Philip Morris International Releases 2022 Integrated Report: Aims to Become a Smoke-Free Company by

Today, on April 6, Philip Morris International (PMI) (NYSE: PM) released its fourth annual integrated report.

The report is based on a formal sustainability materiality assessment and aims to objectively describe the company's business model, governance and management, strategy, and performance.

PMI CEO Jacek Olczak stated: Despite facing many challenges, 2022 was an extraordinary year that brought our employees closer together and witnessed measurable progress towards our goals. We are moving towards our aspiration to become a majority smoke-free company by 2025 and ultimately phase out cigarettes. While such a transformation of this scale and complexity cannot happen overnight, we are committed to achieving it as soon as possible. Through constructive engagement, we will accelerate meaningful and impactful change and complete our transformation.

PMI's latest integrated report conveys the progress the company has made towards achieving its goals—the company's goal statement clarifies that PMI's aim is to achieve a smoke-free future by focusing its resources on the development, scientific validation, and responsible commercialization of smoke-free products, intending to completely replace cigarettes as soon as possible and evolve into a broader lifestyle, consumer health, and healthcare company in the long term.

Based on its ESG framework, PMI has developed eight strategies targeting the company's most pressing impact areas.

To align with these eight strategies, PMI has set 11 goals that form the basis of its 2025 roadmap, along with 19 key performance indicators (KPIs) to measure progress through its sustainability index. Each KPI is also aligned with one of two drivers: product sustainability (11 KPIs) or operational sustainability (8 KPIs).

"An increasing number of external stakeholders are using non-financial information to assess company performance and compare it with others, including the financial community in their analyses and investment decisions. The information and data we disclose publicly accurately reflect our company's progress according to clear calculation methods, which is crucial for the integrity of PMI's reporting," explained PMI CFO Emmanuel Babeau.

Last year, PMI also released its first ESG KPI protocol, which includes definitions, methodologies, and scopes for each sustainability index KPI to provide measurable, verifiable, consistent, and accurate progress reporting. Combined with its latest integrated report, the company also released an updated protocol that specifically outlines the efforts made in 2022 to enhance the robustness of these KPIs.

By 2022, PMI's progress towards its sustainability aspirations continued to advance rapidly as it sought to address the impacts of its products (what it produces) and operations (how it produces).

In terms of the social impact of its products, the company continues to transform and achieve its goals; additionally, it continues to implement youth access prevention programs in its direct and indirect retail channels. Considering the importance of reducing post-consumption waste, it has made progress in implementing smoke-free device and consumable recycling programs and enhancing electronic device repair capabilities.

Product Impact

Social Aspects:

24.9 million: Estimated total adult users of PMI's smoke-free products (2021: 21.7 million)

32.1%: Net revenue from smoke-free products (2021: 29.5%)

73: Markets where PMI's smoke-free products are sold, with 42% in low- and middle-income countries (2021: 71, 42%)

$10.7 billion: Cumulative investment in smoke-free products since 2008 (2021: $9.2 billion)

91%: Total shipment volume covered by youth access prevention programs in indirect retail channels (2021: 91%)

$300 million: Annual net revenue from health and wellness products (2021: $100 million)

Environmental Aspects:

86%: Recycling rate of IQOS devices returned to centralized recycling centers (weighted average percentage per device recycled) (2021: 86%)

68%: Shipment volume covered by litter prevention programs for combustible cigarettes

8.5%: Market shipment volume covered by smoke-free consumer product recycling programs

In terms of social impact, the company has expanded opportunities for PMI employees to access structured lifelong learning, issued a strengthened commitment to human rights, and completed the sixth and seventh human rights impact assessments in Brazil and Malaysia. Environmentally, it continues to decarbonize its direct operations, with its science-based targets validated to achieve net-zero greenhouse gas emissions in its value chain by 2040. In conjunction with the United Nations Biodiversity Conference (#p#Page Title#e#COP15) held in December 2022, the company announced new long-term biodiversity and water goals and strategies, aligning with the post-2020 biodiversity framework adopted by the parties to the convention.

Operational Impact

Social Aspects:

40.7% of management positions held by women, exceeding our 2022 target of 40% (2021: 39.7%)

Seven human rights impact assessments conducted in high-risk countries since 2018 (2021: 5)

Environmental Aspects:

55% of tobacco purchased without the risk of net deforestation and without natural ecosystem conversion (2021: 37%)

CDP has awarded PMI a triple A rating for the third consecutive year in climate, forests, and water security

As a strong complement to the content and data included in PMI's 2022 integrated report, the company has developed 12 case studies and market stories that showcase impact and highlight how PMI's global affiliates drive sustainability. All case studies and market stories can be accessed online in a dedicated section at pmi.com/sustainability.

PMI Chief Sustainability Officer Jennifer Motles stated: We recognize the need to continue building legitimacy and trust among stakeholders, who are the foundation of our company's goals and can accelerate our progress towards achieving them. Our latest integrated report aims to meet their demand for more detailed and comparable information regarding our risks and performance. As we continue to learn, transform, and discover better ways to develop solutions with meaningful impact, we hope our transparency and willingness to engage will inspire dialogue with those who can help accelerate our transformation.

The preparation of PMI's 2022 integrated report considered guidance from international standards and frameworks, including the Global Reporting Initiative (GRI), the United Nations Global Compact (UNGC), the United Nations Sustainable Development Goals, the International Financial Reporting Standards Foundation—including the use of its SASB standards, integrated thinking principles, and integrated reporting framework—and some recommendations from the Task Force on Climate-related Financial Disclosures (TCFD).

Philip Morris International: Building a Smoke-Free Future

Philip Morris International (PMI) is a leading international tobacco company committed to building a smoke-free future and long-term development of its product portfolio to include offerings beyond tobacco and nicotine. The company's current product portfolio primarily includes cigarettes and smoke-free products. Since 2008, PMI has invested over $10.5 billion in the development, scientific validation, and commercialization of innovative smoke-free products for adults who would otherwise continue to smoke, aiming to completely end cigarette sales. This includes establishing world-class scientific assessment capabilities, particularly in the areas of preclinical systematic toxicology, clinical and behavioral research, and post-market studies. As of November 2022, the IQOS and ZYN brands have been authorized by the U.S. Food and Drug Administration (FDA) as modified risk tobacco products (MRTP). As of December 31, 2022, PMI's smoke-free products are available in 73 markets, with an estimated 17.8 million adults having switched to IQOS and stopped smoking. Smoke-free products accounted for approximately 32% of PMI's total net revenue for the full year 2022. With a solid foundation in life sciences and extensive expertise, PMI announced its ambition to enter the health and wellness sector in February 2021, aiming to improve lives by providing seamless health experiences through its subsidiary Vectura Fertin Pharma.