Pakistani human rights impact evaluation

Human rights are inherent to the dignity of human life and a prerequisite for society to prosper. As a global company, we work to uphold human rights within our organization and across our value chain.

To strengthen our due diligence framework, proactively identify risks, and mitigate potential adverse impacts, we have set an ambition to conduct human rights impact assessments (HRIAs) by 2025 in the 10 highest-risk countries in which we operate. In 2023, we partnered with Article One, our external expert advisors, to carry out our eighth country-level HRIA in Pakistan covering our local affiliate’s operations and tobacco leaf supply chain.

Pakistan faces significant socioeconomic challenges, and the country typically scores low on international human rights indicators (such as the United Nations Development Index, the Fund for Peace Fragile State Index, or the Cato Institute Human Freedom Index). The country is also grappling with the ongoing effects of floods in 2022, which led to the displacement of close to eight million people. In addition, gender discrimination is deeply rooted there, and women face barriers in accessing healthcare and education; nearly 60 percent of children not attending school are girls, and four out of five of these girls live in rural areas.1

With this context in mind, and with the aim to progress PMI’s human rights strategy through a collaborative process, we conducted a gender-sensitive HRIA in Pakistan during 2023, leveraging on sound internal and external stakeholder engagement.

Summary of the HRIA methodology

The HRIA combined desktop research with remote and in-person interviews and focus groups (involving over 100 individuals in total) to help surface country-level human rights risks.

As part of the desktop research, Article One considered PMI group-wide and any additional relevant local policies and sustainability disclosures, as well as credible independent human rights risk reports relating to Pakistan, and other third-party resources. This research helped surface an initial assessment of country-level human rights risks, which is linked to the context in which companies operate in. The second step was initial stakeholder engagement through remote interviews with Philip Morris (Pakistan) Limited (PMPKL) management and suppliers. These interviews contributed to the overall understanding of the local context and enabled the in-country visit to center on direct stakeholder engagement through focus groups with permanent employees, third-party workers on PMPKL sites, leaf farmers and farm workers. In carrying out interviews with all focus groups, our external advisors ensured that participants understood it was a safe space for discussion and that nothing they said would be attributed to them personally. Independent translators assisted our external advisors and the focus groups’ participants.

These engagements allowed Article One to compile key findings, including both risks and positive impacts, and to set actionable recommendations. As with any other HRIA we have completed at PMI, the local management in Pakistan reviewed and analyzed the findings and built up a comprehensive action plan to address the risks and issues identified. This action plan will be subject to status updates twice per year to ensure timely implementation.

Overview of the key findings of the HRIA
The scope of the HRIA in Pakistan included the Head Office, selected sales offices, the two factories in Mardan and Sahiwal as well as the leaf supply chain. Efforts to conduct the in-county visit around the time of the harvesting season were made to ensure that the two factories were in operation. To ensure the security of foreign consultants and colleagues, PMPKL’s security and market safety team advised to not visit the farms. Therefore, on-site visits were replaced by focus group interviews with farmers and farm workers that took place at the company’s premises.

Through extensive engagement, spanning remote and in-person internal engagement and discussions with external expert stakeholders, the assessment allowed the highlighting of positive impacts and areas of risks, which are summarized below.

At the Head Office, PMPKL employees praised the positive and empowering working environment, and recognized the competitive wages and benefits provided by the company. They particularly appreciated the support of their line managers and the fact they can benefit from flexible working arrangements. Nevertheless, some employees—especially of higher seniority—stressed the importance of striking a better work-life balance. Furthermore, despite supportive policies and programs in place, female employees only represented 11 percent of PMPKL’s workforce in 2023, showcasing the need to continue efforts to attract and retain more women.

At the manufacturing sites, employees and third-party workers reported concerns about working conditions such as working in high temperatures and, especially during harvesting and threshing season (peak season), in the presence of excessive dust. In addition, some employees reported working extended hours during peak season and commuting long hours between work and their homes due to the remote location of the factories. The value to workers of the company providing transport and accommodation was widely reported. Apprentices, who join PMPKL for a two-year advancement program under specific terms, appreciated the continuous training they receive but reported concerns about their remuneration, which specifically for the apprentice program is above minimum wage but difficult for them to adequately provide for themselves. They also sought job opportunities prospects at PMPKL upon completion of the program.

Third-party workers interviewed reported being previously employed in PMPKL and now are working for third-party suppliers being deployed on PMPKL sites. With this change in their status, they reported deterioration in pay, bonuses, and medical benefits, and lack of accommodation. Third-party workers on PMPKL sites also reported a lack of awareness of the PMI speak-up line or any other grievance mechanism other than engaging with their supervisor at the third-party supplier.

In the sales and distribution operations, employees underlined security as a risk related to their work but this appears to be well managed by PMPKL due to the close collaboration with the local security team. The teams also highlighted feeling that there are opportunities to grow within the organization and seize opportunities based on merit but mentioned difficulty in trying to meet basic personal needs given the current challenging commercial context and high inflationary environment, despite the company’s efforts to support them with wage increases and inflation bonuses.

In the leaf supply chain, the assessment revealed a high level of awareness among farmers and farm workers of PMI’s Agricultural Labor Practices (ALP) Code and participants highlighted the collaborative relationship existing between farmers and field technicians. The risks surfaced through the exercise pertained mainly to inherent sector-specific challenges, such as green tobacco sickness, working at heights, exposure to chemicals, and farm and fieldwork in high temperatures. While wearing Personal Protective Equipment (“PPE”) was widely reported, farmers raised concerns over the cost for them to provide PPE for their workers. Child labor risks are also inherent in the regional context, but farmers and farm workers noted effective mitigation measures, such as training and engagement with field technicians to follow the PMI’s ALP code, leading to a great reduction in incidences.

The HRIA in Pakistan, as in all markets before, was complemented with the development by our local teams, of a country-specific, time-bound corrective action plan to address the findings identified. Within this corrective action plan, responsibility for implementation and progress measurement was assigned at the local level.

Continuation of existing good practices: PMPKL aims to continue improving labor relations to better understand employee concerns and is invested in increasing capability building opportunities for line managers to foster a culture for inclusion. PMPKL will continue to review current compensation and benefits to improve total compensation and rewards for its employees.

Factory and operations workers: PMPKL plans to address excessive dust and heat in both its factories with some short-term solutions, as well as long-term feasibility assessments to improve temperatures, and to revamp the de-dusting system in one of them.

Third Party Workers: PMPKL does not have any administrative control over third-party workers as they are not PMPKL employees. However, PMPKL will continue to work with the third-party service providers to ensure that they continue to comply with the labor laws of Pakistan (local labor laws are part of all service agreements), and PMI’s Responsible Sourcing Principles (RSPs), with heightened focus on working conditions, working hours, issuance of employment related documentation to the service provide personnel, etc. Though PMPKL cannot directly intervene regarding employment related matters, and working conditions of third-party workers, procurement team and third-party vendors applying the PMI RSPs shall contribute towards improving the employment conditions of third-party workers.

In addition to the above and in the short term, PMPKL will work out a mechanism with vendors to increase awareness of speak-up lines for third party workers in case of any grievance(s), and to ensure that this is included as part of every initial request for submitting their service proposals.

Leaf farmers and farm workers: To improve working conditions, PMPKL will continue to provide PPE on credit. PMPKL will also continue the coverage of all PMPKL contracted farmers under ALP initiatives, to run its existing programs to prevent child labor, and to invest to advance safer and more sustainable growing processes in our tobacco supply chain. To ensure farmers feel empowered to discuss pricing and foster fair pricing negotiation conditions, PMPKL plans to raise awareness of grievance mechanisms via flyers and display pricing guidance provided by the Pakistan Tobacco Board at buying stations. The Pakistan Tobacco Board has also established a vigilance committee to monitor compliance of all buying related matters including pricing in the market.

Women: To support attracting and retaining women and improve work life balance, PMPKL is: 1) looking to further enhance the accommodation and daily transport policy for employee and families at the Mardan factory; 2) reassessing the possibility of smart work at sales offices, and the factories; and 3) conducting a study on daycare/aftercare needs. In addition, a project team within PMPKL is assessing ways to upgrade facilities and support available in Mardan to attract women candidates to apply to work there.

As with the implementation of all PMI’s HRIA action plans, the PMPKL team will evaluate progress against its action plan twice a year and report to the global team. We will continue to promote and protect human rights in PMPKL operations, in its sales activities and throughout the tobacco supply chain.

This HRIA illustrates the value of listening to our rightsholders and engaging directly with them. It also demonstrates how a challenging economic situation within a country with particularly high inflation impacts on stakeholders’ enjoyment of the right to an adequate standard of living, highlights the importance of applying PMI’s Responsible Sourcing Principles, and the value of considering local economic and cultural contexts in future HRIAs.

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