Message from our Chief Sustainability Officer

We are delighted to share with you an update on the remarkable progress our company has made. The past year was filled with important developments, and we remain steadfast in our commitment to sustainability as a driving force behind our purpose-led approach to business.

Since the beginning of sustainability at PMI, our strategy has gone beyond minimizing negative externalities and mitigating risks.

Deeply connected to our transformation strategy, sustainability has always been intended to embody a profound opportunity for innovation, growth, and long-term value creation. Our dedication reflects our response to the concerns of our shareholders and other stakeholders alike.

Comparable and reliable nonfinancial data allow external stakeholders to understand not only our performance but also how we are responding to a rapidly changing environment and planning for the long term, fostering a more sustainable and transparent business landscape. From a strategic standpoint, ESG data help inform our organization on how, when, and where to allocate resources to make our sustainability efforts relevant, meaningful, and fully aligned with our business priorities.

We firmly believe that high-quality data are a prerequisite for accurate and meaningful reporting. Consequently, in 2023 we continued developing robust systems and processes to ensure sound data governance and integrity. This approach allows us to measure and account for our progress effectively while addressing the concerns of our diverse stakeholders, including shareholders. As we forge ahead, we remain committed to transparent, consistent, and reliable reporting practices.

Country-level case studies that shed light on our work on priority sustainability areas and market stories that seek to complement our reporting, by connecting and highlighting the impact that our initiatives are seeking to have on society and the environment around the world are available on PMI.com. The cover of this report intends to reflect the diversity of contexts in which we operate and how progress on sustainability is delivered on the ground: it includes designs prepared by our local teams in different markets, showcasing what sustainability means to them.

We will continue to leverage integrated reporting to communicate holistically how we identify and address the most material ESG-related risks related to both our operations and product offerings.

During 2023, we conducted a light sustainability materiality refresh to reassess and further confirm our priority ESG topics. To do this, we considered changes to the external landscape since 2021, including geopolitical shifts. We also considered changes to our business, product portfolio, and geographic expansion.

The sustainability materiality refresh completed in 2023 also allowed us to assess our preparedness to comply with current and upcoming regulatory requirements, notably the EU Taxonomy Regulation and the EU Corporate Sustainability Reporting Directive (CSRD). As a company with an important presence in the EU region, we will be required to comply with this Directive in the coming years. Related to governance, we have taken significant steps to strengthen the role, structure, and processes of our risk functions by improving synergies with our sustainability team. These enhancements are intended to make progress toward ensuring that ESG considerations are fully integrated into our risk management practices.

By embedding sustainability in our risk management practices, we strengthen our ability to respond to regulation, navigate future challenges, seize opportunities, and drive sustainable value creation for all stakeholders, including our shareholders.

Moreover, we remain vocal in our support and active in an engagement that endorses efforts toward further harmonization and standardization of nonfinancial reporting. In line with this, we continue participating in consultations with the International Sustainability Standards Board (ISSB). In 2023, we also engaged with the International Auditing and Assurance Standards Board (IAASB) and participated in a consultation focused on standards for assurance on sustainability reporting. Further, after completing a full climate change risk and opportunities assessment and publishing our first Task Force on Climate-related Financial Disclosures (TCFD) report in April 2023, we are proud to be an early adopter of the Taskforce on Nature-related Financial Disclosures (TNFD) framework. Looking ahead, we anticipate this trend to continue and new regulatory developments and evolving stakeholder expectations to further shape how companies define success and report their performance.

As we present this Integrated Report 2023, we emphasize that delivering a smoke-free future is not just a priority; it is the essence of our purpose. The path we tread is marked by our ambition to lead, our vow to operate transparently, and our dedication to ensuring that cigarettes are relegated to history. We acknowledge the difficulties that lie ahead and reaffirm our dedication to the vision that propels us forward: one where cigarettes are supplanted by smoke-free alternatives in the shortest time frame possible.

We would like to express our gratitude to our employees, partners, and stakeholders who challenge and push us to do better.

We understand that our journey toward sustainability relies on building trust and legitimacy with all of them. And so, to all our stakeholders, I would like to say: Your support and engagement have been vital in helping us drive our progress thus far. We value your feedback, ideas, comments, and questions as they inspire us to continuously improve and find better solutions. As we enter a new year, we are energized by the opportunities that lie ahead and remain committed to our purpose, dedicated to sustainability, and focused on transforming for good.