Key Highlights:
- CTIHK’s MSCI ESG rating was upgraded from BB to BBB, and its S&P CSA score improved from 31 to 36, driven by comprehensive advancements in environmental, social, and governance domains.
- Strong labor practices, full-spectrum GHG emissions tracking (Scope 1, 2, and 3), participation in the Sustainable Tobacco Program (STP), and increased board independence were identified as key factors.
- ESG has been integrated into CTIHK’s long-term strategy, with plans to pursue even higher ratings.
- Scope 3 GHG emissions data management remains a core challenge, addressed through enhanced digital platforms and ESG performance evaluation systems.
- CTIHK is actively aligning with tightening global ESG regulations, including the Hong Kong Stock Exchange (SEHK)’s new climate disclosure requirements.
2Firsts, September 16, 2025 – The 2025 InterTabac International Tobacco Exhibition is around the corner. At last year’s edition, China Tobacco International (HK) [CTIHK] showcased over 100 Chinese tobacco products, becoming a major focal point. Ahead of this year’s event, 2Firsts conducted a written inquiry into CTIHK’s upgraded ESG ratings and scores, its strategies in environmental and governance performance, and its approach to supply chain management.
As global markets and investors place increasing emphasis on corporate sustainability, ESG has become a crucial benchmark for evaluating governance standards and future potential in the international tobacco industry. Balancing business expansion with environmental and social responsibility has emerged as a central competitive issue across the sector.
CTIHK provided a structured response to 2Firsts, outlining its ESG strategies, data management practices, and long-term vision—underscoring that sustainable development is now an integral part of the company’s growth roadmap.
1. Key Drivers of ESG Rating Upgrade
CTIHK stated that its MSCI ESG rating upgrade in July 2025 and its S&P CSA score improvement in August were largely attributable to continued progress in environmental protection, social responsibility, and corporate governance—especially in Scope 1–3 GHG emissions tracking, labor practices, and ESG policy development. Executive-level commitment was also cited as a critical success factor.
On the environmental front, CTIHK optimized its GHG emissions tracking mechanisms across all scopes and launched initiatives such as the “Green Commitment Initiatives” and “Green Pulsation Initiatives,” achieving phased outcomes. Socially, it advanced its “Social Responsibility Programs,” including the CBT Conecta Program: Support for Employees – EHS, and intensified community support efforts. Governance-wise, the company optimized its “Integrity and Compliance Regulations,” introduced a “Human Rights Policy” and “Climate Management Measures,” and continued enhancing the ESG policy framework, alongside improving board diversity and independence.
2. ESG Embedded in Long-term Strategy
CTIHK emphasized that ESG is a central component of its long-term development strategy. The company takes material ESG issues within its operations seriously and plans to continue increasing ESG resource allocation, expand data coverage across the value chain, encourage upstream and downstream partners to join the STP, refine its risk management systems, and pursue further alignment with international standards in pursuit of higher ratings.
3. Environmental Performance and Green Practices
Carbon Reduction Targets and Progress
CTIHK developed comprehensive environmental targets and action plans in 2023, addressing GHG emissions, green logistics, energy efficiency, and waste management. The company has expanded Scope 3 GHG data tracking to include “Purchased Goods and Services” and is considering setting additional quantitative emission reduction targets.
Green Production, Energy Efficiency, and Raw Materials Procurement
CTIHK promotes sustainable farming practices, with nearly 80% of contracted growers adopting no-tillage or reduced-tillage methods and crop rotation to enhance soil structure. Energy-saving measures include route optimization, energy-efficient office equipment, and automated shutdown systems. In Brazil, technicians use the Growers Management System (GMS) to enhance traceability of tobacco leaf sourcing. In 2024, electricity use fell 15% year-on-year, and hazardous waste generation intensity decreased by 13%.
4. Social Responsibility and Supply Chain Management
Product Compliance and Social Responsibility Balance
Product safety and regulatory compliance are core to CTIHK’s social responsibility framework. All tobacco products comply with relevant laws and hold necessary licenses. Marketing materials are factual, transparent, and include mandated risk warnings.
Supply Chain Oversight and Labor Rights
CTIHK promotes supply chain compliance through stringent supplier selection, participation in STP, and Scope 3 GHG data collection. The company has implemented a comprehensive “Human Rights Policy” and employee handbook to safeguard labor rights. It strictly prohibits human trafficking, forced labor, and child labor, with regular monitoring of Brazilian farmers through GMS.
Community Support Initiatives
CTIHK runs social programs centered on community engagement and collaborates with NGOs to conduct various activities, including community visits in Hong Kong, coastal cleanups, book donations to Brazilian schools, and flood relief support.
5. Governance Structure and Transparency Enhancements
Board Diversity and Independence
CTIHK has improved board diversity by appointing a female lawyer and a tobacco-sector INED. Future plans include expanding gender representation on the nomination committee, appointing a lead INED, and enriching the board skills matrix in line with business needs.
Disclosure and Compliance
The company has established a Connected Transaction Control Committee and hired an independent financial advisor to oversee ongoing transactions. It plans to further enhance transparency on dividend policies and shareholder communication in line with the latest SEHK Listing Rules.
Adoption of Global Disclosure Standards
CTIHK’s ESG reports follow SEHK’s ESG Reporting Guide. Its Brazilian subsidiary CBT adheres to the GRI (Global Reporting Initiative) framework for sustainability reporting.
6. ESG Impacts and Future Challenges
ESG Impact on Valuation and Market Access
CTIHK believes robust ESG performance enhances valuation, investor appeal, and compliance with ESG standards required by global trade partners. With ESG regulations tightening—especially within the tobacco supply chain—CTIHK sees this as both a challenge and an opportunity. Enhanced ESG practices are expected to yield dual benefits across capital markets and operational development.
One of The Key Challenge: Scope 3 GHG Emissions Data Management
CTIHK identified Scope 3 GHG data as a major challenge due to its broad value chain, scattered partners, and resource disparity. To address this, CTIHK is conducting one-on-one interviews, improving digital ESG platforms, and integrating ESG indicators into KPI systems to annually review and enhance supply chain sustainability performance.
Preparing for Regulatory Shifts
To adapt to global ESG policy changes—including SEHK’s “New Climate Requirements”—CTIHK is proactively:
- Publishing relevant climate data in advance within its 2024 ESG Report, with enhanced breadth and accuracy planned for 2025.
- Conducting annual reviews of ESG governance policies through dedicated task forces.
- Deploying a unified digital ESG system to standardize data collection and disclosure.
Glossary Note:
- ESG (Environmental, Social and Governance): A global framework for evaluating corporate sustainability.
- GMS (Growers Management System): A tool to track farming operations, covering land, crop, labor, and more for each contracted grower.
- GRI (Global Reporting Initiative): Provides global standards for sustainability disclosures.
- INED (Independent Non-Executive Director): Board members who provide oversight and improve governance objectivity.
- NGO (Non-Governmental Organization): Independent organizations that operate separately from governments.
- Scope 3 GHG Emissions: Indirect greenhouse gas emissions across a company’s value chain (e.g., transportation, use of goods).
- SEHK (Stock Exchange of Hong Kong): CTIHK’s listing platform and regulatory authority.
- STP (Sustainable Tobacco Program): A global initiative to improve labor and environmental standards in the tobacco industry.
Cover image sourced from CTIHK’s official website
