Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Employee Wellbeing
• Responsible Supply Chain
• Human Rights
• Community Investment

Environmental Achievements

• Reduced waste by 20% since 2009
• Reduced waste to landfill by 55% since 2009
• Reduced water consumption by 36% since 2009
• Planted 1.7 million trees in 2017

Social Achievements

• Reduced Lost Time Accident (LTA) rate by 69% since 2009
• 92% of leaf suppliers participated in the Sustainable Tobacco Programme (STP)
• Global volunteering event, Mobilise for May, benefitted more than 86 projects in 38 countries

Governance Achievements

• Full compliance with the UK Corporate Governance Code
• Robust risk management and internal control systems
• Independent assurance and verification of CR performance

Climate Goals & Targets

Environmental Challenges

• Reduction in the size of the legitimate tobacco market due to product regulatory change, excise duty changes, and illicit trade
• Changes in consumer trends and brand equity
• Macro-economic conditions in key markets
• Failure to comply with legislation
• Tobacco litigation
• Access to funding

Mitigation Strategies

• Proactive management of regulatory changes
• Engagement with authorities on excise duty
• Anti-illicit trade initiatives and partnerships
• Monitoring of economic indicators and consumer patterns
• Robust regulatory compliance and quality control
• Strong focus on cash generation and debt reduction
• Strict controls for distributors and dedicated anti-illicit trade team

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Standards
• Sustainable Tobacco Programme (STP)
• Supplier Qualification Programme

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Regulatory changes

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: Null

Certifications: OHSAS 18001 (87% of factories), ISO 14001 (92% of factories)

Third-party Assurance: PwC

UN Sustainable Development Goals

• Not disclosed

Currently reviewing CR programmes and objectives and mapping them against the UN Sustainable Development Goals (SDGs).

Sustainable Products & Innovation

• E-vapour products

Awards & Recognition

• Best Employer awards
• 2017 Dow Jones Sustainability Index score of 84%

Environmental Metrics

ESG Focus Areas

• Consumer health
• Climate and energy
• Farmer livelihoods and welfare
• Human rights
• Waste

Environmental Achievements

• Reduced absolute energy consumption by 17% from the 2017 baseline year
• Reduced total absolute Scope 1 and 2 CO2e emissions by 14% from the 2017 baseline year
• Reduced total waste by 15% compared to 2017 base year
• Reduced water use by 24% from the 2017 baseline year

Social Achievements

• 16% decrease in lost time accident rate compared to 2020
• 40% of workforce are female
• £3 million approximate investment in community investment projects
• 88% of farmers growing complementary crops
• 97% of farmers with access to initiatives to improve agricultural productivity
• 130,000 farming community members benefitting from Imperial Leaf Partnership projects

Governance Achievements

• A rating by CDP for 2020 Climate Change submission for a second consecutive year
• Established a cross-functional Human Rights Compliance Working Group
• Developed a modern slavery audit module in collaboration with Slave Free Alliance

Climate Goals & Targets

Environmental Challenges

• 40% increase in waste sent to landfill from 2017 baseline year (due to improved measurement accuracy at one site and destruction of menthol cigarettes)
• One work-related employee fatality in 2021
• Delays in some sites obtaining re-certification due to the COVID-19 pandemic

Mitigation Strategies

• Trialled take back recycling schemes in Germany and France for myblu pods
• Improving packaging recyclability for combustible brands
• Increased use of leading indicators to better manage risk throughout operations
• Thorough investigation conducted following employee fatality
• Aim to undertake a review of certifications in FY22

Supply Chain Management

Responsible Procurement

• Engaged with subject matter experts and local implementing partners to better understand risks
• Strengthened the Sustainable Tobacco Programme (STP)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events causing disruption

Transition Risks

• Compliance obligations from new climate legislation
• Increased costs of energy and raw materials

Opportunities

• Increased recycling rates and reuse of materials
• Shift to renewable energy
• Investing in supply chain resilience

Reporting Standards

Frameworks Used: GRI Standards: Core Options, SASB Index

Certifications: ISO 14001, OHSAS 18001 / ISO 45001

Third-party Assurance: Ernst and Young LLP (EY)

UN Sustainable Development Goals

• Multiple UN SDGs

Aligned with five UN SDGs, positively contributing to others

Sustainable Products & Innovation

• Pulze (Heated Tobacco)
• myblu (vaping product)
• Skruf and Zone-X (Oral Nicotine products)

Environmental Metrics

ESG Focus Areas

• Consumer Health
• Climate Change
• Packaging and Waste
• Farmer Livelihoods & Welfare
• Sustainable & Responsible Sourcing
• Human Rights
• Employee Health, Safety & Wellbeing
• Diversity, Equity & Inclusion

Environmental Achievements

• Reduced absolute Scope 1 and 2 carbon emissions by 19% since 2017 baseline
• Reduced absolute energy consumption by 19% since 2017 baseline
• Reduced absolute water consumption in operations by 28% since 2017 baseline
• 20% decrease in waste to landfill since last year

Social Achievements

• Launched zero waste to landfill project across manufacturing sites
• Supported projects benefiting at least 84,000 farmers and their families
• Improved governance through the appointment of a new Human Rights Manager
• Launched a new global wellbeing strategy

Governance Achievements

• Established a cross-functional ESG Committee chaired by the CEO
• Integrated ESG metrics for consumer health and climate into executive remuneration for FY23
• Refreshed Supplier Code of Conduct

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to climate events (e.g., drought, extreme weather)
• Increased costs from emerging regulations (e.g., carbon taxation)
• Increased materials costs due to suppliers' operating costs and raw material increases
• Maintaining high certification levels due to travel restrictions

Mitigation Strategies

• Supply chain contingency plans and insurance cover
• Net zero strategy aiming for net zero in direct operations by 2030
• Partnership with key suppliers to drive change in supply chain
• Energy efficiency initiatives and transition to renewable energy sources

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Code of Conduct
• Supplier Qualification Programme
• Science-based targets for 50% of suppliers by spend by 2024

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Drought
• Riverine flooding

Transition Risks

• Carbon taxation
• Increased materials costs

Opportunities

• Cost savings from energy efficiency and renewable energy
• Avoiding carbon costs through Net Zero strategy

Reporting Standards

Frameworks Used: GRI Standards, SASB framework for tobacco

Certifications: ISO 14001, ISO 45001

Third-party Assurance: Ernst & Young LLP (EY)

UN Sustainable Development Goals

• SDG 3
• SDG 7
• SDG 8
• SDG 12
• SDG 13

Initiatives aligned with various SDGs, including health, clean energy, decent work, sustainable consumption and production, and climate action.

Sustainable Products & Innovation

• Next Generation Products (NGPs)

Awards & Recognition

• Financial Times Climate Leader (two consecutive years)
• CDP’s “A List” for climate change (three consecutive years)
• CDP Supplier Engagement Leader (three consecutive years)

Environmental Metrics

ESG Focus Areas

• Consumer Health
• Climate Change
• Packaging and Waste
• Farmer Livelihoods & Welfare
• Sustainable & Responsible Sourcing
• Human Rights
• Employee Health, Safety & Wellbeing
• Diversity, Equity & Inclusion

Environmental Achievements

• Reduced Scope 1 and Scope 2 market-based emissions by 65% since 2017
• Reduced absolute waste across our operations by 27% since 2017
• 96% of purchased grid electricity from traceable renewable sources by end of FY23
• Reduced energy consumption by 26% compared to the 2017 baseline year
• Reduced absolute water consumption by 32% compared to the 2017 baseline year
• 91% waste diverted from landfill in 2023
• 96% of our packaging material in the EU and the UK is reusable, recyclable or compostable

Social Achievements

• NGP revenue increased by 40% between FY21 and FY23
• Reduced lost time accidents by 44% since 2019
• 155,000 people in our leaf supply chain benefitting from Leaf Partnership Projects aimed at improving access to clean water
• Improved access to basic needs for 101,410 farmers and their families through Leaf Partnership Projects
• Scored 92% on 2022 ShareAction Workforce Disclosure Initiative
• Employee turnover rate reduced to 16% in FY23 from 30% in FY22

Governance Achievements

• Strengthened governance of ESG with operational working groups and the ESG Committee
• ELT Sponsors established for each of the eight ESG priority areas
• Internal Triple Zero Campaign initiated to drive engagement and performance
• All factories report against 21 modern slavery leading indicators monthly

Climate Goals & Targets

Environmental Challenges

• Climate change risks across the value chain (crop failure, asset destruction, distribution interruption)
• Supply chain disruptions
• Waste and recyclability challenges with NGP growth
• Lack of adequate alternative for cigarette filters
• Risk of child labor in the cultivation part of the supply chain
• Maintaining consistent wellbeing approach across diverse global operations

Mitigation Strategies

• Net Zero emissions across value chain by 2040 (Scope 1, 2, 3)
• 100% renewable energy for operations by 2030
• Zero waste to landfill by 2025
• 100% reusable, recyclable, or compostable packaging (EU & UK) by 2025
• Collaboration with stakeholders to address cigarette butt littering
• Supplier engagement through CDP Supply Chain Programme and Sedex
• Multi-stakeholder response to child labor (STP, Leaf Partnership Projects, ECLT)
• Wellbeing framework and guidance, behavioral science training for leaders

Supply Chain Management

Supplier Audits: Three international modern slavery audits in FY23; six factory audits by Group Internal Audit

Responsible Procurement

• Supplier Code of Conduct
• Sedex for ethical trading risk assessments
• Supplier Qualification Programme

Climate-Related Risks & Opportunities

Physical Risks

• Crop failure
• Asset destruction
• Distribution interruption

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: ISO 14001, ISO 45001

Third-party Assurance: Ernst & Young LLP

UN Sustainable Development Goals

• SDG 7
• SDG 12
• SDG 13

Initiatives aligned with SDGs 7 (Affordable and clean energy), 12 (Responsible consumption and production), and 13 (Climate action) are detailed throughout the report.

Sustainable Products & Innovation

• Pulze 2.0
• blu 2.0
• blu bar
• zoneX

Awards & Recognition

• Financial Times Climate Leader (3 consecutive years)
• CDP’s ‘A List’ for climate change (4 consecutive years)
• CDP Supplier Engagement Leader (4 consecutive years)

Environmental Metrics

ESG Focus Areas

• Healthier Futures
• Positive Contribution to Society
• Safe & Inclusive Workplace

Environmental Achievements

• Reduced direct emissions (Scope 1 and 2) by 69% since 2017.
• Reduced absolute waste in operations by 32% since 2017.
• Sent zero waste to landfill from manufacturing operations and main offices since May 2024.
• 94% of packaging formats in EU and UK deemed recyclable.
• Achieved 84% average packaging recyclability score for products sold in EU and UK.
• 99% of wood used for tobacco curing is sustainably sourced or matched by managed planting.

Social Achievements

• Reduced lost time accidents by 47% since 2019.
• 64% growth in NGP net revenue since 2020.
• Supported more than 128,000 new beneficiaries through Leaf Partnership Projects in FY24.
• Workforce Disclosure Initiative (WDI) disclosure score 97% in FY24.
• 98% of factory sites self-assessment compliance with human rights leading indicators.

Governance Achievements

• Conducted first double materiality assessment (DMA) in 2023.
• ESG metrics continue to be part of executive remuneration.
• Launched new Supplier Relationship Management (SRM) programme, SRM Connect.

Climate Goals & Targets

Environmental Challenges

• Lack of primary data and complex supply chain hindering accurate Scope 3 emissions reporting.
• Impacts of climate change and compliance with environmental standards.
• Obtaining appropriate regulatory approval to market NGP products.
• Unintended use of NGP products.
• Costs of production fluctuating due to global shifts in raw material prices.
• Risk of child labour in the supply chain.
• Obtaining employee self-identification data for DEI tracking.

Mitigation Strategies

• Investing in energy efficiency, renewable energy, and sustainable logistics.
• Accelerated external engagement, education, and communication on NGP.
• Engaging with suppliers to gain a more precise understanding of their emission sources.
• Implementing Human Rights Leading Indicators (HRLI).
• Leaf Partnership programme to support farmers.
• Implementing a risk-based approach to supplier audits (Sedex, SMETA).
• Launching the “I Belong” employee self-identification campaign.

Supply Chain Management

Supplier Audits: Modern slavery audits in Ivory Coast, US, and Morocco; online audits piloted.

Responsible Procurement

• Supplier Code of Conduct
• Sedex and SMETA audits
• SRM Connect
• CDP Supply Chain Programme
• Science-based targets for suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Energy efficiency improvements
• Development of sustainable products

Reporting Standards

Frameworks Used: GRI Standards, SASB framework for tobacco

Certifications: ISO 14001, ISO 45001

Third-party Assurance: Ernst & Young LLP

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)
• Goal 8 (Decent work and economic growth)
• Goal 5 (Gender equality)
• Goal 3 (Good health and well-being)

Initiatives aligned with SDGs detailed throughout the report.

Sustainable Products & Innovation

• blu vaping products
• Zone tobacco-free oral nicotine pouches
• iSenzia tobacco-free heated herbal product
• Recycled Roll-Your-Own (RYO) packs

Awards & Recognition

• CDP’s A List for climate change (5 consecutive years)
• Financial Times’ 2024 Climate Leader (4 consecutive years)