Recently expanded sustainability materiality assessment informs priorities of PMI’s transformation, strategies for ESG goals, future targets, reporting, and emerging topics

Today, Philip Morris International Inc. (PMI) (NYSE: PM) published its Sustainability Materiality Report 2021. Conducted in the second half of 2021, the sustainability materiality assessment helps identify the environmental, social, and governance (ESG) issues that the Company should focus on. The assessment consists of a threefold approach that evaluates both outward and inward impacts in line with the principles of double-materiality, and accounts for the expectations of the Company’s stakeholders. The report describes the sustainability materiality assessment process and findings, which inform PMI’s sustainability strategy.

Results of PMI’s 2021 sustainability materiality assessment led to the development of a renewed strategic framework, which shows two distinct forms of social and environmental impacts: (1) those that derive from PMI’s products (from what it produces); and (2) those that derive from its business activities (from how it operates). Topics related to the social impacts generated by PMI’s products—including “product health impacts,” “sales, marketing, and consumer communications,” and “wellness and healthcare”—were identified as a clear priority and represent those areas with the greatest transformative potential for the Company. In specific, “product health impact” was deemed the topic carrying both the biggest risks and the greatest opportunities linked to reputation, regulation, and revenue growth. Further, “wellness and healthcare” was included as a new topic in the 2021 assessment, in line with PMI’s aims to generate revenues from products that do not contain tobacco or nicotine and to transition into a broader lifestyle and consumer wellness company. Additionally, PMI identified three topics that were not included in the list of most material topics, but that the Company expects to gain momentum in the future: “human capital development,” “biodiversity,” and “water.”

“As we continue to strengthen the integration of ESG-related risks into our integrated enterprise risk assessment, conducting periodic sustainability materiality assessments allows us to monitor and adapt our business and long-term strategy to social, environmental, economic, political, and technological changes,” said Jennifer Motles, Chief Sustainability Officer, PMI. “With every assessment, we are able to further embed sustainability into corporate strategy strengthening processes, understanding PMI’s impacts, and delivering decision-useful reporting to our stakeholders.”

The 2021 assessment followed a structured five-step approach, namely: (1) identifying ESG topics; (2) gathering internal and external stakeholder perspectives; (3) assessing outward impacts; (4) assessing inward impacts; and (5) defining the most material ESG topics. By compiling all findings from the assessment, PMI identified six topics that cumulatively received the highest scores in both the inward and the outward impact assessments, as well as three topics that were of very high importance according to stakeholders. Finally, PMI identified three topics that were not included in the list of most sustainability material topics but are expected to gain momentum in the future.

To read the Sustainability Materiality Report 2021, please visit this link.

In the Sustainability Materiality Report 2021 and in related communications, the terms “materiality,” “material” and similar terms, when used in the context of economic, environmental, and social topics, are defined in the referenced sustainability standards and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by the U.S. Securities and Exchange Commission.

Philip Morris International: Delivering a Smoke-Free Future

Philip Morris International (PMI) is a leading international tobacco company working to deliver a smoke-free future and evolving its portfolio for the long-term to include products outside of the tobacco and nicotine sector. The company’s current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor and oral nicotine products, which are sold in markets outside the U.S. Since 2008, PMI has invested more than USD 9 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 of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. The U.S. Food and Drug Administration (FDA) has authorized the marketing of a version of PMI’s IQOS Platform 1 device and consumables as a Modified Risk Tobacco Product (MRTP), finding that an exposure modification order for these products is appropriate to promote the public health. As of December 31, 2021, PMI's smoke-free products are available for sale in 71 markets, and PMI estimates that approximately 15.3 million adults around the world have already switched to IQOS and stopped smoking. With a strong foundation and significant expertise in life-sciences, in February 2021 PMI announced its ambition to expand into wellness and healthcare areas and deliver innovative products and solutions that aim to address unmet patient and consumer needs. For more information, please visit www.pmi.com and www.pmiscience.com.

Forward-Looking and Cautionary Statements

This press release contains projections of future results and other forward-looking statements. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” 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 those contained in any forward-looking statements made by PMI.

PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing and regulatory restrictions that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products in certain markets or countries; health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco use and intellectual property; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost, availability, and quality of tobacco and other agricultural products and raw materials, as well as components and materials for our electronic devices; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to produce and commercialize reduced-risk products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, including new products around wellness and healthcare or products that do not contain nicotine or tobacco, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; or if it is unable to attract and retain the best global talent, including attracting women or diverse candidates. Future results are also subject to the lower predictability of our reduced-risk product category's performance.

PMI is further subject to other risks detailed from time to time in its publicly filed documents, including the Form 10-Q for the quarter ended September 30, 2021. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.

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