british american tobacco p.l.c. sustainability report 2010 - Chief Executive’s overview

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Sustainability Report 2010
For me it is clear: If we do not operate sustainably and create shared value, we will not be a successful business in the future.
Nicandro Durante, Chief Executive
Nicandro Durante, Chief Executive

There is an increased emphasis on growth in the Group strategy. How does sustainability sit within this?

Our strategy is designed to deliver our vision of industry leadership and, as a result, build shareholder value. It is based on growth, funded by productivity and delivered by a winning organisation that acts responsibly at all times. Our balanced strategy adds value to all aspects of our business. We think this sets us apart from our competitors and ensures our long-term business sustainability. My predecessor, Paul Adams, was clear when he said that our sustainability goals are intrinsic to our strategy and are a cornerstone to building sustainable value. I agree wholeheartedly. The sustainability agenda is and will remain key to our long-term success.

Does a strategy based on growth contradict the aims of sustainability?

No, they are complementary, not competing, elements in our strategy. Sustainability for us is all about shared value – creating economic value in a way that also creates value for our stakeholders. One example is in the area of tobacco harm reduction where we are developing new products that may have the potential to reduce harm and will hopefully create growth in our business when launched. Another example is the way in which we provide broad-based agronomy advice to farmers, which includes support to grow other crops as well as tobacco. This comprehensive approach to sustainable agriculture helps farmers gain better yields and a higher income as well as securing our supply of high quality leaf.

This Report talks a lot about sustainable value. What do you mean by that?

Sustainable value is an evolution of the old ‘win–win’ idea. For us, this means seeking opportunities to increase our competitiveness through addressing our sustainability impacts and by better meeting society’s needs and expectations. The result is that we create wealth for our shareholders but that we also create value for our other stakeholders – this can be through developing lower-risk products, by creating a great place to work or by minimising our environmental impacts. Sustainable value is not a trade off – it benefits all. It is that simple.

Do you have a personal view of sustainability?

For me it is clear: if we do not operate sustainably and create shared value we will not be a successful business in the future. And a successful business in the future is something I very much want to see.

Are there things you want to see more of and what do you think needs to change?

We cannot overcome our sustainability challenges alone. I want us to engage more with our stakeholders to develop solutions together. I want to use our insights from dialogue to make the right decisions, not only for our business but also for our stakeholders. It’s all about seizing the opportunities to create that shared value. Sustainability is a cornerstone of our business strategy, so there’s not very much to change. If pushed, I’d say more alignment of sustainability activities across the Group to make our approach more efficient. Also, more sharing of best practice to ensure we’re doing the right things well the first time. After all, the way we conduct ourselves today will determine how sustainable we are in the future.

What do you see as British American Tobacco’s greatest sustainability challenge?

For me there are two. How do we develop lower-risk products that will appeal to tobacco consumers? This is tough, and we’re still working out the science. The other is about how we compete successfully when there are large amounts of illicit product in the marketplace. Indeed in some markets, it is our biggest competitor. The solution is straightforward; however, getting there is quite difficult. Governments and the industry need to work together to manage the market in order to not make it attractive to illicit trade. A shared agenda should include sensible excise programmes, robust customs enforcement, retailer and consumer education and balanced regulation. So the illicit market does present us with a challenge, albeit one I’m confident we can overcome.

And the greatest opportunity?

Opportunities are everywhere. Aside from the obvious opportunity that lower-risk products would bring, talent is something I feel passionately about. We need to have the right people to deliver our vision. I know sustainability is something employees care deeply about. Meeting our sustainability goals will make us a more attractive organisation to work for. By attracting the best people we will have more success in achieving our sustainability goals.

There is much talk of integrating sustainability and financial reports. Is this something you intend to do?

We have looked at this and we talked to our stakeholders. They reaffirmed that while it is a good thing to improve the quality of sustainability information within financial reports, there are different audiences who want different types of communication. We were pleased to hear that they thought we have made good progress in integrating sustainability information in our Annual Report. We intend to continue producing stand-alone Sustainability Reports in addition to our Annual Report and we will complement these publications with tailored communications.

This is the 10th year of your sustainability journey. What do you think the next 10 years will bring?

Hopefully, more of the same. We’re getting better at aligning our sustainability programmes with our core business and seizing the opportunities they bring. I hope the next 10 years will see us doing both even better.

Nicandro Durante, Chief Executive
March 2011