Good morning, everyone, and welcome to Tesco's 2025 Annual General Meeting. I'm Ken Murphy, Chair of Tesco, and I'll be chairing today's meeting. On behalf of my fellow directors, I'm delighted to welcome you to the Heart building here on our Welland campus and to open this year's meeting as we clearly have a full quorum. Nothing is more important to us than your safety, so I'd ask you to please spend a moment studying the fire escape routes on the screen behind me. There are no scheduled fire alarm tests today, so if a fire alarm is activated, please make your way to the nearest fire escape located on either side of this room. As you leave the building, marshals will direct you to the fire assembly point located just behind the sports pitch at the back of the building.
The lifts are disabled during an evacuation, so anyone who might have difficulty using the staircases should use the evacuation intercom, and assistance will be provided. I would like to remind everyone that taking photographs or recording the meeting is not permitted, so please make sure that your phones are switched off or on silent. I'd also like to welcome anyone viewing today's meeting online to the webcast, a recording of which will be available on our corporate website for the next month.
Now, I'd like to introduce my board colleagues here with us today, starting from on my right, at your left, with Carolyn Fairburn, my right, our Senior Independent Director, Karen Whitworth, our Audit Committee Chair, Imran Nawaz, our Group Chief Financial Officer, and my unrelated namesake, Ken Murphy, our Group CEO, and Chris Taylor, our New Company Secretary, Alison Platt, our Remuneration Committee Chair, and last but not least, Stuart Gilliland, our Sustainability Committee Chair. We also have our other non-executive directors: Melissa Bethel, Bertram Bodson, Thierry Garnier, Chris Kennedy, and Caroline Silver joining us virtually today, and they are hopefully visible on the screen behind me. They are. Now, since last year's AGM, we've had a few changes to the board, which I will now talk you through. In February, we welcomed Chris Kennedy to the board as a non-executive director.
As the Chief Financial Officer and Chief Operating Officer at ITV, Chris brings a wealth of knowledge in financial management, strategic planning, and corporate governance, and will be a real asset to the board. Carolyn Fairburn is now our Senior Independent Director, having succeeded Byron Grote, who stepped down after last year's AGM. At the conclusion of this year's AGM, we say goodbye to Alison, who, having served nine years on the board, will retire as a director. I would like to thank Alison for her invaluable contribution to Tesco over the years, especially recently in her role as Remuneration Committee Chair. Looking ahead, we're very pleased that Melissa Bethel will succeed Alison as Chair of the Remuneration Committee from the conclusion of the AGM today.
Now, turning to the business of the day, which includes, of course, the opportunity for shareholders to consider the group's performance, to ask questions, and to vote on the resolutions before the meeting. I'm sure there'll be lots of questions for the board, and we want to be able to deal with as many of those as possible. We have invited you to submit your questions at the registration desks before the start of the meeting. If you have already registered a question and made yourself known to a steward, you should be seated in an area behind one of the two question points. A steward will let you know when it's time to move to the question point and to ask your question. If you haven't yet registered a question but want to do so, please ask a steward who will be able to help.
One final point: if you have a question about an individual experience in a store or a customer matter that does not relate to the business of today's meeting, then please could I ask you to speak to a colleague on the customer service or shareholder inquiries desks after the meeting? They will be happy to help and follow up with you as appropriate. As I said, our main purpose today is to vote on the resolution set out in the notice of meeting. Before we get to that, I'd like to share with you my own thoughts about our business over the past year, and then I'll ask Ken to share his reflections about our performance and the progress we're making on our longer-term strategic priorities. Looking back, our 2024-2025 financial year was another strong period for Tesco.
I want to say a big thank you to all of our colleagues across the group. Since I chaired my first Tesco AGM last year, I've had the opportunity and the privilege to visit even more of our colleagues in our stores, distribution centers, and offices across our different markets. I'm always struck by their consistent and enthusiastic dedication to serving our customers, our communities, and our planet a little better every day in everything that we all do. Now, in grocery retail at Tesco scale, there is rarely a predictable period, and last year was no exception, and we navigated our fair share of external and domestic global events and, of course, ever-evolving consumer trends. In recent times, as we've all heard, these have included significantly increased costs for our business, the prospect of fundamental change in global trade, and even stronger competition in the grocery sector.
Now, we always try to stay connected to all of our stakeholders and do what is right for them. Now, this has enabled us to deliver higher customer satisfaction, increased market share in the U.K. and Ireland, and strong trading and financial performance from the group. I'll leave Ken to share more about how we view the outlook for the year ahead in a moment. While inflation has eased a bit over the last year, we retain a relentless focus on offering our customers the best quality and value at Tesco. That is our true north. Our colleagues and the outstanding service they provide are crucial to our business. We continue to recognize their importance and recently announced another GBP 180 million investment in colleague pay, bringing the hourly rate for U.K. store colleagues up to at least GBP 12.64 from the end of August this year.
Now, this investment builds on significant increases over the last few years, rolling up to a cumulative increase of almost a third since April 2022. Supporting our local communities remains at the heart of everything we do. This year, our Stronger Starts program made a real impact for children across the U.K., particularly with our Fruit and Veg for Schools initiative. So far, we've supported 400 schools with more than 5 million portions of fruit and vegetables. A couple of months ago, fellow directors and I visited one of our participating schools and heard firsthand how the scheme is helping to inspire youngsters to eat more healthy food and to try fruit and vegetables they've never tasted or even seen before.
For other young people in some of the U.K.'s most deprived areas, we're offering hundreds of places in our Stronger Starts apprenticeship program, which aims to address youth unemployment and, importantly, offers places to young people without the need for prior qualifications. We hope to expand this scheme and would like to offer at least 1,500 places by 2027. As to our financial performance, we announced a full-year dividend of GBP 13.7, up 13.2% from last year. In addition to GBP 864 million of dividends paid, we completed a GBP 1 billion share buyback, as promised, in April last year, reflecting our ongoing commitment to return cash to our shareholders.
With our full-year results a few weeks ago, we announced a further share buyback totaling GBP 1.45 billion to be completed by April 2026, comprising GBP 750 million funded by free cash flow and an additional GBP 700 million funded by the sale of our banking operations. Before handing over to Ken, I want to thank our entire management team and all of our brilliant colleagues for their hard work and commitment during the year. Against a challenging economic backdrop and facing intense competition, they delivered a strong, all-around performance for all of our stakeholders. Tesco never stands still, and we always look for new ways to do the best we can for our customers, our communities, and for the planet. With that, I'll hand over to Ken for a brief presentation.
Thank you very much, Jerry, and I'd like to thank the Board for their support during the year.
Tesco is in strong hands with you.
Strong hands with now.
Strong hands with now.
Tesco is in strong hands with you.
Tesco is in strong hands now.
As I was saying, good morning, everyone. We really enjoy the opportunity to get to talk to the owners of the business directly, and all our shareholders here are absolutely welcome, and even the activists who I know are very passionate about their chosen subjects that they support. For us, this has been a really strong year, and I'm going to take a few minutes now just to explain how we got there, what are the things that have underpinned that performance. If I give you some quick summary highlights, we grew sales by just over 3%, and that, as Jerry mentioned, has been supported by the fact that we saw a big drop in inflation last year, which I think has been really important for our customers. Really, last year's growth was a volume.
Drop transmit now. Tesco is complicit in pig abuse. Drop transmit now. You've seen the abuse. You need to drop the compliment. Tesco is complicit in pig abuse. Drop.
Okay. All right, guys. Let's get back on track. That drove a profit improvement of nearly 11%, which is really an exceptional performance given the amount of extra cost we've seen down the track, and I'll explain a bit how we managed to achieve that. We did see a drop in cash flow year on- year. That's largely been driven by the fact that we are paying a higher rate of tax. Corporation tax has gone up. We've also seen that the tax credits we got from the large payments we made into the pension fund a number of years ago have now expired. Of course, we saw a normalization in working capital, again, because of the big reduction in inflation that we saw last year. What have been the components of this success?
The first thing to say is that on every single customer measure, we've seen material improvement. Our recommend has gone up substantially, and that's been driven largely by an improvement in value perception, quality perception, and actually the shopping trip. People are saying shopping at Tesco is a better experience. The shops are clean. I can find what I want. It's easy and quick to pay. The fundamentals of what we do, we're improving on consistently, and that's really been recognized by customers. As a consequence of all those factors, we're seeing a material improvement in brand perception, which you can see on the right-hand side. If you look at the gray line, that's the industry brand perception average, and the blue line is the improvement in Tesco's brand perception over the last 12 months.
We are really, really pleased as a team with that because at the end of the day, the only people that really judge the performance of our business are our customers. If we then look as to where have those gains been coming from, where have we seen improvement in performance, we can see that actually we have been winning from everybody. If you look at the left-hand side, the small pink bar is the gains we have had from the limited-range discounters. The brown one in the center is from other parts of the business, and the big one on the right is from other full-line grocers that we compete head-to-head with. You can see that our gains have really been broad-based across a wide range of competitors.
That has been underpinned really by our three big price mechanics: Aldi Price Match, Everyday Low Prices, and Clubcard Prices, the launch of over 1,000 new products, plus improvement of 600 products, market-leading availability, and we have been consistently the cheapest full-line grocer throughout the year. Our strategy has not changed. We have four big pillars on how we want to grow the business. The first one, magnetic value for customers, is really all about doing the basics brilliantly. Be great value, have great quality products, keep innovating, deliver on your ESG ambitions, and deliver the shopping trip. That is something that we have really, really worked hard at over the last 12 months. We have also been investing in our ranges. As I mentioned, launched 1,000 new products across a number of different new cuisines. We have launched new cuisine from Korea. We have launched a new gut-health high-protein range.
Of course, if you haven't seen it, we've launched our new Steakhouse Premium Steak Range, which has performed exceptionally and I can personally attest is absolutely fantastic if you haven't tried it. We're also continually investing in our stores. You'll have noticed over the last number of years, we've been progressively spending more on renewing our business. We've moved from about GBP 800 million in capital to nearly GBP 1.5 billion in capital over the last five years, and that really has been reflected in our store standards. We have really sought to open out our fresh environment with a fresh-first approach to store renewals, using low-level furniture that is, I believe, much more kind of product-friendly. We've been putting a lot of effort in improving our bakery and in some stores bringing it forward in the store.
We've launched a number of new premium products in bakery, our Finest Sourdoughs, for example. I just mentioned our Steakhouse, but we've also been putting fridges on our doors because we have noticed a dramatic reduction in emissions. We've noticed an improvement in product quality, and it doesn't seem to be having an effect on customer satisfaction. In fact, it warms up the stores and makes it a better shopping environment and helping us get to that net zero that we're keen to get to by 2035 in our own operations. Our colleagues are everything. Without the right level of engagement, motivation, and customer service orientation in our shops, our business will go nowhere. We value our colleagues very highly, and we've invested very heavily in them over the last number of years. In fact, since April 2022, we've invested over GBP 900 million in pay.
In addition to that, we have upweighted our other rewards around pay, including enhanced maternity leave, paternity leave, and of course, a free virtual GP service that's accessed 24/7 by colleagues and their families. We've also removed the cap for the colleague Clubcard, and we've increased the range of people you can give second Clubcards to. So we've done a lot of work around our colleague offer. Also important to us, and I know dear to a number of the people in the room, is helping customers lead healthier lives. We are one of the few grocery retailers in the country that report every year on the percentage of healthy products we sell. We have an ambitious target of getting to 65% by the end of this calendar year, and we're well on track to achieve that.
In fact, we have, as you will have noticed maybe in the press in the last couple of weeks, led calls for mandatory reporting on the proportion of healthy food sold through supermarkets and major food businesses, including food to go. We are also working extensively with our health charity partners, Diabetes UK, Cancer Research, and the British Heart Foundation because they are absolutely critical to how we think about the future of health and how we develop policies, products, and capabilities to allow customers to lead healthier lives for the future. As a segue into supporting our communities, one of the things we realize in terms of that ambition to get customers to lead healthy lives is to try and influence people at the very early stages of their development.
We started the Stronger Starts campaign almost two years ago now in schools, primarily primary schools with the greatest need, where we have funded programs to, A, provide food in those schools for kids so that they get a healthy start, massively helps their concentration, but also to provide educational and activity materials so they get the right level of stimulation. On top of that, last year, we also launched fresh fruit in those primary schools, and again, primarily with the view of educating the palate and the curiosity of children at their very early stages to get them interested and excited about healthy food and to apply upward pressure into their families to be able to have that food and fruit available at home as well.
That has been really well received, and I think Jerry referred to it in his presentation when he talked about the school he and the board visited earlier in this year. As I mentioned earlier, working towards our planet goals is as important as ever. I think you may feel that somehow the intensity of focus on this subject has somehow diminished in the press and in reporting due to shifts in kind of mood in other parts of the world. What I can promise you is that Tesco is as committed to its sustainability goals and its ESG goals as ever have been. We genuinely understand and believe that there is a climate crisis, that we must achieve net zero by 2035, that we must stay on track to reduce emissions in our business. We encourage our supply chain to do the same.
We're members of the 10 by 20 by 30 coalition that seeks to influence a dramatic reduction in food waste right through the supply chain, and you can rely on us to continue to do that. It is obviously embedded in our long-term incentive plans, and so it is very visible. Just to give you a quick update, we announced our quarter one results this morning, and we're very pleased to say that the momentum we built up last year has continued into the quarter one period of this financial year and in fact has strengthened. We have delivered for the group overall a 4.6% increase in sales, which is underpinned by the performance in the U.K. and Ireland, where we've seen 5.1% and 5.5% respectively.
What I'm really pleased about is that we've continued to gain share, so we're winning with our customers, and we've done so across all the businesses: so Booker, Ireland, Tesco U.K., and our Central European businesses. That is all I had planned to share with you this morning. Thank you so much for your time, and we look forward to getting your questions. Thank you. Thank you, Ken, and apologies for the earlier disruption. Now to the main business of today's meeting, which is, of course, voting on the resolutions set out in the 2025 notice published on the 8th of May. In all, there are 23 resolutions contained in the notice, which I propose to take as read with your consent. Now, do I have any objections? No. Thank you. Resolutions 20-23 are proposed as special resolutions requiring a 75% majority to pass.
The remaining resolutions are proposed as ordinary resolutions and require only a simple majority to pass. Registrars are required to check the votes at the end of the meeting, including the votes cast using the paper poll cards. Voting on each of the resolutions will be by way of a poll, and I hereby appoint the registrars, Equiniti Limited, to act as scrutineers. Before I invite you to ask questions, I would now like to formally open the voting. On registration, you will have been given a paper poll card. Once you've completed your voting, you should put your poll card in the voting boxes as you leave the meeting room, and your votes will be included in the final figures. If you've got any problems with this, please raise your hand, and an Equiniti colleague will come to help.
At the end of the meeting, provisional voting figures will be displayed on the screen behind me. Now, these figures will include proxy votes cast by shareholders ahead of the meeting but will not include any votes cast in the room. These will be added after the meeting. The final voting figures will be set out in an announcement to the market, which will be released as soon as possible after the meeting ends. Now, I'd like to invite shareholders to ask questions on the proposed resolutions or about the business of the company. Please direct any questions to me in the first instance, and where appropriate, I will ask Ken, Imran, or other board colleagues to respond where I think they can give a better answer than I can.
Now, out of consideration for others and in the interest of good timekeeping, please, can I ask you to keep your questions concise, as direct as possible, and I would ask shareholders not to repeat questions already addressed. Now, please wait for a steward to call you to a question point. When I invite you to ask your question, please state your name and confirm whether you are a shareholder or a proxy. Now, we take the first question from question point A. So please clearly state your name and ask your question.
Good morning. I think it is still morning. Yeah, my name is Dominic Waters. I speak at a time where food retailers continue to play a critical role in shaping the environment, and the reliance on food banks has almost doubled in the past five years. I come from the most deprived blocks of my council estate where I have raised my amazing daughter. Not only do we have a pay-as-you-go gas and electric meter, but also the shop on our estate only sells the lowest quality of processed food. This is a food desert in the Garden of England and an area where the bus rarely shows up. Like us, some of the poorest families live in environments where our access to fresh produce is overlooked.
Last time I was here, I do not know if Ken remembers, in 2023, which was also right around Father's Day, I was on universal credit benefits. I am now working as a community researcher on a leading project looking at how best to build resilience in our U.K. food system. I am passionate about speaking up for unheard and marginalized communities like that in my council estate, and I have just been asked to help inform the national food strategy with DEFRA. Please can I ask the board kindly, as your company is reviewing its healthy food targets this year, how will you include voices like mine from the background that I come from to help inform truly sustainable solutions which support those facing the biggest challenges to afford a healthy diet?
I would just caveat it very briefly with, I would like to extend a formal invite for the board to come to my council estate to begin to raise awareness of what communities go through like mine and their daily realities. Thank you.
Thank you, Mr. Walters, for a very clear and impassioned proposition to the board. Look, we're very aware of the role that food retail generally, and Tesco in particular, given our scale, plays in delivering a healthier diet to the nation in all its manifestations, whether it's delivered through big stores, online, small stores, convenience stores, or whatever. We're very, very aware of the issue and our responsibility, and we're aware of the fact that the challenge is not evenly distributed across society, as you very eloquently put it to us. I think your proposition was that we should hear voices like yours when thinking about our healthy food strategy. We are engaged with the major stakeholders that are part of the field.
With DEFRA, Ken mentioned his letter to the health secretary a few weeks ago, advocating for the publication of statistics from major retailers and caterers on the health status of their offering. We support that. We think that kind of data is important. Building a proper database is really important so that we have science-based evidence on which to build better public policy in this area. We're also very involved with, as Ken said, with our charity partners, with the British Nutrition Foundation. We sponsored effectively town hall meetings with communities around the country to understand how people feel about their food offer from companies like ours. We're working with our charities, the Heart Foundation, Diabetes UK, the Cancer Research UK, so that we do have other voices in the room.
Only a couple of weeks ago, I attended a meeting with the DEFRA Secretary, Steve Reid, sponsored by Dominic Henry Dimbleby, who was helping the government, this government, as well as the last government, on food strategy. We are very engaged on developing our policy in this regard, mindful of the kinds of issues that you raised. We are also aware that the offer in the convenience part of the market is more difficult to deliver because the stores are smaller, the logistics are difficult, and sometimes the community backdrop is challenging, as you pointed out. We are very much on the case, and we hear what you are saying, and we are very keen to hear what you have to say about this. Ken.
First of all, Dominic, I remember you well, and the first thing I want to say is congratulations. I'm delighted at your role. I think you'll bring a lot to it, and to have you involved in the future of food with Henry's team, I think, will be a great addition. We'll be sitting alongside you in trying to develop that plan for the future of food in the U.K., and I think the platform you're on now is exactly the right platform to bring all those diverse voices into the conversation so we end up with a solution that works for everybody in our communities. Thank you.
Next question.
Yes, hello. I'm Jill Clark. I'm a shareholder, and I campaign with Cancer Watch. Here I am again, campaigning against cancer, and here you are again, killing people with your cancer sticks, your cigarettes, and tobacco products. Every year, we seem to meet up. Let's go over the facts again. Tobacco is a major risk factor for 15 types of cancer, including cancer of the lung, of the esophagus, the bowel, pancreas, and bladder, to mention just a few. Tobacco is a contributing factor or a main cause of up to 25% of all cancer deaths in this country. Of course, smoking is also responsible for many other deaths, including respiratory disease, heart attacks, strokes, stillbirths, dementia, and house fires.
Additionally, smoking is also considered to be responsible for up to 50% of all health inequalities, reducing the lifespan of many people lower down the social scale who are already disadvantaged. Yet, you are still selling your cancer sticks. Tesco is the largest retailer in the U.K. Therefore, you are quite possibly the largest retailer of tobacco products, especially after the purchase of Booker. Since cigarettes are the biggest contributors to cancer deaths, the logic seems to be that you are the biggest purveyor and cause of cancer in the whole of the British nation and possibly Ireland as well. Did you know this about yourselves, Dr. Murphy and Mr. Murphy? Is that what you intended when you embarked on your retailing careers? Here, I have a packet of cigarettes sold to me at your large Tesco store in the town of Tenterdon in Kent for GBP 14.10.
About 90% is taxation for the government, so it's not even making Tesco much money. Look what it has written on it. Smoking causes throat cancer. Suppose one of your ready meals had something like that written on it. This product causes throat cancer. Would you allow it anywhere near your shelves? Of course not. Why are you selling cigarettes on your premises? The way it works is this: a customer walks into one of your nice Tesco stores, goes to the front where you can buy lottery tickets, and buys packets of cigarettes.
Everybody says, "How wonderful that we live in a free society and that Tesco offers such a wide choice of products." A few years later, that customer, say he's now aged, say, 56, suddenly gets cancer of the esophagus or has a heart attack, and everybody says, "Gosh, that's bad luck when you're only 56." The chances are it's not bad luck at all. There's a strong chance that it is the direct result of Tesco's shoddy, misguided retailing policies. People talk about individual choice, but I can tell you that you don't get much individual choice when the doctor's administering the diamorphine to control the pain in end-stage cancer, or a baby is stillborn because its mother thought it was clever to smoke during pregnancy, or when people get dementia when they're still in their 50s. Not much freedom of choice then.
I believe that not only is the selling of tobacco products against the ethics of Tesco as a company, but my guess is it's also against your personal ethics and the ethics of your board. I'm well aware how tough it is running supermarkets. An embarrassingly long time ago in another life in a building site then called Docklands, I was trained as a stock analyst. I know all about how tight the margins are in this industry and how every other supermarket in England is breathing down your neck. You know that is no excuse for continuing to sell your killer cancer sticks. Dr. Murphy and Mr. Murphy, you run a hugely successful enterprise, and I'm always pleased to see the captains of British industry being properly remunerated.
I ask this of you: get those cigarettes and tobacco products off your shelves, and please, please stop killing people.
Thank you, Ms. Clark. Yeah, you make a very powerful case for smoking cessation and for smoking regulation. Obviously, we support the ambition for a smoke-free future for our children, but we recognize, as I think you implied in your remarks, that a significant minority of our customers do continue to smoke and wish to buy cigarettes. These are not our products. They are other manufacturers' products, which we make available to a minority of our customers. Our position is that we do not generally restrict consumers' choice. It is, as you said, a free society, and people are free to make their own decisions. In the case of smoking, it is hard to argue that those decisions are not well-informed and have been well-informed for now for generations.
In relation to smoking cessation, we make available as well nicotine replacement products over the counter, and our pharmacies are available for advice for consumers wishing to cut down or cut out smoking. In the round, we think our position is reasonable in terms of giving our consumers choice, and it is responsible.
Good morning, and thank you very much to the board for that presentation. My name is Sanna Ström, and I was previously the operations manager for a London-based vegetable box scheme. I'm now pursuing a PhD focusing on company law, and today I'm speaking on behalf of Share Action. My question is about the memo shared with the investors by senior professionals in the food industry at the start of April. I understand that both the Chair and CEO of Tesco were sent copies of the memo coordinated by InsideTrack and will no doubt have picked up on it in the press also. I understand that it's also been shared with the investor relations team ahead of this meeting. The memo suggests that food producers, manufacturers, and retailers are facing unprecedented risks to supply chains.
As soil health declines, water becomes more scarce, temperatures rise, and there is increased likelihood and severity of flooding and extreme weather events. It states that the quality, the yield, and reliability of key commodities is at risk. The memo also suggests that companies are not being transparent with shareholders about the scale of these risks and are trying to placate them with risk mitigation strategies that are simply not commensurate with the level of this threat. To the question, I would like to ask how investors can access a full response from Tesco to this memo. The memo addresses a number of questions from different departments, so it would be great to have a comprehensive response that covers all the issues and questions raised in this memo made available.
Share Action will be discussing the memo further with their investor coalitions, and we know several investors are already seriously concerned about its contents. At this point, we are seeking from Tesco both reassurance and actions as from the other companies mentioned. Thank you very much.
Thank you for your question, Sanna. On the specifics, I'll ask Ken maybe to address your questions in a moment, but at a high level, I want to reassure you that the board of Tesco is very focused on the resilience and integrity of our supply chain for the long term. I think it's one of the three or four mega trends on which we are very focused because we have to be. Obviously, it's a combination of things. It's not just climate change, but also geopolitics that we have to take into account. At a very high level, in terms of risk, it's one that we absolutely recognize and are, if you like, planning to mitigate in real time. On the specifics, Ken?
Yeah, thank you, Jerry. Thank you very much for the question, Sana. I would focus the answer on six key areas. The first thing we're doing is we seek to improve our products consistently. Through that, we are either incentivizing our growers and farmers to use sustainable farming techniques. You will know that we have a number of sustainable farming groups based in the U.K. where we pay over the market price for sustainable farming practices in areas like dairy, beef, lamb, pork, etc. In addition, we are seeking to consistently decarbonize our end-to-end supply chain. We are by far the largest user of trains in the U.K. to move goods and products, which has a significant decarbonization effect. We are expanding by the day our fleet of electric vans for our grocery home shopping network.
We are looking, as I said earlier when I talked about our fridges, every time we intervene in a store, we look to significantly decarbonize the store. We take all the harmful refrigerants out of the old refrigeration. We replace it with new energy-efficient refrigeration, which is much, much safer gases. We eliminate the greenhouse gases. As I said, we have put doors on those fridges to retain a lot more of the energy. We are also using heat exchange in a lot of our store refurbishments, again, to make sure that we are minimizing the usage of energy. We are also a large contractor in purchase power agreements for sustainable power over the long term, whether that be wind power or other forms of solar power, etc.
If I then move down the chain into supporting sustainable consumption, we look always to optimize with customers' things like their baskets, etc., make it really easy for replenishment. Of course, we lead food waste. I lead the Food Waste Coalition for the Consumer Goods Forum, which is a global organization. We have signed up to the 10 by 20 by 30 initiative, which is designed to reduce food waste in our own operations, but then go up the supply chain into our growers and producers and help eliminate food waste right up the supply chain because we know that food waste accounts for a third of food produced is lost, and food waste therefore accounts for about 10% of global emissions. It is a massive initiative. Now, the issue for us as a society is about 70% of food waste occurs in the home.
The work we have to do next is really with the consumer. The last piece is all about protecting nature. We work tirelessly to make sure that, for example, we source from deforestation-free zones. We have signed up to the kind of deforestation-free initiative. We are always looking at replacement options for things like soy to help minimize the impact on nature from our sourcing operations. Lastly, I would say to you that we spend a lot of time working with organizations like DEFRA and more globally on things that you have brought to light, like soil health, climate change, sourcing strategies, sustainable farming techniques, and a model of partnership that is much more long-term than you would imagine. Many of our growers and producers of food have been with us for 30 plus years.
That continuity has allowed them to invest in the latest techniques in sustainable farming, reducing the time from farm to fork to minimize waste in the supply chain. The only promise I can't promise you is that we solve climate, but what I can tell you is that it's a huge focus area for the business. We work on it through multiple different layers, and we're very committed to it. Thank you.
Oh, actually, good afternoon. My name is Gemma Hoskinds, and I'm here representing Mighty Earth. Methane is a greenhouse gas with 80 times the heating power of carbon dioxide over a 20-year period, and it's responsible for 25% of the world's heating. Urgent and immediate reductions in methane are a much-needed and central solution if we are to remain within 1.5 degrees Celsius global temperature limit. A third of methane emissions come from the food system, and animal agriculture is the biggest contributor within that section, generating 60% of those emissions. To reduce methane emissions, we must focus on reducing emissions from the food and agricultural sector, as just described, particularly livestock.
In March of this year, Mighty Earth launched our Methane Action Tracker and an analysis of the top 20 global retailers' climate ambitions and their progress against those climate targets, with a specific focus on methane action and the role of meat and dairy as an outsized contributor to methane emissions in those retailers' footprints. Whilst the scores and performance across the sector were a little disappointing, not a single retailer discloses its methane emissions, sorry, or has a methane reduction plan. Tesco did top the leaderboard with a score of 51 out of 100 for good performance against things like food waste. I'd like to congratulate Tesco on its first place position within the scorecard. It's fair to say that Tesco is a market leader amongst its European and US peers and can really drive sectoral change.
Whilst we can all celebrate the reductions in refrigeration and transport emissions, it's important to know that these emissions represent just 2% of Tesco's total emissions, and it's really important for us to focus on the major emissions driving your overall footprint. It's estimated that only half of European retailers' emissions come from meat and dairy products. This really demonstrates the outsized role that meat and dairy products are playing in Tesco's estimated 73.2 million tons of carbon dioxide equivalent. Pair this with emissions from the deforestation generated by some soy production reaching Tesco's supply chain for the animal feed, and it's clear to see that meat and dairy emissions are a hidden problem within Tesco's climate ambitions.
We also note that Tesco is, we were disappointed to see that Tesco, whilst we appreciate the honesty, sorry, from Tesco, we were disappointed to see that only 95% of the committed 300% increases in plant-based was delivered, recognizing the increase in plant-based is a key driver in reducing those methane emissions. Given methane is such a key driver of Tesco's overall emissions footprint and reductions are urgently required if Tesco is really committed to its net zero target, will Tesco commit to disclosing, only disclosing its methane footprint as recommended by the greenhouse gas protocol? Can the board outline a timescale for when Tesco will deliver a methane reduction plan, which includes customers to understand the methane footprint of meat and dairy products within those baskets? Finally, we would really appreciate if Tesco would commit to engaging with Mighty Earth on this issue.
We would really be happy to outline solutions and support efforts in driving much-needed change and methane emission reduction across the food section.
Thank you. Thank you, Gemma, for, again, a very good and very topical question. Yes, we are very aware of the methane impact of consumption of animal products, particularly from ruminants. The short answer, of course, is that meaningful reduction in methane emissions requires meaningful reduction in consumption over time. The approach we have taken is to encourage people generally to look at the healthfulness of their food baskets. We will encourage and continue to encourage people to eat more healthily, and that generally means eating more plant-based products. As part of our overall position, we understand the problem, but the solution to it is one that requires significant change in customer behavior, and that is a long-term issue.
On the specifics, as Ken said, we're looking at sustainable farming to ensure that the meat that is consumed is consumed from herds and animals that produce as little methane as possible relative to non-sustainable or less sustainable production methods, but that's unlikely to make a huge impact compared to the consumption issue. On your specific request to look at disclosure of our methane footprint, yeah, that's something we will consider as we develop our reporting in this area.
Thank you.
Thank you.
Hello, Peter Asprey from Warrington. I spoke last year about titanium dioxide in products, and I didn't really receive a straight answer from you guys. It's the same question. What is Tesco doing about titanium dioxide, which is a whitener in paint, which is used in some of the toothpastes and foods as a coloring agent, particularly in view of the Europeans have appeared to abandon it? Now, more recently, the United States are on the same page as the Europeans. I'm asking, what are you guys going to do about it? Why doesn't Tesco take the lead, get together with the other supermarkets, and put pressure on the government here to investigate properly the damage that titanium dioxide does to physiology?
Thank you for the question. I thought we did answer it last year. Titanium dioxide is not contained in any of the food that we sell. It is not permitted as an additive in food. It is not present in any of our food products. As you say, it is present in toothpaste, and it is permitted in toothpaste. To the extent that you wish to campaign against the inclusion of titanium dioxide in toothpaste, I think with respect, the right forum for that is the manufacturers of toothpaste because those products are sold across the market. They are widely available. I suspect a more direct line of attack for you as a campaigner would be with the manufacturers of those products. I think you mentioned Sensodyne last year. I think that is a Haleon product, but I think it is very clear who the manufacturers are.
We don't see it as our role to mandate for ingredients in products like toothpaste that are produced according to acceptable standards and are sold legally across the market. We don't see that as our role.
You're a food scientist, Gerry, I believe.
I used to be.
Lapsed.
Yeah.
You must have a view on the titanium dioxide in toothpaste.
I have a view on it in food. I agree that it's not an acceptable additive in food. Toothpaste, I don't have a view on. Toothpaste is not food. It's subject to rigorous regulatory control by authorities everywhere, and it's a generally approved ingredient. I don't have an expert view on that, I'm afraid.
Okay. Second quick question. Recently, M&S and the Co-op, it was reported, were hacked. I believe that Co-op went back to pen and paper to carry on their order system. What are Tesco's plans, if any, if they're attacked by the hackers or Intel community? What's their plan B if their ordering system goes down, as Co-op's have done? Can I ask that question?
Thank you for that question. Look, cybersecurity is something we take really seriously. It is reviewed by the board regularly. We have expert teams looking at all aspects of this. We test regularly. We do penetration testing. We do all the things you would expect a company that is highly dependent on its information systems to operate. We have a robust resilience plan in the event that there is an attack. I am not going to give you details of that for obvious reasons.
Fair enough.
Thank you. It's a good question.
Thank you.
Thank you.
Good morning, Mr. Chairman, members of the board, fellow shareholders in Tesco. My name is Anthony Lee. My investment company is a long-term and largely happy shareholder in Tesco. What I have to ask about today should be seen against that background. I just want to ask one quick question, what I call housekeeping. I welcome Chris Kennedy to the board. Like Mr. Kennedy, I've spent many happy years working for ITV, but I note in the annual report he hasn't yet bought shares. Has that been corrected since the report was published? Do we know? You're smiling, Ken. Do we know?
I can't recall off the top of my head. Do you know? I don't believe it has, but that's a matter for each individual director. I'm confident that that situation will be rectified in due course. In fact, we have a policy of expecting directors to invest a certain minimum amount in shares that I'm sure.
He can't be arsed.
Sorry?
He can't be arsed. He's.
Look, I don't think it's appropriate to ask directors about their individual share purchase intentions. As I'm saying, I'm confident that will be addressed, and it's up to him when he buys his shares, as long as it's permissible under our stock exchange rules.
With respect, it's not my main worry today, but we are being asked to vote on the board. I can't speak for other shareholders. It may be that the fact that a member of the board does or does not have shares in the company may influence a vote. With respect, it is relevant, but let's leave it at the moment. As I say, I'm largely happy with the direction of the company. I endorse and I approve of a lot of the questions asked regarding the environment and things like that. My questions are really engaged with the running of the company. A year ago, less than a year ago, Nils Pratley and The Guardian wrote a piece, a very admiring piece about the turnaround in Tesco, which is evident.
The piece was headed, "Tesco is unbeatable when it concentrates on the day job." We can all recall the period under Phil Clarke when it did not. He came up with some marvelous wheezes. Pratley listed most of them. He forgot about the acquisition of Giraffe in the attempt to make Tesco destination dining. I have a couple of questions regarding where Tesco goes from here. A week ago, I read with horror that Tesco was going into the nightclub business to celebrate 30 years of Clubcard. Now, I am hoping that this is a couple of days' promotion and not yet another wheeze to expand Tesco's spread over the country. It may work for a couple of days. I know that you are offering a pick-and-mix selection as part of the attractions of nightclubbing in the 1990s. I was still clubbing in the 1990s. I do not remember pick-and-mix.
I remember sex and drugs and rock and roll, but I don't think those are within the Tesco remit. So I'd just like clarification. Is this just a promotion and not the sort of toe in the water for maybe other things? Another question, again.
Let me deal with that one first. We're absolutely not getting into the nightclub business or the sex, drugs, and rock and roll business.
I knew there was something I forgot to tell you, Gerry.
Don't worry about that one.
It is just a two-day promotion and then gone?
It's an event, a celebration. That's all.
Okay. On a more serious note, there was a period not too long ago when Tesco acquired the reputation for being brutish on the small shops and convenience stores that Booker served. The importance of that is that if Tesco gets a bad name again, which it did in the past, people will stop shopping. As a shareholder, I do not want Tesco to get a bad name. There have been reports that Booker, particularly, is pressuring either pressuring small convenience stores by having very high delivery charges, so pricing them out, or reducing the amount of stuff that can be provided so that it does not provide a good service. We have already heard from the gentleman who is gone, sometimes on particular estates, the poor quality of the produce that Tesco might be providing. Many others will be doing a similar thing.
Can we have some sort of assurance that this is not happening because press reports have said, and they quote cases, where it is happening? Ken, do you want to ask that?
Absolutely. I think you're referring to items in the press that are now close to two years old. They were around the cost of living time when there were challenges, first of all, in terms of the cost of delivery. In fact, we were out of kilter with the rest of the market in terms of the cost to deliver versus the cost of customers coming to collect the products at our branches. We did change our delivery charges a couple of years ago. Similarly, we do range reviews all the time, and we look to optimize the range for the customer. That's something that I think unapologetically we'll continue to do. By no means are we shrinking range to reduce choice for customers because the wholesale market is intensely competitive. We have a much smaller market share in wholesale than we do in retail.
There are multiple choices for independent retailers. If Booker cannot satisfy their needs, then there are many other places they can go. I would call out that even last year, when Booker had a relatively tough year, in fact, independent retail had a tough year because it was having had a number of good years, it had a tough year last year. Booker achieved close to its highest customer satisfaction scores. I would hope that as shareholders, you would absolutely recognize that we understand that keeping our customers happy is the only way to grow our business. You can rely on us to continue to do so.
Thank you.
Just for reassurance, Mr. Lee, I think I've just been told that we've attracted 500 new independent retailers in the last year. We are doing something right at Booker in terms of dealing with our wholesale customers.
Very pleased to hear it. On another question of the past and to see what has been done, maybe 18 months ago, maybe a bit longer, Ken, in a telephone question-and-answer session with analysts, you extolled the virtues of Jax and that you were, in fact, expanding the role of Jax and the variety of products on offer. I have never seen a Jax store. I have never seen a Jax part of a Tesco store. I have never seen a Jax product. Does it still exist?
I'm surprised you think that I said something 18 months ago because we closed Jax about three years ago.
I've got the date here. I think it's Booker.
No, no, no.
23.
Honestly, we closed the Jax stores about three years ago. What we did do, though, because actually our independent retail customers said they wanted a range of product that they could use as an own brand entry range for their store base, and they really liked the Jax brand because it had kind of part of the Tesco family on the packs. So we gave the Jax brand to the Booker organization, and Booker supply Jax product to the independent sector, and they love it. It's doing really well. So the product brand lives on, but the retail chain has been gone for some time. It would be in Budgens, yeah, because Budgens is a Booker banner brand. You will find it in Budgens, Londis, Premier.
Again, looking at the future, Tesco has not commented on reports in the press that you are interested in acquiring post offices.
I can categorically confirm that we are not.
No interest at all.
None.
Thank you. Last question. When the government instituted the rise in national insurance costs, understandably, Tesco had a view. My worry is that the way you pitched it was that it would affect the service to the public at the same time as you were extolling the virtues of cost reduction efforts within Tesco that actually more than balanced the increase in your bill due to the NI rise. I'm not interested in comment on the government's policy, but in how you presented the case to react to it.
What we said to the government was that if you look at the cumulative effect of all of the costs that they have added into the retail industry, not Tesco specifically, but to the retail industry and indeed the catering industry, you can see that NIC, we have quoted a number of about GBP 235 million as the impact to Tesco alone. There has been a similar scale of impact from the increase in the national living wage, which, by the way, we absolutely support. We think it is the right thing to do. Plus, they are proposing extra employment legislation costs, which are actually most of the proposals we already exceed, but they do have a cost associated with them. Plus, they have introduced extended producer responsibility, which will have a meaningful cost on products.
They are about to introduce the deposit return scheme next year, which will also have a material on cost. They are also proposing to increase business rates for retailers, particularly large retailers, which will substantially. All we have said to the government is, "Look, be careful, because the cumulative effect of all these costs will be inflationary if you are not careful." At the same time, what we say to our customers and to our colleagues is we have to do everything in our power to mitigate those costs, to stay competitive, and to shield customers from the worst effects of inflation and extra costs. We do that through really optimizing efficiency, introducing automation wherever it makes sense, and protecting the customer experience.
I think the proof's in the pudding in the sense that we're growing market share, which means we're winning with customers, which says we are not impacting their experience. At the same time, our colleague engagement scores are at record highs. We have also just won the Advantage survey for the 10th year in the role with suppliers, who say we are the best retailer to deal with in the country. What I want to kind of communicate to the owners of the business here is that we genuinely believe in a balanced approach to all stakeholder management, including our climate and sustainability obligations, because we understand that's the only way to build a business that will be sustainable for the future.
Great. Thank you very much.
Thank you.
Again, one further point of clarification. I've just been informed that Chris Kennedy has likely bought shares since the.
Great.
We're all good, I think. Thank you for your questions.
Good afternoon. My name's Nigel Hoyd, and I'm from Harrow, and I'm a proxy voter today. My question is in relation to the redevelopment of the Harrow store and the building of several hundred apartments, flats, whatever, on the same site. Harrow already has a multitude of developments that nobody can fill. The local people can't afford to buy them. The council can't afford to put their own people in it. This is leading to the council sending their homeless people up to an hour away from where their support network is, their families, maybe where their children are at school. Just like to ask why are Tesco, in partnership with Notting Hill Genesis, to build lots more unaffordable homes that are just going to lie empty for the best part?
Thank you for your question. I think this was raised last year as well. My understanding is that there have been three rounds of consultation during the planning process for this development, and that process continues. Frankly, I do not think we have a lot more to say about it than we did last year. I think the scheme itself includes something like a third of the housing is affordable by design in the scheme. It is one that is, as you say, currently going through planning. We do not have a lot more to say about it than that. Thank you for the question.
I think part of the problem is what you would describe as affordable is not what the Harrow people would describe as affordable. They are building houses and telling everybody there is so much affordable housing. It is not affordable housing unless you are two working people with reasonable jobs.
Yeah, look, I understand the housing issue generally across the country and the issue of housing affordability. The definition of affordable housing is not our definition. It's a planning definition.
Okay, thank you.
Thank you.
Good afternoon. My name is Karen Hoyd, and I appear on behalf of the Know Tesco Towers group in Harrow. My question is, can Tesco explain why you're willing to go into partnership with a company such as Notting Hill Genesis, who are looking to build this development, who have such an appalling record of customer safety and satisfaction? National media has been full of a child who died, a baby who died because they were not fulfilling the housing criteria. Their Trustpilot rating is one. The reason for that is because you cannot vote less than one. Many of their Trustpilot ratings actually say would have given zero if it was possible. How can you contemplate going into business with a company like this?
Yeah, I don't have a view, an informed view on Notting Hill Genesis and their reputation issues as you describe them. This partnership, I think, has been years in the development. These things take a long time to formulate. We sort of, we are where we are with this development.
Can you become more than that?
Sorry?
Can you become more than that once you're Genesis?
Their attitude towards the people who buy the properties they build?
We're in a contractual partnership with Notting Hill Genesis. We will look at our rights under that partnership and consider the points you've made. Thank you.
Thank you.
At this stage, I've just been reminded to remind you that the voting is still open. If you haven't already voted, please do so with the intent of putting your voting slips in the boxes as you leave the room. Thank you.
Hello, my name is Ruth White. I'm here on a proxy vote. Here are just a few extracts from Tesco's own website regarding their policy on human rights. Human rights is embedded within our core purpose. Tesco is committed to respecting human rights as set out in the UN Guiding Principles on Business and Human Rights. I have a copy here if you'd like to be reminded of the contents. Tesco are committed to respecting and ensuring our business relationships respect the livelihoods and health of communities associated with our sourcing, including the right to water and the ownership or use of land and natural resources. Tesco is committed to meeting its responsibility to respect human rights and fully supports the UN Universal Declaration of Human Rights.
In view of Tesco's seeming willingness to support Israel by selling its produce, even if the fact of genocide is conveniently ignored, Israel continues to commit war crimes and an apartheid regime. Are these just empty words?
Thank you. Thank you for the question. Look, the situation on the ground in Gaza is well reported. It is very distressing, and it is very divisive, as you know very well. Our position on sourcing is that we try to source wherever possible close to home. Where that is not possible for seasonal reasons or because we simply cannot get the products we need close to home, then we source overseas. We have a rigorous process for vetting our suppliers in terms of what they do and how they do it in all respects. That applies to all suppliers wherever located. We do not generally take political positions with regard to our supply base. We follow government guidance on countries from which it is acceptable to source. Right now, there is no government guidance regarding not sourcing from Israel. That is the position that we have taken.
The reality is that Tesco is a very, very broad church. We serve millions of customers. We employ hundreds of thousands of people. Across our customer base and our employee base, one will see every conceivable opinion on every conceivable topic, including all the controversial ones. Our position as a business is that we do not take company positions on controversial issues. We follow government guidance when it comes to things like sourcing from countries that are from time to time controversial.
Okay. In 2014, Tesco stated they would no longer sell products originating from illegal Israeli settlements in the West Bank. They failed to implement this and instead changed their labels to produce of the West Bank. Very misleading, leading people to think that that was a produce from the West Bank and not an Israeli product. It is at best misleading and at worst dishonest and does not allow the consumer to know if goods have originated from illegal Israeli settlements. In July 2024, the International Court of Justice said Israel's military occupation of the West Bank, including East Jerusalem, is unlawful. This therefore brings a legal obligation on Tesco to not be complicit in Israel's illegal military occupation by selling produce originating from land occupied illegally by Israelis in the West Bank.
Will Tesco now fulfill this legal obligation and ensure that no goods from illegal Israeli settlements are stocked in its stores? There are other alternatives. Lots of countries produce dates. Other countries produce grapefruits and avocados. You do not need to sell them from Israel.
Yeah, my understanding is that we do continue to operate for our own brand products the policy of not sourcing from the occupied Palestinian territories. If you have examples where that's not the case, then please share them.
You can change that policy. You have the option.
No, as I said, we don't.
We do not source from the occupied West Bank territory.
You source from Israel.
No, we do not occupy.
Not from the West Bank.
We occupy the West Bank. That is our policy.
Okay, but you source from Israel. Israeli data, I've seen this.
I've explained to you that we basically follow U.K. government guidelines when it comes to countries from which it is acceptable.
We follow our own guidelines, moral guidelines instead of just money.
What I've said is that we generally do not take company positions on controversial issues on which there are.
Which are wanted.
There are a spectrum of views across our customer base and our employee base.
Okay, deaf ears. Thank you.
Good afternoon. My name's Katherine Howarth. I've been a shareholder in Tesco for over 25 years. I'm also the Chief Executive of Share Action, which many on the board will be aware, coordinates an institutional investor coalition that advocates for responsible employment practices. Over the years, I've attended many Tesco AGMs to raise the same concern about low pay of staff and contractors. It is fantastic that the pay of store and distribution employees in Tesco has risen meaningfully and now matches the rate set by the Living Wage Foundation. We like to think that investors' persistent engagement with Tesco on the Living Wage has had some influence in driving that progress. The company's cleaners and security guards aren't yet covered by Tesco's commitment, and we still think that's wrong. Tesco is doing so well as a business, something that every Tesco shareholder can celebrate.
As you've said, Tesco made more than GBP 3.1 billion in profit over the last year, paid out GBP 864 million in dividends, and has committed to GBP 1.45 billion in share buybacks. We estimate that the cost of ensuring that Tesco's cleaners, including agency and contractors' staff, getting that lift up from the national Living Wage to the real Living Wage is not more than GBP 2 million per year, which is well below 1% of profits. Now, the board rightly asks us to vote to authorize share buybacks. Many of us as shareholders want to see capital returns and social responsibility moving together. Dr. Murphy, you also chair Burberry, a company that has been an accredited Living Wage employer for more than 15 years.
May I propose a meeting in the next three months between you and the institutional investors working with Share Action who feel that Tesco has not yet got this matter in hand?
Thank you for your question. As I think we've exchanged views on this, I think on a number of occasions, I think you're well aware of Tesco's position, that we contract out certain services like the ones you've mentioned to a small number of closely vetted companies who deal with their own employees as we would expect and insist as responsible employers. We don't mandate what our subcontractors pay their employees. We don't see that as our role. Specifically on the question of engagement with shareholders, I'm happy to talk to shareholders anytime.
That's great. That's great to hear, and we look forward to that meeting. It is worth saying there's 16,000 accredited Living Wage employers in the U.K., and they do set those standards and require them of contractors. It is very, very widespread practice and one that we would love to see Tesco take up.
Okay.
Good afternoon, everyone. My name is Paddy, and I work for an organization called the High Pay Center, although I'm here as a proxy shareholder on behalf of Share Action. The U.K. Corporate Governance Code encourages companies to strengthen the worker voice in firm strategy, such as via the appointment of a worker director. Given the valuable insights and professional experience, we know that frontline staff can bring to company decision-making. Why has Tesco not adopted this mechanism? Ensuring employees are engaged in the business through meaningful worker voice is surely in the long-term interests of Tesco, as it helps to foster greater engagement, morale, and boost productivity across the workforce. Will the board commit to just looking into the potential for appointing a worker director in the future to help ensure that the needs and interests of the workforce are adequately represented and met? Thank you.
Thank you for the question, and it's something that we will keep under review. The code basically requires companies and directors to engage with the broader workforce. It suggests, I think, a number of different ways of doing that. From, as you say, a worker-appointed director is one approach. It's not the only one. A specific designated director is another approach. In Tesco's case, we operate a more broadly based interface with our workforce through our colleague contribution panels, which are chaired by individual non-executive directors, and they focus on particular parts of the business. Over the year, we hold regular meetings with these colleague contribution panels, which are broadly based, and genuinely conduct open and honest discussions with colleagues in different parts of the business all over the world to hear what's on their minds and what's of concern to them.
It is a very effective and a very efficient way of gathering in real time broadly based views from around the business. We also, as directors, spend time in the business chatting to colleagues. Management by walking about, it used to be called in the old days. There is no substitute for it, actually being in the business and hearing what colleagues in our supermarkets and distribution centers and business support centers feel about their jobs and what matters to them. That is a real source of information. We have formal engagement surveys. We take really seriously our colleague engagement scores. I think they are currently running at 85%, Ken, for recommending Tesco as a great place to work. That is near world-class for a business like ours. I want to reassure you on two points.
One is that we take our engagement with our workforce and hearing the voice of our workers extremely seriously, and we have multiple ways of getting that insight. One of the alternatives offered by the code is a worker director. It is something we keep in mind, right now, we do not feel that is necessary. We will keep it under review.
Okay, thank you.
Good afternoon. Good afternoon. My name is Damien Lardoux. I work for a company called EQ Investors. We are an investment manager focused on system investing. Today, I am here on behalf of Share Action and on behalf of Share Action's long-term investors in People's Health Program, a coalition of over 50 institutional investors representing more than $5 trillion in assets, working to ensure the food sector supports a healthier society. Diet-related ill health remains the leading cause of death globally. As the U.K.'s largest food retailer, Tesco has significant influence on diets and an important responsibility to improve access to healthier products.
We commend Tesco for its recent progress, particularly its commitment to achieving 65 healthier sales in the U.K. and Republic of Ireland by the end of 2025 that you said that you're on a good track achieving, and for its leadership in publicly calling on the U.K. government to mandate health-related reporting across the food sector to help tackle the obesity crisis. With Tesco 2025 targets nearing expiry, investors in the LIPH coalition encourage Tesco to build on this progress by adopting new targets based on the sales-weighted average. The sales-weighted average is fit to drive effective public health benefits, as it intensifies improvements across a company's entire product range and therefore allows companies to make smaller, more feasible, and cost-effective changes to a wider range of products, such as a matrix is backed by experts such as Nesta, for example.
Coming to my question, sorry, a bit of a long introduction. Would Tesco be open to meeting with their coalition this summer to discuss how it might adopt this more robust approach by using an internationally recognized nutrient profiling model and applying it across its key markets? Thank you very much.
Thank you for your question. As you've said, our 65% healthy basket target will be reached, even exceeded by the end of this year. We are currently looking at the ambition and there will be ambition to improve our healthy basket performance over the next few years. We haven't quite decided how to do that yet. Ken, do you want to pick up the specific question?
Yeah, so look, I mean, it's a great question. I think there is always an ongoing debate about how do you make the health score of a product really easy and visible to customers, such as Nutri-Score in France, etc.
I'm French, yeah.
What?
I'm French, though.
Yeah, no, I guessed. It wasn't an accident that I used that example. I do believe that it's going to be part of the future of food conversation through DEFRA and Henry Dimbleby. We're engaging through the IGD. The IGD, for those of you who may not know what it is, is a combination of all the retailers, the food producers, and the farmers. I think you need that end-to-end coalition to get the buy-in to a simple metric so that customers can really clearly understand the nutritional value of what they're eating. That's probably the forum we'll use to engage. My advice to you would be to engage through the future of food so you're able to address the entire industry rather than trying to pick off player by player, because that will be exhausting for you.
I do think that it's something that the future of food should address because I think it's an important point.
Sure. On my question, would you be happy with Share Action and the coalition on that topic?
I think we should go through the future of food and do it through one forum, because otherwise we will find it quite disparate and maybe fractured in different people's opinions. Being the biggest is not always a good idea. When you come to the party and say, "We should use Nutri-Score," everybody else goes, "Oh, no," because Tesco want to do it. If you go through something like the future of food and IGD, then it becomes the platform that everybody can join in on, agree on, and you have one standard in the industry, and that would be the way forward, I think.
Thank you.
Thank you.
Hello, my name is Edward Christopher, and I'm here as a proxy. I'll share Tesco shareholders in general and the board as well, aware that the GetGo feature within the Tesco Grocery and Clubcard app is driven by software from Trigo, an Israeli company whose founders graduated from an elite unit of the Israeli Defense Forces, where they developed computer vision surveillance systems, which have most likely been trialed on Palestinians in the West Bank and Gaza. Since GetGo must be activated within the Tesco Grocery app before use, is Trigo software routinely embedded within the Tesco Grocery app? If so, does Tesco notify its customers of the country of origin of this software before they download the app? Can Tesco guarantee that Trigo software does not provide a surveillance gateway into customers' private phones?
Can Tesco guarantee that customer data that may be transmitted to Israeli servers by the GetGo system will not be misused?
Look, on the broader topic of having an Israeli software supplier, I refer the question to the answer I gave, question or the answer I gave earlier on our approach to suppliers. We do not vet suppliers by country of origin unless there is government guidance in that regard. On the specific questions in terms of the software and the servers, I do not know, to be honest, but it is a question that we will address after the meeting. I cannot imagine why the Israeli security services would have any interest in Tesco shopping baskets, but we will address the question.
Given that they have very advanced facial recognition software, can you guarantee that such software will not be embedded in this Trigo app?
What I can guarantee you is that that software is not embedded in the Tesco app. The software is currently used for camera technology for the couple of stores that we have where we're trialing the Just Walk Out shopping experience, such as Amazon Go. It does not form part of our app.
Okay, thank you.
Thank you.
Thank you.
Thank you, Dr. Murphy. My name is Nicolette Sali. I'm here on a proxy vote. My question relates to our risk as Tesco shareholders, both legal and reputational, in connection with us abiding by our own company policies and obligations. I want to know whether a due diligence exercise and a risk assessment of the companies dealing with Israel and the illegal West Bank settlement companies and products has been conducted, and if not, why. I understand your answer to the questions earlier is that you don't vet suppliers, but the fact that the U.K. government hasn't taken.
No, sorry, I didn't say that. I said we don't apply a country of origin screen.
I'm apologies.
Outside of government guidance.
I'm referring to that.
We absolutely do vet our suppliers.
I'm referring to that comment. The fact that the U.K. government itself has not taken a position on this exposes the U.K. government to legal risk and risk of prosecution in international forums. The fact that the government hasn't taken a position is not a defense for us as a company. Given the overwhelming international recognition of Israel's disregard for international law and non-compliance with U.N. resolutions, which we say we support, and the immeasurable and irreparable harm caused to civilians and the environment by Israel's actions, it is apparent that any dealing with Israel or Israeli businesses puts Tesco at risk. The fiduciary duties of the directors of Tesco require them to act in the best interests of this company, not what the government tells us to do, to act in the best interests of Tesco and to benefit us as shareholders.
This requires compliance with our own policies that commit us to promote human rights in our own company documents. The climate for challenge to institutions, corporations, and individuals who have by acts or omissions failed to abide by commitments to uphold human rights is escalating exponentially at the moment. In addition, every day, citizens are desperate to find some way to express their solidarity with the suffering of Palestinian people. Boycotts, consumer boycotts are an easy way for consumers to do this, and the boycott movement is growing. I grew up in apartheid South Africa. I know what consumer boycotts can do to businesses. It is significant.
If Tesco fails to end its dealings with Israel and Israel businesses or companies associated with its illegal conduct, we run the risk of irredeemable reputational risk and harm to our company, not just in the U.K., but internationally, limiting expansion opportunities in the future and growth opportunities for decades to come. This will haunt Tesco unless we take a position. It appears obvious to us as shareholders. It is not about taking sides. It is not about politics. We have a commitment to human rights, and it is apparent to everybody except the U.K. government that Israel are not abiding by international law and by the U.N. resolutions, which we in our documents say we subscribe to.
It requires an urgent decision on the part of the board to stop liability for breach of fiduciary duties of the directors and liability for Tesco and the reputation of Tesco to stop doing business with Israeli companies and to stop stocking any products from Israel. It is not a political decision. It is a legal and moral and business decision. We would like to see Tesco do that immediately. Thank you.
Thank you for your question. I've nothing to add to the answer I gave earlier on sourcing from Israel. On the broader question of risk assessment and risk monitoring and management of reputational risk, that is something we do in real time. You can rest assured that we will continue to do that as it relates to all aspects of our sourcing.
Sorry. My name is Sally Curran. Excuse me, I'm very nervous. I'm here as a shareholder proxy, but also with the Brent Harrow Palestinian Support Group. I bear in mind what you've already said, Tesco. I'm following on from other questions. Sorry. I bear in mind, sorry, what you said about Tesco not getting involved in controversial issues, plus you go by government guidelines. I would like to say there has been a recent poll that suggests that there's a large and growing number of British public who want British supermarkets basically to stop selling Israeli goods. This is understandable in the face of the atrocities and the genocide that's going on that we watch on our screens day in and day out.
I just want to ask Tesco if you will put aside government sidelines for once and just look into your heart, your humanitarian side, and ask yourself if you could think about going along with this growing public outrage and stop selling Israeli goods in Tesco stores. Thank you.
Thank you. I think the question has been answered a few times already. We keep the matter under review, but I think I have nothing to add to the answers I gave.
Genocide has no statute of limitations. We are all culpable.
My name is Jihad Aldegada. I'm here as a proxy vote. I think you're going to be behind the times. Only last month, the co-op members voted 73% to avoid stocking Israeli goods. This is a tide, and I would urge you to think about it. In March 2022, you did stop selling Russian goods because of the Ukrainian invasion. This is double standards. There is a genocide going on. You are behind the times. There will be a tide that will grow and grow and grow. Don't get left behind. Thank you for your advice. I think the government situation, the government advice regarding the invasion of Ukraine was very clear. I think in that respect, the situation is different.
My name's Elaine McDonald, and I'm a proxy shareholder from Harrow. I know we've touched on the Harrow development, partnering with the controversial Notting Hill Genesis Housing Group, most of which will be unaffordable. There is a huge local opposition to the proposals. 2,000 signed a petition against it. There were over 1,000 objections to the planning application. Last year, elderly residents of the retirement home next door attended the AGM to express how distraught they are about it. As Chairman and Director Gerry Murphy said, supporting local communities remains at the heart of everything Tesco does, but I don't believe in this case. In this case, I'm asking Tesco will they listen, but also about the infrastructure, the fact that they are already struggling with the amount of GPs, the local hospital is struggling, dentistry.
The infrastructure, there's a real lack of social housing for families. This is not proposed at all for the housing that's going to come in this development. There's quite a low percentage, say 30-35% of affordable housing, and that does not conflate with social housing, as we heard before. The rest will be luxury flats or multi-occupancy buildings. I just want to reiterate your statement that you support local communities, but I'm not thinking that you're doing so in Harrow.
Thank you for the comment. I think it broadly repeats what was said earlier. I think the issues, the infrastructure issues are planning issues, and they are the remit of the planning authorities. We will take into account the comments made and review the situation as regards the relationship with our development partner.
Hello.
Hi. My question is, in October 2024, the International Center for Justice for Palestinian Lawyers threatened Tesco with legal action for continuing to sell illegal Israeli settlement goods from stolen Palestinian land. It said that directors and executives could be breaking domestic law by selling these Israeli settlement products. New settlements are popping up all the time.
I'm sorry, I'm going to interrupt you. The questions are just repeating.
No, no.
Unless you have a new point to make, then please.
This is about the legal action. Basically, the new Israeli settlements are popping up all the time, and they are being, so it's a changing situation, and they are being recognized and supported by the Israeli government. When you have produce in your store, fresh produce, which we've seen over the last few months, that are labeled as produce of Israel, they are very likely to come from the illegal settlements. Even though you previously made a commitment to not stock goods from the illegal settlements, the goods you are stocking, because it's a changing situation, that.
Stop, please. Please. Please respect. Please respect the questioner.
It is a changing situation. Whereas Tesco, you've indicated that you are trying to work within the law, because of this changing situation, it isn't possible. Goods are labeled as product of Israel when they're actually from the Israeli settlements, the illegal Israeli settlements. My question is, why does Tesco continue to sell the illegal settlement goods in contravention of the law? What commitments will you make today to end this practice? Thank you.
As I said earlier, our policy is not to source from illegal settlements on the West Bank. If that is not being applied or if it's being inadvertently misapplied, then we will review it. Okay, just one final voting reminder. Voting is still open, so please, if you haven't voted already, I would ask you to do so now. In the interest of time, I think we'll take another question or two, but please don't just rehearse points that have been made on topics that have been well argued. It'll be quick. Already. Are there any other questions on any new topics that you want the board to consider?
Yes. It's on the Tesco Bank.
I see somebody here on my left. Hello?
No, I'm next. Sorry.
Sorry. This gentleman over here.
Cool. Dan Tycharzow, proxy voter. As you know, last year in November, Tesco Bank was sold to Barclays, which has been criticized by a human rights campaign as an environmental campaign for its profoundly unethical business practices. By human rights campaigners such as the Palestine Solidarity Campaign and War on Want, Barclays invests GBP 2 billion in shares in companies that are directly funding violations in the West Bank and Gaza, GBP 6 billion in financial services to these companies, and also acts as a primary bond dealer of Israeli government bonds. Also, for environmental campaigners, research has shown that Barclays is the largest financier of fossil fuels in Europe and seventh in the world.
In light of this and the relationship now between Tesco and Barclays, does the company understand the potential risk to its reputation, acknowledging the relationship that's been formed between, I believe it's a 10-year relationship, and the fact that, yeah, Barclays is now a key player in the Tesco brand? Thank you.
Can Joel comment on the Barclays relationship?
Look, we clearly sold our banking business to Barclays last year because, frankly, we didn't believe we were the best owners of a bank. Barclays are one of the largest providers of banking services in the U.K. We felt that that transaction was in the best interests of Tesco Bank customers. I think any matters relating to Barclays more broadly have to be brought up with Barclays leadership.
I understand the purchase can't be effectively done, but Tesco have also committed to a more long-term kind of more of a long-term relationship, and that's going to be reviewed after 10 years. In light of what I've said earlier and the increasing pressure on Barclays, for example, musicians are boycotting Barclays-sponsored festivals, and there's a lot of pressure that's only going to grow on Barclays. In light of the shareholders that are here, there's a risk here to people's shares because this is only going to grow as situations, environmental degradation happens, and the situation.
We understand your question. Thank you.
Okay.
Thank you. Okay, last couple of questions.
My name is Joel Vogler. I've been with Tesco now for 50 years. I've actually met Mr. Curran, and I used to work for the company. What I want to know is why you've allowed five questions against Israel, and no one, apart from myself, it would appear, wants to support Israel. Don't forget, Mr. Curran was Jewish. Now, if you don't like shopping in a Jewish shop, don't go to Tesco. I'm sorry, but your takeover will go down 0.1%.
Palestine!
Palestine!
Palestine!
See what you're up against.
Okay, enough.
One mention, not one mention of the hostages. Now they're going to throw me out. Oh, how can I have decided to kill them? There they go. I bet they're Methodists. Can I get back? There you are. There's another one. They're being indoctrinated at school.
Antisemitic, stopping antisemitic.
You're antisemitic. I'm Jewish. Why should I be antisemitic?
I'm Jewish too. You're antisemitic. Don't show it. You're only shopping a Jewish store. Don't go to Tesco. My goodness.
You come up.
All right, enough.
I've never heard.
Guys, enough.
Now, perhaps when all the stupid idiots have gone, we can discuss.
John, please. Please, respect everybody's opinion. Yes. That is our policy. Yeah. We have listened to your point.
Listen.
Thank you. Thank you, Mr. Vogler, for your comment and for your.
I've got to get through now because those people can get away with it.
Listen, nobody's going to throw anybody out who's being respectful. Nobody will throw anybody out who is being respectful. I regard the question that you asked as respectful, and it was made respectfully. We are running out of time, and unless you've got something new to say.
That's all I have.
Okay.
I'm all right.
Thank God. It would be nice to have something new.
You're right. I'll have that one. You want this one?
Yeah. Good morning, Mr. Chairman. Monica Redner. I have shares in about 60 companies. Members on the board will recognize me, especially the ladies from HSBC, Tritax, and Barratt Developments, Barratt Redrow as they are now. I've got a sensible comment on the environmental things. I drive past numerous petrol stations. I've not yet seen a Tesco one with solar panels on the roof. It would be a practical thing you could look into. Not to mention very large stores. Tritax Big Box puts solar panels on its roof. You had a question about an hour ago from the gentleman who mentioned titanium dioxide about cybersecurity, and he hit a stone wall. I'm expecting the same answer, but I want the ordinary shareholders here, who are perhaps not politically motivated, to hear the questions, whether you answer them or not. I hope you'll bear with me.
I will stick to the point. By the way, my first purchase of Tesco shares was above GBP 4 because the accounting scandal hit. You can be hit from anywhere by all sorts of things unexpected, like COVID-19. This is a question about damage limitation on cybersecurity. I would like an answer. I've got a master's in IT. I might understand it. Do you have anyone who has responsibility to shut the system down in the middle of the night if you are suddenly attacked? Because action is required urgently and immediately, unless you want to end up like M&S. Secondly, is this person of a sufficient level in the management that they can be assured that they won't be dismissed if they're given wrong information and make a mistake? Because it's very expensive to shut the system down, which I do understand.
How many backup systems have you got? I do not want any details, but it should be more than one, obviously, and I would be interested. How many separate cells will your firewalls create? Because above all, you must cut off the data of the Clubcard holders. It must be held secure, or you will be in terrible trouble because a large part of your income comes from selling the aggregated data from your Clubcard members. I do not own a Clubcard. I do not own a Nectar card, and I do not do any banking online. As you can see, I am a little bit suspicious. I would appreciate some answers. I think they are fairly straight questions.
They are fantastic questions. I never thought I would call cybersecurity light relief.
Really happy to talk about cybersecurity. How long have you got?
Given the very, very serious topics that we've just heard. Look, with regards to cybersecurity, this is a moving target, as you can appreciate. The sophistication and the methodologies of potential hackers and threat actors is evolving almost on a daily basis. We adopt a dynamic approach to cybersecurity. What that means in simple English is we invest lots of money in it. We have a very senior dedicated cybersecurity team, and all they do is think about how to avoid us being broken into and what happens if we do. It is a multifaceted kind of program from what we call a multi-defense layer, so multiple levels of defense in our layer. Then, as you say, if ever there's an access point, how do we minimize the amount of damage a potential threat actor can do?
That said, if you look at what happened to M&S, they were largely hacked through human error, through being able to identify a lot of social media data about employees, mimic that, and successfully get in through an ID-based system. They were able to stay in there for some time, decrypt and re-encrypt a lot of keys on the systems. It is a continuously difficult battle for us. We are someone who looks at not only our internal capabilities, but we have a kind of devil's advocate, a very senior cybersecurity expert that sits on our executive cybersecurity committee, constantly asking us and pushing us on our standards. As Gerry mentioned earlier, we regularly adopt what we call red team efforts to hack us from external expert agencies who look for defects in our systems.
We are constantly building backup systems, either automatic systems, but they're dangerous because they can be compromised too, or actual physical resilience.
It's not if, it's when. I mean, given that it's now, when I was, well, when some of my colleagues were able to get into NASA, it was a case of individuals. You've now got governments working at this, and it's disruption and damage limitation in the future is what's bothering me about many companies. You will get the same question. I will give the same question to Kinetic and people like that.
Yeah.
It's not a case of if, it's a case of when. There must be somebody who can shut the system down and put the firewalls up. You must decide now, before it happens, where you're going to put your firewalls.
Yeah, I mean, it isn't as simple as putting up firewalls. It's not like you physically can go in and just start putting down firewalls.
Yeah, it's a turn of phrase, yes.
No, no, I know, but it's important that people don't get misled by that. What we are doing is we are continuously looking to silo activities and data sets to avoid the cross-contamination you talk about. There absolutely is someone who can shut the system down at a moment's notice. In truth, the threat and the nature of the threat need to be understood before you take that action. Because, as you say, the consequences of that are huge, and therefore, you need to be really sure. That said, I promise you no one's getting fired if they take a decisive decision like that.
It is very helpful because, I mean, that's the human side of it. Someone could be terrified, especially if they've got a mortgage to pay.
No, no, that I can assure you on.
Thank you.
Paper and pencil will be better than AI in this particular case.
Thank you for the question. Do we have one last question?
Oh, good afternoon, Mr. Chairman. My name is Walsh. I'm a private shareholder.
Mr. Walsh.
Regrettably, I'm rather slow-minded and not very bright. Therefore, I'm not very good at public speaking, but there are three points that I think are timely to mention. The first is the different voting system that you brought in last year. I'm so delighted by it because previously, with the flashing lights that we had to press and so forth, I was always concerned that perhaps I'd pressed the wrong button at the wrong moment. It might be the cause of the whole board having to offer the resignation.
So you're.
This is great.
You're another fan of pen and paper, Mr. Walsh.
Yes.
Like the previous speaker.
Yes, certainly. The second thing is I left last year's AGM after the question and answer session with a little feeling of imbalance, and I'm getting that again today. What I feel has been missing is somebody to say thank you to the board because I know everybody's shareholder situation is different, but in my case, when I was given early retirement many years ago, I was quite concerned about the future and even thought about applying for a job at my local Tesco. I didn't worry at all. The reason being is that my Booker and now my Tesco shares have looked after me so well. I'm far better off money-wise than I ever was when I was working. It's absolutely terrific. I don't even have to step out of my front door for all this to happen.
I'm very grateful to all the board for all their hard work and commitment. The third and final point is I know it's hard to put a money value on it, but the shopping experience. I go into several Tesco branches. They're all very nice, but I'll concentrate on the main one that I go into. I arrive at about 6:00 A.M. on a Saturday morning. The night manager is often there saying good morning to customers arriving, even after he's presumably done a long night on his feet. As I go around, I can't remember the last time I went down an aisle and couldn't find what I wanted. It's always there. An interesting point is I can't help but overhear some of the conversations staff have between themselves. It's always such a nice atmosphere.
I've lost count of the number of times I've gone through to check out and said to whatever cashier is on duty, "This is a nice shop to come to. I look forward to coming here." I can't think you can do much better than that. I'm very grateful. To sum up, I certainly know where my bread is being buttered. As far as I'm concerned, it's good Mr. Murphy who's got the lower pack. Thanks very much and best wishes for the year.
Thank you. Thank you, Mr. Walsh. I was waiting for a but after all those nice comments. I think about Ken and his butter stock. Yeah. I cannot hold that image. All right. I think there are no more questions, at least that I can see. As such, we will now move to close the formal voting on the resolutions. Please do finally ensure that you place your poll card in the voting boxes when you leave the room. Once again, if you are having any problems with this, please raise your hand and somebody will help. All right. I now declare that the poll is closed and the provisional voting results for each resolution will be displayed on the screen behind me. Any additional votes cast through the completion of the poll cards here today will be added to the final voting figures.
Now, that concludes the formal business of the meeting, and I declare it closed. I'd like to thank you all for coming and to those listening via the webcast. The final results of the meeting will be announced to the market, to the Regulatory Information Service, and posted on our website as soon as possible. Thank you all and have a safe journey home.