Tea was the first product sold by Tesco’s founder, Jack Cohen so it’s an important part of Tesco’s heritage. Today it’s one of our key areas of focus for responsible sourcing. Our commitment is to lead the industry in addressing the sustainability challenges in our top 20 highest risk products – of which tea is a key commodity. We know tea supply chains globally face significant challenges, one of the greatest being enabling sustainable livelihoods for workers.
Tesco joined Malawi 2020 in 2015 because we recognised the need for cross-industry action. Malawi is a significant sourcing country and the initiative aligned with one of four key strategic pillars in our human rights strategy focusing on sustainable livelihoods. We believed the programme would drive positive change for workers supported by the wider industry. Using the tangible Sustainable Procurement Model enabled signatories to quantify payment premiums needed to bridge the living wage gap.
From the beginning of the sustainable procurement workstream we committed to using the Price Discovery Tool and worked with our suppliers to implement it. Tesco welcomed two collective bargaining agreements between TAML and the Plantation Agricultural Workers Union. This was a fundamental stepping-stone to closing the living wage gap and enabling workers’ calls for better wages to be heard at scale through a trade union.
To raise customer awareness, we produced an extra strong tea line containing a minimum of 50% Malawi tea, making a donation of 5p for every pack sold. The money raised was matched by Tesco and used to fund 31 Village Savings and Loans schemes, benefiting 565 people to date, 70% of whom are women.
Tea is a key focus of our Responsible Sourcing Strategy and Malawi 2020 is an integral part of our work to ensure sustainable livelihoods for the workers and communities in our supply chains. Implementation of the programme has been challenging due to the complexity of the issues being addressed but due to strong collaboration with key stakeholders, positive and substantial steps towards closing the living wage gap in Malawi have been made.
As Malawi 2020 progressed Tesco faced challenges due to one of our main producers being unwilling to engage in the use of the model resulting in some difficult decisions regarding sourcing. This also prompted a reassessment of our ability to bridge the living wage gap via cash payments to workers, versus the tried and tested provision of in-kind benefits. Fluctuations in tea prices also caused Malawi tea to become less competitive in relation to other sourcing countries. This made maintaining volumes a challenging commercial decision and ultimately required investment from the business.
Towards the end of the programme Tesco looked for additional ways to strengthen our involvement. We worked with ETP to undertake a worker survey at Satemwa and Lujeri to understand the in-kind benefits workers valued most and our approach has been led by the outcomes of the survey and input from the independent wages committee. From this we partnered with Satemwa for the 2020 buying season and initiated direct dialogue on the tea price required to generate a ring-fenced pot of $12,000, the amount (based on the Sustainable Procurement Model ) to bridge the living wage gap in full. We are currently working with Satemwa and ETP to initiate a programme of in-kind benefits.
In the future Tesco aims to maintain its Malawi volumes and continue sales of our Malawi extra strong blend. We intend to continue partnering with our strategic estates Satemwa and Lujeri to build long term collaborative relationships.