British American Tobacco - A sustainable approach

Over the past 20 years, we’ve made significant progress on our sustainability journey, as reflected by our presence in the Dow Jones Sustainability Indices (DJSI) for 21 consecutive years and the other notable independent recognition we have received.

Yet our approach needs to constantly develop, much as the world around us is evolving – from increasing expectations of the role of business in contributing to the UN Sustainable Development Goals and addressing climate change; to evolving consumer preferences and the emergence of new category products, such as vapour products that offer reduced risks*† for the estimated 19% of the world’s population who continue to smoke cigarettes.

Future ambition

Just as we are committed to making a step change in our New Categories performance, we are also committed to making a step change in our sustainability ambition. Recently, we announced a number of stretching targets that we are confident will accelerate our purpose to deliver A Better Tomorrow™ for all our stakeholders, including:

• Increasing our consumers of non-combustible products to 50 million by 2030
• Achieving Net Zero by across our value chain by 2050 at the latest and carbon neutrality for our own business activities by 2030
• Accelerating our existing environmental targets to 2025
• Making all  plastic packaging reusable, recyclable or compostable by 2025
• 50% renewable energy use by 2030

Our sustainability agenda

We have evolved our Group strategy with the purpose of delivering A Better Tomorrow™ for all our stakeholders. At its heart, our evolved strategy is about anticipating and satisfying the ever-evolving consumer: providing pleasure, reducing risk and offering increasing choice.

Central to this evolved strategy is our updated sustainability agenda which has been refreshed to reflect the changing external environment. Specifically, we are clear that reducing the health impact of our business is our principal focus area, as well as placing a greater emphasis on the importance of addressing climate change and excellence in environmental management. At the same time, we remain committed to delivering a positive social impact and ensuring robust corporate governance across the Group.

The diagram below sets out our sustainability agenda in full and you will be able to read more about the agenda and our progress against it in our 2022 Combined Annual and ESG Report.

A key strength of our approach to sustainability is a robust process to identify and understand the most material environmental, social and governance (ESG) topics that drive our long-term business sustainability and value creation. Each year we engage with a wide range of stakeholders to understand what matters to them most and complement this with ongoing risk monitoring, research and benchmarking.

This comprehensive approach to evolving our Sustainability Agenda ensures we keep pace with emerging topics and stakeholder expectations.

Along with our principal focus on reducing the health impact of our business, we retain a strong focus on other ESG priorities. Together, this approach helps to create shared value for our consumers, society, our employees and our shareholders. Ultimately, it’s about building towards ‘A Better Tomorrow™’ not just for BAT, but for all our stakeholders.

Progress in 2022

Harm Reduction: Multi-category strategy driving further progress

• Non-Combustible Product consumer acquisition of 4.2 million to 22.5 million; with Non-Combustibles now 14.8% of revenue
• New Categories revenue up 40.9% (or 37.0% at constant rates of exchange) with growth in all three categories
• Over 150 peer-reviewed papers published to date on our cutting-edge research into New Category products

Environment: Reduction in direct carbon emissions with renewable energy target achieved early

• Scope 1 & 2 GHG emissions reduced by 15.1% in 2022; achieved 2025 target of 30% renewable energy use three years early
• 36% of operations sites now Alliance for Water Stewardship (AWS) certified, up 21 ppts; supporting our target of 100% by 2025
• Achieved CDP "A" for Climate Change; "A-" for Water and Forests

Social: Continuing our long-standing commitment to Human Rights

• 0.38% of farms with incidents of child labour reported, down 46%; with 100% reported as resolved by the end of the growing season
• Over 345,000 farmers and community members reported to have engaged in human rights training and awareness programmes
• Increase in female representation in management roles to 41%, supporting our target of 45% in 2025

Governance: Further strengthening of our responsible marketing governance in 2022

• First Chief Sustainability Officer appointed in 2022 to further drive integration of Sustainability in the business
• Continued iCommit training on responsible marketing in digital channels
• 100% of our employees completed training and compliance sign-off on our SoBC