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ESG HIGHLIGHTS from OUR INTEGRATED REPORT 2019 Philip Morris International ESG Highlights 2019

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ESG HIGHLIGHTS from OUR INTEGRATED REPORT 2019 Philip Morris International ESG Highlights 2019 DELIVERING A SMOKE-FREE FUTURE Progress toward a world without cigarettes ESG HIGHLIGHTS FROM OUR INTEGRATED REPORT 2019 Philip Morris International ESG Highlights 2019 About PMI About these highlights In line with our commitment to transparency Philip Morris International (PMI) to Altria Group, Inc. for sale in the United and disclosure, PMI has published its first States under license. PMI is building a future Integrated Report, our fifth Sustainability is leading a transformation in on a new category of smoke-free products Disclosure, which follows our last the tobacco industry to create a that, while not risk-free, are a much better sustainability report published in May 2019. smoke-free future and ultimately choice than continuing to smoke. Through In these highlights, we share a condensed multidisciplinary capabilities in product overview of our approach and performance replace cigarettes with smoke- development, state-of-the-art facilities, in managing our most material sustainability free products to the benefit of and scientific substantiation, PMI aims to topics across the four pillars of our strategy. adults who would otherwise ensure that its smoke-free products meet For a more in-depth overview of our progress adult consumer preferences and rigorous to date, we invite you to read our Integrated continue to smoke, society, the regulatory requirements. PMI’s smoke-free Report 2019 in full on www.pmi.com/ company, and its shareholders. IQOS product portfolio includes heat-not- IntegratedReport2019 the contents of which burn and nicotine-containing vapor products. are shaped by a formal sustainability materiality PMI is a leading international tobacco company As of December 31, 2019, PMI estimates assessment, refreshed in 2019, which takes engaged in the manufacture and sale of that approximately 9.7 million adult smokers into account stakeholder perspectives as well cigarettes, as well as smoke-free products and around the world have already stopped as our impacts on sustainable development. smoking and switched to PMI’s heat-not-burn associated electronic devices and accessories, Disclosures on additional PMI sustainability and other nicotine-containing products in product, available for sale in 52 markets in key topics are available on PMI.com/sustainability cities or nationwide under the IQOS brand. markets outside the United States. In addition, Unless otherwise indicated, the scope of PMI ships a version of its IQOS Platform 1 the data in this report highlights embraces For more information, please visit device and its consumables authorized by our operations worldwide for the full the U.S. Food and Drug Administration www.pmi.com www.pmiscience.com calendar year 2019 or reflect status as of December 31, 2019. Where not specified, data come from PMI estimates. Cover: Employees sampling tobacco leaves in PMI’s Plant Research facility where the team We welcome your feedback on these report explores avenues for selecting crops for more environmental resilience and reduced footprint highlights by emailing us at [email protected]. Key milestones 1847 1972 2008 Mr. Philip Morris opens a shop on Marlboro becomes the world’s PMI is spun off from Altria Group, Inc. London’s Bond Street, selling tobacco number-one-selling cigarette and ready-made cigarettes 1985 2009 1902 Philip Morris Companies Inc. becomes PMI unveils its new research and development Philip Morris & Co., Ltd. is a holding company and acquires General facility in Neuchâtel, Switzerland incorporated in New York Foods. Other acquisitions in the food sector follow over the next decade, including Kraft Foods and Jacobs Suchard 2014 1908 PMI pilots its heat-not-burn product, Marlboro, which will become the company’s 1987 IQOS, in Italy and Japan most famous brand, is established and registered as a trademark Philip Morris International Inc. (PMI) is incorporated as an operating company of Philip Morris Companies Inc. 2016 1919 PMI announces its ambition to deliver A new company is incorporated in Virginia 2001 a smoke-free future, shifting its resources under the name Philip Morris & Co. Ltd., Inc. toward the development and responsible and starts to manufacture cigarettes in its PMI’s Operations Center is transferred marketing of scientifically substantiated factory in Richmond by the end of the next from New York to Lausanne, Switzerland smoke-free products decade 1963 2003 2020 The entity purchases Fabriques de Tabac Philip Morris Companies Inc. is renamed PMI’s Board of Directors adopts PMI’s Réunies in Neuchâtel, Switzerland, a family Altria Group, Inc., and remains the parent Statement of Purpose, reaffirming business that already began to manufacture company of Kraft Foods Inc., Philip Morris the company’s commitment to Marlboro cigarettes under license in 1957 International, Philip Morris USA and deliver a smoke-free future Philip Morris Capital Corporation 1 Contents PILLAR 1 Innovating for better products 12 Product health impacts 13 Access to smoke-free products 15 Overview COVID-19 1 PILLAR 2 16 Creating value at PMI 2 Operating with excellence Letter from the Chief Executive Officer 3 Responsible marketing & sales practices 17 PMI’s Statement of Purpose 4 Sustainable supply chain management 18 Overview of PMI’s performance 7 Respect for human rights 20 Business transformation metrics 8 Sustainability at PMI 9 PILLAR 3 Caring for the people we work with 21 Performance metrics Socio-economic well-being of tobacco-farming communities 22 ESG ratings performance 28 Health, safety, and well-being at work 23 Forward-looking and cautionary statements 29 PILLAR 4 Protecting the environment 24 These Highlights cover the 2019 calendar year, but the aspirations, goals and forward-looking Climate protection 25 plans it contains may be impacted by Littering prevention 26 COVID-19 and its effects on our business. Aspirational targets and goals do not Product eco-design and circularity 27 constitute financial projections, and achievement of future results is subject to risks, uncertainties, and inaccurate assumptions. Please refer to our forward- looking and cautionary statements on page 29. The pandemic has forced us to adapt some factories around the world to produce large of our projects, but has also pressed us to quantities of hydroalcoholic gels (hand COVID-19 make sure sustainability is truly connected sanitizer), distributed primarily to local to delivering value to all our stakeholders. hospitals and vulnerable communities, to PMI has been actively working against help mitigate the spread of coronavirus. In the last decade, the this pandemic since its outbreak, with Scientists from the Genomics and sustainable business ongoing and planned initiatives in more Transcriptomics laboratory at PMI’s R&D than 60 countries where our employees Cube in Neuchâtel helped local hospitals agenda has advanced in live and work. These initiatives involve to analyze inactivated nasopharyngeal many ways, but one of the monetary and in-kind donations, as swab samples from suspected COVID-19 most remarkable shifts has well as volunteer work by teams to patients using the World Health support local efforts to combat the virus Organization’s (WHO’s) recommended RT- been the growing focus and help those most affected by it. qPCR protocol. The work was performed on solutions — not only The company’s activities include respecting the safety measures under the understanding what issues providing protective equipment to trade Biosafety Level 2 and WHO Good Clinical partners, support to care communities, Laboratory Practices. The anonymized raw matter and why but also procurement support to purchase items data was then transmitted to the hospitals how the private sector can essential in the fight against COVID-19, for interpretation. The batches of samples will continue to be analyzed at PMI’s R&D accelerate positive change and financial support to institutions and nongovernmental organizations Cube until hospitals are able to cope with and help communities (NGOs) working to end this crisis. As of current high demand for COVID-19 testing. in need. the end of May 2020, PMI has provided PMI’s commitment to its employees is an more than USD 31 million in financial integral part of the company’s broader Megatrends are significant and in-kind donations, very often in response during the COVID-19 crisis across developments that shape our lives. In response to requests for assistance the world. The company established a set contrast to normal trends, their effects from government authorities. of guiding principles that outline our strong are stronger, their duration longer, and Repurposing our value chain to better commitment to our employees’ job security, their scale larger. Although COVID-19 respond to the crisis is a tangible safety, and peace of mind throughout the caught the world off-guard, global example of PMI’s transformation. global pandemic period, by guaranteeing pandemics were, are, and will continue employment and financial stability, as well We are aware of significant supply to be a looming threat and megatrend. as granting special recognition awards. disruptions for alcohol-based hand Sustainability will redefine itself in the sanitizers, due to an increased demand COVID-19 era, as times of extraordinary during the COVID-19 pandemic. We change require urgent adaptation. temporarily repurposed parts of our 2 Philip Morris International ESG Highlights 2019 Creating Inputs Outputs value SOURCING at PMI $11.4bn Three 84% 97% Annual spend on Most significant non-
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