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Case Study

PMI’s vision of a smoke-free future: Can a tobacco company be sustainable?

By Vanina Farber and Natalia Olynec

25 pages

November 2019

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Reference: IMD-7-2118

Philip Morris International (PMI) CEO André Calantzopoulos announced in 2016 a radical pivot in the Marlboro cigarette manufacturer’s strategy: the company would shift to “smoke-free” products in more than 180 countries around the world. One of these products was IQOS, a new “heat-not-burn” (HNB) device aimed at providing the world’s over 1 billion “adult smokers with better options.” The innovation of the products which, PMI claimed, were less harmful than cigarettes was welcomed by many investors and PMI. Calantzopoulos and PMI’s Board of Directors believed that its sustainability strategy was critical to the company’s long-term success. Nevertheless, convincing important stakeholders that a tobacco company could be part of the solution to rid the world of cigarettes by offering better alternatives was a different matter. The United Nations, World Health Organization (WHO), regulators, public health advocates, and some sustainable investors said that there was no safe level of use and no opportunity for effective engagement with tobacco companies. After a two-year wait, the US FDA issued an order authorizing the sale of IQOS in the US market of 40 million smokers. The FDA found that IQOS was “appropriate for the protection of health.” PMI organized the 2020 Stakeholder Engagement Meeting in Lausanne, Switzerland to convene key stakeholders to engage with PMI’s smoke-free business transformation.

Learning Objective

Recognize the role of sustainability in mitigating negative impact and the potential of positive impact.
Identify the implications of exclusion and engagement for sustainable investors.
Identify stakeholders and recognize which enable a sustainability strategy.
Analyze a company that must address negative health impacts of its own business.
Examine the strategy of sustainable investors trying to achieve short-term financial success and implement a long-term sustainability vision.

Keywords

Sustainability, Strategy, Purpose, Vision, Environmental Social and Governance, Responsible Leadership, Change, Stakeholder Engagement, Social Innovation, Sustainable Investment, Ethical Investment

Settings

World/global
Philip Morris International, Consumer Goods, Tobacco

Type

Field Research

Available Languages

English

Related material

Teaching note

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2019 EFMD CASE WRITING COMPETITION AWARD WINNER (1st prize) - Responsible Leadership category

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Reference IMD-2736

Organization Slow Forest

Industry Food Production, Agriculture;Consumer Goods, Coffee

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