TRANSFORMING FOR GOOD

Towards asmoke-free future

Nordic Sustainability Report 2022

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

About this report
This is PMI’s fourth sustainability report on the Nordic
countries – Denmark, Finland, Iceland, Norway, andSweden. It covers our sustainability efforts in 2022
and maps out our direction for the years ahead. It
is an extension of the PMI Integrated Report 2022,
published in April 2023, and a supplement to the annual
reports for the individual Nordic offices, which includes
disclosure of sustainability efforts according to local
regulations.
While it aligns with PMI’s global strategy, the focusof this report is local rather than global, though manyof our efforts also contribute to goals and targets on
the global level. As we consolidate our sustainability
efforts, we have identified a number of key performanceindicators (KPIs) from our company’s global initiatives
that are most relevant in guiding our work in the Nordic
region. This report presents what we have achieved
so far, and what we are working to achieve moving
forward.

PMI Integrated Report 2022
The PMI Integrated Report is aligned with theInternational Integrated Reporting Framework to better
detail PMI’s business transformation and more fully
capture our company’s progress in delivering on thetransformation.

PMI’S ACQUISITION OF
SWEDISH MATCH
In November 2022, PMI acquired Swedish
Match – a global leader in oral nicotine
products such as snus and nicotine pouches.
The acquisition was an important milestone in
PMI’s journey towards a smoke-free future, anambition it shares with Swedish Match.
This Nordic Sustainability Report does notcomprehensively account for the impact of
the acquisition due to its recent nature, but
we look forward to sharing the progressachieved through the integration of our twobusinesses in our next report.

Contents
OV E RV I E W
03 Leading the way towards a smoke-free future
04 PMI’s Statement of Purpose
05 Message from our global Chief Executive Officer
05 PMI in the world
06 PMI in the Nordic region
07 Sustainability materiality assessment
08 Our sustainability strategy
08 2022 Global highligts

2 0 2 2 P E R FO R M A N C E
FO R T H E N O R D I C S
09 Our 2025 Road Map for the Nordics
10 Purposefully phase out cigarettes
13 Maximise the benefits of smoke-free products
18 Reduce post-consumer waste
22 Foster an empowered and inclusive workplace
23 Tackle climate change
26 Ensure peace, justice and strong institutions

OT H E R 2 0 2 2 H I G H L I G H T S
27 Improve the quality of life of people in our supply chain
29 Performance in ESG ratings, rankings, and indices
29 Further readingi2

Read Sustainability at PMI

pmi.com/sustainability

Philip Morris Nordics Sustainability Report 2022

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

Leading the way towards asmoke-free future
In 2022, PMI continued the diligent work towards thevision of a smoke-free world. We have seen significant
progress, not just as a company but also of the industry as
a whole. As we continue on our transformation journey,
where cigarettes are obsolete, we aim to keep leading theindustry’s smoke-free transition. The most sustainability
contribution is about getting rid of cigarettes.
Since 2008, PMI has invested more than USD 10.5
billion in developing and commercializing smoke-free
products. They now account for more than a third of our
total global net revenues. Our ambition is for more than
two-thirds of the company’s total net revenues to comefrom products beyond nicotine in 2030.

The Nordics in the front
The Nordics gives us a great platform to spearhead
this transition. The region has some of the lowest
prevalence of smoking in the world. Today, there areabout 2.5 million smokers in the Nordics, and PMI want
to play a crucial role in reducing that number evenfurther in the near future.
With the lowest smoking rates in Europe, Sweden ison its way to becoming the world’s first smoke-freecountry. Among men in Europe, Sweden has the lowest
proportions of smokers and the lowest proportion ofsmoke-related deaths.

Acquisition of Swedish Match a milestone
In 2022, the acquisition of Swedish Match marked
a major milestone in our journey and will accelerate
our transition. Together we are committed to asmoke-free future.
3

We also share a commitment to developing, scientifically
substantiating, and responsibly commercializing smoke-free
products that are an alternative to cigarettes.
Swedish Match's leading nicotine pouch product, willbolster our growing smoke-free portfolio of heated
tobacco products and oral nicotine products. This will
put us in a significantly stronger position to meet adultsmokers who would otherwise continue to smoke.
The acqusition will also bring five production sites into
our Nordic region.

consumables. In Finland, we launched a recycling
programme for nicotine pods and e-vapours.
In our tobacco supply chain, we are on track to reduce theprevalence of child labor among the farms from which PMI
buys tobacco and to increase the proportion of contracted
farmer supplying tobacco to PMI who make a living income.
We continue decarbonizing our direct operations. Our
2040 net-zero science-based target was validated by
the Science Based Initiative and we are progressing
well toward our target to purchase tobacco at no risk of
deforestation or conversion of natural ecosystems.

Together towards a smoke-free future"The Nordics gives a great platformto spearhead the smoke-freetransition"

Global and Nordic agendas closely linked
In the Nordics, we are focusing on managing thesocial impact of our products by ensuring that they
do not reach unintended audiences as a priority, andwe continue to put in place youth access prevention
safeguards in our direct and indirect retail channels.
Mindful of the importance of reducing post-consumer
waste, we also made progress in implementing
take-back programs for our smoke-free devices andPhilip Morris Nordics Sustainability Report 2022

Even though we have progressed well in many areas,
we know we must speed up our efforts even more andpave the way towards a smoke-free future.
But we cannot do this alone, at PMI we are constantly
seeking to engage with stakeholders such as governments,
the public health community, industry, and civil society, as
we believe to partake in social dialogue and an open debate
is key to making progress and in reaching our vision.
I would like to thank all colleugues and partners forcontinued support and hard work.

Anette Rosengren
Managing Director,
Philip Morris Nordics

OTHER 2022
HIGHLIGHTSOVERVIEW

PMI’s Statement of Purpose
In 2016, PMI announced the company’s new purpose: to deliver a smoke-free future.
PMI aims to completely replace cigarettes as soon as possible with smoke-free, sciencebased products and to evolve in the longer term into a broader lifestyle, consumer
wellness, and healthcare company.
Our perspective
At PMI, we aim to base our success on a future in which
we no longer make or sell cigarettes, the most harmful
form of nicotine consumption. In stark contrast with ourcompetitors, PMI’s value proposition is not to expand its
portfolio of both combustible and smoke-free products
to offer more choice to consumers. Rather, our goal
is to lead an industry-wide transformation whereby
cigarettes are phased out completely.
Our strategy is centered on researching and developing
alternative products to cigarettes, promoting broad
access to them by adult smokers who would otherwise
continue to smoke, and working to ensure theseproducts replace cigarettes and make smoking obsolete
as soon as possible. To achieve this, we are actively
shifting and reallocating resources, setting ambitious
goals connected to this strategy, and transparently
reporting on our progress.

Transforming for good
Our business transformation
We strive to become a company that has a net positive
impact on society. This ambition starts with researching,developing, and commercializing science-basedalternatives to cigarettes for those adults who otherwise
would continue to smoke, ultimately allowing us to4phase out cigarettes and become an entirely smoke-freebusiness. As a next step, we are expanding our offerings
to include products that fill critical unmet needs within
the wellness and healthcare space.
To achieve our purpose, a radical transformation of
our business is required. Our strategy is to responsiblytransition from a cigarette company into a world-leading
smoke-free business while simultaneously exploring
adjacent avenues of growth in wellness and healthcare.
Our North Star is to create a net positive impact that
benefits our company, shareholders, consumers, andsociety.
Transforming our company is not simply about substituting
one product with another. It requires revamping ourentire value chain and the way we engage with society.
This necessitates a holistic review and overhaul of ourentire business model and value proposition, which brings
challenges and opportunities to all aspects of our business.
Sustainability stands at the core of PMI’s transformation.
It spurs innovation, better positions the company
for long-term success, and helps to address certain
challenges stemming from our transition.

Philip Morris Nordics Sustainability Report 2022

OTHER 2022
HIGHLIGHTS

2022 PERFORMANCEFOR THE NORDICSO U R J O U R N E Y S O FA R

2015

2022

7

73

Markets where PMI
smoke free products areavailble for saleMarkets where PMI
smoke free products areavailble for sale1

4

Smoke-free productcommercialized

Different smoke free product categories
commercialized in the Nordic

0.2%

32.1%

Of adjusted net revenues
from smoke-free productOf adjusted net revenues
from smoke-free product

0.2m

24.9m

Users of PMI
smoke-free products

Users of PMI smoke-free
products, of whom 15.3m are
estimated to have switched andstopped smoking

OVERVIEW

Message from our global
Chief Executive Officer
2022 was a remarkable year. Almost seven years since
we announced our vision of a smoke-free future, thevolume of combustible tobacco products made andsold by our company has decreased by 27 percent. This
past year, we kept our relentless focus on that ambition,
dedicating 99 percent of our research and development
and 74 percent of our commercial expenditure to smokefree products. I can proudly report that, in 2022, smokefree products represented 32.1 percent of our net
revenues, and we estimate that, by year-end, almost 25 million adults were using ourmain smoke-free product.
To further accelerate progress, we achieved two critical milestones in 2022: ouracquisition of Swedish Match and the agreement to take full control of our mainsmoke-free product in the U.S. as of April 30, 2024. Swedish Match will also be a
crucial component of our growth. Bringing together our two companies has expanded
our portfolio and geographic footprint, placing a future free from cigarettes more
firmly in our grasp.It is my hope that our stakeholders will judge us not for thecompany we were but for the company we are today and, importantly, the onethat we are working hard to become. It is through constructive engagement that
we will accelerate the pace of meaningful and impactful change and complete ourtransformation, for good.

Jacek Olczak
Chief Executive Officer

5

Philip Morris Nordics Sustainability Report 2022

PMI in the world
2022 overview by PMI segment

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTSOVERVIEW

PMI in the Nordic region
PMI’s smoke-free alternatives are available for adultsmokers all over the Nordics.
Since 2016, PMI’s heated tobacco platform has
been available in Denmark and Sweden. The third
generation of the device has now been launchedin both countries. In 2021, our e-vapor platform wasintroduced in Finland and oral snus and nicotine products
was launched in Norway, Sweden and Denmark. Nicotine
pouches was allowed in Finland in the spring of 2023.
PMI has offices in four of the five Nordic countries. The Nordic offices cooperate
on sustainability initiatives under the direction of a Nordic Sustainability Manager
collaborating on projects, events, and activities. During 2022 we established a crossfunctional sustainability network collaborating on projects, events and activities.
Philip Morris Denmark was established in 2001, but the history of PMI brands in
Denmark dates to the 1950s. Based in Copenhagen, we employ 78 people to importand sell tobacco-based products. PMI Reduced Risk Products were introduced toDenmark in 2016.
Philip Morris Finland was established in 2004, but the history of our brands in Finland
goes back to 1962, when Marlboro first arrived in the market. Today, we are the market
leader in Finland. Through a sales office in Helsinki, 21 employees import and sell PMI
tobacco products. PMI Reduced Risk Products were introduced to Finland in 2021.
Philip Morris Norway was established in 2005, but Marlboro has been sold in Norway
since the 1950s. Today, we are one of the leading tobacco companies in Norway
employing 18 people. PMI started to offer Reduced Risk Products to Norway in 2021.

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTSPREVALENCE OF
TOBACCO SMOKERS

IcelandTobacco smokers
6% men6% women

FinlandTobacco smokers
14% men
11% women

SwedenSnus users
20% men
7% women

Tobacco smokers
5% men6% women

NorwaySnus users
680 000

Tobacco smokers
7% men8% women

Denmark
Tobacco smokers
22% men
16% women

Philip Morris Sweden was established in 1969 and is now one of the leading tobaccocompanies in the country, employing 163 people. In addition to cigarettes, Reduced
Risk Products from PMI were introduced to Sweden in 2019.
PMI products are available for purchase in Iceland, but we have no offices there.

6

Philip Morris Nordics Sustainability Report 2022
2021

DAILY SMOKERS 2022
Sources: The Danish Health Authority (2023), The Finnish Institute for Health and Welfare (2021), Statistics
Norway (2023), Public Health Agency of Sweden (2022), Icelandic Directorate of Health (2022).

2022 PERFORMANCEFOR THE NORDICS

A complementary regional materiality assessment
and prioritisation has been conducted in the Nordic
countries. In general, our Nordic stakeholder
engagement and materiality assessment shows thesame priorities as the global level; climate, littering,and our products’ health impacts are and should be
our main concerns.
Our stakeholders value the development of smokefree products for adult smokers who will not quit, andother strategies for improving health. Our businessintegrity, as well as working and living conditions
throughout our value chain, are also of high concern
to our stakeholders. We also should continue our work
to prevent littering and reduce post-consumer wastefrom our products, in part by eco-design and use of
biodegradable materials.
Environmental topics, such as minimising our impact on
climate, biodiversity, and greenhouse gas emissions, will
be even more important in 2030. As our world grows
smaller and we become more co-dependant, social
aspects such as transparency in governance, humanrights, as well as socioeconomic well-being and betterworking conditions in poor countries, are expected to
grow in importance.

7

Philip Morris Nordics Sustainability Report 2022

Sales, marketing, andconsumer communications

ClimateBusiness integrity
Innovation in wellness
and healthcare

Signiﬁcance of ESG impacts on PMI

PMI’s sustainability materiality assessment is
the foundation of our strategy – it allows us to
identify, assess, and prioritise material ESG topics –environmental, societal, and governance factors most
likely to have impact on or be affected by our business.

OTHER 2022
HIGHLIGHTS

Product health impact

Laws andregulations
Human capital development
Engagement with policymakers

Diversity and inclusion

Economic contribution
Materials and product eco-design

Water

Labor standards
Post-consumer waste
Operational discharge
Privacy

Health and safety at work
Socioeconomic well-being of
tobacco-farming communities

Employee well-being
Biodiversity

LOW

Sustainability
materiality
assessment

HIGH

OVERVIEW

Philanthropy

Animal welfare

LOW

HIGH

Signiﬁcance of PMI’s impacts on society

Key
Key

Relevance to our stakeholders

Relevance to our stakeholders
ENVIRONMENTAL

Very high

SOCIAL
GOVERNANCEHigh

Our most material topics

MediumEmerging topics

LowOur sustainability strategy

OTHER 2022
HIGHLIGHTS

2022 PERFORMANCEFOR THE NORDICS

OVERVIEW

2022 Global highligts
2022 highlights

The health impact of cigarette smoking is the mostsignificant and pressing negative externality our strategy
aims to address. Lessening this impact is the most valuable
societal contribution we can make and is the cornerstoneof PMI’s purpose and business strategy. Addressing thiscritical issue requires a three-pronged approach:P R O D U C T I M PA C T

24.9 m

1. Maximize the benefits of smoke-free products
2. Purposefully phase out cigarettes
3. Seek net positive impact in wellness and healthcare

SOCIAL

Consistent with the outcomes of our sustainability
materiality assessment, we have placed addressing
the social impacts of our products at the core of
our sustainability strategy. These are the areas onwhich we must focus our resources to innovate anddevelop solutions that can contribute to solving someof society’s most pressing challenges. This approach
represents an opportunity for growth and our strongest
competitive advantage.

(2021: 21.7 m)1(2021: 29.5%)2

Markets where PMI smoke-free products
are available for sale, of which 42% in
low- and middle-income countries

91%

USD 0.3 bn

USD 10.7 bn

ENVIRONMENT(2021: USD 9.2 bn)4

(2021: 71, 42%)3

Of total shipment volume covered byyouth access prevention programs
in indirect retail channels

Annual net revenue from wellness
and healthcare products(2021: USD 0.1 bn)(2021: 91%)5

86%

Recycling rate of IQOS devices
returned to our centralized recycling
hubs (weighted-average percentage
of each device that is recycled)68%

Of shipment volume covered bymarkets with anti-littering programsin place for combustible cigarettes

8.5%

Of shipment volume coveredby markets with smoke-freeconsumables take-back programs7(2021: 86%)6

SOCIALO P E R AT I O N A L I M PA C T

ENVIRONMENT

Our approach to sustainability
addresses our ESG priorities througheight impact-driven strategies– social and environmental –four focus on product impacts,
another four on impacts derived
from business operations. Nine
governance-related topics – policies,
rules, and procedures – define ourability to successfully implement
these strategies.

73

Of net revenues derived fromsmoke-free products

Cumulative investment behindsmoke-free products since 2008

Our approach

32.1%

Estimated total adult users of
PMI’s smoke-free products

40.7%

7

Of management positions held by women,
exceeding our 2022 target of 40%

Human rights impact assessments conductedsince 2018 in highest-risk countries(2021: 39.7%)(2021: 5)

55%

Proportion of tobacco purchased at no risk of net deforestationof managed natural forest and no conversion of natural ecosystems(2021: 37%)

Triple A

Score from CDP for climate,forest, and water security forthe third consecutive year

1 Figures pertain to total IQOS users. See Glossary.
2 For definition of net revenues related to smoke-free products, see Glossary. 2022 figure includes Swedish Match net revenues from November 11, 2022 (acquisition date)to December 31, 2022. 2021 data exclude the impact related to the Saudi Arabia customs assessments.
3 Including Swedish Match and excluding PMI Duty Free. Classification of low- and middle-income countries is based on World Bank report issued in July 2022.
4 Investments reflect research, product and commercial development, production capacity, scientific substantiation, and studies on adult smoker understanding.
5 Total shipment volume includes cigarettes, other tobacco products (OTPs), and smoke-free product consumables, See PMI’s ESG KPI Protocol 2022 for further details.
6 Recycling rate: percentage of the weight of each device that is recycled, weighted-average depending on device type and processing facility (includes 80% recycling and 6% energy
recovery). 2022 data cover CIRCLE hubs in Hungary and Japan.
7 Shipment volume includes heated tobacco units, e-vapor cartridges, and e-vapor disposables. See PMI’s ESG KPI Protocol 2022 for further details.

8

Philip Morris Nordics Sustainability Report 2022

OVERVIEW

Running to the end of 2025, it comprises 8 headline
goals connected to our strategy which aim to address
priority ESG topics identified in the sustainability
materiality assessment.

As we believe business can and must contribute toachieve the UN Sustainable Development Goals(SDGSs), we have linked each of our strategies to thecorresponding SDG.

Explore PMI's 2025 global Road Map

2022
Progress

2025
Aspirations

Purposefully
phase out
cigarettes

Intentionally work toward phasing out
cigarettes by ensuring that smoke-free
products represent at least 30% of ourshipment volumes and more than halfof our net revenues by 2025 while
continuing to reduce our combustible
shipment volume

1.

Smoke-free product shipment ratio(smoke-free/total)*

15.1 %>30 %2.

Commercial expenditure(smoke-free/total)*

74 %

-

Maximize thebenefits ofsmoke-free
products

Develop and commercialize sciencebased smoke-free alternatives, making
them available in 100 markets (of which
at least half in low- and middle-income
markets) and continuing to increase thetotal number of users

3.

Number of Nordic markets where PMI
smoke-free products are available for sale

5 of 55 of 5

4.

Total number of users of PMI
smoke-free products (in millions)*

24.9

-

Deploy robust youth access prevention
programs in indirect retail channels andensure that sales of our products abide by
our Marketing Codes

5.

Number of interactions with poin of sale
(POS) in regards to YAP Goal: minimum
ONE interaction PER POS = 100% Covering
Sweden, Finland, Denmark, Norway

SE 100 %FI 100 %DK 96 %NO 100 %SE 100 %FI 100 %DK 99 %NO 100 %Reduce post-consumer waste andprevent littering by implementing
comprehensive programs covering all
our consumables

6.

Number of anti-littering programs inplace for combustible cigarettes

7.

Number of deployed collection andrecovery programs for smoke-freeconsumables, devices, snus, andnictoine pouches

Follow eco-design and circularity
principles for all smoke-free electronic
devices8.
9.

Foster anempoweredand inclusive
workplace

Tackle climatechangeI M PAC TO P E R AT I O N A L

In the Nordic report our focus is on the areas
where we can have the biggest impact, such on
health, waste, workplace and illicit trade.

Key performance indicators

Reducepost-consumer
waste

In the Nordics we focus on the areas where we canhave the biggest impact locally, such on health, waste,
workplace and illicit trade. Through the thorough workin our global operation, we also ensure full focus on
improving the quality of life of people in our supply
chain and actions to tackle climate change and nature
on a global level.

The 2022 performance shows that we are on trackin our Product pillar and broadly on track across ourOperational pillar.

Goals

I M PAC T

The road-map for the Nordic countries outlines our key
goals and informs the route of our long-term plan.

PRODUCT

Our 2025 Road Map
for the Nordics

Ensure peace,justice andstronginstitutions

Philip Morris Nordics Sustainability Report 2022

OTHER 2022
HIGHLIGHTS

Primary SDGs
Product healthimpactProduct healthimpact, Sales,
Marketing, Consumer
Communication

Materials andproduct, Postconsumer waste

77

100

Percentage of returned electronic
devices that are recycled

100 %

100 %

% of returned pods that are recycled

100 %

100 %

Nurture a more diverse culture that
promotes equity and inclusion by
providing access to lifelong learning
to all our employees and improving
gender and local representation in
management globally

10. Proportion of women in senior roles

36.8 %

40 %11. Employee NPS (satisfaction) Index

4348

12. Equal Salary Certified

Yes

Yes

13. Total number of volunteering hours
enagement Nordics

243

900

Nurture a more diverse culture that
promotes equity and inclusion by
providing access to lifelong learning to
all our employees and improving genderand local representation in management
globally

14. Absolute CO2e Scope 1 + 2,
office + fleet (metric tons)

590.29CarbonneutralClimatePromote peaceful and inclusive
societies for sustainable development,
provide access to justice for all andbuild effective, accountable andinclusive institutions at all levels

17. Memoranda of Understanding with law
enforcement agencies/ governments, ina given year number of countries

2 of 5(SE andNO)

4 of 5

Ensure peace, justiceand strong
institutions

18. Number of laws enforcement officers/
officials met to exchange information andcollaboration. Year by year, Emails, numberof outreach, estimated total number

25

30

19. Tracking and tracing– percentage of packs
sold with unique code applied (in Nordics %)

100 %

100 %

20. Country studies and analysis to improveawareness of illicit trade – number of
Nordic countries (not including Iceland)

4 of 5

4 of 5*Global KPIs

92022 PERFORMANCEFOR THE NORDICS

Wellbeing of employees
and diversity in theworkplaceOVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

Executing our sustainability strategy
Anchoring sustainability at the core of our strategy

Our mission

We can only achieve our purpose by embedding sustainability in all that we do. At
PMI we see sustainability as a fundamental opportunity for innovation, growth, andpurpose-led, impact-driven, long-term value creation. Accordingly, we work hard to
integrate sustainability into every aspect of our business and activities.

Accelerate the end of smoking by offering adult smokers who would otherwise
continue to smoke scientifically substantiated alternatives than smoking and evolve inthe longer term into a broader lifestyle, consumer wellness and healthcare company.

Purposefully phaseout cigarettes

10

Maximize thebenefits of smokefree products

Philip Morris Nordics Sustainability Report 2022

In the Nordics we are focusing on the areas below, where we can have the mostimpact locally.

Reduce postconsumer waste

Foster anempoweredand inclusive
workplace

Tackle climatechangeEnsure peace,justice and strong
institutions

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

Purposefully phase out cigarettes

Intentionally work toward phasing out cigarettes by ensuring that smoke-free
products represent at least 30% of our shipment volumes and more than half of our
net revenues by 2025 while continuing to reduce our combustible shipment volume*

Coworkers at PMI's office in Oslo (Photo: CF Wesenberg)

Preparing for asmoke-free future
Our intention is not only to develop, scientifically
substantiate, and responsibly commercialize smokefree products to adult smokers, but to make sure theseproducts ultimately, and as soon as possible, replacecigarettes completely.
Addressing the impact of our combustible products on
consumers’ health is at the core of our strategy andcompany purpose. We deploy a four-pronged approach:
•
•

•
•
11

Develop science-based alternatives to cigarettesmoking
Broaden access to smoke-free products for those adults
who would otherwise continue to smoke, ensuring thishelps accelerate smoking prevalence decline
Purposefully phase out cigarettes
Market all our products responsibly

Smoking is one of the major factors contributing to
non-communicable diseases. The primary cause is
the harmful chemicals emitted while burning tobaccoand contained in the smoke. Therefore, our greatest
contribution to the SDGs is to replace cigarettes withalternatives for those smokers that otherwise would
continue to smoke.

Access to smoke-free products
Our priority is to address the health impacts associatedwith smoking by offering smoke-free, science-basedalternatives as an option to cigarettes for those adults
who would otherwise continue to smoke. Eliminating
combustion from nicotine-containing products is theway to significantly reduce their toxicity.
Replacing combusted cigarettes with smoke-freealternatives carries a significant public health potential, as
we can help reduce our products’ negative impact on

Philip Morris Nordics Sustainability Report 2022

"We would like to see that theauthorities set an end date forcigarettes combined with a tobacco
regulatory framework based on
reducing harm."
Claude Guiron

Director ScientificEngagement Nordics
individuals and society. To maximise the potential ofsmoke-free, harm reduced, albeit not risk-free alternatives
it is also important to limit the use of these new products
only to those who otherwise would continue smoking.
*During 2023, the goal was updated to: Intentionally work toward phasing out cigarettes by ensuring that smoke-free products
represent 75 percent of our net revenues by 2030 while continuing to reduce our combustible shipment volume.

OVERVIEW

However, we do not believe it is enough to simply offer
more choice to consumers. Rather, we are seeking
to help adult smokers switch to the alternatives now
available and leave cigarettes behind. We are seeking
to work with relevant stakeholders to ensure theseproducts replace cigarettes as quickly as possible.
We have, in the Nordics, a good chance of being global
forerunners in becoming smoke-free. Daily tobacco smoking
is already at low levels, and smoke-free alternatives suchas snus are already established categories.

The end of cigarettes
in the Nordic region
Our goal is to stop selling cigarettes – combusted tobacco
products – in the Nordics. The rate of daily smokers isalready low and steadily declining. With the cooperation ofhealth authorities, NGOs, and our business partners, we
can make a smoke-free future a reality.
To become a more sustainable tobacco company, wemust take every step possible to completely replacecigarettes with smoke-free alternatives. We’re tapping
into our R&D prowess and expertise to fundamentallytransform our entire business model and build our
future on smoke-free products.
At PMI International, we have more than 1,180
scientists, engineers, technicians, and support staff, eachworking in different, complex areas, and all playing a rolein helping us to deliver a smoke-free future.
Until now, the majority of research on smoke-free tobaccoand nicotine products has been carried out by companies
developing these products. But more independent, highquality studies are now increasingly available. To facilitatesuch studies, PMI’s research is publicly available forscientists to audit, verify, or challenge.

12

In general, scientists agree with us that RRPs are notrisk-free. Researchers also agree the combustion of
tobacco is the main cause of the high levels of harmful
substances in cigarettes.
A list of independent studies published on PMI’s smokefree products and/or our methods and results are
openly available at PMIscience.com.

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

Public engagements for a smoke-free future
One way we are working to raise awareness on tobacco harm reduction is
to take part in public debate and business forums, to reach out in different
arenas and engage local communities.
We advocate for a comprehensive and risk-proportionate regulatory frameworkthat acknowledges that not all tobacco and nicotine products are the same.

Reaching a smoke-free future
fasterThere is growing support for smoke-free alternatives. A
growing number of public health institutions, experts,
and governments support the role of alternatives for
adult smokers and public health.
We are fully committed to replacing cigarettes with
science-based alternatives as rapidly as feasible. But wecannot do it alone. In pursuing a vision of a smoke-free
future, we are eager to see measures introduced thatdrive large-scale switching as quickly as possible. We areconfident that the right mix of government leadershipand commercial initiative will dramatically accelerate
efforts to reduce the health burden of smoking.

PMI participated in several seminars at the yearly political events at Almedalen in
Sweden, and at the Soumi Areena Political Festival in Finland, to discuss how tocontribute to better public health by phasing out cigarettes. In Finland PMI also
arranged a smoke-free cruising.

A challenge is that we as a tobacco company are notallowed to communicate with smokers’ and inform
about the smoke-free alternatives.
Governments and public authorities therefore havea critical role to play in providing clear and accurate
information to consumers about this new category of
products and defining the regulatory frameworks that
can accelerate large-scale switching. All tobacco andnicotine-containing products are not the same, andpolicy and regulation should reflect this.

Philip Morris Nordics Sustainability Report 2022

A Danish delegation of politicians visiting our
Science Centre the Cube in Neuchatel, Switzerland.

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

An empowered
and inclusive workplace
Maximise the benefits of smoke-free products
Develop and commercialize science-based smoke-free alternatives, making themavailable in 100 markets (of which at least half in low- and middle-income markets)and continuing to increase the total number of users.
Deploy robust youth access prevention programs in indirect retail channels andensure that sales of our products abide by our Marketing Codes.

Coworkers at PMI's office in Oslo (Photo: CF Wesenberg)
Our priority is to address the negative health impacts
associated with smoking by phasing out our sale ofcigarettes and developing smoke-free, scientifically
substantiated alternatives to encourage smokers, whootherwise would continue to smoke, to switch. Our purpose
is to make our legacy product, the cigarette, obsolete.
By focusing our commercial expenditure on encouraging
adult smokers who otherwise would not quit, to switch
fully to alternatives, we aim to reach as many adultsmokers as possible in as many countries as possible.
PMI’s heated tobacco platform has been available in Sweden
and Denmark since 2016. In 2021, with the introductionof our e-vapor platform in Finland, and oral snus products
launched in Norway, smoke-free alternatives are now widely
available for adult smokers all over the Nordics.

13

Our retailers have been educated on point-of-sale advice
and communication in accordance with the principles of
PMI’s marketing code for all available products.

Smoke-free innovation
Smoke-free products deliver nicotine without
combustion. These products include heated tobacco(also known as heat-not-burn), e-vapor, hybrid products(combining features of heated tobacco and e-vapor
products), and oral tobacco and nicotine products such assnus and nicotine pouches.
By eliminating combustion, these products present, or
have the potential to present, less risk, albeit not risk-freeof harm to adults who switch to them versus continued
smoking of combustible alternatives.

Philip Morris Nordics Sustainability Report 2022

Snus has a long history in Sweden
and Norway and is a major factor in
keeping smoking prevalence among
the lowest levels in the world.

2022 PERFORMANCEFOR THE NORDICS

OVERVIEW

Heated tobacco
PMI’s heated tobacco platform is battery-powered
devices that heats specially designed tobacco units.
The devices heats tobacco without burning it andreleases a nicotine-containing aerosol that can beinhaled by the user.

WHAT IS THE
DIFFERENCE?

Heated tobacco

The nicotine-containing vapour the consumer inhales
contains significantly lower levels of harmful and potentiallyharmful chemicals compared to cigarette smoke.

The electronically heated tobacco units are novel
products containing specially processed tobacco plugs
designed to be heated but not burned, made of groundtobacco leaves.
The tobacco in a cigarette burns at temperatures inexcess of 600°C, generating smoke that contains highlevels of harmful chemicals. But our heat-not-burnproduct heats tobacco to much lower temperatures
without combustion, fire, ash, or smoke.

HEATS TOBACCOWITHOUT BURNING

E-vapor
PMI’s e-vapor platform comprises battery-powered
devices, commonly known as e-cigarettes. The device’s
heating technology uses a metallic mesh with tiny holes
to heat a prefilled, pre-sealed pod containing an e-liquidwith nicotine. This generates a nicotine-containing
vapour which is inhaled by the user. The weave
distributes the heat evenly with low risk of overheating.
The pods are manufactured, assembled, pre-filled, andpre-sealed in our production facilities. It also features
puff-activated heating and a low-liquid-level detection
system that ensures the consistency and quality of thevapour generated and inhaled.

SMOKE-FREE
ELECTRONIC
DEVICECONTAINS REALTOBACCONICOTINE

BURNS TOBACCOHEATS LIQUIDNICOTINE

RELEASES SMOKE AND
ASH

NO TOBACCO

Cigarettes
E-vapour

14

Philip Morris Nordics Sustainability Report 2022

OTHER 2022
HIGHLIGHTSOVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

Snus and nicotine pouches
Nicotine products for oral use, such as snus andnicotine pouches, are new additions to PMI’s portfolio
in the Nordic countries. In 2021, two new brands wereacquired through the acquisition of Danish AG Snus –nicotine pouches and traditional snus. They have been
redeveloped and relaunched as PMI products; snus
in Norway in 2021, as well as all-white snus in 2022,
nicotine pouches in Denmark in 2022, and both snus andnicotine pouches in Sweden in 2022. In November 2022,
PMI acquired Swedish Match – a global leader in oral
nicotine products such as snus and nicotine pouches.
The oral category remains small outside these markets.
Snus is banned in the EU, Sweden is an exemption.
Nicotine pouches have emerged as credible smoke-freealternatives in recent years. With the acquisition of
AG Snus and Swedish Match, PMI’s capabilities in thisarea have grown, and we expect additional product andmarket launches in 2023.

Snus
Snus is tobacco placed in the mouth under the lip.
It comes in loose format and in small pouches.

All white snus
PMI’s All White snus is only sold in Norway. It
contains a low amount of tobacco as well as
plant fibres, nicotine, and flavour.

Nicotine pouches
Nicotine pouches contain plant fibres with added
nicotine and flavour. They do not contain tobacco.

15

Philip Morris Nordics Sustainability Report 2022

Swedish Match joining PMI in late 2022 means significantly
enhanced prospects to progress toward accelerating our common
goal to make cigarettes obsolete. Following PMI’s acquisition of
Swedish Match, we will contribute towards the expansion of, andincrease in access to, smoke-free products as together we are
now present in the large, attractive, and growing U.S. smokefree market. We will also drive accelerated global expansion
opportunities for Swedish Match’s oral nicotine products through
PMI’s international commercial infrastructure.

Lars Dahlgren

President, Smoke-Free
Products (SFP) Oral Products
and CEO Swedish MatchOVERVIEW

Protecting future generations
As a leading manufacturer of tobacco and nicotine
products, we have a critical role to play in guarding
against youth access to our products. Accordingly,
we have developed an enhanced suite of measuresdesigned to ensure a holistic approach to guard against
youth access to our products.
We only offer our products to persons who legally
smoke and our retail partners are key to enforcing this.
We provide our partners with education, guidance, andsupport to help them understand the important role
they play in preventing underage smoking and othernicotine use. Their mission is two-pronged: if you’re
under-aged you should not have access to our products;
and if you do not already smoke, you should not start.
The retailers’ role and mission are parts of the principles
of PMI’s Marketing Code. PMI only works with partners
who follow our code.
Although legislation differs between the Nordic
countries on how they regulate smoke-free products,
PMI consistently applies our Marketing Codes and only
markets our products to adult smokers. This includes
new products, such as snus and nicotine pouches, which
in some cases were only recently regulated as othernicotine products. In Sweden, a new law came into force
on August 1, 2022.

OPEN platform
Guidance includes educational materials on Youth
Access Prevention (YAP) for both combustible andsmoke-free products. A basis for information and othercontent is the digital OPEN platform which is available
for retail store partners in all countries except Norway,
more than 5,000 retailers, as well as yearly in-store,
points of sale visits.

16

Through OPEN, they have access to information,
announcements, and articles on youth access prevention,
training, quizzes, campaign material to use in-store,
invites to anti-littering events and other content.
We develop local and engaging material to inspire retail staff
to engage and return to our content. The goal is for all staff
to refresh their knowledge and training on an annual basis.

Age verification
A further goal of Youth Access Prevention (YAP) isthat all PMI electronic devices like our heated tobaccoand electronic cigarette platforms will soon have age
verification.
Pilots of proprietary age verification technology
embedded in our products were conducted in New
Zealand and the island of Corsica in 2020 and 2021.
These tests highlighted that it is critical to ensure a
simple and easy to use mechanism for consumers tobe age verified, as well as to activate their devices. An
overly complex age-verification process would represent
a barrier in their decision to abandon cigarette smoking
and switch to a smoke-free alternative.

Philip Morris Nordics Sustainability Report 2022

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTSOVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

Marketing is one of the defining
strengths of PMI and its brands
Our Marketing Codes were updated and rolled out inthe organization during 2021.
Tobacco marketing is subject to extensive restrictions,
including outright bans, throughout the world. What
many people don’t realize, however, is that our own
standards are, in many places, higher than those ofsome governments. In such cases, we follow ourMarketing Codes. If the opposite occurs and local laws
set a stricter standard than our Codes, we, of course,
follow the law. Here are a few examples of how theserules apply in our day-to-day marketing:•“This is important for real and would havea real positive effect on the 2.5 million
smokers in the Nordics. To partake in the
open debate is key to make progress and toreach our vision of a smoke-free future.”

We don’t use cartoons, youth-oriented celebrities,
or models who are or appear to be under the age of25
We don’t engage in product placement in movies
or on television – and we decline every request we
receive
We don’t place the names or logos of our cigarettebrands on any promotional items likely to be usedor seen by minors••

All our marketing professionals, wherever they are in theworld, must adhere to these marketing practices at all times.

Our global marketing practices worldwide
follow four core principles:
1. We market and sell our products toadult smokers
2. We warn consumers about the healtheffects of our products
3. Our marketing is honest and accurate
4. We respect the law

17

Philip Morris Nordics Sustainability Report 2022

Anette Rosengren, Managing Director, PMI Nordics, at the Stockholm Media Week,
discussing communication in connection to PMI's smoke-free transition.

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

Focus of making cigarettes obsolete

Beyond our primary focus of replacing cigarettes with alternatives for adults who would otherwise continue tosmoke – thereby reducing the negative impacts of our products on the health of our consumers – we understandthe need to address the environmental impact of our products by embedding principles of circularity and ecodesign, implementing effective post-consumer waste management solutions, addressing litter, and promoting
responsible disposal of products at their end-of-life.

Coworkers at PMI's office in Oslo (Photo: CF Wesenberg)

We care for our environment

Reducing waste from our products

The Nordic countries are frequently recognised as
being good places to live. One of the contributory
factors to this is the region’s commitment to the naturalenvironment. Denmark, Finland, Iceland, Norway, andSweden consistently score highly on indexes of theworld’s most environmentally conscious countries.

•

Cigarettes: We aim to reduce cigarette butt littering by encouraging behaviour change, through awarenessraising campaigns together with our partners, and by empowering consumers to dispose of cigarette butts
appropriately. We work continuously to replace the plastic in cigarette filters with more sustainable alternatives.

•

Smoke-free consumables: As we grow our smoke-free business, we seek to ensure that the consumables
used with our electronic devices are disposed of responsibly at their end-of-life and that users have access torecycling schemes that have an environmental benefit, are economically viable, and are valued by consumers.

•

Smoke-free electronic devices: To reduce the depletion of finite resources, we aim to integrate sustainability
into our product design, drive circularity by improving recyclability, and increase opportunities to refresh andrepair used devices.

•

Packaging: We strive to minimize packaging materials and improve their circularity by increasing theirrecyclability and promoting the use of materials made from renewable resources.

The geographical features of the region contribute toecological awareness and pride. The fjords of Norway,
the glaciers of Iceland, the forests of Sweden, thebeaches of Denmark, as well as the many, many lakesof Finland. The region is home to some of the longest
coastlines and oldest mountains of the world.
The Nordic nations have cultivated a deep commitment
to the protection of our nature. Even our cities rank
among the most sustainable in the world.

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Philip Morris Nordics Sustainability Report 2022

OVERVIEW

Local activities 2022

2022 PERFORMANCEFOR THE NORDICS

COLLECTION AND RECOVERY PROGRAMS FORSMOKE-FREE CONSUMABLES

During the year, we participated in an anti-litter seminarand panel discussion with the Finnish NGO Keep theArchipelago Tidy in the Parliament in Helsinki.
We also deployed collection and recovery programs for
smoke-free consumables in Finland, resulting in almost
30% of retailers offering pods returns.
In Sweden, we successfully launched take-backprograms for snus cans at several festivals such as
Storsjöyran, to raise awareness.
In Denmark, we launched an information campaign
aiming at create awareness that heat-not-burnt devices
can be recycled.
In Norway we participated in various events such as gold
tournaments in festivals to raise awareness on anti-littering.

Recycling of smoke-freeconsumables and devices
There is a risk that our smoke-free consumables usedwith our heat-not-burn devices could be littered. But wehave good indication that the littering rate is lower thanfor cigarette butts.
The non-combustible nature of these products
eliminates the need for consumers to throw their filterson the ground to extinguish them. Our analysis ofconsumer behaviour shows a willingness to put usedsmoke-free tobacco stick filters back in the case to beproperly disposed of later.
In all countries where our electronic device for heated
tobacco is sold, they can be returned for inspection,
disassembly, and recycling in line with strict regulatory
requirements, as part of the CIRCLE programme(centralised inspection and recycling).

19

OTHER 2022
HIGHLIGHTS

Building sustainability considerations, such as source
and circularity, into product design is a way to control
environmental and social impacts across the life cycle ofa product – from development and manufacture to use
and disposal.

Local recycling programme for
e-vapors and pods
In Finland, we have introduced a recycling programme fornicotine pods and e-vapors together with a local partner.

Philip Morris Nordics Sustainability Report 2022

The solution was launched with the device in early2021 and collection points have been set up at 470
locations across the country.
Unbranded recycling boxes are placed next to the
cashier of stores that sell the e-vapor platform.
Consumers are advised to drop used nicotine pods, aswell as broken e-vapor devices, in the box for recycling.
Some stores provide reusable pouches for collecting
the pods and delivering them to the recycling box inretail stores. Our local partner then separates metal andplastic from the collected units and pods.

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

Pocket ashtrays available in all
markets
Our reusable pocket ashtrays have been launched in all
Nordic markets. They are available through our NGO
partners, retail partners, and online stores. Finland waslast to introduce them and already 22 000 units havebeen distributed.
The pocket ashtrays are perceived to be smart, useful,and convenient. They are fire-proof and prevents odour
from leaking, and they are small and light enough to be
carried around, which is essential for them to be used.
Except for in Denmark, the ashtrays are branded with
our partner NGOs. The Danish version is neutral.
All ashtrays have a URL or QR-code that leads to local
websites with information on the consequences of cigarettebutt littering and advice on how to enable better decisions.

Number of pocket ashtrays:
Sweden: approx. 25 000 pcs
Denmark: 55 000 pcs
Finland: 22 000 pcs
Norway: approx. 2 000 pcs

Ongoing communications activity in Sweden, together with Håll Sverige Rent, to promote portable ashtrays.

20

Philip Morris Nordics Sustainability Report 2022

OTHER 2022
HIGHLIGHTSCONSUMERS & REVENUEOVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTSWorld Cleanup Day
Every year, in September, our Nordic team on sites in Stockholm, Copenhagen, Osloand Helsinki get together to participate in the global initiative World Cleanup Day. The
team spend the day picking up rubbish and litter in the streets, squares, and parks.
This year the team gathered almost 40 kg of cigarette butts, snus pouches litter and packages while contributing
to cleaning up the cities. This is equivalent to more than 180 000 butts.
With this activity we also support the important work that the local anti-littering organisations are doing. HållSverige Rent, Hold Danmark Rent, Sneipfritt, and Pidä Saaristo Siistinä ry are all important and appreciatedpartners to us.

CIGARETTE BUTTS THE MOST COMMON TYPE
OF LITTER IN SWEDEN
Top 3 litter in Sweden
1. Cigarette butts 48%
2. Snus pouches 17%
3. Single-use plastics 15%
Source: The Keep Sweden Tidy Foundation 2023

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Philip Morris Nordics Sustainability Report 2022

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

An empowered
and inclusive workplace
Foster an empowered and inclusive workplace
Our employees are drivers of innovation and the ambassadors of our purpose. We
aspire to provide meaningful and fair employment, opportunities to grow, and aworkplace that champions well-being and inclusion.

Coworkers at PMI's office in Oslo (Photo: CF Wesenberg)

Decent work andeconomic growth
Our long-term business success relies on human capitalin the form of the dedication, talent, and passion of
our employees. It is essential for us to provide a fairand inclusive workplace that upholds good working
conditions, protects the health and safety of employees,
promotes their well-being, and offers opportunities togrow and improve their employability.
Investing in our people and providing meaningfulemployment helps us to recruit and retain talented
individuals, achieve high productivity and efficient
operations in a context of rapid change, and deliver on
our company’s purpose.
By protecting and promoting equality, diversity, equity,and fair treatment – human rights that are essential
to unlocking social and economic development – we22seek to instil in our workers a sense of belonging andmaintain an inclusive workplace culture.

Fostering diversity, equity,equality, and inclusion
A gender gap is a talent gap. Building a gender balanced
organisation, therefore, remains one of our top
priorities. Globally, 31.0 percent of our employees were
women in 2022, and 32.2 percent of our managerial
roles were held by women. In the Nordics 38.4 percent
of managers were women.
In the Nordic region we use a balancing hiring strategy
to bring us closer to gender equality. We use softwarethat helps us compose ads that will attract more diverse
applicants. We provide unconscious-bias training forrecruiters and for hiring managers. Applicant selection isweighted, and female applicants get their first meetingwith female managers.

Philip Morris Nordics Sustainability Report 2022

Our Nordic offices received an Equal Salary Certificationin 2020. This includes an external audit of our policies,
salaries, and career paths, with interviews and focus
groups on equal treatment. The certification is valid forthree years.
We have employees of 26 nationalities working at our
Nordic offices and we are convinced this makes ourcompany stronger.
All our efforts, both global and local, has led to PMI
being certified as a Global Top Employer for the fifth
year in a row, by the Top Employers Institute.

OVERVIEW

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Philip Morris Nordics Sustainability Report 2022

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTSOVERVIEW

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

An empowered
and inclusive workplace
Tackle climate change
Achieve carbon neutrality in our operations and accelerate our decarbonization
toward net zero across our value chain.

Coworkers at PMI's office in Oslo (Photo: CF Wesenberg)
Climate change is among the greatest threats to society.
There is broad scientific consensus about the urgency ofsetting more ambitious emission reduction targets to limit
the rise in the global temperature to 1.5 degrees Celsius
above preindustrial levels.
Our value chain spans the globe — from factories in
Lithuania and laboratories in Singapore to farms in
Argentina and our local office in Copenhagen and end-oflife recycling of smoke-free consumables in Gothenburg,
Sweden.
Given the size and reach of our company, our actions,practices, and policies have the potential to significantly
impact sustainable consumption and waste, production
patterns, and the environment at large. Our businessactivities rely on healthy ecosystems, and we understandthe impacts of climate change across all areas of ouroperations. Carbon neutrality remains a top priority.

24

Our climate strategy aims to address pertinentclimate change risks and build resilience while seizing
opportunities presented by a low-carbon future. To
deliver on our climate ambition, we rely on robust
carbon footprint accounting, analysis of climate changerelated risks and opportunities, ambitious mitigation
targets, clear management and governance structures,and key enablers such as our internal carbon pricing.
PMI has aligned with the recommendations of theIntergovernmental Panel on Climate Change (IPCC)
Special Report (2018). We are currently integrating
the latest information from IPCC Sixth Assessment
Report (2021) to further improve scope and directionof our climate action. Another relevant step has been
to update the baseline of the accounting, moving itfrom 2010 to 2019, to include changes in footprint andbusiness model.

Philip Morris Nordics Sustainability Report 2022

Our work to reduce absolute emissions is guided byscience-based targets aligned with a scenario of anincrease in global temperatures of no more than 1.5
degrees Celsius above pre-industrial levels. Our targets,
approved by the Science Based Targets initiative(SBTi), commit us to reducing our absolute scope 1+2
greenhouse gas (GHG) emissions by 50 percent by
2030 versus our 2019 baseline, and to reducing ourabsolute scope 3 GHG emissions by 50 percent within
the same timeframe.

OVERVIEW

Our Low-Carbon Transition Plan (LCTP) was publishedin October 2021. It provides a transparent and detailed
view of how we plan to achieve our climate ambitions,
how we will measure success, and how we will reporton progress. The LCTP describes our approach tocarbon pricing, our portfolio of climate investments,and our governance and management arrangements
and other tools that will help us deliver on our climate
targets.

PROGRESS ACHIEVED THUS FAR

BRINGING OURTARGETS FORWARD

DELIVERING OUR TARGETS ON OUR CLIMATE STRATEGY

2010

2021

2025

2020

-55%

Reduction in our
direct operations(scope 1+2)

-50%

Reduction in our
upstream anddownstream value
chain (scope 3)

The plan brings forward PMI’s ambitions to achievecarbon neutrality in our direct operations (scopes 1+2)
by five years, to 2025, and to achieve carbon neutrality
across our entire value chain (scopes 1+2+3) by 10 years,
to 2040 – 10 years earlier than the previous 2050 goal. *Carbon neutral
in our direct operations(scope 1+2), target
accelerated to 2025;
formerly 2030

New baseline
for our targets
set from 2019
Set science-basedtargets 1.5°C pathway
vs. 2019 baseline
New approachto carbon pricing(shadow price + carbon levy)

Net-zero ambition
Across our value chain,target accelerated to 2040;
formerly 2050
Engaging suppliers
PMI to set a new target on %of suppliers adopting
science-based target
Nature-based solutions
Introduction of the portfolioof climate investments tofinance new technologies
and insetting solutions

8M

2030

2040

Carbon neutral
in our direct operations(scope 1+2)

ACHIEVEDSCIENCE-BASED TARGETS

100%
of factories will becarbon-neutral certified-50%
Absolute reductions in our
direct operations(scope 1+2)

35%
of our fleet will be hybrid orelectric

NET ZERO-50%
Absolute reductions in our
upstream and downstream
value chain (scope 3)

35%
Absolute reduction vs. 2019in our tobacco supply chain
100%
green electricity in
manufacturing50%
reduction in the amount ofplastic litter from all products

Across our entire
value chain(scopes 1+2+3)

100%
Forest net positive in our
tobacco supply chain

6M

The plan also introduces a new goal for PMI’s criticalsuppliers to adopt SBTs in line with the SBTs that PMI has
already committed to, aligned with the 1.5°C pathway
necessary to meet the goals of the Paris Agreement.

Impact of
COVID-19
Carbon neutrality(scope 1+2)

4M

Net zero(scope 1+2+3)

CO2e metrictons

2M

0

Scope 1+2 emissions-1M

Philip Morris Nordics Sustainability Report 2022

OTHER 2022
HIGHLIGHTSPMI’S LOW-CARBON TRANSITION PLAN

PMI’s Low-Carbon
Transition Plan

25

2022 PERFORMANCEFOR THE NORDICS

Scope 3 emissions

Offsets and carbon removals

Net carbon emissions

OVERVIEW

Decarbonisation in the Nordics

From an operational perspective, our global
sustainability functions coordinate the company’s
activities with regional sustainability working groups andlocal market coordinators. This helps to ensure that our
global strategies and programmes can be implemented
at the market level and that local realities are reflectedin our global efforts.
We are proud of the progress PMI has made on a
global scale. We believe it is equally important tosupport these targets at a local level. In the Nordic
region, efforts have been made to minimise our climate
footprint focus on areas we can impact locally, such as
initiatives to reduce littering, sourcing renewable energy
for our offices, and making our car fleet greener. Our
offices in Stockholm and Copenhagen are equippedwith solar panels on the roofs.

Decarbonising factories
The Nordic markets are supplied with tobacco products
from several factories, among them PMI’s factory in
Klaipeda, Lithuania. Over the past decade, PMI has
worked on optimising the factory’s energy usage toreduce carbon emissions. This includes upgrading its
utilities equipment – such as chillers and compressors –and facilitating heat recovery to optimize the fuel used
to heat the buildings. The factory also has a biomass
boiler producing energy from renewable resources,and offsets its remaining carbon emissions from theburning of natural gas with biogas certificates that meetthe highest standards. In 2019, it was the first of ourfactories to go carbon neutral.

26

Fostering carbon neutrality
in our fleet
Following the development of our carbon neutrality
strategy for our fleet of vehicles in 2020, PMI instituted
a new Global Vehicle Fleet policy early in 2021. To
reduce carbon emissions in our fleet, we invest in
sustainable hybrid and electric vehicles, and more
effective driving to optimize energy consumption while
improving operational efficiency. We anticipate thesenew vehicles will emit 40 percent less carbon emissions
than the models they replace.
Today all vehicles in the Nordics are sustainable hybrids
or electric vehicles.

PMI tops the EBI ranking
Philip Morris International tops the Ecogain Biodiversity
Index (EBI) list for the US this year. The index examines
how large companies report on biodiversity in theirsustainability reports; how they identify, set goals,
implement measures and follow up on biodiversity. The
main purpose of the index is to provide an overview
of how businesses perform in setting targets andmitigating biodiversity impact and inspire companies toact and report on the subject in a transparent manner.
PMI lands this top position by conducting a thoroughmapping of its impacts on biodiversity throughout its
value chain, both upstream, downstream, and in thecompany’s direct operations. Time-bound goals havebeen set for a net positive impact on forests by 2025,
as well as “zero net deforestation of managed naturalforests and no conversion of natural ecosystems by2030”. Philip Morris is also engaged with the Task Forceon Nature-related Financial Disclosures (TNFD), a ofglobal engagement in biodiversity that is rare among the
top 100 largest US companies.

Philip Morris Nordics Sustainability Report 2022

2022 PERFORMANCEFOR THE NORDICS

The Ecogain Biodiversity Index 2022 is the fifth editionof the report. In 2022, the EBI included the 300 largest
companies in Europe, and for the first time the 100
largest listed companies in the United States.

OTHER 2022
HIGHLIGHTS

2022 PERFORMANCEFOR THE NORDICS

OVERVIEWOTHER 2022
HIGHLIGHTS

An empowered
and inclusive workplace
Ensure peace, justice and strong institutions
Promote peaceful and inclusive societies for sustainable development, provide accessto justice for all and build effective, accountable and inclusive institutions at all levels

The price of illicit trade
The links between illicit trade and organised crime
are well established, all the way to arms trade, humantrafficking networks and terrorist financing. Throughsmuggling, counterfeiting, and tax evasion, governments
lose tax revenues, legitimate businesses are damaged,
and consumers are exposed to cheap, poorly made, andunregulated products. This also undermines health efforts
to reduce smoking prevalence and prevent youth initiation.

We invest in preventive and protective measures,
including due diligence of importers, distributors andwholesalers, and comprehensive, digital track-and-trace
solutions for our tobacco and smoke-free products
across our entire supply chain.
PMI works with local customs and law enforcement
to prevent illicit trade. Customs officers are trainedin identifying our products and find out their origin,market, and possible connection to other incidents allover the world.

Raising awareness of the illicit trade and sharing
information on how to address it is an important step
forward. PMI addresses illicit trade by maintaining the
integrity of our supply chain and cooperating withcustoms and law enforcement agencies to safeguard
the legitimate supply and purchase of our goods, and toprevent and reduce the illicit trade of our products.

The KPMG report provides valuable information that is sharedwith local law enforcement. According to interviews withlaw enforcement agencies included in the KPMG report, theproduction and distribution of counterfeit cigarettes within
EU ers is increasing, with criminal organizations centering theiractivities toward higher-taxed and higher-priced EU member statesand gaining larger profits. Countries such as Belgium, Denmark,France, and Germany are witnessing a growth in cigarette
seizures and raids on clandestine manufacturing operations.
PERCENTAGE OF CONTRABAND AND COUNTERFEITOF TOTAL CIGARETTE CONSUMPTION 2022

3.9%
Denmark

27

Philip Morris Nordics Sustainability Report 2022

14.7%

12.4%

Finland

Norway7.3%
SwedenILLICIT CIGARETTE
CONSUMPTION IN THE
EU, UK, NORWAY AND
SWITZERLAND (2022)
This report is an annual study
that estimates the scale anddevelopment of the illicit
cigarette market in the 30
European countries. It iscommissioned by Philip Morrisand prepared by KPMG, and it
covers all 27 member states aswell as United Kingdom, Norway
and Switzerland.

OVERVIEW

2022 PERFORMANCEFOR THE NORDICS

An empowered
and inclusive workplace
Improve the quality of life of people in our supply chain
Eradicate systemic child labour in our tobacco supply chain
Ensure all contracted tobacco farmers make a living income, and partner with ourdirect suppliers to promote a living wage for their workers

Promoting and adhering to sustainable businesspractices helps safeguard human rights, improve labour
conditions, protect workers’ health and safety, tackle
social inequalities, and alleviate poverty.
Agricultural supply chains face specific sustainability
and human rights challenges. The tobacco we source
is cultivated in many regions of the world, including
low- and middle-income countries, where it is typicallygrown on smallholder farms. The socioeconomic wellbeing of our over 350,000 farmers and their families
depends on many factors, including the nation’s healthand educational services, political stability, resilience
to extreme weather events and conditions, accessto markets, and public infrastructure. Our supply
chain activities and investments extend beyond our
direct effect on farmers, impacting people’s assets,
capabilities, opportunities, and standards of living.

28

As our business transforms, our supply chain evolves aswell. Promoting fair working and living conditions in our
broader supply chain is therefore increasingly important.
Caring for the quality of life of the people in our supply
chain is consistent with our business purpose and way
of working and is a major predictor of our long-term
success. It is not only right, but also the best businesspractice.

Agricultural Labour Practices
Sound standards and practices to manage our supply
chain sustainably and safeguard human rights are vital
prerequisites to harnessing the connections in our
supply chain to improve the quality of life of those
involved. A principal aim of PMI is to provide a decent
livelihood to all contracted farmers in our tobacco
supply chain.

Philip Morris Nordics Sustainability Report 2022

This has been a focus since we introduced ourAgricultural Labour Practices (ALP) programme in 2011.
The mid- and long-term targets that we have committed
to cover labour standards, income, work hours, healthand safety, accommodation, and access to water,
sanitation, and hygiene.
Our ALP Code, based on International Labour
Organization (ILO) conventions and aligned with theUnited Nations Guiding Principles on Business andHuman Rights (UNGPs), includes seven principles and
33 measurable standards applicable to all the contracted
farmers from whom we source tobacco (more than
286,000 farms in 28 countries). Our integrated
production system enables traceability at the farm level.
And we have a robust due diligence framework in place
to evaluate the implementation of our ALP Code.

OTHER 2022
HIGHLIGHTSOVERVIEW

Zero child labourin our supply chain
We maintain a relentless focus on preventing incidents
of child labor and take immediate action when they arise.
Our objective is to eradicate child labour cases in our
tobacco supply chain that are repetitive and systemic by
2025. We acknowledge that isolated cases might persist,and we will remain alert and tackle them promptly whenidentified.
We updated our methodology for calculating childlabor prevalence in 2022 in line with our new STSC
framework. Child labor datasets now depict theprevalence of child labor among contracted farmers
supplying tobacco to PMI purchased volume. This sets a
new baseline moving forward. Learn more in PMI’s ESG
KPI Protocol 2022.
We use International Labour Organization (ILO) standards
to measure our progress toward our target of zero childlabor. Our methodology centers on preventing theemployment of children under age 18 doing hazardous
tasks, under age 15 being hired, and under age 13 doing
any tobacco-related tasks. It reinforces our risk-based due

diligence processes by improving visibility and granularity
on child labor across our sourcing markets.
Child labor prevalence was 0.1 percent in 2022 in ourpurchased tobacco. While this data point does notreflect child labor prevalence in our total contracted
farm base, the continuous reduction in child labor
incidences among farmers supplying tobacco to PMI
that we have observed gradually, is due to years of
implementation of our ALP program, continuous
training, and targeted interventions. While isolatedcases of child labor do persist, systemic cases have beenbroadly eradicated in the farms we contract with.
Our field technicians continued to conduct farm-byfarm monitoring and to support farmers in addressing
and remedying child labor risks and incidents. During2022, field technicians monitored 100 percent ofcontracted farms supplying tobacco to PMI for childlabor-related issues.
The decrease in child labor incidences is mainly
attributed to Malawi, North Macedonia, and Pakistan
where we observed the positive impact after many
years of implementation of the ALP program.

ALP Code Standards
•
•
•
•

29

No child labour
Fair income and work hours
Fair treatment
No forced labour or human trafficking

Philip Morris Nordics Sustainability Report 2022•••

Safe work environment
Freedom of association
Terms of employment

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTSOVERVIEW

Performance in ESG ratings,
rankings, and indices•

At PMI, we understand the value of participating in ESG ratings:
it helps us assess our sustainability performance, benchmark
ourselves against our peers, and, most importantly, identify areas
for improvement on which we act when they can meaningfully
contribute to improving our company’s performance in line with oursustainability strategy.
•••

We prioritize our participation in ESG ratings that are mostuseful to us and our stakeholders, based on:
The credibility of the methodology and our ability to interpretand use the results
Recognition of the rating among the investor community, as
well as participation by our competitors and peers••

2022 PERFORMANCEFOR THE NORDICS

OTHER 2022
HIGHLIGHTS

Further reading

Its value as a learning opportunity, including a sufficient
feedback loop to allow us to improve over time
Resources required, which should not undermine ourcompany’s focus on performance improvement
The organization’s openness to dialogue, allowing us tounderstand expectations and results, share knowledge,
correct factual inaccuracies, and provide input on ratingsenhancements

The following table provides an overview of certain ratings that
evaluate PMI’s performance but is not intended to represent all
ratings PMI is featured in.

CELEBRATING 10 YEARSOF THE ALP PROGRAMME
In 2021, we commemorated the 10th
anniversary of our ALP programme. A
dedicated report contains reflections on
progress made, achievements celebrated,
and recognitions of the challenges ahead.

Download the report here

pmi.com/sustainability/pmi-celebrates-10years-of-its-agricultural-labor-practicesprogram

Philip Morris International tops the EBI ranking list for the US in 2022
The Ecogain Biodiversity Index examines how large companies report on biodiversity in their sustainability reports; how they identify,
set goals, implement measures and follow up on biodiversity. The main purpose of the Ecogain Biodiversity Index (EBI) is to provide an
overview of how businesses perform in setting targets and mitigating biodiversity impact and inspire companies to act and report on
the subject in a transparent manner.

30

Philip Morris Nordics Sustainability Report 2022

TRANSFORMING FOR GOOD

Towards asmoke-free future
PMI Nordics Sustainability Report 2022

Nordic Headquarters

Sustainability contact

Philip Morris AB
Karlavägen 108
104 51 Stockholm, Sweden

Cecilia Lilljeforss
Manager Communications Nordics
Stockholm, Sweden

pmi.com/se

cecilia.lilljeforss@pmi.com