Statement on Our Efforts to Support Human Rights

Reynolds American Inc. and its operating companies believe that universally recognized human rights should be respected. This principle and its day-to-day practice is one of the foundations of how we conduct our businesses, and Reynolds American Inc. and its operating companies will continue to respond to these issues in appropriate ways.

The starting point for our efforts

Reynolds American and its operating companies use the United Nations Universal Declaration of Human Rights as a core reference point for our efforts. Our understanding of the role we play, along with other companies, governments and civil society in supporting human rights is also based on the U.N. Global Compact's Guiding Principles, which declare that businesses should:

  • “Support and respect the protection of internationally proclaimed human rights within their sphere of influence; and
  • Make sure they are not complicit in human rights abuses.”

Addressing human rights within our sphere of influence

Reynolds American and its major operating companies are U.S. companies that conduct business almost exclusively in the United States and Puerto Rico. More than 99 percent of total tobacco sales revenue, excluding contract manufacturing for other tobacco companies, is generated from the U.S. market; almost all employees are American citizens based in the United States as are all the significant tobacco operations facilities.

The United States has an extensive foundation of federal, state and local laws and regulations that support human rights. In addition, these laws are enforced by federal and state regulatory agencies and through direct access to the courts by individuals. Reynolds American and its operating companies strive to comply with all laws and regulations; we do not believe it is within our sphere of influence to assume the regulatory and enforcement role of the federal, state and local governments.

Reynolds American and its operating companies further support human rights considerations in two primary ways:

  • All employees are required to adhere to the Reynolds American Code of Conduct and certify such on a yearly basis. The Code of Conduct includes clear expectations relating to employment practices, relationships with suppliers and customers, adherence to government regulations, and other aspects of how we conduct our businesses that are supportive of fundamental human rights.
  • Each operating company conducts Corporate Social Responsibility efforts related to its supply chain and procurement activities intended to reinforce suppliers' respect for human rights.

Both the Code of Conduct and Reynolds American's annual CSR reports are available online for review at www.reynoldsamerican.com

Adopted on February 2, 2010
Reaffirmed on February 16, 2011

Human Rights Principles and Our Operating Companies’ Supplier Programs

Reynolds American’s operating companies continue to incorporate human rights principles and considerations into supplier programs to promote continuous improvement in suppliers' performance:

  • Beginning with the 2011 growing season, all U.S. contract tobacco growers will be required to participate in a comprehensive Good Agricultural Practices (GAP) training program. R.J. Reynolds Tobacco Company has worked with major public land grant universities to develop this training program conducted by the Cooperative Extension Services for tobacco-growing states. Each grower must certify that he/she has received this training in 2011 before any tobacco will be purchased from them by the operating companies this year. The program includes training on the following topics:
    1. State and federal employment regulations on hiring practices, wages and hours, workers’ compensation insurance and child labor provisions.
    2. Key seasonal/migrant labor regulations on joint employment, use of farm labor contractors, adequate housing for migrant and seasonal workers, and provisions of the Migrant and Seasonal Agricultural Worker Protection Act.
    3. Agricultural safety regulations and practices covering the safe use of pesticides, farm machinery and equipment, and the prevention of heat stroke and green tobacco sickness (GTS).
    4. Key record-keeping requirements and best practices related to the application of pesticides, farm safety logs and agronomic practices.

    R.J. Reynolds, pursuant to its service agreement with each operating company, has worked directly with major public universities to develop the training program. R.J. Reynolds will also coordinate the provision of this training to contract tobacco growers.

  • R.J. Reynolds has partnered with the North Carolina Department of Labor, referred to as NCDOL, and North Carolina State University over the past several years to produce training videos that have been distributed to its contract growers and are available to all tobacco growers in North Carolina. The videos focus on farm safety practices, safe use of pesticides, heat stress prevention, tobacco baler safety, hazard communications, and prevention of green tobacco sickness. R.J. Reynolds extended this partnership with NCDOL in 2010 by sponsoring a pilot program of face-to-face, on-farm NCDOL training sessions for contract growers and their workers. R.J. Reynolds and NCDOL plan to expand these on-site farm safety training sessions in 2011 to reach additional contract growers and their workers in North Carolina.
  • R.J. Reynolds continues to provide support for NCDOL’s Gold Star Grower program. This voluntary program involves NCDOL inspections of farm-worker housing and worker safety conditions and allows growers to be certified as a Gold Star grower.
  • R.J. Reynolds, American Snuff Company and Santa Fe Natural Tobacco Company also procure tobacco leaf from offshore growing regions through the use of tobacco dealers who purchase and process tobacco leaf from local farmers. R.J. Reynolds contracts with LeafTc Ltd., an independent company also utilized by most of the major multinational tobacco companies, to evaluate tobacco dealers on a broad range of leaf-procurement requirements, which includes the impact these suppliers’ activities have on the environment and safety conditions on local farms.
  • Each major RAI operating company will continue to communicate their expectations of suppliers to respect fundamental human rights through supplier guides, during site visits and in ongoing activities with suppliers. This expectation is further reinforced in all procurement contracts, which require suppliers to adhere to all applicable federal, state and local laws and regulations.
  • R.J. Reynolds utilizes the Business Enabler Survey Tool (BEST) to evaluate many suppliers of raw materials other than leaf tobacco. The survey tool evaluates suppliers on a broad range of procurement requirements through onsite visits and written surveys, and includes verifying that the supplier has a commitment to ensure safe workplace conditions and address other relevant human rights issues. R.J. Reynolds, pursuant to its service agreement with each operating company, will extend the use of this survey to key suppliers utilized by American Snuff Co. and SFNTC during 2011.

RAI and its operating companies continue to identify and act on appropriate opportunities to encourage improved human rights conditions in supply chains. R.J. Reynolds also continues to seek feedback and insight into contract growers’ and their workers’ perspectives through on-farm surveys. RAI and its operating companies continue to believe that the primary responsibility for ensuring human rights rests with suppliers, governments and regulators in the appropriate countries and that it is not appropriate for RAI and its operating companies to assume the regulatory and enforcement role of these individual companies and governments.

Updated in March 2011