Tobacco company Philip Morris International (PMI) announced today the release of its new “Business Transformation-Linked Financing Framework,” in a move aimed to tie the company’s financing strategy to its “smoke-free transformation.”
According to the company, the launch of the new framework demonstrates its commitment to “drive the end of cigarette smoking as fast as possible,” in accordance with Philip Morris’ landmark vision, launched in 2016.
Emmanuel Babeau, PMI’s Chief Financial Officer, said:
“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. 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.”
Sustainability linked securities are an emerging form of sustainable finance instruments, with attributes including interest payments tied to an issuer’s achievement of specific sustainability targets. Financing instruments issued under Philip Morris’ new framework will have financial terms, including margin adjustments, tied to the company’s performance in achieving goals under its smoke-free vision, including the percentage of smoke free revenues to total sales, and the number of markets in which the company’s smoke-free products are available for sale.
The framework includes two Sustainability Performance Targets (SPTs), based on 2025 goals recently announced by the company. These include reaching more than 50% of revenues from smoke-free products (compared to 23.8% in 2020), and making smoke-free products available for sale in 100 markets (compared to 64 at the end of 2020) by 2025.
Jennifer Motles, PMI’s Chief Sustainability Officer, said:
“The transformation of our company is intrinsically linked to our sustainability and corporate strategy. As our most material issue comes from the impact created by the products we sell, only a radical transformation can successfully contribute to a more sustainable world. We are therefore very pleased to publish our business transformation-linked financing framework, which serves as a further step in achieving our purpose.”
Click here to view PMI’s Business Transformation-Linked Financing Framework.