OVERVIEW


Framing our sustainability strategy is our commitment to reduce our environmental impact, collaborate for positive societal impact and maintain high standards of governance.

We are committed to adapting our business to changing consumer demands for our products, as well as a addressing the impacts of climate change. 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 aligned with the recommendations from the Taskforce on Climate-related Financial Disclosures (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?

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 made good progress in reducing our environmental impact over the last decade and in 2019 we 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 by 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. 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, based on our climate reporting in 2019. CDP’s annual environmental disclosure and scoring process is widely recognised as the gold standard of corporate environmental transparency. Our CDP scorecard is available here

From our LCA footprint analysis, we understand that many of our environmental impacts are in our agricultural supply chain and in the manufacture of non-tobacco materials (NTM). We seek to minimise these impacts through the application of the Sustainable Tobacco Programme (STP) for our leaf suppliers and the CDP Supply Chain Programme with both our leaf suppliers and our key strategic NTM suppliers.

We are pleased to be recognised as a Supplier Engagement Leader by CDP. 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.

 

WHAT ARE KEY ISSUES?

CLIMATE AND ENERGY

Growing our business whilst reducing our environmental impact.

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. The changing climate and disruption to energy supply 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 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. For example, working with our tobacco suppliers, we 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).

Targets to reduce the environmental impact of our transportation activities are principally in the areas of route planning, load optimisation, vehicle selection, maintenance and driver training.

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.

As part of this work we have commissioned an independent lifecycle assessment of a myblu device. This assessment will examine all stages of the device’s life, from raw materials to production, distribution, use and disposal. The results will enable us to better understand and manage the associated environmental impacts. The findings from this study will be reported on in late 2020.

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. See case studies for more information.

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. During the year, employees from our Benelux site took part in a local beach clean; collecting litter and trying to raise awareness and change behaviours. See case studies for more information.

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. Further information on filters can be found on our Science website.

Operational Waste

In our manufacturing operations we continuously seek to improve our processes and be more efficient. We aim to achieve the highest output on the basis of a lean way of working. Reducing complexity and the rollout of our Lean Manufacturing Programme continues to move us further towards better ways to working and streamlined processes.

Some of our operations are associated with small amounts of hazardous waste, for example from fluorescent lamps, paint and lubricant oils. We require sites to hold any hazardous waste in secure storage using suitable controls such as secondary containment, restricted access and appropriate ventilation, until suitable approved disposal is organised. See our Performance Summary for more detail.

Many of our office locations have committed to significantly reduce their plastic waste. During the year, our Sales office in Italy was formally recognised as plastic-free by the Italian government. The office is now included on the Italian Ministry of Environments list of plastic-free offices, as part of its ‘loSono Ambiente’ awareness campaign. See case studies for more information.

 

WATER

Water is important in our operations and to the tobacco 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 and we are in the process of developing Context Based Water Targets to provide a meaningful strategy to support reduction measures.

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 STP all our tobacco farmers are trained on water management. 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.

In water scarce regions we have funded the construction of 20 dams and 7 weirs benefiting up to 20,000 people. We have also funded 147 boreholes and 38 solar boreholes allowing access to clean drinking water for up to 150,000 people. As a result, farmers are able to produce healthy seedlings, have access to water all year round regardless of droughts and also have food security as they can water vegetables during the dry season. For further information please see Farmer Livelihoods and welfare.

Water scarcity and seasonal shortages may also impact our factories, as well as the surrounding communities. Our factories generally use mains water from local suppliers; however, some extract and filter groundwater from wells, for production purposes, in accordance with local authority permits and extraction limits. Wastewater quality is strictly controlled to meet local regulations and consent limits. We apply a standard for bulk fuel containment, spillage control and emergency action.

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 page for more information.

We have been participating in the CDP Water disclosure for a number of years and our progress indicates that we are managing and measuring our water impacts and trying to reduce them with company-wide targets and goals.

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.

PERFORMANCE

See the progress we’ve made against our key performance indicators during 2019.