CDP 2016 Climate Change 2016 Information Request

CDP

Philip Morris International

Module: Introduction
Page: Introduction
CC0.1

Introduction
Please give a general description and introduction to your organization.

Philip Morris International Inc. (PMI) is the leading international tobacco company, with its headquarters in New York City, New York, U.S.A. and Operations Centerin Lausanne, Switzerland.
On 31 December 2015, PMI owned and operated 48 manufacturing facilities and sold products in more than 180 markets.
In 2015, PMI recorded total cigarette shipment volume of 847 billion units, had revenues, including excise taxes, of US$ 73.9 billion, and held an estimated 28.7% of
the international cigarette market excluding the People's Republic of China and the U.S. PMI’s 2015 operating income was US$ 10.6 billion.
PMI has an unequalled brand portfolio led by Marlboro, the world’s number one international selling cigarette brand, and L&M, the third most popular brand.
Including Marlboro and L&M, six of our brands rank in the top 15 international cigarette brands in the world. We have a strong mix of international and local productsthat appeal to a wide range of adult smokers.
PMI’s global workforce of more than 80,000 employees is extremely diverse. We have historically expanded our business through a mixture of organic growth,geographic expansion and acquisitions, and have a successful track record of acquiring and integrating companies.
PMI is driven by four long-term goals that guide us as we grow our business in a responsible manner. Those goals are:- to meet the expectations of adult smokers by offering innovative tobacco products of the highest quality available in their preferred price category;- to generate superior returns to our shareholders through revenue, volume, income, and cash flow growth and a balanced program of dividends and share
repurchases;- to reduce the harm caused by tobacco products by supporting effective evidence based regulation and by developing products with the potential to reduce the riskof tobacco-related diseases; and- to be a responsible corporate citizen and to conduct our business with the highest degree of integrity.
For more than a decade, PMI has dedicated significant resources to the development and scientific assessment of non-combustible alternatives to cigarettes. We
refer to these products as Reduced-Risk Products (*see further information) because they have the potential to reduce the risk of smoking-related diseases.

We are committed to responsibly delivering long-term sustainable growth and applying high standards wherever we operate. We also aim to be an industry leader inenvironmental sustainability and have set clear and measurable targets to improve our environmental performance. In 2010, we set ourselves the goal of reducing
CO2 emissions in our manufacturing facilities by 20% by 2015, and reducing the carbon footprint of our value chain by 30% by 2020. We achieved our 2015 target
and continue to work on developing company-wide emissions reduction targets based directly on climate science.

CC0.2

Reporting Year
Please state the start and end date of the year for which you are reporting data.
The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first.
We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting
year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have beenoffered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting
periods here. Work backwards from the most recent reporting year.
Please enter dates in following format: day(DD)/month(MM)/year(YYYY) (i.e. 31/01/2001).

Enter Periods that will be disclosed

Thu 01 Jan 2015 - Thu 31 Dec 2015

CC0.3
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CC0.6

Modules
As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or autocomponent manufacture sub-industries, companies in the oil and gas sub-industries, companies in the information technology and telecommunications sectors andcompanies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire.
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wish to view the questions first, please see https://www.cdp.net/en-US/Programmes/Pages/More-questionnaires.aspx.

Further Information*Reduced Risk Products (RRPs) is the term we use to refer to products with the potential to reduce individual risk and population harm in comparison to smoking
combustible cigarettes. PMI’s RRPs are in various stages of development, and we are conducting extensive and rigorous scientific studies to determine whether we
can support claims for such products of reduced exposure to harmful and potentially harmful constituents in smoke, and ultimately claims of reduced disease risk,
when compared to smoking combustible cigarettes. Before making any such claims, we will need to rigorously evaluate the full set of data from the relevant scientificstudies to determine whether they substantiate reduced exposure or risk. Any such claims may also be subject to government review and approval, as is the case in
the USA today.

Module: Management
Page: CC1. Governance
CC1.1

Where is the highest level of direct responsibility for climate change within your organization?
Board or individual/sub-set of the Board or other committee appointed by the Board

CC1.1aPlease identify the position of the individual or name of the committee with this responsibility

The highest level of direct responsibility for climate change within PMI lies with the Product Innovation and Regulatory Affairs Committee of the Board of Directors.
The Senior Vice-President Operations (SVP Operations) who is a member of PMI's Senior Management Team (our Corporate Executive Team) and reports to PMI’s
Chief Executive Officer, is delegated with operational responsibility.
The SVP Operations reviews PMI’s objectives, strategies and action plans related to climate change with the CEO and the Product Innovation and Regulatory Affairs
Committee of the Board of Directors.

CC1.2
Do you provide incentives for the management of climate change issues, including the attainment of targets?
Yes

CC1.2aPlease provide further details on the incentives provided for the management of climate change issues
Who is entitled to benefit fromthese incentives?

The type of
incentives

Corporate executive teamMonetary
rewardIncentivized
performanceindicator

Comment

Emissions
reduction target
Energy reduction
target

The assessment of Environment, Health and Safety (EHS) results (which includes
annual performance against our carbon footprint reduction targets) directly
influences the annual performance rating of our SVP Operations and other membersof our Corporate Executive Team. This covers the annual cash incentive

Who is entitled to benefit fromthese incentives?

The type of
incentives

Incentivized
performanceindicator

Efficiency target

Management group

All employees

Monetary
rewardMonetary
rewardEnergy managers

Monetary
rewardEnvironment/Sustainability
managers

Monetary
rewardEmissions
reduction project
Emissions
reduction target
Energy reduction
targetEmissions
reduction project
Emissions
reduction target
Energy reduction
project
Energy reduction
targetEfficiency project
Efficiency target
Behaviour change
related indicator
Emissions
reduction project
Emissions
reduction target
Energy reduction
project
Energy reduction
targetEfficiency target
Emissions
reduction project
Emissions

Comment

compensation and long term restricted stock incentive compensation elements for
those roles.
Our CEO specifically covers EHS results (including carbon footprint reductions
against targets) in the assessment of our annual company-wide performance that isreviewed by the Compensation and Leadership Development Committee of theBoard of Directors. Accordingly, these results are included in our overall
performance rating which determines the cash and stock bonus pool for the
management group and other eligible employees. Executive management covering
EHS topics are specifically appraised each year for performance against targets,
including those relating to climate change.

Specific company awards such as the Chairman’s Award and Excellence Awards,
which are either cash or stock, are available for Energy Managers, EHS Managers,
project teams and other employees who are responsible for climate change related
initiatives and improvements.

Managers, team members and others have energy efficiency and carbon footprint
reduction targets set out in their annual performance objectives and are assessedagainst those targets in their annual performance appraisal. Energy efficiency andCO2 emissions reduction targets are set annually for at least three years for all of
our manufacturing facilities.

Managers, team members and others have energy efficiency and carbon footprint
reduction targets set out in their annual performance objectives and are assessedagainst those targets in their annual performance appraisal. Energy efficiency andWho is entitled to benefit fromthese incentives?

The type of
incentives

Incentivized
performanceindicator

reduction target
Energy reduction
project
Energy reduction
targetEfficiency target
Environmental
criteria included inpurchases

All employees

Monetary
rewardOther: - employees in certain
facilities such as our Operations
CenterMonetary
rewardAll employees

Other: - employees in our
Operations group (around 50,000
employees)

Recognition(nonmonetary)

Recognition(nonmonetary)

Emissions
reduction project
Energy reduction
project
Efficiency project
Behaviour change
related indicator
Emissions
reduction project
Energy reduction
project
Efficiency project
Behaviour change
related indicator
Emissions
reduction project
Energy reduction
project
Efficiency project
Behaviour change
related indicator

Comment

CO2 emissions reduction targets are set annually for at least three years for all of
our manufacturing facilities.

Specific company awards such as “Above and Beyond the Call of Duty” (ABCD)
awards for best practice initiatives in the areas of climate change, energy andcarbon reduction.
Employees from the Operations Center are encouraged to use public transportation.
The annual fee for half-price railway subscription as well as a monthly public
transport allowance is paid by the company for those employees who choose to use
public transportation rather than commute in their private cars to work.

In 2015, many affiliates continued to perform voluntary awareness and promotion
campaigns/ programs in order to increase employees’ active participation in EHS
programs and to make carbon footprint reduction part of the company's culture.
Awards and recognition for best practices form a core element of such campaigns.

Operations employees also have the opportunity to earn awards for best practice
initiatives in the areas of climate change, energy and carbon reduction. This forms
part of our Operations “Lead, Lean and Learn” (3L) program which encourages
innovation, continuous improvement and employee engagement.

Further Information

Page: CC2. Strategy
CC2.1
Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities
Integrated into multi-disciplinary company wide risk management processes

CC2.1aPlease provide further details on your risk management procedures with regard to climate change risks and opportunities

Frequencyofmonitoring

To whom are results reported?

Geographical areas considered

Annually

Board or individual/sub-set of theBoard or committee appointed by
the Board

Global coverage with regional highlights: (Asia Pacific (AP), Latin America
and Canada (LAC), Europe (EU) and Eastern Europe Middle East andAfrica (EEMA). Material country and asset-specific risks are highlighted.

How far into the
future are risks
considered?

Comment> 6 years

CC2.1bPlease describe how your risk and opportunity identification processes are applied at both company and asset level
Company Level:
Our risk/opportunity identification and management process covers our entire value chain. Annually it addresses regulatory, physical climate and market risks andopportunities, which can also include company reputation and changing customer demands through:- Carbon footprint reduction initiatives: driving global programs to reduce energy consumption and CO2 emissions which help to manage regulatory, reputational,
and financial risk exposure. Programs include CO2 reductions from our manufacturing operations and we review our progress at least annually. We update ourcarbon footprint every 2-3 years to ensure our risk/opportunity actions remain appropriate. For our products, key developments in product components or new
products are assessed by a Life Cycle Assessment (LCA) process to identify risks/opportunities.
- Climate change risk assessment (CCRA): We have updated in 2015, our comprehensive CCRA for corporate and asset level physical risks and opportunities up to
2025-2030. The process includes key assets such as factories/warehouses, supplier assets (including ports, warehouses, tobacco growing regions and strategic
suppliers). This information is reviewed with top management; it enables risk/opportunity identification and management at the company and asset level; it includes
climate change aspects of regulatory and geopolitical risk.
Asset level:
As well as the global CCRA mentioned above, we also have environmental risk assessments (ISO14001 based in most operations) at the asset level to identify
material risks/ opportunities. These include the need for flood risk management plans which we discuss with our insurers and use to develop mitigation plans. In
tobacco agriculture, they form part of our Good Agricultural Practices program and result in risk/opportunity identification and management through country andsupplier specific action plans.

CC2.1cHow do you prioritize the risks and opportunities identified?
Material issues are identified in a multidisciplinary way and include those which:• have the highest potential impact and a realistic probability of occurrence;• are most relevant to our enterprises and geographic locations; and• are most important to our stakeholders.
In carbon footprint terms we have initially prioritized actions for those areas of our business which constitute more than 5% of our footprint, although we quantify andassess improvement action down to 1%.
We have set a financial threshold of US$100K for materiality of environmental risk/opportunity at the asset level but in 2020+ risk forecasting terms, higher level risks
are defined as those with a potential impact in excess of US$2M or a raw material impact in excess of 1000 metric tonnes of tobacco leaf.
We review our risk/opportunity action plans and priorities every year during our integrated business planning process which includes 3-year and longer-term plansfor our carbon footprint and climate change strategies. We use external sources such as consultancy and risk mapping tools as well as IPCC and academic
publications to keep our information current.

CC2.1dPlease explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan
to introduce such a process in future

Main reason for not having a process

Do you plan to introduce a process?

Comment

CC2.2
Is climate change integrated into your business strategy?
Yes

CC2.2aPlease describe the process of how climate change is integrated into your business strategy and any outcomes of this process

Climate change strategy is included in our overall business strategy and Code of Conduct. It is integrated into normal business activities and forms part of ourannual Long Range Planning process which reviews and sets business direction. The corporate EHS and Sustainability teams undertake annual strategy
development which is based on review of prior year performance, regulatory/external developments, risk/opportunity assessments, stakeholder interest andbusiness changes. The strategy is developed through functional management teams up to the Senior Management Team and CEO and is then cascaded. Climatechange strategy reviews are held during the year, including with the Product Innovation and Regulatory Affairs Committee of PMI’s Board of Directors. Our strategy
is split into two main areas:
1) Minimizing our impact on the environment through carbon footprint reduction initiatives (mitigation).
2) Minimizing future environmental impact on our business through a climate change risk assessment process (adaptation).
We used Life Cycle Assessment (LCA) to establish our carbon footprint - the majority of our footprint comes from our scope 3 emissions, in particular the tobacco
agriculture part of our value chain (~40% of our emissions). The size and importance of the impact from each element is a key input to our strategy development(mitigation). We also assess climate change risk across our value chain and focus areas are identified for adaptation. Our business depends on agriculture for key
raw materials and therefore current and future changes in climate impacting sensitive crops (such as tobacco and clove) are important for our strategy.
Short-term strategy components:
1) Continuing investment in reforestation and Good Agricultural Practices, which includes country-specific action plans to reduce impacts in the short-medium term
including reducing wood use in tobacco curing, promoting efficient and sustainable consumption of wood/fuels, eliminating the use of coal and seeking alternative
fuels.
2) Procuring materials such as paper/boards from sustainable sources.
3) Reducing our CO2 from manufacturing operations by 20% by 2015 against our 2010 baseline and 30% by 2020.
4) Implementing a comprehensive Energy Management Program, including worldwide factory metering and targeting, energy assessments, key Energy Saving
Projects (best practice cascading).
5) Implementing our renewable energy strategy which includes both green energy procurement and development of on-site renewable energy projects.

6) Reducing emissions and sharing best practices across our fleet and Logistics & Distribution.
7) Revising our direct materials supplier program covering sustainability topics and related criteria, including using the CDP Supply Chain program in 2015.
8) Undertaking LCAs of significant developments in cigarette/packaging components or potential new products.
9) Review/update of our carbon footprint every 3 years, continuing to measure the impact of developments in our business.
10) Review and refinement of our climate change risk assessment in 2015 with briefing to functional management on the impact of future projected changes and theneed for adaptation measures.
Long-term strategy:
Our long term commitment on mitigation is to reduce our value chain carbon footprint by 30% by 2020 against our 2010 baseline and our Scope 1 and 2 by 60% by
2040. This is supported by sustained implementation and development of many of the short term actions described above. Development of our climate change risk
assessment continues to inform future management decisions in terms agricultural impacts and forecast physical changes that may occur in certain climates andcountries (adaptation focus). Our agricultural supply chain is widely spread around the world, which helps to mitigate against climate related risks; tobacco crops canpotentially be relocated if some growing areas become more favorable than others in terms of climate. In the long term we will also integrate our customer andsupplier strategies for sustainability and climate change to ensure that our entire value chain is aligned with our objectives. In 2015 we confirmed our commitment todevelop science-based emissions reduction targets and now include our first in this disclosure.
How this strategy gains us strategic advantage:
As the leading international cigarette company, our climate change strategy has a key role in enabling our business efficiency which keeps us ahead of ourcompetitors and supports our long term sustainability, our KPIs are amongst the best in our sector. We are able to assure our investors that our risks andopportunities are well managed. We have taken steps to align with our customer expectations on climate change including the development of our carbon footprint
and our target to reduce that footprint by 30% by 2020. We will continue to work with trade customers, such as Tesco (Tesco Supply Chain strategy for carbon
footprint reduction), so that we can exceed their expectations in this area. In terms of our products, we make sure that we have the right information to take future
decisions on potential strategic advantage by considering the environmental impacts of new products or product developments through LCA. We have implemented
global capacity and footprint planning which improves our flexibility and resilience.
Substantial business decisions influenced by climate change:a) We committed to science-based emissions reduction target development and were involved in the CDP Road to Paris discussions - we attended and supported
an ambitious deal at the Paris climate conference in 2015. Additionally we made key decisions like joining the UN Global Compact. This is a change in our businessapproach and demonstrates our determination to play an active role in the sustainability agenda.
b) Continuing investment in our Energy Management Program which allows for a longer term return on investment when there are additional justified benefits suchas climate change impact reduction. This program includes over US$70M estimated investment in improvement projects between 2010 and 2015.
c) Purchasing green electricity to help mitigate our climate change impact - this is an important business decision as there is no financial payback for the increased
cost of green electricity in most cases.
d) Embedding Environmental Sustainability in our Good Agricultural Practices. Specifically in 2015 we decided to aim for the following by 2020: 70% increase of
efficiency in CO2 emissions per kg of cured tobacco leaf compared to 2010; Zero coal usage for tobacco curing; no deforestation of old growth forest due to thegrowing and curing of tobacco we purchase.

CC2.2bPlease explain why climate change is not integrated into your business strategy

CC2.2c
Does your company use an internal price of carbon?
No, but we anticipate doing so in the next 2 years

CC2.2dPlease provide details and examples of how your company uses an internal price of carbon

CC2.3
Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that
apply)
Trade associations
Other

CC2.3aOn what issues have you been engaging directly with policy makers?
Focus of legislation

CC2.3b

Corporate Position

Details of engagement

Proposed legislative solution

Are you on the Board of any trade associations or provide funding beyond membership?
Yes

CC2.3cPlease enter the details of those trade associations that are likely to take a position on climate change legislation

Trade association

Please explain the trade association's position

Their Energy and Climate Working Group states: "Energy isirreversibly tied to climate. In this realm, transatlantic
coordination of energy policies and climate action targets could
yield substantial results, as both the US and EU are the world’s
leading energy consumers."
APEC have supported the development of an energy strategy
study which includes: "+Expand and Diversify Supply of Energy
Resources; +Promote Conservation and Improve Efficiency;+Promote Open and Efficient Energy Markets; +Clean Energy
Use and Technology Innovation"

Trans-Atlantic BusinessCouncil

Consistent

National Center for
Asia-Pacific Economic
Cooperation

Consistent

US ASEAN BusinessCouncil

Consistent

Their Energy Committee covers broad energy improvement
topics including energy efficiency and renewables.

ConsistentTranslation from their website: "Natural resources are a central
base for the prosperity of our society. Therefore resource
efficiency is a primordial concern of the economy. Swisscompanies act for a "greener economy" strongly and prove their
aspirations with already world leading positions... "EconomieSuisse

CC2.3dIs yourposition on
climatechangeconsistent
with theirs?

How have you, or are you attempting to,
influence the position?

Our trade association memberships relate tospecific business priorities which do not currently
include climate change. We are not currently
involved in, nor do we influence, trade association
positions on climate change.
Our trade association memberships relate tospecific business priorities which do not currently
include climate change. We are not currently
involved in, nor do we influence, trade association
positions on climate change.
Our trade association memberships relate tospecific business priorities which do not currently
include climate change. We are not currently
involved in, nor do we influence, trade association
positions on climate change.
Our trade association memberships relate tospecific business priorities which do not currently
include climate change. We are not currently
involved in, nor do we influence, trade association
positions on climate change.

Do you publicly disclose a list of all the research organizations that you fund?

CC2.3ePlease provide details of the other engagement activities that you undertake
We work with not-for profit organizations and governments to support communities on environmental sustainability topics including sustainable forestry,reforestation, controlled use of pesticides in agriculture, sustainable rural living conditions and education; all of these can have an influence on climate change
improvement, adaptation and mitigation.
Through specific contributions in 2015, PMI supported projects to protect and enhance natural resources, reforest the land, implement conservation agriculture,provide clean water, cater for food security, and improve the livelihoods of people living in rural communities. Selected examples include:
In Greece, PMI partnered with the Thessalonica Agricultural & Industrial Institute to provide training to young tobacco farmers to assist them in land stewardship,
through the development of environmental awareness and the promotion of efficient management of available natural resources for high quality product and revenue
turnover.
In Israel, PMI collaborated with Mi’tlut Le’ cheirut to support a training program targeting people with special needs, in order to foster their personal welfare andintegration in society by advancing their opportunities to access productive and respectable employment. The training focused on electronic equipment recycling,
and on refurbishing and re-use of computers.
In Mexico, PMI supported an initiative of Natural Areas and Sustainable Development Civil Partnership aiming at creating and developing new business
opportunities for small producers, while increasing their resources management capacity and knowledge of eco-technologies solutions. The contribution from PMI
also supported the design of a production and commercialization strategy to market sustainable backyards products.
In Indonesia, PMI supported projects to increase natural disaster resilience, protect and enhance natural resources, and improve the livelihoods of people living inrural communities.
PMI contributed to raising awareness and understanding of the communities in regards to disaster preparedness. Focusing on minimizing the impacts when disasteroccurs, the program included trainings, seminars, simulations and equipment provision.
With the objective of preserving the environment and generating additional income, PMI supported the Kaliandra Sejati Foundation’s tree planting program
benefiting the villagers living in the Sukorejo area.
PMI also partnered with the Indonesian Technology Innovation Foundation to ensure long-term conservation and sustainable use of natural resources. The Programis supporting the development of profitable and scalable environmentally-sustainable and socially-responsible small and growing businesses.
In addition, we signed-up to the UN Global Compact in 2015 and issued our first Communication on Progress in June 2016 which we use as an engagement tool
along with signing up to UNGC Local Networks around the world. We are part of the WeMeanBusiness coalition and participated in the UNFCCC COP21 in Paris,
speaking at side events and publishing articles regarding our commitments on climate change adaptation and mitigation including our intention to adopt sciencebased targets, and our support for an ambitious deal to be made in Paris.

CC2.3f
What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climatechange strategy?
PMI operates within an overarching Code of Conduct to a set of internal policies - our Principles and Practices. These policies cover our mandatory requirements
and processes in relation to Environment, Health and Safety (EHS) and Sustainability, which includes our climate change strategy; corporate contributions; andinteraction with government officials, amongst others. As part of these management controls, we conduct due-diligence to ensure consistency with our Code andPrinciples, potential compliance and reputational issues when joining trade associations. Other external facing activities related to climate change are reviewed by
our Corporate Affairs and Sustainability teams to ensure consistency with our climate change strategy.

CC2.3gPlease explain why you do not engage with policy makers

Further Information
We are already raising internal awareness on a price for carbon and also raising understanding of carbon impacts when assessing new projects for decision making.
We are working on developing the appropriate price of carbon for our operations by undertaking a Marginal Abatement Cost Curve (MACC) assessment.

Page: CC3. Targets and Initiatives
CC3.1
Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in thereporting year?

Absolute target
Intensity target

CC3.1aPlease provide details of your absolute target% ofemissions in
scope%
reductionfrom base
year

Base
year

Base year
emissionscovered bytarget (metrictonnesCO2e)Target
year

ID

Scope

Abs1

Scope 1+2
(marketbased)

Abs2

Scope 1+2
(marketbased)

81%

30%

2010

743001

2020

Yes

Abs3

Scope 1+2
(marketbased)

100%

60%

2010

914050

2040

Yes

28%

33%

2010

2588982015

Is this ascience-basedtarget?

No, but we arereportinganother target
which isscience-based

Comment

This covers manufacturing facilities in our EU region
where we have pursued opportunities for renewableenergy. We have met this target.
This covers all our manufacturing facilities. The % ofemissions in scope are 70% or higher. The target covers
both scope 1 and 2 emissions and has a medium timeframe (target year between 2020 - 2035 inclusive) The
target meets at least a 2.1% year-on-year emissions
reduction between base year and target year.
The % of emissions in scope are 100%. The target
covers both scope 1 and 2 emissions and has a long timeframe (target year beyond 2035) The target meets atleast a 2.1% year-on-year emissions reduction between
base year and target year.

CC3.1bPlease provide details of your intensity target

ID

Scope

% of
emissionsin scope%
reductionfrombase year

MetricBaseyear

Normalizedbase year
emissionscovered bytargetTargetyear

Is this asciencebasedtarget?

Comment

ID

Scope

Int1

Scope 1+2
(market-based)

Int2

Other: Scope 1+2(market based) +3 (upstream anddownstream)% ofemissionsin scope

81%

100%

%
reductionfrombase year

Metric20%

Metrictonnes CO2e
per unit ofproduction

30%

Metrictonnes CO2e
per unit ofproduction

Base
year

2010

2010

Normalizedbase year
emissionscovered bytarget

0.794

6.324

Targetyear

Is this asciencebasedtarget?

2015

No, but weare reporting
another target
which issciencebased

2020

No, but weare reporting
another target
which issciencebased

Comment

This is a publicly declared target to reduce
our emissions from our manufacturing
facilities by 20% per million cigarettes
equivalent by 2015, against our 2010
baseline. We have met this target. During
2016 we are continuing to review longer
term and science-based emissions
reduction intensity targets.
This is a publicly declared target to reduce
our emissions from the entire value chain(Scope 1+2+3) by 30% per million
cigarettes equivalent by 2020, against our2010 baseline. During 2016 we arecontinuing to review longer term andscience-based emissions reduction intensity
targets and ambitious Scope 3 targets
beyond 2020.

CC3.1cPlease also indicate what change in absolute emissions this intensity target reflects

ID

Direction of change
anticipated inabsolute Scope 1+2
emissions at target
completion?

% change anticipated inabsolute Scope 1+2
emissions

Direction of change
anticipated inabsolute Scope 3
emissions at target
completion?

% change anticipated inabsolute Scope 3
emissions

Int1

Decrease

22

Decrease

1

Comment

Scope 3 reduction from fuel and energy
related activities.

ID

Direction of change
anticipated inabsolute Scope 1+2
emissions at target
completion?

% change anticipated inabsolute Scope 1+2
emissions

Direction of change
anticipated inabsolute Scope 3
emissions at target
completion?

% change anticipated inabsolute Scope 3
emissions

Int2

Decrease

30

Decrease

32

Comment

CC3.1dPlease provide details of your renewable energy consumption and/or production target

ID

Energy types
covered by target

Base year

Base year energy forenergy type covered(MWh)% renewableenergy in baseyear

Target year

CC3.1eFor all of your targets, please provide details on the progress made in the reporting year

ID

Abs1

% complete(time)% complete(emissions orrenewable energy)

100%

100%

Comment

We beat our target for 2015, achieving a 60% reduction% renewableenergy in target
year

Comment

% complete(time)% complete(emissions orrenewable energy)

Abs2
Abs3
Int1

50%
17%
100%

80%
40%
100%

Int2

50%

10%

ID

Comment

We have achieved 24% absolute reduction so far, against our 30% target.
We have achieved 24% absolute reduction so far, against our 60% target.
We beat our target in 2015, achieving a 24% reduction
We have made significant progress in implementing programs to reduce our Scope 3 emissions, with a focus on
our agricultural suppliers. We have not fully quantified our progress in 2015 but will do so over the next year.
Therefore at this time we are conservatively estimating 10% progress against our target. We remain confident ofmeeting our 2020 target.

CC3.1fPlease explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years

CC3.2
Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions?

No

CC3.2aPlease provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions

Level of
aggregation

Description of product/Groupof products

Are you reporting
low carbon
product/s or
avoided emissions?

Taxonomy, project or
methodology used toclassify product/s as
low carbon or to
calculate avoided
emissions% revenue fromlow carbon
product/s in thereporting year

% R&D in low
carbon product/s
in the reportingyear

Comment

CC3.3
Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation
phases)Yes

CC3.3aPlease identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings

Stage of development

Under investigation
To be implemented*
Implementation commenced*
Implemented*
Not to be implemented

CC3.3b

Number of projects

23
435
166
208
33

Total estimated annual CO2e savings in metric tonnes
CO2e (only for rows marked *)

41000
47500
65000

For those initiatives implemented in the reporting year, please provide details in the table below

Activity typeTransportation:
fleet

Low carbon
energy purchase

Energyefficiency:
Processes

Energyefficiency:
Processes
Energyefficiency:
Building services

Description of activity

At vehicle renewal, specificallysourcing more fuel efficient
vehicles. Investment estimated atzero as no additional cost over
and above buying a less efficientequivalent vehicle.
Additional certified green
electricity procurement in the EU,over and above existingpurchases from 2014. Investment
is the current additional amount
paid for green electricity.
General improvements from ourEnergy Management Program
over and above individual
examples shown below. We haveinvested over $10M, withindividual projects usually
averaging at a 3 year payback
time.

EstimatedannualCO2esavings(metric
tonnes
CO2e)

9000

11000

30000

Heat recovery from processequipment in Indonesia

1000

Improving the efficiency of chiller
units in Indonesia

2700

Scope

Voluntary/
Mandatory

Scope 1

Voluntary

Scope 2
(marketbased)

Voluntary

Scope 1
Scope 2
(locationbased)
Scope 2
(marketbased)

Voluntary

Scope 1

Voluntary

Scope 1
Scope 2
(location-

Voluntary

Annualmonetarysavings(unit
currency- asspecifiedin CC0.4)

Investment
required(unit
currency as
specifiedin CC0.4)400000

Payback
periodEstimated
lifetime oftheinitiative0<1 year

6-10 years

0

96000

>25
years

Ongoing

3400000

10000000

1-3
years

11-15
years

33000

165000

4-10
years

11-15
years

2990001170000

4-10
years

11-15
years

Comment

Activity type

Description of activity

EstimatedannualCO2esavings(metric
tonnes
CO2e)

Scope

Voluntary/
Mandatory

Annualmonetarysavings(unit
currency- asspecifiedin CC0.4)

Investment
required(unit
currency as
specifiedin CC0.4)120000102000<1 year

11-15
years

62000

420000

4-10
years

11-15
years

93000

625000

4-10
years

11-15
years

3500

0

<1 year

11-15
years

25000

225000

4-10
years

11-15
years

360000420000

1-3
years

6-10 years

74500

128000

1-3
years

11-15
years

140000390000

1-3
years

6-10 years

Payback
periodEstimated
lifetime oftheinitiative

based)
Energyefficiency:
Building services
Energyefficiency:
Processes
Energyefficiency:
Building services

Improving the efficiency of asteam system in Indonesia

1350

Heat recovery from processequipment in Russia

700

Upgrading chiller units in
Kazakhstan

470

Energyefficiency:
Building services

Optimizing heating, ventilation andair conditioning in Russia

Low carbon
energyinstallation

Installing solar power at ourfactories in Pakistan

360

Installation of adiabatic
humidification at our factory inTurkey2400

Heat Recovery from processequipment in Poland

1000

Installing low energy lighting in ourfactory in Brazil

220

Energyefficiency:
Building services
Energyefficiency:
Processes
Energyefficiency:

12

Scope 1

Voluntary

Scope 1

Voluntary

Scope 1
Scope 2
(locationbased)

Voluntary

Scope 1
Scope 2
(locationbased)

Voluntary

Scope 2
(locationbased)

Voluntary

Scope 1

Voluntary

Scope 1

Voluntary

Scope 2
(location-

Voluntary

Comment

Activity type

Description of activity

EstimatedannualCO2esavings(metric
tonnesCO2e)

Building services
Low carbon
energyinstallation

Energyefficiency:
Processes

Energyefficiency:
Processes
Low carbon
energyinstallation
Energyefficiency:
Processes
Energyefficiency:
Processes

CC3.3cScope

Voluntary/
Mandatory

Annualmonetarysavings(unit
currency- asspecifiedin CC0.4)

Investment
required(unit
currency as
specifiedin CC0.4)

162000

Payback
periodEstimated
lifetime oftheinitiative

633000

4-10
years

11-15
years

31000

238000

4-10
years

11-15
years

93000

390000

4-10
years

6-10 years

22500

90000

4-10
years

6-10 years

3600001867570

4-10
years

21-30
years

39000

172000

4-10
years

6-10 years

based)
Conversion of fuels for curingbarns from diesel to biomass in
Italy
Curing barn upgrades to reduce
firewood consumption in
Philippines. Upgrades include
improved insulation and vents;
Venturi furnaces, improved flue
pipes, dampers and chimneyheightCuring barn upgrades to reduce
fuel consumption in Indonesia.
Focus on improved furnaces forexample using Venturi techniques.
Conversion of fuels for curingbarns to biomass in Ecuador
Curing Barn Efficiency Program
targeting to increase the numberof bulk barns to improve efficiency
of curing in Brazil
Reduce fuel consumption throughthe improvement of the curing
infrastructure and refurbishingcuring barns in Colombia.

1800

400

950

460

750

700

Scope 3

Voluntary

Scope 3

Voluntary

Scope 3

Voluntary

Scope 3

Voluntary

Scope 3

Voluntary

Scope 3

Voluntary

Comment

What methods do you use to drive investment in emissions reduction activities?

MethodDedicated budget for energy
efficiency

Employee engagement
Compliance with regulatory
requirements/standards
Lower return on investment(ROI) specification

Other

Dedicated budget for otheremissions reduction activities

Comment

Through our Energy Management Program (over US$70M budget estimated from 2010-2015) which has been developed toachieve the energy reduction and related greenhouse gas emissions targets of 20% by 2015 compared to our 2010 baseline
for our manufacturing affiliates. Additionally, we have targeted a 30% reduction in our carbon footprint by 2020 compared toour 2010 baseline across our entire value chain (scope 1, 2 & 3) and a 60% reduction of Scope 1 and 2 by 2040.
Through our objective setting, Long-Range Planning process and via employee communications, sharing of tools, guidanceand best practices. We gave senior management briefings to all operations employees on sustainability in 2015 and run
specific focus days and campaigns.
We take the opportunity of regulatory developments to achieve energy/emissions reductions (e.g. Switzerland - carbon tax
exemption following a process upgrade) and in particular when investing in new processes/facilities (e.g. requirements forrenewable energy or energy efficiency) for new facilities in Italy, Mexico and our UK offices.
We consider a longer rate of return (4 years or more) for certain energy savings and renewable energy projects. During 2015
we started working on setting a price on carbon and identifying priority opportunities using a Marginal Abatement Cost Curve(MACC) methodology.
The examples included in 3.3b above are just a few of the Good Agricultural Practices (GAP) activities implemented during
2015. GAP is a broad program covering our tobacco suppliers in 4 themes – Governance, People, Crop and Environment. It
includes programs such as Integrated Production Systems which supports farmers to improve yield and farm efficiency on avariety of crops (particularly food crops), not just tobacco. Through GAP we have environmental improvement programs in all
the countries where we source tobacco around the world these programs include: - Curing barn efficiency improvements Fuel switching to greener fuels - Eliminating the use of coal - Increasing the use of biomass - Helping farmers become selfsufficient in their use of wood and in seeking traceable sources of sustainable wood.
We have developed a renewable energy strategy with an initial focus on low-carbon electricity uptake in the EU. We
commenced the program in 2012 and continued to add more facilities during 2015. We continue to seek new opportunities topurchase greener energy.

CC3.3dIf you do not have any emissions reduction initiatives, please explain why not

Further Information

Page: CC4. Communication
CC4.1
Have you published information about your organization’s response to climate change and GHG emissions performance for this reporting year in places
other than in your CDP response? If so, please attach the publication(s)Publication

Page/Section reference

Attach the document

StatusComment

In voluntarycommunications

Complete Pages 48 to 63

https://www.cdp.net/sites/2016/12/14712/Climate Change 2016/Shared
Documents/Attachments/CC4.1/Philip Morris International Communication
on Progress 2015 Final.pdf

In voluntarycommunications

Our website
www.pmi.com/carbon The
Complete attachment gives selected
copied content from our
website.

https://www.cdp.net/sites/2016/12/14712/Climate Change 2016/Shared
Documents/Attachments/CC4.1/Selected clips from website.docx

Complete 10K Filing pages 6-7

https://www.cdp.net/sites/2016/12/14712/Climate Change 2016/Shared
Documents/Attachments/CC4.1/PMI 2016 10K.pdf

Page 4, section on
Environment, Health and
Safety - limited space inCompleteour report so we link
readers to the climatechange info on our website

https://www.cdp.net/sites/2016/12/14712/Climate Change 2016/Shared
Documents/Attachments/CC4.1/PMI_2015AR_CompleteAnnualReport-3.pdf

In other regulatory
filings
In mainstream
reports (including
an integrated
report) but have notused the CDSB
Framework

Further Information

Module: Risks and Opportunities
Page: CC5. Climate Change Risks

Our first
Communication
on Progress to
the UN Global
Compact

CC5.1Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or
expenditure? Tick all that apply

Risks driven by changes in regulation
Risks driven by changes in physical climate parameters
Risks driven by changes in other climate-related developments

CC5.1aPlease describe your inherent risks that are driven by changes in regulation

Risk driver

Description

Fuel/energy
taxes andregulations

In various
countries aroundthe world, there
are electricity andfuel-related levies
or taxes and also
CO2 related
taxes such as theclimate change
levy in the UK
and the CO2 tax
in Switzerland.
We can expect
such initiatives toincrease.

Potential
impactIncreased
operational
cost

Timeframe

3 to 6years

Direct/Magnitude
Likelihood
Indirectof impact

DirectLikelyLow

Estimatedfinancial
implications

Management
methodCost ofmanagement

For our global
operations,such levies andtaxes areestimated ataround US$2M

We are managing
these risks byhaving acomprehensive
EnergyManagement
Program (energy
and CO2
reduction
program),includingambitious CO2
reduction targets
for ourmanufacturing
facilities. This
program can

The costs
associated are
generallyembedded in
our Energy
Management
Program, witharound US$10M
already invested
specifically inenergymonitoring andtargeting and an
associated$200k/yrmanagementcost. The wider

Risk driver

Description

Potential
impactTimeframe

Direct/Magnitude
Likelihood
Indirectof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement

provide the basis
for carbon tax
exemptions (e.g.
our Swiss affiliate
is alreadyexempted due toits energy
reduction results)
and reductions in
the cost tocomply with the
EU ETS.
Standards for thedesign of new
facilities which
include low
carbon building
design (e.g. low
carbon building
materials andenergy efficient
lighting) help
minimize our risk
exposure.
Drivers like EU
Emissions
Trading Scheme(EU ETS) and theEnergy Efficiency
Directive have led
us to consider
process changes
in our factories,
for example
replacement ofolder combustion

best practice
sharing
approach andindividualenergy/CO2
saving projects
involve specificinvestments ofapproximately$10M per year.

Risk driver

Description

Potential
impactTimeframe

Direct/Magnitude
Likelihood
Indirectof impact

Estimatedfinancial
implications

Management
methodequipment tonewer more
efficient plant thatcan potentiallyreduce ourenergy load tobeneath the
20MW regulatory
threshold. For
example in 2014
we were able todelist a site fromEU ETS as we
moved below thetotal combustion
capacitythreshold at thatsite and wedelisted an
additional site in2015. For afactory in Russia,
following ourinternal energy
and CO2
reduction targets
means that thefactory will
already meet or
exceed new state
regulations suchas the “Energy
conservation andimproving energy
efficiency in the
period up to

Cost ofmanagement

Risk driver

Description

Cap and tradeschemes

CO2 related
schemes such as
the EU Emission
Trading Scheme(EU ETS) areregulatory
frameworks thatpose risk ofincreased
operating costs to
PMI. PMI owned
and operated 3
manufacturing
centers (inGermany,
Netherlands andPortugal with total
verified emissionsof over 20,000
metric tonnes of
CO2 in 2015) thatare covered by
the EU ETS in
2015, with
Portugal moving
out of theregulation during
the year. We
have otherfactories in the
EU and EU
accessioncountries which
could also

Potential
impactIncreased
operational
cost

Timeframe

3 to 6years

Direct/Magnitude
Likelihood
Indirectof impact

DirectLikelyLow

Estimatedfinancial
implications

Based on 3 EU
ETS factories
in 2015 which
reduced to 2
during the year,
the annual costof emissions
allowances is
expected to beup to $50K in
the short term.
We will likely
onboard a newsite into EU
ETS during
2016.

Management
method2020” law.
We are managing
these risks byhaving acomprehensive
EnergyManagement
Program (energy
and CO2
reduction
program),includingambitious CO2
reduction targets
for ourmanufacturing
facilities. This
program canprovide the basis
for carbon tax
exemptions (e.g.
our Swiss affiliate
is alreadyexempted due toits energy
reduction results)
and reductions in
the cost tocomply with the
EU ETS.
Standards for thedesign of new
facilities which
include low
carbon building

Cost ofmanagement

The costs
associated are
generallyembedded in
our Energy
Management
Program, witharound US$10M
already invested
specifically inenergymonitoring andtargeting and an
associated$200k/yrmanagementcost. The wider
best practice
sharing
approach andindividualenergy/CO2
saving projects
involve specificinvestments ofapproximately$10M per year.

Risk driver

Description

become subject
to EU ETS
following site
developments orcountry accession
to the EU in the
future. Although
the cost of EU
ETS carbon
credits have been
lower in the past
several years due
to a large surplusof allowances, thecost ofallowances is
expected toincrease due tostricterregulations andmore significant
long-term reforms
to reduceoversupply. This
could result in an
increase in theoperating cost ofpurchasing
allowances in the
future. There is aclear international
trend towards
stricter climate
regulations. In
addition to EU
ETS, other

Potential
impactTimeframe

Direct/Magnitude
Likelihood
Indirectof impact

Estimatedfinancial
implications

Management
methoddesign (e.g. low
carbon building
materials andenergy efficient
lighting) help
minimize our risk
exposure.
Drivers like EU
Emissions
Trading Scheme(EU ETS) and theEnergy Efficiency
Directive have led
us to consider
process changes
in our factories,
for example
replacement ofolder combustion
equipment tonewer more
efficient plant thatcan potentiallyreduce ourenergy load tobeneath the
20MW regulatory
threshold. For
example in 2014
we were able todelist a site fromEU ETS as we
moved below thetotal combustion
capacitythreshold at that

Cost ofmanagement

Risk driver

Productlabelling
regulations
and standards

Description

countries andregions are
considering and,in some cases,
developing similar
programs,
compatible withEU ETS, in aneffort to form a
global carbon
market. Tighter
regulations in thisarea could
indirectly
influence our
supply chain withregard to energy
supply, andincrease inelectricity prices.
Regulations
requiring carbon
labelling on
products could
impact PMI for
both conventional
cigarettes and our
Reduced-Risk
Products (RRPs),
which mayinclude electronic
components. The
business effectcould be in two
categories a)

Potential
impactIncreased
operational
cost

Timeframe

3 to 6years

Direct/Magnitude
Likelihood
Indirectof impact

DirectUnlikely

Low

Estimatedfinancial
implications

Should productlabeling be
required for our
future products
we estimate acost of over
$250K
excluding any
additional
manufacturing
costs
associated withlabeling.

Management
methodsite and wedelisted an
additional site in2015. For afactory in Russia,
following ourinternal energy
and CO2
reduction targets
means that thefactory will
already meet or
exceed new state
regulations suchas the “Energy
conservation andimproving energy
efficiency in the
period up to2020” law.
With respect toour products,
potential
significant
developments incigarette andpackagingcomponents or
potential new
products areassessed througha LCA process forrisks andopportunities inrelation to our

Cost ofmanagement

We undertook
LCA projects,
includingrevisiting
elements of ourcarbon footprint
assessment at a
cost ofapproximately$100K in 2015.

Risk driver

Description

Potential
impactTimeframe

Direct/Magnitude
Likelihood
Indirectof impact

Estimatedfinancial
implications

increased
operating costand b) productdifferentiation(which could also
be an opportunity
for PMI).

Productlabelling
regulations
and standards

Currently there
are no global,
climate changerelated, labelingstandards that
could coherently
be applied totobacco products.
If suchrequirements
were introduced
then uneven orinconsistent
implementation
by regulators
could result insome adverse
impacts on PMI.

Generalenvironmental
regulations,
includingplanning

Many of ourfactories are
subject to generalenvironmental
regulations,
includingemissions limits
and permitting.
Any new factories

Management
methodCost ofmanagement

carbon footprint.
We use external
experts to assist
us in this process.

Reduceddemand forgoods/services

Increased
capital cost

3 to 6years

3 to 6years

DirectDirectUnlikely

LikelyLow

Should productlabeling be
required for our
future products
we estimate acost of over
$250K
excluding any
additional
manufacturing
costs
associated withlabeling.

Low

Tighterenvironmental
regulation in
the future could
cost over $1M
per year acrossour global
facilities.

With respect toour products,
potential
significant
developments incigarette andpackagingcomponents or
potential new
products areassessed througha LCA process forrisks andopportunities inrelation to ourcarbon footprint.
We use external
experts to assist
us in this process.
We are managing
these risks byhaving acomprehensive
EnergyManagement
Program (energy
and CO2
reduction

We undertook
LCA projects,
includingrevisiting
elements of ourcarbon footprint
assessment at a
cost ofapproximately$100K in 2015.

The costs
associated are
generallyembedded in
our Energy
Management
Program, witharound US$10M
already invested

Risk driver

Description

and other
facilities will needto ensure thatenvironmental
considerations
are fully
addressed at thedesign stage. For
example, theEnergy Efficiency
Directive in the
EU and otherlocal regulations
have an impact
on the design of
new facilities that
we are currently
building in Italy.

Potential
impactTimeframe

Direct/Magnitude
Likelihood
Indirectof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement

program),includingambitious CO2
reduction targets
for ourmanufacturing
facilities. This
program canprovide the basis
for carbon tax
exemptions (e.g.
our Swiss affiliate
is alreadyexempted due toits energy
reduction results)
and reductions in
the cost tocomply with the
EU ETS.
Standards for thedesign of new
facilities which
include low
carbon building
design (e.g. low
carbon building
materials andenergy efficient
lighting) help
minimize our risk
exposure.
Drivers like EU
Emissions
Trading Scheme(EU ETS) and thespecifically inenergymonitoring andtargeting and an
associated$200k/yrmanagementcost. The wider
best practice
sharing
approach andindividualenergy/CO2
saving projects
involve specificinvestments ofapproximately$10M per year.

Risk driver

Description

Potential
impactTimeframe

Direct/Magnitude
Likelihood
Indirectof impact

Estimatedfinancial
implications

Management
methodEnergy Efficiency
Directive have led
us to consider
process changes
in our factories,
for example
replacement ofolder combustion
equipment tonewer more
efficient plant thatcan potentiallyreduce ourenergy load tobeneath the
20MW regulatory
threshold. For
example in 2014
we were able todelist a site fromEU ETS as we
moved below thetotal combustion
capacitythreshold at thatsite and wedelisted an
additional site in2015. For afactory in Russia,
following ourinternal energy
and CO2
reduction targets
means that thefactory will

Cost ofmanagement

Risk driver

Emission
reportingobligations

CC5.1bDescription

In various
countries aroundthe world we aresubject toelectricity and fuelrelated reporting
obligations suchas the National
Greenhouse andEnergy Reporting
requirement inAustralia and newtax code related
regulations in the
Ukraine andGermany.

Potential
impactIncreased
operational
cost

Timeframe

3 to 6years

Direct/Magnitude
Likelihood
Indirectof impact

DirectLikelyLow

Estimatedfinancial
implications

More
environmental
reportingobligations in
the future could
cost
approximately$1M per year
across ourglobal facilities.

Management
methodalready meet or
exceed new state
regulations suchas the “Energy
conservation andimproving energy
efficiency in the
period up to2020” law.
We havepurchased andinstalled datacollection andreporting software
for our energy
and climatechange data.
This covers all
ourmanufacturing
facilities and staff
are trained asboth data
contributors anddata validators.
This system
undergoesinternal andexternal data
audit.

Cost ofmanagement

Project costs of$1M, ongoing
operational andmaintenancecosts of up to$200k per year.

Please describe your inherent risks that are driven by changes in physical climate parameters

Risk driver

Description

Change inprecipitation
extremes
anddroughts

Supply ChainTobacco Leaf:
Tobacco leaf
growing is strongly
influenced byphysical climatechange such aschanges intemperature,
precipitation andcyclones(hurricanes andtyphoons). PMI
sources tobacco
from more than 30
countries acrossthe world.
Increased drought /flooding could
disturb the tobacco
leaf life cycle
stages (seedling,transplanting,growing,
harvesting). The
yield, quality andavailability of thetobacco crop could
be influenced by
the seasonalfrequency and theintensity of suchextreme rainfall
events and even

Potential impact

Reduction/disruption
in production
capacity

Direct/Timeframe Indirect>6 years

DirectLikelihood

About aslikely as
not

Magnitudeof impact

Lowmedium

Estimatedfinancial
implications

Management
methodCost ofmanagement

Depending on
the size of thearea
impacted, thefinancial
implications
would varysignificantly,
however theincremental
financial
implications
from theserisks arecurrently
assessed to
be low (lessthan 10 million
US$).
However, inan extreme
case where
simultaneous
crop failures
or tobacco
shortages
occur thepotential
implications
are around
100 million
US$; such asituation isvery unlikely.

Our agricultural
supply chain is
widely spreadaround theworld, whichhelps tomitigate against
climate relatedrisks; tobacco
crops can also
be relocated ifsome growing
areas become
more favorable
than others. In
addition, oursubstantial
inventories oftobacco leaf
can help tomitigate against
short term
impacts andadjustments toourprocurement
patterns canalso be made.
We are also
researchingdrought tolerant
seed varieties.
Other tools that
we use in

The data fromour riskassessments
identifies key
areas which
could be thebase of longer
term actions.
We havealreadyidentified our
key assets at
risk of climatechangeimpacts (bothPMI owned
and in our
entire value
chain). We
investedaround
US$200,000
in this global
risk
assessment
and the main
costs in 2015
were toupdate thatwith external
expertsupport,internal timeand resources

Risk driver

Description

events such as
unseasonalhailstorms which
occurred in Brazil in
2015. This couldchange our crop
buying pattern andresult in increased
operational cost.
Extreme rainfall
may require
pumping of excesswater, similarly,
extreme droughts
could require longterm irrigation, bothof which increaseenergyconsumption, andthe tobacco
production cost.
With respect to our
supply chain, thetransportation of
raw materials andfinished goods, aswell as availabilityof ports could beinterrupted;
similarly damage tostocks in storage
facilities such as
warehouses would
have knock-on
impacts on the
productivity of ourmanufacturing

Potential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement

identifying
significant risks
and/oropportunities
from climatechange include
the following:
Climate change
risk
assessments,
Facility risk
management(insurance
assessments),
Environmental
risk
assessments(ISO14001),
Due Diligence
Assessments
and Good
Agricultural
Practices (GAP)Assessments
and
implementation.
The results ofsuchassessments
are used to
inform our longterm businessplanning. We
have justembarked on anassessment ofwater risk toestimated at$100,000.
The cost of
implementing
GAP isestimated atseveral million
US$.
Insurance
costs are notspecific toclimatechange.

Risk driver

Description

centers. Extreme
rainfall could cause
damage tobuildings including
our manufacturing
centers which
would increase ourcost both inmanagement andinsurance fees. The
risk of damaged
goods and impacts
on manufacturing
centers and our
supply chain could
weaken our ability
to efficiently supply
products to ourcustomers.
Overall, the wellbeing of societies,
for example farmers
in tobacco growing
areas, would be
impacted. PMI’soperations arewidely spread,
mitigating theeffects of severe
catastrophic
climatic disruption.
Furthermore, PMI’s
business continuity
management plans
are designed tomitigate theconsequence ofPotential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodleaf production
facilities and areplanning todevelop a water
stewardshipstrategy which
will incorporate
the findings
from the climate
risk assessment
in order tobetterunderstand our
exposure tochanges inwater
availability inthe future at acatchment andthereby develop
measures tosupport farmers
and/or remove
the risk from our
supply chain.

Cost ofmanagement

Risk driver

Change inprecipitation
extremes
anddroughts

Description

supply chaininterruption anddisruption causedby building
damage, and or
stock/material
damage.
Supply Chain:
Clove is an
important raw
material for PMI touse in our local
kretek brands.
Indonesia produces
over 70% of theworld’s cloves. It
takes at least 5-7
years for clove
trees to become
productive and 2040 years before
they reach peak
production. Yields
are complex;
harvests can vary
by up to 60% over a
4 year harvest
cycle. Clove
production is
weather sensitive,
projected increases
in temperature, dryspell duration,
intensification of thewet season andincreasing soil-

Potential impact

Reduction/disruption
in production
capacity

Direct/Timeframe Indirect>6 years

DirectLikelihood

About aslikely as
not

Magnitudeof impact

Lowmedium

Estimatedfinancial
implications

Management
methodCost ofmanagement

Depending on
the size of thearea
impacted, thefinancial
implications
would varysignificantly,
however theincremental
financial
implications
from theserisks arecurrently
assessed to
be low (lessthan 10 million
US$).
However, inan extreme
case where
simultaneous
crop failures
or cloveshortages
occur thepotential
implications

Our agricultural
supply chain is
widely spreadaround theworld, whichhelps tomitigate against
climate relatedrisks; tobacco
crops can also
be relocated ifsome growing
areas become
more favorable
than others. In
addition, oursubstantial
inventories oftobacco leaf
can help tomitigate against
short term
impacts.
Adjustments toourprocurement
patterns canalso be made.
Other tools that

The data fromour riskassessments
identifies key
areas which
could be thebase of longer
term actions.
We havealreadyidentified our
key assets at
risk of climatechangeimpacts (bothPMI owned
and in our
entire value
chain). We
investedaround
US$200,000
in this global
risk
assessment
and the main
costs in 2015
were toupdate that

Risk driver

Description

moisture levels
would impact clove
growing areas such
as Indonesia (e.g.
damages to bud
development; morepest and diseaseproblems fromincreased rainfall,and oscillation
between drought /flooding presenting
difficulties to small
scale farmers andclove trees). This
would reduce theyield, supply andincrease the priceof cloves.

Potential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

are around
100 million
US$; such asituation isvery unlikely.

Management
methodCost ofmanagement

we use in
identifying
significant risks
and/oropportunities
from climatechange include
the following:
Climate change
risk
assessments,
Facility risk
management(insurance
assessments),
Environmental
risk
assessments(ISO14001),
Due Diligence
Assessments
and Good
Agricultural
Practices (GAP)Assessments
and
implementation,
including Waterrisk
assessments.
The results ofsuchassessments
are used to
inform our longterm businessplanning.

with external
expertsupport,internal timeand resources
estimated at$100,000.
The cost of
implementing
GAP isestimated atseveral million
US$.
Insurance
costs are notspecific toclimatechange.

Risk driver

Description

Change inmean(average)temperature

A change in themean (average)
temperature could
affect our own
operations andthose of our
suppliers globally(manufacturing,
agriculture andother business
operations). In
terms of agricultural
impact, the quality
and yield of tobacco
crop and other raw
materials we use
could be affected.
While a slightincrease in averagetemperature canlengthen the
tobacco growing
season in someregions, it canadversely impact
the yield and qualityof the crop wheresummers are long
and already hot. An
increase of averagetemperature may
cause drought,
which in turn resultsin crops needing
irrigation. This
would impact ourenergyPotential impact

Increased
operational costDirect/Timeframe Indirect>6 years

DirectLikelihood

VirtuallycertainMagnitudeof impact

Lowmedium

Estimatedfinancial
implications

Management
methodCost ofmanagement

Depending on
the size of thearea
impacted, thefinancial
implications
would varysignificantly,
however theincremental
financial
implications
from theserisks arecurrently
assessed to
be low (lessthan 10 million
US$).
However, inan extreme
case where
simultaneous
crop failures
or tobacco
shortages
occur thepotential
implications
are around
100 million
US$; such asituation isvery unlikely.

Our agricultural
supply chain is
widely spreadaround theworld, whichhelps tomitigate against
climate relatedrisks; tobacco
crops can also
be relocated ifsome growing
areas become
more favorable
than others. In
addition, oursubstantial
inventories oftobacco leaf
can help tomitigate against
short term
impacts.
Adjustments toourprocurement
patterns canalso be made.
Other tools that
we use in
identifying
significant risks
and/oropportunities
from climatechange include
the following:

The data fromour riskassessments
identifies key
areas which
could be thebase of longer
term actions.
We havealreadyidentified our
key assets at
risk of climatechangeimpacts (bothPMI owned
and in our
entire value
chain). We
investedaround
US$200,000
in this global
risk
assessment
and the main
costs in 2015
were toupdate thatwith external
expertsupport,internal timeand resources
estimated at$100,000.
The cost ofRisk driver

Description

Potential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

consumption, andthe tobacco
production cost.
Overall, change inmean (average)
temperatures fromclimate change
would also increase
the use of air
conditioning or
heating systems,
leading to increases
in demand forenergy.

Sea level
rise

Rising sea levels inleaf growing areas,
as well as near to
manufacturing andwarehouse centers(e.g. theNetherlands, andReduction/disruption
in production
capacity>6 years

DirectAbout aslikely as
not

Low

The financial
implications ofthese risks
varydepending on
the asset thatis impacted.

Management
methodCost ofmanagement

Climate change
risk
assessments,
Facility risk
management(insurance
assessments),
Environmental
risk
assessments(ISO14001),
Due Diligence
Assessments
and Good
Agricultural
Practices (GAP)Assessments
and
implementation,
including Waterrisk
assessments.
The results ofsuchassessments
are used to
inform our longterm businessplanning.
Adjustments toourprocurement
patterns can bemade andinventories
managed. Other

implementing
GAP isestimated atseveral million
US$.
Insurance
costs are notspecific toclimatechange.

The data fromour riskassessments
identifies key
areas which
could be thebase of longer

Risk driver

Descriptionsome Asian
manufacturing
centers), could
impact our leaf
sourcing (yields andquality) and disrupt
our supply chain
distribution. This
could cause
sourcing delays andmanufacturing
impacts which
would result in
reduction/disruption
to production
volumes. Rising
sea levels could
also impact groundwater, which isused forconsumption andirrigation. Water
treatment
processes(chemical/physical)
for consumption,
irrigation and for
manufacturing use
could be costly andincrease our energy
consumption.
Rising sea levels
could also leavepeople (farmers,
manufacturing
employees, andothers) who live in

Potential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

The threat offlooding in the
Netherlands
and cyclones
in thePhilippines
could cause
damage in our
manufacturing
andwarehousesites (estimate
US$10-20M
for eachlocation).
Damage toraw materials
and finishedgoods could
escalate toaround
US$100M butthat isconsideredvery unlikely.

Management
methodCost ofmanagement

tools that we
use inidentifying
significant risks
and/oropportunities
from climatechange include
the following:
Climate change
risk
assessments,
Facility risk
management(insurance
assessments),
Environmental
risk
assessments(ISO14001),
Due Diligence
Assessments
and Good
Agricultural
Practices (GAP)Assessments
and
implementation,
including Waterrisk
assessments.
The results ofsuchassessments
are used to
inform our longterm businessterm actions.
We havealreadyidentified our
key assets at
risk of climatechangeimpacts (bothPMI owned
and in our
entire value
chain). We
investedaround
US$200,000
in this global
risk
assessment
and the main
costs in 2015
were toupdate thatwith external
expertsupport,internal timeand resources
estimated at$100,000.
The cost of
implementing
GAP isestimated atseveral million
US$.
Insurance
costs are notRisk driver

Description

Potential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

low lying areas indanger of being
flooded, resulting inpeople movement.

Inducedchanges innaturalresources

Change in climatic
variability andextreme events
such as changes in
the frequency andseverity of heatwaves, drought,
floods andhurricanes could
affect the
distribution of pests
and beneficial
predators. This
could affect theyield and quality of
tobacco crops andof other raw
materials we use.
Areas at increased
risk may include
China, thePhilippines, some
African countries
and the Eastern
USA where wesource tobacco.

Reduction/disruption
in production
capacity>6 years

DirectAbout aslikely as
not

Low

Depending on
the size of thearea
impacted, thefinancial
implications
would varysignificantly,
however theincremental
financial
implications
from theserisks arecurrently
assessed to
be low (lessthan 10 million
US$).
However, inan extreme
case where
simultaneous
crop failures
or tobacco
shortages
occur thepotential
implications
are around
100 million
US$; such aManagement
methodCost ofmanagement

planning.

specific toclimatechange.

Our agricultural
supply chain is
widely spreadaround theworld, whichhelps tomitigate against
climate relatedrisks; tobacco
crops can also
be relocated ifsome growing
areas become
more favorable
than others. In
addition, oursubstantial
inventories oftobacco leaf
can help tomitigate against
short term
impacts.
Adjustments toourprocurement
patterns canalso be made.
Other tools that
we use in
identifying
significant risks

The data fromour riskassessments
identifies key
areas which
could be thebase of longer
term actions.
We havealreadyidentified our
key assets at
risk of climatechangeimpacts (bothPMI owned
and in our
entire value
chain). We
investedaround
US$200,000
in this global
risk
assessment
and the main
costs in 2015
were toupdate thatwith external
expertsupport,Risk driver

Description

Potential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

situation isvery unlikely.

Change inprecipitation

Specific impact of
El Niño during

Reduction/disruption
in production

Up to 1year

DirectVirtuallycertainMediumFor our
tobaccoManagement
methodCost ofmanagement

and/oropportunities
from climatechange include
the following:
Climate change
risk
assessments,
Facility risk
management(insurance
assessments),
Environmental
risk
assessments(ISO14001),
Due Diligence
Assessments
and Good
Agricultural
Practices (GAP)Assessments
and
implementation,
including Waterrisk
assessments.
The results ofsuchassessments
are used to
inform our longterm businessplanning.
Adjustments toourinternal timeand resources
estimated at$100,000.
The cost of
implementing
GAP isestimated atseveral million
US$.
Insurance
costs are notspecific toclimatechange.

The data fromour risk

Risk driver

extremes
anddroughts

Description

2015.

Potential impact

capacity

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement

supply under
direct contract
with PMI, El
Niño impacted
in thefollowing ways
in 2015: in
Latin America,
excessive
rainfalls
resulted in a
crop volume
reduction of
approximately
15-20%,
corresponding
to anequivalentfinancial lossof more than
US$ 40M. In
thePhilippines,
the impact
was severe
drought
resulting in a
volumereduction of
approximately
15%,
corresponding
to anequivalentfinancial lossof more than
US$ 5M.

procurement
patterns can bemade andinventories
managed. Our
agricultural
supply chain is
widely spreadaround theworld, whichhelps tomitigate against
climate relatedrisks; tobacco
crops can also
be relocated ifsome growing
areas become
more favorable
than others. In
addition, oursubstantial
inventories oftobacco leaf
can help tomitigate against
short term
impacts.
Adjustments toourprocurement
patterns canalso be made.
Other tools that
we use in
identifying
significant risks

assessments
identifies key
areas which
could be thebase of longer
term actions.
We havealreadyidentified our
key assets at
risk of climatechangeimpacts (bothPMI owned
and in our
entire value
chain). We
investedaround
US$200,000
in this global
risk
assessment
and the main
costs in 2015
were toupdate thatwith external
expertsupport,internal timeand resources
estimated at$100,000.
The cost of
implementing
GAP isRisk driver

Description

Potential impact

Direct/Timeframe Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement

and/oropportunities
from climatechange include
the following:
Climate change
risk
assessments,
Facility risk
management(insurance
assessments),
Environmental
risk
assessments(ISO14001),
Due Diligence
Assessments
and Good
Agricultural
Practices (GAP)Assessments
and
implementation,
including Waterrisk
assessments.
The results ofsuchassessments
are used to
inform our longterm businessplanning.

estimated atseveral million
US$.
Insurance
costs are notspecific toclimatechange.

CC5.1c
Please describe your inherent risks that are driven by changes in other climate-related developments

Risk driver

Changing
consumer
behaviour

Description

Today’s
consumers
expect to see
moresustainableproducts with alowerenvironmental
impact. Ever
increasing
environmental
awareness of
consumers
influences theirproduct
selection andbuyingdecisions. It is
widely believedthat consumers
will continue toplace increased
value onrecyclability
and theperceived
environmental
credentials of
packaging – at
the same time,
demand for
proof ofPotential impact

Reduced demand
for goods/services

Direct/Timeframe Indirect Likelihood>6 years

DirectUnlikely

Magnitudeof impact

Lowmedium

Estimatedfinancial
implications

Management
methodCost ofmanagement

Environmental
reputation may
become a moresignificant
factor in ourcustomers’purchasing
decisions in the
future, but at
this time, we donot see this risk
as significant.
We are also
aware that
regulatory andreputationalrisk may impact
the decisions ofourstakeholders,specifically ourconsumers andshareholders.
If these risks
were tomaterialize
then they could
impact ourbusiness by
several millionsof dollars.

Corporate
Sustainability andclimate change
strategy,
programs andtransparent
communications
including our
website, our UN
Global Compact
Communication
on Progress, this
CDP, carbon
footprint of new
product (e.g.
biodegradable
filters) andpackagingdevelopments.
We are also
looking at
initiatives –includingstrengthening our
product LCA –that can help us
build closer
cooperation
within our value
chain to help our
stakeholders
understandThe internal
costs
associatedwith theseactions are
estimated at
US $1-2M.
Researchcosts forproduct
developments
such as forbiodegradable
filters can be
US$ 1-2M.

Risk driver

Description

sustainability
claims could
grow, forinstance in the
demand for
LCA data.
Practices that
impact climatechange could
be seen as abranddifferentiator for
consumers andtheenvironmental
reputation ofcompanies andbrands could
play anincreasing rolein productdemand. Litterfrom cigarettebutts andpackaging is an
issue thatcomes underregular public
scrutiny. In
many of ourmarkets, suchas thePhilippines,
Japan and
Switzerland,
PMI actively
supports

Potential impact

Direct/Timeframe Indirect Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodenvironmental
impacts ofdifferent
packagingalternatives.

Cost ofmanagement

Risk driver

Changing
consumer
behaviour

Description

programs andcampaigns forresponsible
litter disposal.
Consumers’
increasedawareness anddemands forenvironmental
sustainability
claims on the
products they
buy could drive
moremanufacturers
to display theirenvironmental
performance on
their packaged
products. While
this is an
opportunity for
manufacturers
to develop
moresustainableproducts andcommunicate
to theirconsumers, it
could be achallenge for
PMI and ingeneral for the
tobaccoindustry due toPotential impact

Reduced demand
for goods/services

Direct/Timeframe Indirect Likelihood>6 years

DirectUnlikely

Magnitudeof impact

Lowmedium

Estimatedfinancial
implications

Management
methodCost ofmanagement

Environmental
reputation may
become a moresignificant
factor in ourcustomers’purchasing
decisions in the
future, but at
this time, we donot see this risk
as significant.
We are also
aware that
regulatory andreputationalrisk may impact
the decisions ofourstakeholders,specifically ourconsumers andshareholders.
If these risks
were tomaterialize
then they could
impact ourbusiness by
several millionsof dollars.

Corporate
Sustainability andclimate change
strategy,
programs andtransparent
communications
including our
website, our UN
Global Compact
Communication
on Progress, this
CDP, carbon
footprint of new
product (e.g.
biodegradable
filters) andpackagingdevelopments.

The internal
costs
associatedwith theseactions are
estimated at inexcess of US$1M.

Risk driver

Reputation

Description

packaginglabeling
restrictions on
tobaccoproducts. While
this risk is notyetmaterialized,
examples of
packaginglabeling
restrictions are
discussed or insome cases
already inpractice inAustralia, EU
and Canada.
There is a riskthat society
does not view
our company
positively withrespect to ourenvironmentand climatechangecredentials.
The investor
and consumer
perceptions
about PMI's
climate change
actions could
affect the
reputation and

Potential impact

Reduced demand
for goods/services

Direct/Timeframe Indirect Likelihood>6 years

DirectUnlikely

Magnitudeof impact

Low

Estimatedfinancial
implications

Management
methodCost ofmanagement

Environmental
reputation may
become a moresignificant
factor in ourcustomers’purchasing
decisions in the
future, but at
this time, we donot see this risk
as significant.
We are also
aware that
regulatory andreputationalrisk may impact
the decisions ofCorporate
Sustainability andclimate change
strategy,
programs andtransparent
communications
including our
website, our UN
Global Compact
Communication
on Progress, this
CDP, carbon
footprint of new
product (e.g.
biodegradable
filters) andpackaging

As an example
we will haveinvested over
US$70M in
our Energy
Management
Program from2010-15,
typically an
investment ofaround $10M
each year on
specific
improvement
projects.

Risk driver

Fluctuating
socioeconomic
conditions

Description

consumerdemand for our
products andmay limit
investment
opportunities.
While weconsider thisrisk to be low,
PMI focuses on
mitigating thisrisk bycontinuously
reducing our
Scope 1, 2 and3 emissions
and focusing
on other areasofenvironmental
sustainability.
Physicalchanges inclimate such as
global warming
are projected toresult indecreased
water
availability andcropproductivity inmany parts of
the world.
There is also arisk that the

Potential impact

Reduction/disruption
in production
capacity

Direct/Timeframe Indirect Likelihood>6 years

DirectAbout aslikely as
not

Magnitudeof impact

Low

Estimatedfinancial
implications

Management
methodour
stakeholders,specifically ourconsumers andshareholders.
If these risks
were tomaterialize
then they could
impact ourbusiness by
several millionsof dollars.

developments.
Our programs todrive ourperformance
improvement,such as theEnergyManagement
Program and ourrenewables
strategy areparticularly
important.

Fluctuating
socio-economic
conditions
exacerbated byclimate change
related issues
could increaseprice sensitivity
and lead to theneed to adjust
product
portfolios. If
these risks
were tomaterialize

General businessrisk management
and forecasting managing our
supply chain andmakingadjustments toour procurement
patterns andinventory
management.

Cost ofmanagement

This is aninternal costwithin thegeneralrunning of ourbusiness andis notseparately
quantifiable.

Risk driver

Description

exacerbation of
the recent
economic crisis
due to climatechange could
disrupt tobacco
growing /production
capacity andalso further
impactconsumer’s
disposable
income. For
example,Africa’svulnerability to
climate change
is linked to thestrength of the
agriculturalindustry inmany Africancountries; PMI
currently
sources around
20% of its
tobacco fromAfrica. Climatechange could
impact land
and resource
availability (dueto migration tocities) as well
as resulting inlower crop

Potential impact

Direct/Timeframe Indirect Likelihood

Magnitudeof impact

Estimatedfinancial
implications

then they could
impact ourbusiness by
several millionsof dollars.

Management
methodCost ofmanagement

Risk driver

Increasing
humanitariandemands

Description

yields andquality. This inturn could
impact PMI’s
tobaccosourcing
strategy.
The risk thatclimate change
related issues
cause
agriculturalprioritization forfood crops overnon-food crops.
Extremeweather
conditions suchas droughts
and heavyprecipitation,linked to the
population sizeof communities
could bedisrupting
factors to nonfood production
capacity, as thegrowingdemand forfood crops
could beprioritized overnon-food crops.
Specifically in

Potential impact

Reduction/disruption
in production
capacity

Direct/Timeframe Indirect Likelihood>6 years

DirectAbout aslikely as
not

Magnitudeof impact

Lowmedium

Estimatedfinancial
implications

Management
methodCost ofmanagement

It is possiblethat future
regulatory
initiatives could
seek toprioritize
agricultural
food crops (interms of watersupply, landavailability etc.)
over non-foodcrops, thereby
impacting thesecurity of our
supply chain. If
this risk were tomaterialize
then it could
impact ourbusiness bymany millionsof dollars.

PMI hasdeveloped aGood Agricultural
Practices (GAP)
program to
specificallyaddress andminimize theimpacts of
tobacco farming
and protect our
supply chain in
the long term.
GAP includes asections on water
use andminimization
which also
covers security ofsupply issues.
Many projects
that we are
involved insupport water
security
measures acrosscommunities, notjust focused on
tobacco growing

This is largely
an internal
cost which isestimated atover US$1M
per year. In
terms of GAP
activities, wehave invested
around $20M
to date for one
set ofprograms andin an average
year expect toinvest $2-5M.

Risk driver

Description

Africa there is arisk in someareas thatshortages ofwood could
lead toprioritized
consumption
for other
purposes andthereby restrict
the use ofwood as a fuelfor curing
tobacco.

Potential impact

Direct/Timeframe Indirect Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement(e.g. water damsin Malawi). In
addition, during
2015 wecontinued to
implement
initiatives such as
Integrated
Production
Systems which
supports farmers
to improve yieldand farm
efficiency on avariety of crops(particularly foodcrops), not just
tobacco. GAP
also focuses on
improving thesustainability offuels used forcuring tobacco.

CC5.1dPlease explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential togenerate a substantive change in your business operations, revenue or expenditureCC5.1ePlease explain why you do not consider your company to be exposed to inherent risks driven by physical climate parameters that have the potential togenerate a substantive change in your business operations, revenue or expenditureCC5.1fPlease explain why you do not consider your company to be exposed to inherent risks driven by changes in other climate-related developments thathave the potential to generate a substantive change in your business operations, revenue or expenditure

Further Information

Page: CC6. Climate Change Opportunities
CC6.1
Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations,revenue or expenditure? Tick all that apply
Opportunities driven by changes in regulation
Opportunities driven by changes in physical climate parameters
Opportunities driven by changes in other climate-related developments

CC6.1aPlease describe your inherent opportunities that are driven by changes in regulation
Opportunity
driverCap andtrade
schemes

Description

Expansion of EU ETS
or similar schemes toother countries andregions (e.g. Australia,
Mexico) or in thegrowth of other PMI
factories in the EU or
EU accession
countries. There is thepotential to use ourexperience of theseschemes to enable
performance ahead of
allocated emissions
and thereby generate
carbon credits. Startingfrom 3 EU affiliates(Netherlands,
Germany, and Portugal(de-listed in 2015))
which were in the EU
ETS in 2015, there is
the potential to tradeinternally with other
PMI affiliates andgenerate Energy andCO2 savings.

Potential
impactReducedoperationalcosts

Timeframe

3 to 6years

Direct/Indirect

DirectLikelihood

More likely
than notMagnitudeof impact

Low

Estimatedfinancial
implications

Estimated at
up to US$1M
based oncurrent
financial
exposure in
the EU andpotential
futureinclusion oflargermanufacturing
centers suchas in Russia.

Management
methodCost ofmanagement

We track thisthrough ourEnergyManagement
Program andregulatoryradar screen.
Specifically
we have
deployedenergymonitoring
and targeting
software in
our facilities
so that energy
intensities areunderstood byprocess andbest practices
can beshared. Thismeans thatthe lessons
learnt atregulatedfacilities canbe readily
applied inotherlocations.

There is no
incremental
cost
associatedwith theEnergyManagement
Program as
we arealready
implementing
it for energy
reduction
purposes.
However, thecost of thisprogram isover US$70M
from 20102015. Theenergymonitoring
and targeting
software also
required
installation ofmeters andhas cost$10M overallwith $200k
spent in 2015
on software
maintenanceand upgrades.

Opportunity
driverDescription

Potential
impactTimeframe

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodFuel/energy
taxes andregulations

Subsidies forrenewable Energy
generation have beendeveloped in different
countries and we factor
in these subsidy plansto our cost-benefit
analyses for pertinent
projects so that
improved return on
investment canpotentially bedelivered. Cost-Benefit
analyses andrenewable energy
assessments havebeen performed in
Turkey, Philippines,
Portugal and Poland.
We also have thepotential to identify andsupport Clean
Development
Mechanism (CDM)
project opportunities forour tobacco leaf
suppliers.

Other:
Reducedoperationalcosts andEnergysecurity

3 to 6years

DirectMore likely
than notLow

Estimated atover US$1M.

We track thisthrough ourEnergyManagement
Program andregulatoryradar screen.
Specifically
we have
deployedenergymonitoring
and targeting
software in
our facilities
so that energy
intensities areunderstood byprocess andbest practices
can beshared. Thismeans thatthe lessons
learnt atregulatedfacilities canbe readily
applied inotherlocations.

Fuel/energy
taxes andCompliance withcountry specific

Other:
Reduced3 to 6years

DirectMore likely
than notLow

Estimated at
up to

We track thisthrough our

Cost ofmanagement

There is no
incremental
cost
associatedwith theEnergyManagement
Program as
we arealready
implementing
it for energy
reduction
purposes.
However, thecost of thisprogram isover US$70M
from 20102015. Theenergymonitoring
and targeting
software also
required
installation ofmeters andhas cost$10M overallwith $200k
spent in 2015
on software
maintenanceand upgrades.
The cost for
ISO 50001

Opportunity
driverregulations

Description

legislation provides
PMI with theopportunity to reduceenergy consumption
and lower our CO2
emissions, andtherefore reduce ouroperational cost. Such
opportunities exist in
the form of: a) Energy
taxes, such as inGermany, which
encouraged PMI to
implement an Energy
Management Programto ISO 50001 that willallow us to reduceenergy tax costs. b)
EU ETS - 3 EU
affiliates (Netherlands,
Germany, and Portugal(de-listed in 2015))
have the potential totrade internally withother PMI affiliates that
could generate Energy
savings. Opportunities
are linked to widening
markets and EU ETS
carbon trading
processes to include
EU accession countries
where PMI has
facilities. Also, in
Switzerland our affiliate
obtained CO2 tax
exemptions due toPotential
impactoperationalcosts andEnergysecurity

Timeframe

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

US$800,000
energy tax
reduction inGermany
based on ISO
50001
certification.

Management
methodCost ofmanagement

EnergyManagement
Program andregulatoryradar screen.
Specifically
we have
deployedenergymonitoring
and targeting
software in
our facilities
so that energy
intensities areunderstood byprocess andbest practices
can beshared. Thismeans thatthe lessons
learnt atregulatedfacilities canbe readily
applied inotherlocations.

development
andcertification isestimated to
be no more
than
US$50,000
per location.

Opportunity
driverDescription

Potential
impactTimeframe

Direct/Indirect

Likelihood

Magnitudeof impactenergy saving
objectives andprograms that are inplace within PMI. c)
Energy Efficiency
Directive – promoting
energy reduction atsource (all EU
factories) andreviewing the potential
for combined heat andpower. d) Incentives &Infrastructure/Buildings
upgrade – forrenewable energy andbuildings upgrade e)
Energy Labeling
Directive – for PMI’sconventional products
and potential future
Reduced-Risk
Products (which canhave related electronic
components).

CC6.1bPlease describe the inherent opportunities that are driven by changes in physical climate parameters

Estimatedfinancial
implications

Management
methodCost ofmanagement

Opportunity
driverDescription

Change inmean(average)temperature

Tobacco curing is
an important stepin tobacco
production. Around8 metric tonnes ofwood can be used
per tonne of fluecured tobacco.
Due to potential
physical climatechanges, such as
an increase intemperature, PMI
may have a
reduced need forenergy (tonnes ofwood), or otherenergy sources(such asrenewabletechnologies)
could become
more costeffective. While
this is an
opportunity for the
future, we alreadyhave focusedprograms toincrease theefficiency of ourcuring barns. Justin recent years,(including 2015),
we have helped
our tobacco
suppliers financePotential
impactIncreased
production
capacity

Timeframe>6 years

Direct/Indirect

Indirect(Supply
chain)

Likelihood

About aslikely as
not

Magnitudeof impact

Low

Estimatedfinancial
implications

Management
methodCost ofmanagement

The financial
benefit is interms ofreduced fuelwood costs for
tobaccofarmers,
howevercorresponding
reductions in thecost ofproduction canlead to a benefit
for PMI in theorder of
US$10M.

Through
implementation of
our Good
Agricultural
Practices (GAP)
program. This
comprehensive
program includes
mandatory
requirements for our
tobacco suppliers
and is supported by
the PMI Leaf
Department who
provide specificguidance on
implementation toregional agronomy
teams. Curing Barn
improvement casestudies andguidance areprovided.

Barn efficiency
improvement
costs can be as
little as a few
hundred dollars
per barn but
overall carbon
improvement
programs forfarmers run toapproximately
US$10M per
year.

Opportunity
driverChange inmean(average)precipitation

Description

efficiency
improvements forover 10,000 curingbarns, generating
an estimatedsaving of morethan 500,000 trees
equivalent.
Supply ChainTobacco Leaf:
Tobacco leaf
growing is strongly
influenced byphysical climatechange such aschanges inprecipitation. PMI
sources tobacco
from around 30
countries acrossthe world.
Increased
precipitation could
impact the tobacco
leaf life cycle
stages (seedling,transplanting,growing,
harvesting). Watershort leaf growing
areas could benefit
from increases inprecipitation (i.e.
level, timing andvariability) due toincreases in soil

Potential
impactIncreased
production
capacity

Timeframe>6 years

Direct/Indirect

Indirect(Supply
chain)

Likelihood

About aslikely as
not

Magnitudeof impact

Low

Estimatedfinancial
implications

Management
methodCost ofmanagement

Increased
tobacco yields
can provide
benefits inexcess of
US$10M.

We continuallyreview promising
tobacco leaf
growing areas andassess if climatechange elements
could favor
increased yield. We
implement ourGood Agricultural
Practices (GAP).
This comprehensive
program includes
mandatory
requirements for our
tobacco suppliers
and is supported by
the PMI Leaf
Department who
provide specificguidance on
implementation toregional agronomy
teams. We are also
actively researcheddrought tolerant
seed varieties in
2015.

The cost of thiswork is mainlyinternal time andresources, and isestimated at
US$1M per year.
Implementationof specificprograms like
continuous
production isadditional.

Opportunity
driverChange inmean(average)precipitation

Description

moisture. This
could positively
impact the tobacco
crop patterns; crop
production
capacity andquality.
Continuous
Production (cropproduction all year
round) could
become more
applicable.
Supply ChainClove production:
Clove is an
essential raw
material for PMI touse in our local
kretek brands.
Indonesia
produces over
70% of the world’s
cloves. It takes atleast 5-7 years forclove trees tobecome productive
and 20-40 years
before they reachpeak production.
Yields arecomplex; harvests
can vary by up to
60% over a 4 year
harvest cycle.
Clove production is

Potential
impactIncreased
production
capacity

Timeframe>6 years

Direct/Indirect

Indirect(Supply
chain)

Likelihood

About aslikely as
not

Magnitudeof impact

Low

Estimatedfinancial
implications

Management
methodCost ofmanagement

Increased clove
yields canprovide benefits
in the order of
US$10M.

We reviewpromising clove
growing areas andassess if climatechange elements
could favor
increased yield. We
implement ourGood Agricultural
Practices (GAP).
This comprehensive
program includes
mandatory
requirements that
we adapt for clove
suppliers and is
supported by the
PMI Leaf
Department who
provide specificguidance on
implementation toregional agronomy

The cost of thiswork is mainlyinternal time andresources, and isestimated at
US$1M per year.
Implementationof specificprograms is
additional.

Opportunity
driverDescription

Potential
impactTimeframe

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

weather sensitive,
and climatechanges such as
steady rainfall
could provide
steady wet season
for clove growing
areas increasing
the clove
production volume
and improving thecrop quality.

Management
methodCost ofmanagement

teams.

CC6.1cPlease describe the inherent opportunities that are driven by changes in other climate-related developments
Opportunity
driverDescription

Reputation

We expect that bytackling
sustainability andclimate change
issuesappropriately, ourcompany reputation
could be enhanced.
Opportunities for
PMI include thefollowing: 1)

Timeframe
Potential impact

Increased
demand forexisting
products/services

1 to 3years

Direct/Indirect

DirectLikelihood

About aslikely as
not

Magnitudeof impact

Lowmedium

Estimatedfinancial
implications

As anestimate,
US$10M.

Management
methodCost ofmanagement

Corporate
Sustainability andclimate change
strategy,
programs andcommunications
including our UN
Global Compact
Communication
on Progress, ourwebsite, social

The internal
costs
associatedwith theseactions are
estimated at
US$2M.

Opportunity
driverDescription

Timeframe
Potential impact

Appropriate productlabeling ofsustainability
performance for
PMI’s customers
and consumers.
This could be an
outcome of arigorous verified
product LCA of
PMI’s products to
identify their life
cycle CO2
emissionsperformance.
Displaying suchsustainability
performance on our
products could
enhance thedifferentiation of
PMI’s brands andincrease thecompany’scompetitive
advantage. 2)
Environmental
information for our
key accounts/
retailers: to meetthe growing interestof our key accounts/
retailers insustainability
practices, we
continue to increase
our emphasis on

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodmedia and thisCDP report.

Cost ofmanagement

Opportunity
driverDescription

Timeframe
Potential impact

our products’ LCA
within our value
chain and provide
company
information on oursustainability
performance. 3)
Supply Chain
engagement - weare working towards
strengthening our
product LCA
process to help us
build closer
cooperation within
our supply chain
and help ourpartners tounderstand the
upstream
environmental
impacts of different
material alternatives(e.g. for packaging
components) andthe direction PMI istaking in productdevelopments. In
PMI, we closely
follow consumer
and market
sustainability trends
and engage with
our suppliers on thedevelopment of newmaterials to be inline with these

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement

Opportunity
driverChanging
consumer
behaviour

Description

Timeframe
Potential impact

growing trends.
Leading
performance inthese areas could
attract newinvestors and also
increase ourattractiveness as an
employer.
Consumers are
increasinglyinterested in climatechange andsustainability
aspects of products
and many of ourtrade customers
reflect that interest.
By working with ourcustomers, sharing
company
performance
strategies andassessing changes
due to productdevelopments, we
could provide moredetailed informationon ourenvironmental
performance.
Specifically,
environmental
performance
information relating
to individualNew
products/businessservices

1 to 3years

Direct/Indirect

DirectLikelihood

More likely
than notMagnitudeof impact

Low

Estimatedfinancial
implications

Management
methodCost ofmanagement

Successful
product
developments
could provide
benefits ofover
US$10M.

Corporate
Sustainability andclimate change
strategy,
programs andcommunications
including our UN
Global Compact
Communication
on Progress, ourwebsite, social
media and thisCDP report,
carbonfootprint/LCA
reviews of new
product andpackagingdevelopments.
Consumer
insights research
into the potential
for eco productdevelopments.

The internal
costs
associatedwith theseactions are
estimated at
US$2-5M.

Opportunity
driverDescription

Timeframe
Potential impact

Direct/Indirect

Likelihood

Magnitudeof impact

Estimatedfinancial
implications

Management
methodCost ofmanagement

product/packaging
components could
improve thedifferentiation of
PMI’s brands andincrease ourcompetitive
advantage.
Furthermore, trends
in eco products
increase thedemand for, andavailability of, newenvironmentally
sustainable
materials, or newusage of existingmaterials. An
example of this in
PMI includes theuse of rice husk
briquettes as fuel in
the Philippines, andnut kernels as fuelin Indonesia.

CC6.1dPlease explain why you do not consider your company to be exposed to inherent opportunities driven by changes in regulation that have the potential togenerate a substantive change in your business operations, revenue or expenditureCC6.1ePlease explain why you do not consider your company to be exposed to inherent opportunities driven by physical climate parameters that have thepotential to generate a substantive change in your business operations, revenue or expenditureCC6.1fPlease explain why you do not consider your company to be exposed to inherent opportunities driven by changes in other climate-related developmentsthat have the potential to generate a substantive change in your business operations, revenue or expenditure

Further Information

Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading
Page: CC7. Emissions Methodology
CC7.1
Please provide your base year and base year emissions (Scopes 1 and 2)

Base year

Base year emissions (metric tonnes CO2e)

Scope

Scope 1

Fri 01 Jan 2010 - Fri 31 Dec
2010

443186Base year

Base year emissions (metric tonnes CO2e)

Scope

Scope 2 (location-based)

Fri 01 Jan 2010 - Fri 31 Dec
2010

470864

Scope 2 (market-based)

Fri 01 Jan 2010 - Fri 31 Dec
2010

470864

CC7.2
Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

Please select the published methodologies that you use

The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)
ISO 14064-1
European Union Emission Trading System (EU ETS): The Monitoring and Reporting Regulation (MMR) – General guidance for installations

CC7.2aIf you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data andcalculate Scope 1 and Scope 2 emissions

CC7.3

Please give the source for the global warming potentials you have used

Gas

CO2
CH4
N2O

Reference

IPCC Fifth Assessment Report (AR5 - 100 year)
IPCC Fifth Assessment Report (AR5 - 100 year)
IPCC Fifth Assessment Report (AR5 - 100 year)

CC7.4
Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data at the bottom of thispage

Fuel/Material/Energy

Emission Factor

Other:

Unit

Reference

See Attachment

Further Information
PMI 2015 conversion/emission factors attached
Attachments
https://www.cdp.net/sites/2016/12/14712/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC7.EmissionsMethodology/PMI Fuel
Conversion and GHG Emission Factors 2015 for CDP.xlsx

Page: CC8. Emissions Data - (1 Jan 2015 - 31 Dec 2015)

CC8.1
Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory

Operational control

CC8.2
Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e

361720

CC8.3

Does your company have any operations in markets providing product or supplier specific data in the form of contractual instruments?

Yes

CC8.3aPlease provide your gross global Scope 2 emissions figures in metric tonnes CO2e

Scope 2, location-based

448220

Scope 2, market-based (if applicable)

329324

Comment

CC8.4
Are there are any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selectedreporting boundary which are not included in your disclosure?
No

CC8.4aPlease provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in yourdisclosure

SourceRelevance of Scope 1
emissions from thissourceRelevance of location-based
Scope 2 emissions from thissourceRelevance of market-based Scope 2
emissions from this source (ifapplicable)

Explain why the source is excluded

CC8.5
Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of
uncertainty in your data gathering, handling and calculations

Uncertainty range
Scope

Scope 1
Scope 2 (location-Less than or equal
to 2%Less than or equal

Main sources of
uncertainty

Extrapolation
Extrapolation

Please expand on the uncertainty in your data

For some of our offices and warehouses there is no primary data available currently andtherefore extrapolation from available secondary data has been estimated.
For some of our offices and warehouses there is no primary data available currently andUncertainty range
Scope

based)
Scope 2 (marketbased)

to 2%
Less than or equal
to 2%

Main sources of
uncertainty

Extrapolation

Please expand on the uncertainty in your data

therefore extrapolation from available secondary data has been estimated.
For some of our offices and warehouses there is no primary data available currently andtherefore extrapolation from available secondary data has been estimated.

CC8.6
Please indicate the verification/assurance status that applies to your reported Scope 1 emissions

Third party verification or assurance process in place

CC8.6aPlease provide further details of the verification/assurance undertaken for your Scope 1 emissions, and attach the relevant statements

Verificationor
assurance
cycle inplace

Annualprocess

Status inthecurrent
reportingyear

Complete

Type ofverificationor
assurance

Reasonableassurance

Attach the statement

https://www.cdp.net/sites/2016/12/14712/Climate Change
2016/Shared Documents/Attachments/CC8.6a/PMI GHG
Verification Statement 2015 with detail.pdf

Page/sectionreference

Page 1 total Scope 1
and 2, Page 2 method
and scope, Page 3
specific Scope 1
number.

Relevant
standard

Proportionof reported
Scope 1emissionsverified (%)

ISO140643

100

CC8.6b
Please provide further details of the regulatory regime to which you are complying that specifies the use of Continuous Emissions Monitoring Systems(CEMS)
Regulation% of emissions covered by the system

Compliance period

Evidence of submission

CC8.7
Please indicate the verification/assurance status that applies to at least one of your reported Scope 2 emissions figures

Third party verification or assurance process in place

CC8.7aPlease provide further details of the verification/assurance undertaken for your location-based and/or market-based Scope 2 emissions, and attach the relevant
statements

Locationbased or
marketbased
figure?

Verificationor
assurance
cycle inplace

Status inthecurrent
reportingyear

Marketbased

Annualprocess

Complete

Type ofverificationor
assurance

Reasonableassurance

Attach the statement

https://www.cdp.net/sites/2016/12/14712/Climate
Change 2016/Shared
Documents/Attachments/CC8.7a/PMI GHG Verification

Page/Sectionreference

Relevant
standard

Page 1 total
Scope 1 and 2,
Page 2 method

ISO140643

Proportionof reported
Scope 2emissionsverified (%)

100

Locationbased or
marketbased
figure?

Verificationor
assurance
cycle inplace

Status inthecurrent
reportingyear

Type ofverificationor
assurance

Attach the statement

Statement 2015 with detail.pdf

Page/Sectionreference

Relevant
standard

Proportionof reported
Scope 2emissionsverified (%)

and scope, Page 3
specific Scope 2
number.

CC8.8
Please identify if any data points have been verified as part of the third party verification work undertaken, other than the verification of emissions
figures reported in CC8.6, CC8.7 and CC14.2

Additional data points verified

Other:

Comment

Operations EHS KPIs - energy, water and waste data as well as production volume data(for normalization) and safety KPIs.

CC8.9
Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization?
Yes

CC8.9aPlease provide the emissions from biologically sequestered carbon relevant to your organization in metric tonnes CO2

2320.2

Further Information

Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2015 - 31 Dec 2015)
CC9.1
Do you have Scope 1 emissions sources in more than one country?

Yes

CC9.1aPlease break down your total gross global Scope 1 emissions by country/region

Country/Region

Argentina
BrazilCanadaColombia
Costa Rica
Czech Republic
Dominican Republic
EcuadorGermany
GreeceIndonesia

Scope 1 metric tonnes CO2e8146.010204.9
1981.5
1913.2392.1
4027.7359.5
597.9
20779.4
2188.016457.4

Country/Region

Italy
JordanKazakhstan
South Korea
Lithuania
Malaysia
MexicoNetherlands
Pakistan
Philippines
PolandPortugal
Romania
RussiaSenegalSerbiaSouth Africa
Switzerland
TurkeyUkraineVenezuela
Rest of world

Scope 1 metric tonnes CO2e

333.4
423.6
3190.01839.2
2003.79502.76332.121844.2
9235.640926.910624.2
6576.74221.730774.9531.1
4135.61524.62327.05322.35784.213.0127205.7

CC9.2
Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply)

By activity

CC9.2aPlease break down your total gross global Scope 1 emissions by business division

Business division

Scope 1 emissions (metric tonnes CO2e)CC9.2bPlease break down your total gross global Scope 1 emissions by facility

Facility

Scope 1 emissions (metric tonnes CO2e)
LatitudeCC9.2cPlease break down your total gross global Scope 1 emissions by GHG type

GHG typeCC9.2dScope 1 emissions (metric tonnes CO2e)Longitude

Please break down your total gross global Scope 1 emissions by activity

Activity

Manufacturing
Vehicle Fleet
Aircraft
Offices

Scope 1 emissions (metric tonnes CO2e)

2345141151824289
7735

Further Information
Rest of World – includes our vehicle fleet, offices (including our New York Headquarters and Swiss Operations Center) and aircraft emissions for which our data is
not broken down by country.

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2015 - 31 Dec 2015)
CC10.1
Do you have Scope 2 emissions sources in more than one country?

Yes

CC10.1a
Please break down your total gross global Scope 2 emissions and energy consumption by country/region

Country/Region

Argentina
BrazilCanadaColombia
Costa Rica
Czech Republic
Dominican
Republic
EcuadorGermany
GreeceIndonesia
Italy
JordanKazakhstan
South Korea
Lithuania
Malaysia
MexicoNetherlands
Pakistan
Philippines
PolandPortugal
Romania
RussiaSenegalSerbiaSouth Africa
Switzerland

Purchased and consumed low
carbon electricity, heat, steam orcooling accounted in market-based
approach (MWh)Scope 2, market-based (metrictonnes CO2e)

Purchased andconsumed electricity,heat, steam orcooling (MWh)15714.9
1372.32381.9967.3
93.2
15083.6

15714.9
1372.3
0
967.3
93.2
0

40273.3
20213.914280.08948.51462.525523.60014280.00025523.6

2368.42368.43188.40926.137129.3
13572.1
83567.72355.62558.95308.010251.4
5996.66469.511194.4
11494.02466.238220.046977.6
8947.89271.634533.6
3072.012637.3
2069.7
294.5

926.1
84.9
13572.1
83567.702558.95308.010251.406469.511194.4
8537.32466.238220.03788.309271.634533.6
3072.012637.3
2069.702681.679293.5
18843.6
110748.7
5865.44014.412314.6
18795.6
22216.3
9406.324873.7
28457.86028.177757.3
67905.7
29485.0
18591.7
78960.94456.416128.2
2380.510909.1077738.2005865.400022216.3
0
0
12000
0
0
55363.4
29485.00000010909.1

Scope 2, location-based (metrictonnes CO2e)

Country/Region

TurkeyUkraineVenezuela
Rest of world

Scope 2, location-based (metrictonnes CO2e)

27201.4
12271.7
881.1
20570

Scope 2, market-based (metrictonnes CO2e)

Purchased andconsumed electricity,heat, steam orcooling (MWh)27201.4
12271.7
881.1
19924

57690.427258.83759.567286

CC10.2
Please indicate which other Scope 2 emissions breakdowns you are able to provide (tick all that apply)

By activity

CC10.2aPlease break down your total gross global Scope 2 emissions by business division

Business division

Scope 2 emissions, location based(metric tonnes CO2e)

Scope 2 emissions, market-based(metric tonnes CO2e)CC10.2b
Please break down your total gross global Scope 2 emissions by facility

Purchased and consumed low
carbon electricity, heat, steam orcooling accounted in market-based
approach (MWh)00023914.2

Facility

Scope 2 emissions, location based(metric tonnes CO2e)

Scope 2 emissions, market-based(metric tonnes CO2e)CC10.2c
Please break down your total gross global Scope 2 emissions by activity

Activity

Manufacturing
Offices and datacenters

Scope 2 emissions, location based(metric tonnes CO2e)42495920570

Scope 2 emissions, market-based(metric tonnes CO2e)309399.4
19924

Further Information
Rest of World – includes our offices (including our New York Headquarters and Swiss Operations Center) and datacenters for which we do not separately enter bycountry.

Page: CC11. Energy
CC11.1
What percentage of your total operational spend in the reporting year was on energy?
More than 0% but less than or equal to 5%

CC11.2
Please state how much heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year

Energy type

Heat
Steam
Cooling

Energy purchased and consumed (MWh)

12146
1952
0

CC11.3

Please state how much fuel in MWh your organization has consumed (for energy purposes) during the reporting year

1376395

CC11.3aPlease complete the table by breaking down the total "Fuel" figure entered above by fuel type

Fuels

Jet kerosene
Biogasoline
Brown coal
Diesel/Gas oil

MWh16420.82124.748000.9241976.3

FuelsDistillate fuel oil No 4
Motor gasoline
Natural gas
PropaneLiquefied petroleum gas (LPG)
Wood or wood waste

MWh59697.8268051.4
692861.6
23.940589.5
6648.2

CC11.4
Please provide details of the electricity, heat, steam or cooling amounts that were accounted at a low carbon emission factor in the market-based Scope
2 figure reported in CC8.3a

Basis for applying a low carbon emission factor

MWh consumed
associated with low carbon
electricity, heat, steam orcooling

Comment

Energy attribute certificates, Guarantees of Origin

263015

Renewable energy (certified green electricity) procurement for the
majority of our EU facilities commenced in 2014, all certificates areavailable for 2015.

Contract with suppliers or utilities, with a supplierspecific emission rate, not backed by electricity
attribute certificates

14280

Supply contract with HydroQuebec for our Canadian factoryCC11.5

Please report how much electricity you produce in MWh, and how much electricity you consume in MWhTotal electricity consumed(MWh)838829Consumedelectricity that ispurchased (MWh)838616

Total electricity produced
(MWh)

213

Total renewableelectricity
produced (MWh)Consumed renewableelectricity that is producedby company (MWh)

213

213

Comment

Further Information

Page: CC12. Emissions Performance
CC12.1How do your gross global emissions (Scope 1 and 2 combined) for the reporting year compare to the previous year?
Decreased

CC12.1a
Please identify the reasons for any change in your gross global emissions (Scope 1 and 2 combined) and for each of them specify how your emissions
compare to the previous year

ReasonEmissions
reduction activities

Emissionsvalue(percentage)

8.1

DirectionofchangePlease explain and include calculation

Decrease

In 2015, 60,094 tCO2e of Scope 1 and 2 emissions were reduced by our emissions reduction activities. Our
total Scope 1 and 2 emissions in the previous year were 746286 tCO2e. Therefore, we arrived at a 8.1%
decrease: (60094/746286)*100 = 8.1%. We had an overall decrease in our absolute CO2 emissions (from746286 tonnes in 2014 to 691044 tonnes in 2015 i.e. a total of 55,242 tonnes reduced or 7.4%) driven by the
8.1% decrease due to emission reduction initiatives and taking into account the 0.7% increase due to change
in output described below. The main items in emission reduction activities were an increase in the efficiency ofReasonEmissionsvalue(percentage)

DirectionofchangePlease explain and include calculation

our vehicle fleet by nearly 7% (Scope 1), 4% reduction in Scope 2 emissions from manufacturing (driven byboth additional renewable energy uptake (around 11,000 tonnes reduced) and energy efficiency projects) andnearly 13% reduction in Scope 1 emissions from manufacturing (driven by fuel switching to greener fuels andenergy efficiency projects).
Divestment

0

Acquisitions

0

Mergers0

Change in output
Change inmethodology
Change inboundary
Change in physicaloperatingconditions

0.7

0
0
0

Unidentified

0

Other

0

No
changeNochangeNochangeIncrease

In 2015, 4852 tCO2e of Scope 1 and 2 emissions were added due to an increase in output. Our total Scope 1
and 2 emissions in the previous year were 746286 tCO2e. Therefore, we arrived at a 0.7% increase:(4852/746286)*100 = 0.7%. The main drivers for this were an increase in production volume in 2015, partially
offset by a small decrease in the km driven by our vehicle fleet.

NochangeNochangeNochangeNochangeNochangeCC12.1b

Is your emissions performance calculations in CC12.1 and CC12.1a based on a location-based Scope 2 emissions figure or a market-based Scope 2
emissions figure?

Market-based

CC12.2
Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per unit currency total revenue

Intensity
figure =Metricnumerator (Gross
global combined
Scope 1 and 2
emissions)

0.000026 metric tonnes CO2e

Metricdenominator:
Unit total
revenue

26794000000

Scope
2 figure
usedMarketbased%changefrompreviousyear

3

Directionof changefrompreviousyear

Reason for change

Increase

Decrease in absolute CO2e emissions by 7.4% (from 746,286 tonnes in2014 to 691,044 tonnes in 2015), mainly driven by carbon reduction
activities in our manufacturing facilities offset by changes in net revenue.
The intensity number is derived from our 2015 CO2e emissions divided
by net revenues of US$26.8 billion. Excluding unfavorable currency of$4.7 billion, net revenues increased by 5.9% to US$31.5 billion compared
to US$29.8 billion in 2014. On a currency neutral basis, the intensity
figure would therefore be 0.000022, a reduction of 12.2% from 2014. The
term “net revenues” refers to operating revenues from the sale of our
products, excluding excise taxes, and net of sales and promotion
incentives. In previous years, total revenue has been quoted: however,
we believe that the most appropriate basis of disclosure is net revenue(as defined) and in line with CDP guidance.

CC12.3
Please provide any additional intensity (normalized) metrics that are appropriate to your business operations

Intensity
figure =Metricnumerator (Gross
global combined
Scope 1 and 2
emissions)

Metricdenominator

Metricdenominator:
Unit total

Scope
2 figureused%changefrompreviousyear

Directionofchangefromprevious
year

8.62

metric tonnes
CO2efull timeequivalent(FTE)
employee

80200

Marketbased

4.8

Decrease

0.60

metric tonnes
CO2eunit ofproduction

902479Marketbased

8.8

Decrease

Further Information

Page: CC13. Emissions Trading

Reason for change

Decrease in absolute CO2e emissions by 7.4% (from746,286 tonnes in 2014 to 691,044 tonnes in 2015),
mainly from our manufacturing facilities, while changing
the total number of employees to 80,200. The intensity
number is worked out from our 2015 CO2e emissions of
691,044 tonnes divided by 80,200 FTE employees. The
overall emissions reduction in manufacturing breaks
down to: over 3.9% reduction in Scope 2 emissions(driven by both renewable energy uptake and energy
efficiency projects); and 12.6% reduction in Scope 1
emissions from manufacturing (driven by fuel switchingand energy efficiency projects). In 2014 we had
746,286 tonnes of CO2e emissions and 82,500 FTE
employees.
This covers Scope 1 and 2 emissions from ourmanufacturing facilities only. We decreased our CO2
intensity from 661kg CO2 per million cigarettes
equivalent in 2014 to 603kg CO2 per million cigarettes
equivalent in 2015. This was driven by our Energy
Management Program activities, (details provided in
section 3.3) and renewable energy projects, along with asmall increase in production volumes. The intensity
number is worked out from our 2015 CO2e emissions of
543,914 tonnes (for manufacturing) divided by 902.5
billion cigarettes equivalent production volume. In 2014
we had 590,379 tonnes of CO2e emissions and 893.6
billion cigarettes equivalent production volume.

CC13.1
Do you participate in any emissions trading schemes?
Yes

CC13.1a
Please complete the following table for each of the emission trading schemes in which you participate

Scheme nameEuropean Union
ETS

Period for which data is
supplied

Thu 01 Jan 2015 - Thu 31 Dec
2015

Allowances allocatedAllowances purchased

Verified emissions
in metric tonnes
CO2e

28004

0

22325

Details of ownership

Facilities we own andoperateCC13.1b
What is your strategy for complying with the schemes in which you participate or anticipate participating?

Through our Global Energy Management Program, paired with local reduction initiatives, we have targeted Energy and CO2 savings that will reduce the need forpurchasing allowances. We balance our allowances purchased over a 3 year timeframe. Energy reduction has enabled 2 of our facilities to be removed from the
EU ETS scheme in the last 2 years (moving below total combustion capacity thresholds).

CC13.2
Has your organization originated any project-based carbon credits or purchased any within the reporting period?
YesCC13.2aPlease provide details on the project-based carbon credits originated or purchased by your organization in the reporting period

Creditorigination
or credit
purchase

Creditpurchase

Project type

Project identification

Verified to which
standard

Other: Various see attachedcertificate

Deutsche Post DHL GoGreen Carbon
Management program. We voluntarily offset
some of our logistics impact when we source
services through DHL.

Other: CDM, VER
and VCSR - details
on attachedcertificate

Number ofcredits(metric
tonnes of
CO2e)

Numberof credits(metric
tonnesCO2e):
Risk
adjusted
volumeCredits
cancelled

Purpose,e.g.
compliance248.24248.24

Yes

Voluntary
Offsetting

Further Information
Attached DHL certificate
Attachments
https://www.cdp.net/sites/2016/12/14712/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC13.EmissionsTrading/Philip Morris Europe - Climate Neutral Certificate 2015.pdf

Page: CC14. Scope 3 Emissions
CC14.1
Please account for your organization’s Scope 3 emissions, disclosing and explaining any exclusions

Sources of
Scope 3emissionsPurchased goods
and services

Capital goods

Fuel-and-energyrelated activities(not included in
Scope 1 or 2)

Evaluation
statusRelevant,
calculated

Relevant,
calculated

Relevant,
calculated

metrictonnes
CO2e

Emissions calculation methodology

Includes Tobacco (including the impact of
curing tobacco) and direct materials, composing
the cigarette, the pack and transport packaging(packaging, cigarette papers, acetate tow forfilters, etc.). Our carbon footprint is based on
actual data (primary data) and average industry
data (secondary data), including a number of
estimates and assumptions, using impact
3750000 databases. Elements of our carbon footprint
have been modeled using the Life Cycle
Assessment (LCA) tool, Simapro. For our baseyear in 2010, we undertook a 3rd party review
against ISO 14040 standards and now the GHG
Protocol Scope 3 Accounting and ReportingStandard. We have extrapolated theseemissions from 2014 based on production
volume changes.

Percentageofemissionscalculatedusing dataobtainedfromsuppliers
or valuechain
partners

40.00%

110000Emission factors for infrastructure (taking theproxy of a chemical factory), were used from alife cycle assessment database, ecoinvent v2.2,
and modeled in Simapro.

0.00%

141475

GHG Protocol Corporate Value Chain (Scope 3)
Accounting and Reporting Standard. The
emissions are calculated by multiplying fuelquantities and electricity purchased by
upstream and Transmission and Distribution

100.00%Explanation

Based on our current LCA. We continue ourengagement process with direct materials andother suppliers in order to get more primarydata. In 2014 we joined CDP Supply Chain to
support this process and have continued in2015 and 2016.

Existing infrastructure emissions were
calculated during our original carbon footprint
calculation and we use that to estimate thecarbon emissions related to the manufacture
and transport of capital goods (equipment,machinery, buildings, facilities, and vehicles)
purchased by PMI annually.
The primary data used are the types andquantities of fuels and electricity used by PMI in
2015. Secondary data are used for upstream
and T&D GHGs emission factors. For fossil andbiogenic fuels, the emission factors are global

Sources of
Scope 3emissions

Upstreamtransportation anddistribution

Waste generated
in operations

Evaluation
statusRelevant,
calculated

Relevant,
calculated

metrictonnesCO2e3240007632

Emissions calculation methodology

Percentageofemissionscalculatedusing dataobtainedfromsuppliers
or valuechain
partners(T&D) GHG emission factors. When noemission factor is available for a specificcountry, the emission factor provided by UK
Government (DEFRA) for the corresponding
region is applied. Quality: The quality of the
primary data used is high and the quality of thesecondary data is medium. The quality of theemissions data is considered as medium.
Estimates for tobacco and direct materials
transport. Our carbon footprint is based on
actual data (primary data) and average industry
data (secondary data), including a number of
estimates and assumptions, using impact
databases. Elements of our carbon footprint,
have been modeled using the LCA tool,
25.00%
Simapro. For our base year in 2010, we
undertook a 3rd party review against ISO 14040
series of standards and the draft Scope 3
Accounting and Reporting Standard as releasedby the WBCSD / WRI GHG Protocol Initiative.
We have extrapolated these emissions from2014 based on production volume changes.
GHG Protocol Corporate Value Chain (Scope 3)
Accounting and Reporting Standard. The waste
flows are broken down in over 50 different
waste types and treatment methods. The waste- 100.00%
type specific method is used to calculate GHG
emissions. Each treatment is associated with anemission factor to assess the GHGs emissions

Explanation

without geographic differentiation. For
electricity, T&D losses and heat losses, GHGs
emissions are specific to each country or
region. The activity data come from PMI’s
internal reporting tool. The GHGs emission
factors used are taken from DEFRA guidelinesfor GHG accounting - 2015 and ecoinvent v2.2.

Based on estimated distances travelled.

The primary data used for this category are themass of waste generated in production centres,
excluding office waste. The secondary data are
the emission factors for the different waste
treatment, taken from a life cycle assessment
database, ecoinvent v2.2.

Sources of
Scope 3emissions

Business travel

Evaluation
statusRelevant,
calculated

metrictonnesCO2e82976

Emissions calculation methodology(secondary data) from the treatment (ecoinvent
2.2, IPCC 2007 GWP100). As per the Technical
Guidance for Calculating Scope 3 Emissions of
the GHG Protocol (p.80), emissions fromincineration with energy recovery and fromrecycling are not included in the assessment, toavoid double counting. An estimation of theemissions from the transportation of the waste
to the recycling or incineration facility is
performed. The emissions from thistransportation step are calculated as follows:
0.134 (transport, lorry >16t, fleet average, RER,
in CO2-eq / tkm) * 35 km (assumption) * massof waste recycled or incinerated with energy
recovery (in tonnes). It is assumed that the
paper, cardboard and acetate tow sent tocomposting are fully degraded and therefore
emit only biogenic CO2, not reported in thescope 1,2 and 3 of the GHG protocol. The
transportation of this waste to the composting
facility is accounted for. Quality: The quality ofthe primary data used is high. However, due tothe simplification involved in the modeling (nogeographical differentiation on the waste
treatment was made), therefore the overall
quality of the emission is estimated as medium.
Through air miles accounting, using the DEFRA
GHG Conversion Factors for Company
Reporting - Air Passenger Transport

Percentageofemissionscalculatedusing dataobtainedfromsuppliers
or valuechain
partners

90.00%

Explanation

Covering around 80 countries through PMI air
miles accounting which is estimated at 90% of
overall travel - this is then extrapolated toSources of
Scope 3emissions

Evaluation
statusEmployeecommutingRelevant,
calculated

Upstream leased
assets

Not relevant,explanation
providedDownstream
transportation anddistribution

Relevant,
calculated

Processing ofsold products

Not relevant,explanation
provided

metrictonnes
CO2e77600

Emissions calculation methodology

Conversion Factors for “Premium Economy
class” for 2015.
Estimated based on average commute
distances and transport methods across 80,200
employees using data extrapolation from ourown fleet of vehicles.

Percentageofemissionscalculatedusing dataobtainedfromsuppliers
or valuechain
partners

Explanation

100%.

10.00%

Only some sites have undertaken mobility
surveys of employees (commuting), therefore
primary data is limited.
Our upstream leased assets are not material to
our carbon footprint - associated emissions are
small in comparison to our total Scope 3
emissions and do not meet our 5% materiality
threshold.

496000Distribution of finished goods; estimate basedon 8 key markets extrapolated for the whole of
PMI. Our carbon footprint is based on actual
data (primary data) and average industry data
(secondary data), including a number of
estimates and assumptions, using impact
databases. Elements of our carbon footprint,
have been modeled using the LCA tool,
Simapro. For our base year in 2010, we
undertook a 3rd party review against ISO 14040
series of standards and the draft Scope 3
Accounting and Reporting Standard as releasedby the WBCSD / WRI GHG Protocol Initiative.
We have extrapolated these emissions from2014 based on sales volume changes.

25.00%

Based on estimated distances for definedtransport means in 8 key markets.

Not relevant since our sold products are notprocessed.

Sources of
Scope 3emissions

Evaluation
statusmetrictonnesCO2e

Use of soldproducts

Relevant,
calculated

141000End of life
treatment of soldproducts

Relevant,
calculated

11500

Emissions calculation methodology

This assumes the use of cigarette lighters. Ourcarbon footprint is based on actual data
(primary data) and average industry data
(secondary data), including a number of
estimates and assumptions, using impact
databases. Elements of our carbon footprint,
have been modeled using the LCA tool,
Simapro. For our base year in 2010, we
undertook a 3rd party review against ISO 14040
series of standards and the draft Scope 3
Accounting and Reporting Standard as releasedby the WBCSD / WRI GHG Protocol Initiative.
We have extrapolated these emissions from2014 based on sales volume changes.
Downstream waste treatment and street
cleaning related to cigarette butts and waste
packaging. Our carbon footprint is based on
actual data (primary data) and average industry
data (secondary data), including a number of
estimates and assumptions, using impact
databases. Elements of our carbon footprint,
have been modeled using the LCA tool,
Simapro. For our base year in 2010, we
undertook a 3rd party review against ISO 14040
series of standards and the draft Scope 3
Accounting and Reporting Standard as releasedby the WBCSD / WRI GHG Protocol Initiative.
We have extrapolated these emissions from2014 based on sales volume changes.

Percentageofemissionscalculatedusing dataobtainedfromsuppliers
or valuechain
partners

Explanation

25.00%

Based on estimated usage of lighter fuel per
cigarette.

10.00%

Based on Swiss market assumptions andextrapolation.

Sources of
Scope 3emissions

Evaluation
statusmetrictonnes
CO2e

Emissions calculation methodology

Percentageofemissionscalculatedusing dataobtainedfromsuppliers
or valuechain
partners

Explanation

Downstream
leased assets

Not relevant,explanation
provided

Our downstream leased assets are not material
to our carbon footprint, associated emissions
are small in comparison to our total Scope 3
emissions and do not meet our 5% materiality
threshold.

Franchises

Not relevant,explanation
provided

No existing franchise business.

Investments

Not relevant,explanation
provided

Our investments are not material to our carbon
footprint, associated emissions are small incomparison to our total Scope 3 emissions anddo not meet our 5% materiality threshold.

Other (upstream)
Other(downstream)

CC14.2
Please indicate the verification/assurance status that applies to your reported Scope 3 emissions
Third party verification or assurance process in place

CC14.2aPlease provide further details of the verification/assurance undertaken, and attach the relevant statements

Verificationor
assurance
cycle inplace

Annualprocess

Status inthecurrent
reportingyear

Complete

Type ofverificationor
assurance

Attach the statement

Limitedassurance

https://www.cdp.net/sites/2016/12/14712/Climate Change
2016/Shared Documents/Attachments/CC14.2a/PMI GHG
Verification Statement 2015 with detail.pdf

Page/Sectionreference

Page 1 total Scope 3,
Page 2 method andscope, Page 3
specific Scope 3
category detail.

Relevant
standard

ISO140643

Proportion ofreported Scope
3 emissions
verified (%)

4

CC14.3Are you able to compare your Scope 3 emissions for the reporting year with those for the previous year for any sources?
Yes

CC14.3aPlease identify the reasons for any change in your Scope 3 emissions and for each of them specify how your emissions compare to the previous year

Sources of Scope 3
emissionsReason forchangeEmissions value(percentage)

Direction ofchangeComment

Sources of Scope 3
emissions

Fuel- and energy-related
activities (not included in
Scopes 1 or 2)
Waste generated in operations

Reason forchangeEmissions
reduction
activities
Emissions
reduction
activities

Emissions value(percentage)

Direction ofchange10

Decrease

11

Decrease

Comment

Corresponding to a 7% reduction in energy used in 2015 compared
to 2014 due to energy reduction initiatives and the use of greener
energy sources.
Corresponding to a decrease in total waste quantities from waste
reduction initiatives and an increase in our recycling rate from 85.4%
in 2014 to 87.4% in 2015.

CC14.4
Do you engage with any of the elements of your value chain on GHG emissions and climate change strategies? (Tick all that apply)
Yes, our suppliers
Yes, our customers

CC14.4aPlease give details of methods of engagement, your strategy for prioritizing engagement and measures of success
Our suppliers:
We have used our carbon footprint calculation to identify the main climate change impacts of our purchased materials. In our direct materials (non-tobacco) area we
identified acetate tow and consumer board & paper as significant contributors from a raw materials perspective to our carbon footprint and this is why we prioritizedengagement with suppliers in these areas. We engaged with key suppliers in these two areas through direct discussions and a questionnaire to ascertain carbon
related strategies and performance and as a means of assessing the value of joining CDP Supply Chain. As a measure of success, 90% of the suppliers surveyed
engaged with us on this subject. From this basis we decided to join CDP Supply Chain and were involved in process for the first time in 2014. Based on our carbon
footprint we invited suppliers covering tobacco, paper/board, acetate tow and also distribution/logistics again in 2015 and have expanded our invitee list in 2016. We
aim to have at least 80% of our invited suppliers to engage with us through CDP Supply Chain and we beat that target again in 2015 with over 90% responding. In
the medium term we will use this forum to drive decreases in our value chain emissions where overall we are aiming to reduce emissions intensity by 30% by 2020.
We also engage with our suppliers regularly in the following main areas:• Tobacco leaf suppliers – through Good Agricultural Practices (GAP) collaboration which covers mandatory requirements for managing energy and climate change(mitigation and adaptation) . Implementation of GAP leads to the definition of key areas for improvement where we put initiatives in place to take action, we callthese Sustainable Tobacco Production (STP) initiatives which we work on with our suppliers.
• Direct Materials suppliers – through procurement and product development activities which include the definition of parameters of environmental performance fordifferent raw material components.
• Equipment manufacturers – through an industry colloquium which helps target energy efficiency developments for our manufacturing equipment.
Through engagement and information exchange we aim to increase the proportion of our carbon footprint that is based on primary data rather than LCA. By 2020 we
expect primary data to cover at least 80% of our value chain emissions.
Our customers:
We have engaged with several key account customers on sustainability topics, including with Tesco to support their own carbon footprint reduction target for their
supply chain. We also regularly engage on sustainability topics with other key accounts and stakeholders through questionnaire responses and presentations. We
will measure our success through direct feedback from our customers where in some cases, sustainability topics form a part of our business relationship review.
We prioritize engagement as follows:
1)
Our Customers
2)
Our Suppliers based on share of our carbon footprint (mitigation)
3)
Our Suppliers based on our climate change risk assessment (adaptation)

CC14.4b
To give a sense of scale of this engagement, please give the number of suppliers with whom you are engaging and the proportion of your total spendthat they represent
Number of
suppliers
31

CC14.4c% of total spend (direct
and indirect)
70%

Comment
Covers Direct Material suppliers representing around 70% of Direct Materials total spend. Also the majorityof our main tobacco and logistics services providers. Currently excludes spend on business services.

If you have data on your suppliers’ GHG emissions and climate change strategies, please explain how you make use of that data
How you make use of
the data

Please give details

Identifying GHG sources
to prioritize for reduction
actions

We will include their primary data in our future carbon footprint reviews to improve the accuracy of estimated data. We will consider
supplier/customer data and climate change strategies in our road-map for our carbon footprint reduction targets for our entire supply
chain / value chain. We are continuing to develop best practice sharing on carbon footprint reduction through both direct contact and
CDP Supply Chain.

CC14.4d
Please explain why you do not engage with any elements of your value chain on GHG emissions and climate change strategies, and any plans you haveto develop an engagement strategy in the future

Further Information

Module: Sign Off
Page: CC15. Sign Off
CC15.1
Please provide the following information for the person that has signed off (approved) your CDP climate change response

Name

Andre Calantzopoulos

Further Information

Job title

Chief Executive Officer (CEO)Corresponding job category

Chief Executive Officer (CEO)Module: FBT
Page: FBT1. Agriculture
FBT1.1
Are agricultural activities, whether in your direct operations or elsewhere in your value chain, relevant to your climate change disclosure?
Yes

FBT1.1a
Please explain why agricultural activities are not relevant to your climate change disclosure

FBT1.2
Are the agricultural activities that you have identified as relevant undertaken on your own farm(s), elsewhere in your value chain, or both?
Elsewhere in value chain

FBT1.2aPlease explain why agricultural emissions from your own farms are not relevant
We do not own or operate farms

FBT1.3
Do you account for greenhouse gas emissions from agricultural activities undertaken on your own farm(s) as part of the global gross Scope 1 emissions
figure reported in CC8.2, and/or the Scope 2 figure reported in CC8.3a of the core climate change questionnaire?

FBT1.3aPlease select the form(s) in which you wish to report the greenhouse gas emissions produced by agricultural activities (agricultural emissions)
undertaken on your own farm(s)FBT1.3b
Please report your total agricultural emissions produced on your own farm(s) and identify any exclusions in the table below

Scope

Agriculturalemissions (metrictonnes CO2e)

Methodology

Exclusions

Explanation

Comment

FBT1.3c
Please report your agricultural emissions produced on your own farm(s), disaggregated by category, and identify any exclusions in the table below

Emissions
category

Agriculturalemissions (metrictonnes CO2e)

Methodology

Exclusions

Explanation

Comment

FBT1.3d
Please explain why you do not account for greenhouse gas emissions from agricultural activities undertaken on your own farm(s), and describe anyplans for the collection of this data in the future

FBT1.4

Do you implement agricultural management practices on your own farm(s) with a climate change mitigation and/or adaptation benefit?

FBT1.4aPlease identify agricultural management practices undertaken on your own farm(s) with a climate change mitigation and/or adaptation benefit. Complete
the table

Activity ID

Agricultural
management practiceDescription of agricultural
management practiceClimate change
related benefit

Comment

FBT1.4b
Does your implementation of these agricultural management practices have other impacts? Complete the table
Activity ID

Impact on yield

Impact on cost

Impact on
soil quality

Impact on
biodiversity

FBT1.4c
Do you have any plans to implement agricultural management practices in the future?

FBT1.4d
Please detail your plans to implement agricultural management practices in the future

FBT1.5

Impact on water

Other impact

Descriptionof impacts

CommentIs biogenic carbon pertaining to your own farm(s) relevant to your climate change disclosure?

FBT1.5aPlease report biogenic carbon data pertaining to your own farm(s) in the table below

CO2 flux

Emissions/Removals (metrictonnes CO2e)

Methodology

Exclusions

Explanation

Comment

FBT1.6
Do you account for greenhouse gas emissions from agricultural activities in your value chain as part of the Scope 3 category "Purchased goods andservices" reported in CC14.1 of the core climate change questionnaire?
Yes

FBT1.6aPlease report these agricultural emissions from your value chain and identify any exclusions in the table below

Scope

Agricultural emissions (% of theemissions reported in the
category “Purchased goods
and services”)

Exclusions

Scope 351-60%

None

Explanation

Emissions from tobacco farming which includes curing tobacco, agricultural
machinery, building materials, fertilizers and crop protection agents, etc.

Comment

FBT1.6b
Please explain why you do not account for greenhouse gas emissions from agricultural activities in your value chain as part of the Scope 3 category“Purchased goods and services” reported in CC14.1 of the core climate change questionnaire

FBT1.7
Do you encourage your agricultural suppliers to undertake any agricultural management practices with a climate change mitigation and/or adaptation
benefit?
Yes

FBT1.7aPlease identify agricultural management practices with a climate change mitigation and/or adaptation benefit that you encourage your suppliers to
implement. Complete the table

ActivityID

1

Agricultural
management
practice

Other: Good
Agricultural
Practices
ProgramDescription of agricultural management
practice

Full scope - GAP defines the principles andmeasurable standards to be met by all those whogrow and supply tobacco to PMI. These principles
and standards are organized around three focus
areas (pillars): Crop, Environment, and People(Agricultural Labor Practices (ALP)). Governance isthe foundation of these pillars and incorporates the
management processes that must be put in place
to successfully implement GAP. The Environment
pillar covers sustainable water management, soil
management/conservation, energy and raw
material efficiency, waste management,
biodiversity and the sustainable use of wood.

Your role in theimplementationof this practiceFinancial
Knowledge
sharing
Operational
Procurement

Explanation of how you
encourage implementation

We mandate GAP
implementation for suppliersof tobacco to PMI. Our Leaf
Department supports our
suppliers in implementation
and, where we directly
contract farmers, our fieldtechnicians provide direct
support.

Climatechangerelatedbenefit

Emissions
reductions(mitigation)
Increasing
resilience toclimatechange(adaptation)

Comment

FBT1.7b
Does the implementation of these agricultural management practices in your value chain have other impacts? Complete the table
ActivityID

1

Impact onyield

Impact on
cost

Impact on
soil quality

Evaluated beneficial
impactEvaluated beneficial
impactEvaluated beneficial
impactImpact on
biodiversity
Evaluated beneficial
impactImpact on
water

Other impact

Description of impacts

Evaluated beneficial
impactEvaluated beneficial
impactFull scope - GAP comprehensively
covers economic, labour practices
and environmental topics.

Comment

FBT1.7c
Do you have any plans to engage with your suppliers on their implementation of agricultural management practices?
Yes

FBT1.7d
Please detail these plans to engage with your suppliers on their implementation of agricultural management practices
GAP is mandatory for all suppliers of tobacco to PMI, as is reflected in all PMI’s and its affiliates’ supply contracts. PMI expects all of its’ suppliers to continuously
improve in the implementation of GAP principles and standards, working with the farmers from whom they purchase.
Suppliers are required to conduct annual self-assessments of their GAP implementation and are provided with a management tool and set of measurable standards
against which they rate themselves. Further, the information resulting from the farm by farm monitoring of the measurable standards is consolidated into Key
Performance Indicators that are used to assess suppliers’ improvement in GAP over time.
Farmers’ and suppliers’ progress in GAP implementation is now monitored both internally and externally by third parties who will complete a formal GAP assessment
to verify supplier self-assessments every three years. Additionally, for the People Pillar of GAP (Agricultural Labor Practices (ALP)), a non-governmentalorganization has also guided our efforts to set up a monitoring system with a third party who is completing a detailed assessment of suppliers’ ALP Program
implementation. The results of our ALP program assessments are available on our website.

Further Information

Page: FBT2. Processing
FBT2.1
Are processing activities, whether in your direct operations or elsewhere in your value chain, relevant to your climate change disclosure?
Yes

FBT2.1a
Please explain why processing activities are not relevant to your climate change disclosure

FBT2.2
Are the processing activities that you have identified as relevant undertaken in your direct operations, elsewhere in your value chain, or both?
Both direct operations and elsewhere in value chain

FBT2.2aPlease explain why emissions from processing activities in your direct operations are not relevant

FBT2.3
Do you account for emissions from processing activities in your direct operations as part of the global gross Scope 1 emissions figure reported in
CC8.2a and/or the Scope 2 figure reported in CC8.3a of the core climate change questionnaire?
Yes

FBT2.3aPlease report these emissions from processing activities in your direct operations and identify any exclusions in the table below
Scope

Emissions from processing
activities (metric tonnes CO2e)

Exclusions

Scope 1

8755

None

Scope 2

5033

None

Explanation

Comment
Emissions from PMI owned and operated Stemmeries(tobacco processing).
Emissions from PMI owned and operated Stemmeries(tobacco processing).

FBT2.3b
Please explain why you do not account for emissions from processing activities in your direct operations, and describe any plans for the collection ofthis data in the future

FBT2.4
Do you account for emissions from processing activities in your value chain as part of the Scope 3 category "Purchased goods and services" and/or"Processing of sold products" reported in CC14.1 of the core climate change questionnaire?
Yes

Further Information

Page: FBT3. Distribution
FBT3.1
Are distribution activities, whether in your direct operations or elsewhere in your value chain, relevant to your climate change disclosure?
Yes

FBT3.1aPlease explain why distribution activities are not relevant to your climate change disclosure

FBT3.2
Are the distribution activities that you have identified as relevant undertaken in your direct operations, elsewhere in your value chain, or both?
Both direct operations and elsewhere in value chain

FBT3.2aPlease explain why emissions from distribution activities in your direct operations are not relevant

FBT3.3
Do you account for emissions from distribution activities in your direct operations as part of the global gross Scope 1 emissions figure reported in
CC8.2 and/or the Scope 2 figure reported in CC8.3a of the core climate change questionnaire?
Yes

FBT3.3aPlease report these emissions from distribution activities in your direct operations and identify any exclusions in the table below
Emissions from
distribution activities(metric tonnes CO2e)

Scope

Scope 1115182

Scope 20Exclusions

None - PMI operated
vehicles only

Explanation

These emissions are for PMI’s total vehicle fleet which does include
some benefit vehicles (estimated at 10%).

Comment

FBT3.3b
Please explain why you do not account for emissions from distribution activities in your direct operations, and describe any plans for the collection ofthis data in the future

FBT3.4
Do you account for emissions from distribution activities in your value chain as part of the Scope 3 category "Upstream transportation and distribution"
and/or "Downstream transportation and distribution" in CC14.1 of the core climate change questionnaire?
Yes

Further Information

Page: FBT4. Consumption
FBT4.1Are emissions from the consumption of your products relevant to your climate change disclosure?
Yes

FBT4.1b
Please explain why emissions from the consumption of your products are not relevant to your climate change disclosure

FBT4.1aDo you account for emissions from the consumption of your products as part of the Scope 3 category "Use of sold products" and/or "End of life
treatment of sold products" in CC14.1 of the core climate change questionnaire?
YesFurther Information
CDP 2016 Climate Change 2016 Information Request