PMI Reports 2019 ESG Performance in Its First Integrated Report
June 30 2020 - 4:00AM
Business Wire
Demonstrates Strong Progress Toward Delivering
a Smoke-Free Future; Reaffirms and Broadens 2025 Aspirational
Targets
Regulatory News:
Philip Morris International Inc. (PMI) (NYSE: PM) today
published its first Integrated Report, a comprehensive overview of
the company’s environmental, social, and governance (ESG)
performance and its progress toward delivering a smoke-free
future—including the company’s ambition to switch more than 40
million adult smokers to its smoke-free products by 2025, with half
of the total to come from non-OECD countries.
PMI’s Integrated Report 2019 demonstrates the role of the
organization's strategy, governance, and performance in the
creation of value over the short, medium, and long terms. Further,
the report shows PMI’s approach and important progress in various
ESG areas, while setting new and ambitious targets for 2025 that
complement the company’s prior aspirations. The Integrated Report
also highlights the company’s most material sustainability topics,
including the health impacts of the company’s products, an aspect
often not captured by external ESG assessments. The report focuses
on this key area, and describes how the company is working to
reduce the harm caused by tobacco use by replacing combustible
products with scientifically substantiated reduced-risk
alternatives.
PMI’s evolution from sustainability reporting to integrated
reporting helps investors make the connection between our
product-focused sustainability initiatives, which form the core of
our ESG strategy, and our financial performance over time. The
report also enables the company’s stakeholders to better evaluate
the company’s progress in achieving its purpose. PMI’s Statement of
Purpose, adopted by the company’s Board of Directors earlier this
year and published in its 2020 proxy statement, is also available
in the Integrated Report.
“Clarity of purpose is essential for the internal alignment of
any company. Since we announced our smoke-free commitment in 2016,
we have made enormous progress in terms of organizational
capabilities, the integration of sustainability into every aspect
of our transformation, and our business,” said André
Calantzopoulos, Chief Executive Officer, PMI. “PMI’s Statement of
Purpose reaffirms our commitment to deliver a smoke-free future for
the benefit of people who would otherwise continue to smoke and,
hence, to global public health. It is clear to all of us at PMI
that the biggest positive impact our company can have on society is
to replace cigarettes with less harmful alternatives; this is at
the very core of our corporate strategy and sits atop our
sustainability priorities while we are progressing well on all
others.”
The Integrated Report 2019 demonstrates how PMI is focusing its
resources on developing, scientifically substantiating, and
responsibly commercializing smoke-free products that are a better
choice than continued smoking, with the aim of completely replacing
cigarettes as soon as possible. The company believes that, with the
right regulatory encouragement and support from civil society,
cigarette sales can end within 10 to 15 years in many
countries.
In 2016, PMI introduced a set of Key Performance Indicators
(KPIs), referred to as Business Transformation Metrics, to
transparently measure and verify its progress toward a world
without cigarettes. In 2019, we continued to expand this set of
metrics.
Highlights from our 2019 performance across these metrics
include:
- PMI continued to shift significant resources toward delivering
a smoke-free future, with 98 percent of total R&D expenditure
and 71 percent of total commercial expenditure directed toward
smoke-free products in 2019.
- PMI’s smoke-free product net revenues reached 18.7 percent of
total net revenues in 2019, compared to 2.7 percent in 2016; by
2025 the company aspires to have 38 to 42 percent of total net
revenues coming from smoke-free products. In 2019, net revenues
from smoke-free products already exceeded 50 percent of total net
revenues in four markets.
- PMI’s smoke-free product shipment volume increased to
approximately 60 billion units, up from 7.7 billion in 2016 with an
aspiration of more than 250 billion units by 2025. PMI’s
combustible product shipment volume in 2019 declined to 732 billion
units, down from 845 billion in 2016, partly reflecting the impact
of adult smokers switching to our smoke-free products.
- Since announcing our smoke-free vision in 2016, PMI has
delisted over 600 cigarette SKUs globally, while significantly
broadening our portfolio of heated tobacco units, to over 400
SKUs.
- At year-end 2019, there were an estimated 9.7 million users
worldwide who have stopped smoking and switched to PMI’s
heat-not-burn smoke-free product IQOS, compared to 6.6 million in
2018. PMI’s vision of a smoke-free future is a global and inclusive
one, aiming to provide access to better alternatives to all smokers
around the world. Approximately half of PMI’s global cigarette
sales volume is in non-OECD countries. We therefore aspire that
over 20 million smokers in non-OECD countries switch to our
smoke-free products by 2025, half of our global aspiration of over
40 million users by that time.
ESG highlights from the Integrated Report 2019 include:
- In 2019, PMI conducted a comprehensive and critical review of
the company’s commercial activities related to product marketing
and sales activities. The study’s findings were published in
December 2019 in a report, Responsible Marketing Practices, on
PMI.com. By the end of 2020, PMI aims for youth access prevention
(YAP) programs to be in place in markets representing over 90
percent of PMI’s total shipment volume; by 2023, PMI aims to have
100 percent of PMI’s portfolio of electronic smoke-free devices
equipped with age-verification technology.
- In 2019, PMI continued to assess and mitigate environmental
risks and impacts across its value chain including a 42 percent
absolute reduction of CO2e scope 1+2+3 compared to its 2010
baseline; 72 percent of electricity used and purchased within PMI
factories was from renewable sources; PMI has committed to
achieving carbon neutrality in its direct operations (scope 1+2) by
2030 and across the company’s entire value chain (scope 1+2+3) by
2050.
- PMI continued to focus on the well-being of its tobacco farming
communities: In 2019 we did not find any incidents of child labor
in over 99 percent of the more than 300,000 tobacco farms
monitored. The company aims by 2025 to have zero child labor in its
tobacco supply chain, including by ensuring that 100 percent of
contracted tobacco farmers make a living income.
Huub Savelkouls, Chief Sustainability Officer, said: “Our
Integrated Report aims to provide a comprehensive overview of what
PMI is about, combined with a holistic set of metrics that go
beyond our financial disclosures, covering our business
transformation, as well as environmental, social, and governance
topics. We support and seek to align with GRI, SASB, and TCFD
disclosure standards, enabling all stakeholders to benchmark our
strategy and performance.”
Download the full Integrated Report 2019 at
PMI.com/IntegratedReport2019. Additional information on the
company’s sustainable actions, aspirational targets, and
commitments are available on PMI.com/Sustainability.
Aspirational targets and goals do not constitute financial
projections, and achievement of future results are subject to
risks, uncertainties, and inaccurate assumptions, as outlined in
the forward-looking and cautionary statements on page 189 of the
Integrated Report 2019. Key terms, definitions, and explanatory
notes are set forth in the Integrated Report 2019. In the 2019
Integrated Report and in related communications, the term
“materiality,” “material,” and similar terms, when used in the
context of economic, environmental and social topics, are defined
in the referenced sustainability standards, and are not meant to
correspond to the concept of materiality under the U.S. securities
laws and/or disclosures required by the U.S. Securities and
Exchange Commission.
Philip Morris International: Delivering a Smoke-Free
Future Philip Morris International (PMI) is leading a
transformation in the tobacco industry to create a smoke-free
future and ultimately replace cigarettes with smoke-free products
to the benefit of adults who would otherwise continue to smoke,
society, the company, and its shareholders. PMI is a leading
international tobacco company engaged in the manufacture and sale
of cigarettes, as well as smoke-free products and associated
electronic devices and accessories, and other nicotine-containing
products in markets outside the United States. In addition, PMI
ships a version of its IQOS Platform 1 device and its consumables
authorized by the U.S. Food and Drug Administration to Altria
Group, Inc. for sale in the U.S. under license. 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
IQOS product portfolio includes heat-not-burn and
nicotine-containing vapor products. As of March 31, 2020, PMI
estimates that approximately 10.6 million adult smokers around the
world have already stopped smoking and switched to PMI’s
heat-not-burn product, available for sale in 53 markets in key
cities or nationwide under the IQOS brand. For more information,
please visit http://www.pmi.com and www.pmiscience.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20200630005146/en/
Daniella Weinberg Philip Morris International +1 484.433.0447
Daniella.Weinberg@pmi.com
Philip Morris (NYSE:PM)
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