"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."Paul Adams
Who is this Report for and why are you producing it?
It’s aimed at shareholders, non-governmental organisations, opinion leaders and others who are interested in our strategic approach to sustainability. We also look to engage a wider audience about the topics in this Report, so we communicate through other channels as well. There are real benefits to us in monitoring, measuring and reporting on our sustainability performance and having the information independently verified. Putting ourselves in the spotlight and engaging with stakeholders in dialogue helps us to keep the right focus on the things that matter to us and to stakeholders.
Why do you have separate financial and sustainability reporting?
We don’t think one ‘super report’ would meet different stakeholder interests particularly well. The Annual Report and Accounts is primarily for shareholders. It covers social and environmental performance, although in less detail than the Sustainability Report, which offers more for stakeholders mainly interested in these topics. Some stakeholders may like to read both and they are both available to everyone on our website www.bat.com
What does sustainability mean for your business and your strategy?
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. The Group strategy is based on Growth, Productivity and Responsibility, delivered by a Winning Organisation. As you’ll see in this Report, our sustainability agenda is of course linked to responsibility, but its five key goals cover all areas of our strategy, so it is fundamentally about how we do business and aim to succeed.
Has your approach to sustainability altered in the current economic climate?
We don’t see sustainability as a ‘nice to have’ that can be dropped if the economic environment gets tough. Our sustainability agenda is integrated into our business strategy and we believe our business strategy works in good times and bad, so it won’t change if the going gets tough, and neither will our sustainability agenda. Our sustainability agenda focuses on our most material issues – tobacco harm reduction, the way we operate in our marketplace and supply chain, our environmental impacts and ensuring we have the right people to deliver our vision. These are important in both tough times and boom times – indeed in tough times, they are arguably all the more important.
What have been the successes and the challenges of the past year?
I’m pleased that our sustainability agenda is being well embedded throughout the business. I’m immensely encouraged that for the seventh year running, we are the only tobacco company in the Dow Jones Sustainability World Index. The positive feedback for our first Sustainability Report, which built on our previous Social Reports, shows that it better incorporated stakeholder concerns.
Of course, there has been some negative feedback too, and in this Report we have worked to respond to both. I believe our stakeholder engagement is starting to go beyond listening and understanding, and into trying to develop solutions. Some stakeholders get frustrated that we can’t always make progress quickly. We’re certainly willing to make changes, but new processes and improvements in an organisation of our size can take time to show results.
Are there any ‘big goals’ in this Report?
Yes – such as our aim to halve our CO2 by 2030 and cut it by 80 per cent by 2050. But goals like this are not possible in everything. Some stakeholders ask why we don’t have a similar goal in harm reduction. This is a highly complex area and, given current regulation and scientific knowledge, we think it’s too early. We are certainly exploring opportunities for potentially reduced-risk products, but there is some way to go in both consumer and regulatory acceptance. While harm reduction targets may sound attractive, we feel they would be an empty gesture until many of the challenging issues are resolved.
Do you concentrate on developing markets that have less tobacco regulation?
We have operated in very different cultures around the world for over a century, so it’s certainly not new for us to be in developing economies. It’s also important to point out that when we talk about growth, we don’t mean ‘selling smoking’ to boost the number of people in the world who smoke or the amount they smoke. We mean growing our share – and the value of our share – of adult tobacco consumers. Just because a country is an emerging economy doesn’t mean it will have fewer marketing restrictions.
For example, Mexico and Mauritius have even stricter marketing regulations than the UK and one of the world’s most highly developed countries, the USA, has less demanding restrictions than the UK. All countries have laws and we obey them – and the rules we set for ourselves often go beyond the law. For example, our policy is not to market to anyone under 18, even where the minimum legal age for tobacco sales is lower or there is no legal age at all. Last year, over 40 per cent of our volume was sold in countries where our International Marketing Standards are generally stricter than local law.
Do you engage with stakeholders who are most critical of the tobacco industry?
It’s regrettable that we are unable to engage with some of our critics. We remain committed to constructive engagement with any stakeholder on tobacco-related sustainability issues. I believe we are making some progress. To those we have yet to successfully engage, I can only say again that while there may be areas of contention, we believe that candid and open dialogue can find common ground.