| INTEGRATED REPORT 2019 |
Water is a renewable yet limited local resource, which we all share and that is critical to life on the planet. By responsibly managing their impact on water, companies can contribute to mitigating water scarcity and advancing global health and food security. For businesses operating in water-stressed regions, the need for careful water management is considerable and can be exacerbated by the physical impacts of climate change. This is even more so in low- and middle-income countries where access to water, sanitation and hygiene (WASH) is an enabler of economic development.
In this chapter you will find:
Why it is important to us and our stakeholders
The global water crisis we’re experiencing today is characterized by droughts, floods, and localized shortages and has far-reaching consequences. Water is essential to the planet, its ecosystems, and its inhabitants. It is crucial to hygiene and health. A lack of water can also pose a major challenge to economic prosperity, with many activities relying on this resource. Compared with other industries, the tobacco sector is not particularly water-intensive; nevertheless, water security is a business imperative for PMI, and the scale of our business means we can have significant impacts on water resources.
Our products require water, from growing tobacco crops to product manufacturing. Our agricultural supply chain accounts for around half of our water footprint. The second-largest share of our total water use is in the rest of our supply chain, in particular the manufacture of filters, paper, and packaging materials. Our manufacturing facilities account for 6 percent of our footprint, with fresh water used for manufacturing, sanitation, and other processes.
Responsibly managing water strengthens our ability to minimize operational risks. A limited or irregular water supply could impact our ability to source high-quality tobacco leaf and to manufacture our products. Furthermore, access to adequate and safe water, sanitation, and hygiene services in the communities surrounding our operations and in our supply chain helps to protect workers and their families’ health, livelihoods, and productivity.
Achieving our aims
Water stewardship describes our approach to responsibly managing water across our value chain. Our vision is to preserve water resources and respect the natural cycle of water, working in close cooperation with our stakeholders. We aim to optimize water consumption in our operations, reduce the water footprint of our products, and adequately treat the wastewater from our factories. We strive to understand our operational water use and impacts, and to work collaboratively and transparently with stakeholders to ensure sustainable water management within a catchment context. To this end, our target is to have all our factories certified by the Alliance for Water Stewardship (AWS) standard by 2025, with six already certified as of the end of 2019. As of the end of 2019, 98 percent of our manufacturing facilities were certified to the ISO 14001 standard.
In our tobacco supply chain, we are committed to preserving water resources, safeguarding both water quantity and quality. A key focus is also to enable community access to drinking water, sanitation, and hygiene (WASH) in the areas where we source tobacco. PMI is committed to helping ensure that 100 percent of tobacco farmers directly or indirectly supplying tobacco to PMI have access to improved sources of water by 2025 and access to basic sanitation and hygiene by 2030.
Our company-wide Environmental Commitment and Water Stewardship policy guides our work in this area. It is complemented by internal standards for our operations – our Responsible Sourcing Principles (RSP) for suppliers and our Good Agricultural Practices (GAP) Code in our tobacco supply chain. We rely on our procurement, sourcing, and manufacturing teams and work with our suppliers and farmers to deliver our commitments on the ground. In our tobacco supply chain, the field technicians employed by PMI or our third-party suppliers are instrumental in helping farmers reduce water consumption while improving yields.
Accurate measurement of our water footprint and understanding of water-related risks allow us to adapt our actions. In both our operations and tobacco leaf supply chain, we use external and internal data to shape our strategy and identify appropriate interventions.
Progress in 2019
Water stewardship in our tobacco supply chain
Fresh water is essential to agricultural production. Achieving the best crop results requires the timely application and proper use of water. Our GAP program requires a water management plan to be in place to manage irrigation efficiently and reduce water pollution risks. We also aim for the local communities in the regions we source tobacco from to have access to adequate clean water for drinking, cooking, personal hygiene, and cleaning purposes.
Water risks in our tobacco supply chain
Our global water risk assessment, updated annually using the World Resources Institute’s Aqueduct risk-mapping tool, analyzes physical water risks in all the tobacco-growing areas from which we source and indicates patterns to expect over the coming years.
Alliance for Water Stewardship
Water stewardship at our manufacturing sites is achieved through internal investment in water performance and community engagement in line with the AWS standard. AWS helps us to understand better how to manage water at catchment level. Our goal is to certify all our factories to the AWS standard by 2025.
In 2018, AWS certified our first factory, in Brazil. In 2019, we completed five more certifications, in Indonesia, Italy, Portugal, Russia, and Turkey. Following the upgrade of the AWS standard to include WASH aspects, our factory at Santa Cruz do Sul in Brazil was the first of any facility worldwide to be certified to the new AWS 2.0 standard.
Also in 2019, we gathered our experts in water stewardship at our factory in Greece to discuss the challenges faced in the communities in which we operate. In addition to working together to design our global strategy, participants underwent AWS specialist official accreditation training from SGS Training Academy. Twenty experts passed the certification to become internal AWS auditors, a key milestone that will facilitate the rollout of the AWS program across all our factories.
We also are evolving how we recycle and reuse water. We expect the volumes of recycled water to increase in all our factories as water efficiency and conservation initiatives are expanded.
To decrease our water footprint, we are installing state-of-the-art technology for wastewater treatment and reuse. These systems are based on filtration, physicochemical, biological, membrane, advanced oxidation, adsorption, and electrolytic treatment technologies. As an example of our progress, our smoke-free products factory in Bologna, Italy, improved its water efficiency rate1 by 18 percent in 2019 versus the previous year. Several water-saving initiatives contributed to this, including the purification of 128,000 cubic meters (equivalent to 50 Olympic-size swimming pools) of treated wastewater with reverse osmosis for reuse in cooling processes and steam production. We aim to go further and reclaim water for equipment cleaning operations. Because direct reuse is hampered by high mineral content, we are installing dedicated electrodialysis desalination technology to greatly reduce the water rejection inherent in purification technologies while decreasing costs, chemicals, and energy consumption. We will also attempt the direct reuse of rejected water from reverse osmosis in cooling towers, using (already installed) electrolytic technology.
Next steps
In our tobacco supply chain, we aim to conduct 22 local water-risk assessments by the end of 2020 to complete the mapping of the most relevant countries we source tobacco from.
We will continue with AWS certification and plan to certify five to 10 factories a year until they are complete (no later than 2025). In 2020, we are targeting five sites, in Greece, Korea, Mexico, Poland, and Romania.
We will implement additional efficiency and water-reuse projects at our factories as we continue to invest in water technologies and pilot new projects, and will detail our progress in future reports.
This online supplement to our integrated report should be read in conjunction with PMI’s Integrated Report 2019. The information and data presented in this online supplement cover the 2019 calendar year or reflect status at December 31, 2019, worldwide, unless otherwise indicated. Where not specified, data come from PMI estimates. See About this online supplement 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.
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Forest protection
To PMI, this means preventing deforestation linked to our operations and sourcing activities.
Biodiversity
For PMI, biodiversity is about reducing the negative impacts of our operations and sourcing activities on habitats and ecosystems and looking for contributions we can make to biodiversity.
Waste reduction
Waste reduction means minimizing the waste generated by our manufacturing facilities and offices, promoting materials reuse and recycling, and striving for responsible disposal.