Glossary of terms and acronyms

3TGs – Tin, tantalum, tungsten, and gold

Aerosol – Gaseous suspension of fine solid particles and/or liquid droplets. In the context of our smoke-free products, an aerosol is not smoke and does not contain solid particles

ALP – Agricultural Labor Practices

Available for sale – When PMI products are available for general sale in the market, through direct retail, indirect retail, or e-commerce in either one or more key cities or nationwide

AWS – Alliance for Water Stewardship

B2B – Business to business

B2C – Business to consumer

CA – Cellulose acetate

Carbon removals – Refer to the transfer of a greenhouse gas from the atmosphere to storage within a nonatmospheric pool, driven by biogenic or technological mechanisms

Caregiver – A person who has responsibility for the care of a newborn child or newly adopted child, including the child’s biological parent, the child’s adoptive parent, a person having legal parental responsibility for the child such as the child’s guardian, a stepparent, or a child’s parent through surrogacy

– Primary caregiver – The caregiver who has the primary responsibility for the care of the newborn or newly adopted child following the child’s arrival

– Secondary caregiver – A caregiver who is not the primary caregiver

Combustible tobacco products – The term we use to refer to cigarettes and other tobacco products that are combusted

Combustion – The process of burning a substance in oxygen, producing heat and often light

Company Management – The term we use to refer to the senior management of the company, as presented on our www.PMI.com site (also referred to as “our leadership team” or “Group Management Team”)

Contracted farmers – Tobacco farmers supplying to PMI and contracted either directly by PMI (through the company’s leaf operations) or through third-party leaf suppliers

Contracted workers – We define a contracted worker (also referred to as “agency temp”) as a worker who is under the direct supervision of PMI employees but employed by a temporary employment agency

Contractor – We define a contractor as a person employed or working on behalf of a third-party company contracted by PMI, who remains under the direct supervision of his or her employer rather than PMI and is often involved in project-specific or outsourcing arrangements

CPA – Crop protection agent

Critical raw materials (CRMS) – Minerals and metals that have high economic importance, are essential to energy-related and strategic technologies, and have a high inherent risk of supply disruption due to their economic concentration and the lack of available substitutes

Critical suppliers – Those suppliers who manufacture or sell components used in the manufacture of PMI finished products and meet a certain minimum spend threshold with whom PMI has a direct commercial relationship. This applies to the following categories: direct materials suppliers Tier 1, electronics suppliers Tier 1 & 2, as well as all contracted tobacco farmers and third-party tobacco suppliers

Downstream supply chain – Those stages in the supply chain in which materials (mostly in the form of finished products) flow away from the organization to the customers/consumers

E-liquids – A liquid solution that is used in/with e-cigarettes. E-liquids contain different levels of nicotine in a propylene glycol and/or vegetable glycerin-based solution with various flavors

E-vapor product – Electrical product that generates an aerosol by heating a nicotine or non-nicotine containing liquid, such as electronic cigarettes (or “e-cigarettes”)

EHS – Environmental health and safety

Employee Net Promoter Score, or eNPS – A universal benchmark used across industries to calculate employee engagement calculated by disregarding neutral responses and then calculating the difference between positive and negative responses

EPR – Extended producer responsibility

ERM – Enterprise Risk Management

FCTC – WHO Framework Convention on Tobacco Control

FDA – U.S. Food and Drug Administration

FSC – Forest Stewardship Council

GAP – Good Agricultural Practices

Gender pay gap – Calculated as the percentage difference between the sum of annual base salary, bonus, and stock awards

GHG – Greenhouse gas

Heated tobacco units, or HTUs – The term PMI uses to refer to heated tobacco consumables, which include our BLENDS, DELIA, HEETS, HEETS Creations (defined collectively as "HEETS"), SENTIA, TEREA, TEREA CRAFTED, and TEREA Dimensions, as well as the KT&G-licensed brands, Fiit and Miix (outside of South Korea). HTUs also include zero tobacco heat-not-burn consumables (LEVIA)

HPHCs – The harmful or potentially harmful constituents that have been identified as likely causes of tobacco-related diseases by various public health institutions

Human rights impact assessment, or HRIA – Assessment to identify human rights risks and adverse impacts

Human rights salient risks – Those human rights that stand out because they are at risk of the most severe negative impact through a company’s activities or business relationships (source: UN Guiding Principles)

Illicit trade – Products traded in violation of tax, customs, or other laws, such as contraband, counterfeit, non-tax paid volume produced by local manufacturers, and other illicit products

Industry (or total market) and market shares – PMI estimates for tax-paid products and Global Travel Retail products based on data from a number of internal and external sources and may, in defined instances, exclude the People’s Republic of China. It represents the aggregated estimated IMS volumes for all Trademark Owners operating in a given geography and refers to cigarettes and heated tobacco units, unless otherwise stated. Past reported periods may be updated to ensure comparability and to incorporate the most current information for industry and market share reporting

In-market sales, or IMS – Sales to trade channels, which serve legal age nicotine users. Depending on the market and distribution model, the IMS may represent an estimate. Consequently, past reported periods may be updated to ensure comparability and to incorporate the most current information

IP5 – The five largest intellectual property offices in the world

IPM – Integrated Pest Management

IQOS heat-not-burn devices – Precisely controlled heating devices into which specially designed and proprietary heated tobacco units or nontobacco nicotine-containing units are inserted and heated to generate an aerosol

Key Biodiversity Areas, or KBAs – Sites contributing significantly to the global persistence of biodiversity in terrestrial, freshwater, and marine ecosystems.

LCA – Life-cycle analysis

Low- and middle-income markets – Markets composed of countries classified by the World Bank as low- and middle income economies based on gross national income (GNI) per capita; or where no World Bank classification exists, those with GNI per capita below the World Bank low- and middleincome threshold

LTIR – Lost Time Incident Rate

Managerial roles – The terms we use to refer to employees in different salary grades, regardless of their job title or function:

– Junior roles – Employees in salary grade 9 or below

– Managers – Employees in salary grades 10 to 13

– Management positions – Employees in salary grade 10 and above

– Senior roles – Employees in salary grade 14 and above

– Senior leaders – Employees in senior leadership roles, including all employees in salary grade 17 and above

Market share for HTUs – The in-market sales volume for HTUs as a percentage of the total estimated industry sales volume for cigarettes and HTUs. For Japan, total estimated industry sales volume also includes cigarillos

MRTP – Modified Risk Tobacco Product

MVR – Monitoring, Verification, and Reporting Framework for Sustainable Leaf Curing Fuels

Net debt – Defined as total debt, less cash and cash equivalents

Net revenues related to combustible tobacco products – The operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. These net revenue amounts consist of the sale of our cigarettes and other tobacco products that are combusted. Other tobacco products primarily include roll-your-own and make-your-own cigarettes, pipe tobacco, cigars, and cigarillos and do not include smoke-free products

Net revenues related to smoke-free products, excluding wellness – The operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise tax, if applicable. These net revenue amounts consist of the sale of our products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral products, as well as consumer accessories

Net revenues related to wellness – The operating revenues generated from the sale of products, primarily associated with oral and intra-oral delivery systems

Modern oral pouches – Mainly refer to pre-portioned pouches containing nicotine, flavors, and cellulose substrate. In some markets, modern oral pouches may contain small amounts of tobacco

NGOs – Nongovernmental organizations

No net loss – The point at which business-related impacts on biodiversity are balanced by measures from the mitigation hierarchy, to leave no degradation on natural ecosystems at end balance

Offsetting (or Compensation) – The activity of purchasing carbon credits from activities outside of a company’s value chain as a substitute for abating emissions within its value chain

OHS – Occupational health and safety

Other tobacco products – Primarily roll-your-own and make-your-own cigarettes, pipe tobacco, cigars, and cigarillos, and does not include smoke-free products

PMI heat-not-burn products – Include licensed KT&G heat-not-burn products

PMI segments – Following the sale of Vectura Group Ltd on December 31, 2024, we updated our segment reporting in January 2025 by including the ongoing Wellness segment results (previously referred to as Wellness & Healthcare) in the Europe segment. In addition we renamed our “PMI Duty Free” business to “PMI Global Travel Retail” effective in the first quarter of 2025. As a result of this change, PMI’s segment that includes our duty free business was renamed East Asia,

Australia & PMI Global Travel Retail (EA, AU & PMI GTR). Our four geographical segments are as follows:

– Europe Region is headquartered in Lausanne, Switzerland, and covers all the European Union countries, Switzerland, the U.K., and also Ukraine, Moldova, and Southeast Europe

– South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region (SSEA, CIS & MEA) is headquartered in Dubai, United Arab Emirates. It covers South and Southeast Asia, the African continent, the Middle East, and Turkey, as well as Israel, Central Asia, Caucasus, and Russia

– East Asia, Australia, and PMI Global Travel Retail Region (EA, AU & PMI GTR) is headquartered in Hong Kong, and includes the consolidation of our international Global Travel Retail business with East Asia and Australia

– Americas Region is headquartered in Stamford, Connecticut, and covers the U.S., Canada and Latin America. With our smoke-free business now operating at scale across our regions, including substantial growth from our U.S. business, PMI has implemented an evolved organizational model with two primary business units:International and U.S.

This change was implemented effective January 1, 2026, and as a result PMI realigned its reportable segments accordingly.The four geographic segments will be replaced with three new reportable segments: International Smoke-Free, International Combustibles, and U.S. As of the first quarter of 2026, our reporting will reflect these changes.

PMTA – Premarket Tobacco Application

RBA – Responsible Business Alliance

Refreshed devices – Smoke-free devices resulting from the care and maintenance refresh services (which may include unpacking, diagnostics, cleaning, firmware update, cosmetic parts replacement, battery charging, and repacking of devices) that meet the agreed quality requirements to allow for their reuse as pre-owned devices

Repaired devices – Smoke-free devices resulting from the care and maintenance repair services (which may include unpacking, diagnostics, testing, cleaning, battery charging, firmware update, cosmetic part or battery replacement, component harvesting, and repacking of devices) that meet the agreed quality requirements to allow for their reuse as preowned devices

RMI – Responsible Minerals Initiative

RSP – Responsible Sourcing Principles

SBT – Science-based target

SBTi – Science Based Targets initiative

Significant suppliers – Those suppliers that are identified as having substantial risks of negative ESG impacts or significant business relevance to the company, or a combination of both, and that operate within a yearly spend range in a country with a high ESG risk score. This applies to the following categories: technical procurement, advanced procurement, electronic suppliers Tier 1 & 2, all indirect materials and services suppliers, as well as all contracted tobacco farmers and third-party tobacco suppliers

Smoke – A visible suspension of solid particles, liquid droplets, and gases in air, emitted when a material burns

Smoke-free business, or SFB – The term PMI uses to refer to all of its smoke-free products. SFB also includes wellness products, as well as consumer accessories, such as lighters and matches

Smoke-free product consumables – The term PMI uses to refer to heated tobacco units used with heat-not-burn products, e-vapor disposables, cartridges containing e-liquids that are used for e-vapor products, and oral nicotine products including snus and nicotine pouches

Smoke-free products, or SFPs – The term PMI uses to refer to all of its products that provide nicotine without combusting tobacco, such as heat-not-burn, e-vapor, and oral smokeless, and that therefore generate far lower levels of harmful chemicals. As such, these products have the potential to present less risk of harm versus continued smoking

– Oral smoke-free products conversion:

i. Nicotine pouches (units): 15 pouches per can in the U.S. and approximately 20 pouches per can outside the U.S.

ii. Snus products: weighted average 21 pouches equivalent per can

iii. Moist snuff products: weighted average 17 pouches equivalent per can

iv. Tobacco bits products: weighted average 30 pouches equivalent per can

v. Chew bags products: weighted average 20 pouches per can

– E-vapor products conversion: one milliliter of e-vapor liquidequivalent to 10 units

TCFD – Task Force on Climate-related Financial Disclosures

TGA – Tobacco-growing area

Tier 1 suppliers – Suppliers that directly supply goods, materials, or services to PMI

Tier 2 suppliers – Suppliers that provide their products and services to the tier 1 suppliers

TNFD – Taskforce on Nature-related Financial Disclosures

Tons – “Tons” equates to “metric tons” throughout this report

Total IQOS users* – The estimated number of legal age (minimum 18 years or older depending on market regulation) users of PMI heat-not-burn products, for which PMI HTUs represented at least a portion of their daily tobacco consumption over the past seven days. The estimated number of adults who have "“switched to IQOS and stopped smoking"” reflects:

– For markets where there are no heat-not-burn products other than PMI heat-not-burn products: daily individual consumption of PMI HTUs represents the totality of their daily tobacco consumption in the past seven days

– For markets where PMI heat-not-burn products are among other heat-not-burn products: daily individual consumption of HTUs represents the totality of their daily tobacco consumption in the past seven days, of which at least 70 percent are PMI HTUs

Total PMI e-vapor users* – Defined as the estimated number of legal age (minimum 18 years or older depending on market regulation) users of e-vapor products, who consumed at least one of PMI’s e-vapor products in the past seven days

Total PMI oral smokeless users* – Defined as the estimated number of legal age (minimum 21 years in the U.S. and minimum 18 years or older depending on market regulation outside the U.S.) users of oral smokeless products who consumed at least one of PMI’s oral smokeless products (nicotine pouches in the U.S., and nicotine pouches or snus outside the U.S.) over the past seven days

Poly-users across PMI SFPs categories* – Defined as the estimated number of legal age (minimum 18 years or older depending on market regulation) users who used multiple PMI smoke-free products over the past seven days

Total PMI SFPs users* – The sum of “Total IQOS users”, “Total PMI oral smokeless users," “Total PMI e-vapor users” of PMI products and considering “Poly-users across PMI SFPs categories”

* The above SFPs user metrics reflect PMI estimates, which are based on PMI'’s proprietary Nicotine Containing Products Tracker (NCPT) in combination with SFP offtake volume trends. The NCPT methodology estimates rely on NCPT evapor, oral smokeless (except the U.S.), and poly-usage data, which is calibrated using Total IQOS user data, leveraging our deep understanding of PMI’s heat-not-burn category and its size. Total PMI oral smokeless users in the U.S. are approximated through volume-based estimations, as

NCPT data for the U.S. is not currently available.

Note: NCPT sample-based estimations use a 95 percent confidence interval. The accuracy and reliability of the estimates may vary based on sample size, market maturity, and availability of information.

TRIR – Total Recordable Incident Rate

UNGPs – United Nations Guiding Principles on Business and Human Rights

Upstream supply chain – Those operations in which the materials flow into the organization (i.e., it mainly refers to procurement activities and inbound logistics)

VAP – Validated Assessment Program of the Responsible Business Alliance (RBA) is a leading standard for on-site compliance verification and effective, shareable audits

WASH – Water access, sanitation, and hygiene

WBCSD – World Business Council for Sustainable Development

Wellness products – Primarily refer to products associated with oral and intra-oral delivery systems

WHO – World Health Organization

YAP – Youth access prevention

ZDM – Zero Deforestation Manifesto

 

Key definitions related to our work to improve tobacco farmer livelihoods

A living income and living wage are both about achieving a decent standard of living. A living income is the net annual income required for a household to afford a decent standard of living for all its members and applies to, for example, self employed farmers. A living wage is applied in the context of hired workers (e.g., in factories or on farms) (source: The Global Living Wage Coalition).

A minimum legal wage, as defined in PMI’s ALP Code, is a wage for all workers (including temporary, piece-rate, seasonal, and migrant) that meets, at a minimum, the national legal standard or formalized agricultural benchmark standard. An agricultural benchmark may be formalized where a minimum legal wage is not available or applicable to a specific context.

Child labor, as defined by the ILO, is work that deprives children of their childhood, their potential, and their dignity, and that is harmful to physical and mental development. Under PMI’s ALP Code, the minimum age for admission to work is not less than the age at which compulsory schooling is completed and, in any case, is not less than 15 years or the minimum age accepted by the country’s laws, whichever age limit affords greater protection. No person below age 18 should be involved in any type of hazardous work. In the case of family farms, a child may only help on the farm provided that the work is non hazardous, and the child is at least 13 years old or above the minimum age for such work as defined by the country’s laws, whichever affords greater protection.

Hazardous work means work that, by its nature or by virtue of when or where it is carried out, is likely to harm the health, safety, or morals of children or others. The following can, for example, be hazardous, particularly without the proper personal protective equipment (PPE): applying crop protection agents (CPA); stalk cutting; stringing; carrying heavy loads; working with sharp tools; working in extreme temperatures; and working after dark.

Green tobacco sickness, or GTS, is a type of nicotine poisoning caused by the absorption of nicotine from the surface of wet, fresh, green tobacco leaves through the skin. The characteristic symptoms of GTS include nausea, vomiting, weakness, dizziness, stomach cramps, difficulty breathing, excessive sweating, headache, and fluctuations in blood pressure and heart rate. They can last from 12 to 48 hours.¹

Personal protective equipment, or PPE, in tobacco farming refers to any clothes, materials, or devices that provide protection from exposure to CPA and GTS during specific activities throughout the crop cycle.²

Living income benchmark studies are studies conducted in specific regions or areas to estimate the net annual income required for a household to afford a decent standard of living for all members of that household.

Living Income Reference Values represent a living income for typical families in rural (or urban) areas of low income and middle-income countries.³ Reference Values provide a credible estimate of living wage or income at a country level, for rural and urban areas. They offer an insightful reference beyond the currently available indicators for many countries, which are mostly limited to poverty lines and minimum wages.

Farmer income studies are conducted, through third-party service providers, to assess all legal income sources of contracted farmers within PMI’s tobacco supply chain, including tobacco, complementary crops, and off-farm income.

Sustainable Tobacco Supply Chain framework, or STSC - PMI’s new approach focused on the full life cycle of tobacco production and targets actions toward the tobacco we purchase and use in our products. PMI’s new approach focused on the full life cycle of tobacco production and targets actions toward the tobacco we purchase and use in our products. It introduces the concept of eligible farm base, a preselection of farmers from PMI’s suppliers’ farm base, who may supply tobacco to PMI, as defined below. 

1. Total farm base of contracted farmers: All contracted tobacco farmers who are by default subject to our ALP program and thus farm-by-farm monitoring. Only a subset of these contracted farmers end up supplying tobacco used in PMI’s packed products, with the remainder providing tobacco to other companies.
2. Eligible farm base of contracted farmers: The eligible farm base is composed of that subset of tobacco farmers who have been preselected by suppliers based on their compliance with PMI’s ALP Code requirements. This preselection takes into consideration farmers’ past-year performance related to addressing child labor or forced labor issues, minimum wage payment, decent accommodation for workers, and access to personal protective equipment (except for newly contracted farmers for which such information is not available).
3. Contracted farmers supplying tobacco to PMI: This corresponds to the portion of the eligible farm base whose tobacco is, ultimately, included in PMI’s products.

 

 

 ¹ Schep LJ, Slaughter RJ, Beasley DM (September–October 2009). “Nicotinic plant poisoning.” Clinical Toxicology.

² Adapted from the FAO/WHO (2014) International Code of Conduct on Pesticide Management.

³ Reference values are built on data and knowledge gained from 40 complete Anker methodology benchmark studies. Since they are based on a statistical analysis, they have a margin of error for typical rural (or urban) areas of a country, which is generally around +/– 10% using a 95% confidence interval. Sources: Living Income Reference Values | living income (living-income.com) and Anker Living Wage and Living Income Reference Values | Global Living Wage Coalition.