2023-05-31 08:52:36
The CEO of Philip Morris International has expressed his desire to transform his group into a company that respects environmental, social and governance criteria. A daring turn that is far from being achieved.
Philip Morris, future responsible company that meets environmental, social and governance (ESG) criteria? The hypothesis may seem far-fetched, but the CEO of the American tobacco company firmly believes in it, in an interview given to the Financial Times. Asked by the business daily about the possibility of his company being qualified for ESG criteria in the future, Jacek Olczak replied: “I think so.”
But the CEO of Philip Morris International believes that by gradually moving away from traditional tobacco products, his group is embracing social and environmental responsibility. Behind this unexpected profession of faith, especially on the eve of World No Tobacco Day, there is actually a major investment challenge.
A transition to less harmful products
Jacek Olczak argues that Philip Morris is changing the model. A historic manufacturer of cigarettes, the group, which also owns the Marlboro and Chesterfield brands, has adopted a commercial strategy for several years aimed at anticipating the continued decline in sales of classic cigarettes.
Result of this transition: today, a third of the group’s income comes from less harmful alternatives to tobacco, such as heat-up cigarettes and other nicotine vapor products. With the objective of reaching 50% of turnover within two years. Jacek Olczak also highlights the transparency efforts made by his company.
“[PMI est] at the forefront in terms of reporting on methodology, on transparency and on the assessment of materiality”, he pleads.
The CEO of Philip Morris therefore believes that he deserves these ESG criteria. And to add that 10% of his own remuneration is now linked to environmental and social objectives.
Child labor, an unresolved issue
Except that the statements of Jacek Olczak do not erase the terrible public health record of tobacco. As a reminder, cigarettes are the leading cause of preventable death in the world. Last year, Philip Morris sold more than 600 billion.
In addition, the CEO of the group recognizes it himself with the “FT”: there is still a problem in terms of child labor in tobacco plantations. The ESG criteria are therefore still far from being achieved.
But the challenge for Philip Morris is to position itself to perhaps succeed in bringing back institutional investors. It must be said that ESG investments are now the fastest growing segment of asset management.
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