Philip Morris International
Published 4 years ago.
About a 5 minute read.
Image: PMI is banking on e-cigarettes, a less harmful alternative to smoking, to transform its business | IQOS
/ This article is sponsored by
Philip Morris International.
In its 2018 Sustainability Report, the tobacco giant explains how it is finding success by transforming its business, and allowing stakeholders to see concretely how the company is shifting its resources to achieve a smoke-free future.
Earlier this year, Philip Morris
(PMI) became the first company to be accepted into Sustainable Brands’ new SB
program. This new partnership is yet another sign of PMI’s goal to further
sustainability across the business.
The new program enables companies that have a publicly stated commitment to
transform controversial business
for the better to actively engage with SB Corporate Members in regular meetings
and online. The expectation is that access to a leadership network of this
caliber will provide them with support and guidance to help accelerate ambitious
change as the company pursues qualifications for full membership.
PMI and future SB Voyagers will receive access to the SB Brand Transformation
— a proprietary assessment tool designed to help companies identify where they
sit along a continuum of sustainable business practices. The highest level of
attainment is emerging as a truly "sustainable brand" — a company operating a
profitable, net-positive business model that seeks system-wide solutions through
deep external collaboration, actively tries to shift unsustainable societal
norms and intentionally cultivates breakthrough leaders.
SB Voyagers annually assess their coordinates on this journey using the roadmap
and receive peer assessments from SB Corporate Members, as well. According to
criteria defined by the SB Membership Advisory Council, SB Voyagers must
progress to the next level of maturity in one or more areas of the roadmap
within two years in order to satisfy a main condition for becoming an SB
PMI outlines these achievements, as well as its many challenges, in its fourth
Report, released on
As PMI CEO André Calantzopoulos notes in the report’s introduction:
“Society’s expectations of businesses are changing, and we must play our part in
addressing global challenges.”
For PMI to genuinely address sustainability, it first had to acknowledge — and
tackle — the elephant in the room: that its cigarettes negatively affect the
health of more than 150 million consumers. As a result, PMI declared that its
primary sustainability effort would be to get its adults consumers who would
otherwise continue to smoke, to change from combustible cigarettes to
— which, while not risk-free, are a better choice than continuing to smoke.
“The shift the company has taken by replacing cigarettes with less harmful
alternatives is at the core of addressing our main sustainability impact,” said
Huub Savelkouls, PMI’s Chief Sustainability Officer.
The 2018 Sustainability
Report opens by
highlighting the progress PMI has made in this area to date. Since the debut of
its main smoke-free product, IQOS, in 2014, more than 7.3 million people
have stopped smoking PMI cigarettes and switched to its heat-not-burn products,
which are available for sale in 47 markets, as of March 31, 2019.
“For PMI — or indeed, any tobacco company — to credibly speak about sustainability,
the purpose can be none other than to replace cigarettes with better
alternatives for smokers, society and the environment,” said Jennifer
Motles, Sustainability Manager at PMI. “This is an essential step to becoming
a more sustainable business — the first of many steps ahead in our ambition to
become a ‘sustainable brand.’”
For this, transparency and disclosure are key; PMI’s new sustainability report
is testament to these principles. Most importantly, PMI’s business
transformation metrics, included in the report, are one example of relevant
disclosure — they allow stakeholders to see concretely how the company is
shifting its resources to achieve a smoke-free future.
Two years ago, PMI introduced a set of metrics to make the actions the company
is taking to pursue its smoke-free vision measurable and verifiable. This year,
PMI has added two metrics to better illustrate the speed of its progress at
individual market level — these new metrics show the number of its markets in
which net revenues of smoke-free products exceeded 10 percent or 50 percent of
its total net revenues. In three markets to date, smoke-free products have
become the biggest part of PMI’s business.
Image credit: PMI (view larger version in report [p. 118])
“We will continue engaging with external stakeholders to build support for the
opportunity that a smoke-free future provides for consumers and society more
broadly,” Savelkouls said. “We recognize that societal support is an essential
step to enable the introduction of regulatory frameworks that can end cigarette
smoking rapidly by encouraging smokers to consider smoke-free products.”
PMI makes it clear that its business transformation is built on phasing out
cigarettes in favor of a smoke-free future. To that end, the report notes in its
next steps that the company will continue to execute its strategy to provide all
smokers with access to the best smoke-free products. But the transformation of
PMI’s business is just the beginning of its sustainability efforts, Savelkouls
said. The company is also addressing, as part of its sustainability strategy,
the way it operates, manages its social impact and reduces its environmental
footprint. The four pillars of PMI’s sustainability strategy are: (1)
Transforming Our Business, (2) Driving Operational Excellence, (3) Managing Our
Social Impact, and (4) Reducing Our Environmental Footprint.
In each of these pillars, PMI reassessed its most relevant sustainability
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 towards the UN Sustainable Development
Goals. The 2018
Sustainability Report was developed in accordance with the Global Reporting
Initiative (GRI) reporting standards and the Sustainability Accounting
Standards Board (SASB) standards, and provides extensive data inviting
readers to assess PMI’s sustainability performance across a wide set of metrics.
“We need to be coherent, which means excelling in all four pillars of our
sustainability strategy,” Savelkouls added. “This is even more important as the
transformation brings about its own challenges from a social and environmental
Published May 16, 2019 11am EDT / 8am PDT / 4pm BST / 5pm CEST
This article, produced in cooperation with the Sustainable Brands editorial team, has been paid for by one of our sponsors.