Investor CDP 2014 Information Request
Philip Morris International

Module: Introduction
Page: Introduction
CC0.1
I ntroduc t ion
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 Center in Lausanne,
Switzerland.
On 31 December 2013, PMI owned and operated 53 manufacturing facilities and sold products in more than 180 markets.
In 2013, PMI recorded total cigarette shipment volume of 880 billion units, had revenues, including excise taxes, of US$ 80 billion, and held 28.2% of the international cigarette market
excluding the People's Republic of China and the U.S. PMI’s 2013 adjusted operating company income (OCI) was US$ 14.1 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. Along with Marlboro andL&M, seven of our brands rank in the top 15 international cigarette brands in the world. We have a strong mix of international and local products that appeal to a wide range of adultsmokers.
PMI’s global workforce of more than 90,000 employees is extremely diverse. We have historically expanded our business through a mixture of organic growth, geographic expansion andacquisitions, and have a successful track record of acquiring and integrating companies.
PMI is driven by four key 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;• generate superior returns to our stockholders through revenue, volume, income, and cash flow growth and a balanced program of dividends and share repurchases;• reduce the harm caused by tobacco products by supporting comprehensive and effective regulation and by developing products with the potential to reduce the risk of tobacco-relateddiseases; and• be a responsible corporate citizen and to conduct our business with the highest degree of integrity, at both a local and global level.
We are committed to responsibly delivering long-term sustainable growth and applying high standards wherever we operate. As the leading international cigarette company, we also aim
to be an industry leader in environmental sustainability and have set clear and measurable targets to improve our environmental performance. In 2010, we set ourselves the goal of
reducing CO2 emissions in our manufacturing facilities by 20% by 2015, and reducing the carbon footprint of our value chain by 30% by 2020.

CC0.2
Re porting Y e a r
Please state the start and end date of the year for which you are reporting data.
The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first.
We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have notprovided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option ofanswering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent
reporting year.
Please enter dates in following format: day(DD)/month(MM)/year(YYYY) (i.e. 31/01/2001).
Enter Periods that will be disclosed
Tue 01 Jan 2013 - Tue 31 Dec 2013
CC0.3
Count ry list c onfigura tion
Please select the countries for which you will be supplying data. This selection will be carried forward to assist you in completing your response.
Select country
Argentina
Australia
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Malaysia
MexicoNetherlands
Pakistan
Philippines
PolandPortugal
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RussiaSenegalSelect country
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Rest of world
CC0.4
Curre nc y se le c t ion
Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency.
USD($)
CC0.6
Module s
As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component
manufacture sectors, companies in the oil and gas industry, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco
sectors should complete supplementary questions in addition to the main questionnaire.
If you are in these sectors (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in thenavigation bar when you save this page. If you want to query your classification, please email respond@cdp.net.
If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view thequestions first, please see https://www.cdp.net/en-US/Programmes/Pages/More-questionnaires.aspx.
Further Information
CC0.3 Rest of World – includes our vehicle fleet, offices (including our New York Headquarters) and aircraft emissions for which our data is not broken down by country.

Module: Management
Page: CC1. Governance
CC1.1
Whe re is the highe st le ve l of dire c t re sponsibility for c lim a t e c ha nge w ithin your orga niza t ion?
Senior Manager/Officer
CC1.1aPle a se ide ntify the posit ion of t he individua l or na me of t he c om mitt e e w it h this re sponsibility
The highest level of direct responsibility for climate change within PMI lies with the Senior Vice-President Operations (SVP Operations) who is a member of the Senior Management Teamand reports to PMI’s Chief Executive Officer (CEO).
The SVP Operations also reviews PMI’s objectives, strategies and action plans related to climate change with the Product Innovation and Regulatory Affairs Committee of the Board of
Directors on a periodic basis.

CC1.2
Do you provide inc e nt ive s for t he ma na ge m e nt of c lima t e c ha nge issue s, inc luding t he a tt a inm e nt of t a rge ts?
Yes
CC1.2aPle a se provide furthe r de ta ils on t he inc e nt ive s provide d for the ma na ge me nt of c lim a te c ha nge issue s
Who is e nt it le d t o be ne fit
from t he se inc e nt ive s?

T he t ype ofinc e nt ive s

Corporate executive teamMonetary
rewardManagement group

Monetary
rewardAll employees

Monetary
rewardEnergy managers

Monetary
rewardEnvironment/Sustainability managers

Monetary
rewardAll employees

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

Recognition(non-monetary)

Other: - employees in our Operationsgroup (over 50,000 employees)

Recognition(non-monetary)

Inc e ntivize d pe rform a nc e indic a t or
The assessment of Environment, Health and Safety (EHS) results (which includes annual performance against our carbon
footprint reduction targets) influences the annual performance rating of our SVP Operations and Director EHS&S. This
directly affects the annual cash incentive compensation and long term restricted stock incentive compensation elements for
those roles.
Our CEO specifically covers EHS results (including carbon footprint reductions against targets) in the assessment of ourannual company-wide performance that is reviewed by the Compensation and Leadership Development Committee of theBoard of Directors. Accordingly, these results are included in our overall performance rating which determines the cash andstock bonus pool for the management group and other eligible employees.
Specific company awards such as the Chairman’s Award and Excellence Awards, which are either cash or stock, areavailable for Energy Managers, EHS Managers, project teams and other employees who are responsible for climate change
related initiatives and improvements.
Managers, team members and others have energy efficiency and carbon footprint reduction targets set out in their annual
performance objectives and are assessed against those targets in their annual performance appraisal. Energy efficiency andCO2 emissions reduction targets are set annually for at least three years for all of our manufacturing facilities.
Managers, team members and others have energy efficiency and carbon footprint reduction targets set out in their annual
performance objectives and are assessed against those targets in their annual performance appraisal. Energy efficiency andCO2 emissions reduction targets are set annually for at least three years for all of our manufacturing facilities.
Specific company awards such as “Above and Beyond the Call of Duty” (ABCD) awards for best practice initiatives in theareas of climate change, energy and carbon reduction.
Employees from the Operations Center are encouraged to use public transportation. The annual fee for half-price railway
subscription as well as a monthly public transport allowance is paid by the company for those employees who choose to use
public transportation rather than commute in their private cars to work.
In 2013, many affiliates continued to perform voluntary awareness and promotion campaigns/ programs in order to increase
employees’ active participation in EHS programs and to make carbon footprint reduction part of the company's culture.
Awards and recognition for best practices form a core element of such campaigns.
Operations employees also have the opportunity to earn awards for best practice initiatives in the areas of climate change,energy and carbon reduction. This forms part of our Operations “Lead, Lean and Learn” (3L) program which encourages
innovation, continuous improvement and employee engagement.

Further Information

Page: CC2. Strategy
CC2.1
Ple a se se le c t the option t ha t be st de sc ribe s your risk m a na ge m e nt proc e dure s w it h re ga rd t o c lima t e c ha nge risk s a nd opportunitie s

Integrated into multi-disciplinary company wide risk management processes
CC2.1aPle a se provide furthe r de ta ils on your risk ma na ge m e nt proc e dure s w ith re ga rd to c lima t e c ha nge risk s a nd opport unit ie s
Fre que nc y ofm onit oring
Annually

T o w hom a re re sults
re porte dGe ogra phic a l a re a s c onside re d

Individual/Sub-set of the Board orcommittee appointed by the Board

Global coverage with regional highlights: (Asia Pacific (AP), Latin America
and Canada (LAC), Europe (EU) and Eastern Europe Middle East andAfrica (EEMA).

H ow Àfa r int o t he futurea re risk s c onside re d?

Comm e nt> 6 years

CC2.1bPle a se de sc ribe how your risk a nd opport unity ide nt ific a t ion proc e sse s a re a pplie d a t bot h c om pa ny a nd a sse t le ve l
Our climate change risk identification and management process covers our company’s entire value chain. It addresses regulatory, physical climate and market risks and opportunities,
which can include company reputation and changing customer demands through:- Carbon footprint reduction initiatives: driving global programs to reduce our energy consumption and CO2 emissions which help to manage regulatory, reputational, and financial risk
exposure. Programs include energy and CO2 reductions from our manufacturing operations and we review our progress annually. We update our carbon footprint every 2-3 years toensure our risk/opportunity actions remain appropriate. For our products, key developments in cigarette/packaging components or new products are assessed by a Life Cycle
Assessment (LCA) process to identify risks/opportunities which are then managed through our Product Development processes.
- Climate change risk assessment: We completed a comprehensive climate change risk assessment for our corporate and asset level risks and opportunities. The process included key
assets such as factories and warehouses, supplier assets (including port facilities, warehouses, tobacco leaf growing regions and strategic suppliers). This information is reviewed
periodically with top management and when new information emerges; it enables risk/opportunity identification and management at the company and asset level and includes geopoliticalrisk which may contain climate change components.
- Environmental risk assessments (ISO14001 based in most operations) at both company and asset level to identify material risks/ opportunities. Risk assessments include asset details
such as the need for flood risk management plans which we discuss with our insurers and use to develop mitigation plans. In tobacco agriculture, the risk assessments form part of ourGood Agricultural Practices program and result in risk/opportunity identification and management through country specific action plans.
CC2.1cHow do you priorit ize t he risk s a nd opportunit ie s ide nt ifie d?
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.
We currently set a financial threshold of US$100K for materiality of risk/opportunity at the asset level.
In 2020+ risk forecasting terms, higher level risks are defined as those with a potential impact of in excess of US$2M or a raw material impact in excess of 1000 metric tonnes of tobacco
leaf.
In carbon footprint terms we have initially prioritized actions for those areas of our business which constitute more than 5% of our footprint.
We review our risk/opportunity action plans and priorities every year during our integrated business planning process which includes 3-year and longer-term plans for our carbon footprint
and climate change strategies. We use external sources such as consultancy and risk mapping tools as well as IPCC and academic publications to keep our information current.
CC2.2
I s c lima t e c ha nge inte gra t e d into your busine ss stra t e gy?
YesCC2.2a
Ple a se de sc ribe the proc e ss of how c lima t e c ha nge is int e gra te d int o your busine ss st ra te gy a nd a ny outc om e s of t his proc e ss
Reducing our impact on the environment is fundamental to our business. We do this with a commitment to the highest ethical standards and business integrity, through systems andprocesses, to deliver compliance and conduct efficient and effective operations worldwide. Climate change strategy is embedded in our overall business strategy as a key element of“Doing What is Right” which is at the core of our company Code of Conduct. It is integrated into normal business practices and forms part of our annual Long Range Planning process
which reviews and sets business direction for 3 years and beyond. The corporate EHS team undertakes annual strategy development sessions with regional/business representatives,
which are based on review of previous year performance, regulatory/external developments, risk/opportunity assessments, stakeholder interest and operational/other business changes.
The strategy is developed through functional management teams up to the Senior Management Team including the CEO and when finally approved, the climate change strategy iscommunicated to regions and affiliates for integration into specific country strategies. Climate change strategy reviews are held during the year, including with the Product Innovation andRegulatory Affairs Committee of PMI’s Board of Directors. Our strategy is split into two main areas:
1) Minimizing our impact on the environment through carbon footprint reduction initiatives.
2) Minimizing future environmental impact on our business through a climate change risk assessment process.
We used Life Cycle Assessment (LCA) to establish our carbon footprint, and found that the majority of our footprint comes from our scope 3 emissions, in particular the tobacco
agriculture part of our value chain (~40% of our emissions). The size and importance of the carbon-related impact from each element of our business is a key input to our strategy
development. We also completed a climate change risk assessment across our value chain and focus areas were identified. Our business depends on agriculture for key raw materials
and therefore current and future changes in climate impacting sensitive crops (such as tobacco and clove) are important for our business strategy.
Short-term strategy components:
1) Continuing investment in reforestation and Good Agricultural Practices, which includes the development of country-specific action plans in 2012-13 to reduce impacts in the shortmedium term including reducing wood use in tobacco curing, promoting efficient and sustainable consumption of wood/fuels and seeking alternative fuels.
2) Procuring materials such as paper/boards from sustainable sources.
3) Reducing our CO2 from manufacturing operations by 20% by 2015 against our 2010 baseline.
4) Implementing a comprehensive Energy Management Program, including worldwide factory metering and targeting, energy assessments, key Energy Saving Projects (best practicecascading).
5) Implementing our renewable energy strategy which includes both green energy procurement and development of on-site renewable energy projects.
6) Reducing emissions and sharing best practices in Logistics and Distribution.
7) Revising our direct materials supplier program covering sustainability topics and related criteria, including joining the CDP Supply Chain program in 2013.
8) Undertaking LCAs of potential significant developments in cigarette and packaging components or potential new products.
9) Review/update of our carbon footprint every 2-3 years, continuing to measure the impact of developments in our business.
10) Review and refinement of our climate change risk assessment.
Long-term strategy:
Our long term commitment is to reduce our value chain carbon footprint by 30% by 2020 against our 2010 baseline. This will be supported by sustained implementation and developmentof many of the short term actions described above including reducing the need for wood/fuels for curing tobacco, increasing the proportion of sustainable wood used towards 100% andthe use of biomass; we are already anticipating the continuation of several of our value chain strategy actions into the 2020-2025 horizon. Development of our climate change risk
assessment will continue to inform future management decisions in terms of climate-related agricultural impacts and forecasted physical changes in business environments that may
occur in certain climates and countries. Our agricultural supply chain is widely spread around the world, which helps to mitigate against climate related risks; tobacco crops can potentiallybe relocated if some growing areas become more favorable than others. In the long term we will also integrate our customer and supplier strategies for sustainability and climate changeto ensure that our entire value chain is aligned with our objectives.
How this strategy gains us strategic advantage:
As the leading international cigarette company, our climate change strategy has a key role in enabling our business efficiency which keeps us ahead of our competitors and supports ourlong term sustainability. Specifically, we have taken steps to align with our customer expectations on climate change including the development of our carbon footprint and our target to
reduce that footprint by 30% by 2020. We will continue to work with trade customers, such as Tesco (Tesco Supply Chain strategy for carbon footprint reduction), to ensure that we
exceed their expectations and are viewed advantageously in this area when doing business with them. In terms of our products, we make sure that we have the right information to takefuture decisions on potential strategic advantage by considering the environmental impacts of new products or product developments through LCA.

Substantial business decisions influenced by climate change:a) In 2013 we engaged and communicated more extensively on our climate change strategy including the development of new Sustainability and Climate Change pages on our website(pmi.com) in a project launched in Q1 2013.
b) Development of an Energy Management Program which allows for a longer term return on investment approach when there are additional justified benefits such as climate change
impact reduction. This program includes over US$70M estimated investment in improvement projects between 2010 and 2015.
c) Integrating our climate change strategy (through LCA) as part of our product development process and also including assessment of our portfolio of innovative Reduced-Risk Products
to help ensure that their environmental impact is understood and managed in the early stages of product development.
d) We have sophisticated capacity and footprint planning which helps mitigate against local or regional operations disturbances.
CC2.3
Do you e nga ge in a c tivit ie s tha t c ould e it he r dire c t ly or indire c tly influe nc e public polic y on c lima t e c ha nge t hrough a ny of t he follow ing? (t ic k a ll t ha t a pply)
Trade associations
Other
CC2.3bAre you on t he Boa rd of a ny t ra de a ssoc ia tions or provide funding be yond me mbe rship?
Yes
CC2.3cPle a se e nt e r the de t a ils of t hose t ra de a ssoc ia t ions t ha t a re lik e ly t o t a k e a posit ion on c lim a t e c ha nge le gisla t ion

T ra de a ssoc ia t ion

Trans-Atlantic BusinessCouncil/Dialogue
National Center for AsiaPacific Economic
Cooperation

I s your posit ion onc lima t e c ha nge
c onsist e nt w ith
t he irs?

ConsistentConsistent

Ple a se e x pla in t he t ra de a ssoc ia t ion's position

H ow ha ve you, or a re you a tt e mpt ing t o,influe nc e the posit ion?

Their Energy and Climate Working Group states: "Energy isirreversibly tied to climate. In this realm, transatlantic coordination ofenergy policies and climate action targets could yield substantial
results, as both the US and EU are the world’s leading energy
consumers."
APEC have supported the development of an energy strategy study
which includes: "+Expand and Diversify Supply of Energy Resources;+Promote Conservation and Improve Efficiency; +Promote Open andOur trade association memberships relate to specificbusiness priorities which do not currently include
climate change. We are not currently involved in, nor
do we influence, trade association positions on climatechange.
Our trade association memberships relate to specificbusiness priorities which do not currently include
climate change. We are not currently involved in, nor

T ra de a ssoc ia t ion

I s your posit ion onc lima t e c ha nge
c onsist e nt w ith
t he irs?

Ple a se e x pla in t he t ra de a ssoc ia t ion's position
Efficient Energy Markets; +Clean Energy Use and Technology
Innovation"

US ASEAN BusinessCouncil

Consistent

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

H ow ha ve you, or a re you a tt e mpt ing t o,influe nc e the posit ion?
do we influence, trade association positions on climatechange.
Our trade association memberships relate to specificbusiness priorities which do not currently include
climate change. We are not currently involved in, nor
do we influence, trade association positions on climatechange.

CC2.3gPle a se provide de ta ils of the ot he r e nga ge me nt a c tivit ie s tha t you unde rta k e
We work with NGOs and governments to support communities on environmental sustainability topics including sustainable forestry, reforestation, integrated pest management andcontrolled use of pesticides in agriculture, sustainable rural living conditions and education; all of which can have an influence on climate change improvement, adaptation and mitigation.
Through targeted contributions in 2013, PMI supported projects to protect and enhance natural resources, reforest the land, implement conservation agriculture, provide clean water,
ensure food security, and improve the livelihoods of people living in rural communities. Selected examples include:
In 2013, in Japan, PMI supported initiatives to register Mt. Fuji as a UNESCO World Heritage site through working with NPOs and promoting employee volunteering. The supported
initiatives included a project of the Fujisan Club to combat illegal dumping on the slopes of Mt. Fuji and promoting PMI employee volunteering initiative on Mt. Fuji clean-up. National
Council on Mt. Fuji World Heritage implemented a project which was focused on raising public awareness about environmental issues which Mt. Fuji is facing. These efforts were part of
the work which led to the decision of The World Heritage Committee of UNESCO to inscribe Mt. Fuji on the World Heritage List on June 22 2013.
In Indonesia, PMI continued to support the Mangrove Nursery and Productive Tree Planting program implemented by IDEP Foundation Selaras Alam. This project is focused onreforestation and raising community awareness about environmental preservation. As a result of the program in 2013, 135,000 trees were planted in seven areas of Indonesia.
In Malawi, Mozambique and Tanzania PMI partner with Total LandCare (TLC) on a multi-year initiative to preserve forests, build schools and provide villages with clean water, eco-pit
latrines and fuel-efficient stoves. The work continued in 2013 and part of the project consists of planting tens of millions of trees for household fuel consumption. The program is expected
to benefit around 75,000 households.
In the Philippines - a reforestation project involving local government units, suppliers and NGOs (non-governmental organizations) as well as schools. Around 2.5 million trees have beenplanted over the last 10 years. Other reforestation programs have also been supported in many countries around the world from Brazil to Pakistan to Indonesia.
CC2.3hWha t proc e sse s do you ha ve in pla c e t o e nsure t ha t a ll of your dire c t a nd indire c t a c tivit ie s tha t influe nc e polic y a re c onsiste nt w it h your ove ra ll c lima t e c ha nge
st ra t e gy?
PMI operates within an overarching Code of Conduct to a set of internal policies - our Principles and Practices. These policies cover our mandatory requirements and processes inrelation to Environment, Health and Safety (EHS), corporate contributions, and interaction with government officials, amongst others. Whilst trade association positions on climate change
are not separately mentioned, we do conduct a general process of due-diligence to check potential compliance and reputational issues when joining trade associations.
Further Information

Page: CC3. Targets and Initiatives
CC3.1
Did you ha ve a n e missions re duc t ion ta rge t t ha t w a s a c tive (ongoing or re a c he d c om ple t ion) in the re port ing ye a r?
Absolute and intensity targets
CC3.1aPle a se provide de ta ils of your a bsolut e t a rge t

ID

Sc ope

Abs1

Scope
1+2

% of
e m issionsÀin
sc ope28%% re duc t ion
from ba se ye a r

Ba se
ye a rBa se ye a r e missions(me t ric t onne s CO2 e )Ta rge tye a r33%

2010258898

2015

Comm e nt
This covers conventional cigarette manufacturing facilities in
our EU region where we are pursuing opportunities forrenewable energy.

CC3.1bPle a se provide de ta ils of your int e nsit y t a rge t

ID

Sc ope% ofe missions in
sc ope% re duc t ion
from ba se
ye a r

Int1

Scope
1+2

81%

Int2

Scope
1+2+3

100%

M e t ricBa se
ye a rNorma lize d ba se
ye a r e missions

T a rge t
ye a r20%

Other: kg CO2 equivalent / million
cigarettes

2010

794

2015

30%

Other: kg CO2 equivalent / million
cigarettes

2010

6324

2020

Comm e nt
This is a publicly declared target to reduce our emissions
from our manufacturing facilities by 20% per million
cigarettes equivalent by 2015, against our 2010 baseline.
This is a publicly declared target to reduce our emissions
from the entire value chain (Scope 1+2+3) by 30% per
million cigarettes equivalent by 2020, against our 2010
baseline.

CC3.1cPle a se a lso indic a t e w ha t c ha nge in a bsolute e missions this inte nsity ta rge t re fle c t s

ID

Dire c t ion of c ha nge a ntic ipa t e d ina bsolut e Sc ope 1 +2 e m issions a t
t a rge t c omple tion?

% c ha nge a ntic ipa t e d ina bsolute Sc ope 1 +2
e m issions

Dire c t ion of c ha nge a nt ic ipa t e d ina bsolute Sc ope 3 e missions a t
t a rge t c om ple t ion?

Int1

Decrease

22

Decrease

1

Int2

Decrease

25

Decrease

32

CC3.1dFor a ll of your ta rge t s, ple a se provide de t a ils on t he Àprogre ss ma de Àin the re port ing ye a r% c ha nge a nt ic ipa t e d
in a bsolut e Sc ope 3
e m issions

Comm e nt
Scope 3 fuel andenergy related
activities

ID% c omple te(time )

% c om ple t e(e m issions)

Int1

60%

42%

Int2

30%

5%

Abs1

60%

24%

Com me nt
In 2013 we achieved an 8.4% reduction in our manufacturing facilities against the 2010 baseline.
For Scope 1 + 2+ 3, we have quantified a reduction of at least 1.5%, mainly due to manufacturing improvements. We aresubstantiating further improvements but will only update the % complete (emissions) number every 2-3 years when we recalculate
our carbon footprint.
Launch of new green energy projects in 2013 will result in significant progress in 2014 and 2015.

CC3.2
Doe s the use of your goods a nd/or se rvic e s dire c t ly e na ble GHG e missions to be a voide d by a t hird pa rt y?
No
CC3.3
Did you ha ve e m issions re duc t ion init ia t ive s tha t w e re a c t ive w ithin t he re porting ye a r (t his c a n inc lude those in the pla nning a nd imple me nt a tion pha se s)Yes
CC3.3aPle a se ide ntify the tot a l num be r of proje c t s a t e a c h sta ge of de ve lopme nt , a nd for t hose in t he imple me nt a t ion sta ge s, t he e st im a t e d CO2 e sa vings
St a ge of de ve lopm e nt
Under investigation
To be implemented*
Implementation commenced*
Implemented*
Not to be implemented

Numbe r of proje c ts
687
135
102
594
450

Tot a l e stima t e d a nnua l CO2 e sa vings in m e tric t onne s CO2 e (only for row s ma rk e d * )
65000
12000
92000

CC3.3bFor t hose init ia t ive s im ple m e nt e d in t he re porting ye a r, ple a se provide de t a ils in t he ta ble be low

Ac tivit y t ype

Energyefficiency:
Processes

De sc ript ion of a c t ivit y

Scope 1 and 2, Target Int 1, voluntary. EU Poland, Krakow - Reduction of energy
consumption due to simplification ofprocesses in Primary section of
manufacturing.
Scope 1, Target Int 1, voluntary. EU Germany, Berlin - Installation of heat

Annua lm one ta ry
sa vings (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )I nve stm e nt
re quire d (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )2500

200000120000<1 year

10

800

2100004670001-3 years

10

Est ima t e da nnua l CO2 e
sa vings(m e tric
tonne sCO2 e )Pa yba c kpe riod

Est im a t e dlife time oft heinitia tive ,ye a rs

Comm e nt

Ac tivit y t ype

Energyefficiency:
Processes
Energyefficiency:
Processes

Energyefficiency:
Processes

Low carbon
energypurchase
Energyefficiency:
Building
services

Energyefficiency:
Processes

Energyefficiency:
Processes

Energyefficiency:
Processes
Low carbon
energypurchase

De sc ript ion of a c t ivit yexchanger that transfers heat from processtail gas to a hot water system that supplies
different air handling and ventilation systems.
Scope 1 and 2, Target Int 1, voluntary.
EEMA - Russia, IZHORA - Wet CoolingTowers were installed in place of dry coolers.
This allowed the reduction of chiller power
consumption and to increase chiller system
refrigerating capacity.
Scope 2, Target Int 1, voluntary. EEMA Turkey, PHILSA - Conversion of constant
speed type air handling unit fans to variable
speed type by installing VSD (variable speed
drives) to save electricity. 62 VSDs were
installed on existing air handling units.
Scope 1, Target Int 1 and Abs 1, voluntary.
EU - Germany, Dresden - Installation of
district heating supply in production area toeliminate heating with fuel oil.
Scope 2, Target Int 1, voluntary. EU Greece, Papastratos - Replacement oftraditional lamps with LED and simultaneous
installation of motion sensors in
Administration, Support and Printshop
buildings.
Scope 1 and 2, Target Int 1, voluntary. EU Netherlands, BoZ - Reduction of energy
consumption by switching off energy users
during the idle time between batches inPrimary section of manufacturing.
Scope 1 and 2, Target Int 1, voluntary. EU Netherlands, BoZ – Elimination of an
inefficient process step in the Primarysection of manufacturing and reducing
process complexity.
Scope 1 and 2, Target Int 1, voluntary. EULithuania, Klaipeda – Implementation of arange of Energy Management Program
initiatives including installation of centralized
HVAC systems and process optimization.
Scope 2, Target Abs 1, voluntary. General
PMI project for our EU region coveringtargeted manufacturing centers to convert to

Annua lm one ta ry
sa vings (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )I nve stm e nt
re quire d (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )

750

1280000

990000<1 year10

750160000115000<1 year

10

740

0

0

<1 year

10

420

80000

1080001-3 years

5

360

46000

51500

1-3 years

8630

3190006370001-3 years

81200

4000006000001-3 years

15

1200

0

15000

Est ima t e da nnua l CO2 e
sa vings(m e tric
tonne sCO2 e )

Est im a t e dlife time oft heinitia tive ,ye a rs

Pa yba c kpe riod

3

Comm e nt

Monetary data notavailable - installation ispart of a larger project.

There is no monetary
payback for this. Contract
length is 3 years, howeverAc tivit y t ype

De sc ript ion of a c t ivit y

Est ima t e da nnua l CO2 e
sa vings(m e tric
tonne sCO2 e )

Annua lm one ta ry
sa vings (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )I nve stm e nt
re quire d (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )Est im a t e dlife time oft heinitia tive ,ye a rs

Pa yba c kpe riod

low carbon electricity. This started in 2012
with incremental uptake of new projects in2013 and significant developments plannedfor 2014-15.

Other

Energyefficiency:
Processes

Transportation:use

Energyefficiency:
Building
services

Energyefficiency:
Building
services

Scope 1 and 2, Target Int 1, voluntary.
General PMI Energy Management Program
including many projects of varying size
beyond the individual projects exemplified inthis section.

Scope 1, Target Int 1, voluntary. EU Netherlands, BoZ - Installation of additional
heat exchangers to reduce Natural Gas
consumption in Primary section of
manufacturing. Tail/purge gas heat will betransferred to boiler feed water.
Scope 3, Target Int 2, voluntary. EEMA Russia, Kuban - Switch of transportation
mode for raw materials from land to sea forimport deliveries. Loading factor optimization
and use of “round-trips” approach for internaldeliveries.
Scope 2, Target Int 1, voluntary. EEMA Russia, Kuban - Optimization of facility
lighting to achieve required lighting levels
with maximum energy efficiency. Solar tubes
take advantage of natural day light for indoor
lighting, particularly in warehouses.
Combination of fluorescent for task lighting
over link-ups and LED for backgroundlighting and general lighting. Control lights
through light detectors, motion sensors andtimers.
Scope 1 and 2, Target Int 1, voluntary. AP Philippines, Marikina. General upgrades
including: 1. Central Cooling systems 2.
Steam Trap Monitoring System 3. EfficientLighting 4. Heat Recovery for compressed
air and other systems 5. Automation - BMS /BEMS 6. Solar Thermal Renewable Energy

Comm e nt

it will likely continue
beyond a single contract
period.

3000

1-3 years

5+

650

1670002542001-3 years

8640

1680000<1 year

10

330

95000

4000004-10 years

5

9000

7000003300000

4-10 years

5This consists of many
projects of differing sizes
and therefore specificmonetary savings andinvestments are notseparately provided. The
typical payback is
1-3years and benefits will
normally last at least 5
years.

Ac tivit y t ype

Energyefficiency:
Processes

Energyefficiency:
Processes

Low carbon
energyinstallation

Low carbon
energyinstallation

De sc ript ion of a c t ivit y

7. Idle Mode for Equipment 8. Steam andCondensate System upgrade.
Scope 3, Target Int 2, voluntary. Curing barn
efficiency improvements in Brazil to reduce
fuel wood consumption for tobacco curing.
Over 350 new barns provided and over 250
existing barns upgraded.
Scope 3, Target Int 2, voluntary. Curing barn
efficiency improvements in Philippines toreduce fuel wood consumption for tobacco
curing. 25 new barns provided and 25
existing barns upgraded.
Scope 3, Target Int 2, voluntary. In Ecuador,
tobacco curing barns are being equippedwith a new heating system with indirect
combustion: external furnace for biomass
and internal pipe heating system. Use ofpalm oil nutshell as biomass enables theelimination of kerosene formerly used for
tobacco curing.
Scope 3, Target Int 2, voluntary. In Malawi,
replacing the use of coal (as a fuel for curing
tobacco) with sustainably managed wood
supplies.

Annua lm one ta ry
sa vings (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )I nve stm e nt
re quire d (unitc urre nc y - a s
spe c ifie d in
CC0 .4 )

60000

2500000

14000000

4-10 years

25

1760

23000

97500

4-10 years

15

Est ima t e da nnua l CO2 e
sa vings(m e tric
tonne sCO2 e )

1400

400000Pa yba c kpe riod

4-10 years

Est im a t e dlife time oft heinitia tive ,ye a rs

up to 10 years

Comm e nt

Annual monetary savings
have not been specificallycalculated but the
payback is estimated ataround 4 years.

No monetary data
available.

6000

CC3.3cWha t me t hods do you use to drive inve stm e nt in e m issions re duc t ion a c t ivitie s?

Me t hod
Dedicated budget forenergy efficiency
Employee engagement
Compliance with regulatory
requirements/standards
Lower return on investment(ROI) specification
Other

Comm e nt
Through our Energy Management Program (over US$70M budget estimated from 2010-2015) which has been developed to achieve the energy
reduction and related greenhouse gas emissions targets of 20% by 2015 compared to our 2010 baseline for our manufacturing affiliates (scope 1 & 2,
target I1). Additionally, we have targeted a 30% reduction in our carbon footprint by 2020 compared to our 2010 baseline across our entire value chain(scope 1, 2 & 3, target I2).
Through our objective setting, Long-Range Planning process and via employee communications, sharing of tools, guidance and best practices.
We take the opportunity of regulatory developments to achieve energy/emissions reductions (e.g. Switzerland - carbon tax exemption following a process
upgrade) and in particular when investing in new processes/facilities (e.g. requirements for renewable energy or energy efficiency) for new facilities in
Italy, Mexico and our UK offices.
We consider a longer rate of return (4 years or more) for certain energy savings and renewable energy projects.
The examples included in 3.3b above are just a few of the Good Agricultural Practices (GAP) activities implemented during 2013. GAP is broad program
covering our tobacco suppliers in 4 themes – Governance, People, Crop and Environment. It includes programs such as Integrated Production Systems

Comm e nt

Me t hodwhich supports farmers to improve yield and farm efficiency on a variety of crops (particularly food crops), not just tobacco. Through GAP we haveenvironmental improvement programs in all the countries where we source tobacco around the world. Additional examples include: • Argentina – barn
improvement program including a pilot to add insulation to curing barn floors in 2013 and saving around 9% on energy consumption (pilot result). • Kenya– using bagasse (sugarcane residue – a biofuel) as a fuel source for tobacco curing with plans to have 70% of Kenyan fuel for PMI curing from biomass.
• Italy – replacing diesel as a fuel for curing tobacco with cleaner fuels including biomass and natural gas. • Indonesia – using biofuels such as nut/palm
oil kernels to cure tobacco.
Dedicated budget for otheremissions reduction
activities

We have developed a renewable energy strategy with an initial focus on low-carbon electricity uptake in the EU. We commenced the program in 2012and have added facilities during 2013 with further planned low-carbon electricity procurement during 2014-15.

Further Information
Our Energy Management Program (EMP) has been developed to achieve energy reduction and related CO2 emissions targets of 20% by 2015 compared to our 2010 baseline for our
manufacturing affiliates (scope 1 & 2, target Int1). Additionally, we have targeted a 30% reduction in our carbon footprint by 2020 compared to our 2010 baseline across our entire value
chain (scope 1, 2 & 3, target Int2). The EMP consists of over 1000 energy reduction initiatives with a planned investment of over US$ 70M between 2010 and 2015 which will result insavings of around 1,000MJ per million cigarette equivalent (approximately 1 million GJ of energy) and around 100kg CO2 per million cigarette equivalent (approximately 100,000 metrictonnes of CO2). The program is managed through an organizational structure of regional and sub-regional energy leaders. The energy coordinators, supported by the central Energy
Management team with representatives from affiliates together with regional managers, are responsible for coordination of the development and alignment of local Long Range Plan
targets as well as implementation of the initiatives. The scope of the EMP includes the following: • Implementation of a global energy metering & targeting system in all manufacturing
affiliates. The combination of automatic-reading meters with software will provide all manufacturing facilities with the tools to better understand and monitor their energy consumption. We
completed pilot studies in 3 manufacturing centers and have now rolled-out the program through which we expect to identify an additional 5% CO2 reduction potential. • Management of
global energy saving initiatives: The major initiatives are managed systematically and centrally, which allows leveraging of existing knowledge and economies of scale through central
procurement opportunities, which can help reduce the payback period of projects. For selected projects, it includes a feasibility assessment at some selected facilities, the compilation of
results and the creation of standard procedures for global roll-out. The selection of the major initiatives for global roll-out is done by agreement between the energy leaders andOperations Center during specific workshops. All short-listed initiatives will go through feasibility assessment and standardization procedure including implementation guidelines. • Energy
factory assessment: a tool for local initiatives identification. We have developed a factory energy assessment tool which is used to regularly evaluate new opportunities in utilities, processequipment, and manufacturing lay-out. This assessment contains checklists for behavioral as well as technical aspects. The assessment results in a set of recommendations which range
from initiating a whole new project (which may require investment) to implementing very simple actions, where no investment is required (e.g.: stopping ventilation outside production
hours). • Review of new technologies, including renewable energy. As part of our review of new technologies, we have assessed the applicability of renewable energy technologies in our
different production locations with an external partner. The study is complemented by a tool to assess the feasibility of renewable energy initiatives and we undertook these feasibility
studies at 3 different production sites, solar energy pilot equipment has been installed in several locations, for example at our Serbian manufacturing facility in 2013. • Engagement of ourequipment suppliers. We are looking at improving our process equipment performance and are engaged in an industry colloquium with equipment suppliers to help improve the energy
consumption of our equipment.

Page: CC4. Communication
CC4.1
Ha ve you publishe d inform a tion a bout your orga niza tion÷s re sponse to c lima t e c ha nge a nd GHG e m issions pe rforma nc e for t his re port ing ye a r in pla c e s ot he r t ha n
in your CDP re sponse ? I f so, ple a se a t t a c h t he public a tion(s)Public a t ion
In mainstream financial
reports (complete)
In voluntarycommunications (complete)

Pa ge /Se c tion re fe re nc e
Page 3: CEO on Environmental Performance in 2013. Page
7: 2013 Contributions & Environmental Sustainability
Our corporate website, PMI.com: Sustainability section
including Environmental Performance and Climate Change

At t a c h t he doc ume nt
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared
Documents/Attachments/CC4.1/PMI_2013 ANNUAL REPORT.pdf
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared
Documents/Attachments/CC4.1/PMI_2013 SUSTAINABILITY.pdf

Further Information
On our corporate website under the Sustainability section, we describe our 20% reduction targets for CO2 by 2015 against our 2010 baseline and our commitment to reducing our overallvalue chain carbon footprint by 30% by 2020. Improvement examples, data and case studies are also provided and specific activities related to tobacco agriculture are described in the“Good Agricultural Practices” pages.

Module: Risks and Opportunities
Page: CC5. Climate Change Risks
CC5.1
Ha ve you ide ntifie d a ny c lima t e c ha nge risk s tha t ha ve the pot e ntia l to ge ne ra te a subst a ntive c ha nge in your busine ss ope ra tions, re ve nue or e x pe ndit ure ? T ic ka ll t ha t a pply
Risks driven by changes in regulation
Risks driven by changes in physical climate parameters
Risks driven by changes in other climate-related developments
CC5.1aPle a se de sc ribe your risk s drive n by c ha nge s in re gula tion

Risk drive r

De sc ription

Fuel/energy
taxes andregulations

In various countries
around the world, there
are electricity and fuelrelated levies or taxes
and also CO2 related
taxes such as theclimate change levy in
the UK and the CO2 tax
in Switzerland. We can
expect such initiatives
to increase.

Pote nt ia l
impa c t
Increased
operational
costTime fra m e

Dire c t /Indire c t

Lik e lihood

M a gnit ude
of im pa c t

3 to 6 years

DirectLikelyLow

Estima t e dfina nc ia l
im plic a tions
For our global
operations,such levies andtaxes areestimated ataround US$2M

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

We are managing
these risks by having acomprehensive Energy
Management Program(energy and CO2
reduction program),including ambitious
CO2 reduction targets
for our manufacturing
facilities. This program
can provide the basis
for carbon tax
exemptions (e.g. ourSwiss affiliate isalready exempted due
to its energy reduction
results) and reductionsin the cost to comply
with the EU ETS.
Standards for thedesign of new facilities
which include low
carbon building design(e.g. low carbon
building materials and

The costs
associated are
generallyembedded in our
EnergyManagement
Program, withover US$10M
alreadycommitted
specifically inenergymonitoring andtargeting. The
wider bestpractice sharing
approach andindividualenergy/CO2
saving projects
are estimated tocost up to $20M
per year.

Risk drive r

Cap and tradeschemes

De sc ription

CO2 related schemes
such as the EU
Emission Trading
Scheme (EU ETS) areregulatory frameworks
that pose risk ofincreased operating
cost to PMI. PMI
currently owns andoperates 4
manufacturing centers(in Germany,
Netherlands, Poland
and Portugal with total
verified emissions ofover 30,000 metrictonnes of CO2 in 2013)that are covered by the
EU ETS. We have otherfactories in the EU andPote nt ia l
impa c t

Increased
operational
costTime fra m e

3 to 6 years

Dire c t /Indire c t

DirectLik e lihood

LikelyM a gnit ude
of im pa c t

Low

Estima t e dfina nc ia l
im plic a tions

Based on ourcurrent 4 EU
ETS factories,
the annual costof emissions
allowances is
expected toincrease byapproximately$100K in thenext five years.
The current cost
is approximately$100-150K peryear.

Ma na ge m e nt
me t hodenergy efficient lighting)help minimize our risk
exposure. Drivers like
EU ETS and theEnergy Efficiency
Directive have led us toconsider processchanges in ourfactories, for example
replacement of older
combustion equipment
to newer more efficientplant that canpotentially reduce ourenergy load to beneaththe 20MW regulatory
threshold for our factoryin Portugal. For afactory in Russia,
following our internalenergy and CO2
reduction targets
means that the factory
will already meet or
exceed new state
regulations such as the“Energy conservationand improving energy
efficiency in the period
up to 2020” law.
As described above

Cost ofm a na ge me nt

As describedaboveRisk drive r

Productlabeling
regulations
and standards

De sc ription
EU accession countries
which could also
become subject to EU
ETS following site
developments orcountry accession to
the EU in the future.
Although the cost of EU
ETS carbon credits
have been lower in thepast several years due
to a large surplus ofallowances, the cost ofallowances is expected
to increase due tostricter regulations andmore significant longterm reforms to reduceoversupply. This could
result in an increase in
the operating cost ofpurchasing allowancesin the future. There is aclear international trend
towards stricter climate
regulations. In addition
to EU ETS, othercountries and regions
are considering and, insome cases, developing
similar programs,compatible with EU
ETS, in an effort to forma global carbon market.
Tighter regulations inthis area could indirectly
influence our supply
chain with regard toenergy supply, andincrease in electricity
prices.
Regulations requiring
carbon labelling on
products could impact
PMI for both its
conventional cigarettes
and its future ReducedRisk Products (RRPs),
which may include
electronic components.

Pote nt ia l
impa c t

Increased
operational
costTime fra m e

Dire c t /Indire c t

Lik e lihood

M a gnit ude
of im pa c t

3 to 6 years

DirectUnlikely

Low

Estima t e dfina nc ia l
im plic a tions

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

Should productlabeling be
required for our
future products
we estimate acost of over
$250K
excluding any
additional

We have purchased aLife Cycle Assessment(LCA) tool and havetrained our staff in its
use so that we canundertake theseassessments in-house.
With respect to our
products, potential

The cost and useof the LCA
software, withtechnical support,
is approximately$100K per year.

Risk drive r

De sc ription

Pote nt ia l
impa c t

Time fra m e

Dire c t /Indire c t

Lik e lihood

M a gnit ude
of im pa c t

The business effectcould be in two
categories a) increased
operating cost and b)
product differentiation(which could be an
opportunity for PMI).

Productlabeling
regulations
and standards

Generalenvironmental
regulations,
includingplanning

Emission
reportingobligations

Linked to RR3, currently
there are no global,
climate change-related,labeling standards that
could coherently beapplied to tobacco
products. If suchrequirements wereintroduced then unevenor inconsistent
implementation by
regulators could resultin some adverse
impacts on PMI.
Many of our factories
are subject to generalenvironmental
regulations, including
emissions limits andpermitting. Any new
factories and otherfacilities will need toensure thatenvironmental
considerations are fully
addressed at the design
stage. For example, theEnergy Efficiency
Directive in the EU will
have an impact on thedesign of new facilities
that we are currently
developing in Italy.
In various countries
around the world we aresubject to electricity andfuel related reporting
obligations such as the
National Greenhouse

Reduceddemand forgoods/services

Increased
capital cost

Increased
operationalcost

3 to 6 years

DirectUnlikely

Estima t e dfina nc ia l
im plic a tions
manufacturing
costs
associated withlabeling.

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

significant
developments incigarette andpackaging components
or potential new
products are assessed
through a LCA process
for risks andopportunities in relation
to our carbon footprint.

Low

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

As described above

As describedabove

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

As described above

As describedabove

3 to 6 years

DirectLikelyLow

3 to 6 years

DirectLikelyLow

Moreenvironmental
reportingobligations in
the future could
cost

As described above

As describedaboveRisk drive r

De sc ription

Pote nt ia l
impa c t

Time fra m e

Dire c t /Indire c t

Lik e lihood

M a gnit ude
of im pa c t

and Energy Reporting
requirement in Australia
and new tax code
related regulations in
the Ukraine andGermany.

Estima t e dfina nc ia l
im plic a tions
approximately$1M per year
across ourglobal facilities.

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

CC5.1bPle a se de sc ribe your risk s t ha t a re drive n by c ha nge in physic a l c lim a te pa ra m e t e rs

Riskdrive rChange inprecipitation
extremes
anddroughts

De sc ript ion

Pot e ntia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Supply Chain-Tobacco
Leaf: Tobacco leaf
growing is strongly
influenced by physicalclimate change such aschanges in temperature,
precipitation and cyclones(hurricanes andtyphoons). PMI sources
tobacco from more than
30 countries across theworld. Increased drought /flooding could disturb thetobacco leaf life cycle
stages (seedling,transplanting, growing,
harvesting). The yield,
quality and availability ofthe tobacco crop could be
influenced by theseasonal frequency andthe intensity of suchextreme rainfall events.
This could change ourcrop buying pattern andresult in increased
operational cost. Extreme
rainfall may require
pumping of excess water,
similarly, extreme
droughts could requirelong-term irrigation, bothof which increase energy
consumption, and thetobacco production cost.

Reduction/disruption
in production
capacity>6 years

DirectAbout aslikely as not

Low-medium

Estima t e dfina nc ia l
im plic a tions
Depending on
the size of thearea impacted,
the financial
implications
would varysignificantly,
however theincremental
financial
implications
from these risks
are currently
assessed to below (less than
10 million US$).
However, in an
extreme casewheresimultaneous
crop failures or
tobaccoshortages occur
the potential
implications arearound 100
million US$;such a situationis very unlikely.

M a na ge me nt
me t hod

Cost ofma na ge me nt

Our agricultural
supply chain is
widely spreadaround the world,which helps tomitigate against
climate relatedrisks; tobacco
crops can also be
relocated if somegrowing areas
become morefavorable thanothers. In addition,
our substantial
inventories oftobacco leaf canhelp to mitigate
against short term
impacts.
Adjustments to our
procurement
patterns can also
be made. Other
tools that we use
in identifying
significant risks
and/oropportunities fromclimate change
include thefollowing: Climatechange risk
assessments,
Facility risk

The data fromour riskassessments
identifies key
areas which
could be thebase of longer
term actions. We
have alreadyidentified our key
assets at risk ofclimate change
impacts (bothPMI owned andin our entire
value chain). We
invested around
US$200,000 inthis global risk
assessment but
the main costs in2013 wereinternal time andresources. The
cost ofimplementing
GAP is estimatedat several million
US$. Insurance
costs are notspecific toclimate change.

Riskdrive rChange inprecipitation
extremes
anddroughts

De sc ript ion
With respect to our supply
chain, the transportationof raw materials andfinished goods, as well asavailability of ports could
be interrupted; similarly
damage to stocks instorage facilities such as
warehouses would haveknock-on impacts on the
productivity of ourmanufacturing centers.
Extreme rainfall could
cause damage tobuildings including ourmanufacturing centerswhich would increase ourcost both in management
and insurance fees. The
risk of damaged goods
and impacts on
manufacturing centersand our supply chain
could weaken our ability
to efficiently supply
products to ourcustomers. Overall, thewell-being of societies, forexample farmers in
tobacco growing areas,
would be impacted. PMI’soperations are widely
spread, mitigating theeffects of severe
catastrophic climatic
disruption. Furthermore,
PMI’s business continuity
management plans aredesigned to mitigate theconsequence of supply
chain interruption anddisruption caused bybuilding damage, and or
stock/material damage.
Supply Chain- Acetate
Tow and Pulp: The
acetate tow market is tightwith a capacity utilizationof over 90%, and acetate
facilities (several based in

Pot e ntia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Estima t e dfina nc ia l
im plic a tions

M a na ge me nt
me t hod

Cost ofma na ge me nt

management(insurance
assessments),
Environmental risk
assessments(ISO14001), Due
Diligence
Assessments andGood Agricultural
Practices (GAP)Assessments andimplementation.
The results ofsuch assessments
are used to inform
our long termbusiness planning.

Reduction/disruption
in production
capacity>6 years

DirectAbout aslikely as not

MediumProcess as
described
above, financial
implications areseveral million
US$.

Adjustments to our
procurement
patterns can bemade andinventories
managed. Other

As aboveRisk
drive rChange inprecipitation
extremes
anddroughts

De sc ript ion
S.E. USA) face risks from
cyclones, floods, anddrought. If anything wereto disrupt activities inacetate tow plants,
acetate tow supply would
be impacted, anddisruptions to supply over
several months would
present challenges for
PMI. Cyclones – S.E.
USA is subject tocyclones which could
disrupt acetate facilities
and delay supply. Floods– S.E. USA area has
suffered a number offlooding events in thepast, and if the sites arevulnerable to flooding (i.e.
low-lying, or near a bodyof water) they could facedisruption. Drought – S.E.
USA is more likely to be
at risk of severe droughts
by 2030. Water use in our
supply chain may comeunder pressure if local
water use is restricted tomaintain reserves.
Supply Chain: Clove is an
important raw material for
PMI to use in our local
kretek brands. Indonesia
produces over 70% of theworld’s cloves. It takes atleast 5-7 years for clove
trees to become
productive and 20-40
years before they reachpeak production. Yields
are complex; harvests
can vary by up to 60%
over a 4 year harvest
cycle. Clove production is
weather sensitive, andclimate changes such as
intensification of the wet
season would impact
clove growing areas (suchPot e ntia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Estima t e dfina nc ia l
im plic a tions

M a na ge me nt
me t hod

Cost ofma na ge me nt

tools that we use
in identifying
significant risks
and/oropportunities fromclimate change
include thefollowing: Climatechange risk
assessments,
Facility risk
management(insurance
assessments),
Environmental risk
assessments(ISO14001), Due
Diligence
Assessments andGood Agricultural
Practices (GAP)Assessments andimplementation.
The results ofsuch assessments
are used to inform
our long termbusiness planning.

Reduction/disruption
in production
capacity>6 years

DirectAbout aslikely as not

Low-medium

As for Leafabove

As for Leaf above

As aboveRisk
drive rChange inmean(average)temperature

De sc ript ion
as damages to bud
development; more pest
and disease problems
from increased rainfall,and oscillation between
drought / flooding
presenting difficulties tosmall scale farmers andclove trees). This would
reduce the supply andincrease the price ofcloves.
A change in the mean
(average) temperature
could affect our own
operations and those of
our suppliers globally(manufacturing,
agriculture and otherbusiness operations). In
terms of agricultural
impact, the quality andyield of tobacco crop andother raw materials we
use could be affected.
While a slight increase inaverage temperature canlengthen the growing
season in some regions, it
can adversely impact theyield and quality of thecrop where summers arelong and already hot. An
increase of averagetemperature may cause
drought, which in turnresults in crops needing
irrigation. This would
impact our energy
consumption, and thetobacco production cost.
Overall, change in mean
(average) temperaturesfrom climate change
would also increase theuse of air conditioning or
heating systems, leading
to increases in demandfor energy.

Pot e ntia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Increased
operational cost

>6 years

DirectLik e lihood

VirtuallycertainM a gnit ude
of im pa c t

Estima t e dfina nc ia l
im plic a tions

M a na ge me nt
me t hod

Cost ofma na ge me nt

Low-medium

As for Leafabove

As for Leaf above

As aboveRisk
drive rSea level
rise

Inducedchanges innaturalresources

De sc ript ion

Pot e ntia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Rising sea levels in leaf
growing areas, as well asnear to manufacturing
and warehouse centers(e.g. the Netherlands, andsome Asian
manufacturing centers),
could impact our leaf
sourcing (yields andquality) and disrupt our
supply chain distribution.
This could cause sourcing
delays and manufacturing
impacts which would
result in
reduction/disruption to
production volumes.
Rising sea levels could
also impact ground water,which is used for
consumption andirrigation. Water treatment
processes(chemical/physical) for
consumption, irrigationand for manufacturing use
could be costly andincrease our energy
consumption. Rising sea
levels could also leavepeople (farmers,
manufacturing
employees, and others)
who live in low lying areas
in danger of being
flooded, resulting inpeople movement.
Change in climatic
variability and extreme
events such as changes
in the frequency andseverity of heat waves,drought, floods andhurricanes could affectthe distribution of pests
and beneficial predators.
This could affect the yieldand quality of tobacco
crops and of other raw
materials we use. Areas

Reduction/disruption
in production
capacity>6 years

DirectAbout aslikely as not

Low

Reduction/disruption
in production
capacity>6 years

DirectAbout aslikely as not

Low

Estima t e dfina nc ia l
im plic a tions
The financial
implications ofthese risks varydepending on
the asset that is
impacted. The
threat offlooding in the
Netherlands andcyclones in thePhilippines
could cause
damage in our
manufacturing
and warehousesites (estimate
US$10-20M foreach location).
Damage to raw
materials andfinished goods
could escalate
to around
US$100M butthat isconsidered very
unlikely.

As for Leafabove

M a na ge me nt
me t hod

Cost ofma na ge me nt

As above

As above

As for Leaf above

As aboveRisk
drive rDe sc ript ion

Pot e ntia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Estima t e dfina nc ia l
im plic a tions

M a na ge me nt
me t hod

Cost ofma na ge me nt

Ma na ge me nt
me t hod

Cost ofma na ge m e nt

Corporate
Sustainability andclimate change
strategy, programsand transparent
communications
including our
website, this CDP,
carbon footprint of
new product (e.g.
biodegradable filters)
and packaging
developments. We
are also looking at
initiatives – including
strengthening our
product LCA – that
can help us build
closer cooperation
within our value
chain to help our
stakeholders
understandenvironmental
impacts of different
packagingalternatives.

The internalcosts associatedwith theseactions are
estimated at inexcess of US$1M. Researchcosts such as forbiodegradable
filters can be
US$ 1-2M.

at increased risk may
include China, thePhilippines, some Africancountries and the Eastern
USA where we source
tobacco.
CC5.1cPle a se de sc ribe your risk s t ha t a re drive n by c ha nge s in othe r c lim a t e -re la t e d de ve lopme nt s

Riskdrive rChanging
consumer
behaviour

De sc ript ion
Today’s consumers
expect to see moresustainable productswith a lower
environmental
impact. Ever
increasing
environmental
awareness of
consumers
influences theirproduct selection
and buying
decisions. It is widelybelieved that
consumers willcontinue to placeincreased value on
recyclability and theperceived
environmental
credentials of
packaging – at thesame time, demandfor proof ofsustainability claims
could grow, forinstance in the
demand for LCA
data. Practices that
impact climatechange could beseen as a branddifferentiator for
consumers and the

Pot e nt ia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Reduced demand
for goods/services>6 years

DirectUnlikely

Low-medium

Est im a te d
Fina nc ia l
I mplic a t ions
Environmental
reputation may
become a moresignificant factor
in our customers’purchasing
decisions in the
future, but at thistime, we do not
see this risk as
significant. We
are also awarethat regulatory
and reputationalrisk may impact
the decisions of
our stakeholders,specifically ourconsumers andshareholders. If
these risks wereto materialize
then they could
impact ourbusiness by
several millions ofdollars.

Riskdrive rChanging
consumer
behaviour

De sc ript ion
environmental
reputation ofcompanies andbrands could play anincreasing role inproduct demand.
Litter from cigarettebutts and packaging
is an issue thatcomes under regularpublic scrutiny. In
many of ourmarkets, such as thePhilippines, Japanand Switzerland,
PMI actively
supports programs
and campaigns forresponsible litter
disposal.
Consumers’
increasedawareness anddemands forenvironmental
sustainability claimson the products they
buy could drive moremanufacturers todisplay theirenvironmental
performance on theirpackaged products.
While this is an
opportunity for
manufacturers todevelop moresustainable products
and communicate totheir consumers, it
could be a challenge
for PMI and ingeneral for the
tobacco industry due
to packaging
labeling restrictions
on tobacco products.
While this risk is not
yet materialized,
examples ofPot e nt ia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Est im a te d
Fina nc ia l
I mplic a t ions

Reduced demand
for goods/services>6 years

DirectUnlikely

Low-medium

As above several millions ofdollars.

Ma na ge me nt
me t hod

Cost ofma na ge m e nt

Corporate
Sustainability andclimate change
strategy, programsand transparent
communications
including our
website, this CDP,
carbon footprint of
new product andpackagingdevelopments.

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

Risk
drive r

Reputation

Fluctuating
socioeconomic
conditions

De sc ript ion
packaging labeling
restrictions are
discussed or insome cases alreadyin practice inAustralia, EU and
Canada.
There is a risk thatsociety does notview our company
positively withrespect to ourenvironment andclimate change
credentials. The
investor andconsumer
perceptions about
PMI's climatechange actions
could affect the
reputation andconsumer demandfor our products andmay limit investment
opportunities. While
we consider this risk
to be low, PMI
focuses on
mitigating this risk bycontinuously
reducing our Scope
1, 2 and 3 emissions
and focusing onother areas ofenvironmental
sustainability.
Physical changes inclimate such as
global warming areprojected to result in
decreased water
availability and crop
productivity in many
parts of the world.
There is also a riskthat the exacerbationof the recent
economic crisis due

Pot e nt ia l im pa c t

Reduced demand
for goods/services

Reduction/disruption
in production
capacity

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t>6 years

DirectUnlikelyLow>6 years

DirectAbout aslikely as not

Low

Est im a te d
Fina nc ia l
I mplic a t ions

Ma na ge me nt
me t hod

Cost ofma na ge m e nt

As above several millions ofdollars.

Corporate
Sustainability andclimate change
strategy, programsand transparent
communications
including our
website, this CDP,
carbon footprint of
new product andpackagingdevelopments. Our
programs to drive our
performance
improvement, suchas the Energy
Management
Program and ourrenewables strategy
are particularly
important.

As an example
we will haveinvested over
US$70M in our
EnergyManagement
Program from2010-15.

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

General businessrisk management
and forecasting managing our supply
chain and making
adjustments to our
procurement patterns
and inventory
management.

This is aninternal costwithin thegeneral runningof our businessand is notseparately
quantifiable.

Risk
drive rIncreasing
humanitariandemands

De sc ript ion
to climate change
could disrupt
tobacco growing /production capacity
and also further
impact consumer’s
disposable income.
For example,
Africa’s vulnerability
to climate change islinked to the strengthof the agriculturalindustry in many
African countries;
PMI sources 15% 20% of its tobacco
from Africa. Climatechange could impact
land and resource
availability (due tomigration to cities)
as well as resulting
in lower crop yields
and quality. This inturn could impact
PMI’s tobacco
sourcing strategy.
The risk that climatechange related
issues cause
agriculturalprioritization for foodcrops over non-foodcrops. Extreme
weather conditions
such as droughts
and heavyprecipitation, linked
to the population
size of communities
could be disrupting
factors to non-foodproduction capacity,
as the growing
demand for foodcrops could beprioritized over nonfood crops.
Specifically in Africa
there is a risk in

Pot e nt ia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

Reduction/disruption
in production
capacity>6 years

DirectAbout aslikely as not

M a gnit ude
of im pa c t

Est im a te d
Fina nc ia l
I mplic a t ions
to materialize
then they could
impact ourbusiness by
several millions ofdollars.

Low-medium

It is possible that
future regulatory
initiatives could
seek to prioritize
agricultural foodcrops (in terms ofwater supply, landavailability etc.)
over non-foodcrops, thereby
impacting thesecurity of our
supply chain. If
this risk were tomaterialize then it
could impact ourbusiness by many
millions of dollars.

Ma na ge me nt
me t hod

Cost ofma na ge m e nt

PMI has developed aGood Agricultural
Practices (GAP)
program to
specifically address
and minimize theimpacts of tobacco
farming and protect
our supply chain in
the long term. See
attached GAP
description at theend of this section.
GAP includes asections on water
use and minimization
which also covers
security of supply
issues. Many
projects that we are
involved in support
water security
measures acrossThis is largely aninternal costwhich isestimated at over
US$1M per year.
In terms of GAP
activities, wehave invested
around $20M todate for one setof programs andin an average
year expect toinvest $2-5M.

Riskdrive rDe sc ript ion

Pot e nt ia l im pa c t

Tim e fra m e

Dire c t /I ndire c t

Lik e lihood

M a gnit ude
of im pa c t

Est im a te d
Fina nc ia l
I mplic a t ionssome areas thatshortages of wood
could lead toprioritized
consumption forother purposes andthereby restrict theuse of wood as afuel for curing
tobacco.

Ma na ge me nt
me t hod

Cost ofma na ge m e nt

communities, not justfocused on tobacco
growing (e.g. waterdams in Malawi). In
addition, during 2013
we implemented
initiatives such as
Integrated
Production Systems
which supports
farmers to improveyield and farm
efficiency on avariety of crops(particularly foodcrops), not just
tobacco.

Further Information
Good Agricultural Practices information attached.
Attachments
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared Documents/Attachments/InvestorCDP2014/CC5.ClimateChangeRisks/PMI_2013 GAP.pdf

Page: CC6. Climate Change Opportunities
CC6.1
Ha ve you ide ntifie d a ny c lima t e c ha nge opportunit ie s t ha t ha ve the pot e ntia l to ge ne ra te a subst a ntive c ha nge in your busine ss ope ra t ions, re ve nue ore x pe nditure ? T ic k a ll t ha t a pply
Opportunities driven by changes in regulation
Opportunities driven by changes in physical climate parameters
Opportunities driven by changes in other climate-related developments
CC6.1aPle a se de sc ribe your opport unitie s t ha t a re drive n by c ha nge s in re gula tion

Opport unit ydrive rCap and tradeschemes

De sc ript ion

Pot e ntia lim pa c t

Expansion of EU Emissions
Trading Scheme or similar
schemes to other countries

Reducedoperationalcosts

Tim e fra m e

Dire c t/Indire c t

Lik e lihood

3 to 6 years

DirectMore likely
than notMa gnitudeof impa c t
Low

Est im a te dfina nc ia l
implic a t ions
Estimated at up
to US$1M
based on

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

We track thisthrough ourEnergyThere is no
additional costassociated with

Opport unit ydrive rFuel/energy
taxes andregulations

Fuel/energy
taxes andregulations

De sc ript ion
and regions (e.g. Australia,
Mexico) or in the growth ofother PMI factories in the EU
or EU accession countries.
There is the potential to use
our experience of theseschemes to enable
performance ahead of
allocated emissions andthereby generate carbon
credits. Starting from 4 EU
affiliates (Netherlands,
Germany, Poland, andPortugal) which are currently
in the EU ETS, there could
be the potential to tradeinternally with other PMI
affiliates and generate
Energy and CO2 savings.
Subsidies for renewable
Energy generation havebeen developed in manydifferent countries and we
factor in these subsidy plansto our cost-benefit analyses
for pertinent projects so that
improved return on
investment can potentially bedelivered. Cost-Benefit
analyses and renewableenergy assessments havebeen performed in Turkey,
Philippines, Portugal and
Poland. We also have thepotential to identify andsupport CDM project
opportunities for our tobacco
leaf suppliers.
Compliance with country
specific legislation provides
PMI with the opportunity to
reduce energy consumption
and lower our CO2
emissions, and therefore
reduce our operational cost.
Such opportunities exist in
the form of: a) Energy taxes,
such as in Germany, which
encouraged PMI to

Pot e ntia lim pa c t

Other:
Reducedoperationalcosts andEnergysecurity

Other:
Reducedoperationalcosts andEnergysecurity

Tim e fra m e

Dire c t/Indire c t

3 to 6 years

Direct3 to 6 years

DirectLik e lihood

More likely
than notMore likely
than notMa gnitudeof impa c t

Low

Low

Est im a te dfina nc ia l
implic a t ionscurrent
financial
exposure in the
EU andpotential future
inclusion oflargermanufacturing
centers such as
in Russia.

Estimated atover US$1M.

Estimated at up
to US$800,000
energy tax
reduction inGermany
based on ISO
50001
certification.

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

Management
Program andregulatory radar
screen.

this as we are
already
implementing
our Energy
Management
Program andradar screen.
However, thecost of thisprogram is over
US$70M from2010-2015.

We track thisthrough ourEnergyManagement
Program andregulatory radar
screen.

We track thisthrough ourEnergyManagement
Program andregulatory radar
screen.

As above.

The cost for ISO
50001
development
and certification
is estimated to
be no more than
US$50,000 per
location.

Opport unit ydrive rDe sc ript ion

Pot e ntia lim pa c t

Tim e fra m e

Dire c t/Indire c t

Lik e lihood

Ma gnitudeof impa c t

Est im a te dfina nc ia l
implic a t ions

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

implement an Energy
Management Program to
ISO 50001 that will allow us
to reduce energy tax costs.
b) EU ETS - 4 EU affiliates(Netherlands, Germany,
Poland, and Portugal) andthe potential to tradeinternally with other PMI
affiliates that could generate
Energy savings.
Opportunities are linked towidening markets and EU
ETS carbon trading
processes to include EU
accession countries where
PMI has facilities. Also, in
Switzerland our affiliate has
obtained CO2 tax
exemptions due to energy
saving objectives andprograms that are in place
within PMI. c) Energy
Efficiency Directive –promoting energy reduction
at source (all EU factories)
and reviewing the potential
for combined heat andpower. d) Incentives &Infrastructure/Buildings
upgrade – for renewableenergy and buildings
upgrade e) Energy Labeling
Directive – for PMI’sconventional products andpotential future ReducedRisk Products (which canhave related electronic
components).
CC6.1bPle a se de sc ribe the opport unitie s t ha t a re drive n by c ha nge s in physic a l c lim a te pa ra m e t e rs
Opportunity
drive rChange inmean

De sc ript ion
Tobacco curing is an
important step in tobacco

Pot e ntia lim pa c t

Time fra me>6 years

Dire c t/
Indire c t

Lik e lihood

About aslikely as not

M a gnit ude
of im pa c t
Low

Est im a te dfina nc ia l
implic a t ions
The financial
benefit is in terms

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

Through
implementation ofBarn conversion
costs can beOpportunity
drive r(average)temperature

Change inmean(average)precipitation

De sc ript ion
production. Around 8
metric tonnes of wood canbe used per tonne of cured
tobacco. Due to potential
physical climate changes,
such as an increase intemperature, PMI may
have a reduced need forenergy (tonnes of wood),or other energy sources(such as renewable
technologies) could
become more costeffective. While this is an
opportunity for the future,
we already have focusedprograms to increase theefficiency of our curingbarns. We have helped our
tobacco suppliers financeefficiency improvementsfor over 7000 curing barns,
generating an estimatedsaving of over 300,000
trees equivalent.
Supply Chain-Tobacco
Leaf: Tobacco leaf growing
is strongly influenced byphysical climate changesuch as changes inprecipitation. PMI sources
tobacco from over 30
countries across the world.
Increased precipitation
could impact the tobacco
leaf life cycle stages(seedling, transplanting,growing, harvesting).
Water-short leaf growing
areas could benefit fromincreases in precipitation(i.e. level, timing andvariability) due to increases
in soil moisture. This could
positively impact the
tobacco crop patterns; crop
production capacity andquality. Continuous
Production (cropproduction all year round)Pot e ntia lim pa c t

Time fra me

Increased
production
capacity

Increased
production
capacity

Dire c t/
Indire c t

Lik e lihood

M a gnit ude
of im pa c t

Indirect(Supply
chain)>6 years

Indirect(Supply
chain)

About aslikely as not

Low

Est im a te dfina nc ia l
implic a t ionsof reduced fuelwood costs for
tobacco farmers,
howevercorresponding
reductions in thecost of production
can lead to abenefit for PMI in
the order of
US$10M.

Increased tobaccoand clove yields
can provide
benefits in excessof US$10M.

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

our Good
Agricultural
Practices (GAP)
program.

approximately
US$10M per year.

We continuallyassess promising
tobacco leaf andclove growing
areas and assess ifclimate changeelements could
favor increased
yield. We
implement ourGood Agricultural
Practices (GAP).

The cost of thiswork is mainlyinternal time andresources, and isestimated at up to
US$1M per year.
Implementation of
specific programs
like continuous
production isadditional.

Opportunity
drive rChange inmean(average)precipitation

De sc ript ion
could become more
applicable.
Supply Chain-Clove
production: Clove is an
essential raw material for
PMI to use in our local
kretek brands. Indonesia
produces over 70% of theworld’s cloves. It takes atleast 5-7 years for clove
trees to become productive
and 20-40 years before
they reach peak
production. Yields arecomplex; harvests can vary
by up to 60% over a 4 year
harvest cycle. Clove
production is weather
sensitive, and climatechanges such as steady
rainfall could provide
steady wet season forclove growing areas
increasing the clove
production volume andimproving the crop quality.

Pot e ntia lim pa c t

Increased
production
capacity

Time fra me>6 years

Dire c t/
Indire c t

Indirect(Supply
chain)

Lik e lihood

About aslikely as not

M a gnit ude
of im pa c t

Low

Est im a te dfina nc ia l
implic a t ions

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

Increased clove
yields can provide
benefits in theorder of US$10M.

We continuallyassess promising
tobacco leaf andclove growing
areas and assess ifclimate changeelements could
favor increased
yield. We
implement ourGood Agricultural
Practices (GAP).

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

CC6.1cPle a se de sc ribe the opport unitie s t ha t a re drive n by c ha nge s in othe r c lima t e -re la t e d de ve lopme nt s
Opport unit ydrive r
Reputation

De sc ript ion
We expect that by tacklingsustainability and climatechange issues appropriately,
our company reputation
could be enhanced.
Opportunities for PMI include
the following: 1) Appropriate
product labeling ofsustainability performance for
PMI’s customers andconsumers. This could be an
outcome of a rigorous
verified product LCA of PMI’s
products to identify their life
cycle CO2 emissions

Pot e ntia lim pa c t

Time fra me

Dire c t /I ndire c t

Increased
demand forexisting
products/services

1 to 3 years

DirectLik e lihood

Ma gnitudeof impa c t

About aslikely as not

Low-medium

Est ima t e dfina nc ia l
im plic a tions
As an estimate,
US$10M.

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

Corporate
Sustainability
and climatechange strategy,
programs andcommunications
including thisCDP.

The internal
costs
associated withthese actions
are estimated at
US$2M.

Opport unit ydrive rChanging
consumer
behaviour

De sc ript ion
performance. Displaying
such sustainability
performance on our products
could enhance thedifferentiation of PMI’s
brands and increase thecompany’s competitive
advantage. 2) Environmental
information for our key
accounts/ retailers: to meetthe growing interest of our
key accounts/ retailers insustainability practices, we
continue to increase ouremphasis on our products’
LCA within our value chain
and provide company
information on oursustainability performance. 3)
Supply Chain engagement we are working towards
strengthening our product
LCA process to help us build
closer cooperation within our
supply chain and help ourpartners to understand the
upstream environmental
impacts of different material
alternatives (e.g. for
packaging components) andthe direction PMI is taking in
product developments. In
PMI, we closely follow
consumer and market
sustainability trends andengage with our suppliers on
the development of newmaterials to be in line withthese growing trends.
Leading performance inthese areas could attract newinvestors and also increase
our attractiveness as an
employer.
Consumers are increasinglyinterested in climate change
and sustainability aspects ofproducts and many of ourtrade customers reflect thatinterest. By working with our

Pot e ntia lim pa c t

Time fra me

Dire c t /I ndire c t

Newproducts/businessservices

1 to 3 years

DirectLik e lihood

Ma gnitudeof impa c tMore likely
than notLow

Est ima t e dfina nc ia l
im plic a tions

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

Successful
product
developments
could provide
benefits of over
US$10M.

Corporate
Sustainability
and climatechange strategy,
programs andcommunications

The internal
costs
associated withthese actions
are estimated at
US$2-5M.

Opport unit ydrive rDe sc ript ion

Pot e ntia lim pa c t

Time fra me

Dire c t /I ndire c t

Lik e lihood

customers, sharing company
performance strategies andassessing changes due to
product developments, we
could provide more detailed
information on ourenvironmental performance.
Specifically, environmental
performance information
relating to individual
product/packaging
components could improvethe differentiation of PMI’s
brands and increase ourcompetitive advantage.
Furthermore, trends in eco
products increase thedemand for, and availabilityof, new environmentally
sustainable materials, or newusage of existing materials.
An example of this in PMI
includes the use of rice husk
briquettes as fuel in thePhilippines, and nut kernels
as fuel in Indonesia.

Ma gnitudeof impa c t

Est ima t e dfina nc ia l
im plic a tions

Ma na ge m e nt
me t hod

Cost ofm a na ge me nt

including this
CDP, carbon
footprint of new
product andpackagingdevelopments.

Further Information

Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading
Page: CC7. Emissions Methodology
CC7.1
Ple a se provide your ba se ye a r a nd ba se ye a r e m issions (Sc ope s 1 a nd 2 )Ba se ye a r
Fri 01 Jan 2010 - Fri 31 Dec 2010

Sc ope 1 Ba se ye a r e missions (me t ric tonne s CO2 e )443186

Sc ope 2 Ba se ye a rÀe m issions (me t ric t onne s CO2 e )470864CC7.2
Ple a se give t he na m e of t he st a nda rd, prot oc ol or m e thodology you ha ve use d to c olle c t a c t ivity da ta a nd c a lc ula t e Sc ope 1 a nd Sc ope 2 e m issions
Ple a se se le c t the publishe d m e thodologie s tha t you use
Defra Voluntary Reporting Guidelines

Ple a se se le c t the publishe d m e thodologie s tha t you use
ISO 14064-1
European Union Emission Trading System (EU ETS): The Monitoring and Reporting Regulation (MMR) – General guidance for installations
The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)
CC7.2aI f you ha ve se le c t e d "Ot he r" in CC7 .2 ple a se provide de ta ils of the st a nda rd, prot oc ol or me t hodology you ha ve use d t o c olle c t a c tivit y da t a a nd c a lc ula t e Sc ope 1
a nd Sc ope 2 e missions
CC7.3
Ple a se give t he sourc e for t he globa l w a rming pot e nt ia ls you ha ve use d
Ga s
CO2
CH4
N2O

Re fe re nc e
IPCC Second Assessment Report (SAR - 100 year)
IPCC Second Assessment Report (SAR - 100 year)
IPCC Second Assessment Report (SAR - 100 year)

CC7.4
Ple a se give t he e m issions fa c t ors you ha ve a pplie d a nd t he ir origin; a lte rna t ive ly, ple a se a t t a c h a n Ex c e l spre a dshe e t w it h this da t a a t t he bott om of t his pa ge
Fue l/Ma t e ria l/Ene rgy
Other: see attached Excel spreadsheet

Em ission Fa c t or

U nit
Other: see attached excel spreadsheet

Re fe re nc e
see "Further information" below

Further Information
For Scope 2, we used International Energy Agency's CO2 emissions per kWh from electricity generation per country, unless specific country level information and related instruments
were available.
Attachments
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared Documents/Attachments/InvestorCDP2014/CC7.EmissionsMethodology/Fuel Conversion and GHG Emission
Factors 2013.xlsx

Page: CC8. Emissions Data - (1 Jan 2013 - 31 Dec 2013)
CC8.1
Ple a se se le c t the bounda ry you a re using for your Sc ope 1 a nd 2 gre e nhouse ga s inve ntory
Operational control
CC8.2
Ple a se provide your gross globa l Sc ope 1 e m issions figure s in m e tric t onne s CO2 e420206.6

CC8.3
Ple a se provide your gross globa l Sc ope 2 e m issions figure s in m e tric t onne s CO2 e

408200CC8.4
Are t he re a re a ny sourc e s (e .g. fa c ilit ie s, spe c ific GH Gs, a c tivit ie s, ge ogra phie s, e t c .) of Sc ope 1 a nd Sc ope 2 e missions t ha t a re w it hin your se le c t e d re port ing
bounda ry w hic h a re not inc lude d in your disc losure ?
No
CC8.5
Ple a se e st im a te the le ve l of unc e rt a int y of t he tot a l gross globa l Sc ope 1 a nd 2 e missions figure s tha t you ha ve supplie d a nd spe c ify the sourc e s of unc e rta int y inyour da t a ga t he ring, ha ndling a nd c a lc ula t ionsSc ope 1
e m issions:
Unc e rta inty
ra ngeMore than 2% but
less than or equal to5%

Sc ope 1
e m issions: Ma insourc e s of
unc e rt a int y

Sc ope 1 e m issions: Ple a se e x pa nd
on t he unc e rt a int y in your da ta

Extrapolation

Main item - for some of our offices andwarehouses there is no primary data
available currently and therefore
extrapolation from available secondary
data has been estimated.

Sc ope 2
e m issions:
Unc e rta inty
ra ngeMore than 2% but
less than or equal to5%

Sc ope 2
e m issions: Ma insourc e s of
unc e rt a int y

Sc ope 2 e m issions: Ple a se e x pa nd
on t he unc e rt a int y in your da ta

Extrapolation

Main item - for some of our offices andwarehouses there is no primary data
available currently and therefore
extrapolation from available secondary
data has been estimated.

CC8.6
Ple a se indic a t e t he ve rific a tion/a ssura nc e st a tus tha t a pplie s t o your re porte d Sc ope 1 e missions
Third party verification or assurance complete
CC8.6aPle a se provide furthe r de ta ils of the ve rific a t ion/a ssura nc e unde rt a k e n for your Sc ope 1 e missions, a nd a t t a c h t he re le va nt sta t e me nt s

T ype ofve rific a t ion ora ssura nc e
Reasonableassurance

At t a c h t he st a t e me nt

https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared
Documents/Attachments/CC8.6a/PMI Greenhouse gas emission statementfor 2013.pdf

Pa ge /se c tion re fe re nc e

Re le va nt
sta nda rd

SGS certificate reference CCP
187921/1/PMI/2013/03/14 pages
1-3.

ISO14064-3

CC8.7
Ple a se indic a t e t he ve rific a tion/a ssura nc e st a tus tha t a pplie s t o your re porte d Sc ope 2 e missions
Third party verification or assurance complete

Proport ion ofre port e d Sc ope 1
e missions ve rifie d
(% )
100

CC8.7a
Ple a se provide furthe r de ta ils of the ve rific a t ion/a ssura nc e unde rt a k e n for your Sc ope 2 e missions, a nd a t t a c h t he re le va nt sta t e me nt s

T ype ofve rific a tion ora ssura nc e
Reasonableassurance

At t a c h t he st a t e me nt
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared
Documents/Attachments/CC8.7a/PMI Greenhouse gas emission statementfor 2013.pdf

Pa ge /Se c t ion re fe re nc e

Re le va nt
st a nda rd

SGS certificate reference CCP
187921/1/PMI/2013/03/14 pages
1-3.

ISO14064-3

CC8.8
Ple a se ide ntify if a ny da ta point s ot he r t ha n e missions figure s ha ve be e n ve rifie d a s pa rt of t he third pa rty ve rific a tion w ork unde rta k e n
Addit iona l da t a point s ve rifie dOther:

Comm e nt
Operations EHS KPIs such as lost time injuries.

CC8.9
Are c a rbon diox ide e m issions from biologic a lly se que ste re d c a rbon re le va nt t o your orga niza t ion?
Yes
CC8.9aPle a se provide the e missions from biologic a lly se que ste re d c a rbon re le va nt toÀyour orga niza t ionÀin me t ric tonne s CO2
560.8
Further Information

Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2013 - 31 Dec 2013)
CC9.1
Do you ha ve Sc ope 1 e missions sourc e s in m ore t ha n one c ount ry?
Yes
CC9.1aPle a se bre a k dow n your t ot a l gross globa l Sc ope 1 e m issions by c ount ry/re gion

Count ry/Re gion
Argentina
Australia
BrazilSc ope 1 me t ric t onne s CO2 e
9808.02338.313554.8

Proport ion of
Sc ope 2 e m issions
ve rifie d (% )100Count ry/Re gion
CanadaColombia
Costa Rica
Czech Republic
Dominican Republic
EcuadorGermany
GreeceIndonesia
Italy
JordanKazakhstan
South Korea
Lithuania
Malaysia
MexicoNetherlands
Pakistan
Philippines
PolandPortugal
Romania
RussiaSenegalSerbiaSouth Africa
Switzerland
TurkeyUkraineVenezuela
Rest of world

Sc ope 1 me t ric t onne s CO2 e
6218.42893.7561.5
4782.4504.6
1276.422802.3
2005.1
21666.7
582.0
557.3
3445.52354.13568.210399.7
8124.529488.8
13674.043070.2
13660.8
8831.22889.732658.3
634.8
2334.62526.03692.56825.85883.40.0136593CC9.2
Ple a se indic a t e w hic h othe r Sc ope 1 e missions bre a k dow ns you a re a ble to provide (t ic k a ll t ha t a pply)
By activity
CC9.2dPle a se bre a k dow n your t ot a l gross globa l Sc ope 1 e m issions by a c t ivit y
Ac t ivity
Manufacturing

Sc ope 1 e missions (m e tric t onne s CO2 e )283613

Ac t ivity
Vehicle Fleet
Aircraft
Offices

Sc ope 1 e missions (m e tric t onne s CO2 e )1259023087
7604

Further Information

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2013 - 31 Dec 2013)
CC10.1
Do you ha ve Sc ope 2 e missions sourc e s in m ore t ha n one c ount ry?
Yes
CC10.1a
Ple a se bre a k dow n your t ot a l gross globa l Sc ope 2 e m issions a nd e ne rgy c onsumpt ion by c ount ry/re gion

Country/Re gion
Argentina
Australia
BrazilCanadaColombia
Costa Rica
Czech Republic
Dominican
Republic
EcuadorGermany
GreeceIndonesia
Italy
JordanKazakhstan
South Korea
Lithuania
Malaysia
MexicoNetherlands
Pakistan
Philippines
PolandSc ope 2 me t ric
t onne s CO2 e
15396.2
7297.32541.7536.3
1819.083.814580.4

Purc ha se d a nd c onsum e d e le c t ric it y, he a t,
st e a m or c ooling (M Wh)
41951.6
8677.029215.3
19262.2
10335.0
1497.224754.5

2108.53579.81318.8011474.1
78709.3
2814.72551.85470.69024.36386.510847.7
11311.4
28496.1
3282.142013.2
37244.04323.272370.5
15980.7
111014.5
6932.84508.613574.616931.2
18951.2
14921.2
24860.2
81417.3
7722.787345.4
51639.0

Purc ha se d a nd c onsume d low c a rbon e le c t ric it y, he a t, st e a mor c ooling a c c ount e d for CC8 .3 (M Wh)

72297.512000.0

Country/Re gion
Portugal
Romania
RussiaSenegalSerbiaSouth Africa
Switzerland
TurkeyUkraineVenezuela
Rest of world

Sc ope 2 me t ric
t onne s CO2 e6034.64842.134998.6
2269.37620.13020.8317.922173.3
10480.3
807.1
20328

Purc ha se d a nd c onsum e d e le c t ric it y, he a t,
st e a m or c ooling (M Wh)
23665.2
11724.2
91142.2
3562.610612.93258.611774.9
48202.8
26735.63057.10

Purc ha se d a nd c onsume d low c a rbon e le c t ric it y, he a t, st e a mor c ooling a c c ount e d for CC8 .3 (M Wh)

1132.6

CC10.2
Ple a se indic a t e w hic h othe r Sc ope 2 e missions bre a k dow ns you a re a ble to provide (t ic k a ll t ha t a pply)
By activity
CC10.2c
Ple a se bre a k dow n your t ot a l gross globa l Sc ope 2 e m issions by a c t ivit y
Ac t ivit yManufacturing
Offices and datacenters

Sc ope 2 e m issions (me t ric t onne s CO2 e )38787220328

Further Information"Rest of World" includes offices where electricity consumption data is currently not calculated ["0" value in column "Purchased and consumed electricity, heat, steam or cooling (MWh)"].

Page: CC11. Energy
CC11.1
Wha t pe rc e nt a ge of your tot a l ope ra tiona l spe nd in t he re port ing ye a r w a s on e ne rgy?
More than 0% but less than or equal to 5%
CC11.2
Ple a se st a te how muc h fue l, e le c t ric ity, he a t , ste a m , a nd c ooling in MWh your orga niza tion ha s purc ha se d a nd c onsum e d during t he re port ing ye a r
Ene rgy type
Fuel
Electricity
Heat
Steam

MWh
1633919900471734884

Ene rgy type
CoolingMWh0CC11.3
Ple a se c om ple t e t he t a ble by bre a k ing dow n t he t ot a l "Fue l" figure e nt e re d a bove by fue l type
Fue lsNatural gas
Diesel/Gas oil
Brown coal
Biodiesels
ButaneDistillate fuel oil No 4
Coking coal
Liquefied petroleum gas (LPG)
Motor gasoline
PropaneBiogasoline
Jet kerosene

MWh852108.3
290335.036805.7
117.6
45.8
97129.56724.946210.5
286852.2
89.2
3037.814462.4

CC11.4
Ple a se provide de ta ils of the e le c t ric ity, he a t , st e a m or c ooling a m ounts t ha t w e re a c c ount e d a t a low c a rbon e mission fa c t or in t he Sc ope 2 figure re port e d in
CC8 .3Ba sis for a pplying a low c a rbon e mission
fa c t or
Tracking instruments, Guarantees of Origin

M Wh a ssoc ia t e d w it h low c a rbon e le c t ric ity, he a t , ste a m orc ooling
85430.1

Comm e nt
Germany, Netherlands andSwitzerland

Further Information

Attachments
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared Documents/Attachments/InvestorCDP2014/CC11.Energy/GreenEnergyCertificate_2013_PMMG.pdf
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared Documents/Attachments/InvestorCDP2014/CC11.Energy/SwissHydroCertificate.jpg
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared Documents/Attachments/InvestorCDP2014/CC11.Energy/GreenEnergyCertificate_2013_BoZ.pdf
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared Documents/Attachments/InvestorCDP2014/CC11.Energy/GreenEnergyCertificate_2013_f6.pdf

Page: CC12. Emissions Performance
CC12.1How do yourÀgrossÀgloba lÀe m issions (Sc ope 1 a nd 2 c ombine d) for the re port ing ye a r c ompa re to the pre vious ye a r?

Decreased
CC12.1a
Ple a se ide ntify the re a sons for a ny c ha nge in your gross globa l e m issions (Sc ope 1 a nd 2 c ombine d) a nd for e a c h of t he m spe c ify how your e m issions c ompa re t ot he pre vious ye a r
Emissions va lue(pe rc e nt a ge )Re a sonEmissions
reduction activities

Dire c t ionof c ha nge

Comm e nt

4.2

Decrease

We had a 5.4% decrease in our absolute CO2 emissions, driven by the 4.2% decrease due to emission reduction
initiatives. The main items were an increase in the efficiency of our vehicle fleet by nearly 4%, over 6% reduction in
Scope 2 emissions from manufacturing (driven by both renewable energy uptake and energy efficiency projects) and over
7% reduction in Scope 1 emissions from manufacturing (driven by fuel switching and energy efficiency projects).

1.3

Decrease

Reduction in production volumes in 2013, partially offset by some increasing production complexity and an increase in the
km driven by our vehicle fleet by 5.5%.

Divestment
Acquisitions
Mergers
Change in output
Change inmethodology
Change inboundary
Change in physicaloperatingconditions
Unidentified
Other
CC12.2
Ple a se de sc ribe your gross globa l c om bine d Sc ope 1 a nd 2 e m issions for t he re port ing ye a r in me t ric tonne s CO2 e pe r unit c urre nc y t ota l re ve nue

I nt e nsit yfigure0.00001035

M e tric
nume ra tor

metric tonnes
CO2e

Me t ric
de nomina tor

unit total
revenue% c ha nge
frompre vious
ye a r

8.6

Dire c t ion ofc ha nge frompre vious
ye a rDecrease

Re a son for c ha nge

Decrease in absolute CO2 emissions by 5.4%, mainly from our manufacturing facilities, while
increasing net total revenues by 3.4% (including excise taxes). The overall emissions reduction in
manufacturing breaks down to: over 6% reduction in Scope 2 emissions (driven by bothrenewable energy uptake and energy efficiency projects) and over 7% reduction in Scope 1
emissions from manufacturing (driven by fuel switching and energy efficiency projects). We notethat in our response last year, the answer to question 12.2 was given in million units of revenue(the answer was 11.32 or 0.00001132 when converted to the same units as this year).

CC12.3
Ple a se de sc ribe your gross globa l c om bine d Sc ope 1 a nd 2 e m issions for t he re port ing ye a r in me t ric tonne s CO2 e pe r full time e quiva le nt (FT E) e mploye eI nte nsity
figure

9.09

Me t ric
num e ra t or

metric tonnes
CO2e

M e tric
de nomina tor

FTE employee% c ha nge
frompre vious
ye a r

9.6

Dire c tion ofc ha nge frompre vious ye a r

Re a son for c ha nge

Decrease in absolute CO2 emissions by 5.4%, mainly from our manufacturing facilities, while
increasing the total number of employees from 87,100 to 91,100 (4.6%). The overall emissions
reduction in manufacturing breaks down to: over 6% reduction in Scope 2 emissions (driven
by both renewable energy uptake and energy efficiency projects); and over 7% reduction in
Scope 1 emissions from manufacturing (driven by fuel switching and energy efficiency
projects).

Decrease

CC12.4
Ple a se provide a n a dditiona l int e nsit y (norma lize d) m e tric t ha t is a ppropria te to your busine ss ope ra t ions

I nte nsity
figure0.727

M e tric
nume ra t or

metric tonnes
CO2e% c ha nge
frompre vious
ye a rM e tric
de nomina tor

unit ofproduction

0.5

Dire c tion ofc ha nge frompre vious ye a r

Re a son for c ha nge

We decreased our CO2 intensity from 731kg CO2 per million cigarettes equivalent (this is
our unit of production) in 2012 to 727kg CO2 per million cigarettes equivalent in 2013. Thiswas driven by our Energy Management Program activities, (details provided in section 3.3)
and renewable energy projects, offset by a decrease in production volumes. This covers
Scope 1 and 2 emissions from our manufacturing facilities.

Decrease

Further Information

Page: CC13. Emissions Trading
CC13.1
Do you pa rtic ipa t e in a ny e m issions tra ding sc he m e s?
Yes
CC13.1a
Ple a se c om ple t e t he follow ing t a ble for e a c h of t he e mission t ra ding sc he me s in w hic h you pa rt ic ipa t e

Sc he me na me
European Union
ETS
European Union
ETS
European UnionETS

Pe riod for w hic h da t a issupplie d
Tue 01 Jan 2013 - Tue 31 Dec
2013
Tue 01 Jan 2013 - Tue 31 Dec
2013
Tue 01 Jan 2013 - Tue 31 Dec
2013

Allow a nc e s
a lloc a te dAllow a nc e s
purc ha se d

Ve rifie d e m issions in m e tric
tonne s CO2 e

9410

955

11632

21267

5700

21977

4653

5208

7950

De t a ils of ow ne rship
Facilities we own andoperateFacilities we own andoperateFacilities we own andoperateSc he me na me
European UnionETS

Pe riod for w hic h da t a issupplie d
Tue 01 Jan 2013 - Tue 31 Dec
2013

Allow a nc e s
a lloc a te d9714

Allow a nc e s
purc ha se d

Ve rifie d e m issions in m e tric
tonne s CO2 e
11639

0

De t a ils of ow ne rship
Facilities we own andoperateCC13.1b
Wha t is your stra te gy for c omplying w ith the sc he me s in w hic h you pa rt ic ipa t e or a nt ic ipa t e pa rtic ipa t ing?
Through our Global Energy Management Program, paired with local reduction initiatives, we have targeted Energy and CO2 savings that will reduce the need for purchasing allowances.
CC13.2
Ha s yourÀorga niza tion origina t e d a ny proje c t -ba se d c a rbon c re dit s or purc ha se d a ny w ithin t he re porting pe riod?
Yes
CC13.2a
Ple a se provide de ta ils on t he proje c t-ba se d c a rbon c re dits origina t e d or purc ha se d by your orga niza t ion in t he re port ing pe riod

Cre ditorigina tion orc re ditpurc ha se

Credit Purchase

Proje c t t ype

Other: Various
projects including
wind, reforestation
and biomass

Proje c t ide ntific a t ion

A selection of CDM and otherrecognized projects (e.g. VER)
from the GoGreen program run
by DHL.

V e rifie d t ow hic hst a nda rd

CDM (Clean
Development
Mechanism)

Num be r ofc re dit s(me t ric
t onne s of
CO2 e )
253

N umbe r of c re dits(m e tric t onne s
CO2 e ): Riska djust e d volum e

Cre dit s
c a nc e lle dPurpose , e .g.
c om plia nc e

253

Not relevant

Voluntary
Offsetting

Further Information

Attachments
https://www.cdp.net/sites/2014/12/14712/Investor CDP 2014/Shared Documents/Attachments/InvestorCDP2014/CC13.EmissionsTrading/GoGreen Certificate - Philip Morris - Europe.pdf

Page: CC14. Scope 3 Emissions
CC14.1
Ple a se a c c ount for your orga niza t ion÷s Sc ope 3 e m issions, disc losing a nd e x pla ining a ny e x c lusions

Sourc e s of
Sc ope 3
e m issions

Purchased
goods andservices

Capital goods

Fuel-andenergy-related
activities (notincluded in
Scope 1 or 2)

Upstreamtransportationand distribution

Eva lua t ion
sta t us

Relevant,
calculated

Relevant,
calculated

Relevant,
calculated

Relevant,
calculated

me t ric
t onne s
CO2 eEmissions c a lc ula tion m e thodology

3850000

Includes Tobacco (including the impact of curing tobacco) and directmaterials, composing the cigarette, the pack and transport packaging(packaging, cigarette papers, acetate tow for filters, etc.). Our carbon footprint
is based on actual data (primary data) and average industry data (secondarydata), including a number of estimates and assumptions, using impact
databases. Elements of our carbon footprint, have been modeled using theLife Cycle Assessment (LCA) tool, Simapro. For our base year in 2010, we
undertook a 3rd party review against ISO 14040 series of standards and thedraft Scope 3 Accounting and Reporting Standard as released by the
WBCSD / WRI GHG Protocol Initiative. We have extrapolated our carbon
footprint based on production volume changes.

Pe rc e nta geof e missions
c a lc ula t e dusingprim a ry da t a

40.00%

110000Emission factors for infrastructure (taking the proxy of a chemical factory),
were used from a life cycle assessment database, ecoinvent v2.2, andmodeled in Simapro.

10.00%

183500GHG Protocol Corporate Value Chain (Scope 3) Accounting and ReportingStandard. The emissions are calculated by multiplying fuel quantities andelectricity purchased by upstream and T&D GHGs emission factors. When noemission factor is available for a specific country, the emission factor provided
by DEFRA for the corresponding region is applied. Quality: The quality of the
primary data used is high and the quality of the secondary data is medium.
The quality of the emissions data is considered as medium.

100.00%332000Estimates for tobacco and direct materials transport. Our carbon footprint isbased on actual data (primary data) and average industry data (secondarydata), including a number of estimates and assumptions, using impact
databases. Elements of our carbon footprint, have been modeled using the
LCA tool, Simapro. For our base year in 2010, we undertook a 3rd party
review against ISO 14040 series of standards and the draft Scope 3
Accounting and Reporting Standard as released by the WBCSD / WRI GHG
Protocol Initiative.

25.00%

9800

100.00%Ex pla na tion

Based on our current LCA. We
continue our engagement processwith direct materials and othersuppliers in order to get moreprimary data. This year we havejoined CDP Supply Chain to support
this process.

Existing infrastructure emissions
were calculated during our original
carbon footprint calculation and we
use that to estimate the carbon
emissions related to the
manufacture and transport of capital
goods (equipment, machinery,buildings, facilities, and vehicles)
purchased by PMI annually.
The primary data used are the types
and quantities of fuels and electricity
used by PMI in 2013. Secondary
data are used for upstream and T&D
GHGs emission factors. For fossil
and biogenic fuels, the emission
factors are global without
geographic differentiation. For
electricity, T&D losses and heatlosses, GHGs emissions are specificto each country or region. The
activity data come from PMI’s
internal reporting tool. The GHGs
emission factors used are takenfrom DEFRA guidelines for GHG
accounting - 2013 and ecoinvent
v2.2.

Based on estimated distances
travelled.

Sourc e s of
Sc ope 3
e m issions
Waste
generated inoperations

Eva lua t ion
sta t us
Relevant,
calculated

Business travel

Relevant,
calculated

EmployeecommutingRelevant,
calculated

Upstreamleased assets

Not relevant,explanation
providedDownstream
transportationand distribution

Processing ofsold products
Use of soldproducts

me t ric
t onne s
CO2 e

Relevant,
calculated

Not relevant,explanation
provided
Relevant,
calculated

59934

Emissions c a lc ula tion m e thodology

GHG Protocol Corporate Value Chain (Scope 3) Accounting and ReportingStandard. The waste flows are broken down in 51 different waste types andtreatment methods. The waste-type specific method is used to calculate GHG
emissions. Each treatment is associated with an emission factor to assess the
GHGs emissions (secondary data) from the treatment (ecoinvent 2.2, IPCC
2007 GWP100). As per the Technical Guidance for Calculating Scope 3
Emissions of the GHG Protocol (p.80), emissions from incineration withenergy recovery and from recycling are not included in the assessment, toavoid double counting. An estimation of the emissions from the transportationof the waste to the recycling or incineration facility is performed. The
emissions from this transportation step are calculated as follow: 0.134(transport, lorry >16t, fleet average, RER, in CO2-eq / tkm) * 35 km(assumption) * mass of waste recycled or incinerated with energy recovery (intonnes). It is assumed that the paper, cardboard and acetate tow sent tocomposting are fully degraded and therefore emit only biogenic CO2, notreported in the scope 1,2 and 3 of the GHG protocol. The transportation of thiswaste to the composting facility is accounted for. Quality: The quality of the
primary data used is high. However, due to the simplification involved in themodeling (no geographical differentiation on the waste treatment was made),
therefore the overall quality of the emission is estimated as medium.
Through air miles accounting, using the Guideline to DEFRA / DECC’s GHG
Conversion Factors for Company Reporting, Annex 6: average Air Passenger
Transport Conversion Factors for “Premium Economy class”.

Pe rc e nta geof e missions
c a lc ula t e dusingprim a ry da t a

Ex pla na tion

The primary data used for thiscategory are the mass of waste
generated in production centres,
excluding office waste. The
secondary data are the emission
factors for the different waste
treatment, taken from a life cycle
assessment database, ecoinventv2.2.

85.00%

98000

Estimated based on average commute distances and transport methods
across 91,100 employees using data extrapolation from our own fleet ofvehicles.

10.00%

518000Distribution of finished goods; estimate based on 8 key markets extrapolated
for the whole of PMI. Our carbon footprint is based on actual data (primarydata) and average industry data (secondary data), including a number of
estimates and assumptions, using impact databases. Elements of our carbon
footprint, have been modeled using the LCA tool, Simapro. For our base year
in 2010, we undertook a 3rd party review against ISO 14040 series ofstandards and the draft Scope 3 Accounting and Reporting Standard as
released by the WBCSD / WRI GHG Protocol Initiative.

25.00%

Covering 78 countries through PMI
air miles accounting.
Only some sites have undertaken
mobility surveys of employees(commuting), therefore primary data
is limited.
Our upstream leased assets are notmaterial to our carbon footprint,
associated emissions are small incomparison to our total Scope 3
emissions and do not meet our 5%materiality threshold.

Based on estimated distances fordefined transport means in 8 key
markets.

Not relevant since our sold products
are not processed.
147000This assumes the use of cigarette lighters. Our carbon footprint is based on
actual data (primary data) and average industry data (secondary data),

20.00%

Based on estimated usage of lighter
fuel per cigarette.

Sourc e s of
Sc ope 3
e m issions

End of life
treatment ofsold products

Eva lua t ion
sta t us

Relevant,
calculated

me t ric
t onne s
CO2 e

12000

Emissions c a lc ula tion m e thodology

including a number of estimates and assumptions, using impact databases.
Elements of our carbon footprint, have been modeled using the LCA tool,
Simapro. For our base year in 2010, we undertook a 3rd party review against
ISO 14040 series of standards and the draft Scope 3 Accounting andReporting Standard as released by the WBCSD / WRI GHG Protocol Initiative.
Downstream waste treatment and street cleaning related to cigarette butts andwaste packaging. Our carbon footprint is based on actual data (primary data)
and average industry data (secondary data), including a number of estimatesand assumptions, using impact databases. Elements of our carbon footprint,
have been modeled using the LCA tool, Simapro. For our base year in 2010,
we undertook a 3rd party review against ISO 14040 series of standards andthe draft Scope 3 Accounting and Reporting Standard as released by the
WBCSD / WRI GHG Protocol Initiative.

Pe rc e nta geof e missions
c a lc ula t e dusingprim a ry da t a

10.00%

Ex pla na tion

Based on Swiss market
assumptions and extrapolation.

Downstream
leased assets

Not relevant,explanation
provided

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

Franchises

Not relevant,explanation
provided

No existing franchise business.

Not relevant,explanation
provided

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

Investments

Other(upstream)
Other(downstream)
CC14.2
Ple a se indic a t e t he ve rific a tion/a ssura nc e st a tus tha t a pplie s t o your re porte d Sc ope 3 e missions
Third party verification underway but not yet complete – first year it has taken place
CC14.2a
Ple a se provide furthe r de ta ils of the ve rific a t ion/a ssura nc e unde rt a k e n, a nd a tt a c h the re le va nt st a te m e nts

T ype Àof ve rific a t ion ora ssura nc e

At t a c h t he
st a t e me nt

Third party
verification/assurance
underway

Re le va nt
sta nda rd

Pa ge /Se c t ion re fe re nc e
Statement not yet available - work in progress. We are undertaking third party
verification for our business travel emissions, which whilst only 2% of our baseline
Scope 3 emissions, still amounts to around 60,000 tonnes of CO2 per year.

ISO14064-3

Proport ion of Sc ope
3 e m issions ve rifie d(% )2

CC14.3Are you a ble to c ompa re your Sc ope 3 e missions for t he re port ing ye a r w ith those for the pre vious ye a r for a ny sourc e s?
Yes
CC14.3a
Ple a se ide ntify the re a sons for a ny c ha nge in your Sc ope 3 e missions a nd for e a c h of the m spe c ify how your e missions c om pa re t o t he pre vious ye a r
Sourc e s of Sc ope 3
e missions
Business travel
Purchased goods & services
Fuel- and energy-related activities(not included in Scopes 1 or 2)
Waste generated in operations
Upstream transportation &distribution

Re a son forc ha nge
Change inmethodology
Emissions
reduction activities
Emissions
reduction activities
Emissions
reduction activities
Emissions
reduction activities

Em issions va lue(pe rc e nta ge )Dire c tion ofc ha nge

Comm e nt
Corrections made during data verification and updating our air miles
conversion factor (DEFRA) which now includes factors for distance uplift andradiative forcing.
Based on reductions in CO2 emissions from tobacco agriculture
improvement projects as identified in section 3.3.

15

Decrease

1

Decrease

7

Decrease

Corresponding a 7% reduction in energy used in 2013 compared to 2012.

9

Decrease

Corresponding to a 9% reduction in total waste and a 30% reduction in
waste sent for final disposal in 2013 compared to 2012.

0.2

Decrease

Load optimization and change in transport method from land to sea.

CC14.4
Do you e nga ge w ith a ny of t he e le me nt s of your va lue c ha in on GH G e m issions a nd c lima t e c ha nge st ra t e gie s? (T ic k a ll t ha t a pply)
Yes, our suppliers
Yes, our customers
CC14.4a
Ple a se give de t a ils of m e thods of e nga ge me nt , yourÀst ra t e gy for priorit izing e nga ge me nt s a nd me a sure s of suc c e ss
Our suppliers:
We have used our carbon footprint calculation to identify the main climate change impacts of our purchased materials. In our direct materials (non-tobacco) area we identified acetate tow
and consumer board & paper as significant contributors from a raw materials perspective to our carbon footprint and this is why we prioritized engagement with suppliers in these areas.
We engaged with key suppliers in these two areas through direct discussions and a questionnaire to ascertain carbon related strategies and performance and as a means of assessing
the value of joining CDP Supply Chain. As a measure of success, 90% of the suppliers surveyed engaged with us on this subject. From this basis we decided to join CDP Supply chain in2013 and are involved in the process for the first time in 2014. We aim to have at least 80% of our invited suppliers to engage with us through CDP Supply Chain and in the medium term
will use this forum to drive decreases in our value chain emissions where, depending on the Scope 3 area, we are aiming to reduce emissions by 30% by 2020.
We also engage with our suppliers regularly in the following main areas:• Tobacco leaf suppliers – through Good Agricultural Practices (GAP) collaboration.
• Direct Materials suppliers – through procurement and product development activities which include the definition of parameters of environmental performance for different raw material
components.
• Equipment manufacturers – through an industry colloquium which helps target energy efficiency developments for our manufacturing equipment.
Our customers:
We have engaged with Tesco to support their own carbon footprint reduction target for their supply chain. We also regularly share information with other key accounts and stakeholders
through questionnaire responses and presentations.
We prioritize engagement as follows:
1) Our Customers2) Based on share of our carbon footprint3) Based on our climate change risk assessment
CC14.4b
To give a se nse of sc a le of this e nga ge m e nt, ple a se give t he num be r of supplie rs w it h w hom you a re e nga ging a nd t he proport ion of your t ot a l spe nd t ha t the yre pre se nt
N umbe r of supplie rs
23% of tot a l spe nd
70%

Comm e nt
23 Direct Material suppliers representing 70% of Direct Materials total spend.

CC14.4cI f you ha ve da ta on your supplie rs÷ GHG e m issions a nd c lim a te c ha nge st ra te gie s, ple a se e x pla in how you ma k e use of t ha t da t a
How you m a k e use oft he da t a

Ple a se give de ta ils

Identifying GHG sources toprioritize for reduction actions

We will include their primary data in our future carbon footprint reviews to improve the accuracy of estimated data. We will consider supplier/customer
data and climate change strategies in our road-map for our carbon footprint reduction targets for our entire supply chain / value chain. We will seek toshare best practices.

Further Information
We are undertaking third party verification for our business travel emissions, which whilst only 2% of our baseline Scope 3 emissions, still amounts to around 60,000 tonnes of CO2 per
year.

Module: Sign Off
Page: CC15. Sign Off
CC15.1
Ple a se provide the follow ing informa t ion for t he pe rson tha t ha s signe d off (a pprove d) your CDP c lima t e c ha nge re sponse
Na m eAndy Harrop

J ob tit leDirector EHS&S Sustainability and Performance

Corre sponding job c a te gory
Environment/Sustainability manager

Further Information

Module: FBT
Page: FBT1. Agriculture
FBT1.1
Are a gric ult ura l a c t ivit ie s, w he t he r in your dire c t ope ra t ions or e lse w he re in your va lue c ha in, re le va nt to your c lima te c ha nge disc losure ?
Yes
FBT1.2
Are a gric ult ura lÀe m issionsÀt ha t you ha ve ide nt ifie d a s re le va nt produc e d on your ow n fa rm(s), e lse w he re Àin your va lue c ha in, or bot h?
Elsewhere in value chain
FBT1.2a
Ple a se e x pla in w hy a gric ult ura l e m issions from your ow n fa rms a re not re le va nt
We do not own farms
FBT1.5
Do you a c c ount for e m issions from a gric ultura l a c t ivitie s in your va lue c ha in a s pa rt of the Sc ope 3 c a t e gory "Purc ha se d goods a nd se rvic e s" re port e d in CC1 4 .1of t he c ore c lim a t e c ha nge que stionna ire ?
Yes
FBT1.6
Do you e nc oura ge your a gric ult ura l supplie rs t o unde rt a k e a ny a gric ultura l ma na ge m e nt pra c tic e s w it h a c lima t e c ha nge m it iga t ion a nd/or a da pta t ion be ne fit ?
Yes
FBT1.6a
Ple a se ide ntify a gric ult ura l ma na ge m e nt pra c tic e s w it h a c lima t e c ha nge mit iga t ion a nd/or a da pt a t ion be ne fit t ha t you e nc oura ge your supplie rs to im ple m e nt.
Com ple t e t he ta ble
Ac t ivity
ID

1

De sc ript ion of
a c tivit yYour role

De sc ript ion of role

Drive rGood Agricultural
Practices (GAP)
program

Other: We
mandate GAP
for suppliers of
tobacco to
PMI

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

Emissions
reductions andincreasing
resilience

Comm e nt

FBT1.6b
Doe s the im ple m e nta t ion of t he se a gric ult ura l m a na ge me nt pra c t ic e s in yourÀva lue c ha in ha ve Àse c onda ry impa c t s? Com ple te the ta ble

Ac tivit yID1

I mpa c t
on yie ld

Yes

Im pa c t
on c ostYes

I m pa c t on
soil
qua lityYes

I mpa c t on
biodive rsity

Yes

Im pa c t
on w a te r

Yes

Ot he rim pa c t

Yes

De sc ript ion of impa c t s

Ma na ge m e nt ofim pa c t s

Actually these are primary impacts rather than secondary each of these impacts areas is directly addressed for
improvement by our GAP program. Other impacts include
waste reduction and raw materials optimization.

Through the GAP
program, see 1.6d.

FBT1.6c
Do you ha ve a ny pla ns t o e nga ge w ith your supplie rs on t he ir im ple m e nta t ion of a gric ultura l m a na ge me nt pra c t ic e s?
Yes
FBT1.6d
Ple a se de t a il t he se pla ns t o e nga ge w ith your supplie rs on the ir im ple m e nt a tion of a gric ult ura l m a na ge me nt pra c t ic e s
GAP is mandatory for all suppliers of tobacco to PMI, as is reflected in all PMI’s and its affiliates’ supply contracts. PMI expects all its’ suppliers to continuously improve in theimplementation of GAP principles and standards, working with the farmers from whom they purchase.
Suppliers are required to conduct annual self-assessments of their GAP implementation and are provided with a management tool and set of measurable standards against which theyrate themselves. Further, the information resulting from the farm by farm monitoring of the measurable standards is consolidated into Key Performance Indicators that are used to assess
suppliers’ improvement in GAP over time. Farmers’ and suppliers’ progress in GAP implementation is now monitored by external third parties who will complete a formal GAP assessment
to verify supplier self-assessments every three years. Additionally, for the People Pillar of GAP (Agricultural Labor Practices (ALP)), Verité has also guided our efforts to set up a third
party monitoring system with Control Union who is completing a detailed assessment of suppliers’ ALP Program implementation.
Further Information

Page: FBT2. Processing
FBT2.1
Are proc e ssing a c t ivit ie s, w he the r in your dire c t ope ra tions or e lse w he re in your va lue c ha in, re le va nt t o your c lima t e c ha nge disc losure ?
Yes
FBT2.2Are e m issions from proc e ssing a c t ivit ie s t ha t you ha ve ide nt ifie d a s re le va nt produc e dÀin your dire c t ope ra t ions, e lse w he re in your va lue c ha in, or both?
Both direct operations and elsewhere in value chain

FBT2.3
Do you a c c ount for e m issions from proc e ssing a c tivit ie s in your dire c t ope ra tions a s pa rt of the globa l gross Sc ope 1 e missions figure re port e d in CC8 .2 a nd/or t he
Sc ope 2 figure re porte d in CC8 .3 of t he c ore c lima t e c ha nge que st ionna ire ?
Yes
FBT2.3a
Ple a se re port t he se e missions from proc e ssing a c t ivitie s in your dire c t ope ra t ions a nd ide nt ify a ny e x c lusions in t he t a ble be low
Sc opeScope 1
Scope 2Emissions from proc e ssing a c t ivitie s (me t ric tonne s CO2 e )
14426
8778

Ex c lusions

Ex pla na tion

Comm e nt

FBT2.4
Do you a c c ount for e m issions from proc e ssing a c tivit ie s in yourÀva lue c ha in a s pa rt of t he Sc ope 3 c a t e gory "Purc ha se d goods a nd se rvic e s" a nd/or "Proc e ssing ofsold produc ts" re porte d in CC1 4 .1 of t he c ore c lima t e c ha nge que st ionna ire ?
Yes
Further Information

Page: FBT3. Distribution
FBT3.1
Are distribution a c t ivitie s, w he t he r in your dire c t ope ra t ions or e lse w he re in your va lue c ha in, re le va nt to your c lima t e c ha nge disc losure ?
Yes
FBT3.2Are e m issions from distribution a c t ivitie s t ha t you ha ve ide ntifie d a s re le va nt produc e d in your dire c t ope ra t ions, e lse w he re in your va lue c ha in, or bot h?
Both direct operations and elsewhere in value chain
FBT3.3
Do you a c c ount for e m issions from dist ribut ion a c t ivitie s in your dire c t ope ra t ions a s pa rt of t he globa l gross Sc ope 1 e missions figure re port e d in CC8 .2 a nd/or
t he Sc ope 2 figure re port e d in CC8 .3 of the c ore c lima t e c ha nge que st ionna ire ?
Yes
FBT3.3a
Ple a se re port t he se e missions from dist ribution a c t ivit ie s in your dire c t ope ra tionsÀa nd ide nt ify a nyÀe x c lusions in t he t a ble be lowSc ope
Scope
1
Scope
2

Emissions from dist ribut ion a c tivit ie s (m e t ric
tonne s CO2 e )Ex c lusions

125902Ex pla na tion

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

0

FBT3.4
Do you a c c ount for e m issions from dist ribut ion a c t ivitie s in yourÀva lue c ha in a s pa rt of t he Sc ope 3 c a te gory "U pst re a m tra nsporta t ion a nd dist ribution" a nd/or"Dow nst re a m tra nsport a t ion a nd distribution" in CC1 4 .1 of t he c ore c lima t e c ha nge que st ionna ire ?
Yes
Further Information

Page: FBT4. Consumption
FBT4.1
Are c onsum ption a c t ivit ie s re le va nt to your c lim a te c ha nge disc losure ?
Yes
FBT4.1aDo you a c c ount for e m issions from t he c onsum ption of your produc t s a s pa rt of the Sc ope 3 c a t e gory "Use of sold produc t s" a nd/or "End of life t re a t me nt of soldproduc ts" in CC1 4 .1 of t he c ore c lim a te c ha nge que stionna ire ?
Yes
Further Information

CDP