Philip Morris: Offsetting isn’t the ‘credible’ long-term solution to carbon-neutrality

PMI first announced its factory decarbonisation target this summer

Earlier this year, PMI had cause for celebration when its factory in Klaipeda, Lithuania, achieved carbon-neutral status. After more than a decade of of work on energy efficiency, clean power and circular economy solutions, PMI purchased Gold Standard offsetting certificates to support more than 9,000 Indian families replace kerosene cooking fuels with cleaner, domestic biogas this summer, bringing the facility’s net emissions to zero.

This paved the way for the multinational, which has 44 factories globally, to set an overarching 2030 target for all factories to reach net-zero, joining a cohort of businesses including Panasonic, Volkswagen and Bentley Motors.  

Speaking exclusively to edie, PMI’s director of operational sustainability Laurence Ruffieux said the firm will continue to “do the hard work first” in meeting its 2030 aim, using offsetting only for emissions which are completely “unavoidable” or that would be too expensive to mitigate in the long-term.

“We could – like many corporations – be carbon-neutral tomorrow, if we just purchase carbon credits,” Ruffieux said. “But we say, ‘no, this is the last step of our programme. We want, first, to really focus on energy efficiency, which is where we are putting all of our efforts’.

“Our strategy is not to purchase carbon credits in the future – it is to develop exciting projects within our value chains.”

Ruffieux joined PMI more than 20 years ago and, as such, has overseen much of the work to decarbonise its Klaipeda factory as it progressed. The process’s first step, she explained, was boosting energy efficiency, which is “still a key priority today” for PMI.

The facility’s first energy efficiency campaigns began in 2010, she said, with a portfolio of 20 programmes around technology and behaviour change having been implemented between then and 2013. Over this period, the factory’s Scope 1 (direct) and Scope 2 (power-related) emissions fell by 43% – largely, Ruffieux admitted, due to the sheer passion and dedication of one employee at the site, who she described as a sustainability “hero”.

These schemes paved the way for PMI to make larger investments in a biomass steam boiler, more efficient sealants, more efficient chillers and a heat recovery system, also securing buy-in for a switch to a renewable electricity contract.

Right place, right time

According to Ruffieux, an ethos of following similar steps in the same order will be applied to all future factory decarbonisation efforts, with offsetting only used as a final step for all locations.

But she, and the rest of the sustainability team, are also keen to show staff, customers and other businesses that carbon neutrality is possible ahead of the IPPC’s absolute deadline date of 2050. To that end, PMI is aiming to certify another factory as carbon-neutral by 2020.

“We wanted to kick-off the process – now that we want to go for carbon-neutrality for all our factories by 2030, we didn’t want to wait two or three years to have our first factory,” Ruffieux summarised.

“Beyond regulations, I don’t see a problem of mindset. I see that our people are very excited to move to carbon-neutrality,” she added, noting that staff in many factories are now asking for information on Klaipeda so they can improve the environmental performance of their own workplaces.

Ruffieux did, however, emphasise the importance of context when upscaling carbon-neutrality from one case study to a company-wide model. Being an international business, PMI will inevitably have to develop carbon-neutral solutions compatible with different policy frameworks, cultures and even geographical climates.

To that end, the company’s central sustainability function has identified a portfolio of possible energy efficiency initiatives and will assess them on a location-by-location basis to see which “make sense” for each factory and what results they are likely to deliver in context. The same process will be undertaken for decisions around procuring renewable electricity, with PMI striving to source 100% of its energy for factories from renewables by 2030.

Overarching purpose

For PMI, it is not just the potential of high future costs that prioritises “hard work first” over offsetting. This ethic, Ruffieux said, is also supported by the company’s 2C-aligned science-based targets, which commit PMI to reducing emissions across the value chain by 40% by 2030, rising to 60% by 2040. PMI is currently working to raise these targets in line with 1.5C.

Given that its science-based targets cover indirect emissions, meeting them requires PMI to work closely with tobacco suppliers – particularly farmers and curers, a process which accounts for a significant portion of the firm’s Scope 3 output.

Programmes to engage farmers are “parallel” in layout to those used in factories, consisting of efficiency improvements, switching to cleaner fuels and finally, ensuring that fuels come from traceable and renewable sources. This framework is proving effective and is due to reduce curing-related emissions by 70% by the end of 2020, against a 2010 baseline.

Acknowledging that “it’s usually very difficult for companies to work within their supply chains”, Ruffieux explained that the success of the curing scheme is partly down to the benefits PMI communicates with farmers – including cleaner air, cost savings on fuel and less degradation of local forests in the name of fuel production.

In tandem to this work on health and wellbeing in supply chains – which will also provide all farmers with drinking water by 2025 and sanitation services by 2030 – PMI is also working to minimise the social impact of its products on consumers. The business’s ‘Smoke-Free Future’ programme is aiming to switch 40 million people “who would otherwise have smoked cigarettes” to smoke-free products. This, PMI claims, would reduce smokers by a total of 55 million by 2025 – four times faster than the target set by the World Health Organization.

Ruffieux said this aim is “very bold” and will be “transformational” for the company, arguing that its implementation will have the biggest impact of any of PMI’s environmental and social work to date. But alongside reputational benefits and doing the right thing, ‘Smoke Free Future’ is also boosting innovation and efficiency. 

“Until we had an alternative [to combustible products]… the credibility of our sustainability strategy wasn’t good,” Ruffieux said. “We didn’t have a holistic approach.”

“The energy that this has put into the organisation is amazing. We can see a wind of innovation; of talking about sustainability. This is extremely clear among new colleagues who join us – they say they wouldn’t have joined our industry in the past.”

Ruffieux’s concluding point should bring hope to any sustainability professionals in industries which have been branded as “sinful” by the nature of their business models – largely by a growing class of young workers who want to consume from, and work for, organisations with purpose beyond their products. As Former National Grid boss Steve Holliday has maintained, the transition to net-zero and to meeting the UN’s Sustainable Development Goals (SDGs) will ultimately not be possible without the buy-in of sectors with large negative impacts on planet or people.

edie’s Net-Zero November

This article forms part of edie’s Net-Zero November, a month of content and events to inform and inspire sustainability professionals to push towards net-zero. You can read all our Net-Zero November content here.

Additionally, if you have a net-zero carbon target, or a commitment to set one, that has recently been announced you can add it to our Mission Possible Pledge Wall here.

Sarah George