In order to help suppliers address problems and to support them in improving labour standards, our first step is to ensure we know what is going on, by gathering detailed feedback on conditions in the farms and factories our suppliers run around the world.

As we are not able to monitor all our suppliers¡¯ sites all the time, we take a risk assessment approach to information gathering. We assess all direct supply sites to all our businesses around the world. For suppliers to the UK business we use risk assessment tools including the independent SEDEX ¨C which store detailed information on gender, ethnicity, languages spoken and permanent and temporary workers ¨C and we are rolling these out across our international businesses.

We aim to undertake independent audits of those supplier sites identified as high risk every year, and medium risk every two years. Low-risk sites are required to complete an annual self-assessment, which we monitor.

In 2008, we risk assessed 100% of sites. We increased the number of high-risk sites audited to 87% (up from 73% in 2007), and audited 71% of medium-risk sites within the last two years. There is further progress to be made and we have put in place resources to improve performance in 2009.

We made good progress to improve the quality of audits across our supply chain, to ensure the information they provide is consistent and reliable. We launched our Auditor Recognition Programme in January 2008 to achieve this and, as at August 2009, we now recognise 15 audit bodies, 4 audit schemes and 666 individual auditors and worker interviewers. These give us global coverage from competent and credible individuals who speak the native language of the country.

In 2008 a total of 1,819 independent audits were carried out on suppliers to our UK business.

Announced audits help to ensure all necessary records will be present and build ownership of ethical issues by supplier management. But they can also be subject to a greater degree of preparation ¨C occasionally in an attempt to manipulate findings. To balance this, we introduced semi-announced audits, which are now used for 90% of our high-risk sites where a supplier is given a one-month window during which the audit will take place, rather than an exact date.

As part of our commitment to share best practice and support the convergence of different retailers¡¯ approaches to ethical trade, we have made the full details of our Auditor Recognition Programme publicly available. Other retailers are welcome to adopt our approach and a copy can be accessed <A href="http://www.tescoplc.com/plc/corporate_responsibility_09/suppliers_ethical_trading/ethical_trading/monitoring_supplier_performance/ARPDocument.pdf" target=_blank>here.  As a further measure of transparency, we have also made publicly available a full list of the independent companies that employ the individual auditors we have vetted and recognised, along with the countries we have approved them to audit in. This list is available here.

We continue to carry out a programme of completely unannounced audits as a double-check against other findings. In 2008, we carried out 135 such audits in Bangladesh, China, India, Romania, Sri Lanka and Vietnam.