CDP 2016 Water 2016 Information Request

CDP

Philip Morris International

Module: Introduction
Page: W0. Introduction
W0.1
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 and water use 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 targets and continue to work on developing company-wide emissions reduction targets based directly on climate science.

W0.2
Reporting year
Please state the start and end date of the year for which you are reporting data.

Period for which data is reported
Thu 01 Jan 2015 - Thu 31 Dec 2015

W0.3
Reporting boundary
Please indicate the category that describes the reporting boundary for companies, entities, or groups for which water-related impacts are reported.

Companies, entities or groups over which operational control is exercised

W0.4
Exclusions
Are there any geographies, facilities or types of water inputs/outputs within this boundary which are not included in your disclosure?

Yes

W0.4aExclusions
Please report the exclusions in the following table

Exclusion

Offices (except main offices in
Switzerland) and some minor
facilities.

Please explain why you have made the exclusion

We have excluded some offices and minor activities/facilities such as finished goods warehouses for which we have
limited data and where we consider our water footprint and risks to be very small. These exclusions are not significant tothis disclosure.

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: Current State
Page: W1. Context
W1.1
Please rate the importance (current and future) of water quality and water quantity to the success of your organization

Water quality andquantity

Direct use
importance
ratingIndirectuse
importance
ratingPlease explain

Sufficient amounts ofgood quality freshwater
available for use

Important

Important

Direct: We withdraw relatively small volumes of water for use at our manufacturing facilities. A large
proportion of the use is for staff and green spaces rather than the process. Environmental
assessments help ensure that water withdrawal and discharges are assessed and any potential
impacts are identified and mitigated using ISO14001 based management systems in 93% of ourfactories. This is important as we have set water use reduction targets for all PMI manufacturing
facilities, and in 2015 exceeded our goal to achieve a 20% reduction in water use (24% reduction
achieved). Indirect Use (Value Chain): Regions from which we source tobacco are vulnerable towater-related risks in the form of drought, and flooding associated with above average precipitation orstorm events such as cyclones. In many areas, irrigation is not essential due to sufficient precipitation.
We also use paper and cellulose based raw materials where water is vital for our supplier
manufacturing processes.

Sufficient amounts ofrecycled, brackish and/or
produced water available
for useNeutralNeutralWe do not use significant quantities of this category of water.

W1.2
For your total operations, please detail which of the following water aspects are regularly measured and monitored and provide an explanation as to why
or why not

Water aspect% ofsites/facilities/operations

Water withdrawals- total
volumes76-100

Water withdrawals-

76-100Please explain

100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredpart of normal facility management for our sites and is emphasized by ISO14001 certification in 93% of
those sites. Monthly water data is input from all sites globally into our EHS data management system,
which is checked quarterly and third party verified annually.
100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredWater aspect% ofsites/facilities/operations

volume by sources

Water discharges- total
volumes76-100

Water discharges- volume
by destination

76-100

Water discharges- volume
by treatment method76-100

Water discharge quality
data- quality by standard
effluent parameters76-100

Water consumption- total
volume76-100

Facilities providing fullyfunctioning WASH
services for all workers

76-100Please explain

part of normal facility management for our sites and is emphasized by ISO14001 certification in 93% of
those sites. Monthly water data is input from all sites globally into our EHS data management system,
which is checked quarterly and third party verified annually.
100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredpart of normal facility management for our sites and is emphasized by ISO14001 certification in 93% of
those sites. Monthly water data is input from all sites globally into our EHS data management system,
which is checked quarterly and third party verified annually.
100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredpart of normal facility management for our sites and is emphasized by ISO14001 certification in 93% of
those sites. Monthly water data is input from all sites globally into our EHS data management system,
which is checked quarterly and third party verified annually.
100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredpart of normal facility management for our sites and is emphasized by ISO14001 certification in 93% of
those sites. Monthly water data is input from all sites globally into our EHS data management system,
which is checked quarterly and third party verified annually.
100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredpart of normal facility management for our sites and is emphasized by ISO14001 certification in 93% of
those sites. Monthly water data is input from all sites globally into our EHS data management system,
which is checked quarterly and third party verified annually.
100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredpart of normal facility management for our sites and is emphasized by ISO14001 certification in 93% of
those sites. Monthly water data is input from all sites globally into our EHS data management system,
which is checked quarterly and third party verified annually.
100% of our operational (i.e. factory) sites are monitored for this water aspect and this is consideredpart of normal facility management and is emphasized by ISO14001 and OHSAS18001 (health andsafety management) certification in 93% of those sites. We use a global reporting requirement forwater data with a central data collection system for all sites. Audits and inspections are undertaken tominimum requirements set by our documented standards.

W1.2a
Water withdrawals: for the reporting year, please provide total water withdrawal data by source, across your operations

Source

Quantity(megaliters/year)

How does total
water withdrawals
for this sourcecompare to thelast reportingyear?

Fresh surface water

3.9

About the same

Brackish surface
water/seawater0

Not applicable

Rainwater

1.3

About the same

Groundwater renewable

1444.3

About the same0

Not applicable0

Not applicable

Groundwater - nonrenewable
Produced/process
water
Municipal supply

2204.7Lower

Wastewater fromanother organization0

Not applicable

Total

3654.2

Lower

Comment

All water metrics are collected through our EHS data management system for all sites
globally. This data is input monthly, checked quarterly and verified annually. There is a very
low level of uncertainty for water withdrawals as these sources are metered. There was asmall surface water increase, but this is considered insignificant in the context of our total
water use.

All water metrics are collected through our EHS data management system for all sites
globally. This data is input monthly, checked quarterly and verified annually. There is a very
low level of uncertainty for water withdrawals as these sources are metered. This number
was slightly lower than last year, which generally is in line with programs to reduce water-use;
however, for rainwater this is mainly due to local changes in precipitation. Overall, this volume
is considered small.
All water metrics are collected through our EHS data management system for all sites
globally. This data is input monthly, checked quarterly and verified annually. There is a very
low level of uncertainty for water withdrawals as these sources are metered. There was asmall reduction, which is in line with programs to reduce water-use.

All water metrics are collected through our EHS data management system for all sites
globally. This data is input monthly, checked quarterly and verified annually. There is a very
low level of uncertainty for water withdrawals as these sources are metered. Generally lower
water withdrawal is in line with programs to reduce water-use.

Generally lower water withdrawal is in line with programs to reduce water-use. Driven by our
reduction targets which we beat in 2015 and also highlighted by Water reduction awards forbest performing factories which we implemented in 2015.

W1.2b
Water discharges: for the reporting year, please provide total water discharge data by destination, across your operations

Destination

Quantity(megaliters/year)

How does total
water discharged
to this destinationcompare to thelast reportingyear?

Fresh surface water

502.3

Lower

Brackish surface
water/seawater0

Not applicable

Groundwater

262.6

HigherMunicipal/industrial
wastewater treatment
plant

1163.8Lower

Wastewater for anotherorganization0

Not applicable

Total

1928.7

About the same

Comment

All water metrics are collected through our EHS data management system for all sites
globally. This data is input monthly and checked quarterly and annually. There is someuncertainty with water discharges because not all sites have this metered. The reductionof nearly 50 megalitres is due to our programs to reduce water use/discharge and reusewater.

All water metrics are collected through our EHS data management system for all sites
globally. This data is input monthly and checked quarterly and annually. There is someuncertainty with water discharges because not all sites have this metered.
All water metrics are collected through our EHS data management system for all sites
globally. This data is input monthly and checked quarterly and annually. There is someuncertainty with water discharges because not all sites have this metered; however thisreduction is generally from water reduction and reuse initiatives.

Despite some changes in individual discharge types, the overall discharge volume isabout the same.

W1.2c
Water consumption: for the reporting year, please provide total water consumption data, across your operations

Consumption (megaliters/year)

1725.5How does this consumption
figure compare to the lastreporting year?

Lower

Comment

Generally, lower water consumption is in line with the programs to reduce water use
and reuse water at our sites.

W1.3
Do you request your suppliers to report on their water use, risks and/or management?

Yes

W1.3a
Please provide the proportion of suppliers you request to report on their water use, risks and/or management and the proportion of your procurement
spend this represents

Proportion of
suppliers %

1-25

Total
procurement
spend %

1-25

Rationale for this coverage

PMI has a large number of suppliers, but those most crucial to our business in terms of water risk are tobacco suppliers andfarmers. We have therefore prioritized these areas to engage with on water issues through the implementation of Good
Agricultural Practices (GAP) which cover around 450,000 farmers across 30 countries globally and are a contractual
requirement for tobacco suppliers doing business with PMI. GAP specifically covers measures for water quantity and quality
management.

W1.3bPlease choose the option that best explains why you do not request your suppliers to report on their water use, risks and/or management

Primary reason

Please explain

W1.4
Has your organization experienced any detrimental impacts related to water in the reporting year?

No

W1.4a
Please describe the detrimental impacts experienced by your organization related to water in the reporting year

Country

W1.4bRiver basin

Impact indicator

ImpactDescriptionof impact

Length of impact

Overallfinancial
impactResponse
strategy

Description of
response
strategyPlease choose the option below that best explains why you do not know if your organization experienced any detrimental impacts related to water in thereporting year and any plans you have to investigate this in the futurePrimary reason

Future plans

Further Information
While impacts have occurred, in 2015 they were not significant to our operations.

Module: Risk Assessment
Page: W2. Procedures and Requirements
W2.1
Does your organization undertake a water-related risk assessment?

Water risks are assessed

W2.2
Please select the options that best describe your procedures with regard to assessing water risks

Risk assessment
procedure

Coverage

Scale

Please explain

Risk assessment
procedureComprehensive
company-wide risk
assessment

Coverage

Directoperations andsupply chain

Scale

Please explain

All facilities
and some
suppliers

Managing water risk is essential to our business. Our approach includes several key initiatives to
identify, mitigate and manage risks across the business at a corporate and site level. As noted in
W1.3a, we have prioritised engagement on water issues in our supply chain activities for tobacco
suppliers and farmers, which are business critical. We completed a Climate Change Risk
Assessment (CCRA) across our value chain and focus areas were identified in both our own
operations, distribution channels and key suppliers. The CCRA covered all geographies where we
do business. Extremes of weather such as flooding and drought as well as gradual changes inprecipitation and water scarcity were all evaluated. This year we used the WRI Aqueduct Water Risk
Tool to consider water-related risks, however, previously we used the WBCSD Global Water Tool toidentify our operations which were subject to water stress, by watershed. We will continue to assess
which tools (these or new ones) are fit for purpose each year as they continue to evolve. In addition,water supply and flood risk assessments are undertaken at site level (typically ISO14001 certified
sites) to understand how vulnerable sites are to water related risk and local flooding events (e.g.
Philippines). Water risk management is a fundamental part of our Good Agricultural Practices andcovers management requirements for water quality, water abstraction, water efficiency and water
discharges, all based on risk assessment.

W2.3
Please state how frequently you undertake water risk assessments, what geographical scale and how far into the future you consider risks for each
assessment

Frequency

Geographic scale

How far into the future arerisks considered?

AnnuallyCountry>6 years

Annually

Facility

1 to 3 years

Comment

Review of our Climate Change Risk
Assessment
Facility long range planning

W2.4
Have you evaluated how water risks could affect the success (viability, constraints) of your organization's growth strategy?

Yes, evaluated over the next 10 years

W2.4a
Please explain how your organization evaluated the effects of water risks on the success (viability, constraints) of your organization's growth strategy?

We have completed a Climate Change Risk Assessment (CCRA) across our value chain and focus areas have been identified in both our own operations,distribution channels and key suppliers. Extremes of weather such as flooding and drought as well as gradual changes in precipitation and water scarcity were all
evaluated in our CCRA in terms of their corresponding business impact and how that impact is likely to change in the short, medium and long term.

W2.4b
What is the main reason for not having evaluated how water risks could affect the success (viability, constraints) of your organization's growth strategy,
and are there any plans in place to do so in the future?

Main reason

Current plans

W2.5
Please state the methods used to assess water risks

Timeframe until evaluation

Comment

Method

Please explain how these methods are used in your risk assessment

Internal company
knowledge
WRI Aqueduct
Other: Company-wide
climate change risk
assessment

PMI has several initiatives and methods to assess and manage water risks. Internal company knowledge and expertise is used to
identify and prioritise the most business critical sites (e.g. by production volume, distribution or previously experienced events) andvalue chain operations for PMI. In addition, site specific flood risk assessments, ISO 14001 certification and our Good Agricultural
Practices (standards for tobacco suppliers and farmers who supply to PMI) are used by business managers to identify and manage
water risks. These are all brought together through a company-wide risk review process. PMI has also commissioned independent
experts to complete a climate change risk assessment (CCRA), which was updated in July 2015. This study identified futurechanges in climate and water factors (drought, flooding, cyclones) for all regions where PMI’s direct operations and value chain
operates and highlighted areas of key risk. The WRI Aqueduct tool was used to assess all manufacturing, port and leaf production
sites. This was new this year whereas the WBCSD GWT was previously used. PMI will continue to consider what tool is mostappropriate as the data sets continue to evolve. The internal prioritization according to business risk, Aqueduct risk and CCRA wereanalysed to shortlist locations with a higher water related risk. These are discussed in Section 3 of this response.

W2.6
Which of the following contextual issues are always factored into your organization's water risk assessments?

IssuesChooseoptionCurrent water availability and quality
parameters at a local level

Relevant,
included

Current water regulatory frameworks andtariffs at a local level
Current stakeholder conflicts concerning
water resources at a local level

Relevant,
included
Relevant,
included

Current implications of water on your key
commodities/raw materials

Relevant,
included

Please explain

Relative to other industries, we withdraw small volumes of water for use at our manufacturing
facilities and a large proportion of the use is for staff and green spaces rather than being processrelated. This is factored into company level risk assessment initiatives through use of internal
company knowledge of local conditions and regulation.
This is factored into company level risk assessment initiatives through use of internal company
knowledge on water abstraction and discharge consents.
This is factored into company level risk assessment initiatives through use of internal company
understanding of supply and demand issues.
Our products are based on agricultural raw materials and paper-based materials are also important.
This is factored into company level risk assessment initiatives through our Good Agricultural
Practices and engagement activities with key tobacco and clove suppliers, CCRA, and use of waterrisk tools.

Issues

Current status of ecosystems and habitats
at a local level

ChooseoptionCurrent access to fully-functioning WASH
services for all employees
Estimates of future changes in water
availability at a local level
Estimates of future potential regulatorychanges at a local level
Estimates of future potential stakeholder
conflicts at a local level

Relevant,
included
Relevant,
included
Relevant,
included
Relevant,
included
Relevant,
included
Relevant,
included

Estimates of future implications of water on
your key commodities/raw materials

Relevant,
included

Current river basin management plans

Estimates of future potential changes inthe status of ecosystems and habitats at a
local level
Scenario analysis of availability ofsufficient quantity and quality of water
relevant for your operations at a local level
Scenario analysis of regulatory and/or tariffchanges at a local level
Scenario analysis of stakeholder conflicts
concerning water resources at a local level
Scenario analysis of implications of wateron your key commodities/raw materials
Scenario analysis of potential changes inthe status of ecosystems and habitats at a
local level
Other

Please explain

This is factored into company level risk assessment initiatives as part of our Good Agricultural
Practices.
This is factored into company level risk assessment initiatives and as part of our Good Agricultural
Practices and use of water risk tools.
This is factored into company level risk assessment initiatives as part of our ISO14001 andOHSAS18001 programs and minimum EHS requirements.
This is factored into company level risk assessment initiatives through our long term climate change
risk assessment and as part of our Good Agricultural Practices.
This is factored into company level risk assessment initiatives through use of internal company
knowledge on water abstraction and discharge consents.
This is factored into company level risk assessment initiatives through use of internal company
understanding of supply and demand issues.
Our products are based on agricultural raw materials and paper-based materials are also important.
This is factored into company level risk assessment initiatives through our Good Agricultural
Practices and engagement activities with key tobacco and clove suppliers, CCRA and use of waterrisk tools.

Relevant,
includedThis is factored into company level risk assessment initiatives and as part of our Good Agricultural
Practices.

Relevant,
includedThis is factored into company level risk assessment initiatives through long term climate change risk
assessment, as part of our Good Agricultural Practices and by using water risk tools.

Relevant,
included
Relevant,
includedThis is factored into company level risk assessment initiatives through use of internal company
knowledge on water abstraction and discharge consents.
This is factored into company level risk assessment initiatives as appropriate through use of internal
company understanding of supply and demand issues.
Our products are based on agricultural raw materials and paper-based materials are also important.
This is factored into company level risk assessment initiatives through our Good Agricultural
Practices and engagement activities with key tobacco and clove suppliers, CCRA and use of waterrisk tools.

Relevant,
included
Relevant,
includedThis is factored into company level risk assessment initiatives as appropriate and as part of our Good
Agricultural Practices.

W2.7
Which of the following stakeholders are always factored into your organization's water risk assessments?

Stakeholder

Customers
Employees
Investors
Local communities
NGOs
Other water users at a local
level
Regulators
River basin management
authorities
Statutory special interest
groups at a local level
Suppliers
Water utilities/suppliers at a
local level
Other

Choose option

Please explain

Not relevant,explanation provided
Relevant, included
Relevant, included
Relevant, included
Relevant, included

Water is not involved in the use of our products. We consider our customers and consumers withrespect to their interest in our corporate environmental performance which includes water.
Water usage by our employees and water saving initiatives.
With respect to their interest in our corporate environmental performance which includes water.
Farming communities and water management issues.
Farming communities and water management issues.

Relevant, included

Supply/demand understanding.

Relevant, included

Water abstraction, management and discharge consents.

Relevant, included

We work with river basin management authorities when appropriate.

Relevant, included

We work with local special interest groups as appropriate.

Relevant, included

As part of our Good Agricultural Practices and Climate Change Risk Assessment process. In 2015 wecontinued to use CDP Supply Chain but at this stage the program are more active on the climatechange element.

Relevant, included

Water abstraction and discharge consents and supply/demand issues.

W2.8
Please choose the option that best explains why your organisation does not undertake a water-related risk assessment

Primary reason

Please explain

Further Information

Module: Implications
Page: W3. Water Risks
W3.1
Is your organization exposed to water risks, either current and/or future, that could generate a substantive change in your business, operations, revenue
or expenditure?

Yes, direct operations and supply chain

W3.2
Please provide details as to how your organization defines substantive change in your business, operations, revenue or expenditure from water risk

In relation to substantive change, we refer to materiality - 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 2020+ risk forecasting terms, higher level risks are defined as those with a potential impact in excess of US$5M or a raw material impact in excess of 1000 metrictonnes of tobacco leaf. These apply to both our direct operations and our tobacco supply chain.
We have not specifically defined substantive change in relation to water risk.

W3.2aPlease provide the number of facilities* per river basin exposed to water risks that could generate a substantive change in your business, operations,revenue or expenditure and the proportion this represents of total operations company-wide

Country

PolandIndonesia
Philippines

River basin

Wisla
Other: RIVER BASINSOther: RIVER BASINS

Number of facilities exposed
to water risk

1
1
2

Proportion of total
operations (%)

Comment

1-5
1-5
1-5

W3.2b
Please provide the proportion of financial value that could be affected at river basin level associated with the facilities listed in W3.2aCountry

W3.2c

River basin

PolandWisla

Indonesia

Other: RIVER BASINS

Philippines

Other: RIVER BASINS

Financial reporting
metric% global production
volume% global production
volume% global production
volumeProportion of chosen metricthat could be affected within
the river basin

6-10
6-10
6-10

Comment

Please list the inherent water risks that could generate a substantive change in your business, operations, revenue or expenditure, the potential impact
to your direct operations and the strategies to mitigate them

Country

Poland

River
basin

Wisla

Risk
driverPhysicalFlooding

Potential
impactPlant/production
disruption
leading to
reduced output

Description of
impactPotential forflooding of
manufacturinglocation, basedon company
assessment oflong term
climate change
risk updated in
2015.

MagnitudeofTimeframe Likelihood potential
financial
impact>6 years

Unlikely

Low

Response
strategy

Developflood
emergency
plans
Infrastructure
maintenance
Promote bestpractice andawareness
Water
management
incentives

Costs ofresponse
strategy

Details ofstrategy andcosts

Less than$1M

The cost of
response strategy
is estimatedbased on the costof external
providers used toassess flood andbusiness
continuity riskeach year andrelated staff costs.
Flood risk
assessments areundertaken at thesite level tounderstand how
vulnerable sites
are to local
flooding events.
Understanding thescale and natureof this risk is an
important initial
step in managing
the risk. As wellas undertaking arisk assessment
process, ourinsurance andbusiness

Country

Indonesia

River
basin

Other:RIVER
BASINS

Risk
driverPhysicalFlooding
PhysicalProjectedwaterstressPotential
impactPlant/production
disruption
leading to
reduced output

Description of
impactPotential forflooding of
manufacturinglocation, basedon company
assessment oflong term
climate change

MagnitudeofTimeframe Likelihood potential
financial
impact>6 years

Unlikely

LowmediumResponse
strategy

Developflood
emergency
plans
Engagementwithsuppliers
Infrastructure

Costs ofresponse
strategyLess than$1M

Details ofstrategy andcosts

continuity
management
plans aredesigned tomitigate theimpacts
associated with
disruptions that
may result fromflooding events.
Our operations
are widelydistributed acrossthe world, helping
to mitigate theeffects of any
disruption. We
have asophisticatedcapacity andfootprint planning
process which
mitigates against
local or regional
operations
disturbances.
The cost of
response strategy
is estimatedbased on the costof external
providers used toassess flood andbusiness

Country

River
basin

Risk
driverPotential
impactDescription of
impactrisk updated in
2015.

MagnitudeofTimeframe Likelihood potential
financial
impactResponse
strategy

maintenance
Promote bestpractice andawareness
Water
management
incentives

Costs ofresponse
strategy

Details ofstrategy andcosts

continuity riskeach year andrelated staff costs.
Flood risk
assessments areundertaken at thesite level tounderstand how
vulnerable sites
are to local
flooding events.
Understanding thescale and natureof this risk is an
important initial
step in managing
the risk. As wellas undertaking arisk assessment
process, ourinsurance andbusiness
continuity
management
plans aredesigned tomitigate theimpacts
associated with
disruptions that
may result fromflooding events.
Our operations
are widelydistributed acrossCountry

River
basin

Other:
Philippines RIVER
BASINS

Risk
driverPhysicalFlooding

Potential
impactPlant/production
disruption
leading to
reduced output

Description of
impactPotential for
impacts from
cyclonescausing loss to
manufacturinglocations andassociatedsupply chain
disruption,
based on longterm climatechange risk
assessment
updated in
2015.

MagnitudeofTimeframe Likelihood potential
financial
impact>6 years

Probable

MediumResponse
strategy

Developflood
emergency
plans
Infrastructure
maintenance
Promote bestpractice andawareness
Use of risk
transfer
instruments
Watermanagement
incentives

Costs ofresponse
strategy$1-$5M

Details ofstrategy andcosts

the world, helping
to mitigate theeffects of any
disruption. We
have asophisticatedcapacity andfootprint planning
process which
mitigates against
local or regional
operations
disturbances.
The cost of
response strategy
is estimatedbased on the costof external
providers used toassess flood andbusiness
continuity riskeach year andrelated staff costs.
Flood risk
assessments areundertaken at thesite level tounderstand how
vulnerable sites
are to local
flooding events.
Understanding thescale and nature

Country

River
basin

Risk
driverPotential
impactDescription of
impactMagnitudeofTimeframe Likelihood potential
financial
impactResponse
strategy

Costs ofresponse
strategy

Details ofstrategy andcostsof this risk is an
important initial
step in managing
the risk. As wellas undertaking arisk assessment
process, ourinsurance andbusiness
continuity
management
plans aredesigned tomitigate theimpacts
associated with
disruptions that
may result fromflooding events.
Our operations
are widelydistributed acrossthe world, helping
to mitigate theeffects of any
disruption. We
have asophisticatedcapacity andfootprint planning
process which
mitigates against
local or regional
operations
disturbances.

Country

River
basin

Risk
driverPotential
impactDescription of
impactMagnitudeofTimeframe Likelihood potential
financial
impactResponse
strategy

Costs ofresponse
strategy

Details ofstrategy andcosts

Also our Special
Situation
Management
System for
dealing with
unforeseen
impacts.

W3.2d
Please list the inherent water risks that could generate a substantive change in your business operations, revenue or expenditure, the potential impact toyour supply chain and the strategies to mitigate them

Country

Indonesia

River
basin

Other:RIVER
BASINS

Risk
driverPhysicalClimatechangePhysicalFlooding

Potential
impactDescription of
impactSupplychain
disruption

The supplies oftobacco leaf inIndonesia areexposed to physicalclimate changerisks, with cyclones
and flooding being
most critical. Croplosses, quality

MagnitudeofTimeframe Likelihood potential
financial
impact>6 years

Probable

MediumResponse
strategy

Engagementwith suppliers
Infrastructure
investment
Supplier
diversification

Costs ofresponse
strategy

Details of strategy
and costs$10M +

Our tobacco supply
chain is widely
spread around theworld, which helps tomitigate against
climate related risks;
there is also someflexibility in terms of
the potential toCountry

River
basin

Risk
driverPotential
impactDescription of
impactimpacts and supply
chain
manufacturing
restrictions could
impact PMI’s
production andsourcing strategy.
This could change
our crop buying
pattern and resultin increased
operational cost.
Also, clove is an
important raw
material for PMI touse in our local
kretek brands.
Indonesia produces
over 70% of theworld’s cloves.
Clove yields arecomplex; harvests
can vary by up to
60% over a 4 year
harvest cycle.
Clove production is
weather sensitive,
climate changes
such asintensification of
the wet season
could impact clove
growing areas. This
would reduce thesupply andMagnitudeofTimeframe Likelihood potential
financial
impactResponse
strategy

Costs ofresponse
strategy

Details of strategy
and costs

relocate tobacco
crops if somegrowing areas
become morefavorable thanothers. In addition,
our substantial
inventories oftobacco leaf can help
to mitigate against
short term impacts.
We have engaged
with our clove
suppliers to improve
crop management
practices and arestrengthening our
supply chain forclove at an overall
cost of several tensof millions US$. The
estimated cost isalso based onprogrammanagement forGood Agricultural
Practices
implementation.

Country

River
basin

Risk
driverPotential
impactDescription of
impactMagnitudeofTimeframe Likelihood potential
financial
impactResponse
strategy

Costs ofresponse
strategy

Details of strategy
and costs$1-5M

The potential impacts
are based on a longterm climate change
risk assessment.
Our tobacco supply
chain is widely
spread around theworld, which helps tomitigate against
climate related risks;
there is also someflexibility in terms of
the potential torelocate tobacco
crops if somegrowing areas
become morefavorable thanothers. In addition,
our substantial
inventories oftobacco leaf can help
to mitigate against
short term impacts.
Also, through ourGood Agricultural
Practices we include
water management
actions and support
farming communities
with water supply
projects at a global

increase the priceof cloves.

Pakistan

Other:RIVER
BASINS

PhysicalClimatechangePhysicalDrought

Supplychain
disruption

Tobacco leaf
growing is strongly
influenced byphysical climatechange such aschanges intemperature andprecipitation.
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 bychanges inprecipitation andperiods of drought.
This could change
our crop buying
pattern and resultin increased
operational cost.

>6 years

Unlikely

Low

Engagementwith suppliers
Infrastructure
investment
Supplier
diversification

Country

River
basin

Other:
Philippines RIVER
BASINS

Risk
driverPhysicalClimatechangePhysicalDrought
PhysicalFlooding

Potential
impactSupplychain
disruption

Description of
impactThe supplies oftobacco leaf in
Philippines are
exposed to physicalclimate changerisks, with flooding,drought andcyclones being
possible. Croplosses, quality
impacts and supply
chain
manufacturing
restrictions could
impact PMI’s
production andsourcing strategy.
This could change
our crop buying
pattern and resultin increased
operational cost.

MagnitudeofTimeframe Likelihood potential
financial
impact>6 years

Probable

MediumResponse
strategy

Engagementwith suppliers
Infrastructure
investment
Supplier
diversification

Costs ofresponse
strategy$10M +

Details of strategy
and costs

cost of several
million US$.
Our tobacco supply
chain is widely
spread around theworld, which helps tomitigate against
climate related risks;
there is also someflexibility in terms of
the potential torelocate tobacco
crops if somegrowing areas
become morefavorable thanothers. In addition,
our substantial
inventories oftobacco leaf can help
to mitigate against
short term impacts.
We have engaged
with our tobacco
suppliers to improve
crop management
practices and arestrengthening our
supply chain for
tobacco at an overall
cost of several tensof millions US$. The
estimated cost isbased on programCountry

River
basin

Risk
driverPotential
impactDescription of
impactMagnitudeofTimeframe Likelihood potential
financial
impactResponse
strategy

Costs ofresponse
strategy

Details of strategy
and costs

management forGood Agricultural
Practices
implementation.

W3.2e
Please choose the option that best explains why you do not consider your organization to be exposed to water risks in your direct operations that could
generate a substantive change in your business, operations, revenue or expenditure

Primary reason

Please explain

W3.2f
Please choose the option that best explains why you do not consider your organization to be exposed to water risks in your supply chain that could
generate a substantive change in your business, operations, revenue or expenditure

Primary reason

Please explain

W3.2gPlease choose the option that best explains why you do not know if your organization is exposed to water risks that could generate a substantive
change in your business operations, revenue or expenditure and discuss any future plans you have to assess thisPrimary reason

Future plans

Further Information

Page: W4. Water Opportunities
W4.1
Does water present strategic, operational or market opportunities that substantively benefit/have the potential to benefit your organization?

Yes

W4.1a
Please describe the opportunities water presents to your organization and your strategies to realize them

Country
or region

Opportunity

Companywide

Increasedbrand value

Strategy to realize opportunity

PMI targets continuous improvement in environmental
sustainability performance, including water issues,

Estimated
timeframe

1-3 years

Please explain

We expect that by tackling sustainability and climatechange issues appropriately, our company reputation

Countryor region

Companywide

Companywide

Opportunity

Strategy to realize opportunity

Improvedcommunity
relationsSocial licenceto operate

through our Good Agricultural Practices program, our
EHS Principles and Practices, environmental strategy
and related objectives. Environmental Sustainability also
forms part of our charitable giving programs.

Cost savings
Improvedwater
efficiency

Ensuring
supply chain
resilience
Improvedwater
efficiency

Estimated
timeframe

Please explain

could be enhanced.

As part of our environmental sustainability commitment
we set water use reduction targets for all PMI
manufacturing facilities to drive progress towards ourgoal to achieve a 20% reduction in water use by 2015(per million cigarettes equivalent, from a 2010 baseline).
We beat that target, achieving 24% reduction and are
now focusing on a minimum 1% year-year reduction in
the short term, with additional focus on operations
present in water scarce areas – we will release new
information on our future targets next year.

1-3 years

Cost savings can be achieved through improvements inwater efficiency, conservation and recycling at PMI
manufacturing facilities which are driven by a water
reduction program. Though these opportunities are notcurrently considered substantial in relation to PMI’soperations, revenue or expenditure, opportunities are stillsought and targeted throughout our business. As an
example, since 2010, our Quebec facility has decreased
its water consumption by over 79% - by the end of 2015 it
saved more than 300,000 m3 of water. The main projectthat led to this reduction was the implementation ofclosed loop cooling systems.

Good Agricultural Practices include water management(abstraction, irrigation efficiency and discharge)>6 years

Good water and irrigation management has a positiveeffect on crop yield and helps minimize uncertainty insupply.

W4.1bPlease choose the option that best explains why water does not present your organization with any opportunities that have the potential to provide
substantive benefit

Primary reason

Please explain

W4.1c
Please choose the option that best explains why you do not know if water presents your organization with any opportunities that have the potential toprovide substantive benefit

Primary reason

Please explain

Further Information

Module: Accounting
Page: W5. Facility Level Water Accounting (I)W5.1
Water withdrawals: for the reporting year, please complete the table below with water accounting data for all facilities included in your answer to W3.2a

Facility reference
numberCountry

River basin

Facility name

Total water withdrawals(megaliters/year) at thisfacility

How does the total
water withdrawals at
this facility compare
to the last reportingyear?

Please explain

Facility reference
numberCountry

Facility 1

PolandFacility 2

Indonesia

Facility 3

Philippines

Facility 4

Philippines

Total water withdrawals(megaliters/year) at thisfacility

How does the total
water withdrawals at
this facility compare
to the last reportingyear?

Philip Morris Polska
PT Philip MorrisIndonesia

165.4

About the same

795.4

About the same

PMFTC Batangas

213.4

About the same

PMFTC Marikina

281.8

About the same

River basin

Wisla
Other: RIVER
BASINS
Other: RIVER
BASINS
Other: RIVER
BASINS

Facility name

Please explain

Further Information

Page: W5. Facility Level Water Accounting (II)W5.1a
Water withdrawals: for the reporting year, please provide withdrawal data, in megaliters per year, for the water sources used for all facilities reported in
W5.1

Facilityreference
numberFacility 1
Facility 2
Facility 3
Facility 4

Freshsurface
water

0
1.9
0
0

Brackishsurfacewater/seawater

Rainwater

Groundwater(renewable)

Groundwater
Produced/process(nonwater
renewable)

0
0
0
0

0
0.3
0
0

0
525.5
0
0

0
0
0
0

0
0
0
0

Municipal
water

165.4
267.7
213.4
281.8

Wastewaterfrom anotherorganization

0
0
0
0

Comment

W5.2
Water discharge: for the reporting year, please complete the table below with water accounting data for all facilities included in your answer to W3.2a

Facility reference number

Facility 1
Facility 2
Facility 3
Facility 4

Total water discharged(megaliters/year) at this facility

118.1
469.4
104.5
8.1

How does the total water discharged at thisfacility compare to the last reporting year?

About the same
About the same
Higher
About the same

Please explain

No significant change
No significant change
Process changes from 2014
No significant change

W5.2a
Water discharge: for the reporting year, please provide water discharge data, in megaliters per year, by destination for all facilities reported in W5.2

Facilityreference
numberFacility 1
Facility 2
Facility 3
Facility 4

Fresh surface water

118.1
213.5
0
8.1

Municipal/industrial
wastewater treatment plant

0
255.9
104.5
0

Seawater

00
00Groundwater

0
0
0
0

Wastewater for
another organization

0
0
0
0

W5.3
Water consumption: for the reporting year, please provide water consumption data for all facilities reported in W3.2a

Comment

Facility reference number

Facility 1
Facility 2
Facility 3
Facility 4

Consumption (megaliters/year)

47.3
326
108.9
273.7

How does this compare to thelast reporting year?

About the same
About the same
About the same
About the same

Please explain

No significant change
No significant change
No significant change
No significant change

W5.4
For all facilities reported in W3.2a what proportion of their water accounting data has been externally verified?

Water aspect% verification

Water withdrawals- total volumes

76-100

Water withdrawals- volume by sources
Water discharges- total volumes
Water discharges- volume by destination
Water discharges- volume by treatment
methodWater discharge quality data- quality bystandard effluent parameters
Water consumption- total volume

Not verified
Not verified
Not verified

Further Information

What standard and methodology was used?

100% of manufacturing sites had their water KPIs verified by SGS United Kingdom Limited (SGS)
to their sustainability data assurance process during annual verification.

Not verified
1-25
Not verified

Individual facility data may be verified by local regulators according to legal requirements. Not allsites globally have metered water discharges.

Module: Response
Page: W6. Governance and Strategy
W6.1
Who has the highest level of direct responsibility for water within your organization and how frequently are they briefed?

Highest level of direct responsibility
for water issues

Frequency of briefings onwater issues

Senior Manager/Officer

Scheduled-annual

Comment

W6.2
Is water management integrated into your business strategy?

Yes

W6.2a
Please choose the option(s) below that best explain how water has positively influenced your business strategy

Influence of wateron businessstrategy

Please explain

Influence of wateron businessstrategy

Please explain

Establishment ofsustainability goals

Changes in climate and water availability, which could impact (i.e. reduce yields and/or quality) sensitive crops such as tobacco andclove, are important for our business strategy. The outcome of this impact is that PMI has developed a water strategy that is split into two
main areas: (i) Minimizing our impact on the environment through water use reduction initiatives; and (ii) Minimizing the futureenvironmental impact on our business through a water and climate change risk assessment process.

W6.2bPlease choose the option(s) below that best explains how water has negatively influenced your business strategy

Influence of water on businessstrategy

No measurable influence

Please explain

The level of negative influence is not currently material to our business. We note that we discuss broader influenceson our business within our CDP Climate Change disclosure.

W6.2c
Please choose the option that best explains why your organization does not integrate water management into its business strategy and discuss any
future plans to do soPrimary reason

Please explain

W6.3
Does your organization have a water policy that sets out clear goals and guidelines for action?

Yes

W6.3a
Please select the content that best describes your water policy (tick all that apply)

Content

Company-wide
Performance standards for
direct operations
Incorporated within groupenvironmental, sustainabiilty or
EHS policy

Please explain why this content is included

To set minimum requirements for our own direct manufacturing facilities in terms of water-use efficiency and to cover water use
in relation to Good Agricultural Practices. A summary of key elements of our Water strategy is also provided in our publicly
available Communication on Progress to the UN Global Compact which also includes our interim Human Rights policy
statement.

W6.4
How does your organization's water-related capital expenditure (CAPEX) and operating expenditure (OPEX) during the most recent reporting year
compare to the previous reporting year?

WaterCAPEX (+/% change)

0

Water
OPEX (+/% change)-13

Motivation for these changes

OPEX - stable water prices whilst driving water use efficiency, with a net decrease in water-related OPEX of 13%. Water-related
OPEX is not significant to our business (less than 0.1%). CAPEX - we only segregate CAPEX that is water-related in certain
circumstances, often the project drivers are varied and the water-related element is not financially significant. The level of projects
compared to 2014 is similar and therefore 0% change has been entered for CAPEX.

Further Information

Page: W7. Compliance
W7.1
Was your organization subject to any penalties, fines and/or enforcement orders for breaches of abstraction licenses, discharge consents or other water
and wastewater related regulations in the reporting year?

Yes, not significant

W7.1a
Please describe the penalties, fines and/or enforcement orders for breaches of abstraction licenses, discharge consents or other water and wastewater
related regulations and your plans for resolving them

Facility
namePhilip Morris
Kuban(Russia)
LeonardDingler Ltd(SouthAfrica)Incident

Incident description

Fine

Wastewater quality - increased level ofmaximum allowable concentration ofcontaminants above relatively tight limits
in Russia.

Fine

Final discharge effluent exceeded theparameter limit for pH, COD and
Conductivity levels.

Philip Morris
UkraineFine

Philip Morris
UkraineFine

Wastewater quality - increased levels ofphosphates, ammoniacal nitrogen,suspended solids, detergents above
relatively tight limits for thesesubstances in Ukraine.
Wastewater quality - increased levels ofphosphates, ammoniacal nitrogen,detergents, chlorides, BOD5 above
relatively tight limits for thesesubstances in Ukraine.

Frequency ofoccurrence inreportingyear

Financial
impactCurrency

Incident resolution

4

4254

USD($)

We continue to review operational practices andtreatment improvement opportunities to minimize
impacts.

1

1776

USD($)

1

2130

USD($)1

9130

USD($)

W7.1b
What proportion of your total facilities/operations are associated with the incidents listed in W7.1a

6%

W7.1c

Weekly cleaning of drains, manual removal ofsolid residues from processing before cleaning
operations. Also conduct onsite pH and COD
analysis to proactively monitor fluctuations in
effluent quality.
Root cause assessment (discharge of thewastewater from process cleaning and boiler
water preparation); we continue to review
operational practices and treatment improvement
opportunities to minimize impacts.
Root cause assessment (discharge of thewastewater from process cleaning and boiler
water preparation); we continue to review
operational practices and treatment improvement
opportunities to minimize impacts.

Please indicate the total financial impacts of all incidents reported in W7.1a as a proportion of total operating expenditure (OPEX) for the reporting year.
Please also provide a comparison of this proportion compared to the previous reporting year

Impact as % of OPEX

0.01

Comparison to last year

No change

Further Information

Page: W8. Targets and Initiatives
W8.1
Do you have any company wide targets (quantitative) or goals (qualitative) related to water?

Yes, targets and goals

W8.1a
Please complete the following table with information on company wide quantitative targets (ongoing or reached completion during the reporting period)
and an indication of progress madeCategory oftargetMotivation

Description of target

Quantitative
unit ofmeasurement

Baseline
year

Targetyear

Proportionof targetachieved, %value

Category oftargetReduction of
product water
intensity

Motivation

Description of target

Quantitative
unit ofmeasurement

Baseline
year

Targetyear

Proportionof targetachieved, %
value

Water
stewardship

In 2010, we set ourselves the goal of reducing water use in our
manufacturing facilities by 20% (per million cigarettes equivalent) by 2015
from our 2010 baseline. In 2015 we exceeded this goal and reduced
water use by 24%. Going forward, we have set an interim target of
additional 1% reduction year on year, with our focus being on operations
present in water scarce areas to achieve best water management
performance. We will release new information on our future targets nextyear, including our plans for further water stewardship activities across ourvalue chain.

% reduction perunit of production

2010

2015

100%

W8.1b
Please describe any company wide qualitative goals (ongoing or reached completion during the reporting period) and your progress in achieving these

Goal

Motivation

Description of goal

Engagement with
suppliers to help them
improve water stewardship

Water
stewardship

Implementation of Good Agricultural Practices (GAP) by tobacco suppliers
and farmers. Quality water is essential for growing tobacco and for farming
communities, which is why GAP specifically covers measures for water
quantity and quality management.

Progress

Communicated to all tobacco
suppliers. Progress against
measurable standards not yet
available.

W8.1c
Please explain why you do not have any water-related targets or goals and discuss any plans to develop these in the futureFurther Information

Module: Linkages/Tradeoff
Page: W9. Managing trade-offs between water and other environmental issues
W9.1
Has your organization identified any linkages or trade-offs between water and other environmental issues in its value chain?

Yes

W9.1a
Please describe the linkages or trade-offs and the related management policy or action

Environmental issues

Linking energy and water
reduction in our factories.

Linkageortradeoff

Policy or action

Linkage

Energy is often required to drive water-consuming processes, and by improving the efficiency of processes and equipment
both water and energy consumption can be reduced. Our Energy Management Program (EMP) was developed to help
achieve our CO2e reduction target of 20% by 2015 compared to our 2010 baseline for our manufacturing affiliates. This
program, although focusing on energy, also delivers water savings in specific examples. The management focus provided
by the EMP provides a context for general resource optimization. Examples: • Optimization of steam systems results indecreases in both energy and water use. • Installation of energy and water metering devices at all facilities allows abetter understanding of water consumption and allows targeted improvement actions. • Development and use of a
“Ready mode” on specific equipment has helped to reduce the consumption of electricity, gas, steam and water. •Installation of new high efficiency chillers to improve both electricity and water consumption.

Further Information

Module: Sign Off
Page: Sign Off
W10.1
Please provide the following information for the person that has signed off (approved) your CDP water response

Name

Andre Calantzopoulos

Job title

Chief Executive Officer

Corresponding job category

Chief Executive Officer (CEO)W10.2
Please select if your organization would like CDP to transfer your publicly disclosed response strategy from questions W1.4a, W3.2c and W3.2d to the CEO Water
Mandate Water Action Hub.

No

Further Information
CDP 2016 Water 2016 Information Request