Celebrating
10 years of the
ALP program
AGRICULTUR AL L ABOR PR AC TICES (ALP)
10 YE AR ANNIVERSARY REPORTDECEMBER 2021

Contents
02	Celebrating 10 Years of the ALP program
03 Foreword
04	PMI’s approach to human rights
05 Looking back 10 years
06	ALP at a glance07	A whole new approach
08 Progress toward our targets
09 Key milestones
10 The five key components of ALP
18 Living income, key enabler toaddressing social issues
21	Lessons learned
22 Leveraging ALP learnings
23	Our way forward

Cover image: Tobacco farmworkers taking a break under a shelter in Nayarit, Mexico
Tobacco farmworkers transporting tobacco leaves in Charbagh, Pakistan
Philip Morris International ALP Program 10-Year Anniversary Report01Celebrating 10 Years of the ALP program
At Philip Morris International (PMI), sustainability is at the core of our businessstrategy to deliver a smoke-free future. Our number one sustainability challenge
is the impact of our products and the harm associated with them. To address
this, we are replacing cigarettes with better alternatives for adult smokers.
In parallel, we aim to address the social and environmental impacts resulting
from our own operations and, most importantly, from our supply chain.
Among the people whose human rights are affectedby our business are the workers, farmers, andfamilies living and working on the farms in our
tobacco supply chain. While tobacco growing canprovide a good living under some circumstances,much tobacco leaf is grown on small farms in lowand medium-income countries, and human rights
issues such as child labor, subpar wages, and poor
working conditions are identified risks in the sector.
PMI is a major global buyer of tobacco, and inrecognition of our responsibility to respect the humanrights of the many people who produce tobacco
for us, in 2011, we established our Agricultural
Labor Practices (ALP) program. Developed in close
collaboration with the international fair labor NGO

Verité, our ALP program seeks to ensure respect for
the labor rights of all people living and working on the
tobacco farms in our supply chain, and to promote theachievement of a decent livelihood for all farmers fromwhom we or our third-party suppliers buy tobacco.
The ALP program has been a key focus for PMI for the
past decade, and we have learned much about how
to identify and address potential human rights issues
resulting from tobacco production. As the program
has matured and been implemented at scale globally,
we have refined and continuously strengthened ourapproach. Today we apply innovative and integrated
solutions to systemic issues, while fully engaging
with suppliers, farmers, and local communities.

A field technician visiting a tobacco field in Bahia, Brazil
Philip Morris International ALP Program 10-Year Anniversary Report02Foreword
Agriculture is deeply seeded in Philip
Morris’ roots and throughout our history
we have worked directly and indirectly withtobacco farmers around the world. Ten
years ago PMI adopted the Agricultural
Labor Practices Program (ALP) with the aim
to eliminate child labor and to achieve safeand fair working conditions on farms where
PMI sources tobacco. This program enables
us to identify and monitor areas where wecan proactively address the needs of thesecommunities, particularly in the areas oflabor rights and other occupational risks.

“This program enables us to
identify and monitor areas
where we can proactively
address the needs of thesecommunities, particularly inthe areas of labor rights andother occupational risks.”

Since launching ALP, we have put in place arobust human rights due diligence system,brought safe and decent accommodation
to farm workers in contracted farms, andensured full availability of personal protective
equipment (PPE) for the application of crop
protection agents and the prevention ofgreen tobacco sickness. We are on target
to achieve zero child labor in our tobacco
supply chain by 2025, and provide 100
percent of our contracted farmers with aliving income, also by 2025. These programs
are creating a fundamentally positive impact
on the lives of the farmers of today and thefuture. Our collaboration with Verité hasbeen a strategic and pragmatic enabler for
our ALP program. We are proud of what
we have accomplished over the past ten
years and are looking forward to continuing
to improve the livelihoods of our farmers
and tobacco farming communities.

For more than 10 years, Verité has worked
closely with PMI and its tobacco suppliers
to help imagine, implement, and steadily
improve the ALP program. Today, it
represents a leadership-level model for due
diligence and transparency in commodity
agriculture supply chains, with verified
positive impacts, not just aspirational
policy commitments or well-intentioned,
but limited or ineffective, activities.

“Our collaboration with
PMI has been a strategic
partnership in the true sense,characterized by a deep
shared sense of purpose
and a consistent practice ofengaging with each otherrigorously and honestly.”

Our collaboration with PMI has been astrategic partnership in the true sense,characterized by a deep shared senseof purpose and a consistent practice ofengaging with each other rigorously andhonestly. We have worked together to push
the bar for program performance higher
and higher, and the company has been
willing to resource and institutionalize theprogram accordingly. We are proud of theambition and accomplishments of the ALP
program and urge others to emulate it.
Shawn MacDonald
CEO, Verité

Massimo Andolina
Senior Vice President Operations, PMI

Philip Morris International ALP Program 10-Year Anniversary Report03

PMI’s approach to human rights
Respect for human rights is anabsolute and universal requirement
for businesses, and something we takevery seriously at PMI. This shapes theway we work with employees, suppliers,
business partners, consumers, and thecommunities in which we operate.

It is also fully integrated in PMI’s sustainability
strategy. Through PMI’s Human Rights
Commitment (HRC), we have committed toadhering to the United Nations Guiding Principles
on Business and Human Rights (UNGPs).
That also means avoiding, mitigating, andremediating any human rights risks and impacts
that may arise across our value chain.

In addition, we reviewed our contribution to the
Sustainable Development Goals (SDGs) and haveidentified areas where we have an opportunity tomake the greatest difference. In particular, throughour ALP program, we aim to contribute primarily
to SDG 2 (Zero Hunger) and 8 (Decent Work andEconomic Growth).

Related SDGs

Our approach to respecting human rights

Policyframework

Transparency

Focus onrights-holders

Due diligence

Policy frameworkDue diligence

PMI’s Human Rights Commitment(HRC) is the cornerstone of our humanrights strategy aligned with the United
Nations Guiding Principles on Businessand Human Rights (UNGPs)

Robust programs and processes
to identify our adverse impacts
across our value chain through:• Key policy instruments, such as our
Guidebook for Success, Responsible
Sourcing Principles, Good
Agricultural Practices and otherinternal policies and practices, guideour approach to implementing the HRC• Extensive training and awarenessraising• Risk assessment– Company-wide integrated
risk assessment– Human rights saliency mappings– Human rights impact assessments• Targeted due diligence programs
across our activities• External assessments
and verifications

Transparency

Remediation

Transparency in sharing progressand challenges

Actions addressing our adverse impacts
and maximising our opportunities
to drive positive change for people
across our value chain through:• Integrated report• Targeted communications• Publication of thirdparty assessments

Remediation

Philip Morris International ALP Program 10-Year Anniversary Report• Implementation of action plans
and targeted programs toaddress issues identified• Collaboration with civil society
organizations, governments, and theprivate sector on initiatives for stronger
and more impactful solutions04

Looking back 10 years
Before the launch of the ALP programin 2011, PMI sourced a wide rangeof tobacco leaf types throughvertically integrated operations,third-party suppliers, and otherbuying mechanisms, such as auctions.
Like many other businesses dealing with
agricultural commodities, PMI promoted Good
Agricultural Practices (GAP) principles, including“no child labor” provisions in addition to agronomy
parameters. The social protections afforded by
the GAP framework were limited, however, and in
response to stakeholder concerns, in 2010, PMI
commissioned a study by Verité in Argentina. The
assessment showed that the initiatives implemented
to date had not addressed the root causes of thesocial issues on the contracted tobacco farms.

Shortly after, similar findings were reported in
Kazakhstan, where child labor was particularly
noted to be a concern, and where, as the onlyinternational buyer of tobacco at the time, PMI
took immediate action by again commissioning
Verité to investigate the situation there, and todevelop a comprehensive approach to addressing
the labor issues identified. PMI then engaged
Verité to carry out a broader assessment of thecompany’s approach to managing social issues in
its diverse tobacco supply chains around the world.
Recognizing the need to standardize and strengthen
due diligence systems, PMI publicly announced,
in early 2011, the launch of the ALP program.
Ten years on, through a sustained andevolving effort, PMI and its suppliers havefully embraced the learnings from those early
efforts in Kazakhstan and have put in place thenecessary resources and systems to be able
to identify and address potential risks at scale,across our global tobacco leaf supply chain.

“I feel honored to celebrate this 10-year
anniversary of the ALP program. Its successis the result of collaboration, passion, andhard work of the many people involved:
PMI employees, suppliers, field technicians,
farmers, and local and global partners. We areplaying a key role in improving the livelihoods
and well-being of families and farming
communities around the world. We are aiming
at a radical, long-term, impactful change.”
Laurence Ruffieux
Director Operations Sustainability, PMI

Women collecting water in Malawi

Philip Morris International ALP Program 10-Year Anniversary Report

05

ALP at a glance• Provide technical assistance (agronomy support, ﬁnance,crop inputs, fertilizers, certiﬁed food crop seeds, etc.)• Train farmers on ALP Code requirements

de Standar
o
C
P
ds
AL

286,000

TOBACCO FARMERS

2,675• Monitor ALP implementation on farms

THE ALP PROGRAM CODE:• Small-scale family farms• The vast majority of
tobacco is grown on
2 hectares or less
• Help farmers develop
improvement plans toaddress labor issues• Connect farmers andworkers with local
services and resources• Liaise with ALP Country
Teams to implement
community initiatives

No child labor
Income andwork hours
Fair treatment
No forced labor andhuman traﬃcking
Safe work
environment
Freedom of
association
Terms ofemployment

Independent Assessment
External evaluationof progress made andeffectiveness, withtransparent, public
disclosure

And dedicated ALP Country Teams
implement the program

IMPLEMENTATION
across 23 tobacco growing countries

STRATEGICPARTNER

Our approach is to work collaboratively and transparently
with all stakeholders to achieve tangible progress over time.
Philip Morris International ALP Program 10-Year Anniversary Report

FIELD TECHNICIANSOver
30 Not-for-proﬁt
Organizations
worldwide working
on community
initiatives
06

A whole new approach
PMI and Verité formed a “strategic
partnership” to work together on
the development and rollout of the
ALP program across markets where
PMI sources tobacco.
Together, we created the ALP code, with sevenstrong vision statements—core principles that clearly
articulate farmers’ and the worker’s rights andresponsibilities when growing tobacco. These are:child labor, income and work hours, fair treatmentof workers, forced labor and human trafficking, safe
work environment, freedom of association, andterms of employment. Clear, measurable standards
to monitor and demonstrate good labor practices
were also defined for each ALP code principle.
To transform our aspirations into reality, we
engaged with our third-party suppliers and verticallyintegrated operations to devote resources anda team of “feet on the ground” in the form ofagronomists, or field technicians, to visit farms,
oversee the crop production and monitor social andenvironmental practices. For the first several yearsof ALP implementation, we focused on extending
the scope and coverage of farm monitoring by fieldtechnicians: training and building their capacities
to monitor and engage farmers, strengthening
the skills and capabilities of farmers to live up to
the ALP code principles, and enhancing local andglobal data gathering and reporting systems.
At first, the program was structured to be
implemented in two phases with systematicand planned rollout in sourcing markets.

Phase 1• Supporting suppliers and field technicians witha curriculum on human rights and labor rights.
• Communicating the ALP code to all contracted
farmers.
• Producing a detailed farm profile of all contracted
farms and building the data systems to collectand analyze these profiles.
• Developing the concept of a prompt action—a category of field findings requiring immediate
action by a field technician when someone
is at risk of harm on the farm.

To drive this change we also set
ambitious targets:• Zero child labor in our tobacco supply chain
by 2025• 100% of tobacco farmers paying workers
at least the minimum legal wage by 2022
• 100% of tobacco farmers make a living
income by 2025
• 100% of contracted farmers supplying tobacco to
PMI have basic water access by 2025 and accessto basic sanitation and hygiene by 2030

Phase 2
• Building systems for reporting prompt actions
where practices do not meet ALP standards.
• Addressing underlying root causes of labor
problems found through targeted initiatives
with local partners.
• Engaging Control Union (CU) as independent
third-party auditor to check the ALP program
implementation and progress, committing
to full transparency (CU reports are publishedon pmi.com).
• Digitalizing monitoring and reporting with the useof tablets and phones by the field technicians.

As the ALP program was gradually institutionalized
both within our vertically integrated operations
and by our third-party suppliers in the sourcing
markets, we were increasingly able to gather
accurate and comprehensive data on the program,
both internally through our monitoring, andexternally, through the third-party assessment
program, and gained a more accurate sense of the
program’s overall performance and improvement
opportunities. In 2018, we took the decision to
deploy a Step Change approach to address theroot causes of identified problems and achievesignificant, long-term change for the most
persistent issues in the most impacted locations,in our program referred to as priority countries.

Philip Morris International ALP Program 10-Year Anniversary Report“Since the start of Step Change, wehave solidified the approach andidentified critical enablers to address
the root causes of social issues in
our tobacco supply chain. Improving
the livelihoods of our contracted
tobacco farmers is instrumental inpreventing labor abuses. Accordingly,
we deploy initiatives to improveincome levels for our contracted
farmers, support women in taking anactive role in their households andcommunities, and ensure access toclean water, sanitation, and hygiene.”

Making a Step Change
The Step Change approach focuses onfour priority areas: eliminating child labor,
ensuring payment of at least a minimum
legal wage or agricultural benchmark
standards, ensuring the availability andappropriate use of PPE, and ensuring
adequate accommodation for all
farmworkers. The objective is to resolve
the root causes of these persistent issues
with ambitious action plans developedand implemented in each priority country.
A common set of principles guide thedevelopment of those plans, crucial to be
successful and sustainable in the long term.
In 2020, the program focused on
Argentina, India, Indonesia, Malawi, Mexico,
Mozambique, Pakistan, and Turkey. As
we periodically assess the list of priority
countries, India was added in 2020 due tothe complexities of challenges pertaining
to gender inequality and the payment ofminimum wages, whereas South Africa
was removed after externally validating
the provision of adequate accommodation
to farmworkers.
In addition to a focus on root cause analysis
and action plan development, the Step
Change also introduced or strengthened
three components in the ALP program:• A complementary due diligence tool which isthe external verification• Guidelines on pre-contracting due diligence,
consequence management, and rewards
schemes to foster a standardized approach• Reinforced gender lens to the initiatives
and reporting

Pedro Braga, Vice President, Leaf, PMI

07

Progress toward our targets
PMI relentlessly focuses on preventing
incidents of child labor in its tobacco
supply chain.
Our robust due diligence system allows us
to identify risks and incidences of child laborand take immediate action. Our objective
is to eradicate cases that are repetitive andsystemic. We also acknowledge that isolatedcases (even when systemic occurrences are
fully addressed) might continue to occur, due
to farmer base turnover or unintentional
misbehaviors. We will, in all cases, remain alert
and tackle them promptly when identified.
Our progress toward our target of zero child laboris measured based on internationally definedInternational Labor Organization (ILO) standards.
In 2020, we introduced a new methodology
to include into our reporting not only children
performing hazardous tasks (which was the caseuntil then) but also children under 15 hired, andchildren under 13 doing any tobacco-related tasks.
This new methodology reinforces our risk-based
due diligence processes as it improves visibility
and granularity on child labor across our sourcing
markets. In 2020, 99% of farms were monitored
for child labor–related issues and a total of 2,352
prompt actions were recorded, leading to a global
prevalence of 3.5%. Out those prompt actions,
2,285 cases involved children performing hazardous
tasks (versus 2,712 recorded in 2019), three casesof children under 15 hired, and 64 cases of children
under 13 working. In total, these prompt actions
involved 2,502 children, with 95% of them being thefarmers’ children and the predominant activities were
harvesting or handling green tobacco and stringing.

Knowing where the issue is located and how
it systematically occurs is very important;however, addressing it is as equally complex.
Given that poverty is the key driver for childlabor and other labor abuses, improving the
livelihoods of the contracted farmers supplying
tobacco to the company and, consequently,
the communities in which they live, is thefundamental enabler. In this respect, in 2020,
PMI began conducting living income studies
with third-party experts, analyzing current
farmer income, and developing strategies (ifgaps are identified) to achieve the target that
100% of contracted farmers supplying tobacco
to PMI make a living income. In 2020, 48% ofcontracted farmers were earning at least aliving income.
Finally, 2020 marked the achievement of two
significant ALP targets for PMI: Providing safeand decent accommodation to farm workers incontracted farms and ensuring full availabilityof personal protective equipment (PPE) for
the application of crop protection agents andprevention of green tobacco sickness for all
those working on tobacco.
More details on our progress on each target isshared annually in PMI’s Integrated Report.
Delivering on our targets:

Personal protective
equipment andaccommodation

Of these, 75% were resolved and the remaining
25% are being followed up against the actionplans developed with concerned farmers.

Philip Morris International ALP Program 10-Year Anniversary Report

Read more  Strengthening our reportingon child labor incidences
The calculation of child labor prevalence,
introduced in 2020, is based on the following
new methodology:
1. Introduction of non-conformities
We reinforced our risk-based approachin our farm-by-farm monitoring in orderto strengthen the monitoring procedures
and techniques to better identify risks andaddress them before they evolve into issues.
The non-conformities are identified throughinterviews with multiple stakeholders or
observations and are raised with the farmers.
Their reporting helps us flag risks andproactively take action to mitigate them.
2. Introduction of consolidated reporting
We included child labor incidences per type(children under 18 doing hazardous tasks,
children under 15 hired, and children under
13 doing any tobacco-related tasks).
Based on these enhancements, we calculate thechild labor prevalence using the prompt actions
and the newly introduced non-conformities
reported during the farm-by-farm monitoring,covering all types of child labor. This exercise
is conducted for every sourcing market andthe global prevalence (3.5% in 2020) is aweighted average based on the number offarmers. Furthermore, the methodology
combines, for selected priority markets, theinternal monitoring data with data collectedfrom third-party verifications. The objective is
to integrate learnings from these assessments(including issues raised) into our calculation,achieving higher accuracy of our global and per
country child labor prevalence. We took thiscomprehensive approach in our reporting as we
remain cautious and acknowledge the limitationsof our internal monitoring system: the fieldtechnicians are only present on the farms for alimited time during the growing season, and theissues we face are complex and often persistent.

The Integrated Production System
One of the most fundamental changes thathas enabled success of the ALP program overthe past decade has been a shift in the way
PMI sources tobacco, to a model centered on
direct contracting and long-term relationshipbuilding with farmers. PMI has a tobacco
supply chain spanning across 23 countries.
Global in scale, our day-to-day operations
are more than just a commercial transaction
between our vertically integrated operations
or suppliers and the contracted farmers wesource from. The Integrated Production
System (IPS) is an inclusive farming approachthat adds value in the supply chain to achievesustainability in the tobacco crop production.
This system involves the whole tobacco
production process in conditions that limit
the impact on the environment and improvesocioeconomic conditions of people andcommunities. This is achieved by establishinga solid interaction and relationship with
contracted farmers, working in partnershipto provide them with a contract defining thepurchase of their tobacco, extension services,
crop inputs, financial support, and knowledge
and technology transfer. IPS enhances
capability to move faster in an effective andefficient manner to achieve sustainability inthe tobacco production.
During the 2020 COVID-19 pandemic, forexample, IPS—which covered 99% of ourtobacco purchases—brought financial security
to our farmers by ensuring them a guaranteedpurchase of their volume.
IPS is also vital in providing traceability andvisibility in our supply chain; it enables the
deployment of our ALP monitoring systemdown to the farm level. This model makes the
positive difference: thanks to the strong bondsthat are formed between the farmers andthe field technicians, we are able to generate
enduring success.

08

Key milestones

Achievement of accommodation targets

Introduction of third-party assessments by CU

The evolution of the ALP program
since its rollout in 2011.

2010• Analyzing andaddressing stakeholder
concerns in Kazakhstan

2011• Launch of PMI’s
Agricultural Labor
Practices (ALP) program• Start of strategic
partnership with Verité• ALP Code issued

2012• ALP program rollout- Phase 1: Training on
the ALP code andintroduction of farm
profiles and prompt
actions- Phase 2: Reportingon prompt actions
and introduction oftargeted initiativesof monitoring andreporting

2013

2017

2018

• Introduction of third• Revision of theparty assessments by CU ALP code to alignwith UNGPs• Introduction of the
new Step Change
approach in sourcing
markets• Standardized apporachin monitoring andimplementation of
initiatives• Introduction of public
ALP commitments
and targets

2019• Strengthening ALP
due diligence process
and consequence
management
guidelines issued• Introduction of
external verificationin priority markets• Introduction of living
income target as a key
enabler to addresssocial issues

2020• Achievement of
PPE availability andaccommodation
targets

2025

ALP vision
to 2025 andbeyond• First targeted Human
Rights Impact
Assessment in our
tobacco supply chain in
Mozambique• Data reporting to PMI
fully digitalized

Introduction of the new Step Change
approach in sourcing markets

Achievement of PPE availability target

ALP program rollout: Phase 1 and Phase 2

Philip Morris International ALP Program 10-Year Anniversary Report

09The five key components of ALP
Over the past 10 years there has
been a significant evolution in various
elements of the program. From paper
to electronic monitoring, from sporadic
to systematic and durable projects,
from reactive to proactive solutions.
In all these changes there are five key
components that consistently make up
the core of the ALP program.

Our ALP Framework
Our policies
Responsible Sourcing
Principles (RSP)

ALP code

The RSP, together
with its corresponding
Implementation Guidance,
sets process andperformance standards
for our suppliers.

Sets the principles andmeasurable standards
applicable to all thecontracted farmers fromwhom PMI sources tobacco.

1. Policy
The ALP code is based on the relevant ILO
conventions and the United Nations Guiding
Principles on Business and Human Rights (UNGPs).
It sets the principles and measurable standards
applicable to all the contracted farmers fromwhom we source tobacco. It has seven areas ofaction: child labor, income and work hours, fairtreatment of workers, forced labor and humantrafficking, safe work environment, freedomof association, and terms of employment.
In support of the ALP, there are a numberof policy documents that are shared with
suppliers and local teams, guiding the successful
implementation of the program. A short
description is found in the following table:

Our guidelines
Prompt action,
resolution, and follow
up guidelines

Due diligence,
consequence
management, andrewards mechanisms

External verification
guidelines

WASH guidelines

Accommodation
guidelines

Guidance on the definitionof specific tasks that areconsidered prompt actions
and the process of reporting,following up, and resolving
them.

Guidance on theimplementation of the due
diligence and consequence
management approaches,
as well as recommendations
on a rewards system.

Guidance on how to conduct
external verification,
standardizing the overall
process.

Guidance on indicators foraccess to drinking water,
sanitation, and hygiene(WASH) and how to monitor
relevant data.

Guidance on minimum
accommodation standards
to be applied across sourcing
markets.

“High level of commitment, an amazing, diverse team, andcollaboration with various stakeholders are instrumental.
I believe that things can change, and small wins everyday
cheer us up to keep working hard. With the Step Change,in the last three years we are implementing a long-termsustainable change for the rural tobacco communities in
Nayarit, Mexico. It is a project that also changed my life.”
Paulina Villa, Social Sustainability Manager, Americas, PMI

Philip Morris International ALP Program 10-Year Anniversary Report102. Awareness raising and training
A key component of our human rights due
diligence system in our ALP program is training andawareness raising. Farmers and workers acquire
the fundamental understanding of how the ALP
code is operationalized on the ground and how
to safely cultivate tobacco without affecting theirwell-being and safety. These are carried out at the
beginning and during the crop season as either
general sessions or focused trainings on specifictopics.
Throughout the decade of this program, approaches
to training have been tried, tested, and constantly
reviewed and updated. The education and training
are not just about refreshing knowledge of the
ALP code. The training evolution has focused on
including social skills not traditionally expectedfrom agronomists such as:• Techniques: interviewing, fact-finding methods(triangulation), and observation• Analysis: root causes, outcomes, risks, andimpacts• Solution finding: developing farmer
improvement plans• Collaboration: connecting with NGOs andother social intervention partners (childcare
centers, educational facilities, local authorities,
and universities)

The ALP program has evolved to become a living
and learning system for PMI. The tools of the tradeof the ALP program have diversified and deepened
through learning lessons and striving for constantimprovement. This was done using targeted
exercises of calibration to ensure that within afield technician team, there is a common view ofwhat “best practice” or “good” looks like versus
practices that do not meet the ALP standards. In
addition, as part of engaging the wider tobaccogrowing community the program progressively
reaches out to spouses, women’s groups, farmers’
associations, and other relevant stakeholders.
A major revamp in training materials is currently in
production to be launched in 2022. The objective
is to further upskill the ALP country teams andthe field technicians. It brings a fresh focus onproblem areas that still represent the hardest
social, economic, and contextual challenges tobuilding a global farming network that meets the
ALP’s both practical and visionary objectives.

C A S E S T U DY

Pakistan – Automated Communication
during COVID-19
During the pandemic, our team in Pakistan
leveraged the training and awareness-raising
structures to communicate with farmers andworkers on the ALP principles and on protective
measures against the virus. By collaboratingwith an external IT partner, the team createdan automated platform, communicating
messages to over 6,800 farmers and workers
in local languages on their mobile phones.

These messages, which focused on the ALP code,sustainability, crop integrity issues, and COVID-19
prevention, were sent to all farmers despite
existing infrastructural constraints such as poorinternet connection and the need to maintaindistant interaction amid pandemic situations. In
addition, this platform also spread awarenessto the workers about a public, independent
grievance mechanism channel where they canconfidentially report potential complaints.

A tobacco farmer using digital tools to manage his field in Swabi, Pakistan“During these trainings,
I learned that we must use
the personal protection
equipment: boots, hats,
gloves, etc., to carry out
well-protected field work,as there are many dangers.”
Francisca, Farmer, 63 years old

Philip Morris International ALP Program 10-Year Anniversary Report11Farm proﬁles

Our farm-by-farm monitoring helps us address
issues that may occur in the tobacco fields. Field
technicians raise prompt actions to flag andtrigger an immediate response to any serious ALP
violation. They work with the farmer to develop
a targeted remediation plan, which they thenfollow up and monitor. Remediation activities
differ depending on the root cause of the issue
found. These could include additional training forfarmers, connecting children to school programsor relevant government initiatives, introducing
income generating activities, or supporting withaccommodation improvements.
If the issue is not resolved within the establishedtimeline, it is further escalated and may lead tosanctions including contract termination. In 2020,
field technicians raised 14,751 prompt actions.

Philip Morris International ALP Program 10-Year Anniversary Report

WORKERSDeﬁne how many workers are hired, their status,
pay, duration of employment, how they reached
the farm (e.g., use of labor brokers),
and other employment conditions.

COMMERCIAL
CROPS
Collect data on the type of
tobacco grown, the size of the
farm and tonnage produced.
Include data on othercommercial crops and foodgrown for household consumption.

Provide farm description,
including whether it is ownedby the farmer, leased,
communal or part of asharecropping agreement.

PEOPLE ON
THE FARM
Identify who lives andworks on the farm fromfamily members (monitor school
attendance) to local and migrant
workers (understandtheir origin andMonitor communication
languageand training sessions on
spoken).
ALP. Includes dates of visits,
the ALP code principles
covered and other topics
during each visit.

FARMERS

LIVING CONDITIONS

Collect general
information about thefarmer including name,age, address, contract
start date, farm type,gender, etc.

Understand whether housing
is provided to workers and if
amenities such as drinking andwashing water, a cooking
area, toilets and electric
power are available.

ic data on 286,00
m
o
0f
n
ar
co
e
m
o
FARM PROFILE INCLUDES:

General information
Type of farm and size
Commercial crops grown
ALP code communication
People on the farm
School attendanceWorker accommodation
Living conditions
Tasks on the farm

wide
orld
sw
er

A key milestone of the program is the digitalization of
the data collection process. In 2017, less than 70%
of our farm profiles were collected electronically,reaching 100% in 2020. The benefit is not only in thesimplification of the process, but it is also in allowing
data analytics for further program improvements.

TYPE OF FARM....................

A foundational component of the ALP program isfarm-by-farm monitoring and remediation. In the past
three years, we have been systematically coveringover 90% of our contracted tobacco farmers, withthe commitment of our suppliers and 2,675 fieldtechnicians. In addition to the agronomic support forfarmers, as a first step, field technicians collect farm
profiles. These profiles capture key information about
the people working and living on the farm, the size andtype of land, the number and categories of workers,
housing arrangements, and school attendance, among
other important indicators.

Gathe
ring
so
ci

3. Farm-by-farm monitoring andremediation system

SCHOOL

Assess and follow-up on
school attendance. Record
whether children are family
members or farmworkers’
children. Provide baseline forpromoting access to education.

SCHOOLATTENDANCETASKS ONTHE FARM

Captures tasks performedby the individuals involved
in tobacco production on
the farm, allowing ﬁeld
technicians to determine whodoes what, including tasks consideredsafe/appropriate and those which
are hazardous. It also captures agesof all workers to tackle instances of child labor.

ALP CODECOMMUNICATION

12C A S E S T U DY

Remediating child laborin Malawi throughschool feeding programs

This project is part of a holistic effort toward
protecting children and addressing child labor.
The initiative is aimed at tackling the two
key drivers of child labor in the area: poor
school attendance during the lean food period(September-March), which coincides with thepeak field activities in tobacco production;and the idleness of children after school
hours due to lack of recreational activities.

School-feeding scheme

In the tobacco-growing communities of Mchnji and Kasungu in
Malawi, with the support from a local implementing partner and ourthird-party tobacco suppliers, we implemented a pilot project forschool-feeding and afterschool activities in two schools.
A school in Malawi

The school-feeding scheme consists of providing ameal to approximately 1,000 students during the
mid-morning break, sometimes the only daily meal
they have. The ingredients used, such as maize,
groundnuts, soya, and vegetables, are cultivatedand processed directly at the school by the teacherswith the support of the implementing partner.
In fact, at each of the schools, maize millers andshellers for the groundnuts have been installed
and model vegetable gardens have been planted.
Over the next few years, the schools will
become self-sufficient by selling surplus
ingredients from the cultivations as well as
bread and other baked goods in local markets.
This is a way of ensuring sustainability of theinitiative, as well as an opportunity to generate
additional income within the local community.

Afterschool activities
With the support of the implementing
partner, playground areas for children havebeen refurbished to give students access torecreational activities, both indoor and outdoor.
In addition to installing games such as goal posts,
slides, skipping ropes, chess boards, and board
games have also been provided. The results inthe pilot schools show that attendance increases
when children have the opportunity to play.

1 An impact assessment was conducted in 2020 (January to March)
by the implementing partner in collaboration with the school. School
attendance data from 2020 (year of implementation of the initiative)
were compared to 2018 and 2019.

Philip Morris International ALP Program 10-Year Anniversary Report

Community engagement
At the heart of the project lies the commitment toimprove the livelihoods of the tobacco-growing
communities by engaging with district andcommunity stakeholders. Our implementing
partner held awareness-raising meetings withlocal government officials, such as the District
Education Office and the District Labor Office, tosecure their support. In addition, at each of the twoschools, training sessions on the various activitiesof the project were held with teachers, parentteacher associations, and chiefs surrounding eachschool. These workshops covered topics such as
how to care for the gardens and plantations whileat the same time raising awareness of child laborand the benefits of the afterschool initiatives.

Ongoing support
The impact of our initiative is constantly analyzed1
to refine the model and ensure long-termsustainability of the project. Monitoring visits
are conducted by the implementing partner on amonthly basis to collect data but also to provide
additional support on the use of the equipment
provided and planted crops.With the successful
pilot, the initiative will be rolled out to additional
four schools in other districts such as Dowa.

“Facilitating the ALP program
implementation in Malawi
has been a great personalgratification moment. Promoting
programs to support children’s
education and their families
is a true revelation of the
impact that companies canmake on the ground.”Lethabo Matji, Manager Social Sustainability,
EU & EEMA, PMI

13

C A S E S T U DY

Empowering women throughself help groups in India
Women are known for being more open to learning and changing,
especially when it comes to issues related to their children’swell-being and safety in general. This is why PMI’s ALP program
includes initiatives that empower women, allowing them to play anactive role in improving their economic conditions and enhancing
the overall well-being of their communities.
Community support project in Indonesia

In India, we started the women empowerment
program in 2020 benefitting women throughcapability and livelihood training as well as fromfunding to support either the start-up or the
expansion of their micro-businesses. The aim is toempower women in the villages by enabling themto contribute more income to their families andtheir communities, which in the long-term will help
address the gender inequality issues. The target forthis initiative is women tobacco farmers or workers
and wives or family members of tobacco farmers
who are given the opportunity to participate inself-help groups (SHG). These groups enable
members to help other women start their own
micro-business through their own contributions.
Backyard milk production, animal raising, andtailoring are the most popular micro-businesses
established in these villages.
After two years of implementation, a total of
400 women in 43 SHGs have been trained;
200 of them have received capital for their own
business. Based on the initial monitoring of 100
women who established their business in 2020,
their monthly income has increased, on average,by 45%, to USD 116 per woman. In addition,these 100 women were able to fund 64 additional
women within the same SHGs so they can also
start their own business.

400
After two years of implementation, a total of
400 women in 43 SHGs have been trained“The initiative impacted positively
the livelihoods of the women
beneficiaries, particularly at theheight of the pandemic. The SHG
helped them generate additional
steady income for their families
while giving them a sense of security
in this time of great uncertainty.”
Paul Adalia, Manager Social Responsibility, Asia, PMI“Not only was I able to start raisingbuffalo for milk production, I also
had the opportunity to lead andmanage the functions of the SHG,
and to realize the value of collective
thinking within our group to reachour common goals. I also have learned
to connect with other members of
the group, simple bookkeeping, andeven consult with local banks”
A woman tobacco farmer and beneficiaryof the SHG initiative

We showcase how we empower
women in agriculture in an interactive
story on our corporate website

Philip Morris International ALP Program 10-Year Anniversary Report144. Layers of control
With systemic issues that are this intricate, successcan only be guaranteed if there are robust controls
in place. In addition to our internal farm-by-farmmonitoring, we have introduced robust controls toensure effective implementation of the ALP program.
As part of our due diligence policy, we have threemajor third-party assessments that are continuously
conducted on the ground: Control Union (CU)assessments, external verifications (EV), and Human
Rights Impact Assessments (HRIAs).
Since 2013, CU has conducted assessments toevaluate the management system in place for the local
rollout of ALP, reviewing prompt action protocols andprocedures to identify, record, and address issues,
while also examining the internal capacity to implement
the program. CU also evaluates labor practices at farmlevel, assessing compliance with the ALP standards.
The reports are published on PMI.com. In 2018, aspart of the Step Change approach, we introduced EV
for priority markets.2 Running alongside suppliers’
farm-by-farm monitoring, EV provides an additional
layer of control leading to a more accurate visibilityof issues on the ground.

These are undertaken by local and expert social
investigators and researchers intended forlearning and understanding gaps in monitoring andremediation systems of each supplier. The results
also feed one of the long-standing drivers of the
ALP program: continuous improvement, not just of
farmers, but also us, and suppliers as they implement
the program. EV shows gaps in prioritization or in
focus on ALP-related problems, while in parallelmeasures the impact of relevant local initiatives.
To strengthen our overall due diligence framework,
we regularly conduct HRIAs, including targeted
assessments on PMI’s agricultural supply chain.

“Control Union would like to congratulate
PMI on the 10th anniversary of the
Aiming to maintain our leadership on matters
ALP program. We are proud to havepertaining to the promotion and protection of humanrights, during 2021 we broadened the scope andcontributed to establishing transparency
pushed the boundaries of our HRIAs. In doing so,
and in-depth insights via our independent
we have taken a collaborative approach by engaging
ALP assessments. Together with ourin a multistakeholder tobacco leaf supply chain
local teams, we have seen the programassessment in Turkey. This unique industrywide
initiative intends to find synergies between all relevant prove to be impactful in challenging
stakeholders that can create an impact by better
contexts and achieving to take into
addressing human rights issues on the ground.
account local realities of tobacco-farming
communities. It is inspiring to see that
C
A
S
E
S
T
U
DY
over the past decade the program has
Caption to image
matured and became a leading example
in the industry. We are looking forward
Assessing human rights impacts in our tobacco
to continuing the journey of increasing
supply chain in Mozambique
positive impact in the coming years.”Mozambique is an important
tobacco sourcing market for ourcompany, and a country that faces
systemic social issues. In 2020, we
collaborated with a peer company
and our common suppliers to
conduct a human rights impact
assessment, focusing on impacts
within the tobacco supply chain.

“With the Step Change, we introduced in
Turkey—as in other priority markets—theexternal verification. This brings us new
insights for the ALP program. Learningfrom the EV results, we introduced
new practices such as strengthened
community engagements, additional
checkpoints, enhanced supervisory
controls, rotation of field technicians’monitoring area, and targeted training.
We now feel more confident that we arecapturing the reality on the ground.”Sedef Mayda, Manager Social Sustainability,
EU & EEMA, PMI

Jon Heinrichs, Program Manager, Control Union

Read more online  
A tobacco farmworker harvesting tobacco leaf in Mozambique

Philip Morris International ALP Program 10-Year Anniversary Report

2 In 2020, the priority markets were: Argentina, India, Indonesia,
Malawi, Mexico, Mozambique, Pakistan and Turkey.

15

5. Collaboration
We know we cannot achieve impactful change
on our own. We are committed to engaging withthe suppliers, society, academia, NGOs, and otherstakeholders as it is the only way to address, withlong-term solutions, the systemic issues we arefacing. This is why we connect with organizations
on the ground to contribute to the developmentof inclusive and sustainable communities. We
recognize the value of nature, society, and humandiversity and work with a wide range of partners
who support us in improving livelihoods in the
countries where we operate.
Multistakeholder engagement at the corporate
level is also paramount to advance more
effectively and rapidly toward our goals. During
2020, we participated in various events suchas seminars and conferences to listen to others
and share our learnings and challenges. For
instance, we participated in the Sustainable
Landscapes and Commodities Forum organizedby the Innovation Forum and sponsored by the
Global Agribusiness Alliance, discussing how
agribusiness drives rural social and economic
development. Moreover, PMI’s ongoing efforts
to eliminate child labor on all farms that supply
us with tobacco have been recognized by
the World Business Council for Sustainable
Development (WBCSD). The organization has
included PMI as a sector leader case study
in its new toolkit on advancing human rights
policy and practice in the agribusiness sector.

C A S E S T U DY

In particular, some of the activities carried out include:

Argentina: A multistakeholder
approach to improving living conditions
in tobacco growing communities
Since 2012, Asociación Conciencia, a local NGO, has been
implementing the Porvenir program in three areas where PMI
sources tobacco in Argentina—Misiones, Salta, and Jujuy.

This holistic program helps to protect children
from child labor, safeguards their health and growth,
grants access to education, and consequently
improves overall living conditions in tobaccogrowing communities. Over the past years, theprogram has also started to focus on the living
conditions of women. Part of Conciencia’s successare the alliances they forge between the public
sector, the private sector, and specialized national/
international organizations. This deep connection
within the local community generates uniquecooperation, agreements, and a commitment toaddress human and labor rights issues.

In addition, PMI is featured in the 2020
edition of the Global Goals Yearbook (a noncommercial publication in support of the United
Nations’ SDGs) with a case study on how we are
empowering women for change in the tobacco
supply chain. Best practices stemming from
PMI’s ALP program were also included as part of
the International Cocoa Initiative’s (ICI) reporton Child Labour Monitoring and Remediation
Systems in the West African Cocoa Sector.

Protecting children
The program has been implemented in almost
80 villages, benefitting over 2,000 children
throughout the year. It offers various alternatives
for young children and teenagers, including
educational, recreational, and sports spaces.
This enables them to learn and play instead ofhelping on family and commercial farms.
A farmer’s wife and a Porvenir teacher discussing outside of
the family’s house in Misiones, Argentina

Philip Morris International ALP Program 10-Year Anniversary Report• Caring spaces at times of greater risk: during theharvest period, attention, recreation, and food wasprovided to children and adolescents livingon tobacco farms.
• Accompanying individual families: close and direct
support was provided to families to ensure accessto education and support to obtain official personal
documents, government benefits, etc.
• Strengthening of educational and socio-community
spaces: conditions were monitored and improved toprovide children and adolescents with greater
education, socialization, and recreation opportunities.
• Raise awareness of key stakeholders as agents ofchange: field technicians, teachers, workers, andfarmers were provided with training.
• Socio-productive strengthening: families of small
tobacco farmers received support to improve foodproduction for self-consumption and the generationof complementary income.

Empowering women
Women are agents of change within communities.
With Conciencia, we work to empower women—95
women in 2020—that live and work on tobacco farms.
Our aim is to reinforce their role in the community andhelp them achieve economic independence, with adirect impact on their children and families.
The first visits on the farms create a connection
between Conciencia’s facilitators and the women.
We get to learn about their interests, their passions,and how the NGO can best support them. This helps
the facilitators put them in touch with local groups
such as sports teams, cooking workshops, healthcheck providers, arts, and entrepreneurship programs.
The women also participate in workshops to foster
their economic independence such as learning how
to produce and sell pickles in local markets. Often,
women overlook their health as they prioritize theneeds of their families over their own. For this reason,
women are also put into contact with a healthprofessionals who provides gynecological visits andnutritional assistance.

16

PMI has also been a board member of the ECLTFoundation, a multistakeholder partnership thatworks to find collaborative solutions to address theroot causes of child labor issues in tobacco growing.
In 2020, after 20 years of fruitful partnership,
we decided to end our ECLT Foundation Board
membership, as of 2022. This was by no means aneasy decision, yet the status and maturity of ourprograms invited us to reflect on more impactful
ways to continue making progress. In that regard,
we are allocating our resources and efforts towardfurther implementing our living income program,which we consider a key enabler to addressing
labor abuses and particularly child labor issues.

“We would like to thank the ECLTFoundation, its Board of Directors, aswell as all ECLT Secretariat members fora tremendously successful and rewarding
two-decade partnership. We expect andlook forward to continuing to support theFoundation’s mission at the local level in its
continued efforts to eliminate child laborfrom tobacco-growing supply chains.”

C A S E S T U DY

Evaluating Child Labor Programs: Uncovering How Local
Norms Impact Field-Level Relationships Between Farmers,
Workers and Children
SHIFT, the leading center ofexpertise on the UN Guiding
Principles on Business and Human
Rights, developed a case studyon PMI’s work to prevent childlabor and other labor issues in its
tobacco supply chain by listening
to stakeholder voices and applying
participatory methodologies.

Read more online  
An ALP local coordinator in Nayarit, Mexico

Mauro Gonzalez, Director Sustainable Agriculture, PMI

A tobacco farmer checking the drying process of the tobacco leaves in Nayarit, Mexico

Philip Morris International ALP Program 10-Year Anniversary Report17

Living income, key enabler to addressing social issues
PMI is working toward improving the
livelihoods of the contracted farmers
supplying tobacco to the company and,
consequently, the communities in which
they live.

Calculating the living income benchmark

We see this as a fundamental enabler to addressing
social inequalities and the persistent social
challenges we are facing in some low- and mediumincome countries within our agriculture supply chain.

Potential
householdincomeTo be able to achieve our target that 100% of
contracted farmers supplying tobacco to PMI
make a living income by 2025, we built a threefold
framework:

Costs of a basic decent standardof living for a household

Net off-farmincome1. Establishing living income benchmark values
2. Calculating actual farmer incomes

Other sourcesof income

Income gap

3. Addressing potential income gaps

To prepare for this work, we started byconducting a desktop estimate of the living
income benchmark to identify markets witha potential gap between the farmers’ actual
income and the defined value. In parallel, we set
the foundations for the living income programby partnering with Social Accountability
International (SAI), a founding member of the
Global Living Wage Coalition. SAI works in close
collaboration with Richard and Martha Anker,
the experts who developed the widely accepted
and recognized methodology to calculate a living
income benchmark. SAI and the Ankers oversee
the assessments and have access to third-party
experts such as universities and researchers, who
conduct the in-depth living income benchmark
assessments applying this methodology.

Food formodel diet

DecenthousingPrimary cash
crop income

ActualincomeOther income
Net off-farmincomeOther essential needs

Actual income
Unexpected events

Net farm
incomeSecondarycrop income

Produce consumed
at homeNote: Visual adapted from the Living Income Community of Practice (source).

Philip Morris International ALP Program 10-Year Anniversary Report18

A PMI employee with a tobacco farm worker in Bahia, Brazil

These studies establishing living income benchmarks
support PMI to ascertain the farmers’ actual
income. In parallel, farmer income is estimatedthrough indicators collected by field technicians in
the farm-by-farm monitoring and then validated
by third-party partners. Key data points include
the demographics of the household, other crops
grown on the farm, and income from off-farmactivities. This allows us to determine if there is an
income gap, how wide the gap is, and to develop
strategies to close it. In this respect, we deploy
market-specific strategies based on the following:
1. 	Improving efficiency and productivity
in tobacco. This means analyzing land size
optimization on a country-by-country basis,
improving the tobacco yield and quality throughmechanization/irrigation, introducing higher
yielding tobacco varieties, extending andenhancing the packages of technologies, andengaging in farm management trainings.
2. 	Incorporate other income-generating
activities through diversification initiatives
and introduction of complementary crops.
When designing comprehensive action plans on
a market-by-market basis, we aim to exceed theliving income benchmark targets that are required
to achieve a decent standard of living, making aprovision for potential income fluctuations due
to climatic shocks, a gradual decrease in tobacco
demand3 or volatility due to market dynamics.
We have found that farmers who make a decent
living from growing tobacco among other crops
and other income-generating activities are more
likely to think long term, apply good agricultural
practices, and send their children to school.

Our aim

100%
Percentage of contracted farmers supplying
tobacco to PMI who make a living income by 2025
3 For more information on PMI’s actions related to a gradual decrease of
tobacco demand, please refer to page 81 of PMI’s Integrated Report.

Philip Morris International ALP Program 10-Year Anniversary Report

19

C A S E S T U DY

Brazil: RESPONSIBLE LEAF program
improves productivity and provides
best social and environmental practices.
RESPONSIBLE LEAF is a program developed by Philip Morris
Brazil and Produzindo Certo, a company specializing in supporting
farmers in their efforts to strengthen responsible agriculture.
“Supporting small farmers andfamily farming, is essential forthe sustainable developmentof Brazil. The engagement ofcompanies that buy and sell fromthese farmers is essential, as they
contribute to sharing the costs ofthis support throughout the value
chain and, i n this way, accelerate
the process of transforming
these properties towards a moreenvironmentally friendly and sociallyfairer production . Responsible
Leaf is one of the largest private
initiatives for technical assistance insustainability for small scale farmers,
promoting the socioeconomic
development of its suppliers and,
consequently, improving thequality of life of these farmers.”
Aline Locks, CEO Produzindo Certo

It helps farmers make their properties moreproductive, producing in a more efficientand sustainable way. Farmers receive asocial and environmental diagnosis of theirproperties together with an action plan,
indicating new practices to be adopted andpaths to follow to grow and develop.

A field technician visiting a tobacco field in Bahia, Brazil

Step by Step – How the program works

Goals
Offering farmers an opportunity to adjust to
the new demands of the market and society,the program materializes these concepts:
1. Bringing knowledge and technicalsupport to farmers
2. Identifying social andenvironmental risk factors
3. Assisting farmers with environmental
and labor legislation and producing
according to best practices
4. Equipping them with innovation
tools in the field and training themto use new technologies
5. Qualifying farmers and their families
to manage their properties and thesuccession of family production

Philip Morris International ALP Program 10-Year Anniversary Report

1

2

3

4

Technical visit
The team of technicians
for the RESPONSIBLE
LEAF program visit theproperty to carefully
assess various aspects of
its production related to
PMI’s GAP standards andProduzindo Certo protocol.
Based on this assessment,
they prepare a social andenvironmental diagnosis.

Assessment
With the social andenvironmental diagnosis
in hand, farmers will knowwhat they are alreadydoing right, as well as whatneeds to be adjusted.
They can then produce
more sustainably each day,with higher quality
and efficiency.

Action plan
Farmers receive an action
plan from the technicalteam with a step-by-step
description toward fullcompliance with the local
social and environmental
legislation and PMI’s
GAP standards. The
action plan is tailor-made,based on their needs andpotential, and its adoption
is voluntary. If they choose
to make this commitment,
we will be by their side,
offering ongoing
technical support.

Continuous tracking
Farmers can consult theirsocial and environmental
diagnosis at any time,clearly and simply.
Additionally, every year thesustainability technicians
will perform visits tomonitor and keep trackof the farm evolution,
as well as to provide
any assistance.

20Lessons learned
In this important milestone of 10 yearsof the ALP program implementation,
we had to consider lessons learnedin order to build on those for further
progress and improvements.
With the experience acquired so far, the one thingthat stands out in this endeavour is the need tobuild multistakeholder partnerships. It is a factthat the scale, scope, and complexity of social
issues that not only PMI, but all multinational
companies are facing are of such magnitude thatno one company is able to address them alone.
Collaboration with governments, peer companies,
civil society, and academia is paramount. That is
why overcoming differences and coming together
to face these common challenges is key. To bringothers on board, openness and transparency arealso a must. The ALP program is committed toopenness in sharing challenges, learnings, andsuccesses in everything that is done on the ground.
Continuous improvement is the driving force
toward impactful change. Every day that we
continue to perpetuate the status quo, we are
inevitably delaying the possibility of change.
Continuous improvement has been the key
value in the implementation of the ALP program.
Improving our practices, strengthening our due
diligence policies and processes, staying abreastof developments, and listening to stakeholders’voices have been leading our work toward
positive contributions and shared value.

“When we first began to implement the ALP program ten years ago, we knew
it would be challenging, but we quickly learned that resolving all ALP issues
across our diverse supply chain was far more complex than anticipated.
The implementation of ALP requires an organization to dig deep into theunderlining root causes at the ground level to find meaningful resolutions.
It requires an organization to be adaptive in their training and implementation
Digitalization of the farm-by-farm monitoring
because each origin has its own unique dynamic issues, and one solution does
is key for the overall program success. With
not readily work everywhere. ALP implementation has led to many positive
thousands of field technicians in different
improvements in our supply chain and, more largely, in the communities wherecountries, situations, and educational levels, it
was difficult to interpret the meaning of the code
we operate. Farmers and other stakeholders are much more aware of the salientand standards in a common way to ensure thatissues surrounding human rights and the importance of addressing these issues tothe data collected is reliable. Digitalization of the
become a sustainable tobacco supplier. ALP is not a one-and-done program, butdata collection means fewer mistakes, better
rather an ongoing part of our business culture and a cornerstone of a sustainable
reporting, and, therefore, increased data accuracy.
supply chain. We are extremely proud of the progress we have made satisfying
Relying on accurate data leads to the design of
the ALP principles and remain committed to these standards going forward.”
better interventions and proactive responses
to persistent or emerging issues. Impactful andlong-term change doesn’t happen overnight
but can be achieved with the commitment andpassion of all people involved. Having a positive
impact on people’s livelihoods drives change.

Airton Hentschke, Executive VP and COO, Universal Leaf Tobacco Company, IncA field technician and a tobacco farmer in Mozambique“The implementation of theAgricultural Labor Practices program
was a significant milestone toward therelationship improvement between
Alliance One International and its
integrated farmers. The development
and introduction of the ALP code
established clear expectations andcommitments regarding child labor
prevention and labor practices
improvement. The program
represented a step change on thesocial pillar approach providing bolder
data analysis and new tools to train
and develop farmers on related issues.”
Helio Duarte de Moura Jr. Global Agronomy
Director, Alliance One International, LLC

Philip Morris International ALP Program 10-Year Anniversary Report21

Leveraging on ALP learnings
All along, PMI has shared insightsfrom the ALP journey throughregular progress updates, transparent
publication of Control Union reports,
participation in public forums, and otherforms of external communication.
We have strived throughout to be straightforward
and candid about our challenges and setbacks, aswell as our achievements, in the hopes that othercompanies implementing similar programs could learn
from our experiences and innovations if they wished.
Now, at the 10-year anniversary of the program,
we are going a step further, by supporting Verité toamplify our learnings by integrating them into an
open-source toolkit that Verité will be creating toaid companies, suppliers, and producers in driving
improvements in labor practices at the base of
global agricultural supply chains of all kinds.

The initiative, called the Verité Farm Labor
Due Diligence Toolkit, is part of an action
pledge Verité has made for the ILO Child
Labour Platform, as part of the InternationalYear for the Elimination of Child Labour.
The toolkit will draw on the insights, tools,
frameworks, and approaches developed in thecourse of Verité’s collaboration with PMI on
the ALP program, as well as Verité’s work withother major clients in sectors such as cocoa,
coffee, sugarcane, cotton, and palm oil. PMI has
donated the core materials developed for the ALP
program (including technical guidance documents,
implementation protocols, and field tools) to Verité
for use in the toolkit. PMI will also join a coalitionof other private-sector sponsors convened by
Verité to support the toolkit initiative, collaboratingwith peers from other consumer goods, food andbeverage, and apparel sectors to help prioritize,develop, and promote the materials to be included.

“To create the Farm Labor Due Diligence Toolkit, Verité will
synthesize research on best practices with expertise andinnovations drawn from our work with major agribusinesses,
including from our ten-year strategic partnership with PMI,
whose leadership-level ALP program has successfully achieved
independently verified reductions in child labor and other labor
issues in the company’s global tobacco supply chain over the
past decade. The toolkit will comprise practical, field-tested
resources on topics such as child labor monitoring at farmlevel, farm- and community-level approaches to remediation,root cause analysis of drivers of child labor and other labor
problems, third-party verification of labor monitoring andremediation, and labor data collection and reporting, among
other subjects. We are thrilled to have PMI’s help driving
change for farm families and workers by joining us andsharing their program with other companies in this way.”
Elizabeth Garland, Chief Program Officer, Verité

Crop diversification in Tabanan, Indonesia

Philip Morris International ALP Program 10-Year Anniversary Report22

Our way forward
In this anniversary report, where we celebrate 10 years of the existenceof the program, we share our history, our successes, and our lessons
learned, but we also highlight the challenges we are still facing.
Continuous and constant improvement is what wewant to achieve with our ALP program. We commit
to continuously improve our policies, processes, andpractices that allow us to identify and address risks
and impacts to rights holders across our value chain.
In collaboration with our strategic partner,
Verité, our suppliers and local implementing
partners, we will keep working to strengthen ourmonitoring, better measuring our impact on the
ground, and improving the effectiveness of how
to respond and remediate identified issues.
We will continue focusing on the remaining targets
we have set for ourselves: zero child labor, accessto WASH services, and minimum wage payment.
And these will be complemented by reaching ourtarget that 100% of farmers make a living income.
As we look ahead, having witnessed how climatechange has exacerbated human rights issues andaffected disproportionately the most vulnerable
people, we will focus on further integrating climate
impacts into our ALP program. Earlier this year,
PMI published its Low Carbon Transition Plan
(LCTP), which includes a separate briefing paper4
discussing climate justice, a topic that recognizes
the impact of climate change on human rights
and their intersections as an essential step indeveloping coherent and inclusive strategies.
In this respect, we will introduce a climate justicelens across our human rights due diligenceframework and strengthen our engagement withright holders, particularly with vulnerable groups.

As PMI transforms to achieve its purpose ofdelivering a smoke-free vision, every step of ourvalue chain is transitioning to serve our company
purpose. Our procurement now extends to
new materials such as electronic components.
We need to remain alert of environmental andsocial impacts that this evolution toward theelectronic supply chain creates. In this respect,in 2020, we conducted a human rights saliency
mapping to identify potential risks related toelectronics and proactively address them throughtargeted interventions. In 2021, we joined
the Responsible Business Alliance (RBA), theworld’s largest industry coalition dedicated tocorporate social responsibility in the electronics
global supply chains, as an affiliate member.
Learnings from this human rights assessment
as well as our partnership with the RBA,
combined with our extensive experienceacquired from the ALP program, is guiding us
in developing robust strategies to proactively
adapt to the specificities and challenges thatderive from this new electronic supply chain.
With passion and determination and throughmultistakeholder partnerships, we are committed
to proactively address our environmental andsocial risks and account for new challenges
resulting from our company’s transformation.
Our objective is a positive, long-term change.

4 In 2020, PMI commissioned its human rights advisers with preparing
the climate justice briefing paper.

Philip Morris International ALP Program 10-Year Anniversary Report

A tobacco farmer walking in between tobacco plants in Nayarit, Mexico

23

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Philip Morris International Inc.
120 Park Avenue
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USA

Operations Center
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Avenue de Rhodanie 50
1007 Lausanne
Switzerland

www.pmi.com

www.pmi.com