"Our goals are to grow our brands and the value of our business, to improve productivity and to embed the principles of corporate social responsibility group wide"

This is a direct quote from our Group Chief Executive Paul Adams and reflects the importance we attach to our CSR agenda. Today perhaps more than ever before, society expects companies to use their economic strength for broader social goals, and to demonstrate environmental responsibility, support for communities, and high standards of ethical behaviour, greater transparency and accountability.

Like many companies, [we at] British American Tobacco recognize that by running our business well, we help to drive the engine of economic development, which in turn helps to achieve social and environmental development. Accepting corporate social and environmental responsibilities, and contributing in the ways that a business can, make good business sense. Business cannot deliver every solution, companies can rarely act alone and effective partnerships are vital.

Tobacco can attract controversy, our products pose risks to health and some suggest a tobacco company cannot be socially responsible. We disagree, in fact we believe in managing such products it is all the more important that we do responsibly.

British American Tobacco Group has a long history of responsible behaviour. Our first independently verified Group Social Report covered 2001-2002. This was the first comprehensive and cohesive review that incorporated broad stakeholder contributions. An extensive set of Business Principles have been developed and form the bass of how we expect our business to be run worldwide. A fourth Social report, published in 2005, signals British American Tobacco's continuing commitment to embedding the principles of CSR throughout the British American Tobacco Group.

These efforts are becoming independently recognized. British American Tobacco is included in the Dow Jones Sustainability Index; the UN has described our reporting on community and human rights issues as "world class" and we were recently placed in the top 40 most responsible companies within the UK.

Corporate Social Responsibility is also integrated into British American Tobacco Ukraine's business strategy. We strive to achieve our business goals in a responsible way, taking into account the reasonable expectations of all our stakeholders. In fact, in a developing commercial environment like Ukraine, where we have inconsistency in the law, regulation and enforcement it is even more important to operate responsibly. Our Business Principles form the foundation for everyday life in the Company, are becoming embedded in behaviour and have been widely circulated to external stakeholders. The Business Principles cover the concepts of:

Mutual Benefit - that we build relationships with stakeholders, create an inspiring work environment, add value to the community and enable business partners to succeed;

Responsible Product Stewardship - that we develop, manufacture and market our products in a responsible manner;

Good Corporate Governance - which we exhibit high standards of behaviour and integrity in everything we do.

Within each of these concepts we have a number of core beliefs and a description of what we will directly do and where we can support other institutions and government.

 An excellent example of partnership is the British American Tobacco Ukraine and Priluky city council Memorandum of Cooperation. The Memorandum is a long term partnership for the strategic economic development of Priluky, promoting new investment opportunities in the city whilst improving procedures and regulations to improve the business climate. This is a combined initiative with ERUM and USAID.

The concept of Corporate Social Responsibility is a comprehensive approach to running a business. It is relatively new to Ukraine and often understood only as philanthropy or sponsorship.

Corporate Social Responsibility is "available" for all business - multinational, national, medium and small enterprises. Some may say that the current situation in Ukraine doesn't permit responsible behaviour. This is wrong, we can all respect our employees, pay them legal salaries to ensure proper social allowances, be honest in relationships towards business partners' consumers and the state.

British American tobaccos Ukraine will independently and through the Chamber support initiatives to promote a fuller understanding of CSR. We believe CSR can contribute positively to the development of a sustainable and growing business environment in Ukraine.

John Richardson, General Director

Commerce

July / August 2006

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