british american tobacco p.l.c. sustainability report 2011 - Sustainability at British American Tobacco South Africa

 
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Sustainability Report 2011

Fighting the illegal tobacco trade

In response to a significant increase in South Africa’s illegal tobacco trade in recent years, the company launched an awareness campaign in late 2010.

Supported by the Tobacco Institute of Southern Africa (TISA), the first phase of the campaign was rolled out in Gauteng and the Western Cape, the two provinces with the highest levels of illegal tobacco products. The campaign aimed to educate wholesalers, retailers, consumers and the general public about the issue.

It included raising awareness through billboards, newspapers, magazines and radio, as well as media interviews. A telephone hotline was also set up for members of the public to report incidences of illegal trade.

To measure the campaign’s effectiveness, the company commissioned independent research. Over 60 per cent of respondents indicated that they were aware of the campaign after two weeks. The research also demonstrated a positive impact on consumer behaviour in urban areas, with more than 70 per cent of those respondents who were aware of the campaign indicating that they were now less likely to consider purchasing illegal cigarettes. However, the research showed that the campaign did not have the same positive effect on consumer behaviour in rural areas.

Following this success, the decision was made to roll the campaign out to the rest of the country. The materials from the first stage were adapted slightly based on feedback gathered in the research and a campaign website was launched: www.stopillegalcigarettes.co.za Opens in new window.

British American Tobacco South Africa also continues to work closely with authorities, such as the South African Police Services and the South African Revenue Services, to support enforcement activities. For example it alerts them to the sale of any known contraband products. The company is also engaging with Government agencies on the Group’s approach to digital tax verification, which will help secure the legitimate tobacco supply chain and ensure all taxes and duties are paid.

Sustainability at British American Tobacco South AfricaEnvironmental initiatives

With South Africa’s strong economic growth, rapid industrialisation and mass electrification programme, demand for power has started to outstrip supply. As a result, the country’s power system has become increasingly unreliable. Its heavy reliance on fossil fuels is also unsustainable in the long term.

British American Tobacco South Africa’s factory in Heidelberg uses coal and diesel and is one of the Group’s most energy-intensive factories. It was therefore one of the first of our factories to have a third party energy and CO2e assessment in late 2009. The assessment identified short-, medium- and long-term investments to improve energy efficiency.

Examples of short-term investments that have been made are the installation of motion sensors in the factory’s offices so that lighting and air conditioning switch off automatically when they are unoccupied; introducing a policy for all machinery to be switched off when not in use; and installing variable speed drives in air handling units and the boiler house to regulate the energy used by the motors. This latter initiative resulted in a 3 per cent reduction in energy use.

The company is also assessing the feasibility of the proposed longer-term investments. These include installing a photovoltaic panel as a source of energy for the air conditioners and using solar powered heat pumps for the site’s hot water supply.

British American Tobacco South Africa intends to further improve energy efficiency at the Heidelberg factory and implement similar initiatives in other areas of the company. This will include reducing fuel consumption in logistics and reviewing the company’s approach to waste management.

HIV/AIDS

The company has an HIV/AIDS programme for its employees and their families. It provides education, voluntary testing, counselling, treatment and support.

In 2006, the programme was broadened to incorporate wider employee wellbeing concerns. This shift helped position HIV/AIDS as a serious, but manageable, disease and reduced the stigma it carried. It helped employees and their families to understand that by being part of the programme, they would be better able to manage their risk.

Broad-Based Black Economic Empowerment

British American Tobacco South Africa started more than three years ago to apply the Government’s Codes of Good Practice for Broad-Based Black Economic Empowerment (B-BBEE) as part of its commitment to the transformation of the South African economy.

B-BBEE is a strategic issue facing businesses of all sizes in South Africa, including family businesses and small and medium enterprises. The strategy was released by the South African Government in 2003 and 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 Black1 people that manage, own and control the country’s economy, as well as significant decreases in income inequalities".

The company's approach to B-BBEE includes initiatives in the areas of employment equity, skills development, preferential procurement, enterprise development and corporate social investment as required by the Government’s B-BBEE Codes of Good Practice.

The company has developed a charter and scorecard to measure the effectiveness of these initiatives and those of its suppliers and business partners. It also undergoes annual audits by a B-BBEE verification agency to measure its performance against the B-BBEE Codes of Good Practice. In 2011, it achieved its target of reaching Level 6 in the Codes and has a goal to rise to Level 5 by 2014.

Community investment

In 2011, British American Tobacco South Africa decided to focus its corporate social investment (CSI) on the communities where its sites and its contracted farmers are based.

It will support long-term partnerships with communities in Heidelberg, where its factory is located; in and around Khayamandi, where the Stellenbosch head office is; and in the Skuinsdrift tobacco growing community in the North West province.

In these targeted communities, British American Tobacco South Africa will continue to support projects that are aligned with the Group’s CSI priorities of empowerment, sustainable agriculture and environment, civic life and HIV/AIDS. For example, in the Skiunsdrift community, the company is helping to empower small-scale tobacco farmers to make their operations more commercially successful.

1. The term 'Black' is defined in South African legislation to include people of 'African, Indian and Coloured domain'.

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EXTERNAL RECOGNITION

At the 17th Conference of Parties on Climate Change in South Africa in December 2011, British American Tobacco South Africa received recognition from the Global Carbon Disclosure Project for its sustainability performance, as well as a fourth place Gold Certificate for its carbon disclosure.
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