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Environmental and supply chain management

Driving improvement

We’re a global company, which means we have a global footprint. Reducing the environmental impacts of what we do is a key priority, and something that involves every single person who works for us.

We have had a comprehensive Environmental, Health and Safety (EHS) management system for many years. We monitor and reduce our direct environmental impacts by making our operations more efficient. We also seek to address our indirect impacts by choosing suppliers with strong environmental credentials and encouraging our existing suppliers to improve their environmental performance.

The environment

We expect the effects of climate change to be felt more strongly in the coming years. Resulting changes to the environment could make it harder for us to source tobacco and make and distribute our products, as well as affecting the communities and landscapes in which we operate. The success of our business now and in the future also depends on biodiversity as it provides resources like clean water, healthy soils and timber.

We recognise that good environmental management is not only the right thing to do, but also makes sound business sense given how much we depend on natural resources for our products. Securing access to these resources, as well as being prepared for future changes, is key to ensuring the sustainability of our business.

Our approach

We work to address both our immediate environmental impacts and the likely environmental pressures on the business in the future. This involves risk assessments, performance management and making our operations more efficient.

Environmental problems cannot be solved by one company acting alone. They also need flexibility – what works in one part of the world might not in another. So we also aim to work more with local communities and in collaboration with other international organisations.

Our supply chain management

We rely on a complex but critical supply chain and we need it to be fit for the future. That’s why we’re using our influence to improve sustainability from crop, all the way to the consumer. The nature of our industry means that our supply chain has two distinct supplier categories: tobacco leaf agricultural  and  non-agricultural goods and services, for which we have comprehensive supplier programmes which include environmental criteria, as well as other issues such as human rights.

Tobacco leaf agricultural suppliers

Tobacco remains the most essential part of our product and the farmers who grow it are absolutely crucial to the success of our business.

We buy more than 400,000 tonnes of tobacco leaf each year from suppliers located in 33 countries, which are managed centrally by our Group Leaf Function, and include:

  • BAT-owned companies, which directly contract and support over 90,000 farmers
  • Third-party suppliers, which contract with their own farmers.

We also purchase a small amount of tobacco leaf sourced from auction floors.

We conduct due diligence on our tobacco leaf supply chain through the Sustainable Tobacco Programme (STP) which assesses and monitors suppliers’ performance in meeting industry-wide standards, including key environmental criteria. The programme assesses first-tier suppliers we buy tobacco leaf from and checks if they have the appropriate systems, governance and procedures in place to ensure high environmental and human rights standards on the farms they source from.

Suppliers complete an annual self-assessment covering 178 different criteria under the key areas of: crop, environment, people and facilities. They must also show that they have good governance underpinning all four areas and are required to assess, identify and mitigate any significant risks which may affect their ability to meet the criteria. The environmental criteria include: sustainable water, soil and forest management, pollution control, waste and recycling, fuel and energy efficiency, greenhouse gas emissions, and biodiversity.

Non-agricultural suppliers

In addition to tobacco leaf, the other direct materials we buy to make our products include paper and filters and the components that go into our Next Generation Products.

In 2016, we had over 6,000 direct materials suppliers managed by our global, regional and local Procurement teams. In addition, we have over 65,000 suppliers of other goods and services, such as machinery, IT and consultancy.

As part of our supplier assessment programme, all of our strategic direct materials suppliers undergo an on-site audit, conducted by our independent auditor, Intertek, in order to be appointed as a new supplier to BAT. They are then re-audited every three to four years.

The audit includes criteria covering forced labour, child labour, wages and hours, health and safety, environment and management systems.

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