PMI says ‘sustainability and business interrelated’ as it sets new KPIs

By Charlotte Turner |

Philip Morris International Inc says that ‘sustainability and business performance are fully interrelated and mutually reinforcing’ as it announces an expansion of the business into ‘wellness and healthcare’. 

 

Inside its third annual Integrated Report, PMI states that in order to clearly assess progress toward achieving its goals, the company has introduced 19 KPIs which will define success and evaluate progress. Altogether, these KPIs make up the company’s new Sustainability Index, which explicitly links 30% of the company’s long-term compensation program to ESG performance.

 

As reported, during a recent APTRA Exchange session hosted in Singapore, panelists including Alexander de Nerée tot Babberich from Heineken Global Duty Free; Chris Morris of Concourse; Simon van Moppes of Pernod Ricard and Sunil Tuli, King Power Group (Hong Kong) and President of APTRA, promoted the need for CSR-driven KPIs and tenders. Read more here.

 

In its third annual Integrated Report, PMI has released an updated Statement of Purpose, a new environmental, social, and governance (ESG) framework, as well as detailed information about PMI’s strategic vision, performance, governance, and value creation model. The content was informed by a formal sustainability materiality assessment conducted in 2021.

we are seeking to help adult smokers switch to the better alternatives now available and put cigarettes behind them. A

“We are seeking to help adult smokers switch to the better alternatives now available and put cigarettes behind them,” said PMI in its recent Integrated Report. 

 

‘DATA, SCIENCE AND FACTS’ 

“Sustainability and business performance are fully interrelated and mutually reinforcing. Our actions – grounded in data, science, and facts – speak louder than words,” said Jacek Olczak, Chief Executive Officer of PMI.

 

“PMI is committed to serving as an agent of change and advocate of positive values.

 

“We understand that our business must become a provider of effective alternatives to continued smoking for adult smokers who don’t quit. To achieve this, we are positioning ourselves at the forefront of consumer-centricity, technology, science, and innovation.

 

“With an eye to the long term, we are also expanding our business into areas beyond tobacco and nicotine such as wellness and healthcare.”

PMI says it is shifting focus to its long-term goal from doing less harm to having a net positive impact on society.

PMI says it is shifting from ‘doing less harm’ to having a net positive impact on society.

PMI SHIFTS FOCUS

PMI has expanded its social, human, intellectual, and manufactured capital in ways that allow it to ‘go a step further’, it says, shifting focus to its long-term goal from doing less harm to having a net positive impact on society.

 

The company’s 2021 sustainability materiality assessment helped identify the ESG issues on which PMI should prioritise and focus its resources.

 

PMI subsequently redesigned its ESG framework, recognising two distinct topic areas: those related to PMI’s products and those related to its business operations. This distinction forms the basis of PMI’s new approach to sustainability, which consists of eight clear impact-driven strategies that aim to address its most material ESG topics.

 

These eight strategies – four aimed to address the impact of PMI’s products and four aimed to address the company’s operational impact – are accompanied by a framework of nine governance-related factors.

 

REVAMPED ROADMAP

PMI’s 2025 Roadmap was revamped accordingly, and it now consists of 11 goals directly linked to these eight strategies, clearly explaining the social and environmental impacts PMI aims to achieve.

 

Emmanuel Babeau, Chief Financial Officer of PMI made these comments; “I’m proud to be able to say that our executive compensation program now reflects our commitment to put sustainability at the core of our corporate strategy.

 

“PMI’s Sustainability Index aligns us even further with the interests of shareholders and other stakeholders, forming a strong link between our executive compensation practices and the company’s short- and long-term ESG performance.”

According to PMI, 67% of contracted farmers supplying tobacco to the company make a living income, up from 48% in 2020.

According to PMI, 67% of contracted farmers supplying tobacco to the company make a living income, up from 48% in 2020.

CHALLENGES REMAIN

According to PMI, there were 21.7 million total adult users of PMI’s smoke-free products calculated as of December 31, 2021, of whom 15.3 million have switched and stopped smoking; up from 18.3 million and 13.0 million, respectively, in 2020.

 

In addition, PMI reveals that 29.1% of adjusted net revenues are derived from smoke-free products, which were available for sale in 71 markets worldwide by year end; up from 23.8% and 64, respectively, in 2020.

 

Meanwhile, 99% of adjusted R&D expenditure on smoke-free products now totals $566 million, consistent in proportion, but 14% higher in dollar terms than the $495 million spent in 2020.

 

Other highlights include: 86% recycling rate of IQOS devices returned to PMI’s centralised recycling hubs, weighted-average percentage of each device that is recycled, vs 84% in 2020; 39.7% of management positions held by women, on track to achieve 2022 target of 40%; Five human rights impact assessments conducted since 2018 in highest-risk countries and action plans being implemented, up from four in 2020.

 

“Our 2021 Integrated Report aims to address demands for more robust, comparable, and reliable information on our ESG risks and performance, including data related to our company’s transformation, offering our stakeholders visibility into the future we are working toward,” said Jennifer Motles, Chief Sustainability Officer at PMI.

 

“2021 was a year full of achievements, but challenges remain. As we continue to transform, learn, and discover better ways to develop solutions that have meaningful impact, we hope our transparency and willingness to engage will spark dialogue with those who can help accelerate the pace of change.”

 

PMI’s Integrated Report can be accessed here.

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