SB'24 San Diego is open for registration. Register early and save!

Walking the Talk
A Smoke-Free, Carbon-Neutral Future:
PMI’s Plan to Accelerate Climate Goals While Transforming Its Business

By disclosing our Low-Carbon Transition Plan, we encourage investors and other stakeholders to evaluate whether our company is on the right path, give us feedback, and have an open dialogue with us. I am confident our actions will speak louder than our words.

Philip Morris International’s transformation began with a vision centered on phasing out cigarettes and developing less harmful alternatives to smoking for adults who don’t quit, but this cannot be our end goal. Rather, the end goal for our company is to build businesses that have a net-positive impact on society. A complete and successful transformation will be one that allows us to move from a value proposition centered on doing less harm toward one where we can do more good.

For PMI, this starts by understanding and managing the risks and impacts of our operations, and committing to transparency and disclosure. In support of this, PMI recently published its Low-Carbon Transition Plan (LCTP) — a transparent and detailed view on how we plan to achieve our climate ambitions, measure success and report on progress. In the LCTP, our ambitions are underpinned by the detailed operational measures and solid business strategy that are vital to translate ambition into action and achievement.

Speed is of the essence — because the climate crisis won’t wait. As its urgency becomes more pressing, we’re increasing the pace of our initiatives and accelerating our plan to make our operations carbon neutral.* For direct emissions (Scope 1+2), PMI will achieve carbon neutrality by 2025 — five years earlier than previously announced; and for our entire value chain (Scope 1-3) by 2040 — 10 years earlier than our original target.

As we transform our value proposition, business model and operations on our accelerated path to carbon neutrality, we are putting systems in place to ensure transparency regarding the topics on which we can have the greatest impact. Product impacts came out on top, followed by more traditional environmental, social, and governance topics. We call this P (for product) + ESG. This is why PMI has dedicated its resources to developing, scientifically substantiating and responsibly commercializing smoke-free products that, while not risk-free, are less harmful than smoking.

However small our environmental footprint is in comparison with other fast-moving consumer good companies, our transformation runs counter to our conservation efforts. Our leading heated tobacco product currently has a higher carbon footprint than combusted cigarettes; therefore, PMI is working to close the gap between combustible and smoke-free products through improved manufacturing processes, extending the usable life of our electronic devices, and decreasing the total CO2 footprint through smart material selection and sustainable design. By integrating sustainability considerations into product design, we can control environmental and social impacts across the product’s lifecycle — from development and manufacturing to use and disposal.

Doing our part to address the climate crisis is a key priority of PMI’s sustainability strategy; and our LCTP showcases the breadth of our commitment. In the coming years, our efforts to combat climate change will not only include working towards carbon neutrality in our operations and across our entire value chain, but also increasing the resilience of our business and the communities where we operate. We are acutely aware of the impact our company has on both society and the environment, and we are committed to continuing to create a net-positive impact that is both meaningful and measurable.

PMI’s LCTP is testament to our understanding that the success of our business depends on our ability to adapt to and respect social and environmental boundaries. Pushing a sustainable agenda forward is not only a commitment and a responsibility to society, but also action that has already had positive repercussions on the structure and performance of our company. By disclosing an LCTP, we encourage investors and other stakeholders to evaluate whether our company is on the right path, give us feedback, and have an open dialogue with us. I am confident our actions will speak louder than our words.

* The Intergovernmental Panel on Climate Change (IPCC) defines net zero as the point when “anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period.” The Paris Agreement sets out the need to achieve this balance by the second half of this century.

According to current definitions, individual actors such as companies or public entities are considered to have reached net zero when: an actor reduces its emissions following science-based pathways, with any remaining GHG emissions attributable to that actor being fully neutralized by like-for-like removals (e.g., permanent removals for fossil carbon emissions) exclusively claimed by that actor, either within the value chain or through purchase of valid offset credits.

Individual actors are carbon neutral when CO2 emissions attributable to an actor are fully compensated by CO2 reductions or removals exclusively claimed by the actor, such that the actor’s net contribution to global CO2 emissions is zero. Carbon neutrality can be applied also to products or events. Carbon neutrality is an intermediate step toward net zero, as it happens before the net-zero emission state; and it can be reached using valid carbon credits (offsetting) or with mitigation activities within the value chain (insetting).

The concept of carbon neutrality is sometimes used as a synonym for climate neutrality, from which it differs for the range of climate-changing factors considered: only carbon dioxide (CO2) in the case of carbon neutrality, all GHG and other relevant bio-geophysical changes due to human activities in the case of climate neutrality.

Source: SBTi, UNFCCC Race to Zero, et al.