KT&G published its 2020 KT&G Report, which presents the company’s environmental, social and governance (ESG) management and social contribution activities.
In this report, KT&G disclosed its mid-term to long-term vision for ESG and its sustainability management strategy to achieve this vision. The company has defined six key ESG value creation areas linked with business and plans to enhance future growth potential by strengthening these areas: strengthening the growth potential of businesses contributing to sustainability; performance of environmental responsibility across the value chain; responsible product development; creating a sustainable industrial ecosystem; strengthening human resource management and human rights protection; and advancement of governance and strengthening of implementation capacity.
By 2025, the company will use packaging materials made from recyclable materials for 100 percent of its products as part of its step-by-step strategy for achieving environmental management goals such as 2050 carbon neutrality, and it will conduct a company-wide human rights impact assessment, not only in Korea but also in overseas subsidiaries. In addition, the scale of business-related social contribution projects conducted by the company has more than doubled compared to 2020.
Environmental responsibility across the value chain and sustainable supply chain management are no longer the responsibilities of future generations but are risks and opportunities for us.
“Environmental responsibility across the value chain and sustainable supply chain management are no longer the responsibilities of future generations but are risks and opportunities for us,” said Bok-in Baek, president and CEO of KT&G, in a statement. “We will lay the foundation for enhancing corporate value through the creation of business-related sustainable management values, and based on this, we will strengthen future business growth potential.”
Sustainability, strategy and survival in the tobacco market
By Clive Bates
Before delving into what sustainability means for the tobacco market, we must first ask what the word itself means. A good starting point is an observation of the French philosopher Luc Ferry: “I know that this term is obligatory, but I find it also absurd, or rather so vague that it says nothing.”
Ferry captures the problem well. It is often taken as a green concept, promoting enlightened practices on energy and emissions, waste and recycling and raw materials in the supply chain. A more evolved definition considers social and economic impacts. This has led to a steady output of sustainability reports from major businesses, increasingly with feedback into operations with a view to improving over time and avoiding the wrong half of sustainability league tables. This is all good, but is it good enough?
I favor a more hard-nosed definition of business sustainability. It would be a variation of the concept defined by one of the pioneers of sustainable development, Gro Harlem Brundtland, in 1987: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Brundtland was referring to nations or to the whole world, but that formulation can be repurposed for a business. If the goal of a business is to generate shareholder value (the value of its stock and flow of dividends) then a reasonable equivalent would be to sustain and grow shareholder value over the longer term. Ultimately, sustainability is about designing and executing a corporate strategy that builds resilience and long-termism into a business but not at the expense of today’s shareholders. One reason why a tobacco company cannot just pull out of cigarettes and concentrate on new products is that the shareholders would fire the management, the company would be taken over or the cigarette assets sold as a going concern.
What does this concept of sustainability mean? We can start with what it does not mean: It does not mean the single-minded pursuit of quarterly earnings at the expense of all wider concerns. “Shareholder value” embodies a range of important but less tangible elements that are reflected in the price of a stock. These include numerous market judgments on the future earnings of the company and its resilience to changes in the marketplace. Nor can it be oblivious to the concerns of stakeholders who are not shareholders, including customers, employees, politicians and public health organizations. They frame the operating context and confer the license to operate.
Here are six questions I would ask any company about its sustainability in the tobacco market:
How robust is the company’s approach to the mitigation of litigation risks? No one really denies that about 8 million people die annually from smoking-related diseases. But who is responsible and accountable for that? Plaintiffs and their lawyers will continue to stalk companies and hold them to account for their past and present behavior. Litigation in the early 2000s had a powerful suppressing effect on shareholder value and at times looked like an existential threat. Part of litigation risk mitigation is to be scrupulously honest in describing products and their risks, to be responsible in marketing and promotion, and to provide a range of low-risk alternatives with encouragement for smokers to switch. The conduct of companies that make products that are harmful and open to abuse will always be under scrutiny, often in the courts of law but always in the court of public opinion.
How resilient is the company strategy to political and regulatory pressures? Governments permit, regulate and tax the most dangerous nicotine products, cigarettes, in every country in the world (even in Bhutan, which recently rescinded its longstanding prohibition of tobacco). While that mandate persists, there will be companies lawfully selling cigarettes. But as the low-risk alternatives rise in popularity, governments will be increasingly emboldened to take stronger regulatory actions against cigarettes, for example, in setting reduced-nicotine standards. Many advocates of such policies now argue that highly restrictive measures are becoming feasible as smokers have a range of low-risk and acceptable alternatives to switch to. Prohibitions without alternatives just lead to black markets. For tobacco businesses, the low-risk alternatives to smoking simultaneously threaten to hasten the end of cigarettes but also provide the opportunity in an emerging, and potentially larger, market for much safer smoke-free recreational nicotine.
How well positioned is the company for changes in consumer preferences? What happens if the pace of migration from high-risk cigarettes to low-risk vaping, heated or smokeless nicotine products accelerates? What if there are tipping points when a critical mass of users makes the alternatives become rapidly ubiquitous? Which companies are poised to prevail? In a fast-moving consumer goods market, companies must ask what the consumer really wants and does not want. It is undeniable that many enjoy smoking, but if we break down that experience into different elements, what do they really want: a satisfying nicotine experience; a sensory experience and flavor; behavioral rituals; a social medium; elements of personal identity and group affinity? How can that be offered without cancer, cardiovascular disease and lung disease? Without stigma and social barriers?
In a changing market, how well is the company positioned to gain or defend market share from competitors? I recently heard a tobacco executive say, “We have 25 percent of the cigarette market, but with our new products, I’m going after the other 75 percent.” That was a sharp reminder that in a radically disrupted market, no one can count on brand loyalty, and even the mightiest brand equities count for little. The aggressively sustainable company looks at disruption and sees opportunity to build future shareholder value. In contrast, the passive profit-seeker may find its grasp on its once-loyal customers is not as strong as it thought. How promising is the company’s portfolio of products in the more febrile markets for smoke-free alternatives? How strong is the product pipeline in R&D? What approach is the company taking to synergistic acquisitions of promising companies and their intellectual property?
Who wants to work for this company? It is a tiresome management cliche to say that “our company is our people.” But it is also right, and especially over the longer term. A sustainable company needs to develop, retain and attract talent at every level and in every area. That is ultimately where its longer term value will be created. The staff in the companies today bear little resemblance to the famously pictured lineup of CEOs testifying to Congress in 1994 (with apologies to industry veterans), but many are younger, sharper and motivated by change for the better. Many see themselves as quiet revolutionaries from within—and not always quiet. The ability to attract top quality, highly motivated staff at affordable salaries will be increasingly about how the companies are looking to the future and how they will ultimately shed their reputational baggage.
Does the board have a convincing vision? In Alice’s Adventures in Wonderland by Lewis Carroll, the Cheshire Cat argues, “If you don’t know where you’re going, any road will get you there.” When the board meets, how often does it raise its collective gaze to the horizon and beyond? When it does this, what does it see and how does that affect what it does today, this month and this year? It makes a big difference if the board sees new products as line extensions and a neat new consumer segment or if it sees a structural transition from smoked to smoke-free nicotine products underway and gathering pace.
But what is a sustainable vision for the nicotine market? It goes beyond tobacco harm reduction, which is an important phase in the transition from combustible to noncombustible products. For the long term, I expect we will see a stable business model based on a (grudging) societal acceptance that nicotine is a legal and legitimate recreational stimulant with relatively benign side effects (no intoxication, violence, incapacitation, loss of control, etc.). The challenge for the tobacco market is to make this drug available in a way that is acceptably safe. That does not mean completely safe. It means within the normal societal appetite for recreational risks. In this vision, smoking would have declined to minimal levels primarily through consumer preferences for much safer but satisfying alternatives to cigarettes driven by continuing innovation. Regulators could put a thumb on the scale to tilt the market toward the safer products, but they will have no need to use the iron fist of prohibition. It will also require a rethink in public health groups that resist everything the tobacco companies do by default. They believe there is an irreconcilable conflict between the interests of tobacco companies and public health. In my view, they are wrong.
There are still some who think sustainability is about corporate social responsibility. In the tobacco market, it is more than that: It’s about strategy and survival.
The theme of GTNF 2021 (Sept. 21–23, 2021, in London) is Continuing Change: Innovation & Sustainability.
Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
The future of tobacco machinery in a rapidly changing market for nicotine products
By George Gay
According to the Oxford Dictionary of Humorous Quotations, on June 2, 1890, the New York Journal ran what was to become one of most famous quips by Mark Twain: The report of my death was an exaggeration. The quote is perhaps more often rendered as “Reports of my death have been greatly exaggerated,” and, in this form especially, it could be applied to the tobacco industry. With the word “my” substituted with “the tobacco industry’s,” the quote could have been run in the New York Journal and other U.S. or European newspapers any time during the past 50 years because, while the tobacco industry has suffered a number of well-publicized setbacks, it has always recovered.
No one can deny, however, that while sales of traditional cigarettes might be increasing slightly in a few markets and holding firm in others, in many, they are falling or even plummeting. Certainly, the long-term, worldwide trend seems to be down, and it is difficult to imagine any future scenarios in which tobacco smoking will be given a boost.
This, of course, raises questions about where the machinery sector—and here and elsewhere in this piece I’m writing about making and packing machines for traditional cigarettes—is headed. It would seem reasonable to assume that it will decline in line with the market for cigarettes. But things might not be quite as simple as this, partly because there are divisions within this sector.
Ask around and you will no doubt be told any number of reasons why the tobacco industry has managed to survive in the face of the moral outrage aimed at its existence by the people with the power to put it out of existence, but one of the most important reasons is that it has demonstrated flexibility where necessary, though sometimes reluctantly and, therefore, belatedly.
There was, about 30 years ago, a sense that machinery suppliers, especially those based in Europe, were working themselves out of a job because, as increases in sales of cigarettes outside China slowed, machinery speeds were being ramped up—at times hugely. And at roughly the same time, technology transfer deals were being made with engineering companies in China.
In part, though, there was something of a separation between overall cigarette consumption and machine capacities. The very fastest machines became relevant mostly to what were known as long-run brands, the most internationally in-demand products, the sorts that major cigarette manufacturers wanted to focus on and wanted increasing numbers of consumers to focus on while the manufacture of lesser brands was left in the hands of slower—though mostly not slow—machinery.
On the surface, such a separation was based on the competing claims about machine flexibility. Those supplying slower machinery claimed their equipment was better for manufacturing other than long-run brands because technicians could make the size and other changes needed when switching from the manufacture of one type of cigarette to another more quickly than was the case with faster machinery. And even if changes took the same length of time on the two types of machines, they said, it was more inefficient to have a fast machine sitting idle while lengthy changes were made to it than to have a slower one sitting idle.
Partly in response to this, perhaps, the suppliers of the fastest machinery made well-publicized efforts to make their equipment more flexible. But this response was more likely to have been caused mostly by competitive issues, supplier to supplier, I think. After all, those that supplied the faster machines offered also slower—though not the slowest—equipment, either directly or, as time went by, through acquired specialized suppliers.
Of course, there is more to the machinery capacity arguments than cigarette production numbers; it also concerns investment costs. For many years now, we have been used to seeing the major international cigarette manufacturers swallow smaller companies, and, in recent times, seeing those manufacturers consolidate their product portfolios, all of which, I guess, has tipped the scales toward high-capacity machinery.
New-Generation Products
But what about the future? I guess it is not beyond the bounds of possibility that, having perhaps taken their eyes off the traditional cigarette ball somewhat, the major cigarette manufacturers have left the door open to startups, at least in those countries where it is possible to start a cigarette manufacturing business from scratch. After all, they have stopped manufacturing some of their shorter run brands and are in the process of converting former cigarette factories to manufacture new-generation products. Clearly, if this door is left ajar, part of the focus might start to switch to smaller manufacturers and, therefore, to lower capacity machinery, including secondhand machinery.
Such thoughts were brought to the surface again recently when, according to a report in the Guardian newspaper, Philip Morris International’s CEO, Jacek Olczak, called on the U.K. government to ban cigarettes within the next 10 years. Olczak apparently said PMI could “see the world without cigarettes … and actually, the sooner it happens, the better for everyone.” Olczak said, “Give [people] a choice of smoke-free alternatives … with the right regulation and information, it can happen 10 years from now in some countries. You can solve the problem once and forever.”
I don’t know why Olczak picked on the U.K., but it might have been partly because the country has already seen a fairly dramatic fall in cigarette consumption, because it has taken a generally progressive attitude toward lower risk alternatives to combustible cigarettes and because the country is in a state of transition in respect of tobacco and nicotine as it reviews its tobacco and related products regulations after having left the EU and left behind the necessity to comply with that institution’s Tobacco Products Directive (TPD).
Looked at like this, the U.K. could become an experiment in tobacco harm reduction (THR), were the government to make such a bold move. And this is not altogether unthinkable even for a semi-detached libertarian regime as is now in power. But the real question is: What would be the conclusion of such an experiment? Would the U.K. become, as those supporting the principles of THR might have it, a tobacco smoke-free heaven in which former smokers were satisfied with the new, less risky nicotine-delivery products, cancer rates plummeted and the economy boomed as improvements in health, productivity and social cohesion provided huge dividends?
Or would it conclude, as those opposed to THR might have it, with a nation, most of whose youngsters were hooked on nicotine and committing crimes to obtain the money necessary to buy the black market cigarettes onto which they had moved during their summer breaks abroad—a nation with worsening health, productivity and social cohesion?
Given scenario one, the medium-term to long-term outlook for cigarette machinery suppliers would be bleak because even the best efforts of the World Health Organization and its allies would not be able to hold the tide of countries wanting to take advantage of similar THR dividends. But given scenario two, cigarette machinery suppliers could end up on a roll given that what had appeared to be the only truly viable route out of smoking had been shown to be fatally flawed.
Of course, it is unlikely, I think, that Olczak believes the U.K. government would ban cigarette smoking within 10 years, but I wouldn’t rule out that he is banking on his plan B being taken seriously: “Give [people] a choice of smoke-free alternatives … with the right regulation and information …”
This would, of itself, be a valuable experiment, especially if cigarette smokers were also provided with the right, or rather truthful, information and if the information provided to both smokers and vapers included accurate information about the environmental impacts of traditional cigarettes and lower risk products. After all, it is going to be challenging to enjoy a smoke or a vape if your house has been blown away and you are standing up to your neck in water that is being evaporated by the heat dome that has appeared overhead.
So what is the likely outcome? I think we will see a U.K. scenario that sits somewhere between one and two above. The art of politics is compromise, which, depending on your point of view, means satisfying everybody or nobody. In other words, there will be significant but modest changes in the U.K. that will bring about a welcome boost to the conversion of smokers to less risky products.
Looking further afield, the U.K. example might have some effect on those countries orbiting at the greatest distance from the WHO, while those in closer orbits will continue to try to rebut the ideas of THR. The result will be that cigarette smoking worldwide will continue to fall for the next 10 years, much as it has in the past, and the requirement for cigarette machinery will fall with it, perhaps with demand tilting toward medium-speed equipment. I think there is simply too much inertia in the market, largely held in place by the opposition to THR inherent in positions taken up by the WHO and its allies, for there to be any sudden, major changes. For one thing, it has to be remembered that while the U.K. might have shaken off the shackles of the TPD, it is still tied to the WHO’s Framework Convention on Tobacco Control and the way that treaty is interpreted by the parties to it.
One last point: If the U.K. government does decide to ban cigarettes during the next 10 years, it would be consistent and fair for it to also ban alcohol. In fact, it would be hypocrisy not to do so. Alcohol consumption takes a far greater toll on U.K. society than tobacco consumption, and, with the number of smokers falling and the number of drinkers increasing, the damage caused by alcohol is only going to increase relative to that of tobacco.
Sodim’s Synergies
Eric Favre
In communicating earlier this year about a story published in the August issue of Tobacco Reporter, Eric Favre described as synergistic the relationship between the instrument company of which he is managing director, Sodim, and Hauni, the machinery supplier. He made his remark in reply to a question about what advantages had accrued after the acquisition some years ago of Sodim by Hauni.
Favre made the point, also, that this synergy, this coordination if you like, extended to customers and potential customers. There were, for example, advantages to be had for a customer in acquiring, for instance, a cigarette maker and a quality control (QC) test station as a single package—advantages such as those to do with technology and logistics. And by the same token, Favre added, during an R&D project, a customer could take advantage not only of the machinery expertise and support available from Hauni but also of the quality assurance (QA) and QC oversight of Sodim.
The idea of such synergies did not make it into the August story but, this, the September issue, provides an opportunity to take the idea further because it is looking at making and packing.
Tobacco Reporter: Given that Hauni making machinery would, in the normal course of things, be delivered with QA/QC equipment included, what, specifically, can Sodim add to a cigarette manufacturer’s standards armory?
Eric Favre: Sodim adds the capacity of automatic sampling, a hands-free system that picks a cigarette from the mass flow and delivers it into the hopper of a Sodim test station: a SodiQube or a station from the Sodiline family. The data generated by the test station is then fed back to the maker, which, where necessary, uses it automatically to adjust its settings and thereby keep each cigarette produced very close to the target weight, diameter and dense end position. It is, in fact, a “police camera” that fine tunes the monitoring of the maker.
What can Sodim offer in the way of additional QA and QC equipment in respect of cigarette packing?
In the packing area, Sodim can offer a nondestructive pack seal tester that has the advantage of allowing all boxes that are correctly sealed to be returned to the product flow. Currently, this system is manual, and it would be ideal if it were developed so that it sampled automatically. Such automatic sampling would require complex developments, however, and might not be viable economically.
In respect of making and packing, what can Sodim offer to manufacturers of other tobacco and nicotine products, such as tobacco-heated products (THP) and snus?
Sodim test stations are suitable for measuring THP weights and diameters, though not dense-end positions. And the nondestructive pack-seal tester is suitable for testing THP and snus packs.
Are Sodim’s instruments used mainly by major manufacturers, or do smaller manufacturers also use them?
Sodim equipment is used by any type or size of manufacturer, from small and family-owned businesses to international groups.
Is it true to say there are certain measurements, such as those that have to do with complying with regulations, that all manufacturers must make, though these will differ from country to country, while others are optional because they provide data for internal use, perhaps for improving efficiencies and reducing waste, etc.?
This is correct. In the case of traditional cigarettes, Sodim’s very accurate and specialized equipment is needed to meet both the demands of regulations and internal standards of quality control. But for THPs, which do not generate smoke, our equipment is used more for internal QC reasons because there are fewer specific regulations in respect of these products than is the case with traditional cigarettes.
How does Sodim or a manufacturer running Sodim instruments ensure they are giving the correct readings? Do they need regular servicing and replacement after a given lifetime?
Sodim instruments will give the correct readings provided that the end users—mainly manufacturers but also laboratories—calibrate these devices regularly. And to allow users to calibrate their instruments, Sodim’s ISO 17025-accredited laboratory regularly delivers calibrated standards to the users. In addition, regular servicing is strongly advised and in most cases is carried out by Sodim at customers’ sites. –G.G.
A Veteran’s View: Challenging Times Ahead
Chris Crawley
In another main story accompanying this sidebar, I question how much longer traditional cigarettes, and therefore the machinery that makes and packs them, will be around. My conclusion is that they will be around for quite some time, even though their demise is perhaps being brought into sharper focus right now.
That is my stab at predicting the future, but what is happening right now? In an email exchange, I asked Chris Crawley of Axiom Select, who has been observing and working widely in the tobacco industry for many years, whether he believed that demand for traditional cigarette making and packing machinery was currently strong, average or weak. “I believe the market for new secondary (making and packing) machinery—with almost all the multinationals—is soft globally as traditional cigarette markets mature and volumes decline,” Crawley wrote. “If there’s a bright spot, it is probably Asia, but this, too, has its ups and downs.”
And if Asia is a bright spot, for whom is it a bright spot? Crawley pointed out that the large EU-based machinery producers were finding emerging competition in Asia where labor and materials were often lower. There was an ongoing argument that said the quality of machinery built in Asia was not as good as that built in Europe, but while those putting forward this argument might be correct in some instances, any quality gap was certainly narrowing. And, at the same time, the cost and, therefore, the machinery price gap could be considerable.
Crawley said he expected these trends to continue as mature cigarette markets slowly contracted, particularly in North America and Europe. But again, there is a bright spot. “Nevertheless, there is a highly competitive market—mostly price driven—for used/refurbished machinery from some of the larger independent cigarette producers,” said Crawley.
That is all well and good, but isn’t the competitiveness of this market in part down to the fact that supply has been choked off in recent years? “It has been general policy, with the multinational producers, not to resell or trade their surplus machinery,” Crawley acknowledged. “Nevertheless, not all play by the same rules all over the world. Consequently, there is a good amount of used machinery available if one cares to search. This trend, also, is expected to continue.”
At this point, I couldn’t help asking a question that has often occurred to me in my more fanciful moments. If I decided I wanted to start a modest cigarette manufacturing plant in the EU, what would be my best options in respect of machinery and equipment, assuming that I had a modest budget—whatever that might be—but what I thought was a winning brand name? “A modest startup can still find good used machinery at competitive prices,” said Crawley. “For example, a Molins Mk9 with a Hauni MaxS tipper is a good medium-speed complex with high efficiency/productivity. Spares and expertise are also available. And from this mid-point, you can go up or down in price and type of machinery.
“For the last 30 years, machinery development has focused on higher speed machinery, and, while there are huge benefits to achieving greater speeds from the same machinery footprint, those speed increases often come with the sacrifice of flexibility. Machinery flexibility lags profoundly and there is little development in this sector. Changing machinery configurations for different lengths, diameters and tipping, etc., remains difficult, time consuming and costly.”
Finally, Crawley turned his gaze on the future. “Affluent and highly profitable cigarette markets still abound, but they are increasingly finding their volumes shrinking and competition increasing,” he said. “In the longer term, challenging times are ahead for both machinery and cigarette producers.” –G.G.
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
Philip Morris International inaugurated a HUF3 billion ($10.16 million) e-cigarette recycling center on the outskirts of Budapest this week, reports the Budapest Business Journal, citing state news wire MTI.
The center can recycle 150,000 electric tobacco devices a month, but capacity can be increased, according to PMI Sustainability Director Miguel Coleta.
The company picked the site because of Hungary’s economic stability and the favorable investment environment, he added.
State Secretary Tamas Menczer said the investment created 100 jobs, noting that PMI has just one other recycling center, in Japan.
PMI earned more than HUF230 billion in Hungary last year.
KT&G President and CEO Bok-in Baek (center) with new hires during a company recruitment celebration. (Photo: KT&G)
KT&G has received Equal Salary Certification, making it the first listed Korean company to do so.
This certification verifies that the company implements an equal wage policy for employees with the same qualifications regardless of gender and provides opportunities such as recruitment, evaluation and promotion in an open and fair way. Accredited by the European Commission, it is a certification system organized by the Equal Salary Foundation, a nonprofit foundation in Switzerland.
KT&G decided to obtain the certification in order to have its personnel system, including wage policy, officially verified according to the objective standards of an independent professional institution and to use this as a starting point for advanced human rights management. To obtain the certification, the company underwent a rigorous screening process for about five months.
With this certification, KT&G has been recognized for having a fair personnel system based on an equal wage policy and systematic human rights management. Specifically, recruitment is operated blindly for the purpose of competency-based, nondiscriminatory selection, and evaluation and promotion are conducted through fair procedures such as interviews, an objection system and a promotion review committee rather than by way of notification. Also, to enable employees to balance work and family life, the company has paid leave systems such as maternity leave and parental leave of up to two years per child, childcare allowances and support for fertility treatment expenses for supporting childbirth and childcare.
Meanwhile, KT&G was selected as Korea’s best job creator and work-life balance provider by the Ministry of Employment and Labor and was certified as an excellent family-friendly company by the Ministry of Gender Equality and Family, having proven its efforts to communicate with employees and develop a fair and open HR system.
“This equal wage certification is the result of the company and its employees developing human rights management policies through active communication,” said Bok-in Baek, president and CEO of KT&G, in a statement. “KT&G plans to continuously develop inclusive and fair policies for all employees to strengthen the company’s fundamental competitiveness.”
BAT has been recognized by the Corporate Register Reporting Awards as runner-up for Best ESG Report for its 2019 report.
The company also placed fourth for Innovation in Reporting, fifth for Relevance and Materiality, sixth for Openness and Honesty, and ninth for Creativity in Communications.
These awards receive entries from all types of businesses around the world, and the winners are voted for by Corporate Register’s 65,000-plus registered users from across the sustainability profession worldwide.
Best ESG Report is a new category for the 2021 awards, recognizing the shift in recent years from corporate responsibility or sustainability reports to those focused on environmental, social and governance (ESG).
We’re delighted to be recognized in these awards and are committed to continuing to provide information regarding our ESG efforts in clear, transparent and engaging ways.
“As part of our commitment to building ‘A Better Tomorrow,’ ESG is front and center of everything that we do as a business,” said Jennie Galbraith, BAT’s group head of ESG, in a statement. “We have a long history of best practice and transparent reporting on ESG issues—our next report for 2021 will mark the 20th anniversary of our first ever report.
“Over that time, we’ve understood the importance of evolving our approach to meet the needs of our stakeholders and remain at the forefront of leading practice. So, we’re delighted to be recognized in these awards and are committed to continuing to provide information regarding our ESG efforts in clear, transparent and engaging ways.”
“BAT is one of the large corporations who set the pace on transparent reporting around 20 years ago, with a comprehensive approach that included stakeholder engagement, materiality and third-party assurance,” said Paul Scott, director of Corporate Register.
“Since then, much has changed in the reporting field, but I’m pleased to see that BAT has stayed the course and is still pushing the boundaries of transparent reporting. The votes of our stakeholders in the CR Reporting Awards are the proof of this.”
France wants to reduce the number of discarded cigarette butts in the environment by 40 percent within six years, reports DPA International, citing government officials.
Every year, smokers toss an estimated 23.5 billion cigarettes into the country’s streets and parks.
The French environment ministry wants tobacco companies to help solve the problem. A recycling and anti-waste law passed last year requires them to take responsibility for their products after their “end of life.”
The tobacco industry will pay €80 million ($93.8 million) per year to a newly created institution that will allocate the money to projects aimed at eliminating cigarette butts and raising awareness, the ministry said.
The ministry also wants to distribute pocket ashtrays, set up more cigarette-only trash bins and establish new collection and recycling systems for cigarette butts.
According to the latest EU statistics, smokers account for 22.4 percent of the French population.
KT&G has received the ISO 45001 certification from the International Organization for Standardization (ISO).
ISO 45001 is an international standard of safe and healthy management adopted by ISO and the International Labor Organization. The certification applies to KT&G plants in Sintanjin, Gwangju, Yeongju, Gimcheon and Cheonan
In its efforts to improve safe working environments, KT&G actively solicits employees’ input. Every quarter, the company’s management meets with workforce representatives to discuss safety and health matters. Workers are also offered frequent health checks.
According to a KT&G official, the ISO 45001 certificate proves that the company provides a workplace with a clear goal and a system that prioritizes safety. “The company will practice the systematic safety management in accordance with the global standards to guarantee and respect the right to work safely and thus strengthen the ESG-drive management,” KT&G wrote on its website.
KT&G continues to pursue further safety certifications around the world to maintain the top-level ESG standards. The company’s quality and environment management system has been recognized with the ISO 14001 (environmental management), ISO 9001 (quality management systems) and other qualifications. KT&G also has its eye on ISO 50001 (energy management) certification.
BAT’s Vuse e-cigarette celebrated its position as the first global carbon neutral vape brand with a carbon neutral voyage down the Thames in London, home of BAT’s global headquarters.
The event was organized to underscore Vuse’s commitment to carbon neutrality and its various supporting initiatives. For instance, in utilizing substantial sea freight as part of its global supply chain, BAT aims to move the majority of Vuse’s global shipments by sea freight by the end of next year.
“I am proud of the way that Vuse is playing its part in delivering ‘A Better Tomorrow’ by reducing its impact on the environment,” said Kingsley Wheaton, chief marketing officer at BAT, in a statement.
“Vuse is a leading global brand with ever-increasing scale, which allows us to drive global supply chain efficiencies and effectiveness. I am delighted that, in Vuse, we are demonstrating the kind of purposeful behavior expected from leading brands of the world. This commitment will play a part in our vision of ‘A Better Tomorrow’ becoming a reality.”
Research conducted on behalf of BAT’s R.J. Reynolds Vapor Co. subsidiary found that nearly half (46 percent) of consumers said they would prefer using a vapor product from a company that was successful in becoming carbon neutral. A brand’s environmental priorities and impact are increasingly important to consumers in considering their purchasing choices, with nearly a third of consumers broadly viewing a brand more favorably based on their environmental initiatives, according to Reynolds.
Vuse’s carbon neutrality status and ambition to increase sea freight is part of BAT’s bigger ambition to become an environmentally sustainable vape brand with initiatives including:
An ambition to transport the majority of international shipments by sea by the end of 2022 and 100 percent of its consumable pods by the end of 2023
A global device and pod collection scheme; through the “Drop the Pod” campaign, approximately 200,000 pods were collected since the start of the pilot in 2020
Cutting single use plastics from packaging; the “Cut the Wrap” campaign has saved 100 tons of plastic, or the equivalent of 4 million plastic bottles, in 2020
BAT’s sustainability efforts and commitment have received notable independent recognition. These include appearing in the Dow Jones Sustainability Indices for 19 consecutive years (the only tobacco company to be listed in the prestigious World Index in 2020), a MSCI rating of BBB and CDP A-List status for climate change.
JTI is giving its employees the flexibility to work up to 50 percent of their time per month away from the office, benefit from flexible core hours and work up to 10 days abroad, among other “New Ways of Working” (NWOW) measures, which redefine where and how work is done.
Following the success of remote working during the pandemic, JTI says it has built its new working model around four core elements: greater FLEXibility in ways to work, LEAD with more autonomy, LIVE a more balanced work-life blend and BELONG at JTI—regardless of if one is based in an office, factory or operates in the field.
“Like most people working today, and even before the pandemic hit, achieving more of a work-life balance has been a key priority for our employees,” said Howard Parks, senior vice president of people and culture at JTI, in a statement.
“Flexible working and the ability to work abroad for up to 10 days per year are the latest examples of measures to help every employee feel empowered to strike that balance. Performance and outcomes are what matter here, not hours spent in the office.”
JTI’s NWOW guidance follows the launch in January of the company’s pioneering equal family leave policy, which offers a minimum of 20 weeks fully paid leave to all new parents globally.
We recognize the responsibility we have to do all we can to support our employees and that being happy and content in how they balance their work and personal lives will serve everybody for the better.
“We recognize the responsibility we have to do all we can to support our employees and that being happy and content in how they balance their work and personal lives will serve everybody for the better,” said Christiane Bisanzio, vice president of diversity and inclusion at JTI. “We understand the importance of flexibility and the need to be agile, which is why our new policy is intended to be evolutionary, and with every new learning, we will improve and refine our approach. As far as JTI is concerned, work is an activity, not a place or time.”
The new policy was rolled out on July 1, 2021, and an additional measure of a four-day work week will be piloted in the first quarter of 2022 across selected locations. Further steps are being taken, including close collaboration with markets, to ensure flexibility is offered to factory and sales teams, including piloting remote working in mature locations from 2022.
KT&G published its 2020 KT&G Report, which presents the company’s environmental, social and governance (ESG) management and social contribution activities.
