Materiality

A key element of the Global Reporting Initiative’s G4 Guidelines is for organisations to identify, prioritise and focus on the most material issues and decide which indicators they report against by performing a materiality test.

Identifying our sustainability priorities

The issues covered in our Group Sustainability Agenda are identified through a detailed materiality assessment as those which matter most to our stakeholders and our business.

We’ve been conducting materiality assessments since 2007, which we review on an annual basis and refresh through an in-depth process every three years. This enables us to evolve our strategy and report on it effectively. In 2017, we worked with Carnstone Partners, a highly respected sustainability consultancy, to conduct a new in-depth assessment, based on the following three-stage process:

Stage 1: Identifying a ‘long list’ of issues

A wide variety of stakeholder inputs were used to identify an initial long-list of issues. These included issues raised in our stakeholder engagement activities, at both a Group and local market level, with shareholders, investors, suppliers, farmers, local communities, employees, governments, non-governmental organisations (NGOs) and other key stakeholders.

In addition, we commissioned Kantar Media to conduct a global media review, and identified the key issues covered by industry and FMCG peer companies; relevant national and international regulation; international standards and frameworks, such as the UN Sustainable Development Goals; external reports and allegations regarding BAT or the tobacco industry; and risk monitoring and outlook reports, such as those of the World Economic Forum.

The external insights were complemented by internal BAT inputs, including Group and functional strategies; Group Risk Register; Main Board and regional meetings and committees; and Group policies, principles and standards.

Stage 2: Prioritising and refining

The issues were grouped under common themes and prioritised by mapping them onto the adjacent materiality matrix. This mapping used a defined scoring methodology, developed by Carnstone, to assess the level of importance to our stakeholders and the current or potential impact on the BAT Group.

Carnstone then carried out a series of interviews with BAT senior management, including our Group Legal and External Affairs Director, to gain feedback and refine the issues further.

Stage 3: Validation

Our independent Stakeholder Panel of key opinion leaders reviewed the list of issues identified and details of each stage of the assessment, including the stakeholder inputs, scoring methodology and feedback from internal interviews. They then had the opportunity, via an independently facilitated meeting, to ask detailed questions and provide feedback.

Overall, the Panel supported the process followed and confirmed that the most material issues identified were aligned with their expectations.

Final results

The issues which have the highest level of importance to our stakeholders, and the greatest impact on the BAT Group, form our Sustainability Agenda under the three strategic areas of: Harm Reduction, Sustainable Agriculture and Farmer Livelihoods, and Corporate Behaviour. These are underpinned by our ongoing focus on issues relating to the environmental impacts of our operations, and building a diverse and engaging culture for our people. These are covered in our Sustainability Report  and this website, and in our Annual Report  and on our www.bat.com  website. We also continue to focus on important internal business priorities, as well as to monitor emerging issues of high importance to our stakeholders.

LEVEL OF IMPORTANCE
TO STAKEHOLDERS
Materiality
CURRENT OR POTENTIAL IMPACT ON THE GROUP
 
Low-impact
issues
 
Emerging issues we
continue to monitor
 
Important internal
business priorities
 
Issues of
greatest impact

Material issues

covered in our Sustainability Report 

Harm Reduction
  • Health impacts of our products
  • Consumer information on product health risks, including the reduced-risk potential of Next Generation Products (NGPs)
  • Consumer accessibility to potentially reduced-risk products
  • Ethics/credibility of industry scientific research
Sustainable Agriculture and Farmer Livelihoods
  • Farmer livelihoods, rural poverty and food security
  • Child labour and forced labour
  • Health and safety, and labour rights
  • Ageing farmer populations
  • Environmental and climate change impacts, including deforestation, soil degradation and water scarcity
Corporate Behaviour
  • Regulatory environment and policy influence
  • Anti-bribery and corruption
  • Human rights impacts
  • Marketing practices and preventing underage access for all product categories
  • Illegal tobacco trade
  • Corporate tax
Environment and People
  • Environmental management and operational eco-efficiency, focused on carbon emissions, energy, water and waste
  • Climate change
  • Occupational health and safety
  • Workforce diversity
  • Employee engagement

Other material issues

covered in our Annual Report 

  • Corporate tax strategy
  • Employee attraction and retention
  • Equal opportunities
  • Executive remuneration
  • Risk management and principal Group risk factors

Additionally, the policies, principles and standards that underpin our approach to managing material issues covered in our sustainability reporting are also available on bat.com/principles.

GRI G4 materiality

We have conducted a detailed analysis of the G4 aspects and mapped them against the key areas of our Sustainability Agenda. As part of this process we discussed and agreed the boundaries for each aspect, and identified the material indicators we are able to report against. The outputs of this process can be found in our GRI Index.

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