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Our ambition - Transitioning towards a low carbon economy.Ìý

The transformation of our own operations and those ofÌýour suppliers is a critical part of working towards achieving our science-based emissions reduction targets, in line with Paris Climate Agreement goals.

Across products and operations, weÌýrely onÌýnatural resources such as timber, soil and water. That means we are affected by, and therefore dedicate efforts to manage our impacts on climate change.

Find out more: Read more in our Sustainability Reporting Data Book

How we’ll get there

The Group’s Low Carbon Transition Plan and Environment Policy guide our climate change initiatives.

In 2024, we re-submitted our near-term Science-Based Targets (SBTs) which are in line with a 1.5°C warming pathway and supported by a range of commitments across energy, waste, water and biodiversity.Ìý

We also submitted long-term Net Zero GHG emissions targets to the Science Based Targets Initiative (SBTi).

Reducing GHG emissions in our operationsÌý

1. Site-specific decarbonisation roadmaps and investment in energy-efficiency projects
2. Renewable energy sourcing through power purchase agreements and on-site renewable energy generation
3. Roll-out of electric and hybrid vehicles in our fleet

Reducing GHG emissions in our value chain (Scope 3)

1. Implementing carbon-smart farming and curing efficiencyÌý
2. Designing for end-of-life
3. Increasing use of less carbon intensive materials
4. Working with direct and indirect suppliers to reduce their emissions

Delivering on Decarbonisation

In 2024, the Group discontinued its carbon-neutral operations target, instead focusing investments in absolute emission reductions, and towards achieving Net Zero.

We invested a further £19 million in emission and energy reduction initiatives across 63% of our operations sites. Once completed, we expect these initiatives to reduce absolute Scope 1 and Scope 2 emissions by approximately 27,000 tonnes of CO2e per annum.

After successfully installing biomass boilers in South Korea and Germany in 2023, similar installations have been completed in 2024 at our facility in Croatia. We expect this installation to reduce CO2e emissions by 2,160 tonnes per annum.

We continue to deploy our 10 Golden Rules Programme, which aims to standardise energy efficiency practices across all ourÌýsites. In 2024,Ìý32% of our manufacturing sites implemented the programme, up from 20% in 2023.

For example, the factory in Malang, Indonesia fully adopted the Programme, which resulted in a 76% reduction in Scope 1 and 2 emissions against its 2020 baseline.

Renewable Energy

We have a target across our direct operations to use 50% renewable energy by 2030.1

In 2024, 45.1% of our direct energy usage came from renewable sources such as renewable electricity (both purchased and generated on-site), sustainable biomass and biogas. This represents an increase of 7 percentage points from 2023. 36 of our operations sites are now purchasing 100% renewable electricity.

On-site solar panels were installed in Bangladesh, Papua New Guinea, Serbia, Fiji and Solomon Islands, and are now in place at 30 operations sites (51% out of all operations sites).

ÌÇÐÄ̽»¨Türkiye switched to 100% renewable electricity, with its large-scale 6.5ÌýMWp off-site solar power plant. The plant provides energy for our local operations, and contributes to the national grid.

In addition, ÌÇÐÄ̽»¨Poland entered into a multi-year Power Purchase Agreement (PPA) for solar energy. This will supply over 12GWh of renewable electricity annually, equivalent to approximately 30% of the factory’s electricity consumption in theÌýcountry.

Reducing Fleet Emissions

The Green Mobility Standard outlines our strategy for reducing fleet-related emissions. It sets out initiatives such as optimising travel routes to enhance fuel efficiency and switching to lower-emissions vehicles.

In 2024, our vehicle fleet accounted for roughly 22% of our Scope 1 and 2 emissions.2 Our combined absolute Scope 1 and 2 fleet emissions reduced year-on-year by 9.4% and a further 26% vs our 2020 baseline.

Collaborating with Tobacco Farmers

In 2021, the Group set a Scope 3 target to reduce emissions by 50% by 2030, aligning with the Paris Agreement and SBTi guidelines.

The SBTi's recent methodology change now requires separate reporting for Scope 3 FLAG and non-FLAG emissions, prompting the Group to recalibrate its targets while maintaining its 1.5°C commitment.

As a results, in 2024, we submitted FLAG emission targets to the SBTi for validation. FLAG targets cover emissions that are related to the land sector and complement our industrial (Non-FLAG) emissions.

Purchased tobacco accounted for around 12% of our total Scope 3 GHG emissions, contributing 678 thousand tonnes of CO2e in 2023. In our tobacco supply chain, the majority of FLAG emissions are attributed to fertiliser use, while non-FLAG emissions primarily arise from fuels used in the tobacco curing process.

We aim to increase the use of less carbon intensive fuels in the tobacco curing process by incorporating renewable alternatives such as biomass. To date, more than 87% of our leaf volume is cured with renewable fuels and methods.

The Group's own Leaf Operations and its directly contracted farmers have eliminated the use of coal for tobacco curing. The use of coal for tobacco curing across our tobacco supply chain has also reduced from 3.3% in 2023 to 2.3% in 2024, representing supplier-purchased tobacco volumes.

We seek to help farmers reduce emissions by implementing regenerative agriculture practices and ‘carbon-smart’ farming practices. Carbon-smart farming is focused on both reducing emissions from tobacco farming and harnessing agriculture’s potential to remove carbon from the atmosphere.

ThisÌýcan be accomplished through conservation practices such as minimum tillage that keep the soil covered to minimise disturbance and reduce the possibility of stored carbon from being released. These practices are being implemented throughout the Group’s own Leaf Operations in Brazil, Bangladesh, Mexico, and Pakistan, which account for our highest volumes of directly contracted tobacco.

Working with Direct and Indirect Suppliers to Tackle Scope 3 EmissionsÌý

Our Supplier Code of Conduct (SCoC) applies to all our suppliers and sets out the actions that we expect them to take regarding climate change and other environmental topics.

We evaluate climate-related criteria during procurement sourcing events, and as part of our Supplier Climate Enablement programme, assessing ongoing performance against climate KPIs. Performance updates are provided to the Operations Sustainability Forum which has oversight of our supplier emission performance.

Emissions reduction is embedded throughout each phase of our supplier lifecycle management and covers 26,000 direct and indirect suppliers. Their emissions account for around 50% of our Scope 3 inventory, approximately 2,900,000 tonnes of CO2e in 2023.

Interactions with our suppliers include sourcing events, the CDP Supply Chain programme, and direct one-on-one engagements via our supplier enablementÌýprogramme. We also support suppliers to enhance their standards by sharing data, and encourage them to set Science-Based Targets (SBTs).

We invited 726 suppliers representing 74.5% of our purchased goods and services emissions, to respond to the CDP Supply Chain programme. We recorded a 94% response rate, which is above the global average CDP response rate of 40%.

Data collected through the programme enables us to better understand our suppliers’ progress on emissions reductions and prioritise our own actions, informing our Supplier Climate Enablement programme. In 2024, our Supplier Climate Enablement Programme further extended its scope from 60 of our top CO2e emitting suppliers in 2023 to 150.

The Programme’s expansion was driven by the training of procurement colleagues on incorporating climate discussions into regular supplier engagement.

Our target for 20% of our purchased goods and services suppliers by spend to have set SBTs by 2025, has been achieved one year in advance. By year-end 2024, 23.5% of suppliers had SBTs in place, and an additional 17.3% have committed to settingÌýSBTs.

We will continue to monitor and report progress.

Our CDP Publications

Our policy commitments are supported by our well-established and mature Environment, Health and Safety (EHS) management system. This is based on international standards, including ISO 14001, and includes detailed requirements and guidelines for Group companies on best practice environmental management.

As part of our commitment to transparency in the Climate, we provide information to CDP - a global environmental impact non-profit organisation, through its reporting frameworks.Ìý

Our submissions are below:Ìý

2024 -ÌýCDP Questionnaire - Climate section (3.0 mb)

2023 -ÌýClimate Change 2023 (1.4 mb)

2022Ìý-ÌýClimate Change 2022 (1.5 mb)

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