PMI: Driving Sustainability Through Supplier Engagement

Sustainability is at the heart of how Philip Morris International (PMI) delivers its products and services. 

The business has charted an ambitious path to a smoke-free future driven by a commitment to transforming for good, a purpose-led approach to delivering impact and integrating sustainable best practice across its operations. 

Nowhere is this more important than its global supply network, which consists of 21,400 suppliers and 361,000 contracted farmers. 

Effective engagement with this vast ecosystem helps the company manage risk, mitigate environmental impact and deliver positive social change for the companies and communities it works with. 

To deliver on these opportunities, PMI has developed a robust, holistic and cross-functional supplier engagement programme covering sustainability for electronics suppliers as well as suppliers of tobacco leaf and other direct and indirect materials. 

The programme, which embeds sustainability across areas like onboarding, due diligence and progress monitoring and reporting, has earned the company global recognition. 

In March 2024 it was included in CDP’s Supplier Engagement Leader for the seventh consecutive year, earning an A grade that distinguishes it as a global leader – an honour bestowed to only 6-8% of the thousands of firms that disclose information to CDP each year. 

Leading global supplier engagement

The CDP Supplier Engagement Leaderboard recognises companies that most effectively work with their suppliers on climate action. 

Based on a comprehensive climate questionnaire, it highlights global leaders in governance, Scope 3 emissions, targets and supplier collaboration. Appearing on the list signals best practice and leadership in all areas of sustainable supply chain engagement.

Achieving an A grade means PMI is among a small cohort of “leaders” demonstrating best practice in environmental transparency and performance.

“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,” says Head of Sustainable Procurement Halyna Habegger, discussing the importance of supplier engagement in meeting these standards.

“Such partnership and the exchange of innovative ideas are essential to achieving our sustainability goals,” she adds. “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.”

Supplier engagement strategy

PMI’s operations rely on securing high-quality, cost-effective and fit-for-use materials and services from suppliers. This makes having a holistic and robust supplier engagement strategy essential both for achieving business objectives and delivering positive impact more broadly. 

This strategy is anchored cross-functionally at PMI, an approach that ensures collaboration, structure and expertise are integrated across the entire supply chain. 

Supplier engagement follows a structured and rigorous process that starts with effective and collaborative supplier onboarding. 

All suppliers working with PMI commit to its stringent responsible sourcing principles and code of conduct – frameworks that set out shared expectations for delivering sustainable supply chains and enhancing lives within the value chain. 

Risks and opportunities

Proactively monitoring the sustainability performance of suppliers is paramount to PMI’s ability to prevent, identify and mitigate sustainability-related risks. 

The company works with third parties to perform regular supplier assessments, audits and performance reviews. 

These follow a collaborative approach, forming a foundation for coaching suppliers, providing guidance and identifying potential challenges. 

PMI works closely with suppliers who have the highest risk through various channels including webinars, quarterly sustainability reviews and face-to-face site visits.

Progress reporting and collaboration

Tracking supplier performance is important for understanding sustainability progress, as well as possible areas for improvement. 

PMI leverages Ecovadis – a global platform and service for assessing and benchmarking corporate sustainability performance – to monitor its direct materials suppliers. 

In 2024, 92% of the company’s total direct material spend was assessed through the Ecovadis platform, with suppliers achieving low scores required to implement Corrective Action Plans (CAPs).

Since 2020, PMI has also engaged with suppliers to collect primary data for climate-related information, identified opportunities for reduction and explored environmental partnership initiatives. 

The aim is to use this data to improve carbon accounting, accuracy, visibility and the traceability of the company’s sustainability initiatives – a programme that has formed the basis for carbon reduction plans for air freight, overland transportation and in-market distribution.

PMI also fosters collaboration through its Sustainability Accelerator Program, which equips suppliers with the knowledge, tools, and support needed to embed sustainability deeper into their operations.

In 2025, 46 suppliers enrolled in the initiative, up from five pilot suppliers in 2023.

Supplier success

PMI’s substantial work across supplier engagement has yielded significant and transformative results, including:

• Sustainable sourcing: PMI aims for 100% of spend with critical suppliers to be sourced sustainably by 2025. In 2024 it reached 94%. 
• Science-based targets: PMI engages with critical suppliers to support them in adopting science-based targets for greenhouse gas (GHG) emissions reduction. By 2024, 43% of its total supply chain spend was covered by suppliers committed to or having science-based GHG reduction targets. 
• Human Rights Impact Assessments: PMI conducts human rights impact assessments (HRIAs) in high-risk countries where it operates to proactively identify risks and mitigate potential adverse impacts along its operations and value chain. By 2024, it had conducted all 10 HRIAs one year ahead of schedule. 
• Living income: supported by supplier engagement, 99% of farmers supplying tobacco to PMI earned a living income in 2024.   
• Scope 3 emissions reduction: a 15% absolute reduction in Scope 3 CO2 emissions compared to a 2019 baseline. 
• Water optimisation: 12.3 million cubic meters of water optimised in tobacco-growing areas since 2019.  
• Zero deforestation: PMI reached zero gross deforestation in our tobacco supply chain in 2020, as well as in its procurement of direct materials in 2023.

The company remains dedicated to strong external and internal collaboration to realise its sustainability goals and reach a smoke-free future.