british american tobacco p.l.c. sustainability report 2010 - Broad-Based Black Economic Empowerment

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Sustainability Report 2010
South Africa

In 2003, the South African Government released a strategy for Broad-Based Black Economic Empowerment (B-BBEE). This is defined as “an integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the number of black people that manage, own and control the country’s economy, as well as significant decreases in income inequalities.”

The B-BBEE Codes of Good Practice are binding for all public departments, but they are not binding for companies. However, British American Tobacco South Africa aims to apply the Codes within its business as part of its commitment to the transformation of the South African economy.

During 2010, the company’s leadership team communicated their continued commitment to improve the B-BBEE status of the South African business. Having exceeded its Level 8 target in 2009, by achieving the higher Level 7 as well as being classified as a ‘Value-Adding Supplier’, British American Tobacco South Africa aimed to rise to Level 6 in 2011. Its 2010 audit by an external B-BBEE verification agency confirmed that the company had reached this target already and once again been classified as a ‘Value-Adding Supplier’.

The scores for each section of the B-BBEE Codes are shown in the table below.

PillarPotential points2009 score based on 2008 financial year2010 score based on 2009 financial yearDifference
Management control105.56.050.55
Employment equity153.713.80.09
Skills development151212.010.01
Preferential procurement2015.3114.28-1.03
Enterprise development1505.465.46
Socio-economic development54.053.54-0.51
Total10040.57 – Level 745.14 – Level 64.57

As a wholly-owned subsidiary of the British American Tobacco Group, British American Tobacco South Africa cannot score in the ownership section. The company has identified employment equity (equitable representation at management level for the business) as an area for improvement and opportunities are currently being explored.

In comparison with other companies operating in South Africa, British American Tobacco South Africa is believed to be a leader in skills development. A ‘preferential procurement’ system is under development to further improve performance in this area. Enterprise development and socio-economic development have also been recognised as areas for further improvement and more funding has been allocated to support the relevant strategies in 2011.

A survey of British American Tobacco South Africa’s employees, conducted by Deloitte in 2010, found that while there was a need for more communication and education on B-BBEE, skills development and socio-economic development have been clearly embedded into the business. Action plans will be developed in 2011 to address the issues identified in the survey.

British American Tobacco South Africa now has a goal to rise to Level 5 by 2014.