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‘Sustainability, in all dimensions, is at the core of our business strategy’

Since joining Philip Morris International (PMI) in 1996, Roman Yazbeck has had an impressive career in PMI defined across functions and continents, starting as a Controller, Director Finance and Director Corporate Affairs in Italy to Managing Director Romania and Bulgaria to Area VP Northern Russia then Africa and the Levant to, most recently, VP External Affairs & Business Development South and Southeast Asia. He relocated from Hong Kong to Karachi in Jan 2020 to take up the role.

Roman has led the efforts in building regulatory pathways and engaging both scientists and medical communities. Further, he also helped build political support and has scouted, designed and built new business partnerships and legal entity constructs, enabling the forthcoming success of PMI’s smoke-free future in S&SA.

BR Research recently had an in-depth discussion on how tobacco companies can be sustainable and play their role in minimizing the negative externalities associated with their products. The discussion in PMI’s context is produced below:

BR Research: Philip Morris International (PMI) has recognized the importance of sustainability and made it a key focus area in its operations. What are some of the sustainability initiatives that the company has implemented globally?

Roman Yazbeck: For PMI, sustainability is a fundamental opportunity for innovation and long-term value creation and is more than just a means to minimise negative externalities and mitigate risks while maximizing operational efficiency and resource optimization. PMI’s business transformation connects sustainability and corporate strategy, recognizing that Environment Social and Governance (ESG) issues are business issues. As a consequence, sustainability, in all its dimensions, is at the absolute core of its business strategy.

Among the other ambitious sustainability targets that PMI has set for itself, the target for no net loss is also one of the important sustainability targets. PMI has set a target for no net loss on ecosystem connected to its value chain by 2033. In conjunction PMI has ambitions in place to halt deforestation focused on achieving zero net deforestation of managed natural forests and no conversion of natural ecosystem in both PMI’s supply chain (by 2025) and its paper and pulp-based products supply chain (by 2030).

Working closely with its suppliers and farmers, PMI is establishing traceability to the point of harvest and extensively documenting its sustainable forestry practices. Philip Morris (Pakistan) Limited (PMPKL) is an affiliate of PMI and last year, PMPKL purchased 100 percent of our leaf at zero risk of gross deforestation.

As part of the sustainability agenda, Water stewardship is also one of the priority topics for PMI. By 2050. PMI aims to contribute to a positive impact on water resources by getting its factories certified to the Alliance for Water Stewardship (AWS) standard and optimizing irrigation. PMI focuses on waste reduction and efficient resource management to minimize its footprint.

BRR: Can you provide an overview of the PMI Integrated Report 2022 and its significance in the context of sustainability?

RY: PMI Integrated Report aims to provide an objective description of PMI’s business model, strategy, performance and prospects in relation to PMI’s priority economic, environmental, social and governance topics. The Report highlights PMI’s progress toward its vision of delivering a smoke-free future and creating value for all its stakeholders. The report also showcases PMI’s innovation, transformation, and leadership in developing and commercializing smoke-free products.

The Integrated Report identifies multiple key megatrends such as inequality, technological progress, climate and nature urgency, and erosion of trust - that are closely linked to sustainability and the environment. By understanding and addressing these trends, businesses can position themselves for success and contribute to a more sustainable future. It provides valuable insights and tools for companies to address environmental challenges and capitalize on emerging opportunities. Prioritizing sustainability is crucial for a healthier planet and securing a prosperous future for all.

BRR: PMI’s Integrated Report talks about the Mega Trends in sustainability which identifies key social, economic, and technological trends that are likely to have a significant impact on the future. How does PMI plan to align its sustainability efforts with these megatrends?

RY: PMI recognizes the significance of sustainability megatrends and has developed a robust sustainability strategy to align its efforts accordingly. Through initiatives like reducing environmental impact, promoting sustainable agriculture, and implementing workplace health and wellbeing programs, PMI is committed to addressing these trends. It has made substantial progress in reducing its carbon footprint and increasing the use of renewable energy across its operations. PMI views sustainability as an opportunity for innovation, growth, and operational efficiency and by integrating sustainability into all aspects of its business, PMI strives to create long-term value that is purpose-led and impact-driven.

BRR: What metrics or indicators did PMI use to measure its sustainability performance, and what were the key findings or achievements?

RY: PMI firmly believes that integrated reporting is the most effective means to communicate its business transformation, which prioritizes sustainability. The Integrated Report provides an objective description of PMI’s business model, governance, management, strategy, and performance, guided by a formal sustainability materiality assessment. To reinforce its commitment to sustainability, PMI has introduced the Sustainability Index, which consists of key performance indicators (KPIs) that measure and communicate their progress in achieving sustainability goals.

BRR: Coming to Philip Morris Pakistan, what are the initiatives and projects that the PMPKL is undertaking to demonstrate the company’s commitment to supporting communities in Pakistan?

RY: At PMPKL, we have embarked on a Skills Training Program for children of farming communities across Pakistan. During 2022, 500 children between the ages of 15 to 17 years were enrolled across 20 training centres for skills training programs, with the aim of imparting lifelong skills and enabling them to be financially empowered. Our relentless efforts to tackle child labour in leaf production have also yielded impressive results.

To eliminate children’s involvement in the leaf production process, during 2022, PMPKL equipped its contracted farmers with a total of 593 stringing machines to carry out their operations and continues to provide them with technical support and training to ensure the elimination of children’s involvement in labour.

BRR: Can you explain PMPKL’s approach to disaster relief?

RY: When disaster strikes, PMPKL stands tall, supporting communities in their darkest hours. With unwavering dedication, we enhance resilience and provide vital medical aid. In 2022, devastating floods ravaged Pakistan, leaving homes and farms submerged. We swiftly responded, delivering essential supplies to families in need. Collaborating with Pak Mission Society, we reached over 350 families and more than 2,000 individuals, easing the impact of this catastrophe.

Our relief efforts continued as we provided dry food items to 22,000 flood-affected families, supporting over 130,000 people. Partnering with the Rural Support Programmes Network, our reach extended far and wide. PMPKL’s comprehensive approach is a testament of our commitment to communities in times of adversity. Together, we build resilience and pave the way for a brighter future.

BRR: How does PMPKL prioritise employee growth and well-being within its sustainability strategy, and what specific initiatives or programs has the company implemented to support its employees in their personal and professional development?

RY: PMI’s global transformation demands a thirst for knowledge and a growth mindset. In Pakistan, the Own Your Career campaign, launched by PMPKL in 2022, encourages employees to take charge, embrace learning opportunities, and invest in their personal growth. With an unwavering commitment to fairness, PMPKL proudly holds the Equal Salary Certification.

PMPKL focus on employee well-being goes beyond pay-checks. We have enhanced medical entitlements to cater to physical and mental health of our employees. We have also implemented the flexible work timings and hybrid options to promote work-life harmony. At PMPKL we have introduced the One Medical Plan for all of our employees irrespective of their grade or seniority. Under the company’s medical and life insurance benefits, all the employees are eligible for preventative health check sub-limits. Additionally, the employees are also eligible for a three-year pay continuity plan in the unfortunate case of demise. PMPKL also offers its resources co-shared parental insurance coverage for complete peace of mind. Moreover, working mothers enjoy the flexibility to allocate unused medical benefits to child daycare expenses.

BRR: Can you discuss any approaches or projects that PMI undertook to promote sustainability within its operations or supply chain?

RY: PMI prioritizes social impact management by safeguarding against unintended product reach and implementing youth access prevention measures. Mindful of the importance of reducing post-consumer waste, PMI made progress in implementing take-back programs for its devices and consumables. During 2022, 8.5% of PMI’s shipment volumes covered by markets with its consumables take back programs.

Aside from the product health impact and focusing on reducing post-consumer waste, PMI is also committed to play its part to tackle the climate change. Globally PMI monitors deforestation risk on around 57 million hectares of land which allows to focus on on-site activities and audits on those areas where potential risk of deforestation is detected.

Recognized for environmental leadership by CDP, PMI has achieved a Triple A score for the third consecutive year and certified 13 PMI factories as carbon neutral. Moreover, the Science Based Targets initiative has validated PMI’s 2040 net-zero science-based target.

BRR: How does PMI engage with stakeholders, including customers, employees, and local communities, to address sustainability challenges?

RY: PMI’s supply chain connects us with millions of people, from farmers to suppliers. Through collaboration and continuous engagement, PMI addresses concerns and seek solutions that benefit all stakeholders. PMI prioritizes human rights, labour rights, and sustainability in its supply chain, promoting a living wage and ensuring access to clean water and ensures hygiene. At PMI, responsible supply chain management is at the core of its commitment to making a positive impact.

BRR: How does PMI ensure transparency and accountability in its sustainability efforts, and how does it communicate progress to stakeholders?

RY: In 2021, PMI introduced its Sustainability Index, a comprehensive tool to measure and communicate its progress. This index includes 19 KPIs directly linked to its sustainability goals. PMI has aligned its compensation practices with sustainability, tying it to long-term performance. The index covers both product sustainability and operational sustainability, assessing each KPI annually and assigning a score. By using predefined target ranges and weights based on its sustainability materiality assessment, PMI calculates the overall Sustainability Index score. This rigorous approach helps PMI drive continuous improvement and align with the interests of shareholders and stakeholders.

BRR: From your perspective, what are the most significant challenges or barriers faced by organizations when integrating sustainability into their business strategies, and how can they overcome them?

RY: Lack of awareness and understanding, short-term financial considerations, complex supply chains, regulatory uncertainties, and cultural resistance are some of the challenges still faced by companies. To overcome these barriers, organizations can invest in education, collaborate with experts, conduct cost-benefit analyses, enhance transparency through clear sustainability criteria and technology solutions, stay updated on regulations, foster a culture of sustainability, engage employees, and provide leadership commitment.

BRR: Looking ahead, what are some of PMI’s future sustainability goals or targets? How does the company plan to stay at the forefront of sustainability practices and drive positive change in the industry?

RY: PMI’s commitment lies in preserving resources, minimizing waste, and preventing improper disposal, including littering. To achieve this, PMI implements tailored strategies and specific targets to reduce post-consumer waste across globe. PMI aspires to have eco-design certification for 100 percent of its devices introduced on the market as of end of 2025.

Over the past decade and a half, we have harnessed scientific and technological advances to develop alternatives. PMI embraces a growth mindset, collaborating internally and externally, drawing on science and consumer insights. As industry leaders, PMI is driven to innovate and make a positive impact on the environment.

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