Social performance: Product

PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement

Fully reported

The use of combustible tobacco products is associated with serious health risks. While new types of products, such as Vapour Products (e-cigarettes), are widely considered to be significantly less risky than smoking, some concerns continue to be raised regarding their safety and long-term health risks.

As such, 100% of our products across all our different categories – from combustible tobacco, to smokeless snus, to next generation Vapour and Tobacco Heating Products – are assessed as part of our robust product stewardship processes.

We have developed these robust product assessment procedures through cutting-edge science and peer-reviewed research conducted by our Group Research & Development (R&D).

We use a wide range of analytical techniques, specialised laboratory technology and expertise to first develop and then conduct detailed tests throughout the design, development and manufacturing stages of our products. We also study the way consumers actually use the products to make sure our risk assessments are based on, and reflect, consumers’ behaviours.

For example, for our Vapour and Tobacco Heating Products, all our devices are CE certified for EU safety, health and environmental requirements and assessed by an independent third party, and we operate and maintain a quality management system based on requirements of ISO9001:2008.

Then, with the e-liquids themselves, we use only pharmaceutical-grade ingredients and food-grade flavourings and our toxicologists work to ensure nothing is added that would increase the risk to the consumer.

Only when we are fully satisfied that a product meets our high-quality standards do we allow it to go on the market.

These robust assessments and standards for safety and quality give consumers confidence in our products and ensures they are of the highest quality. We would like the approaches we’ve developed to become the benchmark for the industry and for future regulation. That’s why we’ve been openly sharing our knowledge, expertise and scientific research results, as well as participating, as part of a broad consultation, in the development of industry-wide standards with independent organisations.

Having worked on the development of the first national standards for Vapour Products in the UK and France, we are now participating in working groups of the EU Standards Body (CEN) for Europe-wide standards. We are also providing technical input to the International Organisation for Standardisation (ISO) for developing global specifications.

You can read more about our scientific research and results of product assessments and studies on our dedicated website www.bat-science.com . Detailed information on our work to research, develop and commercialise less risky alternatives to regular cigarettes can be found in our Harm Reduction Focus Report .

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes

Fully reported

Unless reported elsewhere in these GRIs, no material instances were reported by our companies in 2016.

PR3 Type of product and service information required by the organisation’s procedures for product and service information and labelling, and percentage of significant product and service categories subject to such information requirements

Fully reported

100% of our combustible tobacco products are required to carry clearly visible health warnings on packaging, even when not required by local regulation. This is a core requirement of our voluntary International Marketing Principles  (IMP) which state that “all our advertising and packaging will carry clearly visible and legible health warnings.”

All our marketing of tobacco products complies with local legislation and is governed by our IMP wherever they are sold. Our IMP comprise four core values which commit us to always be truthful about the risks of smoking and to never seek to influence the consumer’s decision whether to smoke or not. They make it clear that we will only market cigarettes to adult smokers and that we will always be clear that our marketing originates from a tobacco company.

We are committed to 100% IMP compliance worldwide. All our marketing materials have to be formally reviewed and approved by our Legal and External Affairs function and we provide training to our marketing employees and trade representatives, as well as any external agencies we work with, to ensure they are effectively applied.

For our smokeless tobacco product, snus, we have a separate set of Marketing Standards  due to the fact that snus is proven to be substantially less risky than other tobacco products. Our Snus Marketing Standards require all our snus packaging and advertising to carry appropriate health warnings.

100% of our Vapour Product (e-cigarette) marketing is governed by our Vapour Products Marketing Principles . Aligned to the UK Committee of Advertising Practice Codes, they are based on four core principles:

  • We will target our Vapour Product marketing at adults;
  • We will be clear and factual about our Vapour Products and their potential risks;
  • We will market our Vapour Products to smokers and consumers of vapour and nicotine products;
  • We will not promote combustible tobacco products through our Vapour Product marketing.

In addition, 100% of our Vapour Product packs, inserts and e-liquid refills have appropriate warnings, are sold in child-proof containers and are clearly labelled as being for those aged 18 and over.

We are now working on the development of new Marketing Principles for Tobacco Heating Products. This will ensure we have specific principles in place for each of our different product categories worldwide, which are appropriate to their risk profiles.

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes

Fully reported

For 2016, our companies reported the following matters:

  • In Brazil, our subsidiary company, Souza Cruz, is the subject of thirteen infraction notices issued by the health authority in the course of 2010 for alleged breaches of packaging laws. This is based on allegations that the packaging differs from that previously notified and/or that it contains a prohibited advertising message. In five of these cases, the health authority issued fixed penalties of BRL160,000 (GBP £41,900), which were upheld on appeal. A case for a sixth penalty of BRL160,000 (GBP £41,900) is still under appeal. In the remaining seven cases, the health authority issued fixed penalties of BRL 100,000 (GBP £26,188) which our company has paid and the cases are now closed.
PR5 Results of surveys measuring customer satisfaction

Partially reported

We measure our retail customers’ satisfaction through our Customer Voice programme, which has been designed and developed to provide in-depth qualitative understanding of BAT’s customers. It provides us with a rich and detailed understanding of our retail customers, particularly in terms of uncovering customers’ attitudes, perceptions and ultimately the factors which drive opinions about the BAT experience.

The programme also includes an optional quantitative measurement of key metrics designed to add context to and enhance the findings of the qualitative phase where necessary.

By conducting an ongoing dialogue with customers, we better understand their issues and concerns in the changing retail environment for mutual business benefit. The study’s overall purpose is to provide essential input into BAT cycle planning, with the ultimate aim of implementing positive change where necessary to achieve business growth.

Specifically, it:

  • Creates a channel for retail customers to provide feedback and for BAT to act upon;
  • Identifies any opportunity and areas of lower performance, which can potentially be followed up with further monitoring and communication with retailers in any relevant market;
  • Assesses the satisfaction and relevancy of service provided by BAT;
  • Encourages and drives our companies’ action planning with multi-functional collaboration.
PR6 Sale of banned or disputed products

Fully reported

We comply with all laws and regulations relating to all our different product categories and openly respond to stakeholder questions or public debate.

Smokeless snus

The sale of snus, a low-toxicant smokeless tobacco product, is currently banned in some markets, including Australia and European Union (EU) member states. Sweden obtained an exemption from the ban when it joined the EU in 1995. We currently sell snus products in Sweden and Norway.

Independent scientific evidence tells us that snus has substantially lower risks than cigarette smoking. The wide use of snus among Swedish men is seen as an important reason why Sweden has the lowest rate of male smoking-related diseases of any comparable developed nation.

Therefore, we believe that due to its significant harm reduction potential, snus should be legal in all countries. As such, we were disappointed that in the 2014 update of the EU Tobacco Products Directive (TPD), European regulators have not lifted the ban on the sale of snus in the EU outside Sweden.

Next Generation Products

At the end of 2016, our Next Generation Products were available in 12 markets worldwide, including:

  • Vapour Products (e-cigarettes) in the UK, France, Germany, Italy, Poland, Colombia, Guatemala, Kuwait, Bahrain and the Philippines;
  • Tobacco Heating Products in Romania and Japan.

With the rate of growth of these new products, there has been much debate and confusion about how they should be regulated. This has led to inconsistent approaches around the world. 

Some governments have responded with restrictive regulations, such as bans on advertising and high excise taxes similar to those for tobacco, which we believe could stifle growth.

Other governments, such as in the UK, have considered the potential benefits these products can bring to public health. For example, Public Health England, an executive body of the UK Department of Health, has stated: “Based on the international peer-reviewed evidence, e-cigarettes carry a fraction of the risk of cigarettes and have the potential to help drive down smoking rates and improve public health… Therefore, policies should make clear the distinction between vaping and smoking.”

Some stakeholders also continue to raise concerns regarding the safety and long-term health risks of Next Generation Products.

We have responded by introducing our own voluntary standards for product safety and quality, as described in PR1, and our Vapour Products Marketing Principles, as described in PR4.

We would like to see this approach to product standards for Next Generation Products followed across the industry, so we openly share our expertise as part of multi-stakeholder initiatives. Having worked on the development of the first national standards for Vapour Products in the UK and France, we are now participating in working groups of the EU Standards Body (CEN) for Europe-wide standards. We are also providing technical input to the International Organisation for Standardisation (ISO) for developing global specifications.

We also continue to engage with governments and regulators to advocate for our preferred regulatory approach, which includes:

  • High products standards: based on robust science, to ensure consumer safety and confidence;
  • Responsible marketing to adults only: controlled marketing and advertising rules aimed at adult consumers only;
  • Freedom to innovate: to give consumers more choice and satisfy their evolving needs and preferences;
  • Freedom to collaborate: so the public and private sectors can work together and provide meaningful information to consumers;
  • Appropriate taxes and excise: reflecting the relative product risks and not artificially driving up prices, which can discourage take-up by more smokers.

Following the November 2016 Conference of the Parties to the World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC), we welcome the WHO’s recognition of the potential role of what they refer to as Electronic Nicotine Delivery Systems (ENDS) in helping to reduce the public health impact of tobacco use,  as well as the need for product safety standards. We hope that our work as part of multi-stakeholder initiatives to develop industry-wide product standards will contribute to this vital area.

We also continue to openly respond to key stakeholder concerns on our websites and in our Sustainability Report and Focus Reports, which are summarised below:

Key concerns Views from selected independent experts Our view
They are just as harmful as conventional cigarettes While these products haven’t been around long enough to generate epidemiological data, which looks at health impacts after decades of use, the current expert estimate from respected bodies, such as Public Health England and the UK Royal College of Physicians, is that e-cigarettes are around 95% safer than smoking1. However, some organisations, such as the British Medical Association, continue to raise concerns regarding long-term health risks and so are calling for a precautionary approach through regulatory restrictions, like bans on vaping in public places. The results of our most recent peer-reviewed research show significant reductions in toxicant emissions from Next Generation Products compared with cigarette smoke. This indicates that the health risks are highly likely to be much lower than conventional cigarettes, while recognising that further research is needed. The body of research to date also indicates that Vapour
Products emit lower levels of toxicants than Tobacco Heating Products, however more research is needed to assess the significance of this difference in terms of the relative risk.
Second-hand vapour can cause harm to others A number of studies and evidence reviews have noted that passive exposure to vapour is unlikely to have any significant health impact. Cancer Research UK has stated: “There is no evidence that second-hand vapour is dangerous to others.”2 All of the robust evidence to date does not justify an indoor ban on Next Generation Products on the basis of potential harm to bystanders from second-hand vapour.
They will act as a gateway into smoking for young people The UK Royal College of Physicians has stated: “All the UK evidence, and almost all the international evidence, on the use of e-cigarettes by children and young people to date indicates that concerns about e-cigarettes helping to recruit a new generation of tobacco smokers through a gateway effect are, at least to date, unfounded.”3 We support the UK Royal College of Physicians’ view that the current evidence does not indicate a notable gateway effect for young people. We agree that these products should not be used by anyone under the age of 18, which is why we have a strict requirement for our marketing to be directed at adults only.
Not enough is known yet about the long-term health risks A joint statement by UK public health organisations stated:  “We all agree that e-cigarettes are significantly less harmful than smoking... All the evidence suggests that the health risks posed by e-cigarettes are relatively small by comparison but we must continue to study the long-term effects.”4 We agree that further research and continued monitoring of consumer use is needed to determine long-term risks. Nevertheless, we believe adults, who otherwise would continue smoking, should have the choice to switch to alternative products now. To restrict or ban products under the ‘precautionary principle’ would be a huge wasted opportunity.
The tobacco industry’s involvement in harm reduction  is not credible The tobacco industry is seen as controversial and some organisations, such as the WHO, are sceptical about our motivations. However, some prominent figures in public health have acknowledged the important role tobacco companies can play in being part of the solution. If the ultimate public health aim is for less risky products to be as widespread, successful and easily available as possible in order to reduce the number of people who smoke, then companies such as BAT are best placed to help achieve this through deep consumer insights, global resources, skills, capabilities and ambition.
  1. (a) E-cigarettes: an evidence update , Public Health England, August 2015; (b) Nicotine without smoke: Tobacco harm reduction , a report by the Tobacco Advisory Group of the UK Royal College of Physicians, April 2016.
  2. 10 common questions about e-cigarettes answered , Cancer Research UK, May 2016 (accessed in March 2017).
  3. Nicotine without smoke: Tobacco harm reduction , a report by the Tobacco Advisory Group of the UK Royal College of Physicians, April 2016. 
  4. E-cigarettes: a developing public health consensus , Joint statement on e-cigarettes by Public Health England and other UK public health organisations, July 2016.
PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes

Fully reported

Compliance with our voluntary Marketing Principles

In 2016, no incidents of non-compliance with our International Marketing Principles for combustible tobacco products, our Snus Marketing Standards or our Vapour Products Marketing Principles were identified through our internal procedures.

There were, however, four external allegations made about our marketing practices in relation to local tobacco control and advertising laws. We conducted detailed investigations and found no evidence of any wrongdoing. Where any instances of non-compliance are identified, immediate action plans are put in place to address them.

Compliance with local regulations

For 2016, our companies reported the following matters:

  • In Argentina, BAT was served notice by the Ministry of Health about alleged infringements of the National Tobacco Law (NTL) in relation to point of sale communications. The case is ongoing.
  • In Belgium, BAT was fined €60,000 (£43,555) in respect of a breach of point of sale advertising legislation. BAT paid the fine and the case now is closed.
  • In Brazil, our subsidiary Souza Cruz lost an appeal in January 2017 relating to an infraction notice issued by the Health Authority in 2010 for an alleged breach of advertising laws through its promotion of a music festival. The health authority issued a fixed penalty of BRL160,000 (GBP £41,900) which Souza Cruz paid and the matter is now closed.
  • In Colombia, in addition to the cases listed in SO8, our company has been subject to seven investigations regarding various alleged acts of promotion and advertising in breach of the Tobacco Control Act. Four of these investigations found in favour of BAT and are now closed. Three of these investigations are still ongoing.
  • In Costa Rica, our subsidiary won an appeal in respect of administrative complaints brought by a Congresswoman for alleged breaches of the Tobacco Control Act. The local subsidiary was also subject to an investigation by the Commission of Fair Commerce and Promotion of Fair Competence regarding an anonymous allegation that a commercial promotion, in 2014, was in violation of applicable laws. Although the Commission was successful in the first instance, BAT successfully overturned this result on appeal and the case is now closed.
  • In Guatemala, our subsidiary continues to defend itself against a case, involving a fine of US$40,000 (£26,175), alleging infringement of local advertising laws. A decision is still pending.
  • In Honduras, our company is subject to two cases relating to advertising at point of sale in retail outlets. In the first case, a fine of US$34,000 (£GBP £27,790) was imposed, which the company is in the process of appealing. The second case is pending further review by the judiciary.
  • In Hungary, our company is subject to 50 ongoing claims by the relevant authorities for alleged breaches of advertising regulations. These cases are still pending.
  • In Switzerland, our competitor Phillip Morris International filed a claim with the arbitral body of voluntary regulations (Swiss Cigarette), alleging that BAT breached provisions of the voluntary regulations (Swiss Cigarette Code). Any violation of the Swiss Cigarette Code is subject to an arbitral procedure, the outcome of which is not publicly disclosed or released. The case is awaiting hearing.
  • In Taiwan, BAT was subject to proceedings in respect of alleged breaches of local advertising laws, relating to on-pack communication and stickers. The court found in favour of BAT, but the Health Authority successfully appealed resulting in a fine of GBP £130,242. The case is now closed.
PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

Fully reported

For 2016, our companies reported the following matters:

  • In Brazil, a class action has been brought against Souza Cruz by the Paraná State Public Prosecution Office for alleged environmental damage due to butt littering. A decision was rendered by the Parana State Court of Appeals to suspend the expert evidence phase in order to include other tobacco companies in the lawsuit and all the cities of the State of Paraná. Souza Cruz has filed an appeal to Superior Court of Justice to discuss procedural issues regarding the case. We await the outcome of the appeal.
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