bat sustainability report 2007 - Chief Executive's overview

Paul Adams

"I find that much of the real commitment among our people comes from knowing they work for a business that sets high standards for itself and aims to succeed without compromising them."

Paul Adams, Chief Executive

Question:Your reporting this year is different from your previous Social Reports. What’s changed and why?

Answer:This is our first Sustainability Report. We were the  first tobacco business to undertake social reporting, in 2001-02, and one of the few multinational businesses to roll it out internationally, with reporting by local companies as well as at the global ‘headquarters’ level. By end 2006, our companies were producing reports covering around 40 countries. They all follow key AA1000 Standard principles, including completeness, and collectively report on over 70 topics raised by stakeholders in dialogue.

This means our reporting has often been very comprehensive, detailed and inclusive, in order to be responsive to stakeholders’ interests – all important characteristics. But the emphasis in best practice standards has shifted towards sustainability reporting, which means focusing on the most material issues for stakeholders and our business, with more performance measures to demonstrate progress.

Of course, transparency is still very important and businesses are expected to report very openly. So while our Sustainability Reports will have less detail on some topics – with more detail for example on our website – we aim to maintain transparency and enable stakeholders to assess our performance.

Question:How is the content of this Report different?

Answer:There is more focus on our material issues and  we aim to look forward more, as well as reporting on the past year. There are more meaningful targets and performance measures to help stakeholders judge how we are doing – although we still have more to do in this area. We also include discussion about what sustainability means to the Group.

Question:Will your local companies now also move to  Sustainability Reports?

Answer:Some will move to sustainability reporting – mainly  larger companies – and we will roll out training and support for the transition. Others will produce stakeholder reports, still engaging on key issues that are prominent locally and responding to stakeholders in a transparent way.

Question:What does sustainability mean for your business  and what are the key sustainability issues?

Answer:For us, sustainability means addressing key  business-related social, environmental and economic impacts in a way that aims to bring value to all our stakeholders, including shareholders. Together with stakeholders in dialogue, we have identified our key sustainability issues as: developing reduced risk products; the way we operate in the marketplace; responsible management of our supply chain; addressing our environmental impacts; and developing our employees within a great workplace culture. This is our sustainability agenda.

Question:How did you decide what to include?

Answer:Essentially, we balanced stakeholders’ expectations  with what we see as important to business success. If that sounds simple, it wasn’t! To determine the sustainability issues for our business, we developed a materiality test. As we explain in the Report, this involved evaluating all the topics raised by stakeholders over several years, internal consultation and further dialogue with stakeholders.

Question:Can a tobacco company be sustainable?

Answer:Yes, we believe it can, and we believe our business  is sustainable. This Report offers a lot of information to support that belief. I hope stakeholders will read it and judge for themselves.

Question:Is this all ‘PR spin’?

Answer:Not from where I sit. We have worked hard to  identify meaningful issues and actions for our business. For each topic in the Report, there is a strong case for saying we must get it right to continue our success long term. Of course, there are some stakeholders – and perhaps always will be – who accuse us and other businesses of ‘spin’ whatever we do.

These are often people or groups who refuse to enter dialogue or to discuss their concerns with us. But stakeholders who do talk with us often seem surprised by our candour and willingness to listen. Some are people and groups who would not have engaged with us a few years ago. So there is evidence that, over time, our commitment to corporate responsibility is being seen as far more than just ‘PR’ or ‘window-dressing’. To those who doubt us, our door remains open.

Question:Do you see a business case or a moral case for corporate responsibility? 

Answer:I see both. Businesses have to be honest about what they are and what they can do. Our goal is to create sustainable shareholder value. Businesses can’t assume the role of governments, charities, political parties, action groups or the many other bodies that make up society. But if a business wants to succeed long term, it makes absolute sense for it to operate responsibly. In fact, that makes such obvious sense that it hardly needs stating. But the challenge, more today than in the past, is in understanding what society expects of a business in terms of responsibility.

In a rapidly changing, globalising world, many businesses are having to question their own long held notions of responsibility and are finding that consumers, regulators, shareholders, employees and special interest groups expect something different from them in terms of accountability and contributions to society. If you put this together with the special challenges for a business like ours – whose products can cause serious diseases, but are also legal and pleasurable for their consumers – you have a potent mix.

So it is particularly important for us to listen, understand, and find sound ways to balance stakeholders’ expectations with our proper commercial goals. But I welcome the new challenges because they stretch us; they show us new possibilities and new ways to think. If we engage intelligently with changing expectations, they are a tremendous stimulus for continuous improvement and for getting better at everything we do. That’s the business case and, to my mind, it’s irrefutable.

I think the moral case is also obvious. Businesses are run by people. People overwhelmingly have their own good sense about the right thing to do. Many of our own people would agree that large corporations benefiting from economic success should be expected to think about the social and environmental aspects of what they do. And how many people really want to work for a company that only cares about profits? That’s certainly not a typical attitude I encounter in our Group.

Of course we want to make and grow profits. That’s proper, ambitious – and what some of our most important stakeholders want us to do. But people also want to work for a business that gets the balance right, that puts thought and care into how it makes its profits. I find that much of the real commitment among our people comes from knowing they work for a business that sets high standards for itself and aims to succeed without compromising them.

If that’s the moral case for corporate responsibility, I accept it, and I believe that thousands of our employees do too.

Paul Adams, Chief Executive

June 2008

© 2008 British American Tobacco