain risks only amplified by the uncertainties surrounding future trade deals in a post-Brexit world, competitors have been quicker off the mark to strengthen their local sourcing, and Tesco needs to catch up [11]. In addition, given Tesco\u2019s scale of purchasing power, it could go further than \u2018encouraging\u2019 its suppliers to improve their environmental record. Tesco has proffered the carrot to suppliers by offering to support them make the necessary changes to reduce their carbon footprint. But there also needs to be a (celery) stick. One such approach could be to impose procurement criteria that requires supplier compliance with certain environmental standards.<\/p>\n

Tesco faces several decisions about how to reduce the environmental impact of its supply chain. However, this case study sparks debate about much bigger questions. As environmentally-conscious consumers, do we expect too much from supermarkets to provide what we want, when we want it? Given their role in setting arguably unrealistic expectations with consumers around global year-round supply, should supermarkets try to shift consumers back to more local, seasonal consumption habits? Where does the balance of responsibility for our lettuce lie?<\/p>\n

Figure 3: The case for more local produce<\/strong> [10]<\/p>\n

\"\"<\/a><\/p>\n

(Word count: 799)<\/p>\n

Sources<\/strong><\/h4>\n

[1] Zlata Rodionova, \u201cTesco implements three lettuce limit as European vegetable stocks hit by extreme weather\u201d, Independent<\/em>, February 3, 2017, http:\/\/www.independent.co.uk\/news\/business\/news\/tesco-uk-supermarkets-three-iceberg-lettuce-limit-vegetables-broccoli-spinnach-courgettes-morrisons-a7560571.html<\/a><\/p>\n

[2] Hansen, J., M. Sato and R. Ruedy (2012). \u2018Perception of Climate Change.\u2019 Proceedings of the National Academy of Sciences of the United States of America 109(37): E2415-E2423, http:\/\/www.pnas.org\/content\/109\/37\/E2415.full<\/a><\/p>\n

[3] Tesco PLC, \u201cKey Facts\u201d, https:\/\/www.tescoplc.com\/about-us\/key-facts\/<\/a>, accessed November 2017<\/p>\n

[4] Tesco PLC, \u201cOur carbon footprint\u201d, https:\/\/www.tescoplc.com\/little-helps-plan\/products-sourcing\/reducing-our-impact-on-the-environment\/our-carbon-footprint\/<\/a>, accessed November 2017<\/p>\n

[5] Sara Neill (@lmSaraNeill), \u201cSupermarket rails against lettuce shortage rages\u201d, Twitter, February 2, 2017, 3.23pm, https:\/\/twitter.com\/ImSaraNeill\/status\/827175677128503297\/photo\/1?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fwww.thesun.co.uk%2Fnews%2F2773682%2Fvegetable-rationing-lettuce-broccoli-courgettes-supermarkets-uk%2F<\/a><\/p>\n

[6] Science Based Targets, \u201cCompanies Taking Action\u201d, http:\/\/sciencebasedtargets.org\/companies-taking-action\/<\/a>, accessed November 2017<\/p>\n

[7] Pilita Clark\u00a0and\u00a0Mark Vandevelde, \u201cTesco turns to solar in Paris climate accord pledge\u201d, Financial Times<\/em>, May 14, 2017, https:\/\/www.ft.com\/content\/536fb55a-374e-11e7-bce4-9023f8c0fd2e<\/a><\/p>\n

[8] Ken\u00e9 Umeasiegbu, \u201cTesco commits to use 100% renewable electricity by 2030\u201d, Tesco PLC blog, May 15, 2017, https:\/\/www.tescoplc.com\/news\/blogs\/topics\/carbon-renewable-electricity-tesco\/<\/a><\/p>\n

[9] \u201cTarget commits to 100% renewables as part of science-based targets approach\u201d, Edie.net<\/em>, October 20, 2017, https:\/\/www.edie.net\/news\/10\/Target-commits-to-100–renewable-as-part-of-science-based-targets-approach\/<\/a>, accessed November 2017<\/p>\n

[10] Tim Benton, \u201cBritish Food: What role should UK producers have in feeding the UK?\u201d, <\/em>Wm Morrisons Plc, February 17, 2017, http:\/\/eprints.whiterose.ac.uk\/112876\/1\/BritishFoodReportFeb2017.pdf<\/a><\/p>\n

[11] Zlata Rodionova, \u201cMorrisons to hire 200 British suppliers after warning only half the food eaten in UK comes from the UK\u201d, Independent<\/em>, February 3, 2017, http:\/\/www.independent.co.uk\/news\/business\/news\/morrisons-hires-uk-suppliers-local-produce-warning-a7585216.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In the face of global warming and extreme weather, how will Tesco respond to keep Brits supplied with lettuce all year round?<\/p>\n","protected":false},"author":10211,"featured_media":21960,"comment_status":"open","ping_status":"closed","template":"","categories":[1218,3252,1417,1926,3222,1226,185,897],"class_list":["post-21959","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-climate-change","category-extreme-weather","category-food-retail","category-food-supply","category-global-supply-chain","category-global-warming","category-renewable-energy","category-united-kingdom","hck-taxonomy-organization-tesco","hck-taxonomy-industry-retail","hck-taxonomy-country-united-kingdom"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nThe Tip of the Iceberg: Climate Change, Lettuce Shortages, and Tesco\u2019s Efforts to Adapt its Supply Chain - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-tip-of-the-iceberg-climate-change-lettuce-shortages-and-tescos-efforts-to-adapt-its-supply-chain\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Tip of the Iceberg: Climate Change, Lettuce Shortages, and Tesco\u2019s Efforts to Adapt its Supply Chain - 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