PMI statement of Friday, June 8th 2018 regarding child labor in many tobacco-growing countries:“Child labor is an unacceptable reality in the agricultural sector. We are committed to eliminating childlabor and other labor abuses wherever we source tobacco. We have been working to tackle the root
causes of child labor head-on and have achieved a global reduction of child labor incidents on contracted
farms over time. We welcome continued systematic scrutiny of our efforts and recognize we cannot
succeed alone. This requires serious and lasting efforts by all stakeholders, including government andcivil society.”-Miguel Coleta, Director Sustainability, Philip Morris International
Additional facts based on their inquiry
According to the latest ILO data there are still 152 million children involved in child laborworldwide. Agriculture represents 70% of the total. Child labor is an endemic problem in thewhole agricultural sector. It is not a tobacco specific problem.

Our Agricultural Labor Practices 1(ALP) Program sets a clear policy in line with international
standards, and is supporting farmers in improving living and working conditions. Our program isimplemented in over 350,000 contracted farms with the help of 2,800 trained field staff. Foryears, we have been working with leading NGO on supply chain responsibility, Verité, anddisclose over 20 third-party assessments by Control Union on our website, together withregular, transparent reporting on progress on ALP implementation. Moreover, our ALP Coderequires, and we actively support, freedom of association including collective bargaining rights.2

Our global monitoring data shows that we are making progress even in some of the mostchallenging environments. For example, in Indonesia, which is one of the world’s largest tobacco
growing countries3, our own monitoring shows significant reductions of child labor incidence inthe areas where we were able to implement direct contracts, coupled with technical support
and community initiatives (in Rembang, Blora, Lumajang, Blitar, Purwodadi). In 2018, we expectthat 95% of our volumes purchased in the country will come from farmers directly contracted byour suppliers and covered by the ALP program. We currently reach around 11,000 children witheducational programs and after school activities and over 2,300 families with alternative income
initiatives and basic financial literacy training. In the Lumajang area our progress has been
corroborated by a third-party external assessment, where no case of child labor was identified4.

Many respected organizations have acknowledged our efforts and transparency, including
Human Rights Watch (HRW) and the US Department of Labor (DOL) cited in your questions:o In 2015, the U.S. DOL highlighted PMI’s and partner NGO efforts as one example “ofleadership and good practice”5, after having removed Kazakhstan’s tobacco from its Listof Goods Produced by Child Labor or Forced Labor. The U.S. DOL concluded that “child1

https://www.pmi.com/sustainability/good-agricultural-practices/upholding-labor-rights-on-the-farms
PMI’s 2016 Sustainability Report, p. 55
3
PMI’s 2016 Sustainability Report, p. 53-54
4https://www.pmi.com/resources/docs/default-source/pmi-sustainability/third-party-assessment---indonesia(alliance-one).pdf?sfvrsn=b9e384b5_0
5https://www.dol.gov/ilab/reports/pdf/TVPRA_Report2014.pdf
21labor in Kazakhstan’s tobacco sector has been significantly reduced”. It further addedthat Philip Morris Kazakhstan’s had a “comprehensive and credible” monitoring systemand our partner NGO efforts had been “highly effective in educating agricultural workers
about their rights, available grievance mechanisms, and educational opportunities asalternatives to child labor”.
In 2017, US DOL Bureau of International Labor Affairs (ILAB) launched a mobile app6
featuring PMI as a best practice.
In its research HRW has consistently singled out PMI positively for our work:o In the US (2014) HRW noted that “Of the companies approached by Human RightsWatch, Philip Morris International (PMI) has developed the most detailed and protective
set of policies and procedures, including training and policy guidance on child labor andother labor issues which it is implementing in its global supply chain. PMI has also
developed specific lists of hazardous tasks that children under 18 are prohibited fromdoing on tobacco farms, which include most tasks in which children come into prolonged
contact with mature tobacco leaves, among other hazardous work.” 7o In Indonesia (2016) HRW noted “Transparency is a key element of effective and crediblehuman rights due diligence. Among the companies we studied, Philip MorrisInternational appears to have taken the greatest number of steps to be transparent
about its human rights policies and monitoring procedures, including by publishing on its
website its own progress reports as well as several detailed reports by third partymonitors.”8

Our tobacco purchases in the last 5 years do not confirm a buying trend toward developing
countries. Furthermore, we note that in your questions you mention Zimbabwe and Bangladesh.
PMI does not purchase tobacco in either country. We also note that HRW’s 2018 research on
Zimbabwe included a reference to PMI, highlighting the transparency of our third-party
monitoring as a case study.9

Our programs go far beyond monitoring and building schools. For example, in Malawi, when we
introduced the direct contract approach, in one season alone, farmers’ yields improved 78% andbetter average quality resulted in 5% price increases. This, together with the removal of nonvalue added middlemen and fees, resulted in significant improvements in farmer returns10. We
discourage the tenancy system and currently 100% of our purchases in Malawi come throughdirect contracts with farmers. These contracts are coupled with the provision of inputs at
subsidized cost, technical agronomy assistance, technology transfer (e.g. water saving

6

Comply Chain: Business Tools for Labor Compliance in Global Supply Chainshttps://www.hrw.org/report/2014/05/13/tobaccos-hidden-children/hazardous-child-labor-united-statestobacco-farming
8
https://www.hrw.org/report/2016/05/24/harvest-my-blood/hazardous-child-labor-tobacco-farming-indonesia
9
Human Rights Watch, “A Bitter Harvest, April 05, 2018. Case Study: Transparency in Third-Party Supply ChainAssessments”, p. 78. (https://www.hrw.org/sites/default/files/report_pdf/zimbabwe0418_web_2.pdf)
10
https://www.pmi.com/resources/docs/default-source/pmi-sustainability/alp-progress-report2013887cd8bc6c7468f696e2ff0400458fff.pdf?sfvrsn=1b08b0b5_0 p 39-40
72

techniques, curing barn improvements), access to credit that farmers wouldn’t otherwise have,in some cases with interest rates below regular market level.
We also actively support farmers to diversify and grow food crops. For example, in Mozambique,Malawi and Tanzania, in 2016, the total tonnage of food production by contracted farmers
supported by PMI already surpassed the production of tobacco11. In 2017, total food production
continued to increase reaching 290.000 tons, with 110,000 farmers receiving financial support12.

Our policy follows international standards, which do not allow children to do any kind ofhazardous work. We have specifically detailed the activities for which there is the risk of Green
Tobacco Sickness and through the Eliminating Child Labor in Tobacco Foundation (ECLT), we
agreed to support the International Labor Organization (ILO) in developing global guidance on
what constitutes hazardous work in tobacco. Handling of dried tobacco leaves does notencompass a risk of Green Tobacco Sickness and therefore is not intrinsically a hazardous
activity unless done under conditions that may be hazardous (e.g. closed environment with riskof dust inhalation) and therefore not allowed to children.

Regarding the specific points raised about Mexico, we note that over the last season we
introduced a number of initiatives to improve living and working conditions for indigenous
migrant workers13.
o The average weekly pay of workers on farms contracted by our supplier (TPN) was$2.100MXN, approximately four times the legal minimum wage in the region.
o In Nayarit, indigenous workers arrive for the season with their families. To mitigate childlabor risks we supported five childcare and education centers (CAEIs) run by a local NGO
to provide education, nutrition and medical services for the children. During this time,
450 children per day attended the CAEIs. Fundacion Mexicana del Apoyo Infantil, a thirdparty NGO, monitored child labor and the incidences identified were immediatelyaddressed. All farms with child labor incidents receive a formal notification informingthat recurrence would lead to contract termination.

The Eliminating Child labor in Tobacco Foundation (ECLT) is an independent foundation under
Swiss law and a PMI employee is a member of the board. Since 2011, ECLT as removed orprotected from child labor more than 162,000 children, partnering with respected internationalNGOs, Governments and local communities and with the support and advice of trade unions andinternational organizations.

--ENDS--

11PMI’s 2016 Sustainability Report, p. 50
PMI’s 2017 Sustainability Report, p. 53
13
PMI’s 2017 Sustainability Report, p. 50-51
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