British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Investor Presentation (2021)
44 slides from British American Tobacco P.l.c's investor presentation, 2021
Slide 1: Enterprise of the Future
Enterprise of the Future Science and ESG Accelerating our Transformation Dr David O’Reilly | Director of Scientific Research Jennie Galbraith | Head of Environment, Social and Governance
Slide 2: Important information
Important information The information contained in this presentation in relation to British American Tobacco p.l.c. (“BAT”) and its subsidiaries has been prepared solely for use at this presentation. The presentation is not directed to, or intended for distribution to or use by, any person or entity
Slide 3: Important information
Important information Forward-looking Statements (continued) Additional information concerning these and other factors can be found in BAT’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the Annual Report on Form 20-F and Current Reports on Form 6-K, which may be obtain
Slide 4: Committed to Building A Better Tomorrow
Committed to Building A Better TomorrowTM Our Purpose Our Commitment To provide adult To reduce the consumers with a wide health impact range of enjoyable and of our business less risky products To encourage smokers to switch completely to scientifically-substantiated reduced-risk alternatives* 4 *
Slide 5: Delivering Our Purpose is Transforming BAT
Delivering Our Purpose is Transforming BAT From To Multi-category CPG Cigarettes Nicotine & Beyond* & & Declining Volume Growing Volume Growing Value & Value Building A Better TomorrowTM *Beyond refers to Wellbeing & Stimulation Beyond Nicotine. Target market for consumer acquisition is existing adu
Slide 6: Most of the Harm from Tobacco is caused by Combustion Not Nicotine
Most of the Harm from Tobacco is caused by Combustion Not Nicotine It’s the other chemical compounds in tobacco, and in the smoke created by setting tobacco on fire, that directly and primarily cause the illness and death, not the nicotine. DR. SCOTT GOTTLIEB US FDA COMMISSIONER (JULY 2017) Nicotine
Slide 7: Tobacco Harm Reduction recognised in Policy and Regulation in a number of countries
Tobacco Harm Reduction recognised in Policy and Regulation in a number of countries “The closer the risks and Food and Drug exposures from the Administration Reduced Risk Products are to cessation …the more confident a regulator can be Public Health in the chances for net public Science is England h
Slide 8: Key enablers of Tobacco Harm Reduction
Key enablers of Tobacco Harm Reduction Consumer World-class Standards & choice science regulation Tobacco Harm reduction is at the heart of our ESG strategy 8
Slide 9: Our Strategy Starts with the Consumer
Our Strategy Starts with the Consumer Multi-Category Consumer Portfolio Consumer Moments Digital Insights Consumer Centricity Digitally Product Embedded Satisfaction RGM* Product Index Boundaries A Unique Consumer-Centric Multi-Category model * Revenue Growth Management 9
Slide 10: A Large, Growing Harm Reduction Opportunity
A Large, Growing Harm Reduction Opportunity 2020 2025* Non- THP VAPOUR Combustibles*** THP VAPOUR 13.5mn ~79mn ~123mn Consumers*** MODERN ORAL Net Consumers** Net Consumers** MODERN 17% TRADITIONAL ORAL ORAL Revenue & TRAD Consumers Share^ ORAL Working for A Better TomorrowTM for 1.1bn Smokers 2025
Slide 11: Strong, Global, Scientifically-Substantiated Brands in All Three Categories
Strong, Global, Scientifically-Substantiated Brands in All Three Categories VAPOUR THP MODERN ORAL # 1 # 2 # 2 # 1 # 3 Share positions based on value share of vapour and volume share of THP and Modern oral. Vuse brand represents c. 80% of FY20 vapour revenue. Continue to migrate remaining Vype brand
Slide 12: Underpinned by World-Class Capabilities in Science and Innovation
Underpinned by World-Class Capabilities in Science and Innovation 2x 114 12 60+ 1500 Peer-reviewed BTVentures R&D Years R&D articles and investments spend manuscripts adding new of R&D specialists since 2017 published in New capabilities Categories Accelerating our transformation through attracting
Slide 13: Evaluated Using a Multi-Disciplinary Risk Assessment Framework
Evaluated Using a Multi-Disciplinary Risk Assessment Framework Emissions Exposure Risk What is in the What happens when exposed What is the long-term vapour/aerosol? to these emissions? health risk? Behavioural Biological Clinical Population Chemistry Sciences Sciences Studies Studies 13
Slide 14: Most of the Harm from Tobacco is caused by Combustion Not Nicotine
Most of the Harm from Tobacco is caused by Combustion Not Nicotine* Combustibles1 High 10% Low 100% Toxicants in Emissions 0% TOBACCO & COMBUSTION NO COMBUSTION Our Non-Combustible Products are proven to produce far less toxicants1 1 Relates to standard reference cigarette. *As stated by: Dr. Scott
Slide 15: Building an Evidence Based approach to Tobacco Harm Reduction led by Vaping
Building an Evidence Based approach to Tobacco Harm Reduction led by Vaping First international tobacco company to launch an e-cigarette Largest published dataset on a single vapour product (ePen) First and most comprehensive analysis1 of e-cigarette aerosol Our scientific data is published in 71 pe
Slide 16: Growing Consensus on Harm Reduction Potential of Vaping Products
Growing Consensus on Harm Reduction Potential of Vaping Products ASH UK HOUSE OF COMMONS GOVERNMENT OF (Action on Smoking & Health) 1 SCIENCE & TECHNOLOGY CANADA4 Public health charity COMMITTEE3 “Switching from tobacco “Compared to tobacco “E-cigarettes present an cigarettes to vaping products prod
Slide 17: Reduction in Toxicant Exposure Similar to Cessation
Reduction in Toxicant Exposure Similar to Cessation Carbon Monoxide Benzene 30 7,000 25 6,000 Mean SPMA (ng/24hrs) 5,000 Mean CO (ppm) 20 Cigarette Cigarette 4,000 15 Vuse Vuse 3,000 10 Cessation Cessation 2,000 5 1,000 0 0 Baseline Day 2-3 Day 3-4 Day 4-5 Day 5-6 Day 6-7 Baseline Day 2-3 Day 4-5 Da
Slide 18: Growing Consensus on Harm Reduction Potential of THP products
Growing Consensus on Harm Reduction Potential of THP products Public Health Food and Drug England Administration Compared to cigarette smoke, heated These particular products could help tobacco products are likely to expose users addicted adult smokers transition away and bystanders to lower levels
Slide 19: Biomarker of Potential Harm Responses Similar to Cessation
Biomarker of Potential Harm Responses Similar to Cessation Magnitude of change relative to cessation glo 0% -25% -50% Biologically -75% Significant Target zone Equivalent -100% 100% = To Cessation Oxidative Cardio Cardio Cardio Lung Lung Lung Inflammation Carcinogenesis Stress Function 1 Function 2
Slide 20: Snus is much lower risk than smoking
Snus is much lower risk than smoking* 200 Lung Cancer Deaths in Men Aged >35** 180 160 140 120 100 80 60 40 20 0 * Use of Swedish Snus is not a risk factor for oral cancer and no association has been established with neck, oesophagus and gastric cancer. 20 **WHO-International Agency for Research on
Slide 21: Velo has Much Lower Toxicant Levels than Snus
Velo has Much Lower Toxicant Levels than Snus -99% -76% Toxicants Toxicants vs. vs. Cigarettes Snus2 Assessment of 9 chemicals the WHO recommends to reduce in cigarette smoke1 vs. cigarette and Snus As measured by independent lab 1. D.M. Burns et al.; Tob. Control, 17 (2008), pp. 132-141; 2 Approxim
Slide 22: Extensive Scientific Substantiation support our products as Reduced Risk
Extensive Scientific Substantiation support our products as Reduced Risk* >30 years of studies have Emissions -99%1 Emissions -90% to -95%2 shown snus is much less risky than smoking Toxicology -99%1 Toxicology -95%2 Toxicology even less harmful than snus Clinical studies show Clinical studies show
Slide 23: How New Category Products should be Regulated
How New Category Products should be Regulated An evidence-based approach Proportionate regulation Freedom to innovate Engagement, dialogue & Consumer Choice communication & Freedom Responsible marketing freedoms 23
Slide 24: Harm Reduction is the Cornerstone of our Comprehensive ESG Strategy
Harm Reduction is the Cornerstone of our Comprehensive ESG Strategy H Reducing the HEALTH impact of our business CONSUMER CHOICE WORLD-CLASS SCIENCE STANDARDS & REGULATION E S G Excellence in Delivering a positive Robust corporate ENVIRONMENTAL SOCIAL impact GOVERNANCE management • Climate change •
Slide 25: Building on Strong ESG Foundations
Building on Strong ESG Foundations 2000-2005 2006-2010 2011-2015 2016-2019 2020+ ESTABLISHING DEVELOPING EMBEDDING GROWING ACCELERATING SRTP Social Responsibility in Tobacco Production Supply chain sustainability strategy Stretching new Diversity & Inclusion Targets External strategy 50% CO2e by Sc
Slide 26: Focused on Delivering Value for all our Stakeholders
Focused on Delivering Value for all our Stakeholders Shared Value SHAREHOLDERS CONSUMERS SOCIETY EMPLOYEES Consistently Offering Reducing the Creating a delivering against consumers a overall health and dynamic and our financial choice of environmental purposeful place commitments for enjoyable, les
Slide 27: Our Shared Value Strategy in Action
Our Shared Value Strategy in Action SHAREHOLDERS CONSUMERS SOCIETY EMPLOYEES H Reducing the HEALTH impact of our business E Excellence in ENVIRONMENTAL management S Delivering a positive SOCIAL impact G Robust corporate GOVERNANCE 27 Based on the weight of evidence and assuming a complete switch fro
Slide 28: Embedded in How We Think and Operate
Embedded in How We Think and Operate MARKETING LEX* OPERATIONS R&D HR FINANCE IDT H Reducing the health impact of our business Climate change Climate change Climate change financial Water and waste E Sustainable agriculture Leaf R&D disclosures Sustainable agriculture Circular economy Human rights K
Slide 29: With Clearly Defined Targets
With Clearly Defined Targets^ H Reducing the HEALTH • 50m non-combustible product* consumers by 2030 impact of our business • £5 billion New Category revenue by 2025 E • Carbon neutral: Scope 1 & 2 by 2030; Scope 3 by 2050 Excellence in • 35% reduction in water withdrawn by 20251; 30% increase in wa
Slide 30: E Accelerating our Transformation: Excellence in Environmental Management
E Accelerating our Transformation: Excellence in Environmental Management 2017 2020 CLIMATE CHANGE Carbon neutral - Scope 1 & 2 by 2030 864 541 (- 37.4%) (‘000 tonnes) WATER 35% reduction in water withdrawn by 20251 5.19 4.03 (- 22.5%) (mn cubic metres) BIODIVERSITY & AFFORESTATION 100% sustainable
Slide 31: Comprehensive Carbon Strategy working throughout the value chain
Comprehensive Carbon Strategy working throughout the value chain Enter into longer-term power- purchase agreements Purchase renewable Invest in on-site energy energy certificates generation projects Increase purchase of Roll out electric green energy vehicles in our fleet Apply TCFD-based climate ri
Slide 32: Good progress on Scope 1 & 2 Emissions
Good progress on Scope 1 & 2 Emissions Reduce emissions 37% reduction in Scope 1 & 2 emissions v 2017 On-site renewables Solar energy generation at factories in 8 countries* Renewable energy certificates & All sites incorporate green power purchases Long term power agreements Carbon offset credits O
Slide 33: Working Closely with Our Partners to Reduce Scope 3 Emissions
Working Closely with Our Partners to Reduce Scope 3 Emissions % carbon emissions in supply chain Leaf >30% reduction in fuel use with upgraded 32% Purchased curing barns** Non-leaf Engaging with suppliers to reduce carbon 27% Purchased Goods emissions & Services Other Life-cycle analysis such as opt
Slide 34: S Accelerating our Transformation: Delivering a Positive Social Impact
S Accelerating our Transformation: Delivering a Positive Social Impact 2017 2020 HUMAN Data not 0.5%2 Zero child labour by 20251 RIGHTS available (98.5% resolved) HUMAN 100% of suppliers subject to human rights RIGHTS due diligence3 46% 100% HEALTH & SAFETY Zero accidents group-wide 284 142 (- 50%)
Slide 35: Human Rights Strategy aligned with UN Guiding Principles
Human Rights Strategy aligned with UN Guiding Principles GLOBAL MINIMUM STANDARDS FOCUSING ON SALIENT EMBEDDED IN ISSUES BUSINESS PROCEDURES POLICY SPEAK UP THOROUGH RISK CHANNELS ASSESSMENTS DUE REMEDY DILIGENCE PRIORITISATION OF STAKEHOLDER HIGHEST RISK ENGAGEMENT CORRECTIVE ONGOING ACTION PLANS M
Slide 36: Comprehensive Approach to Eliminate Child Labour in Leaf
Comprehensive Approach to Eliminate Child Labour in Leaf ROBUST MONITORING AND REMEDIATION PROCESS 1 2 3 4 5 6 Strong Policies Risk Mapping Farm Visits Identification Remediation Follow-up Contracted farms 0.5% incidence 98.5% incidents visited monthly1 of child labour2 resolved3 LONGER-TERM FOCUSED
Slide 37: Protecting Human Rights in our Non-Leaf Supply Chain
Protecting Human Rights in our Non-Leaf Supply Chain NEW SUPPLIER: ONBOARDING EXISTING SUPPLIER: INDEPENDENT INDEPENDENT ANNUAL RISK AUDIT Supplier Code of AUDIT Conduct ASSESSMENT Workplace Workplace incorporated in against independent Conditions Conditions contracts human rights indices assessed b
Slide 38: G Accelerating our Transformation: Robust Corporate Governance
G Accelerating our Transformation: Robust Corporate Governance 2017 2020 BUSINESS 100% Standards of Business Conduct ETHICS (SoBC) adherence 100% 100% (employee training) RESPONSIBLE 100% Youth Action Prevention Guidelines MARKETING adherence N/A 100% (markets aligned) REGULATION Principles for Enga
Slide 39: Continuously Strengthening Our Business Conduct & Compliance
Continuously Strengthening Our Business Conduct & Compliance 2021/22 2020 AUDIT, ASSURANCE & 2019 DIGITAL, HARNESSING DATA 2018 EMBED IN AUTOMATION, 3RD PARTY ➢ Data analytics ➢ Automation & RISKS 2017 Integration ORGANISATION ➢ Investigations & ➢ 3rd Party life- STRENGTHENED ➢ Commitment case mgmt.
Slide 40: Ensuring Responsible Marketing Directed at Adult Smokers
Ensuring Responsible Marketing Directed at Adult Smokers International Marketing Principles Youth Access Prevention (IMP) (YAP) Responsible Strengthened YAP approach Accurate Mandatory provision of point-of-sale Targeted at adults materials* Transparent Monitored through internal audit, and Complian
Slide 41: Our Integrated Approach to ESG Contributes Directly to the UN Sustainable Development Goals
Our Integrated Approach to ESG Contributes Directly to the UN Sustainable Development Goals STRATEGIC GOALS PRIORITY GOALS LOCALISED GOALS 41
Slide 42: Creating Value for all Stakeholders
Creating Value for all Stakeholders Our ESG Agenda CONSUMERS SOCIETY H Reducing the HEALTH impact of our business CREATES SHARED E S G VALUE FOR Excellence in Delivering a positive Robust corporate ENVIRONMENTAL EMPLOYEES SOCIAL impact GOVERNANCE management SHAREHOLDERS CREATING SHARED VALUE FOR OUR
Slide 43: Delivering Our Purpose is Transforming BAT
Delivering Our Purpose is Transforming BAT From To Multi-category CPG Cigarettes Nicotine & Beyond* And And Declining Volume Growing Volume Growing Value & Value Building A Better TomorrowTM *Beyond refers to Wellbeing & Stimulation Beyond Nicotine. Target market for consumer acquisition is existing
Slide 44: Appendix
Appendix A1: Environmental Targets Targets cover: climate change, water and waste, sustainable agriculture, human rights, other Social targets, and Governance targets. Full details are available from the ESG Report https://www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DOAWWEKR/$file/BAT_ESG_
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