Stakeholder Panel

Stakeholder Panel Comments

This summary covers the main strengths and areas for improvement identified by Panel members, based on an early draft of our CR Review. Our response is given beneath each point.

Report Structure

The main structural issue raised by Panel members was the need for the business case for CR to be articulated distinctly at the beginning of the Review. Two approaches were suggested.

First, Imperial Tobacco should better define what CR means to the business with an explanation of how this supports the strategic objectives of the Company. Linked to this, the Panel wanted to see a consolidated summary of the business highlights, including financial data, to set the business context.

Second, the Panel recommended that an account be given of how Imperial Tobacco approaches contentious issues through its CR programme. This should clarify for the reader the Company’s priority issues and approaches, and should set out an over-arching position statement on smoking, health and consumer choice. In particular, some felt that the Review could do more to speak up for the consumers of Imperial’s products.

This consolidation of top-level information at the start of the report would give the reader a vital understanding of the principles on which Imperial Tobacco runs its CR programme.

Our Response:

These main structural points have been addressed in this final version of the CR Review, with key information detailed in the introduction by Gareth Davis, Chief Executive, the performance highlights and the Operating Responsibly section. We recognise that we could be more assertive in our response to contentious issues and that there is greater opportunity to align our position with that of the consumer. This will be something to consider going forward.

Content

Overall, the Panel felt that the Review provides good coverage of the key issues of interest and relevance to stakeholders. However, there were three areas where more information could be given.

The first concerned Imperial Tobacco’s involvement in public policy debate. The consensus among the Panel was that the Company does proactively engage in discussions on regulation and the future of the tobacco industry when it is possible. However, sometimes Imperial Tobacco’s participation in such debate is blocked. In order to communicate the Company’s commitment to engagement, and the challenges faced, the Panel recommended that the Review contains an upfront statement explaining the issues related to the tobacco industry’s role in shaping and responding to public policy.

Second, the CR Review was seen by Panel members as an opportunity to demonstrate the Company’s progress against CR objectives and the mechanisms it uses to voice an opinion externally. Therefore, members felt that the Review was an appropriate channel to articulate a clearer response to external criticism of the Company. Linked to this, it was suggested that the internal processes for handling such reputational risks, and approaches to risk areas anticipated for the future should also be presented.

Finally, there was some discussion of emerging issues, particularly the impact of tobacco growing on deforestation and water scarcity, which it was felt should be covered in future reports.

Our Response:

We agree that it is becoming increasingly difficult to maintain positive dialogue with all stakeholders. Along with other tobacco manufacturers, we are increasingly being excluded from engaging with regulators on regulatory proposals. We believe that regulators should draw on our commercial and technical knowledge and expertise when they are considering tobacco regulation. We will continue to seek constructive and effective dialogue with regulatory authorities and to work with them to develop proportionate and workable regulations.

The Panel asked for more information on how regulation could affect the sustainability of our business. We have addressed this within the Introduction and included a specific section on regulatory engagement. In addition we disclose information on regulation in our Annual Report and Accounts and on our corporate website. Looking forward, we will consider how best to expand our reporting of our positive impacts.

We understand that the Panel asked us to be more assertive in our positioning as a legitimate business that manufactures and distributes a legal product. We have sought to address this within the Introduction and through further communication of our corporate positions, many of which are on our website. We will give this further consideration.

We understand the increasing importance of supply chain sustainability issues. We are already addressing these issues as part of our environmental commitments, climate change management and community investment approach. We recognise that we need to give these issues greater prominence and will consider this in our CR approach going forward.

Style

Panel members thought that the Review content was thorough and informative, although key sets of information need to be extracted and presented at the start of the Review for clarity and accessibility. Although the content covers the major issues, a recommendation was made that the Company adjusts the tone and style of future reports to make the Review more accessible to wider stakeholders, especially those outside the industry such as the media and the public, by allowing them to assess quickly the key issues and approaches taken by the Company.

Our Response:

We have addressed this style point by structuring the CR Review around the key areas of responsibility as defined in our CR framework. The Panel also commented that they would have liked a broader employee perspective within the CR Review, particularly in light of integration. In response to this we added a case study which focuses on the restructuring of our operations in France. Looking forward, we will consider how best to improve our communication of the employee aspects of CR.