Tesco with be emphasising its green credentials as it unveils expected profits of £2.2 billion tomorrow.

The company is set to announce the creation of a £100 million fund to powers its stores with green energy. It is reported to be exploring wind, solar, and geothermal power as well as recycling initiatives.

Tesco ceo Sir Terry Leahy is also keen to double the amount of material customers bring to the store for recycling.

The retailer is also believed to be working on plans to build a store made entirely from recyclable materials and improve recycling in stores nationwide.

Stephen Tindale, an executive director of Greenpeace, welcomed the initiative. “Tesco has a massive environmental footprint but also has the potential to move to radically different ways of producing and using energy. The £100m - twice as much as Gordon Brown promised in the budget - could deliver a huge step forward for clean, decentralised energy.”

Meanwhile, analysts suggest Tesco pre-tax profits to be announced on Tuesday will rise further from £2.03bn to a record £2.2bn on sales up from £33.9bn to £38.2bn.

Tesco is also due to update investors on current trading. Analysts expect the company to announce that like-for-like sales rose five per cent over the last seven weeks.

Analysts also hope that Leahy will provide further details of the group’s plans to open a chain of convenience stores in America.

However, while Tesco might be celebrating its results, a black cloud is looming on the horizon with news that the Competition Commission is expected to launch an inquiry into the retail sector within days of the results announcement.

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