2022 ESG HIGHLIGHTS
based on PMI’s Integrated Report 2022

©2023 Philip Morris International, Inc. All rights reserved.

Table of contents
About PMI

p3

Overviewp7

Strategy and governance

p14

Product impact

p38• Maximize the benefits of smoke-free products• Purposefully phase out cigarettes• Seek net positive impact in wellness and healthcare• Reduce post-consumer waste
Operational impact

Fundamentals

p74

Reportingp84• Performance in ESG ratings, rankings,
and indicesp56• Foster an empowered and inclusive workplace• Consolidated list of forward-looking aspirations• Performance metrics• Further resources• Improve the quality of life of people in our supply chain• Tackle climate change• Preserve nature

ESG Highlights

May 2023

2

About PMI

About PMI
The company’s current product portfolio primarily consists of cigarettes and smoke-free
products. Since 2008, PMI has invested more than USD 10.5 billion to develop, scientifically
substantiate and commercialize innovative smoke-free products for adults who would
otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This
includes the building of world-class scientific assessment capabilities, notably in the areas ofpre-clinical systems toxicology, clinical and behavioral research, as well as post-market
studies.

Philip Morris International (PMI)
is a leading international tobaccocompany working to deliver asmoke-free futureand evolving its portfolio for thelong term to include products
outside of the tobacco andnicotine sector.

In November 2022, PMI acquired Swedish Match – a leader in oral nicotine delivery –creating a global smoke-free champion led by the companies’ IQOS and ZYN brands. The
U.S. Food and Drug Administration (FDA) has authorized versions of PMI’s IQOS Platform 1
devices and consumables and Swedish Match’s General snus as Modified Risk Tobacco
Products (MRTPs).
As of March 31, 2023, PMI's smoke-free products were available for sale in 78 markets, andPMI estimates that approximately 18.5 million adults around the world had already switched
to IQOS and stopped smoking. Smoke-free products accounted for approximately 35% of
PMI’s total 2023 first-quarter net revenues.
With a strong foundation and significant expertise in life sciences, PMI announced in
February 2021 its ambition to expand into wellness and healthcare areas and, through its
Vectura Fertin Pharma business, aims to enhance life through the delivery of seamlesshealth experiences.
For more information, please visit www.pmi.com and www.pmiscience.com

ESG Highlights

May 2023

3

About PMI continued

About PMI continued
1847

2008

1963

Mr. Philip Morris opens a shop
on London’s Bond Street, selling
tobacco and ready-made cigarettes

The entity purchases Fabriquesde Tabac Réunies in Neuchâtel,Switzerland, a family businessthat already began to manufacture
Marlboro cigarettes under license
in 1957

1902

1987
1908

Marlboro, which will become
the company’s most famous brand,
is established and registered asa trademark

ESG Highlights

May 2023

PMI’s Board of Directors adopts
PMI’s Statement of Purpose, reaffirming
the company’s commitment to deliver
a smoke-free future

Philip Morris International Inc. (PMI) is
incorporated as an operating companyof Philip Morris Companies Inc.

PMI unveils its new Research andDevelopment (R&D) facility in
Neuchâtel, Switzerland

2021

PMI acquires OtiTopic, Fertin Pharma,
AG Snus, and Vectura; announces
ambition to become majority smoke-freecompany in terms of revenues by 2025

2014

PMI pilots its heat-not-burn product,
IQOS, in Italy and Japan
2022

2001

A new company is incorporated in
Virginia under the name Philip Morris &Co. Ltd., Inc. and starts to manufacture
cigarettes in its factory in Richmondby the end of the next decade

PMI spins off from Altria Group, Inc.
and becomes an independent andseparate company

2009

Philip Morris & Co., Ltd. isincorporated in New York

1919

2020

2003

PMI’s Operations Center is transferredfrom New York to Lausanne, Switzerland

Philip Morris Companies Inc. is renamed
Altria Group, Inc., and remains the parent
company of Kraft Foods Inc., Philip MorrisInternational, Philip Morris USA and Philip
Morris Capital Corporation

2016

PMI announces its transformation
and ambition to deliver a smoke-free
future, shifting its resources toward
the development and responsible
marketing of scientifically substantiatedsmoke-free products

PMI acquires Swedish Match, securesthe full rights to commercialize IQOS in
the U.S. as of April 30, 2024, andreaffirms the company’s Statement of
Purpose4

About PMI continued

Forward-looking and cautionary statements
This presentation contains projections of future results
and goals and other forward-looking statements,
including statements regarding business plans andstrategies. Achievement of future results is subject torisks, uncertainties and inaccurate assumptions. In theevent that risks or uncertainties materialize, or
underlying assumptions prove inaccurate, actual results
could vary materially from those contained in suchforward-looking statements. Pursuant to the “safeharbor” provisions of the Private Securities Litigation
Reform Act of 1995, PMI is identifying important factors
that, individually or in the aggregate, could cause actual
results and outcomes to differ materially from thosecontained in any forward-looking statements made by
PMI.
PMI's business risks include: excise tax increases anddiscriminatory tax structures; increasing marketing andregulatory restrictions that could reduce ourcompetitiveness, eliminate our ability to communicate
with adult consumers, or ban certain of our products incertain markets or countries; health concerns relating to
the use of tobacco and other nicotine-containing
products and exposure to environmental tobaccosmoke; litigation related to tobacco use and intellectual
property; intense competition; the effects of global andindividual country economic, regulatory and politicaldevelopments, natural disasters and conflicts; theESG Highlights

May 2023

impact and consequences of Russia's invasion of
Ukraine; changes in adult smoker behavior; the impact
of COVID-19 on PMI's business; lost revenues as aresult of counterfeiting, contraband and cross-borderpurchases; governmental investigations; unfavorable
currency exchange rates and currency devaluations,and limitations on the ability to repatriate funds; adversechanges in applicable corporate tax laws; adversechanges in the cost, availability, and quality of tobaccoand other agricultural products and raw materials, aswell as components and materials for our electronic
devices; and the integrity of its information systems andeffectiveness of its data privacy policies. PMI's future
profitability may also be adversely affected should it beunsuccessful in its attempts to produce andcommercialize reduced-risk products or if regulation or
taxation do not differentiate between such products andcigarettes; if it is unable to successfully introduce new
products, promote brand equity, enter new markets
or improve its margins through increased prices andproductivity gains; if it is unable to expand its brandportfolio internally or through acquisitions and thedevelopment of strategic business relationships; if it isunable to attract and retain the best global talent,
including women or diverse candidates; or if it is unable
to successfully integrate and realize the expected
benefits from recent transactions and acquisitions.
Future results are also subject to the lower predictabilityof our reduced-risk product category's performance.
PMI is further subject to other risks detailed from time totime in its publicly filed documents, including PMI's
Annual Report on Form 10-K for the year ended
December 31, 2022 and the Form 10-Q for the quarter
ended March 31, 2023. PMI cautions that the foregoing
list of important factors is not a complete discussion of
all potential risks and uncertainties. PMI does notundertake to update any forward-looking statement thatit may make from time to time, except in the normal
course of its public disclosure obligations.

5About PMI continued

About these ESG highlights
This ESG Highlights presentation is based on and should be read in
conjunction with PMI’s Integrated Report 2022 and annual report on
Form 10-K for the year ended December 31, 2022, as well as press
releases and additional resources available at www.pmi.com.
Unless otherwise indicated, the data and information in this presentation
cover our operations worldwide for the full calendar year 2022 or reflect
the status as of December 31, 2022 in line with our financial reporting
calendar. Unless explicitly stated, the data, information, and aspirations inthis report do not incorporate PMI’s Vectura Fertin Pharma subsidiary(consolidating the 2021 acquisitions of wellness and healthcarecompanies Fertin Pharma A/S, Vectura Group plc., and OtiTopic, Inc.),
nor the late 2022 acquisition of Swedish Match AB. Where not specified,data come from PMI financials, nonfinancials, or estimates.
See PMI’s Integrated Report 2022

ESG Highlights

May 2023

6

Overview
Our global footprint in 2022

p8

PMI’s Statement of Purpose

p92022 highlights

p10

Megatrends

p12

Industry trends

p13

ESG Highlights

May 2023

7

Overview

Our global footprint in 2022
Our product portfolio
Smoke-free
products

Combustible tobacco
products

67.9%

PMI’s netrevenues
in 2022132.1%

Proportion of PMI’s total 2022 net revenues generated by each segment2

Proportion of 2022 net revenues derived from smoke-free products in each segment2

EuropeanUnion

ESG Highlights

May 2023

EasternEuropeMiddle East
& Africa

South &Southeast Asia

East Asia& Australia

Americas(incl. the US)

SwedishMatch

Wellness and
Healthcare

1 For definition of net revenues related to smoke-free products and combustible tobacco products, see Glossary. Including Swedish Match net revenues from November 11, 2022
(acquisition date) to December 31, 2022.
2 Figures in the graphs are rounded. For definition of net revenues derived from smoke-free products, see Glossary.
As of December 31, 2022, we managed our business in six geographical segments, a Swedish Match segment (reflecting operating results from November 11, 2022 (acquisition date) toDecember 31, 2022) and a Wellness and Healthcare segment (which includes the operating results of our new Wellness and Healthcare business, Vectura Fertin Pharma). See Glossary.

8Overview continued

PMI’s Statement of Purpose
Issued by PMI’s Board,
PMI’s Statement of
Purpose was publishedin the 2022 Proxy
Statement as an
update to the letter toshareholders publishedin the 2017 Proxy
Statement and theStatement of Purpose
published in the 2020
Proxy Statement.

Transforming for good

The Company
is actively
accelerating thedecline of cigarettesmoking beyond
what traditional
tobacco control
measures canachieve alone.

PMI remains
committed toaccelerating theend of smoking
and laying thefoundations of astrong businessin areas of wellness
and healthcare as
we strive to develop
commerciallysuccessful productsthat have a net
positive impact
on society.

This means not
only transforming
the Company
to deliver on its
purpose but
also inspiring theindustry to follow
its lead.

PMI’s keystakeholder
constituencies,
which arefundamental toboth the achievingof its purpose andto the pace of its
progress, will beaffected in different
ways by PMI’stransformation.

PMI believes
that with theright regulatory
encouragement
and support
from civil society,cigarette sales
can end within
10 to 15 years inmany countries.

Read PMI’s Statement of Purpose

ESG Highlights

May 2023

9

SOCIALP R O D U C T I M PA C T

ENVIRONMENT

Overview continued

2022 highlights

24.9 m32.1%

73

Estimated total adult users of PMI’s
smoke-free products (2021: 21.7m)1

Of net revenues derived fromsmoke-free products (2021: 29.5%)2

Markets where PMI smoke-free
products are available for sale, of which
42% in low- to middle-income countries(2021: 71, 42%)3

USD 10.7 bn

91%

Cumulative investments behindsmoke-free products since 2008
(2021: 9.2 bn)4

Of total shipment volume coveredby youth access prevention programs
in indirect retail channels (2021: 91%)5

USD 0.3 bn
Annual net revenue from wellness
and healthcare products(2021: 0.1 bn)

86%

68%

8.5%

Recycling rate of IQOS devices
returned to our centralized recycling hubs
(weighted-average percentage of each device
that is recycled) (2021: 86%)6

Of shipment volume covered bymarkets with anti-littering programsin place for combustible cigarettes

Of shipment volume coveredby markets with smoke-freeconsumables take-back programs7

ESG Highlights

May 2023

1 Figures pertain to total IQOS users. See Glossary.
2 For definition of net revenues related to smoke-free products, see Glossary. 2022 figure includes Swedish Match net revenues from November 11, 2022 (acquisition date) to December 31, 2022. 2021
data exclude the impact related to the Saudi Arabia customs assessments.
3 Including Swedish Match and excluding PMI Duty Free. Classification of low- and middle-income countries is based on World Bank report issued in July 2022.
4 Investments reflect research, product and commercial development, production capacity, scientific substantiation, and studies on adult smoker understanding.
5 Total shipment volume includes cigarettes, other tobacco products (OTPs), and smoke-free product consumables, See PMI’s ESG KPI Protocol 2022 for further details.
6 Recycling rate: percentage of the weight of each device that is recycled, weighted-average depending on device type and processing facility (includes 80% recycling and 6% energy recovery). 2022 data
cover CIRCLE hubs in Hungary and Japan.
7 Shipment volume includes heated tobacco units, e-vapor cartridges, and e-vapor disposables. See PMI’s ESG KPI Protocol 2022 for further details.

10

SOCIALO P E R AT I O N A L I M PA C T

ENVIRONMENT

Overview continued

2022 highlights

40.7%

7

Of management positions held by women,
exceeding our 2022 target of 40%(2021: 39.7%)

Human rights impact assessments
conducted since 2018 in highest-riskcountries (2021: 5)

55%

Triple A

Proportion of tobacco purchased at norisk of net deforestation of managed
natural forest and no conversion of natural
ecosystems (2021: 37%)

ESG Highlights

May 2023

Score from CDP for climate,forest, and water security forthe third consecutive year

11Overview continued

Megatrends
Climate andnature urgency

Healthierlifestyles

Technologicalprogress

Erosionof trust

Main capitals impacted
ESG Highlights

May 2023

Inequality

HumanIntellectual

NaturalManufactured

SocialFinancial
12Overview continued

Industry trends
Industry volume split 2019–20221

PMI total international share (in %)

2019

2022

Combustible tobacco products

96%

92%

Cigarettes

Smoke-free products

4%8%Heated tobacco units
Source: PMI financials or estimates.
Note: International market excludes China and the U.S., reflects cigarettes and HTUs, and includes cigarillos in Japan.
Sum of share of market by product categories might not foot to total due to rounding

1 See Glossary. Data exclude China and the U.S.

ESG Highlights

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13

Strategy and governanceValue creation

p15

Our sustainability strategy

p30

Transforming for good

p162025 Roadmap

p31

Product transformation

p17

PMI Sustainability Index

p32

External transformation

p18

Internal transformation

p19

Performance indicators and targets

p33

Business Transformation Metrics

p24

Summary of our approach to sustainability

p34

Our approach to sustainability

p26

Sustainability governance structure

p35

Sustainability materiality assessment:
the right focus

p27

Our approach to sustainability programsp36

ESG Highlights

May 2023

14

Strategy and GovernanceValue creation
Key activities

Value created in 2022

Resources and relationships

71,070

Our mission

Employees1, of whom
42% are women

USD 642 m
Adjusted R&D expenditure,of which 99% dedicated tosmoke-free products~281,000 tons

Accelerate the end of smoking
by offering adult smokers who would
otherwise continue to smoke scientifically
substantiated better alternatives than smoking
and evolve in the longer term into a broader
lifestyle, consumer wellness
and healthcare company.

Our value chaintransformation

Packed tobacco sourced

53 factories2
Of which 24 are partially or
fully dedicated to the productionof smoke-free products>220,000
Contracted tobacco farmers

To achieve this mission, all segmentsof our value chain—including sourcing,
operations, commercialization, andconsumers and revenues—areundergoing rapidtransformation.
.

>30,000

CAPITALS

Suppliers~USD 157 bn
Market capitalization asof December 31, 2022

ESG Highlights

Human

Manufactured

IntellectualSocialNaturalMay 2023

Financial

Value created

24.9 m

0.1%

Users of PMI's smoke-free
products3

Prevalence of child labor among contracted
farms supplying tobacco to PMI

2,500

511

Patents granted in IP5 jurisdictions
relating to smoke-free products

Scientific publications since 2008 sharing our
methods and findings

11%

100%

Reduction of CO2e emissions
along the value chain (scope
1+2+3) vs. 2019Tobacco purchased at no risk of deforestationof primary and protected forests

773

In-depth human rights impact
assessments completed since 2018

Markets where PMI smoke-free products areavailable for purchase, among which 42% are
low- and middle-income markets4

93%

99%

Critical supplier spend
sourced sustainably

Tobacco purchased through direct contracts
by PMI and our tobacco suppliers, enabling
implementation of PMI’s Good Agricultural Practices

32.1%

USD 73 bn

Annual net revenues fromsmoke-free products5

In excise tax paid on PMI products

Note: Presentation of information in this visual is informed by the Integrated Reporting Framework of the IFRS Foundation.
1 Incorporating Vectura Fertin Pharma, as well as the 2022 acquisition of Swedish Match, PMI employed approximately 79,800 people worldwide at year-end 2022.
2 Including Swedish Match and Vectura Fertin Pharma.
3 Figures pertain to total IQOS users. See Glossary.
4 Including Swedish Match and excluding PMI Duty Free. Classification of low- and middle-income countries is based on World Bank report issued in July 2022.
5 For definition of net revenues related to smoke-free products, see Glossary. Including Swedish Match net revenues from November 11, 2022 (acquisition date) to December 31, 2022.

15

Strategy and Governance continued

Transforming for good
PMI’s business transformation
While a transformation of thismagnitude and complexity is
not achieved overnight, we arecommitted to making it happen
as fast as possible.

ESG Highlights

May 2023

16

Strategy and Governance continued

Product transformation
Innovating for better products

ESG Highlights

May 2023

17

Strategy and Governance continued

External transformation
Changing the way we engage
with stakeholders
Consumers

Civil society

Regulators

Supplychain

Financecommunity

Public healthcommunity

Employees

Read more about our stakeholder engagement

ESG Highlights

May 2023

18

Strategy and Governance continued

Internal transformation
A new organization andvalue chain

SOURCINGOPERATIONSCOMMERCIALIZATIONCONSUMERS & REVENUES

We were2015

We are2022

We will be
Read more about our value chain transformation

ESG Highlights

May 2023

19

Strategycontinued
continued
Strategy and GovernanceOur internal value chain transformation:

Sourcing
We were2015

Transitioning to an increasingly diversified
supply chain, including electronics sourcing

We are2022>350,000
Tobacco farmers contracted
by PMI and our suppliers in

28 countries
1 Direct spend focuses on materials used in the manufacture of our products; it includes tobacco leaf, directmaterials, and electronic devices and accessories. Data excludes Swedish Match, and Vectura Fertin Pharma.

>220,000
Farmers providing tobacco
to PMI and our suppliers in

20 countries

43%
Of direct supply chain
spend related tosmoke-free products1

20

Strategycontinued
continued
Strategy and GovernanceOur internal value chain transformation:

Reallocating R&D expenditure towards smoke-free
product innovation and scientific capabilities, whilereorienting manufacturing toward smoke-free products

Operations
We were2015

70%
Of adjusted R&D expenditure
related to smoke-free products

3/48
Factories partially or fully
dedicated to manufacturingsmoke-free products

We are2022

USD 423 m

99%

Adjusted R&D expenditure

Of adjusted R&D
expenditure related tosmoke-free products

1 Data reflects the number of factories operated and owned by PMI at the end of the respective year, including Swedish Matchand Vectura Fertin Pharma. 2022 factories include eight facilities producing heated tobacco units, two producing other smoke-freeconsumables and 14 Swedish Match owned facilities, primarily engaged in the production of smoke-free products.

24/53
Factories partially or
fully dedicated to
manufacturingsmoke-free
products1

USD 642 m

Adjusted R&D expenditure21

Strategy and Governance continued

Our internal value chain transformation:

Moving from B2B to an increasingly consumer-centricmodel to commercialize smoke-free products

Commercialization
We were7

2015

Markets where PMI
smoke-free products
are available for sale

1

0.6%

Smoke-freeelectronic productcommercialized

Of total shipment volume
related to smoke-free products

5 bn units smoke-free productshipment volume

877 bn units combustible
product shipment volume

1 Including Swedish Match.
2 These indicators are calculated based on millions of units. Smoke-free products shipment volume includes volume of smoke-free
products that can be converted into cigarette equivalent units, such as heat-not-burn, e-vapor, and oral smokeless. Total shipment volume
includes the listed smoke-free products as well as combustible tobacco products; cigarettes and other tobacco products expressed incigarette equivalent units. Data does not include Swedish Match or wellness and healthcare products.

We are2022

73
Markets where PMI
smoke-free products
are available
for sale1

15.1%
Smoke-free product shipment
ratio (smoke-free/total)2

114 bn units smoke-free
product shipment volume2

10
Smoke-free devices
and over 40 taste
variants for PMI
heated tobacco units

641 bn units combustible
product shipment volume2

22

Strategy and Governance continued

Our internal value chain transformation:

Consumers & revenues
We were

0.7%

2015

Of adjusted net revenues
from smoke-free products

0Electronic smoke-freedevices refreshed or repaired

Shifting revenue source from majority cigarettes
to majority smoke-free products while addressing
post-consumer waste

We are2022

0.2 m

157,000

Users of PMI smoke-free
products

Electronic smoke-freedevices refreshedor repaired

1 Figure includes Swedish Match net revenues from November 11, 2022 (acquisition date) to December 31, 2022.
2 Figures pertain to total IQOS users.

32.1%
Of adjusted net
revenues derived
from smoke-free
products1

24.9 mUsers of PMI smokefree products,2 of whom
17.8 m are estimated tohave switched andstopped smoking
23

Strategy and Governance continued

Business Transformation Metrics
Reporting the pace and scale of our transition

T

Transformation

F

Financial

E

Environmental

S

SocialG

Governance• Business transformation is a very company-specific journey,
which ESG reporting standards do not properly capture.
• In 2016, we introduced a set of bespoke key performanceindicators (KPIs) we call Business Transformation Metrics.
• They allow our shareholders and stakeholders to assess
both the pace and scale of our transformation.
• Transparent, measurable, verifiable, updated based on
stakeholder feedback.
• PricewaterhouseCoopers SA (PwC) has provided limited
independent assurance on select Business Transformation Metrics.1

1 See Assurance Report available in Integrated Report 2022 , p. 202

ESG Highlights

May 2023

24

Consumers& Revenues
Commercialization
Sourcing& Operations

Strategy and Governance continued

Business Transformation Metrics
Total number of users of PMI smoke-free products (in millions)1*
Estimated number of users who have switched to PMI smoke-free
products and stopped smoking (in millions)1*
2 †Adjusted net revenues ratio (smoke-free/total) *Annual net revenue from wellness and healthcare products(in billion USD)3*2015
baseline

2020

2021

2022

2025
aspirations

0.2

18.3

21.7

24.9

0.1

13.0

15.3

17.8

>40

0.7%

24.2%

29.5%

32.1%

>50%

n/a

n/a

0.1

0.3

≥1

Number of markets where smoke-free products are available for sale4*

7

64

71

73

100

Proportion of markets where smoke-free products are available for salethat are low- and middle-income markets5*

17%

39%

42%

42%

>50%

Commercial (marketing) expenditure ratio (smoke-free/total)*

8%

76%

73%

74%

0.6%

10.9%

13.3%

15.1%

>30%

5

80

99

114

>250

Combustible tobacco product shipment volume (billion units)6*†
Change in combustible tobacco product shipment volume (billion units)
vs. 2015 baseline6*†

877

650

645

641

<550

n/a

(25.8)%(26.4)%(26.8)%~(40%)

Adjusted R&D expenditure ratio (smoke-free/total)7*

70%

99%

99%

99%

n/a
3 out of48

33%
9 out of
39

35%
9 out of
38

43%
24 out of53

Smoke-free product shipment ratio (smoke-free/total)6*†
Smoke-free product shipment volume (billion units)6*†8Supply chain direct spend expenditure (smoke-free/total)
Number of factories producing smoke-free products out of total numberof factories9*†

ESG Highlights

May 2023

Notes:The 2022 metrics marked with an asterisk (*) are subject to PwC’s Limited Assurance Report available
on p 202 of PMI’s Integrated Report 2022.
In the fourth quarter of 2022, we acquired Swedish Match, a market leader in oral nicotine delivery witha significant presence in the United States market. The Swedish Match acquisition is a key milestone in
PMI’s transformation to becoming a smoke-free company. PMI consolidated statements of earnings forthe year ended December 31, 2022, include the results of operations of Swedish Match from November
11, 2022 (acquisition date) to December 31, 2022, as presented in the Form 10-K for the fourth quarterand year ended December 31, 2022. Following the Swedish Match acquisition and a review of PMI and
Swedish Match’s combined product portfolio, PMI reclassified certain of its own products previously
reported under its combustible tobacco product category to the newly created smoke-free productcategory to better reflect the characteristics of these products. Where applicable, prior years’ KPIs havebeen recalculated to reflect the reclassification on a comparative basis. Impacted metrics are marked
with (†).
In 2023, we plan to evaluate our published aspirations to ensure they remain ambitious, reasonable,
and achievable in the context of a dynamic and evolving smoke-free industry, and impacts of our recent
acquisitions.
1 Figures pertain to total IQOS users, for definition see Glossary.
2 For definition of net revenues related to smoke-free products, see Glossary. 2022 figure includes
Swedish Match net revenues from November 11, 2022 (acquisition date) to December 31, 2022. 2021
figure excludes the impact related to the Saudi Arabia customs assessments.
3 For definition of net revenues related to wellness and healthcare, see Glossary. 2021 figure includes
portion of net revenues reported after acquisition of Fertin Pharma A/S, Vectura Group plc. andOtiTopic, Inc. that took place in the third quarter of 2021.
4 Including Swedish Match. For definition of available for sale, see Glossary.
5 Excluding PMI Duty Free. World Bank report issued in July 2022 is used on a comparative basis forincome level classification. For definition of low- and middle-income markets, see Glossary.
6 These indicators are calculated based on millions of units. For definition of smoke-free products andcombustible tobacco products, see Glossary. Smoke-free products shipment volume includes volume ofsmoke-free products that can be converted into cigarette equivalent units, such as heat-not-burn, evapor, and oral nicotine. Total shipment volume includes the listed smoke-free products as well as
combustible tobacco products: cigarettes and other tobacco products expressed in cigarette
equivalent units. Data does not include Swedish Match or wellness and healthcare products.
7 Adjusted R&D expenditure excludes asset acquisition cost related to OtiTopic, Inc. in 2021. Total
reported R&D expenditure in 2021 including these items amounted to USD 617 million.
8 Direct spend focuses on materials used in the manufacture of our products; it includes tobacco leaf,
direct materials, and electronic devices and accessories. Data excludes Swedish Match and Vectura
Fertin Pharma.
9 Data reflects the number of factories operated and owned by PMI at the end of the respective year,
including Swedish Match and Vectura Fertin Pharma. 2022 factories include eight facilities producing
heated tobacco units, two producing other smoke-free consumables and 14 Swedish Match owned
facilities, primarily engaged in the production of smoke-free products.

25

Strategy and Governance continued

Our approach to sustainability
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.

ESG Highlights

May 2023

26

Strategy and Governance continued

Sustainability materiality assessment: the right focus
A robust sustainability materiality analysis
allows us to identify, assess, and prioritize
ESG topics on which we should focus.
Seeking to embed the principle of double
materiality, our 2021 assessment
consisted of a fivefold approach.

Our 2021 sustainability materiality assessment process

Read PMI’s 2021 Sustainability
Materiality Report

ESG Highlights

May 2023

27

Strategy and Governance continued

Sustainability materiality assessment: the right focus continued

Read PMI’s 2021 Sustainability
Materiality Report

ESG Highlights

May 2023

28

Strategy and Governance continued

Sustainability materiality assessment: the right focus continued
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 our business operations(how we produce).
Read PMI’s 2021 Sustainability
Materiality Report

ESG Highlights

May 2023

29

Strategy and Governance continued

Our sustainability strategy•

Impact-driven approach to sustainability•

Separate identification of environmental
and social impacts•

Distinct forms of social andenvironmental impacts —•PRODUCT IMPACT:
those impacts generated by our
products (what we produce)•

OPERATIONAL IMPACT:
those impacts generated by ourbusiness operations (how we produce)•

8 impact-driven strategies: 4 on productimpacts + 4 on operational impacts•

9 governance-related topics define ourability to successfully address environmental
and social issues

ESG Highlights

May 2023

30

Strategy and Governance continued

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

Priority ESG
topicsPurposefully phaseout cigarettes

1

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

Product healthimpactMaximize the benefitsof smoke-free
products

2

Develop and commercialize science-based smoke-free alternatives, making them available in 100 markets(of which at least half in low- and middle-income markets) and continuing to increase the total number of users

3

Deploy robust youth access prevention programs in indirect retail channels and ensure that sales of our products abide by our Marketing Codes

Product healthimpact; Sales,
marketing, andconsumer
communications

Seek net positive
Impact in wellness
and healthcare

4

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

Innovation inwellness andhealthcare

Reduce post-consumer
waste

5

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

6

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

Materials andproduct ecodesign; Postconsumer waste

Foster anempowered andinclusive workplace

7

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 andinclusion;
Human capitaldevelopment

Improve the qualityof life of people inour supply chain

8

Eradicate systemic child labor in our tobacco supply chain

9

Ensure all contracted tobacco farmers make a living income, and partner with our direct suppliers to promote a living wage for their workers

Socioeconomic
well-being of
tobacco-farming
communities

Tackle climate change

10 Achieve carbon neutrality in our operations and accelerate our decarbonization toward net zero across our value chain

ClimatePreserve nature

11 Promote biodiversity, address critical water challenges, ensure no conversion of natural ecosystems, and halt deforestation in both our

Biodiversity;
Water

tobacco and pulp and paper supply chains

ESG Highlights

May 2023

Primary
SDGs

31

Strategy and Governance continued

PMI Sustainability Index
Progress on our Roadmap measured by a set of key performance indicators (KPIs) that collectively
form our Sustainability Index, which links executive compensation and ESG performance.
2022
performance

Key performance indicators
Purposefully phaseout cigarettes

Maximize thebenefits of smoke-free
products

1

Smoke-free product shipment ratio (smoke-free/total)¹*

15.1%

> 30%

2

Adjusted net revenues ratio (smoke-free/total)²*

32.1%

> 50%

3

Number of markets where PMI smoke-free products are available for sale³*

73

100

4

Proportion of markets where smoke-free products are available for sale that are low- and middle-income markets⁴*

42%

> 50%

5

Total number of users of PMI smoke-free products (in millions)⁵*

24.9
91%

> 90%

7 Annual net revenue from wellness and healthcare products (in billions USD)⁷*

0.3

≥1

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

68%

≥80%

9 Proportion of shipment volume covered by markets with end-of-life take-back programs in place for smoke-free consumables⁸

8.5%

≥80%

10 Proportion of PMI smoke-free devices with eco-design certification⁹

n/a1

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

157

1,000

Improve the quality oflife of people in our
supply chain

Tackle climate change

Preserve nature

KPI
weight12 Proportion of women in senior roles10

15%

14 Cumulative number of human rights impact assessments conducted since 2018, with findings addressed1180%
7

15 Prevalence of child labor among contracted farmers supplying tobacco to PMI

0.1%

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

73%

17 Net carbon emissions in scope 1+2 (in thousands of metric tons)1250%

297,236

18 CO2e scope 3 absolute reduction versus 2019 baseline (in-line with science-based target)

7.9%

Proportion of tobacco purchased at no risk of deforestation of managed natural forest and no conversion
19 of natural ecosystems13

55%

50%

100%

33%

Notes:The 2022 metrics marked with an asterisk (*) are subject to PwC’s
Limited Assurance Report available on p 202 of PMI’s Integrated Report2022.
Our inventory of GHG emissions (scope 1, 2, and 3) in 2022 is subject toexternal verification by SGS (see the External Verification Statement for
scope 1+2 here, for scope 3 here, and a list of the individual metrics
verified here).
For further details on the definitions, scope, calculation methodology,
and data management for the metrics included in PMI’s Sustainability
Index, please refer to PMI’s ESG KPI Protocol 2022.
1 These indicators are calculated based on millions of units. For
definition of smoke-free products and combustible tobacco products, see
Glossary. Smoke-free products shipment volume includes volume ofsmoke-free products that can be converted into cigarette equivalent
units, such as heat-not-burn, e-vapor, and oral nicotine. Total shipment
volume includes the listed smoke-free products as well as combustible
tobacco products: cigarettes and other tobacco products expressed incigarette equivalent units. Data does not include Swedish Match orwellness and healthcare products.
2 For definition of net revenues related to smoke-free products, see
Glossary. 2022 figure includes Swedish Match net revenues from
November 11, 2022 (acquisition date) to December 31, 2022.
3 Including Swedish Match.
4 Excluding PMI Duty Free. World Bank report issued in July 2022 isused on a comparative basis for income level classification. For
definition of low- and middle-income markets, see Glossary.
5 Figures pertain to total IQOS users. See Glossary.
6 Total shipment volume includes cigarettes, OTPs, and smoke-free
product consumables.
7 For definition of net revenues related to wellness and healthcare, see
Glossary.
8 In 2022, we redefined the minimum criteria which must be met by eachmarket to be considered as having a take-back program in place.
Shipment volume includes heated tobacco units, e-vapor cartridges, ande-vapor disposables.
9 To meet our 2025 aspiration, we may consider either a type 1 or type 2
and/or type 3 product environmental statements as defined by ISO
14020:2022, as constituting an “eco-certification”.
10 Our diversity and inclusion data cover around 94% of PMI’s total
workforce, as they exclude fixed term employees and those on salarycontinuation.
11 Our assessments prioritize countries which are assessed as highest
risks from a human rights standpoint. They are determined based on key
parameters such as PMI’s footprint and the country’s human rights risk
profile, as determined by internationally recognized organizations.
12 Emissions from PMI-operated IQOS stores are partially excluded
from scope 1+2 emissions, as de minimis. In 2022, a portion of PMI’s
retail stores (representing approx. 10% of total retail surface area) havebeen included in the scope 1+2 emissions.
13 For definitions, please see PMI’s Zero Deforestation Manifesto.

100%

PMI Sustainability Index

Key

67%

30.5%

13 Proportion of PMI employees who have access to structured lifelong learning offers

Operational Sustainability performanceContribution
to total
Index score

85%

100%

Product Sustainability performance

Foster an empowered
and inclusive workplace2025
aspirations

6 Proportion of shipment volume covered by markets with youth access prevention programs in place in indirect retail channels⁶
Seek net positive
impact in wellness
and healthcare

Reduce post-consumer
waste

2022
progress

Read more about the mechanics of the Sustainability Index and the definitions
and methods underlying its constituent KPIs in PMI’s ESG KPI Protocol.

32

Strategy and Governance continued

Performance indicators and targets
Our ESG KPI protocol is amethod for making the connection
between our company’s purpose,
strategic direction, financial
performance, and environmental
and social considerations.

Linking ESG performance to executive compensation
In February 2022, PMI’s Board of Directors decided to better reflect PMI’s commitment tosustainability, which is the core of its corporate strategy, by including the Sustainability Index
as one of our performance metrics under equity awards. Following the index’s structure, its
KPIs are aggregated into two main drivers: Product Sustainability and Operational
Sustainability.

Sustainability
Index 30%

EPS 30%

TSR 40%

Read PMI’s ESG KPI
Protocol 2022

ESG Highlights

May 2023

33

Strategy and Governance continued

Summary of our approach to sustainability

ESG Highlights

May 2023

34

Strategy and Governance continued

Sustainability governance structure
Integrating sustainability
into our company relies
on a formal governanceand management
structure with clear
accountabilities
at different levels of
the organization

Board of Directors

Full Board of Directors

Nominating and Corporate
Governance Committee (NCGC)

Other Committees of the Board

Company Management

Chief
Financial
Officer

Sustainability Committee

Operational management and program delivery

Sustainability group

Chief
Sustainability
Officer

Working groups

Global functions and markets

All PMI employees
ESG Highlights

May 2023

35

Strategy and Governance continued

Our approach to sustainability programs
Our harmonized approach to designing and managing material sustainability topics
is built on the following foundational elements:

Deep understandingof the topic●●●

Sustainability
materiality
assessment
Stakeholder
engagement

Governancestructure●

Governance●

Code of Conduct●

Internal policies
and standards(Principles andPractices

Additional targeted,topic-specificassessments

ESG Highlights

May 2023

Performanceindicators●●

Business
Transformation
Metrics
PMI Sustainability
Index

●

ESG KPI Protocol●

ESG ratings,
rankings,
and indices

Concrete
activities●●

Programs
within each of
our sustainability
strategies
Reporting lines
demonstrating
responsibilities
and accountability

Transparent
reporting●

AnnualIntegrated Report●Complementarymaterials(Sustainability
resources)●

Case studies andmarket stories

36GovernanceOur approach to sustainability programs continued
In 2022, to enhance the robustness of our ESG data
management and reporting, we undertook an extensive
relevance review of all our reported ESG metrics.
As part of this exercise, we evaluated the strength,
validity, and maturity of the data reported.

This visual showcases the criteria utilizedThisvisual showcases
utilized
to determine
relevancethe
andcriteria
prioritize
ESG
todata,determineand prioritize
and willrelevanceact as a compass
as we
ESG
data
and
will
act
as
a
compass
continue to fine-tune our internal aswecontinueand
to fine-tune
our internal
processes
expand internaland external
processes
assurance.and expand internal andexternal assurance.

ESG data relevance review

Area of focus forheightened rigor anddata assurance

Metrics included inperformance tables

Read more about our Business Transformation Metrics

ESG Highlights

May 2023

37

Product impact
Maximize the benefits of smoke-free products

p39

Purposefully phase out cigarettes

p48

Seek net positive impact in wellness and healthcare

p50

Reduce post-consumer wastep52

ESG Highlights

May 2023

38

P R O D U C T I M PA C T

Maximize the benefitsof smoke-free products
SI

OUR PROGRESS AND ASPIRATIONS AT A GLANCE

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

Proportion of markets where PMI
smoke-free products are available for salethat are low- and middle-income markets

Note: Figures pertain to total IQOS users. See Glossary.

May 2023

Proportion of shipment volume coveredby markets with youth access prevention
programs in indirect retail channels

Note: Including Swedish Match
Note: Excluding PMI Duty Free. World Bank report issued in July 2022 is used
on a comparative basis for income level classification. For definition of low- andmiddle-income markets, see Glossary.

ESG Highlights

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

Note: Total shipment volume includes cigarettes, heated tobacco units,
other tobacco products, e-cigarettes, and oral nicotine products.

39Maximize the benefits of smoke-free products

Maximize the benefits of smoke-free products
In order to maximize the benefits of our SFP to individual smokers and the population as a whole, we deploy
a three-fold approach:-

ESG Highlights

May 202340

Maximize the benefits of smoke-free products continued

Science-based, less harmful
alternatives to cigarette smoking

Science-based,
less harmful
alternatives tocigarette
smokingx

Access tosmoke-free
products andcigarette
phase-out

Responsible
marketing=

Maximized
benefits ofsmoke-free
products

PMI’s scientific assessment of smoke-free products• 99% of R&D expenditure of USD 642 million dedicated to noncombustible
products in 2022

Our scientific research• USD >10.5 billion in researching and developing better alternatives
to cigarettes since 20081

251• 2,500 patents granted for smoke-free technologies by the five largest
intellectual property (IP5) offices in the world since 20152

Toxicological assessment
studies, 26 clinical assessment
studies, and 58 perception
and behavior premarket and postmarket (surveillance) studies
on smoke-free products since 2015.

1 Investments reflect research, product and commercial development, production capacity, scientific substantiation, and studies on adult smokers.
2 IP5 jurisdictions are Europe (patents granted by the European Patent Office), China, South Korea, Japan, and the U.S.

ESG Highlights

May 2023

Our scientific results areavailable on PMIscience.com

41

Maximize the benefits of smoke-free products continued

Access to smoke-free products

Science-based,
less harmful
alternatives tocigarette
smokingx

Access tosmoke-free
products andcigarette
phase-out

Responsible
marketing=

Maximized
benefits ofsmoke-free
products

R E G U L AT O R Y F R A M E W O R K
ESG Highlights

May 2023

42

Maximize the benefits of smoke-free products continued

Awareness

Access tosmoke-free
products andcigarette
phase-out

Awarenessx

Acceptability

Informing the general public
about the smoke-free category

Communicating and engaging
with adult consumers

We seek to improve awareness of thesmoke-free product category among the generalpublic, enhance understanding of key concepts
underpinning it, such as the role of combustion,
nicotine, tar, and harm reduction, and address
widespread misconceptions about smoke-free
products.

• Deploy consumer-centric branded
campaigns

x

AvailabilityxAffordability• Engage with adult smokers via our cigarette
packaging, e.g. JustScan•

In 2022, we reached approximately
1.3 million adult consumers across
36 markets globally via JustScan• Shift to a more consumer-centricand increasingly B2C commercialization
model
Read more about PMI’s “Unsmoke” campaign

ESG Highlights

May 2023

43

Maximize the benefits of smoke-free products continued

Acceptability

Access tosmoke-free
products andcigarette
phase-out

Awarenessx

Acceptabilityx

AvailabilityxAffordability

No single productwill address
the individual
preferences of all
adult smokers
We are delivering a multicategory portfolioof better, science-basedalternatives to cigarettes
offering a wide variety
of user experiences,
technologies, tastes,and price options for
adult smokers who would
otherwise continue tosmoke cigarettes.
ESG Highlights

May 2023

44

Availability

Access tosmoke-free
products andcigarette
phase-out

Awarenessx

Acceptabilityx

AvailabilityxAffordability

Progress in 2022

Advocating forcontemporary tobacco
control policies andrisk-proportionate
regulation

Making our smoke-free
products available
in an increasing numberof markets

73
Markets where
smoke-free products areavailable for sale1

285
Flagship IQOS boutiquesand stores worldwide

1 Including Swedish Match.

ESG Highlights

May 2023

45

Maximize the benefits of smoke-free products continued

Affordability

Access tosmoke-free
products andcigarette
phase-out

Awarenessx

Acceptabilityx

AvailabilityxAffordability

Our vision of a smoke-free future can only materialize if all adult smokers can afford to switch
to better alternatives and actually do if they don’t quit.
Progress in 2022

We must ensure thatour portfolio includes
products that are
affordable to all adultsmokers and deploy
inclusive solutions toalleviate cost-barriers

Maintained

2

Second life

42% Of markets where
smoke-free products are available
for sale that are low- and middleincome markets(2021: 42%)1

lil SOLID 2.0 & BONDS by IQOS

Remarketing of used products
collected and refreshed or
repaired following stringent
standards to address costconsumer acquisition barriers

Our diversified portfolio offers
different price points to facilitate
access for consumers in the lowand middle-income segments

1 Including Swedish Match and excluding PMI Duty Free. Classification of low- and middle-income countries is based on World Bank report issued in July 2022.

ESG Highlights

May 2023

46

Maximize the benefits of smoke-free products continued

Responsible marketing

Science-based,
less harmful
alternatives tocigarette
smokingx

Access tosmoke-free
products andcigarette
phase-out

Responsible
marketing=

Maximized
benefits ofsmoke-free
products

Progress in 2022

2

14

16

Substantiated violations of ourMarketing Codes by PMI
employees investigated andaddressed by our Ethics andCompliance function (2021: 13)

Audits covering 21 markets
conducted by our Corporate
Audit department

Maintained

Mystery shopper

Maintained

A central governanceprocess to evaluate all new
flavored product variants

Through our mystery shopper
program, an independent third
party uses mystery shoppers tomonitor compliance with our
responsible marketing andcommercialization requirements

91% Of PMI’s total shipment
volume covered by youth accessprevention programs in indirect
retail channels (2021: 91%)1

Marketing Codes published:•
Code for Non-combusted
Alternatives•
Code for Combusted
Tobacco Products

76,000People (approximately)
participated in at least one
Marketing Codes-related
training session in the past
two years, of whichapproximately 32% were
PMI employees and 68%
were third-party workers.

1 Total shipment volume includes cigarettes, other tobacco products, and smoke-free product consumables. See PMI’s ESG KPI Protocol 2022 for further details

ESG Highlights

May 2023

See Marketing Codes

47

P R O D U C T I M PA C T

Purposefully phase out cigarettes
OUR PROGRESS AND ASPIRATIONS AT A GLANCE

Adjusted net revenue ratio(smoke-free/total)1

SI

Smoke-free productshipment ratio (smoke-free/total)2

Sustainability Index

Combustible tobacco productshipment volume (in billions)2
Devices

Consumables

Note: For definition of net revenues related to smoke-free products, see Glossary. 2022 figure includes
Swedish Match net revenues from November 11, 2022 (acquisition date) to December 31, 2022. 2021
adjusted net revenues excludeSmoke-free
the impact
related to the Saudi Arabia
assessments.
Reduction in customs
combustible tobacco
product
product shipment
1 For definition of net revenues related to smoke-free products, see
Glossary. 2022 figure includes Swedish Match net revenues from November 11, 2022
(acquisition date) to December 31, 2022. 2021 adjusted net revenues exclude the impact
related to the Saudi Arabia customs assessments.

volume (in billions)2

shipment volume (billion units)
vs. 2015 baseline2

2 These indicators are calculated based on millions of units. For definition of smoke-free
products and combustible tobacco products, see Glossary. Smoke-free products
shipment volume includes volume of smoke-free products that can be converted into
cigarette equivalent units, such as heat-not-burn, e-vapor, and oral nicotine. Total
shipment volume includes the listed smoke-free products as well as combustible tobacco
products: cigarettes and other tobacco products expressed in cigarette equivalent units.
Data do not include Swedish Match or wellness and healthcare products.

ESG Highlights

May 2023

48

Purposefully phase out cigarettes

Purposefully phase out cigarettes
To accelerate the end of smoking, we:

Allocate ourresources tosmoke-free
products

Engagewithstakeholders

Advocate forrisk-appropriate
regulation andtaxation

Lead anindustrytransformation

In 2022, smoke-free products represented:• >50% of our net revenue in 17 of 73 markets• 74% of our commercial expenditure (marketing) ratio (smoke-free/total)• 15.1% of product shipment ratio (smoke-free/total), while combustible tobacco product shipment
volume decreased by 26.8% vs. 2015 baseline
Note: Please refer to “Performance metrics” section of Integrated Report 2022 pp. 190-201 for complete KPIs with accompanying footnotes.

ESG Highlights

May 2023

49

P R O D U C T I M PA C T

Seek net positive impact in wellness
and healthcare
SI

Sustainability Index

OUR ASPIRATION AT A GLANCE

Annual net revenue from wellness andhealthcare products (in billions USD)

Devices

Consumables

Striving to become a company that has
a net positive impact on society, we are
expanding our offerings to include productsthat will address critical unmet consumer
and patient needs within the wellness
and healthcare space.

Note: For definition of net revenues related to wellness and healthcare,see Glossary. 2021 figure includes portion of net revenues reported after
acquisition of Fertin Pharma A/S, Vectura Group plc. and OtiTopic, Inc.
that took place in the third quarter of 2021.

ESG Highlights

May 2023

50

Seek net positive impact in wellness and healthcare• Developing a pipeline of products that would bring at least USD 1 billion in net revenues inwellness and healthcare business by 2025
• In March 2022, we launched a new wellness and healthcare business consolidating three
innovative and forward-looking companies we acquired in 2021: Vectura Fertin Pharma
Key growth areas

Inhaledtherapeutics

ESG Highlights

ConsumerhealthMay 2023

Nicotine
replacement
therapies

Contract Development
and Manufacturing
Organization (CDMO)

51

P R O D U C T I M PA C T

Reduce post-consumer wasteSI

OUR ASPIRATIONS AT A GLANCEDEVICESCONSUMABLES

PACKAGING

100%
Devices

Maintain

2023

70%

Effective recycling rate of oursmoke-free electronic devices1

2025

≥1m

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

100%
100%
80%
ESG Highlights

Of smoke-free electronic
devices introduced on themarket as of the end of 2025
that have eco-design
certification
Of PMI smoke-freeelectronic device sales
volume covered by the
CIRCLE program2
Effective recycling rate of oursmoke-free electronic devices1

May 2023≥80%
Of shipment volumes covered by markets
with anti-littering programs in place for
combustible cigarettes≥80%
Of shipment volumes covered by markets
with end-of-life take-back programs in place
for smoke-free consumables

Sustainability Index

Recyclable inner liners
by year-end3

Consumables

Packaging

Read about our
strategy online

100%
Of packaging materials made withrecyclable materials

95%
Of packaging materials coming fromrenewable sources

15%
Reduction of packaging materials
weight versus 2018 baseline

Notes: Aspirations referring to smoke-free electronic
devices exclude disposable products and non-PMIdesigned devices. We plan to recalibrate our 2025
packaging aspirations as we plan for 2030, taking a fresh
look at being impactful in an ever-changing environment.
1 The effective recycling rate is calculated based on the
proportion of device sales volume covered by the CIRCLE
program multiplied by the actual recycling rate of devices
at the active CIRCLE hubs (weighted average), which
includes actual recycling and energy recovery. Russia
CIRCLE hub was discontinued in 2022 and is therefore
excluded from the reported recycling numbers of 2022.
2 We plan to recalibrate this aspiration in 2023 to accountfor regulatory and market developments. In particular, asof 2023, depending on market circumstances (e.g.,
available waste treatment infrastructure and regulatory
frameworks), collected devices may be considered
covered by the CIRCLE program if they are either
processed at our centralized CIRCLE hubs, through local
e-waste streams, or by local recycling partners (under thegovernance of PMI central CIRCLE team to fulfill ourstandardized processing requirements and recycling rates
performance).
3 For all markets where possible in compliance with local
regulatory requirements.

52

Reduce post-consumer waste continued

Reduce post-consumer waste
Cigarettes

Smoke-free consumables

1. Invest in R&D toward filters made of plasticfree alternatives.

1. Deploy end-of-life take-back programs

2. Encourage behavioral change throughimpactful anti-littering awareness programs
and initiatives

2. Design for circularity andwaste reduction
3. Responsible disposal

Progress in 2022

Progress in 2022

>2,000Required that our affiliates
launching VEEV pods,
VEEBA disposable e-vapor
products, and TEREAHTUs put in place end-oflife take-back programs

employees inover 60
countries
participated in
the challenge aspart of PMIdriven activities

ESG Highlights

Proportion of shipment volumes coveredby markets with anti-littering programsin place for combustible cigarettes

HTUs on average
3x less likely tobe littered thancigarette butts

Proportion of shipment volumes
covered by markets with end-of-lifetake-back programs in place forsmoke-free consumables

Note: Shipment volume includes heated tobacco units,
e-vapor cartridges, and e-vapor disposables.

May 2023

53

Reduce post-consumer waste

Reduce post-consumer waste continued

Smoke-free electronic devices
1. Design for circularity and waste reduction
2. Improve recyclability
3. Refresh and repair used devices

Progress in 2022
Number of smoke-free electronic
devices refreshed or repaired(cumulative since 2021), in thousands

Proportion of smoke-free electronic device
sales volume covered by the CIRCLE program

Effective recycling rate of our smoke-freeelectronic devices

Note: Excludes disposable products and non-PMI designed devices.
The effective recycling rate is calculated based on the proportion of devices
sales volume covered by the CIRCLE program multiplied by the actual recycling
rate of devices at the active CIRCLE hubs (weighted average), which includes
actual recycling and energy recovery. Russia CIRCLE hub was discontinued
in 2022 and is therefore excluded from the reported recycling numbers of 2022.

Note: Aspirations referring to smoke-free electronic devices exclude disposable
products and non-PMI-designed devices. We plan to recalibrate this aspirationin 2023 to account for regulatory and market developments.

Source: Adapted from the Ellen MacArthur
Foundation Butterfly diagram

ESG Highlights

May 2023

54

Reduce post-consumer waste

Reduce post-consumer waste continued
Progress in 2022

Packaging
1. Minimize packaging materials
2. Improve packaging circularity by designing
for recyclability
3. Promote use of materials made fromrenewable resources

Proportion of packaging materials
coming from renewable sources

Note: Prior years’ data has been restated to take into account more accuratecomputation of packaging material usage.

Use of materials in our packaging in 2022
Material

Proportion

Paper and board

92%

Plastic

6%

Aluminum

1%

Other

2%

Proportion of packaging madewith recyclable materials

Reduction of packaging materials
weight versus 2018 baseline

Proportion of recyclable inner liners
by year-end

Note: For all markets where possible in compliance withlocal regulatory requirements.

ESG Highlights

May 2023

55

Operational impact
Foster an empowered and inclusive workplace

p57

Improve the quality of life of people in our supply chain

p60

Tackle climate change

p65

Preserve naturep70

ESG Highlights

May 2023

56

O P E R AT I O N A L I M PA C T

Foster an empowered and inclusive workplace
OUR ASPIRATIONS AT A GLANCE

MaintainSI

100% Of employees earningat least a living wage

<0.65 Collision rate in our fleet≥30 Employee Net Promoter Score

Global EQUAL-SALARY certification

40% Of management
positions held by women
Devices

2022

100%

2023

32%

Of senior roles held by women70%

Of PMI employees with access to
structured lifelong learning offers≥60%

Representation of local talent in the executive
management teams of at least 80% of ourmarkets or clusters

35%

Of senior roles held
by women>70%

Perception of psychologicalwell-being among our employees

2025

ESG Highlights

Sustainability Index<0.3 Total Recordable Incident Rate (TRIR)
for PMI employees, contracted employees,
and contractors (per 200,000 hours worked)

Of PMI employees covered by parental leave principles

May 2023≤60%

Representation of any
gender in managerial roles in mostof our functions and regions≥20%

Representation of Asiantalent in senior roles globally57

Foster an empowered and inclusive workplace
Progress in 2022
Providing fair
employment

Protecting the health, safety,
and security of our employees• Maintained our global EQUALSALARY certification which verifies
that PMI continues to pay female andmale employees equally for equal work

• 98% of manufacturing facilities with ISO
450011

Promoting mental
health and well-being• Developed “Mental Health for All”, a self-paced,online training on our internal e-learning platform

Total Recordable Incident Rate for
PMI employees, contracted employees,
and contractors

Perception of psychological well-being
among our employees

Vehicle collision rate in our fleet(collisions per million km driven)

Proportion of PMI employees coveredby new parental leave principles

Proportion of employees earningat least a living wage

Note: Excludes Russia.

ESG Highlights

May 2023

1 Scope covers manufacturing facilities producing more than three billion cigarette equivalents annually.
2022 excludes Russia, due to sanctions applied to the country.

58

Foster an empowered and inclusive workplace

Foster an empowered and inclusive workplace
continued
OUR ASPIRATIONSProgress in 2022
Developing our human capital• Certified by the
Top Employers
Institute as a global
Top Employer forthe seventh year
in a row• Employee turnoverdecreased to
9.3% (2021: 12%)

ESG Highlights

Employee Net Promoter Score (eNPS)

Fostering diversity, equity, equality, and inclusion• Included in the Bloomberg Gender-Equality Index (GEI) in 2023 forthe third consecutive year
• Continued to foster our global Employee Resource Groups (ERGs)
Proportion of management
positions held by women

Proportion of senior roles held
by women

Proportion of PMI employees withaccess to structured lifelong learning offers
Representation of Asian talent
in senior roles globally

May 2023

Note: For the purpose of m easuring progress against this indicator, PM I uses thenationality data of em ployees recorded in our HR system s. The determ inationof Asian nationalities is based on the regional groupings as listed by theUnited Nations, and we consider the following regions: Central and Southern Asia,
Eastern and South-Eastern Asia.

Proportion of markets with at least 60%
representation of local talent in theexecutive management teams

Note: Considers M anaging Directors and their direct reports within PM I m arkets andclusters who have local nationality registered in PM I HR system s. Excludes
countries where em ployee national identity is not collected in PM I HR system s.

59

O P E R AT I O N A L I M PA C T

Improve the quality of lifeof people in our supply chainSI

OUR ASPIRATIONS AT A GLANCE

Maintain

2022

2025

>90% Of PMI purchased tobacco volume for whichlabor practices and adherence to our Agricultural
Labor Practices Code are systematically monitored

100%

Of contracted farmers supplying tobacco to PMI paying their workers
at least the minimum legal wage or agricultural benchmark

100%

Of contracted farmers supplying tobacco
to PMI make a living income

10
2030

100% Of contracted tobacco farmers and farmworkers
supplying tobacco to PMI have accessto personal protective
Devicesequipment for the application of crop protection agents andprevention of green tobacco sickness

100%

0%

Prevalence of child labor among contracted
farmers supplying tobacco to PMIHighest-risk countries covered by external human rights impact
assessments, with findings addressed

Sustainability Index

100% Of tobacco farmworkers are provided withsafe and adequate accommodation1

100%

Of critical suppliers from whom PMI
sources sustainably

100%

Of contracted farmers supplying tobacco
to PMI have basic water accessContracted farmers supplying tobacco
to PMI have access to basic sanitation and hygiene

Note: In 2022, we strengthened our approach to monitoring the quality of life of people in our tobacco supply chain by introducing the Sustainable Tobacco Supply Chain (STSC) framework. Although it is still a requirement to monitor performance against our Agricultural
Labor Practices (ALP) Code for all contracted farms, we decided to shift from reporting sustainability progress on all farmers contracted by PMI’s suppliers or PMI leaf operations to farmers whose tobacco volumes are purchased and used in PMI products.
1 Scope is limited to farmers that provide accommodation to workers.

ESG Highlights

May 2023

60

Promoting fair working and living conditions
in our tobacco supply chain
Implementing our Sustainable Tobacco
Supply Chain (STSC) framework

223,299 Contracted
farmers who supplied
tobacco to PMI in
2022, located in
20 countries

95% Of purchased
tobacco volume forwhich labor practices
and adherence to
our ALP Code weresystematicallymonitored

ESG Highlights

May 2023

Monitoring the implementation of PMI’s ALP Code• Internal monitoring by field technicians, who raise“prompt actions” and report “nonconformities”• External assessments by the independent third-party
organization Control Union (all reports available here)• External verification by specialized local expert partners
Breakdown of total prompt actions recorded by fieldtechnicians in 2022, by type
Safe working
environment
Hazardous work
performed by children
Income and working
hours

Further reading: Agricultural Labor Practices (ALP) (2011), ALP Step Change (2018),
ALP Code, Good Agricultural Practices (GAP), Human Rights Commitment, Responsible
Sourcing Principles, ALP 10-year anniversary report61Promoting fair working and living conditions in our tobacco supply chain continued
Contributing toward alleviating poverty•

Robust analyses and studies to define living income values and assess current farmer incomes•

Support to farmers in maximizing efficiencies on their farms and improve productivity•

Promote opportunities for households to diversify their income, notably through the cultivationof complementary crops beyond tobacco

Proportion of contracted farmers
supplying tobacco to PMI whomake a living income

Our ALP Code requires that the wages of all workers
meet—at a minimum—the national legal standard orformalized agricultural benchmark standard
Proportion of contracted farmers
supplying tobacco to PMI paying theirworkers at least the minimum legal
wage or agricultural benchmark

Note: Excludes China and Switzerland.

ESG Highlights

May 2023

62

Promoting fair working and living conditions in our tobacco supply chain continued
Eliminating child labor
Progress in 2022
Prevalence of child labor among contracted
farmers supplying tobacco to PMI• We use International Labour Organization (ILO) standards tomeasure our progress toward our target of zero child labor
Total number of prompt actions
recorded in 2022 relating to childlabor among contracted farms
supplying tobacco to PMI, by type64

Handling or applying CPA or fertilizer

32%

Philippines

51

Stringing

24%

14

Mozambique

45

Harvesting or handling green tobacco

18%

6Indonesia

10

Carrying heavy loads

8%

Working with sharp tools

6%

155

Children under 15 hired

ESG Highlights

Types of prompt actions recorded in
2022 relating to hazardous work
performed by children among contracted
farms supplying tobacco to PMI

TurkeyChildren under 18 performing
hazardous tasksChildren under 13 performing lightwork

Total number of child labor prompt
actions recorded in 2022 among
contracted farms supplying
tobacco to PMI, by country

May 2023

Pakistan

5

Driving a tractor or operating machinery

2%

Other

10%

Further reading:
ALP 10 year Anniversary Report63Promoting fair working and living conditions in our tobacco supply chain continued
Promoting a safe working environment• 5,490 prompt actions related to unsafe working
environment recorded by field technicians in
2022

Proportion of tobacco farmworkers provided
with safe and adequate accommodation

Types of prompt actions recorded in 2022 relating to safe working environment
issues among contracted farms supplying tobacco to PMI

Exposure to green tobacco sickness(GTS) due to not wearing proper
personal protective equipment (PPE)Crop protection agent (CPA) stored
in a way that could cause a healthand safety incident
Working at height without protection
Exposure to CPA due to not wearing
proper PPE
Unsafe or insufficient work
accommodation
Other

30%

23%
21%

Note: Scope is limited to farmers that provide accommodation to workers(approximately 2% of the contracted farmers supplying tobacco to PMI in 2022).

Proportion of contracted farmers supplying
tobacco to PMI that have basic water access

19%
2%
5%
Note: Estimated based on surveys that indicate whether the farmer has an improved
drinking water source within one km or 30-minute round trip. Excludes China.

ESG Highlights

May 2023

64

O P E R AT I O N A L I M PA C T

Tackle climate change
OUR ASPIRATIONS AT A GLANCE

2023

Zero

SI

Sustainability Index

Coal used as curing fuel for the tobacco we source

Devices
Carbon neutrality in our direct operations(scope 1+2)

100%

Of our manufacturing facilities
certified carbon neutral

35%

Reduction in absolutegreenhouse gas (GHG)
emissions in our tobacco supply
chain versus 2019 baseline

100%

Of electricity used andpurchased in our factories
derived from renewable sources

15%

Of suppliers by spend (coveringpurchased goods and services)
will have science-based targets
(SBT)

2030

50%

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

50%

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

50%

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

2040

Net zero2023

ESG Highlights

25%

Reduction in absolute scope 3
GHG emissions versus 2019baseline

GHG emissions in our value chain (scope 1+2+3) (SBT)May 2023

65

Tackle climate change
Our three-pronged approach to decarbonization

PMI’s Low-Carbon Transition Plan
Our Low-Carbon Transition Plan
(LCTP), published in October 2021,
provides a transparent and detailed
view of how we plan to achieve ourclimate ambitions. It describes thevarious tools and enablers—including
our approach to carbon pricing, ourportfolio of climate investments, andour governance and management
arrangements—that will help usdeliver on our climate targets. By
openly sharing our objectives andmethodologies, we seek to accelerate
the achievement of our targets andcommitments (read more here).

Further reading:
Task Force on Climate-related
Financial Disclosures (TCFD)

ESG Highlights

May 2023

66

Tackle climate change continued
Carbon emissions along our value chain in 20221

ESG Highlights

May 2023

1 Presentation of information aligns with guidance of the Greenhouse Gas Protocol. Figures are rounded.
See PMI’s Low-Carbon Transition Plan.

67

Tackle climate change

Tackle climate change continued
Carbon neutrality in our direct operations

Carbon reduction in our value chain

Reduction in absolute scope 1+2
GHG emissions versus 2019 baseline

Proportion of our manufacturing
facilities certified carbon neutral

Reduction in absolute scope 3
GHG emissions versus 2019 baseline

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

Net CO₂e scope 1+2 (metric tons)

Proportion of electricity used andpurchased in our factories derived
from renewable sources

Proportion of Virginia tobaccopurchased cured with coal

Proportion of suppliers by spend coveringpurchased goods and services with
science-based GHG reduction targets

ESG Highlights

May 2023

68

Tackle climate change continued

ESG Highlights

May 2023

Full details of this visual available for download at PMI’S Low-Carbon Transition Plan

69

O P E R AT I O N A L I M PA C T

Preserve nature
OUR ASPIRATIONS AT A GLANCE

MaintainZero gross deforestationof primary and protected
forests associated with ourtobacco supply chain

SI>70% Of flue-cured tobaccopurchased cured withrenewable fuel sources(self-sufficient firewood orbiomass)

100% Of tobaccopurchased without
detection of residues
attributable to the use ofhighly hazardous
Devicespesticides≤3.1 Water ratio in our
manufacturing facilities(water withdrawn in cubic
meters per million
cigarettes Consumables
equivalent)

Zero net deforestation of managed naturalforest and no conversion of natural
ecosystems in our tobacco supply chain

Net positive impact on forests associatedwith our tobacco supply chain

100% Of our tobacco-growing areas covered by local
water risk assessments (cumulative since 2018)

100% Of our manufacturing facilities certified to the
Alliance for Water Stewardship (AWS) standard1

2030≥10 million cubic meters of water optimized in our
tobacco-growing areas (cumulative since 2019)

Net zero deforestation of managed natural forest and no conversionof natural ecosystems in the paper and pulp-based products supply chain2033

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

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

2050

Contribute toward a net positive impact on nature

Contribute toward a positive impact on water resources2025

ESG Highlights

May 2023

1 Aspiration pertains to priority manufacturing facilities identified based on-site overall risk in relation to the watershed, water withdrawal, water
consumption, product portfolio, and other strategic considerations.

Sustainability Index

Virtually zero waste tolandfill in manufacturing
sites

Zero gross deforestation of primary andprotected forest associated with our supplyof paper and pulp-based materials

70Protecting biodiversity
PMI completed two analyses to better understand its footprint and define
key action areas:1.
2.

Progress in 2022

Biodiversity extent, condition, and significance (BECS) land-based
assessment
Global biodiversity score (GBS) resource use-based assessment

Results of PMI biodiversity footprint

Proportion of tobacco purchased without
detection of residues attributable to theuse of highly hazardous pesticides

Further reading: Biodiversity and Water Ambitions (2022)

ESG Highlights

May 2023

71

Halting deforestation
We are committed to achieving
a deforestation-free supply
chain for our tobacco and paper
and pulp-based materials

Progress in 2022
Proportion of tobacco purchased
at no risk of gross deforestationof primary and protected forests

Proportion of tobacco purchased at no risk of
net deforestation of managed natural forests
and no conversion of natural ecosystems

Proportion of flue-cured tobacco purchasedthat is cured with renewable fuel sources(self-sufficient firewood or biomass)

Proportion of paper and pulp-based materials
purchased at no risk of gross deforestationof primary and protected forests

Further reading: Biodiversity and Water Ambitions (2022)

ESG Highlights

May 2023

72

Managing water responsibly
Our ambition is to preserve water
resources and respect the natural
cycle of water while also providing
benefits to biodiversity, climatechange, and social impact

Progress in 2022
Proportion of tobacco-growing areas
covered by local water risk assessments(cumulative since 2018)

Cubic meters of water optimized
in our TGAs (cumulative, since 2019)

Note: Indicator is based on the World Resources Institute’s volumetric benefit
accounting methodology and is verified by an external third party.

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

Further reading: Biodiversity and Water Ambitions (2022)
ESG Highlights

May 2023

Note: In 2021, we updated our methodology to account for theconversion factor of heated tobacco units to conventional cigarettesof 5:1 and have restated historical data accordingly.

Proportion of PMI factories certified
to AWS standard

Note: Aspiration pertains to priority manufacturing facilities identified based onsite overall risk in relation to the watershed, water withdrawal, water consumption,
product portfolio, and other strategic considerations.

73Fundamentals
p75

Manage our supply chain
sustainably

Sustain product reliability

p75

Safeguard data privacy andprotection

p81

Nicotine sciencep76

Apply fair fiscal practices

p81

Uphold business ethics and integrity p77

Case studies

p82

p78

Market stories

p83

Conduct R&D responsibly andtransparently

Respect human rights

ESG Highlights

May 2023

p79

74

Fundamentals

Conduct R&D responsibly
and transparently

Sustain product reliability

R&D is focused on developing and scientifically
substantiating smoke-free alternatives to cigarettes
for adults who would otherwise continue to smoke.

Our quality management system covers all our products,
smoke-free and combustible, from raw material to retailshelf. Our factories are designed to manufacture our
products to the highest quality standards, following the
ISO 9001 certification principles.

• Builds confidence in our science among scientificcommunity, regulators, consumers• Protects our company from reputational risk
• Allows us to commercialize smoke-free products
Sharing our methods and findings

Quality management
system• 1,800 product quality
associates• ~100 corporate quality
professionals

Open Science• Factories

Published papers on smoke-free
products in peer-reviewed
publications since 2008

Conference series continued
throughout 2022, available on
PMIscience.com.

• Inspection by authorities
and certified bodies

ESG Highlights

May 2023• Zero product recalls• Contracted farmers
and suppliers

450+

Presented findings at conferences and virtual events in the fieldof toxicology, aerosol engineering, respiratory drug delivery

Progress in 2022

• Packaging, storage,
and transport of finishedgoods to consumers• PMI quality assurance
colleague on site at eachkey electronic manufacturing
supplier of smoke-freedevices75

Fundamentals continued

Nicotine science
While nicotine is addictive andnot risk-free, it is not the primarycause of smoking-relateddiseases, such as cardiovascular,
respiratory diseases, and cancer.

Nicotine plays an importantrole in helping adults who would
otherwise continue to smoke
to transition from cigarettes
to better alternatives with anicotine profile that resembles
that of a cigarette.

ESG Highlights

May 2023

76

Fundamentals continued

Uphold business ethics and integrity
We clearly define the ethical and compliance expectations towhich we hold ourselves and the third parties with whom wework, and we back up these expectations with governanceand management systems to ensure we deliver on them.

Progress in 2022
• 98.7% of eligible employees globally, including 100% ofsenior management, have certified their commitment to
the newly launched PMI’s Code of Conduct1• Closed 923 of 990 reports of suspected complianceallegations and other concerns, of which:• 429 (46%) involved a compliance allegation• 494 (54%) did not involve a compliance allegation• Total of 352,796 Ethics & Compliance training courses
completed by employees and third parties

Further reading:
Our Code of Conduct (2023)

Substantiated violations

Theft and fraud
28%
Workplace integrity
33%
Failure to speak up or
10%
obstructing an investigation
Other
34%

• Launched a series of five e-learning courses (available
in 31 languages) to approximately 40,000 employees
1 For the purposes of the 2022 PMI Code of Conduct Annual Certification, “eligible employees” are those who have office-based
computer access, and “Senior Leaders” are defined as employees at a salary grade of 19 and above.

ESG Highlights

May 2023

77

Fundamentals continued

Respect human rights
Progress in 2022
• Seven Human Rights Impact Assessments (HRIAs)
completed, and findings addressed (cumulative since 2018)1• Made our company-wide Business and Human Rights
e-learning available in seven additional languages• Refreshed our Human Rights Commitment

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

1 Our assessment prioritizes countries which are assessed as highest risks from a human rights standpoint. They are determined based on key
parameters such as PMI’s footprint and the country’s human rights risk profile, as determined by internationally recognized organizations.

ESG Highlights

May 2023

78

Fundamentals continued

Manage our supply chain sustainably
2022 Supply chain spend

Progress in 2022
• 93% critical supplier spend sourced sustainably1• 30% of total procurement spend on smoke-free
products’ critical suppliers• 67% of electronic supply chain spend covered by
Responsible Business Alliance’s (RBA’s) Validated
Assessment Program or Customer Managed Audits(CMAs)2
Direct spend withhighest exposure tosustainability risk

Main risks

Tobacco production across Africa,
Asia, South America

Working conditions, child labor,
climate change, access towater, socioeconomic well-beingof farming communities

Electronics manufacturing

Working conditions

Paper and pulp-based materials

Deforestation, biodiversity loss,
climate change

ESG Highlights

May 2023

See our Responsible Sourcing Principles and corresponding Implementation Guidance.
1 Sustainable sourcing is determined based on a minimum threshold score of 45 out of 100 in EcoVadis (direct materials) or 125 out of 200
in RBA with no open priority issues (electronics). All tobacco purchased by contracted farmers, thereby covered by PMI’s integrated
production system, is considered sustainable.
2 This figure includes 42 out of 46 of our electronic critical suppliers sites.

79Fundamentals continued

Manage our supply chain sustainably continued
Overview of electronics supply chain

Overview of tobacco supply chain

At a glance• >30,000 tier 1 suppliers globally• USD 12.6 billion supply chain spend1
Principles of sustainable supply chain management• Proactive engagement• Risk-based approach• Continuous improvement• Impactful programs totackle climate change,
protect nature, promote
fair working conditions

1 Total supply chain spend includes procurement spend and tobacco leaf sourcing spend.

ESG Highlights

May 2023

Note: The volume purchased through third-party
leaf suppliers includes spot purchases (i.e.,
unplanned purchases for which we do not haveaccess to sustainability data), which represented
approximately 5 percent of our total purchasedvolume in 2022.

80

Fundamentals continued

Safeguard data privacy
and protection

Apply fair fiscal
practices

PMI’s Global Privacy Program

Paying taxes commensurate with
our economic activities is not only our
duty but the responsible thing to do.

sets standards for data privacy and security
across markets and functions. It governs collection,
processing, and sharing of personal data by
PMI affiliates.
In 2022, we continued providing our workforce
with renewed training to assist with identifying
and reacting to key cyber threats.

2022 taxes

Corporate income tax

2.2

Complemented by:

Total excise taxes on PMI products

73.4

•

Simulated phishing campaigns

48.9

•

Hub of resources on information security
awareness accessible to employees andcontractors• Excise taxes on PMI products reported
by PMI affiliates• Excise taxes reported by our importers
and distributors1

24.5

VAT and sales tax

9.0

Total
(USD billion)

1 Note: In addition to the taxes reported by PMI legal entities, our importers and distributors in many countries are
responsible for paying import duties and excise taxes on our products. Though such payments may not appear in PMI’s
financial statements, they represent a portion of the product taxes paid by our consumers worldwide and so are included in
the table above.

ESG Highlights

May 2023

81

Fundamentals continued

2022 Case studies
Malaysia

Indonesia

Switzerland

PMI

BrazilThailandFirst end-to-end
human rights
impact assessmentin Malaysia

A holistic
approach to water
stewardship at our
Sukorejo plant inIndonesia

Embeddingconvenience into
our smoke-freeconsumables takeback program in
Switzerland

The future of work –Lifelong learning
program in PMIAssessinghuman rights
impacts in Brazil

Our Operations
function continued
to expand its
voluntary lifelong
learning program,encouraging
employees todevelop skills toshape their careers
in the way they
desire.

Our seventh HRIA
focused on helping
identify, prioritize, andaddress potential
risks andopportunities across
our Brazilian affiliate’svalue chain.

Heightened
engagement withretailers to minimize
the risk of youth
having accessto our productsin Thailand

In 2022, wecompleted our sixthcountry-level HRIA
since 2018, aimed to
identify relevant risks
and opportunities
across Malaysia’svalue chain.

How Philip MorrisIndonesia developed
a holistic water
stewardship strategy
while pursuing theAlliance for Water
Stewardship (AWS)
certification at our
Sukorejo plant.

Addressing wastefrom our products
and improving
circularity in our value
chain through the firstsmoke-free take-backprogram.

Deployingheightened efforts
and communication
with indirect channels
to help prevent
youth’s access toour products.

Further reading: PMI’s Case studies and market stories

ESG Highlights

May 2023

82

Fundamentals continued

2022 Market stories
Pakistan

Slovakia

Italy

Indonesia

TurkeyWorkplace

Empowering
women to return towork in Pakistan

Paving the way
forward forsustainability in
Slovakia

The importance ofpreventing litteringin Italy

Focus on:Harnessing green
energy inIndonesia

Drivingsustainability
forward in Turkey

Championing
well-being in theworkplace

Learn how an
initiative in Pakistan
is helping break
down barriers andthe societal
expectations
between womenand the workplace.

Learn how ourSlovakian team israising awareness of
post-consumer
waste recycling
opportunities.

Discover how PMI’seffort to addressing
littering in Italy has
evolved, and how
it’s continuing toencourage
responsible
behaviors.

PMI works toward
its carbon-neutrality
targets with atransformative newsolar energy projectfor Sampoerna inIndonesia.

A focus on safer
driving techniques ishaving a wideranging impact on
the environment inTurkey.

Discover how a
network of wellbeing champions istransforming ourapproach to
employee healthand happiness at
PMI.

Further reading: PMI’s Case studies and market stories

ESG Highlights

May 2023

83

Reporting
Performance in ESG ratings, rankings, and indicesp85

Consolidated list of forward-looking aspirations

p86

Performance metrics

p94

Further resources

p95

Glossary of terms and acronyms

p96

ESG Highlights

May 2023

84

Reporting

Performance in ESG ratings, rankings, and indices2022 score

S&P Global Corporate
Sustainability Assessment

PMI was selected for the third year in a row as a member of the Dow Jones Sustainability North America Index (score asof March 17, 2023).

Sustainalytics

PMI maintained its “Medium ESG Risk” classification (score as of November 30, 2022).

24.1

MSCI

PMI maintained a rating of BBB in the MSCI ESG Rating assessment (score as of December 23, 2022).

BBB

CDP Climate, Forest,
Water Security

PMI was awarded a Triple A score for the third consecutive year in recognition of its efforts to combat climate change,
protect forests, and promote water security.

AAA

CDP Supplier Engagement

PMI earned a place on CDP’s Supplier Engagement Leaderboard for the sixth consecutive year.

Bloomberg Gender-Equality
Index

PMI was included for the third year in a row in the 2023 Bloomberg Gender-Equality Index (GEI) for its transparency ingender reporting and advancing women’s equity.

Index
memberS&P ESG Evaluation

PMI scored 62/100, based on its ESG Profile Score (59/100) and Preparedness Opinion (“Adequate +3”). The former isbased on entity-specific scores and sector/region scores (score as of February 3, 2023; report available here)

62/100TobaccoTransformation Index

PMI ranked second out of 15 tobacco companies assessed, leading the industry in the “Strategy and Management,”“Capital Allocation & Expenditure,” and “Marketing Policy & Compliance” categories (score as of September 2022).

3.69/5ISS ESGPMI achieved industry leadership, maintaining a rating of “C” (score as of August 2, 2022).

C

State Street R-Factor

Outperformer within the tobacco industry; industry average score of 56 (score as of February 1, 2023)

65

ESG Highlights

May 2023

84/100

Leaderboard

85

Reporting continued

Consolidated list of forward-looking aspirations
Aspiration

Goal

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

Timeline

Sustainability Strategy

Sustainability
Index

Material Topic

2025

Product health impact; Sales,
marketing, and consumer
communications

Estimated number of users who have switched to PMI smoke-free products andstopped smoking (in millions)

>40

2025

Product health impact; Sales,
marketing, and consumer
communications

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

100

2025

Product health impact; Sales,
marketing, and consumer
communications

Proportion of markets where smoke-free products are available that are low- andmiddle-income markets

>50%

2025

Product health impact; Sales,
marketing, and consumer
communications

Proportion of PMI’s total shipment volume covered by youth access prevention
programs in indirect retail channels>90%

Maintain

Product health impact; Sales,
marketing, and consumer
communications

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

>30%

2025

Product health impact

Smoke-free product shipment volume (billion units)

>250

2025

Product health impact

Combustible tobacco product shipment volume (billion units)

<550

2025

Product health impact

Change in combustible tobacco product shipment volume (bn units) vs. 2015 baseline~(40%)

2025

Product health impact

Adjusted net revenues ratio (smoke-free/total)

>50%

2025

Product health impact

≥1

2025

Innovation in wellness and healthcare

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

Business
Transformation Metric
ESG Highlights

Maximize the benefits ofsmoke-free products

Purposefully phaseout cigarettes

Seek net positive impact inwellness and healthcare

May 2023

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index, please refer to PMI's ESG KPI Protocol 2022.

86Reporting continued

Consolidated list of forward-looking aspirations continued
Goal

Timeline

Proportion of shipment volume covered by markets with anti-littering program inplace for combustible cigarettes

≥80%

2025

Materials and product eco-design;
Post-consumer waste

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

100%

2025

Materials and product eco-design;
Post-consumer waste

Cumulative number of smoke-free electronic devices refreshedor repaired since 2021

>1m

2025

Materials and product eco-design;
Post-consumer waste

70%

2023

Materials and product eco-design;
Post-consumer waste

80%

2025

Materials and product eco-design;
Post-consumer waste

Proportion of IQOS device sales volume covered by the CIRCLE program

100%

2025

Materials and product eco-design;
Post-consumer waste

Recycling rate of IQOS devices at the CIRCLE hubs
(weighted average)80%

MaintainMaterials and product eco-design;
Post-consumer waste

Proportion of shipment volume covered by markets with take-back programs inplace for smoke-free consumables

≥80 %

2025

Materials and product eco-design;
Post-consumer waste

Recyclable inner liners

100 %MaintainMaterials and product eco-design;
Post-consumer waste

Proportion of packaging material that is recyclable

100%

2025

Materials and product eco-design;
Post-consumer waste

Proportion of packaging material that is renewable

95%

2025

Materials and product eco-design;
Post-consumer waste

Reduction of packaging materials used vs. 2018 baseline

15%

2025

Materials and product eco-design;
Post-consumer waste

Effective recycling rate IQOS devices

Reduce post-consumer waste
ESG Highlights

May 2023

Sustainability Strategy

Sustainability
Index

Aspiration

Material Topic

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index, please refer
to PMI's ESG KPI Protocol 2022.

87Reporting continued

Consolidated list of forward-looking aspirations continued
Goal

Timeline

Employees earning at least a living wage

100%

Maintain

Employee well-being

Employee Net Promoter Score≥30

Maintain

Employee well-being

Maintain

Employee well-being
Employee well-being

Global EQUAL-SALARY certification

Sustainability Strategy

Sustainability
Index

Aspiration

Material Topic

PMI employees covered by parental leave principals

100%

2022

Total recordable incidents rate (TRIR) per 200,000 hours worked—PMI employees,
contracted employees, and contractors<0.3

Maintain

Health and safety at work

Collision rate within PMI’s fleet of vehicles per year (collisions per million km driven)<0.65

Maintain

Health and safety at work

Proportion of manufacturing facilities with ISO 45001 certification

100%

Maintain

Health and safety at work

Employee self-assessment psychological well-being measure

>70%

2025

Health and safety at work

Proportion of PMI employees who have access to structured
lifelong learning offers

>70%

2025

Diversity and inclusion;
Human capital development

Proportion of management positions held by women≥40%

Maintain

Diversity and inclusion;
Human capital development

32%

2023

Diversity and inclusion;
Human capital development

35%

2025

Diversity and inclusion;
Human capital development

Proportion of Asian talent in senior roles globally

≥20%

2025

Diversity and inclusion;
Human capital development

Proportion of markets or clusters with at least 60% representation of local talent in
the executive management teams

≥80%

2025

Diversity and inclusion;
Human capital development

Proportion of women in senior roles

Foster an empowered andinclusive workplace

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index,
please refer to PMI's ESG KPI Protocol 2022.

88Reporting continued

Consolidated list of forward-looking aspirations continued
Sustainability
Strategy

Sustainability
Index

Aspiration

Goal

Timeline

Proportion of purchased tobacco volume for which labor practices and adherence to
our Agricultural Labor Practices (ALP) Code are systematically monitored>90%

Maintain

Socioeconomic well-being of tobaccofarming communities; Labor standards

Proportion of contracted tobacco farmers supplying tobacco to PMI who make a living
income100%2025

Socioeconomic well-being of tobaccofarming communities; Labor standards

Proportion of contracted farmers supplying tobacco to PMI paying their workers atleast the minimum legal wage or agricultural benchmark

100%

2022

Socioeconomic well-being of tobaccofarming communities; Labor standards

Prevalence of child labor among contracted farms supplying tobacco to PMI

Zero

2025

Socioeconomic well-being of tobaccofarming communities; Labor standards

Proportion of contracted tobacco farmers supplying tobacco to PMI who have accessto water

100%

2025

Socioeconomic well-being of tobaccofarming communities; Labor standards

Proportion of tobacco farmworkers provided with safe and adequate accommodation

100%

Maintain

Socioeconomic well-being of tobaccofarming communities; Labor standards

Proportion of contracted tobacco farmers and farmworkers supplying tobacco to PMI
have access to personal protective equipment for the application of crop protection
agents and prevention of green tobacco sickness

100%

Maintain

Socioeconomic well-being of tobaccofarming communities; Labor standards

Proportion of critical suppliers from whom PMI sources sustainably

100%

2025

Socioeconomic well-being of tobaccofarming communities; Labor standards

Proportion of contracted farmers supplying tobacco to PMI have access to basic
sanitation and hygiene

100%

2030

Socioeconomic well-being of tobaccofarming communities; Labor standards

Improve the quality of life ofpeople in our supply chain

ESG Highlights

May 2023

Material Topic

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index, please refer
to PMI's ESG KPI Protocol 2022.

89Reporting continued

Consolidated list of forward-looking aspirations continued
Sustainability
Strategy

Sustainability
Index

Aspiration

Goal

Timeline

Absolute reduction of CO2e scope 1+2 vs. 2019 baseline

50%

2030

ClimateCarbon neutrality

2025

ClimateProportion of electricity used and purchased that is from renewable sources

100%

2025

ClimateProportion of carbon-neutral factories

100%

2025

ClimateProportion of suppliers by spend (covering purchased goods and services)
Which will have science-based targets (SBT)

15%

2025

Climate25%

2025

Climate50%

2030

Climate35%

2025

Climate50%

2030

ClimateCO2e intensity reduction in tobacco curing vs. 2019 baseline

75%

2025

ClimateProportion of Virginia tobacco purchased cured with coal

0%

2023

ClimateAbsolute reduction of CO2e scope 1+2+3 (‘000 metric tons)

Net zero

2040

ClimateA

Maintain

ClimateNet CO2e scope 1+2 (metric tons)

Material Topic

Absolute reduction of CO2e scope 3 (‘000 metric tons) vs. 2019 baseline

Absolute reduction of CO2e scope 3 (‘000 metric tons) from tobacco supply chain
vs. 2019 baseline

CDP Climate Change rating

Tackle climate change

ESG Highlights

May 2023

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index,
please refer to PMI's ESG KPI Protocol 2022.

90Reporting continued

Consolidated list of forward-looking aspirations continued
Sustainability
Strategy

Sustainability
Index

Aspiration

Goal

Timeline

Proportion of tobacco purchased at no risk of gross deforestation of primary andprotected forests

100%

Maintain

ForestProportion of tobacco purchased at no risk of net deforestation of managed naturalforest and no conversion of natural ecosystems

100%

2025

ForestProportion of flue-cured tobacco purchased that is cured with renewable fuel sources(self-sufficient firewood and biomass adoption)>70%

MaintainA

Maintain

Forest100%

2025

ForestNet positive impact on forest associated with our tobacco supply chain2025

ForestProportion of paper, board, and pulp-based products purchased at no risk of net
deforestation of managed forest and no conversion of natural ecosystems

2030

ForestCDP Forest rating
Proportion of paper, board, and pulp-based materials purchased at no risk of grossdeforestation of primary and protected forests

Material Topic

ForestCubic meters of water optimized in our tobacco-growing areas (cumulative since2019) (million m3)

≥10m

2030

Water

Proportion of tobacco-growing areas which are covered by Local Water Risk
Assessments (cumulative, since 2018)

100%

2025

Water

Water ratio in our manufacturing facilities (water withdrawn in m3 per million units ofcigarettes sold)<3.1

Maintain

Water

Proportion of PMI factories certified to AWS standard

100%

2025

Water

A

Maintain

Water

CDP Water rating

Preserve nature

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index,
please refer to PMI's ESG KPI Protocol 2022.

91Reporting continued

Consolidated list of forward-looking aspirations continued
Aspiration

Goal

Timeline

Sustainability
Strategy

Sustainability
Index

Material Topic

Scale solutions toward a positive impact on water resources, measured as volume ofwater optimized and restored

2033

Water

Contribute toward a positive impact on water resources

2050

Water

Proportion of tobacco purchased without detection of residues attributable to the useof highly hazardous pesticides (HHPs), as defined by FAO and WHO guidelines in
2016

100%

Maintain

Biodiversity

Proportion of tobacco purchased without detection of residues attributable to the useof WHO TOX1 group of crop protection agents

100%

Maintain

Biodiversity

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

2033

Biodiversity

Contribute toward a net positive impact on nature

2050

Biodiversity

Proportion of PMI factories with virtually zero waste to landfill

100%

2022

Waste

Proportion of waste generated from PMI operations recycled

85%

Maintain

Waste

Proportion of waste generated from PMI operations disposed to landfill<1%

Maintain

Waste

Proportion of manufacturing facilities certified to ISO 14001

100%

Maintain

Environmental management

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index, please refer to
PMI's ESG KPI Protocol 2022.

Preserve nature

ESG Highlights

May 2023

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Consolidated list of forward-looking aspirations continued
Fundamentals
Aspiration

Percentage of spend with critical suppliers from whom PMI sources sustainably
Proportion of tobacco purchased through direct contracts by PMI and PMI tobacco
suppliers

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

Manage our supply
chain sustainably

ESG Highlights

Respect forhuman rights

May 2023

Sustainability
Strategy

Sustainability
Index

Goal

Timeline

Material Topic

100%

2025

Sustainable supply chain
management>90%

Maintain

Sustainable supply chain
management

10
highest-riskcountries

2025

Respect for human rights

Notes: See “Performance metrics” section of Integrated Report 2022 (pp. 190-201) for complete aspirations with accompanying footnotes.
For further details on the definitions, scope, calculation methodology, and data management for the metrics included in PMI’s Sustainability Index,
please refer to PMI's ESG KPI Protocol 2022.

93Reporting continued

Performance metrics
Please visit
www.pmi.com/sustainability/performance-metrics
to browse and download our Business Transformation Metrics
and complete performance data.

GRI Content Index
SASB Content Index
available here
Read more in PMI’s
2022 Integrated Report
ESG KPI Protocol andSustainability Index

ESG Highlights

May 2023

94

Reporting continued

Further resources

Integrated Report
2022

More resources

ESG Highlights

ESG KPI Protocol

Sustainability ReportingMay 2023

TCFD Report

Sustainability Resources

Business
TransformationLinked Financing
Framework

Biodiversity and
Water

Post-consumer
waste strategy

Subscribe to PMI's quarterly Sustainability newsletter

95

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Glossary of terms and acronyms
3TGs – Tin, tantalum, tungsten, and gold
Aerosol – Gaseous suspension of fine solid particles and/or
liquid droplets
ALP – Agricultural Labor Practices
ASI – Aluminum Stewardship Initiative
AWS – Alliance for Water Stewardship
B2B – Business to business
B2C – Business to consumer
CA – Cellulose acetate
CAGR – Compound annual growth rate
Caregiver – A person who has responsibility for the care of a new-born
child or newly adopted child including the child’s biological parent, the child’s
adoptive parent, a person having legal parental responsibility for the childsuch as the child’s guardian, a stepparent, or a child’s parent throughsurrogacyPrimary caregiver – The caregiver who has the primary responsibility for thecare of the new-born or newly adopted child following the child’s arrival
Secondary caregiver – A caregiver who is not the primary caregiver
Combustible tobacco product – The term we use to refer to cigarettes andother tobacco products that are combusted.
Combustion – The process of burning a substance in oxygen, producing
heat and often light
Company Management – The term we use to refer to the senior
management of the company, as presented on our www.PMI.com site (alsoreferred to as “our leadership team” or “senior management team”)
Contracted employee – We define a contracted employee as an employee
who is under the direct supervision of PMI employees but employed by atemporary employment agency
Contracted farmers – Tobacco farmers supplying to PMI and contracted
either directly by PMI (through the company’s leaf operations) or throughthird-party leaf suppliers
Contractor – We define a contractor as a person employed or working on
behalf of a third-party company contracted by PMI, who remains under the
direct supervision of his or her employer rather than PMI and is often
involved in project-specific or outsourcing arrangements
COPD – Chronic obstructive pulmonary disease
CPA – Crop protective agent
Downstream supply chain – Those stages in the supply chain in whichmaterials (mostly in the form of finished products) flow away from theorganization to the customers/consumers.

ESG Highlights

May 2023

Downstream supply chain – Those stages in the supply chain in whichmaterials (mostly in the form of finished products) flow away from theorganization to the customers/consumers.
E-liquids – A liquid solution that is used in/with e-cigarettes. E-liquids containdifferent levels of nicotine in a propylene glycol and/or vegetable glycerinbased solution with various flavors.
E-vapor product – Electrical product that generates an aerosol by heating anicotine or non-nicotine containing liquid, such as electronic cigarettes (or “ecigarettes”)
EHS – Environmental, Health, and Safety
Employee resource groups, or ERGs – Employee-led groups that focus onparticular dimensions of diversity and are intended to provide a platform forbuilding a sense of belonging and sparking conversations.
EPR – Extended Producer Responsibility
ERM – Enterprise Risk Management
ESG – Environmental, Social, and Governance
FAO – Food and Agriculture Organization of the United Nations
FCTC – WHO Framework Convention on Tobacco Control
FDA – U.S. Food and Drug Administration
FSC – Forest Stewardship Council
GAP – Good Agricultural Practices
Gender pay gap – Calculated as the percentage difference between thesum of annual base salary, bonus, and stock options.
GHG – Greenhouse gas
GPP – Global Privacy Program
Heated tobacco units, or HTUs – The term we use to refer to heated
tobacco consumables, which include the company’s BLENDS, HEETS,HEETS Creations, HEETS Dimensions, HEETS Marlboro and HEETS FROMMARLBORO (defined collectively as HEETS), Marlboro Dimensions,Marlboro HeatSticks, Parliament HeatSticks, SENTIA and TEREA, as well as
the KT&G-licensed brands, Fiit and Miix (outside of South Korea).
HPHCs – The harmful or potentially harmful constituents which have been
identified as likely causes of tobacco- related diseases by various publichealth institutions
Human Rights Impact Assessment, or HRIA – Assessments to
identify human rights risks and adverse impacts
Human rights salient risks – Those human rights that stand out because
they are at risk of the most severe negative impact through the company’s
activities or business relationships (source: UN Guiding Principles)

Illicit trade – Domestic non-tax paid products
ILO – International Labour Organization
In-market sales, or IMS – Sales to the retail channel, depending on themarket and distribution model
Insetting – The act of generating a carbon credit within the corporate’s
sphere of influence and retiring the unit on behalf of 1 ton of carbon that has
been emitted by the corporate (source: International Carbon Reduction andOffset Alliance)
IP5 – The five largest intellectual property offices in the world
IPM – Integrated Pest Management
IPS – Integrated Production System
IQOS heat-not-burn devices – Precisely controlled heating devices into
which a specially designed and proprietary tobacco units are inserted andheated to generate an aerosol.
KPIs – Key performance indicators
LCA – Life-cycle analysis
Low- and middle-income markets, or LMIMs – Markets comprised ofcountries classified by the World Bank as low- and middle-income economies
based on Gross National Income (GNI) per capita; or where no World Bank
classification exists, those with GNI per capita below the World Bank LMIC
threshold
LTIR – Lost Time Incident Rate
Managerial roles – The terms we use to refer to employees in different
salary grades, regardless of their job title or function• Junior roles – Employees in salary grade 9 or below• Managers – Employees in salary grade 10 to 13• Management positions – Employees in salary grade 10 and above• Senior roles – Employees in salary grade 14 and above• Senior leaders – Employees in senior leadership roles
including all employees in salary grade 17 and above
Market share for HTUs – The in-market sales volume for HTUs as apercentage of the total estimated industry sales volume for cigarettes and
HTUs. For Japan, total estimated industry sales volume also includes
cigarillos
MRTP – Modified Risk Tobacco Product
MVR – Monitoring, Verification, and Reporting Framework for Sustainable
Leaf Curing Fuels
NCGC – Nominating and Corporate Governance Committee of PMI’s Boardof Directors

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Glossary of terms and acronyms continued
Net debt – defined as total debt, less cash and cash equivalents.
Net revenues related to combustible tobacco products – The operating
revenues generated from the sale of these products, including shipping andhandling charges billed to customers, net of sales and promotion incentives,and excise taxes. These net revenue amounts consist of the sale of ourcigarettes and other tobacco products that are combusted. Other tobacco
products primarily include roll-your-own and make-your-own cigarettes, pipe
tobacco, cigars and cigarillos and do not include smoke-free products.
Net revenues related to smoke-free products – Represent operating
revenues generated from the sale of these products, including shipping andhandling charges billed to customers, net of sales and promotion incentives,and excise taxes, if applicable. These net revenue amounts consist of thesale of all of our products that are not combustible tobacco products, suchas heat-not-burn, e-vapor, and oral nicotine, also including wellness andhealthcare products, as well as consumer accessories such as lighters andmatches.
Net revenues related to wellness and healthcare products – Represent
operating revenues generated from the sale of products primarily associatedwith inhaled therapeutics, and oral and intra-oral delivery systems that areincluded in the operating results of PMI's new Wellness and Healthcare
business, Vectura Fertin Pharma.
NGOs – Non-governmental organizations
No Net Loss – The point at which business-related impacts on biodiversity
are balanced by measures from the mitigation hierarchy, to leave nodegradation on natural ecosystems at end balance.
NRTs – Nicotine replacement therapies
OECD – Organisation for Economic Cooperation and Development
Offsetting – The act of purchasing a carbon credit generated outside thecorporate’s sphere of influence and retiring the unit on behalf of 1 ton ofcarbon that has been emitted by the corporate (source: International Carbon
Reduction and Offset Alliance)
OHS – Occupational Health and Safety
Other Tobacco Product– Primarily roll-your-own and make yourown cigarettes, pipe tobacco, cigars and cigarillos, and does not include
smoke-free products
PCI – Portfolio of Climate Investments
OECD – Organisation for Economic Cooperation and Development

ESG Highlights

May 2023

PMI Segments
As of December 31, 2022, we managed our business in six geographicalsegments, a Swedish Match segment and a Wellness and Healthcare
segment:• The European Union Region (“EU”) is headquartered in Lausanne,
Switzerland, and covers all the European Union countries and also
Switzerland, Norway, Iceland and the United Kingdom;• The Eastern Europe Region (“EE”) is also headquartered in Lausanneand includes Southeast Europe, Central Asia, Ukraine, Israel and Russia;• The Middle East & Africa Region (“ME&A”) is also headquartered in
Lausanne and covers the African continent, the MiddleEast, Turkey andour international• duty free business;• The South & Southeast Asia Region (“S&SA”) is headquartered in Hong
Kong and includes Indonesia, the Philippines and other markets in thisregion;• The East Asia & Australia Region (“EA&A”) is also headquartered in Hong
Kong and includes Australia, Japan, South Korea, the People's Republicof China ("China") and other markets in this region, as well as Malaysia
and Singapore;• The Americas Region (“AMCS”) is headquartered in Stamford,
Connecticut and covers the South American continent, Central America,
Mexico, the Caribbean and Canada;• Swedish Match, which reflects our fourth quarter 2022 acquisition of thecompany; and• Wellness and Healthcare ("W&H"), which includes the operating results ofour new Wellness and Healthcare business, Vectura Fertin Pharma. In
the third quarter of 2021, we acquired Fertin Pharma A/S, Vectura Groupplc.(also known as Vectura Group Ltd.) and OtiTopic, Inc. On March 31,
2022, we launched a new Wellness and Healthcare businessconsolidating these entities, Vectura Fertin Pharma. The operating resultsof this new business are reported in the Wellness and Healthcare
segment.
To further support the growth of our smoke-free business, reinforce
consumer centricity, and increase the speed of innovation and deployment,
in January 2023, we rearranged our operations in four geographicalsegments, down from the current six and as follows:• Europe Region is headquartered in Lausanne, Switzerland, and covers all

the European Union countries, Switzerland, the United Kingdom, and also
Ukraine, Moldova and Southeast Europe;• South and Southeast Asia, Commonwealth of Independent States, Middle
East and Africa Region is headquartered in Dubai, United Arab Emirates.
It covers South and Southeast Asia, the African continent, the Middle
East, Turkey, as well as Israel, Central Asia, Caucasus and Russia;• East Asia, Australia, and PMI Duty Free Region is headquartered in Hong
Kong and includes the consolidation of our international duty freebusiness with East Asia & Australia; and• Americas Region is headquartered in Stamford, Connecticut and covers
the United States, Canada and Latin America.
• The operations of Swedish Match and our Wellness and Healthcare
segment remained unchanged. We will report our financial results basedon the new geographical segments as of the first quarter of 2023.
PMI heat-not-burn products (also referred to as PMI heated tobacco
products) – Include licensed KT&G heat-not-burn products.
PMTA – Pre-Market Tobacco Application
QMS – Quality management system
R&D – Research and development
RBA – Responsible Business Alliance
Reduced-risk products or RRPs –The term we use to refer to productsthat present, are likely to present, or have the potential to present less risk ofharm to smokers who switch to these products versus continuing smoking.
PMI has a range of RRPs in various stages of development, scientificassessment and commercialization. PMI's RRPs are smoke-free productsthat contain and/or generate far lower quantities of harmful and potentiallyharmful constituents than found in cigarette smoke.
Refreshed devices – Smoke-free devices resulting from the care andmaintenance refresh services (which may include unpacking, diagnostics,
cleaning, firmware update, cosmetic parts replacement, battery charging,
and repacking of devices) that meet the agreed quality requirements to allow
for their re-use as pre-owned devices
Repaired devices – Smoke-free devices resulting from the care andmaintenance repair services (which may include unpacking, diagnostics,
testing, cleaning, battery charging, firmware update, cosmetic part or battery
replacement, component harvesting, and repacking of devices) that meet
the agreed quality requirements to allow for their re-use as pre-owned
devices97

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Glossary of terms and acronyms continued
RMI – Responsible Minerals Initiative
RSP – Responsible Sourcing Principles
SBT – Science-based target
SBTi – Science Based Targets initiative
SDGs – Sustainable Development Goals
Smoke – A visible suspension of solid particles, liquid droplets, and gases
in air, emitted when a material burns

Note: The above IQOS user metrics reflect PMI estimates, which are basedon consumer claims and sample-based statistical assessments with anaverage margin of error of +/-5% at a 95% Confidence Interval in key
volume markets. The accuracy and reliability of IQOS user metrics mayvary based on individual market maturity and availability of information. As
of December 2020, PMI heat-not-burn products and HTUs include licensed
KT&G heat-not-burn products and HTUs, respectively.
TRIR – Total Recordable Incident Rate

Smoke-free products or SFPs – The term we primarily use to refer to allof its products that are not combustible tobacco products, such as heat-notburn, e-vapor, and oral nicotine. In addition, SFPs include wellness andhealthcare products, as well as consumer accessories such as lighters andmatches.

UNGPs – United Nations Guiding Principles on Business and Human
RightsSmoke-free product consumables – The term PMI uses to refer to heated
tobacco units used with heat-not-burn products, e-vapor disposables,
cartridges containing e-liquids that are used for e-vapor products, and oral
nicotine products including snus and nicotine pouches
TGA – Tobacco-growing area

VAP – Validated Assessment Program of the Responsible Business
Alliance (RBA) is a leading standard for on-site compliance verification andeffective, shareable audits
Voluntary standards and frameworks

Tier 1 suppliers – Suppliers that directly supply goods, materials
or services to PMI
Tier 2 suppliers – Suppliers that provide their products andservices to the Tier 1 suppliers
TNFD – Taskforce on Nature-related Financial Disclosures
Tons – “Tons” equates to “metric tons” throughout this report
Total IQOS users – The estimated number of legal age (minimum 18
years) users of PMI heat-not-burn products, for which PMI HTUs
represented at least a portion of their daily tobacco consumption over the
past seven days.
The estimated number of adults who have "switched to IQOS and stopped
smoking" reflects:• In markets where there are no heat-not-burn products other than PMI
heat-not-burn products, daily individual consumption of PMI HTUs
represents the totality of their daily tobacco consumption in the pastseven days;• In markets where PMI heat-not-burn products are among other heat-notburn products. daily individual consumption of HTUs represents thetotality of their daily tobacco consumption in the past seven days, ofwhich at least 70% is PMI HTUs.

ESG Highlights

May 2023

Upstream supply chain – Those operations in which the materials flow
into the organization (i.e., it mainly refers to procurement activities andinbound logistics)• Global Reporting Initiative (GRI)• International Integrated Reporting Council (IIRC)• Sustainability Accounting Standards Board (SASB)• Task Force on Climate-related Financial Disclosures (TCFD)• UN Global Compact (UNGC)• UN Sustainable Development Goals (SDGs)
WASH – Water access, sanitation, and hygiene
WBCSD – World Business Council for Sustainable Development
Wellness and Healthcare products – The term we use to primarily refer toproducts associated with inhaled therapeutics and oral and intra-oraldelivery systems that are included in the operating results of PMI's new
Wellness and Healthcare business, Vectura Fertin Pharma.
WHO – World Health Organization
YAP – Youth access prevention
ZDM – Zero Deforestation Manifesto

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Glossary of terms and acronyms continued
Key definitions related to our work to improve tobacco farmer livelihoods:
A living income and living wage are both about achieving adecent standard of living. A living income is the net annual
income required for a household to afford a decent standardof living for all its members and applies to, for example, selfemployed farmers. A living wage is applied in the context of
hired workers (e.g., in factories or on farms). (source: The
Global Living Wage Coalition).

Hazardous work means work that, by its nature or by virtueof when or where it is carried out, is likely to harm the health,safety, or morals of children or others. The following can, forexample, be hazardous, particularly without the proper PPE:
applying crop protection agents (CPA); stalk cutting; stringing;carrying heavy loads; working with sharp tools; working in
extreme temperatures; and working after dark.

A minimum legal wage, as defined in PMI’s ALP Code,is a wage for all workers (including temporary, piece-rate,seasonal, and migrant) that meets, at a minimum, the national
legal standard or formalized agricultural benchmark standard.
An agricultural benchmark may be formalized where a minimum
legal wage is not available or applicable to a
specific context.

Green tobacco sickness or GTS is a type of nicotine
poisoning caused by the absorption of nicotine from the surface
of wet, fresh, green tobacco leaves through the skin. The
characteristic symptoms of GTS include nausea, vomiting,weakness, dizziness, stomach cramps, difficulty breathing,excessive sweating, headache, and fluctuations in bloodpressure and heart rate. They can last from 12 to 48 hours.1

Child labor, as defined by the ILO, is work that deprives
children of their childhood, their potential and their dignity,
and that is harmful to physical and mental development. Under
PMI’s ALP Code, the minimum age for admission to work is notless than the age at which compulsory schooling is completed
and, in any case, is not less than 15 years or the minimum age
accepted by the country’s laws, whichever age limit affords
greater protection. No person below age 18 should be involvedin any type of hazardous work. In the case of family farms, achild may only help on the farm provided that the work is nonhazardous, and the child is at least 13 years old or above theminimum age for such work as defined by the country’s laws,
whichever affords greater protection.

Personal protective equipment or PPE in tobacco farming
refers to any clothes, materials, or devices that provide
protection from exposure to CPA and GTS during specificactivities throughout the crop cycle.2

ESG Highlights

May 2023

Living income benchmark studies are studies conductedin specific regions or areas to estimate the net annual income
required for a household to afford a decent standard of living for
all members of that household.

estimate of living wage or income at a country level, for ruraland urban areas. They offer an insightful reference beyond thecurrently available indicators for many countries, which aremostly limited to poverty lines and minimum wages.
Farmer income studies are conducted, through third-party
service providers, to assess all legal income sources ofcontracted farmers within PMI’s tobacco supply chain, including
tobacco, complementary crops, and off-farm income.
Sustainable Tobacco Supply Chain framework or STSC –PMI’s new approach focused on the full life cycle of tobacco
production and targets actions toward the tobacco we purchaseand use in our products.

1 Schep LJ, Slaughter RJ, Beasley DM (September-October 2009). “Nicotinic plantpoisoning.” Clinical Toxicology.
2 Adapted from the FAO/WHO (2014). International Code of Conduct on Pesticide
Management.
3 Reference values are built on data and knowledge gained from 40 complete Anker
methodology benchmark studies. Since they are based on a statistical analysis, they havea margin of error for typical rural (or urban) areas of a country, which is generally around+/– 10% using a 95% confidence interval. Sources: Living Income Reference Values |livingincome (living-income.com) and Anker Living Wage and Living Income Reference
Values | Global Living Wage Coalition.

Living Income Reference Values represent a living income fortypical families in rural (or urban) areas of low-income andmiddle-income countries.3 Reference Values provide a credible

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Reporting continued

Notes
In this presentation, “PMI,” “we,” “us,” and “our” refer toPhilip Morris International Inc. and its subsidiaries.
In this presentation and in related communications, theterm “materiality,” “material,” and similar terms, whenused in the context of economic, environmental, andsocial topics, are defined in the referenced sustainability
standards, and are not meant to correspond to theconcept of materiality under the U.S. securities laws
and/or disclosures required by the U.S. Securities andExchange Commission.
This presentation contains references and links to
websites operated by third parties. These references areprovided as a convenience to you and as an additional
avenue of access to the information contained in thosesources; they should not be viewed as an endorsement
by us of the content of these references and linked sites
or opinions of their authors.

Trademarks and service marks in this report are theregistered property of, or licensed by, the subsidiaries ofPhilip Morris International Inc., and are italicized or shownin their logo form.
Estimates for total industry volume and market share incertain geographies reflect limitations on the availability
and accuracy of industry data during pandemic-related
restrictions.
Aspirational targets and goals do not constitute financial
projections, and achievement of future results is subject
to risks, uncertainties, and inaccurate assumptions, as
outlined in our forward-looking and cautionary statements
on slide 5 of this presentation.
This presentation should be read in conjunction with
PMI’s 2022 Integrated Report and ESG KPI Protocol
2022

Unless otherwise stated, all references to IQOS are to our
IQOS heat-not-burn devices and consumables.

©2023 Philip Morris International, Inc. All rights reserved.

ESG Highlights

May 2023100