W A TE R
M AN A G E M EN T
PHILIP MORRIS

August 2024

Water is one of the most widespread substances in nature andthus the most important natural resource, which is essential to thefunctioning of the ecosystem, society and economy. Withoutwater, there is no life on Earth - its surface is covered with water in
71%. That is why it's so important to save it and make sure not topollute it. Our future depends on it!

The UN Sustainable Development Goals leave nodoubt about the importance of water - both directly,
looking at Goal No. 6 - Clean Water and Sanitation,and indirectly in goals such as No. 13 - Climate Action,and No. 15 - Life Under Water.
The evidence showing how important water is toeveryone in the world, and the fact that we are
increasingly seeing problems with it, speak for itself:• Over the past decade, the World Economic Forumhas ranked water-related risks among the top fiveworldwide in its annual Global Risks Report (SIWI,2020).
• Climate change is causing an intensification of thewater cycle in nature. Thus, it brings more intense
rainfall and associated flooding, as well asincreasingly intense droughts in many regions (IPCC,2021).
• According to UNICEF and WHO reports, about 2.3
billion people worldwide lack soap and water towash their hands at home (WHO/UNICEF 2021).
• Since 1970, the population size of freshwater
species has declined by an average of about 84
percent. (WWF Living Planet Report, 2020).
The above facts leave no doubt as to how importantmatter is to take care of water resources, as well as totake an interest in the challenges and threats that affectwater management in the region.
Philip Morris International has also responded to thischallenge, adding the Alliance for Water Stewardship(AWS) certification to its core sustainability pillars in2017.

The company's ambition is to have this standard
certified at all of our facilities by 2025. The Kraków
plant was PMI's eleventh plant worldwide and thesecond company in Poland to receive AWS
certification in 2020. This is a great honor for us, butalso an obligation. 2023 was a challenge for us, as weembarked on a recertification audit. Since theacquired AWS standard certification is valid for threeyears, last year's positive audit result allowed us tokeep the certificate and renew it for another threeyears.
The implementation and keeping the AWS standard at
the Kraków factory allows for sensible water
management and the implementation of solutions tosave water in ongoing production processes, but also
to improve the quality of wastewater produced in theprocess. This standard enables broad stakeholder
collaboration, provides a basis for discussion andallows us to analyze risks concerning water
management in our region. Our goal is not only to savewater in our production processes - we also strive to
mitigate our impact on the water environment by
taking care of biodiversity or educating our employeeson environmental topics and more.
We present to you the Water Report, in which wehave the honor and pleasure of sharing our activities
and experiences, believing that some of them may
inspire or be directly applicable to other organizations
as well. We strongly encourage you to cooperate on
the projects. Together we can do more!

Local AWS team

We try to make sure that the actions wetake respond to the threats in our region.
Thanks to tools such as Water Risk Filter, wehave the ability to identify them. Our
biggest problem in the region is surface
water pollution - unfortunately, the qualityof water in our country's rivers and lakes isclassified as high risk. The next classified
risks in our region are shown in the adjacenttable. The aforementioned risks areidentified and discussed together with ourstakeholders during meetings of the Water
Alliance.

RISK

THREAT LEVEL

Surface waterpollution

High

Flood

MediumDeterioration of theecosystem

MediumDroughts

MediumAmount of water
consumption

Small

Access to sanitation andsafe drinking waterVery small

We monitor our water consumption andidentify areas, where we can implement newsolutions or improve those already in place totake care of both the quality of wastewater andsave water that is consumed in themanufacturing processes of our products.
From 2019 a local AWS standards
team, led by a sustainability manager
and a project leader, is working at
the Kraków factory.
The team includes specialists from various
departments
such
as:Primary(department for preparation of tobaccofor production), Facility (department formaintenance of the building andinstallations and utilities), General Services(department dealing with services
provided to PMI, i.e. canteen, laundry ofwork clothes or maintenance of green
areas), Internal Communications andExternal Affairs and representative ofPhilip Morris Tobacco Ltd. (engaged in thecontracting of tobacco for pro- duction
and cooperation with tobacco growers).

Below we cite some examples of technical andengineering projects we are implementing:
1. Implementation of a process for washingadhesive apparatuses in closed loop washingmachines.
2. Use of heat recovery water from a dryer fora wet dust collection unit in one of thePrimary department's lines.
3. Reduction of the consumption of steam
needed for the preparation of cut tobacco.
4. Replacement of key steam system dehydratorswith modern ones using the Venturi effect.

WATER SAVINGGOALS VS. PERFORMANCE

In last year's Water Report, we declared that by2024 we aim to reduce water consumption by 20
percent in comparison to 2020 (meaning thewater we use for production processes).
What stage are we at?
Comparing the figures at the end of 2023 withthose of 2020, our water consumption has
decreased by 19 %!
In 2023, we used almost 12,000 cubic meters lesstap water than in 2022, 54 percent from which
was possible with reduction in the use of water
diverted to the production process of ourproducts.
We also monitor the water consumption of theprocess in an indicator per million cigarettes
produced.

2021

2,79*

2022

2,37*

2023

2,58*
2,44

2024

2,81*?

* m3 / milion cigarettes

We ended 2023 with a water
consumption rate of 2.44 m3/million
cigarettes, an achievement better than
the target of 2.58 m3/million cigarettes.
Our target for 2024 is consumption of2.81 m3/million cigarettes. It is higher
than in 2023, which is due to the factthat our Kraków factory is in the processof transforming from a conventional
factory to a dual factory producing
innovative tobacco products that provide
a better alternative for adult smokers which results in the addition of newprocesses.

WATER PROJECTS IN PMPL
FOCUS ON FIVE AVS RESULTS:

GOOD WATERMANAGEMENTSUSTAINABLE
WATER BALANCEGOOD WATERQUALITY

SAFE WATERSANITATION AND
HYGIENE FOR ALL

IMPORTANTWATER-RELATED
AREASGOOD PRACTICES
Restoration of urban flower meadows
Together with the Urban Greenery Administration, we were able to restore
1.5 hectares of urban flower meadows, which had a positive impact on boththe image value and biodiversity of the area. Flower meadows not only look,smell and even sound beautiful, but also have a positive effect on waterretention, which is especially important in urban areas. Our employees alsojoined in the action, volunteering to sow meadows in Lotników Park.

Insect houses
Currently, nearly 7,000 square meters of land owned byPhilip Morris Polska S.A. in Kraków are covered with flower
meadows. To ensure that visiting insects can stay in the area
longer, we installed seven houses for them during thespring. They were created during a workshop on insects thatwas held at our Misie Filipisie preschool for the children of
the staff.

Pollinators - our friends
We received an unusually large number of beautiful entries
for the photo contest of the above name. By holding acontest for employees, we wanted to remind them of theimportant role that insect pollinators play in nature.

GOOD PRACTICES
Cleaning up the Dłubnia River and the area of theplanned Wozniców ParkFor several years now, we have been participating in an action
organized by our stakeholder: the EcoTravel Foundation,
which invites residents to clean up the banks of the Dłubnia
River twice a year. We are very satisfied with the fact thatwith each action there seems to be less waste. Sadly, tires,used equipment, construction waste, bottles that should neverreach the riverbank, are still found.
In June, we were pleased to support the cleanup of the site ofthe future Woźniców Park. Together with the Urban Greenery
Administration, councilors and residents of District XIV, wecollected waste from the area, while learning about thedevelopment plans.

Earth DayAs part of our Earth Day celebrations, every year we engage
employees in actions to promote care for the well-being of
the planet. This time we invited the Board of Directors toplant dozens of trees on the site, and a collection of electrowaste was held in cooperation with Remondis. Plant
seedlings were distributed for participation in the collection.
During the webinar, experts from the Urban Greenery
Administration told our employees about the role ofbiodiversity in the city.

Water Day
March was an opportunity for us to learn more about the problem
identified as the biggest water risk in Poland - surface water pollution.
An assessment of the condition of the water by the Environmental
Protection Inspectorate showed that more than 90 percent of thewater in the rivers is of poor quality. This is caused by a number offactors, but each of us can take action, such as joining cleanup
campaigns, and in this way improve water quality. Through internal
communication channels, we reminded our employees that clean water
is not an infinite resource. We need to take care of it, because it isessential for life.

GOOD PRACTICES
New water filters in the halls
For the sake of our production workers, we installed seven new water
filters in the production halls during the summer. Hydration isespecially important when temperatures are high, so we are confident
that water filters located closer to workplaces will be eagerly used. We
also encouraged people to drink water straight from the tap via
awareness campaigns and by donating SodaStream saturators at theannual Operations Conference.

We educate in cooperation with Wodociągi Miasta Krakowa
In 2023, at one of the cyclical meetings of seniors, who worked at thePhilip Morris plant in Kraków, we hosted a representative of WodociągiMiasta Krakowa, who encouraged people to drink tap water.
We were also able to invite actors working with the waterworks to theMisie Filipisie staff preschool with a performance of "Wyprawa
Batyskafem. Misja Skratek”. During the performance, the children learned,
among other things, what they should not throw into the sewage.

Stakeholder meeting and workshop with service providers
Every year we meet with stakeholders of the Alliance for Global Water
Adaptation to discuss and share experiences. This time the main topics
were the quality of surface and groundwater in the region, green
retention in the city, and a presentation of the Czysta Dłubnia
campaign. For our part, we had the opportunity to share projects
underway at the factory and good agronomic practices in thecultivation of tobacco.
At the workshop, we also met with representatives of the companies
we work with on a daily basis at the factory. We had the opportunity toget feedback on the solutions we are implementing and suggestions onwhat we can do in the future.

2024 PLAN
EXAMPLES OF ONGOING/PLANNED PROJECTSPRO J E CT

IMPLEMENTATIONDATE

Support for thepublication of "Z życiaŁąk Nowohuckich"January

Increase water
retention capacity

Optimization of thetobacco dryer
cooling process
Webinar on Water
Day covering water
retention for
employees
Installation ofdrinking
troughs foranimals"Woda w
obiektywie” photo
contest for
employees
Improvement offiltration
conditions on
wet dust
removalProjects incollaboration withstakeholders

December

JulyMarchJuly

AugustDecemberAll year

AWS
RESULTSDESCRIPTION
Financial support forthe printing andpromotion of the
publication of the C.K.
Norwid Culture
Center
Installation of storage
reservoir andconsidering new
options as part of thetransformation
Optimization of water
consumption for theprocess

PURPOSE
Printing of500
publications

Improvement ofwater retention at
PMPL site installation ofretention tank
Reduction in
consumption
by 40 cubicmeters

Increase of awareness ofwater retention
opportunities

Engagement of
100 employees

Caring for animals
appearing on thePMPL site

Installation of 2
drinking troughs

Increasing ofawareness ofemployees in thesubject of water inan artistic way

Engagementof50 employees

Replacement offilter mats

Improvement offiltration efficiency
and wastewater
quality

Cleaning the Dłubnia
River with the EcoTravel
Foundation/a walk in theNowa Huta Meadowswith OKN/a trip forseniors from the WMK
to Dobczyckie Lake

Improvement offiltration efficiency
and wastewater
quality

SUSTAINABLE TOBACCO CULTIVATION AND
GOOD AGRONOMIC PRACTICES(SUSTAINABLE TOBACCO PRODUCTION - STP)The STP defines sustainable tobacco production
as the efficient production of high-quality rawmaterial under conditions that reduce
environmental impacts as much as possible andimprove the socio-economic conditions of thecommunities involved in its production.
The STP defines the rules and criteria that shouldbe met by all those who cultivate and supply
tobacco to STP producers.
They are organized around four thematic areas:
1. Cultivation
2. Environment
3. Society
4. Management
The STP also includes defined local bestpractices, by which planters are judged during
the growing season. The evaluation is carried out
on an ongoing basis by PMPL-T agronomic
advisors, as well as by external entities
designated by PMI.

SUSTAINABLE TOBACCO CULTIVATION AND
GOOD AGRONOMIC PRACTICES(SUSTAINABLE TOBACCO PRODUCTION - STP)
Water is essential for all forms of life and is anecessary element of agricultural production. It
must be used in the right amounts and at theright time to achieve the best results in yourcrop. Fertilizers improve plant growth,protectants protect them, but these substances
can pass into groundwater or watercourses andaffect aquatic ecosystems.
That is why it is important to:• Manage water resources in such a manner thatpollution does not occur and quality ispreserved or improved. Compliance withexisting laws, management of potential waterpollution, introduction of buffer zones aretaken as a minimum.
• Avoid fertilizer application during times ofincreased leaching and preparation of crop
protection products near watercourses.
• Store agrochemicals, fertilizers or manure in away that prevents water contamination.
• Maintain buffer zones, when applying plant
protection products - min. 10 m fromwatercourses and bodies of water.

WATER RISK ASSESSMENT

PMPL-T regularly undertakes water risk
assessments in tobacco-growing regions basedon data from recognized institutions such as,
among others: Central Statistical Office, Chief
Inspectorate of Environmental Protection,
Institute of Cultivation, Fertilization and Soil
Science, National Research Institute, National
Fund for Environmental Protection and Water
Management, Polish Waters, and own datacollected during visits to farms and plantations offarmers from whom it buys tobacco.
The assessments include:• availability of surface and groundwater,• rainwater
availability(seasonalvariability, risk of drought, floods, local
washouts),• impact of upstream and downstream
agricultural land use,
• water pollution and contamination,• water management.
Awareness campaigns for planters are being
conducted, in order to draw their special
attention to the environmental aspects of thecrop, including water management, among
others.

To assess the impact of atmospheric phenomena on
yield quality and quantity, PMPL-T regularly
monitors and analyzes data provided by theInstitute of Meteorology and Water Management(IMGW) and the Agricultural Drought Monitoring
System (SMSR) of IUNG and proposes preventive
measures to planters, such as:• rainwater collection for watering the seedbed,• implementation of regenerative agriculture
practices,• using varieties that are less sensitive to drought,• optimal planting date,• planting on ridges,• buffer zones around water bodies.

WATER MANAGEMENTP H I L I P M O R R I S | 2024