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Case Study

A world without cigarettes? Actions speak louder than words

By Vanina Farber and María Helena Jaén

13 pages

December 2020

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Reference: IMD-7-2218

By March 2020, Philip Morris International (PMI) had defined its purpose, “[to] create a smoke-free future and ultimately replace cigarettes with smoke-free products” and had validated PMI’s materiality matrix. PMI’s statement of purpose (SoP) was first published in the form of a letter from the board of directors to the company’s shareholders and was published in its proxy statement of March 2020. PMI’s sustainability leadership team (Huub Savelkouls, Chief Sustainability Officer and Jennifer Motles Svigilsky, Director of Social Impact & Sustainability) were working on the company’s first ever integrated report (IR) due for publication by June 2020. Connecting a sound sustainability materiality assessment, a concrete SoP and a detailed IR would, they thought, bring together actions and words, and convey exactly how the company’s strategy would create value for society and shareholders. They had the difficult task of setting realistic but ambitious targets, with a timeline to achieve them. They knew that targets – or a timeline – that were too ambitious and that the company could not deliver on could cause blowback for the team. At the same time, targets that were too conservative could lead to disengagement and exacerbate stakeholders’ mistrust and undo all their hard work since 2015. The case is about a company in one of the so-called sin industries that has committed to phase out cigarettes in favor of a smoke-free future based on reduced-risk products.

Learning Objective

Judge on a company’s SoP responsiveness to stakeholder’s demands and the impact that a company has on society.
Judge the strategic value of having a SoP signed by the board.
Judge the strategic value of identifying material sustainability topics based on their relevance for corporate strategy and their impact on society and the environment.
Judge the strategic value of metrics and targets in the IR to on sustainability progress.
Self-assess values and be aware of them when facing cognitive dissonance as well as take responsibility for values and their impact on decisions.

Keywords

Reporting, Corporate Reporting, Integrated Reporting, Purpose Statement, Environmental Social and Governance, Investor, Business Model Transformation, Value Creation, Stakeholder Engagement, Responsible Procurement, Value-based Management, Sustainability

Settings

Philip Morris International, Consumer Goods, Tobacco
March-June 2020

Type

Field Research

Available Languages

English

Related material

Teaching note

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