british american tobacco p.l.c. sustainability report 2011 - Our economic impact

 
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Sustainability Report 2011

As one of the world’s most international businesses, British American Tobacco’s economic contribution stretches from a local to a global level.

We sell brands in more than 180 markets worldwide, with 46 cigarette factories based in 39 countries. Our Group employs more than 56,000 people, with many more people indirectly employed through our supply chain, including suppliers, contractors, distributors and retailers, as well as over 200,000 farmers who grow the tobacco leaf we buy.

Total 2011 revenues
£46,980m
Net sales plus revenues from financial investments and sales of assets


Economic value distributed

£45,753m
  • £7,176m Operating costs
    Payments to suppliers, non-strategic investments, royalties and facilitation payments
  • £2,694m Employee wages and benefits
    Total monetary outflows for employees (current payments, not future commitments)
  • £3,675m Payments to providers of capital
    All financial payments made to the providers of capital
  • £32,194m Payments to governments
    Tax paid including excise taxes
  • £13.7m Community investments
    Voluntary contributions and investment of funds in the broader community (includes donations)

Economic value retained

£1,227m

Calculated as revenues less economic value distributed (investments, equity release, etc.)

 

Economic impact studies

Our Group companies commission economic impact studies on an ad hoc basis to meet local business needs. In 2011, three new studies and one update on a 2010 study were commissioned by our company in Poland.

In 2011, an update was made to the study known as the ‘Green Book’ which was originally commissioned by our company in Poland in 2010 and carried out by the Polish Employers Organisation on the tobacco sector within the national economy of Poland. This update showed that the tobacco industry generated 9.1 per cent of the annual tax revenue of the Polish state budget in 2009, directly secures 60,000 jobs and indirectly supports a further 500,000 for 120,000 retailers and wholesalers. Poland has the biggest number of cigarette factories in the European Union and the tobacco sector accounts for 36 per cent of the Polish surplus in foreign trade of agriculture products. The share of illegal tobacco products amounts to 15 per cent of the entire market.

In 2011, a follow-up publication to the ‘Green Book’ was also commissioned by British American Tobacco Poland and carried out by the Polish Employers Organisation. This study, known as 'The White Book’, contains an analysis of the impact some proposed tobacco control regulations may have on the Polish economy. The report analyses both the European (especially the EU Tobacco Products Directive) and local regulatory trends and provides recommendations on how to shape the law and measures to avoid unintended negative consequences. It also includes recommendations for tackling the illegal tobacco trade.

The Polish Employers Organisation also published another study in 2010 entitled 'Unregistered economy in the sector of excise goods'. This study aims to assess the smuggling and illicit trade of excise goods (fuel, alcohol, tobacco) in Poland. It shows that the Polish state budget lost PLN6 billion (£1.263 billion) in 2010 due to the illegal trade of fuel, tobacco and alcohol. It also states that one of the reasons behind the growth of this illegal trade is the fiscal policy, when there are sudden and excessive hikes in excise tax.

A third study commissioned by our company in Poland in 2011, was carried out by the Republican Foundation on ‘State's tax policy for the tobacco sector and its economic and social consequences’. The study analyses taxes imposed on the tobacco sector and the impact they might have on legal tobacco consumption, workplaces in the sector and the economy. It gives recommendations on future excise changes.

In 2011, we commissioned independent research by Development Delivery International (DDI) into the impacts of tobacco growing, which comprised a literature review of over 300 published sources on the subject and field research into the circumstances of tobacco and non-tobacco farmers in three contrasting tobacco growing countries.

This literature review concluded that the existing research base was both limited and lacked contextual understanding. No clear evidence to support a causal link between tobacco cultivation and poverty or that tobacco growing necessarily leads to adverse labour or employment outcomes could be found. The literature on environmental risks was equally problematic with the possible exception of deforestation, although the evidence suggested that this is site specific and can be mitigated. It also found that there is no clear evidence that tobacco growing exacerbates poverty; and that there is minimal evidence that it contributes to food insecurity.

The second part of the study took the form of a practical investigation in Bangladesh, Brazil and Uganda, looking at whether tobacco cultivation poses a greater hazard to the welfare of poor people in comparison with the cultivation of other available crops. The case study results show that the claims for a direct causal link between tobacco cultivation and poverty do not hold true as a generalisation. It also found that the ability of households to move in and out of tobacco cultivation does not support a picture of entrapment; that tobacco cultivation is seen to be an important and reliable income source that enhances food security and has contributed to increasing farmers’ welfare; and that suitable agronomy support can help mitigate both environmental and health risks, such as green tobacco sickness, associated with tobacco farming.

DDI’s report contributes to the currently limited evidence base in this area and includes detailed on the ground research about the impact of tobacco cultivation on farmers’ livelihoods. The report says that the percentage of the literature reviewed that shows any peer-review or quality assurance process is rather limited and so restricts the evidence base that policy makers can work with.

The report can be downloaded from DDI’s website at www.ddinternational.org.uk Opens in new window.

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