By John O’Reilly, Group Head of Procurement, Strategy & Sustainability, BAT
“We recognise the need for everyone to cut emissions and to increase the engagement with their value chain on this topic”
At BAT, we believe businesses and their network of suppliers play a critical role in tackling climate change by helping us to reduce carbon emissions from our activities. This is not just because it is the right thing to do, but because BAT relies on natural resources to run our business. Our ability to secure resources is directly affected by the effects of climate change on the environment.
BAT has set a course to be Net Zero across its value chain – which covers Scope 1, 2 and 3 greenhouse gas (GHG) emissions – by 2050. We recognise the need for everyone to cut emissions and to increase the engagement with their value chain on this topic. At Group level, BAT’s goal is to have 20% of suppliers of purchased goods and services (by spend) to have SBTi-approved Science-Based Targets by 2025. At the end of 2022, we were more than half-way to achieving this goal, with 13% of suppliers by spend having approved Science-Based Targets in place. In 2023, we have continued to proactively engage with our purchased goods and services supply base, covering over 90% of the GHG emissions in this area through our engagement and collaboration work, to make further progress towards our Scope 3 emissions reduction target.
| What are ‘Scope 3’ emissions for BAT and why are they so important? The term ‘Scope 3’ refers to the indirect greenhouse gas (GHG) emissions that occur outside of companies’ own operations, in their upstream or downstream value chain. At BAT, our Scope 3 emissions come, for example, from purchased goods and services, upstream transportation and downstream distribution, use of sold products, and end-of-life disposal of sold products. Altogether, these Scope 3 emissions currently constitute over 90% of BAT’s total carbon footprint. In comparison: Scope 1 comprises direct GHG emissions from a companies’ owned or controlled activities; and, Scope 2 comprises indirect emissions from a companies’ purchase and use of electricity, steam, heating and cooling. |
Group-wide, BAT has more than 30,000 direct and indirect suppliers beyond the tobacco supply chain. These include suppliers of product materials such as paper and the packaging for all our products. Additionally, for our New Category products, we have a growing supply chain in consumer electronics and e-liquids. We also have a large number of suppliers of indirect goods and services, such as IT services and facilities management.
While our suppliers overall want to address their impacts on climate change, they may not always have the relevant expertise or resources to do it alone. This is where engagement and partnerships come into play.
We use a range of initiatives to ensure suppliers are engaged and effective to be part of our Scope 3 emissions reduction. For example, we invited them to make climate change disclosures via the CDP Supply Chain Programme (for over 600 BAT suppliers in 2023), for which we now have a submission rate of over 90% of suppliers invited. And we estimate around 50% of our direct and indirect suppliers’ emissions can be attributed to 60 suppliers. Therefore, by engaging with these suppliers through data sharing and direct discussions, we can focus on areas where we believe we can make the biggest impact together in reducing emissions.
When we are bringing new suppliers on board, we use our supplier qualification process to require minimum standards such as compliance with our Supplier Code of Conduct (SCoC), as well as focused questions to understand suppliers’ maturity on matters such as human rights, environmental management and carbon emissions reduction. In both contracts and supplier management processes, we have sustainability as a standing item, as well as part of key metrics for performance measurement.
We also hold Supplier Summits to detail how and why they can collaborate with us and we can best work together. These events allow us to hear from the suppliers we work with about the challenges and progress they are making in the sustainability space, as well as on how they are innovating to build on traditional practices. Engagement such as this highlights the importance of working in partnership towards our sustainability ambitions and fosters an open and supportive environment for everyone.
This collaborative approach leads to the concerted efforts that are necessary in approaching sustainability issues and practices across global organisations and supply chains. However, there is still much to be done and all of us have a role to play. Partnerships are important here because no one can do this alone. This is what makes it so important for us to encourage and work with the companies in our wider value chain to create A Better Tomorrow™ together.
