Climate Change Data

Environmental Metrics

ESG Focus Areas

• Economic responsibility
• Employee responsibility
• Supplier responsibility
• Consumer and marketplace responsibility
• Societal responsibility
• Environmental responsibility

Environmental Achievements

• Implemented a new sustainability data management software for more reliable global reporting.
• Introduced an internal online environmental training program.
• Improved disclosure score in the Carbon Disclosure Project (CDP).

Social Achievements

• Expanded the scope of the global employee survey.
• All significant tobacco suppliers signed a Social commitment document.
• Reached a milestone for snus compliance with WHO recommendations.

Governance Achievements

• Swedish Match’s IR function ranked best among large cap companies in Sweden (Regi study).

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to extreme weather conditions.
• Illicit trade of Swedish snus.
• Changes in EU chemical regulations impacting raw material quality.

Mitigation Strategies

• Special label on snus cans sold on Baltic Sea ferries to help spot irregularities.
• Ongoing dialogue with suppliers to address social and environmental issues.
• Continuous monitoring of regulatory changes and adaptation of operating models.

Supply Chain Management

Supplier Audits: 100% of significant tobacco suppliers completed social commitment document (2012)

Responsible Procurement

• Code of Conduct
• Group Procurement Policy
• Social commitment document for suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Extreme weather
• Droughts

Transition Risks

• Changes in fuel/energy regulations
• Changes in EU chemical regulations
• Cap and trade schemes

Opportunities

• More efficient use of resources
• Increased demand for environmentally friendly products

Reporting Standards

Frameworks Used: GRI G3

Certifications: ISO 14001, ISO 9001, FSC™

Third-party Assurance: Tofuture Oy (Application Level Check)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Ranked number one in tobacco and confectionary suppliers (Handelsattityder survey)
• Certificate of Quality NBR ISO 9001-2008 (Brazil)
• CSP Retailer Choice Best New Product Finalist award (US)

Environmental Metrics

ESG Focus Areas

• Economic responsibility
• Employee responsibility
• Supplier responsibility
• Consumer and marketplace responsibility
• Societal responsibility
• Environmental responsibility

Environmental Achievements

• Manaus lighter factory in Brazil was certified for ISO 14001
• Improved disclosure score in Carbon Disclosure Project’s (CDP) global annual review
• Approximately 300 employees completed the internal online environmental training program

Social Achievements

• Developed and implemented a supplier Code of Conduct, included in new and renegotiated supplier contracts
• Engaged LeafTc (a division of ABSustain) to monitor leaf supplier performance
• All significant tobacco suppliers signed a Social commitment document
• Received the employer branding prize 'New thinker of the year' from Universum

Governance Achievements

• One reported infringement of Group policies addressed using the whistleblower function

Climate Goals & Targets

Environmental Challenges

• Increased injury rate (primarily due to machine operations in the Dominican Republic)
• Growing illicit trade of Swedish snus
• Difficulties receiving responses from government/regulators and the scientific-health community in stakeholder surveys
• Concerns about the legality of marketing certain items in a store and snus advertisements

Mitigation Strategies

• Developed and implemented a supplier Code of Conduct
• Engaged LeafTc for supplier monitoring
• Extended special labeling on snus cans and rolls to the entire product portfolio
• Continued efforts to improve communication and engagement with stakeholders
• Addressed concerns through cooperation and information, or termination of relationships where necessary

Supply Chain Management

Supplier Audits: 100% of significant suppliers underwent screening on social commitment

Responsible Procurement

• Supplier Code of Conduct
• Social commitment for Swedish Match suppliers document
• LeafTc's SRTP program

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Extreme weather conditions
• Droughts
• Increased intensity of storms
• Tropical cyclones

Transition Risks

• Fuel/energy taxes and regulations
• Changes in EU chemical regulations

Opportunities

• More efficient use of resources
• Increased crop yields

Reporting Standards

Frameworks Used: GRI G3 Guidelines

Certifications: ISO 14001, ISO 9001

Third-party Assurance: Global Reporting Initiative (Application Level Check)

Sustainable Products & Innovation

• FoilFresh® packaging for cigars
• Use of recycled paperboard in packaging
• Environmentally adapted materials in packaging

Awards & Recognition

• New thinker of the year from Universum
• CSP Retailer Choice Best New Product Finalist award for White Owl Gold FoilFresh® cigarillos
• Vendor of the Year from McLane Company

Environmental Metrics

ESG Focus Areas

• Economic responsibility
• Environmental responsibility
• Employee responsibility
• Supplier responsibility
• Consumer and marketplace responsibility
• Community responsibility
• Regulatory engagement

Environmental Achievements

• Significantly improved its disclosure score in the Carbon Disclosure Project (CDP).

Social Achievements

• Initiated a special gender equality project in Sweden.
• Received an award for workplace health and safety in the Netherlands.
• First annual set of results from AB Sustain’s Social Responsibility in Tobacco Production (SRTP) program.
• Continued to work with retailers, distributors, and public officials to prevent underage tobacco use.
• Focus on snus documented to have significantly lower negative health effects than cigarettes.
• Swedish Match GOTHIATEK® standard for snus aids in efforts to improve public health.

Governance Achievements

• Submitted a Modified Risk Tobacco Product (MRTP) application to the US FDA.
• ECLT Foundation Board signed a pledge to combat child labor in tobacco growing.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to extreme weather conditions
• Regulatory changes impacting product labeling and marketing
• Difficulties in receiving responses from government/regulators and the scientific/health community in stakeholder surveys
• Underage tobacco use
• Illicit products distorting market competition

Mitigation Strategies

• Implemented new standards and control procedures to evaluate supplier conduct
• Engaged AB Sustain for supplier audits and monitoring
• Worked with retailers, distributors, and public officials to prevent underage tobacco use
• Improved disclosure score in CDP
• Revised supplier contracts to incorporate standards of conduct
• Developed a new online environmental training program

Supply Chain Management

Supplier Audits: Yearly self-assessment questionnaires and periodic on-site reviews by AB Sustain

Responsible Procurement

• Supplier Code of Conduct (included in new and renegotiated contracts)
• Purchasing negotiations based on procurement policy
• Light on-site audits by purchasers

Climate-Related Risks & Opportunities

Physical Risks

• Sea level rise
• Change in precipitation extremes and droughts
• Change in mean temperature
• Tropical cyclones

Transition Risks

• Fuel/energy taxes and regulations
• Product labelling regulations and standards
• Other regulatory drivers

Opportunities

• Reduced consumption of CO2-emitting energy
• Increased demand for child-resistant lighters
• Increased crop yields and quality

Reporting Standards

Frameworks Used: GRI G3 Guidelines

Certifications: ISO 14001, ISO 9001

Third-party Assurance: Global Reporting Initiative (Application Level Service)

Sustainable Products & Innovation

• Snus with GOTHIATEK® quality standard
• Safety matches
• Cricket lighters with self-extinguishing nylon and child-resistant features

Awards & Recognition

• Swedish Match’s Swedish operations ranked number one by convenience trade customers (Handelsattityder)
• Supplier of the year by Shell (Norway)
• Tobacco Company of the Year by SAWD (US)
• Convenience Store News’ Best New Products Award (US)
• Certificate of Quality NBR ISO 9001-2008 (Brazil)

Environmental Metrics

ESG Focus Areas

• Environmental Performance
• Employee and Social Performance
• Economic Performance

Environmental Achievements

• Reduced total energy consumption by 9,832 MWh (5%) compared to 2014
• Reduced total greenhouse gas emissions by 4,560 metric tons (8%) compared to 2014
• Reduced total water withdrawal by 2,408,055 m3 (73%) compared to 2014

Social Achievements

• Increased total workforce by 448 employees compared to 2014
• Improved injury rate to 1.88 per 100 employees from 2.00 in 2014
• Increased percentage of employees receiving formal performance evaluations to 78% from 76% in 2014

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Lower production volumes for matches, mainly from Brazilian operations, impacting wood consumption and energy use.
• Increased complexity in snus production in Sweden leading to more scrapped goods and waste.
• Highly volatile water withdrawal figures due to varying climate conditions.

Mitigation Strategies

• Energy efficiency improvement projects resulting in energy savings of 898 MWh and cost savings of 783,115 SEK.
• Investments to change urinals to a water-free model in the Santiago factory to reduce water consumption.
• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Code of Conduct, Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI G3 guidelines (level B), transitioning towards GRI G4

Certifications: ISO 14001 (10 manufacturing facilities)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Public Health
• Business Ethics
• Equal Opportunity
• Child Labor
• Greenhouse Gases
• Waste and Emissions

Environmental Achievements

• Completed mapping of GHG emissions across the full value chain, totaling 254,572 tons CO2e.
• Reduced propylene glycol use in pouch production by 200 metric tons annually.
• Removed and exchanged 19 hazardous chemicals, with a plan to exchange 6 more, in the repair shop and laboratories.
• Reduced chemicals for process cleaning in the Kungälv plant by approximately 35 percent.

Social Achievements

• Increased share of female employees in the US from 29% to 30% and minority population from 15% to 16%.
• Extended parental leave in the US to include up to three weeks of paid time off for the other parent.
• Increased the number of women at the SMD Logistics warehouse from three to 30.

Governance Achievements

• 60% of the workforce completed e-learning on the Code of Conduct.
• Twelve issues raised and evaluated through the whistleblower function.

Climate Goals & Targets

Environmental Challenges

• Child labor in the tobacco supply chain.
• GHG emissions across the entire value chain.
• Waste and emissions from production facilities.
• Gender inequality in management positions.

Mitigation Strategies

• Membership in and commitment to the ECLT Foundation and its Pledge.
• External expertise to refine risk assessment of human rights violations, particularly child labor.
• Mapping of GHG emissions across the full value chain and exploration of science-based targets.
• Common systematic approach to reduce waste and emissions, sharing best practices and setting group-wide targets.
• Gender equality plan with specific goals and activities, including training for managers and a new talent program.

Supply Chain Management

Supplier Audits: 8 third-party audits on raw tobacco suppliers in 2016

Responsible Procurement

• Supplier Code of Conduct aligned with the Company’s Code of Conduct.
• Sustainable Tobacco Programme (STP)

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4 framework, UN Sustainable Development Goals, UN Global Compact, UN Guiding Principles on Business and Human Rights

Certifications: ISO 14001 (83% of production facilities)

Sustainable Products & Innovation

• ZYN (tobacco-derived nicotine product)

Environmental Metrics

ESG Focus Areas

• Improve public health
• Ensure ethical business practices
• Reduce environmental impact
• Human rights in our supply chain
• Equal opportunity

Environmental Achievements

• Reduced CO2e emissions by 7% compared to 2019
• Close to 100% of total cigar consumer packaging converted to film with lower aluminum content
• Launched Cricket Eco – the first lighter body in the world made from recycled nylon
• 49% of total energy used in our own operations was fossil free versus 44% in 2019

Social Achievements

• Improvement in all parameters for the 2020 global employee survey compared to the prior 2018 survey
• 100% of significant suppliers of direct material committed to the principles of Swedish Match Supplier Code of Conduct

Governance Achievements

• Revised and expanded goals to further enhance commitment to ethical business practices, highlighting commitment to responsible marketing practices

Climate Goals & Targets

Environmental Challenges

• 2020 target of 12 percent reduction in CO2e emissions from 2017 levels was not achieved, despite a significant improvement per unit of sales

Mitigation Strategies

• Raised annual reduction target from 4 to 5 percent for the coming years to reflect commitment to science-based targets and the Paris Agreement
• Included greenhouse gas reduction target as a performance criteria in the Long Term Incentive plan for senior management since 2020

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Code of Conduct
• Sustainable Tobacco Program (STP)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather

Transition Risks

• Regulatory changes

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: UN Sustainable Development Goals (SDGs), Science Based Targets initiative (SBTi), Greenhouse Gas Protocol, CDP

Certifications: ISO 14001 (9 of 15 production facilities)

Third-party Assurance: Deloitte AB

UN Sustainable Development Goals

• Goal 3.4
• Goal 3.A
• Goal 8.7
• Goal 8.8
• Goal 12.4
• Goal 12.5
• Goal 13.1
• Goal 14.1
• Goal 5.1
• Goal 5.5
• Goal 10.3
• Goal 16.5
• Goal 17.16

Nine of the UN SDGs align with our sustainability focus areas; we also contribute to seven of the remaining eight goals through our general business contribution and societal engagement.

Sustainable Products & Innovation

• ZYN nicotine pouches
• Cricket Eco lighters

Awards & Recognition

• MSCI ESG rating leader in sector (corporate governance, product safety, supply chain labor standards)
• Top Workplaces regional award (US Division)

Environmental Metrics

ESG Focus Areas

• Product health impact
• Climate
• Sales, marketing, and consumer communications
• Business integrity
• Innovation in wellness and healthcare
• Materials and product eco-design
• Post-consumer waste
• Human capital development
• Socioeconomic well-being of tobacco-farming communities
• Diversity and inclusion
• Water
• Biodiversity

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards 2021, SASB, ISSB/IFRS

UN Sustainable Development Goals

• SDG 3: Good health and well-being
• SDG 8: Decent work and economic growth
• SDG 12: Responsible consumption and production
• SDG 13: Climate action
• SDG 15: Life on land
• SDG 17: Partnerships for the Goals

Mapping of most material topics to SDGs, distinguishing between primary and secondary SDGs based on potential outward impact.

Environmental Metrics

ESG Focus Areas

• Improve public health
• Ensure ethical business practices
• Reduce environmental impact
• Human rights in our supply chain
• Equal opportunity

Environmental Achievements

• Reduced GHG emissions by 11% versus 2021 across the value chain (188,750 tons CO2e)
• Reduced total waste in operations by 19% compared to 2021, and by 25% per unit of net sales
• Increased share of non-hazardous waste to 98% in 2022

Social Achievements

• Smokefree business accounted for 75.1% of total Swedish Match sales of tobacco and nicotine products
• Increased number of retailers carrying nicotine pouches outside Scandinavia from 130,000 to 160,000
• 94% of employees agree their working group is free from discrimination

Governance Achievements

• Annual review and update of the Code of Conduct
• No internal data breaches recorded in the annual GDPR compliance report
• Six Code of Conduct concerns raised and evaluated, resulting in corrective actions

Climate Goals & Targets

Environmental Challenges

• Widespread misconceptions about smokefree products compared to cigarettes
• Lack of nicotine pouch-specific regulation in many countries
• Continued volume growth making absolute GHG emission reduction challenging
• Limited control over Scope 3 emissions
• Phasing out fossil fuels challenging in some markets
• Nicotine listed as hazardous waste
• No direct control on age verification at retail
• Diverse and unclear regulatory requirements for products internationally
• Current tobacco regulation's 'one-size-fits-all' approach
• Women underrepresented at management level
• Difficulty measuring some aspects of diversity

Mitigation Strategies

• Sourcing materials from different parts of the world
• Risk-based approach to mitigate environmental, ethical, and human rights risks
• Auditing suppliers to safeguard standards
• Providing training and improvement initiatives
• Identifying alternative sources of supply
• Climate risk assessments as part of annual ERM process
• Loss prevention and continuity planning program
• Relevant environmental management systems
• Periodic inspections of major facilities by an independent third party
• Governance systems and training to reinforce sustainability policies
• Improving trade and point-of-purchase communication
• Mandatory training for employees on anti-corruption and bribery
• Terminating supply to customers who fail to meet ethical standards
• Marketing products responsibly and providing transparent information
• Proactive approach to product safety
• More sustainable practices in product packaging
• Highlighting public health and sustainability in consumer communications
• Choosing more efficient transportation solutions
• Setting fuel efficiency and emissions reduction targets
• Non-discriminatory promotion and recruitment processes
• Incentives for equal sharing of parental leave
• External recruitment to diversify candidate pools
• Annual gender pay gap analysis in larger markets
• Setting gender balance targets and cultural background targets locally

Supply Chain Management

Supplier Audits: Five third-party audits on high-risk suppliers in 2022

Responsible Procurement

• Supplier Code of Conduct
• STP (Sustainable Tobacco Program) for tobacco suppliers
• Cigar Leaf Audit Program for cigar tobacco suppliers
• Due diligence programs for other direct materials

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather impacting tobacco supply
• Extreme weather disrupting manufacturing and distribution

Transition Risks

• New carbon-related regulations
• Shift in consumer preferences

Reporting Standards

Frameworks Used: UN Global Compact (aligned with principles, not a signatory), Science Based Targets initiative (SBTi)

Third-party Assurance: Deloitte AB

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 2: Zero Hunger
• Goal 5: Gender Equality
• Goal 8: Decent Work and Economic Growth
• Goal 10: Reduced Inequalities
• Goal 13: Climate Action
• Goal 16: Peace, Justice and Strong Institutions

Initiatives contribute to these goals through various programs and policies

Sustainable Products & Innovation

• Nicotine pouches (ZYN)

Awards & Recognition

• Top Workplaces regional award (Richmond office)

Environmental Metrics

ESG Focus Areas

• Environment
• Governance
• Social

Environmental Achievements

• Successfully integrated greenhouse gas (GHG) inventory into PMI's value chain carbon accounting.

Social Achievements

• Continued providing ergonomically sound workplaces, free from health and safety hazards, including safety trainings and wellness programs.
• Continued commitment to non-discrimination in all employment practices.

Governance Achievements

• Launched PMI Code of Conduct to Swedish Match employees globally.
• Implemented PMI’s Whistleblower/Speaking Up Program.
• Launched key Compliance policies, including PMI’s Marketing Codes and Personal Data Protection Policy.

Climate Goals & Targets

Environmental Challenges

• Need for joint efforts to improve diversity across the organization, especially in senior management positions.
• Integration of Swedish Match's supply chain data into PMI's reporting.

Mitigation Strategies

• Ongoing integration efforts to implement PMI's diversity, equality, and inclusion strategy throughout the Swedish Match organization.
• Continued adherence to Supplier’s Code of Conduct and participation in the Sustainable Tobacco Program (STP).
• Planned integration of Swedish Match into PMI’s supply chain-related sustainability data reporting by 2026.

Supply Chain Management

Responsible Procurement

• Supplier’s Code of Conduct

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Anticorruption
• Employees and social conditions
• Human rights

Social Achievements

• Swedish Match is dedicated to providing ergonomically sound workplaces, free from health and safety hazards. Specific activities, including safety trainings and wellness programs, are carried out at the operational level to ensure the physical and mental wellbeing of our employees. Periodic inspections are conducted by an independent third party at major production facilities.

Governance Achievements

• In 2023, PMI began its Legal & Compliance integration efforts with Swedish Match to ensure that PMI’s standards and requirements are also applied across Swedish Match entities. Highlights from these efforts in 2023 include the launch of the PMI Code of Conduct to Swedish Match employees globally, implementation of PMI’s Whistleblower/Speaking Up Program (including the third-party-operated PMI Compliance Help Line), and the launch of key Compliance policies, including PMI’s Marketing Codes and Personal Data Protection Policy, among others.

Climate Goals & Targets

Environmental Challenges

• Legal proceedings have been initiated in the USA against Swedish Match North America LLC, a subsidiary to Swedish Match AB. The lawsuits include allegations that the company when marketing ZYN nicotine pouches failed to warn about the products’ health effects and that the products are designed to attract underage users.
• A preliminary assessment at the start of the integration process highlights the need for joint efforts to improve diversity across the organization, especially in senior management positions.

Mitigation Strategies

• The company’s opinion is that the allegations are completely incorrect and lack legal basis and the company will vigorously defend the allegations in the ongoing lawsuits.
• The expectation is that existing shortcomings [in diversity] will be addressed as the integration journey continues, thereby ensuring that PMI's diversity, equality, and inclusion strategy is implemented throughout the Swedish Match organization.

Supply Chain Management

Responsible Procurement

• Swedish Match continued to ensure that our suppliers would adhere to their Supplier’s Code of Conduct. Swedish Match continues to be part of the Sustainable Tobacco Program (STP), an industry-wide initiative developed by tobacco manufacturers designed to assure standards in agricultural practices, environmental management, and key social and human rights.

Climate-Related Risks & Opportunities