Naveed Ahmad Khan
Islamabad, 4 June, 2021 — Philip Morris International Inc. (PMI) (NYSE: PM) has published its Integrated Report, a comprehensive overview of the company’s environmental, social, and governance (ESG) performance and its progress towards its purpose of delivering a smoke-free future. This includes its 2025 ambitions to have switched more than 40 million adult smokers to its smoke-free products, with half from non-OECD countries, and for smoke-free products to account for more than 50 percent of PMI’s total net revenues. .
“I present this report with pride in what we have already achieved in just five years., such as smoke-free products accounting for nearly one-quarter of our total net revenues in 2020, from essentially zero in 2015. I also have a deep recognition of the immense work ahead. Our new ambitious goals signal our confidence in our ability to monumentally change our company’s long-term future,” said Jacek Olczak, Chief Executive Officer. “PMI is committed to serving as an agent of change and advocate of positive values. Innovation and inclusiveness are key to solving our challenges, whether related to tobacco harm reduction, environmental impact, or social impact. We aim to create a sustainable future that benefits our company, shareholders, consumers, and society.”
PMI’s Integrated Report 2020 demonstrates how the organization’s strategy, governance, and performance create value. To showcase impact, the company reports on progress in various ESG areas, including toward achieving its ambitious 2025 Roadmap—a set of forward-looking targets pertaining to all Tier 1 topics from PMI’s sustainability materiality assessment.
“Sustainability stands at the core of PMI’s transformation and drives our development of strong ESG programs to mitigate the risks associated with our value chain while spurring innovation and growth to secure our success over the long term,” said Emmanuel Babeau, Chief Financial Officer. “It is our firm belief that sustainability and corporate performance do not follow separate paths, and I am proud that we have spent the last year continuing to strengthen our sustainability governance and ensuring that ESG is integrated into decision-making at all levels of our organization.”
Acknowledging the unique and difficult challenges of the past year, PMI dedicated sections throughout its Integrated Report to showing how it addressed the impacts of the COVID-19 pandemic on its workers, business, and value chain, as well as instances where the pandemic directly affected the company’s sustainability efforts and the adjustments made in response.
“Despite the unprecedented challenges brought on by the global pandemic, we have not deviated from our efforts to show care, support those in our orbit, and continue our quest to become a more sustainable company,” said Jennifer Motles, Chief Sustainability Officer. “As we continue to transform, stakeholder engagement and constructive dialogue remain paramount to this evolution. In 2020, multi-stakeholder partnerships were key to the significant progress we made toward addressing many of our priority sustainability topics, ranging from protecting the health and safety of our employees to safeguarding the human rights of those impacted by our business and accelerating efforts to mitigate our impact on climate change throughout our value chain.”
On June 2, PMI hosted an ESG-focused webcast during which the company offered additional insight into how integrating sustainability across its business creates value for its shareholders and stakeholders. PMI will also publish in the coming week an ESG Highlights document, which will provide a more data-focused executive summary of the Integrated Report and will be made available on PMI.com/investor relations.
Progress on PMI’s Business Transformation – As of December 31, 2020, one of our smoke free product was available for sale in 64 markets, and an estimated 12.7 million adult smokers had switched and stopped smoking, out of 17.5 million total smoke free product users.
– In 2020, PMI invested USD 495 million in R&D expenditures, nearly 100 percent of which was dedicated to smoke-free products.
– PMI’s smoke-free product net revenues accounted for 23.8 percent of total net revenues in 2020, compared with 0.2 percent in 2015.
– PMI’s smoke-free product shipment volume accounted for over 10 percent of total shipment volume in 2020, compared with 0.1 percent in 2015. Selected ESG Performance Highlights – In 2020, 48 percent of PMI’s contracted farmers supplying tobacco were earning at least a living income, based on the Anker methodology, which is widely recognized for estimating living income benchmarks worldwide. Despite challenges of the global pandemic, 100 percent of tobacco farmers and farmworkers in PMI’s supply chain were provided with access to personal protective equipment.
– PMI is well on track to achieve its net zero targets of carbon neutrality in its direct operations (scope 1+2) and across its value chain (scope 1+2+3) in 2050. In 2020, it achieved significant absolute CO2e emissions reductions, including a 26 percent reduction in its direct operations (scope 1+2) and an 18 percent reduction across its value chain (scope 1+2+3). These were partially driven by COVID-19-related impacts but were mainly due to accelerated efforts toward our carbon neutrality goals.
– PMI introduced a new methodology to measure the prevalence of all types of child labor incidents—to gain greater visibility and increase reporting accuracy—as part of its aim for zero child labor in its tobacco supply chain by 2025.
– To strengthen its diligence framework and proactively identify risks and mitigate potential adverse impacts in its operations and value chain, PMI conducted human rights impact assessments in two countries—Mozambique and Russia—in 2020 and is on track to cover its 10 highest-risk markets by 2025.
– In 2020, PMI achieved its target of having 100 percent of its tobacco purchased at no risk of deforestation of old-growth forest, furthering its efforts to protect biodiversity and prevent the destruction of nature.
– PMI received a Triple A Score from CDP for its efforts in combating climate change, protecting forests, and promoting water security, and maintained its position on the A List for Climate Change for the seventh year in a row.
– As of December 2020, 37.2 percent of management positions at PMI were held by women, up from 36.1 percent in 2019, showing PMI’s commitment to achieving gender balance at all levels.
PMI is building a future on a new category of smoke-free products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary capabilities in product development, state-of-the-art facilities, and scientific substantiation, PMI aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements. PMI’s smoke-free product portfolio includes heat-not-burn and nicotine-containing vapor products. As of March 31, 2021, PMI’s smoke-free products are available for sale in 66 markets in key cities or nationwide, and PMI estimates that approximately 14 million adults around the world have already switched smoke free product and stopped smoking.