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Supply Chain Management in the Tobacco Industry

Research
Last Update 06/15/21

SASB staff evaluated whether supply chain management related issues are likely to have material impacts on the financial condition or operating performance of companies in the tobacco industry.

Sector

Food & Beverage

Issues

Supply Chain

Project Status

Completed

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  • 5

Project Outcome

SASB staff conducted research and consultations between February 2020 and May 2021.  Research and consultation findings indicated that while sustainability issues related to supply chain management are likely to present material financial implications, investor interest in the issue varies widely and there is uncertainty about the market needs that SASB could serve through standard setting.

Staff plans to consider how learnings from the project may be applied to potential projects around the environmental and social issues in the agricultural supply chain. While the Board expressed interest in the staff pursuing a broader supply chain management project, no timeline or next steps were discussed, based on the acknowledgement that various other projects are higher priority at present.


Project Overview

Project Objective

SASB staff is gathering and evaluating evidence of whether supply chain management related issues are likely to have material impacts on the financial condition or operating performance of companies in the tobacco industry.

Project Background

Tobacco cultivation results in environmental and social externalities. Tobacco manufacturers monitor and engage with suppliers on these issues, and investors have indicated interest in disclosures on tobacco supply chain management. The Tobacco Industry Standard does not currently include any topics or metrics on supply chain management and material sourcing.

This topic has been previously considered by the Standards Board, and was decided to not be added to the Tobacco Industry Standard due to lack of evidence at the time of strong consensus that the disclosure topic is reasonably likely to constitute financially material information for most companies in the industry. Subsequent market feedback received during consultations and via public comments from investors and companies have encouraged SASB to re-evaluate the decision.


Project Status

  • Phase 1 - Initial Research
  • Phase 2 - Stakeholder Consultation
  • Phase 3 - Post-Consultation Analysis
  • Phase 4 - Ongoing Research
  • Phase 5 - Completed

Current Status

The project concluded in May 2021.

Next Steps

Staff is evaluating how learnings from the project may be applied to potential projects around the environmental and social issues in the agricultural supply chain.


Published Documents & Supplemental Materials

Published Documents

There are no published documents or drafts at this time.

Supplemental Materials


Board Materials & Decisions

Board Meeting Outcomes

May 2021

  • Staff presented key findings from the Supply Chain Management in the Tobacco Industry research project. Research and consultation findings indicated that while sustainability issues related to supply chain management are likely to present material financial implications, investor interest in the issue varies widely and there is uncertainty about the market needs that SASB could serve through standard setting.
  • The Board supported the staff view to conclude the research project without initiating standard setting, while applying the findings of the research project to a supply chain management project that is broader than the Tobacco industry in the future. While the Board expressed interest in the staff pursuing a broader supply chain management project, no timeline or next steps were discussed, based on the acknowledgement that various other projects are higher priority at present.

February 2020

  • Staff proposed to the board a new standard-setting proposal on evaluating supply chain management as a new topic within the Tobacco Industry Standard.
  • After discussion with staff and evaluation of historical market input and staff’s research evidence, the board decided that the project is more appropriate as a Research Project at this stage for staff to further evaluate evidence of financial materiality of the topic.

Board Materials

For a full list of past and upcoming Standards Board meetings, as well as associated materials, please visit our Board Meetings Calendar & Archive.


The staff has prepared this summary for informational purposes only. Any Standards Board decisions are tentative and do not change current accounting. Official positions of SASB are determined only after extensive due process and deliberations.