Philip Morris International published its business transformation-linked financing framework, which integrates the company’s smoke-free transformation into its financing strategy.
“To strengthen our commitment and further highlight to stakeholders the seriousness of our smoke-free ambitions, we wish to link our most material sustainability priorities to our financing,” said Emmanuel Babeau, chief financial officer, in a statement. “We believe that a business transformation-linked financing framework not only helps reinforce our commitment to reinvent our company but will also allow investors and lenders to engage with and support our industry-leading transformation as we work to accelerate the end of smoking and use our strong capabilities to develop products that go beyond nicotine and have a net positive impact on society.”
The framework outlines the guidelines that PMI will follow in issuing business transformation-linked financing instruments in the debt capital and loan markets, which may include public notes offerings, private placements, loans and other relevant financing instruments.
The key performance indicators (KPIs) selected for the framework directly measure and respond to the focus of PMI’s sustainability and corporate strategy and the company’s most material sustainability topic: addressing the health impact of its products.
The framework includes two sustainability performance targets (SPTs), with an observation date of Dec. 31, 2025: Increase PMI’s full-year 2025 smoke-free/total net revenue percentage to more than 50 percent from the 2020 baseline of 23.8 percent; and increase the number of markets where PMI’s smoke-free products are available for sale to 100 markets by the end of 2025 from the baseline of 64 markets on Dec. 31, 2020.
The framework was validated by S&P Global Ratings, which provided a second party opinion (SPO). The SPO recognized the chosen KPIs and related SPTs as material, measurable, ambitious, regularly reported and externally verified—in line with the June 2020 Sustainability-Linked Bond Principles administered by the International Capital Market Association (ICMA) and the May 2021 Sustainability-Linked Loan Principles administered by the Loan Market Association (LMA). The SPO is also available on the PMI website.
“The framework builds on our genuine commitment to transform,” said Jennifer Motles, chief sustainability officer, “reflecting: a Statement of Purpose issued by the Board of Directors; concrete KPIs for reporting and compensating executives on that purpose (Business Transformation Metrics); business transformation-linked financing instruments tied to targets for select KPIs; and transparent, periodic disclosures on our progress through integrated reporting. I hope this can serve to inspire something bigger within our industry and set an example for other industries also undergoing transformations.”