Our response to the Panel's statement

The Panel’s insights, challenge and constructive feedback are invaluable in helping to ensure our reporting meets the needs of our stakeholders. In their third year of independently reviewing our Report, the Panel continued to highlight both strengths in our reporting and where improvements could be made. Our initial drafting of the Report continued to benefit greatly from the Panel’s input, and we’re committed to openly responding to their feedback.

Materiality and performance

We’re pleased the Panel noted our approach to reporting as providing a clear and compelling insight into the sustainability challenges and opportunities we face. We appreciate their feedback for us to be explicit and transparent about how our sustainability agenda supports our commitment to transform tobacco and we believe we have already taken significant steps in articulating this.

This includes detail on how we are transforming our business and industry through our commitment to providing a diverse range of potentially reduced-risk products (PRRPs). How we articulate this is supported by our cuttingedge technology, robust science, product safety and quality standards, as well as our approach to openly sharing our science. We’re also clear that our relationships with farmers continue to be central to the success of our ambitions, and that our transformation will continue to be supported by the highest standards of corporate behaviour.

We have applied signposts to our 2018 Annual Report and Accounts, to encourage interested audiences to find out more about the key financial metrics related to our PRRPs, and will continue to identify opportunities to better report on the scale of our harm reduction ambitions.

Harm reduction

We appreciate the Panel’s continued recognition of our progress in this area, and note their recommendation for more information on consumer access to PRRPs, effective regulation, and transparent and science-driven engagement, as these are crucial for PRRPs to maximise their contribution to tobacco harm reduction.

Despite some notable legislative developments in enabling the sale of PRRPs, such as in Canada and New Zealand, there are still many parts of the world with real regulatory and marketplace obstacles to launching PRRPs. A supportive regulatory environment is crucial to maximise the potential of these products to contribute to harm reduction and, for a number of years, we have openly shared our view on what we believe to be the key principles for an effective regulatory framework for PRRPs (see p13). We continue to launch in as many markets as practically as we can, with our PRRPs now available in 29 markets, including Colombia and Guatemala.

We are committed to transparent engagement – including with governments, public health authorities and the scientific community – and openly share our science, provide technical data and bring our expertise to developing regulation and policy. In this Report, we outline examples of where we have been able to contribute our expertise and insights, and we will continue to report on these.

Sustainable agriculture and farmer livelihoods

As part of our Thrive programme, we have assessed 280,000 farmers against the set of indicators outlined in this Report, accounting for around 90% of our total tobacco leaf purchases. These assessments, as well as the STP – which has now seen all of our supply base independently reviewed – are already enabling us to drive change at farm level.

However, whilst the introduction of the Farmer Sustainability Management tool has greatly enhanced the quality and efficiency of data collection, with the diverse geographic and socioeconomic profiles of the markets we source leaf from, communicating consolidated performance data brings another set of challenges. Still, as we continue improving our monitoring, we note the Panel’s recommendation for more specific indicators and targets, and hope that the learnings from the third-party review we commissioned in 2018 will help us to better communicate the outcomes of our programmes.

We acknowledge that we have not yet provided further detail on what we understand to be the long-term impacts of climate change, as suggested by the Panel in their 2017 statement. We have previously conducted studies into the weather-related impacts of one of our strategic tobacco-growing markets but we also understand that our tobacco supply chain is not the only area that will be impacted by climate change. We continue to explore how we can better assess and report on climate change risk and opportunity across all of our business.

Corporate behaviour

We’re very pleased that the Panel found our reporting in this area to be strong and that it addresses their feedback. Responsible behaviour and ethical values have long been at the centre of our Group policies and work culture, and as our Delivery with Integrity programme evolves, we are confident that this global, consistent approach will strengthen our culture further.

In 2019, continuing to empower our employees to deliver with integrity and to promote our Speak Up channels will be a priority. We hope to see an increase in the number of cases reported over the coming years and we’re committed to including further information from our Speak Up channels in future reports.

Other observations

We share the Panel’s deep regret on the fatalities that occurred in 2018. While acknowledging the challenges in the many diverse geographies we operate in, we continue to remain absolutely committed to working collaboratively and tirelessly across our markets to do all we can to prevent future incidents.

We are proud of our achievements this year in reducing our environmental impact, and to have recorded a notable improvement in our performance, despite the significant changes to the scale and magnitude of our operations. We are also grateful to the Panel on the feedback they’ve provided on reporting more prominently around our science-based targets commitment and we look forward to reporting on this in more detail next year.

Concluding remarks

While we welcome the Panel’s observations on how the Report may benefit from further disclosure on some of our efforts, such as the work undertaken by our Extension Services, given the diverse audiences of our sustainability reports, it is essential that we provide the right balance and level of information in this Report to meet these diverse needs. Those with a specific interest in aspects of our sustainability agenda can find much more detailed information across our dedicated channels, such as our focus reports and bat-science.com , and we have better signposted these at the Panel’s recommendation.

We would like to thank the Panel for their time and thorough review of our Report and look forward to continuing this open and constructive dialogue.

British American Tobacco
March 2019