We clearly define the ethical and compliance expectations to which we hold ourselves and the third parties with whom we work, and we back up these expectations with governance and management systems to ensure we deliver on them.
Our Ethics & Compliance (E&C) program is led by our Vice President, Associate General Counsel, and Chief Ethics & Compliance Officer, who reports to PMI’s Senior Vice President & General Counsel and, periodically, to the Audit Committee of the Board of Directors.
PMI’s Code of Conduct sets clear standards and expectations. Its mandatory provisions apply to all PMI employees, officers, and directors. Key risk areas addressed in this document include, but are not limited to, anti-bribery and anti-corruption, anti-competitive practices, conflicts of interest, information protection security and data privacy, responsible marketing and sales, scientific integrity, supply chain responsibility, and workplace integrity, among others. Internal PMI Policies provide more-specific guidance on these and other topics.
In 2022, we began the process of updating and enhancing our Code of Conduct to align it more closely with PMI’s business transformation strategy and industry best practices.
The updated PMI Code of Conduct was reviewed and approved by the PMI Board of Directors at the end of 2022. Accordingly, we will roll out a comprehensive employee communication and training program on the new Code of Conduct in 2023.
Employee communication and training
At PMI, we use training and communication to help employees understand the compliance-related standards and rules that are relevant to their roles and how to apply them in their daily work.
In 2022, we launched a global Code of Conduct annual certification process. To date, more than 98.7 percent of eligible employees, including 100 percent of senior leaders, have certified their commitment to comply with the PMI Code of Conduct.1 In 2023, as we launch the updated PMI Code of Conduct, we will expand this certification requirement to all PMI employees, including our factory workers.
In addition to the PMI Code of Conduct certification, in 2022, the E&C team launched a series of five e-learning courses (available in 31 languages) to approximately 40,000 employees across the globe addressing the following key compliance risk areas: anti-corruption, conflicts of interest, insider trading, privacy, and sexual harassment. Also, regional and local compliance officers supplemented these e-learning courses with additional compliance training offerings, including in-person training sessions, to address compliance risk topics specific to their respective region(s) and market(s), as appropriate. Overall, employees and third parties completed a total of 352,796 E&C training courses in 2022 (2021: 261,890).
Also, in 2022, we revamped our E&C intranet to improve employee usability, and we continued publishing regular updates on relevant compliance topics for our employees.
1 For the purposes of the 2022 PMI Code of Conduct Annual Certification, “eligible employees” are those who have office-based computer access and “Senior Leaders” are defined as employees at a salary grade of 19 and above.
Evaluating our Ethics & Compliance culture
We evaluate our E&C culture periodically, including, for example, through the use of a global online survey to understand employee experiences and attitudes related to ethical business conduct. For the last 15 years, PMI has conducted this type of survey of its global employee population every two to three years.
In addition, we regularly work with third parties to assess elements of our E&C program.
At PMI, individuals may ask questions, raise concerns, or report instances of observed or suspected misconduct by contacting any of the following:
- The individual’s supervisor, department head, or affiliate or function leadership
- E&C key contacts (e.g., Regional Director, Cluster Head, E&C Country/Market Head)
- PMI Global E&C confidential email address
- PMI Compliance Help Line (online or by telephone), which is a third-party operated reporting channel available 24 hours a day, seven days a week, in all languages spoken at PMI. Individuals may use the Compliance Help Line anonymously, subject to local laws and regulations.
PMI also has implemented a Global Speaking Up Policy, the principles of which are reinforced by the PMI Code of Conduct and all PMI compliance policies.
There is a strong speaking-up culture at PMI, with most employees communicating directly with the E&C department and disclosing their identity when doing so. Specifically, in 2022, only 16 percent of the reports received by E&C were submitted anonymously (2021: 22 percent).
The E&C team continues to increase its outreach to employees on PMI’s speaking-up program. As part of our Inside E&C initiative, for example, the department shares quarterly statistics with employees globally about speaking-up reports, compliance violations, and disciplinary actions, as well as anonymized real-life examples of misconduct and advisory guidance provided in response to employee questions.
At PMI, we take all reports received through our speaking-up channels seriously and are committed to following up objectively and in a timely manner. We investigate all reports that raise compliance concerns, and we involve other functions or line management as warranted. We implement corrective measures to address investigation findings and calibrate disciplinary actions against past outcomes to keep the process fair. When investigating suspected E&C violations, trained personnel adhere to PMI Investigations Standards, which are designed to ensure an equitable and respectful process. We run a post-investigation quality assurance program to get feedback on how well we met these standards. We also have implemented a Retaliation Check program to detect, remedy, and prevent retaliation against people who speak up, a process that includes regular follow-ups with employees who have made a report. Finally, we run checks to ensure year-end performance assessments are fair, and we review substantial employment decisions pertaining to any employee identified as at risk of retaliation before the decisions are implemented.
We received 990 reports through Ethics & Compliance Speak Up channels in 2022 (2021: 929). This represents an increase from the prior two years, reflecting employees’ return to the office following the COVID-19 disruptions. Around 54 percent of the matters that were closed in 2022 did not involve a compliance allegation and were resolved through E&C advisory services or referred to line management or appropriate departments, such as our People & Culture teams, for further action.
In 2022, we investigated and closed 429 cases that involved potential violations of PMI’s Code of Conduct and compliance policies (2021: 508). At least one violation was substantiated in 52 percent of these cases (2021: 46 percent), with “workplace integrity” accounting for 33 percent of substantiated violations (2021: 22 percent); “theft and fraud” accounting for 28 percent of substantiated violations (2021: 30 percent); and substantiated violations related to speaking up (such as failure to speak up or obstructing an investigation) accounting for 10 percent (2021: 14 percent). The appropriate parties implemented corrective measures and disciplinary sanctions following these investigations. Specifically, in 2022, termination of employment accounted for 48 percent of the disciplinary actions arising from these cases, while suspension accounted for 3 percent, written warnings for 20 percent, and verbal warnings or counseling for the remaining 29 percent.
Preventing bribery and corruption
Our standard is clear: we do not bribe anyone, anywhere, for any reason. We recognize that our refusal to participate in corrupt activities may make doing business more difficult in some markets, but bribery is unacceptable at PMI.
Our anti-corruption standards regulate our interactions with government officials and entities, as well as with private individuals, both directly and through third parties. These standards prohibit all forms of bribery and facilitation of payments. They also describe acceptable forms of giving and receiving gifts or entertainment, govern political contributions, and set clear preapproval, reporting, and registration requirements.We publicly disclose on PMI.com the very limited political contributions we make, and we adhere to lobbying regulations.
Our strategy highlights the importance of governance-related topics, which cannot be overstated. Our company’s policies, rules, and procedures define our ability to implement sound strategies that successfully address environmental and social issues.
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This online content about our Integrated Report should be read in conjunction with PMI’s Integrated Report 2022. Unless otherwise indicated, the data contained herein cover our operations worldwide for the full calendar year 2022 or reflect the status as of December 31, 2022. Where not specified, data comes from PMI financials, non-financials, or estimates. Unless explicitly stated, the data, information, and aspirations referenced do not incorporate PMI’s Vectura Fertin Pharma business (consolidating the 2021 acquisitions of wellness and healthcare companies Fertin Pharma A/S, Vectura Group plc., and OtiTopic, Inc.), nor the late 2022 acquisition of Swedish Match AB. Please also refer to 'This report at a glance' on page 2 of the Integrated Report 2022 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 214. In the Integrated Report 2022 and in related communications, the terms “materiality,” “material,” and similar terms, when used in the context of economic, environmental, and social topics, 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.