Publishes Low-Carbon Transition Plan with updated targets and detailed strategy to decarbonize its direct operations by 2025 and to achieve net-zero emissions across its entire value chain by 2040

As the urgency to adapt and take action to tackle the climate change crisis becomes more pressing, Philip Morris International Inc. (PMI) (NYSE: PM) today releases its Low Carbon Transition Plan (LCTP), which provides a transparent and detailed view on how we plan to achieve our climate ambitions, measure success, and report on progress.

The plan brings forward PMI’s ambitions to achieve carbon neutrality in its direct operations (scopes 1+2) by five years, to 2025, and to achieve carbon neutrality across its entire value chain (scopes 1+2+3) by 10 years, to 2040. In addition, it introduces a new goal for PMI’s critical suppliers to adopt science-based targets (SBTs) in line with the SBTs that PMI has already committed to, aligned with the 1.5°C pathway necessary to meet the goals of the Paris Agreement. The importance of this new target is linked to the relevance attributed to supplier engagement, which is essential to support the achievement of PMI’s CO₂ reduction targets for scope 3 over time, allowing the company to maintain its leadership role in climate actions. The LCTP links these considerable ambitions to the company’s purpose and even greater fundamental ambition of ridding the world of cigarettes, while further seeking a net-positive impact on society.

“By presenting our low-carbon transformation strategy, we hope to encourage change and foster engagement with investors and other stakeholders who will be able to evaluate whether our company is appropriately adapting its business model for success in a net-zero carbon economy,” said Jennifer Motles, Chief Sustainability Officer. “The LCTP showcases how our targets are underpinned by detailed operational measures and a solid business strategy, which are vital to translate ambition into action, achievement, and impact, and most important, the only way to safeguard the sustainability of our business and to help contribute to wider societal action.”

Delivering on climate ambitions to create long-term value

PMI has adopted a three-step approach to achieving its emissions targets: 1) reducing consumption and optimizing efficiency to cut greenhouse gas (GHG) emissions, 2) minimizing the use of fossil fuels and promoting the switch to renewable energy, and 3) compensating unavoidable emissions by prioritizing insetting projects (nature-based solutions) and purchasing high-quality carbon credits.

“Strong action must be taken to reduce the risks of climate change and stop the destruction of nature. We believe that PMI must play its part in protecting vulnerable ecosystems and communities around the world by reducing our environmental impact across our value chain, and by defining and executing strategies and initiatives to achieve our long-term targets,” said Massimo Andolina, SVP, Operations. “Our business and sustainability strategies are advancing hand-in-hand with increasing momentum, and we are investing in innovative programs and taking a multidisciplinary approach to reducing the environmental impact of our products, operations, and value chain.”

Investing in nature-based solutions: Portfolio of Climate Investments

Recognizing that with today’s technologies, some emissions are unavoidable, PMI’s approach to carbon pricing announced last year includes the introduction of two complementary internal carbon prices: a shadow price of USD 65 per ton of CO₂e and a carbon levy of USD 8 per ton of CO₂e. The shadow price helps in the prioritization of business cases for investment in activities aimed at structurally reducing carbon emissions, while the carbon levy helps size the investments required today to decrease GHG emissions through offsetting and insetting initiatives.

Guiding these initiatives, PMI has created its Portfolio of Climate Investments (PCI), which will provide transparency in the activities necessary to further the company’s decarbonization efforts. The PCI’s advisory committee is responsible for managing and allocating the budget for climate-investment solutions along three main lines of intervention: purchases of high-quality carbon credits to support short-term neutrality targets, investments in insetting projects within PMI’s value chain to support long-term net-zero ambitions, and investments in innovative technologies that can help permanently remove carbon from the atmosphere.

Social and Environmental Connectivity

Climate change impacts not only the environment but also people’s livelihoods. PMI’s efforts to combat climate change are not limited to working towards carbon neutrality in its operations and across its entire value chain. The company is also working to adapt to the impact of climate change and increase the resilience of its business and the communities where it operates. Recognizing that sustainability challenges do not exist in a vacuum but are often linked to one another and must be considered to craft appropriate solutions, PMI commissioned Article One to prepare a briefing paper, entitled: “Climate Justice in Global Supply Chains: A Perspective for the Private Sector.” The paper will discuss the connectivity between environmental and social issues, drawn from the impacts of climate change, as well as the ability to shape solutions that are mutually reinforcing.

Recognitions of PMI’s climate action progress

In the S&P Global Ratings’ ESG Evaluation report, PMI was recognized not only as a leader in the transition to carbon neutrality but an industry differentiator for its approach to carbon pricing. The company was also included in the Dow Jones Sustainability Index (DJSI) North America for the first time last year, achieving the highest score of 100 in the climate strategy, environmental reporting, and environmental policy and management systems categories. In 2020, PMI was one of just 10 companies worldwide to receive the prestigious “Triple A” score for environmental sustainability leadership by CDP, and maintained its position on CDP’s A List for Climate Change for the seventh year in a row. In addition, CDP placed PMI on its Supplier Engagement leaderboard for the fourth consecutive year.

To access PMI’s LCTP Report, as well as additional information on PMI’s approach to sustainability, please refer to the LCTP Report and PMI Sustainability. To review PMI’s integrated performance, please refer to PMI’s 2020 Integrated Report, which includes progress on the company’s efforts to reduce its carbon footprint. The report addresses some recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), while the remainder are covered by the company’s reporting to CDP.

Philip Morris International: Delivering a Smoke-Free Future

Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke, society, the company, its shareholders, and other stakeholders. PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes, as well as smoke-free products, associated electronic devices and accessories, and other nicotine-containing products in markets outside the U.S. In addition, versions of PMI's IQOS Platform 1 device and consumables have received marketing authorizations from the U.S. Food and Drug Administration (FDA) under the premarket tobacco product application (PMTA) pathway; the FDA has also authorized the marketing of a version of IQOS and its consumables as a Modified Risk Tobacco Product (MRTP), finding that an exposure modification order for these products is appropriate to promote the public health. PMI is building a future on a new category of smoke-free products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary capabilities in product development, state-of-the-art facilities, and scientific substantiation, PMI aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements. PMI’s smoke-free product portfolio includes heat-not-burn products, nicotine-containing vapor products and oral nicotine products. As of September 30, 2021, PMI’s smoke-free products are available for sale in 70 markets in key cities or nationwide, and PMI estimates that approximately 14.9 million adults around the world have already switched to IQOS and stopped smoking. For more information, please visit www.pmi.com and www.pmiscience.com.

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