BAT 2541.27p About us Our products How we work Sustainability Investors Media Reporting Careers A sustainable approach A sustainability agenda for A Better Tomorrow™ We have a long and proud history of sustainability achievements, but today we are transitioning from being a business where sustainability has always been important to one where it is front and centre in all that we do. Over the past 20 years, we’ve made significant progress on our sustainability journey, as reflected by our presence in the Dow Jones Sustainability Indices (DJSI) for 20 consecutive years and the other notable independent recognition we have received. Yet our approach needs to constantly develop, much as the world around us is evolving – from increasing expectations of the role of business in contributing to the UN Sustainable Development Goals and addressing climate change; to evolving consumer preferences and the emergence of new category products, such as vapour products that offer reduced risks*† for the estimated 19% of the world’s population who continue to smoke cigarettes. Future ambition Just as we are committed to making a step change in our New Categories performance, we are also committed to making a step change in our sustainability ambition. Recently, we have announced a number of stretching targets that we are confident will accelerate our purpose to deliver A Better Tomorrow™ for all our stakeholders, including: increasing our consumers of non-combustible products to 50 million by 2030 achieving carbon neutrality for our own business activities and for our value chain by 20501 accelerating our existing environmental targets to 2025 Eliminating unnecessary single-use plastic and making all plastic packaging reusable, recyclable or compostable by 2025 100% renewable electricity in operations sites by 2030; Our sustainability agenda We have evolved our Group strategy with the purpose of delivering A Better Tomorrow™ for all our stakeholders. At its heart, our evolved strategy is about anticipating and satisfying the ever-evolving consumer: providing pleasure, reducing risk and offering increasing choice. Central to this evolved strategy is our updated sustainability agenda which has been refreshed to reflect the changing external environment. Specifically, we are clear that reducing the health impact of our business is our principal focus area, as well as placing a greater emphasis on the importance of addressing climate change and excellence in environmental management. At the same time, we remain committed to delivering a positive social impact and ensuring robust corporate governance across the Group. The diagram below sets out our sustainability agenda in full and you will be able to read more about the agenda and our progress against it in our 2020 ESG Report. H Reducing the HEALTH impact of our business Consumer choice World-class science Standards and regulation E Excellence in ENVIRONMENTAL management Climate change Water Waste Biodiversity and afforestation S Delivering a positive SOCIAL impact Human rights Farmer livelihoods Health and safety People and culture G Robust corporate GOVERNANCE Business ethics Responsible marketing Regulation and policy engagement Creating shared value for Consumers Society Employees Shareholders A key strength of our approach to sustainability is a robust process to identify and understand the most material environmental, social and governance (ESG) topics that drive our long-term business sustainability and value creation. Each year we engage with a wide range of stakeholders to understand what matters to them most and complement this with ongoing risk monitoring, research and benchmarking. This comprehensive approach to evolving our Sustainability Agenda ensures we keep pace with emerging topics and stakeholder expectations. Along with our principal focus on reducing the health impact of our business, we retain a strong focus on other ESG priorities. Together, this approach helps to create shared value for our consumers, society, our employees and our shareholders. Ultimately, it’s about building towards ‘A Better Tomorrow™’ not just for BAT, but for all our stakeholders. Progress in 2020 Reducing the health impact of our business £1.4 billion of our revenues came from New Categories in 2020, representing 15% growth compared to 2019 Increased non-combustibles consumer base to 13.5 million, adding +3 million consumers in 2020. Excellence in Environmental Management 37.4% reduction in Scope 1 and 2 emissions; climate risk scenario analysis for major tobacco-growing markets 22.5% reduction in water withdrawn Over 99% wood used for tobacco curing by our contracted farmers is from sustainable sources Waste mapping across our value chain and independent review of our packaging materials for recyclability, with results showing 82% of our plastic packaging is reusable, recyclable or compostable Delivering a Positive Social Impact 99.7% of tobacco farms monitored for child labour 93 supplier labour audits conducted on product materials and high-risk indirect service suppliers Over 50% of tobacco hectares grown by our contracted farmers is from our hybrid tobacco seed varieties, boosting yields by up to 20% 27% reduction in total accidents from previous year 38% female representation in management roles Robust Corporate Governance 100% of Group employees completed Standards of Business Conduct sign-off and training Further strengthened compliance procedures and internal controls for International Marketing Principles 100% markets reported alignment with Youth Access Prevention Guidelines DROP THE POD As part of our sustainability efforts, we are running a pilot programme to make it as easy as possible for our adult vapour consumers to do their bit to help the planet in relation to waste. Our ambition is that together we can reduce landfill. To this end, we have introduced our DROP THE POD pilot programme in Mexico retail outlets, which makes it easier for adult consumers there to dispose of their empty pods. In exchange for every 10 empty Vuse pods consumers bring into our participating Vuse Inspiration Stores in Mexico they will receive one replacement flavour pack of Vuse pods. The pilot programme showed early success among consumers – in Mexico the return rate as a percentage of sales in participating stores was 30%, with 13% of total pods sold in 2020 having already been collected. The pilot also ran in France and the UK and learnings are being used to further develop and expand the programme in 2022. The video below shows how the DROP THE POD sustainability pilot programme works. 00:00 00:00 - Please note this content was produced prior to COVID-19 lockdown measures being implemented. Based on Scope 1 and 2 carbon dioxide equivalent (CO2e) emissions. * Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive. † Our products as sold in the US, including Vuse, Velo, Grizzly, Kodiak, and Camel Snus, are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance. About us We are BAT Our purpose and strategy A sustainable approach Sustainability recognition World-class science Harm reduction People and culture Meet the Board Corporate governance Policies, principles and standards Our history - a timeline Home About us A sustainable approach Follow us Latest tweets BAT @BATplc #ICYMI: BAT’s commitment to #diversity and #inclusion has been rewarded with a significant piece of recognition. 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