Philip Morris International is undergoing a historic transformation moving from cigarettes to smoke-free products and evolving into a broader lifestyle company. We talk with George Margonis, General Manager of Philip Morris Bulgaria, about the role of sustainability in this transformation and how ESG is incorporated in the way companies run their business nowadays.
ESG has become an essential part of how to do business yet companies take a different approach to it. What is PMI’s approach to ESG?
Our strategy is to responsibly transition from a cigarette company into a world-leading smoke-free business, while exploring new avenues of growth in the areas of lifestyle, consumer wellness and healthcare. We are disrupting our business to achieve this ambition as quickly as possible – shifting our resources and fundamentally changing both our purpose and our operations. Almost all our R&D and most of our commercial investments are dedicated to smoke-free products. To our knowledge, we are the only company ever to have proactively disrupted its own business in a quest for a better future for all. And we are making rapid progress. Innovating for a better future and addressing the health impact, generated by our products, is in the heart of our sustainability strategy. We are taking every step possible to completely replace cigarettes with better alternatives for those adults who would otherwise continue smoking, addressing challenges across our value chain and seizing opportunities to add value to society. We have publicly committed to this ambition and have detailed our work and performance in the areas of human rights, labour rights, environment, and anti-corruption. We have recently expanded our sustainability metrics and goals in these areas with a particular focus on achieving our smoke-free vision. We will continue to be transparent and disclose both progress made and challenges we face.
Can you elaborate a bit more on what are the different areas you are focusing on?
We focus on developing strategies that can successfully address the environmental, social, and governance topics identified as a priority by our sustainability materiality assessment. We have outlined two distinct forms of social and environmental impacts – those generated by our products, or what we produce, and those generated by our business operations, or how we produce. Through a dedicated team we have been taking into an account everything that we represent as а business – our products, our partners, our employees, our consumers, our footprint. Topics related to the social impacts generated by PMI’s products – including “product health impacts,” “sales, marketing, and consumer communications,” and “wellness and healthcare”- were identified as a clear priority and represent those areas with the greatest transformative potential for the company. In specific, “product health impact” was deemed the topic carrying both the biggest risks and the greatest opportunities linked to reputation, regulation, and revenue growth. Further, “wellness and healthcare” was included as a new topic in the assessment, in line with PMI’s aims to generate revenues from products that do not contain tobacco or nicotine and to transition into a broader lifestyle and consumer wellness company. Additionally, PMI identified three topics that were not included in the list of most material topics, but that the company expects to gain momentum in the future: “human capital development,” “biodiversity,” and “water.” We have also recently started conducting periodic sustainability materiality assessments, which is a tool that allows us to monitor and adapt our business and long-term strategy to social, environmental, economic, political, and technological changes.
What key goals would you like to achieve and within what timeframe?
Sustainability is a journey that will be part of our lives and how we do our business for a long period of time ahead. We have much to achieve in order to face the expectations of our consumers, customers, investors and even our own – the goals we have set for ourselves are ambitious and prove our commitment to be a responsible organization that runs a responsible business. We remain committed to our smoke-free future mission by offering better alternatives to those adult smokers who would otherwise continue to smoke and by laying the foundations of a strong business in other areas beyond nicotine as well. The reality is that the vast majority of smokers simply do not quit. Even the WHO’s predicts that there will continue to be more than 1 billion smokers by the year 2025, roughly the same number as today. Providing these smokers with science-based, less harmful alternatives is, therefore, a commonsense solution to improve public health. We believe that with the right regulatory encouragement and support from civil society, cigarette sales can end within 10 to 15 years in many countries.
What are some of the key initiatives you’re running on a local level in Bulgaria?
When it comes of practical things that we can do here in Bulgaria – our objectives are aligned with the global ones and localised after that, so they can fit best our reality here. So far more than 200,000 people in Bulgaria have switched to our products with the aim to double them by 2025. We will continue to provide access to our smoke-free alternatives to the adult smokers in the country, fighting misinformation and providing them with accurate information about the science behind our products and raising their understanding about what causes the harm in smoking, so that they can make informed choices.
At the same time and we will continue to be very strict when it comes to youth access prevention and illicit trade monitoring. We will take care of the so-called post-consumer waste through different programs and initiatives for internal and external audiences. Last but not least we will continue leading by example by providing equal opportunities for our employees in Bulgaria, taking care of their well-being and safety at work. We are proud of our achievement and certification in recent years – Philip Morris International is the first international company to receive the prestigious Equal Salary Award for equal pay for equal work – one of the evidences of our great focus in this field. Last but not least, we will continue securing human capital development and keeping up with our diversity and inclusion policies, while making sure we meet the global guidance for sustainable offices and sustainable car fleet.