CSR Committee
Current members
Karen de Segundo (Chairman)
Dr Ana Maria Llopis
Dr Gerry Murphy
Kieran Poynter
Corporate social responsibility
Summary Terms of Reference
The CSR Committee is responsible for:
- reviewing and making appropriate recommendations to the Board as regards the Company’s management of CSR and the conduct of business in accordance with the Statement of Business Principles;
- monitoring and reviewing the effectiveness of the Group’s strategy for, and management of, significant social, environmental and reputational issues;
- reviewing and monitoring the Group’s plans for, and progress towards, business sustainability; and
- monitoring the effectiveness of the CSR governance process.
The Committee’s terms of reference were reviewed in December 2010 and minor updates were made with effect from 1 January 2011. The full terms of reference are available from the Company Secretary and on www.bat.com
Key activities of the CSR Committee in 2010
The CSR Committee held three scheduled meetings in 2010, and one additional meeting was held at the beginning of April to approve the Company’s annual Sustainability Report. The other specific items considered by it included:
CSR governance
- Feedback and update reports from the regional audit and CSR committees.
- An analysis of the results of the Control Navigator self assessment exercise for the CSR controls.
- A review of the key reputational risks identified in the Group Risk Register, the potential impacts and consequences of such risks and the current controls in place to address them.
- A continuing review of the potential reputational impact arising from incidents of non-compliance with the Standards of Business Conduct.
CSR policies and compliance
- Human rights and related issues, including a consideration of the challenges, risks and opportunities of operating in specific countries of potential concern to stakeholders and the measures and controls in place to mitigate risks.
- Initiatives aimed at reducing the use of child labour in tobacco growing.
- Youth smoking prevention initiatives.
- Environmental, health and safety measures, including measures to improve safety culture behaviour throughout the Group.
- Adherence to the Group’s International Marketing Standards.
- Corporate social investment activities and an improved approach to Corporate Social Investment (CSI) funding, with fewer initiatives but an increased average commitment per initiative, focused on the three themes of sustainable agriculture, empowerment and civic life (see further below).
Sustainability planning and reporting
- A review of the CSR Strategy and the focus in 2010 of embedding sustainability into the Group’s functions and developing above-market centres of expertise to support the delivery of the sustainability agenda.
- A review of the methodology for stakeholder mapping and classification and the steps taken since 2008 to simplify the system and reduce costs.
- An assessment of the 2010 goals and commitments for sustainability reporting and progress made against the 2009 goals and commitments.
- Ernst & Young’s Assurance Management report, including areas of potential improvement highlighted by them and the Company’s responses to these.
Attendance at meetings in 2010
| Name | Meetings attended | Meetings eligible to attend |
|---|---|---|
| Karen de Segundo | 4 | 4 |
| Dr Ana Maria Llopis1 | 2 | 4 |
| Dr Gerry Murphy | 3 | 4 |
| Kieran Poynter2 | 2 | 2 |
| Sir Nicholas Scheele3 | 1 | 2 |
The CSR Committee is authorised by the Board to review CSR and sustainability activity within the business. It is authorised to seek the information it requires from, and require the attendance at any of its meetings of, any Director or member of management, and all employees are expected to cooperate with any request made by the Committee. It is authorised by the Board to obtain, at the Company’s expense, independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
The Chairman of the Committee reports to the subsequent meeting of the Board on the Committee’s work and the Board receives a copy of the minutes of each meeting. The papers considered by the Committee are available to any Director who is not a member, should they wish to receive them.
The CSR Committee will be reviewing comments made during the 2010 Board evaluation process in relation to its activities and any additional actions relevant to its role and responsibilities will be reported back to the Board and implemented during 2011.
CSR governance
The CSR Committee is supported at regional and local levels through combined audit and CSR committees. The structure supports the embedding of CSR and sustainability principles across the Group and allows performance against those principles to be monitored. The regional audit and CSR committees meet three times annually, and they follow a standard agenda, in order that materials and issues which are presented and raised at local and regional level may feed into Board level discussions, and vice versa.
Statement of Business Principles
Our Statement of Business Principles sets out our expectations for the responsible management of the Group’s business. It was developed in 2002 in consultation with stakeholders, supported by the Institute of Business Ethics. The Statement comprises three principles – Mutual Benefit, Responsible Product Stewardship and Good Corporate Conduct – and 18 Core Beliefs which explain in more detail what each principle means for the Group. It is available from the Company Secretary and on www.bat.com
Sustainability reporting
The Company’s Sustainability Reports and, prior to 2008, its Social Reports have detailed its social, ethical and environmental performance and performance against its commitments each year since the Company’s first Social Report in 2002. Sustainability reporting, like the social reporting that preceded it, is conducted using a robust methodology, including independent assurance conducted by Ernst & Young LLP, in line with the AA1000 Assurance Standard (2008). Engagement with key stakeholders is a major requirement of the Standard and we have continued to hold independently facilitated and assured dialogue with those stakeholders throughout the year.
The Company’s sustainability reporting is based on its sustainability agenda, which was developed in 2007 and focuses on five pillars: harm reduction, marketplace, environment, supply chain and people and culture. Its aim is to create value for the Company’s shareholders and other stakeholders by addressing the Group’s social, environmental and economic impacts.
Starting with the 2009 Report, produced in 2010, a single Sustainability Report has been produced for the Group, including balanced scorecards and case studies from some of the Group’s largest markets. This approach, together with the information provided on www.bat.com, aims to provide comprehensive coverage of the Group’s sustainability efforts globally.
In April 2010, the Company published its third Sustainability Report outlining progress in each of the five key elements of its sustainability agenda. In March 2011, it is publishing its fourth Sustainability Report, to coincide with publication of this Annual Report.
The Company has taken into account the increasing emphasis that is being placed on integrated financial and non-financial reporting. We believe that it is important to address sustainability issues in the Annual Report, but we also acknowledge that different audiences have differing expectations and requirements. As a result, we intend to continue publishing a separate Sustainability Report which covers in more detail progress against our sustainability agenda, including monitoring performance against targets. In addition to the Sustainability Report and the information provided in this Annual Report, the Company will continue to publish more detailed sustainability information on www.bat.com
The Company has been included in both the Dow Jones Sustainability World Index and the Dow Jones STOXX Sustainability Index for the ninth successive year. In 2010, the Company was again included in the Platinum sector of the UK’s Business in the Community Corporate Responsibility Index, with a score of 96.5 per cent. In 2009, it was the first tobacco company to achieve Platinum status.
Corporate social investment
The Company recognises the role of business as a corporate citizen and Group companies have long supported local community and charitable projects. The Group’s approach to corporate social investment (CSI) is to regard it as an end in itself, rather than as a means of promotion, and Group companies have always been closely identified with the communities where they operate.
Group companies are encouraged to focus their CSI activities around three themes:
- Sustainable agriculture: This includes activities such as efforts to improve biodiversity and access to water, afforestation, programmes to prevent child labour, grants for agricultural research or training to help farmers optimise land yields by growing additional (non-tobacco) crops. These initiatives are expected to complement the Group’s own agricultural, environmental and biodiversity conservation practices.
- Empowerment: This focuses on communities where we operate, providing people with educational opportunities to help them develop, for example through scholarships and information technology training or programmes supporting small businesses and promoting entrepreneurship. Group companies also continue to make other important contributions to meet local needs, such as relief efforts after natural disasters or AIDS prevention.
- Civic life: This encompasses activities that aim to enrich public and community life, including supporting the arts and educational institutions, conserving indigenous cultures and restoring public spaces.
The major activities currently supported by the Company are the British American Tobacco Biodiversity Partnership and the Eliminating Child Labour in Tobacco Growing Foundation.
Charitable contributions
Payments for charitable purposes in 2010 amounted to £15.5 million (2009: £14 million), £2 million of which was paid in the UK (2009: £2 million).
OECD Guidelines
The Group recognises its responsibilities to the countries in which it operates and in this context, notes the OECD Guidelines for Multinational Enterprises in their current form.