Message from our Chief Sustainability Officer

Our business transformation connects sustainability and corporate strategy, recognizing that ESG issues are business issues. As a consequence, sustainability, in all its dimensions, is at the absolute core of our business strategy. Accordingly, PMI has chosen to practice integrated reporting because this is the best way to communicate about a business transformation that has sustainability at its core. Our reporting addresses both the material ESG risks related to our operations, as well as those connected to our product. Since 2016, our company has worked to professionalize its approach to ESG reporting by seeking alignment with the expectations of voluntary standards and frameworks. In addition, we have introduced bespoke reporting of key performance indicators (KPIs) linked to our company’s sustainability materiality results, such as PMI’s Business Transformation Metrics and Sustainability Index.

Historically, ESG disclosures have been mostly voluntary. However, that is changing rapidly. Regulators and standards setters in various geographies are working to create comparable and more reliable standards for mandatory disclosures. We see this in the U.S., for instance, through the Securities and Exchange Commission (SEC), in the EU via the Corporate Sustainability Reporting Directive (CSRD), and globally through efforts led by the International Financial Reporting Standards (IFRS) Foundation’s International Sustainability Standards Board (ISSB). We have actively engaged in the consultation processes led by the EU and the U.S. SEC, as well as with the ISSB, and will continue to support efforts to set a baseline for sustainability-related disclosures.

Moreover, building on that preparedness, we have completed a new in-depth climate-related risk and opportunity assessment aligned with the framework of the Task Force on Climate-related Financial Disclosures (TCFD). Alongside this year’s integrated report, we are publishing PMI’s first TCFD report detailing activities and targets related to its recommendations, anticipating regulatory requirements that may result from the U.S. SEC’s current climate-related disclosure proposal. We welcome more rigorous and regulated sustainability reporting requirements, as we believe this will further strengthen our ability to produce sustainability-related disclosures that are consistent, comparable, and reliable. In turn, our shareholders and stakeholders will be better able to assess how we are managing and improving on material ESG-related risk factors and how this is contributing to long-term value creation.

Capturing high-quality data is essential to accurate reporting. Accordingly, we are building systems and processes that can host a sound data governance model to ensure that nonfinancial data reported are meaningful, well-defined, and verifiable, and that processes are appropriately documented. Further, we continue to build synergies with our Legal and Finance teams to increase rigor and improve the robustness of our ESG disclosures. 

To enhance our reporting and prepare for upcoming regulatory changes, we are also partnering with PMI’s risk functions to build a roadmap to gradually expand the scope of external assurance of our ESG data, seeking further alignment with voluntary standards.

We intend to continue evolving our processes to produce a leaner and more technical integrated report, primarily aimed at serving the needs of the financial community. To achieve this, we began a reporting relevance review in 2022 whereby we assessed the maturity, significance, and robustness of all KPIs disclosed in our integrated reports. As our organization becomes more sophisticated and our approach to ESG reporting further professionalizes, we aim to reduce the number of KPIs by prioritizing quality over quantity. To give our stakeholders visibility into this process, this Integrated Report 2022 describes the rationale and logic behind this exercise. Ultimately, our intent is not only to be transparent on what we report, but also to be clear and precise in  the way we communicate why, what, and how we measure our ESG performance.

We recognize the essential need to continue building legitimacy and trust among our stakeholders, who are fundamental to our company’s purpose and can accelerate the pace at which we achieve it. Our Integrated Report 2022 aims to address their demands for more transparent, comparable, and reliable information on our ESG-related risks and performance. As we continue to learn, transform, and discover better ways to develop solutions that have a meaningful impact, we hope our transparency and willingness to engage will spark dialogue with those who can help accelerate our pace of change. I invite you to reach out and share your feedback, to question, to challenge, and, above all, to engage with us as we remain focused on making our company better, dedicated to sustainability, and committed to transform, for good.