CORPORATE BEHAVIOUR Sustainability Focus Report 2016 As a major international company in a controversial sector, we are focused on creating shared value for our business and society, while continuing to work to address the health impacts of our products. A strategic approach to sustainability Our sustainability agenda focuses on the three key areas which have the greatest significance to our business and our stakeholders. Harm Sustainable Corporate Reduction Agriculture and Behaviour We are committed Farmer Livelihoods We are committed to researching, We are committed to operating to the developing and to working to enable highest standards of commercialising less prosperous livelihoods corporate conduct risky alternatives to for all farmers who and transparency. regular cigarettes. supply our tobacco leaf. Performance across all three areas can be found in our annual Sustainability Summary report. In addition, we periodically produce individual focus reports on each area. At the end of 2014, we published two reports covering Harm Reduction and Sustainable Agriculture and Farmer Livelihoods. This 2016 report covers Corporate Behaviour which underpins every area of our business. In this report 02 MARKETING RESPONSIBLY 03 CONTRIBUTING TO COMMUNITIES 04 STRENGTHENING OUR APPROACH TO HUMAN RIGHTS 06 PROMOTING STANDARDS FOR VAPOUR PRODUCTS 08 SAFEGUARDING OUR PEOPLE 09 COLLABORATING TO TACKLE THE ILLEGAL TOBACCO TRADE 10 REDUCING OUR ENVIRONMENTAL IMPACTS 12 UPHOLDING HIGH STANDARDS OF CORPORATE GOVERNANCE www.bat.com/sustainability OPERATING TO THE HIGHEST STANDARDS OF CORPORATE CONDUCT Sustainability is one of the key pillars of This is reflected through the many industry-leading our Group strategy and I see it as crucial practices we have in place, such as our approaches to our long-term success. As such, our to responsible marketing, combatting smuggling Group sustainability agenda focuses on the three and corporate governance, as recognised by the most material and fundamental issues for our Dow Jones Sustainability Index. business and our stakeholders. Yet we’re always striving to remain at the forefront While I’m particularly proud of the progress of best practice and to build upon our approach we’re making in harm reduction and sustainable to meet new challenges and opportunities. For agriculture and farmer livelihoods, both are example, we’re strengthening our management underpinned by corporate behaviour – the third of human rights and have adopted product and area of our sustainability agenda. After all, it’s our marketing standards for Vapour Products. actions and behaviour that will ultimately deliver This focus on continuous improvement and on our commitments. high standards of corporate behaviour forms Being in such a controversial industry has meant the foundation of our culture and values. This that we’ve long been aware of our responsibilities cannot be delivered without the commitment and the importance of operating to the highest and dedication of our people at every level of standards of corporate conduct and transparency. the business. I’m pleased to share some great examples in this report. For me, this is an exciting time to be leading British American Tobacco and I’m confident in our future as a sustainable, trustworthy and forward-looking company for the 21st century. NICANDRO DURANTE CHIEF EXECUTIVE, BRITISH AMERICAN TOBACCO SEPTEMBER 2016 www.bat.com/sustainability 01 British American Tobacco Marketing Communities Human rights Vapour Products Safety Anti-illicit trade Environment Governance 100% MARKETING score and industry leader in the Responsible Marketing Policies category RESPONSIBLY of the 2015 Dow Jones Sustainability Index The challenge Our approach Tobacco products pose serious health Our International Marketing Principles comprise four core values risks, so it’s vital that they do not get into which we believe are at the heart of responsible tobacco marketing. the hands of under 18s and are marketed We are committed to 100% compliance and monitor this through responsibly wherever they are sold around market audits and annual self-assessments. If any incidents of non- the world. compliance are found we take immediate action and report it to our Board Audit Committee. In 2015, two incidents of non-compliance But every market is different, in terms of the were identified. type and level of regulation that’s in place, as well as cultural and economic circumstances, One of the fundamental requirements of our Principles is that our such as high levels of poverty or an informal marketing is aimed only at adult smokers and is not designed to retail trade. engage or appeal to children. This is supported by our global youth smoking prevention (YSP) activities, which include working with retailers As a result, some critics may think that worldwide to raise awareness of existing laws and supplying in-store we take the easy option and ignore our YSP posters and other materials. International Marketing Principles in developing countries or where the market More at www.bat.com/imp is more challenging. This is not the case. Chriz Tan engaging with a Malaysian retailer in his previous role as a trade representative In action Responsible marketing, for me, is key issues like youth smoking prevention. a no-brainer. Of course, marketing I routinely reminded them about the law and to under 18s is illegal, but more penalties for selling to under 18s and gave importantly it’s against our core principles practical tips and advice, such as ways to verify and against what each of us who works here someone’s age. believes to be right. I think the retailers really appreciate this Our International Marketing Principles give personal approach. us clear direction on how to act and are vital We also provide all our retail outlets with YSP when developing new plans and campaigns to signage – I was responsible for replenishing be rolled out to adult smokers. I find the readily the materials and checking they were properly available guidelines really helpful for when displayed. This is all about building awareness. I’m a little unsure. We have clear governance processes in place and work closely with the The way I see it, our approach to responsible Legal and External Affairs team. They review marketing is firstly about understanding the all our marketing materials, from the initial Group perspective and then applying that to concepts through to the final sign-off, to help real-life scenarios that are relevant for us locally. ensure compliance. And they’re always on I find it very satisfying to see all our hard work hand to support us. paying off and I feel like I’m making a genuine contribution to upholding high standards of I think it’s also important to understand the corporate behaviour in the marketplace. challenges our retailers face – they are basically at the frontline of selling our products. In my previous role as a trade representative, I visited Chriz Tan retailers every day and so was in the ideal BRAND EXECUTIVE, MALAYSIA position to communicate the importance of 02 Sustainability Focus Report 2016: Corporate Behaviour British American Tobacco TO CONTRIBUTING COMMUNITIES Bangladeshi women collecting water from a new water filtration unit The challenge We operate in many different countries around the world, where our companies have a long history of supporting local communities. Each community is different from the next, with its own economic, environmental and social issues. These range from political instability to poverty and unemployment, a lack of education and health services, or poor infrastructure for In action clean water and electricity. Bangladesh, like any developing These projects complement the work of our country, has many social and economic leaf extension services which, as in all BAT leaf As such, we need to ensure our challenges, but it is also a country operations, provide advice and support for all contributions are meaningful and reflect that’s full of optimism. It is the place where I our farmers. Our local leaf technicians work on-the-ground circumstances, while being grew up, so being able to contribute to the lives in the field with farmers, covering everything aligned to our global priorities. of thousands of fellow Bangladeshis is, for me, from agreeing contracts and supplying seeds, the ultimate job. to best practice approaches to soil and water management, or how to get the most from their We’re one of the top five companies in the land by growing other crops alongside tobacco. country by market capitalisation and have more Our approach than 1,500 employees. We also support around In Bangladesh, we support this through our 52,000 people indirectly, including farmers, farmers’ field schools, which we run with the distributors and local suppliers. Government’s Department for Agriculture. Over the last five years, we have They are great ways of teaching farmers more Take the farmers in particular. Many of them live invested more than £60 million sustainable techniques, and bringing them in remote rural communities where there’s limited in projects which support the together to create a support network so they access to electricity or clean drinking water and can help each other. communities where our sanitation. Developing and running community companies work. investment projects is one of the ways I’m working I’ve seen first-hand how all these activities can Our Group Framework for Corporate to help address this. really make a difference to the lives of farming communities – and that makes me very proud to Social Investment outlines how our For example, we’re installing water filtration be part of such a progressive organisation. companies are expected to develop, units in villages which, so far, are providing deliver and monitor community clean water to over 170,000 people every day. investment programmes. It covers We’ve also provided over 1,600 solar panels for Anowarul Amin 16 villages, benefiting around 10,000 people.