Human
Rights Report
JUNE 2023

Philip Morris International – Human Rights Report 2023

About PMI
Philip Morris International (PMI) 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 productportfolio primarily consists of cigarettes and smoke-free products, including heatnot-burn, vapor, and oral nicotine products. Since 2008, PMI has invested morethan USD 10.5 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. This includes the buildingof world-class scientific assessment capabilities, notably in the areas of preclinicalsystems toxicology, clinical and behavioral research, as well as post-market studies.
In November 2022, PMI acquired Swedish Match – a leader in oral nicotine delivery– creating a global smoke-free champion led by the companies’ IQOS and ZYN
brands. The U.S. Food and Drug Administration (FDA) has authorized the marketingof versions of PMI’s IQOS Platform 1 devices and consumables and Swedish Match’s
General snus Modified Risk Tobacco Products (MRTPs). As of December 31, 2022,
PMI’s smoke-free products are available for sale in 73 markets, and PMI estimatesthat approximately 17.8 million adults around the world had already switched to
IQOS and stopped smoking. Smoke-free products accounted for approximately
32% of PMI’s total full-year 2022 net revenues. With a strong foundation andsignificant expertise in life sciences, in February 2021, PMI announced its ambition
to expand into wellness and healthcare areas and, through its Vectura Fertin Pharma
subsidiary, aims to enhance life through the delivery of seamless health experiences.

a

For more information, please visit www.pmi.com
and www.pmiscience.com

About this report
This publication constitutes our first report dedicated to describing our strategy torespect human rights and the progress made to date in implementing our Human
Rights Commitment (Commitment) published in 2017. In this inaugural Human Rights
Report (Report) we will share our recently updated Commitment, lessons learned,
good practices in our ongoing work across our value chain, challenges faced, andfuture actions. As part of this Report, we have also conducted a preliminary analysis
foregrounding alignment between disclosures on our work on human rights andthe headline considerations of the UN Guiding Principles Reporting Framework(UNGPRF), which enables companies to report meaningfully on their human rights
performance (see page 46). We view the assembly of this first Human Rights Reportas a priming exercise for this analysis and future reporting. Going forward, we aim
to carry out a full analysis of our approach to human rights, using the UNGPRF.
We aspire to continuously improve and advance the sophistication of our approach.
Unless explicitly stated, the data and information in this report do not incorporate
PMI’s Vectura Fertin Pharma business (consolidating the 2021 wellness and healthcareacquisitions of Fertin Pharma A/S, Vectura Group plc., and OtiTopic, Inc.), nor the late2022 acquisition of Swedish Match AB.
As we evolve and continue to integrate these business acquisitions, we will, wherematerial and feasible, include them into our reporting in future reporting exercises.
This report was prepared in collaboration with Article One, PMI’s expert human rights
advisers. For further information on our overall approach to sustainability, strategy,commitments, performance, and related reporting please visit our website.

aContents

Letter from the CEO

02

Key milestones in PMI’s approachto Human Rights

04

Our approach to human rights

06

Assessing our human rights impacts

18

Focus on rightsholders

24

Consumers

25

Employees and contractors

28

Suppliers and supply chain workers

33

Communities

39

PMI speak up culture –grievance mechanisms

41

Your feedback is important, and we welcome your comments andsuggestions. Please send them to sustainability@pmi.com©2023 Philip Morris International, Inc. All rights reserved

1

Transparency

42

Looking ahead

44

UNGP Reporting Framework

46

Glossary of terms and acronyms

56

Notes

57

Philip Morris International – Human Rights Report 2023

Letter from our Chief Executive Officer
Our purpose is to transition to a world-leading
smoke-free business, leaving cigarettes behindwhile simultaneously expanding our offerings
to include products within the wellness andhealthcare space that may in the longer term
have a net positive impact on society.
The biggest and most pressing negative externality
we aim to address is the health impacts of cigarettesmoking. This is the main contribution we canmake to public health and is the cornerstone of
our company’s purpose and strategy. To achieve
it, we must radically transform our business—
not only substituting one product with a newone but also evolving our entire value chain andchanging the way we engage with stakeholders.
Our company is focusing its resources on developing,scientifically substantiating, and responsiblycommercializing smoke-free products that are lessharmful than smoking, with the aim of completely
replacing cigarettes as soon as possible. To makeour progress measurable and verifiable, we
regularly report on a set of metrics and related
goals allowing our stakeholders to assess both thepace and the scale of our transformation. Although
our transformation journey started with a vision
centered on the critical mission of phasing out
cigarettes, this is not its sole ultimate end goal. We
are now actively working to expand our purposeand evolve into a broader lifestyle, consumer
wellness and healthcare company commercializing
products that go beyond tobacco and nicotine.

“Progressing on such a
massive transformation
journey and managing theimpacts of the transition
itself requires us to embedsustainability in our
strategy, which includes
promoting and protecting
human rights.”

Progressing on such a massive transformation
journey and managing the impacts of the transition
itself requires us to embed sustainability in our
strategy, which includes promoting and protecting
human rights. This is the only way both ourcompany and society at large can prosper.

02

We appreciate the potential for mandatory
human rights and environmental due diligence toprevent potential negative impacts occurring andminimize actual negative impacts on rightsholders.
Within this evolving global context, we aim tocontinuously improve and lead by example,
setting best practices on areas such as respecting
human rights in our supply chain and fostering
an environment of continuous improvement.

Our human rights journey was formalized in2017 when we issued our first Human Rights
Commitment and affirmed our vision to integrate
the United Nations Guiding Principles on Businessand Human Rights (UNGPs) throughout ourbusiness operations. While we had previously
implemented a range of labor and human rights
programs throughout our global operations andour tobacco supply chain, our commitment to alignour practices with the UNGPs inspired us to adopt
a more systematic and structured approach torespecting human rights, from supplier to consumer.

The challenges and opportunities shaping our reality
only accentuate how crucial safeguarding humanrights is and emphasize the role that businesses canand should play in that regard. We currently face aperiod of major geo-political instability, and the effects
of climate change, which are becoming increasingly
visible, yet we do not all face its consequences
equally. Social inequality is growing at a rapid paceand its impacts will be most acutely felt by the world’s
most vulnerable groups. As a company operating
globally in a fast-moving context, with millions
directly or indirectly involved in our operations
and our broader value chain, we must exercise
heightened due diligence on how we operate andbe ready to understand and respond to the humanrights and environmental impacts we may create.

We have acted upon our commitment andworked consistently for many years to conduct
human rights due diligence to identify and assess
risks on a company-wide basis. This includes our
Human Rights Roadmap describing practical steps
required to integrate our Commitment throughout
our global operations and value chain, robust
communication and training among our employees,
two global human rights saliency mappings, anda third one in our electronics supply chain.
We have also set a goal to conduct comprehensive
human rights impact assessments in our 10 highest
risk markets by the end of 2025. During 2022,
we completed our sixth and seventh assessments
since 2018. As with previous exercises, these mostrecent assessments helped us better understandand address our impacts, proactively identify risks,and sophisticate our approach both in terms ofscope, reach, and stakeholder engagement.

As we continue to move along our company’s
new trajectory, we value the perspectivesof our stakeholders, and we will continue toconstructively engage with them towards
meaningful and impactful change. We hope thisreport provides a useful overview of our approachto promoting and protecting human rights.

Underpinning our Human Rights Commitment, wehave policies, practices, and programs in place that
contribute to protect and promote the rights of our
stakeholders throughout our value chain, including ourtobacco supply chain, our electronics supply chain,
our workplace, and our downstream commercial
activities. Our comprehensive approach tosustainability aims to ensure that success is achieved
while respecting environmental and social boundaries.

Jacek Olczak
Chief Executive Officer

These policies and programs are the product of yearsof transformative work at PMI. We recognize there
has been evolution in what society and stakeholders
expect from companies regarding respecting humanrights across their value chain, recently leading tolegislation being introduced in certain countries.

03

Philip Morris International – Human Rights Report 2023

Key milestones in PMI’s approach to human rights

1847
2017

2011
• Adoption of UN Guiding Principles
on Business and Human Rights• First company-wide humanrights saliency mapping• Refresh of company-wide
human rights saliency mapping• Launch of PMI’s Agricultural
Labor Practices (ALP) program• Publication of our first Human
Rights Commitment• Training on human rights of PMI
security personnel completed,in cooperation with ICoCA• Publication of updated PMI’s
Human Rights Commitment• PMI’s Board of Directors adopts
PMI’s Statement of Purpose,
reaffirming the company’scommitment to deliver asmoke-free future

2018• Publication of
our Human
Rights Roadmap

1847
2022

2020

Human Rights
Roadmap2023• Launch of ALP
Step Change
approach andintroductionof externalverification2013• Launch of external assessments
in PMI’s agricultural supply chain,conducted by Control Union, an
independent third-party auditor

2021
2019

2016

• Launch of business & human rights
e-learning available to PMI employees• Targeted saliency mappingin electronics supply chain• PMI joins the Responsible
Business Alliance (RBA)• PMI announces its ambition
to deliver a smoke-free future,
shifting its resources toward thedevelopment and responsible
marketing of scientifically
substantiated smoke-free products

0405

Philip Morris International – Human Rights Report 2023

Our approach to human rights
PMI’s human rights strategy

Human rights are inherent to the dignity ofhuman life and a prerequisite for businesses andsociety to prosper. At PMI, we are committed
to respecting human rights in all our operations
and business relationships. We seek to placerightsholders at the center of all we do. Our approachto human rights is grounded in international
standards, including the UN Guiding Principles
on Business and Human Rights (UNGPs).

At PMI, we are committed to business practices
that respect internationally recognized humanrights, and we uphold the principles enshrined in
the UNGPs. We commit to respect the International
Bill of Human Rights and the International Labour
Organization’s 1998 Declaration on Fundamental
Rights and Principles at Work, and to endorse theOECD Guidelines for Multinational Enterprises
as well as the OECD Due Diligence Guidancefor Responsible Business Practices. Across ourvalue chain, we work to identify and address ouradverse impacts and maximize opportunities
to drive positive change for people whom ouractivities may affect. Setting a strong foundationand integrating respect for human rights into
our organization are essential. While this can bechallenging given the scope and complexity of theissues and the breadth of our operations, we believethat human rights are an absolute and universal
requirement— one we are committed to uphold.

At PMI, advancing the promotion and continuous
integration of human rights considerations into ourstrategy, policies, and business practices is not justthe right thing to do; safeguarding and promoting
human rights within our value chain creates thebasic environment and conditions in which our
stakeholders, including our employees and workers
across our supply chain, can thrive and create value.
It assists us to proactively prevent the risk of supply
chain disruptions. Further, in combination with apositive, inclusive culture, and sound management,
this provides the space and opportunity needed forour key business enablers of innovation, collaboration,
continuous improvement, and execution.

We seek to place rightsholders at the center of all
we do. Our approach to human rights is based onfour pillars: a sound policy framework, rigorous
due diligence, remediation, including throughgrievance mechanism channels, and transparency.

In parallel, society increasingly holds companies
to a higher standard with regards to human rights.
Consumers, investors, employees, shareholders,
and wider stakeholders are increasingly concernedwith the potential and actual negative impacts
which businesses can have on human rights, society,and the environment. Having the right policies andpractices in place helps PMI to meet evolving policy
and regulatory requirements, while minimizing
risk and potential exposures. Concepts withininternationally recognized voluntary frameworks
such as the UNGPs and the OECD Guidelines forMultinational Enterprises are fast evolving into
regulatory requirements. Moreover, additional
international and local regulations, such as the
proposed EU level Corporate Sustainability Due
Diligence Directive (CSDDD), if adopted, would oblige
companies to conduct human rights due diligenceacross their operations and supply chains globally.

Respect for human rights is deeply woven into
our broader approach to sustainability, which
focuses on developing strategies that can
successfully address the environmental, social,and governance topics identified as a priority
by our sustainability materiality assessment.
In 2021, we conducted a sustainability materiality
assessment (find more details in dedicated reportavailable here). Findings helped us to establish
eight impact-driven strategies aimed at addressing
the social and environmental impacts generated
both by our products (“what” we produce) andour business operations (“how” we produce). We
recognize that implementing these eight strategies
depends on having the proper policies, rules, andprocedures in place, and, therefore, we surfaced ninepriority governance-related topics in our strategy.

06

Our human rights strategy

A sound policy framework
Our work is governed by PMI’s Human Rights Commitment,
implemented by PMI’s principles & practices. Awareness-raisingand training help us embed these instruments and an ethos ofrespect for human rights within our corporate culture.

aRead more on pg. 10

Rigorous due diligence
We have robust programs and processes in place to identify ouradverse impacts across our value chain. These include our companywide integrated risk assessments, human rights saliency mappings,
and human rights impact assessments, as well as targeted due
diligence programs focused on areas of potential risk.

aRead more on pg. 14

Remediation
We implement measures aimed at addressing adverse impacts and maximizing
opportunities to drive positive change for people across our value chain.
We seek to collaborate with various stakeholders on initiatives to designand deploy strong and impactful solutions. Wherever adverse human rights
impacts occur, we will strive to ensure affected individuals have access toeffective remedy. We provide grievance mechanisms that are in line with the
UNGPs and encourage our business partners to do the same. We promoteawareness of our grievance channels, including within our value chain.

aRead more on pg. 24

Transparency
A complex global value chain brings potential human rights risks
that we need to understand, manage, and continuously address.
Transparency on our progress and challenges through our annual
reporting and targeted communications is key to our approach.

aRead more on pg. 42

07

Philip Morris International – Human Rights Report 2023

In our latest sustainability materiality assessment,
we did not consider “human rights” as a standalone
topic, but rather as an ever-present topic relevant
across our company and all Environmental, Social, andGovernance (ESG) issues. Thus, we feature “respectfor human rights” as a fundamental governancepriority, emphasizing the need for a structured
and comprehensive approach. We also elevated“respect for human rights” in our ESG framework.

Progress requires clearly articulated targets
and accountability for meeting them. We
developed a set of KPIs linked to each objective
in our 2025 Roadmap, which articulate how tomeasure progress and define success. These
19 KPIs constitute our Sustainability Index,
allowing us to track our company’s performanceyear-over-year across our priority ESG areas,
which include respect for human rights.

a

Our 2025 Roadmap consists of 11 critical objectives
connected to our eight strategies. This guide offers
direction to our stakeholders by clearly outlining thesocial and environmental impacts we aim to achievewith both our products and our business operations.

ien

sibl

eR

&D

Fos
te
i nc r a n
l us e m
ive

of
fe
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l
of h a i n
it y p ly clu a ups

Im pr
peo oveple the
in
ou q
r

sc

ne

Respo
n

Purposefully phaseout cigarettes

Reducepost-consumer
waste

and
red e
we lacp o r kpow

Seek net
positive impact
in wellness andhealthcare

Our company’s policies, rules, and procedures define
our ability to implement sound strategies that can help
address human rights risks. In that regard, our Ethics &Compliance program and broader Legal & Compliancedepartment help us ensure we conduct businessethically and with integrity, setting clear standards,
expectations and investigating potential concerns.

In more detail, the Sustainability Index is now
included as one of our performance metrics forequity awards, amounting to 30 percent of the2022–2024 performance share units (PSUs)
performance cycle. Following the index’s structure,
its KPIs are aggregated into two main drivers:
Product Sustainability and Operational Sustainability,reflecting key performance indicators pertaining
to social and environmental impacts. One of the
KPI pertains to progress toward our aspiration to
conduct human rights impact assessments in our
10 highest-risk markets by the end of 2025.

The Chief Sustainability Officer (CSO) heads
PMI’s Sustainability Team, which leads thesustainability materiality analysis, manages
reporting on performance, and coordinates strategy
implementation across our business. She updates
the Sustainability Committee on a quarterly basisand hosts a quarterly Sustainability Group—composed of functional leaders. The Nominating
and Corporate Governance Committee (NCGC)
and full Board of Directors are each updated atleast once per year by the CSO on sustainabilityrelated matters, including human rights.

aea g sue m pple n y ch
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ge

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ch

ce

ty

te

re

a bilia p r ivacy

P ro d u c t r e l i

Maximize thebeneﬁts ofsmoke-free
products

Our governance structure ensures that we conduct
our business with high ethical standards and integrity.
Integrating sustainability and human rights into ourcompany relies on a formal structure with clear
accountabilities at different levels of the organization.

tu

oti

e nt

k
Tac

Ni c

g a ge m

Our executive compensation program reflects
our commitment to put sustainability at the coreof our corporate strategy. In 2022, performancebased annual incentive awards were assessed on six
growth measures, which are heavily focused on ourtransformation to smoke-free products and include
the drive for material and measurable progress inpriority sustainability corridors, alongside transparent
and clear sustainability reporting, and disclosure.

Specifically, our work on human rights is managed
by a team that sits within the Operations
department and works cross-functionally withsustainability leaders. They are present in eachfunction and are responsible for accelerating theimplementation of the human rights strategy.

rt fo t sec
s p righ
Re an
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hu

ce

St

eh
ak

ol

en
der

Read more about our approach to sustainability,
our 2025 Roadmap, and our Sustainability Index
in PMI Integrated Report 2022

Governance and management

rﬁ
Fai

in

Busin es

sc

p
al

ra

s i nte g rit y

08

09

For more information on the executive
compensation program, see our Proxy Statement
2023 and our Integrated Report 2022

Our work is governed by PMI’s Human Rights
Commitment. From its first iteration in 2017, our aim
has been to continuously evolve our approach asreflected in the latest update of the Commitment
published in 2022. Our refreshed Human Rights
Commitment aligns with the findings of our 2020
human rights saliency mapping and now also includes:

A sound policy
framework
Our Human Rights Commitment articulates
our commitment to respect human rights inall our operations and business relationships.
We aim to promote and embed these values
throughout our company culture.

Human
RightsCommitment

Introduction to PMI’s Human
Rights Commitment• The Framework Principles on Human Rights and theEnvironment, following recognition of a healthy
environment as a human right by the United Nations(UN) in Human Rights Council in 2021 and by the
UN General Assembly in 2022.

At PMI, we are committed to business practices
that respect internationally recognized humanrights and we uphold the principles as enshrinedin the United Nations Guiding Principles on
Business and Human Rights (UNGPs).

• The respect of the UN Declaration on the Rights ofIndigenous Peoples, and the Free Prior Informed
Consent (FPIC) principle in PMI’s project activities
that encompass significant land transformation
especially when it is linked to communities’ land rights.

SUPPLY CH A IN

• The OECD Guidelines for Multinational Enterprises,
which build upon the UNGPs.

• Data privacy, including managing personal data ina transparent and secure way as per PMI’s Global
Privacy Program, internal policies and privacy notices.

HUMAN RIGHTSCOMMITMENT• Mental well-being as part of a safe and healthy
work environment for employees and contractors.

OUR COMMITMENT TO HUMAN RIGHTS

Protecting and promoting the rights of our stakeholders is paramountto Philip Morris International Inc. (“PMI” or the “Company”). As a global
company, we work on respecting human rights within our organization andacross our value chain, taking a systematic approach following the United
Nations Guiding Principles on Business and Human Rights.
While PMI is widely known as a cigarette company, in 2016 it announced its new purpose: to deliver a smoke-free future
by focusing its resources on developing, scientifically substantiating, and responsibly commercializing smoke-free productsthat are less harmful than smoking, with the aim of completely replacing cigarettes as soon as possible.
As expressed in PMI’s Statement of Purpose, in the process of transforming its business, the Company has expanded
its social, human, intellectual, and manufactured capital in ways that allow it to go a step further, moving from a value
proposition centered on doing less harm toward one where it can seek to have a net positive impact on society. PMI
is now actively working to expand its purpose and evolve into a broader lifestyle, consumer wellness and healthcarecompany, extending its value proposition and innovative capability to commercialize products that go beyond tobacco andnicotine.

Jacek Olczak
Chief Executive Officer

Our policy framework

PMI OPER ATIONS• The ILO Conventions No. 138 on Minimum
Age and No. 182 on the Worst Formsof Child Labour also included in ourAgricultural Labor Practices (ALP) Code.

Our Human Rights Commitment is implemented
by PMI policy instruments covering specific areasof our value chain.
We are committed to conduct human rights impact
assessments to our 10 highest-risk countries withfindings addressed by 2025. Such assessments allow
us to proactively identify and mitigate potential
adverse human rights impacts, informing our routeof travel and where we must focus our efforts.

Responsible sourcing principles (RSP)

Agricultural Labor Practices(ALP) CodeIn our tobacco supply chain, ourAgricultural Labor Practices Codeprovides 7 Principles and 33 measurable
standards to improve working andliving conditions on tobacco farms.

PMI’s Code of Conduct
Our Code of Conduct affirms PMI’s practices that guide the work of our teams globally.
It formally documents our commitment to compliance, ethics, and business integrity.
It also brings together a set of policy frameworks (Compliance Principles and Practices)that aim to reinforce PMI’s work for the protection and promotion of human rights.

Our Marketing Code for Non-Combusted Alternatives and Marketing
Code for Combusted Tobacco Products establish the core principles,
practices, and governance processes to follow when developing, designing,marketing, engaging with adult consumers, and selling PMI’s nicotinecontaining products. They enshrine our commitment to market our products
responsibly to adult consumers and help safeguard against youth access toour products. Our Marketing Codes are also accompanied by a set of internal
guidelines that provide more detailed information on implementation.

page 1

See our Human Rights Commitment here

10

The Responsible Sourcing
Principles details theprocess and performancerequirements we expect
all suppliers doing businesswith PMI to apply, witha goal to achieve measurable,
tangible improvements inour supply chain.

Marketing Codes

COMMERCI A LIZ ATION

A sound policy framework

Philip Morris International – Human Rights Report 2023

11

A sound policy framework

Philip Morris International – Human Rights Report 2023

Employee awareness and training
Embedding an ethos of respect for human rights in our corporate culture and an understandingof its implications in business decisions, starts with awareness-raising and training.
Our key trainings include:

Business and Human Rights

Ethics and Compliance

In 2019, we launched an e-learning to give our
employees a practical understanding of human rights
risks and the expectation for PMI’s Human Rights
Commitment to be embedded through our operationsand value chain. We developed the training incollaboration with an external expert organization,and its various modules align with our most salient
risks by covering child labor, forced labor, freedomof association, and environmental stewardship. The
e-learning seeks to explain what human rights are,how they relate to both PMI and each employee, andthe role of employees in helping safeguard them. We
made the e-learning available to all employees andhave integrated it into existing learning frameworksof certain business functions, such as Operations.
In 2022, we made the e-learning available in sevenadditional languages. This key step aims to facilitate its
accessibility and widen the scope of colleagues acrossour global operations to learn about human rights.

We use training and communication to help
employees understand which standards, aligned withthe company’s Code of Conduct, are relevant to theirroles and how to apply them in their daily work. We
reach broadly across the organization using multiple
formats and languages. Key topics addressed include
workplace integrity, speaking up, conflicts of interest,
responsible marketing, privacy, and anti-corruption.

“Respect for Human Rights is integral to ourapproach to security worldwide. We work
to ensure our business practices reflect thevalues and principles adopted by PMI and
the international community. Training andawareness among our own team is an
ongoing priority in this journey, in addition
to holding our key security provider
partners accountable.”
Richard Gould Vice President, Global Security & Market Safety

Inclusion and Diversity
In 2021, we created a new global pathway for
women’s empowerment, the first program to be
developed with our Inclusion & Diversity (I&D) team.
As it focused on high-potential female employees, morethan 50 senior female leaders participated in thesix-month program. In 2021, we also continued ourefforts to build a culture of inclusive behaviors throughour I&D learning curriculum. We support teams inaddressing challenges through a set of e-learning
experiences in which employees learn about the origins
of bias and the various ways it shows up in organizations.
Participants receive practical tools and techniques tocombat prejudice and preconceived notions.

Security and Human Rights
In some cases, our business and human rights
e-learning was rolled out as a mandatory
requirement for priority teams, such as Security.
By the end of 2020, all Security employees hadcompleted it. In addition, in the same year, toensure more detailed and practical understanding,we partnered with International Code of Conduct
Association (ICoCA) to deliver focused training
to all security regional and country heads.

In 2022, we piloted a new program called “Elevate” tosupport the development of women in managerial
roles and career progression. The pilot, which received
positive feedback, was undertaken in the Market
Safety & Security team.

12

13

Rigorous due diligence

Philip Morris International – Human Rights Report 2023

The mapping highlighted the need to focus on ourcompany’s biggest and most pressing negative
externality: the health impacts of cigarette smoking.
Tackling product health risks by researching,developing, and commercializing scientificallysubstantiated nicotine-containing products thatare less harmful alternatives to cigarette smoking—and providing broad access to adult smokers who
would not otherwise quit smoking—is the mostimportant contribution we can make to publichealth. Our aim is to ultimately make our legacy
product, cigarettes, obsolete. While we work
toward this aim, it is essential that we establish andimplement policies and practices that guide theresponsible commercialization of our products.

Rigorousdue diligence
Our company-widesaliency mapping
Our first company-wide saliency mapping was
conducted in 2017. It was then refreshed in 2020 toreflect changes in the business in the context of rapidtransformation and heightened understanding of
human rights.
In the refresh, Article One, our human rights advisers,
mapped all aspects of PMI’s business against the
Universal Declaration of Human Rights and ILO
Core Conventions. Based on this mapping, Article
One identified and prioritized salient human rights
risks. The process was informed by a desk review,
management and stakeholder interviews. Salient
risks were prioritized in line with the UNGPs, by
focusing on scale, scope, remediability and likelihood.

It also confirmed that risks are heightened in casesof use of our products by youth. Nicotine products,
including smoke-free alternatives, are not risk-freeand should not be used by them. We have robust
measures and processes in place to prevent nicotine
products from being sold to youth and we have theopportunity and an imperative to continuously engage
in responsible marketing and commercialization.
For employees and contractors, workplace health andsafety, working hours and wages, and diversity, equity,equality, and inclusion were surfaced as salient risks.

Like the 2017 mapping, the 2020 refresh focused on
key groups of rightsholders: consumers, employees
and contractors, suppliers and supply chain workers,
and communities.

For our suppliers and supply chain workers, thesalient risks identified included risks of child laborand forced labor and modern slavery, on farms andin factories. The initial risk of freedom of association
identified in our 2020 saliency mapping was replacedby safe work environment, which was further
confirmed as a key priority across our supply chain.

Following the 2020 refresh exercise and in
preparation of this report, we fine-tuned evenfurther our approach to account for new
insights acquired through our human rights due
diligence implementation. The outcome of thisprocess was a revised, prioritized list of salient
human rights risks and opportunities for PMI(see the findings depicted on the next page).

The mapping also noted the environmental risks
resulting from our activities and supply chain
footprint, as well as impacts related to the sourcing
of conflict minerals. In both risk areas, there could
be adverse impacts for communities, globally.

The saliency mapping identified risks specificto particular rightsholder groups.

On the basis of the findings of our saliency mapping,
we developed strategies to minimize these salient
risks and maximize PMI’s opportunities for positive
impacts. This report is structured accordingly, with
relevant sections describing how PMI mitigates theidentified risks pertaining to each rightsholder group.

14

Human rights saliency mapping: Putting rightsholders at the center

Consumers

Employees
and contractors

Suppliers
and supply chain
workers

Communities

Products’health risk

Workplacehealth and safety

Child
labor

Environmental
stewardshipResponsible
marketing andcommercialization

Workinghours
and wages

Forced laborand modern
slavery

Conflict
minerals

Diversity,
equity, equality,
and inclusion

Safe work
environment

Access to grievance mechanisms

What is a saliency mapping?
A saliency mapping serves to identify and assess salient risks to human rights across our operations and value chain
from the perspective of the rightsholders. The analysis assesses risks against the rights within the UN Declaration of
Human Rights and based on the UNGPs indicators of a) scale, b) scope, c) remediability, and d) likelihood of negative
impacts. In order to understand how risks manifest, we assess current management and define areas for improvement.
This includes a desk-based review of our internal policies, procedures, and prior assessments, a media review bycompany and industry, as well as engagement interviews with key internal functional leads and external experts. In thisway, regular saliency mapping enables us to have a thorough understanding of PMI’s relevant risks. Measures to address
surfaced risks are developed and prioritized, alongside opportunities to support the realization of rights.

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Human rights saliency mapping in our electronics supply chain
For the sourcing of minerals and metals, especiallywith regards to conflict minerals, the main risks
concern potential child labor and forced labor,
health and safety conditions in the extraction andprocessing, poor working conditions (including
low wages), conflict and right to life concerns,
land rights violations, and environmental damage
for communities (e.g., soil degradation).

We remain cognizant of potential new andemerging human rights issues related to PMI’stransformation towards delivering a smokefree future. As our company transforms andventures into new areas, so does our value chain.
Accordingly, our focus expands into our electronics
supply chain, which is complex, very dynamic,
and brings specific challenges. Since 2016, wehave been working with stakeholders to assess
and improve human rights performance there.1

Lastly, the key risks identified for the sourcingof plastics and paints reflect similar risks aswith mineral and metal sourcing. These include
land rights and environmental impacts, unsafe
working conditions and long working hours,
the risk of forced labor and the restriction of
movement, particularly of migrant workers.

Our 2020 refreshed saliency mapping included anassessment of the range of risks associated withthe electronics supply chain. Building on this first
analysis, in 2021, we decided, alongside Article
One, to map and assess the salient human rights
risks in this specific segment of our supply chain.
This assessment focused on three pillars of
the electronic supply chain: manufacturing,sourcing of minerals and metals, andsourcing of plastics and paints.

Article One identified that there is a weakcausal relationship between PMI and thesesalient risks at the raw material stage, giventhat these commodities are sold to countlesspurchasers across multiple tiers.

The main risks associated with manufacturing
are related to working hours, working andliving conditions, and issues related to migrantrights (such as payment of recruitment fees).

1 You can view a case study on social impact in our electronics supply chain
from our 2018 Sustainability Report, which detailed our engagement with
suppliers to promote high standards for work conditions.

Overview of our electronics supply chain

Leveraging multi-stakeholder expertisein our electronics supply chain

TIER 3+

Trading, refining,smeltering,and processing

TIER 2Mining andextraction

Component
manufacturing

16

TIER 1

Electronics
manufacturing

We require our Tier 1 and Tier 2 PMImanaged suppliers to conduct an RBA
Validated Assessment Program (VAP)
audit, conducted by independent external
auditors to review electronics suppliers’
sustainability performance against our RSP.

Following this human rights saliency mapping, we
implemented a key recommendation from Article
One and, in 2021, we joined the Responsible
Business Alliance (RBA), the electronics industry
initiative for sustainable supply chains.

Going forward we will continue strengthening
our human rights due diligence approach in
the electronics supply chain, including bypiloting the RBA Workers’ Voice as well as
the Responsible Factor Initiative (RFI) whichassists suppliers to gain further insights
and improve their sustainability journey.

We are leveraging RBA’s stakeholder network,
expertise, best-in-class methodologies and tools,
including members’ audit reports, to enhancethe evaluation and performance of our suppliersin the electronics supply chain. We engage new
suppliers in the RBA online training platform
in order to increase their knowledge of bestindustrial practices and use of RBA tools.

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Assessing our humanrights impacts

Human rights impact assessments

Human rights impact self-assessments
2018

1. Human rights impact assessments (HRIA)
Carried out by independent expert organizations andfollowing a formal process aligned with the UNGPs,
HRIA allow us to proactively identify risks andmitigate potential adverse impacts in our operationsand value chain. At the end of each HRIA, a reportis shared with the relevant market leadership team,which then develops a tailored, cross-functional
action plan with timeline, assigned responsibilities andprogress measurement. The Operations Sustainability
team supports and guides the markets during theimplementation of the action plan, receiving biannual status updates from the local teams.

PMI is committed to conducting its business according
to the UN Guiding Principles on Business and Human
Rights (UNGPs) and thus identifying, analyzing,
preventing, mitigating, and accounting for any adverse
human rights impact related to our operations andbusiness relations throughout our value chain.
Assessing human rights impacts is a fundamental
piece of our program. Human rights impact
assessments (HRIA) and targeted due diligenceprograms are an essential tool for proactively
identifying and addressing risks before they
become adverse human rights impacts.

Our approach

2. Human rights impact self-assessments
To ensure all countries can be assessed, not just thoseat highest risk, we piloted a new type of assessment
process in 2021. In early 2023, we worked with
Article One to further refine the self-assessment
toolkit. We plan to roll out this refreshed toolkit thisyear. Our aim is to allow affiliates in medium- andlow-risk markets to self- identify salient humanrights risks and impacts in their markets and todevelop action plans to address them. These selfassessments are guided by a toolkit and processthat align with the UNGPs and include guidance
and review from external expert advisers.

To be effective, our approach to assessing humanrights impacts must be scalable, consistent, andcomprehensive, covering both our operations andour value chain. To this end, it must account forthe specificities of our business activities and thedifferent risk contexts in which we operate.
To identify and prioritize markets that have thehighest inherent human rights risk, we refer to a range
of independent, credible international indices, such as
the Freedom in the World Index and the International
Trade Union Confederation (ITUC) Global Rights
Index on Labour Rights. We also factor in the extent
and nature of PMI’s footprint in each market, including
presence of manufacturing facilities and type of
supply chain. Based on this range of human rights
indicators, we classify our markets according to higher,
medium, and lower risk. Accordingly, we deploy
appropriate due diligence assessment processes
to identify, assess, and address risks within each.

Mexico2019

Philippines

2020

Mozambique
Russia2021

Turkey3. Targeted due diligence programs
We deploy targeted due diligence programs
focused on areas of potential risk, such as in our
tobacco and electronics supply chains, which
involve external assessments and verifications,
including social compliance audits.

Belgium,
Netherlands,
Luxembourg

2022

These assessments help us continually improve
our approach to respecting human rights, focusing
on where we can have the biggest impact, while
ensuring scalability. We review the findings andrecommendations from each assessment and develop
action plans for risk mitigation and remediation.

In this way, we tailor our approach to each market
using mainly three levels of due diligence basedon its inherent risk level, our activity, and supply
chain context (e.g., agriculture, electronics, or
corporate affiliate):

MexicoBrazilMalaysia

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Human rights impact assessments
in PMI’s highest risk markets

This collaborative setting allows us to share our bestpractices and challenges with the rest of the industry,
encouraging open dialogue, and further sharing
opportunities and insights on how to implement
actions on the ground.

For the high- and some of the medium-risk contexts,
we commission external experts to carry out humanrights impact assessments. In 2022, Article One
completed our sixth and seventh HRIA since 2018,
focusing on Malaysia and Brazil.

Last but not least, in addition to identifying andaddressing salient human rights risks, the cumulative
learnings from each HRIA we have conducted—along with the monitoring of their action plan
implementation—help us learn and strengthen ouroverall human rights program.

Following a formal process aligned with the UNGPs,
our HRIA includes five steps.
It starts with an in-depth review of international anddomestic standards and regulations, key internal
policies and processes, country-level human rights risk
reports, and credible third-party reports on humanrights risks related to the market and industry. This
step is followed by interviews with stakeholders,
including key internal functions, as well as external
experts including academic experts, civil society
groups, and business associations to ensure all risks
are surfaced. A crucial element is direct engagementwith rightsholders, by means of extensive focus
groups with workers in our own operations and in
our supply chain in the assessed market. Participationin these focus groups is voluntary, and our approachis collaborative and respectful at all times.

COVID-19: Adapting our methodology intimes of a global pandemic
The challenges of the global pandemic, suchas mobility restrictions and relevant healthrisks, forced us to temporarily adapt to conduct
human rights impact assessments remotely.
Whereas in-country on-site assessments werecarried out in Mexico, Mozambique, and thePhilippines pre COVID-19, in-person engagement
and travel were restricted during the pandemic.
Throughout this period, our priority was theprotection of the health, safety, and well-beingof our employees and all stakeholders. We
were intent on continuing with our humanrights due diligence work as far as feasible while
respecting public health guidelines. As a result,
we re-shaped our approach and conducted two
assessments in Russia and Malaysia with remotestakeholder engagement via video conference.

We ensure that our consultants engage with adiverse and representative sample of stakeholders,
including for example migrant workers, contract
workers, newer and seasoned employees, parents,
and women workers. If needed, our consultants may
re-engage with internal functions to ensure clarity andcomprehensiveness of the assessment. Each HRIA
results in a report setting out key findings, including
potential and actual risks and positive impacts, andpresents actionable recommendations and areas
for further assessment. The assessment report isshared with the corresponding market leadershipteam and is translated into tailored action plans for
implementation, including timebound deadlines, which
we then monitor and report on. Responsibility for
implementation is designated to relevant functions.
Local teams strengthen their internal policies andpractices as they execute their action plans.

While field visits and direct interactions areinvaluable and will continue to be a coreelement of our due diligence going forward,
the opportunity to conduct interviews andfocus groups via video conference allowed us
to advance these critical assessments despite
the restrictions, capturing important pandemicrelated findings. Lessons learned in Russia andMalaysia will help us improve virtual engagementin the future. Due to the virtual nature of ourinterviews, it was possible for us to connect withinternal and external stakeholders, from nonprofits to academia and business associations,
across a wider range of locations in Russia
than would have been feasible in-person. This
provided us with additional insights into the rangeof potential human rights risks within Russia.

We have also conducted targeted HRIA of ourtobacco leaf supply chain with industry peers in
Turkey and Mozambique, to foster collaboration andcommon understanding of potential human rights
risks and impacts among industry players.

20

The process of a human rights impact assessment

1

Preparation

Review of policies,
procedures, and controls

Interviews with key
stakeholders within PMI

2

Methodology
and research

Definition of method and scopeof the assessment

3

Assessment

4

Integration

5

ReportingOn-site visits and interviews withrightsholders, including internal andexternal stakeholders

Based on thefindings, development ofrecommendations, and acorresponding action plan

Monitoring of thefollow-up actions,
including bi-annual status
updates with Operations
Sustainability

 Reporting on progress against the action plan
and learnings from the assessment

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Self-led assessments in lower
human rights risk contexts

External assessments and external verification of ALP implementation in our tobacco supply chain

One challenge we have faced is getting our affiliates
to become comfortable to sign up to carry out
this self-assessment. This is, in part, due to thecomplexity of the current toolkit, and their lack ofexperience in identifying human rights risks andimplementing the UNGP framework. Based on theseimportant insights, we decided to work with Article
One to streamline the current process, without,
however, sacrificing the nuance of effectiveness of
the assessment. A revised toolkit was developed inearly 2023, which will enable us to strategically scale
self-assessment and further embed due diligenceand stakeholder engagement in lower risk markets.
We plan to roll out the new toolkit this year in selectmarkets and to continue strengthening our approach.

For our operations in lower risk countries, we havepartnered with our human rights advisers Article
One to develop and implement a comprehensive
self-assessment tool that mirrors the work of a full
HRIA. The aim is to help our local teams identify
and understand risks to human rights before theyturn into adverse impacts. Practically, the selfassessment involves a mixture of desk research andinterviews with internal and external stakeholders.
The internal project lead, using assessment andengagement tools, identifies and prioritizes salient
human rights risks. Throughout the process, theOperations Sustainability team and Article One
oversee the exercise and provide feedback andsupport to the project lead and internal stakeholders.
Where necessary, Article One steps in to support
external engagement. Using the self-assessment
toolkit and process, the internal project lead from
PMI’s affiliate carrying out the self-assessment can:External assessments by Control Union

Targeted due diligence programs
Certain risks are more prevalent in different
segments of the supply chain. In addition to ourglobal human rights due diligence work, we also put
in place targeted programs addressing sector-specificrisks in our tobacco and electronics supply chains.

• Assess the degree to which each identified
risk is managed by existing processes

In particular, through our Agricultural Labor Practices(ALP) program, we have a strong due diligenceframework to evaluate the implementation of
our ALP Code across our sourcing countries.

• Develop a practical action plan to enable
PMI to mitigate risks and maximize
opportunities for positive impact

It comprises internal farm-by-farm monitoring by fieldtechnicians, external assessments by Control Union,and external verification by specialized third parties.

• Meet and exceed evolving standards,
regulations, and stakeholder expectations
and international standards.

Regarding our electronics supply chain, as
mentioned above, we joined the Responsible
Business Alliance (RBA) in 2021, with the objective
to leverage on the experience and available tools
provided and bring a stronger structure in ourdue diligence framework in this supply chain.

This self-assessment model was piloted in
Belgium, the Netherlands, and Luxembourg
cluster markets (Benelux) in 2021. The Benelux
team developed an action plan that included
short- and long-term objectives. Our affiliate in
Mexico also participated in the pilot phase of
the human rights self-assessments, to conduct a
refresh of the HRIA completed there in 2018.

Globalroll-outof ALP
Program

2010

2011

2013

2014

2015

2016

2017

2018

Verité
assessment

Our work in both our agriculture and electronics supply
chains are further explored in the sections below.

External verification by specialized third parties

22

23

2019

2020

2021

2022

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Consumers

Addressing products’ health risks andresponsible commercialization

We aim to place consumers and their rights at theheart of our business. Our priority is to advanceour business transformation to a smoke-free
future and address the health impacts associatedwith smoking by offering smoke-free, sciencebased alternatives that have been proven to be a
far better choice than cigarettes for those adults
who would otherwise continue to smoke.

Remediation

Focus on rightsholders
Employees
and contractors

Consumers

Cigarette smoking is the most dangerous form of
nicotine consumption. People who do not smoke
should not start. Those who do smoke should quit
nicotine and tobacco altogether. However, given thatmany adult smokers continue to smoke, we started
commercializing scientifically substantiated better
products, which could play a role in moving adultsmokers away from cigarettes. Extensive scientificresearch has shown that smoke-free products havethe potential to be a less harmful alternative tosmoking, and those adults who smoke and wouldn’t
otherwise quit smoking would benefit from switching
to such alternatives. The evidence on our smokefree products to date, including experimental andreal-world data, points towards harm reduction. Our
most thoroughly assessed smoke-free product is the
IQOS tobacco heating system and we will continue
our rigorous scientific assessment going forward.
We also conducted chemistry and indoor air quality
studies, which demonstrated that the use of IQOS
does not negatively impact indoor air quality.

Through our responsible commercialization efforts,
we aim to persuade as many of our consumers as
possible to replace cigarettes with scientifically
substantiated smoke-free alternatives.
We deploy a four-pronged approachto address these critical issues:
1. Develop science-based, less harmful
alternatives to cigarette smoking.
2. Broaden access to smoke-free products
for those adults who would otherwise
continue to smoke, ensuring this helps
accelerate smoking prevalence decline.

a3. Purposefully phase out cigarettes.
4. Market all our products responsibly.

Suppliers
and supply
chain workers

The public health benefit of smoke-free products
depends not only on their potential to reduce theindividual risk of smoking-related disease but also on
their actual use by adult smokers as alternatives tocigarettes and other combusted tobacco products. For
adult smokers to switch to them, these alternatives
must be known and accessible. To the extent
permitted, we deploy relentless efforts to improve andincrease consumer awareness, acceptability, availability,
and affordability of our smoke-free products. Lack of
information about—and awareness of—smoke-free
products, and of the fact that they are a better
alternative to continued smoking, is a big hurdle toachieving tobacco harm reduction. For adult smokers
to consider switching from cigarettes, it is fundamental
to make smoke-free alternatives conveniently available,
and to advocate for an appropriate fiscal frameworkthat will incentivize switching by applying differentiatedtaxation to less harmful alternatives to smoking toensure they are affordable. In that context, adifferentiated regulatory framework allowing the
products to be sold and adult smokers to know thatthese products exist and are available, while introducing
the necessary safeguards against unintended use suchas by youth, is also essential.

Communities

Through the due diligence measures describedabove, PMI identifies and addresses salient
human rights risks faced by four rightsholder
groups, including consumers, employees
and contractors, suppliers and supply chain
workers, and communities. It is only throughidentifying and considering the practicalchallenges faced by each rightsholder groupthat we can begin to understand how we canprevent, mitigate, or remediate, potential or
actual adverse impacts on human rights. In thissection, we summarize the most salient risks andapproaches in our efforts to address them.

Listening to the concerns and suggestions ofrightsholders is essential. We encourage everyone
to speak up and raise concerns relating to any
potential violations of PMI’s Human Rights
Commitment. We provide and promote grievancemechanisms that are in line with the UNGPs andencourage our business partners to do the same.
Further, we recognize that some groups may be
at greater risk of adverse human rights impacts
due to their vulnerability or marginalization, suchas women, children, and migrant workers, and alsorisks for those who speak up about human rights
concerns. We will prioritize efforts to engage
with these groups and address relevant risks.

24

Seeking net positive impact
in the longer term
Notwithstanding its critical importance,
achieving a smoke-free future is not our final
horizon. We are simultaneously exploring
adjacent opportunities for growth in wellness
and healthcare, leveraging the capabilities
we have accrued and developed whiletransforming our business. It is throughthese avenues of growth that we will achieve
our ultimate goal: becoming a business thathas a net positive impact on society.

aRead more about scientific results withsmoke-free products here

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assessment reaffirmed continued guarding against
youth access to products. This is an ongoing effort,
and we strive to improve continuously within ourmultifaceted approach to youth access prevention.

Our core business strategy is to develop andresponsibly commercialize smoke-free products.
These products are not risk free and provide nicotine,
which is addictive. We want those adults who
would otherwise continue to smoke to understandthe risks and benefits of our smoke-free products
compared with continued cigarette use. They alsoneed to understand that quitting tobacco andnicotine altogether is the best option. We apply strict
principles regarding how we communicate aroundthe risks and benefits of our smoke-free products.

Specific requirements set in our Marketing
Codes to guard against youth access to our
products
The global youth access prevention requirements
included in our Marketing Codes apply to all ourcommercial activities, even when not required by
local laws. These stringent standards, combined with
our responsible approach to marketing (in terms ofchannels and content) reduce the likelihood that our
products and related consumer communications reachor are particularly appealing to youth. A fundamental
requirement is that a consumer’s age must be verified
before they can purchase our products— ensuring
they are of legal age to purchase or at least 18 years
old (in markets without a minimum legal age).

A cross-functional team, consisting of scientists,
market researchers, lawyers, communication
experts, and marketers, reviews product claims
and consumer messages about our productfeatures and benefits, to ensure that all statements
are accurate, clear, and non-misleading.
Our Human Rights Commitment recognizes theimportance of having strict measures to ensure
implementation of our marketing standards. Our
marketing and sales principles and practices arecodified in two separate Marketing Codes: onefor combusted tobacco products and one forsmoke-free (or “non-combusted”) alternatives.
We rolled out updated versions of these Codesinternally early in 2021 and trained employees
and relevant third parties, encouraging them toprovide feedback and seek clarification as needed.
The Codes are subject to a robust governanceprocess under the responsibility of the Marketing
Review Council, composed of members of ourcompany’s management. The Marketing Codes
and their implementation is stringent: for instance,
we do not pay for product or brand placement
for combusted and smoke-free products, inentertainment programs, films, radio, video games,or any other program disseminated to the public.

Requirements in our Marketing Codes also shape
the content of our creative materials, ensuring, forinstance, that they do not contain images of models
who are, or appear to be, under age 25 or imagesof youth-oriented celebrities. They also guard
against product placement in places or channels
frequented primarily by minors; this means that
our advertising, marketing, and sales materials areplaced, for example, where the audience is reasonably
estimated to be at least 75 percent above legal age.

B2B Youth access prevention— engaging with
our trade partners
We do not own or control the vast majority of retail
outlets that sell our products: Around 99 percent
of our sales occur outside our managed channels.
We set robust requirements and work with retailers
to ensure they understand why they should notsell nicotine-containing products to youth. These
measures complement the local regulations for youth
access prevention which we comply with and thatretailers must enforce. Our youth access prevention(YAP) programs in indirect retail channels combine
guidelines and tools to help our affiliates work more
effectively with their trade partners to guard against
sales of our combustible tobacco and smoke-free
products to minors. They are based on three pillars:(i) communication by our affiliates’ heads to the trade
partners reinforcing the YAP requirements set out inour Marketing Codes, (ii) online or in-person training

Youth access prevention
As a leading manufacturer of tobacco and nicotine
products, we have a critical role to play in guarding
against youth access to our products. Accordingly,
we follow strict principles to minimize the riskof unintended consequences, including youth
access to, and use of, our smoke-free products,
through a suite of measures designed to ensure
a holistic approach to guard against youth accessto our products. Our Human Rights Commitment
reiterated that our products, and marketing and sales
activities are not meant for youth. Our 2020 saliency

26

sessions with retailers’ staff, and (iii) materials suchas stickers, banners, or leaflets placed at the point ofsale. We are committed to maintaining high coverageof our shipment volume (minimum 90 percent) with
YAP programs in indirect retail channels. By the endof 2022, markets representing 91 percent of our total
shipment volume were implementing such programs.

operators, or banks) or scan an uploaded copy ofa person’s identity document ensuring frictionlessconsumer experience. Where the necessary
technology is not available, or where a person cannot
be age-verified using either of these methods,
alternative age-verification processes are applied,which include face-to-face age verification on delivery
by couriers or at collection pick-up points. Mystery
shopper programs remain an effective way to monitor
compliance with our responsible marketing andcommercialization requirements. In 2022, we moved
to a decentralized approach to allow markets todecide on the most appropriate way to achieve thisimportant compliance objective in the local context.

B2C Youth access prevention— efforts in ourowned channels
At our brick and mortar brand retail outlets, any adultconsumer who wishes to purchase our products must
be age-verified by a trained salesperson. In 2022,
when selling our products online, we implemented
online age verification methods integrating latest
technologies in 23 markets. When performing age
verification online, this requires that we leveragedatabases from reliable and credible sources (e.g.,
government organizations, telephone network

C A S E S TU DY

Upstream activities covering our tier 1 supplierof our electronic smoke-free devices aswell as our affiliate’s direct operations, including
the local plant and head office, were also
incorporated in the assessment.

First end-to-end humanrights impact assessment
At the end of 2021, alongside the expert
human rights advisers at Article One, we carriedout an end-to-end HRIA in Malaysia. For the
first time, we expanded the scope of our
HRIA to include downstream activities covering
IQOS retail stores.

The potential human rights risks associated withIQOS retailers dentified in the HRIA, included:• Heightened concerns of COVID-19 exposure,despite all protection measures taken,
reported by frontline workers in retail.
• COVID-19 also contributed to concerns
expressed about well-being, working
hours and fatigue due to standing andworking in personal protective equipment
for protracted periods of time.
• Because of consumers wearing masks,
retail workers raised the concern that age
verification could not be done throughface check in most instances and had
to be done through ID checks too.

a27

 ead more about the action plan implementedR
to address these outcomes as well as theother potential risks identified along the value
chain in the case study available.

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Employees and contractors

The HRIA we have conducted have consistently noted
PMI as an employer of choice, with a strong cultureof partnership, openness, and strong awarenessof grievance channels among employees andcontractors. At PMI, we want to ensure employees
and workers at our contractors have access torobust and effective grievance mechanisms. For
example, we acted upon the feedback from our HRIA
in Malaysia, working with the local management
team, to reaffirm in training and cultural materials
that PMI values feedback from its workers, andcontinuing to raise awareness and re-emphasize theintegrity and anonymity of the Speak Up channel.

Our employees are drivers of change and theambassadors of our purpose. Their engagementand dedication are essential to making PMI’s visionand strategic goals a reality. Treating people withrespect and dignity is central to the principles
that guide our business conduct. It is essential for
us to provide a fair and inclusive workplace that
upholds good working conditions and labor rights,
protects the health and safety of employees,
promotes their well-being, and offers opportunities
to grow and improve their employability.
As featured in our Human Rights Commitment, we
provide a safe and healthy work environment for
employees and contractors, to prevent accident
and injury and support mental well-being.

Workplace health and safety
Keeping people safe is a moral and business
imperative, as is affirmed in our Human Rights
Commitment. We are committed to providing a safeand healthy workplace that promotes a culture of
empowerment. Our Senior Vice President, Operations
oversees the company’s strategy and performanceon health and safety across our manufacturing sites,
fleet, and offices. The health and safety of employees
and contractors is covered by our management
systems, which are based on recognized guidelines
and standards, including ISO 45001. In addition, it
is assessed and audited internally and externally.

Our approach accounts for the findings of ourmost recent human rights saliency mapping,which highlighted the need to promote fairtreatment of workers and to mitigate:• risks linked to workplace health andsafety, including mental wellbeing,• risks related to working hours and wages, and• risks related to diversity, equity,equality, and inclusion.

Health and safety in our factories is coordinatedcentrally by our Global Manufacturing team, guided
by ambitious corporate targets. Each facility has
a dedicated team to ensure that standards are
met. In addition, external certification including
annual assessments and employee surveys
gauge the level of our sites’ safety culture, whichhelps us continuously improve. We conduct risk
assessments to identify hazards and implement
necessary controls. All incidents in our manufacturing
operations are subject to root cause analysis,
and we apply the same thorough approach to all
incidents involving contractors in our manufacturing
facilities. We use behavioral observation systems(BOS) in our factories to improve practices.

To understand and address the salient risks faced byour employees and contractors, it is essential to seek
their input and listen to them. Our HRIA include direct
engagement through focus groups with PMI workers,
contracted workers, and workers at key suppliers. We
take care in preparing these focus groups to ensure
representation of both permanent and contract
workers, women workers, trade union representatives,and other rightsholders. We employ a culturally
sensitive approach to these engagements and ensurethat participation is always voluntary and safe.

We seek to protect our employees by providing
safe vehicles and driver safety awareness programs,
aiming to achieve zero preventable fleet safety
accidents. Our target is to reduce high-severity
collisions, and ultimately, our goal is to eliminate
fatal accidents completely. PMI’s fleet safety
management system is based on recognized
standards such as ISO 14001 and ISO 39001 andcovers risk assessment, driver training, vehicle
safety, and driver behavior. A dedicated team—led
by our Vice President , Security and Market Safety
in coordination with local fleet safety committees—
manages security and market safety. In 2021, weissued a global policy governing the managementof our fleet vehicles and operational guidelines.

Our Human Rights Commitment includes providing
a work environment to support the mental wellbeing of our employees. The 2020 saliency mapping
noted that COVID-19 likely exacerbated risks tomental health, while also posing risks to physicalhealth. We aspire to approach employee wellbeing in an increasingly holistic manner, including
awareness raising sessions across the organizationand providing training support to managers toassist them to handle more complex situations.

During the COVID-19 pandemic, we instigatedheightened safety and awareness across theorganization, and increased health and safety
reporting among contractors on PMI premises. We
developed a global plan integrating the concept of‘Smart Work’—a hybrid of remote and office-based
work to deal with the possibility of a resurgence of
COVID-19 in different markets. Our 2020 HRIA in

C A S E S TU DY

HRIA in the Philippines
In 2019, we conducted an on-field HRIA in thePhilippines, covering our head office, two factories(Batangas and Marikina), one sales office (Marikina),
suppliers, farms, and surrounding communities. Among
the recommendations from the assessment were
opportunities to strengthen security and support for oursales employees. In direct engagement with them,security was raised as a risk which exists in certain partsof Metro Manila. As a result of the assessment, weprioritized efforts to address these risks. For example,
we reviewed route assignments in consultation with thesales staff, and ensured that two employees are teamed
up if working in identified higher risk areas andimplemented other practical support to our sales staff.

a28

Russia surfaced key strengths in this area, including
the company’s support of employees during
COVID-19, strong internal communications, andcoordination of PMI’s transition to remote work,
as well as PMI’s protective measures and support
extending beyond employees to contractors.

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Working hours and wages
Consistent with our Human Rights Commitment,
we seek that all of our employees are paid fairly
and competitively. This means, at a minimum, that
all employees earn wages at a level sufficient tomeet their basic needs and enable the generationof discretionary income. Wages meet the minimum
legal standards or, where there are no suchstandards, appropriate industry benchmarks. We
do not tolerate wage deductions as a disciplinary
measure. We are committed to ensuring that
all PMI employees across the geographies inwhich we operate earn at least a living wage.

C A S E S TU DY

Our first HRIA in Mexico –focusing on working hours
The first of our market-specific HRIA took placein Mexico in 2018. Article One visited ouroperations in Mexico to interview stakeholders
and rightsholders such as factory workers,
contracted employees, trade union representatives,suppliers, and third-party staff, as well as
external stakeholders, such as nongovernmentalorganizations (NGOs), local authorities, tradeassociations, and international human rights
organizations. The assessment highlighted thateven though in compliance with Mexican labor
law, some PMI workers at our manufacturing
facility sometimes worked excessive overtime
during peak season, posing a human rights risk
related to workers’ safety.

We have worked with Business for Social
Responsibility (BSR), a sustainability consultancy,
since 2018 to assess living wages globally. In
2022, we continued to analyze the data, which
confirmed that we continue to pay at or above
the living wage for all our employees worldwide.
We plan to conduct a living wage assessment atleast every two years, and to initiate actions asnecessary to ensure we continue to meet our
global living wage commitment to our employees.

We understand equal pay for equal work as thebaseline standard for gender equality. In April
2022, we achieved re-certification of our initial
global EQUAL-SALARY certification from 2019.
This independent certification substantiates that
PMI pays men and women equally for equal work
everywhere the company operates. Further, weare proud to confirm the re-certification which isvalid until March 2025. As a part of this process,auditors from PricewaterhouseCoopers validated
additional qualitative aspects regarding equality,
such as the commitment of PMI top management
to gender equality and equal pay. In addition, it
validated the objectivity of our People & Culture pay
policies and practices, transparent communication,
and also employee perceptions on these matters.

The recommendations included that a fourshift model be piloted in the factory. In
response to the recommendation, PMI
conducted a trial of the four-shift model.
We have also worked with our suppliers toencourage them to follow a similar approach.
This new working scheme is being
implemented in the factory, resulting in muchbetter work–life balance for unionized andnon-unionized employees.

Our 2020 saliency mapping recorded that some
employees have noted working long hours which
they linked to competing priorities as PMI continues
in its transformation. We take any working
hours and wages issues raised seriously and areintent on creating a working environment thatprioritizes employee well-being. As we affirm in
our Commitment, working hours should comply
with each country’s legal standards and should
be reasonable, allowing for sufficient rest.

The pilot HRIA in Mexico also revealed
strengths in safety, employee loyalty, diversity
and inclusion policies and practices, andparental leave, and a high awareness of theinternal grievance process. In parallel, it
substantially improved awareness of humanrights impacts in PMI Mexico.

Regarding freedom of association and collective
bargaining, we ensure our employees are informedof their rights by their local People & Culture teams,
PMI’s Code of Conduct, and related principles
and practices—including our Workplace Integrity
policy. Collective labor agreements govern many of
our employees’ terms and conditions at work, andmay include arrangements pertaining to working
hours, occupational health and safety, holidays,
wages, and procedures for dispute resolution.

a30

Read more in our case study

Diversity, equity, equality, and inclusion
We regard our employees’ diversity as one of ourgreatest assets. We understand that for our workers
and contractors to realize the full enjoyment of rights
and capacities, it requires us to be vigilant against
potential discrimination and to listen attentively.
Within our HRIA, our human rights advisers
engage directly with workers. In this, we strive
to ensure all voices are heard, including women
workers, parents, younger and older workers, newhires, contract workers, and seasonal or migrant
workers. Our assessments found risks specific tosome rightsholder groups, including limited accessto nursing rooms for working mothers, as well as
the challenge of juggling working hours with theadditional burden of childcare responsibilities.
However, our HRIA also surfaced consistentareas of strength, such as women’s experience ofa level playing field for advancement at PMI.
Building a gender-balanced organization
remains one of our top priorities. In 2022, PMI
reached its target of at least 40 percent female
representation in management—but there is
still more work to do. We have set out our next
gender representation target: to achieve at least
35 percent of women in senior roles by 2025.
To continue our progress and achieve ourgoals, actions include having a commitment togender balance, crafting personalized career anddevelopment plans for female leaders, celebrating
female talent as role models, and providing female
talent with opportunities to build connections andgain mentoring and sponsorship support throughnetworking events and leadership forums.

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Beyond gender representation, there is a needfor our executive teams to better reflect PMI’sgeographic span and the diversity of our consumers.
We have set a new commitment to increase to atleast 20 percent Asian representation in senior
roles by 2025. We have also set an ambition
to achieve a minimum local representation of
60 percent in at least 80 percent of our markets.

We believe that education and awareness-raising
is an essential first step to promoting inclusion.
Our employee resource groups focus on particulardimensions of diversity and are intended to provide
a platform for building a sense of belonging andsparking conversations. We are exploring ways
to measure inclusion and track progress overtime in a sophisticated manner. In partnershipwith the International Institute for Management
Development (IMD) in Switzerland, we haveworked to formulate effective ways to promote
inclusive cultures within organizations of all types.

We understand that only a truly inclusive
culture can ensure we benefit fully from thevalue diversity can bring to our organization.

Suppliers and supply
chain workers

We seek to collaborate with civil society organizations,
governments, and the private sector on initiatives todesign and deploy strong and impactful solutions.

Caring for the quality of life of the people inour supply chain is consistent with our businesspurpose, way of working, and is a major predictorof our long-term success. We respect humanrights, not only in our direct operations but in our
supply chain too. Our supply chain accounts fora significant portion of our potential social andenvironmental risks and impacts, which we arecommitted to identifying, managing, and addressing
responsibly. Our approach to sustainable supply chain
management is built on the following core principles:

From our 2020 saliency mapping, working conditionsin the agricultural supply chain, including child labor,
forced labor, and safe work environment, remain key
priorities. To mitigate these risks, our supply chain
sustainability strategy is grounded in our Responsible
Sourcing Principles (RSP), which is aligned with the
UNGPs and International Labour Organization (ILO)
Conventions. The RSP details our expectations andsets processes and performance standards for our
suppliers of materials and services, from the directmaterials used in manufacturing our products to thegoods and services required to run our business.

• Proactive engagement is key to fostering open
and transparent relationships with our suppliers
in which expertise is shared and built together.

Adherence to our RSP is mainly built into ourcontractual agreements with suppliers. We monitor
the activities of our critical suppliers through asuite of tools, including third-party assessments,
on-site audits, and field visits, with the possibility
to terminate their contract if serious risks tohuman rights are identified. We apply tailored
due diligence instruments and mechanisms
within specific segments of our supply chain.

• We take a risk-based approach, deploying tailored
tools and interventions, and prioritizing areasin which we can have the greatest impact.
• We seek to support our suppliers in continuously
improving their sustainability performance andachieving the highest standards of compliance.
• We leverage our reach and understanding of our
supply base to implement impactful programs andaccelerate progress in our sustainability corridors,such as our efforts to tackle climate change, protect
nature, and promote fair working conditions.

A culture of diversity,
equity, equality, and inclusion
Across the HRIA conducted by our independent
human rights advisers, which include
direct engagement with employees and contracted
workers, our culture, commitment to ethicalbusiness practices, and diversity, equity
equality, and inclusion have repeatedly been
identified as key strengths. While much work
remains to be done, we are proud to see
consistent findings in this regard in our HRIA
in Mexico, the Philippines, Russia, Malaysia,
and Brazil.

32“I am proud for how thecompany is campaigning fordiversity and inclusion. I am soproud of that, wheneverI go to meetings that is the#1 achievement. Everybody
is included.”
Union representative, Marikina, Philippines

We monitor adherence to the RSP and thesustainability performance of our critical suppliers
through tailored due diligence instruments,
including the EcoVadis platform in our directmaterials, indirect materials and services, technicalprocurement, and advanced procurement supply
chains. In our electronics supply chain, we leverage
the work of the Responsible Business Alliance(RBA) and Validated Assessment Program (VAP).

At PMI, we recognize that a complex global value
chain brings potential human rights risks that weneed to understand, manage, and continuously
address. As our business transforms, our supply chain
evolves as well. Promoting fair working and living
conditions in our broader supply chain is therefore
increasingly important. Transparency on our progressand challenges through our annual reporting andtargeted communications is key to our approach.
We have robust programs and processes in place
to identify our adverse impacts across our supply
chain. These include our company-wide integrated
risk assessments, human rights saliency mappings,
and HRIA. We also deploy targeted due diligenceprograms focused on areas of potential risk, suchas in our tobacco and electronics supply chains, aswell as external assessments and verifications. We
implement measures aimed at addressing adverse
impacts and maximizing opportunities to drive
positive change for people across our value chain.

In our tobacco supply chain, our work is governedby the Good Agricultural Practices (GAP) and ourAgricultural Labor Practices (ALP) Code, which areoperationalized at farm level by field techniciansworking year-round with the farmers contracted
by PMI and our suppliers. These policies help
identify and mitigate adverse impacts in the salient
risk areas identified for the supply chain by ourhuman rights saliency assessment, including risks
of forced labor, child labor, risks to working hours
and wages, and workplace health and safety.

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Child labor

If the matter is not resolved within the agreed
timeline, it is further escalated and may lead tosanctions, which can include contract termination.

We are committed to identifying any form of childlabor in our operations and value chain and will
act to prevent, mitigate and cease such practices.
Our Human Rights Commitment states that we
consider the use of child labor as unacceptable. We
follow ILO Conventions No. 138 on Minimum Ageand No. 182 on the Worst Forms of Child Labor.

minimum wages, inequalities suffered by
women, and, in some areas, a lack of adequate
access to water, sanitation, and health services.

C A S E S TU DY

Targeted HRIA in our
tobacco supply chain

In 2021, we undertook another industrywide initiative to assess the Turkish tobacco
supply chain. While the results of the HRIA
had been previously identified through ourfarm-by-farm monitoring, they helped clarify
and build a shared understanding of the issues
at hand. The HRIA identified five priority
areas of focus: child labor, farmer income
and livelihoods, working conditions, genderinequality, and the environment. Thanks
to the shared assessment, participatingcompanies gained a collective understandingof the actual and potential human rights,
labor, and environmental risks in Turkey. This
industry-wide initiative allowed PMI to shareits best practices and find opportunities
for dialogue and cooperation with all
stakeholders to address human rights issues.

As part of our due diligence, we undertake
various assessments to ensure that our ALP
and GAP standards are being adhered to andare implemented on the tobacco farms wesource from. However, we recognize the power
in working in a multi-stakeholder setting, tocollaborate and foster common understandingsof strengths and challenges in shared sourcing
areas. This is why, since 2020, we have carriedout two targeted HRIA in collaboration with
our industry peers and third-party suppliers.
These were conducted by twentyfifty, thehuman rights and business consultancy.
The first we conducted was in Mozambique,in 2020, in collaboration with a peer
company and our common leaf supplier. The
engagement of our third-party leaf supplier
was vital in this process, and its strong
collaboration throughout the assessment wascommended by twentyfifty. By gatheringexperiences and perspectives from over 260
people, including farmers, workers and theirfamilies, and community leaders, twentyfifty
highlighted findings including incidences ofwork performed by children, difficulties ofconsistent school attendance among migrant
workers, income levels below national

For both assessments, clear action plans
are put in place to address all the potential
human rights issues such as, in Mozambique,where we are engaging with local schools to
address education access for migrant children,
and, in Turkey, where we are collaboratingin three industry-wide working groups.

a ead the case studies about our HRIAR
in Mozambique and in Turkey.

Our ALP Code sets out that there shallbe no child labor, specifically:• There is no employment or recruitment of childlabor. The minimum age for admission to work is notless than the age for the completion of compulsory
schooling and, in any case, is not less than 15 years
or the minimum age provided by the country’slaws, whichever affords greater protection.

We work toward the goal of eliminating child labor in
our tobacco supply chain by 2025. We operationalize
this through our ALP program which has been
implemented on the ground since 2011 and, eventhough we have made significant progress so far, we
aspire to do better. We are committed to identify
child labor, forced labor, and other labor issues
through our internal monitoring system, which is
performed by field technicians who visit the farms
throughout the tobacco‑growing season. These
technicians raise “prompt actions” to flag any serious
violations and trigger an immediate response. They
also report “nonconformities” which are based on
declarations of rightsholders and identify risks before
they have evolved into issues. Field technicians workwith farmers to develop remediation plans, which
are then followed up on and regularly monitored.

• No person below 18 is involved in
any type of hazardous work.
• In the case of family farms, a child may only
help on his or her family’s farm provided thatthe work is light work, and the child is between
13 and 15 years or above the minimum age
for light work as defined by the country’slaws, whichever affords greater protection.
We acknowledge that isolated cases—even whensystemic occurrences are fully addressed—might persist
due to farmer turnover or unintentional misbehaviors.
We will remain alert, continue refining our approachand tackle them promptly when identified.

Sharing our challenges and best practices
In our ALP program, we have consistently aimed
to share transparently both our challenges
and progress, throughout the years. We
have worked with leading organizations tocommunicate on our work to eliminate childlabor from our agricultural supply chain.

The case study noted that the ALP program involves
contracting third-party surveyors to carry out
external verification, using tools including household
surveys, interviews, and participatory observation.
The World Business Council for Sustainable
Development (WBCSD) recognized PMI’s ongoing
efforts to eliminate child labor on all farms that
supply us with tobacco. It included PMI as a “sector
leader” case study in its toolkit on advancing humanrights policy and practice in the agribusiness sector.
WBCSD also published a Human Right progress
report and included an update of the case study
on our ALP and our actions to tackle child labor.

Shift, the international center of expertise on the
UNGPs, put together a case study, describing
how participatory methods allowed local people
to express, in their own terms, any local realities
that are effective barriers to PMI’s target of
eliminating the use of child labor on farms.

Celebrating
10 years of the
ALP program

AGRICULTURAL LABOR PRACTICESPROGRESS UPDATE

TAKING ACTION
TO ELIMINATE
CHILD LABORFROM OUR LEAF
SUPPLY CHAIN

FOCUSING ON MEXICO:IMPROVING HUMAN RIGHTS
AND LABOR PRACTICESPROGRESS UPDATE 2/2019

Q4 2020AGRICULTUR AL L ABOR PR AC TICES (ALP)
10 YE AR ANNIVERSARY REPORTDECEMBER 2021

a Read more
34

a Read more

a Read more
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Forced labor and modern slavery• Our RSP sets out that our suppliers are expected
not to engage in or condone the use of forced labor.

We consider any use of forced labor or any formof slavery as unacceptable. As outlined in our
Human Rights Commitment, we are committed
to identifying and addressing any form of forcedlabor or modern slavery in our operations andvalue chain. We will act to prevent, mitigate andcease such practices, including requiring workers
to pay recruitment fees or deposits, the retentionof worker identity documents, the withholding ofwages, and deceptive recruitment practices.

• Our ALP Code has seven principles, all of which
are relevant to the elimination of forced laborand modern slavery, in particular, principle 7(No forced labor and human trafficking).
• In PMI’s Code of Conduct, we affirm that weare working to eliminate child labor, forced laborand other labor abuses in our supply chain.
We recognize that the risk of forced labor continues
to exist in our supply chain. In our electronics supply
chain, we are working with the RBA to review
and update our management approaches to risks
of forced labor. For example, we are planning topilot the Responsible Labour Initiative from the
RBA, which focuses specifically on forced labor,
identifying and addressing the risk of forced laborat an Employment Site or Labor Provider.

PMI is committed to preventing modern slavery
at every level of our operations across theworld. The right to be free of slavery is reflected
through the PMI policies and principles:

In addition, in accordance with local legislation,
we issue annual statements in compliance with
the Australian and UK Modern Slavery Acts.

Monetizing our social impact: A pilot with Value Balancing AllianceThis helped us understand the VBA pilot outcomes
and operationalize the impact by comparing the
VBA calculation with our internal numbers. In
fact, by comparing the two outcomes we cansee maximum impact we may have in a country
versus our actual impact on the ground. This hashelped us evaluate which markets may be at ahigher risk of child labor and where we may havea greater (negative) economic impact through our
upstream operations. We are also exploring theapplicability of this methodology to calculate thevalue creation of child labor remediation initiatives
in specific countries, by calculating the positive
impact these may have on reducing child labor.

In 2019, PMI joined seven global companies inthe Value Balancing Alliance (VBA): a non-profit
organization that aims to create a standard formeasuring and disclosing the environmental,
human, social, and financial value companies
have on society—shifting to a framework of
optimizing value creation. In particular, theaim is to standardize accounting calculations,
methodologies, and outcomes to ensurecomparability and increase transparency.
In 2021, we piloted two new methodologies toestimate the negative impact of child labor andforced labor. For this pilot, we used our 2020
results for our upstream operations in the tobacco
supply chain. In particular, we computed the resultsfor 22 countries from which we source tobacco.

Overall, we found this exercise to be extremely
positive, despite some initial difficulties in
the interpretation and applicability of theresults. However, we believe that utilizing,
improving, and working through the VBA
methodology will strengthen our leadership
position on non-financial reporting andspecifically on estimating our social impact.

As we dove deeper into the methodology, by
way of comparison, we also used the farmdemographic information and instances of childand forced labor collected by the field technicians
who monitored farmers on the ground that year.

C A S E S TU DYFirst end-to-end HRIA

Safe work environment

PMI partnered with Article One to carry out a country-level
HRIA, started in 2021 and was completed in 2022. This
assessement extended to new parts of the company’s value
chain in Malaysia. For the first time, we included a targeted
assessment of our key upstream electronic supplier with theobjective to identify human rights risks and opportunities.
Recruitment practices were identified as a salient risk. While
Malaysia announced a National Action Plan on forced labor in
2021, expert stakeholders interviewed as part of our assessment
highlighted country level risks, particularly migrant workers.
The assessment surfaced the issue of recruitment fee which
certain migrant workers would have been asked to pay. An
investigation followed with the supplier. While the scope waslimited, an action plan was put in place by the supplier andreimbursement was made to the affected workers. The supplieris committed to maintain a process ensuring that this practiceis unacceptable.

aRegarding our electronics supply chain, through the
RBA membership, PMI requires its critical suppliers
to conduct regular on-site audits, which are basedon a set of recognized social, environmental, andethical industry standards, including ILO conventions
and ISO standards. Safe work environment isa key priority for RBA, with suppliers required
to implement measures on occupational safety,
emergency preparedness, injuries and illness,
industrial hygiene, physically demanding work, or
machine safeguarding. To make audits more robust,
PMI is planning to implement other RBA tools
and initiatives, including the RBA Worker Voiceand Grievance Mechanism, which will allow us to
identify and address issues on an ongoing basis.

Ensuring a safe work environment to prevent
accidents and injury and to minimize health risks is not
only PMI’s responsibility but also that of its suppliers.
The right to a safe and healthy work environment isreflected throughout PMI’s policies and principles:• The RSP introduces the requirement for suppliers
to provide a safe and healthy work environment,
including by ensuring workers have and use
appropriate personal protective equipment.
• Our ALP Code has a dedicated principle
on safe work environment, principle 5.
These principles are put into practice by
our suppliers across our supply chain.

In our agricultural supply chain, since theestablishment of the ALP Code in 2011, ensuring safe
working conditions for both farmers and workers oncontracted farms has been a priority of the program.

 ead more about our work in our electronics
Rsupply chain and, specificially, in Malaysia.

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Health and safety risks can arise in farming if safetymeasures are not in place when handling hazardous
substances such as crop protection agents (CPA).
Some risks are linked to tobacco farming, specificallygreen tobacco sickness (GTS). All these identified
risks are preventable through the appropriate
use of personal protective equipment (PPE).

Defining crop protection agentsand green tobacco sickness
In tobacco, like any other agricultural crop,
farmers may use crop protection agents (CPA) toprotect their crop, help them increase yields andimprove quality. CPA can be synthetic or organic
substances, and they can be intended to serveas control mainly against weeds, insects, fungi,
and bacteria. These organisms can compete forresources such as water and nutrients with thetobacco crop, or may feed from it, and diminish
the full potential yield and quality of the crop.

PPE in tobacco farming refers to any clothes,materials or devices that provide protection from
CPA exposure and GTS during specific activities
throughout the crop cycle. PMI, together with its
technical partner, the Centre for Agriculture andBioscience International (CABI), have developed
guidelines for markets, depending on the CPA used,
to ensure adequate PPE is provided in all cases.

Green tobacco sickness (GTS) is a potential
risk to those working with the tobacco plant.
It may occur when a person handles wet, fresh,or green tobacco leaves. The nicotine from theplant mixes with the moisture on the leaves, andthen upon contact, is absorbed through the skin,causing irritation and associated symptoms. It
is a sickness that is not always well understoodbecause many of those who experience GTS do
not connect their symptoms with the handling ofgreen tobacco, as they are similar to those causedby heat stress and pesticide exposure, and as aresult, GTS is often misdiagnosed. This sickness
is non-life threatening, and only severe cases
require medical attention due to dehydration.

2020 marked the achievement of a significant
ALP target for PMI: ensuring full availability of
PPE for the application of CPA and preventionof GTS for all those working on tobacco.
Availability of the PPE is, however, not enoughunless coupled with appropriate usage. In thisrespect, awareness raising and training have been
key components of our work to ensure that theunderlying messages are understood and thatbehaviors relating to safety change as a result.
We now have a multitude of delivery approaches
which include role playing through theater anddrama, animated videos, radio messages, classroom
training, printed materials, and mobile vans.
In addition, we are working to reduce the risksof tobacco farming both to people and theenvironment. This is why PMI is committed toremoving Highly Hazardous Pesticides (HHP)
from its tobacco supply chain and promoting theuse of safer alternatives such as the biopesticides
within its Integrated Pest Management program.
Safe work environment remains a key focus andwe strive to maintain access to appropriate PPE
for all our contracted farmers and farmworkers.
Understanding the hazards related to certain tobaccotasks and encouraging behavior change is key tosafeguarding the health and safety of those involved.

Communities

ambitious climate action in the private sector byenabling organizations to set science-based emissions
reduction targets, and has verified and validated PMI
2030 absolute reduction targets as well as its 2040
net-zero target. PMI is among leading companies thathave SBTi net-zero target validated. This confirms ourleadership and the correct and effective path we havetraced to decarbonize our operations and value chain.

Honesty, respect, and fairness are the core values
that embody our commitment to society. Everyday, we interact with a broad range of stakeholders,
including, but not limited to, our consumers,
employees, regulators, supply chain partners,
civil society, and shareholders. Our interactionand engagement with the rights of communities
is an important consideration for PMI. Our 2020
saliency mapping noted salient risks to communities,
including environmental stewardship and risks
linked to the sourcing of “conflict minerals”.

aThis commitment demonstrates theseriousness of the whole company—from theboard to every level of the organization—
toward tangible climate actions.

Environmental stewardship
At PMI, we recognize that the realization of humanrights is dependent on whether the environmental
conditions allow for it. We are exploring the ways
in which we can align our work on respecting
human rights with environmental stewardship.
Our commitment to constantly improve ourbusiness activities to achieve the highest standardsof environmental sustainability is set out in ourEnvironmental Commitment. While improving theenvironmental performance of our manufacturing
operations is key, we estimate that most of ourenvironmental impacts arise elsewhere in our value
chain, especially in tobacco growing and curing,
and with consumer waste. Working collaboratively
with tobacco growers, suppliers, retailers, NGOs,
and governments is key to the success of ourenvironmental programs and to achieving our targets.

In October 2021, we published a Climate
Justice Briefing Paper, authored by Article One
and funded by PMI. There, we called attention
to our 10-year experience of implementing
programs in our agriculture supply chain,through which we have witnessed how
climate change has exacerbated human rights
issues on vulnerable people. This briefing
paper helps us better understand the impact
of climate change on human rights and theirintersections, which are an essential step indeveloping coherent and inclusive strategies.

Briefing paper

CLIMATE JUSTICEIN GLOBAL
SUPPLY CHAINS

Sustainability is at the core of ourtransformation, and we are responding to
the urgency of climate change by:

A perspective for the private sector
October 2021

• carrying out integrated risk assessments androbust GHG emissions accounting to define
new—and validate existing—strategies,• engaging in transparent, strategic, and sciencebased target setting and disclosure of progress,

One of our goals is to achieve carbon neutrality in
our operations2 and accelerate our decarbonization
across our value chain.3 We also aim to engage
other key value chain stakeholders to adopt sciencebased targets (SBTs). As climate change and humanrights of vulnerable people are inter-related, ourgoal is to complement and synergize effective
climate action with measures to ensure respectfor human rights. Further information about ourwork on sustainability, including our Low Carbon
Transition Plan (2021) and Zero-Deforestation
Manifesto (2021) can be accessed in pmi.com.

• investing in—and developing—scalable solutions that
produce co-benefits for climate and nature, and• supporting and partnering with experts, sciencebased initiatives, and advocacy organizations.
The Science Based Targets Initiative (SBTi), oneof the most accredited organizations that drives
2 Part of this effort is our Portfolio of Climate Investments (PCI), created in 2021
to standardize and provide transparency on our approach to investments.
Such investments compensate for unavoidable carbon emissions related to ourdirect operations and are essential to achieving our 2025 carbon neutrality goal.
(p. 142 of the 2022 Integrated Report)
3 For our entire value chain (scope 1+2+3), we are targeting carbon neutrality by
2040.

38

Read more in our Low Carbon Transition Plan

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Specifically, in some conflict-affected and highrisk parts of the world, 3TGs are sometimes
mined using forced labor and modern slavery
and used to finance armed conflict. Cobalt is also
often linked to unethical mining practices.
Companies are thus expected to demonstrate
how they respect human rights and avoid
contributing to conflict in their mineralpurchasing decisions and practices.
As our Human Rights Commitment states, wecommit to the responsible sourcing of minerals
used to make our technology products and, inparticular, the responsible sourcing of 3TGs andcobalt. We acknowledge that addressing themost entrenched human rights impacts related
to conflict minerals is a shared responsibility,
often requiring industry-wide and multistakeholder programs available in the industry.
We have a dedicated Conflict Minerals Policy which iscommunicated to our direct suppliers to help achieve
responsible sourcing of 3TGs in our supply chain. Our
Policy, which is reviewed annually by the Conflict
Minerals Team, is also publicly available on our annual
Conflict Minerals Report. As part of our efforts toprevent and minimize risks, we are members of the
Responsible Minerals Initiative (RMI). We are following
the current industry standards and continuously
engage with our direct suppliers to communicate our
expectation that smelters used in our supply chain
for conflict minerals have the Responsible Minerals
Assurance Process (RMAP) certification in place.
While the quantities of cobalt required for our
products are minor compared with the total global
market size, since 2019 we have deployed a due
diligence program based on the RMI approachand tools to identify and address potential humanrights risks in the supply chains of our suppliers.
In 2022, seven battery suppliers responded to a
PMI request, and one supplier was unable to provide
information. Subsequent due diligence indicatedthat, as of December 31, 2022, each of the 19
smelters from which PMI battery suppliers source
cobalt were either on RMI’s conformant list (17smelters) or undergoing the assessment process(two smelters). We continue to engage with our
suppliers to improve visibility in this complex supply
chain and enhance our due diligence framework.

Conflict minerals
As our company continues to transform, weare preparing to tackle the risks inherent to our
new and expanding electronics manufacturing
supply chain. This supply chain is complex
and dynamic and faces specific challenges,
including the presence of conflict minerals.
Conflict minerals, which consist of tin, tantalum,
tungsten, and gold (3TGs) as well as cobalt are
essential materials for some of PMI’s smoke-free
products and, as noted in our 2020 saliency mappingand our 2021 electronics-specific, these might be tied
to severe risks to communities in sourcing countries.

40

PMI Speak Up culture –Grievance Mechanisms
Following investigations, we apply corrective
measures and disciplinary sanctions when justified.

Providing access to effective grievance mechanisms
in our operations and across our supply chain
is a key requirement of the UNGPs and a coreelement of our due diligence approach.

We review our mechanisms for speaking up regularly.
The Ethics & Compliance Department trains
employees to investigate concerns that are raised,
and we run a quality assurance program following
the investigation to ensure that our processes
are fair, unbiased, and respectful. We also have a
Retaliation Check program to detect, remedy, andprevent retaliation against people who speak up.

Internally, we maintain clear policies, run regulartrainings, and work to ensure that robust processes
are in place to encourage employees to speak up
if things don’t seem right or can be improved.
At PMI, individuals may ask questions, raise concerns,or report instances of observed or suspected
misconduct by contacting any of the following:

Our support for voicing concerns is not limited to ourdirect employees, and throughout our supply chain
we believe everyone should be able to seek help.
In our RSP, we stipulate that, where possible, oursuppliers must have grievance mechanisms to enable
the remediation of adverse human rights impacts.
We ask our suppliers to provide their workers witheasily accessible ways to raise concerns anonymously
and to protect them from retaliation. In addition,
suppliers are asked to create ways for stakeholders
outside the organization to raise concerns.

• The individual’s supervisor, department
head, or affiliate or function leadership• E&C key contacts (e.g., Regional Director,
Cluster Head, E&C Country/Market Head)• PMI Global E&C confidential email address• PMI Compliance Help Line (online or by telephone),which is a third-party operated reporting channel
available 24 hours a day, seven days a week,
in all languages spoken at PMI. Individuals may
use the Compliance Help Line anonymously,
subject to local laws and regulations

Our ALP Code provides for the fair treatmentof workers by farmers, including access to a fair,transparent, and anonymous grievance mechanism.
These mechanisms are available in some countries
where we source tobacco and concerns canbe raised with field technicians at any time.

There is a strong speaking-up culture at PMI, withmost people speaking up in person. In 2022, only
16 percent of the reports received by E&C were
submitted anonymously (2021: 22 percent). Thisimplies that employees overall feel comfortable
and safe about speaking up when things don’t
seem right or can be improved. When investigatingsuspected Ethics & Compliance violations, trained
PMI personnel adhere to its Investigations Standards.

41

Transparency

Philip Morris International – Human Rights Report 2023

• 2021 Philip Morris Australia
Modern Slavery Statement• 2021 Philip Morris UK Modern
Slavery Statement• PMI Human Rights Roadmap• PMI sustainability publications

Transparency

Our Human Rights Roadmap committed that
“PMI will disclose progress about our work on our
Human Rights Commitment, and the KPI we are using
to assess our performance in our Sustainability
Reports, published annually.”

Case Studies• Assessing human rights impacts in the
tobacco supply chain in Turkey• Human rights impact assessmentin the Philippines• Conducting a human rights impact
assessment in Russia, remotely• Human rights due diligence in Mexico• Addressing social impact in ourelectronics supply chain• Assessing human rights impacts in our
tobacco supply chain in Mozambique• Assessing human rights risks in Brazil• First end-to-end human rights
impact assessment in Malaysia• SHIFT – Evaluating Child Labor Programs• WBCSD –Advancing human rights
policy and practice in the agribusinesssector: An implementation toolkit• WBCSD – Continuous Improvement in Human
Rights Due Diligence: 2020 case-study progressTransparency is one of the four pillars of ourapproach to human rights, along with a sound policy
framework, rigorous due diligence, and remediation.
This approach is grounded in the UNGPs. A complex,
global value chain brings potential human rights
risks that we need to understand, manage, andcontinuously address. By reporting periodically on
our progress through an annual, integrated report
and targeted, thematic communication, such as thisReport, we enable external scrutiny. This allows
our stakeholders to assess our transformation,
as well as our work related to our social andenvironmental potential risks. We will continue todisclose progress about our work on our Human
Rights Commitment and we will regularly report on
our progress in relation to PMI’s 2025 Roadmap.

Other reports

Agricultural Labor Practices(ALP) Progress updates

Key policy documents• Q1 2021 – Delivering On Our Targets: PersonalProtective Equipment And Accommodation• Q1 2020 – Empowering Women For Change• Q2 2020 – Supporting Farming
Communities During The Covid-19 Crisis• Q3 2020 – Access To Water, Sanitation,
And Hygiene: Improving Livelihoods
In Our Tobacco Supply Chain• Q 4 2020 – Focusing On Mexico: Improving
Human Rights And Labor Practices• Q1 2019 – Update focusing on accommodationin Mexico, South Africa and Argentina• Q2 2019 – Taking action to eliminate
child labor from our leaf supply chain• Q3 2019 – Focusing on Indiz• Q 4 2019 – Ensuring Safe Working
Conditions On Contracted Farms• Human Rights Commitment• Agricultural Labor Practices (ALP) Code• Good Agricultural Practices (GAP) Code• Responsible Sourcing Principles• Marketing Codes• Environmental Commitment
Key documents and reports• PMI Integrated Report 2022
• PMI Integrated Report 2021
• PMI Sustainability Materiality Report 2021
• ALP 10 Year Anniversary Report• ESG KPI Protocol 2022
• ESG Highlights 2022
• 2021 Climate Justice Briefing Paper

42

Message fromARTICLE ONE
Article One is a specialized strategy and management consultancy with a focus on humanrights, responsible innovation, and sustainability. We partner with the world’s leading
companies to drive transformative change that places people at the center of business. Article
One has supported PMI in developing this human rights report. We believe transparency onhuman rights impacts and commitment to continuous progress in addressing those impacts
is a critical element of the corporate responsibility to respect human rights, as outlinedin the UNGPs. We commend PMI on the decision to strengthen its human rights disclosureswith the publication of this human rights report.
We have been working with PMI since 2018 to help guide the company’s humanrights strategy and due diligence program. Partnering with a tobacco company was not an easy
decision for us. However, we believe that the commercialization of less harmful alternatives
to cigarettes, and ultimately the phasing out of cigarettes, is PMI’s most important priority
as described in this report, as well as in PMI’s Integrated Reports. Implementing PMI’scommitment and progress toward transitioning to a smoke-free future, to phase out cigarettes,
and to move beyond nicotine products are essential steps in addressing these risks, and thiscommitment was essential for our decision to work with PMI. We remain conscious of theimportance to end smoking and eliminate cigarettes, and we know how much work remains
to be done to achieve PMI’s vision.
We also believe that PMI’s work to address its other salient risks, from working conditionsin the supply chain to diversity, equity, equality, and inclusion in its offices around the world,
represents an important step towards meeting the company’s goal to respect human rights.
We hope that this report provides meaningful information on PMI’s human rights
risks and management to all stakeholders, and that it stimulates dialogue and collaboration
to further advance human rights across the company’s operations, products andbusiness relationships.

43

Transparency

Philip Morris International – Human Rights Report 2023

Looking ahead

Strengthening ourhuman rights strategy

defined action plan. Based on the updated
criteria profiling we performed in 2022, wehave identified other countries where PMI
has a significant footprint with high inherent
human rights risks, and we will prioritize theseto perform HRIA in 2023 and beyond. In
addition, we will streamline our human rights
self-assessment toolkit and organize dedicatedtraining sessions to foster understanding andusability of the toolkit. This will enable us to scaleand deploy the toolkit effectively across lowand medium-risk markets in the coming years.

Respect for human rights is a key componentof who we are and how we are conducting
our business. We believe that PMI must playits part in respecting and protecting humanrights around the world by defining andexecuting strategies and initiatives to address
our negative impacts, working towards a
positive change across our value chain.
We are determined to remain at the forefrontof the human rights agenda and comply withemerging requirements and trends related tohuman rights due diligence. In this respect, we
will continue to evolve our approach as follows:

Remediation: Regarding our targeted programs
across our supply chains, we will continue
evaluating their effectiveness, strengthening
our scope, and increasing maturity. Specifically,in our agricultural supply chain, we will continue
working on enhancing both our layers of controls
and remediation activities while sharing ourwide experience externally. In our electronics
supply chain, we will further integrate therecommendations generated by the targeted
human rights saliency mapping and leverage our
RBA membership to further strengthen our work.

Policy framework: Following the in-depth
revision and enhancement of our Human
Rights Commitment, we will continue to ensure
coherence between our policy instruments
and the updated Commitment. The first stepis the revision of our Responsible Sourcing
Principles. In parallel, we will continue raisingawareness of the importance of human rights
across our organization and translate our humanrights e-learning into additional languages.

In addition, as access to remedy is interconnectedwith provision of effective grievance mechanism
channels, we are strengthening our work
toward stronger alignment with the UNGPs
requirements. This is achieved through provisionof easily accessible and diverse channels ofreporting, robust communication, and a structured
framework ensuring confidentiality, anonymous
reporting, and measures against retaliation.

Due diligence: Having completed our HRIA in
Malaysia, including assessing risks and impacts
with a key supplier in our electronics supply
chain and our downstream operations, wewill implement relevant action plans. In themeantime, we also completed another HRIA, in
Brazil, and we will focus on addressing the risks
raised following the recommendations and

PMI is committed to continuing to develop
comprehensive policies and principles,
improving our processes and working toaddress identified gaps at every point of ourbusiness and along our supply chain to ensure
human rights are respected and protected.

Stakeholder engagement
Constructive dialogue is essential for moving forward our work and for advancing
sustainable solutions to systemic human rights risks, especially regarding practices thatare culturally embedded. We believe that the only way to reach our aspirations of asustainable future is through stakeholder consultation. Remaining open to dialogue with
our stakeholders allows us to understand their expectations and respond accordingly.
We will continue increasing consultation with rightsholders, particularly the most vulnerable groups,
which is key to identify, mitigate, and remedy human rights issues throughout our value chain.
Our approach to stakeholder consultation will remain a core tenet of our approach to humanrights, striving to increase scope and reach. If you are aware of ways in which we can improve orare aware of any concerns regarding the realization of human rights in our operations or in our
supply chain, please do get in contact. We welcome feedback and the sharing of knowledge.
Jennifer Motles
Chief Sustainability Officer

Transformation and theimportance of advancing
human rights

The UNGPs have provided companies acrossindustries with a shared roadmap for respecting
human rights and have changed the humanrights landscape, contributing toward heightenedawareness and more rights-respectful practices.

The continuing transformation of our businessmodel is aimed toward a shared and sustainable
future. Along with our goal to lead an industrywide transformation whereby cigarettes arephased out completely, we also aim to enshrine
respect for human rights in all our activities. Ourability to build and maintain trust and legitimacy
relies on ensuring our words match our actions.

We will continue to report transparently on
progress, lessons learnt, and key challenges.
Going forward, we plan to strengthen ouralignment with the UN Guiding Principles
Reporting Framework (UNGPRF) and further
enhance the sophistication of our approach.
We aim to work as effectively as possible toreduce the risk of human rights incidences inour business activities. We are committed tocontinuous improvement and recognize thatthe only way to ensure this happens is throughongoing dialogue. Our vision is of a future where
we can have a net positive impact in the world.

Scott Coutts
Senior Vice President, Operations

44

Yann Guérin
SVP & Global Head of Law & Compliance45

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UNGP Reporting Framework

UNGPRF UNGPRF
Reference Section

Corresponding informationin publicly available documents

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation• ‘Governance andmanagement’, ‘Our policy
framework,’ ‘Employee
Awareness andTraining’, ‘Transparency’(pgs. 9 – 12, 42)

Human rights feature inpolicies relevant to different
aspects of the supply chain. We
implement our Commitment
by taking actions, including
through HRIAs in countries
with higher inherent risks inwhich internal and external
stakeholders are consulted.
Advancing an approach tailoredto risks to human rights, we arealso scaling self-assessments inlower-risk markets. Employees
are made aware of the ways
in which human rights should
impact their decisions throughvarious trainings covering
human rights topics. Employees
are also encouraged to speak up
and raise concerns relating toany potential violations of our
Commitment. Environmental,
Social, and Governance (ESG) is
integrated into targets of senior
management, and within ESG,
human rights is a standalone
target.

Embedding Respect for Human Rights

Part A
Commitment to and governanceof human rights risk management.

UNGPRF UNGPRF
Reference Section

A2

How doesthe company
demonstrate theimportance it
attaches to theimplementation of
its human rights
commitment?

• Updated Human Rights
Commitment• 2022 Integrated Report (pgs.
07, 10, 119, 133, 134, 176-178)• 2021 Integrated Report(pgs. 208 – 212)
• Celebrating 10 Years Of The
ALP Program, December 2021
• 2020 Integrated Report‘Implementing our Human
Rights Commitment’ (pg. 71)• Responsible Sourcing Principles• Good Agricultural Practices• Agricultural Labor
Practices Code

A 2.1

How is the day-today responsibility
for human rights
performanceorganized within
the company,
and why?

• ‘PMI’s human rights• Updated Human Rights
strategy’, ‘GovernanceCommitment
and management’• Code of Conduct(pgs. 6, 9 -10)
• Proxy Statement March 23, 2023
• 2022 Integrated Report(pgs. 36-37, 47, 176)
• 2021 Integrated Report(pgs. 52, 53, 208)
• 2020 Integrated Report (pg. 71)

A 2.2

What kinds ofhuman rights issues
are discussed bysenior management
and by the board,
and why?

• ‘PMI’s human rights• Updated Human Rights
strategy’, ‘GovernanceCommitment
and management’• Proxy Statement March 23, 2023
(pgs. 6, 9 -10)
• 2022 Integrated Report(pgs. 42, 47)• 2021 Integrated Report(pgs. 52, 53, 208)
• 2020 Integrated Report (pg. 73)

A 2.3

How are employees
and contract
workers madeaware of the ways
in which respectfor human rights
should informtheir decisions
and actions?

• ‘PMI’s human rights• Updated Human Rights
strategy’, ‘Our policy
Commitment
framework’, ‘Employee• Code of Conduct
awareness and training’,• 2022 Integrated Report (pg. 176)
(pgs. 6, 10 – 12) ‘Focus on• 2021 Integrated
rightsholders’ ‘Employees
Report (pg. 209)
and Contractors’,• Marketing Codes: Design,‘Working Hours andMarketing, And Sale of NonWages,’ (pgs. 24 – 32)
Combusted Alternatives and‘Transparency’ (pg. 42)
Design, Marketing, And Sale Of
Combusted Tobacco Products• Responsible Sourcing Principles• Good Agricultural Practices• Agricultural Labor
Practices CodePart A has two overarching questions, each with one or more
supporting questions, which focus on the company’s commitment
to and governance of human rights risk management.
Reporting Principles: available here

Corresponding informationin publicly available documents

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation• Updated Human Rights
Commitment• 2022 Integrated Report (pgs.
6-7, 12, 28, 118-119, 126, 131,
133, 134, 176-179, 182, 200).
• 2021 Integrated Report (pgs.
122, 146, 147, 161, 209, 212)
• Webpage: ‘Respect for humanrights’ published 18 May 2021
• Statements for Australian and
UK Modern Slavery Acts

• ‘Letter from the CEO’,‘Introduction to PMI’s
updated Human
Rights Commitment’(pgs. 2 – 3, 10)

We publicly state that weare committed to businesspractices that respect humanrights in our Human Rights
Commitment, in line with the
UNGPs. We commit to respect
the International Bill of Human
Rights and the International
Labor Organization’s 1998
Declaration on Fundamental
Rights and Principles at Workand endorse the OECD
Guidelines for Multinational
Enterprises as well as the OECD
Due Diligence Guidance for
Responsible Business Practices.

Policy Commitment
A1

What does thecompany say
publicly about
its commitment
to human rights?

A 1.1

How has the public
commitment
been developed?

• Updated Human Rights
Commitment• 2022 Integrated
Report (pg. 177)
• 2021 Integrated
Report (pg. 212)

• ‘Our approach to humanrights: Governanceand management’,‘Introduction to PMI’s
updated Human
Rights Commitment’(pgs. 6 – 10)

A 1.2

Whose humanrights does the
public commitment
address?

• Updated Human Rights
Commitment• 2022 Integrated Report(pgs. 18-19)• 2020 Integrated Report(pg. 72)• ‘Human Rights at PMI:
Our Commitment:
Employee Awareness andTraining’. (pgs. 10 – 12)• Sections in the reportaddressing different
rightsholders tie
back to the Human
Rights Commitment(pgs. 24 – 41)

A 1.3

How is the public
commitment
disseminated?

• Updated Human Rights
Commitment• 2022 Integrated Report(pgs. 176-177)• 2021 Integrated Report(pgs. 122, 209)
• Celebrating 10 Years Of The
ALP Program, December 2021
• 2020 Integrated Report (pg. 71)• Responsible Sourcing Principles

46• ‘Introduction to PMI’s
updated Human Rights
Commitment’, ‘Employee
awareness and training’(pgs. 10 – 12)

47

Philip Morris International – Human Rights Report 2023

UNGPRF UNGPRF
Reference Section

Corresponding informationin publicly available documents

Corresponding informationin Human Rights Report

Embedding Respect for Human Rights
A 2.4

A 2.5

How does thecompany makeclear in its business
relationships theimportance itplaces on respectfor human rights?

• Updated Human Rights
Commitment• Code of Conduct• 2022 Integrated Report(pgs. 119, 131, 176-182)• 2021 Integrated Report(pgs. 213 – 220)
• Marketing Codes: Design,
Marketing, And Sale Of NonCombusted Alternatives andDesign, Marketing, And Sale Of
Combusted Tobacco Products• Human Rights Roadmap• Responsible Sourcing Principles• Good Agricultural Practices• Agricultural Labor
Practices Code

What lessons
has the company
learned during thereporting period
about achieving
respect for humanrights, and what haschanged as a result?

• ‘Assessing our human• 2022 Integrated Reportrights impacts’ (pgs.
on follow up (pgs. 126,
18 – 23) and Feature
131, 177-176, 181-182)
Boxes throughout• 2021 Integrated Report on
follow up (incl. pg. 220)
• Celebrating 10 Years of The ALP
Program, 21 December 2021
• Published online case studies(HRIAs, Social Impact Reports)• ‘Suppliers and supply
chain workers’ and‘Transparency’(pgs. 33 – 38, 42)High level analysis on how
PMI meets expectation

Part B

Part B provides a filter point for the reporting company to narrow therange of human rights issues on which it will focus the remainder of its
reporting under Part C. The focus is on those human rights issues thatare salient within its activities and business relationships.

Defining a Focus of Reporting

UNGPRF UNGPRF
Reference Section

Corresponding informationin publicly available documents

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation• 2022 Integrated
Report (pg. 177)
• 2020 Integrated Report on‘Identifying human rights
risks and issues’ (pg. 72)• 2019 Integrated Reporton ‘Respect for humanrights’ (pg. 96)• Human Rights Roadmap• ‘Our company-widesaliency mapping’(pgs. 14 – 15)

We identified our salient humanrights issues in our companywide saliency assessments(2017, 2020) as well as atargeted saliency mapping in ourelectronics supply chain (2021).
We discuss these issues andoutcomes in the 2020, 2023 and2022 Integrated Reports and in
this first human rights report.

• 2022 Integrated
Report (pg. 177)
• 2021 Integrated Report,‘Identifying human rights
risks in our electronics
supply chain’ (pg. 210)
• 2020 Integrated Report,‘Identifying Human Rights
Risks and Issues’ (pg. 72.)

• ‘Our company-widesaliency mapping’(pgs. 14 – 15)

The determination of salientissues is conducted with support
from our human rights advisers,
and involves direct engagementwith internal stakeholders,and consultation with external
experts.

• 2022 Integrated
Report (pg. 177)
• 2021 Integrated Report,‘Conducting human rights
impact assessments in
our highest-risk markets’(pgs. 210 – 211)
• 2020 Integrated Report (pg.
80) See discussion content‘Socio-Economic WellBeing of Tobacco Farming– Achieving Our Aims’• Online Case Studies
covering HRIA
• 2019 Integrated Report(pgs.113-114) See discussion
content ‘Agricultural
Labor Practices’• ‘Human rights impact
assessments in PMI’s
highest risk markets’(pgs. 20-21)

The decision of where toprioritize HRIA is based on
identification of the higher risk
countries of operation, using
credible international indicesand factoring in the company’s
footprint in that market.

Statement of Salient Issues
B1

Statement ofsalient issues:state the salient
human rights
issues associatedwith the company’s
activities
and business
relationshipduring thereporting period.

Determination of Salient Issues
B2

Determinationof salient issues:
describe how thesalient humanrights issues
were determined,
including any input
from stakeholders.

Choice of Focal Geographies
B3

48

Choice of focal
geographies:
if reportingon the salient
human rights
issues focuseson particulargeographies,
explain how thatchoice was made.

49

Philip Morris International – Human Rights Report 2023

UNGPRF UNGPRF
Reference Section

Corresponding informationin publicly available documents

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation

Additional Severe Impacts
B4

Identify any
severe impacts
on human rightsthat occurred orwere still being
addressed during
the reporting
period, but whichfall outside of thesalient humanrights issues,and explain how
they have beenaddressed.

During the reporting period, no
severe impacts which are related
to salient human rights issues
were identified, with which thecompany has been involved.

Part CManagement of Salient Human
Rights Issues

UNGPRF UNGPRF
Reference Section

Part C has six overarching questions, each with one or more supporting
questions, which focus on the effective management of each of thesalient human rights issues on which the company is reporting.

Corresponding information in
publicly available documents

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation

The updated Human Rights
Commitment takes into accountsalient human rights issues fromthe 2020 saliency mapping. The
Code of Conduct is particularly
relevant to issues identified for
employees and contractors.
The Responsible Sourcing
Principles, the Agricultural Labor
Practices Code, including its
Step Change approach, and theGood Agricultural Practices
are relevant to salient issues
identified for suppliers andsupply chain workers. The
Marketing Codes are relevant
to consumers as is the Youth
Access Prevention Program. The
annual conflict minerals reportdemonstrates our commitment
and actions to responsibly
source such minerals. Protecting
the environment, those who
inhabit it and PMI’s policies andprograms are embedded in theEnvironmental Commitment.

Specific Policies
C1

Does the company
have any specificpolicies that
address its salient
human rights
issues and, if so,
what are they?

• Updated Human Rights
Commitment• Code of Conduct• 2022 Integrated Report ‘Our
Approach’ (pgs. 176-177) and‘Reinforcing our Human Rights
Commitment’ (pg. 177)
• 2021 Integrated Report,
discussion of ‘Our Approach’(pg. 208) and ‘A Sound Policy
Framework’ in the (pg. 209)
• Marketing Codes: Design,
Marketing, And Sale of NonCombusted Alternatives andDesign, Marketing, And Sale Of
Combusted Tobacco Products• 2020 Integrated Report (pg. 75)• Responsible Sourcing Principles• Good Agricultural Practices• Agricultural Labor
Practices Code• Environmental
Commitment Code• ‘A sound policy
framework’ (pgs. 10 – 11)‘Focus on rightsholders’(pgs. 24 – 41)

C 1.1

How does thecompany makeclear the relevanceand significanceof such policies tothose who need to
implement them?

• Updated Human Rights
Commitment• 2022 Integrated Report‘Respect Human Rights’ (pgs.
176-178) and ‘Manage ourSupply Chains’ (pgs. 179-183)• 2021 Integrated Report (pgs.
208 – 212) Human Rights and‘Manage Our Supply Chain
Sustainably’ (pgs. 213 – 220)
• 2020 Integrated Report(pgs. 70 – 75)• Human Rights Roadmap• ‘Our approach to humanrights’, ‘A sound policy
framework’, ‘Employee
awareness and training’and ‘Looking ahead’ (pgs.
6 – 8, 10 – 12, 44 – 45)• Code of Conduct• 2022 Integrated Reportdiscussion of HRIA in ‘Respect
Human Rights’ (pgs. 176-178)• 2021 Integrated Report‘Stakeholder Engagement’,
discussion of HRIA in ‘Respect
Human Rights.’ (pgs. 28, 208)
• Responsible Sourcing Principles• Good Agricultural Practices• Agricultural Labor Code• ‘Letter from the CEO’,‘Transparency,’ ‘Looking
ahead’ – subheading‘Stakeholder engagement(pgs. 2 – 3, 42, 45)

Stakeholder Engagement
C250

What is thecompany’s
approach toengagement withstakeholders in
relation to eachsalient humanrights issue?

51

Our aim is to engage witha representative range ofstakeholders in the courseof HRIA, through focus
groups, site visits, interviews
with management andconversations with expert
external organizations. We
consider potentially impacted
stakeholder groups througha mapping process, based oninternal and external guidance.

Philip Morris International – Human Rights Report 2023

UNGPRF UNGPRF
Reference Section

Corresponding information in
publicly available documents

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation

Stakeholder Engagement
C 2.1

C 2.2

C 2.3

How does thecompany identify
which stakeholders
to engage in
relation to eachsalient issue,
and when andhow to do so?

UNGPRF UNGPRF
Reference Section• 2022 Integrated Report‘Respect Human Rights’(pgs. 176-178)• 2021 Integrated Report,
discussion of HRIA in ‘Respect
Human Rights’ (pg. 208)
• 2020 Integrated Report(pgs. 70, 74)• ‘Our company-widesaliency mapping’,‘Assessing our humanrights impacts’,‘COVID-19: Adapting
our methodology
in t imes of a global
pandemic’, ‘Addressing
products’ healthrisks and responsiblecommercialization’,‘Transparency’,‘Stakeholder engagement’(pgs. 14 – 15, 18 – 23,
25 – 27, 42 and 45)

During thereporting period,
which stakeholders
has the company
engaged withregarding eachsalient issue,
and why?

• 2022 Integrated Report‘Respect Human Rights’(pgs. 176-178)• 2021 Integrated Report – see
discussion of HRIA in ‘Respect
Human Rights’ (pg. 208)

During thereporting period,
how have the viewsof stakeholders
influenced thecompany’s
understanding ofeach salient issue
and/or its approachto addressing it?

• 2022 Integrated Report‘Respect Human Rights’(pgs. 176-178)• 2021 Integrated Report,‘Respect Human
Rights’ (pg. 208)
• 2020 Integrated Report,‘Action plans: Monitoring
implementation’ (pg. 73)• ‘Our company-widesaliency mapping’ and‘Stakeholder engagement’(pgs. 14 – 15 , 45)• Feature Boxes
throughout• 2022 Integrated Report(pgs. 176-177)• 2021 Integrated Report,‘Respect Human
Rights.’ (pg. 208)
• Celebrating 10 Years Of The
ALP Program, December 2021
• 2020 Integrated Report (pg. 72)• ‘Our company-widesaliency mapping’,‘Human rights saliency
mapping in ourelectronics supply
chain’ (pgs. 14 – 17)

How does thecompany identify
any changes
in the natureof each salient
human rights
issue over time?

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation

Assessing Impacts• ‘Our company-widesaliency mapping’,‘Assessing our humanrights impacts’,‘COVID-19: Adapting
our methodology
in t imes of a global
pandemic’, ‘Addressing
products’ healthrisks and responsiblecommercialization’,‘Transparency’,‘Stakeholder engagement’(pgs. 14 – 15, 18 – 23,
25 – 27, 42 and 45)• Feature Boxes
throughout

C 3.1

During thereporting period,
were there any
notable trends orpatterns in impacts
related to a salientissue, and, if so,
what were they?

• Updated Human Rights
Commitment• 2022 Integrated Report‘Performance in ESG
ratings, rankings andindices,’ ‘Performance
Metrics’ (pgs. 189-201)• 2021 Integrated Report‘Performance in ESG
ratings, Rankings andIndices,’ ‘Performance
Metrics (pgs. 229 – 244)

• ‘Focus on rightsholders’,‘PMI Speak-Up culture –Grievance Mechanisms’(pgs. 24 – 41 )C 3.2

During thereporting period,
did any severe
impacts occur thatwere related to asalient issue and, if
so, what were they?

• 2022 Integrated Report‘Respect Human Rights’(pgs. 176-178)• 2021 Integrated Report,‘Respect Human
Rights’ (pg. 208)
• HRIA case studies
published online• Feature Boxes
throughout

52

We did not report any severe
impacts related to a salientissue.

Integrating Findings and Taking Action
C4

How does thecompany integrate
its findings about
each salient
human rights issue
into its decisionmaking processes
and actions?

• ‘Our company-wide• PMI Climate Justicesaliency mapping’
Briefing Paper‘Focus on rightsholders’• 2022 Integrated Report(pgs. 14-15, 24-41)‘Respect human rights’(pgs. 176-177)• 2022 Integrated Report‘eliminating child labor’, and‘promoting safe working
environment’ (pgs. 127-128)• 2021 Integrated Report,
discussion of how PMI carriedout analysis of Electronics
Supply Chain, following Saliency
refresh in 2020 (pg. 210)

C 4.1

How are thoseparts of thecompany whose
decisions andactions can affectthe managementof salient issues,
involved in finding
and implementing
solutions?

• Proxy Statement March 23, 2023 • ‘Our approach tohuman rights’ and• 2022 Integrated Report‘Governance and‘Respect Human Rights’management’ (pgs. 6 – 9)
(pgs. 176-177) and‘Sustainability governanceand management’ (pg. 42)• 2021 Integrated Report(pgs. 52, 53, 208)
• 2020 Integrated Report,‘Action plans: Monitoring
implementation’ (pg. 73)

C 4.2

When tensions
arise between
the prevention
or mitigation of
impacts related
to a salient issue
and other businessobjectives, how
are these tensions
addressed?

• Proxy Statement March 23, 2023
• 2022 Integrated Report (pg. 42)• 2021 Integrated Report (pg. 43)

Assessing Impacts
C3

Corresponding information in
publicly available documents

We identify changes in thenature of each salient issue
over time through regularsaliency mapping. Over the
coming years, we aim to
expand our reporting on how
we incorporate stakeholder
engagement into ourassessment of changes in salient
human rights issues.

53

We use the findings from eachsaliency mapping to refreshand establish our priorities.
Over the coming years, ouraim is to include more detailon preventive and mitigating
actions relating to identified
salient risks, and following
the progression of integrating
findings from assessments, andthe effectiveness of measurestaken.

Philip Morris International – Human Rights Report 2023

UNGPRF UNGPRF
Reference Section

Corresponding information in
publicly available documents

Corresponding informationin Human Rights ReportHigh level analysis on how
PMI meets expectation

Integrating Findings and Taking Action
C 4.3

During thereporting period,
what action has thecompany taken toprevent or mitigate
potential impacts
related to eachsalient issue?

UNGPRF UNGPRF
Reference Section

C 5.1

How does thecompany know
if its efforts toaddress eachsalient humanrights issue
are effective
in practice?

• Sustainability Resources• Conflict Minerals Report• Webpage on Socioeconomic
well-being of tobacco-farming
communities, see discussionof Living Income program• Agricultural Labor
Practices Program• ‘Focus on rightsholders’,‘Transparency’(pgs. 24 -42)

• 2022 Integrated Report‘Performance in ESG
ratings, rankings andindices,’ ‘Performance
Metrics’ (pgs. 189-201)• 2021 Integrated Report‘Performance in ESG
ratings, rankings andindices,’ ‘Performance
metrics (pgs. 229 – 244)
• 2020 Integrated Report,‘Action plans: Monitoring
implementation’ (pg. 73)• Sustainability Resources:
Case Studies on Human
Rights Impact Assessments• Sustainability Resources:
Control Union Reports• ‘Governance andmanagement’ (pg.
9), ‘Assessing ourhuman rights impacts’(pgs. 18 – 23)

C 6.1

Through whatmeans can thecompany receive
complaints orconcerns related toeach salient issue?

• ‘PMI Speak Up• Code of Conduct
culture – Grievance• 2022 Integrated Report
Mechanisms’ (pg. 42)‘Grievance mechanisms’ (pg.
178) and ‘Speaking Up’ (pg. 174)
• 2021 Integrated Report,‘Uphold business ethics
and integrity’ (pg. 205)
• Responsible Sourcing Principles• Agricultural Labor
Practices Program• Webpage: Business Integrity;
Compliance and Integrity;
Ethics and Compliance
Report an Incident

Our established Key
Performance Indicators
measure progress against the2025 Roadmap.

C 6.2

How does thecompany know if
people feel able
and empowered
to raise complaints
or concerns?

• Code of Conduct• 2022 Integrated Report‘Evaluating our Ethics &Compliance culture’ (pg.
174) and ’Complianceinvestigations’ (pgs. 174 – 175)
• 2021 Integrated Report:‘Uphold business ethics
and integrity’ (pg. 205)
• Check 2021 report for
relevant paragraph- 2021
Integrated Report ‘Grievance
Mechanisms’ (pg. 212)

• ‘PMI Speak Up
culture – Grievance
Mechanisms’ (pg. 42)

C 6.3

How does thecompany processcomplaints
and assess theeffectivenessof outcomes?

• Code of Conduct• Updated Human Rights
Commitment• 2022 Integrated Report‘Speaking up’ (pgs. 174-175)• Responsible Sourcing Principles• Agricultural Labor
Practices Code• ‘PMI Speak Up
culture – Grievance
Mechanisms’ (pg. 42)

What specificexamples from thereporting period
illustrate whether
each salient issue
is being managed
effectively?

C 6.4

During thereporting period,
what were thetrends and patterns
in complaints orconcerns and theiroutcomes regarding
each salientissue, and what
lessons has thecompany learned?

• 2022 Integrated Report‘Speaking up’ (pgs. 174-175)• 2021 Integrated Report:‘Uphold business ethics
and integrity’ (pg. 205)
• Webpage: Performance
Metrics Overview

C 6.5

During the reporting
period, did thecompany provide or
enable remedy forany actual impacts
related to a salientissue and, if so,
what are typical orsignificant examples?

• 2022 Integrated Report‘Compliance investigations’(pgs. 174-175)• 2021 Integrated Report(pgs. 152-157)• 2021 Integrated Report:‘Uphold Business Ethics
and Integrity’ (pg. 205)

Remediation
C6

How does thecompany enableeffective remedy if
people are harmed
by its actions
or decisions inrelation to asalient humanrights issue?

Corresponding informationin Human Rights Report

Remediation

Tracking Performance
C5

Corresponding information in
publicly available documents• Updated Human Rights
Commitment• Code of Conduct• 2022 Integrated Report‘Human Rights’ (pg. 176)
‘Grievance mechanisms’(pg. 178) and ‘Evaluating
our Ethics and Complianceculture’ (pg. 174-175)• 2021 Integrated Report‘Stakeholder Engagement’(pg. 28) and ‘Uphold businessethics and integrity’ (pg. 205)
• Responsible Sourcing Principles• Agricultural Labor
Practices Program• Webpage: Ethics andCompliance Report an Incident54• ‘Focus on rightsholders’,‘PMI Speak Up culture –Grievance Mechanisms’(pgs. 24 – 41)

Issues relating to adverse
impacts of human rights canbe raised through the hotline,
through grievance channels set
up by suppliers, or through the
ALP. Customers can raise issues
in relation to products throughcustomer services. Grievancechannel use and resolutionof complaints is documented
and reported in the annual
Integrated Report.

55• ‘Focus on rightsholders’(pgs. 24 – 41)

High level analysis on how
PMI meets expectation

Philip Morris International – Human Rights Report 2023

Glossary of terms and acronyms

Notes

3TGs
Tin, tantalum, tungsten, and gold

In this report, “PMI”, “we”, “us”, and “our” refer toPhilip Morris International Inc. and its subsidiaries.

are at risk of the most severe negative impact
through the company’s activities or business
relationships (source: UN Guiding Principles)

ALP
Agricultural Labor Practices

ILO
International Labour Organization

Combustible tobacco product,
or combusted tobacco productA manufactured consumable product that combusts
tobacco and/or generates smoke inhaled directly by
the user when it is used as intended. Combustible
tobacco products include, for example, cigarettes,
cigarillos, cigars, “roll your own”, and pipe tobacco

IQOS heat-not-burn devices
Precisely controlled heating devices into which
specially designed and proprietary tobacco units
are inserted and heated to generate an aerosol
LCTP
Low-Carbon Transition Plan

Contracted farmers
Tobacco farmers supplying to PMI and contracted
either directly by PMI (through the company’s leaf
operations) or through third-party leaf suppliers

OECD
Organisation for Economic
Cooperation and Development

Contractor
A person employed or working on behalf of athird-party company contracted by PMI, who
remains under the direct supervision of his or her
employer rather than PMI and is often involved inproject-specific or outsourcing arrangements

RSP
Responsible Sourcing Principles

RBA
Responsible Business AllianceIn this report and in related communications, theterm “materiality”, “material”, and similar terms, whenused in the context of economic, environmental,
and social topics, are defined in the referenced
sustainability standards, and are not meant tocorrespond to the concept of materiality under the
U.S. securities laws and/or disclosures required by
the U.S. Securities and Exchange Commission.

Trademarks and service marks in this report are
the registered property of, or licensed by, thesubsidiaries for Philip Morris International Inc.,and are italicized or shown in the logo form.
The aspirational targets and goals in this report
do not constitute financial projections.

This report contains references and links to websites
operated by third parties. These references areprovided as a convenience to you and as an additional
avenue of access to the information contained inthose sources; they should not be viewed as anendorsement by us of the content of these references
and linked sites or opinions of their authors.

SBTi
Science Based Targets initiative

CPA
Crop protective agent

SHIFT Project
The leading center of expertise on the UN Guiding
Principles on Business and Human Rights

Downstream supply chain
Those stages in the supply chain in which materials(mostly in the form of finished products) flow awayfrom the organization to the customers/consumers

UNGPs
United Nations Guiding Principles on
Business and Human Rights

ESG
Environmental, social, and governance

Upstream supply chain
Those operations in which the materials flow
into the organization (i.e., it mainly refers to
procurement activities and inbound logistics)

GAP
Good Agricultural Practices

VAP
Validated Assessment Program of the
Responsible Business Alliance (RBA) is aleading standard for on-site complianceverification and effective, shareable audits

Human rights impact assessment, or HRIA
Assessments to identify human rights
risks and adverse impacts
Human rights salient issues
Those human rights that stand out because they

WBCSDWorld Business Council for Sustainable Development

56

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