advancing industry transformation

The purpose of the Foundation for a Smoke-Free World is to improve global health by ending smoking in this generation. Our task is urgent. More than a billion people smoke worldwide, and more than seven million global deaths are attributed to tobacco use each year.

In support of its mission, the Foundation’s Industry Transformation efforts focus on attaining change within the global tobacco industry and nicotine ecosystem. The Tobacco Transformation Index, which is the first action of the Foundation’s Industry Transformation initiative, will provide quantifiable evidence over time of what steps the largest tobacco companies are taking toward achieving a world free of combustible cigarettes and other high-risk products, and any actions they take to impede that progress. Specifically, the Tobacco Transformation Index will periodically evaluate 15 of the largest tobacco companies in the world. The Foundation for a Smoke-Free World announced consultancy agreements with global market research company Euromonitor International and leading consulting firm and think tank SustainAbility for the creation of the Tobacco Transformation Index, which was previously known as the Smoke-Free Index. The Index will be published in September 2020, with regular updates thereafter.

Establishing a complete data set that encompasses the companies that produce nicotine-based products is a necessary precursor to developing effective policies that promote the Foundation’s purpose. The Global Trends in Nicotine reports contribute to laying the groundwork for the Foundation’s work, and represent an important step in the Foundation’s research program. Specifically, the reports identify the major players in nicotine delivery, outline their product organization and geographic focus, and quantify their output.

Many “dirty” and unhealthy legacy industries can change, and are changing, by undergoing a transformation toward cleaner activities and products. The Foundation’s work contributes to this discussion by presenting six case studies of companies that undertook significant business transformations. The six cases demonstrate varying motivations, and, as business transformation is not without risk, some of the companies performed better than others. That said, the tobacco industry sells a deadly product – cigarettes, which some consumers are rejecting. Transformation of the tobacco industry can provide an enormous and crucial acceleration to the process of eliminating combustible tobacco. The Foundation believes that the appropriate way to influence industry is indirectly through strategic partnerships. In particular, we believe the investor community is a powerful, yet mainly underutilized, lever with which to influence company management.

The Foundation’s Industry Transformation strategy aims to attain transformation, in support of the overarching purpose, in a manner that is compatible with the United Nations Sustainable Development Goals (SDGs) framework.  The Foundation intends to complement WHO FCTC efforts by further examining the necessary future transformation of the tobacco industry and nicotine ecosystem, as well as by considering ways to change the core products that are responsible for preventable premature deaths and numerous diseases. To accomplish this undertaking successfully, we must and will engage all stakeholders with the material ability to affect change for the good. The Tobacco Transformation Index will encourage the development of metrics that investors and policy makers understand, value, and utilize. The Index will report all companies that impede progress in fair, verifiable, and systematic ways.

The Foundation believes that innovation and consumer-driven demand are part of the solution, in addition to policy prescriptions. The record shows that implementation of policy strategies alone is not achieving the degree and speed in the reduction of the prevalence of cigarette smoking that is desired – and witnessed, for example, in certain countries such as Japan and South Korea.

The Tobacco Transformation Index’s key premise is that by actively encouraging and monitoring the transformation, it will over time incentivize the tobacco companies to act more quickly and more responsibly than they otherwise would. Conversely, players that do not make the necessary transition rapidly enough will be exposed. As a result, all stakeholders, such as investors and public health professionals, will be better informed and able to demand necessary action.