‘Can a Tobacco Company Be Sustainable?’ Philip Morris International Says ‘Absolutely,’ & Outlines Clear Progress Towa...
May 15 2019 - 4:32AM
Business Wire
Philip Morris International Inc. (PMI) (NYSE:PM) today
published its fourth Sustainability Report, detailing its progress
in key areas across its value chain. PMI’s mission to unsmoke the
world 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 mission to unsmoke the world, 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 people who would otherwise have smoked
cigarettes will have switched to PMI’s smoke-free products by 2025,
reducing the number of PMI cigarette smokers by 55 million.
The report documents how PMI is continuing to focus considerable
resources to prevent child labor and improve labor 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.
- 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 centralized 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 labor 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 labor in 2018.
- PMI reinforced its human rights due
diligence work by conducting a pilot human rights impact assessment
at its factory in Mexico.
- 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.
- PMI’s factory in Brazil received the
Alliance for Water Stewardship certification in 2018—the first of
any industry in Latin America—and the aim is that by 2025, all
PMI’s factories will be certified to the AWS standard.
- 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.”
Download the full 2018 Sustainability Report here:
www.pmi.com/sustainability/sustainability-report.
About 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,
smoke-free products and associated electronic devices and
accessories, and other nicotine-containing products in markets
outside the U.S. 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, 2019, PMI estimates that approximately 7.3 million
adult smokers around the world have already stopped smoking and
switched to PMI’s heat-not-burn product, which is currently
available for sale in 47 markets in key cities or nationwide under
the IQOS brand. For more information, please visit www.pmi.com and
www.pmiscience.com.
Forward-Looking and Cautionary Statements
This press release and the Sustainability Report contain
projections of future results and other forward-looking statements.
Achievement of future results is subject to risks, uncertainties
and inaccurate assumptions. In the event that risks or
uncertainties materialize, or underlying assumptions prove
inaccurate, actual results could vary materially from those
contained in such forward-looking statements. Pursuant to the “safe
harbor” provisions of the Private Securities Litigation Reform Act
of 1995, PMI is identifying important factors that, individually or
in the aggregate, could cause actual results and outcomes to differ
materially from those contained in any forward-looking statements
made by PMI.
PMI's business risks include: excise tax increases and
discriminatory tax structures; increasing marketing and regulatory
restrictions that could reduce our competitiveness, eliminate our
ability to communicate with adult consumers, or ban certain of our
products; health concerns relating to the use of tobacco products
and exposure to environmental tobacco smoke; litigation related to
tobacco use; intense competition; the effects of global and
individual country economic, regulatory and political developments,
natural disasters and conflicts; changes in adult smoker behavior;
lost revenues as a result of counterfeiting, contraband and
cross-border purchases; governmental investigations; unfavorable
currency exchange rates and currency devaluations, and limitations
on the ability to repatriate funds; adverse changes in applicable
corporate tax laws; adverse changes in the cost and quality of
tobacco and other agricultural products and raw materials; and the
integrity of its information systems and effectiveness of its data
privacy policies. PMI's future profitability may also be adversely
affected should it be unsuccessful in its attempts to produce and
commercialize reduced-risk products or if regulation or taxation do
not differentiate between such products and cigarettes; if it is
unable to successfully introduce new products, promote brand
equity, enter new markets or improve its margins through increased
prices and productivity gains; if it is unable to expand its brand
portfolio internally or through acquisitions and the development of
strategic business relationships; or if it is unable to attract and
retain the best global talent. Future results are also subject to
the lower predictability of our reduced-risk product category’s
performance.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including the Form 10-Q for the
quarter ended March 31, 2019. PMI cautions that the foregoing list
of important factors is not a complete discussion of all potential
risks and uncertainties. PMI does not undertake to update any
forward-looking statement that it may make from time to time,
except in the normal course of its public disclosure
obligations.
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Philip Morris InternationalMarija SommerPhilip Morris
International Media OfficeT. +41 58 242 5502E. marija.sommer@pmi.com
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