Measuring Stakeholder Capitalism content index 2020

World Economic Forum’s Stakeholder Capitalism* Index
For the first time, we attempt in this index to map our disclosures to the accounting metrics and disclosures of the *International Business Council of the World Economic
Forum’s report “Measuring Stakeholder Capitalism – Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.” (WEF Framework). The report details
21 Core and 34 Expanded Metrics and disclosures, which the report recommends to both IBC members and nonIBC companies for adoption, namely:
Core Metrics: “A set of 21 more-established or critically important metrics and disclosures. These are primarily quantitative metrics for which information is already being
reported by many firms (albeit often in different formats) or can be obtained with reasonable effort. They focus primarily on activities within an organization’s own boundaries.
This summary cross-reference our disclosures to all 21 Core Metrics and disclosures of the WEF Framework.” 1
Expanded Metrics: “A set of 34 metrics and disclosures that tend to be less well-established in existing practice and standards and have a wider value chain scope or convey
impact in a more sophisticated or tangible way, such as in monetary terms. They represent a more advanced way of measuring and communicating sustainable value creation.
This summary cross-references our reporting to select Expanded Metrics and disclosures pertaining to the “Principles of Governance” pillar and to our company’s tier 1 topics.”1
This summary is structured as follows:•••

A table cross-referencing contents of our reporting with all core metrics, as well as selected expanded metrics and disclosures of the “Principles of Governance”
pillar of the Measuring Stakeholder Capitalism framework.
A table cross-referencing contents of our reporting on our company’s tier 1 sustainability topics (defined as per our sustainability materiality assessment) with all
relevant core metrics and disclosures, as well as select expanded metrics and disclosures of “Planet”, “People”, and “Prosperity” pillars of the Measuring
Stakeholder Capitalism framework.
A table cross-referencing contents of our reporting on our company’s tier 2 sustainability topics with relevant core metrics and disclosures of “Planet”, “People”,
and “Prosperity” pillars of the Measuring Stakeholder Capitalism framework.

This summary should be read in conjunction with the Philip Morris International Inc. Form 10-K for the year ended 2020, PMI’s Proxy Statement 2021, PMI’s Integrated Report
2020, and the additional sustainability-related communications available on www.pmi.com/sustainability. 2

1 Source: World Economic Forum and Big Four analysis. Definitions for Planet, People and Prosperity taken from the UN’s 2030 Agenda for Sustainable Development(http://www3.weforum.org/docs/WEF_IBC_Measuring_Stakeholder_Capitalism_Report_2020.pdf)
2 The content of PMI’s Integrated Report 2020 content is shaped by a formal sustainability materiality assessment, refreshed in 2019. We have structured our sustainability topics around four strategic pillars of action and two tiers. PMI’s Integrated
Report 2020 provides information on context, relevance, management approach, targets, and performance for each tier 1 topic. Details about our management and performance on tier 2 topics, as well as case studies that shed light on our work atcountry level, are available on www.PMI.com/sustainability. In this summary and in related communications, the term “materiality,” “material,” and similar terms, when used in the context of economic, environmental and social topics, are definedin the referenced sustainability standards, and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by the U.S. Securities and Exchange Commission.

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Measuring Stakeholder Capitalism content index 2020

PRINCIPLES OF GOVERNANCE“The definition of governance is evolving as organizations are increasingly expected to define and embed their purpose at the centre of theirbusiness. But the principles of agency, accountability and stewardship continue to be vital for truly ‘good governance’.” 3
The summary below cross-references contents of our reporting with all core metrics, as well as select expanded metrics and disclosures of the “Principles ofGovernance” pillar.
Theme

Metrics and disclosures

Core /
ExpandedReference in published materials

Governing
purposeSetting purpose
The company’s stated purpose, as the expression of the means by whicha business proposes solutions to economic, environmental and social
issues. Corporate purpose should create value for all stakeholders,
including shareholders.

Core• PMI’s Statement of Purpose, available in PMI’s Proxy Statement 2020, PMI
Integrated Report 2019, and on PMI.com.

Governing
purpose

Purpose-led management
How the company’s stated purpose is embedded in company strategies,
policies and goals.

Expanded• PMI’ Statement of Purpose, available in PMI’s Proxy Statement 2020, PMI
Integrated Report 2019, and on PMI.com• PMI Integrated Report 2020: see Letter from the Executive Chairman on page 5
and Governance and Management on pages 30-31

Quality of
governing body

Governance body composition
Composition of the highest governance body and its committees by:competencies relating to economic, environmental and social topics;
executive or non-executive; independence; tenure on the governancebody; number of each individual’s other significant positions andcommitments, and the nature of the commitments; gender;
membership of under-represented social groups; stakeholder
representation.

Core

Quality of
governing body

Progress against strategic milestones
Disclosure of the material strategic economic, environmental and social
milestones expected to be achieved in the following year, such
milestones achieved from the previous year, and how those milestones
are expected to or have contributed to long‑term value.

Expanded

Quality of
governing body

Remuneration
1. How performance criteria in the remuneration policies relate to thehighest governance body’s and senior executives’ objectives for
economic, environmental and social topics, as connected to thecompany’s stated purpose, strategy and long‑term value.
2. Remuneration policies for the highest governance body and senior
executives for the following types of remuneration:• PMI Integrated Report 2020: see 2025 Roadmap on pages 27-28, andPerformance tables on pages 129-142. Furthermore, for each sustainability
topic, PMI’s Integrated Report (for tier 1 topics) and additional disclosures on
PMI.com (for tier 2 topics) provide information on context, relevance,
management approach, targets, performance and next steps.
• PMI’s Proxy Statement 2021, pages 5-7

Expanded• PMI Integrated Report 2020: see Governance and management on pages 30-31• PMI’s Proxy Statement 2021, pages 27-28 and 31-43• PMI Integrated Report 2020: see Governance and management on pages 30-31• PMI’s Proxy Statement 2021, pages 8-26

3 Source: World Economic Forum and Big Four analysis. Definitions for Planet, People and Prosperity taken from the UN’s 2030 Agenda for Sustainable Development(http://www3.weforum.org/docs/WEF_IBC_Measuring_Stakeholder_Capitalism_Report_2020.pdf)

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Measuring Stakeholder Capitalism content index 2020

– Fixed pay and variable pay, including performance‑based pay,equity‑based pay, bonuses and deferred or vested shares– Sign‑on bonuses or recruitment incentive payments– Termination payments– Clawbacks– Retirement benefits, including the difference between benefit
schemes and contribution rates for the highest governance body,senior executives and all other employees
Stakeholder
engagement

Ethical behaviour

Ethical behaviour

Ethical behaviour

Risk andopportunity
oversight

Material issues impacting stakeholders
A list of the topics that are material to key stakeholders and thecompany, how the topics were identified and how the stakeholders
were engaged.

Core

Anti-corruption
1. Total percentage of governance body members, employees andbusiness partners who have received training on the organization’s anticorruption policies and procedures, broken down by region.
a) Total number and nature of incidents of corruption confirmed during
the current year, but related to previous years; andb) Total number and nature of incidents of corruption confirmed during
the current year, related to this year.
2. Discussion of initiatives and stakeholder engagement to improve thebroader operating environment and culture, in order to combat
corruption.
Protected ethics advice and reporting mechanisms
A description of internal and external mechanisms for:1. Seeking advice about ethical and lawful behaviour and organizational
integrity; and2. Reporting concerns about unethical or unlawful behaviour and lack oforganizational integrity.
Alignment of strategy and policies to lobbying
The significant issues that are the focus of the company’s participationin public policy development and lobbying; the company’s strategy
relevant to these areas of focus; and any differences between its
lobbying positions and its purpose, stated policies, goals or other public
positions.
Integrating risk and opportunity into business process
Company risk factor and opportunity disclosures that clearly identify theprincipal material risks and opportunities facing the company
specifically (as opposed to generic sector risks), the company appetite inrespect of these risks, how these risks and opportunities have moved
over time and the response to those changes. These opportunities andrisks should integrate material economic, environmental and social
issues, including climate change and data stewardship.

Core

Our reporting on Business integrity can be found on PMI.com and on page 133 of
PMI Integrated Report 2020. We currently do not break down our performancedata in the format required for this metric.

Core• Business integrity, available on PMI.com

ExpandedCore

3• PMI Integrated Report 2020: see Sustainability materiality on page 23-24, andExternal transformation: Changing the way we engage with stakeholders on
pages 12-13• PMI Sustainability Materiality Report 2019

• PMI Integrated Report 2020: see External transformation: Changing the way weengage with stakeholders on pages 12-13, Our business environment on pages
17-19, Access to smoke-free products on pages 41-49• Responsible engagement, available on PMI.com• PMI Integrated Report 2020: see Risk management on page 32 and Assessing
climate change risks and opportunities on page 101

Measuring Stakeholder Capitalism content index 2020

PLANET, PEOPLE, AND PROSPERITY“An ambition to protect the planet from degradation, including through sustainable consumption and production, sustainably managing its
natural resources and taking urgent action on climate change, so that it can support the needs of the present and future generations.”“An ambition to end poverty and hunger, in all their forms and dimensions, and to ensure that all human beings can fulfil their potential indignity and equality and in a healthy environment.”“An ambition to ensure that all human beings can enjoy prosperous and fulfilling lives and that economic, social and technological progressoccurs in harmony with nature.” 4
The summary below cross-references our reporting on PMI’s tier 1 sustainability topics with all core metrics and disclosure, as well as selected expanded metrics
and disclosures of the “Planet”, “People”, and “Prosperity” pillars of the WEF’s framework.
PMI’s Tier 1
Topics
Product healthimpacts

Access tosmoke-free
products

Respect forhuman rights

Theme

Metrics and disclosures

Reference in published materials

Innovation of
better products
and services

Core /
Expanded

Total R&D expenses ($)
Total costs related to research and development.

Core• PMI Integrated Report 2020: see Business transformation metrics
on pages 15 and 130, and Product health impacts on pages 34-40

Core• PMI Integrated Report 2020: see Transforming our business on
pages 9-16, Business transformation metrics on pages 15 and 130,
Access to smoke-free products on pages 41-49, and Performancetable: Financials on page 129• PMI Annual Form 10-K 2020, pages 52-53

Employment andwealthgeneration

Dignity andequality

Financial investment contribution
1. Total capital expenditures (CapEx) minus depreciation,
supported by narrative to describe the company’s investment
strategy.
2. Share buybacks plus dividend payments, supported bynarrative to describe the company’s strategy for returns ofcapital to shareholders.
Human rights review, grievance impact & modern
slavery (#, %)1. Total number and percentage of operations that have been
subject to human rights reviews or human rights impact
assessments, by country.
2. Number and type of grievances reported with associatedimpacts related to a salient human rights issue in the reporting
period and an explanation on type of impacts.
3. Number and percentage of operations and suppliersconsidered to have significant risk for incidents of child labour,
forced or compulsory labour. Such risks could emerge in
relation to:

Expanded• PMI Integrated Report 2020: see Respect for human rights on pages
69-75, Sustainable supply chain management on pages 59-68,
Socioeconomic well-being of tobacco-farming communities on
pages 78-90 and respective performance tables on pages 131, 132,
and 134

4 Source: World Economic Forum and Big Four analysis. Definitions for Planet, People and Prosperity taken from the UN’s 2030 Agenda for Sustainable Development(http://www3.weforum.org/docs/WEF_IBC_Measuring_Stakeholder_Capitalism_Report_2020.pdf)

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Socioeconomic
well-being of
tobacco-farming
communities

Dignity andequality

Health, safety,
and well-being
at work

Health andwell‑being

Health, safety,
and well-being
at work

Health andwell‑being

Climateprotection

Climateprotection

Climate change

Climate changea) type of operation (such as manufacturing plant) and type of
supplier; andb) countries or geographic areas with operations and suppliersconsidered at risk.
Risk for incidents of child, forced or compulsory labour
An explanation of the operations and suppliers considered tohave significant risk for incidents of child labour, forced orcompulsory labour. Such risks could emerge in relation to:a) type of operation (such as manufacturing plant) and type of
supplier; andb) countries or geographic areas with operations and suppliersconsidered at risk.
Health and safety (%)
The number and rate of fatalities as a result of work-related
injury; high-consequence work-related injuries (excluding
fatalities); recordable work-related injuries; main types of workrelated injury; and the number of hours worked.
An explanation of how the organization facilitates workers’
access to non-occupational medical and healthcare services,and the scope of access provided for employees and workers.
Employee well‑being (#, %)1. The number of fatalities as a result of work‑related ill‑health,recordable work‑related ill‑health injuries, and the main types
of work‑related ill‑health for all employees and workers.
2. (a) Percentage of employees participating in “best practice”
health and well-being programmes, and (b) Absentee rate (AR)of all employees.
Greenhouse gas (GHG) emissions
For all relevant greenhouse gases (e.g. carbon dioxide,
methane, nitrous oxide, F-gases etc.), report in metric tonnes ofcarbon dioxide equivalent (tCO2e) GHG Protocol Scope 1 andScope 2 emissions.
Estimate and report material upstream and downstream (GHG
Protocol Scope 3) emissions where appropriate.
TCFD implementation
Fully implement the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD). If necessary,
disclose a timeline of at most three years for full
implementation. Disclose whether you have set, or havecommitted to set, GHG emissions targets that are in line withthe goals of the Paris Agreement – to limit global warming towell below 2°C above pre-industrial levels and pursue efforts tolimit warming to 1.5°C – and to achieve net-zero emissions
before 2050.
5Core• PMI Integrated Report 2020: see Respect for human rights on pages
69-75, Sustainable supply chain management on pages 59-68,
Socioeconomic well-being of tobacco-farming communities on
pages 78-90 and respective performance tables on pages 131, 132,
and 134

Core• PMI Integrated Report 2020: see Health, safety, and well-being at
work on pages 91-96 and respective performance table on page
135, and Socioeconomic well-being of tobacco farming communities
on pages 78-90 and 134

Expanded• PMI Integrated Report 2020: see Health, safety, and well-being at
work on pages 91-96 and respective performance table on page 135

Core• PMI Integrated Report 2020: see Climate protection: Progress in2020 on pages 102-111 and respective performance table on pages
139-140• PMI’s submission to the CDP, available on PMI.com

Core• PMI Integrated Report 2020: see About this report on page [X],Climate protection: Achieving our aims on pages 99-101 andrespective performance table on pages 139-140• PMI’s submission to the CDP, available on PMI.com

Measuring Stakeholder Capitalism content index 2020

Climateprotection

Climate change

Climateprotection

Climate change

Littering
prevention

Solid waste

Product ecodesign andcircularity

Resource
availability

Paris‑aligned GHG emissions targets
Define and report progress against time‑bound science‑based
GHG emissions targets that are in line with the goals of the Paris
Agreement – to limit global warming to well below 2°C above
pre‑industrial levels and pursue efforts to limit warming to
1.5°C. This should include defining a date before 2050 by which
you will achieve net‑zero greenhouse gas emissions, andinterim reduction targets based on the methodologies provided
by the Science Based Targets initiative, if applicable.
If an alternative approach is taken, disclose the methodology
used to calculate the targets and the basis on which they deliveron the goals of the Paris Agreement.
Impact of GHG emissions
Report wherever material along the value chain (GHG Protocol
Scope 1, 2 & 3) the valued impact of greenhouse gas emissions.
Disclose the estimate of the societal cost of carbon used andthe source or basis for this estimate.
Single‑use plastics
Report wherever material along the value chain: estimatedmetric tonnes of single‑use plastic consumed.
Disclose the most significant applications of single‑use plastic
identified, the quantification approach used and the definitionof single‑use plastic adopted.
Resource circularity
Report the most appropriate resource circularity metric(s) for
the whole company and/or at a product, material or site levelas applicable. Potential metrics include (but are not limited to)
the Circular Transition Indicators (WBCSD), indicatorsdeveloped by the Ellen MacArthur Foundation and company
developed metrics.
Disclose the methodological approach used to calculate thechosen circularity metric(s) and the rationale for the choice of
metric(s).

6Expanded• PMI Integrated Report 2020: see Climate protection: Achieving ouraims on pages 99-101 and respective performance table on pages
139-140

Expanded

In 2020, we piloted a first version of the Value Balancing Alliance (VBA)
methodology with a set of nine topics, including GHG emissions. Read
more on page 24 of PMI Integrated Report 2020. We plan to further
communicate on results of the impact valuation exercise as we
progress on the topic.

Expanded• PMI Integrated Report 2020: see Littering prevention on pages 112115, and Product eco-design and circularity on pages 116-125

Expanded• PMI Integrated Report 2020: see Product eco-design and circularity
on pages 116-125 and respective performance table on page 141

Measuring Stakeholder Capitalism content index 2020

The summary below cross-references our reporting on PMI’s tier 2 sustainability topics with core metrics and disclosures of the “Planet”, “People”, and“Prosperity” pillars of the WEF’s framework.
PMI’s Tier 2
TopicsCore /
ExpandedReference in published materials

Nature loss

Land use and ecological sensitivity
Report the number and area (in hectares) of sites owned,
leased or managed in or adjacent to protected areas and/or key
biodiversity areas (KBA).

Core

We currently do not report in the format required for this metric.
However, we describe our approach and progress regarding Forest
conservation and Biodiversity on PMI.com, and in the performancetables of PMI Integrated Report 2020 (page 141).

Water
stewardship

Freshwater
availability

Core• PMI Integrated Report 2020: see Performance table: Water
stewardship on page 142• Water stewardship, available on PMI.com

Diverse andinclusive
workingenvironment

Water consumption and withdrawal in water‑stressed areas
Report for operations where material: megalitres of water
withdrawn, megalitres of water consumed and the percentage
of each in regions with high or extremely high baseline water
stress, according to WRI Aqueduct water risk atlas tool.
Estimate and report the same information for the full value
chain (upstream and downstream) where appropriate.

Dignity andequality

Diversity and inclusion (%)
Percentage of employees per employee category, by age group,
gender and other indicators of diversity (e.g. ethnicity).

Core

Diverse andinclusive
workingenvironment

Dignity andequality

Pay equality (%)
Ratio of the basic salary and remuneration for each employee
category by significant locations of operation for priority areasof equality: women to men, minor to major ethnic groups, andother relevant equality areas.

• PMI Integrated Report 2020: see Our global footprint on page 8, andPerformance table: Diverse and inclusive working environment on
page 136• Diverse and inclusive working environment, available on PMI.com

Core• PMI Integrated Report 2020: see Performance table: Diverse andinclusive working environment on page 136• Diverse and inclusive working environment, available on PMI.com

Dignity andequality

Wage level (%)
Ratios of standard entry level wage by gender compared to
local minimum wage.
Ratio of the annual total compensation of the CEO to themedian of the annual total compensation of all its employees,
except the CEO.

Skills for the
futureTraining provided (#, $)Average hours of training per person that the organization’s
employees have undertaken during the reporting period, bygender and employee category (total number of hours of
training provided to employees divided by the number of
employees).
Average training and development expenditure per full time
employee (total cost of training provided to employees divided
by the number of employees).

Forestconservation
and Biodiversity

Fair working
conditions

Talentattraction,
retention, andemployability

Theme

Metrics and disclosures

7• PMI’s Proxy Statement 2021, page 63

Core

Core

We currently do not report on ratios of standard entry level wage by
gender compared to local minimum wage. However, we assess living
wages amongst our employees, as described on the Fair working
conditions section available on PMI.com. We also aim to achieve 100%of contracted farmers supplying tobacco to PMI making a living income
by 2025, as described on pages 78-86 of PMI Integrated Report 2020.
• PMI Integrated Report 2020: see Performance table: Talentattraction, retention, and employability on page 138• Talent attraction, retention, and employability, available on
PMI.com
We currently do not breakdown our training performance data by
gender and employee category.

Measuring Stakeholder Capitalism content index 2020

Fair working
conditions andTalentattraction,
retention, andemployability

Employment andwealthgeneration

Fair fiscal
practices

Community andsocial vitality

Our business

Employment andwealthgeneration

Absolute number and rate of employment
1. Total number and rate of new employee hires during thereporting period, by age group, gender, other indicators ofdiversity and region.
2. Total number and rate of employee turnover during thereporting period, by age group, gender, other indicators ofdiversity and region.
Total tax paid
The total global tax borne by the company, including corporate
income taxes, property taxes, non-creditable VAT and othersales taxes, employer-paid payroll taxes, and other taxes that
constitute costs to the company, by category of taxes.
Economic contribution
1. Direct economic value generated and distributed (EVG&D),
on an accrual’s basis, covering the basic components for theorganization’s global operations, ideally split out by:– Revenues– Operating costs– Employee wages and benefits– Payments to providers of capital– Payments to government– Community investment
2. Financial assistance received from the government: totalmonetary value of financial assistance received by theorganization from any government during the reporting period.

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Core

• PMI Integrated Report 2020: see Performance table: Talentattraction, retention, and employability on page 138• Talent attraction, retention, and employability, available on
PMI.com
We currently report on employee overall and voluntary turnover data,
as well as on women employee overall turnover data.

Core• PMI Integrated Report 2020: see Creating value on page 29, andPerformance table: Financials on page 129• Fair fiscal practices, available on PMI.com

Core• PMI Integrated Report 2020: see 2020 Highlights on page 4,
Creating value on page 29, Business transformation metrics on page15, and Performance table: Financials on page 129• Fair fiscal practices, available on PMI.com• Community support, available on PMI.com• PMI Annual Form 10-K 2020