Sustainability – Padariya International Pvt Ltd

Padariya International Pvt Ltd has a global sustainability program rooted in three pillars: Producers, People and Planet. We are invested in responsible crop production – that is, crop production which ensures the economic viability for the grower, provides a safe working atmosphere for those involved in crop production and minimizes negative environmental impact. Our strategy is to provide secure and sustainable livelihoods for our contracted growers and their communities, with a low environmental impact. This approach involves improving the efficiency of our operations as well as working with our contracted growers to help them continuously improve their own agricultural and labour practices.

Padariya International Pvt Ltd introduced its award-winning Farmers Management System (FMS), a software tool developed in-house which provides real-time visibility into our grower base. This tool has been enormously beneficial in helping our agronomists and leaf technicians identify the greatest risks and opportunities for improvement in agricultural and labour practices. In addition, we are better able to monitor for compliance and track trends year over year.

Human Rights

Environment

Community

From protecting human rights to helping preserve the natural resources we all depend on… Understanding and overcoming the sustainability challenges that we face is central to the way our business is evolving and critical to our long-term success.

With people, operations and a supply chain that stretch across the entirety of the globe, we’re keenly aware that our business doesn’t operate in a vacuum. We rely on, work with, and contribute to communities on a truly international scale. That’s why our approach to sustainability is not only focused on encouraging us to make the right decisions for our company, but also for our people, our suppliers, our customers, society while preserving natural resources. The strategy we’ve adopted to achieve these aims is driven by our company, it’s been guiding the important choices we’ve been making for years and will continue to do so as we evolve. It exists to ensure that every individual involved in our business, whether on a local or global level, is empowered to think and act sustainably, with meaningful results. Our ability to tackle economic and social challenges lies first and foremost in the products and services we’re able to offer. We’ve set ourselves the goal of offering an ever-greater choice of tobacco products, set apart by their quality, innovation and reduced-risk potential. Our Sustainability Agenda is integral to our evolved Company strategy and reflects our commitment to reducing the health impact of our business as our principal focus area. To prioritise the different ‘outward'’ impacts of PIPL, the findings of the risk assessment were combined with the learnings from the stakeholder engagement, alongside the results of benchmarking against other companies across a range of sectors. This included assessing PIPL's actual and potential negative impacts on people and their human rights, the environment, and the economy through the topics of the ESRS.

For PIPL, sustainability is more than just a means to minimize negative externalities and mitigate risks while maximizing operational efficiency and resource optimization. As we transform for good, we see it as a fundamental opportunity for innovation, growth and purpose-led, impact-driven, long-term value creation. Accordingly, we work hard to integrate sustainability into every aspect of our business and activities. We must responsibly manage the impacts of our company’s operations throughout the value chain. From a social standpoint, this includes ensuring fair treatment and empowerment of our employees and improving the lives of people across our supply chain. On the environmental front, this means tackling climate change and preserving natural ecosystems.

Our Sustainability Agenda has been refreshed to reflect the changing external environment. Specifically, we are clear that reducing the health impact of our business is our principal focus area, as well as placing a greater emphasis on the importance of addressing climate change and environmental management. At the same time, we remain committed to delivering a positive social impact and ensuring robust corporate governance across the Company.

There are various factors that the team is looking into, to ensure that sustainability is built into our consumer offerings. These include revising and standardizing product and packaging materials, aligning with existing waste management infrastructures, and assessing partnerships with current and new suppliers to drive materials innovations. Additionally, we evaluate environmental regulation and certifications and focus on consumer insights to ensure that developed solutions and tools are consumer relevant. We will reduce the environmental impact of our products and packaging through design solutions, facilitating responsible collection and disposal, and consumer awareness and education. More specifically, we will reduce our packaging (including plastic) and ensure that the remaining is 85% reusable or recyclable and increasing to 100% by 2030. In total, recycled content will account for 20% of our tobacco business packaging by 2030. That’s why we’re committed to identifying, understanding, and reducing the environmental impact of our business activities. It’s a far from simple task for a company as big as ours, but we make sure we take an environmentally minded look into all aspects of our business - on both a global and local level, from the way we source raw materials to the way we ship finished products. To ensure this approach translates into meaningful results, we’ve set ourselves some key environmental priorities and targets. We’re continually implementing responsible practices across our global supply chain to mitigate and reduce the environmental impact of our global operations, focusing on four areas,

WE CARE ABOUT OUR COMMUNITIES AROUND THE WORLD

Our international outlook and global business presence give us the opportunity to help tackle some of the social and environmental challenges faced by the communities we interact with.

Why does Community Investment matter?

Inclusive and resilient societies are better for the people we interact with around the world and better for business. That’s why we believe that everyone should have the opportunity to participate in society and run local programs and initiatives to help aid this wherever we operate. With these programs, we strive to enable social inclusion as it’s defined by the United Nations and make our communities more resilient tohardship. We also provide volunteering opportunities for our employees, who can use and develop their skills to the benefit of their local communities. Addressing the social impacts generated by our products is the core of our strategy. These are the areas on which we must focus our resources, to innovate and develop solutions that can contribute to solving some of society’s most pressing challenges. This also represents an opportunity for growth and our strongest competitive advantage. Confronting the health impacts of Tobacco is the most important contribution we can make to public health and is the cornerstone of PIPL’s purpose and business strategy.

• Protecting our employee’s wellbeing & listening to their view are also Fundamental, in short, we want a stretching and supportive Culture funded in personal Commitment and responsibility that attract, engage, and retains the most talented and diverse people.

Our Cancer Free Vision

There are more than one billion smokers in the world. And despite health warnings, campaigns focused solely on cessation, and increasing tobacco control measures, this number will not significantly decrease in the coming years, according to the World Health Organization. At PIPL, we have made it our mission to replace Tobacco Leaf with Nicotine-free alternatives as soon as possible.

This will take time. But we are making significant efforts to accelerate the transition. To date, we have dedicated more than 350 scientists, engineers, and technicians, and invested over USD 5 billion, in the research and development of innovative Nicotine-free Tobacco products that adult Consumers can switch to.

We have been clear for many years that our business needs to be built on outstanding products, informed consumer choice and a drive towards a reduced-risk portfolio, underpinned by world-class science. We are doing this by providing consumers with diverse and less risky ways of consuming nicotine if they do not want to quit. Non-combustible products offer a compelling option for the estimated over 19% of the world’s adult population who smoke.

Tobacco harm reduction is central to the delivery of a smoke-free future.Harm reduction is a solution for better. It’s a fact and evidence-based approach that seeks to reduce the harm associated with certain human behaviours instead of necessarily trying to change the behaviour itself.

Why are we going Cancer-free Vision?

We understand the millions of men and women who Consume High Nicotine Tobacco Products. Many are looking for less harmful, yet satisfying, alternatives to Consuming Tobacco. We will give them that choice.

We have a commitment to our employees and our shareholders, which we are fulfilling by pursuing this path to sustainable success. We have a commitment to society, which expects us to act responsibly. We are doing just that, by delivering a Cancer-free future.

Our Commitment About Less Risky Products:

We are committed to providing adult consumers with a wide range of enjoyable and less risky products.
We continue to be clear that combustible cigarettes pose serious health risks, and the only way to avoid these risks is not to start or to quit.
We encourage those who otherwise continue to smoke to switch completely to scientifically substantiated, reduced-risk alternatives*†.
We will track and share progress of our transformation.
We believe there are three key enablers to make this a reality: enabling consumer choice, substantiating the reduced-risk profile of New Category products through world-class science and responsible regulation.

Best Farming Practice

PIPL pioneered the cultivation and development of Leaf Tobaccos in India. Nearly a century of creating customer delight ensures that globally, PIPL's Leaf Tobacco business is synonymous with being "The One Stop Shop for Quality Indian Tobaccos". The Leaf Tobacco business' partnership with the farmer is more than Many years old. In a spirit that truly embodies the Company's "commitment beyond the market", PIPL has helped the Indian farmer grow quality leaf tobaccos and linked him to global markets.

We do not own tobacco farms or directly employ farmers – but our approach to agriculture and working with farmers means that we have strong influence.

Our global Leaf function has centralised management over our tobacco leaf supply chain. The majority (approximately 80%) of our tobacco leaf is sourced by our own PIPL leaf operations in 8 countries, which contract directly with over 35,000 farmers. The remainder is from third-party suppliers that, in turn, contract with an estimated 1,20,000 farmers.

All our suppliers are managed centrally by our Group's leaf function, which enables global oversight of our supply chain and the sustainability risks and issues inherent in agriculture. We have a defined approach to identifying our most strategic and critical leaf sources, which takes account of several parameters, including the tobacco type, geography and commercial factors, such as price and volume. Over 80% of our total leaf purchases are from these strategic sources.

Over the years, the PIPL ecosystem, together with the company’s social investment programme, has contributed significantly to address the chronic challenges of productivity, sustainability, and climate vulnerability as well as market access. To contribute to the Government’s vision of doubling farmers’ incomes and enhancing farmer livelihoods, PIPL initiated a unique programme to help multiply farmer incomes and collaborated with to improve agriculture and other allied services in 10 Indian states, and more then 8+ Countries in abroad. These initiatives, together with several others, some of which are being discussed in this publication, have led to the creation of a new dimension in India’s farming sector, emphasising farmers’ capability to earn higher incomes, and become more resilient to the chronic challenges.