Capture PMI's Transformation Journey towards Sustainability

Sustainability sits at the core of our transformation, we see it as a fundamental opportunity for innovation, growth, and purpose-led, impact-driven, long term value creation. We work hard to integrate sustainability into every aspect of our business and activities. In this post, you will find some of the recent initiatives towards sustainability in Philip Morris International (PMI) and PMI Istanbul HQ Office.

This is the green view of our balcony in Istanbul HQ Office. This balcony is the place where I have my coffee breaks, catch up with my colleagues and even brainstorm with my project team. This time I am alone in this green balcony and I have things to read: PMI’s sustainability achievements and objectives. Through sustainability reporting, companies communicate their performance and impacts on a wide range of sustainability topics, spanning environmental, social and governance parameters. PMI is very transparent in terms of sustainability reporting and acts responsibly towards a sustainable world.

 

In Philip Morris Turkey offices, employees can easily find so many recycling bins. Recycling is crucial to lessen the carbon footprint and contribute toward a healthy environment and sustainability. We have an eco-friendly waste management system that protects the environment and secures the community’s wellbeing. Materials such as plastics, paper, glass, and aluminum can be recycled and reused over and over again.

Animal welfare is our passion. We believe that all animals, from the domestic to the exotic, deserve the right to be protected and to live happy and healthy lives. Even our offices are places where animals live in a safe habitat and we live in harmony together. 

All the world is a stage for sustainability. In this photo, you see the “Stage”. It is a meeting room in our green garden of Istanbul HQ Office. It is just like an office room in the middle of a forest. The stage is one of the continuous improvements towards reducing the environmental impacts of the office work. It facilitates activities that promote sustainable lifestyles. The atmosphere in Stage inspires employees to get involved and adopt environmentally-friendly habits. Come in, Stage is yours, just act towards sustainability!

 

Sustainable development relates to all humans and involves all aspects of our lives; learning must therefore be part of a lifelong process. In PMI, we have lifelong learning opportunities that proactively respond to our expressed needs and objectives, such as learning, development or capacity building programmes for soft and hard skills. We have tools like Fuse, Udemy and Rosetta Stone. This picture shows a scene from my live tutoring session on English. I have a dream to work in a foreign country and I invest to excel my communication skills. Having such an opportunity in PMI not only contributes to my development but also opens the way for a sustainable future for lifelong and self-motivated learning.

 

Creating a sustainable office environment strengthens our core smoke-free vision with an ever-developing approach to sustainability. Our office in Istanbul is a living, breathing ecosystem set within an urban environment. Our workplace has plenty of space with trees and plants. They make our environment healthier and more productive. Placing plants around the office helps us to clean the air and promote natural climate control. Our trees in the garden where we get afternoon sun significantly reduce our air conditioning costs. Also, trees help to block cold winter winds, so planting coniferous keep our winter heating costs down. Simply, we implement go-green ideas in a full-green environment.

We have an inclusive and equal working environment with opportunities for everyone. As an employee of PMI, I see my company focuses on eliminating gender disparities in work environment and ensuring equal access to all levels of development for the vulnerable, including persons with disabilities. That is one of the drivers how we achieve full and productive employment and decent work for all women and men, including for persons with disabilities, and equal pay for work of equal value.

 

In PM Turkey Istanbul office, we are aware that cleaning wastewater of any kind first requires understanding its composition and particle-size distribution. From there, wastewater treatment can identify the right mix of mechanical processes, chemical water treatment and biological solutions. For sure, removing contaminants is not enough. For a truly sustainable approach, there are many ways to future-proof water treatment processes, and we are happy to share our experience in Turkey.

Sport has the power to change the world; it is a fundamental right and a powerful tool to strengthen social ties and promote sustainable development and peace, as well as solidarity and respect for all. In PM Turkiye offices we have gym where we can exercise for a healthy and sustainable life. It is open not only office days but also weekends. So we enjoy everyday as a new game day!

One of the most sustainable things people can do is to increase the physical activity for a more active life. The battle to tackle physical inactivity starts by keeping yourself fit for the action. And we have a great gym for those who want a healthier and ultimately happier planet.

In PMI, we have wide variety of learning opportunities for Sustainability. These learning plans provide a comprehensive knowledge highlighting the wide range of skills and processes that are needed to support the constructive collaboration and action required for addressing complex issues. Udemy Business is one of these tools provided to PMI employees to deep dive into Sustainability issues.

In PM Turkiye offices, we literally walk the talk: our garden is totally green and sustainable because we walk the green talk!

Gardening in a sustainable way is more economical as it involves using recycled materials, reducing the use of natural resources, and requires less maintenance. Creating a sustainable garden is what we have done in Turkey as we realized the importance of having backyards that are not only beautifully planted and well designed, but also work in partnership with green life in the city center and help to mitigate climate change.

We are not alone in the world, we share it with others, just like the turtle on the right side of the photo shares the pool with the turtle in the left side of the pool.

Life continues in a sustainable way – in the pool of our PMI office.

In order to decrease the number of hardcopy ledgers and printouts in the way of working, we benefit from digitalization through our transformation journey. Digitalization enables us to keep data in cloud instead of on paper, so that we decrease our carbon footprint as well.

Inside our office, we protect the nature by acting responsibly so that we save the green forests. Outside our office, we live in our green garden, enjoy our coffee and lunch breaks in a natural environment which feeds our mental well-being.

As we transform for good, we see it as a fundamental opportunity for innovation, growth, and purpose-led, impact-driven, long-term value creation. Accordingly, we work hard to integrate sustainability into every aspect of our business and activities. And we periodically report on sustainability and inform our investors and stakeholders.

As one of the winners of PMI’s World Clean Up Challenge 2022, our company gifted me 2 special gifts; one for individual success and one for team success. My gift was two trees for the planet. Every tree is geolocated and photographed – I can follow its story online, that’s great to follow up its growing.

I was working for PhilSA in 2014, the year that I became a father, and that summer all employees were given one olive tree seedling. One of my friends had not had the opportunity to plant, so he handed over his seedling to me as well. I went home with two seedlings in the service bus and looked after them on the balcony until the end of the week, and at the weekend I planted them in the garden of our summer house in Seferihisar, district of Izmir. The seedlings that I gave the life water to, dreaming of getting olives in the future, hugged the soil and life tightly, loved their place, started to rise, and get stronger.

 

About PMI’s Integrated Report 2021| What I Read and Understand

On 17 May 2022, Philip Morris International (PMI) announced its Integrated Report for 2021 which describes how the company is delivering on its purpose and provides detailed information about its strategic vision, performance, governance, and value creation. The content of the report is shaped by a formal sustainability materiality assessment conducted during 2021. This is the third annual integrated report of PMI, and as a PMI employee with interest in sustainability, this report is exciting read for me.

About PMI

For those who are not familiar with the company, report starts with general information about the company. Accordingly Philip Morris International is a leading international tobacco company working to deliver a smoke-free future and evolving its portfolio for the long-term to include products outside of the tobacco and nicotine sector.

The company’s current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products, which are sold in markets outside the U.S. Since 2008, PMI has invested more than USD 9 billion to develop, scientifically substantiate, and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes.

With a strong foundation and significant expertise in life sciences, in February 2021, PMI announced its ambition to expand into wellness and healthcare areas and deliver innovative products and solutions that aim to address unmet patient and consumer needs.

CEO’s Message

As a finance professional, I am focused on seeing numbers and PMI’s CEO Jacek Olczak clearly states the numbers while sharing the company’s objectives:

"Our ambition is that by 2025, at least USD 1 billion of our net revenues will derive from these adjacent avenues of growth, marking an initial milestone for a business with potential to grow much further over the longer term. In 2021, we kept our relentless focus on that ambition, dedicating 99 percent of our research and development and 73 percent of our commercial expenditure to smoke-free products. Moreover, smoke-free products represented over 29 percent of our adjusted net revenues and, by year-end, we estimate that more than 15 million adults in total had switched to IQOS and stopped smoking. The strong position of our smoke-free business has allowed us to accelerate our timeline; early in 2021, we announced our ambition that by 2025 our smoke-free products would be sold in 100 markets and at least 50 percent of our net revenues would derive from smoke-free products."

CFO’s Message

What I notice in PMI is that our CFO Emmanuel Babeau shows an ownership on sustainability. The level of importance he gives is also clear from the message he shares within the report:

"Strategy, Finance, and Sustainability—the three teams I lead—play a critical role within today’s PMI and have the capacity to establish a roadmap for success that not only responds to short-term needs but also accounts for medium- and long-term impacts. To achieve our ambitions, it has been of paramount importance for our entire organization to recognize that sustainability and financial performance are mutually reinforcing and part of the same strategy. That is why integrated reporting is a top priority: It allows all our employees, including management, as well as the company’s Board, our shareholders, and other stakeholders to understand how our financial and nonfinancial performance are interrelated."

And Chief Sustainability Officer’s Message

Our CSO Jennifer Motles highlights that PMI dedicated much of 2021 to strengthening its governance and better integrating sustainability into its corporate strategy.

Jennifer also states that "PMI’s Sustainability Index consists of 19 KPIs, which measure progress toward the 11 goals in our 2025 Roadmap. We aim to continuously improve our performance and drive material and measurable progress—all communicated through open and clear reporting and disclosure."

Transforming for Good

Transforming the company is not only about substituting one product with a new one. It is described in a holistic way:

Sustainability stands at the core of PMI’s transformation and helps address some of the challenges resulting from the transition, while spurring innovation and better positioning the company for success over the long haul. The complexity of our strategy comes from simultaneously managing the impacts of two value chains—the one we are aiming to move away from (our cigarette portfolio) and the one we are moving towards (our smoke-free portfolio)— while also managing the impacts of the transition itself.

Anchoring Sustainability at the core of Strategy

For PMI, sustainability is more than just a means to minimize negative externalities and mitigate risks while maximizing operational efficiency and resource optimization. It is stated in bold:

"We can only achieve our purpose by embedding sustainability in all we do."

The biggest and most pressing negative externality PMI’s strategy aims to address is the health impacts of cigarette smoking. This is the most important contribution we can make to public health and is the cornerstone of PMI’s purpose and business strategy. Addressing this critical issue requires a three-part approach:

1. Develop better alternatives to smoking 

Research, develop, and commercialize scientifically substantiated nicotine-containing products that are less harmful than cigarettes

2. Accelerate smoking decline 

Provide broad access to adult smokers, who otherwise would not quit smoking, to ensure these products accelerate the decline of smoking prevalence

3. Make cigarettes obsolete 

Purposefully work to ensure these products ultimately replace cigarettes, driving their obsolescence

Despite its critical importance, achieving a smoke-free future is not PMI’s final horizon. PMI is simultaneously exploring adjacent opportunities for growth in wellness and healthcare, leveraging the capabilities we have accrued and developed while transforming our business. It is through these avenues of growth that we will achieve our ultimate goal: becoming a business that has a net positive impact on society and the environment.

Risk Management

PMI’s Global Head of Risk & Controls, Marie-Pauline Lauret mentions that they have various risk evaluation mechanisms in place to support the development of tailored strategies and responses for their priority ESG issues along our value chain. Focused on environmental and social issues, some of these assessments include human rights risks saliency mapping, periodic climate risk and opportunities assessments, product life cycle assessments, and deforestation and water risk assessments.

Product Impact

PMI’s CEO Jacek Olczak clearly states that:

“We can make an important contribution to accelerating the end of smoking. To achieve this objective, we are dedicating the vast majority of our resources to commercializing our smoke-free products. Everyone within our organization—regardless of business function—plays a crucial role in delivering on this purpose. We recognize that PMI alone cannot achieve a smoke-free future. Such systemic change requires a collaborative multistakeholder approach. In particular, we actively advocate for others in the industry to follow our lead by transforming their businesses, phasing out cigarettes, and reporting transparently on progress.”

Pre-transformation (in 2015), PMI’s combustible product volume totaled 881 billion units, or 99.9 percent of our shipment volume ratio, and, since then, in only seven years, it has declined by more than 26 percent. Over the same period, PMI’s smoke-free shipment increased to 95 billion units, representing 12.8 percent of our shipment volume in 2021.

What about the goal? Intentionally work toward phasing out cigarettes by ensuring that smoke-free products represent at least 30 percent of its shipment volumes and more than half of its net revenues by 2025 while continuing to reduce its combustible shipment volume.

In short, a future where PMI’s success is no longer based on cigarettes is targeted.

Appropriate Regulation and Taxation to Drive Cigarette Obsolescence

To speed up the process, regulators and public health authorities can ensure that adult smokers have access to accurate information about smoke-free products. They can introduce product standards to ensure that only scientifically substantiated smoke-free products are commercialized. And, through riskproportionate regulation and taxation, they can provide the right incentives to encourage adults who smoke to switch from cigarettes to less harmful, scientifically substantiated alternatives and incentivize manufacturers to direct their investments and R&D toward these better products. The acceptability of smoke-free products for adult smokers must always be balanced against the objective of minimizing use by unintended audiences such as never smokers, former smokers, and youth.

What about Countries that do not Permit Smoke-Free Products Sale?

There is a position state for those countries which do not permit smoke-free products sale:

Currently, some countries do not permit the sale of smoke-free products. We nevertheless continue to engage with stakeholders in these markets to advocate for regulatory frameworks that support tobacco harm reduction. We do not believe that banning smoke-free products is a rational policy, especially considering that these countries permit the sale of the most harmful forms of tobacco and nicotine consumption: cigarettes and other combustible tobacco products. Banning smoke-free alternatives runs counter to the aim of ending cigarette use.

Informing the World about the Smoke-free Category

Smoke-free alternatives are a new product category and are still relatively unfamiliar to most people. In 2019, PMI launched “Unsmoke”—a global corporate campaign deployed across various online and offline communications channels to address widespread misconceptions about the smokefree category and the concepts that underpin it.

The campaign’s core message is simple:

“If you don’t smoke, don’t start. If you smoke, quit. If you don’t quit, change.”

Currently, the campaign encompasses two distinct strands:

• Unsmoke Your World (UYW): Calls for positive change by reinforcing that quitting tobacco and nicotine altogether is the best choice and informing the adult general public that better, smokefree alternatives exist for those adult smokers who would otherwise continue smoking. It also encourages the public to get involved and calls for regulation that would allow adult smokers access to—and information about—better alternatives.

• Unsmoke Your Mind (UYM): Speaks to the regulatory and scientific community and other stakeholders with an interest in tobacco harm reduction policy. UYM challenges misconceptions around the smoke-free category and calls for an open and transparent conversation to support risk-proportionate regulation that differentiates smoke-free products from cigarettes. It also urges policymakers to put science and evidence at the center of decision-making

Operational Impact

PMI’s vision of a smoke-free future helps to attract and retain talent. The opportunity to contribute to achieving the company’s purpose is compelling to many, as is the chance to make a positive societal impact.

For more about PMI and its integrated report 2021, please visit:

https://pmidotcom3-prd.s3.amazonaws.com/docs/default-source/pmi-sustainability/pmi-integrated-report-2021.pdf