Philip Morris International's 2022 Integrated Report

On April 5th, Philip Morris International (PMI) (NYSE:PM) released its annual integrated report. The report reveals that PMI aims to achieve a smoke-free future by concentrating resources on developing, scientifically proving, and responsibly commercializing smoke-free products as a replacement for traditional cigarettes.

The CEO of PMI, Jacek Olczak, has stated the company's goal to become a leading smoke-free company by 2025, with plans to gradually phase out traditional cigarettes.

Eleven targets were established with nineteen key performance indicators to support them.

Philip Morris International (PMI) has developed eight strategies targeting the company's most urgent areas of impact based on its ESG framework. To support these strategies, PMI has established 11 goals that form the foundation of its 2025 roadmap, and has identified 19 key performance indicators (KPIs) to measure progress through its sustainability index. Each KPI is aligned with either product sustainability (11 KPIs) or operational sustainability (8 KPIs) and with one of two driving factors.

11 targets | Image source: PMI

19 Key Performance Indicators (KPI) | Image source: PMI

Last year, PMI released its first ESG KPI agreement which included definitions, methods, and scope for each sustainable development index. This was done to provide measurable, verifiable, consistent, and accurate progress reports. Alongside the release of its latest comprehensive report, the company also published an updated agreement detailing efforts to strengthen these KPIs by 2022.

Key performance indicators for 2022: Product impact and operational impact.

In 2022, PMI has made significant progress towards its sustainable development goals as it aims to address the impact of its products and operations.

Measures taken to address the impact of the product.

Implementing a plan to prevent minors in retail channels.

b. Advancing the smoke-free equipment and consumables recycling plan;

c. Increase equipment maintenance capability.

The company continues its transformation and achieves its goals.

Product Impact Indicators:

In the area of society.

: According to estimates, the total number of adult users of PMI's smoke-free products is 24.9 million in 2021, with a net income of 32.1% coming from these products compared to 29.5% in 2020. PMI has 73 markets where its smoke-free products can be sold, with 42% of these markets located in low- and middle-income countries. The company has invested $10.7 billion in smoke-free products since 2008, with a net income of $30 million coming from health and wellness products in 2021. In terms of the environment, 91% of total shipments through indirect retail channels are covered by youth access prevention programs.

According to the latest data, the IQOS device has a recycling rate of 86% at centralized recycling centers. This percentage represents the weighted average of each device that is recovered. Moreover, the market covered by the litter prevention plan for combustible cigarettes is 68% of total shipments. The market share covered by the recycling program for smoke-free products is 8.5%. We are implementing measures to improve our operations in these areas.

Social aspect:

a. Increased opportunities for employees to access structured lifelong learning programs.

B. A statement has been issued, promising to strengthen human rights commitments.

C. The sixth and seventh human rights impact assessments have been completed in Brazil and Malaysia.

Environmentally:

Continue to decarbonize its direct operations;

Based on scientifically validated goals, achieve net-zero greenhouse gas emissions across the entire value chain by 2040.

The announcement of the new long-term biodiversity and water targets and strategies, aligned with the 2020 Biodiversity Framework adopted by the Convention's parties, and in line with the United Nations Biodiversity Conference.

Operating performance indicators:

Social Issues

The proportion of women in management positions is at 40.7%, exceeding the target of 40% set for 2022 (compared to 39.7% in 2021). In addition, the company has conducted seven human rights impact assessments in high-risk countries since 2018 (compared to five in 2021), and has also made progress in environmental matters.

In 2021, 55% of tobacco purchases were made without the risk of net deforestation and conversion of natural ecosystems, up from 37% the previous year. The company has been awarded a triple-A rating for climate, forest and water security by CDP for three consecutive years. Reference:

Philip Morris International has recently published its Integrated Report for the year 2022.

Original report.