As the retailer’s size and influence expands, Tesco-bashing has become a media obsession. Dodgy petrol, under-age drinking, global-isation and planning may be disparate issues but Tesco has become embroiled in all of them in 2007.

The retailer is even the subject of a book, Tescopoly, published this week. In it, author Andrew Simms alleges Tesco is at least partly responsible for everything from “clone towns” to Third World poverty. Tesco, of course, denies it.

While countering such claims remains central to the store’s PR strategy, another issue is slowly starting to dominate Tesco’s agenda: the environment. Just as the leaders of the UK’s largest political parties have been anxious to spell out their green credentials in recent weeks, so Sir Terry Leahy, chief executive of Tesco, is keen to do the same.

Speaking exclusively to EG at MIPIM, Leahy is adamant that Tesco is doing its bit. “The way Tesco develops will change. We’re doing things differently, and are moving towards working on a low-carbon basis,” he says.

Property is at the centre of Leahy’s thinking, especially as regards lowering carbon emissions. He acknowledges that if Tesco’s property isn’t green enough, it will be impossible for the company to reach the demanding targets he has set.

“Most carbon emissions come from the buildings,” says Leahy. “We have set a target to halve carbon emissions from 2000 levels by 2010. We’re on course to hit that target by 2008, so we’ve set a new target to halve them again by 2020.”

The ways in which Tesco will achieve this include “micro-generation of power, wind turbines, recycling machines, the use of natural materials and different refrigeration methods”, according to Leahy. Such measures will not be restricted to the supermarket’s new schemes – they will also be applied to existing property.

Huge commitment

That makes for a huge commitment. The company operates more than 1,900 stores in the UK, accounting for more than 30% of UK supermarket outlets. Moreover, Tesco reported pretax profits of £2.2bn off sales of £41.8bn for the year ending April 2006. Last October, the chain reported half-year profits of £1.1bn.

Such wealth and ubiquity mean it is not just authors and headline-writers who get animated about Tesco’s predominance. Alongside other grocers, Tesco has recently found itself at the centre of an inquiry by the Competition Commission, which has focused on Tesco’s alleged landbanking. The commission has determined that Tesco has the largest landbank of any UK supermarket.

Leahy does not seem fazed by the issue. He suggests that large occupiers have to build up a development pipeline “for the long term”. Tesco says the landholdings it owns are in place for its own development projects, and it does not engage in a “spoiling game”.

“Anyone who knows the property market knows it’s highly competitive,” says Leahy. “People have confused a development pipeline with a landbank. Sitting on land makes no sense in retailing.”

Tesco owns the freeholds of around 85% of the property it occupies, including distribution warehousing. Leahy says this is a policy that is unlikely to change, although the company sometimes enters into sale-and-leaseback arrangements, such as last week’s £650m deal with British Land, involving 21 stores. “Property is an integral part of retailing. You can’t separate the two things,” he observes.

Dismissive of revaluing

Buildings are kept on Tesco’s books at an historic value and Leahy dismisses any notion of revaluing. “We don’t revalue property. Book values are one thing but you need to trade it to see the true value,” he says.

Despite the vast weight of private equity stalking the likes of Sainsbury’s at present, Leahy does not see the potential under-valuation of Tesco’s key property assets as being risky. “People have always been buying into businesses because they believe that what’s on the balance sheet is undervalued. Does this make us vulnerable? The right thing is not to stumble,” he says, adding that the matter will be “kept under review”.

Tesco is already active in Europe and other parts of the world. Some 24.5% of sales come from outside the UK, while, as a developer and landlord, Leahy acknowledges that booming European property values have been great news for the company.

The retailer will continue to expand globally in the months and years to come. It is developing more property in central Europe and recently opened its first branded stores in Arizona and Beijing. All of which means Tesco is unlikely to be forced off the front page – or, perhaps, the Amazon bestseller list – any time soon.

Terry vision: Liverpool stand draws the crowds

Liverpool-born Sir Terry Leahy flew out to MIPIM to extol the virtues of his home city as a board member of urban regeneration company Liverpool Vision. His speech on Thursday attracted the Liverpool stand’s biggest crowd of the week.

Leahy, 51, believes Liverpool can “stand on its own two feet”. This is just as well, since the city’s European Objective 1 funding expires at the end of 2008. “It’s a difficult call when you take the arm bands off but there comes a time when you need to do it,” he says.

Leahy is optimistic, thinking both of the wave of up to 20,000 new city-centre residents and the fact that the city’s population as a whole is on the up. He expects Liverpool to extend its “hinterland”, and speaks boldly about attracting shoppers from as far away as Cardiff and Carlisle.

Leahy says Tesco is “probably” the largest private sector employer in Liverpool and that it trades well in the city. The multiple is continually developing new Liverpool stores but has decided not to take one in Grosvenor’s city-centre Liverpool One scheme, which is due to open next year.

Tesco is, however, involved in the development of a new stadium for Everton FC – the club Leahy supports – at a site outside Liverpool’s local authority boundary in Kirkby. The retailer will anchor the development.

Liverpool Vision is currently in the process of merging with two other city quangos, Liverpool Land Development Co and Business Liverpool. Leahy will not confirm whether he will join the board of the new organisation.

“It depends if I’m asked,” he says. “If I’m asked, I will consider it at the time.”