Transforming for Good

By Jennifer Motles, Chief Sustainability Officer, Philip Morris International

For nearly seven years, Philip Morris International (PMI) has been committed to delivering a smoke-free future. We, at PMI, have made it our mission to accelerate the end of smoking by offering scientifically substantiated alternatives that are a better choice than continuing to smoke. In the longer term, we also aim to evolve into a broader lifestyle, consumer wellness, and healthcare company that has a net positive impact on society— to this end, sustainability is at the core of this business transformation.

For us, sustainability is more than just a means to minimize negative externalities and mitigate risks. We see sustainability as a fundamental opportunity for innovation and growth, for maximizing operational efficiency and resource optimization. It helps us create long-term value that is purpose-led and impact-driven. Thus, we work hard to integrate sustainability into every aspect of our business and activities.

An objective overview through integrated reporting

At the beginning of April, we published our fourth annual Integrated Report. We are convinced that integrated reporting is the best way to communicate about our business transformation—one that has sustainability at its core. Guided by a formal Sustainability Materiality Assessment conducted in 2021, our 2022 Integrated Report aims to objectively describe PMI’s business model, governance and management, strategy, and performance. It addresses both the priority sustainability risks related to our operations and those connected to our product. To further substantiate our commitment to sustainability, in 2022 we introduced PMI’s Sustainability Index, formed through a set of key performance indicators (KPIs) that help us measure and communicate our progress.

In terms of the environmental aspects of PMI’s products, we made progress in implementing take-back programs for our products and increased our electronic device repair capabilities. In 2022, we reached a recycling rate of 86% of our devices that were returned to centralized recycling hubs. More than half (68%) of our shipment volume was covered by markets with anti-littering programs in place for combustible cigarettes.

As for the social side of PMI’s operational impact, we expanded access to structured lifelong learning offers for employees and published a strengthened commitment to human rights, among other measures. We are proud to have surpassed our 2022 target of having 40% of management positions held by women, with 40.7%. The human rights impact assessments we conducted in Brazil and Malaysia brought the total number to seven completed assessments since 2018.

We continued the decarbonization of our direct operations and announced new long-term biodiversity and water ambitions and strategies, aligned with the post-2020 biodiversity framework adopted by the parties of the UN Biodiversity Conference (COP 15). We also received a triple A score from CDP for climate, forest, and water security for the third consecutive year. The proportion of tobacco purchased at no risk of deforestation of managed natural forest and no conversion of natural ecosystems was 55% in 2022.

Implementing sustainability on a local level

We are an international company operating on a global level, so it is important to closely monitor how our sustainability strategy is implemented on the ground by PMI affiliates. The progress we are making on individual issues locally is showcased in case studies and market stories.

In Pakistan, we focused our sustainability efforts on environmental protection, community development, disaster relief, and employee well-being. In collaboration with Pak Mission Society (PMS), PMPKL established the innovative “Haryali Hub and Khushali Hub” recycling facility in Islamabad. Local workers collect waste from 1,000 households, transporting it to the hub for recycling. We also joined Network of Organizations Working with Persons with Disabilities (NOWPDP) for a beach cleanup and awareness session in Karachi on World Cleanup Day 2020 and repeated it with EYDS and SEED Ventures in 2022. Additionally, we introduced fuel-efficient furnaces, reducing fuelwood consumption by 10% and achieving 100% sustainable sourcing for tobacco curing; 94% of our contracted barns have been upgraded with venturi furnaces.

One of our initiatives is a Skills Training Program for adolescent children aged 15-17, where during 2022 500 children were enrolled across 20 centers for training in skills such as cloth weaving and electrician training. To address the issue of child labour in production, we provided machines to farmers and developed a specialized mechanism to eliminate children’s involvement in the process. Through this initiative PMPKL successfully reduced child labour in its operations to 0.2%, compared to its original target of 2% for 2022.

In terms of disaster relief, PMPKL distributed essential supplies to families affected by floods in various regions of Pakistan, in two tranches. Additionally, we continue to focus on our employees’ well-being and professional growth, offering learning opportunities and support through initiatives like the Own Your Career campaign and the Make Your Comeback program. PMPKL is also committed to market safety, implementing emergency preparedness, fire hydrant systems, and fleet safety training measures. We strive to create a fair and inclusive workplace, providing extensive benefits to our employees, including a comprehensive medical plan and childcare benefits.

The need for collaboration

Ultimately, our goal goes beyond becoming a smoke-free company—we want to make cigarettes obsolete. However, we cannot achieve this change on our own. Only by working with relevant stakeholders and through the support of both civil society and business can we create a paradigm shift to a future in which cigarettes no longer exist. For us, this means that we must build trust and ensure that our words match our actions. We are convinced that by transparently disclosing our progress through sound integrated reporting, we can build the trust that is needed among the stakeholders who are fundamental to achieving our company’s purpose In Pakistan, like in other countries, we continue to engage with relevant government stakeholders to support the development of differentiated regulations that will enable adult smokers to know about different nicotine-containing products and their corresponding risk profiles compared with continued smoking.

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