It was a cold, wet January day in 2004. Simon Lee walked into the headquarters of Marks & Spencer in west London clutching a bag of plastic bottles in one hand and a bundle of fabric samples in the other.

The former advertising executive had an idea — that empty plastic bottles could be recycled into a fabric that would eventually become fluffy fleece jackets.

Three years and 25 meetings later, Lee, 46, who had quit the media world to found Greenpac, a company that brings inventors together with retailers and suppliers, last week saw his dream become reality.

The Marks & Spencer boss Stuart Rose, sporting a predictably green tie, declared that from this autumn, M&S men’s fleeces will be made from recycled plastic bottles — just one aspect of an ambitious £200m programme designed to make the reborn British retailer an environmental and climate-change champion.

At the heart of Rose’s announcement was the headline-grabbing pledge that his company aims to be carbon neutral by 2012. In effect, Rose was kick-starting an environmental arms race among Britain’s retailers.

Three days later, Sir Terry Leahy, boss of Tesco, Britain’s biggest retailer, committed the company to the introduction of carbon labelling on all the 70,000 lines the company sells. Once the system is up and running — Tesco refuses to commit itself to a date — a shopper should be able to make a simple judgment on how much carbon dioxide has been expended in growing, processing, manufacturing, packaging, transporting, storing and distributing anything picked off a supermarket shelf.

As with M&S, the announcement formed only part of a much larger package of moves. The company wants to slash carbon emissions from new and existing stores; it will offer shoppers the chance to earn extra points on their Tesco clubcards for buying eco-friendly products. And in America — where Tesco has plans to build a huge chain of convenience stores, solar cells will be installed on store roofs. Tesco’s new distribution centre in Riverside, California, will be fitted with the world’s largest roof-top solar panel.

Asda’s chief executive, Andy Bond, has criticised the “grandstanding and chest beating” of rivals over green initiatives. But Asda’s American parent Wal-Mart promised more than a year ago that it would cut greenhouse-gas emissions from its global network by a fifth by 2012.

J Sainsbury, too, has pledged to reduce waste as part of its eco-promises. Only the Bradford-based chain Wm Morrison has been left behind in the rush to go green; but Marc Bolland, the new chief executive, is likely to address that when he unveils a new group strategy in the spring.

Nobody pretends that the retailers’ attempts to green themselves are pure altruism. Saving energy means saving money. And consumers are increasingly discriminating in favour of companies that can demonstrate they really are trying to clean up their environmental act. Green pays. Green brings in customers.

Tony Shiret, retail analyst at Credit Suisse First Boston, said: “Whether M&S wants to save the rainforest or save itself from Tesco is the question.”

And cynics point out that this is a particularly useful time for a food retailer to trumpet its green aspirations. On Tuesday the Competition Commission will reveal its first thoughts on its investigation into the £100 billion grocery sector. Supermarkets need to win as many friends as they can.