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

All Business Units across the Group are required to confirm that appropriate training and awareness activities supporting the Standards of Business Conduct  have been conducted as part of their internal controls sign-off.

Additionally, in 2016, we delivered the following training that included specific content on human rights:

  • Training webinars for our Legal and External Affairs employees on our Standards of Business Conduct and Supplier Code of Conduct ;
  • A global roll-out of new training and communications materials for all employees worldwide on our Standards of Business Conduct, clarifying what they should do if they discover actions that conflict with our Standards;
  • A series of workshops with our BAT-owned and third-party suppliers across the globe to introduce the Sustainable Tobacco Programme  (STP) and its specific criteria on human rights and forced labour. They then delivered training to their teams and farmers; and
  • Through our agricultural Extension Services, we provided training and capacity building on human rights issues for our farmers and members of local communities, attended by over 60,000 beneficiaries.

In 2017, we will develop and roll-out a new human rights e-learning package to colleagues working within our Procurement and Legal and External Affairs functions.

HR3 Total number of incidents of discrimination and corrective actions taken

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 discrimination) 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, reported to the relevant authorities. Where any weakness in internal controls is identified, appropriate measures are taken to strengthen them.

The Workplace and Human Rights Policy makes clear our commitment to treating all of 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 Whistleblowing Policy in the 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.

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 highest risk countries are then noted by our Board Audit Committee, and the performance of our companies in managing human rights in those countries is monitored by our Regional Audit and CSR committees.

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. In 2016, 40% of our employees worldwide were represented by an independent Trade Union or covered by collective bargaining agreements.

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. 

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 and includes 178 criteria under the key areas of: crop, environment, people and facilities. Freedom of association is specifically covered under the people criteria. 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 STP criteria.

We will use the results of suppliers’ STP self-assessments and on-site reviews to work collaboratively with suppliers to drive corrective action and improvements. In the event of any serious and/or persistent issues, or where suppliers fail to demonstrate a willingness to improve performance, we reserve the right to terminate the business relationship.

For our non-agricultural suppliers, in 2016, we worked to build upon and strengthen our existing supplier assessment programme, to be better aligned to the UN Guiding Principles and extending it to cover all of our 70,000+ non-agricultural first-tier suppliers worldwide.

This included working with experts from Verisk Maplecroft , a respected independent consultancy, to develop a systematic, integrated supply chain due diligence (SCDD) process. The starting point for SCDD is to assess each supplier’s inherent human rights risk based on the type of supplier and the country where it operates. To do this, we use a series of Verisk Maplecroft’s human rights indices, including the Freedom of Association and Collective Bargaining Index.

We then prioritise those suppliers identified as being exposed to the highest risks and ask them to complete a self-assessment questionnaire. The latter is structured around the key areas of our Supplier Code of Conduct and provides us with information on the policies, procedures and practices the supplier has in place to effectively manage these risks.

Where the results of the self-assessment highlight minor areas for improvement, we work with the supplier to develop corrective actions and agree a timescale for material progress towards compliance.

Where the results reveal more significant issues, an on-site audit will be conducted by our independent auditor, Intertek. This includes criteria covering forced labour, child labour, wages and hours, health and safety, environment and management systems.

Should the audit identify areas of concern, we agree an action plan with the supplier that includes clear timescales for improvements to be made. In the event of serious and/or persistent non-compliance, or where suppliers fail to demonstrate a willingness to improve performance, we reserve the right to terminate the business relationship.

Having successfully tested the process in 2016, we are now conducting a phased roll-out to all our non-agricultural suppliers worldwide.

In addition to audits triggered by the SCDD process, all of our strategic direct materials suppliers, as part of our existing supplier assessment programme, have to undergo the same audit, also conducted by Intertek, in order to be appointed as a new supplier to BAT. They are then re-audited every three to four years.

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

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.

The highest risk countries are then reviewed by our Board Audit Committee, and the performance of our companies in managing human rights in those countries is monitored by our Regional Audit and CSR committees.

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 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 Organisation  (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 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 agro-chemicals).

Our Sustainable Tobacco Programme  (STP) sets out the minimum requirements we expect of our first-tier tobacco leaf suppliers, including specific human rights criteria covering child labour prevention, fair treatment and preventing forced labour, safe working environment, freedom of association, community and traditional rights, and income, working hours and benefits for farm workers.

In addition to the formal reviews as part of STP, 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 STP helps 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.

Our Sustainable Agriculture and Farmer Livelihoods  (SAFL) programme takes a more holistic approach focused at the farm and community-level. It helps us identify the most pressing issues and risks impacting the sustainability of farming communities and then to develop local actions and long-term multi-stakeholder partnerships to address them. This builds upon the many examples of best practice projects from across our tobacco leaf supply chain.

For example, in Brazil we support the Tobacco Industry Interstate Union’s Growing Up Right programme, which uses farmer training to address child labour and has been recognised as an example of best practice by the ILO. Also in Brazil, our Extended School Day programme helps provide after-school activities for children in tobacco-growing regions.

In Mexico, our company has been working for over 15 years with the Government on the Blossom programme, helping to build centres that support the children of indigenous migrant farmworkers through providing education, health checks, better nutrition and somewhere to play.

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. The project 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

We were founding Board members of the ECLT Foundation  in 2000 and remain active members today, along with all the major tobacco companies, leaf suppliers and the International Tobacco Growers’ Association. The ILO and Save the Children Switzerland also serve as advisors to the Board.

ECLT strengthens communities, improves policies, advances research and brings together key stakeholders to develop and implement innovative projects. Since 2000, it has funded 26 long-term projects, reaching over half-a-million families.

Its independent status also means it can call upon governments to take action. For example, over the last year, the ECLT has worked with over 400 key stakeholders to renew national commitments and action plans on child labour.

In December 2014, all ECLT members signed a shared Pledge of Commitment and Minimum Requirements on combatting child labour. The Pledge is consistent with the UN Guiding Principles on Business and Human Rights and signing it is a pre-requisite of membership.

It provides a framework for members to align, reinforce and, where necessary, expand current policies and practices in addressing child labour in tobacco growing. The ECLT publishes results of an annual self-assessment of progress towards full implementation.

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

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 Modern Slavery Index.
The highest risk countries are then reviewed by our Board Audit Committee, and the performance of our companies in managing human rights in those countries is monitored by our Regional Audit and CSR committees.

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 includes our commitment to eliminating exploitation of labour. We do not condone forced, bonded or involuntary labour, or the exploitation or unlawful use of immigrant labour. Workers should never be required to surrender identity papers or pay deposits as a condition of employment. Where national law or employment procedures require use of identity papers, we will use them strictly in accordance with the law.

Our suppliers

Our Supplier Code of Conduct  defines the minimum standards required of all our suppliers, including the respect of human rights, and is incorporated into our contractual arrangements with suppliers. Specifically, the Code requires that all suppliers ensure their operations are free from forced, bonded, involuntary, trafficked or unlawful migrant labour.

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

We consider the greatest risk of forced or compulsory labour to be in our agricultural tobacco leaf supply chain.

Our Sustainable Tobacco Programme , against which all our first-tier tobacco leaf suppliers are assessed, includes a number of criteria relating specifically to forced labour, covering prevention of bond, debt and threat, freedom to leave employment, withholding of payments, retention of identity documents and valuables, and prison and compulsory labour.

We will use the results of supplier self-assessments and on-site reviews to work collaboratively with suppliers to drive corrective action and improvements. In the event of any serious and/or persistent issues, or where suppliers fail to demonstrate a willingness to improve performance, we reserve the right to terminate the business relationship.

Our approach to working directly with our contracted farmers and supporting rural communities can help to address rural poverty, which is recognised as one of the root causes of forced or bonded labour in agriculture.

Our recently launched Sustainable Agriculture and Farmer Livelihoods (SAFL) programme – which builds on the work our agricultural Extension Services and field technicians have undertaken with farmers over many years – aims to enhance farmer livelihoods and, in doing so, minimise the risk that they resort to the use of forced or bonded labour. More information on SAFL can be found in our Sustainability Report 2016 .

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 chain, in our Modern Slavery Act Statement 2016 .

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 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 highest risk countries are then noted by our Board Audit Committee, and the performance of our companies in managing human rights in those countries is monitored by our Regional Audit and CSR committees.

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 in countries of concern 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.

In 2016, there were three incidents where it has been alleged we failed to protect the human rights of people in our supply chain, two of which were brought to our attention through reports by non-governmental organisations (NGOs).

We take such allegations extremely seriously and openly engaged with the NGOs prior to the reports being published, providing detailed responses to the issues raised and, where possible, also providing supporting evidence, including independent studies, where we felt allegations were unfounded.

Bangladesh

In June 2016 Swedwatch, a non-governmental organisation (NGO), published a report entitled ‘Smokescreens in the supply chain: the impacts of the tobacco industry on human rights and the environment in Bangladesh’ .

We conducted our own internal review in Bangladesh and remain of the view that the report as a whole is not representative of the reality on the ground. However, we recognise the serious nature of the allegations and so have also commissioned an independent assessment of the human rights-related impacts of tobacco growing in the country. We will report on the key findings and, if any issues are identified, we will of course address them as soon as is practically possible.

Indonesia

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.

These plans include our work with an ECLT -led, multi-stakeholder project to address child labour in Indonesian tobacco growing, as well as further developing our own internal processes to ensure that all aspects of the supply chain are meeting our expected standards.

United States

Also, in 2016, the International Union of Food (IUF) workers made a complaint to the UK National Contact Point (NCP) of the Organisation for Economic Cooperation and Development (OECD), alleging human rights abuses of migrant farmworkers in our US supply chain.

An initial assessment by the UK NCP  found that the complaint that we had directly caused or contributed to abuses could not be substantiated and, as a result, they will not examine it further. However, the complaint that we may not have taken adequate steps to leverage a business relationship in order to prevent abuses will be examined further by the NCP. We vigorously disagree with this secondary complaint, and are actively and constructively engaging with the NCP to contest it. We will report on the findings once the NCP's investigation has concluded.

HR12 Number of grievances about human rights impacts 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 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 Workplace and Human Rights Policy makes clear our commitment to treating all of 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 Whistleblowing Policy in the 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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