Respecting and recognising fundamental freedoms
We must always conduct our operations in ways that respect the human rights of our employees, the people we work with and the communities in which we operate.
We have had a long-standing commitment to respect fundamental human rights, as affirmed by the Universal Declaration of Human Rights.
With operations and supply chains in many different, diverse and challenging environments around the world, human rights are particularly important for our business and an area we’ve long focused on addressing.
That’s why we welcome the UN Guiding Principles on Business and Human Rights (UNGPs), and legislation such as the UK Modern Slavery Act , as they clearly articulate the expectations placed on businesses today, as well as providing a roadmap for them to follow and be held account to.
We recognise that, like all businesses, we run the risk of being exposed to modern slavery either within our own operations or those of our extended supply chain. This encompasses slavery, servitude, forced and compulsory labour and human trafficking, which affects some of the world’s most vulnerable individuals and groups, often through exploitation by criminal gangs.
We published our first Modern Slavery Act statement, in accordance with the Modern Slavery Act, in March 2016. Our 2017 statement details how we continue to build upon and strengthen our approach within the context of our broader human rights strategy. It sets out the steps taken by BAT plc and subsidiary Group companies, during 2017, to prevent modern slavery and human trafficking in our business and supply chains.
In recent years, we have been strengthening our approach to further align to the UNGPs. This began in 2012, with a review of our existing policies and approach to human rights management, informed by an independently facilitated stakeholder dialogue.
As a result, in 2014, we incorporated our Human Rights Policy into our Standards of Business Conduct (SoBC)– the core policy document that Group employees must confirm compliance with. In early 2016, we complemented this with the introduction of our our Supplier Code of Conduct which defines the minimum standards expected of all our suppliers worldwide, including the respect of human rights.
Having established a strong policy base, we continued to focus in 2017 on enhancing due diligence across our business and supply chains.
Arguably, the area of greatest risk for human rights abuses is in our tobacco leaf agricultural supply chain. We have extensive due diligence in place for all our tobacco leaf operations and third-party suppliers, including the industry-wide Sustainable Tobacco Programme.
We have also long had due diligence processes in place for strategic suppliers of direct product materials, such as major suppliers of cigarette filters, paper and packaging. But to closer align with the UNGPs, and to better manage supply chain risks and opportunities, we extended the scope in 2016 to include all our direct materials suppliers worldwide, as well as strategic suppliers of indirect goods and professional services. All these suppliers are now assessed according to independent human rights indices and those with the highest risk exposure are prioritised for enhanced due diligence.
In 2017, on-site audits were conducted on a total of 65 direct suppliers in 29 countries, representing 20% of our total direct Procurement spend. The audits are conducted by Intertek – a highly respected global auditing company – and include criteria on forced labour, child labour, wages and hours, health and safety, environment and management systems. If any issues are identified, suppliers are required to implement corrective actions. Intertek verifies they have done so either through a desktop review, for moderate issues, or a follow-up audit for more serious issues.
For our indirect suppliers, 102 suppliers in 16 countries were identified as high risk and required to undergo a self-assessment in 2017. This provided us with information on the policies, procedures and practices the supplier has in place to effectively manage human rights risks. Where the assessments highlighted areas for improvement, we worked with the supplier to develop corrective actions.
With the majority of our employees working in Trade Marketing and Distribution, managerial or manufacturing roles, where we have robust oversight and control, human rights risks in our own business operations are substantially avoided. The risks that do exist are also mitigated as a result of robust policies, practices, compliance and governance procedures in place across all our Group companies.
However, we recognise the need to continually work to ensure these are effectively applied and to carefully monitor the situation in countries where local circumstances may mean a greater exposure to human rights risks, such as where regulation or enforcement is weak, or there are high levels of corruption, criminality or unrest.
It is a specific requirement of our key business controls, which apply to all Group companies, for human rights risk assessments and risk mitigation action plans to be in place in high-risk countries and for processes to be in place to demonstrate that human rights are managed effectively in the workplace and supply chain. All BAT operations are required to report compliance against the controls annually.
In 2017, we worked with a specialist sustainability consultancy to further strengthen our approach, by developing a process for more focused monitoring of high-risk operations. This includes using independent human rights indices to assess the Group’s risk exposure in all the countries where we operate, which is reviewed by our Board Audit Committee. Each high-risk country completes an assessment to confirm compliance with Group policies, standards and controls, and provides details of any additional local measures in place to enhance human rights management. Our regional audit and CSR committees then review the compliance status for each country and, if any areas for improvement are identified, request actions to be taken, with defined timescales.
To increase the accessibility of, and strengthen, our long-standing Whistleblowing Policy and procedures, in early 2018, we launched a new third-party managed Speak Up system, including a website available in multiple languages and local language hotlines in each country where we operate.
It provides better global oversight and enables anyone who works for, or with, the Group (including suppliers, suppliers’ employees, farmers, farm labourers and members of the public) to report suspected breaches of our Standards and to raise concerns or grievances, in confidence and without fear of reprisal.
We thoroughly investigate all reported issues and allegations and strong action is taken where required. Information on compliance and reported incidents is gathered at a global level and reported through the year to our regional audit and CSR committees, and quarterly to the Main Board Audit Committee.
In 2017, over 18,000 employees worldwide completed our SoBC e-learning, including details on our Human Rights Policy, to re-emphasise the importance of compliance at BAT and drive a consistent approach globally.
We also developed a new human rights e-learning training package, targeted at our Procurement and Legal and External Affairs functions, including specific details on modern slavery and forced labour. This was completed by over 1,000 managers worldwide.
In addition, our agricultural Extension Services delivered training and communications on human rights, child and forced labour issues, for over 67,000 farmer and rural community beneficiaries in 2017.