Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduction in energy consumption in some production facilities due to new machinery and LED lighting.
• Increased tobacco waste recycling from 23% to 30%.
• Reforestation projects in Dominican Republic, Honduras, and Indonesia resulting in the planting of thousands of trees.

Social Achievements

• High employee engagement rate (87%) based on a 2017 survey.
• Continued dialogue with employees and their representatives.
• Support for employees' children's education through scholarships in Nicaragua, Honduras, and the Dominican Republic.

Governance Achievements

• Global Whistleblower Scheme implemented to report illegal, dishonest, and wrong behavior.
• Zero-tolerance approach to corruption and bribery.

Climate Goals & Targets

Environmental Challenges

• Increase in work-related accidents (Lost Time Accidents) from 80 in 2016 to 83 in 2017.
• Challenges in addressing child labor and below-standard working conditions in the tobacco supply chain.
• Lack of training on anti-corruption policy in 2017.

Mitigation Strategies

• Initiatives taken at local and EHS Programme levels to prevent accidents.
• Development and implementation of a uniform, systematic, and risk-based approach to due diligence related to child labor in the tobacco supply chain (planned for 2018-2019).
• Prioritization of anti-corruption training for 2018.

Supply Chain Management

Responsible Procurement

• Simple reviews of selected tobacco suppliers (irregular intervals), planned improvement in 2018-2019.

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Impacts
• Employees and Communities
• Human Rights
• Anti-Corruption and Bribery

Environmental Achievements

• Reduced total energy consumption in Group production by 6.4% compared to 2018.
• Decreased tobacco waste by 13.1% compared to 2018.
• Decreased general waste by 8% compared to 2018.
• Planted more than 6,000 trees in the Dominican Republic as part of a reforestation program.

Social Achievements

• Reduced work-related accidents (Lost Time Accidents) in production facilities from 67 in 2018 to 54 in 2019.
• Decreased the accident rate from 1.01 in 2018 to 0.91 in 2019.
• Offered regular health checks to employees in several production facilities and offices.
• Supported local communities through initiatives including sponsoring equipment to local hospitals, schools, and other community institutions.
• Facilitated scholarships for employees' children in Nicaragua, Honduras, and the Dominican Republic.
• Reached the goal of at least 25% women on the shareholder-elected Board of Directors by 2020 (28% achieved in 2019).

Governance Achievements

• Developed an anti-corruption e-learning training module (to be introduced in 2020).
• Implementing a new and improved Whistleblower reporting system in 2020.

Climate Goals & Targets

Environmental Challenges

• Increased water consumption in 2019 due to a damaged underground water pipe (since repaired).
• Risk of child labor in tobacco growing and below-standard working conditions in the supply chain.
• Corruption and bribery in some markets where the company operates.

Mitigation Strategies

• Repair of damaged water pipe.
• Developing a uniform, systematic, and risk-based approach to due diligence in the tobacco supply chain (planned for 2020).
• Developing an anti-corruption e-learning training module and implementing a new Whistleblower reporting system.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• People and Communities
• Planet
• Ethics
• Governance

Environmental Achievements

• Reduced tobacco waste in pre-acquisition sites in 2020 compared to 2019.
• Incremental installation of energy-saving equipment in selected production facilities.

Social Achievements

• Reduced work-related accidents (Lost Time Accidents) in pre-acquisition facilities from 53 in 2019 to 34 in 2020.
• Continued to offer regular health checks to employees in several production facilities and offices.
• Supported local communities through initiatives including sponsoring equipment to local hospitals, schools, and other community institutions.

Governance Achievements

• Implemented a new, more structured approach to managing and reviewing groupwide policies.
• Conducted anti-corruption and anti-bribery training for all employees.
• Updated the Group’s Whistleblower portal to improve access and management of reports.

Climate Goals & Targets

Environmental Challenges

• Disruption of regular EHS production site audits in 2020 due to the COVID-19 pandemic.
• Integration of Agio Cigars sites, leading to increased accident rates and resource consumption in 2020.
• Child labor and below-standard working conditions in tobacco growing communities.

Mitigation Strategies

• Implemented Group EHS safety procedures in all new sites.
• Continued to introduce Group best practices following the acquisition of Agio Cigars.
• Continued membership and engagement with the Eliminating Child Labour in Tobacco Growing Foundation (ECLT).
• Developing a more uniform, systematic, and risk-based approach to due diligence in the tobacco supply chain.

Supply Chain Management

Supplier Audits: Relatively simple reviews of selected tobacco suppliers at irregular intervals.

Responsible Procurement

• Developing a risk-based approach to due diligence, particularly in relation to child labor.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: UN Sustainable Development Goals

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• 8, 10, 12, 13, 17

The four focus areas and related activities impact these SDGs.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• People and Communities
• Planet
• Ethics
• Governance

Environmental Achievements

• Group-wide CO2 equivalent emissions (Scope 1 and 2) decreased by 3.7% in 2021 compared to 2020.
• Water use in production facilities declined by 3.1% in 2021 compared to 2020.
• Tobacco waste generated in production sites decreased by 16.4% in 2021 compared to 2020.

Social Achievements

• Overall accident rate decreased by 59% in 2021 compared to 2020.
• 88% of Group employees participated in the 2021 engagement survey, with 92% agreeing the company is committed to employee safety.
• Initiatives to improve diversity and inclusion, including management workshops and training courses.

Governance Achievements

• Continued anti-corruption and anti-bribery training for new employees.
• Implemented a more structured approach to managing and reviewing Group-wide policies.
• Maintained a zero-tolerance approach to corruption and bribery.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic disruptions impacting international travel and safety audits.
• Child labor risks in the tobacco supply chain.
• Need to further reduce greenhouse gas emissions.

Mitigation Strategies

• Investment in local safety initiatives and training to maintain employee safety during the pandemic.
• Continued support for the Eliminating Child Labour in Tobacco Growing Foundation (ECL T).
• Pilot initiatives to identify levers for emissions reduction, including optimizing production, using renewable energy, and phasing out older refrigerants.

Supply Chain Management

Supplier Audits: Simple reviews of selected tobacco suppliers conducted at irregular intervals.

Responsible Procurement

• Efforts to ensure products do not contain tobacco grown, harvested, or processed using child labor.
• Commitment to safe and proper working conditions for suppliers’ employees.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Optimizing production footprint
• Shifting to green electricity power purchase agreements
• Increasing use of renewable energy at production sites
• Phasing out older refrigerants.

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate change
• Water management
• Land use & responsible agriculture
• Environmentally friendly materials & packaging
• Diversity & Inclusion
• Employee health and safety
• Anti-child labour
• Community engagement
• Good Governance & Responsible Business Conduct
• Sustainability Center of Excellence
• Strong corporate ethics
• Responsible supply chain & procurement
• Proactive & transparent reporting
• Responsibility towards the consumer

Environmental Achievements

• 19.5% reduction in scope 1 and scope 2 carbon emissions compared to the 2020 baseline
• 6.3% Reduction in water withdrawal compared to 2020 baseline
• 30.5% of total electricity consumption from renewable sources in 2022 (up from 3.6% in 2021)
• Implementation of a tobacco reclaimer in the Dominican Republic to reuse tobacco and reduce waste

Social Achievements

• Launched more than 20 initiatives across the communities where they operate
• Continued integration of D&I into key people processes
• Continued support and involvement with the Eliminating Child Labour in Tobacco-growing Foundation (ECLTF)
• Updated Code of Conduct and created a Supplier Code of Conduct
• Conducted anti-corruption and anti-bribery training for employees
• More than 1,500 employees participated in educational webinars on sustainability

Governance Achievements

• Established a Sustainability Center of Excellence
• Integrated climate KPIs into management’s compensation scheme
• Established sustainability reporting workstream to ensure compliance with CSRD requirements
• Updated Code of Conduct and created a Supplier Code of Conduct

Climate Goals & Targets

Environmental Challenges

• Climate change impacts on agricultural products and practices
• Water quality issues in some production areas
• Risk of child labor in tobacco growing communities
• Potential ethical aspects of data generation, use, and processing

Mitigation Strategies

• Commitment to the Science Based Targets initiative (SBTi) with targets for 2030 and 2050
• Focus on energy efficiency, renewable energy, and modern refrigeration equipment
• Increased water recycling and improved wastewater treatment
• Support for the Eliminating Child Labour in Tobacco-growing Foundation (ECLTF)
• Development of a Supplier Code of Conduct
• Development of a Data Ethics Policy

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Climate change impacts on agriculture

Transition Risks

• Regulatory changes

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: SBTi, CDP, EU Taxonomy, CSRD

Certifications:

UN Sustainable Development Goals

• Not disclosed

Sustainable Products & Innovation

• STRÖM nicotine pouch product

Environmental Metrics

ESG Focus Areas

• Climate change
• Resource use & circular economy
• Own workforce (Diversity & Inclusion, Employee development, Health & Safety)
• Workers in the value chain (Anti-child & forced labour)
• Consumers & end-users (Health & Safety)
• Business conduct (Corruption & bribery, Responsible supply chain & procurement, Data ethics)

Environmental Achievements

• Reduced Scope 1 and Scope 2 emissions by 4.3% compared with 2022 and by 22.9% compared with the 2020 baseline.
• Reduced energy consumption by 6.4% in 2023 compared to 2022.
• Increased renewable energy share to 21.3% of total energy use.

Social Achievements

• Maintained lost-time accident (LTA) levels (excluding non-employees) compared with 2022.
• Launched a training programme to ensure the Code of Conduct is better known and understood by all employees.
• Disseminated the new Supplier Code of Conduct to all leaf tobacco suppliers.

Governance Achievements

• Conducted a Double Materiality Assessment (DMA) with reference to the Corporate Sustainability Reporting Directive (CSRD).
• Launched a global awareness campaign on the Whistleblower Policy.
• Launched the first training on the Code of Conduct.

Climate Goals & Targets

Environmental Challenges

• Decreasing volumes in most product categories driven by lower consumption.
• Increasing cost inflation across the entire value chain.
• High promotional pressure in the online business.
• Regulatory changes in the tobacco industry.
• Cyber security threats.
• Implementation of a new Group Enterprise Resource Planning (ERP) system.

Mitigation Strategies

• Solid pricing and increasing sales in growth opportunities like new products, retail stores and international sales of handmade cigars.
• Continuous cost optimisations.
• Investments in Growth Enablers (international sales of handmade cigars, retail stores and Next Generation Products).
• Engagement with regulators and stakeholders to ensure reasonable regulation.
• Implementation of security policies, business continuity management, and employee education in cyber security.
• Structured and systematic approach to monitoring and tracking the ERP implementation.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Climate change impacts on tobacco growers and farms

Transition Risks

• Regulatory changes

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: CSRD, SBTi, CDP

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Next Generation Products (NGPs): Modern Whites and Modern Actives

Awards & Recognition

• Not disclosed