The science behind sustainability at PMI

What role does science play in sustainability at PMI? 

Science is a path to understanding the world around us. The global sustainability issues we face require a deep understanding of their causes, how the issues are interrelated, and the actions we can take to remedy them. Science and technology can play an immense role in building the necessary knowledge and choosing our actions to maximize impact. At PMI, science and technology are the engine of our business transformation, centered around our vision of accelerating the end of smoking. We rely on expert opinions from the scientific community to help guide our approach to sustainability. We also join forces with our stakeholders, experiment and implement meaningful actions, and monitor the impact of our actions.

Science also calls for rigorous measurement and transparency, both of which we seek to apply to our sustainability priorities. Our goal of replacing cigarettes completely with better, smoke-free alternatives needs to be sustainable in many ways, not only considering our environmental impact. For instance, with the impact of our products at the core of our strategy, we developed early on a set of Business Transformation Metrics, which we report on periodically. This set of performance indicators, which we’ve expanded over the years to increase transparency and clarity, allows our stakeholders to assess both the pace and scale of our transformation. It also showcases how we’re allocating resources away from our traditional cigarette business, aiming to base our success on a future where we no longer make or sell cigarettes.

 

How does science help PMI set targets for its environmental programs? 

Basic scientific research has provided a stronger understanding of the pressures facing the environment, providing a deeper awareness of planetary boundaries. These boundaries tell us the extent to which humans can interact with the Earth’s systems without causing an upset to that system. Climate change is one consequence of humans crossing planetary boundaries. PMI sets many of its climate-related targets in response to science-based global targets, like the Paris Climate Agreement. This agreement aims to stabilize global warming to 1.5 °C above pre-industrial levels. Global science-based targets like these provide a helpful framework for companies like ours to define targets in a way that effectively contributes to globally agreed goals.

In 2020, we strengthened our science-based targets to align with the recommendations of the Paris Climate Agreement: we have set science-based targets for reduction versus the 2019 baseline by 50% on scope 1+2 and also scope 1+2+3 by 2030. Those targets play a key role in our roadmap towards our goal of carbon neutrality in our direct operations by 2025 and our longer-term ambition of achieving net-zero emissions across our entire value chain by 2040. The potential of science-based targets is, however, not limited to climate action, and I’m pleased to see current developments around the application of such frameworks to other pressing environmental issues like biodiversity and freshwater.

 

What are our goals for carbon emissions at PMI, and what specifically are we doing to achieve those goals? 

Carbon emissions are a major contributor to the climate crisis and one of the principal threats to our planet. This is why reducing carbon emissions is a high priority for PMI. We’ve adopted a three-step approach to achieving our emissions targets:

In our value chain, we have the most control over our sites and our fleet. We invest in optimizing energy and process efficiencies and replacing fossil fuel-based energy with renewable sources. To reduce carbon emissions in our manufacturing sites, we promote efficient energy use, empower our workers to recommend and implement solutions, and we apply those improvements in the factories as well as across the company, just to name a few examples.

We compensate for our carbon emissions only as a last resort. In 2020, we developed a targeted study to map the potential of nature-based solutions in our tobacco supply chain and evaluate carbon sinks. The study helped define where we could make changes for the biggest impact to compensate our carbon emissions from within our own supply chain. We’ll be reporting on the projects that came out of this study in our next integrated report.

We introduced two complementary internal carbon prices last year: a shadow price of USD 65 per ton of CO2e (carbon dioxide equivalent) and a carbon levy of USD 8 per ton of CO2e. The shadow carbon price is a theoretical cost that helps us prioritize business cases for investment in activities aimed at structurally reducing carbon emissions. The carbon levy is an internal tax that is virtually charged to a selection of our business units as an incentive to reduce emissions and fund compensation solutions for unavoidable emissions. This helps us to size the investments required today to decrease GHG emissions through offsetting and insetting initiatives.

 

Final thoughts to share?

Not all sustainability issues are created equal. A company must focus on those sustainability issues where it can have the greatest impact. We are finalizing a new, comprehensive sustainability materiality assessment that will help us to define our new strategy for sustainability. This will help keep our strategy current, allow us to best fulfill our stakeholders’ expectations regarding sustainability, and ensure that our initiatives continue to address the issues where we can have the greatest impact. This will allow us to reassess, recalibrate, and reaffirm our goals. We will communicate the findings in our next report. Stay tuned!