Social performance: Labour

LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region

Partially reported

We do not currently collate this information for all Group employees, but are able to do so for management-level employees as detailed below:

  New hires Total turnover Voluntary turnover
  2014 2015 2016 2014 2015 2016 2014 2015 2016
Americas 112 122 68 288 291 218 145 152 111
Asia-Pacific 294 272 221 558 501 365 403 304 204
Eastern Europe. Middle East and Africa 243 177 133 491 584 374 295 275 142
Western Europe 133 192 181 359 310 218 147 144 86
UK Headquarters and global IT 75 87 82 174 189 115 71 55 48
Total 857 850 685 1,870 1,875 1,290 1,061 930 591
% of total management population 7% 8% 6% 16% 17% 15% 8% 8% 7%
LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation

Not reported – information not collated at Group-level

Our Employment Principles make clear our strategy of ensuring that our reward levels are highly competitive within the local area, and we are confident that through regular external benchmarking with comparator organisations, we remain a generous benefit provider.

You can download a copy of our Employment Principles at www.bat.com/principles .

LA3 Return to work and retention rates after parental leave, by gender

Not reported – information not collated at Group-level

LA4 Minimum notice periods regarding operational changes, including whether these are specified in collective agreements

Partially reported

Our Employment Principles make clear that, where restructuring is necessary, we are committed to doing so in a responsible manner. Where such situations do occur, our companies adopt responsible local approaches and procedures to address each instance, including severance pay and any other measures as may be appropriate to the situation and location, including outplacement support to help displaced employees to find alternative employment.

You can download a copy of our Employment Principles at www.bat.com/principles .

LA5 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs

Not reported – information not collated at Group-level

LA6 Type of injury and rates of injury, occupational diseases, lost days and absenteeism, and total number of work-related fatalities, by region and gender

Partially reported

  2012 2013 2014 2015 2016
Lost workday cases 164 197 157 159 175
Lost Workday Case Incident Rate (LWCIR) 0.23 0.29 0.24 0.26 0.24
Total number of serious injuries and fatalities 55 55 58 53 55
Of which, serious injuries to employees 33 36 37 31 32
Of which, employee fatalities 5 1 3 0 2
Of which, serious injuries to contractors 10 13 13 9 17
Of which, contractor fatalities 7 5 5 7 4
Total number of fatalities to members of the public involving BAT vehicles* - - - 6 2
Occupational illness rate 0 0.003 0.003 0.003 0

* We began reporting on this measure in 2015.

Our health and safety reporting covers all BAT operating companies, including employees and contractors under our direct control and supervision (who we also categorise as employees). Contractors who are not under our direct control and supervision are not included in our LWCIR, lost workday cases or occupation disease rate. However, these contractors are included in our reporting of serious injuries and fatalities.

The figures in the table above are calculated as follows:

  • LWCIR: the number of lost workday cases through injury x 200,000 divided by total hours worked.
  • Lost workday cases: the number of work-related accidents (including assaults) resulting in injury to employees and to contractors under our direct supervision, causing absence of one shift or more.
  • Serious injuries and fatalities: total number of serious injuries and fatalities to employees (including contractors under our direct control and supervision) and contractors not under our direct control and supervision.
  • Occupational disease rate: the number of incidents of occupation illness per 1,000,000 hours worked.

We are committed to a safe working environment for all our employees and contractors worldwide and have a Group-wide goal of zero accidents.

We focus on risk management and assessments, employee training and awareness, and specific initiatives for high-risk areas of our business. For example, to further integrate health and safety into manufacturing practices and procedures, we’re implementing an internationally recognised management system.

In 2016, total reported accidents remained steady. However, we were pleased to achieve an 8% improvement in our Lost Workday Case Incident Rate – from 0.26 in 2015 to 0.24 in 2016.

Nearly 70% of total accidents are in Trade Marketing & Distribution (TM&D), where we have over 26,000 drivers out on the road every day who are particularly vulnerable to road traffic accidents (RTAs) and robberies.

Our fleet and driver safety programme focuses on addressing these risks through: enhanced global vehicle specifications and safety controls; driver training to improve skills and hazard perception; toolkits and practical guidance for management; security protocols and escorts in high-risk locations; efficient route-to-market planning; and tracking progress through quarterly business reviews. As a result, in 2016, we achieved a 14% reduction in accidents in the TM&D area of the business.

Sadly, however, four contractors lost their lives – three in armed robberies and one in a fall from height, and two employees died – one in an RTA and one in a train accident. In addition, two members of the public lost their lives in accidents involving our vehicles.

While this is a reduction in fatalities compared to 2015, any loss of life is completely unacceptable and is a matter of enormous concern to us. We deeply regret this loss of life
and the suffering caused to family, friends and colleagues.

We want to reduce the chances of similar events happening again. So, we carry out detailed reviews of all reported accidents and fatalities to learn lessons and identify where we can improve our approach to ensure the health and safety of all our employees and contractors. 

 
LA7 Workers with high incidence or high risk of diseases related to their occupation

Partially reported

While we do not directly employ tobacco farmers or farm workers, tobacco growing is a significant part of our supply chain for which green tobacco sickness (GTS) is a risk. GTS is a type of nicotine poisoning caused when nicotine is absorbed through the skin from wet tobacco leaves. It’s a real risk to farmers and their workers if they harvest tobacco when it’s wet.

Our business is actively working to improve its understanding of GTS. We believe that education is key and that tobacco workers should be given practical guidance to better understand and avoid the risks of contracting the illness. Education programmes include information about risk factors, preventative measures, symptoms, diagnosis and treatment. For more information on our approach, please see www.bat.com/gts.

In addition, as a global business, we recognise that some of the countries in which we operate have a higher risk of communicable diseases. To address this, our markets implement Endemic Disease programmes aiming to reduce the impacts of diseases such as malaria, tuberculosis, HIV/AIDS and hepatitis on employees, their families and communities. It includes a range of interventions such as vaccination, peer education, workshops, water purification, nutrition and personal hygiene.

Our companies also have programmes to protect and promote health and wellbeing for employees, their families and local communities. These are particularly valuable in those parts of the world where local health services struggle to provide an adequate service and those that have higher risk of communicable diseases.

LA8 Health and safety topics covered in formal agreements with trade unions

Not reported – information not collated at Group-level

LA9 Average hours of training per year per employee by gender, and by employee category

Partially reported

We provide training for our employees at global, regional and local levels through our Group-wide learning and development programme.

This includes a diverse mix of learning based on a 70:20:10 methodology: 70% on the job learning, 20% learning from others through coaching and mentoring, and 10% formal online and classroom-based training.

We have a purpose-built development centre in the UK where international-level classroom-based training programmes are delivered. These bring together world renowned academic and business educators from diverse academic institutions around the world including the IMD Business School in Switzerland, Cranfield University in the UK, the Universities of Virginia and Southern California in the USA and the global INSEAD Business School. The international programmes cover issues such as operations, business strategy, leadership, marketing, finance, and IT among others.

We track hours related to classroom-based training only, which is an average of 3.6 hours per full-time equivalent per year.

BAT is committed to develop and promote employees from within the organisation and, in 2016, 93% of senior management appointments were filled by internal employees. These results demonstrate the effectiveness of our learning and development programme which is designed to challenge and accelerate talent development so our people are ready for the next career step.

Our Group Employment Principles  specifically cover learning and development and the provision of opportunities, and also emphasise the importance of personal responsibility for growth.

LA10 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

Partially reported

The quality of our people is a major reason why the Group continues to perform well. In return, we commit to invest as much time and energy in our people as we do our brands. The way our people operate is embodied in our four Guiding Principles: Enterprising Spirit, Freedom Through Responsibility, Open Minded and Strength from Diversity.

The long-term culture of the Group has been about developing talent from within, stretching and supporting the high-performing managers who lead the delivery of our strategy. In 2016, over 93% of our senior appointments were drawn from people already within the business – moves that have helped deliver stronger and more diverse leadership teams and succession plans.

In 2016, we welcomed the first intake into our new global graduate programme  – an accelerated 12-month initiative giving emerging talent early commercial responsibility and international experience, supported by collaborative, world-class development. The programme culminates in the global attendees from the 18 countries coming together in London to attend the new ‘BAT Academy’ in 2017.

We continue to evolve our learning and development portfolio of functional and leadership programmes which drive capability enhancement of our people. An example from 2016 was the launch of the ‘CEO challenge’ – a forum for teams of senior leaders to come together to engage the CEO and the Board on transformational change and breakthrough performance.

Our Employment Principles  make clear that, where restructuring is necessary, we are committed to doing so in a responsible manner. Where such situations do occur and where it is appropriate to do so, we provide outplacement support to help displaced employees find alternative employment.

Additionally, our Retirement policy details how we support staff in their preparation for retirement. It outlines various arrangements which can be made to facilitate the transition from working to retired life. This includes a pre-retirement interview arranged approximately one year in advance of an employee’s retirement.

LA11 Percentage of employees receiving regular performance and career development reviews, by gender and by employee category

Partially reported

100% of management employees around the world are required to follow the performance management process and have access to our electronic performance management and career development systems. This process includes formal mid-year and year-end performance and career development reviews. It also encourages employees to think about performance management throughout the year and line managers to provide employees with regular feedback – not only at the formal review points.

Non-management employees set annual performance objectives and development plans using local systems as per local needs. In the UK for example we use a ‘job family’ appraisal system for all non-management employees. As different systems are used, this data is not tracked globally.

LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity

Partially reported

Our ambition is to significantly increase representation of women and focus nationalities in senior management roles by 2020.

In 2016, the Thomson Reuters Diversity & Inclusion Index ranked us as the industry leader and one of the most diverse and inclusive companies to work for.

Gender

While we are proud to have achieved 27% female representation on our Main Board, we recognise that we still have more to do, particularly in increasing the number of women in senior leadership positions and at the executive Management Board level.

Having a diverse workforce means we are better able to understand and meet the needs of our consumers, customers and stakeholders, who themselves will be from a diverse mix of backgrounds, and helps create a positive corporate culture and build stronger leaders.

We have made good progress over the last five years, with a 25% increase in the number of women on leadership teams and a 38% increase in the number of women recruited to senior management roles.

However, despite these improvements, in 2016 the percentage of women across all Group employees dropped to 22%, from 27% in 2015. This was primarily driven by a decrease in women in our non-management population. While our focus was to increase diversity in management roles, we hope that our initiatives across the Group will lead to improvements for non-management roles.

Percentage of women

  2013 2014 2015 2016
Total Group employees 24% 24% 27% 22%
Non-management grades 22% 22% 25% 19%
Management grades 32% 32% 33% 33%
Of which, junior management grades 34% 34% 35% 36%
Of which, middle management grades 29% 29% 30% 30%
Of which, senior management grades 5% 14% 16% 16%
Main Board 27% 30% 31% 27%
Focus nationalities

In 2016, we achieved 19% representation of focus nationalities from Asia, the Middle East, Africa and Eastern Europe in senior management roles. Over the last five years, we have filled 29% of senior roles with focus nationalities.

We have 144 different nationalities represented across our management population globally and six different nationalities on our Board of Directors. In 2016, we were recognised by a review into Ethnic Diversity of UK Boards, which ranked BAT in the top 20 of the FTSE.

  2014 2015 2016
Percentage of focus nationalities in senior management grades 17% 18% 19%
LA13 Ratio of basic salary of women to men by employee category, by significant locations of operation

Not reported – information not collated at Group-level

We are preparing to disclose information as per the UK Gender Pay Gap regulations in 2018.

LA14 Percentage of new suppliers that were screened using labour practices criteria

Fully reported

All our new and existing first-tier tobacco leaf and direct materials suppliers are screened using labour practices criteria as part of our supplier programmes.

We conduct due diligence on our tobacco leaf supply chain through the Sustainable Tobacco Programme  (STP), which assesses and monitors suppliers’ performance in meeting industry-wide standards, including key criteria on labour practices. The programme assesses first-tier suppliers we buy tobacco leaf from and checks if they have the appropriate systems, governance and procedures in place to ensure high environmental and human rights standards on the farms they source from.

STP was developed in 2015 in collaboration with five other tobacco manufacturers to bring together best practice from across the industry. Implementation began in June 2016, replacing our Social Responsibility in Tobacco Production programme, which ran for more than 15 years.

The programme is aligned to important external standards, such as those of the International Labour Organisation (ILO), and includes strengthened processes and more frequent on-site reviews.

Suppliers complete an annual self-assessment covering 178 different criteria under the key areas of: crop, environment, people and facilities. They must also show that they have good governance underpinning all four areas and are required to assess, identify and mitigate any significant risks which may affect their ability to meet the criteria. The people criteria include: child labour prevention, safe working environment, fair treatment and preventing forced labour, freedom of association, and terms of employment.

As well as the self-assessments, independent on-site reviews will be carried out every three years, including in-depth analyses of suppliers’ policies, processes and practices and visits to the tobacco farms they source from.

We will use the results of the self-assessments and on-site reviews to work collaboratively with suppliers to drive corrective action and improvements.

In addition to tobacco leaf, the other direct materials we buy to make our products, such as paper and filters and the components that go into our Next Generation Products, represent our highest value strategic supply chain.

All of these strategic direct materials suppliers have to undergo an on-site audit, conducted by our independent firm, Intertek, in order to be appointed as a new supplier to BAT. They are then re-audited every three to four years.

The Intertek audit includes criteria covering forced labour, child labour, wages and hours, health and safety, environment and management systems.

LA15 Significant actual and potential negative impacts for labour practices in the supply chain and actions taken

Partially reported

All our new and existing first-tier tobacco leaf and direct materials suppliers are screened using labour practices criteria as part of our supplier programmes, as described above in LA14.

In 2016, the following incidents relating to labour practices in our supply chain were reported or identified:

An Intertek audit of a direct materials supplier in Thailand identified one incident relating to labour practices. This related to the supplier’s non-compliance with local laws concerning the amount of notice employees need to give prior to terminating their employment. We are now working with the supplier to implement a corrective action plan to address this issue.

In June 2016 Swedwatch, a non-governmental organisation (NGO), published a report, ‘Smokescreens in the supply chain: the impacts of the tobacco industry on human rights and the environment in Bangladesh’. Among its findings, the report alleged that many tobacco farmers in Bangladesh risk being trapped in a cycle of over indebtedness, and that this “raises the risk of the farmers being in a situation equivalent to that of bonded labour”.

As a result, we conducted our own internal review in Bangladesh and remain of the view that the report is not representative of the reality on the ground. However, we recognise the serious nature of the allegations and so have commissioned an independent assessment of the human rights related impacts of tobacco growing in the country and will use the results to address any issues that may be identified.

In addition, there have been ongoing allegations of human rights abuses on unspecified tobacco farms in our United States (US) supply chain, including concerns raised regarding migrant workers’ awareness of their rights for freedom of association and unionisation. We prioritised an independent on-site review of our US supply chain in 2015, along with a separate independent report to examine the specific allegations – neither of which uncovered any evidence of wrongdoing.

However, we continue to engage with the relevant stakeholders and work with our associate company, Reynolds American Inc (RAI) – including RAI’s subsidiary RJ Reynolds Tobacco Company – to address these concerns. This includes RJ Reynolds’ participation in the Farm Labor Practices Group (FLPG), a US-based multi-stakeholder forum established to directly promote compliance with the laws protecting worker rights in the US tobacco supply chain.

Details of significant human rights impacts in our supply chain can be found in HR11.

LA16 Number of grievances about labour practices filed, addressed, and resolved through formal grievance mechanisms

Fully reported

In the year to 31 December 2016, 40 instances of suspected improper business conduct contrary to our Workplace and Human Rights Policy (which covers labour practices) in the Group’s Standards of Business Conduct  were reported to the Board Audit Committee. This included 32 brought to our attention through ‘whistleblowing’ reports from employees, ex-employees, third parties or unknown individuals reporting anonymously.

15 were established as breaches and appropriate action was taken and the investigations for the other cases found no wrongdoing. The appropriate action will vary from case to case but will include, depending on the circumstances, dismissal or disciplinary action and, where appropriate, reporting the case to the relevant authorities. Where any weakness in internal controls is identified, appropriate measures are taken to strengthen them.

The Whistleblowing Policy in the Group’s Standards of Business Conduct enables anyone working for or with BAT, in confidence, to raise concerns about possible improprieties or wrongdoing, including workplace and human rights issues. They can do so without fear of reprisal, provided that such concerns are not raised in bad faith. The policy is supplemented by local procedures throughout the Group, which provide staff with additional guidance and enable them to report matters in a language with which they are comfortable. The Board Audit Committee receives regular reports on whistleblowings.

An example of local procedures is the UK formal Grievance Policy. It enables employees to raise issues with management regarding their work, working environment or working relationships, or about their employer’s, client’s, a third party’s or their fellow worker’s actions that affect them. Examples include: terms and conditions of employment, health and safety, relationships at work, new working practices, organisational change and equal opportunities. This policy sets out a global best practice for replication throughout the Group subject to local, end market jurisdiction.

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