European Union Effects on Tesco

Describe the impact of international factors on a selected business. M3 – assess the impact of changes in the global and European business environment on a selected business. Kyoto Protocol

The Kyoto Protocol is an international agreement on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas emissions. This amounts to an average of five per cent over the five-year period 2008-2012.

The Protocol was initially adopted on 11 December 1997 in Kyoto, Japan, and entered into force on 16 February 2005. As of September 2011, 191 states had signed and joined the protocol. The only remaining signatory not to have joined the protocol is the United States. Other United Nations member states which did not ratify the protocol are Afghanistan, Andorra and South Sudan. In December 2011, Canada announced its departure from the Protocol.

Recognizing that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere, the Protocol places a heavier burden on developed nations under the principle of “common but differentiated responsibilities.”

An impact of the Kyoto Protocol has meant many businesses have had to amend their carbon footprint which in result will help them become more environmentally friendly. One Business that has been affected a lot is Tesco; they are supposedly using nearly four million tonnes of carbon a year.

Tesco supports the UK Government’s position on climate change and the Kyoto Protocol and are doing their bit to lower their greenhouse emissions by participating in the UK Emissions Trading Scheme and Climate Change Levy. As part of the Trading Scheme they are committed to an absolute reduction in greenhouse gas emissions over a five-year period at a control group of 118 stores, in return for a payment from the Government which is invested in further energy saving initiatives.

In 2009 Tesco opened there first zero – carbon store in Cambridgeshire, the store generates is own renewable energy using on-site renewable fuel. The store which is timber-framed rather than steel costs 30% more to build than others stores, however this does not bother Tesco as they know that this will be cost efficient as huge savings will be made on electricity and water bills. This will be done by using rain water to flush toilets and to wash the cars in the car wash while the refrigerators will have doors to save energy while also getting rid of harmful HFC refrigerant gases.

On the Tesco website they claim that their aim is to become a zero-carbon business by 2050. Another sign that they are making forward footsteps to do this was in 2010 when they installed over 500 PowerPerfector units at a cost of about 25m. Each unit will help a store save between 5 and 8% of its total energy usage which should equate to around 12m a year.

Tesco have established that an effective way to cut their carbon footprint is to self-generate energy from renewable sources such as solar, wind, biomass and geothermal. To do this they have set aside £500m which will be spent over the next five years on environmentally-friendly technologies such as these.

The Kyoto protocol clearly has already had a huge impact on Tesco as massive amounts of money have been pumped into the project in the aim of reducing first reducing its carbon footprint on stores by 50% in 2020. The fact that Tesco are actually doing this quickly rather than simply talking about it says a lot for the business, it proves that they see it as a serious matter that needs to be addressed.

The money being thrown into the project is astronomical amounts and Tesco deserve a lot of recognition for this, instead of focusing of expansion and investment back into the business they are using the money gained from profit on the reduction of their carbon footprint.

As a result of being environmentally friendly Tesco hope this could lead to a positive impact on sales in the business. Due to the fact Tesco’s are now opening new zero carbon stores, this should change opinion and view that the members of the public have upon them as a company. Customers who themselves are also passionate about the state of the environmental issues may be aware of the fact that Tesco’s are choosing to open new stores in a battle against the carbon footprint and sway towards shopping at Tesco as appose to another supermarket.

The European Union
A second international factor that has had an effect on Tesco has been the EU legislation on employment. The EU was developed after the destruction of the Second World War; it is an economic and political union of 27 member states which are located primarily in Europe.

There are three main institutions that run the EU:

* The European Council
* The European Parliament
* The European Commission

The European Council

The European Council is an institution of the European Union. It comprises of all the EU leaders meeting at least twice every six months and is charged under the Treaty of Lisbon with defining “the general political directions and priorities” of the Union however it has no legislative power.

The European Parliament

The European Parliament is the directly elected parliamentary institution of the European Union. Together with the European Council and the European Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world. Parliament is currently composed of 754 Members, who represent the second largest democratic electorate in the world.

The European Commission

The European Commission is one of the main institutions of the European Union. It looks after the interests of the EU as a whole. It puts together proposals for new European laws and then manages the day-to-day business of implementing EU policies and spending EU funds.