british american tobacco p.l.c. sustainability report 2009 - Supply chain sustainability strategy

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SUSTAINABILITY REPORT 2009

In 2009, we began the development of an integrated supply chain sustainability strategy, building on the many good practices already existing in various areas of our business and endeavouring to encompass all aspects of our global operations. To do this, we invited employees, suppliers, business partners and other relevant stakeholders to a day-long dialogue session on our major supply chain impacts.

Supply chain sustainability strategyThe group of around 65 people was asked to identify issues and aspects of the supply chain where we should concentrate our resources to improve our performance. Once these had been established, the group suggested projects that would deliver environmental, social and economic benefits.

The discussions were wide-ranging and characterised by a willingness to share information – both in terms of strategic approaches and at a more practical level. Over the course of the day, the participants highlighted a number of themes running through our supply chain work:

  • The need for a greater degree of joined-up thinking, both among our own employees in our supply chain and between our employees and our supply chain partners;
  • Their desire for us to consider joint initiatives with other companies in our sector;
  • A need for both the concept and the practice of sustainability to be more firmly embedded into our corporate culture;
  • Our lack of specific expertise on some emerging issues such as water scarcity;
  • The need for longer time horizons in our business planning and decision making if sustainability issues are to be adequately addressed;
  • Concern that we are not currently measuring all the appropriate indicators required to assess supply chain performance against the Group’s objectives; and
  • The importance of testing existing models and approaches through scenario planning focused on environmental change and the issues arising from it.

There was widespread support for continued stakeholder involvement in the development of the strategy. The dialogue was immensely useful to us and has helped to develop our thinking around supply chain sustainability. The large number of suggestions arising from the dialogue makes it impractical to implement them all, but we are committed to implementing some and investigating the feasibility of others. As a result, we will:

  • Develop a strategy to address sustainability in our supply chain in a more joined-up way;
  • Investigate the feasibility of a common approach to carbon accounting within our supply chain;
  • Consider the feasibility of establishing an advisory panel of stakeholders to provide guidance and challenge on supply chain sustainability issues;
  • Carry out a water footprint analysis to better understand the risks and opportunities that changes in water availability could present for us;
  • Further integrate sustainability principles into the selection criteria for our direct materials and machinery suppliers; and
  • Endeavour to incorporate longer time horizons into our leaf supply chain sustainability planning, addressing long term impacts and dependencies identified through risk assessments.

We acknowledge that we do not have all the answers. In addressing the challenges that were highlighted we need to involve our suppliers and business partners, many of whom have already started to develop solutions.

 
Supply chain strategy: what's next?
We will take the output from the dialogue into developing our strategy and will report back in next year’s Sustainability Report. The strategy will build on the many approaches we already have in place. These have continued to deliver benefits in managing social and environmental impacts in our supply chain in 2009.

Comment from
Ernst & Young LLP

During 2009, British American Tobacco revised its approach to stakeholder dialogue to involve stakeholders more directly in the development of sustainability plans and activities. This has meant inviting a wider range of stakeholders to dialogue and greater involvement of senior management. We saw evidence of the new approach being used at the stakeholder dialogue session held on the supply chain sustainability strategy in London.