Social performance: Human rights

HR1 Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

Not reported – information not collated at Group-level

HR2 Total hours of employee training on human rights policies or procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

Partially reported

In 2017, over 1,000 managers in our Procurement and Legal and External Affairs functions completed our detailed human rights e-learning training course. The training course took approximately one hour to complete, so this equates to over 1,000 training hours.

Over 18,000 employees worldwide also completed our Standards of Business Conduct e-learning, which included a module on the Group Workplace and Human Rights Policy. This equates to approximately, 1,500 training hours.

In addition, our agricultural Extension Services delivered training and communications on human rights, child and forced labour issues, for over 67,000 farmer and rural community beneficiaries in 2017.

HR3 Total number of incidents of discrimination and corrective actions taken

Fully reported

In the year to 31 December 2017, 42 instances of suspected improper business conduct contrary to our Respect in the Workplace Policy (which covers discrimination) in the Group’s Standards of Business Conduct  were reported to the Board Audit Committee. This included 38 brought to our attention through ‘whistleblowing’ reports from employees, ex-employees, third parties or unknown individuals reporting anonymously.

16 were established as breaches of our Respect in the Workplace Policy, and appropriate action was taken, including dismissal, disciplinary measures and strengthening our internal controls. The investigations for the other cases found no wrongdoing.

The Group’s Standards of Business Conduct  sets out the Group’s whistleblowing policy, enabling anyone working for, or within Group, in confidence (and anonymously where they wish), to raise concerns without fear of reprisal, including concerns regarding accounting or auditing matters. Employees can raise concerns with their line manager, HR or one of the Group’s Designated Officers for whistleblowing based locally throughout the world. Alternatively, they can use the confidential, independently managed external Speak Up  channels via telephone or internet which offers additional channels to raise any concerns or report any matter, and this can be done anonymously. Our Speak Up channels are available 24 hours a day in local languages and are highlighted in our internal training and communications. Our Speak Up portal is also available to business partners and suppliers.

The Whistleblowing Policy is supplemented by local procedures throughout the Group and in the Group’s London headquarters, which provide staff with additional guidance and enable them to report matters in a language with which they are comfortable. 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.

The Board Audit Committee receives regular reports on whistleblowings.

HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk and measures taken to support these rights

Partially reported

Our operations

100% of BAT operations are reviewed annually against country-level human rights risk indicators by Verisk Maplecroft , an independent global risk analytics consultancy. This includes Maplecroft’s Freedom of Association and Collective Bargaining Index.

The list of high-risk countries is reviewed by our Board Audit Committee and the relevant regional audit and CSR committee (RACC). The committees can also add further countries to the list, in the event of new developments in human rights or business circumstances. The Head of Legal and External Affairs in each high-risk country is then asked to conduct an assessment to confirm compliance with Group policies, standards and controls, and to provide details of any additional local measures in place to enhance human rights management. The RACCs then review the compliance status for each country and, if any areas for improvement are identified, request actions to be taken, with defined timescales.

It is also a specific requirement of our key business controls, which apply to all Group companies, for human rights risk assessments and risk mitigation action plans to be in place for our operations in the highest risk countries and for processes to be in place to demonstrate that human rights are managed effectively in the workplace and supply chain. 100% of BAT operations are required to report compliance against the controls annually. 

Our Human Rights Policy, as part of the Group’s Standards of Business Conduct  (SoBC), also includes specific provisions for respecting freedom of association. Our workers have the right to be represented by local company-recognised trades unions, or other bona fide representatives. Such representatives should be able to carry out their activities within the framework of law, regulation, prevailing labour relations and practices, and agreed company procedures.

All business units worldwide complete an annual self-assessment against our key audit controls, in which they confirm they have adequate procedures in place to support SoBC compliance. In addition, all staff working across the Group are required to complete an annual sign-off, confirming their commitment and adherence to the SoBC, and re-declare any personal conflicts of interest.

Continuous information on compliance with the Standards through the year is gathered at a global level and reported to the RACCs, and quarterly to the Board Audit Committee. 

Our suppliers

All our new and existing first-tier tobacco leaf and direct materials suppliers are screened using human rights criteria as part of our supplier programmes, which includes freedom of association.
Our Sustainable Tobacco Programme  (STP) applies to 100% of our first-tier tobacco leaf suppliers, including our own leaf operations, and includes criteria under the key areas of: crop, environment, people and facilities. Freedom of association is specifically covered under the people criteria.

For our non-agricultural suppliers, all direct product materials supplier, as well as strategic suppliers of indirect goods and professional services are now assessed according to Verisk Maplecroft , independent human rights indices, including the Freedom of Association and Collective Bargaining Index, as part of our supply chain due diligence programme. In 2017, this assessment covered 46% of our total procurement spend. Those identified as having the highest risk exposure are prioritised for enhanced due diligence.

In 2017, on-site audits were conducted on a total of 65 direct suppliers in 29 countries, representing 20% of our total direct Procurement spend. The audits are conducted by Intertek – a highly respected global auditing company – and include criteria on forced labour, child labour, wages and hours, health and safety, environment and management systems.

If any issues are identified, suppliers are required to implement corrective actions. Intertek verifies they have done so either through a desktop review, for moderate issues, or a follow-up audit for more serious issues.

While we always try to use the results of any supplier assessment or audit to support our suppliers in improving their performance, if they are unwilling to engage with us, we will terminate the business relationship.

In 2018, we plan to extend the scope of our Intertek supplier audits to include tier two and three Next Generation Products (NGPs) material suppliers, and high-risk indirect suppliers of point-of-sale marketing materials and lighters.

HR5 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour

Fully reported

As described in HR4, 100% of BAT operations are reviewed annually against country-level human rights risk indicators by Verisk Maplecroft , an independent global risk analytics consultancy. This includes Maplecroft’s Child Labour Index.

Our Human Rights Policy, as part of the Group’s Standards of Business Conduct , also includes our commitment to eliminating child labour. We do not condone or employ child labour, and seek to ensure that the welfare, health and safety of children are paramount at all times.

We recognise that the development of children, their communities and their countries is best served through education. As such:

  • no one under 18 will be directly employed by any Group company in any work assessed as hazardous to their health, safety and well-being; and
  • no one under 15 (or, if higher, the age for finishing compulsory schooling in the country concerned) will be directly employed by any Group company.

All business units worldwide complete an annual self-assessment against our key audit controls, in which they confirm they have adequate procedures in place to support SoBC compliance. In addition, all staff working across the Group are required to complete an annual sign-off, confirming their commitment and adherence to the SoBC, and re-declare any personal conflicts of interest. Continuous information on compliance with the Standards through the year is gathered at a global level and reported to the Regional Audit and CSR committees, and quarterly to the Board Audit Committee.

Based on careful assessment and the insights developed over many years, we believe that the greatest risk of child labour is in our agricultural tobacco leaf supply chain. For example, the International Labour Organization  (ILO) reports that 60% of global child labour occurs in agriculture. We have always made it clear to all our suppliers of tobacco leaf and contracted farmers that exploitative child labour and other human rights abuses will not be tolerated.

The measures we take to contribute to the elimination of child labour in tobacco growing are outlined below:

Supplier standards and assessments

Our supplier programmes, as described in HR4, include specific criteria on child labour.

Our Supplier Code of Conduct  includes a specific requirement for all our suppliers to ensure their operations are free from the exploitation of child labour. Specifically, this includes not employing anyone under the age of 18 in any work that is considered hazardous, or anyone under the age of 15 (or below the legal age for finishing compulsory schooling – whichever is higher) in any capacity.

In the case of tobacco farming, the reality of rural agricultural life in many parts of the world means certain kinds of work can play a formative, cultural, social and familial role for children. Where local law permits, we consider it acceptable for children of between 13 and 15 years of age to help on their families’ farms provided it is light work, does not hinder their education or vocational training and does not involve any activity which could be harmful to their health or development (for example, using mechanical equipment or handling green tobacco or agrochemicals).

In 2017, we developed a new operational standard on child labour prevention, with important contributions from the Eliminating Child Labour in Tobacco Growing (ECLT) Foundation and the ILO. It is set to be rolled out across all our leaf operations in 2018 and will bring increased consistency and effectiveness to the way in which our long-standing Child Labour Policy is implemented.

For example, it provides clear guidelines and procedures for regular training and capacity building, farm monitoring and spot checks, and immediate reporting of any incidents of child labour. It also includes clearly defined steps for developing and implementing actions to prevent or remediate child labour, and to improve the situation of affected children and their communities.

Our expert field technicians around the world regularly visit more than 90,000 famers in our tobacco leaf supply chain. These visits give our staff the opportunity to check conditions on the ground and provide a further safeguard against child labour and other human rights abuses within our supply chain.

Long-term collaborative solutions

While our supplier programmes help ensure high human rights standards on a day-to-day basis, child labour in agriculture has more endemic root causes which one company – or even one sector – cannot tackle alone. So, implementing long-term community based projects and multi-stakeholder partnerships is central to our approach.

For example, in Brazil we support the Tobacco Industry Interstate Union’s Growing Up Right programme, which focuses on tackling child labour through farmer training and initiatives such as its Rural Professional Learning Programme. This programme is run in partnership with local municipalities, and is certified by the Ministry of Labour. Children from tobacco farms, aged between 14 and 18, take part as ‘rural apprentices’, and are selected on criteria based on social vulnerability and their risk of becoming involved in child labour. Regular school attendance is a prerequisite of the programme and apprentices are paid for a 20-hour week.

Since 2001, our company in Mexico has partnered with the Government, the Rural Association of Collective Interest and local NGOs to prevent around 15,000 children of migrant farm labourers from being exposed to the risk of child labour.

In Sri Lanka, our business has worked for over 10 years on a project to tackle rural poverty, which is recognised as a root cause of child labour. It aims to empower poor rural families through a programme of training and support focused on food cultivation and animal husbandry to help them become more self-sufficient and economically independent.

Eliminating Child Labour in Tobacco Growing (ECLT) Foundation

In 2000, as part of our long-running commitment to end the practice within tobacco farming, we became a founding board member of the ECLT Foundation  We remain active members today, alongside other major tobacco companies, leaf suppliers and the International Tobacco Growers’ Association. The ILO also serves as an advisor to ECLT’s Board.

ECLT’s independent status means it can call upon governments to take action, improve policies and advance research into child labour. It also carries out important work helping to strengthen communities and brings together key stakeholders to develop and implement local and national approaches to tackle child labour.

For example, in 2017 our company in Indonesia continued its work with ECLT on a multi-stakeholder project to address child labour in tobacco growing. This included developing a new collective strategy, involving national and local governments, farmers’ associations, tobacco companies, civil society, international organisations and development agencies.

You can find out more at the Foundation’s website www.eclt.org .

HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labour, and measures taken to contribute to the elimination of all forms of forced or compulsory labour

Fully reported

Based on careful assessment, research and the insights developed from our long history of operating in the tobacco industry around the world, we have identified that the greatest risk of forced labour is in our tobacco leaf agricultural supply chain.

The ILO states that an estimated 1.1 billion people are engaged in agriculture and that the sector accounts for over 30% of global employment. The sheer scale and characteristics such as large numbers of casual and temporary workers, family labour in small-scale farming, and high levels of rural poverty, makes this a particularly vulnerable sector. The ILO also recognises that cases of forced labour have been widely documented in the agricultural sector of wealthier, as well as poorer, countries.

Therefore, we conduct assessments and independent on-site reviews on 100% of our leaf operations and suppliers, in all countries, through the industry-wide Sustainable Tobacco Programme (STP), as described in HR4.

While due diligence, as part of STP, is an important part of our approach, we recognise that there are wider root causes to modern slavery in agriculture, which need a longer-term, collaborative approach to address. Our global network of expert field technicians provides on-the-ground Extension Services support, technical assistance and capacity building for all 90,000+ farmers who supply all our leaf operations. These field technicians play an active and important role in rural communities, acting as a direct link between the farmers and BAT.

Debt bondage can be a very real concern for some farmers and is often the case when they borrow money to invest in growing a crop but don’t have a guaranteed buyer or price. This leaves them particularly vulnerable to getting trapped in a cycle of debt. To ensure this is not the case for the farmers we work with, our field technicians agree contracts with them at the beginning of each growing season – guaranteeing to buy their tobacco crop at a fair price, as well as detailing the free support and training they’ll receive from our Extension Services and options to access resources at lower costs, such as seeds, fertilisers and personal protective equipment. The contract can also be used as security for credit or loans they need from banks, enabling them to invest in their farms.

Our field technicians then continue to visit the farms at every stage of the growing cycle, building trusted relationships and gaining unique insights into the challenges our farmers face, as well as wider sustainability issues affecting the local community or landscape. These insights enable us to tailor our approach to meet real needs and circumstances on the ground. They also give our staff the opportunity to check conditions on the ground and provide a further safeguard against forced or bonded labour being used within our tobacco leaf supply chain.

Our third-party suppliers also use a similar Extension Services model to provide guidance, technical assistance and capacity building for the 260,000+ farmers they contract.

Building on our long history of working in partnerships and implementing long-term projects in farming communities, we have developed a global programme, known as Thrive. This takes a holistic and collaborative approach to identifying and addressing root causes and long-term risks, including those relating to modern slavery and forced labour, such as rural poverty.

You can also find detailed information on the steps we’re taking to prevent forced labour, modern slavery and human trafficking in our business and supply chains, in our Modern Slavery Act Statement 2017 .

HR9 Total number and percentage of operations that have been subject to human rights reviews or impact assessments

Fully reported

100% of BAT operations are reviewed annually against country-level human rights risk indicators for businesses by Verisk Maplecroft , an independent global risk analytics consultancy. This includes Maplecroft’s key human rights risk indices, covering issues relating to labour rights, such as freedom of association, child labour and modern slavery; issues relating to safety and security, such as occupational health and safety, levels of criminality, conflict severity, terrorism intensity, and abuse of human rights by security forces; and issues relating to equal opportunities and fair treatment, such as discrimination in the workplace and the rights of vulnerable minority groups.

The list of high-risk countries is reviewed by our Board Audit Committee and the relevant regional audit and CSR committee (RACC). The committees can also add further countries to the list, in the event of new developments in human rights or business circumstances. The Head of Legal and External Affairs in each high-risk country then conducts an assessment to confirm compliance with Group policies, standards and controls, and to provide details of any additional local measures in place to enhance human rights management. The RACCs then review the compliance status for each country and, if any areas for improvement are identified, request actions to be taken, with defined timescales.

It is also a specific requirement of our key business controls, which apply to all Group companies, for human rights risk assessments and risk mitigation action plans to be in place for our operations in the highest risk countries and for processes to be in place to demonstrate that human rights are managed effectively in the workplace and supply chain. 100% of BAT operations are required to report compliance against the controls annually. 

Our Human Rights Policy, as part of the Group’s Standards of Business Conduct , also makes it clear that we must identify specific human rights risks that may be relevant for, or impacted by, our operations. In doing so, we will seek the views of our stakeholders, including employees and their representatives. We will take appropriate steps to ensure that our operations do not contribute to human rights abuses and to remedy any adverse human rights impacts directly caused by our actions.

HR10 Percentage of new suppliers that were screened using human rights criteria

Fully reported

All our new and existing first-tier tobacco leaf and direct materials suppliers are screened using human rights criteria as part of our supplier programmes, as described in HR4.

HR11 Significant actual and potential negative human rights impacts in the supply chain and actions taken

Partially reported

We have always done our utmost to uphold high standards, openly engage with our stakeholders and work to strengthen our approach to align to their expectations.

If we do receive any reports of unethical behaviour or negative human rights impacts, we conduct detailed investigations, take appropriate action to address any issues identified, and report transparently on the progress and outcomes.

Following allegations made in 2016 by the Swedish NGO Swedwatch , regarding tobacco leaf growing in Bangladesh, in 2017, we commissioned the international sustainability and human rights consultancy DNV-GL to conduct a review of the tobacco leaf growing practices of our business in Bangladesh and against the allegations posed within the Swedwatch report. We are pleased that the outputs were consistent with the outcomes of our own investigations and that DNV-GL found no evidence to support the allegations, including claims of child and bonded labour.

Equally, we are grateful that the review highlighted some procedural and control issues that will further help us manage human rights risks in-country. BAT Bangladesh has already implemented a number of initiatives that will strengthen our approach, particularly around preventing child labour, bonded labour and gender discrimination.

The full report of DNV-GL’s review and details of our response and actions can be found at www.bat.com/humanrights/respond .

In May 2016, the NGO Human Rights Watch published a report entitled, ‘The Harvest is in My Blood: Hazardous Child Labor in Tobacco Farming in Indonesia’ .

The report into tobacco growing in Indonesia highlighted a number of issues that result from the way in which certain types of tobacco are traditionally grown and sold in the country. We are pleased that it acknowledges the collective responsibilities of the Government, the tobacco industry and NGOs, and we support many of the recommendations on how these groups can tackle this issue. The report findings have been fed into an existing review of our practices in Indonesia and have contributed to our ongoing plans.

For example, in 2017 our business in Indonesia continued its work with ECLT  on a multi-stakeholder project to address child labour in tobacco growing. This included developing a new collective strategy, involving national and local governments, farmers’ associations, tobacco companies, civil society, international organisations and development agencies.

In addition, there have been ongoing allegations of human rights abuses on unspecified tobacco farms in our US supply chain, including concerns raised regarding migrant workers’ awareness of their rights for freedom of association and unionisation.

We have planned a supplier review, as part of STP, for 2018, which will include RJ Reynolds Tobacco Company in its capacity as a BAT leaf operation, following our acquisition in July 2017. Prior to this, in 2015, we brought forward an independent, on-site review of our US tobacco leaf suppliers. It found no evidence of any wrongdoing, but did highlight some areas for improvement, which the suppliers addressed.

We believe that the most effective and practical way of dealing with the issues is by encouraging all the parties in the US to get around the table and talk. This is why RJ Reynolds and other US suppliers have been participating with other stakeholders in the Farm Labour Practices Group, and together they are working on initiatives to improve workers’ experiences and promote compliance with the laws that protect workers’ rights.

In 2017, Intertek audits on direct materials suppliers identified major issues relating to human rights with two direct materials suppliers, both of which were immediately escalated to our Group Head of Direct Procurement.

The first related to a supplier in Malaysia, which was found to be storing the passports of all foreign workers. Intended for the purposes of safekeeping, the workers had all signed consent forms and could request the passports back at any time. However, there was no procedure in place to enable this. The supplier took corrective action to immediately return the passports to the workers and provide personal lockers for them to store their passports on site if they wished. Intertek revisited the supplier within three months and a 100% audit score was achieved.

In the second case, it was found that a supplier’s employees in Poland were not free to decline overtime and had received an official order from managers to work on days off. The supplier amended its policy to explicitly state that overtime is strictly voluntary and communicated this to the supplier’s management, for which all have signed written confirmation.

HR12 Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms

Fully reported

In the year to 31 December 2017, one instance of suspected improper business conduct contrary to our Human Rights Policy in the Group’s Standards of Business Conduct  was reported through a 'whistleblowing' channel and brought to the attention of our Board Audit Committee.

The case involved allegations relating to employee terminations and redundancies in the context of a local restructuring. The investigation found no evidence of wrongdoing.

Our Human Rights Policy makes clear our commitment to treating all our colleagues and business partners inclusively, with dignity, and with respect. This includes specific provisions for promoting equality and diversity and preventing harassment and bullying. It details how all aspects of harassment and bullying are completely unacceptable and that we are committed to removing any such actions or attitudes from the workplace.

The Group’s Standards of Business Conduct  sets out the Group’s whistleblowing policy, enabling anyone working for, or within Group, in confidence (and anonymously where they wish), to raise concerns without fear of reprisal, including concerns regarding accounting or auditing matters. Employees can raise concerns with their line manager, HR or one of the Group’s Designated Officers for whistleblowing based locally throughout the world. Alternatively, they can use the confidential, independently managed external Speak Up  channels via telephone or internet which offers additional channels to raise any concerns or report any matter, and this can be done anonymously. Our Speak Up channels are available 24 hours a day in local languages and are highlighted in our internal training and communications. Our Speak Up portal is also available to business partners and suppliers.

The Whistleblowing Policy is supplemented by local procedures throughout the Group and in the Group’s London headquarters, which provide staff with additional guidance and enable them to report matters in a language with which they are comfortable. 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.

The Board Audit Committee receives regular reports on whistleblowings.

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