Zoheir Mehrabani

Mark Moskvitine

Matt Templeton

Mike Testa

Table of Contents

1. Overview

2. Stakeholders

3. Ethical Audit

4. Issue Analysis

5. Recommendations

02

Overview

History of Tobacco in Canada

- First grown by the natives

- In 17th century grown by French settlers

- During WWI the demand for cigarettes rose

- Until recently tobacco farms were located in Ontario,

Quebec and the Maritimes

Major Tobacco Firms in Canada

- Imperial Tobacco

- Phillip Morris USA

- Rothmans, Benson & Hedges

03

Stakeholders

• Health Canada (The Government)Educating about consequences of smoking, issue laws.

• SocietyDirectly impacted by smoking.

• ShareholdersUse tobacco firms to generate value.

• EmployeesDepend on tobacco firms for employment.

• ConsumersAffected by changes in distribution or production of tobacco.

04

Stakeholders

• Business Partners, SuppliersTobacco farmers are heavily invested in tobacco production.

• Communities where plants are located.Factory closure negatively impacts small communities.

• MediaPromoting anti-smoking message, blocking tobacco ads.

• Environmental GroupsPressure firms to properly dispose of chemical waste.

• Not-For-Profit OrganizationsPursue various agendas.

05

Stakeholders06

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POWER

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0 105

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5-

5Health Canada

NGOs

Society

Shareholders

Employees

Consumers

The Media

Ethical Audit

Industry Canada CSR Implementation Framework

1. Conduct CSR assessment

2. Develop CSR strategy

3. Develop CSR commitments

4. Implement CSR commitments

5. Verify and report on progress

6. Evaluate and improve

07

1. Conduct CSR assessment

• Assemble a CSR leadership teamImperial Tobacco CSR Committee

• Develop a working definition of CSREconomic, social, and environmental responsibilities

• Review corporate documentsBusiness principles and code of conduct

• Identify and engage key stakeholdersLet’s talk initiatives

Ethical Audit08

2. Develop a CSR

• Build support with management and employees

CSR Committee

• Prepare matrix of proposed CSR actionsExpectations on committed issues

• Decide direction, approach, focus areas

Individually, together, and support others

Ethical Audit09

3. Develop CSR commitments

• Discussions with major stakeholders

Stakeholder meetings

• Create working groups

Internal experts and CSR drive team

• Consult affected stakeholders

Listen, decide, deliver

Ethical Audit10

4. Implement CSR Commitments

• Set measureable targets and performance measures

Key performance indicators not identified

• Engage employees

“Let’s Talk” workshops

• Create communications plans

Internally: Your Voice surveys

External: CiB Award of excellence

Ethical Audit11

5. Verify and report on progress

• Measure and verify performance

Bureau VERITAS independent assurance

• Engage stakeholders

Comprehensive web site inconclusive

• Report on performance

2006-2007 Social Report

Ethical Audit12

6. Evaluate and improve

• Evaluate performance

AA1000 assurance standards

• Opportunities for improvement

Bureau VERITAS highlighted key areas

• Engage stakeholders

Ongoing dialogue with stakeholders

to be republished two years from now.

Ethical Audit13

• Issues identified by Imperial Tobacco

• Health Effects

• Illicit Trade

• Underage Smoking

• Issues identified by ethical audit

• Questionable marketing

• “Healthier” products

Issue Analysis14

• Product proven to be harmful to the consumers

• Obligation to shareholders

• In 2006 cigarette sales fell to $2.7 billion

Health Effects15

• Illegal sales estimated to be more than 25% of total sales by 2010

• The quality of illegal cigarettes is questionable

Illicit Trade16

• In most cases, long-term addiction begins during youth

• 30% of underage (15-17yrs) and 60% of 18-year-old smokers purchase cigarettes at a corner store

Underage Smoking17

• Promoting cigarettes in contravention of Anti-Tobacco laws

Cigarette girls in clubs

• Laws prohibit sponsoring at sports or cultural events

Canadian Grand Prix

Questionable Marketing

18

• Smokeless tobacco products with fewer health risks than cigarettes

Snus

• Signifies company’s apparent dedication to harm reduction

• Not proven to help get smokers off tobacco

More likely a promotional push to get more people addicted to tobacco

“Healthier” products

19

Recommendations

• Genuine concerns for health would result in Imperial Tobacco’s efforts to completely eliminate tobacco products.

• Healthy alternative uses of tobacco Food and industrial products

Antibiotics and vaccines

• Entering nicotine gum and patches markets as a way of generating profits on sales of more ethical products.

• Improving company performance almost always comes at the expense of raising moral and ethical issues

20

Questions?21