TRANSFORMING FOR GOOD

No going backfrom going smoke-free

Nordic Sustainability Report 2021

Photo: ShutterstockOVERVIEW

About this report
This is PMI’s third sustainability report on
the Nordic countries – Denmark, Finland,
Iceland, Norway, and Sweden. It covers oursustainability efforts in 2021 and maps out our
direction for the years ahead. It is an extensionof the PMI Integrated Report 2021, publishedin May 2022, and a supplement to the annual
reports for the individual Nordic offices, which
includes disclosure of sustainability efforts
according to local regulations.
While it aligns with PMI’s global strategy,
this report focuses on the UN Sustainable
Development Goals in which we have thegreatest possible impact in the Nordic region:
health, littering, responsible employment, andillegal trade. Its focus is local rather than global,
though many of our efforts also contributeto goals and targets on the global level. As
we consolidate our sustainability efforts, wehave identified a number of key performanceindicators (KPIs) from our company’s global
initiatives that are most relevant in guiding ourwork in the Nordic region. This report presents
what we have achieved so far, and what we areworking to achieve moving forward.

i2

PMI Integrated Report 2021
This Nordic Sustainability Report is aligned with
our global sustainability strategy as describedin the PMI Integrated Report 2020, whichcontains information about our material topics,
our approach to managing them, and how
we are progressing. It also provides detailed
updates on our commitments, achievements
and challenges, and case studies from ourglobal operations.
The PMI Integrated Report is aligned with theInternational Integrated Reporting Framework
to better detail PMI’s business transformationand more fully capture our company’s progressin delivering on achieving the transformation.

Read Sustainability at PMI
pmi.com/sustainability

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACT

Contents
OV E RV I E W
04 Transforming for good and leading the way
06 Delivering a smoke-free future
07 Transforming the company
09 Our approach to sustainability
18 PMI in the Nordic region

P RO D U C T I M PAC T
21 Preparing for a smoke-free future
24 Maximise the benefits of smoke-free products
30 Seek net positive impact in wellness and healthcare
33 Reduce post-consumer waste

O P E R ATI O N A L I M PAC T
50 Foster an empowered and inclusive workplace
50 An empowered and inclusive workplace
61 Tackle climate change, protect nature
66 Preserve Nature

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACTOV E RV I E W
04 Transforming for good and leading the way
06 Delivering a smoke-free future(our purpose)
07 Transforming the company(our business transformation)
09 Our approach to sustainability(our strategies)
18 PMI in the Nordic region

Tjörn, Sweden (Photo: Drahomír / Unsplash)3

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

Transforming for goodand leading the way
This is our third annual sustainability report on theNordics, and it is a regional elaboration to PMI’s
Integrated Report 2021 that was released in May
2022. As in previous years, the Nordic reportcontains local insights into our transformation as acompany. Our business transformation is a journey
towards sustainability.
With great influence comes great responsibility. As
the world changes, companies such as PMI, with far
reaching networks of impact all over the world, notonly have to change with it – we have to lead thischange – do better every year, continue to improve,and report our progress for everyone to see.
We have new tools at our disposal; a new materiality
assessment of our key areas, a new framework
crafted from the insights of our key stakeholders, and
new impact-driven strategies to reach our goals. We
are moving fast, and we need to do our research, test
and learn, and keep innovating.
One of our main goals is that 50 percent of PMI’s
global net revenue should come from smoke-free
products by 2025. Our aspiration is also that atleast USD 1 billion in net revenues are generated
by products beyond nicotine by 2025, for example
products in our growing wellness and healthcare
portfolio.
In the Nordics, we are steadfastly moving forward
towards our local goals and contributing to our
4common global objectives. In 2021, we launched
PMI’s e-vapor platform in Finland and snus in
Norway, thereby offering smoke-free alternatives
in all the Nordic markets for adult smokers whootherwise will not quit.
We also expanded our portfolio of smoke-freealternatives with the acquisition of two categories
of products for oral application – snus and nicotine
pouches. The acquisition of AG snus will pave theway for global launches which are expected toperform well in the Nordic countries – variants ofsnus are well-known and commonly accepted smokefree alternatives in the Nordics.
Our products and packaging are being developed toincrease circularity – from materials and production
to recycling and post-consumer waste. There is asecond-hand market for recycled and refreshed
electronic devices, and we have launched a recycling
programme for both nicotine pods and e-vapor
devices in Finland.
We continue to combat littering in cooperation
with retailers and local NGOs; on awareness raising
activities such as clean-up days and on projects
prototyping infrastructure and nudges for proper
disposal with behavioural experts in Oslo andGothenburg. It is fascinating to see how you canchange habits and behavioural patterns. It should bemade easier for consumers to act responsibly.

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACTOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

I am proud of our new financing framework which
integrates PMI’s smoke-free transformation into ourfinancing strategies, a great example of our ambition
to make ESG issues a core part of our businesspriorities. Linking financing to our most importantsustainability priorities strengthens our commitment
and further highlights our smoke-free ambitions tostakeholders.

Anette Rosengren: Littering prevention and sustainability in the Nordics
youtube.com/watch?v=G9Gqcbge964

During the past few years, we have had to be agile
and find new ways of working. Things we have taken
for granted have been unavailable to us. I believe thatin these changes we have found further strength tofuel us through the even larger transformation we
have initiated. This will be beneficial for us, for ourcustomers, for adult smokers who are looking for
better alternatives, and for our common future.

Anette Rosengren
Managing Director,
Philip Morris Nordics

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Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Delivering a smoke-free future
In 2016, PMI announced the company’s new purpose: to deliver
a smoke-free future. Our priority is to address the health impacts
associated with smoking by encouraging adult smokers to switch tobetter, science-based alternatives, and ultimately phase out cigarettes.

Changes to our strategy and vision prompted therevision of our Statement of Purpose, expanding it to nolonger have as its last horizon to achieve a smokefree future,
but also to encompass our strategic efforts to venture
toward becoming a wellness and healthcare company.
André Calantzopoulos, Executive Chairman, Philip Morris International

In early 2022, PMI’s Board of Directors
reaffirmed the Statement of Purpose and thecompany’s commitment to deliver a smoke-free
future in a Proxy Statement to shareholders.
The Board also announced the expansion of
our business for the long-term toward areas
outside of tobacco and nicotine.
To succeed in reaching a smoke-free future,
we need adult smokers that otherwise would
continue smoking to have access to oursmoke-free products: that they are aware of
the benefits of smoke-free products; that the
products are accepted by smokers as a viable
alternative to cigarettes; that the products
are conveniently available for sale to adultsmokers; and that smoke-free products areaffordable to them.
To date, we are the only company within the
traditional international tobacco industry tohave committed to going completely smokefree by encouraging the full switch of adult6

smokers to better alternatives than continued
smoking. We are transforming our business todeliver on our purpose but also to inspire theindustry to follow our lead.
PMI are actively accelerating the decline ofcigarette smoking beyond what traditional
tobacco control measures can achieve alone.
We believe that with the right regulatory
encouragement and support from civil society,cigarette sales can end within 10 to 15 years inmany countries.
We remain committed to accelerating theend of smoking and laying the foundationsof a strong business in areas of wellness
and healthcare as we strive to develop
commercially successful products that have a
net positive impact on society.

i

Philip Morris Nordics Sustainability Report 2021

Read our full Statement of Purpose

pmi.com/statement-of-purpose

PMI’s key stakeholders are fundamental, both to achieving
our purpose and to the pace of progress, and they will beaffected in different ways by our transformation. We seek toengage and collaborate with relevant stakeholders to speed
the transformation while mitigating negative consequences.

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Transforming the company
PMI will be far more than a cigarette company. We want tochange society and deliver a better, smoke-free future. To makeour vision a reality we are transforming and staking our entire
future on smoke-free products.

pmi.com/sustainability/business-transformation-metrics

Philip Morris Nordics Sustainability Report 2021

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7

Explore PMI’s Business Transformation Metrics

er s
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ati keholdrmasfo ith st
an
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ter y we ea

The way we engage with external stakeholders
is critical to achieving our purpose andsuccessfully transform our business. Working
together with different parts of society, we
can create a paradigm shift where cigarettes
become obsolete.

Changing the way we engage with stakeholdershe

The most visible part of our transformationis that related to our product lines. PMI
has harnessed scientific and technologicaladvances to develop alternatives to cigarettes
that are scientifically substantiated to be abetter choice for adult smokers than continued
smoking.

Ex

External transformation

gt

Beyond our own operations, every step of
PMI’s value chain is being transformed toserve our stated purpose. We recognise thechallenges and are actively helping those
impacted by the transformation (in direct
and indirect operations) to best manage thetransition.

gi n

A new organisation and value chain

Innovating for better productsianProduct transformation

Internal transformation

Ch

Transforming our business is not only about
substituting one product with a new one.
It also requires transforming the company’s
entire value chain, as well as the way it
engages with society. This requires a holistic
review and overhaul of the entire businessmodel and value proposition, which brings
with it new opportunities as well as challenges
throughout all aspects of the business.

PMI’S BUSINESS TRANSFORMATION

A new organization and value chain

Internal transformation

To make our transformation measurable and verifiable, PMI has
developed Business Transformation Metrics, a set of key performanceindicators (KPIs) composed of both financial and nonfinancial metrics.
They allow stakeholders to assess the pace and scale of PMI’stransformation, as they showcase how we are allocating resources awayfrom our traditional cigarette business and advance toward a future
where we no longer make or sell cigarettes.

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACTF in a n cin g f r a m e wo r k :I NTEG R ATI N G S U S TA I N A B I LIT Y A N D
CO R P O R ATE S TR ATEG Y
In 2021, PMI published a Business Transformation-Linked Financing Framework,
which integrates the company’s smoke-free transformation into our financing
strategy. The framework outlines the guidelines that we will follow in issuingbusiness transformation-linked financing instruments in the debt capital and loan
markets.
The KPIs selected for the framework are directly linked to two of our mostambitious and strategic Business Transformation Metrics, which measures andresponds to PMI’s most material sustainability topic: addressing the health impactof our products.
• PMI’s smoke-free/total net revenue percentage, measuring the scale of ourbusiness transformation to become a predominantly smoke-free company.
Increase PMI’s full-year 2025 smoke-free/total net revenue percentage tomore than 50 percent, from the 2020 baseline of 23.8 percent.
• Number of markets where PMI smoke-free products are available
for sale, measuring the access provided to adult smokers, a key
indicator of our commitment to drive the obsolescence of cigarettes as fast
as possible in as many markets as possible. Increase the number of markets
where PMI’s smoke-free products are available for sale to 100 markets by theend of 2025, from the baseline of 64 markets on December 31, 2020.
i

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Philip Morris Nordics Sustainability Report 2021

PMI’s Business Transformation-Linked Financing Framework

pmi.com/investor-relations/overview/business-transformation-linked-financing-framework

OVERVIEW

PRODUCT
IMPACT

Our approachto sustainability
Sustainability materiality
assessment
Our goal of achieving a smoke-free future must
be conducted sustainably. PMI’s sustainability
materiality assessment is the foundation of ourstrategy – it allows us to identify, assess, andprioritise material ESG topics – environmental,
societal, and governance factors most likely tohave impact on or be affected by our business.
In line with the principles of double materiality,
PMI's 2021 sustainability materiality analysis
gathered stakeholder perspectives, assessed
the potential impact of sustainability topics on

9

our performance and business overall in termsof risks and opportunities that could havean impact on the company’s ability to create
value.
A complementary regional materiality
assessment and prioritisation has been
conducted in the Nordic countries. PMI
Nordics reached out to local stakeholders,such as NGOs engaged in anti-littering andkey customers and have ongoing dialogue andcooperation with local customs authorities andlaw enforcement, to incorporate all parties’
perspectives and priorities when assessing our
regional impact.

Philip Morris Nordics Sustainability Report 2021

In general, our Nordic stakeholder engagement
and materiality assessment shows the samepriorities as the global level; climate, littering,and our products’ health impacts are andshould be our main concerns.
We also should continue our work to prevent
littering and reduce post-consumer waste fromour products, in part by eco-design and useof biodegradable materials. Our stakeholders
value the development of less harmful
products for adult smokers who will not quit,
and other strategies for improving health. Our
business integrity, as well as working and living
conditions throughout our value chain, are alsoof high concern to our stakeholders.

OPERATIONALIMPACT

PRODUCTIMPACT

Further explore our
PMI’s Sustainability Materiality Report 2021

i

OPERATIONALIMPACT

Product health impact

Sales, marketing, andconsumer communications

ClimateBusiness integrity
Innovation in wellness
and healthcare

Signiﬁcance of ESG impacts on PMI

The sustainability materiality assessment predicts
that environmental topics, such as minimising our
impact on climate, biodiversity, and greenhousegas emissions, will be even more important in
2030. As our world grows smaller and we become
more co-dependant, social aspects such astransparency in governance, human rights, as well
as socioeconomic well-being and better working
conditions in poor countries, are expected to growin importance.

HIGH

OVERVIEW

Laws andregulations
Human capital development
Engagement with policymakers

Diversity and inclusion

Economic contribution
Materials and product eco-design

pmi.com/sustainability/focusing-on-the-priorities-forpmis-sustainability-strategy

Water

Labor standards
Post-consumer waste
Operational discharge
Privacy

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

Employee well-being

LOW

Biodiversity
Philanthropy

Animal welfare

LOW

HIGH

Signiﬁcance of PMI’s impacts on society

Key
Key

Relevance to our stakeholders

Relevance to our stakeholders
ENVIRONMENTAL

Very high

SOCIAL10

Philip Morris Nordics Sustainability Report 2021

GOVERNANCEHigh

Our most material topics

MediumEmerging topics

LowOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

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Philip Morris Nordics Sustainability Report 2021

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

Based on the results of the 2021 materiality
assessment, we redesigned our ESG
framework to better showcase the ESG topics
we should focus on, and to prioritise ourresources. The framework recognises two
distinct forms of issues: Those that relate toour products (what we produce) which arepart of the “Product Impact” pillar, and thoserelated to our business operations (how we
produce), which are part of the “Operational
Impact” pillar. We subsequently classified each
topic, based on its environmental, social, orgovernance-related nature.

PRODUCTA new ESG Framework

E

S

G

ENVIRONMENTAL

SOCIAL

GOVERNANCE

Materials andproduct eco-design–
Post-consumer
waste

Product healthimpact–Sales, marketing,and consumer
communications–
Innovation inwellness and healthcare

Responsible R&D–
Product reliability–
Nicotine science

Climate–
Water–
Biodiversity

Diversity and inclusion–
Socioeconomic wellbeing of tobacco-farming
communities–
Human capitaldevelopment

Business integrity–
Respect forhuman rights–
Sustainable supply
chain management

Operational discharge–
Animal welfare

Labour standards–
Health and safety at work–
Employee well-being–
Philanthropy

Stakeholder engagement–
Data privacy–
Fair fiscal practices

our assessment, as well as on our
ESG framework, in our Sustainabilityy Assessment Report 2021.

Impact pillar include climate; water; biodiversity;
diversity and inclusion; socioeconomic well-beingof tobacco-farming communities; human capitaldevelopment; business integrity; respect forhuman rights; and sustainable supply chain
management.

E

S

G

ENVIRONMENTAL

SOCIAL

GOVERNANCE

2. Accelerate smoking decline
analysis results, addressing the social impacts
PRODUCTOPERATIONAL
Provide broad access toadult smokers, who otherwise
generated by our productsOVERVIEW
is the core of our strategy.IMPACT
IMPACT
would
not
quit
smoking,to ensure these products
These are the areas on which we must focus our
acceleratethedeclineofsmoking prevalence
resources, to innovate and develop solutions that cancontribute to solving some of society’s most pressing
3. Make cigarettes obsolete
challenges. This also represents an opportunity for
Purposefully work to ensure these products ultimately
growth and our strongest competitive advantage.
replace cigarettes, driving their obsolescence

The biggest and most pressing negative externality our strategy
Materials andProduct healthResponsible R&D
aims to addressis the health impactof cigarette smoking. This is
product eco-design
impact–––Product reliability
the most important
contribution
we–can make to public health
Post-consumer
Sales, marketing,waste
and consumer
Nicotine scienceand is the cornerstone
communications of PMI’s purpose and business strategy.
–
Innovation
Jacek Olczak,
CEO Philipin Morris International
wellness and healthcare

Climate–
Water–
Biodiversity

Diversity and inclusion–
Socioeconomic wellbeing of tobacco-farming
communities–
Human capitaldevelopment

A new impact-driven
strategy

Business integrity–
Respect forhuman rights
Our
approach to sustainability addresses our–
Sustainable supply
ESG priorities through eight impact-driven
chain management

strategies – social and environmental – four
PMI sees sustainability Labor
as a standards
fundamental
focus on product impacts, another four on
Stakeholder engagement–
Operational
dischargefor innovation,–
Health and safety
at work
opportunity
growth,andimpacts
derived from business operations.
––
Data privacy
Employee well-being
Animal welfare–
purpose-led, impact-driven, –long-term value Fair fiscalNine
governance-related topics – policies,
practices
Philanthropy
creation. Accordingly, we work hard torules, and procedures – define our ability tointegrate sustainability into every aspect of our
successfully implement these strategies.
business and activities. 40
Our approach to sustainability
ipmi.com/sustainability/our-approach-tosustainability

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Philip Morris Nordics Sustainability Report 2021

41i

Explore PMI’s eight impact-driven strategies

pmi.com/sustainability/purposefully-phase-out-cigarettes

OVERVIEW

PRODUCT
IMPACT

Priority ESG topics
and primary SDGs

Goals

Purposefully
phase out
cigarettes

Our 2025 Road Map

Explore PMI’s 2025 Road Map

13Philip Morris Nordics Sustainability Report 2021

2

I M PAC T

3

I M PAC T

pmi.com/sustainability/our-2025-roadmap

O P E R AT I O N A L

i

PRODUCT

PMI’s roadmap outlines our key goals andinforms the route of our long-term plan. The
revised 2025 Road Map comprises 11 headline
goals, running to the end of 2025, connected
to our eight strategies.

Maximize thebenefits ofsmoke-free
products

1

OPERATIONALIMPACT

Progress
in 2021

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

Product health impact

Develop and commercialize science-basedsmoke-free alternatives, making them available
in 100 markets (of which at least half in lowand middle-income markets) and continuing toincrease the total number of users

Product health impact;
Sales, marketing,and consumer communications

 eploy robust youth access prevention programsD
in indirect retail channels and ensure that salesof our products abide by our Marketing Codes

Seek net
positive impact
in wellness andhealthcare

4

Leverage scientific and development capabilities
to generate at least USD 1 billion in annual net
revenues from products in wellness andhealthcare

Innovation in wellness andhealthcare

Reduce postconsumer waste

5

Reduce post-consumer waste and prevent littering
by implementing comprehensive programs
covering all our consumables

Materials and product eco-design;
Post-consumer waste

6 ollow eco-design and circularity principles for allFsmoke-free electronic devices

Foster anempoweredand inclusive
workplace7

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

Diversity and inclusion;
Human capital development

Improve thequality of lifeof people in our
supply chain8

 radicate systemic child labour in our tobaccoEsupply chain

Socioeconomic well-being of
tobacco-farming communities

9 nsure all contracted tobacco farmers make a livingEincome, and partner with our direct suppliers topromote a living wage for their workers

Tackle climatechange10

Achieve carbon neutrality in our operations andaccelerate our decarbonization toward net zeroacross our value chain

ClimatePreserve
nature11

Promote biodiversity, address critical water
challenges, ensure no conversion of natural
ecosystems, and halt deforestation in both ourtobacco and pulp and paper supply chains

Biodiversity; Water

Progress with challenges

On track

Progress further than anticipatedOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Mapping UN SDGs to our
ESG Framework
PMI’s Road Map, strategies and goals can bemapped to the UN Sustainable Development
Goals (SDGs). Considering interdependencies
between different ESG topics and theirconnection to multiple SDG targets, we
distinguished between “primary SDGs”
directly linked to a significant outward impact
connected with an ESG topic, and “secondary
SDGs” with a more limited impact.

G RE ATE S T
IMPAC T

PRIMARYSDGS

SECONDARYSDGSALLENCOMPASSINGHUMAN
RIGHTSThe SDG with the greatest impact directly relating to our most material topic is SDG 3: Good healthand well-being. Primary SDGs directly related to our other material topics include SDG 8: Decent workand economic growth, SDG 12: Responsible consumption and production, SDG 13: Climate action,and SDG 15: Life on land. Five other SDGs directly related to one material topic each. We also foundthat SDG 17: Partnerships for the Goals enables progress against the broader agenda.

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Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACT

Key performance indicators

OPERATIONALIMPACT

2021
performance2025
aspirations

1

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

12.8%

>30%

Our Sustainability Index

2

Smoke-free product adjusted net revenue ratio (smoke-free/total)

29.1%

>50%

3

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

71

100

Progress on PMI’s 2025 Road Map is measured
with a set of 19 key performance indicators(KPIs) that collectively form PMI's Sustainability
Index (SI). These KPIs are directly linked to the
11 roadmap goals. The index has allowed PMI’s
Board of Directors to enhance the company’scompensation practices, explicitly linking
long-term executive compensation to ESG
performance.

4

Proportion of markets where PMI smoke-free products are available forsale that are low- and middle-income markets

43%

>50%

5

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

21.7

6

Proportion of shipment volume covered by markets with youth
access prevention programs in place in indirect retail channels.

91%

>90%

Annual net revenue from
wellness and healthcare products(in billions USD)

0.1

≥1

7

8

Proportion of shipment volume covered by markets with anti-littering
programs in place for combustible cigarettes

n/a

≥80%

9

Proportion of shipment volume covered by markets with end-of-lifetake-back programs in place for smoke-free consumables

9 pilots≥80%10Proportion of PMI smoke-free devices with eco-design certification

n/a

100%

11

Cumulative number of smoke-free electronic devices refreshedor repaired since 2021 (in thousands)

62

1,000

31.1%

35%

n/a

70%

5

10

i

Explore the SI in
PMI’s Integrated Report 2021 (p. 45–47)
pmi.com/integratedreport2021

Product Sustainability

12

Proportion of women in senior roles

13

Proportion of PMI employees who have accessto structured lifelong learning offers

14

Cumulative number of human rights impact assessments
conducted since 2018, with findings addressed

15

Prevalence of child labour among contracted
farmers supplying tobacco to PMI

1.8%

0%

16

Proportion of contracted farmers supplying tobacco
to PMI who make a living income

67%

100%

17

Net carbon emissions in scope 1+2 (in thousands of metric tons)

357

0

18

Absolute carbon emissions reduction in scope 3 versus
2019 baseline (in line with science-based target)

17%

25%

19

Proportion of tobacco purchased at no riskof deforestation of managed natural forest
and no conversion of natural ecosystems

37%

100%

Operational Sustainability
SUSTAINABILITY INDEX

15

Philip Morris Nordics Sustainability Report 2021

PRODUCTIMPACTOVERVIEW

The leading region in sustainability
The Nordic region has earned a worldwide reputation for beinga leader in numerous sustainability areas — from quality of life tosafety and gender equality.
In terms of achieving the ambitious SDGs
by the UN’s 2030 deadline, all the Nordic
countries rank highly. The 2022 SDG Index
is topped by four Nordic countries – Finland,
Denmark, Sweden, and Norway, scoring
between 82.3 and 86.5 of the maximum 100.
A score of 100 indicates that all goals havebeen reached.
Finland and the Nordic countries are also thehappiest countries in the world according to
the World Happiness Report.
While each country has its own specificsustainability profile, the three common
denominators in the region are: climate
and environment, sustainable businessenvironments, and developing and educating
a diverse, equal, and skilled workforce.

WORLD HAPPINESS REPORTThe report uses global
survey data to report how
people evaluate theirown lives in more than150 countries. Factorsthat contribute are levels
of GDP, life expectancy,
generosity, social support,
freedom, and corruption.

1

86.5

SDG Index Rank

SDG Index Score

2

85.6

SDG Index Rank

SDG Index Score

3

85.2

SDG Index Rank

SDG Index Score

4

82.4

SDG Index Rank

SDG Index Score/163

Denmark/163#1 Finland#2 Denmark#3 Iceland#7 Sweden#8 Norway

Sweden/163

Source: worldhappiness.report 2022

Given our targeted focus on harm reduction,
we believe that PMI is part of the solution, inparticular with regards to SDG 3,
by bringing the Nordic region closer toachieving this goal.

In general, the Nordic countries show a highlevel of support for the SDGs. Yet even thesecountries face challenges in achieving several
goals, notably SDGs 12 and 15 on responsible
consumption and production, climate andbiodiversity.
16

Finland

OPERATIONALIMPACT

Philip Morris Nordics Sustainability Report 2021

Norway/163

Iceland22/163

SDG Index Rank

Source: SDG Index 2022

78.9
SDG Index Score

OVERVIEW

Smoking in the Nordics– a snapshot
Iceland
8% men7% women

Finland
12% men
9% women

However, although smoking in the Nordics isdecreasing in absolute numbers, this is not thecase in the rest of the world. While the global
proportion of people smoking is decreasing,according to the WHO, as the population
grows the absolute number of people smoking
stays the same. Today, 1.1 billion people still
smoke, including 2.5 million in the Nordic
countries.

21.1

2010

Sweden6% men6% women

18.9

2015

24.8
17.0

2020

23.2
15.4

6% men9% women

Denmark
15% men
11% women

2025

Source: WHO global report on trends in prevalence of tobacco smoking
2000–2025, fourth edition. World Health Organization, 2021

17

NorwayGlobal (%)
Europe (%)

26.6

OPERATIONALIMPACT

PREVALENCE OF
TOBACCO SMOKERS

As societies around the world increasingly
prioritise health and well-being, we are seeing
a steady decline in cigarette smoking. In theNordic countries smoking is already at low
levels, and we should be able to reach our goalof achieving a smoke-free future for the region.

28.7

PRODUCT
IMPACT

Philip Morris Nordics Sustainability Report 2021

DAILY SMOKERS 2021
Sources: The Danish Health Authority (2020), The Finnish Institute for Health and Welfare (2021),
Statistics Norway (2022), Public Health Agency of Sweden (2022), Icelandic Directorate of Health (2022).

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

PMI in the Nordic region
PMI has offices in four of the five Nordic countries. The Nordic
offices cooperate on sustainability initiatives under the directionof a strategic Issue Lead for the Nordics, collaborating on
projects, events, and activities.

Philip Morris Denmark was established in 2001, but
the history of PMI brands in Denmark dates to the1950s. Based in Copenhagen, we employ 75 people
to import and sell tobacco-based products. PMIReduced Risk Products were introduced to Denmarkin 2016.
Philip Morris Finland was established in 2004, but
the history of our brands in Finland goes back to
1962, when Marlboro first arrived in the market.
Today, we are the market leader in Finland. Through asales office in Helsinki, 16 employees import and sell
PMI tobacco products. PMI Reduced Risk Products
were introduced to Finland in 2021.
Philip Morris Norway was established in 2005, but
Marlboro has been sold in Norway since the 1950s.
Today, we are one of the leading tobacco companies
in Norway employing 15 people. PMI started to offer
Reduced Risk Products to Norway in 2021.
Philip Morris Sweden was established in 1969 andis now one of the leading tobacco companies in
the country, employing 131 people. In addition tocigarettes, Reduced Risk Products from PMI wereintroduced to Sweden in 2019.
PMI products are available for purchase in Iceland,
but we have no offices here.

Coworkers at PMI’s office in Helsinki (Photo: Pasi Salminen)
18

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACTPRODUCTI M PAC T
21 Preparing for a smoke-free future
24 Maximise the benefits of smoke-free products
30 Seek net positive impact in wellness
and healthcare
33 Reduce post-consumer waste

Copenhagen, Denmark (Photo: Febyian / Unsplash)19

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTPRODUCT

G LO B A L I M PAC T

29.1%

Marketing andsales practices

Total adult users of PMI’s smoke-free
products, of whom 15.3 million haveswitched and stopped smoking

Of adjusted net revenues derived
from smoke-free products, whichwere available for sale in 71 markets
worldwide by year-end1

New Marketing Codes deployedglobally for both combusted andsmoke-free (non-combusted) products,
published in 2022 on PMI.com

ENVIRONMENTSOCIAL(2020: 18.3 m; 13.0 m)(2020: 23.8%; 64)

Wellnessand healthcare

USD 9.2 bn

91%

Cumulative investments behindsmoke-free products since 2008²(2020: 8.1 bn)

Of total shipment volume covered byyouth access prevention programs
in indirect retail channels3(2020: 94%)

The 2021 acquisitions of Fertin Pharma,
OtiTopic, and Vectura have provided
a foundation for progress toward ourambition to generate at least USD 1 billion
in annual net revenues from products
in wellness and healthcare by 2025

86%

46

Smoke-freeconsumables

Recycling rate of IQOS devices
returned to our centralized recycling
hubs (weighted-average percentage
of each device that is recycled)4Countries where our affiliates
deployed cigarette butt antilittering campaigns focusing on
driving behavioral change

Programs deployed to take back smokefree consumables after use by consumers
in various markets, including Canada,
Finland, Guatemala, and Switzerland(2020: 84%)
1
2
3
4

20

21.7 mNumber of markets where PMI smoke-free products were available for sale: 2021 figure excludes Belarus and the U.S.
Investments reflect research, product and commercial development, production capacity, scientific substantiation, and studies on adult smoker understanding.
Total shipment volume includes cigarettes, heated tobacco units, other tobacco products, e-cigarettes, and snus. In 2021, we evolved our minimum requirements for
effective youth access prevention (YAP) programs in indirect retail channels.
Including recycling (78%) and incineration with energy recovery (8%).

Philip Morris Nordics Sustainability Report 2021

OPERATIONALIMPACTOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Preparing for a smoke-free future
Addressing the impact of our combustible products
on consumers’ health is at the core of our strategy
and company purpose. We deploy a four-pronged
approach:• Develop science-based, less harmful
alternatives to cigarette smoking• Broaden access to smoke-free
products for those adults who
would otherwise continue to smoke,ensuring this helps acceleratesmoking prevalence decline• Purposefully phase out cigarettes• Market all our products responsibly

Smoking is one of the major factors contributing
to non-communicable diseases. The primary cause
is the harmful chemicals emitted while burning
tobacco and contained in the smoke. Therefore,
our greatest contribution to the SDGs is to replacecigarettes with less harmful alternatives for thosesmokers that otherwise would continue to smoke.
Our goal is to intentionally work towards phasingout cigarettes by ensuring that smoke-free products
represent at least 30 percent of our shipment
volumes and more than half of our net global
revenues by 2025 while continuing to reduce our
shipment volume of combustible cigarettes.

21

Access to smoke-free
products
Our priority is to address the health impacts
associated with smoking by offering smoke-free,science-based alternatives that have been provento be a better, albeit not risk free, choice thancigarettes for those adults who would otherwise
continue to smoke. Eliminating combustion
from nicotine-containing products is the way tosignificantly reduce their toxicity.
Replacing combusted cigarettes with smoke-freealternatives carries a significant public healthpotential, as we can help reduce our products’
negative impact on individuals and society. To
maximise the potential of smoke-free, harm reduced
alternatives it is also important to limit the use of
these new products only to those who otherwise
would continue smoking.
However, we do not believe it is enough to simply
offer more choice to consumers. Rather, we are
seeking to help adult smokers switch to the better
alternatives now available and leave cigarettes
behind. We are seeking to work with relevant
stakeholders to ensure these products replacecigarettes as quickly as possible.
We have, in the Nordics, a good chance of being
global forerunners in becoming smoke-free. Daily

Philip Morris Nordics Sustainability Report 2021

Stockholm, Sweden (Photo: Nikola Johnny Mirkovic / Unsplash)tobacco smoking is already at low levels, andsmoke-free alternatives such as snus are alreadyestablished categories.
We advocate for a comprehensive and riskproportionate regulatory framework that
acknowledges that not all tobacco and nicotine
products are the same.

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Complementing WHO efforts

European Business Forum 2021: Business for a Better World

Public engagements for
smoke-free futures
One way we can raise awareness on tobacco
harm reduction is to take part in public debate
and business forums, to reach out in different
arenas and engage local communities.
In November 2021, Anette Rosengren,Managing Director of PMI Nordics, participatedat the European Business Forum, speaking on
how to sustainably transform your business forgood, as one of the change-making speakers at
the forum’s Transformation Lab. Earlier in theyear she also spoke on business transformation
at the American Chamber of Commerce inFinland.

22

In the aftermath of the European Business
Forum, we were approached by students
from Copenhagen Business School who werewriting their master's thesis on PMI andsustainability; on our smoke-free platforms
as well as stakeholder engagement insustainability reporting. Our work continuously
attracts the attention of the next generationof changemakers who wants to study ourtransformation.
To release the public health potential in
tobacco harm reduction, we need to join
forces. PMI Nordics transparently works withall stakeholders who believe in a smoke-free
future, finding solutions in cooperation withauthorities, industries, NGOs, consumers, aswell as academia.

Philip Morris Nordics Sustainability Report 2021

Today, an estimated 1.1 billion people worldwide smoke
cigarettes or other combustible tobacco products. The
latest statistics from the WHO project a decline in smoking
prevalence (age 15+), from 21.5 percent in 2010 to an
estimated 17.1 percent in 2025. At the same time, the global
adult population is growing by around 70 million people per
year. The net effect of this population growth and declining
smoking prevalence is a forecast of just under 1.1 billion
smokers by 2025 — essentially no change compared to 2010
in absolute numbers.
Source: WHO Global Report on Trends in Prevalence of Tobacco Use
2000–2025, third edition (World Health Organization, 2019)

Pre-transformation, in 2015, our combustible productvolume totalled 881 billion units, or 99.9 percent of ourshipment volume ratio. Since then, it has declined by morethan 26 percent, in only seven years. Over the same period,
our smoke-free shipment increased to 95 billion units,
representing 12.8 percent of our shipment volume in 2021.
As of the end of 2021, 21.7 million adults were using oursmoke-free products, of whom we estimate that 15.3 million
had switched completely to these products and stopped
smoking. PMI smoke-free products were available for salein 71 markets.
Source: PMI Integrated Report 2021

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Keep the Archipelago Tidy
https://www.youtube.com/watch?v=taoGA0k9yaM

Online seminar on litteringwith Keep the Archipelago
Tidy
In March, Pidä Saaristo Siistinä ry (Keep theArchipelago Tidy), one of the most wellknown environmental organisations in Finland,arranged an online seminar on cigarette-butt
litter. Invited speakers and panellists included
Minister of Environment Krista Mikkonen,
Member of Parliament Saara-Sofia Sirén, andPäivi Mononen-Mikkilä, Manager Regulatory
Affairs of Philip Morris Finland. The seminar
was streamed online and can be viewed on
demand.

the responsibility we all need to carry inorder to successfully combat littering. She
also described the on-going legislative
process regarding the SUP directive and its
implications.
Cigarette butt litter is a waste stream thatdiffers from most others, as the objects is
on fire at the time of disposal. The invited
speakers agreed that in addition to raisingawareness on the consequences of littering,appropriate regulation, and adequate litter
infrastructure, such as accessible ashtrays, arealso key in order to tackle this problem.

Krista Mikkonen emphasised the importanceof cooperation of all stakeholders and23

Philip Morris Nordics Sustainability Report 2021

Archipelago of Stockholm, Sweden (Photo: Jens Reiterer)

OVERVIEW

PRODUCT
IMPACT

Maximise the benefits of smoke-free products
Our priority is to address the negative healthimpacts associated with smoking by phasing out
our sale of cigarettes and developing smoke-free,scientifically substantiated alternatives to encourage
smokers, who otherwise would continue to smoke,
to switch. Our purpose is to make our legacy
product, the cigarette, obsolete.
Replacing combusted cigarettes with smoke-freealternatives carries a significant public healthpotential, as we can help reduce our products’
negative impact on individuals and society. To
maximise the potential of smoke-free, harm-reduced
alternatives it is also important to limit the use of
these new products only to those who otherwise
would continue smoking.
By focusing our commercial expenditure on
encouraging adult smokers who otherwise would
not quit, to switch fully to better alternatives, we
aim to reach as many adult smokers as possible
in as many countries as possible; this includes thearound 130 million PMI cigarette smokers, as well as
the hundreds of millions of adult smokers who buy
competitor brands.
PMI’s heated tobacco platform has been available
in Sweden and Denmark since 2016. In 2021, with
the introduction of our e-vapor platform in Finland,and oral snus products launched in Norway, smokefree alternatives are now widely available for adultsmokers all over the Nordics.

24

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

Reduced Risk Products
Even though smoking tobacco is declining in theNordics, it is rising in other regions. According to the
WHO more than one billion people will smoke in2025 which makes smoking a significant challenge
to global health.
Inhaling cigarette smoke is one of the most harmful
way to consume nicotine, as many harmful andpotentially harmful substances are created whenigniting the cigarette.
The best option for smokers is to never start. If you
smoke, you should stop. But for smokers who would
otherwise continue to smoke, switching to lessharmful alternatives is a better option.
Smokers can only switch to reduced risk products(RRPs) if they are aware of them and if the products
are available. In addition, smokers need accessto clear and meaningful information about thesignificant differences between the combusted
versus the combustion-free alternatives, and where
the different tobacco and nicotine categories areplaced on the risk continuum. Access to facts canbe key in motivating smokers to switch to better
alternatives.

Philip Morris Nordics Sustainability Report 2021

A cumulative total of more than 19,000 legal age
adults in Germany, Italy, and Japan have participatedin our cross-sectional population-based studies.
The data from these post-market studies confirm
that our heated tobacco platform is reaching theintended audience (adult consumers of nicotine
products) and is of limited interest to adults who
had never smoked or had already quit using tobaccoand nicotine. The results show that more than 99
percent of users of PMI’s heated tobacco platformin Germany, Italy, and Japan were already using
tobacco or nicotine products at the time they began
to use our product.
Sources:
Fisher et al: POS# PH-352; Presented at SRNT 2021.
pmiscience.com/resources/docs/default-source/srnt2021/Srnt-2021-poster-karina-fischer.pdf
Sutanto et al: Int. J. Environ. Res. Public Health 2019, 16,4630; doi:10.3390/ijerph162346 [pubmed.ncbi.nlm.nih.
gov/31766410/]
PMI Integrated Report 2021, p. 75

OPERATIONALIMPACTOVERVIEW

Modified Risk Tobacco
Product
In March 2020, the US Food and Drug
Administration (FDA) determined that issuing a
Modified Risk Tobacco Product (MRTP) Order,
with reduced exposure claims for PMI’s heatedtobacco platform, is appropriate to promote publichealth and is expected to benefit the health of the
population as a whole, taking into account both
existing users of tobacco products and persons who
do not currently use tobacco products. The order
followed a rigorous review of our applications,peer-reviewed published literature, as well as othersources and is a mark of quality for the research
conducted by PMI and independent researchers.
Sources: FDA
fda.gov/news-events/press-announcements/
fda-authorizes-marketing-iqos-tobacco-heatingsystemreduced-exposure-information

The end of cigarettes
in the Nordic region
Our goal is to stop selling cigarettes – combusted
tobacco products – in the Nordics. The rate of daily
smokers is already low and steadily declining. With
the cooperation of health authorities, NGOs, andour business partners, we can make a smoke-free
future a reality.
To become a more sustainable tobacco company,
we must take every step possible to completely
replace cigarettes with smoke-free alternatives.
We’re tapping into our R&D prowess and expertise25

to fundamentally transform our entire businessmodel and build our future on smoke-free products.
Until now, the majority of research on smoke-free
tobacco and nicotine products has been carriedout by companies developing these products. But
more independent, high-quality studies are now
increasingly available. To facilitate such studies,
PMI’s research is publicly available for scientists toaudit, verify, or challenge.
In general, scientists agree with us that RRPs are notrisk-free. Researchers also agree the combustionof tobacco is the main cause of the high levels ofharmful substances in cigarettes.
A list of independent studies published on PMI’s
smoke-free products and/or our methods andresults are openly available at PMIscience.com.

Protecting future generations
As a leading manufacturer of tobacco and nicotine
products, we have a critical role to play in guarding
against youth access to our products. Accordingly,
we have developed an enhanced suite of measuresdesigned to ensure a holistic approach to guard
against youth access to our products.
We only offer our products to persons who legally
smoke and our retail partners are key to enforcing
this. We provide our partners with education,
guidance, and support to help them understandthe important role they play in preventing underagesmoking and other nicotine use. Their mission is
two-pronged: if you’re under-aged you should nothave access to our products; and if you do not

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTalready smoke, you should not start. The retailers’role and mission are parts of the principles of PMI’s
Marketing Code. PMI only works with partners who
follow our code.
Although legislation differs between the Nordic
countries on how they regulate smoke-free
products, PMI consistently applies our Marketing
Codes and only markets our products to adultsmokers. This includes new products, such as snus
and nicotine pouches, which in some cases were
only recently regulated as other nicotine products.
In Sweden, a new law came into force on August 1,
2022.

OPEN platform
Guidance includes educational materials on Youth
Access Prevention (YAP) for both combustible andsmoke-free products. A basis for information andother content is the digital OPEN platform whichis available for retail store partners in all countries
except Norway, more than 5,000 retailers, as well as
yearly in-store, points of sale visits.
Through OPEN, they have access to information,
announcements, and articles on youth accessprevention, training, quizzes, campaign material
to use in-store, invites to anti-littering events andother content.
We develop local and engaging material to inspire
retail staff to engage and return to our content.
The goal is for all staff to refresh their knowledge
and training on an annual basis. In 2021, the digitalplatform was even more important as in-store visits
had to be minimised due to the pandemic.

OPERATIONALIMPACTOVERVIEW

Age verification
A further goal of Youth Access Prevention (YAP)is that all PMI electronic devices like our heated
tobacco and electronic cigarette platforms will haveage verification by 2023.
Pilots of proprietary age verification technology
embedded in our products were conducted in
New Zealand and the island of Corsica in 2020
and 2021. These tests highlighted that it is criticalto ensure a simple and easy to use mechanism for
consumers to be age verified, as well as to activate
their devices. An overly complex age-verification
process would represent a barrier in their decision
to abandon cigarette smoking and switch to asmoke-free alternative.

Marketing is one of the defining
strengths of PMI and its brands
Our Marketing Codes were updated and rolled
out in the organization during 2021.
Tobacco marketing is subject to extensive
restrictions, including outright bans,throughout the world. What many people
don’t realize, however, is that our own
standards are, in many places, higher thanthose of some governments. In such cases, wefollow our Marketing Codes. If the opposite
occurs and local laws set a stricter standard
than our Codes, we, of course, follow the law.

26

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

PRODUCT
IMPACTOPERATIONALIMPACT

KEY MILESTONES2014
PMI pilots its heated tobacco product in Italy and Japan.

4. We respect the law
Here are a few examples of how these rules
apply in our day-to-day marketing:•••

We don’t use cartoons, youth-oriented
celebrities, or models who are or appear to
be under the age of 25
We don’t engage in product placement inmovies or on television – and we decline
every request we receive
We don’t place the names or logos of ourcigarette brands on any promotional items
likely to be used or seen by minors

2016
PMI announces its ambition to deliver a smoke-free
future, shifting its resources toward less harmful noncombustible alternatives.
PMI’s heated tobacco platform introduced in Denmark.

2020
PMI’s Board of Directors adopts PMI’s Statement of
Purpose, reaffirming the company’s commitment.

All our marketing professionals, wherever
they are in the world, must adhere to thesemarketing practices at all times.
Marketing standards:
https://www.pmi.com/our-views-and-standards/
standards/marketing-standards

Philip Morris Nordics Sustainability Report 2021

2021
PMI Reduced Risk Products are available in all Nordic
markets.

OVERVIEW

Smoke-freeinnovation
Smoke-free products deliver nicotine without
combustion. These products include heated
tobacco (also known as heat-not-burn),
e-vapor, hybrid products (combining featuresof heated tobacco and e-vapor products),
and oral tobacco and nicotine products suchas snus and nicotine pouches. By eliminating
combustion, these products present, or havethe potential to present, less risk of harm toadults who switch to them versus continued
smoking of combustible alternatives.

PRODUCT
IMPACTOPERATIONALIMPACT

THE DIFFERENT PARTS OF A HEATED TOBACCO DEVICETOBACCOUNIT

PLA filter
Tobacco plug

Heated tobacco
PMI’s heated tobacco platform is batterypowered devices that heats specially designed
tobacco units. The devices heats tobacco to atemperature below 350 degrees Celsius (°C)
and releases a nicotine-containing aerosol thatcan be inhaled by the user.
The electronically heated tobacco units arenovel products containing specially processed
tobacco plugs designed to be heated but notburned, made of ground tobacco leaves.

Heating blade

HOLDER

Control electronics

Battery

CHARGER

27

Philip Morris Nordics Sustainability Report 2021

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Heated tobacco

WHAT IS THE
DIFFERENCE?

HEATS TOBACCOWITHOUT BURNINGSMOKE-FREE
ELECTRONIC
DEVICECONTAINSREALTOBACCOPMI office in Oslo (photo: CF Wesenberg)

The tobacco in a cigarette burns attemperatures in excess of 600°C, generatingsmoke that contains high levels of harmful
chemicals. But our heat-not-burn productheats tobacco to much lower temperatures
without combustion, fire, ash, or smoke.

E-vapor
PMI’s e-vapor platform comprises batterypowered devices, commonly known ase-cigarettes. The device’s heating technology
uses a metallic mesh with tiny holes to heat aprefilled, pre-sealed pod containing an e-liquid28with nicotine. This generates a nicotinecontaining vapour which is inhaled by the user.
The weave distributes the heat evenly with low
risk of overheating.
The pods are manufactured, assembled,
pre-filled, and pre-sealed in our production
facilities. It also features puff-activated heating
and a low-liquid-level detection system that
ensures the consistency and quality of thevapour generated and inhaled.

Philip Morris Nordics Sustainability Report 2021

NICOTINE

BURNS TOBACCORELEASES SMOKEAND ASHHEATS LIQUIDNICOTINE
NO TOBACCO

Cigarettes
E-vapourOVERVIEW

How does non-combustion
reduce risk?
In its review the FDA found that heating
tobacco without combustion significantly
reduces the production of harmful andpotentially harmful chemicals (HPHCs) acrossthe constituents of FDA’s HPHC list, comparedto cigarette smoke.
When a cigarette is lit the temperature of
the tobacco reaches 600 to 900°C. A hightemperature reaction by burning or combustion
generates HPHCs. When heating technology
is used, the device constantly monitors andcontrols the temperature to ensure that itremains below levels that cause combustion.
As a result, the nicotine-containing vapour the
consumer inhales contain significantly lower
levels of HPHCs than cigarettes.

PRODUCT
IMPACTOPERATIONALIMPACT

Snus and nicotine pouches
Nicotine products for oral use, such as snus
and nicotine pouches, are new additions to
PMI’s portfolio in the Nordic countries. In
2021, two new brands were acquired throughthe acquisition of Danish AG Snus – nicotine
pouches and traditional snus. They have been
redeveloped and relaunched as PMI products;
snus in Norway in 2021, as well as all-whitesnus in 2022, nicotine pouches in Denmark in
2022, and both snus and nicotine pouches in
Sweden in 2022.

Photo: Shutterstock

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

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

All white snus
The oral category remains small outside thesemarkets. Snus is banned in the EU, Sweden isan exemption. Nicotine pouches have emerged
as credible smoke-free alternatives in recent
years. With the acquisition of AG Snus, PMI’s
capabilities in this area have grown, and we
expect additional product and market launches
in 2022.

29

Philip Morris Nordics Sustainability Report 2021

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

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

OVERVIEW

Seek net positive impact inwellness and healthcare
Researching and developing smoke-freealternatives that are scientifically substantiatedto be less harmful than cigarettes was thefirst step in our journey to address our biggest
negative externality: the impact of cigarettesmoking on health. In the process, we have
expanded our social, human, intellectual, andmanufactured capital in ways that allow us
to go a step further and develop productsthat seek to be better than “less harmful.”
The aim now is to use this capital to develop
significant growth opportunities in wellness
and healthcare.

30

PMI’s innovation in wellness and lifestyleis part of a larger transformation that puts
science, technology, and sustainability at theheart of our company’s future, delivering
products and solutions that aim to improve
people’s lives and deliver a net positive
impact on society. Building on our company’s
investment and expertise in aerosol chemistry
and physics, device technology, clinicalresearch, and best-in-class preclinical safety
and inhalation models, we are developing
innovative and differentiated products for
unmet patient and consumer needs.

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACT

Over the years, many researchers in the field of harm
reduction have asked us why we are not using ourknowledge in aerosolization and inhalable devices beyond thetobacco harm reduction space. Building upon the researchexpertise and knowledge we’ve gained from developing
and assessing smoke-free products, we are in a really good
position to work on, for example, inhaled therapeutics.”
Patrick Picavet, Vice President New Business and Chiefof Staff at Philip Morris International

Our aspiration≥USD 1 bn

SI

At least USD 1 billion in net revenues
generated from wellness and healthcare
products by 2025

To demonstrate the seriousnessof our endeavor and the strategic
relevance of this aim, we introduced
a new topic, “Innovation inwellness and healthcare,” to our2021 sustainability materiality
assessment process, following
the introduction of this new
aspiration, which complements
our Business Transformation
Metrics and 2025 Roadmap.
SI

Sustainability Index

OVERVIEW

RRPs now available in all
Nordic markets

Snus and All-Whites launch in
NorwayAs of 2021, PMI Reduced Risk Products (RRPs)
are available in all Nordic markets, offeringsmoke-free alternatives to adult smokers allover the region.

In late 2021, PMI’s oral platforms snus and allwhite snus were launched in Norway, making
our smoke-free alternatives more widely
available for legal age smokers. We also started
the launch of nicotine pouches in Denmark.
We relaunched in Sweden, where the products
were already available. The new products
reached consumers in the first weeks of 2022.

E-vapor platform launched
in Finland
In April 2021, our e-vapor platform waslaunched in Finland, introducing PMI’s smokefree products to yet another Nordic market. In
preparation for launch, retailers were educatedon point-of-sale advice and communicationin accordance with the principles of PMI’s
marketing codes.

31

The oral platforms are acquisitions of brands
that already have a presence in most of theNordic countries. The brands are reworked andrelaunched to respective markets.

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACT

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Product Impact Global KPIS U S TA I N A B I L I T Y I N D E X – P R O D U C T S U S TA I N A B I L I T Y

Key performance indicatorsO U R A S P I R AT I O N S
2021
performance2025
aspirations

1

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

12.8%

>30%

2

Smoke-free product adjusted net revenue ratio (smoke-free/total)

29.1%

>50%

3

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

71

100

4

Proportion of markets where PMI smoke-free products areavailable for sale that are low- and middle-income markets

43%

>50%

5

Total number of users of PMI’s smoke-free products (in millions)1

21.7

6

Proportion of shipment volume covered by markets with youth
access prevention programs in place in indirect retail channels.

91%

>90%

7

Annual net revenue from
wellness and healthcare products(in billions USD)

0.1

≥1

n/a
9 pilots

Proportion of shipment volume covered by markets with anti8
littering programs in place for combustible cigarettes
9Proportion of shipment volume covered by markets with end-oflife take-back programs in place for smoke-free consumables

>90%

2023

100%

2025

SI

of PMI smoke-free electronic devices introduced to the market
as of 2023 equipped with age-verification technology~40%

reduction in our combustible
product shipment volume
versus 2015 baseline
SI

≥80%

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

≥80%

>50%

SI

n/a

100%

11 Cumulative number of smoke-free electronic devices

62

1,000

Sustainability Indexof shipment volume covered by markets with youth
access prevention programs in indirect retail channels>30%

10 Proportion of PMI smoke-free devices with eco-design certification

refreshed or repaired since 2021 (in thousands)

MaintainSI<550 bn>250 bn>50%

100

combustible productshipment volume
SI

net revenues(smoke-free/total)of markets globally where
PMI smoke-free products areavailable for sale that are lowand middle-income markets>40 m

smoke-free productshipment volume
SI

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

adult smokers globally
who switch to PMI
smoke-free products

Product Impact PMI Nordics KPIPRODUCT SUSTAINABILITYACTUAL
2020

TARGET
2021

ACTUAL
2021

TARGET
2022

TARGET
2025

Number of Nordic markets where PMI RRPs are available

2 of 53 of 55 of 53 of 55 of 5

Number of interactions with Points of Sale (POS) in regards to YAP. Target: minimum one interaction per POS = 100%

75%

90%

97%

97%

98%

Sweden - Total POS: 7500 (Interactions 2020: 3755)

50%

90%

100%

100%

100%

Finland - Total POS: 8000 (Interactions 2020: 7386)

92%

90%

99%

99%

99%

Denmark - Total POS: 5200 (Interactions 2020: 4785)

92%

90%

90%

90%

95%

Norway - Total POS: 7850 (Interactions 2020: 5000)

64%

90%

99%

99%

99%

32

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

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

We care for our environment
The Nordic countries are frequently recognised
as being good places to live. One of thecontributory factors to this is the region’scommitment to the natural environment.
Denmark, Finland, Iceland, Norway, andSweden consistently score highly on indexesof the world’s most environmentally conscious
countries.

33

The geographical features of the region
contribute to ecological awareness andpride. The fjords of Norway, the glaciers of
Iceland, the forests of Sweden, the beachesof Denmark, as well as the many, many lakesof Finland. The region is home to some of thelongest coastlines and oldest mountains of theworld.
The Nordic nations have cultivated a deep
commitment to the protection of our
nature. Even our cities rank among the mostsustainable in the world.

Philip Morris Nordics Sustainability Report 2021

Copenhagen, Denmark (Photo: Febyian / Unsplash)

SUSTAINABLE CITIES INDEXThe 2022 Sustainable Cities
Index is composed of 12
quantitative indicators ofenvironmental sustainability
performance in five categories:
consumption-based climate
emissions, air quality, climatechange resilience, transportation,and renewable energy policy.

#1 Stockholm#2 Oslo#3 Copenhagen--#6 Helsinki

Source: Sustainable Cities Index
www.corporateknights.com/sustainable-cities-report/

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Reducing waste from our products
To reduce post-consumer waste across our portfolio, we seek to design
and implement impactful strategies to our various products and packaging:• Cigarettes: We aim to reduce cigarettebutt littering by encouraging behaviourchange, through awareness-raising
campaigns together with our partners, andby empowering consumers to dispose ofcigarette butts appropriately. We work
continuously to replace the plastic incigarette filters with more sustainable
alternatives.
• Smoke-free consumables: As we growour smoke-free business, we seek toensure that the consumables used with
our electronic devices are disposed of
responsibly at their end-of-life and thatusers have access to recycling schemesthat have an environmental benefit, areeconomically viable, and are valued byconsumers.

• Smoke-free electronic devices: To reducethe depletion of finite resources, we aim
to integrate sustainability into our productdesign, drive circularity by improving
recyclability, and increase opportunities torefresh and repair used devices.
• Packaging: We strive to minimize
packaging materials and improve theircircularity by increasing their recyclability
and promoting the use of materials madefrom renewable resources.

Alesund, Norway (Photo: Jarand K. Løkeland / Unsplash)34

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTNo ifs. No butts.
COMPOSITION OF A CIGARETTE FILTER

Cigarette butts are among the most frequently
found items of litter. While many consumers
dispose of their waste properly, too muchlitter ends up in our environment. Improperly
disposed of plastics pollute landscapes
and water, and impact wildlife. PMI takes
this seriously and is committed to making
measurable improvements in preventing thelittering of our products.

The butt consists of a cellulose
acetate core and two layers of paper
and/or similar cellulose fibres

The composition and disposalof a cigarette butt
The main constituent of cigarette filters is
cellulose acetate (CA), a bioplastic made fromwood-based cellulose. The butt also contains
fine paper and small amounts of residues
from tobacco, ash, and smoke. The paper andresidues degrade rapidly.
Contrary to popular belief, CA biodegrade overa period of a couple of months up to 15 years(depending on the surrounding conditions)and does not accumulate in the environment
over time. In contrast, conventional plastics
made from petrochemicals take hundreds ofyears to degrade, often breaking down to form
microplastics.

The filter captures some of theparticles from the smoke and dilutes
tar, nicotine and carbon monoxide

Usually, cigarette butts burn when you wantto get rid of them and therefore can’t bedisposed of with other waste, unless carefully
extinguished first. For easy disposal they needeither fixed ashtrays or mobile solutions, suchas pocket ashtrays, to avoid fire hazard andodour.

Source: UN Environment Programme report“Valuing Plastic” (UNEP, 2014)35

Philip Morris Nordics Sustainability Report 2021

Every filter consists of over 12,000
cellulose acetate fibres - fibres that aremuch thinner than sewing thread

OPERATIONALIMPACTOVERVIEW

Research into filters withimproved degradability
For many years, PMI has invested in R&D
towards filters made of more sustainable,
plastic-free alternatives that allow fasterbiodegrading, resolving the issue of plastic
litter altogether. To be acceptable, any newmaterial must compare with CA filters on four
criteria: filtration, taste, biodegradation, andcommercial viability.
While we will continue research to improvethe environmental profile of our products,
biodegradability does not solve the problemof littering which also needs to be tackled at
the user end, helping consumers change their
behaviour and properly dispose of cigarettebutts.

OPERATIONALIMPACT

Local action and awarenessagainst littering
Locally, PMI’s littering prevention initiatives
focus on inspiring change in consumer habits
through impactful anti-littering programsin cooperation with local non-governmentorganisations. These initiatives include
communications campaigns and clean-up
activities to raise awareness, partnerships,
portable disposal solutions, and improvementof public equipment solutions.
Awareness efforts and other campaigns fromthe tobacco industry can be problematic,
as they could be classified as branding or
marketing which is illegal. Partnership with
relevant NGOs and customers is therefore
essential.

Local governments also use
other measures to discourage
littering. From January 1,
2022, throwing away littersuch as cigarette butts andused snus will be fined in
Sweden.
36

PRODUCT
IMPACT

Philip Morris Nordics Sustainability Report 2021

PMI’S STRATEGY AGAINST LITTERING (3 ES)
Educate:Awareness of the problem and its consequences.
Enable:Infrastructure such as bins in public hot spots.
Enforce:
Reinforce and make sure that inappropriate behaviour isaddressed through relevant legal or “societal” penalties.
Positive impact can only be achieved through collaboration andinvolvement of relevant stakeholders. PMI Nordics works withstakeholders in all markets to reach our goals on littering. These
partners are mainly NGOs that focus on raising awareness onlittering in their respective market.

Decent work
OVERVIEW& economic growth

Smoke-free consumables

EPR for Single-Use Plastics

There is a risk that our smoke-freeconsumables used with our heat-not-burndevices could be littered. But we have good
indication that the littering rate is lower thanfor cigarette butts.

The Single-Use Plastics (SUP) Directive
requires that producers participate in Extended
Producer Responsibility (EPR) schemes. EPR
is an established governance scheme forcircular waste management, and it is now being
used for the first time in the EU to address
the extensive use of plastic in products thatis normally only used once. The European
Council adopted the directive in June 2019,and it came into force in July 2021 when
implemented by EU member states.

The non-combustible nature of these products
eliminates the need for consumers to throw
their filters on the ground to extinguish them.
Our analysis of consumer behaviour shows awillingness to put used smoke-free tobacco
stick filters back in the case to be properly
disposed of later.
In all countries where our electronic device forheated tobacco is sold, they can be returned
for inspection, disassembly, and recycling inline with strict regulatory requirements, aspart of the CIRCLE programme (centralised
inspection and recycling).

Cigarette manufacturers will be required
to contribute to the costs of collecting andcleaning up cigarette butts because of thebioplastic content in the butt. PMI supports
the concept of an industry wide EPR, provided
such schemes are managed in a cost-efficient,proportionate, and transparent way that
addresses the objectives of reducing plastic
litter and changing consumer behaviour.

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

37

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACTOVERVIEW

Stockholm, Sweden

Philip Morris Nordics Sustainability Report 2021

OPERATIONALIMPACT

World Cleanup Day
Every year, in September, all ouroffices in the Nordics participate
in the global initiative World
Cleanup Day. On September
18, many of our co-workers
got together to spend the day
picking up rubbish and litter inthe streets, squares, and parksof Copenhagen, Helsinki, Oslo,and Stockholm.

38

PRODUCT
IMPACT

We collected 104.7 kg of litter and rubbish.
This included 18.7 kg of cigarette butts,
corresponding to 92,500 butts!
With this activity we also support theimportant work that the local anti-litteringorganisations are doing. Håll Sverige Rent,
Hold Danmark Rent, Sneipfritt, and Pidä
Saaristo Siistinä ry are all important andappreciated partners to us.

OVERVIEW

PRODUCT
IMPACT

Local recycling programme
addresses user concern
During preparatory work on the launch of
PMI’s electronic cigarette platform in Finland,
focus groups raised concerns about theamount of plastic in the nicotine pod. PMI
addressed this and found a local partner inFinland that recycles the pods. The solution
was launched with the device in early 2021
and collection points have been set up at 470
locations across the country.
Unbranded recycling boxes are placed next
to the cashier of stores that sell the e-vapor
platform. Consumers are advised to dropused nicotine pods, as well as broken e-vapor
devices, in the box for recycling. Some storesprovide reusable pouches for collecting thepods and delivering them to the recyclingbox in retail stores. Our local partner thenseparates metal and plastic from the collectedunits and pods.
The programme has been positively received
and at the end of the first year many stores
had a noticeable number of returned pods. The
trend has rising numbers each month.

39

Pocket ashtrays available inall markets
Our reusable pocket ashtrays have beenlaunched in all Nordic markets. They areavailable through our NGO partners, retailpartners, and online stores. Finland was last to
introduce them and already 10,000 units havebeen distributed there during 2021.
The pocket ashtrays are perceived to be smart,
useful, and convenient. They are fire-proof andprevents odour from leaking, and they are small
and light enough to be carried around, whichis essential for them to be used. Except for in
Denmark, the ashtrays are branded with ourpartner NGOs. The Danish version is neutral.

Philip Morris Nordics Sustainability Report 2021

All ashtrays have a URL or QR-code that leads
to local websites with information on theconsequences of cigarette butt littering andadvice on how to enable better decisions.

OPERATIONALIMPACTOVERVIEW

skodbedre.nu

tumpittalteen.fi

www.fimparätt.nu

sneipfritt.no40

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACTOVERVIEW

Sneipfritt eventat Sotra Golf Park
Anti-littering organisation Sneipfritt, together with PMI,
held an anti-littering awareness event at Sotra Golf Park,
near Bergen in Norway, on World Cleanup Day.
Sneipfritt sponsored the eighth hole on the Sotra course, where they installeda spin-the-wheel challenge. Players received information on Sneipfritt and theorganisation’s work with cigarette butts in Norway, as well as pocket ashtrays
to take home with them. Golfing and other activities at the eighth hole wasbroadcast live on Instagram.
Ballot bins for cigarette butts were also placed in the golf clubhouse and at thedriving range. The event was promoted on various digital and social channels aswell as on the Matchplay Nordics website.

41

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACTOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Anti-littering
at Arendalsuken
Every August, politicians, journalists, businesses,
and NGOs meet in the City of Arendal in Norway
to discuss politics. For a whole week, the city is
buzzing with political debate and conversation. PMI
participated to promote the importance of antilittering, as well as sustainability in general. Together
with the company Sneipfritt we executed several
activities that received a fair amount of attention.
Our aim was to stress the need for awareness as wellas infrastructure, perhaps even more relevant today,
as the SUP Directive is rolled out across the EU.

The solution is making it fun
to dispose of the cigarette butt
correctly!

Sneipfritt had ballot bins in place all week withvarious dilemmas for people to answer, many of apolitical nature and some more recreational. The bins
also displayed facts on cigarette butt littering and a
QR-code linking to the Sneipfritt website and more
information on littering and the need for awarenessand infrastructure.
Pocket ashtrays were handed out specifically tosmokers and they were informed about challenges
related to cigarette butt littering. The feedback we
received was positive. The pocket ashtrays wereperceived as very practical and almost odour-free.
Politicians and other decision makers showedinterest in our efforts, and we got the opportunity
to underline the responsibility the authorities carry
to facilitate preventive action, such as access to
infrastructure and regulations that prevent littering,rather than merely focusing on cleaning up.
Ballot bins with various dilemmas. In these, "Left or Right?" and "Norway's next
Prime Minister?"

42

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

Opportunities for fixed waste
containers for cigarette butts
In light of the littering problem of cigarette butts,
PMI wants to explore opportunities to improve thesolution by installing fixed ashtrays in the public
space. As an entry-point, an interview study was
made among stakeholders in the area.
Findings from the interviews show that thefollowing should be emphasised when planning forforthcoming solutions:• Focus on aesthetics. Ashtrays should
harmonise with the rest of the public space.
• Integrate with the current waste collection
and treatment system.
• Operating routines are essential. The
frequency of emptying is crucial for the
success of fixed ashtrays.
• Placement of fixed ashtrays should
be in proximity to where people stay,
popular places for recreation, or attachedto established and functioning waste
containers.
i

43

Philip Morris Nordics Sustainability Report 2021

Download report

Mapping of stakeholders: Collaborators in Osloarea for fixed waste containers for cigarette butts(2021)PRODUCT
IMPACTOPERATIONALIMPACTOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

The experiments show that butt littering
could be reduced through nudging andsmall changes in design of bins.

Ballot bins and nudging
at Grønland torg
Cigarette butt littering is a common problem in rural
areas. Ashtrays are scarce and the ones in place are
not used as much as we would like. A large portionof the cigarette butts end up on the streets andeventually in the sea. During the summer of 2021,
we were involved in a project that was plannedand executed by the behavioural scientists at thecompany Mindshift at Grønland Torg in Oslo.
The project conducted several experiments to capture
the attention of smokers and nudging them into using
ballot bins for disposal of their cigarette butts andthereby reducing littering. When using nudges, thedesigner must be careful or risk backfiring. Signs thatsay “Don’t litter” in areas that are already littered, may
instead increase the littering.

44

The study confirms the importance of attention andhow small changes in design of bins can have a large
effect on littering behaviour.
One experiment used simple nudging in the form of
painted footsteps on the ground, an image of a handputting out a cigarette and a sticker to locate the gapof the bin, where the cigarette butt should go. The
result was an increase in use by 145 percent.
In the next experiment, measures that drew additional
attention towards the bin were added.
A light was mounted inside the bin, a polite “clearingof the throat” sound was triggered (manually) as
nearby smokers finished their cigarette. This resulted
in a 26 percent increase in use compared to the firstand a 208 percent improvement compared to thebaseline.

Philip Morris Nordics Sustainability Report 2021

145 %increase in bin usage with simple nudging andprompts about the purpose of the bin.

208 %increase in bin usage with simple nudging andprompts about the purpose of the bin, as wellas additional measures to capture attention.

1.23 million
estimated reduction of cigarette butts
a year if these measures had been
implemented throughout the city.

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACTFURTHER ADVICE

The report gives advice on how to further
develop the design for greater effectiveness.
1. Bin design (infrastructure)

3. Social norm

In busy environments, where attention is limited,
it is very important that the bins are highly
visible from all directions, and that they aredesigned so that there is no doubt about their
purpose. Does the design of the ballot bin itself
introduce barriers to usage?

The study suggests that measures that play onsocial norms (what other people are doing –like painted footsteps on the ground) are very
effective ways of reducing littering. Likewise,
existing litter on the ground communicates social
norms and strongly predicts future littering.

2. Availability (infrastructure)

4. Effect of context

People tend to smoke independently of theavailability of bins. Reducing the number ofbins does not reduce the number of smokers,
and certainly not the amount of littering.
Observations showed that people without
immediate access to a bin, were more likely todrop their cigarette butts on the ground.

The experiments were conducted in a busy
urban area known as an area particularly
exposed to littering. By conducting a variety ofexperiments in different contexts and at a larger
scale, the results will give a better precision andcould to a greater extent be generalised.

Avisa Oslo, 20/11/21: "Psychology project increased use of ashtrays by 208 percent"i

45Philip Morris Nordics Sustainability Report 2021

Download reportmindshift.no/en/oslo-kommune/

OVERVIEW

Ballot bins andnudging in Gothenburg
A similar project to the pilot in Oslo was
performed in Gothenburg in the summer of 2021.
The aim was to evaluate the use of nudging
designs to increase the amount of cigarette butts
properly disposed of. The concept and designs
were developed by our partners Håll Sverige
Rent (Keep Sweden Tidy) and behavioural design
agency Beteendelabbet.
Ballot bins for cigarette butts were placed in threelocations around the city. The design concepts
were adapted to the chosen locations andthemed with sea, trams and love.

The effects of the nudging designs and ballot bins
were measured and referenced to three similar areas
with no nudging designs, to compare if and how
much they supported the ballot bins and increased
proper disposal of cigarette butts.
The report showed that areas with nudging designs
had a 61 percent decrease in cigarette butt littering
compared to the reference areas where the decrease
was 27 percent. The project concluded that thedesigns, based on observation of behaviour anddeveloped with experts in nudging, worked very well.
The designs developed for the project were muchappreciated by companies, municipalities, and people
in general.
Keep Sweden Tidy now wants to pass these results
on to more municipalities in Sweden, as innovative
methods to decrease littering, such as behaviouralnudging, are in great demand.

46

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACT“It is evident that to be successful the campaigns to reduce cigarettebutt littering by nudging, have to include preparatory studies of actual
behaviour and a well-developed design concept – a process we tested in this collaboration.”
Johanna Ragnartz, CEO, Håll Sverige Rent (Keep Sweden Tidy)

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Product Impact Global KPIO U R A S P I R AT I O N S

S U S TA I N A B I L I T Y I N D E X – P R O D U C T S U S TA I N A B I L I T Y
Key performance indicators

2021
performance2025
aspirations

1

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

12.8%

>30%

2

Smoke-free product adjusted net revenue ratio(smoke-free/total)

29.1%

>50%

3

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

71

100

4

Proportion of markets where PMI smoke-free products areavailable for sale that are low- and middle-income markets

43%

>50%

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

21.7

6

Proportion of shipment volume covered by markets withyouth access prevention programs in place in indirect
retail channels.

91%

>90%

Annual net revenue from wellness
and healthcare products(in billions USD)

0.1

≥1

8

Proportion of shipment volume covered by markets with
anti-littering programs in place for combustible cigarettes

n/a

≥80%

9

Proportion of shipment volume covered by markets with end-oflife take-back programs in place for smoke-free consumables

9 pilots≥80%10Proportion of PMI smoke-free devices with eco-design certification

n/a

100%

11

Cumulative number of smoke-free electronic devices
refreshed or repaired since 2021 (in thousands)

62

1,000

7

Product Impact PMI Nordics KPI

Devices

Consumables

Packaging

2023

≥80%

100%

Sustainability Index

inner
100% recyclable
liners by year-end¹

2022

2025

5

SI

effective recycling
rate of our heated
tobacco devices²70%≥1 millionSI

smoke-free electronic
devices refreshed or repaired(cumulative since 2021)

100%

SI

of shipment volumes coveredby markets with antilittering programs in place
for combustible cigarettesSIof smoke-free electronic devices
introduced on the market asof the end of 2025 that haveeco-design certification

100%

≥80%

of packaging made withrecyclable materials

95%

of packaging materials comingfrom renewable sourcesSIof shipment volume coveredby markets with end-of-lifetake-back programs in place
for smoke-free consumables

15%

reduction of packaging materials
weight versus 2018 baselineof PMI smoke-free productusers have access to collection
and recovery of devices

80%

effective recycling rateof our heated tobacco
devices²12

For all markets where possible in compliance with local regulatory requirements.
Effective recycling rate is calculated based on the proportion of device sales
volume covered by the CIRCLE hubs program multiplied by the recycling rate ofdevices at the CIRCLE hubs (weighted average).

ACTUAL2020

ACTUAL
2020

TARGET
2021

ACTUAL
2021

TARGET
2022

TARGET
2025

365

260

300

176

500

900

Sweden

100%

100%

100%

100%

100%

100%

Denmark

75%

100%

100%

100%

100%

100%

Finland

n/a

n/a

100%

n/a

100%

100%

Percentage of returned pods that are recycled - (Finland)

n/a

n/a

100%

n/a

100%

100%

PRODUCT SUSTAINABILITY
Total number of volunteering hours in anti-littering engagement (PMI Nordics)
Percentage of returned electronic devices that are recycled

47

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACTO P E R AT I O N A L
I M PAC T
50 Foster an empowered and inclusive workplace
50 An empowered and inclusive workplace
61 Tackle climate change, protect nature
66 Preserve Nature

Søndervig, Denmark (Photo: Frederik Falinski / Unsplash)48

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTO P E R AT I O N A L

ENVIRONMENTSOCIALI M PA C T

39.7%

Agricultural Labor
Practices5

Of management positions held
by women, on track to achieve our2022 target of 40 percent*(2020: 37.7%)

Publication of a dedicated reportcelebrating the 10-year anniversary of
PMI’s Agricultural Labor Practices (ALP)
program in its tobacco supply chain

Human rights impact assessments
conducted since 2018 in highestrisk countries and action plans
being implemented

Low-Carbon
Transition Plan

100%

Triple A

Publication of strategy to decarbonize
our direct operations by 2025
and our entire value chain by 2040

Of tobacco purchased at norisk of deforestation of primaryand protected forests

Score from CDP for the second
consecutive year, recognizing our efforts
to combat climate change, protect
forests, and promote water security(2020: 4)(2020: 100%)* Calculation methodology updated in 2021 to expand data scope to employees on long-term leave (over 30 calendar days). 2020 data restated accordingly.

49

Philip Morris Nordics Sustainability Report 2021

OPERATIONALIMPACTOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACTAn empowered
and aninclusive
workplace
Fosterempoweredand inclusive workplace

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

Decent work and economic
growth
Our long-term business success relies onhuman capital in the form of the dedication,
talent, and passion of our employees. It isessential for us to provide a fair and inclusive
workplace that upholds good working
conditions, protects the health and safety of
employees, promotes their well-being, andoffers opportunities to grow and improve theiremployability.

50

Investing in our people and providing
meaningful employment helps us to recruitand retain talented individuals, achieve highproductivity and efficient operations in acontext of rapid change, and deliver on ourcompany’s purpose.
By protecting and promoting equality, diversity,
equity, and fair treatment – human rights thatare essential to unlocking social and economic
development – we seek to instil in our workers
a sense of belonging and maintain an inclusive
workplace culture.

Philip Morris Nordics Sustainability Report 2021

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

Furthermore, we regard diversity as oneof our greatest assets. We strongly believethat a more diverse and inclusive culture
better attracts talent and improves decisionmaking, innovation, customer orientation, andemployee satisfaction.

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Adapting to a world-wide
pandemic – second year
In 2021, the world – and our company –continued to navigate the far-reaching impactsof the world-wide COVID-19 pandemic.
Throughout the year, our priority remained toprotect the health, safety, and well-being of
our employees and address the needs of our
stakeholders while relentlessly working towards
our purpose of achieving a smoke-free future.
During the pandemic we have adapted workroutines and workplaces. The months ofworking from home turned into a year, andeven more adjustments had to be made when
online meetings and remote working turned
into a new normal.
As in 2020, we adapted in 2021 to remote
working. Governments slowly started toabandon restrictions, and sometimes took
steps back to enforcing them because of new
waves of infection. However, at PMI, somethings will have changed for good.
During this time other models of work havegrown in relevance. New hybrid models, wheretime at the office is alternated with work from
home, balancing the demands of work tasks
with the needs of the co-workers – as long as
51

the work is done and results are met, this is
acceptable. PMI has developed a global modelfor “Smart Work”, where the general rule is that
employees are permitted to work remotely up
to 60 percent of the time, with the remainderof the workweek spent onsite. In the Nordic
region this also includes making sure that ouremployees have a good work environment at
home, with appropriate desk, chair, and light.
All employees have life insurance and longterm sickness plans, access to an employee
assistance programme that provides support
on a variety of issues, such as financial andlegal advice and mental and physical wellbeing.
The insurances, plans, and programmes havebeen updated to cover remote work.
All managers are being trained in leading
through change, and to support their coworkers whether they choose to work fromthe office or from the office at home. Meeting
guidelines have been implemented to help set
boundaries, between work life and private life,
even when working from home. Meetings areplanned for business hours, and must have
purpose, be efficient, and make sense – andcan be physical when needed.

Philip Morris Nordics Sustainability Report 2021

WORK-LIFE BALANCE INDEX
People in the Nordics tend to enjoy a healthy
work-life balance. The amount and quality ofleisure time is important for people’s overall wellbeing. Three of the Nordic countries are in the
top 10. Sweden has the lowest rate of very longhours, 1%, and all three are below 1.4% (OECDaverage: 10%).

1. Italy

9.4

2. Denmark

8.6

3. Norway

8.5

7. Sweden

8.1

16. Finland

7.3

The index is based on length of working hours, time
for leisure and personal care in the 38 OECD member
states, plus Russia, Brazil and South Africa.
Source: OECD Better Life Index, 2022.
https://www.oecdbetterlifeindex.org/topics/work-life-balance/

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Fostering diversity, equity,equality, and inclusion
A gender gap is a talent gap. Building a genderbalanced organisation, therefore, remains oneof our top priorities. Globally, 42.2 percent of
our employees were women in 2021, and 39.7
percent of our managerial roles were held by
women. In the Nordics 38 percent of managers
were women.

We have employees of 26 nationalities
working at our Nordic offices and we areconvinced this makes our company stronger.
All our efforts, both global and local, has
led to PMI being certified as a Global Top
Employer for the fifth year in a row, by the Top
Employers Institute.

In the Nordic region we use a balancing hiring
strategy to bring us closer to gender equality.
We use software that helps us compose ads
that will attract more diverse applicants. We
provide unconscious-bias training for recruiters
and for hiring managers. Applicant selection isweighted, and female applicants get their firstmeeting with female managers.
Our Nordic offices received an Equal Salary
Certification in 2020. This includes an external
audit of our policies, salaries, and career paths,
with interviews and focus groups on equal
treatment. The certification is valid for three
years.

52

An empowered and inclusive workplacepmi.com/sustainability/foster-an-empowered-and-inclusiveworkplace

Philip Morris Nordics Sustainability Report 2021

Photo: Kolonihaven

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT• Personal purpose and alignment with PMI’s purpose• Inclusion and sense of belonging• Career growth and skills development• Volunteerism opportunities

Self-fulfillment

Psychological needs

Physical needs

PMI's office in Helsinki, Finland (Photo: Pasi Salminen)

53

Philip Morris Nordics Sustainability Report 2021

All underpinned by ways of working, leadershipbehaviors, and psychological safety• Quality of relationships at work: Providing a work
environment that promotes psychological safety,
employee appreciation and recognition, and respect
for personal boundaries and work-life balance• Support: Providing appropriate proactive (e.g., education,
self-help tools) and reactive (e.g. Employee Assistance
Program, insurance) support to employees• Comfortable workplace and access to facilities
or tools to encourage physical fitness• Comprehensive benefits offer to support well-being• Policies and norms that encourage healthy
behaviors and recharge energy

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACTI strongly recommend others to join the companion
program. My companion has contributed to both myprofessional and personal development, but above all
I have found a new friend.
Mentee at the Companions programme,
Sweden (February 2021)

Coworkers outside PMI's office in Helsinki, Finland (Photo: Kolonihaven)

Regular pulses and follow up
actions
At PMI we do regular anonymous employee
surveys, which we call pulses, as well as follow
up the results in team sessions. The sentiments
must be converted into action, and the regularpulses have led to several programmes within
PMI Nordics in 2021.
A mentorship programme called Companions,a mutual mentorship between twelve mentees
and twelve of the Nordic organisations mostsenior leaders, for mutual benefit and learning.
They meet about twelve times during twelve
months.

54

Giving and receiving feedback are particularly
important skills and a focus area for thecompany, also derived from the pulses. Coworkers get regular feedback trainings in a
psychologically safe environment, to improvetheir skills on seeking and actively give
feedback. The training is aimed to both leaders
and individual contributors.
Our co-worker’s commitment is measured by
the employee Net Promoter Score (eNPS),
based on a single question: How likely is itthat you would recommend your employer
to a friend or acquaintance? The answers are
graded from 0 (not at all likely) to 10 (extremely
likely). Answers of 9 and 10 add to the score,

Philip Morris Nordics Sustainability Report 2021

while answers from 0 to 6 subtract from thescore.
When the pandemic hit in 2020, everything
about our workplace changed, and the eNPS
score dropped. During last year, we slowly
have regained trust and commitment, and aslightly better eNPS score. A Change Leader
network was initiated, and action plans werecreated at department level. In general terms,
everything above 0 is acceptable, and a scoreabove 20 is good. In 2021, we had a score of9, which we aim to improve every year moving
forward.

OVERVIEW

PUBLIC DEBATE ON LGBTQ+INCLUSION IN COPENHAGEN
Gender inclusion is not the only inclusion.
During Pride Month 2021, PMI hosted
and facilitated a public debate on LGBTQ+
inclusion at our Heat and Brew store in
Copenhagen. Present were politicians from
Copenhagen Town Hall – Mette Reissmann(Socialdemocrat), Jens Kristian Lütken (Venstre/
Liberal), and Christopher Røhl (Radikale), as
well as Helle Jacobsen of Amnesty and reality
star Sascha Louise Sprange.
It is of utmost importance, that we at PMI cancreate a work environment where personal
situations are understood, differences arevalued, and everyone is treated with fairness
and respect. We want our employees tofeel supported, respected, and have theopportunity to achieve their full potential,
regardless of their gender, age, nationality,
ethnicity, sexual orientation, religion, disability,
or any other characteristic, visible or invisible,that makes them themselves.

55

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACTOVERVIEW

PRODUCT
IMPACT

Activities to support mental
well-being in the wake of thepandemic
In early 2021, PMI’s co-workers got access to
Unmind, a health app that gives confidential
access to tools, training, and exercises tosupport mental wellbeing. The contents of
Unmind are rooted in neuroscience, cognitive
behavioural therapy, mindfulness, and positive
psychology, and can be used to work on,among other things, sleeping habits, easetension or master distraction.
In May, PMI’s Inclusion & Diversity teamarranged a global Mental Health Conference,
which was followed by a Mental HealthWeek in October. Both events were full oflive sessions on different aspects of mental
health, keynotes on listening, and the power ofrecognition and feedback on well-being.
The events also contained practical yoga
sessions for co-workers, high-intensity
trainings, as well as shared stories anddiscussions on personal mental health on ourinternal social networks.
The main theme was to educate andencourage conversations on mental health,on how to look after yourself and how to
get support, how to see signs of burnout, in56

yourself and in colleagues, and how to give andto get support.

Meaningfulness
outside work
At PMI we know that a meaningful vocation is
not limited to the workplace. We need otherand maybe more personal meaningfulness.
PMI promotes personal engagement, not only
in word but by paid time off for volunteering.
Volunteering can motivate and enrich the livesof our co-workers, help them develop new
skills, and enhance their perception of PMI as agreat place to work.
Co-workers can be granted up to five
additional paid leave days per year for any

Philip Morris Nordics Sustainability Report 2021

volunteer work they choose to do on their own
time. This is in beyond the existing customary
practice of giving paid leave for participating
in initiatives organised by the company during
traditional work hours.
These guidelines were piloted in 2021, amid
the COVID-19 pandemic, without broadly
promoting them. In 2022, the plan is toincrease awareness of the programme among
co-workers, to empower them and assimilate
volunteer work as a regular practice.

OPERATIONALIMPACT

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Operational Impact Global KPI – People (workplace)
S U S TA I N A B I L I T Y I N D E X – P R O D U C T S U S TA I N A B I L I T Y

1
2
3
4
5
6

7

8

Operational Impact PMI Nordics KPI – People (workplace)
ACTUAL
2020

TARGET
2021

ACTUAL
2021

TARGET
2022

TARGET
2025

Employee NPS (satisfaction) Index

3

13

9

15

27

Equal Salary Certified

Yes

Yes

Yes

Yes

Yes

Proportion of management position held by women

41%

42%

38%

37.5%

40%

OPERATIONAL SUSTAINABILITY– workplace

57

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACT

Improve the quality of lifeof people in our supply chain
Promoting and adhering to sustainablebusiness practices helps safeguard humanrights, improve labour conditions, protect
workers’ health and safety, tackle social
inequalities, and alleviate poverty.
Agricultural supply chains face specificsustainability and human rights challenges. The
tobacco we source is cultivated in many regionsof the world, including low- and middle-income
countries, where it is typically grown on
smallholder farms. The socioeconomic wellbeing of our over 350,000 farmers and theirfamilies depends on many factors, including

58

the nation’s health and educational services,
political stability, resilience to extreme weather
events and conditions, access to markets,and public infrastructure. Our supply chain
activities and investments extend beyond our
direct effect on farmers, impacting people’s
assets, capabilities, opportunities, andstandards of living.
As our business transforms, our supply chain
evolves as well. Promoting fair working andliving conditions in our broader supply chain istherefore increasingly important. Caring for thequality of life of the people in our supply chain

Philip Morris Nordics Sustainability Report 2021

is consistent with our business purpose andway of working and is a major predictor of ourlong-term success. It is not only right, but also
the best business practice.

Agricultural Labour Practices
Sound standards and practices to manage our
supply chain sustainably and safeguard humanrights are vital prerequisites to harnessing theconnections in our supply chain to improve thequality of life of those involved. A principal aimof PMI is to provide a decent livelihood to allcontracted farmers in our tobacco supply chain.

OPERATIONALIMPACTOVERVIEW

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

ALP Code Standards• No child labour• Fair income and workhours
• Fair treatmenti59• No forced labour orhuman trafficking• Safe work environment• Freedom of association• Terms of employment

Read more on PMI’s Agricultural Labour Practices

pmi.com/sustainability/social-sustainability-agricultural-labor-practices

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACT

Zero child labourin our supply chain
We maintain a relentless focus on preventing
incidents of child labor and take immediate
action when they arise. Our objective is toeradicate child labour cases in our tobacco
supply chain that are repetitive and systemicby 2025. We acknowledge that isolated cases
might persist, and we will remain alert andtackle them promptly when identified.
Progress towards our objective is measured
within the ALP. Results over the past two
years show a decline in the prevalence of childlabour among our contracted farms, from 3.5
percent in 2020 to 1.8 percent in 2021. Thisdecrease is mainly attributed to Argentina,
Mexico, Mozambique, and Turkey, where
we observed the positive impact of years of
implementation of the ALP programme.

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

Download the report here

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

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Operational Impact Global KPI – People (supply chain)
O U R A S P I R AT I O N S

Maintain

>90%

2022

100%

2025

100%

SI

of contracted tobacco farms
for which labor practices andadherence to our Agricultural
Labor Practices Code aresystematically monitored

100%

of farmers and farmworkers
having access to personal
protective equipment for theapplication of crop protection
agents and prevention ofgreen tobacco sickness

SIof contracted farmers
supplying tobacco to PMI
make a living income

Zero

SI

child labor in our tobacco
supply chainSIhighest-risk countries covered by external humanrights impact assessments, with findings addressed100%of contracted farmers supplying tobacco to PMI
have access to basic sanitation and hygiene

60

100%

of tobacco farmworkers
are provided with safe andadequate accommodationof contracted farmers paying their workers at least theminimum legal wage or agricultural benchmark

10
2030

Sustainability Index

Philip Morris Nordics Sustainability Report 2021

100%

of critical suppliers from whom
PMI sources sustainably

100%of contracted farmers supplying tobacco
to PMI have basic water accessS U S TA I N A B I L I T Y I N D E X – O P E R AT I O N A L S U S TA I N A B I L I T Y

OVERVIEW

Tackle climate change,
protect nature

61

impact sustainable consumption and waste,
production patterns, and the environment atlarge. Our business activities rely on healthy
ecosystems, and we understand the impactsof climate change across all areas of ouroperations. Carbon neutrality remains a toppriority.

Philip Morris Nordics Sustainability Report 2021

OPERATIONALIMPACT

Countryside in Sweden (Photo: Alex Kotomanov / Unsplash)

Climate change is among the greatest threats to society. Thereis broad scientific consensus about the urgency of setting more
ambitious emission reduction targets to limit the rise in the global
temperature to 1.5 degrees Celsius above preindustrial levels.
Our value chain spans the globe — fromfactories in Lithuania and laboratories in
Singapore to farms in Argentina and our
local office in Copenhagen and end-of-life
recycling of smoke-free consumables in
Tampere, Finland. Given the size and reachof our company, our actions, practices, andpolicies have the potential to significantly

PRODUCT
IMPACT

CDP TRIPLE A SCORE
In 2021, PMI was awarded a Triple A score forthe second consecutive year in recognition of
our efforts to combat climate change, protect
forests, and promote water security.

Read CDP Triple A score

pmi.com/sustainability/pmi-awarded-triple-a-ratingfrom-cdp-for-the-second-consecutive-year

OVERVIEWOur climate strategy aims to address pertinentclimate change risks and build resilience
while seizing opportunities presented by a
low-carbon future. To deliver on our climate
ambition, we rely on robust carbon footprintaccounting, analysis of climate change-relatedrisks and opportunities, ambitious mitigation
targets, clear management and governancestructures, and key enablers such as ourinternal carbon pricing.
PMI has aligned with the recommendationsof the Intergovernmental Panel on Climate
Change (IPCC) Special Report (2018). We are
currently integrating the latest informationfrom IPCC Sixth Assessment Report (2021)
to further improve scope and direction of
our climate action. Another relevant step has
been to update the baseline of the accounting,moving it from 2010 to 2019, to include
changes in footprint and business model.

Our work to reduce absolute emissions is
guided by science-based targets aligned with ascenario of an increase in global temperaturesof no more than 1.5 degrees Celsius above
pre-industrial levels. Our targets, approved by
the Science Based Targets initiative (SBTi),
commit us to reducing our absolute scope
1+2 greenhouse gas (GHG) emissions by 50
percent by 2030 versus our 2019 baseline,
and to reducing our absolute scope 3 GHG
emissions by 50 percent within the same
timeframe.
In October 2021, Philip Morris released the
Low-Carbon Transition Plan (LCTP). The planbrings forward PMI’s ambitions to achievecarbon neutrality in our direct operations(scopes 1+2) by five years, to 2025, and toachieve carbon neutrality across our entire
value chain (scopes 1+2+3) by 10 years, to2040 – 10 years earlier than the previous
2050 goal. ** Our commitment to net zero emissions (scope 1+2+3)
by 2040 is undergoing validation by SBTi.

62

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACT

The plan also introduces a new goal for PMI’s
critical suppliers to adopt SBTs in line with
the SBTs that PMI has already committed to,aligned with the 1.5°C pathway necessary tomeet the goals of the Paris Agreement.
To deliver on those ambitious goals, weprioritize reducing absolute carbon emissions.
We do so by optimizing efficiency and reducing
consumption while minimizing the use of fossil
fuels and promoting the switch to renewableenergy (by procuring green electricity andinstalling technology to self-produce or store
green energy).
Our CO2 roadmap towards 2025
pmi.com/sustainability/our-2025-roadmap

OPERATIONALIMPACTOVERVIEW

REDUCES W I TC H

PRODUCT
IMPACTOPERATIONALIMPACTO FF S E T

THREE PRIORITY STEPS TO DELIVERING CLIMATE AMBITIONSPMI has adopted a three-pronged approach in our efforts to achieve emission targets:
Reduce consumption and optimising efficiency to cut GHG emissions.
Minimize the use of fossil fuels and promoting the switch to renewable energy.
Compensate unavoidable emissions by prioritising insetting projects(nature-based solutions) and purchasing high-quality carbon credits.

Sundsvall, Sweden (Photo: Peter Van der Meulen / Unsplash)

63

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

PMI’s Low-Carbon Transition PlanPMI’S LOW-CARBON TRANSITION PLAN

Our Low-Carbon Transition Plan
(LCTP) was published in October
2021. It provides a transparent anddetailed view of how we plan toachieve our climate ambitions, how
we will measure success, and how
we will report on progress. The LCTP
describes our approach to carbon
pricing, our portfolio of climate
investments, and our governance andmanagement arrangements and othertools that will help us deliver on our
climate targets.

PROGRESS ACHIEVED THUS FAR

BRINGING OURTARGETS FORWARD

DELIVERING OUR TARGETS ON OUR CLIMATE STRATEGY

2010

2021

2025

2020

-55%

Reduction in our
direct operations(scope 1+2)

-50%

Reduction in our
upstream anddownstream value
chain (scope 3)

Carbon neutral
in our direct operations(scope 1+2), target
accelerated to 2025;
formerly 2030

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

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

8M

2030
Carbon neutral
in our direct operations(scope 1+2)

ACHIEVEDSCIENCE-BASED TARGETS

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

35%
of our fleet will be hybrid orelectric

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

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

PMI Accelerates Path to Carbon Neutrality

2040

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

100%
Forest net positive in our
tobacco supply chain

6M

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

4M

Net zero(scope 1+2+3)

CO2e metrictons

2M

0

Scope 1+2 emissions-1M

64

Philip Morris Nordics Sustainability Report 2021

Scope 3 emissions

Offsets and carbon removals

Net carbon emissions

OVERVIEW

PRODUCT
IMPACT

Decarbonisation in the Nordics
From an operational perspective, our global
sustainability functions coordinate thecompany’s activities with regional sustainability
working groups and local market coordinators.
This helps to ensure that our global strategies
and programmes can be implemented at
the market level and that local realities arereflected in our global efforts.
We are proud of the progress PMI has madeon a global scale. We believe it is equallyimportant to support these targets at a
local level. In the Nordic region, efforts havebeen made to minimise our climate footprint
focus on areas we can impact locally, suchas initiatives to reduce littering, sourcing
renewable energy for our offices, and making
our car fleet greener.

Decarbonising factories
The Nordic markets are supplied with tobacco
products from several factories, among them
PMI’s factory in Klaipeda, Lithuania. Over the
past decade, PMI has worked on optimising
the factory’s energy usage to reduce carbon
emissions. This includes upgrading its utilities
equipment – such as chillers and compressors– and facilitating heat recovery to optimize thefuel used to heat the buildings. The factory
65

also has a biomass boiler producing energy
from renewable resources, and offsets its
remaining carbon emissions from the burningof natural gas with biogas certificates thatmeet the highest standards. In 2019, it was thefirst of our factories to go carbon neutral.
Carbon-neutral factories: Helping deliver PMI’s
Low-Carbon Transition Plan

Fostering carbon neutrality
in our fleet
Following the development of our carbon
neutrality strategy for our fleet of vehicles in
2020, PMI instituted a new Global Vehicle
Fleet policy early in 2021. To reduce carbon
emissions in our fleet, we invest in sustainablehybrid and electric vehicles, and more effective
driving to optimize energy consumption while
improving operational efficiency. We anticipate
these new vehicles will emit 40 percent
less carbon emissions than the models they
replace.
In 2021, our ambition to reduce carbon
emissions from our Nordic fleet were notfulfilled. This was in part due to the ongoingpandemic.

Philip Morris Nordics Sustainability Report 2021

Reducing GHG emissions
in our offices and warehouses
We have offices and warehouses in morethan 80 countries worldwide, most of which
we lease rather than own. Together, theyaccounted for 1 percent of our total carbon
footprint in 2021.
During the year, we continued to define
minimum energy efficiency expectations foroffice equipment in the markets where wehave initially targeted carbon neutrality. We
plan to extend these expectations to additional
markets by the end of 2022.
Overall, carbon emissions from our offices andwarehouses decreased by 46 percent versus
the 2019 baseline, continuing the positive
trend from 2020. This is due, in part, toawareness campaigns, more accurate internal
emissions reporting, and reduced office use
due to COVID-19 restrictions and precautions.

OPERATIONALIMPACTOVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Saarijärvi, Finland (Photo: Tapio Haaja / Unsplash)

ENVIRONMENTAL PERFORMANCEINDEX (EPI) 2022
The EPI ranks
180 countries onenvironmental healthand ecosystems vitality,
using 40 performanceindicators across 11
issue categories.

Preserve Nature

Biological richness and natural resources
are being lost at an alarming rate. Global
scientific studies indicate that one million
plant and animal species face extinction,
thousands of species are already extinct, andseveral million hectares of natural forest are
lost each year despite international efforts
to counter the trend.1 The unsustainable
use of natural resources can lead to soil

66

loss and erosion, diminished landscape andrecreational value, and a subsequent lossof economic value. Often, it is the world’s
most impoverished communities that are
most vulnerable to the negative impacts ofchanges in climate, biodiversity, and ecosystem
function. Protecting forests and regenerating
ecosystems can help prevent the worst
impacts of extreme climate events and improve
livelihoods.

Philip Morris Nordics Sustainability Report 2021

#5 Sweden#10 Iceland

Source: Environmental performance index [epi.yale.edu]

of the world’s most environmentally conscious
countries.
The region is in the forefront of sustainable
development, preserving and restoring
greenspaces in our cities, using ecosystemservices for cooling, biodiversity, stormwater
management, and as resilient adaptation toclimate change.
Sources:
IPBES (Bonn, 2019). Summary for policymakers of the
global assessment report on biodiversity and ecosystemservices of the Intergovernmental Science-Policy Platform
on Biodiversity and Ecosystem Services.
ipbes.net/global-assessment
1

The Nordic countries are frequently recognised
as being good places to live. One of thecontributory factors to this is the region’scommitment to the natural environment.
Denmark, Finland, Iceland, Norway, andSweden consistently score highly on indexes#3 Finland#20 Norway

Natural capital is a wealth we all share and depend on. It isessential that we protect, sustainably manage, and nurture it.

We collectively depend on soil, land, forests,
and water, which provide resources andservices critical to human existence. Moreover,a healthy natural ecosystem plays a vital rolein tackling climate change, with land andoceans absorbing and storing carbon from theatmosphere.

#1 Denmark

FAO and UNEP (Rome, 2020). The State of the World’s
Forests 2020. Forests, biodiversity and people.
doi.org/10.4060/ca8642en

OVERVIEW

Halting deforestation
PMI are committed to achieving a deforestation-free supply
chain for our tobacco and paper and pulp-based materials.
In early 2021, we reinforced this commitmentby issuing our revised Zero Deforestation
Manifesto (ZDM). The ZDM governs ourforestry management efforts and is designed
to move us toward becoming forest positive,
to protect and measure our impact on forests
linked to PMI’s supply chain. The manifesto
establishes the importance of covering bothnatural forests (primary and protected forest
areas) and natural managed forests (naturally
occurring production forests) in our frameworkof action and specifies criteria for on-theground interventions needed for us to meetour 2025 and 2030 targets.

67

Managing water responsibly
From tobacco cultivation to manufacturing,
our products require water. Our agricultural
supply chain accounts for around half of ourwater footprint. The second-largest share of
our water use (around 40 percent) derives
from other sectors of our supply chain—in particular, the processes by which thefilters, paper, and packaging materials wesource are manufactured.
Water is a renewable, yet finite resourceshared by all. We can help combat water
scarcity and advance global health andfood security by responsibly managing
our impacts on water, especially in waterstressed regions.

Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACT

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Operational Impact Global KPI – Climate and nature
O U R A S P I R AT I O N S

2023

SI

Sustainability Index

Zero

O U R A S P I R AT I O N S

Zero

100%

Zero

>70%

2022

Zero

3.1

2025

Zero

Maintaincoal used as curing fuel forthe tobacco we source

2025

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

35%

reduction in absolute GHG
emissions in our tobacco supply
chain versus 2019 baseline

2030

50%

reduction in absolute scope
1+2 GHG emissions versus
2019 baseline (SBT)

2040

100%

of our manufacturing facilities
certified carbon neutral

25%

SI

100%

of electricity used and purchasedin our factories derived
from renewable sources

reduction in absolute scope
3 GHG emissions versus
2019 baseline (SBT)

50%

gross deforestation of primaryand protected forests associatedwith our tobacco supply chain

virtually zero production waste
to landfills

reduction in absolute
scope 3 GHG emissions
versus 2019 baseline

50%

SI

reduction in absolute GHG
emissions in our tobacco supply
chain versus 2019 baseline

virtually zero waste to landfill

SI

net deforestation of managed
natural forest and no conversionof natural ecosystems in
our tobacco supply chain

100%

Net zeroof our tobacco-growing
areas covered by local
water risk assessments(cumulative since 2018)

GHG emissions in our value
chain (scope 1+2+3)

2030

10

Sustainability Indexof tobacco purchased without detection of residues
attributable to the use of highly hazardous pesticidesof flue-cured tobacco purchased cured with renewable
fuel sources (self-sufficient firewood or biomass)water ratio in our manufacturing facilities (water withdrawn
in cubic meters per million cigarettes equivalent)

Net positive
impact on forests associatedwith our tobacco supply chain

Zerogross deforestation of primaryand protected forest associatedwith our supply of paper
and pulp-based materials

100%of our manufacturing facilities
certified to the Alliance for Water
Stewardship (AWS) standard

At least 10 million cubic meters of water optimized in
our tobacco-growing areas (cumulative since 2019)Zeronet deforestation of managed natural forest
and no conversion of natural ecosystems in thepaper and pulp-based products supply chain

Water and biodiversity: During 2022 we will develop and introduce new KPIs and related aspirations for these two topics.

68

Philip Morris Nordics Sustainability Report 2021

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Operational Impact Global KPI – Climate and nature
S U S TA I N A B I L I T Y I N D E X – O P E R AT I O N A L S U S TA I N A B I L I T Y

Operational Impact PMI Nordics KPI – Climate and nature
ACTUAL2019

ACTUAL
2020

TARGET
2021

ACTUAL
2021

TARGET
2022

TARGET
2025

Total level of Climate Compensation for all PMI Nordic employee work related flight

n/a

0%

100%

0%

100%

100%

Nordic CO2e (metric tons GHG), offices

n/a

n/a

n/a

32.6

n/a

n/a

Nordic CO2e (metric tons), emissions from fleet

n/a

n/a

406

804.7

n/a

n/a

Nordic CO2e emissions from vehicles (g CO2e per km)

n/a

n/a

163

704.23n/an/a

OPERATIONAL SUSTAINABILITY –climate and nature

69

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

PRODUCT
IMPACTOPERATIONALIMPACT

Prevent and fight illicit trade
The price of illicit trade
The links between illicit trade and organised crime
are well established, all the way to arms trade,human trafficking networks and terrorist financing.
Through smuggling, counterfeiting, and tax
evasion, governments lose tax revenues, legitimate
businesses are damaged, and consumers are exposed
to cheap, poorly made, and unregulated products.
This also undermines health efforts to reducesmoking prevalence and prevent youth initiation.
Illicit trade is a global issue and a serious, growing
threat that breeds violence and corruption, threatens
human rights, and damages the environment. It also
seriously undercuts legitimate efforts to reduce andeventually eliminate cigarette smoking.

Securing our global supply chain
Raising awareness of the illicit trade and sharing
information on how to address it is an important step
forward. PMI addresses illicit trade by maintaining
the integrity of our supply chain and cooperatingwith customs and law enforcement agencies tosafeguard the legitimate supply and purchase of ourgoods, and to prevent and reduce the illicit trade ofour products.

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Philip Morris Nordics Sustainability Report 2021

We invest in preventive and protective measures,
including due diligence of importers, distributors
and wholesalers, and comprehensive, digital trackand-trace solutions for our tobacco and smoke-free
products across our entire supply chain.
The transfer of expertise and experience is at
the core of fighting illicit trade. We work in close
collaboration with authorities using our experience,
network, and technology to provide support,
recognise counterfeit products, and assist customs
officers in analysing seizures.
PMI works with local customs and law enforcement
to prevent illicit trade. Customs officers are trainedin identifying our products and find out their origin,market, and possible connection to other incidents
all over the world.
The KPMG report and the annual Empty Pack
Surveys provide valuable information that is sharedwith local law enforcement. We also inform customs
on new smoke-free products and how to identify
them.
Fighting illicit trade:
Essential for delivering a smoke-free future
pmi.com/illicit-trade-prevention

ILLICIT CIGARETTE CONSUMPTION
IN THE EU, UK, NORWAY AND
SWITZERLAND (2021)
This report is an annual study that estimates
the scale and development of the illicit
cigarette market in the 30 European countries.
It is commissioned by Philip Morris andprepared by KPMG, and it covers all 27
member states as well as United Kingdom,
Norway and Switzerland.

OVERVIEW

Empty Pack Survey

Tracking and tracing

Since 2009, discarded empty cigarette
packs have been collected from city streets
all over Europe once a year to map out theshare of domestic (duty paid), non-domestic,
and counterfeit products in each market.
The Empty Pack Survey is funded by British
American Tobacco, Imperial Tobacco, Japan
Tobacco Int, and PMI. In the Nordics, it isconducted by independent agencies.

In line with the EU Tobacco Product Directive,
individual cigarette packs in the EU are now
identifiable by a unique identification code
and a tamper-proof security feature, giving law
enforcement authorities the possibility to trace
packs by place and date of production, throughall distribution layers and points of sale.

Source: KPMG, Illicit cigarette consumption in
the EU, UK, Norway and Switzerland (2021)

OPERATIONALIMPACT

In 2024, the same directive will also apply tosnus and nicotine bags. Preparations for this isunderway.
Source: European Commission [ec.europa.eu/
health/tobacco/products_en]

Counterfeit are cigarettes that are illegally
manufactured and sold by a party otherthan the original trademark owner.
Contraband (includes Illicit whites) are
genuine products that have been eitherbought in a low-tax country and which
exceed legal border limits or acquired
without taxes for export purposes, to beillegally re-sold (for financial profit) in ahigher priced market.
Illicit whites are cigarettes that are usually
manufactured legally in one market but
have been smuggled across borders to amarket where they have limited or no legal
distribution.

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IMPACT

Philip Morris Nordics Sustainability Report 2021

ESTIMATE OF TOTAL CIGARETTE CONSUMPTION
IN THE EU27 (BN CIGARETTES)
The chart shows the approach of KPMG’s reports to estimating
the size and scale of illicit cigarette consumption, known as
Counterfeit & Contraband (C&C), including Illicit Whites.
Using empty pack surveys, from market research agencies
commissioned by tobacco manufacturers, and Legal Domestic
Sales (LDS), provided by manufacturers and third-party market
research agencies, this approach allows us to split total cigarette
consumption into its constituent parts. Legal Domestic Sales,available in every country, underpin the initial volume estimate,while empty pack surveys enable the estimate of additional ‘non‐domestic’ component of consumption.
Source: KPMG, Illicit cigarette consumption in the EU, UK,
Norway and Switzerland (2021)

OVERVIEW

PRODUCT
IMPACT

A European and Nordic challenge
The illicit cigarette trade has been a challenge for many years, and it
is growing. In the EU, an estimated 10.4 billion euros in tax revenue
is lost every year due to illicit cigarettes. In the Nordic countries thetax revenue lost is 529 million euros.1
While total cigarette consumption continues
to decline, the share of illicit cigarettes in
Europe increased by 0.3 percentage points to
8.1 percent in 2021. The increase was largely
driven by a significant rise in counterfeit
consumption in France.
In Denmark and Finland, the proportion ofillicit cigarettes to total consumption has
increased to 6.5 percent and 13.6 percent
respectively, the highest levels since thereports from KPMG started in 2017. The
proportion of illicit cigarettes in Norway is
12.8 percent, higher than 2020 but lower
than before. In Sweden the proportion has
decreases to 7.3 percent.

illegal factories within the EU. This is noted ininterviews with law enforcement and analysed
by KPMG and is further supported by theincreasing number of illegal cigarette factory
raids in multiple European countries. The
move has been noted to increase during the
COVID-19 pandemic, due to continued traveland border restrictions.
In March 2021, we saw an illegal factorydismantled in the municipality of Vamdrup in
Denmark. This was the first case of an illegal
factory being dismantled in the country.
Thirteen individuals were arrested, and 11
million cigarettes seized alongside 11 tonnesof raw tobacco and a full production line.

Organised crime groups (OCG) continue tomove their operations inside the EU borders,
as a large portion of counterfeit and illicit whitecigarettes are believed to be manufactured in
1)

KPMG, Illicit cigarette consumption in the EU, UK, Norway and Switzerland (2021)

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Philip Morris Nordics Sustainability Report 2021

Europol: Seizure of €14 million worth ofcontraband cigarette leads to 13 arrestswww.europol.europa.eu
Disclaimer: These are raids that we have been made awareof either through notifications from law enforcement or
through the media.

OPERATIONALIMPACT

PRODUCTIMPACTOVERVIEWOPERATIONALIMPACT

Operational Impact PMI Nordics KPI – Illicit trade
FUNDAMENTALS –Illicit trade

ACTUAL2019

ACTUAL
2020

TARGET
2021

ACTUAL
2021

TARGET
2022

TARGET
2025

Memoranda of Understanding with law enforcement agencies/governments
in a given year number of countries

3 of 5

4 of 5

4 of 52 of 53 of 5

4 of 5

Number of laws enforcement officers/officials met to exchange informationand collaboration (year by year)

18

20

25

25

25

30

Coverage for tracking and tracing – master case level (in %) (All markets)

100%**

100%

100%

100%

100%

100%

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

100%

100%

100%

100%

100%

100%

Country studies and analysis to improve awareness of illicit trade – number of Nordic countries

4 of 5

4 of 5

4 of 5

4 of 5

4 of 5

4 of 573

Philip Morris Nordics Sustainability Report 2021

OVERVIEW

Significant progress towards
a smoke-free Nordics
In 2021, we’ve seen a major overhaul ofstrategy based on close dialogue with our key
stakeholders. The goals of our road map areclosely tied to our strategies and measured by
select KPIs in a sustainability index. And all of
this is interwoven with our long-term business
transformation. We are ramping up to reachour ambitions for 2025.
Everything we do in our Nordic markets add
to our global impact. And I am proud to saythat in many areas we are punching above ourweight.
This year we have made significant progress
towards a smoke-free Nordics, having smokefree alternatives available in Denmark, Sweden,
Norway, and Finland. We have dived into
how we can strengthen our anti-littering
efforts and learned that nudging done right, in
conjunction with awareness raising and proper
infrastructure (fixed and portable ashtrays)
carries significant effect.

We also have returned to the arenas ofpolicymakers and other stakeholders, whensociety yet again have opened after the
pandemic, to speak about where we aregoing and what we are trying to achieve.
Government, business, academia, the public
sector, and you – we all need to share
great ideas and best practices, demanding
responsibility and taking responsibility.
Now we invite you to get involved and help
us to do make an even greater impact. Do
you think we are prioritizing right in oursustainability efforts? Are we measuring thebest parameters?
Use my address below to keep in touch. Let’scontinue this conversation. I look forward tohearing from you.

Pia Prestmo
Issue Lead Sustainability Nordics
pia.prestmo@pmi.com
Pia Prestmo

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Philip Morris Nordics Sustainability Report 2021

PRODUCT
IMPACTOPERATIONALIMPACT

PMI Nordics Sustainability Report 2021

Nordic Headquarters

Sustainability contact

Philip Morris AB
Karlavägen 108
104 51 Stockholm, Sweden

Pia Prestmo
Issue Lead Sustainability Nordics
Oslo, Norway

pmi.com/se

pia.prestmo@pmi.com