British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Our regions and markets
This sections provides details of sustainability performance in our four regions and nine of our largest markets. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Region and market data comparator
International Youth smoking Preventing underage Energy use Marketing Standards prevention access
Carbon dioxide Water use Waste to landfi ll Recycling
Succession planning Employee opinion Gender diversity Lost Workday Case survey Incident Rate
The following pages enable you to compare data between the regions and markets for each of our key performance measures. These measures cover the marketplace, environment and people and culture areas of our sustainability agenda. We do not currently have a comparable quantitative measure for our efforts in tobacco harm reduction or disaggregated data for our supply chain measures. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
International Marketing Standards
We apply a consistent, responsible approach to marketing across the Group by requiring our companies to follow our International Marketing Standards (IMS) wherever local law is less stringent. Our IMS state that our companies’ marketing should be targeted at adult tobacco consumers and not undermine their understanding of the health risks. We monitor our companies adherence to our IMS and report any incidences of non-adherence. For more information, please see the marketplace section of this Report.
Regions Number of reported instances of partial or non-adherence
2009 2010 2011 Americas 117 Asia-Pacific 023 Eastern Europe. Middle East and Africa 12 1 6 Western Europe 025
Markets Number of reported instances of partial or non-adherence
2009 2010 2011 Australia 000 Brazil 001 Canada 001 Germany 010 Malaysia 000 Nigeria 201 Russia 002 South Africa 201 South Korea 001 British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Youth smoking prevention
Our approach to youth smoking prevention (YSP) includes our companies engaging with the government for the adoption of minimum age laws of 18 for tobacco sales where none exist; or, where they do, running YSP programmes to raise retailers awareness of them. For more information, please see the marketplace section of this Report.
Regions Percentage of reporting markets where our business states they are running or supporting youth smoking prevention programmes
100% 67% 2011 54% 79%
89% 72% 2010 54% 79%
90% 38% 2009 15% 36%
0 10 20 30 40 50 60 70 80 90 100 Percentage (%)
Americas Asia-Pacific Eastern Europe, Middle East and Africa* Western Europe**
Markets Markets where our business reports running or supporting youth smoking prevention programme
2009 2010 2011 Australia Yes No No Brazil Yes Yes Yes Canada Yes Yes Yes Germany Yes Yes Yes Malaysia No Yes Yes Nigeria Yes Yes Yes Russia Yes Yes Yes
South Africa Yes Yes Yes * The 2009 data for Eastern South Korea Yes Yes Yes Europe, Middle East and Africa only covers the markets in the Africa and Middle East region under the Group’s previous regional structure. They do not include the additional Eastern Europe markets that previously sat in a separate region.
** The 2009 data for Western Europe includes fi ve additional markets under the Group’s previous regional structure. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Preventing underage access
In addition to youth smoking prevention activities, some of our companies also engage with the government to improve measures to help prevent underage access to tobacco. For example, introducing stricter enforcement and penalties for retailers caught selling tobacco products to the underage. For more information, please see the marketplace section of this Report.
Regions Percentage of reporting markets where our business states they are engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco
56% 44% 2011 38% 63%
61% 44% 2010 35% 58%
57% 57% 2009 25% 60%
0 5 10 15 20 25 30 35 40 45 50 55 60 65 Percentage (%)
Americas Asia-Pacific Eastern Europe, Middle East and Africa* Western Europe**
Markets Markets where our business reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco
2009 2010 2011 Australia No No No Brazil Yes Yes Yes Canada Yes Yes Yes Germany No Yes Yes Malaysia No No No Nigeria No No Yes Russia Yes Yes Yes South Africa No No No * The 2009 data for Eastern Europe, Middle East and Africa South Korea Yes No No only covers the markets in the Africa and Middle East region under the Group’s previous regional structure. They do not include the additional Eastern Europe markets that previously sat in a separate region.
** The 2009 data for Western Europe includes fi ve additional markets under the Group’s previous regional structure.
British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Energy use
When it comes to reducing our environmental impacts within our direct operations, our priority is to minimise energy consumption. In 2011, we exceeded our global 2012 target to reduce our energy use by 6.7 per cent to 11.03 gigajoules per million cigarettes equivalent produced, from our 2007 baseline of 11.82 gigajoules per million cigarettes equivalent produced. For Group data and more information, please see the environment section of this Report. The data is from our online Group-wide EHS reporting system. Previous figures reported in local publications may vary due to differing local reporting standards.
Regions Gigajoules per million cigarettes equivalent produced
10.18 8.62 2011 11.54 11.45
11.04 8.95 2010 12.24 11.89
10.55 8.84 2009 12.63 12.21
012345678910111213
Americas Asia-Pacific Eastern Europe, Middle East and Africa Western Europe
Markets Gigajoules per million cigarettes equivalent produced
25 21.77 20.93 20.53 20.35
20 18.99 18.77 18.83 18.04 17.90 16.85 16.85 16.12 15.82 15.50 15.34 15.36 15 13.01 12.51 10.36 10.16 9.94 10 9.78 8.79 8.50 8.03 7.84 7.81
5
0 Australia Brazil Canada* Germany Malaysia Nigeria Russia South South Africa Korea
2011 2010 2009
*Our company in Canada does not have a manufacturing facility, therefore the data uses the normalised output fi gure ‘cigarettes equivalent sold’ instead of ‘cigarette equivalent produced’. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Carbon dioxide
Group carbon dioxide equivalent (CO2e) equivalent includes the WBCSD Scopes 1, 2 and 3. These cover CO2e from all energy sources controlled by the Group, from purchased energy, from business travel and freight and from incineration and landfill. Our global targets are to reduce our CO2e by 50 per cent by 2030 and 80 per cent by 2050 from our year 2000 baseline of 1.38 tonnes per million cigarettes equivalent produced. For Group data and more information, please see the environment section of this Report. The data is from our online Group-wide EHS reporting system. Previous figures reported in local publications may vary due to differing local reporting standards.
Regions
Tonnes CO2e per million cigarettes equivalent produced
0.55 0.86 2011 1.04 0.90
0.60 0.88 2010 1.10 0.87
0.58 0.87 2009 1.13 0.91
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2
Americas Asia-Pacific Eastern Europe, Middle East and Africa Western Europe
Markets
Tonnes CO2e per million cigarettes equivalent produced
3 2.7 2.69
2.5 2.45 2.32 2.27 2.16 2.15 2.12 2.00 2 1.65 1.63 1.43
1.5 1.41 1.38 1.08 1.08 1.07 1.03 1 0.77 0.74 0.74 0.67 0.58 0.53 0.5 0.26 0.26 0.25
0 Australia Brazil Canada* Germany Malaysia Nigeria Russia South South Africa Korea
2011 2010 2009 *Our company in Canada does not have a manufacturing facility, therefore the data uses the normalised output fi gure ‘cigarettes equivalent sold’ instead of ‘cigarette equivalent produced’. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Water use
Water is an important resource for us, especially in manufacturing and tobacco growing. For many years, we have been measuring water use in our operations and working to reduce it. In 2011, we exceeded our global 2012 target to reduce our water use by 13.4 per cent to 4.2 cubic metres per million cigarettes equivalent produced, from our 2007 baseline of 4.85 cubic metres per million cigarettes equivalent produced. For Group data and more information, please see the environment section of this Report. The data is from our online Group-wide EHS reporting system. Previous figures reported in local publications may vary due to differing local reporting standards.
Regions Cubic metres per million cigarettes equivalent produced
3.79 3.94 2011 4.29 3.36
3.99 4.32 2010 4.48 3.70
4.12 4.22 2009 5.36 3.74
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5
Americas Asia-Pacific Eastern Europe, Middle East and Africa Western Europe
Markets Cubic metres per million cigarettes equivalent produced
20 18.03 16.54
15 12.9
10 8.96 7.95 7.29 6.82 5.52 5.54 5.07 4.98 5 4.73 4.00 3.23 3.08 2.84 2.72 2.73 2.67 2.59 2.49 2.11 1.77 1.62 1.21 0.89 0.73
0 Australia Brazil Canada* Germany Malaysia Nigeria Russia South South Africa Korea
2011 2010 2009 *Our company in Canada does not have a manufacturing facility, therefore the data uses the normalised output fi gure ‘cigarettes equivalent sold’ instead of ‘cigarette equivalent produced’. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Waste to landfill
In 2011, we exceeded our 2012 global target to reduce our waste to landfill by 12 per cent to 0.022 tonnes per million cigarettes equivalent produced, from our 2007 baseline of 0.025 tonnes per million cigarettes equivalent produced. For Group data and more information, please see the environment section of this Report. The data is from our online Group-wide EHS reporting system. Previous figures reported in local publications may vary due to differing local reporting standards.
Regions Tonnes per million cigarettes equivalent produced
0.014 0.007 2011 0.032 0.017
0.014 0.008 2010 0.032 0.014
0.013 0.008 2009 0.029 0.028
0 0.0025 0.005 0.0075 0.01 0.0125 0.015 0.0175 0.02 0.0225 0.025 0.0275 0.03 0.0325
Americas Asia-Pacific Eastern Europe, Middle East and Africa Western Europe
Markets Tonnes per million cigarettes equivalent produced
0.1 0.095 0.091
0.08 0.076 0.072 0.058
0.06 0.057 0.043 0.041 0.040 0.040 0.04 0.034 0.031 0.022
0.02 0.017 0.013 0.005 0.004 0.004 0.003 0.003 0.001 0.001 0.002 0.001 0.001 0.000 0.001 0 Australia Brazil Canada* Germany Malaysia Nigeria Russia South South Africa Korea
2011 2010 2009 *Our company in Canada does not have a manufacturing facility, therefore the data uses the normalised output fi gure ‘cigarettes equivalent sold’ instead of ‘cigarette equivalent produced’. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Recycling
In 2011, we met our global target to recycle more than 85 per cent of waste generated in each year. For Group data and more information, please see the environment section of this Report. The data is from our online Group-wide EHS reporting system. Previous figures reported in local publications may vary due to differing local reporting standards.
Regions Percentage of waste recycled
86.61% 90.43% 2011 77.51% 90.02%
87.48% 89.85% 2010 76.39% 91.25%
87.27% 88.88% 2009 76.89% 84.31%
0 10 20 30 40 50 60 70 80 90 100 Percentage (%)
Americas Asia-Pacific Eastern Europe, Middle East and Africa Western Europe
Markets Percentage of waste recycled 99.92% 99.37% 99.54% 99.49% 98.86% 100 97.75% 96.14% 96.07% 96.25% 95.87% 95.79% 94.89% 86.24% 83.63% 82.40% 80.53% 77.96% 74.89% 73.57%
75 71.42% 70.69% 68.81% 66.37% 57.49% 55.93% 50.52% 50 42.66% Percentage (%)
25
0 Australia Brazil Canada Germany Malaysia Nigeria Russia South South Africa Korea
2011 2010 2009 British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Succession planning
Ensuring clear succession plans are in place for every senior role remains our long-term objective. This means having at least one local successor ready in the short term and two local successors identified for long-term development. We also aim to achieve a 70:30 ratio of local to expatriate senior managers in each business unit. This gives our companies a valuable balance between local knowledge and international perspective. For more information, please see the people and culture section of this Report.
Local succession coverage - 1:1:2 at business unit level Regions Percentage of business units with at least one local successor in the short term and two local successors in the long term for each senior position.
88% 76% Americas 78% Americas 85% 78% 76%
31% 39% Asia-Pacific 50% Asia-Pacific 17% 53% 35%
Eastern Eastern 47% 32% Europe, Middle 47% Europe, Middle 36% East and 37% East and 50% Africa* Africa*
38% 22% Western 45% Western 16% Europe** 38% Europe** 57%
51% 53% Average 57% Average 43% 58% 63%
0 25 50 75 100 0 25 50 75 100 Short term Long term
2011 2010 2009 2011 2010 2009
Markets Percentage of business units with at least one local successor in the short term and two local successors in the long term for each senior position
71% 71% Australia 100% Australia 100% 43% 71% 100% 67% Brazil 100% Brazil 83% 83% 67% 20% 20% Canada 40% Canada 80% 80% 80% 40% 20% Germany 80% Germany 60% 38% 31% 67% 67% Malaysia 67% Malaysia 50% 56% 56% 40% 0% Nigeria 40% Nigeria 0% * The 2009 data for Eastern Europe, 43% 43% 33% 33% Middle East and Africa only covers Russia 60% Russia 40% 50% 33% the markets in the Africa and Middle 60% 40% South Africa 20% South Africa 60% East region under the Group’s 43% 86% 17% 0% previous regional structure. They do South Korea 17% South Korea 0% 44% 78% not include the additional Eastern 0 25 50 75 100 0 25 50 75 100 Short term Long term Europe markets that previously sat
2011 2010 2009 2011 2010 2009 in a separate region.
** The 2009 data for Western Europe includes fi ve additional markets under the Group’s previous regional structure. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Local top teams - 70:30 at business unit level Regions Percentage of local representation on business unit senior management teams
80 * The 2009 data for Eastern 74% 72%
69% Europe, Middle East and Africa only covers the markets in the Africa 58% 60 57%
55% and Middle East region under the 54% 53% 51% 50% Group’s previous regional structure. 45% 45% They do not include the additional 41% 40% 40% 40 Eastern Europe markets that previously sat in a separate region. Percentage (%)
20 ** The 2009 data for Western Europe includes fi ve additional markets under the Group’s previous 0 Americas Asia-Pacific Eastern Europe, Western Europe** Average regional structure. Middle East and Africa*
2011 2010 2009
Markets Percentage of local representation on business unit senior management teams 100% 100 100% 83% 83% 80%
75 71% 67% 67% 67% 60% 60% 57% 57%
50 45% 43% * The 2009 percentage of local 40% 40% 40% Percentage (%) 33% 33% representation on the business unit 29% senior management team has been 25 20% 20% 17%
17% re-stated to the one previously reported of 71 per cent, due to the earlier fi gure being incorrectly 0% 0% 0 Australia Brazil Canada Germany Malaysia* Nigeria Russia South South quoted in the 2009 Report. Africa Korea
2011 2010 2009 British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Employee opinion survey
We know that people do not stay in jobs just because of the pay or promotion opportunities. Employees want a supportive culture where their views are listened to. Our Group-wide ‘Your Voice’ employee opinion survey is carried out every two years, with the most recent one in 2010. Below you will find regional and market level scores in the engagement category the survey. For Group data across all the categories and more information, please see the people and culture section of this Report.
Regions British American Tobacco regions vs. Towers Watson global FMCG benchmark Regional scores in engagement category ranked by difference from benchmark
20 150 % favourable scores +11 10 83% 82% 100 74% 72% 76% 79% 72% 77% +2 +6 +5 0 +3 50 -1 -3 -5
Difference from benchmark -10 0 Americas Asia-Pacific Western Europe Western Eastern Europe, Middle East and Africa
2008 2010 2008 2010 % favourable scores | Difference from benchmark
Markets British American Tobacco local company vs. Towers Watson local country national benchmark Local scores in engagement category ranked by difference from relevant national benchmark
10 150
+6 +5 5 +4 125 +3 +2 +2
+1 % favourable scores 0 -1 -1 -1 100
85% -2 81% 81% 80% 79% 78% 77% -5 78% 75% 74% 74% -4
-5 70% 70% 75 68% 67% -6 65%
-7 55% 53% -10 -9 50 -11 Difference from benchmark
-15 25
-17
-20 0 Brazil Russia Nigeria Canada Australia Malaysia Germany South Africa South Korea
2008 2010 2008 2010 % favourable scores | Difference from benchmark British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Gender diversity
Our focus on diversity includes having greater demographic representation across our senior management, including by gender and by nationality. We continue to support the career development of our female managers, with the aim of increasing the proportion of women in senior management roles. For Group data and more information, please see the people and culture section of this Report.
Regions Percentage breakdown for women in management
2009 2010 2011 Management trainees Americas 44.2% 42.0% 39.0% Asia-Pacific 37.0% 43.0% 45.1% Eastern Europe. Middle East and Africa* 56.5% 48.6% 47.0% Western Europe** 47.8% 56.6% 50.7%
Management grade 34 Americas 34.0% 34.0% 32.2% Asia-Pacific 26.7% 27.0% 28.3% Eastern Europe. Middle East and Africa* 34.5% 32.7% 31.3% Western Europe** 39.2% 40.2% 41.2%
Management grade 35 Americas 31.3% 29.0% 29.0% Asia-Pacific 27.4% 29.0% 28.5% Eastern Europe. Middle East and Africa* 41.7% 32.7% 34.0% Western Europe** 33.3% 35.9% 37.9%
Management grade 36 Americas 20.8% 26.0% 23.6% Asia-Pacific 27.2% 24.0% 27.0% Eastern Europe. Middle East and Africa* 40.1% 29.2% 29.5% Western Europe** 30.0% 30.5% 31.6%
Management grade 37 Americas 17.7% 18.0% 20.3% Asia-Pacific 16.8% 22.0% 24.6% Eastern Europe. Middle East and Africa* 44.0% 23.3% 20.2% Western Europe** 20.7% 22.4% 21.6%
Management grade 38 Americas 11.3% 19.0% 19.0% Asia-Pacific 17.4% 17.0% 15.0% Eastern Europe. Middle East and Africa* 50.0% 10.7% 13.2% Western Europe** 13.7% 10.2% 12.1% British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Management grade 39 Americas 7.4% 0.0% 4.5% Asia-Pacific 7.7% 6.0% 9.1% Eastern Europe. Middle East and Africa* 0.0% 8.7% 9.5% Western Europe** 10.5% 11.8% 20.0%
Management grade 40 Americas 0.0% 0.0% 11.1% Asia-Pacific 0.0% 0.0% 0.0% Eastern Europe. Middle East and Africa* 0.0% 7.1% 7.1% Western Europe** 11.1% 15.4% 18.2%
Markets Percentage breakdown for women in management
2009 2010 2011 Management trainees Australia 30.8% 22.0% 75.0% Brazil 42.9% 17.0% 25.0% Canada 20.0% 27.0% 25.0% Germany 50.0% 70.0% 64.3% Malaysia 41.4% 69.0% 53.8% Nigeria 33.3% 50.0% 57.1% Russia 57.1% 64.0% 52.6% South Africa 34.6% 43.0% 54.5% South Korea 20.0% 22.0% 27.3%
Management grade 34 Australia 27.2% 29.0% 30.2% Brazil 30.2% 29.0% 24.8% Canada 37.8% 35.0% 32.7% Germany 39.8% 41.0% 38.3% Malaysia 18.3% 29.0% 33.9% Nigeria 21.4% 27.0% 28.3% *The 2009 gender data for Eastern Russia 37.2% 38.0% 35.1% Europe, Middle East and Africa South Africa 42.3% 50.0% 41.9% only covers the markets in the South Korea 38.0% 35.0% 31.3% Africa and Middle East region under the Group’s previous regional structure. They do not include the additional Eastern Europe markets that previously sat in a separate region.
**The 2009 gender data for Western Europe includes fi ve additional markets under the Group’s previous regional structure.
British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Management grade 35 Australia 36.8% 35.0% 28.4% Brazil 26.8% 24.0% 24.8% Canada 41.3% 43.0% 42.2% Germany 31.1% 31.0% 34.9% Malaysia 33.8% 35.0% 32.6% Nigeria 17.5% 20.0% 23.1% Russia 43.2% 43.0% 44.4% South Africa 26.2% 32.0% 31.5% South Korea 26.8% 29.0% 30.0%
Management grade 36 Australia 33.8% 32.0% 36.4% Brazil 19.8% 26.0% 23.3% Canada 28.6% 36.0% 35.4% Germany 16.4% 18.0% 18.8% Malaysia 32.7% 25.0% 32.6% Nigeria 28.6% 26.0% 22.9% Russia 36.2% 32.0% 36.0% South Africa 31.8% 35.0% 35.0% South Korea 29.4% 31.0% 34.3%
Management grade 37 Australia 24.1% 23.0% 21.9% Brazil 24.1% 23.0% 21.8% Canada 23.8% 29.0% 35.0% Germany 9.3% 7.0% 37.9% Malaysia 30.8% 35.0% 12.5% Nigeria 19.0% 20.0% 23.1% Russia 25.0% 23.0% 23.1% South Africa 19.7% 21.0% 21.6% South Korea 25.0% 14.0% 22.2%
Management grade 38 Australia 33.3% 0.0% 16.7% Brazil 28.6% 33.0% 30.8% Canada 0.0% 0.0% 0.0% Germany 0.0% 0.0% 0.0% Malaysia 25.0% 25.0% 14.3% Nigeria 16.7% 25.0% 20.0% Russia 100.0% 22.0% 14.3% South Africa 8.3% 10.0% 0.0% South Korea 20.0% 14.0% 16.7% British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Management grade 39 Australia 0.0% 0.0% 25.0% Brazil 0.0% 0.0% 12.5% Canada 20.0% 0.0% 0.0% Germany 0.0% 0.0% 0.0% Malaysia 25.0% 25.0% 20.0% Nigeria 0.0% 0.0% 0.0% Russia 0.0% 25.0% 33.3% South Africa* 20.0% 20.0% 16.7% South Korea 0.0% 0.0% 0.0%
Management grade 40 Australia 0.0% 0.0% 0.0% Brazil 0.0% 0.0% 0.0% Canada 0.0% 0.0% 100.0% Germany 0.0% 0.0% 0.0% Malaysia 0.0% 0.0% 0.0% Nigeria 0.0% 100.0% 100.0% Russia 0.0% 0.0% 0.0% South Africa 0.0% 0.0% 0.0% South Korea 0.0% 0.0% 0.0%
* The 2009 percentage of women in management grade 39 has been re-stated to the one previously reported of 25 per cent, due to the earlier fi gure being incorrectly quoted in the 2009 Report. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Region and market data comparator
Lost Workday Case Incident Rate
We are committed to providing a safe working environment for all our employees and contractors and have a Group goal of zero accidents. Along with the number of serious injuries and fatalities for both employees and contractors, we also monitor our Lost Workday Case Incident Rate (LWCIR). For Group data and more information, please see the people and culture section of this Report.
Regions LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked
0.54 0.05 2011 0.27 0.49
0.45 0.30 2010 0.13 0.60
0.35 0.35 2009 0.29* 0.68**
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
Americas Asia-Pacific Eastern Europe, Middle East and Africa* Western Europe**
Markets LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked
5 4.19 4.04 4
3 2.67
2
1 0.92 0.72 0.71 0.71 0.69 0.68 0.56 0.56 0.48 0.46 0.42 0.33 0.29 0.20 0.17 0.14 0.12 0.07 0.07 0.00 0.00 0.00 0.00 0 0.00 Australia Brazil Canada Germany Malaysia Nigeria Russia South South Africa Korea * The 2009 LWCIR only covers the
2011 2010 2009 markets in the Africa and Middle East region under the Group’s previous regional structure. It does not include the additional Eastern Europe markets that previously sat in a separate region.
** The 2009 LWCIR includes fi ve additional markets in Western Europe under the Group’s previous regional structure. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Regions
Balanced scorecard for Americas
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 1 1 7
Youth smoking prevention 2009 2010 2011 Trend Notes Percentage of markets where our businesses report running or supporting youth smoking prevention programmes 90% 86% 100%
Preventing underage access 2009 2010 2011 Trend Notes Percentage of markets where our businesses report engaging with the government to improve measures to help prevent underage access to tobacco 57% 61% 56%
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 10.55 11.04 10.18
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 0.58 0.60 0.55
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.013 0.014 0.014
Recycling 2009 2010 2011 Trend Notes
Percentage of waste recycled 87.27% 87.48% 86.61%
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 4.12 3.99 3.79
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of business units Short with at least one local successor term 78% 78% 88% in the short term and two local successors in the long term for Long each senior position term 76% 85% 76% British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Regions
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 72% 69% 74%
Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco region vs Towers 1 Watson global FMCG benchmark Score in the Engagement category 83 82 Ranked by difference from benchmark +11 +6
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 44.2% 42.0% 39.0% Management grade 34 34.0% 34.0% 32.2% Management grade 35 31.3% 29.0% 29.0% Management grade 36 20.8% 26.0% 23.6% Management grade 37 17.7% 18.0% 20.3% Management grade 38 11.3% 19.0% 19.0% Management grade 39 7.4% 0.0% 4.5% Management grade 40 0.0% 0.0% 11.1%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.35 0.45 0.54
Notes 1 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
Our regions Sustainability and Engagement and Harm reduction Marketplace Environment Supply chain People and culture and markets our business governance
Regions
Balanced scorecard for Asia-Pacific
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 2 3
Youth smoking prevention 2009 2010 2011 Trend Notes Percentage of markets where our businesses report running or supporting youth smoking prevention programmes 38% 72% 67%
Preventing underage access 2009 2010 2011 Trend Notes Percentage of markets where our businesses report engaging with the government to improve measures to help prevent underage access to tobacco 57% 44% 44%
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 8.84 8.95 8.62
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 0.87 0.88 0.86
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.008 0.008 0.007
Recycling 2009 2010 2011 Trend Notes
Percentage of waste recycled 88.88% 89.85% 90.43%
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 4.22 4.32 3.94
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of business units Short with at least one local successor term 53% 50% 31% in the short term and two local successors in the long term for Long each senior position term 35% 17% 39% British American Tobacco Sustainability Report 2011
Sustainability Report 2011
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Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 54% 40% 53%
Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco region vs Towers 1 Watson global FMCG benchmark Score in the Engagement category 74 72 Ranked by difference from benchmark +3 -3
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 37.0% 43.0% 45.1% Management grade 34 26.7% 27.0% 28.3% Management grade 35 27.4% 29.0% 28.5% Management grade 36 27.2% 24.0% 27.0% Management grade 37 16.8% 22.0% 24.6% Management grade 38 17.4% 17.0% 15.0% Management grade 39 7.7% 6.0% 9.1% Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.35 0.30 0.05
Notes 1 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Balanced scorecard for Eastern Europe, Middle East and Africa
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 12 1 6
Youth smoking prevention 2009 2010 2011 Trend Notes Percentage of markets where our businesses report running or supporting youth smoking prevention programmes 15% 54% 54% 1
Preventing underage access 2009 2010 2011 Trend Notes Percentage of markets where our businesses report engaging with the government to improve measures to help prevent underage access to tobacco 25% 35% 38% 1
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 12.63 12.24 11.54
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 1.13 1.10 1.04
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.029 0.032 0.032
Recycling 2009 2010 2011 Trend Notes
Percentage of waste recycled 76.89% 76.39% 77.51%
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 5.36 4.48 4.29
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of business units Short with at least one local successor term 48% 47% 47% 1 in the short term and two local successors in the long term for Long each senior position term 33% 36% 32% British American Tobacco Sustainability Report 2011
Sustainability Report 2011
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Regions
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 45% 40% 45% 1
Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco region vs Towers 2 Watson global FMCG benchmark Score in the Engagement category 76 79 Ranked by difference from benchmark -1 +2
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management 1 grades Management trainees 41.5% 48.6% 47.0% Management grade 34 27.2% 32.7% 31.3% Management grade 35 25.2% 32.7% 34.0% Management grade 36 23.6% 29.2% 29.5% Management grade 37 16.5% 23.3% 20.2% Management grade 38 10.1% 10.7% 13.2% Management grade 39 12.0% 8.7% 9.5% Management grade 40 0.0% 7.1% 7.1%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.29 0.21 0.27 1
Notes 1 The 2009 data for these measures only covers the markets in the Africa and Middle East region under the Group’s previous regional structure. They do not include the additional Eastern Europe markets that previously sat in a separate region. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
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Balanced scorecard for Western Europe
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 2 5
Youth smoking prevention 2009 2010 2011 Trend Notes Percentage of markets where our businesses report running or supporting youth smoking prevention programmes 36% 79% 79% 1
Preventing underage access 2009 2010 2011 Trend Notes Percentage of markets where our businesses report engaging with the government to improve measures to help prevent underage access to tobacco 60% 58% 63% 1
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 12.21 11.89 11.45
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 0.91 0.87 0.90
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.028 0.014 0.017
Recycling 2009 2010 2011 Trend Notes
Percentage of waste recycled 84.31% 91.25% 90.02%
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 3.74 3.70 3.36
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of business units Short with at least one local successor term 38% 45% 38% 1 in the short term and two local successors in the long term for Long each senior position term 57% 16% 22% British American Tobacco Sustainability Report 2011
Sustainability Report 2011
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Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 41% 50% 58% 1
Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco region vs Towers 2 Watson global FMCG benchmark Score in the Engagement category 72 77 Ranked by difference from benchmark -5 +5
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management 1 grades Management trainees 47.8% 56.6% 50.7% Management grade 34 39.2% 40.2% 41.2% Management grade 35 33.3% 35.9% 37.9% Management grade 36 30.0% 30.5% 31.6% Management grade 37 20.7% 22.4% 21.6% Management grade 38 13.7% 10.2% 12.1% Management grade 39 10.5% 11.8% 20.0% Management grade 40 11.1% 15.4% 18.2%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.68 0.59 0.49 1
Notes 1 The 2009 data for these measures includes fi ve additional markets in Western Europe under the Group’s previous regional structure. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Australia Viewpoint from the General Manager Australia
2011 was a stimulating but challenging year for us, especially with the Government passing legislation requiring us to use plain packaging for tobacco products. HIGHLIGHTS
■ David Crow, Managing Director Market share of British American Tobacco Australia approximately 45% ■ The Sydney office is also the headquarters for the Australasia area, including Australia, New Zealand and the South Pacific Islands
■ Over 2,000 employees in the Australasia area As one of the largest companies within British American Tobacco, it’s fantastic to have the opportunity (includes 300 seasonal to make a significant contribution to the Group’s sustainability goals. farmers in Fiji)
I’ve watched our approach develop over the last 10 years: from social responsibility as the right thing ■ Products manufactured to do, to sustainability as a way of adding value to the business and society. In Australia, we’ve come by the company are a long way in embedding this approach within our company and through our supply chain. We’ve exported to more than got a number of amazing sustainability initiatives in place, some of which you can read about in the 14 other markets following pages. And we continue to engage with our stakeholders on the issues that matter to them and to us. 2011 was a stimulating but challenging year for us, especially with the Government passing legislation requiring us to use plain packaging for tobacco products from late 2012. We have been engaging with the Government and other stakeholders on the issue, through a focused and transparent campaign. It’s been a seriously intense experience – from the press conference launch through to sitting alongside one of Australia’s leading constitutional lawyers in front of a Senate Legal and Constitutional Affairs Committee. I am immensely proud of our campaign against plain packaging and, from the number of debates that were held in Parliament, I think it’s clear that our messages resonated with certain MPs and the public. Ultimately, we really did want to avoid going to court over this, but I really feel that now that the legislation has been passed, we’ve been left with little alternative. We have a right to our brands and a responsibility to defend them on behalf of our shareholders. The support we received throughout our campaign from the regulatory centre of expertise back in London and the cross-functional teams across the business was really heartening. I think it’s a great example of how the joined-up, coordinated approach to regulatory engagement that we have across the Group really works. You can read more about plain packaging on our campaign website, www.plainpack.com. What I’ve learnt in the years that I’ve been with British American Tobacco, is that we have great resilience – plain packaging is going to be a big challenge for us, but one that I believe we can rise to. David Crow, Managing Director British American Tobacco Australia
PERFORMANCE HIGHLIGHTS IN 2011
■ Achieved 100% adherence to our International Marketing Standards. British American Tobacco Sustainability Report 2011
Sustainability Report 2011
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Balanced scorecard for Australia
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 0 0
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes No No
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco No No No
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 16.85 18.83 18.99 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 2.45 2.69 2.70 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.072 0.091 0.095 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 55.93% 50.52% 42.66% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 5.07 5.54 5.52 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 100% 100% 71% in the short term and two local successors in the long term for Long each senior position term 71% 43% 71%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 45% 43% 57% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco Australia vs. 2 Towers Watson Australia national benchmark Score in the Engagement category 79 74 Ranked by difference from benchmark +4 -1
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 30.8% 22.0% 75.0% Management grade 34 27.2% 29.0% 30.2% Management grade 35 36.8% 35.0% 28.4% Management grade 36 33.8% 32.0% 36.4% Management grade 37 24.1% 23.0% 21.9% Management grade 38 33.3% 0.0% 16.7% Management grade 39 0.0% 0.0% 25.0% Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 4.04 4.19 2.67
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Sustainability at British American Tobacco Australia STAKEHOLDER VIEWPOINT In 2011, British American Tobacco Australia’s main focus has been the Government’s Tobacco Plain Packaging and Trade Plain packaging is Marks Amendment Bills, which were passed by the Senate in simply wrong and bad November. Under the new legislation, from December 2012, public policy. Once all cigarettes will be required to be sold in standard olive brown brands are removed and packaging, with graphic health warnings taking up 75 per cent of all packaging is made the pack and no brand colours or logos. to look the same, it is The company launched a high-profile campaign in early 2011 to easy to imagine how raise its concerns about plain packaging, particularly around the much simpler it will be very serious unintended consequences it could have. to counterfeit a pack of The likely consequences of plain packaging legislation are cigarettes. It will reduce not well understood. The company is concerned that the brand owners’ ability Government has rushed through this legislation without to take action against conducting more robust research. During an October 2010 counterfeiting and will Senate hearing, it was highlighted that the effect plain packaging increase the burden on would have on smoking rates has not been quantified. already overstretched To contribute evidence to the debate, the Group commissioned public agencies as Deloitte to examine the intended and unintended impacts of they try to keep tobacco packaging regulation. As Australia is likely to be the illicit products away first country to introduce plain or unbranded packaging, Deloitte could not assess existing plain packaging legislation. Instead, from consumers. the research focused on other types of tobacco packaging regulation that have reduced the space on the pack The International Chamber of available for our brands, for example by increasing the size of health warnings. Commerce’s ‘Business Action to Deloitte’s report1 revealed that increasing the size of health warnings on packs and introducing graphic warnings Stop Counterfeiting and Piracy’ had not directly reduced tobacco consumption. It therefore called into question whether plain packaging would group, October 2011 reduce smoking rates. The report also recognised that plain packaging could lead to a number of unintended consequences, such as an increase in the black market in tobacco. It is estimated that more than one in 10 cigarettes smoked in Australia already comes from the black market, costing an estimated A$1.1 billion (£708 million) a year in lost tax income. The legislation also risks breaching intellectual property rights and the rights of a brand owner to use its packaging to distinguish its products from those of its competitors. British American Tobacco Australia’s campaign included a dedicated website, www.plainpack.com, television and radio interviews, billboards, press conferences and advertisements in the national press. Three of the company’s employees, including the Managing Director, also used Twitter to provide real-time updates on their response as the legislative developments took place. The Alliance of Australian Retailers also pledged its opposition to the legislation. It represents many owners of small businesses – convenience stores, newsagents, service stations and milk bars – who employ thousands of people. Their campaign had the transparent financial support of tobacco companies. Two Parliamentary inquiries were held, to which British American Tobacco Australia contributed. At the House of Representatives’ Health and Ageing Committee Inquiry into Plain Packaging in August 2011, the company’s Managing Director and Head of Corporate & Regulatory Affairs answered questions from the Committee. Near the end of the campaign, an independent poll by one of Australia’s largest newspapers saw public opinion move from the majority supporting plain packaging to a majority opposed. Despite the campaign’s effectiveness, the legislation was still passed. Like all brand owners, we believe we are entitled to use our packs to distinguish our products from those of our competitors. By restricting brands, governments risk breaching intellectual property rights and, in most cases, international trade agreements. British American Tobacco Australia always said it wanted to avoid going to court over plain packaging regulation. But the company has been left with little alternative: as a legal company selling a legal product it has a duty to defend its intellectual property on behalf of its shareholders. So we, and other tobacco companies in Australia, are challenging the constitutional validity of the removal of trade marks and other intellectual property without compensation. We hope that the campaign demonstrated to other governments that plain packaging legislation is problematic and that we will fight for our entitlement to use our packs to distinguish our products from those 1 Tobacco Packaging Regulation: of our competitors. An international assessment of the intended and unintended impacts’ by Deloitte, May 2011. British American Tobacco Sustainability Report 2011
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Reducing environmental impacts In September 2000, British American Tobacco Australia was the first tobacco company to join the Australian Packaging Covenant (APC). Signatories to this voluntary initiative develop plans to reduce the environmental impacts of their packaging and their wider operations. Since 2000, the company has: ■ Increased its packaging waste recycling rates to 80 per cent; ■ Increased purchases of products with recycled content: 84 per cent of office paper now contains recycled material; and ■ Improved waste and recycling systems. British American Tobacco Australia’s APC Action Plan for 2011–2015 focuses on three areas: sustainable design, recycling and product stewardship. It includes commitments to: ■ Report on average water and energy consumption per unit of production annually to the APC; ■ Introduce further best practice waste and recycling initiatives; ■ Identify opportunities to source more products with recycled content; and ■ Include requirements for packaging take-back and/or reuse or recycling of used packaging in certain procurement contracts. It will be challenging to implement some of these actions given the introduction of plain packaging in late 2012. While all the specific requirements for plain packaging are not yet clear, British American Tobacco Australia remains committed to working with its suppliers, customers and employees to deliver the most sustainable packaging options for its products. Corporate social investment In 2009, a corporate social investment (CSI) strategy for the Australasia area, including Australia, New Zealand and the South Pacific Islands, was developed. This recognised that the company relies on a healthy, educated workforce, strong societies and stable economies and that supporting these is therefore good for long-term business success. The strategy had a particular focus on the developing markets of the South Pacific, where whole sectors of society struggle to access basic services. While this remains a priority, in 2011 the strategy was extended to also cover initiatives in the areas of civic life, sustainable agriculture, environmental protection and empowerment. It continues to support the transfer of insights from British American Tobacco companies in developed countries, such as Australia and New Zealand, to our companies in the area’s developing markets, and to encourage partnerships with community organisations. Employee engagement British American Tobacco Australia is facing a period of great change, including preparing for the challenge of implementing plain packaging, as well as separate office relocations for all its corporate, call centre and IT employees at the same time as the transition of most of its manufacturing to offshore locations. In this context, to retain talented employees and drive strong business performance, it is essential that the company supports its employees well. To prepare employees for these changes, the company has introduced an initiative called the Engaging Conversation Series. This programme is designed to build employee engagement and drive excellence in people management. It involves a series of master classes on people management and employee engagement, covering topics including reward and recognition, performance reviews and career development. The initiative also includes a series of events to motivate employees. These include presentations from external guest speakers who have handled change well in their lives. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in Australia
The upcoming plain packaging legislation ILLEGAL TOBACCO IN worries me. I’m convinced we’re going to see AUSTRALIA an increase in illicit trade. A Deloitte report in 2011 found Barry Wilson, Area Anti-illicit Trade, Excise & Security that the illegal tobacco trade in Manager, British American Tobacco Australia Australia increased from the equivalent of 12.3% of legal tobacco consumption in 2009 to 15.9% in 2010. This represents an annual loss in tax revenue of approximately A$1.1 billion (£708 million) for the Australian Being in an anti-illicit trade role at British American Tobacco Australia is challenging and very varied. I get to Government. work with colleagues in many parts of the business – regulation, marketing, legal, supply chain and so on – and to engage with external stakeholders on the issue. It’s also a big responsibility when you think about the A recent report by the Australian scale and the impacts of the illegal tobacco trade in Australia. Crime Commission into organised Recently, we’ve been working on some pretty interesting initiatives. One of them is a tool that maps volumes crime outlines the involvement of illicit tobacco across Australian electorates. And there’s a website – illegaltobacco.com.au – that we’ve of organised crime in the illegal trade of tobacco and states that designed to share that information with the industry and enforcement authorities, so that together we can increases in excise tax are likely tackle the rapid growth of illegal tobacco in Australia. to attract further organised crime Anyone can access the website, so we’re hoping that it’ll get people talking locally – consumers and local groups to the illicit tobacco market. politicians. The politicians are particularly important as they can get things moving to address the issue in their own backyards, as well as putting pressure on the Government to respond to this serious issue. Another part of my role involves working with enforcement bodies, from customs and border protection to crime task forces. This grass roots engagement is crucial for ensuring that illegal tobacco doesn’t get overlooked when limited government resources are allocated. One of our big successes in this area was a Tobacco Crime Forum, organised by the company and including New South Wales police, customs, security experts and the tobacco industry. It looked in some depth at how to address the escalation in tobacco-related crime, ranging from simple theft to illegal trade. The upcoming plain packaging legislation worries me. I’m convinced we’re going to see an increase in illicit trade. The latest research shows that the illegal trade is already moving away from loose tobacco towards smuggled and counterfeit cigarettes. In fact, the volumes of these doubled between October 2010 and April 2011. It’s highly likely that illegal traders will set themselves up to take advantage of plain packaging. We won’t make it easy for them though! We’ll be attacking illicit trade from all sides: doing our best to ensure retailers are not selling illegal tobacco; working with enforcement agencies to help increase seizures and arrests; measuring the problem and providing intelligence to the Government; and raising awareness within the industry and among the wider public of how damaging the illegal tobacco trade really is. Barry Wilson, Area Anti-illicit Trade, Excise & Security Manager British American Tobacco Australia British American Tobacco Sustainability Report 2011
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Brazil Viewpoint from the company President Brazil
Over the years we have built what many see as a leading approach to sustainable agriculture. HIGHLIGHTS
Andrea Martini, President of Souza Cruz ■ Founded in Rio de Janeiro in 1903 and part of the Group since 1914
■ One of the largest companies in Brazil and At Souza Cruz, we are proud to be not only one of the largest companies in the British American Tobacco listed on the São Paulo Group, but also one of the largest in Brazil, with a history going back more than 100 years. Stock Exchange Sustainability is a really important part of our strategy and it’s something we’ve received external ■ Market share of 61% recognition for. In 2011, many organisations in southern Brazil took part in Brazil’s Sustainable ■ Over 7,000 employees Management Survey1 and we were one of only 11 to get a Certificate of Management Excellence. What I’m ■ 193,900 tonnes of tobacco really proud of is that you can’t get these certificates by being strong in one area – you have to score well leaf purchased in 2011 across all aspects of sustainable management. ■ Over 70.9 billion cigarettes I want to focus on a couple of areas here though: sustainable agriculture and working with our retailers. sold every year Over the years, we’ve built what many see as a leading approach to sustainable agriculture. We offer agronomy support for approximately 30,000 farmers with whom we work, projects to tackle child labour, research into the tobacco plant and more. The focus of our work – and this is really important to me – isn’t just tobacco. It covers all areas of agricultural practices, which means that other crops benefit too. So our contracted farmers get better food crops and become more self-sufficient. What’s more, we share what we’ve learned with others in Brazil and across the Group. The relationships we have with our retail partners are equally strong. If tobacco products are being sold irresponsibly, it gives us a bad name. So we work closely with them on issues like youth smoking prevention. We’re also sponsoring the Responsible Retailing Development Centre, which is doing great work to help improve standards of conduct across retail management. With programmes like this, we’re giving Souza Cruz a really strong foundation to build upon in the future. I can see us achieving our long-term goals, delivering business success and continuing to contribute to society and the environment. Andrea Martini, President of Souza Cruz
PERFORMANCE HIGHLIGHTS IN 2011
Met or exceeded Group targets for: ■ Energy and water use ■ Waste sent to landfill and recycling ■ Succession coverage in the short term and the 70:30 ratio of local to expatriate senior managers at business unit level
1 The Sustainable Management Survey is conducted by the Editora Expressão Publisher and Aequo Solutions for Sustainability and is based on indicators adopted by the Ethos Institute. British American Tobacco Sustainability Report 2011
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Balanced scorecard for Brazil
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 0 1
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco Yes Yes Yes
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 7.84 8.50 8.03 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 0.25 0.26 0.26 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.004 0.004 0.005 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 95.79% 96.14% 94.89% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 2.84 2.67 2.49 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 83% 100% 100% in the short term and two local successors in the long term for Long each senior position term 67% 83% 67%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 83% 83% 100% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes Souza Cruz vs Towers Watson Brazil 2 national benchmark Score in the Engagement category 85 81 Ranked by difference from benchmark +2 -1
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 42.9% 17.0% 25.0% Management grade 34 30.2% 29.0% 24.8% Management grade 35 26.8% 24.0% 24.8% Management grade 36 19.8% 26.0% 23.3% Management grade 37 24.1% 23.0% 21.8% Management grade 38 28.6% 33.0% 30.8% Management grade 39 0.0% 0.0% 12.5% Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.29 0.46 0.33
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Sustainability at Souza Cruz
Souza Cruz is involved in the entire production cycle, from working with tobacco leaf growers and processing tobacco, to the manufacture and distribution of cigarettes. Its approach to sustainability therefore covers every area of the business. Tackling the illegal tobacco trade It is estimated that illegal tobacco products make up more than 28 per cent of the total Brazilian market. High taxes on tobacco products, light penalties for smuggling, long national borders that are difficult to police and the sheer size of the country all contribute to the problem. An inquiry by the Brazilian Congress found that there are approximately 360 illegal brands in the country, some of which are smuggled from Paraguay. Souza Cruz supported the Brazilian Internal Revenue Service in implementing its System for the Control and Tracking of Cigarettes. This enables Government authorities to monitor the volumes of tobacco products manufactured in the country to ensure all taxes and duties are paid. In this way, it helps tackle the issue of tobacco products being manufactured and sold in the country without being declared to the authorities, to evade tax. But it does not address smuggling, which remains a major challenge for Brazil. Souza Cruz was also one of the founding members of the Brazilian Institute for Ethics in Competition. To help keep competition fair, the Institute encourages political, legal and moral practices across all industry sectors. It also undertakes specific projects in individual industries, including raising public awareness of the negative impacts of illegal tobacco. Working with retailers Souza Cruz sells its products through 300,000 retailers and encourages retailers to adopt responsible practices. For example, in 2007, the company sponsored the establishment of the Responsible Retailing Development Centre by the Dom Cabral Foundation. It generates expertise, develops management tools and implements projects to enhance standards of conduct in retail management. Souza Cruz makes the Centre’s outputs accessible to its retail partners, for example in the company’s magazine for retailers, at events and through its activities. Topics covered include taxation, illicit trade and environmental initiatives. Following the Centre’s development in 2010 of the Fundamental Principles of Responsible Retailing, which includes guidelines for retailers to enhance their responsible business practices, in 2011 the Centre established the Responsible Retailing Compact to help align these guidelines with retailers’ business strategies. In 2011, the Centre also continued to build upon its research with projects focused on the 10 biggest retail companies in Brazil and their uptake of the voluntary international standard ISO 26000 Guidance for Social Responsibility. With its retailers spread across the country and many of them very small outlets, it can be challenging for Souza Cruz to engage with them on sustainability issues – not only because of the geographical distance, but also because what works for larger retailers may not be viable for smaller ones. However, it is hoped that momentum will build and retailers will see the benefits as the company demonstrates its long-term commitment to sustainability. The company works to address the issue of youth smoking, through supporting a youth smoking prevention (YSP) campaign delivered by national retail trade associations. The campaign aims to raise retailer awareness of the minimum age law of 18 for the sale of tobacco products in Brazil. Retailers are given YSP point-of-sale materials and the company’s Trade Marketing & Distribution teams discuss the importance of youth smoking prevention and provide guidance on verifying a customer’s age. Sustainable agriculture Working directly with nearly 30,000 tobacco farmers contracted by Souza Cruz, the company has the opportunity to promote sustainable farming practices in Brazil and help to improve the lives of farming communities. The company has a long-standing sustainable agriculture programme. It focuses on addressing the environmental impacts of tobacco growing and contributing to successful farming communities by tackling child labour, enhancing farmers’ livelihoods and improving working conditions. The programme is delivered by the company’s team of over 220 leaf managers and technicians who engage individually with contracted farmers, as well as through partnerships with local organisations such as SENAR, the national service for rural learning. Some examples of the programme’s initiatives are detailed below. British American Tobacco Sustainability Report 2011
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Several of Souza Cruz’ projects are aimed at avoiding farmers’ use of wood from natural forests as a fuel for curing tobacco. Farmers are provided with financing to either plant seedlings to meet their future fuel needs or to buy firewood from legal sources. In 2011, more than six million seedlings were planted and over 1,000 farmers benefited. In 2011, Souza Cruz signed an agreement with the Association of Tobacco Farmers, SindiTabaco (the Tobacco Industry Union in Brazil), the Brazilian Institute of Environment and Natural Resources and the Ministry of the Environment to eradicate deforestation in the Atlantic Forest region. Under the agreement, the region will be monitored by satellite and joint projects will be implemented to raise farmers’ awareness of the issue and encourage sustainable wood sourcing along with other areas of environmental best practice, such as responsible chemical use. Since 1984, the Planting Corn and Beans after Tobacco Harvest programme, as part of an agreement between Souza Cruz and the Rio Grande do Sul state, has aimed to stimulate and support crop rotation to help generate higher incomes through the distribution of maize seeds. In 2011, the agreement was once again signed in the state of Rio Grande do Sul, as well as in the state of Santa Catarina, to distribute seeds to farmers, with the Secretaries of Agriculture and Farmers and Agriculture Federations, in the areas. Such seed distribution also takes place in the State of Paraná, coordinated by its Secretary of Agriculture, which the company hopes to support through a signed agreement in 2012. The company’s leaf managers and technicians also work with contracted farmers to preserve soil and water through their soil master plan, which contains guidance on a wide range of issues including farm planning, soil analysis, direct and minimum tillage, crop rotation and protection of river basins. Tackling child labour Since 2002, Souza Cruz has administered an Extended School Day programme to help tackle child labour, which is validated by the Souza Cruz Institute, a charitable organisation set up by the company. The programme includes investment for rural schools to enable them to provide extra-curricular activities, so that children spend their time in education and not working on farms. In 2008, the company signed a Term of Commitment with Brazil’s Ministry of Labour. This establishes measures to help protect children and adolescents in rural areas, for example, by monitoring school attendance and promoting best practice health and safety standards for farmers. Originally focused on the State of Rio Grande do Sul, in 2011, it was extended to all the states where Souza Cruz operates. Through the Growing Up Right programme, a partnership between the Tobacco Industry Union and the Brazilian Leaf Farmers Association, the company works with external partners to raise awareness of child labour issues and deliver education projects. Growing Up Right’s projects focus not only on children, but also on adolescent labour. In 2011, this was a particular focus of several campaigns, such as plays, seminars, training for field staff, pamphlets and other media used to raise awareness among farmers, local authorities and other stakeholders that can support the objectives of the programme. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in Brazil
TOBACCO LEAF FARMING Souza Cruz isn’t just a faceless company: IN BRAZIL we’re actually out there in the fields, working with the farmers. Brazil is the second biggest tobacco producer in the world Robson Luiz Lima, Industrial Leaf Manager, Souza Cruz It is one of the Group’s largest tobacco leaf growing markets
30,000 farmers are directly contracted to Souza Cruz I’ve been working at Souza Cruz for 27 years and have been in my current role as Industrial Leaf Manager 193,900 tonnes of tobacco leaf since 2009. Over the years, I’ve watched the company evolve a model of sustainable agriculture that was purchased by Souza Cruz distinguishes us from other companies. It means we’re often the partner of choice for farmers. in 2011 Souza Cruz isn’t just a faceless company: we’re actually out there in the fields, working with the farmers to find solutions to challenges and developing best practice approaches that benefit us all. A great example is our partnership with SENAR, the national service for rural learning, on the Safety, Organisation and Cleanliness (SOL) Rural programme. It’s all about making production processes safer, cleaner and more organised. This can help the farmers by increasing the land’s value and providing a better quality of life, as well as improving the quality of tobacco leaf – something that’s essential for us to make high quality products. We also provide guidance and training to farmers in a number of other areas – such as how to reduce the amount of agrochemicals used on their crops, tackling child labour, conserving natural forests and soil conservation and diversification to name just a few. This all helps contribute to the success of the farms not only in terms of productivity, but also helping to protect the environment and bring social benefits for the farming communities. Seeing these benefits first-hand is definitely one of the highlights of my job. Robson Luiz Lima, Industrial Leaf Manager, Souza Cruz British American Tobacco Sustainability Report 2011
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Canada Viewpoint from the company’s President and CEO Canada
Surely it’s better to have a legitimate, regulated industry than a black market that is untaxed and unregulated HIGHLIGHTS
Marie Polet, President and CEO, Imperial Tobacco Canada ■ Operating in Canada since 1908
■ The leading tobacco company in Canada, with a market share of approximately 50%
■ Diverse brand portfolio that When a tobacco company starts talking about sustainability, it raises a few eyebrows – particularly in contains three of the five top Canada, where tobacco control measures are among the strictest in the world. cigarette brands in Canada It seems clear to me that the intention of the restrictive tobacco policies in Canada is to ensure there is ■ More than 600 employees no future for the industry. But despite all these measures, like retail display bans, ingredients bans and ■ Distributes its products to high taxes and excise, people continue to choose to smoke. 35,000 retailers The difference is that many of these smokers now go to illegal sources – in fact, it’s estimated that in 2010 one in five cigarettes sold in Canada was illegal. Many of these illegal cigarettes are made on First Nations reservations of indigenous Canadians and distributed by organised criminal gangs. They’re sold in roadside smoke shacks in untaxed bags of 200 cigarettes, which often sell for as little as a 10th of the price of legal cigarettes. The people selling these products aren’t following any of the tobacco regulations, such as having health warnings on the bags and not selling cigarettes to children. So surely it’s better to have a legitimate, regulated industry than a black market that is untaxed and unregulated. As the leading tobacco company in Canada, we have a responsibility to raise awareness of these issues. Of course we want to protect our business, and we fully intend to remain the market leader, but what we’re fighting for isn’t just better for us – it’s better for Canadian society too. Marie Polet, President and CEO, Imperial Tobacco Canada
PERFORMANCE HIGHLIGHTS IN 2011
Exceeded Group target for water use British American Tobacco Sustainability Report 2011
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Balanced scorecard for Canada
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 0 1
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco Yes Yes Yes
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent sold 20.35 15.34 15.50 1, 2
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent sold 1.43 1.07 1.08 1, 2
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent sold 0.043 0.031 0.034 1, 2
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 68.81% 73.57% 71.42% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent sold 1.21 0.73 0.89 1, 2
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 80% 40% 20% in the short term and two local successors in the long term for Long each senior position term 80% 80% 20%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 40% 40% 40% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes Imperial Tobacco Canada vs Towers Watson 3 Canada national benchmark Score in the Engagement category 70 75 Ranked by difference from benchmark -2 -1
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 20.0% 27.0% 25.0% Management grade 34 37.8% 35.0% 32.7% Management grade 35 41.3% 43.0% 42.2% Management grade 36 28.6% 36.0% 35.4% Management grade 37 23.8% 29.0% 35.0% Management grade 38 0.0% 0.0% 0.0% Management grade 39 20.0% 0.0% 0.0% Management grade 40 0.0% 0.0% 100.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.71 0.48 0.71
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Our company in Canada does not have a manufacturing facility, therefore the data uses the normalised output fi gure ‘cigarettes equivalent sold’ instead of ‘cigarettes equivalent produced’. 3 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Sustainability at Imperial Tobacco Canada
Fighting the illegal tobacco trade In 2010, approximately one fifth of cigarettes sold in Canada were illegal. Tackling this illicit trade is a priority for the company. It has been reported that there are approximately 50 illegal cigarette factories operating in Canada on First Nations reservations of indigenous Canadians and, in 2006, the Royal Canadian Mounted Police reported that there were over 300 ‘smoke shacks’ selling these illegal products. Imperial Tobacco Canada believes the illegal sale of tobacco is a critical public policy matter. Any lasting solution to the problem must involve collaboration between, and be supported by, all relevant stakeholders, including enforcement bodies, federal and provincial governments, First Nations leadership, the tobacco industry and consumers. In 2011, the company continued its campaign calling for Government action to address the issue. Youth smoking prevention Imperial Tobacco Canada distributes its tobacco products to 35,000 retailers and more than half of its employees work in the field, engaging directly with these retail customers. This means that the company is able to take a partnership approach to issues such as youth smoking prevention. For example, it supports the ‘We Expect ID’ national age verification programme, which is managed by the Canadian Convenience Store Association. The programme encourages retailers to prevent youth access to all adult-only products, including alcohol, cigarettes and lottery tickets. Information kits are distributed to retailers – to date, over 14,000 have been sent out – and web-based training and certification is delivered in French, English and Korean. Fuel efficiency Imperial Tobacco Canada’s main environmental and supply chain issues arise from its offices and distribution network. In 2011, the permanent car fleet used by the company’s trade account representatives was replaced with hybrid cars. This resulted in an estimated 43 per cent reduction in fuel consumption and carbon dioxide emissions, along with considerable cost savings. Community investment Imperial Tobacco Canada matches donations made by its full-time employees to community organisations. It has also established a private charitable foundation to invest in the community: the Imperial Tobacco Canada Foundation. The Foundation’s key projects include its Montreal South-West Community programme that provides six donations a year of C$20,000 (£12,610) each for projects that enhance community and public life, as well as its Arts Achievement Award, under which C$75,000 (£47,288) is donated to a Canadian arts organisation that has made an exemplary contribution to its art form, to the public and to cultural life in Canada. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in Canada
It is about being proactive and preparing for the future. I don’t like to think in terms of restrictions. It’s too negative.
Sylvain Foisy, Senior Brand Manager, du MAURIER, Imperial Tobacco Canada
When a new acquaintance finds out that I am a senior manager for Canada’s biggest tobacco brand, du MAURIER, the look on their face is usually a combination of confusion and disbelief. There is a great deal of misinformation and scepticism about the tobacco industry out there. But once I talk a little about my job, my company and how we take our responsibilities extremely seriously, they usually begin to see Imperial Tobacco Canada in a different light. It doesn’t faze me. I am very proud of how I contribute to Imperial Tobacco Canada’s sustainability and I am acutely aware of my responsibilities. And when you know the alternative – a contraband market that doesn’t comply with Government regulations – there’s no shame in working for the legitimate tobacco industry. Tobacco brand marketeers have a huge challenge in Canada. How do you build a brand when consumers cannot even see the packs in stores? How do you differentiate your product from those of your competitors if 75 per cent of the pack could be covered by a health warning? How do you define your brand when the regulations of what you can and cannot do are so strict? How do you compete against an illegal tobacco market that doesn’t comply with any tobacco regulations? And how do you do it all responsibly? The responsibility part for me is a no-brainer. Promoting, marketing and selling tobacco products to children are all illegal, against the core principles of our International Marketing Standards and against what each of us who works here believes to be right. Our marketing activities are directed only at adult tobacco consumers. But we still sell a legal product to adult consumers who are informed of the health risks. So my job as a marketeer is to meet the needs and preferences of those adult consumers. The job isn’t easy, particularly in a market as restrictive as Canada. It is about being proactive and preparing for the future. I don’t like to think in terms of restrictions. It’s too negative. For example, the planned increase in the size of graphic health warnings to 75 per cent on Canadian cigarette packs: we have seen this kind of extreme legislation before. It forces us to go back to the root of what’s important to consumers. This is a much more positive approach and, ultimately, more sustainable for the company. That means looking at our portfolio differently by focusing on creating innovative products and premium brands to differentiate ourselves from the competition. That’s how we’ll grow our market share among existing adult smokers and ensure that we continue to succeed as a business. Sylvain Foisy, Senior Brand Manager, du MAURIER, Imperial Tobacco Canada British American Tobacco Sustainability Report 2011
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Germany Viewpoint from the Managing Director Germany
For me, acting responsibly means facing up to our most important impacts including the health risks associated with tobacco HIGHLIGHTS products. • Operating in Germany since Ad Schenk, Managing Director, British American Tobacco 1926 Germany • 18% market share and third largest tobacco company in the country • Some 2,100 employees • Manufacturing sites in Bayreuth At British American Tobacco Germany, our vision is not only to lead the German tobacco market in terms and Bremen of consumer choice, but also to be the company of choice for business partners and employees. We know we can only achieve this by acting responsibly at all times. • The Bayreuth site is the largest producer in the Group, For me, acting responsibly means facing up to our most important impacts including the health risks producing 53 billion cigarettes associated with tobacco products. The long-term success of our company depends on us being able to in 2011 develop reduced-risk products in the future. Our Group R&D are doing some great work in this area. And, in the meantime, at British American Tobacco Germany we need to be responsible now with our existing products, such as through our marketing standards and youth smoking prevention programmes. We have a good reputation in Germany as a top employer with a family-friendly culture. We’re also known for our corporate social investment work, such as our Foundation for Future Studies, which contributes to wider debates affecting society. For me it’s fantastic to see how much our employees are really behind this work. That’s down to how much we involved them in developing our sustainability programme. We held sustainability workshops last year with different areas of the business and some great initiatives came out of these, developed by the employees themselves. Our sustainability goals can only be achieved if we all work together and take practical actions that everyone can contribute to. It makes me immensely proud to see this playing out in our day-to-day business. Our challenge now is to keep this momentum going, to create a truly sustainable business in the long term. Ad Schenk, Managing Director, British American Tobacco Germany
PERFORMANCE HIGHLIGHTS IN 2011
Met or exceeded Group targets for: • 100% adherence to our International Marketing Standards • Energy and water use • Waste sent to landfill and recycling. British American Tobacco Sustainability Report 2011
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Balanced scorecard for Germany
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 1 0
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco No Yes Yes
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 10.16 8.79 7.81 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 0.67 0.58 0.53 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.001 0.001 0.000 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 99.54% 99.37% 99.92% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 2.73 2.72 2.59 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 38% 80% 40% in the short term and two local successors in the long term for Long each senior position term 31% 60% 20%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 29% 60% 60% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco Germany vs Towers 2 Watson Germany national benchmark Score in the Engagement category 68 78 Ranked by difference from benchmark -6 +3
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 50.0% 70.0% 64.3% Management grade 34 39.8% 41.0% 38.3% Management grade 35 31.1% 31.0% 34.9% Management grade 36 16.4% 18.0% 18.8% Management grade 37 9.3% 7.0% 10.8% Management grade 38 0.0% 0.0% 0.0% Management grade 39 0.0% 0.0% 0.0% Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.68 0.56 0.42
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Sustainability at British American Tobacco Germany
In 2010, British American Tobacco Germany carried out a materiality test, using the Group’s methodology, to identify the issues of most concern to the business and its stakeholders. This involved consultation with external stakeholders, followed by workshops with different areas of the business to devise sustainability goals for each area. The result was the development of a sustainability programme that contributes to the Group’s sustainability goals at the same time as addressing local needs. Examples of some of the initiatives in the programme are detailed below. Youth smoking prevention British American Tobacco Germany continues to tackle youth smoking through a campaign to raise awareness of the issue among retailers and wholesalers. In 2011, 150,000 copies of the youth smoking prevention (YSP) campaign’s brochure were distributed to the company’s trade partners. The brochure is also available electronically for retailers to distribute to their employees. It contains information on the minimum age law, guidance on effective ways to verify a customer’s age and three point-of-sale stickers for the retailers to display. A total of 450,000 stickers were distributed, enabling the retailers to meet the German legal requirement to display the minimum age for sales wherever tobacco products are sold. The campaign’s online presence includes a YSP section of the company’s website, which was updated in 2011 to include an e-learning tool for retailers that features resources such as quizzes and videos showing how to handle typical situations. British American Tobacco Germany hopes that by working with retailers and its trade partners in this way, it can effectively contribute to addressing youth smoking in Germany. Reducing environmental impacts British American Tobacco Germany is committed to addressing its environmental impacts. It was the first company in our Western Europe region to be certified to the new European DIN EN 16001 standard, which focuses specifically on energy efficiency. The company’s work to reduce its environmental impacts is primarily focused on its manufacturing and logistics, as well as having initiatives such as its programme encouraging employees to use natural resources responsibly, both at work and at home. The company’s factory in Bayreuth is the largest manufacturing site in the Group. As such, it was one of the first to undergo a third party energy and CO2e assessment in late 2009. As a result of the assessment, the site has begun to upgrade its boilers, which represents up to half its total energy use, to more energy-efficient models. The vehicle fleet used by the company’s trade and account representatives is currently being replaced with more fuel-efficient cars. To date, 46 per cent of the fleet has been replaced. This is expected to result in an estimated 10 per cent reduction in the fleet’s overall fuel consumption and CO2e emissions, as well as considerable cost savings. The company plans to replace its entire fleet by 2014. Employer of choice British American Tobacco Germany has built a reputation as an employer of choice, focused on employee wellbeing. In 2011, it was recognised, for the seventh successive year, as a Top Employer in Germany by the CRF Institute, an international organisation that identifies top performers in the areas of human resources, leadership and strategy. The company’s work in this area includes a family services programme that provides employees with support through family events and day trips, free child care facilities in emergency situations and assistance with caring for sick or elderly relatives. Free confidential counselling services are also available for all employees. In recognition of this family-friendly approach, the company was accredited in 2010 by a national initiative, Berufundfamilie gGmbH, under the auspices of the Federal Minister for Family Affairs and the Federal Minister of Economics. British American Tobacco Sustainability Report 2011
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Employee survey In the 2010 ‘Your Voice’ employee opinion survey, British American Tobacco Germany saw positive results: in all 11 categories, employee opinion had improved compared to the 2008 survey. However, the company recognises that there are still some areas for improvement. For example, despite being 4 per cent above the national benchmark in the area of talent development, areas for improvement were identified. In 2011, these areas were addressed through initiatives including the establishment of an academy for graduates and existing non-management employees who have the potential to move into management roles. The academy includes training, coaching and seminars on leadership and management skills. Through the Group’s new learning management system, new training courses and materials have also been developed for management employees. Guidance was also provided for line managers to give more consistent and transparent feedback to employees following Talent Review meetings. Community investment British American Tobacco Germany has a long-standing corporate social investment programme. For example, the company is the main sponsor of Hamburg’s annual ‘Long Night of Museums’ event, in which over 40 museums and galleries are opened to the public overnight. More than 30,000 visitors took part in 2011. In Bayreuth, where the company’s main factory is located, British American Tobacco Germany supports young artists through its Campus Gallery project. In partnership with the University of Bayreuth, exhibitions are held for international artists and young international artists are supported with scholarships and exhibition opportunities. The Foundation for Future Studies The company also continues to support the Foundation for Future Studies, which it founded in 1979. The Foundation contributes to society’s debates around the future and sustainability. It produces publications based on independent research and holds events and seminars to encourage open discussion of the issues. In 2011, the Foundation’s geographical scope was extended beyond Germany to include other European countries. Projects under this new scope included the publication ‘United Dreams of Europe’. This report into expectations for the future of Europe was based on a survey of 15,000 people across 13 European states and interviews with European politicians, scientists and students. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in Germany
STAKEHOLDER VIEWPOINT The best way we can address youth smoking I’ve been able to build a is to support retailers to adhere to the one-to-one relationship minimum age law. with the company rep who visits my store. Ralf Artes, Sales Representative, British American Tobacco Germany We discuss not only sales and products, but also issues like youth smoking prevention and health warnings. For me, this demonstrates how seriously British In my role as a trade marketing representative, I visit over 50 retailers a week – in my fuel-efficient car, American Tobacco I’d like to point out! That level of engagement with the retailers puts me in the ideal position to talk to Germany takes these them about key issues for our business, like youth smoking prevention and marketing standards. issues and shows that The best way we can address youth smoking is to support retailers to adhere to the minimum age it’s not just lip service. law. So we talk to them about the issue, provide advice on age verification, supply them with point-of- They really do practice sale materials like ‘no sales to under 18s’ stickers and so on. I think the retailers really appreciate this personal approach and from my experience it’s a far more effective way of addressing the problem. what they preach! The fact that our International Marketing Standards (IMS) are more stringent than local laws in some K. Frank, Retailer, TABA-PRESS, areas presents us with a challenge. For example, we include health warnings on all our point-of-sale Nürnberg, Germany materials, but in the shop, sometimes other materials obscure the health warnings. As health warnings on these materials are not required by local law, some retailers struggle to understand why this is a problem. Of course, we talk to them about our IMS and explain why it’s important. Then they generally get it. Last year, the company developed a new training programme to help us better understand the IMS and translate it into real-life scenarios. What was particularly helpful was the face-to-face training. Hearing about other reps’ experiences and picking up tips on how to engage with retailers on difficult issues really helps me to do my job better. And that means I’m doing my bit to contribute to us upholding high standards in the marketplace. Ralf Artes, Sales Representative, British American Tobacco Germany British American Tobacco Sustainability Report 2011
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Malaysia Viewpoint from the Managing Director Malaysia
Being part of an international group is a real benefit for our local business in helping us to keep pace with external best practices. HIGHLIGHTS William Toh, Managing Director, British American Tobacco Malaysia • Operating in Malaysia since 1912 • Ranks among the top 25 companies on the Malaysian Stock Exchange by market capitalisation In 2012, we will mark the centenary of our presence in Malaysia. We’ve seen a lot of changes in those • Market share of 100 years. Sustainability, for example, wasn’t something we talked about until fairly recently. But when approximately 60% you dig a bit deeper, you find that the concepts underneath it aren’t so new. • Over 1,100 employees It has always made business sense to embrace these concepts – from maintaining good relationships with the communities in which we operate, to looking after our retail customers and supporting our employees. However, what we have seen in recent years is how external expectations of a responsible company are evolving. With the development of the Group sustainability agenda in 2007 and a step-change towards sustainability and shared value, I think this has helped to put us ahead of the game compared to other companies in Malaysia. That is where being part of an international group is a real benefit for our local business in helping us to keep pace with external best practices. Besides the major challenge of the illegal cigarette trade in Malaysia, there are also increasing expectations from our stakeholders and the public in general to continue performing responsibly in our operations, not least on environmental best practices. Through continued work with enforcement bodies and environmental initiatives, I hope we’ll start to see a real change in these areas. But they are definitely long-term issues and they require long-term solutions. William Toh, Managing Director, British American Tobacco Malaysia
PERFORMANCE HIGHLIGHTS IN 2011
Met or exceeded Group targets for: • 100% adherence to our International Marketing Standards • Waste sent to landfill and recycling British American Tobacco Sustainability Report 2011
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Balanced scorecard for Malaysia
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 0 0
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes No Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco No No No
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 18.77 18.04 21.77 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 2.15 2.12 2.27 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.003 0.001 0.001 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 95.87% 96.07% 96.25% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 18.03 16.54 12.90 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 56% 67% 67% in the short term and two local successors in the long term for Long each senior position term 56% 50% 67%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 67% 67% 67% 2 British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco Malaysia vs Towers 3 Watson Malaysia national benchmark Score in the Engagement category 70 65 Ranked by difference from benchmark -5 -11
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 41.4% 69.0% 53.8% Management grade 34 18.3% 29.0% 33.9% Management grade 35 33.8% 35.0% 32.6% Management grade 36 32.7% 25.0% 32.6% Management grade 37 30.8% 35.0% 37.9% Management grade 38 25.0% 25.0% 14.3% Management grade 39 25.0% 25.0% 20.0% Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.17 0.12 0.07 4
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 The 2009 percentage of local representation on the business unit senior management team has been re-stated to the one previously reported of 71 per cent, due to the earlier fi gure being incorrectly quoted in the previous Report. 3 Data is based on 2008 and 2010 biennial employee survey. 4 Sadly, there was one vehicle-related fatality to a contractor in 2011. British American Tobacco Sustainability Report 2011
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Sustainability at British American Tobacco Malaysia
Fighting the illegal cigarette trade MALAYSIA’S ILLEGAL The illegal cigarette trade in Malaysia is, according CIGARETTE TRADE to the 2009 Global Tobacco Report by Goldman Sachs, the largest in the world by market share. In 2011, according to research With a vast 172 per cent rise in excise tax between conducted by Neilson, illegal cigarettes represented 36.3% of 2004 and 2010 leading to Malaysia having the the market in Malaysia. third highest cigarette prices in Asia, the demand for cheaper, illegal cigarettes has increased. The The Malaysian Government is country’s long coasts, isolated jetties and extensive estimated to lose up to MYR2 borders make it relatively easy for cigarettes to be billion (£402 million) in unpaid smuggled in from neighbouring countries. taxes each year as a result of the illegal tobacco trade. The illegal cigarette trade not only affects British American Tobacco Malaysia’s revenues, it has negative consequences for society. The state loses out on tax income, cigarettes are easily accessible to children and criminal gangs profit. The company cannot hope to tackle a problem of this scale alone. It is therefore collaborating with the Government, industry groups and enforcement bodies to develop joint solutions, share intelligence and enhance enforcement capabilities. In 2011, British American Tobacco Malaysia took the crucial step of re-evaluating its efforts and addressing the issue with a fresh approach. As a result, the local business (through the Confederation of Malaysian Tobacco Manufacturers) worked with and supported the media to highlight the illegal cigarette trade and its consequences. It also outlined a comprehensive approach and strategy to the Government on addressing the issue. Following this, the Malaysian Government made its biggest acknowledgement of the seriousness of illicit trade to date by not raising the excise tax on cigarettes for the first time in history during the tabling of the 2012 National Budget. The Prime Minister further attributed this move to the fact that the illicit cigarette trade rate of nearly 40 per cent of the market was a concern for the Government. The illegal cigarettes problem, however, is not an issue that can be solved overnight. It will require sustainable and continuous efforts from both the industry and the Government. Environment, health and safety initiatives In 2011, British American Tobacco Malaysia implemented various initiatives to improve environmental performance in its operations. A second rainwater harvesting tank was installed at its manufacturing site to collect water for wetting tobacco dust waste and cleaning. It is expected to provide the site with 100,000 litres each year, reducing demand on local water supplies. A third tank is planned for 2012. The energy efficiency of the factory’s boilers was enhanced in 2011, with the installation of a third economiser unit to recover waste heat. This is expected to cut energy consumption by 18.9 per cent. The system used to filter the site’s emissions to air was also upgraded in 2011, using a new tundra peat as an organic bio-filter. In addition, the treatment capacity of waste water from the factory premises was increased by 20 per cent through an expansion of the Effluent Treatment Plant. To improve safety and fuel efficiency among the company’s drivers, a defensive driving programme was developed in 2010. Since then, a total of 356 employees have attended 13 sessions covering safe driving, vehicle handling in emergency situations, vehicle maintenance and tips on saving fuel. Sadly, however, there was one vehicle-related fatality of a contractor in 2011. We greatly regret this loss of life and hope that the defensive driving programme and other safety initiatives will help prevent a recurrence. Employee volunteering British American Tobacco Malaysia’s charitable foundation organises employee volunteering days. In the past, these have been in employees’ own time during the weekends. In 2011, however, this was changed to encourage a higher level of participation. The company sees employee volunteering as valuable not only for the community, but also for building stronger relationships between employees and teams. Three volunteering days were organised during the working week in 2011. Volunteering activities on these three days included planting saplings and seeds at a home for the elderly, and a waterfall and beach clean-up. In addition to this, volunteer events were also held during Malaysian festive celebrations. British American Tobacco Sustainability Report 2011
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External allegations The Malaysian Trades Union Congress made a complaint against British American Tobacco Malaysia, alleging anti-union activity in 2007. The complaint was analysed by the UK National Contact Point for the Organisation for Economic Cooperation and Development’s (OECD’s) Guidelines for Multinational Enterprises and their final ruling was published in 2011. The main allegations of the Trades Union Congress were that the company had restructured the business in such a way that the trade union became unsustainable and that insufficient employee consultation took place. British American Tobacco Malaysia explained that the restructuring was necessary to comply with a local law that requires managers and employees to belong to different unions. In its final ruling, which can be found on www.bis.gov.uk, the UK National Contact Point stated its decision not to investigate the restructuring, as to do so could result in a ruling that conflicted with local law. We maintain that British American Tobacco complied with the law and with our employment principles: wherever we operate, we respect workers’ fundamental rights to freedom of association and collective bargaining. The final ruling also recommended that British American Tobacco strengthen its consultation processes, which has now been done. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in Malaysia
What I love about my job is that environment, health and safety touches pretty much every part of the business.
Loo Ling Wah, Environment, Health & Safety Manager, British American Tobacco Malaysia
I’ve worked as the Environment, Health & Safety Manager at British American Tobacco Malaysia for almost three years. Until recently, most people here saw sustainability as being just about the environment. What’s great is to see how sustainability now seems to be the buzzword on everyone’s lips, no matter what area of the company they work in. I think that’s thanks to the way the Group sustainability agenda has been structured across the five key areas and how our business in Malaysia has aligned itself through its own sustainability framework and initiatives. It’s really resonated with the employees and given them a clearer view of how important sustainability is to our company. What I love about my job is that environment, health and safety touches pretty much every part of the business – from promoting health and safety in the offices, to organising the defensive driving programme for our sales force, to implementing environmental initiatives in our factory. The part that I find more challenging is getting the buy-in from management and employees for new initiatives. People are often scared of change or find it hard to see the business benefits – especially as lots of sustainability projects have longer pay-back periods than we’re used to. I have to say though, with so much more awareness now, that part of my job is definitely getting easier. We’ve still got a way to go, but I really believe that by getting the whole company to work together like this we’ve made a huge step forward. Loo Ling Wah, Environment, Health & Safety Manager, British American Tobacco Malaysia British American Tobacco Sustainability Report 2011
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Nigeria Viewpoint from the Managing Director Nigeria
We’re one of only a handful of companies in the country to carry out stakeholder dialogue. HIGHLIGHTS Beverley Spencer-Obatoyinbo, Managing Director, British American Tobacco Nigeria • Operating in Nigeria since 1912 • Market share of over 85% • Head office in Lagos also serves as the head office for our West Africa area, which covers 25 countries • Works with over 850 Having returned to British American Tobacco Nigeria just over two years ago, I’m so encouraged to see independent farmers and the progress that’s been made with regards to corporate social responsibility. I really believe we’re one of purchased over 2,000 tonnes of the leaders in this country when it comes to CSR. leaf from these farmers in 2011 In Nigeria, you say ‘CSR’ and people think ‘philanthropy’, because most companies focus just on • Two manufacturing sites in community development issues. They don’t have the broader focus of looking at the social, environmental Zaria and Ibadan and economic impact of their business operations. • Employs around 800 people For example, we’re one of only a handful of companies in the country to carry out stakeholder dialogue. and indirectly supports It’s helped to build our reputation for openness and transparency, which I think has helped stakeholders approximately 1,000 more through its distribution partner who previously would’ve refused to engage with us to now be more willing to do so. This approach to dialogue has been brilliant for us: knowing what our stakeholders think means we can make better business decisions. And it’s introduced us to organisations that we can partner with to help address some of our mutual issues. To be fair, some companies are showing more of an interest now. They’re asking about what we do so that they can learn from us. That’s really satisfying actually – to think that we’re not only making a difference ourselves, but encouraging other businesses to make more of a difference too. Beverley Spencer-Obatoyinbo, Managing Director, British American Tobacco Nigeria
PERFORMANCE HIGHLIGHTS IN 2011
Achieved a Lost Workday Case Incident Rate of zero British American Tobacco Sustainability Report 2011
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Balanced scorecard for Nigeria
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 2 0 1
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco No No Yes
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 20.53 20.93 17.90 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 1.63 1.65 1.41 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.076 0.057 0.040 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 57.49% 66.37% 70.69% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 6.82 4.73 4.98 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 43% 40% 40% in the short term and two local successors in the long term for Long each senior position term 43% 0% 0%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 71% 20% 20% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco Nigeria vs Towers 2 Watson Nigeria national benchmark Score in the Engagement category 67 78 Ranked by difference from benchmark -7 +2
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 33.3% 50.0% 57.1% Management grade 34 21.4% 27.0% 28.3% Management grade 35 17.5% 20.0% 23.1% Management grade 36 28.6% 26.0% 22.9% Management grade 37 19.0% 20.0% 12.5% Management grade 38 16.7% 25.0% 20.0% Management grade 39 0.0% 0.0% 0.0% Management grade 40 0.0% 100.0% 100.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.00 0.00 0.00
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Sustainability at British American Tobacco Nigeria STAKEHOLDER VIEWPOINT Marketplace responsibility Enforcement of youth The Group’s International Marketing Standards smoking prevention (IMS), which are stricter than the current tobacco laws, regulations and regulation in Nigeria, have strengthened the guidelines is everyone’s company’s approach to responsible marketplace practice. British American Tobacco Nigeria has responsibility. been encouraging the Government for some Stakeholder in dialogue on time to incorporate similar standards into local minimum age law legislation and is pleased to see that this is reflected in the proposed Tobacco Control Bill, many aspects of which the company supports. This includes the provision to introduce a minimum age of 18 for tobacco sales. There are currently no restrictions on the age at which people can buy cigarettes and, while it welcomes the proposed restriction, the company also anticipates problems with its enforcement. In Nigeria, it is culturally acceptable for children to buy cigarettes on behalf of adult smokers. The STAKEHOLDER market is also highly fragmented, with many small traders and street vendors. There is also no widely available VIEWPOINT or used national identification scheme that could be used to verify customers’ ages. From my community’s To explore these challenges and how they might be tackled, in 2011 British American Tobacco Nigeria held an experience since 2009, independently facilitated stakeholder dialogue session. Participants included representatives from government, the way British American NGOs, retailers and law enforcement agencies. Tobacco Nigeria The main message from the dialogue was that clarity is needed on how the minimum age law will be effectively conducts its Corporate enforced, such as through agreement on the areas of responsibility for all the stakeholders concerned, Social Investment including the Government, law enforcement bodies, retailers and the industry. It was suggested that a interventions through framework could be developed to clearly define responsibilities and that, based on this, solutions and areas for genuine community cooperation could be identified. British American Tobacco Nigeria will work with other stakeholders to explore participation and developing such a framework. empowerment, self-help The company’s trade marketing representatives will also discuss the proposed minimum age law directly and reliance on the with retailers. The trade marketing team already engages with retailers in this way, encouraging them to sell beneficiary community’s tobacco only to those aged 18 or over, despite this not yet being law. local human and natural Community investment assets largely accounts The British American Tobacco Nigeria Foundation is an independent charitable organisation established for the sustainability in 2002. The company provides funding that the Foundation uses to improve the quality of life of and high impact of these Nigeria’s citizens. projects as shown with One of the Foundation’s flagship projects is its Agricultural Development Initiative. This develops programmes our cassava processing to help traditional subsistence farmers adopt modern agricultural techniques. For example, model farms have centre. This does not been established to show how cassava, maize, watermelons and rice can be cultivated. Small processing even happen with plants for cassava and palm oil have also been built. These help farmers to understand how different Government projects. techniques can enhance their incomes. It is a model for other The Foundation’s other projects include vocational training centres to help people acquire employable trades companies to emulate. such as tailoring, cookery, plumbing and IT. There are currently two training centres in the Zaria and Jere communities in Kaduna State and a third has been commissioned for the Idi Ayunre community in Oyo State. Stakeholder in dialogue on community investment In 2011, British American Tobacco Nigeria held a stakeholder dialogue session on the subject of community investment. In particular, the company wanted to explore how the work of the Foundation could be better aligned with the Millennium Development Goals (MDGs). Participants included representatives from development agencies, charities, NGOs and government agencies. A major challenge raised during the dialogue was that there is currently no consistent framework for measuring the impact of community programmes. Despite this, participants agreed that there are opportunities for Nigerian companies to collaborate to help achieve common MDG and sustainability goals. Drawing on the insights gained from the dialogue session, British American Tobacco Nigeria will strengthen the design and implementation of the Foundation’s projects to be better aligned with Nigeria’s MDG targets. In 2011, the Foundation assessed the impacts of its projects. In 2012, it will publish the results of this assessment and adapt its Corporate Social Investment programme as appropriate. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in Nigeria
TOBACCO GROWING I get to see first hand how the work we do IN NIGERIA helps to improve the quality of life in these farming communities. In Oyo State, South West Nigeria, tobacco is the most widely Adeladan Ademola Amidu, Leaf Training and Sustainability cultivated cash crop. Supervisor, British American Tobacco Nigeria The company works with over 850 independent farmers and purchased approximately 2,000 tonnes of leaf from these farmers in 2011. When I first joined British American Tobacco Nigeria to work in the leaf department, I never imagined the scope of the work involved. Of course, I knew we’d be giving farmers agronomy support. That basically means we visit farms and provide training sessions where they can get advice on agricultural best practice, from water protection to the safe handling of agrochemicals. STAKEHOLDER What I hadn’t realised is how much advice is given on other crops – it’s not just tobacco. So, for example, we VIEWPOINT encourage crop rotation. It’s good for the farmers, as it means they can grow food crops to help feed their It has been a wonderful families. And it’s good for us – we want them to use fertilisers to improve the quality of their tobacco crops, business relationship but fertilisers are increasingly expensive. If they’re growing a food crop afterwards, the fertilisers they’ve bought for their tobacco crop are still in the soil, so the food crop benefits. And that means the farmers are with BAT Nigeria. It is more willing to spend money on the fertiliser. commendable that the Curing fuel is a big issue for us at the moment. We’re encouraging our farmers to establish sustainable wood company is the only one lots, so that they have a source of wood for curing their tobacco leaf, without having to take it from the natural in the Oyo North area forest. And we’re exploring other fuels, like sawdust briquettes, as well as more efficient curing barns, like of Nigeria that offers rocket barns that need only about half the wood that traditional barns do. technical support to I hadn’t appreciated how complicated the child labour issue was before I started working here or how much farmers for tobacco and of our time with farmers would be spent on it. I think it’s really important for people to understand that it’s food crop production. considered normal among the local communities for children to help out on their parents’ farms. It becomes The presence of the child labour when the ‘helping out’ starts to interfere with the child’s welfare, safety or education. It’s not company here has always an easy distinction to make, so we help the farmers to understand where the line needs to be drawn helped to create job and the steps they need to take, like making sure children don’t handle chemicals. opportunities for our All these aspects of my job make for an interesting and challenging role – no day is ever the same! And it’s people. extremely satisfying – I get to see first hand how the work we do helps to improve the quality of life in these farming communities and that means I go home proud. Mr Alani Adewuni, tobacco grower, Igboho community, Oyo State, Adeladan Ademola Amidu, Leaf Training and Sustainability Supervisor, British American Tobacco Nigeria Nigeria British American Tobacco Sustainability Report 2011
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Russia Viewpoint from the General Manager Russia
Stakeholders are often surprised by how open we are – even when we’re being criticised or HIGHLIGHTS facing viewpoints different from our own. • Market share of 20.7% Johan Vandermeulen, General Manager, British American • Over 3,000 employees Tobacco Russia • Three factories in Moscow, St Petersburg and Saratov • Distribution to more than 670 cities nationwide
I’m proud to say that British American Tobacco Russia is seen as one of the pioneers of stakeholder engagement and reporting in our country. We began our programme back in 2001 and I don’t think many companies here can say they’ve had a stakeholder dialogue programme in place for that long. The dialogue process has given us a better understanding of the key issues for our local stakeholders – their opinions help inform what we have to do. We need to meet stakeholders’ expectations to help ensure the sustainability of our business, so engaging with them has helped us make better decisions. Of course, some stakeholders are sceptical of our approach just because we are a tobacco company, so they refuse to engage with us. But those stakeholders that do meet with us are often surprised by how open we are – even when we’re being criticised or facing viewpoints different from our own. It’s this kind of challenge that really keeps us on our toes. OK, we may not agree with everything they say, but we always respond and we try to be clear about our reasoning. I think that this long history of listening to our stakeholders places us in a unique position: we have a lot of experience and insights to share with others, which I hope can make a real contribution to sustainable development in Russia. Johan Vandermeulen, General Manager, British American Tobacco Russia
PERFORMANCE HIGHLIGHTS IN 2011
Met or exceeded Group targets for: • Energy and water use • Waste sent to landfill and recycling. British American Tobacco Sustainability Report 2011
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Balanced scorecard for Russia
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 0 2
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco Yes Yes Yes
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 9.78 9.94 10.36 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 0.74 0.74 0.77 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.022 0.017 0.013 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 77.96% 82.40% 86.24% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 2.11 1.77 1.62 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 50% 60% 33% in the short term and two local successors in the long term for Long each senior position term 33% 40% 33%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 0% 0% 17% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco Russia vs Towers 2 Watson Russia national benchmark Score in the Engagement category 74 80 Ranked by difference from benchmark -4 +5
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 57.1% 64.0% 52.6% Management grade 34 37.2% 38.0% 35.1% Management grade 35 43.2% 43.0% 44.4% Management grade 36 36.2% 32.0% 36.0% Management grade 37 25.0% 23.0% 23.1% Management grade 38 100.0% 22.0% 14.3% Management grade 39 0.0% 25.0% 33.3% Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.00 0.07 0.14
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Sustainability at British American Tobacco Russia
Stakeholder engagement STAKEHOLDER British American Tobacco Russia’s long-standing VIEWPOINT stakeholder engagement programme has The fact that you’re helped inform and develop its approach to holding this dialogue, sustainability over the last 10 years. It has helped ensure that initiatives are in line with that you’re not afraid to local stakeholder expectations as well as the present your reports, Group’s sustainability agenda. speaks to the fact that In 2011, the company published its latest yours is a truly public, Stakeholder Report, detailing its recent stakeholder results-driven company. dialogue sessions on environment, health and State agency representative in safety at its factory in St Petersburg and on dialogue tobacco product regulation in Moscow. You can read more about the St Petersburg dialogue in the employee viewpoint and can download a copy of the Stakeholder Report here. STAKEHOLDER Youth smoking prevention VIEWPOINT Despite having had a minimum age law of 18 for tobacco sales since 2001, underage smoking rates in Russia The company is are still among the highest in the world. To help tackle this, British American Tobacco Russia is part of an genuinely interested industry youth smoking prevention (YSP) programme coordinated by two independent NGOs. in implementing useful The programme aims to reduce access to tobacco products for under 18s by training retailers. The training projects, which is the is delivered by the NGOs together with State authorities. This collaborative approach has enabled a more essence of business focused and effective programme with wider reach. responsibility to Retail chains are also invited to use the programme’s training module as part of their in-house training courses. the region and its This enables more regular training for their staff than the programme would be able to deliver itself and helps inhabitants. increase its reach. Representatives from the industry also discuss YSP issues with retailers as part of their day-to-day work and State agency representative in provide them with point-of-sale stickers and booklets stating that the retailer does not sell tobacco products to dialogue anyone under 18. The industry programme also aims to raise public awareness of the issue of youth smoking. In 2011, events were held in over 20 Russian cities, attended by representatives from local administrations, regional oversight agencies, commercial and non-governmental organisations and the local media. A conference devoted to the issue of youth retail access prevention was also held in St Petersburg in late 2011. This was attended by around 100 representatives of State bodies, NGOs and local businesses. YOUTH SMOKING The main objective of the conference was to develop a set of measures to strengthen enforcement of PREVENTION HIGHLIGHTS the minimum age law and help reduce youth smoking. Following the conference, a summary of the main 2004–2011: conclusions and recommendations was circulated to relevant parties, including the Government and the State Duma. • Programme run in over 40 cities. • 744 YSP educational seminars Many stakeholders are still sceptical about the intentions of tobacco companies in this area. British American and training events and over 90 Tobacco Russia hopes that the work it is putting into raising awareness, strengthening enforcement and public events held. supporting retailers to comply with the minimum age law will result in lower youth smoking rates and • Over 15,000 employees from demonstrate the company’s good intentions. 720 key retail accounts, covering In 2012, the company plans to publish results of a study conducted by an independent research agency to 14,000 outlets, took part in measure the effectiveness of the programme. training sessions. • Around 40,000 copies of YSP Environmental initiatives educational materials distributed in retail outlets across Russia. As part of the Group’s global plan to reduce the environmental impact of our factories, British American • YSP training module run in 56 Tobacco Russia’s three factories are running joint and site-specific programmes to reduce energy and water colleges and training centres for use, minimise waste generation and increase recycling rates. retail employees. The three factories have environmental management systems certified to the ISO 14001 international standard and take advantage of a common documentation database, harmonised processes and shared experience. For example, an energy saving culture project, which aimed to encourage employees to use energy at work and home in a responsible way, was successfully piloted at the factory in Saratov before being rolled out to the factories in St Petersburg and Moscow. This project was complemented by an ‘EcoFactory’ campaign which aimed to raise employees’ awareness of wider environmental issues, including the cost of natural resources. British American Tobacco Sustainability Report 2011
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Energy and resource use assessments were carried out at each of the three factories between 2010 and 2011. These assessments help the company to identify and prioritise measures to further reduce its energy and resource use. For example, the factory in St Petersburg replaced a range of pump and fan drives with energy- efficient alternatives and improved insulation of heating and cooling systems. This work built on a number of environmental initiatives already underway at the factories, examples of which are detailed below. In the Saratov factory, waste heat from the tobacco dryer is now used to heat water in summer and to melt snow in winter. A project is also underway to modernise the factory’s boiler system to a more efficient model, which is expected to result in reducing the site’s use of natural gas by 7–10 per cent, resulting in total energy savings of 2–3 per cent. The factory in St Petersburg saved 7 per cent of its total water use by installing a rainwater collection system for cooling hot water from the site’s boiler before disposal. Another example is the introduction of FIBEX at the St Petersburg factory to reduce and reuse waste. FIBEX is a British American Tobacco patented technology that converts previously unusable tobacco (for example, because the particle size is too small) into a useable product similar to ordinary tobacco. It involves crushing and extruding tobacco materials then reconstituting them under high pressure. The finished product can then be blended with regular tobacco. The factory in Moscow was one of the first manufacturing sites in the city to take part in an initiative of the Government’s Department of Nature to install an online system for monitoring emissions into the air. The system measures emissions data every 20 minutes, which is then collated with other data from the area and made publicly available on its website, http://mosecom.ru/air/air-today/. You can read more about environmental initiatives in the Saratov and St Petersburg factories in British American Tobacco Russia’s last two Stakeholder Reports, which can be downloaded here. Workplace safety All three of British American Tobacco Russia’s factories have health and safety management systems certified to the OHSAS 18001 international standard. These systems are based on regular identification of potential hazards, assessing associated risks and developing preventive measures. The company also holds regular training days and events to continually remind employees of the importance of health and safety. For example, the factories hold a Health & Safety and Fire Safety week each year that includes quizzes, competitions and other activities designed to engage employees in a fun way. A number of employees also act as ambassadors to champion health and safety among their colleagues. Initiatives like these have helped to embed the Group’s position that health and safety is not only the responsibility of management, but needs everyone to look out for each other. The factory in St Petersburg introduced a new system to monitor ‘near misses’, enabling it to respond to minor injuries and hazardous situations and help prevent potential lost workdays and serious injuries. The factory in Saratov made a step change in emergency preparedness at the site through installing technical means of registering employees at the fire assembly points and facilitating the evacuation procedure. The company’s factory in Moscow also took advantage of a new opportunity, in June 2010, for Moscow employers to register to the Moscow State Labour Inspection Certificate of Trust. Gaining such certification is not only recognition of the factory’s high standards of health and safety, but also helps to demonstrate its commitment to this important area, both externally and to its employees. To help reduce vehicle-related accidents in the Trade Marketing & Distribution teams, the company has had a Traffic Accident Reduction programme in place since 2008. The programme includes setting annual targets, which are included in performance objectives for key environment, health and safety personnel and drivers; recording and analysis of ‘near misses’; defensive driver training focused on practical skills to avoid accidents and handling vehicles in emergency situations; regular testing of drivers’ knowledge of local road rules; and awards and recognition for teams with accident-free records. A continuous positive trend has been seen with around a 55 per cent reduction in the road traffic accidents rate since 2006. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in Russia
ST PETERSBURG FACTORY We didn’t think we knew it all, but I for one thought about some things differently after that session. More than 540 employees
Victor Remezov, St Petersburg Factory Power Facilities Manager, Produces 26.8 billion cigarettes British American Tobacco Russia a year
In 2011: • Energy use of 7.21GJ per million cigarettes equivalent • CO2e of 0.51 tonnes per million cigarettes equivalent I’ve worked at the St Petersburg factory for 14 years and I’m now the Power Facilities Manager. • Water use of 1.44m3 per million cigarettes equivalent In November 2010, I was asked to participate in a dialogue session on environment, health and safety • Recycling rate of 90% issues. I’d never been to an event like this before, with people from inside and outside the company. To • Lost Workday Case Incident be honest, I was a bit nervous to start with, not knowing how it would work, and I thought it might be a Rate of zero complete waste of time. Of course, I was wrong! I soon realised that it was really useful – and enjoyable. I liked having the opportunity to explain our approach with the external stakeholders – being able to demonstrate to them that we take these issues seriously and are tackling them from lots of angles. That made me feel proud. And the comments we got back from them were really useful too. Don’t get me wrong – we didn’t think we knew it all, but I for one thought about some things differently after that session. As much as we think we might be on the right track, having that level of external challenge is invaluable in helping us to make further progress. As a result of this dialogue, we now want to engage with our stakeholders on a whole list of other topics. I think it’s great that we’re developing a strong stakeholder engagement programme – for one thing, because I think it’s really important that we don’t become complacent and, for another, because it shows how committed the company really is to addressing its environmental impacts. And that makes me proud to work here. Victor Remezov, St Petersburg Factory Power Facilities Manager, British American Tobacco Russia British American Tobacco Sustainability Report 2011
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South Africa Viewpoint from the Managing Director South Africa
We know we need to be ‘future fit’ to continue to deliver value to shareholders and other stakeholders. And that means meeting our sustainability goals. HIGHLIGHTS
Brian Finch, Managing Director, British American Tobacco South Africa • Operating in South Africa since 1904 • 86% share of the total legitimate tobacco market • Over 2,000 employees • Heidelberg factory produces 27.5 billion cigarettes a year British American Tobacco South Africa has deep roots in this country: we’ve been operating here for • 31% of the tobacco used over a century. The success of our company is intertwined with the success of the country so, to me, our comes from South African commitment to sustainability makes no sense if it isn’t also a commitment to sustainable development in farms South Africa. • Once again voted as one of the The Group sustainability agenda gives us a clear framework for focusing on the issues that are most top employers in the country material for the Group as a whole and those that matter most to people here in South Africa. For example, HIV/AIDS is a really serious problem here and this can affect our employees, our consumers, our suppliers – in short, our business. We’ve made good progress in addressing this, not least by evolving our HIV/AIDS support into a broader employee wellbeing programme. This has made it easier for employees to access testing and treatment without fear of being stigmatised. Another important issue here is the fact that most Black1 South Africans still hold little economic power. Broad-Based Black Economic Empowerment is about creating an inclusive and prosperous society in which all South Africans can participate fully. For British American Tobacco South Africa, encouraging Black South Africans to prosper in our workforce or wider supply chain means that we don’t miss out on talented individuals who may have much to offer our business. According to the Tobacco Institute of Southern Africa illegal cigarettes make up over 20 per cent of the total cigarette market in South Africa, so tackling illicit trade is another major focus for us. The media campaign we launched last year helped to raise public awareness and we will continue to tackle the issue. We know we need to be ‘future fit’ to continue to deliver value to shareholders and other stakeholders. And that means meeting our sustainability goals. Brian Finch, Managing Director, British American Tobacco South Africa
PERFORMANCE HIGHLIGHTS IN 2011
Met the Group target for 70:30 ratio of local to expatriate senior managers at business unit level
1 The term ‘Black’ is defi ned in South African legislation to include people of ‘African, Indian and Coloured domain’. British American Tobacco Sustainability Report 2011
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Balanced scorecard for South Africa
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 2 0 1
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco No No No
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 15.36 16.85 15.82 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 2.00 2.32 2.16 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.041 0.058 0.040 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 80.53% 74.89% 83.63% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 7.29 8.96 7.95 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 43% 20% 60% in the short term and two local successors in the long term for Long each senior position term 86% 60% 40%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 57% 100% 80% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco South Africa vs Towers Watson South Africa national 2 benchmark Score in the Engagement category 81 77 Ranked by difference from benchmark +6 +1
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 34.6% 43.0% 54.5% Management grade 34 42.3% 50.0% 41.9% Management grade 35 26.2% 32.0% 31.5% Management grade 36 31.8% 35.0% 35.0% Management grade 37 19.7% 21.0% 21.6% Management grade 38 8.3% 10.0% 0.0% Management grade 39 20.0% 20.0% 16.7% 3 Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.56 0.72 0.92 4
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Data is based on 2008 and 2010 biennial employee survey. 3 The 2009 percentage of women in management grade 39 has been re-stated to the one previously reported of 25 per cent, due to the earlier fi gure being incorrectly quoted in the previous Report. 4 Sadly, there was one fatality in 2011 to a contractor in the Trade Marketing & Distribution team as the result of an assault. British American Tobacco Sustainability Report 2011
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Sustainability at British American Tobacco South Africa
Fighting the illegal tobacco trade EXTERNAL RECOGNITION In response to a significant increase in South Africa’s illegal tobacco trade in recent years, the At the 17th Conference of Parties company launched an awareness campaign in on Climate Change in South late 2010. Africa in December 2011, British Supported by the Tobacco Institute of Southern American Tobacco South Africa received recognition from the Africa (TISA), the first phase of the campaign was Global Carbon Disclosure Project rolled out in Gauteng and the Western Cape, the for its sustainability performance, two provinces with the highest levels of illegal as well as a fourth place tobacco products. The campaign aimed to educate Gold Certificate for its carbon wholesalers, retailers, consumers and the general disclosure. 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. 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. Environmental 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. British American Tobacco Sustainability Report 2011
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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 defi ned in South African legislation to include people of ‘African, Indian and Coloured domain’. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in South Africa
Employees see that the company cares about its people and about the country and that makes it a great place to work.
Mokgethi Daniel Mokone, Human Resources Service Centre Officer, British American Tobacco South Africa
I have worked for British American Tobacco South Africa for over 30 years. More than 20 of those years have been in human resources. It sounds like a cliché, but to its employees British American Tobacco South Africa really doesn’t feel like an ordinary company. I think there is an understanding that the company’s ultimate success depends on its people. They’re the company’s lifeblood and that view is embraced at all levels of the business. I think focusing on becoming an employer of choice and highlighting our strengths as an employer has helped us attract and retain talented people. Becoming an employer of choice is partly about giving employees a better work-life balance and greater control. So, for example, we introduced a greater range of flexible working options and we’ve provided an integrated wellbeing programme. We’ve also developed a coaching culture so that employees can get the help they need to develop their skills, rather than relying on classroom training to tell people what they need. My own advancement through the company – from the factory floor up through office roles into the human resources department – has shown how, if you want to develop and progress, all the opportunities are there. I’ve been supported at every stage of my career and have been inspired by seeing the rise in Black professionals in the company. It amazes me now to think how different a country South Africa was when I first started in the company; we were at the height of apartheid. Redressing these inequalities has been a big challenge for the whole country and businesses have an important part to play in this. We have a clear approach to Broad-Based Black Economic Empowerment (B-BBEE). I really believe this is not about paying lip service to the Government’s B-BBEE strategy. It’s something that the company really believes in and is strongly committed to. After all, the rise in the Black middle class in South Africa presents a real opportunity for us to recruit talented professionals. And I think employees see this commitment – not just to B-BBEE, but to all our sustainability issues and to our continued business success. They see that the company cares about its people and about the country and that makes it a great place to work. Mokgethi Daniel Mokone, Human Resources Service Centre Officer, British American Tobacco South Africa British American Tobacco Sustainability Report 2011
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South Korea Viewpoint from the General Manager South Korea
These days sustainability is just part of how we do business.
Stephan Liechti, General Manager, HIGHLIGHTS British American Tobacco Korea • Market share of approximately 15% • Annual sales of 13.5 billion cigarettes
Being part of this Sustainability Report is really important to us at British American Tobacco Korea. It • Over 1,000 employees allows us to demonstrate how we’re committed to the Group’s sustainability goals and the contribution • Distributes to around we’re making towards meeting them. 100,000 retailers The goals are just as relevant for us locally as they are globally, such as adhering to our International Marketing Standards, reducing our resource use and emissions, supporting our employees and having a strong workplace culture – they all make good business sense on the ground. So much so, these days sustainability is just part of how we do business. Being within the tobacco industry, we face many challenges as regulations become tougher and social expectations of the tobacco industry get higher. Youth smoking is also a growing concern in Korea. We’re working hard to address this, both directly with retailers and together with other tobacco companies through a youth smoking prevention campaign. There’s also still a perception here in Korea that sustainability is about community investment. Of course, we do contribute to the communities in which we operate and that’s an important part of our approach. But we would like to work closely with stakeholders to see more acceptance of the role of business in wider sustainability issues. Stephan Liechti, General Manager, British American Tobacco Korea
PERFORMANCE HIGHLIGHTS IN 2011
• Outperformed the Group targets for water use, waste sent to landfill and recycling • Achieved a zero Lost Workday Case Incident Rate British American Tobacco Sustainability Report 2011
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Balanced scorecard for South Korea
Trend key: Improvement or maximum level Minimal or no change (2 percentage points or less) Decline
International Marketing Standards 2009 2010 2011 Trend Notes Number of reported instances of partial or non-adherence 0 0 1
Youth smoking prevention 2009 2010 2011 Trend Notes Reports running or supporting youth smoking prevention programmes Yes Yes Yes
Preventing underage access 2009 2010 2011 Trend Notes Reports engaging with the government, directly or indirectly, to improve measures to help prevent underage access to tobacco Yes No No
Energy use 2009 2010 2011 Trend Notes Gigajoules per million cigarettes equivalent produced 12.51 13.01 16.12 1
Carbon dioxide 2009 2010 2011 Trend Notes
Tonnes CO2e per million cigarettes equivalent produced 1.03 1.08 1.38 1
Waste to landfi ll 2009 2010 2011 Trend Notes Tonnes per million cigarettes equivalent produced 0.003 0.002 0.001 1
Recycling 2009 2010 2011 Trend Notes Percentage of waste recycled 97.75% 98.86% 99.49% 1
Water use 2009 2010 2011 Trend Notes Cubic metres per million cigarettes equivalent produced 3.08 3.23 4.00 1
Local succession coverage – 1:1:2 at business unit level 2009 2010 2011 Trend Notes Percentage of the business unit Short with at least one local successor term 44% 17% 17% in the short term and two local successors in the long term for Long each senior position term 78% 0% 0%
Local top teams – 70:30 at business unit level 2009 2010 2011 Trend Notes Percentage of local representation on business unit senior management teams 33% 17% 33% British American Tobacco Sustainability Report 2011
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Employee opinion ‘Your Voice’ survey 2008 2010 Trend Notes British American Tobacco Korea vs Towers 2 Watson Korea national benchmark Score in the Engagement category 55 53 Ranked by difference from benchmark -9 -17
Gender diversity 2009 2010 2011 Trend Notes Percentage of women in management grades Management trainees 20.0% 22.0% 27.3% Management grade 34 38.0% 35.0% 31.1% Management grade 35 26.8% 29.0% 30.0% Management grade 36 29.4% 31.0% 34.3% Management grade 37 25.0% 14.0% 22.2% Management grade 38 20.0% 14.0% 16.7% Management grade 39 0.0% 0.0% 0.0% Management grade 40 0.0% 0.0% 0.0%
Lost Workday Case Incident Rate (LWCIR) 2009 2010 2011 Trend Notes LWCIR = Number of lost workday cases through injury x 200,000 divided by total hours worked 0.20 0.69 0.00
Indicates that this market has met or outperformed the Group target for this measure.
Notes 1 The environmental data is from our online Group-wide EHS reporting system. Previous fi gures reported in local publications may vary due to differing local reporting standards. 2 Data is based on 2008 and 2010 biennial employee survey. British American Tobacco Sustainability Report 2011
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Sustainability at British American Tobacco Korea
Youth smoking prevention STAKEHOLDER Youth smoking is a growing concern in South VIEWPOINT Korea. In 2011, a survey of 76,000 students under I’ve noticed that British 19 (the minimum age for the sale of tobacco products), conducted by the Korea Centre of American Tobacco Disease Control and Prevention, showed that Korea is strongly around 80 per cent of respondents could easily buy committed to retailer cigarettes in retailer shops without being asked to engagement for youth show ID. smoking prevention. Retailers’ licences for selling tobacco can be The campaign adopted suspended for violating the law when they are a long-term and holistic found to have sold cigarettes to under 19s. Despite approach to raise this, some of the main issues for youth smoking awareness among are lack of enforcement and retailers’ commitment retailers and I can say it to help prevent youth access. works! For several years, British American Tobacco Korea has supported a youth smoking prevention campaign focusing on age verification, together with three other tobacco companies and the industry association. Joining Dong-Gye Park, a retailer who forces with other tobacco companies helps to avoid confusing retailers with inconsistent messages and participated in the YSP campaign duplication of effort. The campaign includes engagement with retailers to raise awareness of the issue; providing point-of-sale materials and face-to-face training; and retailers being asked to sign a pledge that they will not sell to the underage. In addition, a celebrity acts as an ambassador and endorses the campaign in order to help raise awareness among youth. In 2011, the campaign targeted 70,000 retailers, with some 9,000 signing a pledge to not sell tobacco products to the underage. Environmental initiatives The company’s focus in 2011 was on reducing the environmental footprint of its manufacturing site in Sacheon. Although Sacheon is one of the more energy-efficient factories in the Group, there is always room for improvement. Therefore, in 2011 the company assessed its energy use and CO2 emissions and identified and prioritised improvement initiatives. Since the assessment, a number of ‘quick win’ changes have been made, including insulating valves in the boiler house; reducing the temperature of intake air used in the production process; modernising the site’s air conditioning unit; replacing fluorescent lighting with more energy-efficient LED lights; and installing daylight and motion sensors. An action plan has also been drawn up for investigating and implementing medium- and long-term investments, such as replacing manufacturing equipment with more energy-efficient models and exploring renewable energy options. The company also recognises that employee behaviour is a key factor in reducing environmental impacts. Therefore, in 2011 it ran a programme to raise employee awareness of environmental issues and advise them on how they can save energy in their day-to-day work. The campaign included posters and leaflets and various employees acted as ambassadors to champion environmental awareness. British American Tobacco Sustainability Report 2011
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Viewpoint from an employee in South Korea
Being part of an international business that is so focused on sustainability has been a great help.
Kyu-Tae Kim, Environment Health & Safety Supervisor, Sacheon factory, British American Tobacco Korea
I’ve been an Environment, Health & Safety (EHS) Supervisor at the Sacheon factory for just over a year now. I found that my previous experience at the factory in engineering roles means that I have a good understanding of the pressures my colleagues are under and how the different factory processes work. So I try to find solutions that take these things into consideration as well as the environmental issues – which makes them more likely to succeed. Being part of an international business that is so focused on sustainability has been a great help too. The Group EHS management system is so well established, I definitely wasn’t starting from scratch. And I’ve had a lot of help from my EHS colleagues, especially in getting used to the EHS data reporting system, which requires a massive amount of information. But I can see that it’s only through that kind of detail that we can get a true picture of our environmental performance. The introduction of the Group manufacturing roadmap last year was also great to see. It gave us a consistent and well thought out structure for conducting self-assessments of our energy and CO2e performance across the factory. The assessments helped us to prioritise our improvement actions and we’re already seeing the results. But we’re not complacent; even though we’re one of the more energy-efficient sites in the Group, we’re always looking for further reductions. Take this year, when we installed new machinery for a product innovation. We found that it consumed more energy and generated more waste than the other machines, but we’ve found a way to recycle some of the waste. I now need to look into how we can make further reductions, while still being able to manufacture our products and keep productivity levels up. I am proud to think that my work is contributing, at least in some way, towards the Group’s sustainability goals. I know there’s more we can do and I look forward to facing the challenges ahead. Kyu-Tae Kim, Environment Health & Safety Supervisor, Sacheon factory, British American Tobacco Korea British American Tobacco Sustainability Report 2011
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About this Report
This is the British American Tobacco p.l.c. Sustainability Report 2011. It reports on the activities of British American Tobacco companies in the UK and internationally and covers the calendar year 2011. Associate companies are excluded. References to ‘British American Tobacco’, ‘we’, ‘us’ and ‘our’ when denoting opinion refer to British American Tobacco p.l.c. (the Company) and when denoting tobacco business activity refer to Group operating companies, collectively or individually as the case may be.
Statements and assurance This Report contains forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries in which the Group operates. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. Ernst & Young LLP has been engaged by British American Tobacco to provide external assurance of this Report. Ernst & Young LLP reviewed all commitments and statements of progress, data, GRI information, text and, specifically, performance-related information for the period 1 January 2010 to 31 December 2011.
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