We expect Suppliers to integrate environmental considerations into their product design, operations and/or provision of services, and to comply with all applicable local legal and regulatory requirements governing environmental management. These arrangements should also cover their supply chain.

Doing so could include integrating ESG policies and practices into their business strategy and operations.

Suppliers should work towards continual improvement in environmental performance, underpinned, where relevant and practicable, through the implementation of environmental management standards and practice, using ISO 14001 or an equivalent.

Additionally, we encourage Suppliers to report on and publicly disclose their performance and progress, including through initiatives such as the Science Based Target initiative (SBTi), the Science Based Target Network (SBTN) and the Carbon Disclosure Project (CDP).

We expect Suppliers to provide the Group (where requested) with available information relating to their environmental performance, and with reasonable assistance as we seek to reduce the environmental impacts of our operations, products and services.

Where relevant, this may include (but not be limited to):

• life cycle assessments in relation to the Group’s products;
• data and information relating to the waste footprint of Group products; and
• carbon reduction plans in relation to the Group’s Scope 3 emissions.

In line with BAT Group’s Environment Policy Statement, we encourage Suppliers to take environmental considerations into account across the following priority areas:

•  tackling climate change;
• eliminating waste and progressing towards a circular economy;
• protecting biodiversity and forests; and
• water stewardship.

We expect Suppliers to manage, monitor and maintain a record of their environmental performance with regards to greenhouse gas (GHG) emissions, with the aim of:

• understanding their own GHG emissions (Scope 1 and 2);
• reducing their own GHG emissions;
• understanding the GHG emissions of their supply chain (Scope 3); and
• working with their Suppliers to reduce GHGs in their supply chain.

As a minimum we expect Suppliers to:

• undertake reasonable efforts to aim for 100% of their purchased electricity to be from renewable sources by 2030; and
• report on Scope 1 and 2 emissions to the BAT Group (where requested)*.

We expect Suppliers to work towards:

• reporting on their Scope 3 emissions to the BAT Group (where requested)*.

Where relevant and practicable, Suppliers should work towards:

• implementing a GHG [CO2e] management system (e.g. ISO 50001, PSA 2060);
• setting a target of Net Zero by no later than 2050 across their value chain;
• the provision of an externally verified report on Scope 1, 2 and 3 emissions; and
• improving primary data for products and services to specific emissions factors (through LCAs).

* For details of GHG accounting and reporting standards visit https://ghgprotocol.org

We expect Suppliers to aim to use fewer resources, create less waste and enable reuse, recycling, and circularity in products and processes.

Suppliers must ensure all materials provided to the BAT Group for the purpose of packaging are designed to be fully reusable, recyclable or compostable, by 2025 or sooner.

We expect Suppliers to work towards inclusion of recycled content in the materials provided to the BAT Group for the purpose of packaging.

Where relevant and practicable, Suppliers should work towards designing for the circularity of their products, including but not limited to increasing the use of renewable sources and reducing the use of virgin materials.

Where relevant, we expect Suppliers to take steps towards protecting, preserving and regenerating nature, and to aim for Net Zero deforestation in the supply chain of products and materials provided to the BAT Group.

Suppliers of wood and wood pulpbased materials (including but not limited to primary and secondary packaging, fine paper, acetate tow and point of sale materials) and leaf Suppliers are expected to supply materials and tobacco that are Deforestation and Conversion Free (DCF status), with independent certification where possible, produced or cured (if applicable) with wood from sustainable and traceable sources.

Where relevant and practicable, Suppliers should work towards understanding biodiversity dependencies and impacts in their own operations and their value chains.

Where relevant, we expect Suppliers to reduce the amount of water withdrawn and increase water recycling across their operations.

Suppliers must be aware of the water risk level in the area they are operating in, as defined, for example, by the World Resource Institute (wri.org).

We expect Suppliers to work towards understanding water dependencies and impacts in their own operations and their value chains, with a focus on areas threatened by water scarcity.

Where relevant and practicable, Suppliers should work towards mitigating operational and supply chain water risks, ideally using, or based on an equivalent level of, the Alliance for Water Stewardship Standard (https://a4ws.org/about/).