Philip Morris International releases the 2023 Integrated Report - Business Review (2024)

Philip Morris International has released its fifth annual Integrated Report, which outlines the company’s ongoing work to advance toward its 2025 Roadmap goals, with the primary focus on addressing the health impacts of the company’s products.

The 2023 Integrated Report highlights PMI’s continued expansion of smoke-free alternatives in markets worldwide, as well as social and environmental programs deployed with and in parallel to these products—including the deployment of responsible marketing and sales practices and efforts to reduce post-consumer waste. Further, PMI reports its progress toward fostering an empowered and inclusive workplace, improving the quality of life of people in its supply chain, decarbonizing its operations and value chain, and preserving nature and biodiversity.

“2023 was a year marked by unity, determination, and a continued commitment to our vision of a smoke-free future,” saidJacek Olczak, Chief Executive Officer of PMI. “As we encounter new challenges, our people’s enduring resilience, exceptional talent, and depth of purpose ensure we are well-equipped to continue our journey—pursuing progress, embracing innovation, and fostering sustainability as we transform for good.”

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PMI’s approach to sustainability is guided by the outcomes of its 2021sustainability materiality assessment, which, following the principles of double materiality, identified the topics on which PMI focuses and prioritizes resources. PMI’s sustainability strategy addresses two distinct forms of topics: those related to its products (what the company produces), which are part of the “Product Impact” pillar, and those related to its business operations (how the company produces), which are part of the “Operational Impact” pillar.

Product Impact highlights

Social

• Approximately 33 million estimated users of PMI smoke-free products, including 28.6 millionIQOSusers (2022: 24.9 millionIQOSusers)1
• 36.4% of adjusted net revenues derived from smoke-free products (2022: 32.1%)2
• 84 markets where PMI smoke-free products are available for sale3, of which 47% are in low- and middle-income markets4(2022: 73, 42%)
• 25 markets where smoke-free products represented more than 50% of annual net revenues (2022: 17)USD 12.5 billioncumulative investment behind smoke-free products since 2008 (2022:USD 10.7 bn)5
• 98% of total shipment volume covered by youth access prevention programs in indirect retail channels (2022: 91%)6

Environmental

320,000 cumulative number of smoke-free electronic devices refreshed or repaired since 2021 (2022: 157,000)7

76% of shipment volume covered by markets with anti-littering programs in place for combustible cigarettes (2022: 68%)7

17.6% of shipment volume covered by markets with smoke-free consumables take-back programs (2022: 8.5%)7

Operational Impact highlights

Social

• 41.8% of management positions held by women, continuing to exceed our aspiration of 40% (2022: 40.7%)
• 8 human rights impact assessments conducted since 2018 in highest-risk countries (2022: 7)7
• 0.1% prevalence of child labor among contracted farmers supplying tobacco to PMI (2022: 0.1%)7

Environmental

• 94% proportion of tobacco purchased at no risk of net deforestation of managed natural forest and no conversion of natural ecosystems (2022: 55%)7
• 8.14 million cubic meters of water optimized in our tobacco-growing areas (cumulative since 2019) (2022: 4.94 million cubic meters)

PMI’s 2023 Integrated Report is complemented bycountry-level case studiesonPMI.comthat shed light on the company’s work in priority sustainability areas andmarket storiesthat complement our reporting by connecting and highlighting the impact the initiatives are seeking to have on society and the environment around the world.

“Strategic foresight unites our nonfinancial aspirations with financial outcomes. This is consistent with our purpose, which increasingly resonates with our stakeholders, and we believe powerfully demonstrates the interplay between societal impact and the generation of long-term shareholder returns,” explainedEmmanuel Babeau, Chief Financial Officer of PMI. “Delivering a smoke-free future and excelling in our sustainability aspirations are not just ethically sound decisions, they are the bedrock of our strategy and the key to our shared success.”In 2023, PMI’s sustainability performance was recognized by ESG ratings providers and sustainability-related organizations, including:

• Achievement ofCDP’s Triple A rating for the fourth consecutive year—placing PMI among the world’s leading companies in environmental transparency and action
• Inclusion inCDP’sSupplier Engagement Leader Board for theseventh year
• Inclusion inDow JonesSustainability World Index for the first time and the Dow Jones Sustainability North America Composite Index for the fourth consecutive year (index inclusion effective as ofDec. 18, 2023), in addition to being awarded “Prime” status in theISSESG Corporate Rating (ISS ESG Rating as ofNov. 21, 2023)
• Validation from the Science Based Targets initiative (SBTi) on its Forest, Land, and Agriculture (FLAG) emissions reduction targets, making PMI one of very few companies to achieve this recognition
• Named anEarly Adopterfor having committed to advancing the adoption of theTaskforce on Nature-related Financial Disclosures(TNFD) recommendations

“As we present this 2023 Integrated Report, we emphasize that delivering a smoke-free future is not just a priority, it is the essence of our purpose. The path we tread is marked by our ambition to lead, our vow to operate transparently, and our dedication to ensuring that cigarettes are relegated to history,” said Jennifer Motles, Chief Sustainability Officer of PMI. “We remain committed to transparent, consistent, and reliable reporting practices that allow external stakeholders to understand not only our performance but also how we are responding to a rapidly changing environment and planning for the long term, fostering a more sustainable and transparent business landscape.”

The preparation of PMI’s 2023 Integrated Report considered guidance of international standards and frameworks, including theGlobal Reporting Initiative(GRI), theUN Global Compact(UNGC), the UN Sustainable Development Goals, and the IFRS Foundation—including use of its SASB Standards, Integrated Thinking Principles, and Integrated Reporting Framework.

The report aims to provide an objective description of the company’s business model, strategy, performance, and prospects in relation to its priority economic, environmental, social, and governance topics. It describes PMI’s progress in delivering on its purpose, as articulated in itsStatement of Purpose, to completely replace cigarettes as soon as possible with smoke-free products that are scientifically substantiated to be less harmful than smoking, while in the longer run laying the foundation for a strong business in the areas of broader lifestyle, consumer wellness, and healthcare.

Please visitpmi.com/sustainabilityto learn more, and read the full2023 Integrated Report,case studies and market stories, and theSustainability KPI Protocol 2023.