REPORTING RESPONsiBLE PERFORMANCE: PRINCIPLES, CRITERIA AND METHODOLOGIES Introduction We engage an independent third In 2013, we undertook our first This document sets out Imperial Brands’ party to provide assurance and data assessment of ‘materiality’ to determine reporting approach and criteria which verification for our publicly reported how important our sustainability enables the PLC Board’s commitment to information. This is in line with good issues are to us and our stakeholders. disclose our responsible performance. practice and to help build trust with This assessment was informed by our stakeholders. The assurance and the work of an external agency that We aim to: verification exercise is scoped to test identified and quantified relevant whether reporting is accurate and social and environmental risks • Report our activities honestly and give reliable, and to enable the third party within the geographical context of a fair impression of business conduct; to provide an opinion as to whether the our value chain and the relevance to reporting provides a fair and balanced our main stakeholders. This work was • Provide key stakeholders with view of responsible performance. The validated by the Responsibility Steering appropriate information, as guided by assurance and verification involves data Committee. leading frameworks and standards assessment, sample site visits and a such as the Global Reporting Initiative; number of interviews with management Towards the end of financial year 2016, and and relevant personnel. we revisited our materiality assessment to review, identify and prioritise the • Inform relevant investor evaluations We have a formal approach to most important sustainability issues and indices responsibility reporting, which identifies for our business. The assessment important issues and performance involved input from a range of external Commitment to reporting indicators. Resulting information is stakeholders and will help to further As a UK public company, we are required used by Executive Management to set develop our Corporate Responsibility to disclose specific information in the improvement objectives and targets, (CR) strategy. More details will be Annual Report and Accounts, under which are also endorsed by the PLC reported in 2017. the UK Companies Act. In addition, we Board. Performance management is provide other information voluntarily. then driven and enabled at functional, Scope of reporting This helps to demonstrate that our market and site level. Non-financial reporting (NFR) includes Board of Directors are addressing collecting and collating performance their social, environmental and Issues of importance data from markets, main offices and economic responsibilities towards key Our approach to identifying and manufacturing sites, worldwide. stakeholders; including employees, articulating our issues has evolved Primarily, we utilise a web-based investors, suppliers, customers, over time. We have found it useful reporting system known as the ‘NFR consumers, communities, government to reference leading guidelines and System’, which is powered by Enablon. and society. indices, which include the Global Reporting Initiative, and the RobecoSAM We track our CR performance against We disclose information relating to for Dow Jones Sustainability Index. our progress in four key areas which are: our responsible performance in the We also participate in relevant Annual Report and Accounts, and on external forums and engage with our RESPONsiBLE WITH PrODUCTS our website www.imperialbrandsplc. stakeholders. We make our own internal com/. This better enables us to assessments by considering global REWARDING WORKPLACE participate in a number of external sustainability issues and relevant social indices, to benchmark our responsible and environmental risks. We have RESPECTING NATURAL RESOUrcES performance, to respond to surveys and internal subject matter experts to help to answer stakeholder queries. inform and guide our responsibility REINVESTING IN SOciETY agenda, and who are represented on our Responsibility Steering Committee. 1 OUR VALUES OUR RESPONSIBILITY General reporting principles main sources from manufacturing • Leakage of refrigerant gases In developing our reporting, we have sites over which we have operational been guided by good practice principles. control and our main offices • Process emissions from the Dry Ice We therefore seek to report information (Bristol, Hamburg, Paris, Madrid and Expanded Tobacco process at our which is: Casablanca). Operations not included, tobacco expansion plant. as deemed de minimis or being outside • Inclusive; relevant to our key of our current reporting scope, relate Our Scope 2 emissions comprise: stakeholders to the small sales offices (which collectively contribute no more than The indirect emissions resulting • Significant; mutually important to us two per cent of our total Scope 1 and 2 from the use of purchased electricity, and our stakeholders emissions). Scope of data is provided in heat and steam at our sites. We report the indicator definitions and clarified according to the GHG Scope 2 Guidance • Responsive; action based on informed in reporting footnotes. (2015), using location-based emission decisions factors. • In order to comply with UK mandatory • Robust; timely, accurate and, where greenhouse gas emissions reporting Emissions for financial year 2016 possible, subject to verification and regulations, we have adapted our comprise unverified data for the first assurance environmental reporting and report on six months of financial year 2016, and greenhouse gas emissions resulting verified data for the last six months of • Transparent; provide year-on-year from our tobacco operations, which financial year 2015; except for mobile comparable data with explanation fall within our consolidated financial fuel consumption by our fleet vehicles statements using the operational which comprises complete verified data Reporting boundaries control reporting approach. We report for 2015. Our business is managed and reported Scope 1 (direct) and Scope 2 (indirect) on a functional basis. We therefore CO2 emissions for which we are Verified data for financial year 2015 is manage, gather and report data responsible using a methodology in reported 12 months in arrears to allow either as a whole or by function. We line with the Greenhouse Gas (GHG) for collation, validation and external do not report on a legal entity basis. Protocol Corporate Accounting and assurance. Where appropriate, we differentiate Reporting Standard (revised edition). manufacturing operations as these As such, we report on the seven main Assurance locations make a greater contribution greenhouse gases and report in terms We commission external service to the data values for the majority of of tonnes of CO2 equivalents (CO2e). providers to assure our responsibility indicators. Our relative emissions are expressed reporting. This includes assurance of against tobacco net revenue. the qualitative information detailed in • The logistics part of our Group the CR Section of the Annual Report and business operates under the legal Our relative emissions are expressed Accounts, the Responsibility section entity of Logista. Due to commercial against net tobacco revenue, which of the website and select non-financial sensitivities, this entity is managed is consistent with the standardised indicators. Details of assurance remotely and does not report wholly Carbon DP reporting format and activities, including the assurance into Group data. This is specified in facilitates meaningful comparison with statements, can be accessed on our the scope of individual indicators as other businesses that report both their website www.imperialbrandsplc.com/. detailed below. We report externally emissions and financial fundamentals. verified information provided by Logista in our Annual Report and Our Scope 1 emissions comprise: Accounts. Logista has provided verified data since financial year • Emissions from stationary fuel (FY) 2014 for absolute Scope 1, 2 and combustion at our sites 3 emissions. Further information on Logista can be found at • Emissions from mobile fuel www.grupologista.com combustion in our fleet of company vehicles • Our reported emissions include all 2 OUR VALUES OUR RESPONSIBILITY 2016 RESPONsiBILITY INDicATOrs Indicator Page RESPONsiBLE WITH PrODUCTS 8 Number of countries for which cigarette ingredients are published on Imperial Tobacco website 8 % improvement of the Global Quality Index 8 Main operating countries with a formal agreement for combating illicit trade 9 REWARDING WORKPLACE 10 Lost Time Accident Frequency Rate 10 Sickness Absence 10 Human Capital Return on Investment 11 Employee Engagement Score 11 Female Employees 12 Female PLC Board Members 12 RESPECTING NATURAL RESOUrcES 13 Operations with ISO 14001 at the time of reporting 13 Absolute & Relative Environmental Waste 13 Waste Recycled 14 Absolute & Relative Environmental Waste to Landfill 14 Absolute & Relative Energy Consumption 15 Absolute & Relative CO2 Equivalent Emissions from Energy Consumed 15 Absolute & Relative Water Consumption 16 Fleet Fuel 16 REINVESTING IN SOciETY 17 Tobacco Suppliers’ Average Performance Score in the Social Responsibility in Tobacco Production Programme 17 Group Community Investment (Allocations) 18 3 OUR VALUES OUR RESPONSIBILITY Imperial Brands NFR system • Timely and accurate reporting at site or system documentation The NFR system is the main reporting market level system for collecting