While some of the world’s largest companies in most sectors of industry have begun reporting on their social and environmental impacts, tobacco businesses have been conspicuous absentees from the field.

British American Tobacco has now bucked the trend. It began public environmental reporting two years ago, and became this summer the first cigarette manufacturer not only to produce an overarching corporate social and environmental report, but also to begin producing separate social reports for its operations across the world.

In the first phase of this unusual and ambitious process, it has published 12 reports focusing on its activities in Argentina, Brazil, Germany, Hong Kong, Hungary, Malaysia, Russia, South Africa, Sri Lanka, Uganda, the United States and Zimbabwe. While each of the reports dovetails to some extent with the 156-page ‘Plc’ report, which has been produced at UK headquarters, each is different, addressing the local company’s impact on society in the country concerned.

The group plans to add a further 15 from other countries each year until it is producing around 70 separate annual reports covering more than 90 per cent of the group’s business.

British American Tobacco makes no claims that it is at the forefront of social reporting, but it has certainly managed the task more thoroughly than many companies.

It has, for instance, taken the crucial step of having the data in the UK-based corporate report independently verified by an external agency, Bureau Veritas, and has based the structure of all its reports on the recommendations of the Global Reporting Initiative, an international body based in Amsterdam which specifies what combined social and environmental reports should cover. Only half of all reporters do this.

It has also closely followed the AA1000 standard on reporting and stakeholder dialogue, produced by the Institute of Social and Ethical Accountability – again putting it among a select group of reporters. Stakeholder dialogue – whereby a company seeks the views of people affected by its operations – is the foundation of all British American Tobacco’s reports.

For the Plc document, produced with help from the social reporting consultancy EQ Management, the company invited stakeholders to take part in dialogue run by two theologians – the Rt. Rev. David Jenkins, former Bishop of Durham, and the Rev. Charles Yeats, who teaches business ethics at the University of Durham. In other countries, facilitators included a television presenter in Hungary, a former High Court judge in Zimbabwe and, in Sri Lanka, six moderators chosen to ensure ethnic diversity.

Each reporting country arranged the dialogue in its own way, with some convening all stakeholders together and others splitting them into groups. But the ruling principle was that the stakeholders themselves should set the agenda and raise any issue they wished in the face-to-face discussions. What was said at these meetings formed the basis of much of the reports’ contents.

The response in many countries was encouraging, with 80 per cent of invitees taking part in Uganda, for instance. However the reaction in the UK, where only 34 out of 167 stakeholder groups accepted an invitation to talk, was disappointing for the company.

British American Tobacco thinks many groups refused to take part because they mistrusted the company’s motives and admits that as a result the dialogue ‘cannot be described as fully representative or complete’.

However, it argues that producing its first report in an open and transparent manner will encourage more stakeholders to take part in future dialogues. This, it believes, will help to break down the ‘emotional wall’ of suspicion. Next year, the company will carry out more ‘internal dialogue’ with employees and suppliers in addition to ‘external dialogue’ with people outside the group.

It says the feedback received so far has been invaluable in helping to map future social and environmental priorities. The group has also learned valuable lessons about the process of talking to stakeholders, which was one of the subjects on which participants were invited to give their views.

‘What stakeholders in the West expect differs markedly from those in developing countries,’ says Michael Prideaux, British American Tobacco’s corporate and regulatory affairs director.

Group headquarters in London co-ordinated the production of the reports, but left the operating unit in each country free to tailor the programme to local sensibilities. All the reports are written in the local language. If this is not English, they are also available in English.

‘British American Tobacco is a kind of federation of country units, and the end markets must be accountable to their local stakeholders,’ says Jose Luiz Gaiad, international social reporting manager. ‘We believe that one size doesn’t fit all, and that issues for stakeholders in Uganda are different from those in Brazil or the US. The idea has been to give due consideration to the local stakeholders at the same time as we are listening to global ones.’

The dialogues confirmed that the single biggest concern of stakeholders was the health risks associated with the company’s products.

Another ‘key learning’, says Prideaux, was ‘the need to define spheres of responsibility clearly’ when it comes to ameliorating the effects of cigarette smoking. Stakeholders in a number of countries had widely differing views on where the responsibilities of the company ended and those of government began – such as whether British American Tobacco should be involved in initiatives to motivate children not to smoke.

To get even this far has been neither cheap nor easy – the cost of producing the Plc report alone was around £500,000 ($782,000) – but British American Tobacco says it is determined to show that its decision to begin reporting is not merely a public relations exercise.

Although reaction from some quarters has been hostile – Action on Smoking and Health, the anti-smoking pressure group, said the idea of the company producing a social report was ‘laughable’ – others, including John Elkington, chairman of the SustainAbility consultancy and an influential voice in the corporate social responsibility field, have welcomed the move.

They stress, as does British American Tobacco, that social reporting is not an end in itself but a way of embedding CSR principles throughout the group, increasing corporate transparency and helping it keep abreast of the changing expectations of society.

‘The most important thing to realize is that social reporting is a long-term process,’ says Prideaux. ‘Some of the scepticism has given way to encouragement, and we are convinced this is a powerful process for change.’