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Responding department: Corporate Affairs (also with input from Company Secretariat and Operations)

Stock exchange symbol: (BATS:LN)

Does your company have a publicly available commitment to respect human rights?

We reference the company’s human rights commitment within another corporate policy. We have a specific human rights commitment within our key internal Governance document – our Standards of Business Conduct. Our Standards of Business Conduct are an integral part of the Group’s governance and, together with our Business Principles (referred to below) underpin our commitment to high standards of corporate responsibility. This includes our commitment to conduct our operations with respect to human rights and our support of the UN Guiding Principles on Business and Human Rights. The Standards apply to all Group companies and employees. Each company is required to adopt them or local policies which reflect them and each employee is expected to know and comply with their provisions. To help achieve this, the Standards are brought to the attention of every staff member each year and training is provided where relevant. We also ask our business partners to act consistently with our Standards of Business Conduct and apply similar standards in their own organisations. Our Standards of Business Conduct are published on: [link]

Additional Corporate Policies:

Statement of Business Principles - Our Statement of Business Principles forms the basis upon which we expect our businesses to be run in terms of responsibility. Developed with the help of stakeholders in dialogue, it consists of three Business Principles: Mutual Benefit, Responsible Product Stewardship and Good Corporate Conduct, and eighteen Core Beliefs. All Group companies have adopted the Statement. One of our Core Beliefs within the Good Corporate Conduct Principle is our belief that universally recognised fundamental human rights should be respected. Our statement of Business Principles is published on: [link]

Employment Principles: Our Employment Principles build on our commitment to good employment practices and workplace related human rights. They set out a common approach to our companies’ development of policies and procedures, while recognising that each company must take account of local labour law and practice and the local political, economic and cultural context. All our companies have committed to the Employment Principles and, through our internal audit process, are required to demonstrate that they are embedding them in the workplace. Our auditing also monitors that our companies are strongly encouraging key suppliers to meet similar standards. Our Employment Principles are published on: [link]

Philosophy for Supplier Partnerships: Our philosophy for Supplier Partnerships is a Group statement on supply chain management, which has been distributed to key global, regional and local supply partners. It builds on our Business Principles and supply chain practices. Our two major supplier programmes are explained more fully in response to Question 3. Our Philosophy for Supplier Partnerships is published on: [link]

In our 2013 Sustainability Summary Report we publicly committed to develop and publish a supplier code, aligned to the UN Guiding Principles for Human Rights, by end 2015. We are on track to deliver this commitment and in so doing will review our Philosophy for Supplier Relationships. Our 2013 Sustainability Summary Report is published on: [link]

How are human rights governed in your company?

Strategy and Relevance Sustainability is one of the key pillars of our Group strategy, of which human rights is an important part. Most recently, BAT’s Board Corporate Social Responsibility (CSR) Committee agreed to a new Sustainability Agenda. This followed a process that included inputs from a wide variety of external stakeholders. There was consensus that the three Sustainability issues identified by BAT – Harm Reduction, Sustainable Agriculture and Corporate Behaviour were the most important and material issues for us to focus on. Human rights and child labour, farmers’ labour rights, farmer livelihoods, farmers’ occupational health and safety as well as workplace health and safety for our own employees are included within this framework.

Goals and commitments are currently being reviewed and/or developed in line with the new Sustainability Agenda and will be published in our Sustainability Summary Report in March 2015 and available on our website www.bat.com.

CSR Governance Group corporate social responsibility (CSR) performance (including human rights) is monitored through our Board CSR Committee, which is chaired by a Board Non-Executive Director and attended by two other Non-Executive Directors, with the attendance of the CEO, the Chairman of the Executive Board and other Functional Directors by invitation. This includes detailed reviews of our operations in countries that have been identified as countries of concern based on independent reports on human rights risks analytics by Verisk Maplecroft a reputable 3rd party risk provider. At regional and local levels CSR performance is monitored through combined Audit and CSR committees. This structure supports the embedding of CSR and sustainability principles across the Group and allows performance against those principles to be monitored. Our Human Rights Policy is outlined in our Standards of Business Conduct.

Each operating company in the Group must adopt the Standards of Business Conduct or its own standards reflecting them. Standards of Business Conduct apply to all BAT staff worldwide and compliance is acknowledged by all employees annually. This information is viewed by local Audit and CSR committees and aggregated for review by regional Audit and CSR committees. Reported breaches of the Standard are reviewed by the Main Board Audit Committee and investigated.

How are human rights managed within your company?

As outlined more fully in response to Question 2 our Audit and CSR governance committees, including our Board CSR Committee, monitor the performance of our companies in managing human rights at regular intervals each year. As part of the annual global confirmation of compliance with the Standards of Business Conduct, senior managers are required to confirm that the Standards have been made available to all staff reporting to them and all business units separately confirm that appropriate training and awareness activities supporting the Standards have been conducted as part of their internal controls sign-off. As a result of this process our Standards of Business Conduct (which includes human rights) is acknowledged by employees worldwide on an annual basis.

Supplier Programmes

Our business partners are required to act in accordance with the relevant local laws and additionally, we ask our suppliers to act consistently with our Standards of Business Conduct and apply similar standards in their own organisations. Whilst not responsible for standards of employment practice at suppliers, we seek to influence our business partners in ensuring and sharing appropriate employment principles according to BAT corporate standards. Additionally, BAT has two major supplier programmes - Business Enabler Survey Tool (BEST) and Social Responsibility in Tobacco Production (SRTP) programme. BEST is designed for non-tobacco suppliers, of which we have over 88,000, and SRTP is designed for suppliers of tobacco, i.e. leaf suppliers. Both programmes promote best practice and provide a framework for continual improvement. All our new and existing strategic suppliers are reviewed using human rights criteria as part of our supplier programmes. We are currently working on bringing together our existing supplier programmes into a systematic approach to human rights due diligence aligned to the UN framework.

Social Responsibility in Tobacco Production Programme (SRTP)

As child labour is a particular issue in agriculture and as BAT relies on the agricultural supply chain for its tobacco, SRTP includes a specific focus on child labour. Established in 2000, the programme communicates, monitors and addresses the way our leaf is produced, including agronomy, environmental, economic and social elements of performance. Social and economic elements include issues such as eliminating exploitative child labour in the tobacco growing supply chain, human rights and livelihood and labour standards. SRTP is a programme that allows specific areas to be monitored at the relevant level of the leaf supplier, and creates a platform for constructive dialogue in order to focus improvements. SRTP delivers business, social and environmental benefits through a process of regular self-assessment and periodic on-site independent reviews, coupled with knowledge transfer throughout the industry. SRTP sets out minimum requirements expected to be met. Suppliers include British American Tobacco local companies and third party leaf suppliers which source from over 100,000 contracted farmers.

Eliminating Child Labour in Tobacco Growing Foundation (ECLT)

In our on-going effort to actively tackle exploitative child labour in tobacco growing BAT has been a supporter and founding member of the ECLT since 2001.We acknowledge the challenge of addressing child labour, labour, and that this complex issue is best tackled with a multi-stakeholder approach including local communities, business and government in combination with our own efforts. The ECLT’s purpose is “to promote the elimination of child labour in the tobacco-growing sector”. It does this through best practice research and advocacy, both locally and internationally. It also works to raise awareness of child labour issues; improve access to education and health services for children; and build local capacity to address the problem. The advocacy work undertaken by the ECLT is further expanded in response to Question 4. Approach to identified issues We endeavour to respond to any queries regarding human rights issues and also to address any allegations, such as those made recently alleging poor worker conditions in the tobacco fields in North Carolina, USA and allegations made regarding child labour in our supply chain, such as in Malawi and the USA. We take such allegations very seriously and are committed to open dialogue and a multistakeholder approach to address issues identified. For example in response to the allegations of poor worker conditions in North Carolina we have been engaging with a number of stakeholders and have committed to prioritising a scheduled independent review of our supply chain in the US this year. This will be conducted by AB Sustain, an independent reviewer of the SRTP platform. Our Standards of Business Conduct set out our whistleblowing policy which enables employees, ex-employees, third parties or anonymous individuals, in confidence, to raise concerns, including a breach of human rights. They can do so without fear of reprisal, provided that such concerns are not raised in bad faith. The Main Board Audit Committee receives reports on whistleblowing.

What is the company’s approach to the engagement of stakeholders (including workers, and local communities impacted by the company’s activities), on human rights issues?

Our approach to formal stakeholder dialogue has been in place Group-wide since 2001 and is based on the AA1000 Stakeholder Engagement Standard (AA1000SES). In October 2013, we hosted an independently facilitated stakeholder dialogue that focused on the challenges posed to business by changing international and national regulations and societal expectations relating to human rights. You can download a copy of the full dialogue report at:

[link]

This dialogue followed an independent review of our approach to human rights in February 2013. The insights from the dialogue and review were used to inform our new Human Rights Policy, published in our Standards of Business Conduct in September 2014. We also engage on an industry, multi-stakeholder level through our founding membership of the Eliminating Child Labour in Tobacco Growing Foundation (ECLT), along with others in the industry, trades unions and the ILO. Examples of the Foundation’s advocacy work include the Malawi National Conference on Child Labour in Agriculture September 2012, participation in the III Global Congress on Child Labour in Brazil 2013, co-hosting an event on child labour in agriculture at the UN Palais de Nations in June 2013 within the Meeting of the Human Rights Council on Business and Human Rights.

Priority human rights issues: What are some of the priority human rights issues for your company?

The company selected the following from a check list:

  • Health (including environmental health, workplace health & safety)
  • Workplace diversity / non-discrimination
  • Forced labour and human trafficking (including in supply chains)
  • Operations in conflict zones
  • Sexual harassment
  • Freedom of association and trade union rights
  • Children (including child labour)

Actions on health

Example 3 - Health and Wellbeing

We are a diverse company operating across a wide range of environments from city offices to remote farms. Our approach to health and well-being takes into account the diversity of countries and environments in which we operate.  We aim to be among the leaders in occupational health management. We focus on identifying hazards, assessing risks to people's health at work and introducing appropriate controls and well-being programmes. The majority of BAT companies worldwide have programmes to protect and promote health and well-being for employees, their families and in some cases, local communities. For example, the provision of on-site medical facilitates, private medical insurance and in some cases off-site medical services such as mobile clinics. These are particularly valuable in those parts of the world where local health services struggle to provide an adequate service. While we do not directly employ farmers or farm workers we partner with over 100,000 contracted farmers worldwide. Our support includes local expertise through our Extension Service programme which engages 1,000 field technicians. Our Extension Service field technicians provide farmers with agronomy support including advice on the safe use of agrochemicals, integrated pest management and green tobacco sickness (GTS). GTS is a type of nicotine poisoning caused when nicotine is absorbed through the skin from wet tobacco leaves. Raising awareness of GTS has become a major priority for us and we work with farmers to explain some of the ways they can reduce the risks of developing GTS such as wearing protective clothing when handling wet tobacco leaves.

Actions on tax avoidance & revenue transparency

Example 2 - Transparency in payments to governments

Our Standards of Business Conduct set out our policy on political donations. Contributions from our companies to political parties and organisations, their officers, elected politicians and candidates for elective office are actively discouraged, and may only be made subject to specific controls. Contributions are not permitted to be made in order to achieve any improper business or other advantage or to influence any decision by a public official to the advantage of the Group or any Group company. In addition, they must not be intended personally to benefit the recipient or his or her family, friends, associates or acquaintances and must be permissible under all applicable laws. Any donation must be authorised by the board of the company making it, must be fully documented in the company’s books and, if required by local law, must be put on the public record. Details must be notified in writing each year to the Company Secretary of British American Tobacco plc. and these are monitored by the Main Board Audit Committee. Donations to political organisations and political expenditure within the European Union may only be made out of funds previously authorised by shareholders at a General Meeting. We collate information centrally on contributions to political parties and to individual politicians that are made for the benefit of their party and report any such occurrences to the Main Board.

Actions on children (including child labour)

Example 1 - Child Labour

As detailed in response to Question 3 we run two major supplier programmes through which human rights are incorporated. Child labour is an important human rights issue for any industry with an agricultural supply chain and the tobacco industry is no exception. All of our new and existing leaf suppliers are screened using child labour criteria as part of our Social Responsibility in Tobacco Production (SRTP) programme. We publish our leaf suppliers’ scores in this category at [link]. As also noted in response to Question 3, we are founding members of the Eliminating Child Labour in Tobacco Growing Foundation (ECLT), through which we engage on an industry, multi-stakeholder level along with others in the industry, trades unions and the ILO. Additionally, we also have a number of long-standing community-based programmes to address child labour in tobacco growing areas.

For example in Mexico we run a programme with Universal Leaf, Government Departments and NGOs to provide day care, health services, meals and educational support for the children of migrant tobacco harvesters, and in Brazil we have an anti-child labour programme in partnership with the Tobacco Industry Union (Sinditabaco) and the Brazilian Tobacco Growers Association (AFUBRA). We understand that child labour is driven by a number of social issues and that strengthening farmer livelihoods has a role to play. For example, increased prosperity means farmers are less likely to use child labour and more likely to send their own children to school. BAT’s approach to sustainable farmers’ livelihoods includes five focus areas: i) farm income, ii) natural resources, iii) infrastructure and resources, iv) skills, knowledge and labour and v) community networks. We believe that this holistic approach will assist farming communities to thrive and will provide mutual benefit to farmers, their families, rural communities and BAT. Our Supporting Farmers’ Livelihoods Sustainability Focus Report for 2014 is published on:

[link]

How are human rights commitments and information about how the company addresses its human rights impacts communicated, internally and externally?

We publicly report on human rights in three ways as follows: (i) our Annual Reports and Accounts; (ii) our Sustainability Reports and (iii) our Corporate Website, bat.com. Information is presented in a number of different ways, to meet the needs of different stakeholders.

Specifically: a) Our approach to managing human rights in our supply chain and child labour are detailed on our corporate website, bat.com, via the links below:

[link]

[link]

[link]

b) As part of our Sustainability Reporting, we report specifically on details of human rights in our leaf supply chain both in our Summary Report (see p13) and in our recent Focus Report on Supporting Farmers' Livelihoods (see p6). Both can be downloaded via the link below: [link]

c) On our Sustainability Data Centre, on bat.com, we publish our leaf suppliers’ scores in the

child labour section of SRTP and report against GRI G4 Human Rights Indicators.

d) A report on our stakeholder dialogue on human rights was published on bat.com at:

[link].

We communicate with staff and other stakeholders through the various processes and Standards as outlined in response to Questions 2 and 3.

What provisions does your company have in place to ensure that grievances from workers and affected communities or individuals are heard, and can you provide examples of remedies provided?

The Group’s Standards of Business Conduct set out our whistleblowing policy which enables employees, ex-employees, third parties or anonymous individuals, in confidence, to raise concerns about possible breaches, including a breach of human rights. They can do so without fear of reprisal, provided that such concerns are not raised in bad faith. Reported breaches of the Standard are reviewed by the Main Board Audit Committee and investigated.

Example – Grievance Policy An example of local procedures is the UK formal Grievance Policy. It enables employees to raise issues with management regarding their work, working environment or working relationships, or about their employer’s, client's, a third party’s or their fellow worker’s actions that affect them. Examples include: terms and conditions of employment, health and safety, relationships at work, new working practices, organisational change and equal opportunities. This policy sets out a global best practice for replication throughout the group subject to local, end market jurisdiction. The Main Board Audit Committee receives reports on whistleblowing. It remains satisfied that the policy and the procedures in place incorporate arrangements for the proportionate and independent investigation of matters raised and for the appropriate follow-up action.

Which external and collaborative human rights initiatives does your company participate in, and what is the nature of your involvement?

We look to work in multi-stakeholder partnerships and implement joint solutions to problems. As noted in response to Questions 3 and 4 we co-founded the Eliminating Child Labour in Tobacco Growing (ECLT) Foundation and remain active members, along with others in the industry, trade unions and the ILO. The Foundation’s purpose is “to promote the elimination of child labour in the tobacco-growing sector”. It does this through best practice research and advocacy, both locally and internationally. It also works to raise awareness of child labour issues; improve access to education and health services for children; and build local capacity to address the problem. Other BAT activities specific to the area of child labour are our programme in Mexico, where our company works on an anti-child labour project with Universal Leaf, Government Departments and local NGOs to provide day care, health, meals and education support for the children of migrant tobacco harvesters. Our company in Brazil also has an anti-child labour programme in partnership with the Tobacco Industry Union (Sinditabaco) and the Brazilian Tobacco Growers Association (AFUBRA).

Our companies have always been closely identified with the communities where they operate and we manage our community projects across three pillars – i) sustainable agriculture and environment, ii) empowerment and iii) civic life. Many of these local projects support wider issues that can affect human rights, such as social welfare, food security or education. Many of these projects around the world are in partnership with local stakeholders, including governments, academic institutions, NGOs, industry associations and development agencies. They range from offering training and development opportunities and/or scholarships to farmers and young people living in rural areas, to providing much needed local infrastructure and resources for communities, such as health services, clean water and electricity.

Example 1 Since 2011, BAT Bangladesh has provided over 1,300 solar energy panels that generate electricity for 15 remote villages in tobacco growing areas. We have also installed 53 water filtration plants that purify up to 270,000 litres a day providing much needed clean drinking water in 14 districts.

Example 2 We have a number of projects around the world focused on providing skills and knowledge to farming communities. For example, to help develop a next generation of farmers, our company in Brazil works with local partners to provide classroom and practical training for rural youth on areas such as farm management, crop diversification and project planning.

Which are the key one, two or three elements of your approach to human rights that been developed or amended since June 2011? Please indicate if these actions were in response to the UN Guiding Principles.

In October 2013, we hosted an independently facilitated stakeholder dialogue that focused on the challenges posed to business by changing international and national regulations and societal expectations relating to human rights. This dialogue followed an independent review of our approach to human rights in February 2013. The review acknowledged the need to continue to strengthen our approach to identify and address the human rights impacts of our supply chain.

Consequently, we have updated and published in September 2014, our mandatory group Standards of Business Conduct to include, ‘respect in the workplace and human rights’. This expands on the content already embedded in our Employment Principles referred to in response to Question 1. As part of our continuing commitment to strengthen our approach to human rights we are also working on an improved systematic management approach to human rights due diligence aligned to the UN framework. In our Sustainability Summary Report 2013 we publicly committed to develop and publish a supplier code, aligned to the UN Guiding Principles for Human Rights by end 2015. We are on track to deliver this commitment and in so doing will review our Philosophy for Supplier Relationships.

What are some of the obstacles and challenges that your company encounters in implementing its human rights commitments?

Child labour is a challenging issue for any industry with an agricultural supply chain. The tobacco industry faces challenges as a result of most tobacco being grown by smallholder farmers in low-income nations where poverty, education infrastructure issues and conflict are often drivers of child labour. These challenges are best tackled with a multi-stakeholder approach recognising also that in rural agricultural life work can play a formative, cultural or social role for children and that some participation of children in non-hazardous activities can be positive. On-going guidance in terms of the implementation of the UN Guiding Principles would be helpful including the sharing of best practice examples and case studies, particularly from within the agricultural sector.