Annual report 2010 - Imperial Tobacco Group

Supplier RelationshipsOur main supplier engagement and assessment programmesare Social Responsibility in Tobacco Production Programme(SRiTP) for tobacco suppliers and Supplier QualificationProgramme for non-tobacco materials supply. We havecontinued to work with suppliers and business partners totackle issues such as deforestation, environmental protection,child labour, sustainable development and poverty alleviation.One of the most important partnerships we are involved in isthe Eliminating Child Labour in Tobacco (ECLT) Foundation ofwhich we are a board member. ECLT works with communitiesto address the underlying causes of child labour. Duringthe year, we have continued to provide financial support,guidance and advice in line with our long term commitmentto the Foundation.The majority of the tobacco that we use is purchasedthrough the leading international leaf supplying companies.Only a small portion is purchased directly from growers,mainly in Morocco, Madagascar and Laos who also nowparticipate in SRiTP. All of our tobacco suppliers (100 percent) participated in the programme (2009: 92 per cent).Evaluations of our supplier SRiTP self assessments forthe 2009 calendar year indicated the majority of suppliersaveraging a score of 60 per cent, indicating a good levelof risk management. Weak performance is identifiedthrough annual review. We are increasing dialogue withweak performers to focus improvements. We aim to deliverongoing improvements and are embedding new categoriesfor post-harvest management and climate change. Giventhis change, general scores were impacted and wecontinue to monitor and seek to improve our performancewith our suppliers.We have also continued to roll-out our SRiTP programmewith our USA cigar tobacco suppliers. All cigar suppliershave been incorporated into the rolling audit plan.All of our non-tobacco materials suppliers are part of oursupplier qualification programme which includes relevantsocial and environmental aspects. Our central team ofnon-tobacco materials buyers have received ISO accreditedtraining and been certified as auditors. They subsequentlyvisited suppliers at eleven sites in 2010.In line with our enhanced Code of Conduct, we have startedto progress a new supplier standard that will extend acrossall our suppliers Group-wide.Social Assessment and Human RightsWe have identified 28 manufacturing sites in countriesdeemed medium to high risk in terms of human rights inline with our own criteria. We use the principles of the SocialAccountability SA 8000 standard and the InternationalLabour Organization’s (ILO) core conventions as a basis ofevaluation of the labour practices at these sites, combinedwith our own employment policies, practices and standards.Our assessments of these sites have confirmed that localemployment practices are aligned with our Group policy.We have conducted social assessment visits to 19 of thesesites including visits to the Philippines, Puerto Rico andthe Dominican Republic in 2010. Recommendationsincluded minor improvements related to the need forformal documentation for grievance, non-discriminationand disciplinary procedures which we are progressing.We continued to keep abreast of developments in HumanRights, including the work of the United Nation’s SpecialRepresentative, Professor John Ruggie, and via ourmemberships of organisations such as the Confederation ofBritish Industry and the International Chamber of Commerce.Information on our Human Rights Policy and due diligenceprocesses including our supply chain activities is availableon our website.Stakeholder PanelOur Stakeholder Panel, comprising representatives frommany of our main stakeholder groups including consumers,investors, suppliers, employees and community, met withus during the year to share views on our business. Theirvaluable input has continued to help shape our CorporateResponsibility approach and reporting.Feedback has related to how we engage with a widerrange of stakeholders across a broader geographic spread.This includes further extending the membership of theStakeholder Panel as well as increasing our transparencyon regulatory issues. We have also incorporated the Panel’simprovements into our 2010 reporting.51