The four global accounting firms, Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY) and KPMG – collectively known as the “Big Four” – are multinational networks of professional services firms. In 2019, they audited all of the companies in the FTSE 100.¹ The majority of their revenue, however, comes from other services, such as tax advice, management consulting, corporate finance and legal services.²

A spate of corporate scandals involving audit failures have led to renewed calls for the break-up of the Big Four into separate audit and consulting firms. Concerns have been raised about their lack of skepticism and independence from company management if, at the same time, they are seeking lucrative consultancy work from the same companies. The UK’s Financial Reporting Council has ordered them to split their audit work by 2024 but resisted calls to break them up.³

Serving the Tobacco Industry

The Big Four have been employed by the tobacco industry as both auditors and advisors for many decades. While some of the services provided are technocratic, providing help on IT systems for instance, other work concerns issues of public interest. This includes: helping devise strategies to oppose tobacco control regulations, providing seemingly independent evidence to win public policy debates, and advising on corporate responsibility to shift public perceptions of tobacco companies.

Work for the tobacco industry has generated multi-million dollar fees. For example, from 1994 – 1998 KPMG generated revenues of approximately $47million from consulting and information technology engagements with one tobacco company, Philip Morris (PM). ² In 2019 British American Tobacco (BAT) paid KPMG over £24million as its external auditors.⁴

Despite public statements of social purpose – PwC’s is to “build trust in society and solve important problems”⁵ – the actions of the Big Four demonstrate they serve the commercial interests of the tobacco companies and themselves.

• See Big Tobacco, Big Tax Avoidance: STOP briefing on how the tobacco industry avoids paying its fair share of tax

Audit Work for the Tobacco Industry (and associated organisations)

Auditing of tobacco companies by the Big Four generates multi-million dollar fees, although these are overshadowed by much larger consulting fees earned from the industry. PwC has acted as external auditor to more of the world’s biggest tobacco companies for longer.

Notes on the table: mergers among the Big Four in the 1980s/1990s make clear timelines on tobacco auditing difficult; we are unable to provide a figure we are confident on for Deloitte’s JTI fee

Non-Audit Services for the Tobacco Industry

Positioning tobacco as ‘responsible’ to ‘regain influence’

For many decades the Big Four have helped controversial companies, including tobacco, improve their reputations. The consultancies provide advice on devising and implementing strategy, giving notional external verification of industry claims (“whilst being aware of any potential conflicts of interest,” as PwC notes⁶) and promotion through corporate social responsibility awards.

In the late 1990s, as the tobacco industry’s denial campaign was exposed and the companies found themselves facing both growing skepticism among policy-makers and an increased threat of regulation, the industry sought to win back trust – and a seat at the table – by repositioning themselves as ‘responsible’.

Ernst & Young advised British American Tobacco (BAT) to “take the lead” in positioning itself as a trusted adviser to governments by taking a “responsible and long term perspective on issues” and providing politicians with “accurate, measured and fair” information.⁷ Once trust is established with government “lobbying is much easier”, EY wrote.

BAT’s aim to rebrand itself to “regain influence and control of its future”⁸ was later developed by KPMG and PwC (BAT’s independent auditor at the time), with both pitching to work on its corporate responsibility programme. PWC put its estimated costs at $2-3million.⁹

KPMG’s recommendations focused on BAT taking voluntary action on public health issues, such as curbing underage smoking, and working with governments to “guide legislation”.⁸ The firm was clear that BAT did not need “to get out of the tobacco industry”.¹⁰ The goal was to shift perceptions so that BAT was seen as “the responsible company within a controversial industry”. ⁸

This strategy was apparent in the late 1990s in the tobacco industry’s campaign to counter the threat posed by the World Health Organisation’s proposed Framework Convention on Tobacco Control (FCTC),¹¹ which saw BAT take a lead in promoting an alternative voluntary regulatory regime.¹² KPMG proposed to help ensure that BAT’s proposals became a “powerful tool” rather than a “spoiling tactic, which backfires on BAT”.¹¹

Producing Information to Support Tobacco Lobbying

The Big Four have all produced tobacco-funded reports that have been used to support industry lobbying against tobacco control regulations and are often directed at persuading policymakers and the media.

They have also conducted studies for tobacco industry allies and proxies, such as Ernst & Young for the Foundation for a Smoke-Free World (see ‘Potential for conflicts of interest’ below), providing useful third party endorsement for tobacco lobbying positions.

However, rather than being “accurate, measured and fair”, as EY counselled,¹³ the quality of much of the information produced in these reports has been heavily criticised (see ‘Criticism of Big Four work for the tobacco industry’, below). It has, however, earned the Big Four many millions over decades.

Studies on the Negative Economic Impact of Tobacco Regulation

Tobacco companies have long argued that the economic benefits of the industry outweigh the negatives of what their products. Consultants from the Big Four have helped the industry develop strategies around this argument with some – KPMG in the 1970s and 1980s¹⁴ and PWC in the 1990s – producing multiple reports to bolster this case.¹⁵

A 1997 EY ‘route map’ for BAT stated that these studies have proved a “valuable lobbying tool” for the industry.¹⁶

Studies Exaggerating the Illicit Trade in Tobacco to Fight Regulation

Another issue that the tobacco industry has used to push back against regulation is that it will drive the trade in illicit tobacco. Again, Big Four firms have provided multiple studies to support these claims.

Philip Morris International (PMI), for example, funded KPMG to quantify the scale of the illicit trade in Europe, beginning in 2006;¹⁷ BAT funded reports by PwC in the 2000s that detailed the supposedly growing problem of Australia’s illegal tobacco market;¹⁸ and in a 2010 report for BAT, Ernst & Young claimed that the true level of illicit tobacco consumption in New Zealand was three times higher than previously thought, and that a tobacco tax hike could push it higher.¹⁹

Illicit Tobacco Studies used to Oppose Plain Packaging Around the World

Many of these reports by the Big Four on the illicit trade have been presented to policy makers to argue against the introduction of standardised, or plain packaging, regulations, particularly in Australia and the UK which have led on the issue. Plain packaging, the industry claimed, will make counterfeiting easier.

Ahead of the regulation’s introduction in Australia in 2011, for example, Deloitte published multiple industry-commissioned reports on the illicit trade and plain packaging in the country, as well as an international study on the “intended and unintended consequences” of plain packaging for BAT.²⁰ When the UK government consulted on plain packaging in 2012, BAT²¹, Imperial Tobacco, Japan Tobacco International (JTI)²² and PMI²³ submitted as evidence claims from Deloitte’s reports.

Big Four firms have also been employed to produce studies that undermine plain packaging once it is introduced, with EY disputing in a report for BAT plain packaging’s role in curbing tobacco consumption²⁴ and KPMG examining the regulation’s link to smuggling.²⁵

Criticism of Big Four Work for the Tobacco Industry

Potential for Conflicts of Interest

There is clear potential for conflicts of interest from the Big Four providing consultancy services to firms they audit.²⁶ Audits provide shareholders with an independent opinion of a company’s financial position, and as such it should not be influenced by any other, potentially more financially beneficial relationship with company management. The Big Four, however, regularly provide other services to organisations that they audit.

Ernst & Young, for instance, is the external auditor for the Foundation for a Smoke-Free World,²⁷ which describes itself as an independent scientific organisation but is solely funded by PMI.

In 2018 a consultancy arm of Ernst & Young was commissioned to produce a report for the Foundation – a report that promoted a message supportive of PMI’s lobbying²⁸ and which was criticised as an exercise in “market research for PMI”²⁹ – and in 2019 the Foundation gave the auditing firm a grant of over US$1million for a further study.²⁷

Criticism of Quality of Big Four Reports for Tobacco

Reports by Big Four firms designed to provide credible, third party support for the tobacco industry’s lobbying have been heavily criticised by governments, academics, NGOs and even rival firms for their: flawed methodology, bias, exaggeration, use of unsupported assumptions, and for referencing other industry-funded, rather than independent research.

A 2005 economic impact study by PwC, for example, which was used to oppose a smoking ban in New Jersey, was not based on hard data, but rather “a series of unsupported assumptions,” according to analysis by Stanton Glantz, Professor of Medicine at University of California³⁰ “Grossly exaggerated”, “one-sided” and “flawed” was how rival firm Arthur Anderson described a previous tobacco economic impact study by Price Waterhouse.³¹

The Big Four’s reports on the potential for regulation to increase the illicit trade in tobacco have also been slated. Claims made in Deloitte’s reports on the illicit trade and plain packaging in Australia, were described by the country’s Minister in charge of customs issues, Brendan O’Connor, as “baseless”.³² He accused the lobby of scaremongering to protect profits.

Analysis by academics at the University of Bath of KPMG’s studies into the EU’s illicit trade concluded that it employed flawed methodology and used only industry-validated data.¹⁷ Regardless, PMI presented its findings in its evidence to the UK government’s consultation on plain packing.³³

KPMG’s research on the impact of Australia’s plain packaging law on smuggling were also damned by the Australian Government as inaccurate. “Like previous illicit trade reports commissioned by the tobacco industry”, it said, KPMG “substantially exaggerates” the size of the illicit market.³⁴

Ernst & Young’s warnings that a proposed tax increase would lead to higher levels of illicit tobacco consumption in New Zealand were described as “fundamentally flawed” in analysis by the New Zealand Institute of Economic Research, and “of no value in informing debate on policy measures to reduce tobacco consumption”.³⁵ Despite this assessment, and Ernst & Young’s extensive work for tobacco companies, the New Zealand Ministry of Health appointed the firm to review its tobacco taxation policy in 2018.³⁶

Criticism of Corporate Responsibility Work for Tobacco

Corporate responsibility programmes by tobacco companies have been widely criticised as public relations exercises designed to secure political influence and fend off tougher regulation. The WHO’s Framework Convention on Tobacco Control is clear that the goal of these activities by the industry are “to distance its image from the lethal nature of the product it produces and sells or to interfere with the setting and implementation of public health policies.”³⁷

For more information see: CSR Strategy

Controversies outside of the tobacco industry

The Big Four have all been embroiled in numerous ethical and legal controversies dating back decades. From the lack of racial diversity in their recruitment practices³⁸ to being too close to organisations to offer a meaningfully independent service.

Audit Failures

All of the Big Four firms have been investigated and fined multiple times for the poor quality of audits and concerns have been raised about their lack of skepticism and independence from company management.

Recent high profile scandals include: Deloitte’s “serious audit failings” in the case of technology firm, Autonomy;³⁹ KPMG’s alleged negligence in its audits of outsourcing firm Carillion;⁴⁰ PwC’s accounts of retailer BHS and the potential conflict with its consulting earnings, which were eight times its audit fees;⁴¹ Scandals involving Ernst & Young’s audit practice in 2020 led Forbes to ask “whether EY is more concerned about keeping clients happy than providing full and accurate audits”.⁴²

Marketing Tax Avoidance Schemes

The Big Four firms have a history of developing and marketing complex tax avoidance schemes. A 2015 UK Parliamentary inquiry concluded that PwC’s activities, for example, represented the promotion of tax avoidance “on an industrial scale”.⁴³

Criticised For Being too Close to Governments

The Big Four have long been influential voices in politics in Britain and around the world. Their access is in part a product of the many lucrative government contracts awarded to them, including multi-million pound contracts issued in 2020 without competitive tender as part of state responses to the COVID-19 crisis.⁴⁴

Big Four firms have also donated millions to political parties in the UK; the revolving door between government and the Big Four includes many former UK ministers; and hospitality has been used to cement relationships. People like EY’s UK chief, Steve Varley, who is also a UK Treasury advisor⁴⁵ enjoy unrivalled access to government. Meanwhile the audit companies second staff to the government which helps them gain an inside track.⁴⁶

Role in Health Privatisation

The Big Four have been involved in the privatisation of public assets and services, providing advice to both governments looking to sell off and outsource services and corporations seeking to profit from the process. KPMG, for example, has been involved in efforts to restructure the National Health Service (NHS) in England. In 2010, KPMG’s head of health, Mark Britnall, told a conference of private sector executives that future NHS changes would show “no mercy” to the NHS and offer a “big opportunity” to the for-profit sector.⁴⁷

Clients Accused of Corruption

KPMG has been embroiled in the scandal centred on the relationship between former South African president, Jacob Zuma and the powerful Gupta brothers. Partners at KPMG’s South Africa office audited a Gupta-owned company involved and approved the firm to treat as a business expense spending on a lavish family wedding, which four KPMG partners attended. KPMG lost multiple clients in South Africa over its involvement.⁴⁸

TobaccoTactics Resources

• Countering Industry Arguments Against Plain Packaging
• Deloitte
• Ernst and Young (EY)
• Hiring Independent Experts
• KPMG
• PriceWaterhouseCoopers (PwC)
• Tobacco Smuggling
• Tobacco Industry Arguments Against Taxation

References

The post Big Four Global Accounting Firms appeared first on TobaccoTactics.

• The “Tobacco Transformation Index” (TTI) is a project of the Foundation for a Smoke-Free World (FSFW). It describes itself as an “objective” index for measuring the corporate transformation of the tobacco industry.⁴⁹⁵⁰
• However, FSFW is wholly-funded by Philip Morris International (PMI), the second-largest transnational tobacco company in the world.
• The lack of independence and external oversight, extensive industry involvement and flawed methodology of the TTI produces a fundamental misalignment with public health and tobacco control goals. The TTI instead enables industry self-promotion and furthers tobacco companies’ corporate goal of profit maximisation.

Background

In September 2017, FSFW was established using a US$80 million investment from PMI, announced as the first of twelve annual instalments totalling US$960 million.⁵¹⁵² Though FSFW initially claimed that it was “seeking and expects to receive funding from other sources” in addition to PMI,⁵³ in June 2020 the wording on the funding page of its website changed to “may seek funding from other sources”.⁵⁴

FSFW has divided its research “core work pillars” into three streams: Agriculture & Livelihoods; Health, Science & Technology; and Industry Transformation.⁵⁵ Based on FSFW’s Mid-Point Strategy Update documents published in July 2020, which FSFW states assess its progress, mission alignment and cohesiveness halfway through its 2019-2021 Strategic Plan, it appears that aside from a single grant to a UK-based company on FSFW engagement with China (Feng Insight: US$220,638), the sole product of the Industry Transformation workstream is the TTI.⁵⁶

The original Request for Proposals (RfP) issued by FSFW in October 2018 called TTI the “Smoke-Free Index”.⁵⁷⁵⁸ However, the Southeast Asia Tobacco Control Alliance (SEATCA) has published a Smoke-Free Index since 2016. SEATCA’s Smoke-Free Index was developed to assess the extent to which smoke-free policies in the Association of Southeast Asian Nations (ASEAN) align with the WHO FCTC. In July 2019, SEATCA posted an official complaint on its website with a statement from its Executive Director, Dr Ulysses Dorotheo to say that “[the Foundation’s] use and trademarking of the term “Smoke-Free Index” is misleading, potentially confusing, and tantamount to wrongful appropriation of SEATCA’s intellectual property”.⁵⁹ FSFW changed the index’s name to the “Tobacco Transformation Index” thereafter, but without public reference to its appropriation of the name of SEATCA’s index.

In March 2019, two grantees under the industry transformation work pillar were announced: market research company Euromonitor International and a private research consultancy SustainAbility.⁶⁰ According to FSFW’s 2019 tax return, it gave US$2,005,158 in funding to Euromonitor in 2019, with US$4,524,534 committed for the future.  SustainAbility received US$3,127,420, with a further US$1,820,503 agreed.⁶¹ Euromonitor has also received funding from PMI for its work on PMI IMPACT, (with Euromonitor’s announcements of these funding streams coming only a day apart)⁶² and was awarded a second grant by FSFW in March 2020 to analyse the impact of the EU menthol ban.⁵⁶ In January 2020, Biochromex was awarded US$29,100 to produce a “Nicotine Product Relative Risk Assessment”.⁶³⁶⁴ This assessment was published on 16 September 2020 in a pre-print repository, without peer review (more below).⁶⁵ On FSFW’s grants webpage, this work is classified as “Industry Transformation”, but on its Mid-Point Strategy document, it is classified as “HST+”, a designation used to indicate education and awareness associated with the Health, Science and Technology research pillar.⁵⁶

In 2020, a new website was created specifically for the Tobacco Transformation Index: https://tobaccotransformationindex.org/. There, it detailed TTI’s premise, design and management and governance, including the formation of an “External Advisory Panel”. FSFW is not mentioned on the homepage of the website. Over the course of 2020, it released several documents through this website:

• External Advisory Panel Charter (undated)
• Stakeholder Consultation Report (March 2020)
• Industry Consultation Summary (May 2020)
• Response to Industry Feedback (May 2020)
• Preliminary Index Methodology (May 2020)
• Preliminary Country Indicators (May 2020)

Upon the TTI’s final release in September 2020, the following documents were also added, as well as a webpage detailing the final company rankings:⁶⁶

• 2020 Index Ranking Report: Executive Summary (September 2020)
• 2020 Index Ranking Report (September 2020)
• 2020 Index Methodology (September 2020)
• Advisory Panel Statement on 2020 Index (September 2020)

The planned Country Fact Sheets are listed as “coming soon” on the website’s “Methodology” webpage.⁶⁷

Lack of independence

As an organisation wholly funded by the tobacco industry, Foundation for a Smoke-Free World (FSFW) is neither an objective nor independent research body. Previous critiques have shown how FSFW has an unavoidable conflict of interest in producing research and advocacy on the tobacco industry: you can find them outlined at Foundation for a Smoke-Free World: How It Frames Itself.

The Tobacco Transformation Index (TTI) is, in its own words, “convened, funded, and overseen” by FSFW.⁶⁸ On the TTI website, FSFW is described as “responsible for overall strategic direction and governance of the Index”⁶⁸ and the party with “ultimate accountability and decision-making”.⁶⁹

The same critique of FSFW as not independent applies to TTI: as a project funded by an organisation funded solely by the tobacco industry, it cannot be considered objective or legitimate.

In its own Stakeholder Consultation Report, participants in consultations on TTI (facilitated by FSFW grantee SustainAbility) shared this concern about its legitimacy as a product of FSFW, and thus, tobacco money: “many participants felt that [FSFW funding independence policies] do not sufficiently mitigate the appearance of a dangerous conflict of interest”. FSFW concluded this report with a recommendation to “spin out” future versions of TTI as “an independent entity with a fiduciary board”.⁶⁹ After the release of  the final 2020 Index report, FSFW confirmed on the TTI website that it would “evaluate alternative governance structures, including funding mechanisms, to maximize the impact of the Index on its purpose for the long term”.⁷⁰

FSFW has previously made promises of seeking alternative funding for itself that it later reversed (as detailed above). No additional funding partners have been announced for TTI as of September 2020. Even if TTI were transferred to another governance structure , it would still remain an industry-influenced product due to its original funding and design.

Lack of public health involvement

Although the External Advisory Panel Charter says that members should include those with expertise in “public health and tobacco control”,⁷¹ the panel members as of September 2020 have no experience in tobacco control.⁷² This may indicate that FSFW struggled to appoint tobacco control experts to the panel.

Two stakeholder consultations on TTI were cancelled in Thailand and Turkey after pressure from policymakers and academics. In Turkey, the event was cancelled by the government, and in Thailand, by SustainAbility itself, due to a lack of interest by potential attendees and amidst reports that the academic community would boycott the event.⁶⁹

Lacks external oversight

As discussed above, FSFW maintains ultimate governance over TTI, despite its claims of independence.⁷²

Neither the data nor methodology are independently verified,⁵⁰ despite recommendations from stakeholder consultations that both an external validation and technical advisory board be established. FSFW says it will seek independent verification of company data in future.⁶⁹⁷³

Engagement with industry representatives is also inadequately documented. The minutes provided by FSFW on the TTI website of consultation calls between Euromonitor and Philip Morris International (PMI), British American Tobacco (BAT) and Swedish Match are very brief.⁷⁴ Additionally, company responses to the initial consultation letter in January and February 2020 were not published.

Industry heavily involved in development

The TTI embraces as its premise that, through “constructive engagement, investors and other stakeholders can more clearly articulate their expectations and influence companies to change”.⁷⁵ Historical and contemporary evidence, however, shows that the tobacco industry has consistently used engagement with government and third parties to deceive the public about the perils of using its products and promote its own interests, to the detriment of public health.

Beginning in the late 1980s and continuing into the 2000s, Philip Morris International funded scientists to “restore the acceptability of smoking” and “sustain controversy” about the harms of secondhand smoke through The Whitecoat Project. Evidence from these industry-funded third parties was used to “resist and roll back smoking restrictions” around the world.⁷⁶

More recently, the Global Tobacco Industry Interference Index documented global attempts by the tobacco industry to influence policymakers. In Japan, the country with the worst ranking in 2019, the close relationship between the government and Japan Tobacco Group (parent company of Japan Tobacco International) led to the dismissal of both smoke-free public places draft legislation in 2017 and a proposal for pictorial health warnings on packaging in late 2018.⁷⁷

FSFW said in its initial Request for Proposals (RfP): “there will be no consultation with industry employees regarding the Index-making process, which comprises index development, compilation, scoring, and reporting”.⁵⁷

Yet in the introduction to its Industry Consultation document, it is clear that the industry was heavily involved in the creation of TTI. Euromonitor, which was tasked with TTI design, data analysis and final scoring, was also the grantee in charge of industry consultation. For each phase of development, including index design, methodology, formal data submission and data validation, companies were “given the opportunity to review, comment and relay feedback”:⁷⁴

“Multiple touch points across these four phases and extensive communication with updates throughout this iterative process, help to reinforce a collaborative approach to Index development…Apart from written feedback, the Index team has also offered conference calls to provide companies with the opportunity to share more details on their feedback, ask questions directly to the Index team and have a productive conversation.”

In the final TTI report, data informing assessment included “interviews with industry experts”.⁵⁰ These “industry experts” are further defined as “trade organizations, former company employees, and relevant stakeholders across the supply chain”.⁷⁸ It is unclear whether this group was included in the “expert review” phase of finalising the methodology.⁷⁸

Part of the “data validation” phase is the referral back to companies to “review data informing preliminary score and propose clarification of any discrepancies”.⁷⁴ Given no external data verification is included in this phase, it is difficult to see how this step allows for any more than tobacco companies to dispute any poor scores they may receive.

Tobacco industry suggestions for additions and alterations to the types of data to be gathered, detailed in the Industry Consultation report, also appear in the Preliminary Methodology. As the version of the methodology that was sent to companies in November 2019, according to FSFW,⁷⁴ is not publicly available, it is not possible to conclude the extent to which industry suggestions influenced the final TTI methodology.

Industry feedback that appears in the methodology includes:⁷⁸⁷⁹

• Swedish style moist snuff (known as “snus”) be reclassified as reduced-risk and differentiated from Asian-style chewing tobacco (recommended by Swedish Match)
• Incorporation of a metric on illicit trade (recommended by BAT): TTI does not include a metric on illicit, but does incorporate it into the associated Preliminary Country Indicators.
• Ratio of marketing spend of “high-risk” to “low-risk” products (general)
• Capital allocation to include research and development (R&D) and capital expenditure (general)

Image 1: The final ranking of the 2020 Tobacco Transformation Index. Note the top six companies are publicly-traded transnational tobacco companies. (source: TTI 2020 Index Report)

The three companies that provided additional data to Euromonitor on follow-up calls were ranked top three in the final TTI ranking (Image 1).⁵⁰⁷⁴ Despite the industry’s heavy involvement in the development of TTI, there is little indication to suggest that tobacco companies submitted their own data in addition to publicly available information or existing databases, including Euromonitor’s own. One of the limitations included in the final report was the “lack of data availability”.⁵⁰

Misrepresents tobacco control and harm reduction

The Tobacco Transformation Index (TTI) positions tobacco harm reduction as necessary to aid “failing” tobacco control. This is a false narrative; tobacco control is successful worldwide.

The Cancer Prevention & Control Program at Georgetown University, USA estimated that implementation of WHO FCTC MPOWER measures in 2007 would result in 22 million fewer projected smoking-attributable deaths by 2014.⁸⁰ ‘Conventional’ tobacco control policies such as price and tax policies; comprehensive smoke-free policies; health warnings; bans on tobacco advertising, sponsorship and promotion (TAPS); and evidence-based cessation interventions are consistently found to be the most effective measures to reduce tobacco-related health harms and encourage quitting. ⁸¹ One of the single largest barriers to effective policy implementation is tobacco industry interference.⁸¹

Tobacco harm reduction is promoted by industry & allies as ‘the solution’, when in reality, it is only effective as a public health activity when other strong tobacco control measures are in already in place. Research by members of the Tobacco Control Research Group (TCRG) has found that the industry adopts harm reduction as “opportunistic tactical adaption to policy change rather than a genuine commitment to harm reduction”.⁸²

A common narrative used to bolster the industry’s claims on harm reduction is the ‘Swedish Experience‘: that Sweden experiences low rates of smoking and tobacco-related disease as a result of the presence of Swedish-style moist snuff, or “snus”, being available in the country. While snus may cause less harm to users than combustible cigarettes, many commentators have argued that Swedish data are a result of strong tobacco control legislation, rather than attributable solely or primarily to snus.⁸³ This “proof of concept” idea has been promoted by another FSFW grantee, Knowledge-Action-Change.⁸⁴

While the use of  newer nicotine and tobacco products may reduce harm when compared to the use of combustible cigarettes, the technical basis of arguments around the relative risk of newer products in the development of the TTI is very limited. This is similar to the way in which US FDA’s July 2020 decision to issue modified exposure status to its HTP, IQOS, risks conflating HTPs and e-cigarettes creating confusion among the public, and even governments.⁸⁵ In its Response to Company Feedback, FSFW stated that its classification of products as “reduced-risk” and “high-risk” (Image 2) in its preliminary methods document is based on only two papers, by Nutt et al. and Abrams et al. (Image 3 and 4). It uses this same classification in the final TTI, based on a non-peer reviewed, pre-print analysis commissioned by FSFW itself.^655079868788

Image 2: TTI classifies “high-risk” products as including all traditional combustible tobacco and chewing tobacco products; “reduced risk alternatives” include e-cigarettes, heated tobacco, moist snuff (aka “snus”), nicotine replacement therapy and nicotine pouches. This image is drawn from the pre-print paper commissioned by FSFW from Biochromex (source: TTI 2020 Index Report)

Preliminary nicotine product characterisation based on two publications

Nutt et al.’s 2014 paper aimed to estimate the relative harms of nicotine-containing products based on the opinions of an expert panel (Image 3). The authors themselves flag the following limitations of the paper:⁸⁸

1. “a limitation of this study is the lack of hard evidence for the harms of most products on most of the criteria” (i.e. the scorings are based on “knowledge and experience alone”) and
2. “there was no formal criterion for the recruitment of the experts”.

An editorial in The Lancet describes the evidence in the paper as “extraordinarily flimsy”, since “the opinions of a small group of individuals with no prespecified expertise in tobacco control were based on an almost total absence of evidence of harm”.⁸⁹

The paper acknowledges funding from EuroSwiss Health and ‘support’ from Lega Italiana Anti Fumo (LIAF).⁸⁸ EuroSwiss Health was founded by Delon Human, who had previously received funding from British American Tobacco (BAT). In 2013, he endorsed BAT’s public health credentials in the company’s sustainability report.⁹⁰⁹¹⁹² The chief scientific adviser (previously President) of LIAF is Riccardo Polosa, who has received funding from PMI, PM USA and FSFW; and has worked as a contractor for BAT.⁹³

Image 3: Figure from Nutt et al., 2014 that categories tobacco and nicotine products by relative harms. (source: Nutt et. al, 2014)

The second paper on which the TTI bases its interpretation of high/reduced risk categories of newer products in its preliminary documents is Abrams et al., 2018. The ‘harm minimization continuum’ developed in this paper (Image 4) is adapted from Nutt et al.’s paper, which as outlined above, based its findings on the ‘knowledge and experience’ of a small group of individuals.

The authors use the term ANDS (“alternative nicotine delivery systems”) to describe products that do not combust tobacco, and state that this encompasses both e-cigarettes and ‘heat-not-burn’ tobacco. This description is in contrast to the first independent study on PMI’s heated tobacco product, IQOS, which, in 2017, found that heated tobacco products produce harmful chemicals similar to smoke through pyrolysis (incomplete combustion), just as in combustible cigarettes. The authors stated that calling these products “heat-not-burn” are “dancing around the definition of smoke”.⁹⁴

Abrams et al. do flag the limitations of the existing evidence base on the relative risk of newer products, saying “new and evolving ANDS products may raise new issues and data needs. For example, products that heat rather than burn tobacco, but still mimic smoking, may raise issues different from those raised by e-cigarettes.” As such, similarly to Nutt et al’s paper, this paper does not attempt to synthesise the evidence base on the potential harms of HTPs.⁸⁷

Image 4: The ‘harm minimisation continuum’ developed by Abrams et al. (source: TTI Response to Company Feedback)

Its authors include David Abrams and Raymond Niaura, who, In January 2020, were both named to FSFW’s scientific advisory board.⁹⁵ Both have previously appeared as speakers at the Global Tobacco and Nicotine Forum (GTNF), an industry-sponsored event,⁹⁶ and received funding from e-cigarette manufacturer Cuts Ice e-Liquid Laboratories for “publication and open access costs” (which was not declared as a conflict of interest).⁹⁷

TTI classification of products by risk based on FSFW-funded paper

While the TTI’s preliminary documents base their classification of the relative risk of nicotine products on these two papers discussed above, for the TTI’s final product, FSFW commissioned a further review on which to base the index’s classification.

FSFW grantee, Biochromex, was paid US$29,100 in 2020 by the Foundation for a “Nicotine Product Relative Risk Assessment”.⁶³⁶⁴ Biochromex is a research services company which has worked with the healthcare, pharmaceutical and consumer goods industries. It provides ‘tailored, systematic literature review, competitive landscaping and content writing’ for its clients⁹⁸ and since February 2017 its director has been Dr. Rachel Murkett.⁹⁹

On 16 September 2020, Biochromex authors (including Murkett) released a paper entitled ‘Nicotine Products Relative Risk Assessment: A Systematic Review and Meta-Analysis’ on the online platform, OSF Preprints.⁶⁵ This output is a non-peer-reviewed publication, and the pre-print platform seemingly does not allow for reviews of the paper, unlike many other pre-print platforms. Although the paper declares funding from FSFW (with no mention of FSFW being fully-funded by PMI), its authors assert they have no conflicts of interest.

The paper is a systematic review and meta-analysis, used to create a “relative risk hierarchy” of 13 nicotine products. The paper’s introduction relies heavily on the Nutt et al and Abrams et al papers outlined above, saying “these studies represent an excellent foundation upon which the data-driven assessment of the relative risk of nicotine products can be built”.⁶⁵

The TTI uses this paper to classify nicotine products into high risk (which includes combustible cigarettes, cigarillos, pipe tobacco, shisha, cigars, moist snuff and chewing tobacco) and ‘reduced risk’ (which includes heated tobacco products, snus, e-cigarettes and nicotine replacement therapy; Image 2). The TTI also uses the relative risk scores calculated within Murkett et al’s paper to calculate the scores within ten of its 35 metrics, saying in its “Approach to Scoring” section:⁷⁸

“The relative risk assessment…was leveraged to evaluate companies’ offerings and sales of reduced-risk products, and to further compare these according to their relative risk. To do so, the relative risk by product was used as a multiplier for each company’s sales and offer in the high-risk and reduced-risk categories. For example, volume sale of cigarettes was multiplied by the relative risk of cigarettes (100), while volume sale of chewing tobacco was multiplied by its relative risk (11.18), to reflect the different level of risk associated with each type of product.”

However, key steps of Murkett et al.’s methodological procedure are opaque. The paper fails to list the 320 studies on which its analysis is based. It also fails to report the funding sources of these studies, meaning it is impossible to tell the extent to which the paper relies on tobacco industry funded science. The authors themselves concede that one of the paper’s limitations is “the lack of comprehensive and high-quality data, which leaves significant gaps in the analysis”.⁶⁵

In fact, the order in which HTPs are located on the “relative risk hierarchy” reproduced in the TTI (below chewing tobacco, in the “reduced risk” category) is based on a lack of data, according to Murkett e al.:⁶⁵

“With the exception of snus, the reduced risk products are not represented at all in the epidemiological analysis, which can be attributed to their relative novelty compared with combustible and smokeless tobacco. In the toxin emissions analysis, the heat-not-burn devices place higher than chewing and dipping tobacco, however, this order is reversed in the final hierarchy due to the position of chewing and dipping tobacco relative to combustible cigarettes in the epidemiological analysis.”

Despite evidence that heated tobacco score higher in terms of toxin emissions than chewing tobacco, a “high-risk” product, it was moved to the “reduced risk” category without any epidemiological evidence to support this reordering. Thus, the TTI’s conceptualisation of a ‘reduced-risk’ product category, and calculations for ten of its metrics, are based on a paper which has several flaws. The TTI lists both heated tobacco products (HTPs) and e-cigarettes in the “reduced-risk” category, giving them implicit equivalence in their risk profile, despite a lack of consensus on the potential harms posed by HTPs.

Both the US Food and Drug Administration (FDA) concluded that the evidence submitted by PMI in support of HTPs was insufficient to merit a “reduced-risk” label (FDA)^100101102103 The Australian Therapeutic Goods Administration (TGA) reached a similar conclusion, and blocked the importation of HTPs into the country (TGA).¹⁰⁴¹⁰⁵

Alignment with industry corporate strategy

The “corporate transformation” narrative is essential to tobacco industry strategy; as its primary business model of selling combustible tobacco products begins to fail, it must turn to new products to maintain its profits and ensure its future existence.¹⁰⁶ PMI in particular has used “transformation” language associated with its newer products in order to achieve a number of corporate goals, as revealed within its leaked corporate affairs plan from 2014.  Here it outlined its plans to use harm reduction arguments to tackle industry “denormalization” and to “establish PMI as a trusted and indispensable partner”, in support of both its “combustible and reduced risk (RRP) product businesses”.¹⁰⁷¹⁰⁶

The TTI further supports this industry narrative, effectively rewarding transnational, publicly-traded tobacco companies for following their profit motive. The six publicly-traded tobacco companies were ranked top of TTI, despite their poor scores for the volume of high-risk products sold, one of the key indicators of real world transformation of their business. This was possible because of the additional points awarded for following corporate environmental, social and governance (ESG) frameworks, and the massive investments of money on research and development (R&D) which their profits allow them.⁵⁰

In reality, however, the tobacco industry has not transformed. Instead of supporting tobacco control measures, including increased tobacco taxes, which would drastically reduce the harm caused by tobacco product use, the industry continues to vigorously oppose them.¹⁰⁶⁷⁷ The industry has not stopped selling cigarettes; tobacco kills more than 8 million people around the world each year ¹⁰⁸ and cost US$1436 billion in global healthcare expenditure and productivity loss in 2012.¹⁰⁹ It continues to launch new brands of combustibles, especially targeting low- and middle-income countries (LMIC), where tobacco control legislation may be less well enforced.^106110111 In fact, 40% of the cost of smoking is disproportionately incurred by LMICs.¹⁰⁹

Like other sustainability indexes, the TTI does not evaluate industry business practices such as lobbying against evidence-based tobacco control measures,⁷⁷ sourcing tobacco farmed using modern slavery and child labour,¹¹² evading taxes¹¹³ and flouting advertising bans to market its products to youth.¹¹⁴  The TTI therefore legitimises tobacco companies’ efforts to portray themselves as responsible corporate citizens.

Despite FSFW statements that a ranking from “bad” to “less bad” will prevent tobacco companies from using TTI as a form of promotion and corporate social responsibility (CSR),⁶⁹ the final TTI report reads as a scorecard; the External Advisory Panel confirms this in its statement, calling the TTI “a nuanced scorecard and benchmark”.⁷³ We have already seen tobacco companies incorporating indexes and awards into their CSR and business strategies. See our page on CSR: Awards to find out more.

Appropriation of sustainable development

The Tobacco Transformation Index (TTI) says that it “aims to contribute to SDG 3 (Good Health and Well-being) and SDG 9 (Industry, Innovation, and Infrastructure”.⁷⁸⁷⁹ Yet, like the tobacco industry, FSFW also ignores the inclusion of Target 3A in the United Nations Sustainable Development Goals (SDGs). Target 3A calls for countries to “strengthen the implementation of the World Health Organization Framework Convention on Tobacco Control”, including Article 5.3 (non-engagement with the tobacco industry).¹¹⁵ The tobacco industry funding and close collaboration on the development of TTI directly contradict WHO FCTC and thus Target 3A.

• Read more about the tobacco industry’s appropriation of sustainable development on our Greenwashing

Flawed and inadequate metrics

This page does not seek to provide a comprehensive, in-depth criticism of the methodology of the Tobacco Transformation Index (TTI). However, there are several overarching problems with its preliminary methodology.

Inadequate theory of change

The TTI relies on a theory of change that shareholders will be able to apply pressure to companies to get them to change their behaviour. Regardless of the plausibility of this theory, nine of the 16 companies included in the 2020 TTI were private and state-owned companies. It is unclear how the TTI could be used to influence these companies. The Expert Advisory Panel noted:⁷³

“The Index has identified institutional investors as a primary user of the Index, with the potential to actively engage with tobacco companies to transform the industry. In the case of private and state-owned companies, this lever is held by shareholders and governments that may have the luxury to ignore market and stakeholder pressure to transform the tobacco industry. The Index team, the Panel, and FSFW all acknowledge this poses an outsized challenge relative to the creation of other indexes.”

The Panel recommends that FSFW “urgently develop a subsidiary theory of change for the Index relevant for the non-publicly quoted companies”.⁷³

Overemphasis on “commitment” and “transparency”

There is an overemphasis placed on metrics used to assess “commitment” to industry transformation. The 35 indicators of TTI are organised around three main “strategic pillars”: commitment, performance and transparency. FSFW describes the commitment pillar as an assessment of “the extent to which the company has incorporated the goal of industry transformation into its vision and strategy, its internal policies and codes of conduct, and its public stance and subsequent action”.⁷⁸

Image 5: The weighting of TTI indicators according to its methodology. Note the cumulative weight of commitment and transparency indicators (strategy and management, marketing, lobbying and advocacy; 30%) is roughly equivalent to that afforded to product sales (35%). (source: TTI 2020 Index Report)

This issue is reflected in the way that metrics are weighted (Image 5).⁷⁸ Over a third (12/35) of these indicators measure only commitment or transparency. These include the Marketing category, which depends on companies to voluntarily disclose violations of their internal marketing policies. TTI counts these reports as positive signs of the company’s “transparency”.⁵⁰⁷⁸ Yet tobacco companies often fail to report marketing violations, as in the case of social media promotion targeted at youth and young adults first uncovered by The New York Times in 2018.¹¹⁶¹¹⁷ The FSFW’s own stakeholder consultation recognised that “youth uptake must be prevented and that this should be explicitly addressed by the Index”;⁶⁹ yet no indicator in the final ranking addresses the behaviour of tobacco companies towards youth and young adults.

In the “Limitations” section of its final report, TTI also recognises that the reasoning for including the “Capital Allocation” category is flawed. By its own admission, the reason for decreasing the weighting (from 29% to 25%) of this category from preliminary to finalised methodology was: “justified by the consideration that the direct size of financial investment is not necessarily correlated with a positive harm reduction approach”.⁵⁰

Diverts focus from reducing sales of high-risk products

According to the final TTI methodology weighting of TTI categories (“metrics”) and sub-categories (“indicators”) is reportedly based on the stakeholder consultation and an “analytical hierarchical process”, or “AHP”.⁷⁸ AHP establishes the relative importance of one element to another. However, this method requires first establishing what makes something more important than something else. In the case of TTI, one of the principles used to do this is to emphasise the importance of increasing relative sales of “reduced-risk” alternatives, “which are weighted higher than indicators solely focused on high-risk products”.⁷⁸ Within the Product Sales category, arguably the only category included in TTI that measures actual company performance, each subcategory is further divided into “Volume Sales of High-Risk Products” (indicators 2A.1-2) and “Ratio of Volume Sales (Reduced-risk vs High Risk Products)” (indicators 2A.3-4). Indicators 2A.1-2, which in TTI’s own words, represent “a decreasing contribution to ongoing tobacco-related harm, are nonetheless weighted at a mere 5%, whereas Indicators 2A.3-4 are weighted at 45% despite representing only “potential progress in transitioning consumers away from high-risk products”.⁷⁸ The problem with this approach is that it ignores the capacity of transnational tobacco companies to continue to sell high volumes of combustibles and diverts focus from the essential and evidence-based focus of tobacco control on reducing sales of high risk products.

Opaque calculation of HMIC vs LMIC differential

From the preliminary to final methodology, TTI changed its accounting of differences in tobacco company policy and performance between high- and middle-income countries (HMIC) and low- and middle-income (LMIC) countries from separate indicators to a “LMIC vs HMIC multiplier”.⁷⁸ Though this multiplier is referenced multiple times in the text of the methods report (e.g. ““Details on the LMIC vs HMIC multiplier are provided in the Approach to Scoring section”⁷⁸), no such explanation is actually provided. This is especially concerning considering the multiplier is used to calculate companies’ scores for 11 of the 35 total indicators.

Does not account for dual/poly use

The harm reduction framework employed by TTI also does not consider the possibility of dual- and poly-usage of combustible and non-combustible tobacco products. Dual use does not necessarily reduce harm; users are still exposed to high levels of risk from use of high-risk tobacco products. Although products have not been on the market in many countries for long enough to draw conclusions on the general prevalence of dual and poly use, there is a growing body of academic research emerging from Japan (the largest market for PMI’s IQOS),¹¹⁸¹¹⁹ and South Korea,¹²⁰¹²¹ which has found significant levels of dual use of heated tobacco products (HTPs) and conventional cigarettes. Research published in 2020 from South Korea suggest that up to three quarters of youth HTP users who are current cigarette users and are less likely to quit than e-cigarette users.¹²¹

There is also some emerging evidence that newer products like heated tobacco devices may be attractive to those who have never smoked cigarettes, including young people.^121122123124

By failing to put in place sufficient guards against marketing to youth and young adults, the tobacco industry enables youth uptake of newer products and continuing dual- and poly-use.¹²⁵ TTI does not acknowledge this tobacco industry strategy.

Ignores tobacco industry interference

None of the TTI metrics attempt to capture the ways in which the tobacco industry interferes with policymaking and opposes effective tobacco control measures. The only category that mentions policymaking, Lobbying & Advocacy, contains indicators that solely assess companies’ “disclosure of policy positions related to industry transformation” (6A.1) and disclosure of lobbying and advocacy activities (6A.2).⁷⁸ In the final report, only three of the report’s 121 pages directly address the tobacco industry’s role in lobbying, and even then, only whether companies disclose their policy positions and lobbying organisation memberships.⁵⁰ Indicator 6A.1 allows tobacco companies to “score points “ for disclosing policy positions related to tobacco harm reduction;⁵⁰ what this fails to account for is how these positions are used to combat tobacco control policy worldwide. See, for example, our page on PMI Promotion of IQOS Using FDA MRTP Order.

Though the TTI also originally promised to “document FCTC violations” in the Request for Proposals,⁵⁷ no further mention is made to this in subsequent documents. In its review, the Expert Panel recognised that FSFW should improve its analysis of the “actual behavior of ranked companies, including at a country level”.⁷³

Tobacco companies actively oppose strong tobacco control measures that would benefit public health.⁷⁷ More examples of how the industry attempts to interfere with governments across the world to weaken tobacco control can be found in The Global Tobacco Industry Interference Index, produced by GGTC, a partner in STOP.

Relevant Links

• Foundation for a Smoke-Free World website: org/advancing-industry-transformation/
• Tobacco Transformation Index website: tobaccotransformationindex.org

TobaccoTactics Resources

• Foundation for a Smoke-Free World
• Foundation for a Smoke-Free World Archives
• Philip Morris International
• Euromonitor International
• Greenwashing
• CSR Strategy
• CSR: Awards

TCRG Research

• Foundation for a Smoke-Free World is not complementary to public health efforts – it’s undermining them, H. Lusardi, A. Gilmore, U. Dorotheo, Tobacco Control, 4 March 2020
• The Philip Morris-funded Foundation for a Smoke-Free World: tax return sheds light on funding activities, T. Legg, S. Peeters, P. Chamberlain, A.B. Gilmore, The Lancet, 6 June 2019
• Euromonitor International now accepts tobacco industry funding: a win for PMI at the expense of research on the tobacco industry, A.W.A. Gallagher, A.B. Gilmore, Tobacco Control, 8 April 2019
• Understanding the emergence of the tobacco industry’s use of the term tobacco harm reduction in order to inform public health policy, S. Peeters, A.B. Gilmore, Tobacco Control, 2015;24:182-189
• Transnational Tobacco Company Interests in Smokeless Tobacco in Europe: Analysis of Internal Industry Documents and Contemporary Industry Materials, S. Peeters, A.B. Gilmore, PLOS Medicine, 2013;10(9):e1001506
• Latest Tax Return Sheds Light on Philip Morris-funded Foundation for a Smoke-free World, STOP Industry Activity Brief, May 2019
• 10 Takeaways from The Foundation for a Smoke-Free World’s 2019 Tax Return, STOP Industry Brief, May 2020
• Addiction at Any Cost: Philip Morris International Uncovered, STOP report, February 2020

Other Resources

• Global Tobacco Industry Interference Index

References

The post Foundation for a Smoke-Free World’s Tobacco Transformation Index appeared first on TobaccoTactics.

Signals Analytics  describes its work as assisting companies by using artificial intelligence “to extract data from external sources – such as blog posts, product reviews, and patents – and transform that data into accessible, usable, and relevant insights for your business.”¹²⁶

Founded in 2009, the company has its headquarters in New York, USA, with an office in Netanya, Israel, and employs over 130 people.¹²⁷

Signals Analytics primary product, the Signals Playbook, is a cloud-based data intelligence platform.¹²⁸ The platform was recently used to study COVID-19, monitoring drugs that are being tested and tracking vaccine development.¹²⁸

The company lists Procter & Gamble, Nestle, Johnson & Johnson, Bayer, Roche, and Mars among its clients.¹²⁹ It is reportedly financed by Sequoia Capital, Qumra Capital, Pitango Growth, and TPY Capital.¹³⁰

The founders of Signals Analytics, Gil Sadeh and Kobi Gershoni, served in Israeli military intelligence units.¹³¹

Relationship with the Foundation for a Smoke-Free World

In March 2019, the Foundation for a Smoke-Free World (FSFW), which is wholly funded by Philip Morris International (PMI), awarded a US$1.6 million contract to Signals Analytics to develop a “Nicotine Ecosystem Intelligence Platform and Smoking Cessation Playbook” through 2022.¹³²

FSFW’s 2019 Annual Filings records that the contract value increased to US$2,130,000.¹³³ According to FSFW’s March 2019 board meeting minutes, Signals Analytics’ work would cover: “Data gaps in cessation rates and bring together timely data on epidemiology, product availability and public and private perceptions of nicotine”.¹³²

The Foundation described Signals Analytics’ work as “to apply cutting-edge data analytics to nicotine and its links to cessation, harm reduction and even cognitive enhancement”. It would build a business intelligence platform that would “identify, investigate and track signals, trends and opportunities in the nicotine and smoking cessation spheres”.¹³²

In practice, this entails monitoring discussions on social media and other forums, which, as the company stresses, often precede reports published in official channels such as the media or academic journals.¹³⁴¹³⁵

Addressing the board in March 2019, President of FSFW, Derek Yach, described Signals Analytics’ data platform as crucial to delivering evidence of how companies are supporting nicotine industry transformation or indeed, impeding it.¹³²

FSFW’S 2019 Annual Tax Return reported that a second phase of the platform is under development to establish an “early warning system” that will identify and analyse “adverse events related to vaping”.¹³³

That same year, a former Market Research Supervisor and Consumer Insights Executive at PMI Israel joined Signal Analytics as a Consultant, according to LinkedIn.¹³⁶ The Consultant reportedly analyses “millions of data points (Big Data) to identify growth opportunities and support Fortune 500 clients’ [of which PMI is one] marketing and innovation decisions.” It is unknown if the same consultant is engaged in the FSFW contract.

Meanwhile, Dr Shlomi Madar, Vice President of Healthcare Solutions for Signals Analytics, has been a guest on Derek Yach’s podcast.¹³⁷

EVALI and Signals Analytics

EVALI is the name for severe lung illness cases related to the use of e-cigarette and vaping products and was first identified in 2019.

As of 28 February 2020, a total of 2,807 hospitalized EVALI cases and 68 deaths were reported in the USA.¹³⁸

Signals Analytics built a data-analysis platform to extract, classify and analyse information from social media to find out what had driven EVALI reporting and the wider ramifications for the industry. It also looked to predict further such outbreaks by early identification of reporting trends.

The company found that vaping-users routinely shared their experiences on social media and on online forums for various reasons, for example seeking advice to reporting lesser-known symptoms.¹³⁵

A Signals Analytics’ research paper published in April 2020 highlighted the company’s use of its proprietary, AI-driven approach in this project.¹³⁵ Pini Matzner, senior data scientist at Signals Analytics, said: “The platform detected early public reporting of seizures associated with cannabidoil (CBD) vaping almost a year before official reports were released”.¹³⁵ Matzner delivered a presentation on advanced analytics at the 2020 Global Forum on Nicotine.¹³⁹ The Forum is run by Knowledge-Action-Change Limited (K-A-C), which is a private organisation founded by Gerry Stimson. It is also funded by the Foundation for a Smoke-Free World (FSFW).

The FSFW used Signals Analytics’ research on EVALI to supports its own arguments on the regulation of next generation products and is making use of the company’s methodolgy.¹⁴⁰¹⁴¹

Interest in China

In March 2019, the FSFW reported that Signals Analytics had been contracted to analyse three language groups: English, Japanese and Mandarin.¹³² In November 2019, China moved to ban vaping in public and online sales of e-cigarettes following public health concerns, jeopardising one of the industry’s largest markets, with over 7.4 million e-cigarette users.¹⁴² FSFW has made additional moves towards China in 2019, contracting the PR firm MarketKonnect, a subsidiary of APCO, to coordinate its activities in the country.

Relevant Links

• Signals Analytics website

Tobacco Tactics Resources

• Foundation for a Smoke-Free World
• Foundation for a Smoke-Free World Grantees

References

The post Signals Analytics appeared first on TobaccoTactics.

Philip Morris International (PMI) is the largest tobacco company in the world (excluding the Chinese National Tobacco Corporation).¹⁴³ The company is headquartered in New York in the United States (US), but also based operationally in Lausanne, Switzerland and Hong Kong. According to the Associated Press, Altria decided to separate Philip Morris USA and its international operations in order to “clear the international tobacco business from the legal and regulatory constraints facing its domestic counterpart, Philip Morris USA”.¹⁴⁴

In 2018, PMI and its subsidiaries sold its products in over 180 markets, selling cigarettes, other tobacco products and newer nicotine and tobacco products. The company reported in 2019 that it held 28.4% of the global market for cigarette and heated tobacco products (HTPS) excluding the US and China.¹⁴⁵ The company owned six of the top 15 international cigarette brands in 2018. Its global cigarette brands are Marlboro (the world’s bestselling international brand), Merit, Parliament, Virginian S, L&M, Philip Morris, Bond Street, Chesterfield, Lark, Muratti, Next and Red & White. The company reported owning a market share of at least 15% or over in 100 countries in 2018, although in the UK PMI held only fourth position for cigarette market share behind Imperial Tobacco, Japan Tobacco International (JTI) and British American Tobacco (BAT).¹⁴⁶

According to Euromonitor International, PMI’s global share of the cigarette market (by retail volume) was under 14% in 2018, and fell to 12% in 2020 (figures rounded). ¹⁴⁷

On 27 August 2019, global news outlets reported that PMI and Altria were considering a merger to reunite the brands that had split in 2007.^148149150 However the merger was called off the next month, in response to news that the FDA was considering a ban on flavoured e-cigarettes.¹⁵¹¹⁵² On March 21, 2018, PMI acquired Tabacalera Costarricense, S.A. and Mediola y Compañía, S.A. for USD$95 million, which sell Derby, Marlboro and L&M cigarettes in Costa Rica.¹⁴⁵

Employees or Board Members: Past and Present

Jacek Olczak was appointed the Chief Executive Officer of PMI in May 2021.¹⁵³ Previously he was the company’s Chief Operating Officer. He succeeded André Calantzopoulos who was appointed Executive Chairman of the Board. The previous chairman Louis C. Camilleri, stepped down in Decemer 2020. A full list of the company’s leadership team can be accessed at PMI’s website. Other persons that currently work for, or have previously been employed with, the company:

Massimo Andolina | Chris Argent | Drago Azinovic | Emmanuel Babeau | Werner Barth | Charles Bendotti | Frank de Rooij | Frederic de Wilde | Suzanne Rich Folsom | Stacey Kennedy | Martin King | Michael Kunst | Andreas Kurali | Bin Li | Marco Mariotti | Mario Massroli | Deepak Mishra | Silke Muenster | John O’Mullane | Paul Riley | Marian Salzman | Gregoire Verdeaux | Michael Voegele | Stefano Volpetti | Jerry Whitson |  Martin J. Barrington | David Bernick | Bertrand Bonvin | Harold Brown | Patrick Brunel | Mathis Cabiallavetta | Louis C. Camilleri | Andrew Cave | Herman Cheung | Kevin Click | Marc S. Firestone | John Dudley Fishburn | Jon Huenemann | Even Hurwitz | Jennifer Li | Graham Mackay | Sergio Marchionne | Kate Marley | Kalpana Morparia | Jim Mortensen | Lucio A. Noto | Matteo Pellegrini | Robert B. Polet | Ashok Rammohan | Carlos Slim Helú | Julie Soderlund | Hermann Waldemer | Stephen M. Wolf | Miroslaw Zielinski

Affiliations

Memberships

In 2019, PMI declared membership of the following organisations on the European Transparency Register:¹⁵⁴

The American Chamber of Commerce to the European Union | American European Community Association (AECA) | American Chamber of Commerce of Lithuania | Ass. Industrial Portuguesa (AIP) | Business Europe | Centromarca | CEOE | Czech Association Branded Goods | Czech Foodstuff Chamber | Economiesuisse | Estonian Chamber of Commerce | European Communities Trademark Association (ECTA) | European Policy Centre (EPC) | Kangaroo Group | Latvian Chamber of Commerce | Latvian Traders Association | Lithuanian Confederation of Industrialists | MARQUES | Spanish Tobacco Roundtable | VBO-FBE

PMI had previously listed memberships of: International Trademark Association (INTA) | The Trans-Atlantic Business Council (TABC) | | European Risk Forum | European Smokeless Tobacco Council (ESTOC) | British Chamber of Commerce | Public Affairs Council | APRAM | LES France | AmCham Germany | Bund fur Lebensmittelrecht & Lebensmittelkunde | Europaischer Wirtschaftssenat (EWS) | Wirtschaftsbeirat der Union e.V. | American Chamber of Commerce of Estonia | American Lithuanian Business Council | Lithuanian Confederation of Industrialists | Investors’ Forum | AmCham Spain | Unindustria (Confindustria) | Consumer Packaging Alliance | British Brands Group | Foodstuff Chamber The company is also a donor to the Eliminating Child Labour in Tobacco Growing Foundation (ECLT), alongside BAT, Imperial Brands, JTI and Swedish Match, among others.¹⁵⁵

In May 2015, ECLT and the International Labour Organization (ILO) entered into an agreement to develop global guidance on occupational health and safety with regards to child labour in the tobacco industry.¹⁵⁶ PMI was a member of the Confederation of European Community Cigarette Manufacturers (CECCM), but left in 2006 following a dispute with other members.¹⁵⁷

Consultancies

PMI has worked with numerous Public Relations (PR) and law consultancies:

• In 2020 and 2021 PMI released white papers and held events on public trust in science in partnership with the Industry Transformation Coalition.
• In January 2020, PMI released a white paper entitled “Unsmoke Your Mind: Pragmatic Answers to Tough Questions for a Smoke-Free Future”. The company enlisted the consulting firm Povaddo, which works across public affairs, strategy and research,¹⁵⁸ to conduct an opinion-based survey of smokers across 14 countries.¹⁵⁹ The report was heavily criticised in The Lancet medical journal (see below)¹⁶⁰ who pointed out that its findings were based on a “self-funded online survey”.¹⁶⁰ In July 2020, PMI published another white paper called “In Support of the Primacy of Science”, which was also based on online surveys conducted by Povaddo, on the public’s views on science.¹⁶¹¹⁶² In March 2021 PMI released the results of a third online survey, conducted by Povaddo in 20 countries, on public attitudes to newer nicotine and tobacco products and collaboration between governments and tobacco companies.¹⁶³ Povaddo has conducted previous research for PMI.¹⁶⁴
• In December 2019, researchers and academic institutions received invitations from the consulting firm, Handshake, to commission research on behalf of PMI on how companies navigate corporate transformation.¹⁶⁵
• In 2016, Philip Morris UK was a client of London-based PR and communications company Instinctif Partners.
• That same year, media also linked Brussels-based PR company Pantarhei Advisors to Philip Morris.
• In 2014, UK-based Media Intelligence Partners was PMI’s media contact during Sir Cyril Chantler’s plain packaging review.
• In 2014, German PR company Communications & Network Consulting AG (CNC) listed Philip Morris as a client on the EU Transparency Register.
• In that same year, Luxembourg-based Felula SA, a one-person consultancy run by Serge Estgen, listed PMI as its client on the EU Transparency Register.
• In 2013, Edinburgh-based Halogen Communications supported PMI’s opposition to Scotland’s plans to introduce Plain Packaging.
• In 2012 and 2013, PMI worked with London-based PR and media company Pepper Public Affairs on PMI’s Anti-Plain Packaging Media Campaign.
• In 2012, the UK branch of Crosby Textor Group, helped PMI oppose Plain packaging in the UK.
• Law firm Clifford Chance has a history of lobbying for PMI in the UK and European Union (EU). In 2009, the firm submitted anonymous Freedom of Information requests to a UK university on behalf of the tobacco company, and in 2011 and 2012 Clifford Chance’s Michel Petite lobbied on the EU Tobacco Products Directive.
• From 2009 to 2011 PR company Gardant Communications worked for Philip Morris UK. In 2009, the PR company supported Philip Morris’ PR Campaign Against the Display Ban and was involved in Philip Morris’ Regulatory Litigation Action Plan Against the Display Ban.
• APCO Associates‘ collaboration with PMI goes back to the 1990s when it helped the company set up the European Science and Environment Forum. More recently, it was involved in Philip Morris’ PR Campaign Against the Display Ban.
• London-based PR company INHouse Communications also played a part in Philip Morris’ PR Campaign Against the Display Ban.
• Ogilvy Group‘s collaboration with Philip Morris goes back to the 1950s when it ran one of its advertising campaigns.
• José María Aznar, the former Spanish Prime Minister (see below)

Controversial Marketing Strategies

Since its controversial “Be Marlboro: Targeting the World’s Biggest Brand at Youth” campaign in 2014, PMI have been accused on multiple occasions of targeting their products at young people. On its website, PMI says that it is “committed to doing our part to help prevent children from smoking or using nicotine products”. ¹⁶⁶ It further states that its “marketing complies with all applicable laws and regulations, and we have robust internal policies and procedures in place so that all our marketing and advertising activities are directed only toward adult smokers”.¹⁶⁶ Despite these assurances, PMI has been accused of, and fined for, running marketing campaigns that target young people. For more information see Be Marlboro: Targeting the World’s Biggest Brand at Youth. PMI has increasingly used social media to market its newer products, including e-cigarettes (also known as electronic nicotine delivery systems, or ENDS) and heated tobacco products.

• For more information on PMI’s newer, including IQOS, visit Newer Nicotine and Tobacco Products: Philip Morris International and Heated Tobacco Products: Philip Morris International.

In December 2023 The Times newspaper highlighted PMI’s role in third party campaigns promoting e-cigarettes in the UK.¹⁶⁷ For more information visit the Foundation for a Smoke-Free World page.

Complicity in Tobacco Smuggling

PMI portrays itself publicly as a victim of illicit tobacco trade, with the company reporting that tobacco smuggling results in “considerable financial losses” and “damage” to manufacturers’ brands.¹⁶⁸ To help tackle illicit trade, PMI launched a funding initiative called PMI IMPACT in 2016, worth US$100m and aimed at bringing together “organisations that fight illegal trade and related crimes, enabling them to implement solutions”.¹⁶⁹¹⁷⁰ In its first call for proposals in 2016, PMI asked for “projects that have an impact on illegal trade and related crimes in the European Union…”¹⁷¹ The second call, made in 2017, expanded the areas of focus to include the Middle East, North Africa, South and Central America and South and Southeast Asia.¹⁷² For more information, visit our page on PMI IMPACT. In contrast to the company’s public persona of being part of the smuggling solution, evidence shows that the company was, in fact, part of the problem. In 2000, the European Commission (backed by a majority of EU member states) started court proceedings in the US Courts against PMI and other tobacco companies for its complicity in tobacco smuggling. The Commission claimed that the tobacco companies “boosted their profits in the past by deliberately oversupplying some countries so that their product could be smuggled into the EU”, costing the EU millions of euros in lost tax and customs revenue.¹⁷³¹⁷⁴ PMI and the Commission settled their dispute in 2004, when the company agreed to pay the Commission £675m to fund anti-smuggling activities.¹⁷⁵ The two Parties signed an Anti-Counterfeit and Anti-Contraband Cooperation Agreement,¹⁷⁶ referred to by the company as Project Star. As part of this agreement, PMI commissioned KPMG to measure annually the size of the legal, contraband and counterfeit markets for tobacco products in each EU Member States. Project Star’s methodology and data have been strongly criticised for lack of transparency, overestimating illicit cigarette levels in some European countries, and serving PMI’s interests over those of the EU and its member states.¹⁷⁷

Tactics to Subvert Tobacco Control Campaigns and Policies

PMI has strongly opposed tobacco control legislation and regulations across the world, including plain packaging in Australia and the UK, the EU Tobacco Products Directive (TPD), and tobacco control decrees in Uruguay. The company has used a variety of strategies and tactics to influence tobacco control policies and subvert existing regulations.

Funding Pro-Tobacco Research and Discrediting Independent Evidence

In response to plain packaging proposals in the UK, PMI funded research, expert opinion and public relations activities which supported its position. One of the people that PMI funded for this purpose was Will O’Reilly, a former Detective Chief Inspector with the London Metropolitan Police. O’Reilly was appointed as a PMI consultant in 2011,¹⁷⁸ conducting undercover test purchases of illicit tobacco and publicising his findings in UK regional press.¹⁷⁹ One of PMI’s arguments to oppose plain packaging was that the public health measure would lead to an increase in illicit tobacco, including counterfeited plain packs. For background on, and a critique of, this argument, go to Countering Industry Arguments Against Plain Packaging: It will Lead to Increased Smuggling. O’Reilly’s test purchases appear to have enabled PMI to secure significant press coverage of its data on illicit tobacco.¹⁸⁰ In March 2019, Euromonitor International, a market research organisation, received funding through two PMI initiatives: the Foundation for a Smoke-Free World and PMI IMPACT.^181182183 Examples of other organisations and individuals that have received funding from PMI to produce research or expert opinions or critiques of independent evidence, in order to oppose tobacco control legislation are: Deloitte | KPMG | Transcrime | Roy Morgan Research | Ashok Kaul | Michael Wolf | Populus | Centre for Economics and Business Research¹⁸⁴¹⁸⁵ | Compass Lexecon¹⁸⁶ | Rupert Darwall¹⁸⁷ | James Heckman¹⁸⁸ | Lord Hoffman¹⁸⁹ | Alfred Kuss¹⁹⁰ | Lalive ¹⁹¹ | LECG^192193194 | London Economics | Povaddo¹⁶⁴| SKIM Consumer Research¹⁹⁵

• To see a list of all organisations funded through PMI’s Foundation for a Smoke-Free World (FSFW), visit our pages on the FSFW’s Centres of Excellence and grantees.
• For more information on the tobacco industry’s use of research to undermine legitimate independent evidence see: Plain Packaging in the UK: Tobacco Industry Funded Research, Expert Opinion and Public Relations.

Using Freedom of Information Requests to Acquire Public Health Research Data

Freedom of Information (FOI) requests are one strategy that the tobacco industry uses to undermine tobacco control legislation, often covertly using third parties.¹⁹⁶ In 2009, and again in 2011, PMI sent Freedom of Information requests to Stirling University (UK) requesting access to a wide range of data from its research on teenage smoking. PMI alleged that it wanted “to understand more about the research project conducted by the University of Stirling on plain packaging for cigarettes”.¹⁹⁷ The FOI requests were eventually dropped. For more information on these FOI requests, and an explanation on how these requests impacted the University of Stirling, go to our page FOI: Stirling University.

Fabricating Support through Front Groups

PMI has used front groups to oppose tobacco control measures. Front Groups are organisations that purport to serve a public interest, while actually serving the interests of another party (in this case the tobacco industry), and often obscuring the connection between them. In Australia, leaked private documents revealed that the supposed anti-plain packaging retailer grass roots movement, the Alliance of Australian Retailers was set up by tobacco companies and that the Director of Corporate Affairs Philip Morris Australia, Chris Argent, played a critical role in its day-to-day operations.^198199200

• For more information on this front group, and Philip Morris Australia’s involvement, visit the Alliance of Australian Retailers page.
• For more information on front groups funded and/or organised by PMI and other tobacco companies, see the list on the Expose Tobacco website.

Lobbying of Decision Makers

Article 5.3 of the The World Health Organization Framework Convention on Tobacco Control (WHO FCTC) explicitly aims to reduce industry influence in public health policymaking by obliging parties to protect their health policies from tobacco industry interests and interference.²⁰¹ Yet tobacco industry representatives, and third-parties regularly attempt to influence public health policymaking in the industry’s favour. This section details some of these incidents involving PMI and the response of the governments and the global health community.

EU

PMI reported that it spent between €1,250,000 and €1,499,999 in 2019 lobbying EU institutions, employing only 2 fulltime equivalent staff in its Brussels office.¹⁵⁴ If this data is correct, it suggests that PMI relied heavily on external lobbying firms. A 2013 leaked internal PMI document revealed that the company had 161 lobbyists working to undermine the revision of the EU Tobacco Products Directive (TPD).²⁰² The objective of PMI’s campaign was to either “push” (i.e. amend) or “delay” the TPD proposal, and “block” any so-called “extreme policy options” like the proposed point of sales display ban and plain packaging.²⁰³

• For more information on PMI’s campaign to undermine the TPD, go to EU Tobacco Products Directive Revision and PMI Mobilised Support from Retailers.

UK

The leaked internal PMI documents from 2013 also revealed the extent of a multi-faceted campaign against Plain Packaging in the UK, including a detailed media campaign using dozens of third parties (both individuals and organisations) to promote its arguments against the policy. The documents also included a detailed political analysis of potential routes of influence for the tobacco company (Image 1).¹⁷⁸

One third party appointed in November 2011 to help PMI oppose the plain packaging proposal was the Crosby Textor Group. This appointment led to a conflict of interest scandal, given that Lynton Crosby co-Director of the Crosby Textor Group, was also the political election strategist for the UK’s Conservative Party, which was in power in the UK. David Cameron, then Prime Minister, insisted that Crosby never lobbied him about plain packaging. ²⁰⁴²⁰⁵ Despite a lack of evidence that Crosby lobbied the Prime Minister and Health Minister on plain packaging, documents released under FOI legislation, obtained by the University of Bath Tobacco Control Research Group, show that Crosby lobbied the UK Government on plain packaging via Lord Marland, the then Parliamentary Under Secretary of State for Intellectual Property, to oppose plain packaging. For more information on this lobbying scandal, go to Lynton Crosby’s page.

• For more detail on PMI’s attempts to undermine plain packaging proposals in the UK, visit: PMI Mobilised Support from Retailers | PMI’s Anti-Plain Packaging Lobbying Campaign | PMI’s Anti-Plain Packaging Media Campaign | PMI’s “Illicit Trade” Anti-Plain Packaging Campaign
• For information on the tobacco industry’s tactics to undermine this tobacco control measures, visit our pages on: Plain Packaging in the UK: Tobacco Company Opposition | Plain Packaging in the UK: Tobacco Industry Funded Research, Expert Opinion and Public Relations | Plain Packaging in the UK: Tobacco Industry Built Alliances | Plain Packaging in the UK: Tobacco Industry Funded Third Party Campaigns
• PMI also opposed the tobacco product display ban gradually introduced in the UK from 2012. More information on PMI’s tactics to stop this measure, see: Philip Morris’ PR Campaign Against the Display Ban

Australia

Australia has one of the least hospitable regulatory environments for the tobacco industry, having passed regulations banning advertising since 1976, a point of sale ban in 2011, and a plain packaging law in 2012. It also has regulation in place to prevent the sale of nicotine products, including e-cigarettes and HTPs.²⁰⁶

The industry has not, however, given up on attempting to market its products and lobby decision makers across the country. In a 2019 article, the Sydney Morning Herald reported that Tammy Chan, Managing Director of PMI Australia, New Zealand and the Pacific wrote letters to health organisations urging them to enter into a “dialogue” on PMI’s “smoke-free” vision in the lead up to a parliamentary select committee meeting on the impact of e-cigarettes on “personal choice”.²⁰⁷

In March 2019, PMI was accused of “subliminal advertising” in its sponsorship of the Ferrari Formula One team during the Australian Gran Prix in Melbourne. PMI has been accused of attempting to evade advertising bans by sponsoring motorsports teams.

• For more information see Motorsport Sponsorship

Latin America

José María Aznar, the former Prime Minister of Spain, has been widely reported by media outlets as having taken up a position as a lobbyist for PMI in Latin America.^208209210211

• For more information on his meetings with public officials in Chile and Peru, as well as his history of association with the tobacco industry while in office, see our page on José María Aznar.

Intimidating Governments with Litigation or Threat of Litigation

PMI has legally challenged tobacco control regulations across the globe, including:

• Comprehensive No Smoking Ordinance (2010 and 2016) and Tobacco-Free Generation Ordinance (2016) in Balanga, Philippines. A front group for the world’s biggest tobacco companies, including PMI, called the Philippine Tobacco institute (PTI) sued the city of Balanga in August 2017 over the Comprehensive No Smoking Ordinance, which it argued was “arbitrary and oppressive” and cost PMI USD$420,000 a month in lost sales. In July 2018, regional courts ruled in PTI’s favour, noting that although the city’s tobacco control efforts were “commendable”, they were also unconstitutional. PTI launched another lawsuit in May 2018 to challenge the constitutionality of the city’s Tobacco-Free Generation Ordinance.²⁰⁷
• The Cigarettes and Other Tobacco Products (Packaging and Labelling) Second Amendment Rules, 2018 text and pictorial health warnings law in India. PMI affiliate Godfrey Phillips India sought a stay of implementation of new legislation requiring health warnings to increase to cover 85% of the surface of cigarette packaging, from the High Court of Karnataka in Bangalore, India. The Court rejected the request for stay in August 2018. The legality of the Rules themselves was at the time pending in the Supreme Court.²¹³
• The May 20, 2016 Decree plain packaging law in France. In December 2016, the Conseil d’Etat (the Council of State, the highest administrative jurisdiction in France) dismissed a six-part legal challenge jointly brought against the plain packaging law by JTI, Philip Morris France, BAT France, a tobacco paper manufacturer and The National Confederation of Tobacco Retailers of France (Confédération Nationale des Buralistes de France).²¹⁴
• In 2013, the mayor of Popayán, a city in southwestern Colombia, issued a decree prohibiting tobacco sales within 500 metres of schools, libraries and health institutions. Following heavy lobbying from Coltabaco, a Philip Morris affiliate, the radius was decreased to 200 metres. Coltabaco sued Popayán in March 2015, arguing that a mayoral decree was insufficient to effect legitimate regulation. Coltabaco won its lawsuit in September 2015.²¹⁵
• The Standardised Packaging of Tobacco Products Regulations 2015 (UK). Following the passage of the legislation in March 2015, PMI and others launched a legal action, which it lost in May 2016 (the day before the legislation was due to come into force).²¹⁶²¹⁷
• The 2014 EU Tobacco Products Directive (TPD). PMI and BAT attempted to invalidate the TPD as a whole, or various provisions within it, but this legal challenge was dismissed in the European Court of Justice in May 2016.²¹⁸ More details can be found on the page TPD: Legal Challenges.
• The Ministry of Public Health Notice of Rules, Procedures, and Conditions for the Display of Images, Warning Statements, and Contact Channels for Smoking Cessation on Cigarette Labels of 2013 (Thailand). In July 2013, Philip Morris Thailand and Japan Tobacco International (JTI) Thailand requested a temporary injunction against an increase of picture and text health warnings from 55 to 85 percent of the front and back of cigarette warnings. Though their request was initially granted in August 2013 in the Central Administrative Court of Thailand, the injunction was reversed in May 2014 by the Supreme Administrative Court following appeal by the government. PMI and JTI ultimately withdrew their legal challenge.²¹⁹
• Following heavy criticism of its “Be Marboro” campaign worldwide (see below), Germany banned PMI from displaying “Be Marlboro” advertising in the country. A German court overturned the ban in 2015, stating that the wording of the advertisements did not explicitly target younger than legal age smokers.²²⁰
• National Systems of Health Oversight RDC No. 14/2012 Brazil. The Brazil Health Regulatory Agency’s (ANVISA) resolution No. 14 banned tobacco additives and flavours. The National Confederation of Industry (Confederação Nacional da Indústria) challenged the ban as an unconstitutional use of regulatory power. In February 2018, the highest court in Brazil, the Supreme Federal Tribunal, upheld the 2012 ban and reaffirmed the right of ANVISA to regulate tobacco products.²²¹
• The Tobacco Plain Packaging Act 2011 (Australia). PMI fiercely opposed the legislation, fearing that it might set a global precedent. The company fought this legislation unsuccessfully on three fronts:
  • World Trade Organization (WTO) challenge: In 2014, PMI supported a request by the Dominican Republic government before the WTO Dispute Settlement Body, alleging that Australia’s plain packaging laws breach the WTO’s General Agreement on Tariffs and Trade (GATT), Agreement on Technical Barriers to Trade (TBT) and agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).²²² Similar requests were submitted by Ukraine, Cuba, Indonesia and Honduras, and furthermore, a record number of more than 40 WTO members joined the dispute as third parties.²²³
  • Constitutional challenge: In March 2012, PMI supported a claim made by British American Tobacco (BAT) in December 2011 before the Australian High Court that plain packaging was in breach of the Australian constitution.²²⁴ On 15 August 2012, the Hight Court ruled that plain packaging was not in breach with the Australian constitution as there had been no acquisition of property as alleged by the tobacco companies.²²³
  • Bilateral Investment challenge: In 2011, PMI started legal proceedings against the Australian government for allegedly violating the terms of The Australia – Hong Kong Bilateral Investment Treaty.²²⁵ In December 2015, The Permanent Court of Arbitration issued a unanimous decision that it had no jurisdiction to hear the claim. For more information on all three claims go to Australia: Challenging Legislation.
• Executive Decree No. 611 passed on 3 June 2010 in Panamá. Philip Morris Panamá joined onto a claim of unconstitutionality brought by British American Tobacco (BAT) against a ban on tobacco advertising, promotion and sponsorship (TAPS) and tobacco product display at the point of sale. BAT Panama claimed the ban violated freedom of expression and property rights, among others. The Supreme Court ruled in May 2014 against BAT, noting that, among other things, freedom of expression could be restricted in order to protect public health.²²⁶
• 2010 Amendment to the 1973 Act relating to the Prevention of the Harmful Effects of Tobacco (the Tobacco Control Act) in Norway. The Norwegian display ban on tobacco products came into effect on 1 January 2010 after an amendment was passed by the government in favour of the prohibition of visible tobacco products, smoking accessories and vending machines of tobacco products. PMI unsuccessfully challenged the ban as imposing a barrier to trade; the Oslo District court ruled in favour of the display ban in September 2012.²²⁷
• Ordinance 514, dated 18 August 2008, and Decree 287/009 dated 15 June 2009 (Uruguay). PMI unsuccessfully challenged the Uruguayan Tobacco Control Act which included a mandate for 80% health warnings on tobacco packets. The case was decided in favour of public health in 2017.²²⁸ PMI brought its claim under the Switzerland-Uruguay Bilateral Investment Treaty at the World Bank’s International Center for Settlement of Investment Disputes. The tribunal ruled in favour of Uruguay in July 2016.²²⁹

Newer Nicotine and Tobacco Products

As the harms from conventional products have become better understood, and tobacco control measures have been put in place, the cigarette market – from which tobacco companies make most of their profits – has started to shrink. To secure the industry’s longer-term future, transnational tobacco companies (TTCs) have invested in, developed and marketed various newer nicotine and tobacco products.²³⁰  

In January 2017, PMI issued a press release which stated that the company intended to move its business away from conventional tobacco products entirely (see Image 2).²³¹ The company’s much publicised vision for a “smoke-free” future is one in which PMI plays a central role in “[providing] better alternatives to smoking for those who don’t quit”.¹⁴⁵ Integral to this vision was the release of IQOS in 2014. By 2016, PMI was the market leader in heated tobacco products (HTPs), accounting for over 99% of the global HTP market.²¹² By 2018, PMI’s share of the global HTP market had fallen to around 80%.²¹²²³² PMI reported that by the end of 2019, IQOS was available in 52 markets, including the United States (US), and a number of lower income countries.²³³

• For more information on IQOS and PMI’s newer products see Newer Nicotine and Tobacco Products: Philip Morris International and Heated Tobacco Products: Philip Morris International.
• See also PMI’s Promotion of IQOS Using the FDA’s 2020 Modified Risk Tobacco Product (MRTP) Order

In April 2019, a life insurance company Reviti was launched. Registered in the UK at Companies House, Reviti is a wholly owned subsidiary of PMI.²³⁴²³⁵ The London-based company specialises in offering policies to smokers, with discounts for those who reduce or switch to PMI’s newer products.²³⁶

In May 2022, PMI made an offer of US$16 billion deal to acquire Swedish Match, a manufacturer of snus and nicotine pouches, as well as chewing tobacco, snuff and cigars.²³⁷²³⁸ Swedish Match had planned to sell its cigar business but these plans were put on hold in March 2022.²³⁹ PMI CEO Jacek Olczak said of the deal: “An important aspect of this proposed combination is the opportunity in the U.S., which is the world’s largest market for smoke-free products.”²⁴⁰PMI is also hoping to significantly increase its market share of newer nicotine products in Europe and Asia.²⁴¹ 

As of 28 November 2022, PMI had acquired over 90% of Swedish Match, gaining control of the company and enabling it to buy the remaining shares and take Swedish Match off the stock market.²⁴²²⁴³

• For details see Swedish Match

Tobacco companies, including PMI, also invest in therapeutic products, such as nicotine lozenges, gum and inhalers. More information can be found on this page: Tobacco Company Investments in Pharmaceutical & NRT Products

“Smoke-Free” Campaigns

PMI has run various “smoke-free” campaigns promoting its newer products, including “Hold My Light” (UK); “Unsmoke Your World” (global); “It’s Time” (targeting policy makers); and “Futuro sin Humo” (in Mexico).

• For details see: Philip Morris International: “Smoke-Free” campaigns

Participation in Global Platforms to Rehabilitate Image

PMI has attempted to gain access to many high-level international events as a means of “rehabilitating its image and securing influence over global institutions and policy elites”. Since January 2019, PMI presence has been documented at:²¹²

January 2019

• World Economic Forum (WEF; Davos, Switzerland): PMI launched its first “white paper” to coincide with WEF. Though it was not an invited guest, PMI held a side-event co-hosted by the Wall Street Journal, and sponsored the Davos Playbook, Politico’s daily newsletter distributed to attendees.

June 2019

• (Group of 20) G20 Summit (Osaka, Japan): PMI took out a two-page advertisement in The Japan Times promoting its corporate transformation and reiterating the need for dialogue between decision-makers and industry.
• Cannes Lions International Film Festival of Creativity (Cannes, France): PMI attended Cannes to talk about newer tobacco products and potentially recruit celebrity activists to its cause.²⁴⁴ In addition, PMI had its own schedule of events, hosted by actress Rose McGowan and rapper Wycliff Jean. It also spoke in the festival’s Good Track stream alongside organisations including Greenpeace and UN Women. The decision to include PMI on the Good Track was heavily criticised in the light of “the ethics of proclaiming a smoke-free philosophy while continuing to sell billions of cigarettes a year”.²⁴⁵²⁴⁶

October 2019

• United Nations General Assembly (UNGA; New York City, USA): Though barred from participating directly in the UNGA, PMI hosted a parallel event at Concordia, a high-level event to foster partnerships between businesses, governments and UN agencies. In attendance were officials from the UN’s World Food Program, the UN Foundation and the World Bank as well as PMI’s Vice President of Global Partnerships and Cooperation, who spoke at the event. Bob Eccles, a paid PMI advisor, spoke at the UNGA during a side event on Exclusion and Engagement in Sustainable Investing.

TobaccoTactics Resources

• PMI Mobilised Support from Retailers
• PMI’s Anti-Plain Packaging Lobbying Campaign
• PMI’s Anti-PP Media Campaign
• PMI’s “Illicit Trade” Anti-Plain Packaging Campaign
• PMI IMPACT
• Philip Morris vs the Government of Uruguay
• Philip Morris’ PR Campaign Against the Display Ban
• Philip Morris’ Regulatory Litigation Action Plan Against the Display Ban
• Philip Morris’ Marlboro Brand Architecture
• Codentify
• Motorsport Sponsorship
• Digital Coding & Tracking Association (DCTA)
• Foundation for a Smoke-Free World
• Foundation for a Smoke-Free World: How it Frames Itself for a detailed analysis of the ways in which the Foundation portrays itself and those who oppose the Foundation, plus the counter evidence to these portrayals
• Foundation for a Smoke-Free World People
• Foundation for a Smoke-Free World Grantees
• Foundation for a Smoke-Free World Centres of Excellence
• Newer Nicotine and Tobacco Products: Philip Morris International
• Heated Tobacco Products: Philip Morris International

Relevant Links

• Read the STOP report: Addiction At Any Cost: The Truth About Philip Morris International
• Philip Morris International company website
• Cancer Council Australia’s Critiques of KPMG Australia illicit tobacco trade reports
• Foundation for a Smoke-Free World website
• PMI Impact website

TCRG Research

• The Philip Morris-funded Foundation for a Smoke-Free World: tax return sheds light on funding activities, T. Legg, S. Peeters, P. Chamberlain, A. Gilmore, The Lancet, 2019, 393(10190):2487-2488
• The revision of the 2014 European tobacco products directive: an analysis of the tobacco industry’s attempts to ‘break the health silo’, S. Peeters, H. Costa, D Stuckler, M. McKee, A. Gilmore, Tobacco Control, 2016, 25(1):108-117
• ‘It will harm business and increase illicit trade’: an evaluation of the relevance, quality and transparency of evidence submitted by transnational tobacco companies to the UK consultation on standardised packaging 2012, K. Evans-Reeves, J. Hatchard, A. Gilmore, Tobacco Control, 2015, 24(e2):e168-e177
• Illicit trade, tobacco industry-funded studies and policy influence in the EU and UK, G, Fooks, S. Peeters, K. Evans-Reeves, Tobacco Control, 2014, 23(1):81-83
• Transnational tobacco company interests in smokeless tobacco in Europe: Analysis of internal industry documents and contemporary industry materials, S. Peeters, A. Gilmore, PLoS Medicine, 2013, 10(9):1001506
• Towards a greater understanding of the illicit tobacco trade in Europe: a review of the PMI funded ‘Project Star’ report, A. Gilmore, A. Rowell, S. Gallus, A. Lugo, L. Joossens, M. Sims, 2013, Tobacco Control, doi:10.1136/tobaccocontrol-2013-051240

For a comprehensive list of all TCRG publications, including research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

The post Philip Morris International appeared first on TobaccoTactics.

Consultancy

To recruit supposedly independent experts who are critical of tobacco control measures.
WHO Definitions of Tobacco Industry Tactics for resisting effective tobacco control, 2009.”

The tobacco industry has a history of using Think Tanks, scientists or other consultants to work on their behalf. Paying for research and for endorsement from medical doctors, for instance, as explored on the Influencing Science page, is also a form of hired help and third party techniques. Recent examples of hiring so-called independent experts include the industry’s use of this tactic to oppose the UK government’s policy on the Display Ban or on Plain Packaging.

• For a list of pages in this category, see Hiring Independent Experts
• See Third Party Techniques for more information on other similar industry tactics

Hiring Independent Experts
Third Party Techniques
Influencing Science
Think Tanks
Challenging Legislation

References

The post Hiring Independent Experts appeared first on TobaccoTactics.