Tesco's forays take it to Turkey
Tesco is expanding intoTurkey following the acquisition of local supermarket chain Kipa for £75m.
The acquisition is part of the push by Tesco, which cannot do big deals in Britain because of competition restraints, to expand overseas. It already has operations in centralEurope and Asia.
As Britain's largest supermarket chain continued its expansion it also pledged to improve the way it tracks the treatment of workers in developing countries following pressure from institutional investors.
Sir Terry Leahy, chief executive, made the commitment in response to shareholders' concern. They felt the group might be vulnerable to criticism that it used suppliers who employed people in "sweat shop" conditions.
Although the group is a member of the ethical trading initiative, investors had foundTesco did not always have the systems in place to track the behaviour of its suppliers. The initiative aims to ensure working conditions of people producing goods for the UK meet international standards.
Rachel Crossley, director at fund management group Insight Investment, said: "We were pretty concerned. [Tesco] did seem to lag behind the likes of Sainsbury's and Marks & Spencer. That exposes it to unnecessary risks. There would be concern if labour standard abuses were found."
After lobbying from investors, Tesco has now promised to catch up with its rivals by putting auditing systems in place to track trading policies.
The group is planning to write to 2,000 suppliers with an ethical trading questionnaire as well as auditing "medium and high risk" sites to review how suppliers manage their supply chains.
Tesco is also pledging to work with other retailers and suppliers to develop a trading database.
Tesco said it had signed up to the ethical trade initiative for some time and was not just reacting to shareholder pressure. "We've been trying to work out how to move it [the ethical trade initiative] forward. We're hoping we have something here that the supply chain can sign up to," a Tesco spokeswoman said.
Insight is one of a number of investors who track the performance of companies to ensure they do not leave themselves open to criticism from non-governmental organisations about labour practices.