The Tobacco Transformation Index 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 tobacco products and any actions they take to impede that progress. The Foundation for a Smoke-Free World established consultancy agreements with global market research company Euromonitor International and leading think tank and advisory firm SustainAbility for the creation of the Tobacco Transformation Index, the first report of which will be published in September 2020, with regular updates thereafter. The Tobacco Transformation Index will evaluate 15 of the largest tobacco companies in the world. Previously known as the Smoke-Free Index, the Tobacco Transformation Index is the first action of the Foundation’s Industry Transformation initiative, a core strategy of the Foundation’s overall mission to achieve a smoke-free world within this generation.
Technological disruption is well underway in the tobacco industry and nicotine ecosystem. The Foundation believes now is the right time for industry innovation, as unprecedented and innovative technologies are reducing the health risks associated with nicotine delivery compared with those of emissions found only in combustible tobacco. Using an objective methodology, the Tobacco Transformation Index endeavors to measure the nature of the tobacco companies’ allocation of capital, research and development, marketing, product sales, regional variations, production decisions, violations, and more. The objective is to incentivize scientific research and development for the advancement of product innovations to benefit public health and potentially millions of adult smokers, particularly in developing countries. The Index will also review indicators associated with approximately 36 countries to demonstrate their policies and actions in contributing to a world free of combustible cigarettes and other high-risk tobacco products through measures such as tax structure on combustible cigarettes, regulatory policy on reduced-risk products, and other metrics.
We believe investors have significant influence on corporate management decision-making. The Index will provide them and their advisors with quantifiable evidence of how companies are addressing industry transformation, on both an absolute and a relative basis, as an additional tool with which to wield influence and promote change. By creating a direct relationship between a company’s transformation and shareholder value, while quantifying transformation through clear and transparent metrics, we envision using a market-driven approach to incentivize sustainable change toward a smoke-free world.
The Foundation laid the groundwork for its work in this area with the Global Trends in Nicotine reports, which identify the major players in nicotine delivery, outline their product organization and geographic focus, and quantify their output. In addition, two “case study” Indexes were researched and evaluated – Access to Nutrition and Access to Medicine.
In September 2018, the Foundation issued a Request for Proposals (RFP) to develop and implement the Tobacco Transformation Index. After careful consideration, two award selections were made in January 2019 and the program was initiated in February 2019. Euromonitor International was awarded lead responsibilities for process design, Index research & analysis, and reporting. SustainAbility was awarded lead responsibilities for stakeholder engagement & seminars, program oversight, and project review. Given that Euromonitor International and SustainAbility are among the most respected independent research firms in the world, we believe these selections offer the Foundation the opportunity to ensure that the Tobacco Transformation Index is received by all stakeholders as a credible, valuable, and material change agent toward ending smoking in this generation.
Euromonitor International and SustainAbility are collaborating to develop the Index through a work process that includes research, global stakeholder engagement and listening seminars, Index development, data analysis, and independent expert oversight. Their progress will be communicated in an open and transparent manner at critical milestones leading up to the release of the initial Tobacco Transformation Index in September 2020, with regular updates thereafter.
To aid the design of the Index, we have received inputs from key multidisciplinary stakeholder groups through a series of listening seminars and consultations in multiple countries. The purpose of these meetings was to explore and strengthen the Index’s theory of change, identify and prioritize specific topics the Index should address, and inform the measures necessary to ensure the research process and outputs of the Index are objective, credible, and effective.
Since May 2019, the Tobacco Transformation Index consultation sessions have taken place in multiple locations. The meetings brought together representatives from academia, the investor community, consulting, nongovernmental organizations, and tobacco and agriculture associations. The dialogues illuminated a broad range of perspectives. In line with the Foundation’s commitment to openness and transparency, an interim report summarizing common key discussion points and recommendations about the Index process and content has been compiled. A complete summary report will be published following the conclusion of the dialogue sessions.
For more information on the Tobacco Transformation Index, see Frequently Asked Questions (FAQs).