PMI: Embedding Sustainability into its Global Supply Chain

Philip Morris International (PMI) positions sustainability as central to its business model and extends this into its global supply chain.

With 21,400 suppliers and 361,000 contracted farmers, the company depends on strong relationships to maintain resilience, reduce environmental impact and support communities. Supplier engagement underpins PMI’s strategy to create a smoke-free future while embedding sustainability across every step of its value chain.

Recognition of this approach comes through inclusion on CDP’s Supplier Engagement Leaderboard. PMI achieves an A grade in March 2024, a distinction awarded to only 6–8% of companies disclosing to CDP, marking the seventh consecutive year of recognition.

CDP (formerly the Carbon Disclosure Project) evaluates companies on governance, Scope 3 emissions, supplier collaboration and environmental transparency.

Head of Sustainable Procurement, Halyna Habegger, explains: "at PMI, we believe that the foundation of a sustainable business is the robust collaboration across our value chains, with each supplier playing a crucial role. Such partnership and the exchange of innovative ideas are essential to achieving our sustainability goals.

"Our objective is to build resilient and cost-effective supply chains that not only support our people but also manage/reduce our environmental impact. Our investment in supplier engagement is key to this effort.

"This investment aims to create a ripple effect that extends beyond our direct operations, advancing the sustainability agenda for all stakeholders.”

Embedding sustainability in supply relationships

PMI’s supplier engagement strategy integrates sustainability from the start. New suppliers must align with its responsible sourcing principles and code of conduct, frameworks that outline expectations on labour rights, environmental standards and ethical business practices.

This approach sets a consistent baseline across both direct and indirect suppliers.

The strategy is cross-functional, involving teams across procurement, sustainability and operations to ensure that expertise and structure are embedded throughout the supply chain.

Supplier onboarding is collaborative, with PMI working alongside suppliers to set shared objectives.

The company also applies its Sustainable Tobacco Supply Chain framework to secure transparency and traceability from farm to product.

This allows data collection on farming practices, water use and labour conditions, providing the information required to monitor progress and take action where needed.

Since 2019, PMI has optimised 12.3 million cubic metres of water in tobacco-growing regions, showing how supply chain interventions can deliver tangible environmental results.

Monitoring forms a central part of PMI’s process, using third-party assessments, audits and reviews to evaluate supplier performance.

Rather than punishing poor results, PMI builds collaboration through coaching, training and guidance.

High-risk suppliers receive additional support through webinars, quarterly reviews and site visits, ensuring that corrective measures are both practical and aligned with business needs.

Data, collaboration and capacity building

Tracking and reporting are essential for PMI’s progress. The company uses Ecovadis, a global sustainability ratings platform, to assess its direct materials suppliers.

In 2024, 92% of PMI’s total direct material spend goes through Ecovadis. Suppliers with low scores are required to develop Corrective Action Plans, ensuring continuous improvement.

PMI also collects primary climate-related data directly from suppliers. This helps identify reduction opportunities and improve carbon accounting, visibility and traceability across the supply chain.

Data-driven insights support targeted carbon reduction strategies in freight, overland transport and distribution.

Collaboration is reinforced through the Sustainability Accelerator Program, which provides suppliers with knowledge, tools and support to embed sustainability into their operations. From five pilot suppliers in 2023, participation has grown to 46 suppliers in 2025, illustrating the scalability of the initiative.

This structured engagement has helped suppliers adopt science-based greenhouse gas (GHG) reduction targets. By 2024, 43% of PMI’s supply chain spend was covered by suppliers committed to, or already implementing, such targets.

This directly contributes to a 15% absolute reduction in Scope 3 CO2 emissions against a 2019 baseline.

The company also applies human rights impact assessments (HRIAs) in high-risk countries to proactively identify and address issues. All 10 planned HRIAs were completed by 2024, a year ahead of schedule.

Results show that 99% of tobacco farmers supplying PMI earn a living income, a figure directly supported by supplier engagement programmes.

Supply chain outcomes and future goals

PMI reports tangible progress across a range of sustainability indicators tied to supplier engagement:

• Sustainable sourcing: 94% of spend with critical suppliers was sustainable in 2024, with a target of 100% by 2025
• Science-based targets: 43% of total supply chain spend covered by suppliers committed to science-based GHG targets in 2024
• Human rights: All 10 planned HRIAs were completed by 2024
• Living income: 99% of tobacco farmers earned a living income in 2024
• Scope 3 emissions: 15% absolute reduction in CO2 since 2019 baseline
• Water use: 12.3 million cubic metres optimised in tobacco regions since 2019
• Deforestation: Zero gross deforestation achieved in the tobacco supply chain in 2020, and in direct materials by 2023

These outcomes show that supplier engagement delivers not only compliance but measurable impact. By embedding sustainability into procurement and operations, PMI aligns its business resilience with environmental and social outcomes.

Recognition from CDP reinforces the message that best practice in supply chain sustainability requires consistent transparency, robust monitoring and strong collaboration.

PMI’s position on the Supplier Engagement Leaderboard demonstrates that addressing Scope 3 emissions and human rights in global supply chains is achievable when suppliers are treated as partners in long-term sustainability.

As PMI progresses toward its target of a smoke-free future, the company keeps supplier engagement at the centre of its supply chain strategy.

Collaboration with suppliers, farmers and partners ensures that sustainability is embedded from farm to factory to finished product, creating an impact that extends beyond PMI’s direct operations into the broader business ecosystem.