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

ObjectiveConduct 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, and3. Reviewed Industry for Broad Inventory of Environmental

Sustainability Tactics.

Overview of US Cigarette Manufacturing

Major US Manufacturers• Altria - PMUSA• RAI –RJR Tobacco• Lorillard

 Number of Employees

Facility Size (million sqft) Manufacturing Location

Annual Capacity (billion cigarettes)

PMUSA 2300 1.6 Richmond , VA 135RAI Tobacco 3900 2.1 Tobaccoville, NC 110SFNTC (RAI) 400 0.098 Oxford, NC 2.8Lorillard 2800 0.97 Greensboro, NC 50

Other Lorillard RJR Tobacco PMUSA

8 1429

49

2011 Market Share (%)

Industry Sustainability Reporting

2009 2010 2011 2012

239301

477

Newsweek US Green Ranking

Altria

RAI

Lorillard

Comparative Environmental Impact

2006 2007 2008 2009 2010

0

50

100

150

200

250

300

TRI Facility Score

PMUSA Lorillard RAI Tobaccoville RAI Santa Fe

Comparative Environmental ImpactThousands of Pounds Released

2006200720082009201020110

10000

20000

30000

40000

PMUSA RAI Tobaccovile Lorrilard Santa Fe

2006200720082009201020110

10000

20000

30000

40000Nicotine and Salts Ammonia

Altria RAI Altria RAI Altria RAI

0

200000

400000

600000

800000

1000000

CDP Fuel Breakdown of Energy Producing Fuels Used (MWh x 1000)

Distillate fuel oil No 2 Natural gas Bituminous coal

2009

2010 2011

Comparative Environmental Impact

Comparative Environmental Impact

20092010

2011

050,000

100,000150,000200,000250,000300,000

CDP Scope 1 & 2 Emission Intensity             (Cigarettes Produced x 1000/ Emissions metric tonnes) 

Altria RAI

 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%

GRI Reported Data Non-Hazardous Waste Disposition

Comparative Environmental Impact

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

– Historical Orientation,CategoryTotal 

Possible PMUSA RAIHistorical Orientation 4 3 3Network Embeddedness (a) Supply chain 4 1 1Network Embeddedness (b) Other Stakeholders 7 5 3Endowments 5 2 1Managerial Vision 4 3 0Top management Team Skills 4 4 4Human Resources 2 1 1Total  30 19 13

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

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.

“There is no magic bullet – it’s about understanding what works best in a particular location.”

-Participant Comment in BAT CSR Report

Thank You