Philip Morris International Releases 10-Year Anniversary Report on Agricultural Labor Practices

PMI publishes report detailing history, strategy, challenges, and progress made; ALP’s learnings will support the development of Verité’s upcoming ‘Farm Labor Due Diligence Toolkit’

Today, in recognition of International Day of Human Rights and the International Year for the Elimination of Child Labor (2021), Philip Morris International Inc. (PMI) (NYSE: PM) publishes its Agricultural Labor Practices: 10-Year Anniversary Report. The report recognizes the company’s decade-long Agricultural Labor Practices (ALP) program, which launched in 2011 with the aim to eliminate child labor and to achieve safe and fair working conditions on farms where PMI sources tobacco.

“In marking the 10-year anniversary of our ALP program and the International Year for the Elimination of Child Labor, we have developed a comprehensive report to reflect on the progress we’ve made while acknowledging that accelerated action is more urgent than ever,” said Jennifer Motles, Chief Sustainability Officer, PMI. “We are acutely aware that poverty and inequality are at the root of child labor and other human rights issues. Through our focus on living income, we aim to build resilience in our farming communities, provide new and alternative sources of revenue, and improve income levels and households’ livelihoods.”

Updated in 2019 to include its living income target, PMI’s ALP program remains one of the most ambitious and comprehensive efforts to improve labor practices in a global agricultural supply chain. The report reaffirms the company’s commitment to continue protecting, promoting, and supporting the socioeconomic well-being of tobacco-farming communities. This includes the ambition to achieve 100% of its contracted farmers paying at least the legal minimum wage by 2022, zero child labor in its tobacco supply chain by 2025, 100% of its contracted farmers making a living income by 2025, and 100% of contracted farmers supplying tobacco to PMI to have basic water access by 2025 and access to basic sanitation and hygiene by 2030.

These strategic ambitions continue to build on important ALP targets already achieved in previous years, which include providing safe and decent accommodation to workers, and ensuring 100% of farmers and workers have access to personal protective equipment for the application of crop protection agents and prevention of green tobacco sickness.

In commemoration of the 10-year anniversary, PMI is also partnering with Verité to integrate its learnings into an open-source toolkit that will aid companies, suppliers, and producers in driving improvements in labor practices of agricultural supply chains around the world. The initiative, called the “Verité Farm Labor Due Diligence Toolkit,” is part of an action pledge Verité has made in support of the International Year for the Elimination of Child Labor.

The toolkit will draw on the insights developed during Verité’s collaboration with PMI on the ALP program, as well as Verité’s work with other clients. PMI will join a coalition of other private-sector sponsors convened by Verité to support the toolkit initiative, helping to prioritize, develop, and promote the materials to be included within.

Anna Kletsidou, Head of Social Impact, PMI, said: “By continuing to collaborate with our partners such as Verité, we further strengthen our foundations, scale our efforts, and share our learnings to improve agriculture labor practices. As the company delivers a smoke-free future, we are expanding into electronics—leveraging our ALP learnings, PMI remains alert to environmental and social impacts created by this supply chain and is developing robust strategies to address them.”

Since its implementation, PMI’s ALP program has showcased the importance of partnership, digitalization, and continuous improvement. Earlier this year, PMI commissioned a publication focused on climate justice and the interconnectivity between environmental and social issues, recognizing the impact of climate change on human rights and the need to develop coherent and inclusive strategies.

To learn more about PMI’s ALP program, its work with Verité, or to read the anniversary report, visit the PMI Social Sustainability landing page.

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, 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. 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.

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.

About Verité

Verité is an independent, non-profit, civil society organization (CSO), recognized for its unique credibility. Since 1995, they have partnered with hundreds of corporations, governments, and CSOs to illuminate labor rights violations in supply chains and remedy them to the benefit of workers and companies alike. Verité has been recognized by the Skoll Award for Social Entrepreneurship and Schwab US Social Entrepreneur of the Year. Verité’s goals are to provide businesses with tools that help to eliminate labor abuses; To empower workers to advocate for their rights; To create publicly-shared resources that enlighten and drive action; To contribute their expertise to government labor and human rights policy. Verité has a history of work in over 70 countries, with a global network of experts in Africa, Asia, Europe, South America, North America and Australia. Visit their website to find out more.

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