ESG Risks Associated with Next-Generation Tobacco Products

This report provides a comprehensive analysis of the ESG risks related to next-generation tobacco products (NGPs), including heated tobacco products, vapes, and oral nicotine pouches. It outlines how these products are reshaping the tobacco subindustry's strategic, regulatory, and environmental landscape. The document highlights the increasing scrutiny from regulators and the public, with over 130 countries imposing restrictions or bans on NGPs, which leads to compliance costs and market uncertainties. It details the contrasting management approaches of major companies like Philip Morris International and British American Tobacco, noting that firms with larger NGP portfolios face heightened exposure to material ESG issues, particularly concerning business ethics. The report emphasizes the importance for investors to understand how these risks translate into exposure and management gaps, providing insights into the evolving regulatory landscape, health impacts, and company-level responses to these challenges. The findings aim to equip investors with a clearer understanding of the long-term risk trajectories in the nicotine market.