TobaccoAsia/ InterTabac Podcast #55

00:00:04: This is Tobacco and Vape News & Views, brought to you by Tobacco Asia in partnership with Business Insights.

00:00:11: The new digital platform of inter-Tabac and intersupply!

00:00:16: You host this.

00:00:16: TobaccoAsia's Thomas Schmidt.

00:00:18: Welcome to a new episode.

00:00:25: Hello everybody ESG and SBTI are both abbreviations for industrial certification standards that nowadays almost must have If you want to prevail in an increasingly environment-conscious and heavily regulated world.

00:00:42: And perhaps both are of particular importance for stakeholders in the broader tobacco sector.

00:00:48: Of course, ESG is an abbreviation for environmental social and governance.

00:00:55: It's a framework used by investors and businesses To evaluate a company sustainability its ethical impact... ...and it long term risk management.

00:01:06: And that's beyond just its financial performance.

00:01:10: And SBTI stands for Science-Based Targets Initiative, a global organization... ...that enables companies and financial institutions to set rigorous verifiable greenhouse gas emission reduction targets.

00:01:26: Emphasis on Reduction.

00:01:28: I mean you really don't wanna have those global warming activists pestering you!

00:01:33: It's already enough that they clue themselves to our roads.

00:01:37: I'm having on the mic today Hugo Asinjaira, the executive director for global research and innovation at Singapore-based specialty filter company Filtrona!

00:01:48: I think neither need any closer introduction... To put it colloquially if you are involved in tobacco sector You know Filtrona And If you know Fltrona you certainly know Hugo.

00:02:02: What's more, Hugo has been a regular guest on this show over the past five or six years.

00:02:08: And well... Hugo is of course also an avid ESG and SBTI advocate!

00:02:14: He's a chunky so to speak but for good reason.

00:02:18: Beltrona has poured intense R&D & financial resources into both ESG & SBTI over the years vigorously developing and solidifying its footprints.. ...and thus impact.

00:02:33: But let's say hello to Hugo once again, he is waiting anxiously.

00:02:37: Hi Hugo!

00:02:38: Am I coming through and how have you been?

00:03:02: moving towards a more sustainable business.

00:03:05: And the SBTI is, as you already mentioned one of the tools that we utilize to ensure that we are doing everything by the book and that credibility can be measured and substantiated.

00:03:16: looking forward for next thirty minutes or so chat with you Thomas

00:03:21: And as I just mentioned, we are of course taking on the very two topics that are so close to your heart ESG and SBTI.

00:03:36: In fact you have relatively recently returned from Geneva where broader sustainability and regulatory discussions took place as part of the WHO COP-ELEVEN CTC... ...and since Denfil Trona has released both its latest sustainability white paper As well as its two thousand twenty-five sustainability report, correct?

00:04:02: Yes.

00:04:02: That's right Thomas.

00:04:04: I was recently in Geneva during the broader discussions surrounding the COP eleven.

00:04:09: Following that we assessed there wasn't an opportunity for us to release our white paper where we tried to advertise Where We put out what will be Our strategy To address several risks and challenges that we anticipate in the future, but also turning them as opportunities not only for us, but widely for industry.

00:04:36: And the sustainability report which we launched recently this year is obviously covering last year, twenty-twenty five.

00:04:45: it's already third edition But I feel still very excited to talking about.

00:04:51: As you can see, Shotona became a standalone company.

00:04:57: And this report reflects the progress that we have been making across ESG innovation and also climate action.

00:05:04: Now... You've been on the ESG train so to speak for quite few years but I believe in twenty-five marked an important stepping stone forward For Filtrona.

00:05:17: Can it please tell me briefly Why last year was such a decisive turning point in the company's sustainability journey?

00:05:26: We should.

00:05:26: So, twenty-twenty-fives marked our transition from setting ambitions to executing them at scale across business.

00:05:35: Over the past few years we built foundations and created governance structures And created an ESG committee.

00:05:43: We created reporting systems.

00:05:46: We submitted our science-based targets.

00:05:49: In twenty twenty five we focused on the operational delivery and measurable outcomes, uh...we have always put a great focus On ensuring that our claims or reporting can be as substituted And they are independently verified With strength in ESC governance through establishment of an executive ESC committee Reporting directly to the executive leadership team And we have also created a cross-functional ESG working committee to ensure that sustainability is integrated into the business planning and operational decision making.

00:06:27: For us, ESG is not only that report that will launch once a year in spite of our daily activities.

00:06:35: it's embedded in the mindset and values in the work processes of the company.

00:06:42: Importantly, sustainability is not separated from the business performance at Siltrona.

00:06:48: We also use our ESG targets to measure the performance of our business.

00:06:55: It supports resilience operational efficiency regulatory readiness and also delivers long-term customer value.

00:07:05: And let me just deep dive a little bit more on that customer value because we are doing this to support our customers.

00:07:14: If we don't have a sustainability report and targets that supports the customer's as they industry, it will be nothing but a vanity exercise.

00:07:25: And thats exactly what you want us do here.

00:07:28: We occupy A position in value chain where we need suppliers before or after we need to support the customers.

00:07:37: You've created this group of likely minded companies, stakeholders and today the sustainability targets that Siltrona talks publicly are supported also by other players in the value chain.

00:07:52: Okay so it's not just window dressing or...so you have a nice certificate.

00:07:57: frame it on your wall.

00:07:59: there actually benefits for all stakeholders?

00:08:03: Absolutely we can talk about activities to process improvements of greenhouse gas emissions in terms of energy savings, reduction use of water.

00:08:16: The activities that we support in the communities where are present is a strictly governed company with everybody who receives training on basic compliance topics and ensuring people get proper training.

00:08:39: The conversations that we have with stakeholders, namely suppliers or customers show us that we are doing the right track.

00:08:48: And definitely it's not about window dressing.

00:08:51: is something that people leave though company believes and It's definitely not something I just Robert our CEO or Hugo talking About.

00:09:00: i'm absolutely convinced That within Sultrana you can Have a very similar conversation With any employee and they'll be able to convey how legit, how solid are our values around this topic?

00:09:14: It's still very complex to put everything into action.

00:09:18: Can you tell me a little bit about the complexity implementation actually is?

00:09:24: Sustainability transformation isn't something that happens overnight.

00:09:28: What we're talking today... She has an outcome of three years of implementation on all these language, all these parameters.

00:09:37: All this processes and methods when you think about a global manufacturing company like Siltrona where we have plants in Americas In Europe Middle East India China Southeast Asia.

00:09:52: it becomes even more complicated because we operate across nine manufacturing sites multiple regions And highly regulated markets.

00:10:02: So the implementation required alignment across operations, functions like procurement supply chain quality R&D of course compliance and also an alignment with our customers.

00:10:19: We actually don't find ourselves boiling in ocean when we invest or put energy on things that doesn't bring real value for our customer because once again Going to him is using this word a lot today.

00:10:34: We want to do these because it serves our customers and it serves the industry.

00:10:40: What one thing that I also like to add, even though This is very complex And doesn't happen overnight In reality we only had To create One extra headcount.

00:10:52: We have one new rule Created ESG manager That in reality consolidates All activities across the sites.

00:11:01: That puts everyone working together on that milestone which is the sustainability report.

00:11:08: But does it in a way, doesn't become tiring or disruptive process?

00:11:15: I would like to highlight also for other companies out there assessing if they should not invest in proper sustainability targets and reporting don't stop doing it or don't consider basically calling your headcounts and things like that because there is a whole network around the industry today of third-party vendors, suppliers and consultants who can support you.

00:11:40: Very good point Hugo mentioning those nine manufacturing facilities across the world.

00:11:45: in such diverse and different regulatory markets You have to balance and juggle them somehow consistently implement your ESG goals,

00:11:58: right?

00:11:59: So when we look at you as a two thousand twenty-five sustainability report what facts and figures can you share with us.

00:12:10: As far as Filtrona's efforts in the ESG arena are concerned

00:12:16: there is plenty of data on our Sustainability Report And I do actually invite everyone interested to go to our website.

00:12:24: under shiltrona.com and the sustainability, there's a sustainability section on that report can be shown there.

00:12:32: well many of our biggest environmental challenges especially scope.

00:12:36: three missions are shared across the value chain and depend upon the collaboration with suppliers and customers.

00:12:43: so even though we aren't in very specific mission to value chain We rely on our suppliers to give us the data rely on us, and we provide customer service by collecting the data from our suppliers in a whole envelope and holistic set of data.

00:13:03: Our approach is to stay pragmatic science-based.

00:13:06: We ensure that if you continue delivering quality then it's reliable And we continued to be innovative when launching new products into market.

00:13:16: In terms of figures, the Indirect-Editifieds field owners achieved a fifty one percent absolute reduction in Scope One and Two greenhouse gas emissions when compared to our baseline.

00:13:27: And now our baseline is set on twenty twenty two.

00:13:32: We have also been able to maintain zero waste to landfill across all operational sites.

00:13:39: we have increased significantly to thirty seven percent the total electricity consumption of renewable sources, which is also quite commendable I believe.

00:13:54: And today approximately twenty-four percent of our product portfolio consists of sustainable or plastic free solutions.

00:14:03: we have also strengthened at a responsible sourcing by now having eighty-eight percent of our wood based materials sourced from certified or controlled sources, such as FSC and BPFC.

00:14:24: On the social sides one hundred percent of all employees are covered by ISO.

00:14:29: forty-one thousand zero one which certifies occupational health and safety systems And ninety-five percent of our employees have completed ethics and compliance training.

00:14:43: Another example how sustainable the journey is, last year I reported one hundred forty pages... ...and due to a request from several stakeholders we did have to print it.

00:14:56: This year will reduce it to seventy two pages.

00:14:59: We also printed out but were little bit more cautious.

00:15:04: We are obviously using a certified source of paper, using soil-based deans and so on.

00:15:10: So even in the printouts... ...of our reports were being extremely sustainable

00:15:16: And in a few years you will have achieved all your goals?

00:15:19: Then we only need single page sustainability report with huge leisering.

00:15:24: All done!

00:15:25: Exclamation mark.

00:15:29: I appreciate the positive spirit, Thomas.

00:15:32: But being an irony person... ...I believe that we need always to be striving for continuous improvement.

00:15:38: Now let's talk a little bit about scope one and scope two and mission reductions.

00:15:44: Can you refresh my mind a little?

00:15:48: Yes of course!

00:15:49: That is probably question that lingers around everybody because it's an example of how... It is very easy to talk, sometimes criticize some of the figures.

00:15:59: Because we are not aware about definition of parameters but in reality its' very simple.

00:16:06: Scope one are direct emissions from sources that we owe or control such as fuel used in boilers and operational equipment.

00:16:17: so emissions are directly under filtronous controls.

00:16:22: scope to emissions are indirect emissions from the electricity and energy that we purchase or consume.

00:16:30: And, That's why it is so important to continue looking for renewable sources For the energy that you consume There obviously industrially speaking there always trying to produce your energy.

00:16:42: We do have four sites where we have solar panels.

00:16:45: You sell incremental energy through national grid lines But that doesn't happen everywhere.

00:16:53: I can mention Paraguay because it's a very obvious example where the electricity that we buy is produced by the tapu dam in the border between Brazil and Paraguai, so in that case in Paraguayan you achieve one hundred percent renewable source energy.

00:17:10: The definition of scope-one on scope two they are very important Because together there indicators off how efficiently and responsible corporate dollar business.

00:17:22: I'd have a question here, do you understand it correctly that there is not one single certification body?

00:17:30: That issues the definite ESG certification but they are various organizations that may accord certifications in line with the broader ESG picture.

00:17:43: or am i mistaken your other certifications that you think more important to have than perhaps others?

00:17:51: Well, Thomas I understand why some people shield that way because the ESC landscape can be complex and sometimes fragmented.

00:18:00: But credible standards on external assurance are important Because they create accountability, consistency and transparency.

00:18:09: We focus on frameworks And certifications That are globally recognized and the operationally meaningful, not just symbolic.

00:18:19: An example of Sfiltronus Sustainability Report is externally assured by SGS under AA-one thousand standards.

00:18:31: our emission targets are validated by SBICTI And we were awarded in twenty twenty five an EcoVidis Gold status placing as above the top five companies globally assessed.

00:18:47: For us, these frameworks are not about marketing.

00:18:51: they help to drive discipline governance and continuous improvement.

00:18:57: so you're saying ecovirus is a certification that's advisable to achieve or to attain correct?

00:19:08: I am.

00:19:08: but like in some other industries the framework There are other frameworks similar to EcoVadis, CDP being one for example.

00:19:21: But because we have to report the improvements of our customers We end up by receiving or looking into different frameworks I would say top down.

00:19:33: So it's our customers that tell us which framework they're working and then naturally We show that there is a streamlined communication.

00:19:46: For example, in terms of reporting we can submit our KPIs on some databases and then our customers do have immediate access to the data.

00:19:58: So this is a streamline benefit.

00:20:02: And I believe it's another examples how tobacco industry is pioneering in these fields is the fact that the value chain is collaborating very closely together.

00:20:14: And I believe maybe in three, four or five years we'll end up by having a more clear framework where will have two of three top frameworks and then may be could have some kind of segmentation with premium tiers undervalued tiers but reality today.

00:20:37: it requires time to understand the complexity of those targets, and also it requires external support.

00:20:48: I think that best recommendation i can give anyone out there looking into sustainability in this industry is get solid reliable ESG consultants To support setup for these methods.

00:21:07: Yet there are always some skeptics who say, well all these certifications they're quite unnecessary if your company already works under a moral ethical framework.

00:21:22: Why do you need?

00:21:22: All the certifications?

00:21:24: aren't They anything else but money-making machines for whoever is behind them?

00:21:30: I mean nowadays You find that certification for everything.

00:21:34: isn't that getting it A little bit out of hand, what's your take on it?

00:21:37: Is is really necessary to obtain all these certifications... ...to feel better.

00:21:42: To feel less guilty as a company?

00:21:46: Yes!

00:21:47: You are obviously right and there will always be critiques And you know very well that tobacco industry under strict scrutiny.

00:21:56: I see this as being normal.

00:21:58: about twenty years ago when i started doing innovation in the Tobacco Industry I had to assess a platform to capture ideas.

00:22:08: I did the process platforms and at that time, remember this was in two thousand ten?

00:22:15: I've found about one hundred fifty different platforms.

00:22:18: today you do the same exercise is probably gonna find six twelve.

00:22:23: The market actually did the work And i'm absolutely convinced That's something will happen Today.

00:22:28: yes it might seem little bit.

00:22:31: This control this govern fragmented But the market will do what the market always does.

00:22:37: and the market to assess, we'll select.

00:22:40: And you will approve.

00:22:42: The ones that bring value are reliable, credible, ethical, unsustainable.

00:22:50: For me it's also very important That companies that I'm mentioning Also need to be regulated.

00:22:57: The regulators just needs to do their part

00:23:00: Right.

00:23:01: And now that Filtrona has sprung into full gear so to speak, what's up for you guys in twenty-six and beyond of course?

00:23:12: Well our focus continues to be on execution and scaling the impact across business.

00:23:19: We are continuing to implement climate transition plan through renewable energy expansion and stronger supplier engagement.

00:23:27: regarding scope three missions We are also accelerating the lower impact on plastic facial thrashing solutions within our eco range to support customer and regulatory needs.

00:23:39: And they EU single-use plastic directives, an extended producer responsibility framework.

00:23:48: At the same time we continue strengthening the ESG governance The operational integration and innovation across the business.

00:23:56: Chotrona is known because of almost one hundred years of innovation.

00:24:02: We have six-hundred patents covering our portfolio, we continue looking into opportunities to innovate and create, And actually also today look very seriously in new categories!

00:24:18: We've seen the extremely interesting growths reduced with products... Thomas I am sure that Chitron will become also very important player in that category sooner than later.

00:24:33: Okay, it seems as if things are really taking shape nicely here and all of this is going to be implemented or already?

00:24:43: isn't the process being implemented across all your nine manufacturing facilities correct?

00:24:50: Absolutely!

00:24:50: And we might even have to implement at a cross more then nine manufacturing but that we will communicate in due time.

00:24:59: Second ability is embedded across a lot of global operations, not just isolated sites where you make a lot effort to ensure the site communicates and shares best practices.

00:25:12: so some initiatives like zero waste land shield under the eyes of Forty-Five Thousand Zero One certified safety systems are already implemented across all facilities And the programs, including renewable energy and sustainable material transitions are progressing based on local operational and regulatory requirements.

00:25:35: The key priority is ensuring consistent execution agility and long-term value creation across all markets.

00:25:42: I would add it's also to continue supporting our customers in their journey to transformation deliver quality

00:25:52: speed

00:25:54: An innovation.

00:25:55: Somebody has got to take the lead and apparently it's Filtrona, so do you also hope that other companies whether they are from your particular sector or not of following that lead?

00:26:10: Yes!

00:26:10: That is correct.

00:26:11: since the beginning Filtrona realized because our very specific position in a value chain we would need to collaborate with suppliers across the value chain and also with our customers.

00:26:27: So what we are achieving is in reality, thanks to the collaboration that we have from other players on them We've been able for years together many of the players around us.

00:26:43: And today if you think about plastic-free shelters under our eco range not only Siltrona is ready.

00:26:54: We have the products, we've sent thousands of samples on those filters to many customers and potential customers.

00:27:03: But also gathered for example the non-woven paper suppliers, OEMs, adhesive supplier.

00:27:10: so there's a whole supply chain ready to start supplying those plastic free filters.

00:27:19: And same thing goes with reduce cruise categories and some of the new propositions for the heated tobacco products, so heat not burn filters that we have developed under our warriors or for the range.

00:27:34: So basically whatever you are doing it almost automatically filters down to your own raw material suppliers.

00:27:41: in the end right?

00:27:43: Absolutely!

00:27:44: Since the beginning we've decided that engage with them directly as soon as possible bring more value to ourselves, to themselves and also our customers.

00:27:56: It's a very complex value chain.

00:27:59: everybody needs work together to ensure that we have capacity of the capabilities And will so have off course The desire To transform this industry altogether.

00:28:10: We found several partners with whom we share That strategic appetite to change during the industry.

00:28:18: Okay Hugo That was a very interesting talk.

00:28:22: And as you mentioned earlier, that sustainability report for two thousand twenty five is actually available for free downloading.

00:28:31: All someone interested in it needs to do is go to your website.

00:28:38: Let me see what?

00:28:39: Is again philtrona dot com slash E S G?

00:28:45: let me repeat That's philtrona.com slash ESG, is that correct?

00:28:53: Yes!

00:28:54: That's it Thomas.

00:28:55: Great.

00:28:56: All right Hugo I think we are at the end for now time for me to say goodbye unless you have a few closing remarks.

00:29:05: yes Thomas as always was very enjoyable to talk to you.

00:29:09: just to finalize Sustainability is not a destination for the Troner.

00:29:16: It's a continuous transition that requires collaboration, accountability innovation teamwork and so on.

00:29:26: We believe that responsible business performance and commercial performance must go hand in hands And we remain committed to supporting our customers with practical science-based and scalable solutions And we continue to strengthen our own operational environmental performance.

00:29:44: Great, and that goes across all industries.

00:29:47: of course it's not only restricted to the tobacco or tobacco supplier industry.

00:29:53: Of course there are many other industries which can take inspiration from.

00:29:58: I also know they have other industries taking inspiration out of work done by the whole value chain in the tobacco industry.

00:30:06: That is a wrap as you say.

00:30:09: I look forward to seeing you at InterTabac in September.

00:30:16: I'll probably drop-in for a coffee as always, which is my sustainability standard!

00:30:23: I bid you farewell for now Hugo thank you for your time and i hope to be talking to you soon.

00:30:31: Thank You once again Thomas.

00:30:32: yes...you will see us at Intertabac In September.

00:30:36: And thank you very much once again for entrusting the sustainability credentials of Ultrona.

00:30:42: I look forward to talking with you soon, again!

00:30:50: This was Tobacco and Rape News & Views a podcast produced by Tobacco Asia for Business Insights.

00:30:58: Thank You For Listening In.

00:31:00: Please Tune in Again Next Time.

00:31:02: Your Host Was Thomas Schmidt.

00:31:04: If You Didn't Know Now

00:31:06: You

00:31:06: Do.