Glossary and acronyms

3TGs – Tin, tantalum, tungsten, and gold

Aerosol – Gaseous suspension of fine solid particles and/or liquid droplets.

ALP – Agricultural Labor Practices

AWS – Alliance for Water Stewardship

CA – Cellulose acetate

Caregiver – A person who has responsibility for the care of a newborn child or newly adopted child, including the child’s biological parent, the child’s adoptive parent, a person having legal parental responsibility for the child such as the child’s guardian, a stepparent, or a child’s parent through surrogacy.

Primary caregiver – The caregiver who has the primary responsibility for the care of the newborn or newly adopted child following the child’s arrival.

Secondary caregiver – A caregiver who is not the primary caregiver.

Combustible tobacco product or combusted tobacco product – A manufactured consumable product that combusts tobacco and/or generates smoke inhaled directly by the user when it is used as intended. Combustible tobacco products include, for example, cigarettes, cigarillos, cigars, roll your own, and pipe tobacco.

Combustible products – The term PMI uses to refer to cigarettes and OTP, combined.

Combustion – The process of burning a substance in oxygen, producing heat and often light.

Company Management – The term we use to refer to the senior management of the company, as presented on our PMI.com site (also referred to as “our leadership team” or “senior management team”).

Contracted employee – We define a contracted employee as an employee who is under the direct supervision of PMI employees but employed by a temporary employment agency.

Contracted farmers – Tobacco farmers supplying to PMI and contracted either directly by PMI (through the company’s leaf operations) or through third-party leaf suppliers.

Contractor – We define a contractor as a person employed or working on behalf of a third-party company contracted by PMI, who remains under the direct supervision of their employer rather than PMI and are often involved in project-specific or outsourcing arrangements.

CPA – Crop protective agent

Downstream supply chain – Those stages in the supply chain in which materials (mostly in the form of finished products) flow away from the organization to the customers/consumers.

Directors – The term we use to refer to employees in salary grades 14 to 16.

E&C – Ethics & Compliance

E-liquids – A liquid solution that is used in/with e-cigarettes. E-liquids contain different levels of nicotine in a propylene glycol and/or vegetable glycerin-based solution with various flavors.

E-vapor product – Electrical product that generates an aerosol by heating a nicotine or non-nicotine containing liquid, such as electronic cigarettes (or “e-cigarettes”).

Employee resource groups or ERGs – Employee-led groups that focus on particular dimensions of diversity and are intended to provide a platform for building a sense of belonging and sparking conversations.

EPR – Extended Producer Responsibility

ESG – Environmental, social, and governance

FAO – Food and Agriculture Organization of the United Nations

FCTC – WHO Framework Convention on Tobacco Control

FDA – U.S. Food & Drug Administration

GAP – Good Agricultural Practices

Gender pay gap – Calculated as the percentage difference between the sum of annual base salary, bonus, and stock options.

GHG – Greenhouse gas

GPP – Global Privacy Program

Heated tobacco product or HTP – A manufactured tobacco product that delivers a nicotine-containing vapor (aerosol), without combustion of the tobacco mixture.

Heated tobacco units or HTUs – The term we use to refer to heated tobacco consumables, which for PMI include the company’s HEETS, HEETS Creations, HEETS Dimensions, HEETS Marlboro and HEETS FROM MARLBORO (defined collectively as HEETS), Marlboro Dimensions, Marlboro HeatSticks, Parliament HeatSticks and TEREA, as well as the KT&G-licensed brands Fiit and Miix (outside of South Korea).

HPHCs – The harmful or potentially harmful constituents which have been identified as likely causes of tobacco-related diseases by various public health institutions.

Human Rights Impact Assessment or HRIA – Assessments to identify human rights risks and adverse impacts.

Human rights salient issues – Those human rights that stand out because they are at risk of the most severe negative impact through the company’s activities or business relationships (source: UN Guiding Principles).

Illicit trade – Domestic non-tax paid products.

ILO – International Labour Organization

In-market sales or IMS – Sales to the retail channel, depending on the market and distribution model.

Insetting – The act of generating a carbon credit within the corporate’s sphere of influence and retiring the unit on behalf of one ton of carbon that has been emitted by the corporate (source: International Carbon Reduction and Offset Alliance).

IPM – Integrated Pest Management

IPS – Integrated Production System

IQOS heat-not-burn devices – Precisely controlled heating devices into which specially designed and proprietary tobacco units are inserted and heated to generate an aerosol.

ITP – Illicit trade prevention

KPIs – Key performance indicators

LCA – Life-cycle analysis

LCTP – Low-Carbon Transition Plan

Low- and middle-income markets or LMIMs – Markets comprised of countries classified by the World Bank as low- and middle-income economies based on Gross National Income (GNI) per capita; or where no World Bank classification exists, those with Gross National Income (GNI) per capita below the World Bank Low and Middle-Income Country (LMIC) threshold.

LTIR – Lost Time Incident Rate

Management positions – The term we generically use to refer to all positions in a defined salary grade (10) and above, regardless of their job title or function.

Managers – The term we use to refer to employees in salary grades 10 to 13.

Market share for HTUs – Total sales volume for HTUs as a percentage of the total estimated sales volume for cigarettes and HTUs.

MRTP – Modified Risk Tobacco Product

MVR – Monitoring, Verification, and Reporting Framework for Sustainable Leaf Curing Fuels

NCGC – Nominating and Corporate Governance Committee of PMI’s Board of Directors

Net revenues related to combustible products – The operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either upon shipment or delivery of goods.

Net revenues related to smoke-free products – Represent operating revenues from the sale of non-combustible products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes.

NGOs – Non-governmental organizations

Non-combustible products – The term PMI uses to refer to products, excluding cigarettes and OTP. This may include heated tobacco units, heat-not-burn devices and related accessories, other nicotine-containing products, primarily e-vapor products, and products in wellness and healthcare.

NRTs – Nicotine replacement therapies

OECD – Organisation for Economic Co-operation and Development

Offsetting – The act of purchasing a carbon credit generated outside the corporate’s sphere of influence and retiring the unit on behalf of one ton of carbon that has been emitted by the corporate (source: International Carbon Reduction and Offset Alliance).

Other Tobacco Product or OTP – Primarily roll-your-own and make-your-own cigarettes, pipe tobacco, cigars and cigarillos. Does not include smoke-free products

P&C – People & Culture

PCI – Portfolio of Climate Investments

PMI Regions – We manage our business in six geographical segments and an Other category: The European Union region (EU); the Eastern Europe region (EE); the Middle East & Africa region (ME&A), which includes PMI’s international duty free business; the South & Southeast Asia region (S&SA); the East Asia & Australia region (EA&A); the Americas (AMCS); and Other, which includes our third quarter 2021 acquisitions of Fertin Pharma A/S, Vectura Group plc. and OtiTopic, Inc.

PMI heat-not-burn products – include licensed KT&G heat-not-burn products.

QMS – Quality management system

R&D – Research & development

RBA – Responsible Business Alliance

Refreshed devices – Smoke-free devices resulting from the care and maintenance refresh services (that may include unpacking, diagnostics, cleaning, firmware update, cosmetic parts replacement, battery charging, and repacking of devices) that meet the agreed quality requirements to allow for their reuse as pre-owned devices.

Repaired devices – Smoke-free devices resulting from the care and maintenance repair services (that may include unpacking, diagnostics, testing, cleaning, battery charging, firmware update, cosmetic part or battery replacement, component harvesting, and repacking of devices) that meet the agreed quality requirements to allow for their reuse as pre-owned devices.

RSP – Responsible Sourcing Principles

SBT – Science-based target

SBTi – Science Based Targets initiative

SDGs – Sustainable Development Goals

Senior leaders – The term we use to refer to employees in senior leadership roles; it includes all employees in salary grade 17 and above.

Senior roles – The term we generically use to refer to all positions in a defined salary grade (14) and above, regardless of their job title or function.

Smoke – A visible suspension of solid particles, liquid droplets, and gases in air, emitted when a material burns.

Smoke-free products, reduced risk products (RRPs), or noncombusted alternatives (NCAs) – The terms we use to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continuing smoking. PMI has a range of smoke-free products in various stages of development, scientific assessment, and commercialization. PMI’s smoke-free products contain and/or generate far lower quantities of harmful and potentially harmful constituents than found in cigarette smoke.

Smoke-free product consumables – The term PMI uses to refer to heated tobacco units used with heat-not-burn products, and cartridges containing e-liquids that are used for e-vapor products and oral nicotine products, including snus and nicotine pouches.

SUP – Single-use plastics

TCFD – Task Force on Climate-related Financial Disclosures

TGA – Tobacco growing area

Tier 1 suppliers – Suppliers that directly supply goods, materials or services to PMI.

Tier 2 suppliers – Suppliers that provide their products and services to the Tier 1 suppliers.

TNFD – Taskforce on Nature-related Financial Disclosures

Tons – “Tons” equates to metric tons throughout this report.

Total IQOS users – The estimated number of legal-age (minimum 18 years) users of PMI heat-not-burn products, for which PMI HTUs represented at least a portion of their daily tobacco consumption over the past seven days.

The estimated number of adults who have “switched to IQOS and stopped smoking” reflects:

• for markets where there are no heat-not-burn products other than PMI heat-not-burn products: Daily individual consumption of PMI HTUs represents the totality of their daily tobacco consumption in the past seven days;
• for markets where PMI heat-not-burn products are among other heat-not-burn products: Daily individual consumption of HTUs represents the totality of their daily tobacco consumption in the past seven days, of which at least 70 percent is PMI HTUs.

Note: The above IQOS user metrics reflect PMI estimates, which are based on consumer claims and sample-based statistical assessments with an average margin of error of +/-5 percent at a 95 percent Confidence Interval in key volume markets. The accuracy and reliability of IQOS user metrics may vary based on individual market maturity and availability of information.

Total shipment volume – Includes cigarettes, OTPs, and smoke-free product consumables.

TRIR – Total recordable incident rate. The integrated Total Recordable Incident Rate (or iTRIR) covers PMI employees, contracted employees, and contractors.

UNGPs – United Nations Guiding Principles on Business and Human Rights

Upstream supply chain – Those operations in which the materials flow into the organization (i.e., it mainly refers to procurement activities and inbound logistics).

VAP – Validated Assessment Program of the Responsible Business Alliance (RBA) is a leading standard for on-site compliance verification and effective, shareable audits.

WASH – Water access, sanitation, and hygiene

WBCSD – World Business Council for Sustainable Development

WHO – World Health Organization

ZDM – Zero Deforestation Manifesto