BAT: Toward a Socially Responsible Tobacco Company?
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Holmes Report

BAT: Toward a Socially Responsible Tobacco Company?

When British American Tobacco published its first social responsibility report in July of 2002, the reaction from anti-smoking groups and from several members of the NGO community was swift and severe, a predictable mix of outrage and incredulity.

Paul Holmes

When British American Tobacco published its first social responsibility report in July of 2002, the reaction from anti-smoking groups and from several members of the NGO community was swift and severe, a predictable mix of outrage and incredulity. BAT, the second largest tobacco company in the world, could never claim to be socially responsible as long as it continued to profit from a product that kills so many of its users. Any talk of social responsibility was a mere public relations ploy, a smokescreen. The company was making a mockery of the entire CSR movement.

But over the past four years, BAT has forced CSR advocates to take its efforts seriously. It received awards from the international accountancy body ACCA and for building public trust from PricewaterhouseCoopers. It was ranked fourth on a best practice survey of social reporting by the United Nations Environment Programme and SustainAbility. It has become the first tobacco company accepted into the Dow Jones Sustainability Index. And, executives at the company believe, it has demonstrated a sincere commitment to stakeholder engagement and to ethical business practices across a spectrum of activities from sourcing to marketing.

At the very least, by engaging with the CSR movement, BAT has opened a discussion worth having. Can a tobacco company ever be socially responsible? If so, what would a socially responsible tobacco company look like? How would it have to change? What kind of activities could it no longer engage in? And if the notion of a socially responsible tobacco company is not completely absurd, is BAT that company?

In asking—and attempting to answer—those questions, BAT has learned a lot about evolving public expectations of major corporations. And much of what the company has learned is relevant to public relations practitioners in entirely unrelated industries at a time when more and more of those industries (from fast food to movies and music) are under fire for their supposed contributions to societal problems and when multinationals in general are being asked to meet new behavioural standards.

Can a Tobacco Company Be Socially Responsible?

Tobacco products cause millions of deaths every year. According to the World Health Organization, 10 million people a year will die from smoking, and about half the people who smoke today—about 650 million people—will eventually be killed by diseases related to their use of tobacco products. Moreover, tobacco increases healthcare costs and reduces productivity, costing society an estimated $200 million a year. And it makes a significant contribution to poverty. Some of the poorest families in many low-income countries spend as much as 10 percent of their household income on tobacco products.

Under the circumstances, it is not surprising that some people reject the notion that a company engaged in the manufacture and marketing of cigarettes could ever be considered socially responsible.

But the fact that tobacco products are bad for consumers’ health does not make them unique. Most fast food is unhealthy. Most soda is unhealthy. Most ice-cream is unhealthy, but an ice cream company—Ben & Jerry’s—is counted among the paragons of corporate social responsibility. So the fact that a product carries health risks is not, of itself, enough to render its producers irresponsible.

Of course, fast food and soda and ice cream are qualitatively different from tobacco. They are not addictive. But alcohol is. Can we imagine a socially-responsible liquor company? Is it possible to be a socially responsible brewer? Heineken has many supporters within the responsibility community. What about a socially responsible vineyard? Responses to these questions will be subjective, but most people will not recoil from the suggestion of a socially responsible beer company or a socially responsible wine maker as they do from the notion of a socially responsible tobacco company.

Moreover, if cigarette manufacturing and marketing is inherently irresponsible, presumably the industry’s critics would like to see major corporations such as BAT abandon the business entirely. If that’s the case, those critics need to acknowledge the consequences of such action.

The first possibility is that millions of people who currently choose to smoke would be denied the right to make that choice. Their freedom would be curtailed in the name of public health. Some might see that as a dangerous precedent. If you can deny people the right to smoke to protect them from cancer, why not also deny them right to extramarital sex to protect them from AIDS? 

Some anti-smoking activists might consider that an acceptable trade-off, but most people would probably not, as evidenced by the fact that no major democratic society has sought to ban smoking outright.

The second, perhaps more likely, possibility is that the production and sale of cigarettes would be forced underground, onto the black market. Tobacco products would still be produced and consumed, but those involved in the process would be criminals, and there would be additional costs to society related to that increase in criminal activity.

The likely consequences of driving tobacco production and consumption underground should at the very least make one thing clear: even if there is no such thing as a socially responsible tobacco company, there are different degrees of irresponsibility. Publicly-traded corporations, which operate in accordance with the laws and regulations of their various markets around the world, are to be preferred to extra-legal organizations with no public accountability.

And companies that seek to go beyond the requirements of the law, to voluntarily accept higher standards across a wide range of activities—from the way they treat the growers of their ingredients to the way they market their products—are to be preferred to those who merely aim to operate to the strict letter of the law.

So it is clearly possible for tobacco companies to be more responsible. So what would a more responsible tobacco company look like? What standards would it have to meet before earning the grudging respect of a sceptical public?

Again, the answers to those questions are likely to be subjective. But I would suggest at least 10 criteria on which a socially responsible tobacco company should be judged:
1. It would communicate openly and honestly. A responsible tobacco company would be honest about the health risks associated with its products, and the addictive quality of those products. It would share its own scientific research on health issues with regulators, healthcare professionals and the public in a timely manner. It would not seek to undermine solid scientific evidence presented by impartial sources.
2. It would engage in dialogue. A responsible tobacco company would be prepared to listen to its critics, and to take action on legitimate criticisms.
3. It would do all it could to ensure that its products did not fall into the hands of children. A responsible tobacco company would not market directly to children, nor would it market to adults via media that reach significant numbers of children. It would support government efforts to restrict the sales of cigarettes to children, including age restrictions related to the purchase of tobacco companies and bans on vending machines in locations accessible to children.
4. It would market its products ethically. A responsible tobacco company would ensure that any advertising of its products included information about the risks associated with them. It would avoid advertising clearly designed to make smoking look “cool.”
5. It would lobby in an ethical and transparent manner. A responsible tobacco company would be open and honest about its public policy positions, and it would not act privately in a way that contradicted those stated positions (by lobbying for the removal of marketing restrictions while claiming to support them, for example). Nor would it use “front groups” without being transparent about its role in those groups, including any funding it provided to third parties. 
6. It would acknowledge the societal cost of smoking. A responsible tobacco company would not oppose efforts to recover those societal costs, including healthcare costs, via taxation of its products.
7. It would monitor its supply change and avoid exploitation of producers. A responsible tobacco company would seek a mutually beneficial relationship with suppliers in developing countries and strive to provide a living wage to producers.
8. It would encourage responsible smoking. A responsible tobacco company would discourage its consumers from using its products irresponsibly, by smoking in public places, for example, or exposing their children to its products.
9. It would defend the right of adult consumers to use its products. A responsible tobacco company would defend the principle that adult consumers have the right to choose their own pleasures, even if those pleasures might have harmful health consequences.
10. It would follow these principles globally. A responsible tobacco company would not embrace one standard in developed countries because of the threat of regulatory or legal action in those countries, while following a different standard in less developed markets with less onerous regulations.

Substance or Spin?

The question of how close British American Tobacco comes to this idealized version of a responsible tobacco company—or a more responsible tobacco company—remains the subject of much debate between the company and its critics. Does the company’s reporting on its social and environmental performance represent a genuine commitment to continuous improvement and accountability, or is it a cynical attempt to hoodwink stakeholders, to head off stricter regulation? Is it about action or words? Is it substance or is it merely spin?

“This is a serious piece of work; it is not a PR document,” BAT chairman Michael Broughton told reporters, unveiling that first report three years ago, showing a poor understanding of what public relations really is but a keen grasp of the kind of criticism tobacco foes would level against his company and its CSR efforts. “Social reporting is about squarely addressing the issues surrounding our products.”

And to support that contention, Broughton can point to the external recognition the company has achieved for its CSR efforts. BAT has accumulated awards for its social and environmental reporting from the accountancy firm ACCA and for “building public trust” from PricewaterhouseCoopers. In 2005, the company was ranked fourth on the United Nations Environment Programme/SustainAbility best practice survey of “global reporters,” and it has now been listed on the Dow Jones Corporate Sustainability Index for four years running.

To deflect criticism that the company’s CSR activities are all about image, the company has sought to introduce as much rigor into the process as possible. The Institute of Business Ethics and MORI help facilitate the company’s stakeholder dialogue meetings; BAT adheres to the AA1000 standard (established in 1989 by the Institute of Social and Ethical Accountability) and the Global Report Initiative guidelines (authored  by Coalition for Environmentally Responsible Economies, or CERES) in producing its annual social report; and all claims in the report are verified by Bureau Veritas, an independent company that specializes in quality, health and safety, and environmental and social auditing.

The company has also worked with independent parties who bring integrity and credibility to its activities. One of the company’s first stakeholder dialogue sessions was facilitated by the former Bishop of Durham David Jenkins, known for his progressive politics.

“We tell people, if you can’t trust the company, trust the process,” says Fran Morrison, BAT’s head of corporate communications. “That’s why we need such a robust process.”

Morrison works alongside Adrian Payne, the company’s head of social responsibility, in the company’s corporate and regulatory affairs department, which encompasses investor relations, political and regulatory affairs, and competence development (training non-communications executives to communicate) as well as corporate communications and CSR.

“We are very anxious that CSR is not seen as an apology for the risks our products pose,” says Payne. “We have tried to put some distance between PR and CSR. Fran and I work together closely because we need communications expertise to tell our CSR story, to produce our report, for example. But we believe CSR has to be a change agent.”

For that reason, the company has “a boardroom to basement approach to CSR,” says Payne. “It has to be a conviction thing rather than a compliance thing.”

The company’s social report articulates “core beliefs” in three categories: mutual benefit (creating long-term shareholder value, engaging constructively with shareholders, creating inspiring work environments); responsible product stewardship (accurate, clear health messaging, reducing the health impact of tobacco consumption while respecting the right of informed adults to choose the products they prefer, regulation that balances the interests of all sections of society—including tobacco consumers); and good corporate conduct (respect for human rights, social responsibility, world class environmental performance).

Each of these core beliefs—there are 18 in all—is explained in detail in the social report, with a commitment to certain specific behaviours. When it comes to providing accurate, clear health messages, for example, “we will ensure that all our advertising, all cigarette packs… shall carry a clearly visible health warning even where not prescribed by law.” In addition, “we see it as the main role of scientists, the public health community and governments to provide useful information based on the best available science that reinforces the public’s understanding of the risks of tobacco consumption. We will contribute by adding our expertise in relation to our products wherever possible.”

And today, BAT companies in 34 countries—from Germany and Russia to Kenya and South Africa to Australia and Bangladesh—are engaged in producing social reports and another 10 (including Jordan, Senegal, Jamaica and Peru) are producing shorter stakeholder reports on key issues but without reporting on GRI indicators.

But the company’s sincerity has been called into question by comments such as one from a BAT executive who described CSR as offering “air cover from criticism while improvements are being made. Essentially it provides a degree of publicly endorsed amnesty”

While such statements suggest a cynical side to the company’s CSR activities, Morrison insists they are not representative of management’s mindset. 

“If every single document ever generated by this organization or any generation ends up in the public domain, you would see a lot of half-baked ideas that are not representative of the thinking at the top of the organization and the thinking that drives the strategy,” says Morrison. “Our critics are very good at picking through millions of documents to find the one that proves their case.

“We employ 90,000 people, and some of them have said bloody silly things. But that doesn’t mean they were speaking for all of us. That’s why we say to our stakeholders, ‘Don’t judge us by a few old documents; judge us by our behaviour.”

Critics say that’s exactly what they’re doing.

“Tobacco companies are being allowed to hijack CSR, and the commendable ideals behind the concept will lose their legitimacy and the support of the public,” says Jeff Collin, a lecturer with the Centre on Global Change and Health. “CSR should not be used as a ‘greenwash,’ or a public relations opportunity by disreputable corporations seeking to appear respectable while peddling death and disease to millions.”

While BAT proudly hails its adherence to Global Reporting Initiative guidelines, the GRI has been criticized by activist groups who warn that its voluntary nature allows companies pick and choose which guidelines to follow.

ASH, for example, points out that under GRI guidelines the “society” section of corporate reports should contain information on “consumer health and safety.” ASH holds BAT accountable for the deaths of one million people expected to die prematurely each year for the next three decades because of its products—a number the group extrapolates from World Health Organization estimates. “This is the most important impact of its products and should be estimated in its social reporting,” says Clive Bates.

There were complaints too that the transparency of the process would be undermined by BAT’s insistence on holding meetings under the “Chatham House” rule, requiring participants not to disclose who attended or the specifics of what was said by individual participants.

Indeed, the company’s staunchest foes offer a sweeping indictment of the company’s CSR initiative, challenging BAT’s right to be seen as part of the social responsibility movement.

“The central idea behind CSR is that corporations should work to improve their environmental and social impacts, with an emphasis on voluntarily developing practices that exceed standards required for legal compliance,” says Collin.

“The tobacco companies would argue that as long as it is legal to make cigarettes, then surely it is right to recognise any steps the tobacco industry is taking to act more responsibly. But the tobacco industry is cynically highlighting carefully selected examples of philanthropy and good practice in an attempt to defuse pressure from the effective control measures that would promote global health and so jeopardise the industry’s future profits.

“We believe that it is extremely difficult to reconcile proclaimed social responsibility with the manufacture of products which kill around half of their consumers and which will, according to WHO, account for ten million deaths worldwide each year by 2030.”

And it’s not just the CSR report that has been a lightning rod for criticism. Nottingham University Business School came under fire when it accepted a £3.8m endowment from BAT to fund the U.K.’s first MBA in corporate social responsibility.

According to Craig Bennett, a campaigner at Friends of the Earth, “I doubt that this kind of backing is going to be a great advert for any potential students genuinely interested in changing core business behaviour. It strongly suggests that the corporate sector is getting in the habit of promoting CSR as all about image and not substance.”

Mutually Beneficial Engagement

Stakeholder dialogue is the foundation of BAT’s social reporting. The company continues to work with independent facilitators in an attempt to lend credibility to the process, and engaged in three dialogue cycles in multiple markets in 2004, focusing on issues such as appropriate marketing and youth smoking prevention; ways of providing information about the health risks of the company’s products; efforts to reduce harm; supply chain issues; and the illicit tobacco trade.

Still, many stakeholders—particularly those most critical of the company—have been reluctant to engage in these dialogue sessions.

A majority of the most vocal tobacco activists ignored the company’s initial invitation to participate. “If BAT does not admit any past wrongdoing ... why should critics simply wipe the slate clean and ignore 40 years of the most terrible mendacity?” ASH wrote later in its analysis of BAT’s social report.

ASH has provided information in some information to BAT’s social auditors but still refuses to get involved in the dialogue for several reasons: the group says it cannot see any outcome that would benefit the public health agenda; it has no evidence of good faith or candour on BAT’s behalf; and thinks the process has been managed badly.

“Some stakeholders are still reluctant to engage with us, particularly in the public health and tobacco control communities and amongst some NGOs,” acknowledged BAT chief executive Paul Adams in the company’s fourth social report. “Our message is simply that our door remains open. We do not seek to compromise any stakeholder and we believe that, even on some of the most challenging issues, there are real areas of common ground for working towards solutions.”

The company says it has seen benefits from engagement, particular in terms of its relationship with consumers and with employees.

“Consumers often feel that their voice is excluded in debates about tobacco issues and their feelings about being ignored can be very strong,” says Adams. “We certainly aim to work for regulatory outcomes that balance consumers’ interests fairly with the interests of others.”

And employees were delighted to see their company speaking up for itself.

“I think the first reaction we noticed was that employees were pleased and relieved that we were talking about these issues,” says Morrison. “We told all our people, ‘If someone challenges you at a party, if someone asks you whether smoking kills, you can say yes. If someone asks you whether nicotine is addictive, you can say yes.”

The other consequences of the company’s more forthright discussion of the health issues was that “once everybody knew and agreed about those things, we could start to talk about how to reduce the risks associated with our products.”

As long ago as the 50s, tobacco companies in the U.K. and the U.S. had been on what Payne calls “a quest” to produce a safer cigarette. But over the next 30 years, the industry found itself in a constant confrontation with NGOs challenging its right to exist. “In any confrontation there’s one winner and one loser,” he says. “In a quest, everyone wins. We wanted to get back to the quest.”

The company is now testing Swedish-style snus—finely-ground moist tobacco that comes either loose or in tiny sachets a bit like miniscule tea-bags and are placed under the upper lip—in South Africa and Sweden. Some research has indicated that snus are much less harmful than cigarettes, and in Sweden snus are now more popular than cigarettes.

This focus on developing a smokeless cigarette, Payne says, was a direct consequence of the stakeholder engagement process that accompanied the CSR initiative. “When we talked to stakeholders, we found them saying, ‘This is something you should be taking a look at.’”

Says Morrison, “We had been concerned that we would be accused of enticing more people into smoking.” But such concerns were misplaced, at least as far as dialogue participants were concerned.

That’s perhaps the biggest benefit of the engagement process: the company has learned from its stakeholders. It understands their expectations better.

Says Adams, “As a dialogue participant, I have gained a great deal from listening. Taking the dialogue to Kenya this year, where Board members joined candid discussions with tobacco farmers, was enormously worthwhile. Taking it to Brussels, where we addressed ways of tackling illicit trade, showed that members of the political community are amongst those willing to discuss constructive ideas with us on vital topics of shared concern.”

When Did You Stop Beating Your Wife?

It’s only a little more than a decade since the CEOs of the world’s largest tobacco companies appeared before the U.S. Congress and testified under oath that they did not believe nicotine was addictive and saw no evidence that smoking increased the risk of cancer.

Whether or not you buy the “informed consent” argument—that adults who understand the risks associated with tobacco products should have the right to make their own decision about those risks—it is clear that the industry’s denial of the dangers of smoking, long after a scientific consensus had been achieved, was irresponsible in the extreme. So it seems appropriate to wonder when the industry began to see the light on social responsibility.

But Morrison bristles when she is asked about BAT’s transformation into a socially responsible company.

“My hackles rise when people talk about BAT becoming a responsible company,” she says. “The people who ran this company for 100 years always held themselves to the highest standards.

“I don’t think we changed to become more responsible. I believe expectations have changed. The world holds companies to higher standards today. It’s no longer enough to run your business well, to be a good employer, to not break the law. It’s no longer enough to do all those things, because the world expects more from you.”

That’s true for all companies, Morrison says. The tobacco industry may be under more intense scrutiny on product safety and health issues, but many of the issues with which BAT deals are universal. It markets its products in more than 180 markets (with the largest market share in 50 of them); it has 81 factories in 64 countries; it supports tobacco farmers in 22 countries; it has 90,000 employees and almost 70,000 shareholders. In other words, it’s a big multinational, dealing with the issues all big multinationals face in today’s world.

“We have benefited from trade barriers falling,” she says. “We have benefited from globalization, and so of course we have been caught up in the globalization debate. We believe we can do good by investing in developing countries, by importing western capital and western standards. But people want us to prove we mean it, to show them the benefits, the rising living standards.”

No matter how zealously Morrison—who joined BAT in 1999 from Shell Information Services—defends previous generations of management, there’s no doubt that the industry’s positions on key issues have changed dramatically over the past decade.

Morrison points to the history of the company to provide at least a partial explanation.

“Until relatively recently British American Tobacco was part of a giant conglomerate called BAT Industries, which included a host of different businesses, including financial service companies. At one point we owned L’Oreal cosmetics. We owned Farmers Insurance, Allied Dunbar. The tobacco business was just one division. So when the flak was flying in the 90s, the tobacco people were told to keep their heads down, to keep winning the lawsuits, to keep delivering the cash flow.

“In the decades of demonization, BAT didn’t have a personality of its own.”

The conglomerate broke up in the 90s, with the final de-merger of the financial services business coming in 1998, at which time British American Tobacco was listed on the London Stock Exchange as a stand-alone business and its senior executives began to speak out. Says Morrison, “That’s when we began to manage our own reputation strategy.”

At the same time, it is clear that for many years the industry’s communications strategy was driven by legal considerations rather than reputation considerations.

“When we were besieged by product liability lawsuits, there was a focus on winning those suits,” says Morrison. “The lawyers wanted us to say as little as possible. Anything we did say could not be prejudicial. We got to a point where we were afraid to say what we wanted to say.”

That’s what Adrian Payne means when he talks about the company being caught in a “compliance mindset” for so many years.

“The fact is, you can’t diagnose how an individual got lung cancer,” says Payne. That provided a legal defence that was quite effective—BAT never lost a health-related lawsuit, although in some cases a lengthy appeals process was required before victory could be declared—because no plaintiff could ever demonstrate that his or her cancer had been caused by smoking, rather than by other environmental factors or even bad genes.

So BAT was being scientifically accurate when it claimed that tobacco could not be identified as the cause of a single instance of cancer. But if that argument held up in a court of law, the court of public opinion recognized it for the obfuscation it was. The correlation between smoking and cancer was well-established, and if tobacco companies could not be fingered as the villain in individual cases, they could—and should—be held accountable for the societal impact of their product.

“We had to move away from the scientific language and the legal language and talk plainly about the issues,” says Payne. “Today, if you go to our website, you will see that we are very clear about the fact that tobacco does contribute to all kinds of health problems. We spent a while trying to work out what language we should use, and there was a lot of discussion because we are a science-based company and we wanted to get it right, but we wanted to be quite clear about we were saying.”

The company’s website is today quite unequivocal about the health risks associated with BAT products. “Along with the pleasures of smoking there are real risks of serious diseases such as lung cancer, respiratory disease and heart disease, and for many people, smoking is difficult to quit,” says the company. “Smoking is a cause of various serious and fatal diseases, including lung cancer, emphysema, chronic bronchitis and heart diseases.”

But Payne, while acknowledging the changes in the company’s position, is reluctant to condemn its past positions.

“Where we got it wrong,” says Payne, “was that we got out of synch with our environment. We were like the boiling frog.” (A frog thrown into a pan of boiling water will immediately jump out. But a frog placed in a pan of cold water which is slowly brought to a boil will stay in place and eventually be boiled alive, because the change in his environment occurs so gradually that he doesn’t notice it until it’s too late to act.)

“It’s not just the tobacco industry,” adds Morrison. “A lot of businesses are being more open today than they were 20 years ago. But when the change came, it was not difficult to persuade people here of the benefit of being more open. That was like pushing on an open door.”

Youth Smoking

BAT introduced new international marketing standards voluntarily in 2000, around the same time as several other tobacco companies announced changes in the ways they promoted their products.

Among the changes at BAT:
• No advertisement shall be aimed at or particularly appeal to youth; feature a celebrity or contain an endorsement by a celebrity; depict any person appearing to be under 25 years of age; suggest that sporting or athletic success, popularity, professional success or sexual success is enhanced by smoking.
• All advertisements shall contain a clearly visible health warning.
• No advertisement shall be placed in any printed publication unless there is a reasonable basis to believe that at least 75 percent of its readers are adults.
• No advertisements shall be placed on any billboard that is located closer than 100 meters to any school.
• There shall be no direct or indirect payment for the placement of tobacco products in any motion picture, television programme, or video game.

The new standards were globally applicable—a significant change, and a necessary one after tobacco companies that piously insisted they would never market to children in the U.S. or western Europe were accused of handing out free product samples to teenagers attending pop concerts in developing markets in Asia.

“What it meant was that the marketing practices we already adhered to in western Europe became universal,” says Morrison. “Most companies in the 60s and 70s said they obeyed the law everywhere they operated. We recognize that that’s no longer enough.”

Persuading executives in some less developed markets to accept higher ethical standards presented some challenges.

“Applying the standards meant stopping tobacco advertising on TV and radio even where it was still allowed by law, and placing health warnings on tobacco advertisements as well as on packs,” Morrison says. “Sponsorship of sporting events was restricted and will be restricted further from December 2006 when we exit from our Lucky Strike brand sponsorship of Formula One.” (The company honoured its existing contractual commitments to Formula One).

“Adopting the international marketing standards meant that our companies could be placed at a competitive disadvantage against companies with lower standards, and some were,” Morrison says. Managers in some of those countries were less than enthusiastic about the proposed restrictions, at least at first. But the company’s marketing chief, Jimmi Rembiszewski, was a big supporter of the guidelines.

“He felt that if we were good marketer, then we could move into a new world of marketing, of permission marketing and one-to-one marketing, and be a leader.”

Today, acceptance of the guidelines is universal, and in 2004, BAT companies in 62 countries reported that they had encouraged their governments to incorporate the standards into local laws.

But the company felt it need to be proactive about dissuading young people from using its products. So BAT has run smoking prevention ads in Europe, on channels including MTV. “It wasn’t finger-wagging,” says Morrison of the company’s approach. “We tried to reinforce the idea that it was cool not to smoke.” The response was mixed, she concedes. “A lot of people feel uncomfortable that a tobacco company is involved in smoking prevention.”

Simon Chapman, professor of public health and community medicine at the University of Sydney and editor of the Tobacco Control Journal, has been one of the most vocal critics of the company’s youth smoking campaigns. “They have the temerity to continue to run fairly expensive campaigns all around the world that say, ‘Hey, smoking is an adult custom, we don’t want kids to smoke,’” he says. “Of course that sort of stuff actually incites kids to smoke. It says, ‘this is how you look grown up, use this product,’ and it is very, very attention-getting.”

Other critics cite a 1991 document from the US Tobacco Institute—to which BAT subsidiary Brown & Williamson belonged—which seemed to suggest a more cynical motive for supporting anti-smoking campaigns: “The youth program and its individual parts support the Institute’s objective of discouraging unfair and counterproductive federal, state and local restrictions on cigarette advertising, by ... seizing the political centre and forcing the anti-smokers to an extreme.”

It’s a debate the company is never going to win. After BAT voiced its support of government efforts to increase the age at which young people can legally purchase cigarettes in the U.K. from 16 to 18, it was similarly accused of a cynical effort to making smoking cool by positioning it as an activity for adults only. But if the company had opposed the changes, it’s hard to imagine that its most hardened critics would have praised its efforts to make smoking less cool.

Finding itself between a rock and a hard place, the company has turned to its stakeholder dialogue process for guidance. 

“We have tried to be responsive to local stakeholders,” says Payne. “So in the Gulf, for example, we have supported youth smoking prevention efforts because local groups there tell us they want us to be involved.”

The bottom line: “We don’t want to sell cigarettes to children,” says Morrison, an assertion that would no doubt draw snorts of derision from anti-smoking activists and critics of the industry’s marketing practices. “Most of our brands are premium brands that children can’t afford. We target adult smokers who have money to spend on the brands we sell. We want people to migrate to our brands. Our marketing budgets are not going to be wasted targeting people who can’t buy our products.”

Not only that, she says, but under-age smoking is a huge problem for the industry. Now that most tobacco companies defend their products by talking about freedom of choice, under-age smoking is an issue on which they are incredibly vulnerable: adults are capable of understanding the risks associated with smoking and choosing to accept those risks, but the “informed consent” argument falls apart when applied to children.

Responsible Lobbying?

“We believe in regulation that balances the interests of all sections of society, including tobacco consumers and the tobacco industry,” says BAT in its social report.

“Given the risks associated with tobacco products, we acknowledge the right of governments to enact tobacco regulation that is proportionate and reasonable. We do, however, reserve the right to challenge regulation that is disproportionate and undermines the fundamental protections that legal systems afford us.”

The company pledges to work with governments “on their issues of concern,” to “engage constructively and transparently with governments in discussions about the content and enforcement of tobacco regulation.”

Still, any involvement by tobacco companies in the public policy process is bound to attract strong criticism.

For example, a recent report from Christian Aid, Action on Smoking and Health and Friends of the Earth claimed BAT had used lobbyists and front groups to argue against the United Nations’ Framework Convention on Tobacco Control, which would provide international regulatory standards for tobacco products. In particular, critics say BAT has been in the forefront of attempts to discredit the UN’s research into the effects of second-hand smoke.

“BAT sees the Framework Convention as a threat to its growing markets in developing countries,” says Clive Bates of ASH, the U.K.’s most powerful anti-smoking group. “It is determined to derail it, delay it, and sabotage it in any possible way it can.”

BAT clearly disagrees with some of the suggestions of the Framework Convention, as is its right, and has said so publicly. Morrison says the World Health Organisation “has historically and intentionally excluded the tobacco industry from dialogue in international tobacco policy formation.” Indeed, the group stated  at the outset of its work on developing the Framework Convention, “The tobacco industry, its trade associations and key allies should be kept from the negotiating process.”

“It is tempting to conclude that some of those who accuse the tobacco industry of ‘undermining’ policy formation or of using ‘front organisations’ are of the belief that our industry or its consumers should not be allowed to hold or advocate any view at all,” says Morrison. “For our part, we believe in the basic tenet of good policy development and regulatory process—as recommended by the OECD—that the regulated should be consulted. We do not think there is anything underhand or inappropriate about seeking to have our views heard.

“We own our opinions, state them publicly, and seek opportunities to engage with regulators in proper advocacy,” Morrison says. “We are open about any organisations we belong to, such as national tobacco trade associations, and about any groups we fund. For example, in the U.K. we give modest funding to FOREST, which represents tobacco consumers’ interests and campaigns for choice, tolerance and sensible solutions.

“We think anyone advocating views in public policy formation—a multinational business, NGO or any other party—should do it transparently,” says Morrison, who concedes that there is no universally-accepted definition of responsible lobbying. Nor does BAT have a specific policy on lobbying practices, although some of the most egregious excesses—bribery, for example—are clearly covered by its standards of business conduct.”

The company’s relationship with supplies is another area of controversy that BAT has moved to address in recent years.

Christian Aid has published two reports detailing the company’s treatment of tobacco farmers in Brazil and Kenya, where some farmers are tied to contracts obliging them to buy their chemicals, seed and equipment from BAT subsidiaries. The result, according to the charity, is that farmers end up owing the company more money than they receive. As a result, some are forced to employ their children in the fields.

Says ASH director Deborah Arnott, “Tobacco firms like BAT hide behind glossy reports and boast of corporate social responsibility…. Companies like BAT offer the ultimate devil’s bargain. When they enter developing countries in search of new markets, they come with a smile a handshake and an open cheque book. But they leave behind nothing but a trail of addiction, misery and death.”

According to Morrison, “We have run active support programmes for tobacco growers for many years, so again, this is not really about sudden change but about continuous evolution in good programmes that we have run for some time.”

The company has sponsored afforestation programmes since the 1970s, to ensure a sustainable supply of wood to tobacco growers who use it as a fuel in curing. Over the years the company has planted almost 600 million trees, making BAT one of the world’s largest tree-planters outside the timber and paper industries.

At the same time, the company is unique among its peers in that it enjoys a direct relationship with around 250,000 growers, running agronomy support programmes in 22 countries covering approximately 65 per cent of the leaf it buys. The programmes include efforts to reduce pesticide use, protect local water resources, and encourage soil conservation and crop rotation.

Overall, when it comes to issues management, “There is growing demand from stakeholders, ranging from investors to NGOs, for lobbying to be covered by clear policies and standards, and we are actively considering whether we should adjust our existing standards or develop a new policy,” Morrison says. “We plan to address the issue of how we assure stakeholders about the consistency of our lobbying positions.”

In fact, Morrison says BAT “will be seeking opinions” from “relevant stakeholders” during the next reporting cycle in an attempt to better understand expectations in this arena.

In the meantime, she says, the company works to “explain openly and publicly the views we advocate to regulators or policy formers… It is hard to think of any view or position that we support and seek to engage on with regulators that we have not explained openly in other forums.”

The company’s website outlines most of its policy positions, and includes a pretty clear definition of “reasonable” tobacco regulation. In general, however, it clearly prefers accommodation over regulation—a preference that becomes clear when it comes to BAT’s position on the problem of second-hand smoke.

According to BAT’s most recent social report, “environmental tobacco smoke is often a source of annoyance to non-smokers and smokers alike and is considered by some public health authorities to be a health concern. We think a sense of proportion needs to be maintained. For example, while outright public and workplace smoking bans may meet the needs of some non-smokers, they prejudice the rights of smokers to consume a legal product and in our view are generally unnecessary.”

In Germany and several other markets, BAT has run ads promoting socially responsible use of its products, urging consumers to be considerate about smoking in public spaces and on long car trips.

“It is not a global advertising campaign, but it has long been part of our position internationally that we do not think people should be free to smoke wherever they like and to support considerate smoking,” says Morrison. The company has supported efforts to establish separate smoking and non-smoking areas in restaurants, hotels, bars and other venues, and “we have been vocal in discouraging smoking around babies and young children.”

Is It Working?

“Every company involved in corporate social responsibility recognizes that you can’t build a reputation on what you say you are going to do,” says Payne. “You have to improve performance on the metrics that matter to your stakeholders.”

Still, it’s disappointing that five years into its social reporting history, BAT does not have any solid metrics to show that its reputation has improved.

“Like many companies, we recognise that it is difficult to devise standardised, meaningful metrics internationally—particularly for a business operating in many different cultures and addressing differing
stakeholder expectations,” says Morrison. “One encouraging sign is that since we began social reporting internationally in 2001, almost all our companies have been able to engage in dialogue with a broader range and increasing number of stakeholders.

“Extending the dialogue obviously helps us to develop appropriate actions in response. Although we still encounter reluctance to engage amongst the tobacco control and public health communities, stakeholders in these groups have participated in some countries—very encouraging, particularly as we
recognise the importance of discussing with tobacco control and public health stakeholders the potential in our work towards reduced-harm products.”

But Payne has anecdotal evidence, at least, that progress has been made.

“In the eight years I have been with this company, I have seen some big changes,” says Payne. “When I first came here, the press was on the phone every day with some new story about smoking and health, looking for a quote from us that contradicted the quotes they were getting from our critics. Every story was about that confrontation.

“We don’t get those calls any more, because we have moved away from confrontation. Now we get the same calls about our supply chain and our environmental impact and our labour practices.”

In other words, the company is now being asked to address many of the issues that other large multinationals are facing, rather than issues unique to the tobacco industry. That’s a step in the right direction.

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