Engagement and Reporting

It is important that we respond to emerging trends and issues of interest to our stakeholders, understanding their priorities and concerns.

Building and maintaining trust with our stakeholders and acting with integrity at all times are critical to our success, our global reputation and our long-term sustainability.

Stakeholder engagement offers an important way of introducing wider perspectives into the debate about CR and sustainability. It helps us to understand the views and concerns of our stakeholders, and informs the way we manage and report our economic, social and environmental issues.

Stakeholder Engagement

We have identified our key stakeholders as those that have a financial interest in the Company. These are our investors, employees, consumers, suppliers, customers and governments. Other stakeholders include the communities around our factories, our competitors, non-governmental organisations and the media.

During the year we continued to engage with our stakeholders at Group and market level as part of our normal work activities. This includes investor relations, corporate and regulatory affairs, marketing and customer relationships, supply chain and procurement, environmental management and human resources.

We continue to work with various trade associations, partner organisations, consultants and specialists and participate in relevant information-sharing forums, research projects and academic studies. This enables us to remain informed on current issues and share good practice.

Specific examples are described in the various sections of this Review. We also continue to engage with public authorities and report on some of our activities in the Regulatory Engagement.

The engagement that takes place at market level is dependent on prevailing and emerging issues relevant to the local operating environment. The challenge is to capture the output and learning opportunities that result so that these can be shared between markets and at a Group level. We have piloted a market engagement survey based on our CR framework and are reviewing and improving the process to ensure it meets our business needs.

Specific engagement activities during 2009 at a Group level have covered topics such as business sustainability, climate change and deforestation; product regulation and anti-illicit trade; human rights, child labour and responsible sourcing; international developments and the UN Millennium Development Goals.

To help us to prioritise these issues and identify improvements we are implementing more formal engagement processes. This has included the formation of a Stakeholder Panel to critically appraise our performance and to provide a critique of our 2009 CR Review. A summary of their comment is reproduced in the Stakeholder Panel section, together with our response.

OUR CR REPORTING PROCESS

REPORTING ON ISSUES OF IMPORTANCE

How and What do we Report?

Our annual CR Review is the main means of communication of our performance in the key issues covered by our CR framework. We also produce an overview of our CR performance in our Annual Report and Accounts. More detailed information on our management approach to CR is available on our website, together with Fact Sheets and case studies from around the business.

We continue to be guided by the Global Reporting Initiative (GRI) sustainability reporting guidelines and produce a free-standing GRI Index which we publish on our website.

This allows us to communicate more general information on our performance using the GRI economic, social and environmental indicators. The summary GRI Index in the Fact File cross-references where you can find this information.

We also participate in the Business in The Community (BITC) CR Index, Sustainability Asset Management’s (SAM) Research for the Dow Jones Sustainability Index, the Carbon Disclosure Project, and other indices that provide information on environmental, social and governance performance to investors.

Data Collection

Performance data is collated from our markets and manufacturing sites worldwide via a web-based Non-Financial Reporting (NFR) system, structured around our CR framework. The system is used to track progress at site, function, country, regional and Group level.

We have made good progress during 2009 with the roll-out of the system to Altadis, starting with the collection of occupational health, safety and environment data.

Regional NFR training workshops were held in Morocco, France and Spain. Phase two of the roll-out will encompass Altadis USA.

We will also cover other reporting areas, including international marketing standards, product stewardship, employment practices and community investment.

Assurance and Verification

The information and data that we report publicly are verified by independent assurors who visit our sites periodically to check that our reporting is accurate, reliable and provides a fair and balanced view of our CR performance.

As in previous years, SGS United Kingdom Limited have verified our performance data and reporting processes in line with their assurance methodology.

This year, we asked Corporate Citizenship to provide independent assurance that our reporting is not only accurate, robust and credible, but also addresses the concerns of key stakeholders.

As part of this process they also provided advice and guidance on our policies and strategies as they relate to our reporting process. Corporate Citizenship also assessed the quality and content of our reporting against the GRI guidelines and in their view we had maintained a level of B+.

The findings of both companies are summarised in their Assurance Statements in the Fact File. A full version of Corporate Citizenship’s statement is available on www.imperial-tobacco.com.