Sustainability in Tobacco

September 2023

The global tobacco industry is increasingly addressing environmental, social and governance issues, strengthening the harm reduction narrative and increasing investment in sustainability initiatives in response to increasing pressure from consumers, investors and legislators.

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Key Findings

Stakeholders’ pressure for ESG 

The tobacco industry is embracing environmental, social and governance (ESG) factors when making business decisions to attract investors and consumers, comply with legislation and gain competitive advantage. The development of environment and social interest initiatives is expected to continue, encouraged by increasing pressure from key stakeholders.

ESG investments

ESG is here to stay, as reflected in planned corporate investments across all areas, with the expansion of reduced risk products (RRP) products, the development of more sustainable products and tackling product waste being top of mind for businesses.

Investors more prone to accelerate industry transformation

An increasing number of investors in tobacco are engaging more with tobacco companies as a means of accelerating industry transition towards a more sustainable future built on ESG initiatives and reporting.

Sustainable initiatives

With tobacco users showing a commitment to environmental initiatives, but also being increasingly price sensitive, tobacco players are struggling to pass the cost of compliance with sustainability measures on to consumers.

Barriers to communicating sustainability

To meet growing consumer demand for sustainability, tobacco companies are undertaking environmental initiatives and expanding their sustainable product portfolios, although strict restrictions on promotion and advertising make it difficult to communicate them to stakeholders.

 

 

Scope
Key findings
Tobacco and Sustainability
Key industry drivers
Sustainability in tobacco involves not just consumers but investors and legislators
Sustainability challenges from the consumer perspective
Consumers are embracing green activities to positively impact the planet…
Smokers slightly more committed than non-smokers to reducing environmental impact
Affordability and convenience remains key
Regulation fatigue might hinder sustainability efforts
Sustainability is under threat from soaring inflation prices
High price sensitivity among smokers hinders price increases
Sustainable packaging is key in the shift to a circular and low-carbon economy
The launch of products with sustainability claims is on the rise
Product claims and packaging to promote sustainability initiatives
Sustainability challenges from the investor perspective
ESG is an ever more material element of investor calculus
Divestment has been the predominant activist investor stance towards tobacco
Can tobacco companies ever be sustainable?
Tobacco transition creates its own issues regarding sustainability
Sustainability, transformation and tobacco – the unsquareable circle?
Sustainability challenges from the regulators’ perspective
Key sustainability legislation drivers in tobacco and nicotine (1)
Additional regulation in both character and degree facing the industry
Sustainability set to play a key role for the tobacco industry
Sustainability: Cigarette butts set to face tougher restrictions
Sustainability: Recycling schemes to tackle product waste
Environmental impact beyond product waste
Key sustainability legislation drivers in tobacco and nicotine (2)
Sustainability: Due diligence legislation discussed in the EU
Sustainability challenges from the industry perspective
Shift to smoke-free alternatives gaining momentum
Ambitious goals projected for 2020-2025
RRP offers positive impact on public health…
….but creates greater sustainability concerns than combustible tobacco
Recycling schemes
Net zero carbon emissions to reduce environmental impact
Sustainability action from tobacco and nicotine players
Sustainability: Cigarette butt littering on the spotlight
Addressing single-use plastics in cigarettes
Sustainability innovation begins to filter through to consumers

Tobacco

Passport Tobacco covers the seven major tobacco categories: Cigarettes, Cigars & Cigarillos, Smoking tobacco (made up of Pipe tobacco and RYO tobacco), Smokeless Tobacco (snuff and chewing tobacco), E-Vapour Products (closed and open); Heated Tobacco; and Tobacco Free Oral Nicotine. Smoking paraphernalia such as pipes, rolling papers, lighters or matches, etc., are not included, nor are nicotine replacement therapy (NRT) products, which are part of Euromonitor's Passport Consumer Healthcare database.

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