Philip Morris outlines clear progress towards a sustainable, smoke-free future

‘Can a Tobacco Company Be Sustainable?’ Philip Morris International Says ‘Absolutely,’ and Outlines Clear Progress Toward a Sustainable, Smoke-Free Future

Philip Morris International Inc. has published its fourth Sustainability Report, detailing its progress in key areas across its value chain. PMI’s vision for a smoke-free future is core to its sustainability ambition and business strategy.

André Calantzopoulos, PMI’s Chief Executive Officer, said: “We’re often asked, ‘Can a tobacco company be sustainable?’ Our answer to that is, ‘Absolutely.’ That is, provided we are taking every step possible to completely replace cigarettes with better alternatives for the adult smokers who would otherwise continue smoking, addressing challenges across our value chain and seizing opportunities to add value to society. Our most recent Sustainability Report reflects the hard work and dedication of all our employees globally in moving toward our goal of a smoke-free future. It demonstrates that we are on track to achieve this bold ambition and are well positioned to address the challenges ahead.”

The 2018 Sustainability Report outlines how PMI is accelerating efforts to accomplish its vision to move away from being a cigarette company, including its progress against a set of key business transformation metrics. The company’s strategy supplements the efforts by the World Health Organization (WHO) to reduce smoking prevalence, and is aiming to reduce smoking among PMI consumers more than three times faster than the target set by the WHO. The company’s aspiration is that at least 40 million adult smokers who would otherwise have smoked cigarettes will have switched to PMI’s smoke-free products by 2025, reducing the number of PMI cigarette adult smokers by 55 million.

The report documents how PMI is continuing to focus considerable resources to prevent child labour and improve labour conditions throughout its value chain; scaling up its efforts toward improving inclusion and diversity; and reducing its environmental footprint through greener energy, water and litter management and the preservation of biodiversity, land and forests.

The following were among PMI’s key milestones in 2018 on the road to a sustainable, smoke-free future:

· Only four years after it was launched, PMI estimates that 6.6 million adult smokers have stopped smoking and switched to the company’s heated tobacco product IQOS, which was recently authorised for sale in the USA by the Food and Drug Administration. At the moment, smoke-free products cannot legally be sold in Australia.

· Smoke-free products represented 5.1 percent of shipment volume, but already 13.8 percent of net revenues. IQOS was available in 44 markets by the end of 2018. In 19 of these markets, net revenues from smoke-free products for PMI exceeded 10 percent of total net revenues, and in three markets, smoke-free products already became the biggest part of PMI’s business, exceeding 50 percent of total net revenues.

· PMI continued to shift its resources toward smoke-free products: 92 percent of its research and development investment and 60 percent of its global commercial expenditure were dedicated to smoke-free products, while seven manufacturing facilities were producing them, up from three factories in 2017.

· Playing its part in the circular economy, PMI established a centralised initiative to recycle used IQOS devices; CIRCLE (Central Inspection and Recycling for Closed Loop Economy) brings returned device recycling to the highest industry standards.

· PMI initiated a step change improvement of its Agricultural Labor Practices program, with the ambition to have no child labour within its tobacco supply chain by 2025. Its program is already considered industry-leading, and the monitoring data, covering 88 percent of contracted farms, show that 98 percent of the over 300,000 farms visited by field technicians were free of child labour in 2018.

· PMI scaled up its efforts in managing social and labor practices in its electronics supply chain.

· Worldwide representation of women in PMI management roles increased to 35.2 percent, on track to reach its target goal of 40 percent by 2022.

· For the fifth year in a row, PMI achieved CDP’s Climate A-list for its comprehensive action to reduce greenhouse gas emissions and mitigate climate change and for transparency in its reporting practices.

The four pillars of PMI’s sustainability strategy are: Transforming Its Business, Driving Operational Excellence, Managing Its Social Impact and Reducing Its Environmental Footprint. In each of these pillars, PMI reassessed its most relevant challenges, with insights provided by a broad group of external and internal stakeholders, to prioritize areas where its work can have the greatest impact, thereby contributing toward the United Nations Sustainable Development Goals. The 2018 Sustainability Report was developed in accordance with the Global Reporting Initiative (GRI) reporting standards and is aligned with the Sustainability Accounting Standards Board (SASB) standards and provides extensive data, inviting readers to assess PMI’s performance across a wide set of metrics.

“It was important to have an updated outside view, considering that our business transformation is advancing rapidly and will lead to new challenges and opportunities,” said Huub Savelkouls, PMI’s Chief Sustainability Officer.

“The sustainability materiality analysis we carried out last year highlighted that the mission of our company—to unsmoke the world by replacing cigarettes with better smoke-free alternatives for those adult smokers who would otherwise continue smoking—is fundamental for PMI’s ambition to become a sustainability leader.

Philip Morris Australia Managing Director Tammy Chan said:

“At the moment Australian adult smokers do not have the alternative options afforded to smokers in most other developed countries and we believe they should.”

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