2020 Sustainability Report Toward a smoke-free future Rothmans, Benson & Hedges Inc. 2020 Sustainability Report 2 Table of contents Letter from our Managing Director 4 Approach to sustainability 5 Creating a smoke-free future 7 Operating with excellence 10 Caring for people 12 Protecting the environment 16 Change is underway at Rothmans, Benson & Hedges Key goals 19 Inc. (RBH). We are transforming our company, our products and our place in society. In this report, we share our vision and strategies for creating a smoke-free Canada and being a leader in the reduced-risk product space – along with our approaches to managing key environmental, social and governance topics. This report is published for the purpose of providing general information about Rothmans, Benson & Hedges Inc. The purpose of this report is not for advertising or marketing; it is for use by scientists, the public health and regulatory communities, and other stakeholders with an interest in tobacco policy. The material in this report should not be regarded as an offer to sell, or a solicitation of an offer to buy, any product of RBH. Such products are sold only in compliance with the laws of the particular jurisdictions in which they are sold. Letter from Director Approach to sustainability Creating a smoke-free future Operating with excellence Caring for people Protecting the environment Key goals Rothmans, Benson & Hedges Inc. 2020 Sustainability Report 3 RBH, a subsidiary of Philip Morris International Inc. (PMI), is one of Canada’s leading tobacco companies. We are also spearheading the Unsmoke Canada conversation and helping Canadians go smoke-free. 780 31% 2019 economic employees of employees impact across Canada are women, and $180 million spent on 37% local goods and services of these women $120 million paid in 5 hold management positions employee wages and offices benefits $1 million invested in employee training Manufacturing plant 250 Over $200 million paid in Quebec City toward federal and vehicles provincial taxes We work with ≈ 8B 150 cigarettes farmers produced in 2020 in Canada Letter from Director Approach to sustainability Creating a smoke-free future Operating with excellence Caring for people Protecting the environment Key goals Rothmans, Benson & Hedges Inc. 2020 Sustainability Report 4 Letter from our Managing Director to Unsmoke Canada by 2035, by which we mean to move Canada to a smoke-free future and to stop selling cigarettes. We haven’t talked much about Our message on smoking is clear: if you don’t smoke, don’t start. If you smoke, quit. If you these things publicly before – and don’t quit, change. And our parent company, PMI, is investing billions of dollars in research we want to fix that, recognizing and development to create innovative products that help adults who won’t quit that transparency and dialogue smoking to switch to alternatives. The best option is to always quit nicotine are critical for building trust and and tobacco use altogether, but smokers who choose not to quit should also be aware that fostering the change we envision.” alternatives exist. It is important to remember that these alternatives are not without risk. In this report, you’ll learn about some of our Thank you for taking the time to read our I am pleased to introduce RBH’s first They still contain nicotine and are addictive. other priorities as well, which relate to how sustainability report. We’re eager to have sustainability report. As a tobacco company, But, for adult smokers who would otherwise we conduct our business, how we support conversations with Canadians about creating we recognize that a report from us may continue to smoke, smoke-free alternatives our employees and communities, and actions a smoke-free future, and we hope this report be greeted with skepticism – and that’s provide an option that does not involve we’re taking to reduce our environmental gets the discussion going. While RBH has understandable – but we’re in a much combustion – or “burning” – like smoking a footprint. We haven’t talked much about contributed to the problem of smoking, different place than we were just four years cigarette does. This eliminates the inhalation these things publicly before – and we want we now have the means, resources and ago and we want to engage with Canadians on of smoke and, as a result, has the potential to fix that, recognizing that transparency and commitment to drive meaningful change. topics that matter deeply to us and to them. to significantly reduce the levels of harmful dialogue are critical for building trust and But we need governments, consumers and or potentially harmful chemicals caused fostering the change we envision. Canadians at large to join us. It goes without saying that the first and by by combustion. far the most significant of these topics is I’d also like to take this opportunity to Thank you, cigarette smoking and its negative impacts Here in Canada, RBH is tackling the issue of recognize publicly our own employees. Our on human health. It may surprise you to smoking on multiple fronts, which I encourage ability to achieve our Unsmoke vision depends learn that we’re staking our future on you to read about on page 5. These activities on their skills, dedication and relentless getting out of cigarettes, for the good of are at the heart of our corporate strategy and efforts, and they are rising to every challenge. Peter Luongo society and of our business. Our vision is sit atop our sustainability priorities. We cannot thank them enough. Managing Director Rothmans, Benson & Hedges Inc. Letter from Director Approach to sustainability Creating a smoke-free future Operating with excellence Caring for people Protecting the environment Key goals Rothmans, Benson & Hedges Inc. 2020 Sustainability Report 5 Approach to sustainability RBH’s vision to Unsmoke Canada The exercise helped us clarify priorities by 2035 is core to our strategy. and develop the pillars of our sustainability strategy. Our next step is to establish goals We know it is the right thing to against which we will then track and report do, and technology now makes publicly on progress. it possible. We are committed Within each pillar, tier 1 topics are those to setting ambitious goals, deemed to be most important to RBH’s working hard to reach them and sustainability as identified through our communicating our progress. assessment. For these topics, we will consider the commitments, goals and management To ensure that our sustainability work aligns approaches needed to mobilize our people with societal expectations and focuses and partners, and achieve meaningful impact. where we can have the greatest impact, we Tier 2 topics are important to us and managed conducted a materiality assessment in 2019. in the regular course of our business. Of Based on the approach proposed by the Global these topics, inclusion and diversity, illicit Reporting Initiative (GRI), an independent tobacco trade, policy influence, community organization that helps businesses engagement, emissions and energy, and water communicate their impact on critical stewardship are discussed in this report. sustainability issues, our assessment involved: Implementation of RBH’s sustainability • identifying topics based on prior strategy and performance is led by RBH’s assessments and peer reporting Director of External Affairs, Jeff Gaulin, • prioritizing topics based on stakeholder and his team, who reports to our Managing insights gathered through an online survey Director. In 2021, we plan to create and follow-up telephone interviews with a corporate Sustainability Committee select participants responsible for establishing, integrating and reporting on our sustainability goals and key • validating priorities and identifying performance indicators. key metrics, governance and reporting considerations Letter from Director Approach to sustainability Creating a smoke-free future Operating with excellence Caring for people Protecting the environment Key goals Rothmans, Benson & Hedges Inc. 2020 Sustainability Report 6 RBH sustainability pillars Stakeholder engagement Stakeholder engagement is critical to STRATEGIC PILLARS TIER 1 TOPICS TIER 2 TOPICS achieving our vision of a smoke-free Canada. We need governments, health care Creating professionals, the scientific community, a smoke-free industry stakeholders, consumers and their Public health loved ones, plus the general public to be future Smoke-free products involved – and we engage regularly with all of these groups. Putting an end to smoking in Canada As part of our sustainability materiality assessment, we engaged with 59 internal and 69 external stakeholders in 2019. Responsible marketing and sales Operating These included RBH employees as well as with Responsible research and Illicit tobacco trade commercial customers, suppliers, community/ development civil society organizations, business excellence Policy influence Bribery, corruption and anti- associations, academia, sustainability Taxation consultants/experts, and provincial and Transforming Being a responsible business and competition corporate citizen municipal government representatives. for a Human rights sustainable Also in 2019, we stepped up our engagement with Indigenous communities. RBH joined smoke-free the Canadian Council for Aboriginal future Fair working conditions Business to identify and pursue meaningful Caring for Inclusion and diversity people Fair pay economic partnerships that can create Talent attraction and retention and support jobs, training and education