Welcome to J Sainsbury plc's Environment Report 2003. This is our eighth report since we began reporting publicly on our environmental performance in 1996.

The last year has provided us with the challenge of continuing to improve our environmental performance, whilst also pursuing an extensive business transformation programme. We have embedded environmental awareness within our business strategy, ensuring that we have continued to drive steady progress against our environmental targets.

Sainsbury's Supermarkets

Our UK supermarkets business, which constitutes over 80% of the group, has shown a solid improvement in its environmental performance throughout this year. Our ambitious business transformation programme aims to deliver improved cost efficiencies and operating costs and our environmental work has proved to be an important element of this drive. This is particularly true in the areas of transport and energy.

Our extensive work on the supply chain has enabled us to reduce our vehicle journeys by 5.2 million km, in a year when the number of deliveries has risen by 9.4%. This saving is the equivalent to 4,750 tonnes of CO₂ emissions. In fact, over the last three years, increased supply chain efficiencies have reduced the amount of CO₂ emitted by our vehicles by 16,350 tonnes.

Sainsbury's Supermarkets has further reduced its CO₂ emissions through improvements in store energy usage. The achievement is due to a combination of projects, including a £14.5 million capital investment programme in conjunction with our energy supplier, RWE, which should ensure that we meet our goal of reducing carbon dioxide emissions by 10% in 2005. Overall, CO₂ emissions are now 5.8% below the baseline year of 1997/98.

In May 2002, 35 institutional investors, representing assets of US$4.5 trillion, wrote to the Chairmen of the FT500 Global Index companies. They asked companies for investment relevant information relating to greenhouse gas mitigation. I am pleased to say that in the subsequent report, J Sainsbury plc was placed top of the global Food and Drug Retailing sector and the group's work was complimented several times in the section highlighting best practice in food retailing.

The responsible construction of our stores has also been recognised by the Considerate Constructors Scheme, which rewards companies that minimise the disruption caused when building a new site. We were delighted to be awarded with bronze awards for our stores at Lincoln, Hazelgrove in Manchester, Bretton in Peterborough and one silver award for our supermarket in Horsham.

During the year, we also announced that by 2010, all our own-label fresh, frozen and canned wild capture fish will be sourced from well-managed fisheries, which meet the needs of the United Nations' Food and Agriculture Organisation Code of Conduct for responsible fisheries. We are the only supermarket chain to have set this target.

Shaw's and Sainsbury's Bank

The last year has seen steady progress in Shaw's environmental performance. The highlight of 2003 was the presentation of the top award in the Clean Air - Cool Planet Climate Champion Awards, which recognise leadership in greenhouse gas emissions reductions and the championing of the need for climate action.

Sainsbury's Bank, a joint venture with HBOS, has once again achieved all its targets for the year and has now set new targets concentrating on reducing paper usage and waste at its Head Office in Edinburgh.

For the fourth year running, the Index of Corporate Environmental Engagement, published by Business in the Environment, named J Sainsbury plc as the leading food retailer. In addition, the new Business in the Community survey on corporate responsibility shows The Group in the top echelon of companies.

The Group's continued progress against its key environmental objectives over the last year is due to the great efforts of a number of dedicated colleagues. Throughout a period of radical transformation and growth for the business, successes such as improvements in transport and energy efficiencies and reductions in waste levels, are real accomplishments. I would like to thank them for their dedication and commitment, which is invaluable as we look to build on these achievements and continue to fulfil our environmental promises.