Materiality

BAT has conducted Materiality Assessments^ since 2007 and, in 2022, we undertook our first Double Materiality Assessment (DMA) through an external consultancy. This has provided greater insight, focus and granularity on the sustainability / ESG matters which are significant in terms of:

•  BAT's impact on society and the environment; and
•  Potential risks and opportunities which could have an impact on BAT's financial value

Impact Assessment: Prioritisation of BAT's impact on society and the environment

In order to prioritise the different ‘outward'’ impacts of BAT, the findings of the risk assessment were combined with the learnings from the stakeholder engagement, alongside the results of benchmarking against other companies across a range of sectors. This included assessing BAT's actual and potential negative impacts on people and their human rights, the environment and the economy; through the topics of the ESRS.

Financial Materiality

We analysed potential risks and opportunities which could have a significant impact on BAT's financial value. These pose potential 'inward impacts'. For each issue and overall topic identified, several questions were used to establish whether they met our financial materiality criteria:

•  Could it affect assets / liabilities recognised in financial reporting today, or be recognised because of future events?
•  Could it affect Enterprise Value?
•  Could it influence the possibility to continue to use or obtain resources needed for our business, as well as the quality and pricing of those resources?
•  Could it affect our ability to rely on relationships needed in our business processes?

Double Materiality

Having undertaken our detailed assessments, we determined the relative importance of issues and overall topics according to their 'outward' and 'inward' importance.