British American Tobacco - Materiality

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Materiality

Delivering value through excellence in ESG

A key strength of our approach to sustainability is a robust process to identify and understand our most material ESG priorities. Our comprehensive approach to evolving our Sustainability Agenda ensures we keep pace with emerging priorities and stakeholder expectations.

This materiality process also helps us to assess the level of importance of different topics for our stakeholders and our business – those with the highest level of importance form our Sustainability Agenda and are covered in our 2020 ESG Report (14.1 mb) .

Our approach to materiality assessment

A key strength of our approach to sustainability is a robust process to identify and understand our most material ESG priorities. Our comprehensive approach to evolving our Sustainability Agenda ensures we keep pace with emerging priorities and stakeholder expectations. This materiality process also helps us to assess the level of importance of different topics for our stakeholders and our business – those with the highest level of importance form our Sustainability Agenda and are covered in this Report.

Identifying focus areas 

 Each year, we engage with a wide range of stakeholders to understand the priorities most important to them and complement this with ongoing risk monitoring, research and benchmarking. These external insights are mapped against the focus areas identified as most important to our business, based on strategic plans, risk registers, governance meetings and committees, and Group policies and standards.  

Prioritising topics 

We group the topics identified under common themes and use a defined scoring methodology to assess their level of importance to our stakeholders and the BAT Group. In 2020, we also conducted a detailed review of leading practices in articulating the link between ESG risks and opportunities and corporate purpose; how leading companies are balancing their ESG ambitions and best practice in setting smart targets. We also sharpened how we position our contribution to the SDGs, in line with our prioritisation of ESG topics. 

Final results

The most material topics identified through this process in 2020 are outlined in the adjacent graphic. Given the serious public health impacts of smoking, harm reduction is our principal focus area. Climate change, the environmental impacts of our operations and the importance of sustainable agriculture to our tobacco supply chain mean these are priorities for us. Growing concerns regarding plastics and post-consumption waste mean that the importance of circular economy principles has also been elevated to a priority area. Following the assessment in 2020, we have updated our Sustainability Agenda and made three key changes:

  • As sustainable agriculture practices extend to mitigating the impact of climate change, reducing water use and protecting biodiversity, we no longer report against sustainable agriculture as a stand-alone issue. Instead, each of our environmental issues has a clear signpost to how we are promoting sustainable agriculture practices. 
  • We have long had a strong approach to tackling loss of biodiversity, and with our updated reporting structure for sustainable agriculture, we now report on biodiversity and afforestation as a standalone issue. 
  • Given circularity is a key principle across how we manage environmental impact, we now report on waste as a standalone issue – from innovating on how we design and manufacture our products to minimise waste to eliminating waste sent to landfill across our operations.

Our ESG focus areas

HIGH Importance to stakeholders and the Group HIGHEST
PRINCIPAL FOCUS AREA
  • Harm reduction
PRIORITY FOCUS AREAS
  • Climate change
  • Water
  • Biodiversity and Afforestation
  • Waste
  • Human Rights
  • Farmer Livelihoods
  • Health and Safety
  • People and Culture
  • Business Ethics
  • Responsible Marketing
  • Regulation and Policy Engagement
OTHER FOCUS AREAS
  • Anti-illicit Trade
  • Board Diversity
  • Executive Remuneration
  • Tax Transparency
  • Stakeholder engagement
  • Data Privacy and Cybersecurity
Key
  • Harm reduction
  • Environmental
  • Social
  • Governance
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