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2018 Harm Reduction Focus Report British American Tobacco | Harm Reduction Focus Report 2018 Bat.Com/Sustainability

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2018 Harm Reduction Focus Report British American Tobacco | Harm Reduction Focus Report 2018 Bat.Com/Sustainability Innovative Choices Responsible Growth 2018 Harm Reduction Focus Report British American Tobacco | Harm Reduction Focus Report 2018 bat.com/sustainability In this report Our Group strategy and sustainability agenda Our Group vision is to be the world’s best at satisfying consumer moments in tobacco and beyond. Our strategy focuses on the four key areas of growth, productivity, winning organisation and sustainability. As a key strategic focus area, sustainability is crucial to the delivery of our Group strategy and is integrated across all areas of our business. In particular, three key 1 areas have been identified through a detailed materiality process as having the greatest significance to our business and our stakeholders: Introduction Harm Reduction The harm reduction journey 2 We are committed to working to reduce the public health impact of smoking, through A view from the outside: offering adult consumers a range of potentially reduced-risk products (PRRPs). a stakeholder viewpoint 3 Sustainable Agriculture and Farmer Livelihoods We are committed to working to enable prosperous livelihoods for all farmers who supply our tobacco leaf. Corporate Behaviour We are committed to operating to the highest standards of corporate conduct and transparency. Performance across all three areas can be found in our annual Sustainability Report. 2 In addition, we produce in-depth Focus Reports on each area of our sustainability agenda. This Focus Report addresses specifically the area of harm reduction. Our PRRP portfolio Vapour products 4 What is harm reduction? Tobacco heating products (THPs) 6 Oral products 8 Harm reduction is a well-established public health concept that seeks pragmatic ways to minimise the impact of an inherently risky activity without stopping it entirely. Our approach to tobacco harm reduction focuses on enabling adult smokers who want to continue consuming tobacco or nicotine to use products known as potentially reduced-risk products (PRRPs). We use the term PRRPs to cover tobacco and nicotine products that, based on the available science, have been shown to be reduced-risk; are likely to be reduced-risk; or have the potential to be reduced-risk, in 3 each case if switched to exclusively as compared to continuing to smoke cigarettes. Maximising the harm reduction potential of PRRPs Our diverse portfolio of PRRPs The importance of innovation for harm reduction 10 Building trust in our products through science 12 A growing body of independent evidence 14 The importance of effective regulation and responsible growth 16 Vapour products Tobacco heating (e-cigarettes)* products (THPs) Oral products* Handheld, battery-powered THPs heat but don’t burn Oral products usually contain devices that create a vapour tobacco, so no smoke (which is tobacco, but there is no to inhale. The most popular a key source of toxicants) burning. There is strong tobacco-free alternative, is produced. Research indicates epidemiological evidence that vaping is estimated to be by heating tobacco rather than switching to snus completely around 95% less harmful burning it, THPs can have the reduces risk significantly, than smoking, according potential to be reduced-risk compared to smoking. 4 to Public Health England. compared to smoking. Looking ahead Page 4 Page 6 Page 8 A Q&A on shaping the future for harm reduction 19 * Our vapour product Vuse, and oral products Grizzly, Camel Snus and Kodiak, which are only sold in the U.S., are subject Our commitment to to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance. tobacco harm reduction 20 British American Tobacco | Harm Reduction Focus Report 2018 At BAT, we’re committed to transforming tobacco by providing consumers with satisfying alternatives to smoking.” range of potentially reduced-risk products. Building trust through science Collectively we refer to these products as PRRPs are still relatively new products PRRPs and we now have these available and it is essential that consumers believe in a total of 28 countries globally. With and understand the reduced risk profile the acquisition of Reynolds American in of any product and can make an informed 2017 we significantly increased both our choice. To do this, we must have a robust geographic reach and our prospective scientific framework in place. Equally, consumer base. We are a stronger, truly we also need to provide the results of our global company, with an innovative, even scientific assessments to all interested more diverse portfolio of PRRPs. stakeholders so that regulators can also understand the reduced-risk potential and A diverse portfolio we continue support the growth of the category in order to be proud of to contribute to tobacco harm reduction. Our range today includes vapour products I’m proud to say we are at the forefront of and tobacco heating products, as well scientific research and always share our as oral tobacco and nicotine products. findings openly and transparently. After 37 years at BAT, eight of those It is clear to me that consumers looking as chief executive, I will retire in April to switch to alternative products need to Facilitating responsible growth 2019. I have always been proud of our go through a journey and a large part of of PRRPs commitment to harm reduction. It’s this is about having access to the right And yes, I am delighted at the progress we something that we have been dedicated to alternatives. Without the right products, have made but there are challenges too. for decades, and despite investing many tobacco harm reduction will never be Often ones we can’t resolve alone. These millions of pounds, it isn’t something a reality, which is why our approach is products can only meet their potential if that’s been easy to achieve. centred on developing an outstanding the right regulatory and market conditions product portfolio. are in place. Stakeholders from across However, recent years have brought government, industry and public health the most dynamic period of change our I’ve always held the belief that a range of need to work together on creating an industry has ever encountered and there products is essential because consumers environment for tobacco harm reduction have been huge advancements in the field of themselves are different, with a wide range to be successful. tobacco harm reduction. An unprecedented of preferences and needs. A one-size-fits-all confluence of technology, societal change approach isn’t going to work: to maximise The future of harm reduction at BAT and public health awareness means that the potential for PRRPs to contribute There are still 1.1 billion smokers in the consumers now have access to a much to harm reduction, we need to provide world and we are undoubtedly at the start broader range of alternatives. Many alternative products to suit the different of a long journey, but as I come to the end international experts believe these products taste palates of smokers, in formats they find of my eight-year tenure as the CEO of this can be less risky than smoking – vapour accessible, in a cleaner and hassle-free way. fantastic company, I am confident we can products, for example, are estimated to be deliver against our commitments. 95% less harmful. Our role in tobacco harm reduction is clear but we still have a long way to go. We have a clear vision and priorities in At BAT, I am particularly proud that We are investing significantly in developing place. We are clear that we want to be so much progress has been made since and commercialising our product range the world’s best at satisfying consumer 2012, when shortly after taking over as and have a strong pipeline of innovative moments in tobacco and beyond and CEO we articulated a new vision – to be products across all categories – with several we are well equipped to accelerate the the best at satisfying consumer moments innovative product launches planned transformation we have started. in “tobacco and beyond” – placing for 2019. consumers and our desire to lead the And as I hand over to my successor, I know development of reduced-risk products However, we are not just investing within the company is in great hands and that right at the centre of our strategy. This our business, we are increasingly looking this is just the beginning of BAT’s mission marked the start of what has become the at disruptive technology solutions that can to transform tobacco. most meaningful transformation of BAT help consumers find the right alternative in our 116-year history. PRRP, one which will really work for them Nicandro Durante and one that they will want to switch to – Chief Executive, December 2018 Since this milestone we have radically only then will we be able to help reduce the changed our approach to R&D to deliver a harm tobacco causes in society. 1 British American Tobacco | Harm Reduction Focus Report 2018 bat.com/sustainability INTRODUCTION The harm reduction journey Tobacco-related harm reduction will only be delivered when consumers shift from a risky product – cigarettes – to less risky products. During this change, a smoker tends to go through a number of stages, asking key questions at each: below, we outline this journey towards transition, which we will discuss in more detail throughout this report. ADULT SMOKER CONCERN HARM REDUCTION OPPORTUNITY Many adult smokers want to switch to products that have the potential I want to switch to something that is less harmful to reduce risk (PRRPs), rather than quitting altogether, but may than smoking.” lack knowledge about what products are available and the science behind them. OBJECTIVE No tobacco or nicotine product is 100% safe, but if an alternative Are these really less harmful than smoking?” product is less harmful than cigarettes, it is a better option.
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