Multinational expands goals set for 2025 and Brazil stands out with actions in the Southern Region
Philip Morris International (PMI) has published its first Integrated Report, a comprehensive overview of the company’s progress on Environmental, Social and Governance (ESG) and its business transformation. Its goals include enabling more than 40 million adult smokers who would otherwise continue to smoke to transition to its reduced-risk products by 2025.
The Brazilian operation is one of the highlights of the document, with actions to combat child labor in tobacco plantations, through support for the Instituto Crescer Legal (Growing Up Right Institute) – promoted by Sinditabaco – and the work of its advisors and technicians with families of small producers. The results of education programs are also reported, such as scholarships from the Escolas Família Agrícola de Santa Cruz do Sul (RS) and Vale do Sol and the digital inclusion program in rural schools, which has already benefited more than 2,000 children and young people since 2016. Finally, the results of the Programa de Boas Práticas Agrícolas (Good Agricultural Practices Program) and +Campo (+Campo) are described, which provide guidance on environmental preservation and safety, among other things, to thousands of producers.
The 2019 PMI Integrated Report demonstrates the role of organizational strategy, governance and performance in creating value in the short, medium and long term. The Report also describes how the company is working to reduce the externalities associated with cigarette consumption by replacing it with scientifically proven reduced-risk alternatives.
PMI’s evolution from sustainability reporting to integrated reporting helps investors make the connection between product-centric sustainability initiatives, which are at the core of ESG strategy, and financial performance over time. “Clarity of purpose is essential for internal alignment in any company. Since announcing our commitment to building a smoke-free future in 2016, we have made significant progress in terms of organizational capabilities, integrating sustainability into all aspects of our transformation, and our business,” said André Calantzopoulos, PMI’s CEO.
The 2019 Integrated Report demonstrates how PMI focuses its resources on developing, scientifically testing and responsibly marketing smoke-free products that are a better alternative to continued smoking, with the goal of fully replacing cigarettes as quickly as possible. The company believes that with the right regulatory incentives and support from civil society, cigarette sales could end within 10 to 15 years in many countries.
In 2016, PMI introduced a set of Key Performance Indicators (KPIs) called Business Transformation Metrics to transparently measure and verify its progress toward a smoke-free world. In 2019, the company continued to expand this set of metrics.
Performance highlights in 2019 across these metrics include:
⦁ PMI continued to deploy significant resources towards achieving a smokeless future, with 98% of total R&D investment and 71% of total commercial investment directed towards smokeless products in 2019.
⦁ PMI’s smokeless product volume increased to around 60 billion units, up from 7.7 billion in 2016, with an aspiration of over 250 billion units by 2025. PMI’s combustible product volume in 2019 decreased to 732 billion units, compared to 845 billion units in 2016, reflecting, in part, the impact of adult smokers switching to smokeless products.
Highlights from the 2019 ESG Integrated Report include:
⦁ In 2019, PMI continued to assess and mitigate environmental risks and impacts across its value chain, including an absolute reduction of 42% in CO2 emissions from scopes 1+2+3 (which includes fleets, offices and the value chain) compared to 2010; 72% of electricity used and purchased within PMI’s factories came from renewable sources; PMI is committed to achieving carbon neutrality across its direct operations (scopes 1+2, which includes fleets and offices) by 2030 and across the entire value chain (scopes 1+2+3, adding the entire value chain) by 2050.
⦁ PMI continued to focus on the well-being of its tobacco farming communities. In 2019, no incidents of child labor were found in over 99% of the more than 300,000 tobacco farms monitored. The company aims to have zero child labor in its tobacco supply chain by 2025, including ensuring that 1,00% of its contracted tobacco farmers have good working and living conditions.
“Our Integrated Report aims to provide a comprehensive view of what PMI is all about, combined with a holistic set of metrics that go beyond our financial reporting to encompass our business transformation as well as environmental, social and governance issues. We support and seek to align with the disclosure standards of the GRI (Global Reporting Initiative), SASB (Sustainability Accounting Standards Board) and TCFD (Task Force on Climate-related Financial Disclosures), enabling all stakeholders to assess our strategy and performance,” said Chief Sustainability Officer, Huub Savelkouls.
The full 2019 Integrated Report is available at PMI.com/IntegratedReport2019. Additional information about the company's sustainability actions, objectives and commitments is available at PMI.com/Sustainability.
