Final score of PMI’s 2022-24 Sustainability Index
For the PSUs granted in February 2022, the Compensation and Leadership Development (CLD) Committee of PMI’s Board of Directors set performance metrics aligned with the Company’s transformation goals.
Alongside the PSUs’ Total Shareholder Return (TSR) performance metric (40% weighting) and currency neutral compound annual growth rate of adjusted diluted Earnings Per Share (EPS) (30% weighting), the Committee introduced a new performance metric using the Company’s Sustainability Index, consisting of two components (30% weighting): product sustainability and operational sustainability.
The Committee adopted this approach because, along with our management, it views product and operational sustainability as key components of our business strategy and long-term success. A focus on sustainability is tied directly to our business transformation, helps us anticipate and address risks before they impact our products and operations, and ensures we stay ahead of evolving regulatory requirements while maintaining the highest standards of transparency and accountability. We also see sustainability as a catalyst for innovation and growth, opening new market opportunities, improving our organizational capabilities and supply chain, and driving the development of products that offer solutions and create lasting value.
PMI Sustainability Index 2022-2024 Achievement
The Company’s 2022-2024 Sustainability Index was based on two components:
- Product Sustainability (20% Weighting): The aggregate achievement with respect to 11 key performance indicators (KPIs) pertaining to social and environmental impacts generated by the Company’s products, focused on measuring progress on the Company’s efforts to purposefully phase out cigarettes, maximizing the benefits of smoke-free products, seeking net positive impact on wellness and healthcare, and reducing post-consumer waste; and
- Operational Sustainability (10% Weighting): The aggregate achievement of eight KPIs pertaining to social and environmental impacts generated by the Company’s business activities, focused on measuring progress on the Company’s efforts to tackle climate change, preserve nature, improve the quality of life of people in its supply chain, and foster an empowered, and inclusive workplace.
For each KPI, the Committee measured performance against established goals to determine the result applicable to such KPI. Achievement for each KPI was scored on a scale of 0 to 3 with 0 (missed target) representing 0%, 1 (target partially achieved) representing 50%, 2 (target achieved) representing 100%, and 3 (target exceeded) representing 150%. The weighted average of the KPI scores was then calculated to determine the actual score for both Product Sustainability and Operational Sustainability, with a maximum possible result of 150% per Index component, and then converted into a final rating for each with a maximum possible result of 200% per Index component.
With respect to the Product Sustainability component of the metric, of the 11 KPIs, performance for four KPIs exceeded the target goal, performance for three KPIs satisfied the target goal, and performance for four KPIs missed the target goal, resulting in an aggregate achievement of 76%, which was converted into a final rating of 82%. With respect to the Operational Sustainability component of the metric, of the eight KPIs, performance for six KPIs exceeded the target goal, performance for one KPI satisfied the target goal, and performance for one KPI missed the target goal, resulting in an aggregate achievement of 115%, which was converted into a final rating of 113%. Taken together the final rating for the 2022-2024 Sustainability Index was 89%.
Further details regarding performance against each KPI are provided in the tables below. The Company’s Integrated Report includes more granular information about the Company’s Sustainability Index and its product and operational sustainability components. PricewaterhouseCoopers SA has provided limited assurance on management’s governance and preparation of the 2022-2024 Sustainability Index based on predefined governance and process controls. This limited assurance report is available at Sustainability resources.
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This online content about our Integrated Report should be read in conjunction with PMI’s Integrated Report 2024. This report includes metrics that are subject to uncertainties due to inherent limitations in the nature and methods for data collection and measurement. The precision of different collection and measurement techniques may also vary. This report includes data or information obtained from external sources or third parties. Unless otherwise indicated, the data contained herein cover our operations worldwide for the full calendar year 2024 or reflect the status as of December 31, 2024. Where not specified, data comes from PMI financials, nonfinancials, or estimates.
Unless explicitly stated, the data, information, and aspirations in this report do not incorporate PMI’s wellness and healthcare business, Aspeya. Regarding the Swedish Match acquisition, completed late 2022, unless otherwise indicated, this report includes information pertaining to its sustainability performance. Please also refer to "This report at a glance" on page 2 of the PMI’s Integrated Report 2024 for more information. Aspirational targets and goals do not constitute financial projections, and achievement of future results is subject to risks, uncertainties and inaccurate assumptions, as outlined in our forward-looking and cautionary statements on page 210. In PMI’s Integrated Report 2024 and in related communications, the terms “materiality,” “material,” and similar terms are defined in the referenced sustainability standards and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by the U.S. Securities and Exchange Commission.