british american tobacco p.l.c. sustainability report 2011 - Tobacco regulation and engagement

 
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Sustainability Report 2011

Increasingly stringent regulation is being proposed and introduced around the world, mainly driven by the World Health Organisation’s Framework Convention on Tobacco Control (FCTC).

Tobacco regulation and engagementNew types of regulation we are seeing today, such as ingredients bans, are not based on strong evidence that they are likely to reduce smoking rates. It is often not clear that the regulation will achieve its stated objectives, while in many cases it is likely to have unintended consequences. These include increasing the black market in tobacco or damaging the livelihoods of tobacco farmers and retailers. It is this type of regulation that we do not support.

 

TRANSPARENT LOBBYING

We believe that views advocated in policy formation should be communicated transparently. So the views and positions we advocate are reflected on www.bat.com Opens in new window.

We support best practice principles on the development of regulation, including the EU Communication on Smart Regulation and the guidelines of the Organisation for Economic Cooperation and Development and the UK Better Regulation Executive.

In 2011, we continued to engage with our stakeholders on regulatory issues at global and local levels. This activity is coordinated centrally as we develop global positions and help our companies improve their abilities to advocate our views. We also worked with independent third parties on developing objective evidence to help inform our positions.

Our engagement position on two key areas in 2011, plain packaging and alternative crops, is discussed below. Our views on ingredients bans, pricing and tax measures and retail display bans are covered on the other regulatory issues page.


Plain packaging

Some governments are considering regulation to restrict the colours, designs and trademarks that can be used on tobacco packaging. In Australia, legislation has been passed requiring all tobacco products to be sold in plain packaging from December 2012.

Australia is likely to be the first country to introduce plain or unbranded packaging legislation but other types of packaging regulation elsewhere have reduced the space on the pack available for brands, for example by increasing the size of health warnings. In 2011, we commissioned a report by Deloitte to examine the intended and unintended impacts of this type of packaging regulation. It revealed that neither increasing the size of health warnings on packs nor introducing graphic images had directly reduced tobacco consumption. The report also recognised that plain packaging could lead to a number of unintended consequences, such as an increase in the black market in tobacco.

This suggests that plain packaging legislation might not reduce smoking rates and that it might increase the illegal tobacco trade instead. The illegal market does not pay any excise tax on the tobacco it sells, so the government loses out on revenue and cigarettes are cheaper to buy. Also, illegal traders do not stick to the age limit for tobacco sales, so cigarettes could become more easily available to the underage.

This suggests that plain packaging legislation might not reduce smoking rates and that it might increase the illegal tobacco trade instead. The illegal market does not pay any excise tax on the tobacco it sells, so the government loses out on revenue and cigarettes are cheaper to buy. Also, illegal traders do not stick to the age limit for tobacco sales, so cigarettes could become more easily available to the underage.

Like all brand owners, we believe we are entitled to use our packs to distinguish our products from those of our competitors. By restricting branding, governments risk breaching intellectual property rights and, in most cases, international trade agreements. British American Tobacco Australia always said it wanted to avoid going to court over plain packaging regulation. But the company has been left with little alternative: as a legal company selling a legal product it has a duty to defend its intellectual property on behalf of its shareholders. So we, and other tobacco companies in Australia, are challenging the constitutional validity of the removal of trade marks and other intellectual property without compensation.

Alternative crops

The FCTC requires governments who are party to it to promote, as appropriate, economically viable alternative crops for tobacco farmers to grow where their livelihoods are seriously affected as a consequence of local tobacco control programmes. We support this. However, the FCTC working group in this area appears to be going beyond this mandate by seeking to phase farmers out of tobacco growing ahead of any decline in demand. We believe that while the demand for tobacco exists, farmers should have the right to choose whether they grow tobacco or not and that governments should not try to drive farmers out of tobacco growing as this can result in social, economic and other impacts for those farmers and their wider communities.

Any assessment of economically sustainable alternative livelihoods to tobacco cultivation should be evidence based, look at all the potential impacts and use a methodology agreed in consultation with impacted growers, key tobacco producing countries, tobacco merchants and manufacturers. We agree that governments should consider the protection of the environment and the health of people engaged in tobacco cultivation in their countries and decide what measures they may wish to introduce. But we believe that independent research should be carried out to assess the environmental and social impact of tobacco growing in comparison with other types of crops. To help contribute to this evidence base, in 2011, we commissioned independent research into the impact of tobacco farming on communities and the environment, which you can read about in the supply chain section.

STAKEHOLDER VIEWPOINT

Our analysis did not identify any direct impact of PSA [plain packaging] regulation on consumption.

‘Tobacco Packaging Regulation: An international assessment of the intended and unintended impacts’ by Deloitte, May 2011

 

EMPLOYMENT TRENDS IN THE TOBACCO SECTOR

In 2011, the International Labour Organisation conducted research into employment trends in the tobacco sector, with a view to inform policy debates on the impacts some regulation may have on employment and the livelihoods of tobacco farmers. We contributed data to this research along with other tobacco companies, governments and social partners in key tobacco growing countries.
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