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Analysis of Major Environmental Impacts and Strategies Within the U.S. Cigarette Manufacturing Industry TIMOTHY R. BELITZ ADVISOR: DR. DEBORAH RIGLING-GALLAGHER, NICHOLAS SCHOOL OF THE ENVIRONMENT
Objective Conduct a comprehensive review of environmental performance, sustainability strategies, and practices of US cigarette manufacturers to enable continual improvement.
Methods Used publically available literature on US cigarette manufacturers Three facets of analysis: 1. Comparative Review Environmental Performance, 2. Examined Environmental Sustainability Strategies, and 3. Reviewed Industry for Broad Inventory of Environmental Sustainability Tactics.
Overview of US Cigarette Manufacturing Major US Manufacturers Altria - PMUSA RAI RJR Tobacco Lorillard 2011 Market Share (%) 49 29 14 8 Other Lorillard RJR Tobacco PMUSA Number of Employees 2300 3900 400 2800 Facility Size (million sqft) 1.6 2.1 0.098 0.97 Annual Capacity (billion cigarettes) 135 110 2.8 50 Manufacturing Location Richmond , VA Tobaccoville, NC Oxford, NC Greensboro, NC PMUSA RAI Tobacco SFNTC (RAI) Lorillard
Industry Sustainability Reporting Newsweek US Green Ranking 239 301 Altria RAI Lorillard 477 2009 2010 2011 2012
Comparative Environmental Impact TRI Facility Score 300 200 100 0 2006 2007 2008 2009 2010 PMUSA Lorillard RAI Tobaccoville RAI Santa Fe
Comparative Environmental Impact Thousands of Pounds Released 40 40 Nicotine and Salts Ammonia 30 30 20 20 10 10 0 0 PMUSA RAI Tobaccovile Lorrilard Santa Fe
Comparative Environmental Impact CDP Fuel Breakdown of Energy Producing Fuels Used (MWh x 1000) 1000 800 600 400 200 0 AltriaRAIAltriaRAI 2009 Altria RAI 2010 2011 Distillate fuel oil No 2 Natural gas Bituminous coal
Comparative Environmental Impact CDP Scope 1 & 2 Emission Intensity (Cigarettes Produced x 1000/ Emissions metric tonnes) 300 200 100 0 2009 2010 2011 Altria RAI
Comparative Environmental Impact GRI Reported Data Non-Hazardous Waste Disposition Waste Disposed at Landfills (millions of Pounds) Total Waste (millions of Pounds) Percent Waste Recycled 2011 2010 2009 2011 2010 2009 2011 2010 2009 RAI 37 43 39 68 65 100 46% 34% 60% Altria 26 38 28 292 125 133 91% 70% 79%
Analysis of Environmental Strategy Basis of Analysis Measuring Environmental Strategy: Construct Development, Reliability, and Validity -2011 Validated content analysis method Designed to use publically available data Organized into categories that demonstrate a firm s proactive environmental strategy
Analysis of Environmental Strategy Total Possible PMUSA 4 4 7 5 4 4 2 30 Historical Orientation, Category Historical Orientation RAI 3 1 3 1 0 4 1 13 3 1 5 2 3 4 1 Network Embeddedness (a) Supply chain Network Embeddedness (b) Other Stakeholders Endowments Managerial Vision Top management Team Skills Human Resources Total 19
Industry Environmental Sustainability Tactics A broad collection of US/international cigarette manufacturers environmental sustainability tactics was developed while conducting this project. Over 140 examples of practices that are being used in 9 environmental sustainability practice areas.
Recommendations There is no magic bullet it s about understanding what works best in a particular location. -Participant Comment in BAT CSR Report 1. Utilize their environmental sustainability information to its fullest. Continue to improve quality and validation 2. Improve Network Embeddedness of the supply chain, government relationships, and volunteer programs. 3. Investigate niche market for organic, additive free, green cigarettes. 4. Investigate alternatives to fossil fuel power generation.
