Product eco-design and circularity

Building sustainability considerations into product design is a way to control environmental and social impacts across a product’s life cycle—from development and manufacturing to use and disposal.

Topic description

For PMI, contributing to the circular economy means developing more environmentally friendly products—devices, consumables, accessories, and packaging—by improving their recyclability, efficiency, life span, and repairability, and reusing our own materials again.

The business case

Natural and social capital costs of non-renewable resource extraction and disposal impact the cost of doing business. Commodity and raw material prices will continue to remain volatile as climate change, demographics, and technological innovation impact resource supply and demand. In addition, regulatory requirements, including landfill closures, material bans, and extended producer responsibility policies, are proliferating globally. The concept of the eco-design and circularity makes business sense as it represents a remarkable economic opportunity, while simultaneously delivering environmental and social benefits. It increases speed and reduces cost across different electronic products due to common components. It also reduces costs of returns, obsolescence, and disposal, which can otherwise be significant. We further believe that investing in eco-design and circularity may accelerate growth by spurring innovation of new products and reducing operating costs. Moreover, it can prevent reputational challenges by strengthening relationships with customers and employees.

Achieving our aims

At PMI, we are committed to understanding and managing environmental and social impacts across our entire value chain, including the life cycle of our products. Focusing on their sustainability is particularly important as we continue to deliver technologically advanced products that are at the heart of our transition to a smoke-free future.

With respect to our smoke-free products, our 2025 eco-design and circularity ambitions, which extend to electronic devices, accessories, and consumables, are as follows:

• Provide access to collection and recovery for the device and its consumables to all IQOS users
• Continue to reduce the carbon footprint of our smoke-free products in line with our science-based targets
• Achieve eco-certification for all our PMI smoke-free electronic devices introduced on the market as of the end 2025

Meeting these goals relies on a systematic approach whereby sustainability is considered from the start of the product development process. Our work is guided by our sustainable product design strategies, which account for impacts related to materials selection and sourcing, components production and product manufacturing, distribution, use, and end-of-life.

Our sustainable design guidelines, developed in 2019, support decision-making and help to integrate sustainability throughout our innovation process. We have now fully embedded these guidelines into our innovation stage-gate processes and continually reinforce our requirements and principles at each stage. In 2020, we continued to advance this program by incorporating sustainability into our predevelopment processes, recognizing that the exploration of new technologies will play a critical role in the sustainability performance of our future product portfolio. Our five eco-design principles are applied to various degrees across PMI’s product innovation, with an eye to achieving the highest sustainability impact. Each product generation we launch incorporates improvements in, for example, quality, functionality, ease of use, or robustness.

Performance is shared regularly with senior management in our Product and Consumer teams through the established development governance framework. We are committed to evaluating sustainability characteristics and making design choices that will continually enhance the performance of all our products and packaging. Life-cycle analysis (LCA) and other relevant environmental assessments are performed prior to the launch of any product, and results are presented in internal decision-making forums per our sustainable design governance programs. We continue to advance these technical environmental assessments earlier into our development cycle, understanding the impacts and sustainability potential of new innovations at the earliest stage.

In 2018, we adopted a centralized approach to the end-of-life of our devices by establishing two CIRCLE (Central Inspection and Recycling for a Closed Loop Economy) hubs, in Europe and Asia. The benefits of this approach include economies of scale, regional investment, illicit trade prevention, and quality enhancement (accelerating manufacturing and design improvements minimizes product returns). On certain occasions, due to regulatory restrictions governing cross-border e-waste transportation, we may complement our centralized approach with more localized solutions.

Our 2025 eco-design and circularity ambitions apply to the electronic devices developed by PMI. In 2020, PMI commercialized devices developed by KT&G under the endorsement of the IQOS brand in certain markets. As KT&G owns the development and manufacturing of these devices, many of our sustainability initiatives cannot be applied. However, due to our commitments toward environmental protection and product quality, the CIRCLE inspection and take-back program is open to KT&G devices commercialized by PMI, and we aim to achieve similarly high standards of performance for these devices.