Framing our sustainability strategy is our commitment to reduce our environmental impact, maintain high standards of governance and collaborate for positive societal impact.
We are committed to adapting our business to changing consumer demands for our products as well as a changing climate. We are in the process of developing a new environmental strategy that seeks to manage and mitigate our most significant environmental impacts across our value-chain, whilst ensuring we’re taking the necessary steps to align our business in keeping global temperatures in line with the Paris Agreement’s stated 2-degree limit and 1.5-degree aim.
During the year we completed a carbon and water life-cycle analysis (LCA) across our value chain and an initial assessment of our climate related risks and opportunities using the CDP framework aligned with the recommendations from the Taskforce on Climate-Related Financial Disclosure (TCFD). We focused on both transitional and physical risks and opportunities, creating a shortlist of material issues which will be analysed further through scenario analysis in 2019. The collective results will help inform how we can best address climate change by setting a robust Science Based Target to significantly reduce our greenhouse gas emissions.
For further information please see our response to the TCFD recommendations.
WHY IS IT IMPORTANT?
Improving our environmental performance supports efficiency and cost optimisation and enables us to better comply with evolving environmental legislation. We also recognise that certain resources are finite and as such this presents us with opportunities to explore sustainable solutions that both support our business sustainability and protect the environment.
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 are pleased with our environmental performance in meeting our current targets for waste, energy, greenhouse gas emissions and water consumption. We are developing long-term science based targets for CO2, and energy, and long-term targets beyond 2020 for waste and water. These new targets will be reported towards the end of 2019.
From our environmental footprint analysis, we understand that many of our environmental impacts are in our agricultural supply chain. We seek to minimise these impacts through the application of the Sustainable Tobacco Programme (STP) and the CDP Supply Chain Programme, with our suppliers.
CLIMATE AND ENERGY
We reduce our direct impacts through energy efficiency and carbon emissions management. We reduce our indirect impacts by working with our suppliers, both through our STP for leaf suppliers and with the CDP Supply Chain Programme for our strategic Non-tobacco material (NTM), leaf and Next Generation Product (NGP) suppliers. Suppliers 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 for our high-energy consuming manufacturing sites; including Germany, Morocco, Poland, Russia and Spain. We also have renewable energy sources at our factories in Germany, the USA (solar), 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.
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 will support the development of our refocused environmental strategy and development of long-term targets.
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 recycling.
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 environmental performance for more detail.
We are currently reviewing the environmental impacts of our NGP value chain to understand where to target improvements and will report on this in FY19.
Water is important in our operations and to the tobacco farmers and communities in our 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. Water scarcity and seasonal shortages may impact our factories and 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. Waste water 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 level, improvements made include new waste water discharge systems, better water metering, water recycling from air conditioning, cooling tower processes and rainwater use for sanitary facilities. We have a strong track record of effectively managing water use, see our environmental performance data for more information.
We have been participating in the CDP Water disclosure for a number of years are pleased with our progress, indicating that we are managing and measuring our water impacts and trying to reduce them with company-wide targets and goals.
During the year we conducted a water life-cycle analysis across our value, the results of which will support the development of a water sustainability strategy as well as short and long term-targets which we will detail in 2019. 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.