MNG81001: CSR Evaluation of Phillip Morris International's Practices

This report provides a comprehensive analysis of Phillip Morris International's (PMI) Corporate Social Responsibility (CSR) practices. It evaluates PMI's sustainability efforts, including their focus on smoke-free tobacco products, carbon emission reduction, and workplace equality. The report uses tables and extracts from PMI's website to assess the company's CSR reporting, highlighting strengths such as transparency and a dedicated sustainability department. However, it also identifies weaknesses, such as a lack of detailed information on community participation and limited references to scientific sources, raising questions about report credibility. The report also examines the importance of communicating CSR activities and the dangers of empty boasting, offering recommendations for improvement, emphasizing the need for ongoing dialogue with stakeholders and addressing potential negative impacts of inadequate communication and false claims on reputation.

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Corporate Social Responsibility: Phillip Morris International
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Abstract
Corporate social responsibility (CSR) is a form of self-regulatory model adhered to by
organizations, with the purpose of implementing and taking accountability for actions of the
philanthropic, sustainable and charitable type. The following paper extensively and
elaborately analysed the credibility and components of CSR principles followed by an
organization, Phillip Morris International (PMI) – a consumer goods based company which
seeks to manufacture and develop tobacco smoking products which are smoke free and emit
less carbon emissions as compared to regular cigarettes. Using detailed tables as well as
extracts of the company’s website, this paper provides information on how extensively PMI
reports its CSR objectives of reducing greenhouse gas emissions, increasing smoke-free
cigarette usage and promoting workplace equality and diversity. It was observed however,
that the organization provides little information on community participation and engaging in
ongoing dialogue with external organizations. Lastly, the paper focusses on the negative
impacts of lack of communication and false boasting on an organization’s reputation, by
using relevant examples, followed by briefly recommendations strategies for improvement.
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Table of Contents
Abstract…………………………………………………………… 2
1. Introduction 4
2. Evaluation and analysis of the company's CSR activities [Question 1]…….…….. 5
2.1 Evaluation of the website…………………………………………..…………. 7
2.2 Analysis of the CSR report………………………………….………………… 9
3. Communicating about CSR [Question 2]…………………………………………. 11
4. The lack of dialogue [Question 3]……….……...………………………………… 13
5. The dangers of empty boasting and CSR [Question 4]…….................................... 15
5.1 Empty boasting and reputation……………….………………………………. 15
5.2 Corporate scandal 1…………………………………………........................... 16
5.3 Corporate scandal 2………………………………………................................ 16
6. Conclusion…………………………………………………………………………. 17
7. Recommendations………………………………………………………………… 18
8. Appendices and attachments [if appropriate e.g. scree shot of website] 19
9. References…………………………………………………………………………. 20
10. Glossary (if applicable)…………………………………………………………….
List of Tables and Figures [Number according to each section]
Table 2.1 How green is my company……………………………………………… 5
Table 2.2 Analysis of the CSR report 9
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1. Introduction: The Importance of Communicating CSR Practices
Corporate social responsibility (CSR) can be implied as a form of self-regulatory model of
organizational business adopted by industries, organizations and companies which assists
these businesses to comply with the need to engage in socially acceptable sustainable,
philanthropic and charitable organizational actions and taking accountability for the same
(Lins, Servaes & Tamayo 2017, p. 1790). Communicating a company’s CSR values and
activities provides a number of advantages, mainly: enhanced consumer loyalty, long term
savings in operational expenditures, increased staff retention, competitive advantage, greater
recognition and overall growth. Due to its multifaceted advantages, organisations are required
to communicate their CSR values appropriately and frequently (Saeidi et al. 2015, p.
345).The following report will aim to evaluate and analyse CSR communication strategies
adopted by an organization, Phillip Morris International (PMI 2019), along with the presence
of discrepancies or empty boasting in terms of dialogue.
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2. Evaluation and analysis of the company's CSR activities
2.1. Introduction: Sustainability and CSR Attributes
The following sections shed light on the how ‘green’ or sustainable are the actions engaged
by Phillip Morris, with the aid of interactive tables (Table 2.1, 2.2) and extracts of the
company’s website (Appendix A).
2.2. Discussion
2.2.1. CSR Components
From the given tabulated information (Table 2.1), it can be observed that PMI has it’s a
separate department adhering to CSR activities and all information is available on their
website. This is a major strength since it implies that not only the company has prioritised
CSR as a core organizational activity, the ready availability of CSR information ensures
consumer transparency (Kang, Germann & Grewal 2016, p. 77)
2.2.2. CSR Activities
From the given information (Table 2.1.) it can be observed that PMI adheres to multiple
components of CSR activities, ranging from reducing carbon emissions, to ensuring women
empowerment and workplace diversity, as well as supporting Indigenous communities via
local business collaborations and localised ingredient sourcing. This is a major strength since
it implies that the organization adheres to not one, but multiple societal, philanthropic,
charitable and ethical expectations (Jamali & Karam 2018, p. 44).
2.2.3. Report Design
From the given information (Table 2.2.) it can be observed that the CSR information
provided by PMI targets multiple stakeholders, thus demonstrating the presence of a
comprehensive and holistic CSR information. A key disadvantage was that the report lacked
any details on community activities and how PMI will achieve its sustainability goals of
renewable energy usage thus demonstrating lack of transparency (Dyck et al. 2019, p. 702).
2.2.4. Report Credibility
Despite the presence of extensive information, there are no references to scientific
information sources nor is there any information on major challenges or drawbacks (‘bad
news’) faced by PMI, thus raising doubts on the credibility and validity of information (See
Table 2.2.) (Liang & Renneboog 2017, p. 859).
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Table 2.1: How 'green' is my company
1. Company name: Philip Morris International
2. Industry type: Consumer goods: Smoke-free tobacco and cigarette
manufacturing company
3. Is there a CSR department?  Yes  No
4. What is it called? Sustainability Department, headed by the Chief
Sustainability Officer
5. Is there a CSR Report for 2018?  Yes  No
6. Is it available on the website?  Yes  No
7. Corporate Social Responsibility in Action. Which social change activities does the
company engage in? Identify activities from each relevant category.
CSR activity  OR  Activity
a. Environment  Designing tobacco and cigarette products
which are smoke free and reduce smoke
emissions and reducing the shipment of
products which are combustible, agrees to
international environment agreements and
has its own non-deforestation, water
management and wastage reduction
policies.
b. Consumer
responsibility
 Development of e-cigarettes and smoke-
free cigarette products with built-in carbon
heating systems to reduce the risk
associated with long term smoking of
regular cigarettes
c. Community  Partnerships with 2300 local organizations
throughout the world and provision of
charitable assistance to 280 global
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projects.
d. Employee
relations
 Ensuring safe and fair working and living
conditions for tobacco farm workers as
well as fair employment practices at the
workplace.
e. Indigenous  Inclusion and Diversity as one of the key
organizational principles, partnerships with
local organizations and recruitment of
diverse employees.
f. Diversity  Inclusion and Diversity as one of the key
organizational principles, partnerships with
local organizations diverse employees.
Aims of increasing women leadership and
empowerment and follows ‘Equal Pay for
Equal Work’ policies.
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8. How ‘green’ is the website? Easy availability and access to
comprehensive sustainability rankings,
achievements and principles in terms of
climate change, biodiversity, waste
reduction, water management and
deforestation.
9. How ‘green’ is the company? Reduced global greenhouse gas emissions
from 8349, 000 tons at 2010 to 5504, 000
tons at 2018, purchasing 70% of sustainably
cured tobacco leaves, 40% carbon emissions
in business operations and values chains
from 2010 to 2018, aims to source 100% of
its manufacturing electricity from renewable
energy sources by 2030.
10. CSR indices/rankings Climate A list Score from CDP (Carbon
Disclosure Project)
Source: Based on Company A 2019 (Developed for MNG81001 Assessment 4 Session 2 2019)
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Table 2.2: Attributes of the CSR report
1. Describe the form and content of the CSR report:
The company’s CSR principle of manufacturing of smoke-free products,
can be highlighted in the CSR report titles ‘Business Transformation
Metrics’. The information is tabulated and discusses on the increase in
the usage and manufacturing of smoke-free products across consumers
and industries from 2015 to 2018.
The CSR report on Sustainability is presented in a bullet form and
discusses on extent to which PMI has reduced its carbon footprint and
greenhouse gas emissions.
2. Who is the report designed for?
Constituency  OR  Key message
a. Investors  Net revenues from smoke-free
products increased from 0.2% at
2015 to 13.8% at 2018.
b. Employee present  Net revenues from smoke-free
products increased from 0.2% at
2015 to 13.8% at 2018, equal pay
for equal work policies, increased
women in leadership positions
from 29% to 35.5% from 2014 to
2019.
c. Employees future  Net revenues from smoke-free
products increased from 0.2% at
2015 to 13.8% at 2018, aims to
increase by 38 to 42%
respectively, equal pay for equal
work policies, increased women in
leadership positions from 29% to
35.5% from 2014 to 2019.
d. Academics  Increased Research and
Development expenditure from
70% to 92%, from 2015 to 2918,
respectively.
e. Community activities  No details provided.
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f. Public officials  Present and future strategies on
increasing afforestation, fuel
efficiency for curing tobacco in
barns, reverting to biomass and
sustainable sources of wood for
energy. No details on strategies
provided.
g. Corporate managers  Number of markets where
revenues from smoke-free
products exceeded 10% increased
from 0 at 2015 to 19 at 2015
respectively.
h. Other  Ranked in the Climate A list by
CDP
3. How thorough and credible is the report?
Report elements  OR 
a. Is this a CRS report? 
b. Does the report provide details on CSR practices as well as
policies?

c. Does the CSR report provide systematic data? 
d. Does the company report data in a comparable form? 
e. Does the report present future goals as well as past practices? 
f. Does the report include bad news as well as good news? 
g. Does the report address the company’s greatest CSR
challenges?

h. Does the company integrate CSR reporting with its traditional
business strategy and its financial reporting?

4. Identify the key elements of the report
The key elements of the CSR report include: data on increased manufacturing, usage
and revenues from smoke-free products, data on reduction of emissions and non-
renewable energy sources and future policies and manifestos on achieving CSR
Sustainability goals and sustainable water management by 2030.
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5. Identify two sustainability initiatives for 2018
1. Greenhouse gas emissions reduced from 8349, 000 tons at 2010 to 5504, 000 tons at
2018.
2. Shipment volume of combustible products reduced from 881 billion units at 2015 to
767 billion units at 2018 respectively.
Source: Based on Company A 2019 (Developed for MNG81001 Assessment 4 Session 2 2019)
(Based on: PMI (2019). Who We Are. [online] Pmi.com. Available at: https://www.pmi.com/who-
we-are [Accessed 7 Oct. 2019].
2.3. Conclusion
Providing information on details of achieving future sustainability goals, personal statements
by employees or customer along with segregating its key messages for investors, employees,
academicians and the like, could have been helpful. The following sections will discuss on
the importance of ongoing CSR dialogue, taking insights from this information.
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3. Communicating about CSR: The Importance of ongoing, active
dialogue
3.1. Introduction
The previous sections provided key insights on the components, strengths and limitations on
the CSR reports provided by PMI, along with a brief discussion on scope of improvement.
The following sections will now demonstrate the importance of communicating an
organization’s CSR activities and the need to engage in an ongoing dialogue across multiple
stakeholders like customers, investors and public health officials by referring to the
information observed previously.
3.2. Discussion
3.2.1. Consumer Satisfaction and Transparency
Actively communicating its CSR activities, as evident in PMI’s extensive reports on
sustainability, diversity and workplace quality (Table 2.1., 2.2.) demonstrates full disclosure
and transparency of internal operations of a company. Not only does this result in consumer
awareness on the organization’s attempts at sustainable practices it also results in consumer
trust by demonstrating that it has nothing to hide and is taking full responsibility of its actions
(Petrenko et al. 2016, p. 266). Further, PMI’s official social media handle (PMI 2019) allows
consumers to report and post their own personal stories of ‘unsmoking’ and PMI’s
contributions in their achievements. Such ongoing communication strategies ensures
consumer satisfaction by actively involving consumers in their operations (Chernev & Blair
2015, p. 1415).
3.2.2. Organizational Growth
Ongoing CSR communication with investors, public health official and other organizations
allows a company to promote its CSR ideals across multifaceted corporate business and thus
allows it to generate a brand identity of its own. This can result in the company receiving
support in the form of partnerships from other private and public organizations seeking to
achieve CSR goals. Not only can this ensure competitive advantage but will result in shared
expenditures, increased revenues, expansion of workforce capacity and overall growth. There
is however, little information on how PMI targets investors and other organizations (See
Tables 2.1., 2.2.) (Ioannou & Serafeim 2015, p. 1060).
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3.3. Conclusion
Thus, this section demonstrates a brief insight on how adoption of CSR enhances customer
satisfaction and overall growth for a company, taking insights form the activities undertaken
by PMI. However, it was observed that PMI actively engaged in communicating with its
consumers, improvements can be made in terms of communicating CSR with investors,
additional organizations and public health officials. The following sections will hence focus
on the implications of a lack of CSR dialogue.
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4. The lack of dialogue: What are the consequences?
4.1. Introduction
The previous section extensively discussed on the importance of maintaining ongoing
dialogue and communication on CSR activities by an organization. The following sections
will hence aim to elaborate on the consequences an organization can encounter if it not
engaging in an active dialogue with customers, relevant environmental officials and
organizations.
4.2. Discussion
4.2.1. Loss of Trust
When an organization does not or rather engages in projecting its CSR policies or any
information of its achievements without any form of dialogue and consumer engagement, its
results in consumers perceiving that their preferences and voices are not being heard and
thus, their opinions are not respected or treated with dignity (Frynas & Yamahaki 2016, p.
260). Thus, this results in a loss of consumer trust, increased consumer dissatisfaction and
loss of consumer loyalty and increased losses for the organization. If not controlled, such lack
of dialogue can lead to fatal results, which is observed especially in case of food and
beverage or drug companies projecting false claims of its products (Crane & Glozer 2016, p.
1233).
4.2.2. Conflicts of Interests
When there is an observed lack of dialogue in terms of communication CSR activities, doubts
are raised regarding the credibility and validity of the claims demonstrated by the
organization. This can especially occur if information clamed is not updated, is not supported
with scientific sources or does not project any negative results. This results in a conflict of
interest and raises doubts on whether an organization is truly functioning for the benefit of
society or merely to fulfil objectives skewed towards its own needs (Asmussen & Fosfuri
2019, p. 899).
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4.3. Conclusion
This section hence provides a succinct insight on the adverse consequences an organization
can encounter if it fails to engage in a continuous dialogue with relevant stakeholders
regarding its CSR policies activities. A lack of dialogue not only results in a loss of trust
across consumers but also raises doubts on the credibility of the CSR activities claimed to be
followed by an organization. The following sections will focus on results of empty boasting
on CSR using examples.
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5. The dangers of empty boasting and CSR
5.1. Introduction: Empty boasting and Organization reputation
The previous section provided key insights on possible implications an organization can
encounter due to lack of dialogue with a concluding statement on how lack of addressing this
issue can result in fatal consequences. In addition to a loss of consumer trust, boasting
organizational achievements without scientific claims can severely retard a company’s
reputation along with impacting the lives of billions of consumers on a large scale (Knudsen
2015, p. 377). The following sections will demonstrate such consequences using real life
examples.
5.2. Discussion
5.2.1. Consumer Scandal 1: Essure
One of the most notable corporate scandals which caused a worldwide uproar is regarding the
retail of a birth control device ‘Essure’ in 2018 which claimed to be a permanent
contraceptive solution via insertion of coils within the fallopian tubes of a woman’s body,
hence preventing the movement of eggs towards the uterus. Upon implementation, a number
of women complained of weight gain, internal bleeding, pain, depression, perforation and
unwanted pregnancies. Further investigations revealed an absence of any form of testing or
conclusive scientific research to support the claims. The global criticism not only harmed its
sales worldwide but also evoked media coverage via news reports and documentary films
(Spangler 2018).
5.2.2. Corporate Scandal 2: Milo Powder
Milo, the global manufacturer of chocolate beverage powders, received widespread criticism
in 2018, after it labelled its products as having a rating of 4.5 with the help of Australia’s
Health Star Rating (HSR) System – a policy aiming to rate foods based on their degree of
‘healthiness.’ Doubts regarding how the product’s high sugar content garnered such
impressive ratings further raised criticism on Australia’s health policy initiatives resulting in
Milo removing its ratings and HSR system being compelled to revise its scoring systems
(Metherell 2019).
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5.3. Conclusion
Thus, from the above sections, the rate and scale of which an organization’s reputation, future
survival and consumer health can be impacted due to false basting can be understood. This
section demonstrates that organizations must not halt at merely sharing their CSR reports but
must continue to engage in frequent dialogue across all stakeholders and monitor the
scientific credibility of its claims.
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6. Conclusion: Key Findings
This paper thus successfully evaluates and analyses the components of a CSR report of a
chosen organization. From the data so acquired, it could be implied that while PMI
incorporates an extensive array of comprehensive data in its CSR reports, adding detailed
information on strategies it has or will use to achieve its sustainability objectives would have
been beneficial. The paper then demonstrates the importance of ongoing dialogue and how
PMI incorporates the same using active social media handle. However, it is recommended
that the PMI increases it dialogue with other organizations to ensure overall organizational
growth.
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7. Recommendations
Communication of organizational goals and activities must be mastered since it paves the
way for long term sustainable practices, cost savings, growth and consumer satisfaction. One
of the first recommendations to improve communication is ensure multiple stakeholder
involvement and not limiting it to only consumers. This can be done by repeatedly discussing
CSR policies with employees during meetings or organizing workshops or conferences where
other organizations may also be invited (Liang & Renneboog 2017, p. 2017).To prevent
adverse consequences, it is recommended that the organization communicates its CSR claims
scientifically, by first monitoring the same using scientific sources and then acknowledging
the source during communication across various channels (Harjoto, Laksmana & Lee 2015,
p. 650).
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8. Appendices
Appendix A. An extract of the company’s website
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9. References
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