TOWARDS A NET POSITIVE
IMPACT ON NATURE
PMI’S AMBITION ON
BIODIVERSITY AND WATERDECEMBER 2022

Aspirations set in 2022 to guide our long term workon biodiversity protection and on water stewardship©2022 Philip Morris International, Inc. All rights reserved

Philip Morris International: Preserve nature

Protecting biodiversity is critical to maintaining the quality and resilience of ecosystems on which both business andsociety rely. On the heels of the 2022 United Nations Biological Diversity Conference (COP15), we are especially
mindful that when it comes to preserving ecosystems, developing nature-based solutions, and building natural capital,
there’s a real need to create strong and collaborative connections between different stakeholders, including private
sector, science and policy in order to achieve nature-positive solutions.
COP15 will see the adoption of the post-2020 Global Biodiversity Framework. The framework will provide a strategic
vision and a global roadmap for the conservation, protection, restoration and sustainable management of biodiversity
and ecosystems for the next decade. The lead-up to COP15 and related meetings has provided us, as well as thebroader global community, with opportunities to strengthen our efforts and to continue our work to achieve the Aichi
Biodiversity Targets.
Our company currently manages those environmental impacts derived from its business operations through two main
strategies: Tackling Climate Change and Preserving Nature. We believe that to effectively tackle climate change, ourcarbon reduction targets need to go hand in hand with nature-related goals. Accordingly, and seeking to align with
COP15 discussions and outcomes, this report introduces new ambitions related to water and biodiversity connected
to our strategy to preserve nature.
For our objective of preserving biodiversity, we are aiming to protect nature by achieving no net loss on ecosystems
connected to PMI’s value chain by 2033 and contribute towards a net positive impact on nature by 2050. We arealso introducing a new ambition to scale solutions towards a positive impact on water resources, measured as volume
of water optimized, by 2033, and to contribute to a positive impact on water resources by 2050. These ambitions
have been intentionally structured around a 10-year span, from 2023 to 2033, to align with COP15 discussions andoutcomes, as well as to maximize their impact. This dedicated report provides an overview of our new aspirations andthe strategies we have developed and will continue to deploy in order to make them a reality.
Nature loss poses both risks and opportunities for business, now and in the future. We believe that having the rightkind of data to understand how nature impacts our company’s immediate financial performance—or the longerterm financial risks that may arise from how our company (positively or negatively) impacts nature—is paramount.
Accordingly, we are vocal about our support of progress being made by the Taskforce on Nature-related Financial
Disclosures (TNFD), are members of the TNFD Forum, and are committed to supporting the progress of TNFD withrevision of draft documents and participation in pilot activities to test the beta releases of the standard.
As we continue to transform for good, learn, and discover better ways to develop solutions that have meaningful
impact, our company will continue to work toward minimizing negative externalities and to move longer-term in a
direction that seeks net positive impact on society—which includes the responsible and sustainable management ofour planet’s natural resources. We hope our transparency and willingness to engage will spark dialogue with those who
can help accelerate the pace of change. I invite you to reach out and share your feedback, to question, to challenge,
and above all, to engage with us as we remain dedicated to making our company better, focused on sustainability, andcommitted to our purpose.

Jennifer Motles
Chief Sustainability Officer, PMI

2

Philip Morris International: Preserve nature | Anchoring sustainability at the core of strategy

Anchoring sustainability at
the core of strategy
Embedding sustainability in all we do
For PMI, sustainability is more than just a means to minimize negative externalities and mitigate
risks while maximizing operational efficiency and resource optimization. We see it as a fundamental
opportunity for innovation, growth, and purpose-led, impact-driven, long-term value creation.

Purpose, Value& Impact

Technology,
Innovation &GrowthOperational& Resource
Efficiency

Mitigating
Risk &
Compliance Read more about PMI’s sustainability efforts

3

Philip Morris International: Preserve nature | Sustainability materiality assessment

Sustainability materiality assessment

HIGH

A robust sustainability materiality analysis allows us to identify, assess, and prioritize ESG
topics on which we should focus. In line with the principle of double materiality, it consists ofa fivefold approach.

Product health impact

Sales, marketing, andconsumer communications

ClimateBusiness integrity
Signiﬁcance of ESG impacts on PMI

Innovation in wellness
and healthcare
Laws andregulations
Human capital development
Engagement with policymakers

Diversity and inclusion

Economic contribution

Water

Materials and product eco-design
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

Signiﬁcance of PMI’s impacts on society

HIGH

Key

Relevance to our stakeholders

Learn more about our sustainability materiality assessment andhow we identify our ESG priorities
Read PMI’s Sustainability Materiality Report
Note: In this report and in related communications, the terms “materiality,” “material” and similar terms, when used in the context of economic, environmental, and social topics,
are defined in the referenced sustainability standards and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by
the U.S. Securities and Exchange Commission.

4

Philip Morris International: Preserve nature | ESG framework

ESG framework

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

I M PAC T

PRODUCT

Our ESG framework showcases these priority ESG topics. This framework recognizes two distinct
forms of issues: those that relate to our products (what we produce) and those related to ourbusiness operations (how we produce).

E

S

G

ENVIRONMENTAL

SOCIAL

GOVERNANCE

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

Responsible R&D–
Product reliability–
Nicotine science

Materials andproduct eco-design–
Post-consumer
waste

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

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

Stakeholder engagement–
Data privacy–
Fair fiscal practices

5Philip Morris International: Preserve nature | Our sustainability strategy

Our sustainability strategy• Impact-driven approach to sustainability• Separate identification of environmental and social impacts• Distinct forms of social and environmental impacts• PRODUCT IMPACT: those impacts generated by our products (what we produce)•O PERATIONAL IMPACT: those impacts generated by our business operations (howwe produce)• 8 impact-driven strategies: 4 on product impacts + 4 on operational impacts

na

tu

re

• 9 governance-related topics define our ability to successfully address environmental and social issues

P

s
re

er

ve

6

Philip Morris International: Preserve nature | 2025 Roadmap

2025 Roadmap
11 headline goals connected to 8 strategies. Our roadmap outlines our key commitments andinforms the route of our long-term plan.

I M PAC T

PRODUCT

Purposefully
phase out
cigarettes

1

Intentionally work toward phasing out cigarettes by Product health impact
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

Maximize thebeneﬁts ofsmoke-free
products

2

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

3

Deploy robust youth access prevention programs inindirect retail channels and ensure that salesof our products abide by our Marketing Codes

Seek net
positive impact inwellness andhealthcare

4

Leverage scientiﬁc and development capabilities togenerate at least USD 1 billion in annual net
revenues from products in wellness and healthcare

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

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

6

Foster anempoweredand inclusive
workplace7

Improve thequality of lifeof people in our
supply chain

8

Tackle climatechange10

Preserve
nature11

9Progress
in 2021

Priority ESG topics
and primary SDGs

Goals

Product health impact;
Sales, marketing,and consumer communications

Follow eco-design and circularity principles for all
smoke-free electronic devices

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

Diversity and inclusion;
Human capital development

Eradicate systemic child labor in our tobacco
supply chain

Socioeconomic well-being of
tobacco-farming communities

Ensure all contracted tobacco farmers make a living
income, and partner with our direct suppliers topromote a living wage for their workers
Achieve carbon neutrality in our operations andaccelerate our decarbonization toward net zeroacross our value chain

ClimatePromote 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

7

Philip Morris International: Preserve nature | Our Sustainability Index

Our Sustainability Index
Progress on our Roadmap measured by a set of key performance indicators that collectively form
our Sustainability Index, which links executive compensation and ESG performance.

IMPAC TPRODUCT

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 smokefree 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%

21.7

5

Total number of users of PMI’s smokefree products (in millions)1
Proportion of shipment volume covered bymarkets with youth access prevention programsin place in indirect retail channels.

91%

>90%

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

0.1

≥1

7

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

n/a

≥80%

8

9 pilots

≥80%

n/a

100%

62

1,000

6

9

Proportion of shipment volume covered bymarkets with end-of-life take-back programsin place for smoke-free consumables

Proportion of PMI smoke-free devices
10 with eco-design certiﬁcation
11

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

IMPAC T

Contribution
to total
index score

85%

15%

Product Sustainability

O P E R AT I O N A L

KPI
weight

100%

31.1%

35%

n/a

70%

5

10

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 labor 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 risk of
deforestation of managed natural forest andno conversion of natural ecosystems

37%

67%

50%

50%

Operational Sustainability
SUSTAINABILITY INDEX

100%

100%

33%
100%

1 During 2022, we intend to develop a new 2025 aspiration related to the total number of users of PMI smoke-free products. See page 45.

Read more about the mechanics of the Sustainability Index and the definitions and methods
underlying its constituent KPIs in PMI’s ESG KPI Protocol.
8Philip Morris International: Preserve nature

Preserve nature
The right thing to do

The business case

We collectively depend on soil, land,
forests, and water, which provide resources
and services critical to human existence.
Moreover, a healthy natural ecosystem
plays a vital role in tackling climate change,
with land and oceans absorbing and storingcarbon from the atmosphere. Yet biologicalrichness and natural resources are being
lost at an alarming rate. Global scientificstudies indicate that 1 million plant andanimal species face extinction, thousandsof species are already extinct, and several
million hectares of natural forest are losteach year despite international efforts tocounter the trend. The unsustainable useof natural resources can lead to soil 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 impactsof changes in climate, biodiversity, andecosystem function. Protecting forests andregenerating ecosystems can help preventthe worst impacts of extreme climate eventsand improve livelihoods.

Our business activities rely on healthy
ecosystems. The degradation and lossof natural capital can cause disruptions
and increase production costs. The raw
materials used in our products rely on
fertile soil, stable climate conditions,and access to water. In our agricultural
supply chain especially, even smallchanges in the balance of ecosystems
can lower crop productivity, increase
production costs linked to remediation
and adaptation measures, andnegatively impact farmers’ livelihoods.
Promoting the efficient use of natural
resources and taking steps to protect,preserve, and improve them help
manage risks and prepare us to meet
regulatory frameworks that may emerge
in response to increased awareness of
our limited environmental resources,
ecosystem degradation, and biodiversity
loss. Further, we understand that
we all have a role to play to halt thedestruction of natural habitats and willplay our part in helping address thisglobal issue.
9Philip Morris International: Preserve nature | Preserving natural ecosystems

Preserving natural ecosystems
We are committed to the responsible
and sustainable management of natural
resources. We understand that forestry
management, biodiversity protection,water stewardship, and waste reduction
are deeply intertwined. Moreover, robust
ecosystems capture and store carbon fromthe atmosphere, thus playing a key role—
alongside efforts to reduce GHG emissions
from man-made activities—in combatingclimate change. We seek to account for
those synergies and consider our impacts
holistically when designing and deploying
our nature-related strategies and programs.
We have set targets and initiatives tied
to various aspects of natural capital, witha particular focus on the highest-risk
segments of our value chain. Our ambitions
for biodiversity and water strengthen
PMI’s actions to address the environmental
impacts of its business operations andreflect the company’s priorities, as definedby its sustainability materiality analysis.
Protecting biodiversity
We strive to reduce the negative impactsof our operations and sourcing activities on
habitats and ecosystems while looking forways to contribute to the diversity of plant
and animal life.
We believe companies have a critical roleto play in tackling biodiversity loss bypromoting conservation in partnership withboth international organizations driving
for global ambitions and local stakeholders
who understand their surroundings andexperience effects on the ground. We
participate in international forums suchas CSR Europe’s Biodiversity & Industry
Platform, WBCSD’s working groups on

nature and forests, and Business for Nature,
and we leverage the work of the Science
Based Targets Network (SBTN). As of2021, we also participate in the member
forum of the TNFD, providing support
and contributing to collective action. We
call on governments to adopt a common
and ambitious framework during the 15th
meeting of the Conference of the Parties(COP15) to the Convention on Biological
Diversity (CBD) to set the stage forworldwide action on biodiversity.
We understand that building a meaningful
global approach to biodiversity requires
the conscious cross-pollination of various
strategies and interventions. The combined
effects of nature degradation, climatechange, water scarcity, and forest loss—
among other factors—are creating a
biodiversity crisis. To respond appropriately
to this crisis, we must account for thesynergies and interdependencies ofenvironmental impacts along our value
chain and put biodiversity protection at
the nexus of our climate, forest, and water
strategies. Over the past couple of years,
we have focused on gaining visibility into
and an understanding of our impacts on
biodiversity. We have started to accountfor biodiversity impacts related to ourbusiness, in 2019 testing the Mean Species
Abundance (MSA) metric on selectedbusiness areas. We participated in CSR
Europe’s 2020 evaluation of the maturity of
biodiversity practices.
In 2021, we partnered with the Biodiversity
Consultancy to identify the main impacts
related to our tobacco supply chain. Our
aim was to align strategy developmentwith the SBTN approach to set interim
targets that have measurable, actionable,
time-bound objectives that will be revised
10Philip Morris International: Preserve nature | Preserving natural ecosystems

once the global goals for nature have beenformally set by the Global Biodiversity
Framework. Our work, combined with an
in-depth assessment in 2022, supported theidentification of the following priority areas
along our value chain:• In our tobacco supply chain, our focus
should be on the tobacco cultivation
process, including the curing stage forflue-cured tobacco, which carries risks
related to degradation of the naturalenvironment linked to loss of ecosystemarea, chemical pollution, and invasive
species.
• In our non-tobacco supply chain, emphasis
needs to be put on the deforestation risks
linked to the sourcing of paper andpulp-based materials.
• In our direct operations, attention shouldbe paid to the proximity of our sites toprotected and key biodiversity areas andthe implementation of good environmental
practices at manufacturing sites.
• Downstream in our value chain, we should
concentrate on preventing the litteringof our product consumables.

water used for manufacturing, sanitation,and other processes.
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.
Mindful that a significant portion of ourwater footprint comes from our agricultural
supply chain, we conduct an annual global
water risk assessment complemented by
local water risks assessments to evaluate
and understand water risk, helping us
make informed decisions and effectively
manage water resources. Our efforts
focus on optimizing water through farmand landscape-level interventions and on
protecting water quality.
We also have a long-standing approachto driving water stewardship in our direct
operations, including our manufacturing
sites, guided by periodic risk assessments.
In particular, we are focused on improving
water efficiency and protecting the qualityof the water returned to the environment
from our factories.

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 shareof our water use (around 40%) derives
from other sectors of our supply chain—inparticular, the processes by which the filters,
paper, and packaging materials we source
are manufactured. Our direct operations are
not particularly water intensive, representing
around 5% of our water footprint, with fresh
11

Philip Morris International: Preserve nature | Preserving natural ecosystems

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

SI

Zero

100%

Zero

>70%

2022

Zero

3.1

2025

Zero

Maintaingross deforestation of primaryand protected forests associatedwith our tobacco supply chain

virtually zero production waste
to landfills

virtually zero waste to landfill

SI

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

water ratio in our manufacturing facilities (water withdrawn
in cubic meters per million cigarettes equivalent)

Net positive
impact on forests
associated with ourtobacco supply chain

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

10

Zero

No net loss*

Towards positive impact**

Net positive*

Positive impact**

Protect nature by achieving no net
loss on ecosystems connected to
PMI’s value chain by 2033

2050

of flue-cured tobacco purchased cured with renewable
fuel sources (self-sufficient firewood or biomass)100%

At least 10 million cubic meters ofwater optimized in our tobacco-growing
areas (cumulative since 2019)2033

of tobacco purchased without detection of residues
attributable to the use of highly hazardous pesticides

100%of our tobacco-growing areas coveredby local water risk assessments(cumulative since 2018)2030

Sustainability Index

Contribute towards a net positive
impact on nature by 2050

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

net deforestation of managed natural forest
and no conversion of natural ecosystems in thepaper and pulp-based products supply chain

Scale solutions towards a positive impact on water resources,
measured as volume of water optimized and restored,by 2033

Contribute towards a positive impact
on water resources by 2050

*Aspirations set in 2022 to guide our long-term work on biodiversity protection**Aspirations set in 2022 to guide our long-term work on water stewardship12Philip Morris International: Preserving nature

PMI’S AMBITION ON
BIODIVERSITY

13

Philip Morris International: Preserve nature | PMI’s ambition on biodiversity

PMI’s ambition on biodiversity
Our ambition to contribute towards a net positive impact on nature will be reflected in our
behaviors, actions, and how we engage with stakeholders in our value chain. Pressures onnature cannot be tackled individually. Only a holistic approach building on interlinks between
programs and activities lead to achieving targets to reduce the impact of pressures on nature.
PMI’s has already delivered reduction on drivers of nature loss with its biodiversity strategy,
related programs, and the new activities we foresee to enhance our contribution to mitigate
impact and support natural ecosystems and their services by 2033.
PMI’s zero deforestation and no natural ecosystem conversion program operated to protect
natural habitats, particularly to biodiversity sites of global importance and protected areas. In
its supply chain, PMI:
• Has already achieved zero gross deforestation on primary and protected forests in 2020 		
(ecosystem use change pressure) for tobacco.
• Is on track to the zero net deforestation on natural managed forests target that prescribes
sustainable management of resources to our suppliers.
• Is implementing zero gross and net deforestation targets for paper and pulp-based 		
materials respectively in 2025 and 2030.
A dedicated monitoring verification and reporting (MVR) program with results validated
through external assurance is the backbone of robust progresses against targets. Energy
sources are a key topic in our work towards the decarbonization of PMI supply chain as wellas in our manufacturing sites. PMI promotes the switch from fossil to low carbon renewable
alternatives including biomass. We define criteria for sustainable biomass in alignment withthe most robust forestry standards and in synergy with our zero deforestation manifesto.
PMI’s overall ambition on biodiversity is to contribute in the longer-term with its programs andactions towards a longer term net positive impact in line with the Global Biodiversity Framework.
We aim to work across our value chain to protect ecosystems connected to it and achieve
no net loss by 2033, implement meaningful actions against identified relevant pressures onnature and contribute towards a nature positive impact by 2050.
To achieve its ambition, PMI is already working to avoid and reduce impacts to biodiversity inthe following areas:• Sustainable management of working lands with a focus on regenerative practices.
• Restoring affected biodiversity in ecosystems connected to PMI’s value chain.
• Promoting transformative actions beyond our industry sector applying landscape approaches.
PMI recognizes the importance of taking early actions to start bending the curve of
biodiversity loss and will set area targets for its most significant existing biodiversity footprint
in line with the Global Biodiversity Framework and Science-Based Targets Network.
14

Philip Morris International: Preserve nature | PMI’s ambition on biodiversity

At PMI, we are committed to doing our part to achieve the UN SDG agenda, and our approach tobiodiversity is aligned with the following goals:

Key business themes addressed by PMI’s ambition relative to SDG
15 (source SDG Compass)
1

2

3

4

DEFORESTATION
AND FOREST
DEGRADATIONLANDSCAPESFOREST
MANAGEMENT
AND FIBER
SOURCING

NATURAL
HABIT
DEGRADATIONTERRESTRIAL
AND INLANDFRESHWATERECOSYSTEMS

15

Philip Morris International: Preserve nature | PMI’s ambition on biodiversity

Our approach
To define our approach to biodiversity, we aligned with the Initial Guidance for Business fromthe Science Based Targets for Nature (SBTN) by the Science Based Targets Network.
Science Based Targets’ Framework
1.
Assess2.
Interpret &prioritize

Conduct materiality
assessment

Identify spheresof influence

Map the value
chain

Prioritize places

3.
Measure,set &disclose

4.
Act

5.
Track

Measure baseline

Avoid

MonitorDevelop monitoring
plan

ReduceReportRestore & regenerate

VerifySet targets

Transform

Disclose baseline& targets

Visual taken and edited from the Science Based Targets for Nature: Initial Guidance for Businesess

1. Assess
Our most recent company-wide sustainability materiality assessment, conducted in 2021,
highlights the importance of addressing biodiversity. In 2022, we applied the SBTN approachto define, within biodiversity as an overarching topic, the materiality level of the different
themes it encompasses. We applied the mitigation hierarchy lens, data availability, andexpert guidance to come to first outcomes on assessing our impacts. We included paper andpulp-based materials considering their interlinks with natural ecosystems and their protection.

2. Interpret & prioritize
In 2022, PMI completed two analyses to better understand its footprint and define key action areas:
1. Biodiversity extent, condition and significance (BECS) land-based assessment.
2. Global biodiversity score (GBS) resource use-based assessment.
OUTCOMES• Ecosystem use and use change in the supply 		
chain was identified as the greatest driverof potential biodiversity loss for land-based 		
impacts.
• Pollution and water use were identified as
the main pressures on natural resources for
non-land-based impacts. PMI currently uses
the Integrated Biodiversity Assessment Tool 		
(www.ibat-alliance.org) to determine priorities inaddressing impacts through spatial analysis.

Results of PMI biodiversity footprint

BECS

GBS

TobaccoPaper and pulp-based materials
PMI sites
PMI’s total land occupancy
footprint as per 2021 BECS
analysis is 3,471 MSA.km2

TobaccoPaper and pulp-based materials
PMI sites
PMI’s total footprint
as per GBS analysis
2021 is 405 MSA.km2

16

Philip Morris International: Preserve nature | PMI’s ambition on biodiversity

PRESSURES
Ecosystem use& use change

Water resources
exploitation

Climate change

Pollution of soil,
water, air

Spread ofinvasive species

Mean Species Abundance (MSA)
Uses coefficients of biodiversity loss to account interlinks and dependencies with intensity of associated pressures. For example, 1 MSA.km2 represents
an area of complete biodiversity loss. This metric is used to prioritize areas of action.
Biodiversity Extent, Condition, and Significance (BECS)
Estimate land occupancy footprint (in MSA) and biodiversity significance. Results highlight areas of high biodiversity significance and related footprint.
Global Biodiversity Score (GBS)
Estimates a quantitative footprint (in MSA) of non-land use biodiversity pressures. Results provide the magnitude of main biodiversity impacts and theirbiodiversity risk.

3. Measure, set, and disclose
In 2022, we identified the most relevant pressure categories, set interim area targets, andidentified enablers towards contributing to net positive impact on biodiversity. In 2023
we will continue this work by updating our Environmental Commitment to align it to our
biodiversity strategy development, develop internal guidelines, and set the final roadmap to2033. In 2023/24, we will align with relevant updates on international methodologies such as
Science Based Targets for Nature (SBTN) and showcase participating in working groups on
biodiversity. We plan to disclose our first full value chain report on dependencies and impacts
on biodiversity by 2025 and to address the identified pressures leveraging PMI’s current
programs and new activities, we aim to have specific projects to address all relevant pressures
for the business areas in scope by 2028.
2022

2023/2024

2025

2028

2033

NNL on ecosystem
maintained

2050

Projects to address all relevant pressures on biodiversity

Biodiversity
Footprint
Pressure
Categories
definedInterim areatargets set
for tobacco,
manufacturing,
paper & pulpbased materials
Enablers
identified forelectronics,
other rawmaterials andproduct use
and disposal
Biodiversity
strategylaunched

PMI
environmental
commitment
updatedInternal
guidelines for
implementation
createdCompileadditional
information
to complete
footprint
Revisit targets& strategy toalign with GBF &SBTN guidance
Final roadmap
set to 2033

Report on
impacts anddependencies
on biodiversity
for PMI’s valuechain

No net loss on
ecosystems
connected to
PMI’s value
chain

Contributetowards a net
positive impact
on nature
Milestones
Strategyalignment &revision

Biodiversity
area targets met
SBTN aremet

TargetDevelopmentof 2033–2050
biodiversity
ambition in linewith net positive
impact/nature
positive

17

Philip Morris International: Preserve nature | PMI’s ambition on biodiversity

2033 no net loss
The point at which business-related impacts on biodiversity are balanced by measures from the mitigation
hierarchy, to leave no degradation on natural ecosystems at end balance.

2050 net positive impact
Impacts on biodiversity are outweighed by actions taken to avoid and reduce such impacts, rehabilitate
affected ecosystems, and offset any residual impacts.

PRESSURES

AREA TARGETS

1. Ecosystem use & use change
2. Spread of invasive species
3. Climate change
4. Water recources exploitation
5. Pollution of soil, water, air

1. Zero deforestation and no ecosystem conversion
2. Species protection
3. Net zero
4. Water stewardship
5. Waste and littering reduction

4. Act: the theory of change
Our theory of change is based on counterbalancing the impact on biodiversity that PMI
activities can generate across the value chain. Each action embeds challenges and different
step-wise approaches to solve them. We are embracing SBTN guidance on the mitigation
hierarchy following the AR3T framework as a blueprint for action in engaging key stakeholders,
including our business partners and other stakeholder groups to promote landscape andjurisdictional approaches.
AR3T Framework
AVOID
Avoid new impacts compared to 2023 baseline with focus on no gross conversion of natural habitats.
REDUCE
Reduce and minimize existing unavoidable impacts through the application of sustainable and regenerative
practices and measure progress across the 5 highlighted pressures on nature.
RESTORE & REGENERATE
Restore affected biodiversity areas to balance degradation caused by ecosystem loss and validate outcomeson net gains.
TRANSFORM
Transform business models within and beyond sectors to include regenerative practices to foster long-termsustainability of ecosystem and resource use.

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Philip Morris International: Preserving nature

PMI’S AMBITION
ON WATERSTEWARDSHIP

19

Philip Morris International: Preserve nature | PMI’s ambition on water stewardship

PMI’s ambition on water stewardship
Water stewardship at PMI is key to the responsible and sustainable management of natural
resources. PMI’s ambition is to preserve water resources and respect the natural cycle ofwater while also providing benefits to biodiversity, climate change, and social impact. Water
stewardship means reducing water use through efficiency measures, promoting water recycling,protecting watersheds, preventing water pollution, enhancing recharge, and promoting
sustainable water management in collaboration with stakeholders. Caring for water and people’s
well-being also extends to preserving water quality and promoting safe access to water,
sanitation, and hygiene services (WASH). PMI water stewardship aims to build resilience inwatersheds, from tobacco and our raw materials supply chain to our own operations; results canbe achieved only through understanding water-related risks and addressing them, engaging withstakeholders for scaling solutions to impact and through the use of a science-based approach
supported by robust methodologies and implementation tools. Our ambition and strategy
actions are reflected in our aim to be an active stakeholder in the watershed where we operate
directly or through business partners to:
Scale solutions towards a positive impact on water resources, measured as volume
of water optimized and restored, by 2033
Contribute towards a positive impact on water resources by 2050
At PMI, we are committed to doing our part to achieve the UN SDG agenda and ourapproach to water stewardship is aligned with the following goals:

Key business themes addressed by PMI’s ambition relative to SDG
6 (source SDG Compass)
1

2

3

4

5

SUSTAINABLE
WATER
WITHDRAWALS

IMPROVEDWATERQUALITY
THROUGH
EFFLUENT
TREATMENTIMPROVEDWATEREFFICIENCYEQUAL,
AFFORDABLE,
AND SAFE,
WASH FOREMPLOYEES ANDCOMMUNITIESPROTECTION
OF WATERRELATEDECOSYSTEMSAND
BIODIVERSITY
20

Philip Morris International: Preserve nature | PMI’s ambition on water stewardship

OUR APPROACHWATER
FOOTPRINT& RISKASSESSMENTPURPOSEALIGNMENTSTAKEHOLDEREXPECTATIONSWATERSTRATEGYBEST
PRACTICESLEADER’S
BENCHMARKPMI assesses risks and impacts to prioritize opportunities while closing information gaps.
This builds awareness, both internally and with key watershed stakeholders, on where PMI
can make a difference to create shared value for the business, its suppliers, and society
more broadly. For our tobacco supply chain, we assess risk through both global [leveraging
tools like the WRI’s Water Risk Atlas Aqueduct | World Resources Institute (wri.org)] andlocal water risk assessments. Local risk assessments are performed on the ground engaging
key stakeholders and contextualizing the response to local water conditions using a PMI
tailor-made methodology. Tobacco growing areas (TGAs) and water stewardship projects
are prioritized based on resulting risk indices, including irrigation water dependency andoutcomes from the Integrated Biodiversity Assessment Tool (www.ibat-alliance.org). For
direct operations, PMI adopts a similar approach to monitor risks and prioritize actions for
its manufacturing sites. Factory water withdrawals and consumption, exposure to water
risks, and product type-specific attributes are assessed on a regular basis to allow betterinteractions with watershed stakeholders. Aligned with PMI’s continuous improvement
approach, we are extending the application of risk assessment tools to direct materials
beyond our tobacco supply chain to detail our risk map over additional watersheds.

21

Philip Morris International: Preserve nature | PMI’s ambition on water stewardship

FROM AMBITIONS TO TARGETS
In 2022, with the assistance of Bluerisk (blueriskintel.com) and Valuing Impact (Home | valuingnature),
our technical partners on water, PMI held a series of workshops with subject matter experts across
key company functions to co-create the ambition and targets for our water stewardship strategy.
Guided by our long-term net positive vision, our ambition was set on contributing to a positive
impact on water resources by 2050 in alignment with our biodiversity strategy.
PMI already has goals in place to optimize water resources with a target of a cumulative 10
million cubic meters by 2030, addressing shared water challenges in its tobacco supply chain.
In our tobacco supply chain we will:• Further focus on restoring water resources in areas that have identified water-related 		risks such as baseline water stress or seasonal variability.
• Strengthen the good agricultural practices already in place by promoting regenerative 		
agriculture and measuring the impact of it.
• Continue to collect water withdrawal and irrigation data annually.
• Continue to improve our tools to better understand volumes that need to be restored toachieve our targets and contribute to net positive impacts.
In 2033, we aim to continue to optimize irrigation and restore volumes to address
water consumption at farm level and risks at watershed level.
In our manufacturing operations, we will renew the focus on water by driving efficiency
in water consumption at the factory level and further working on water discharge toprotect water habitats. Reach 100% of our factories* with AWS (Alliance for Water
Stewardship) certification by 2025, building on the value added by the certification with astrong stakeholder engagement.
For our priority factories, we will:• Promote water circularity, increasing plant water use efficiency and maximizing beneficial
use of water discharged.
• Balance remaining water consumption through restoration activities.
By 2033 we aim to achieve water circularity with a mix of efficiency improvements andrestoration activities for priority factories.
For our non-tobacco materials such as electronics, paper and pulp-based and agricultural
products, PMI will work collaboratively with suppliers and key stakeholders to drive water
wcircularity and resilience starting from priority areas in its supply chain. This entails, as
the first step, expanding our water risk assessment process to cover the most relevant
categories of materials.
* Prioritization based on production volume, type of product, water consumption, and internal capacity
22Philip Morris International: Preserve nature | PMI’s ambition on water stewardship

2022

2023/2024

2025

2028

2033

Optimized volumes
maintained

2050

Projects to address targets on water in place

PMI strategy
co-createdthroughparticipatory
approachof relevantbusiness area
owners andSMEs

PMI water
stewardshippubliccommitment
updated

PMI ambitions
defined andcommunicatedRisks related to
procurement
categories
and suppliers
assessed

Interim targets
set for tobacco
manufacturing,
non-tobacco
materials
PMI water
stewardshipstrategylaunched

Guidelines for
implementationsocialized

Revisit targets& strategy toalign with SBTN
guidance
Final roadmap
set to 2033

100% Local Risk
Assessment
completed for
Tobacco TGAs
100% or our
manufacturing
facilities*
certified withAWS standard

Scalesolutions
towards a
positive impact
on waterresources

Development2033-2050
water ambition
program inline with net
positive impact/
nature positive
approachContributeto a positive
impact on water
resources

Milestones

Global risk
assessment
completed for
non-tobacco
materials criticalrisk categories

Circularity
inmanufacturing

Non-tobacco
materials
priority
categories
and suppliers
engagedOptimization
volumes for
tobacco &manufacturing

Strategyalignment &revisionTargetTarget set for
Non-tobacco
materials*Prioritization based on production volume, type of product, water consumption, and internal capacity

Scale solutions at watershed level
Water is a shared resource, valued across industries, communities, and ecosystems.
PMI’s water stewardship strategy is based on collaboration, understanding both the risks andthe potential impact on stakeholders. We will implement our targets by fostering collaboration
with our business partners to catalyze action toward the desired outcomes.
We aim to expand our stakeholder engagement to develop projects that deliver co-benefits
across the communities and watersheds where we operate.
We will measure project impacts by looking beyond water and assessing natural, human,and social capital in an integrated approach.

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Philip Morris International: Preserve nature

Compensate for impacts
The largest share of the water footprint across our value chain is related to the growing of
tobacco. Our contracted farmers utilize on average over 100 million cubic meters of water
for irrigation each year, with annual fluctuations depending on grown volumes, sourcing
origins and climate variability. To mitigate water-related risks and to help reduce shared water
challenges, PMI is following WRI’s volumetric water benefit accounting methodology tomeasure progress on our target to optimize cumulative 10 million m3 of water by 2030. To
date, a variety of water stewardship projects that address shared water challenges have been
implemented to progress on this target with a strong emphasis on community-based projects.
This includes Brazil where we support farmer communities to fence and protect areas aroundstreams against biological contamination from cattle and agrochemicals runoff, or in Turkey
where farmers harvest rainwater to use in the dry season.
PMI is revising its 2030 target in line with 2033 ambition on water, to continue to optimize
irrigation and restore volumes to address water risks at watershed level. We will further
connect our strategy with PMI’s biodiversity ambition, promoting regenerative agriculture
and streamlining projects we implement to deliver benefits beyond water. We strongly pursue
a holistic vision of an integrated environmental stewardship to achieve our ambition to a
positive impact on water resources.
The production of smoke-free consumables is more water-intensive than the manufacturingof cigarettes. While the public health benefits of smoke-free products justify the trade-off ofincreased water intensity, our accelerated efforts to enhance efficiency in the manufacturing
process and our end-to-end water stewardship strategy will help mitigate this increased water
demand and contribute to our net positive targets.

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Philip Morris International: Preserve nature | Looking ahead

Today’s accelerated rate of biodiversity loss poses extraordinary risks forsociety and business: Taking action to reverse this trend is of paramountimportance and everyone’s role to play. As a global player with a large-scalevalue chain, we recognize our key role in taking actions to reverse biodiversity losses. In doing so, we willleverage positive changes we are continuing to implement in our own operations and across our value chain
together with our business partners. PMI’s strategy on biodiversity and water consolidates existing targets
and actions to address impacts of our business on nature, while also updating our directional ambition for2033 and expressing longer-term goals for 2050, to contribute to a nature-positive future in line with the
Post 2020 Global Biodiversity Framework.
Massimo Andolina, Senior Vice President, PMI Operations

PMI’s ambition on biodiversity and waterand dependencies by 2025. We aim to achieve

gives us renewed energy to carry forward

no net loss at 2033, meaning that we will

and increase the impact of our programs

protect the integrity of natural ecosystems

to preserve nature. We believe that aconnected with PMI and its business partners,

constant effort at the landscape level is key

and we extend our ambition to 2050 toto transforming the relationship we havecontribute towards a nature positive future.

with ecosystems and local stakeholders in
the mutual goal of protecting nature and theresulting ecosystem services generated by

Claudia Berardi, Director, Environmental Sustainability,
PMI Operations

it. We are on track to a deforestation-free
supply chain. Our updated strategy looks
rigorously at the most relevant pressures onnature with focus on ecosystem use and usechange including sustainable management
and protection of water resources acrossour value chain, in alignment with the Post
2020 Global Biodiversity Framework andleveraging guidance from the Science Based
Targets for Nature. We will publish our firstvalue chain report on biodiversity footprint

25

Additional resources hilip MorrisP
Integrated Report2021

 hilip Morris Low Carbon
P
Transition Plan MI ZeroP
Deforestation
Manifesto andCommitments

Find out more on our initiatives to preserve nature
Discover more resources
26

Read more on https://www.pmi.com/sustainability©2022 Philip Morris International, Inc. All rights reserved