OVERVIEW

Our sustainability strategy details our commitment to reducing our environmental impact, collaborating for positive societal impact and maintaining high standards of governance.

We have refocused our environmental strategy to manage and mitigate our most significant environmental impacts across our value chain; climate and energy, waste and water. We have developed new long-term environmental targets, ensuring we’re taking the necessary steps to support keeping global temperatures in line with the Paris Agreement’s stated 2-degree limit and 1.5-degree aim. 

We have undertaken a carbon and water life-cycle analysis (LCA) across our value chain. We have also conducted an initial assessment of our climate-related risks and opportunities using the CDP framework and are working towards aligning this with the recommendations from the Taskforce on Climate-Related Financial Disclosure (TCFD). We focused on both transitional (the potential financial impacts of transitioning to a lower-carbon footprint) and physical risks (the potential impacts of a changing and variable climate) and opportunities. This created a shortlist of material issues which were analysed further through scenario analysis; a tool for understanding the implications of climate change on our business and prompts longer term strategic thinking about risks and opportunities. The collective results have helped inform our risk management framework for environmental issues and supported the development of robust Science Based Targets to significantly reduce our greenhouse gas emissions. 
 

WHY IS IT IMPORTANT?

As a global business, we understand the importance, influence and duty we have in protecting the environment. We also recognise that certain resources are finite and as such, this presents us with opportunities to explore sustainable solutions that support our business sustainability and protect the environment. Reducing our environmental impact also supports efficiency and cost optimisation and enables us to better comply with evolving environmental legislation.
 

WHAT ARE WE DOING ABOUT IT?

To further strengthen our governance of environmental issues, in 2020 we reviewed and enhanced our Group Environmental Policy to clearly set out the foundations of our approach to environmental sustainability. All employees and business partners are required to adhere to this policy, which aligns closely with our Supplier Code of Conduct. The policy has been reviewed alongside the Group Occupational Health and Safety Policy and Group Occupational Health, Safety and Environment Framework which support the business with practical steps on how to implement the policy.

We have a formal approach to environmental management through the application of the internationally recognised managed system ISO 14001 across our operations, which helps us to focus our environmental approach and seek continuous improvements.  

We have a long-standing commitment to reducing our environmental impact. Previously, we had set 2020 targets from a 2009 base-year for carbon, energy, waste and water, and these were exceeded ahead of time in 2017. We have made good progress in reducing our environmental impact over the last decade and, following a carbon and water life cycle analysis across our value chain, we have developed new long-term environmental targets for the next 10-30 years.

By 2030, from a 2017 base year, we will:

  • reduce absolute scope 1 and 2 GHG emissions by 25 per cent
  • reduce absolute scope 3 emissions by 20 per cent
  • reduce energy consumption by 25 per cent
  • reduce waste generated within our operations by 20 per cent
  • reduce waste to landfill by 50 per cent
  • increase recycling rate to 75 per cent
  • reduce water consumption by 15 per cent

We have also set a target to ensure that 50% of our key strategic suppliers by spend, will set science-based targets by 2023. We are pleased that our carbon targets for Scope 1, 2 and 3 (supply chain) have been approved and validated by the Science Based Targets Initiative (SBTi). Setting carbon targets for both our direct operations and our supply chain, where we have the biggest carbon impact, is described as ‘ambitious’ by the SBTi.

Our actions to cut emissions and mitigate climate risks have earned us a position on the CDP’s ‘A List’ for climate change, for a second consecutive year. CDP’s annual environmental disclosure and scoring process is widely recognised as the gold standard of corporate environmental transparency. Our 2020 CDP scorecard is available on our Performance page

During the year, a dedicated team from our manufacturing sites initiated a project to investigate the different opportunities we have to ensure delivery of our 2030 environmental targets. This involved:

  • Modelling opportunities identified to understand their return on investment;
  • Improving energy efficiencies through different mechanisms;
  • Considering retrofitting of existing facilities; and
  • Reviewing best current technologies, e.g. digital technologies for energy management and optimization; as well as procurement of renewable energy in markets.

Findings from the project will support our manufacturing sites with practical solutions to deliver against our 2030 targets.

Through our carbon footprint analysis, we understand that that around 78% of our of our overall carbon footprint comes from activities across our value chain. These are our Scope 3 emissions and we are reliant on our suppliers to understand, reduce and report on their Scope 1 and 2 emissions in order for us to better understand our Scope 3 emissions.

We have been working with our procurement teams to ensure that all of our key suppliers are invited to report this information to us. This is largely done through the CDP Supply Chain Programme. In 2020 we also piloted a programme to directly engage with those key suppliers who do not participate in CDP. For our leaf supply chain we also seek to minimise environmental impact through the application of the Sustainable Tobacco Programme (STP).

We were pleased to be recognised as a Supplier Engagement Leader by CDP in 2019 and 2020. All companies responding to the CDP Climate Change questionnaire receive a Supplier Engagement Rating (SER) in addition to their climate change score. The top 3% of companies with the best SER are considered Supplier Engagement Leaders. SER provides a rating for how effectively companies are engaging their suppliers on climate change. Our SER score report is available to view on our Performance page.

In 2020 we completed a life-cycle analysis (LCA) of our vaping product, myblu which identified key carbon and water impacts across the production and use of the product. A number of recommendations have been made to reduce these environmental impacts, which we will continue to deliver against. For further information read our case studies.

 

WHAT ARE KEY ISSUES?

CLIMATE AND ENERGY

Growing our business whilst reducing our impact on the climate

WASTE

Minimising the waste and waste to landfill associated with our business operations.

WATER

Working with our suppliers and farming communities to manage our water footprint.

CLIMATE AND ENERGY

We are not an energy intensive company however we acknowledge our global reach and influence in addressing concerns over climate change. Disruption in climate and energy has the potential to impact our business across the value chain, from crop production to manufacturing and distribution.

In line with the recommendations from the Taskforce on Climate related Financial Disclosure (TCFD) we have begun exploring what different scenarios of increasing global temperatures would mean to our business across our value chain. The results of this work, along with our recent LCA, have supported the development of our refocused environmental strategy and our long-term targets.

Changes in weather systems such as rising temperatures and increases in average rainfall, frequency of heavy rainfall and hurricanes are considered to be a risk for our business. We monitor this risk and put in place intervention or mitigation measures where necessary. One example of how a climatic event has impacted our business occurred in January 2020. Our operations in Madagascar received extremely heavy rainfall, with 50% of expected seasons rainfall in five days, resulting in extensive flooding on the small-holder farms and our commercial operations. Following a detailed assessment a three-year investment plan was approved by the Executive Committee to strengthen the infrastructure of the site.

We work with our tobacco suppliers, to provide farmers with advice and tools to protect their crop against the changing elements. This includes vegetative methods, such as the use of grasses like vetiver which are extremely effective barriers to prevent soil erosion. These simple solutions can have a huge impact on crop protection from flooding and erosion. See case studies for more information.

We reduce our direct impacts through energy efficiency and carbon emissions management. We reduce our indirect impacts and realise opportunities by working with our suppliers, who disclose how they are managing their climate and water related risks and opportunities and provide data to help inform and improve our scope 3 performance. 

Where appropriate we have invested in renewable energy, understanding that solar, wind and geothermal generated energy can provide benefits in terms of reducing our greenhouse gas emissions, energy security, cost stabilisation and protection against energy price volatilities.

We have energy saving projects at several sites, including the USA, Morocco, Poland, Russia and Spain and continue to assess opportunities at our higher-energy consuming manufacturing sites. We also have renewable energy sources at our factories in Laos (hydropower) and the Netherlands (thermal).

In 2020, we have worked closely with our procurement teams to investigate how we can increase the amount of direct energy we procure from renewable sources across the business. This is an ongoing project and we hope to report on the outcomes in 2021.
 

WASTE

Our approach to minimising waste has largely focussed on improving processes within our manufacturing locations. We seek to minimise the waste and waste to landfill associated with our products, packaging and production process through a combined approach of reduce, reuse and recycle.

We acknowledge that as our NGP business grows, we are faced with additional packaging waste and recyclability issues. We continue to look at how we can improve the sustainability of NGP materials and packaging. This includes looking at ways of increasing the amount of recycled and recyclable packaging used in our products.

This year we developed a recycling playbook to support markets in understanding how to implement waste management initiatives for the myblu device, pods and packaging. The playbook was launched in September 2020 and explains to markets the potential issues associated with electronic waste; highlights compliance and regulations across the globe; discusses recyclability issues associated with pods; and discusses how to set up ‘take back’ schemes and promote the scheme responsibly.

Both the playbook and the myblu LCA are encouraging our product design teams to consider the waste impacts of our products at design conception stage. 

Litter

All consumers have a responsibility to properly dispose of their litter, whether this is cigarette butts and product packaging, chewing gum, drinks’ cans, fast food containers or any other items.

We believe the best approach to tackling litter is for key stakeholders, such as tobacco companies, government, environmental bodies, business and local communities to work together to educate and change people’s behaviour.

We take our responsibilities in the area of product development and environmental impact seriously and for many years we have worked with our material suppliers to research the decomposition process of filters and whether this can be sped up. 

Consumer acceptance and emissions regulation have meant that we are yet to find an alternative material substitute, however we remain committed to researching a new generation of filters.

To support our consumers with the responsible disposal of our NGPs, a number of our markets have introduced ‘take-back’ schemes for vaping devices and pods. We have provided incentives to consumers to return their empty pods and associated waste and continue to assess responsible disposal methods that can be extended to other markets. 
 

WATER

Water is important in our operations and to tobacco suppliers, farmers and communities in our supply chain. Our recent life-cycle analysis confirmed that 99% of our water footprint comes from our tobacco supply chain.

With an adequate, sustainable water supply, smallholder tobacco farmers are able to produce high yielding, high quality tobacco often with a lower labour burden. Through the Sustainable Tobacco Programme (STP) we encourage suppliers to adopt a water stewardship approach to managing water, which encourages the sustainable management of shared water resources.  Through our Leaf Partnership projects we have worked with our suppliers to provide tobacco farming communities with access to clean water and storage for water. 

Providing tobacco farming communities with access to drinkable water is a priority for us and our suppliers. Through our Leaf Partnership projects in 2020 we funded water projects in Africa, Asia and South America making a positive impact on rural farming communities, with over 12,000 people gaining access to safe drinking water. For further information please see Farmer Livelihoods and welfare.

At a local factory level, improvements made include: new wastewater discharge systems, better water metering, water recycling from air conditioning, cooling tower processes and rainwater use for sanitary facilities. Despite not having water intensive manufacturing processes, we maintain a strong track record of effectively managing water use. See our Performance Summary for more information.

We have been participating in the CDP Water disclosure for a number of years and are pleased to have scored an A- for our 2020 submission which indicates that we are implementing current best practices in water management across our operations and supply chain. Our 2020 CDP scorecard is available on our Performance page.

We continue to engage with our supply chain on this issue, where we deem water to be a bigger risk than to our direct operations.  

 

OUR APPROACH

Our sustainability strategy is integral to the long-term success of our business and underpins our drive to create shared value for our stakeholders.

CASE STUDIES

Our case studies showcase our progress against our sustainability strategy.

ESG PERFORMANCE

See the progress we’ve made against our key performance indicators during 2020.