Methodology

The 2020 Tobacco Transformation Index evaluates companies’ activities and performance against 35 indicators across six distinct measurement categories, exploring several facets of company behavior relevant to tobacco harm reduction.

The index is a relative ranking, meaning companies are compared to each other rather than against an ideal state. The focus of the index is on differentiating between companies to increase competition and accelerate transformation, in the same way that other indexes have operated.

Measurement Categories

The 2020 index consists of six measurement categories, each covering a distinct area of corporate activity and/or performance related to tobacco harm reduction. Each category is further broken down into subcategories which are measured based on quantifiable indicators.

Indicators

The methodology includes 35 indicators that characterize a given company’s activities and performance in multiple areas. Each indicator has been included based on its relevance, feasibility, and materiality. For purposes of assessing companies, each indicator is resolved to a
numeric value based on analysis of relevant quantitative and/or qualitative metrics.

Strategic Pillars

Each indicator is linked to one of three strategic pillars in order to provide a fully rounded view of each company’s approach to transformation. The three pillars are defined as follows:

  • Commitment: Addresses the extent to which the company has incorporated the goal of tobacco harm reduction into its vision and strategy, its internal policies and codes of conduct, and its public stance and subsequent action.
  • Performance: Addresses the company’s quantifiable progress in phasing out high-risk tobacco products, along with performance and investments associated with reduced-risk alternatives. Associated indicators represent the tangible results of the company’s strategy.
  • Transparency: Addresses the company’s disclosure of information necessary for stakeholders to effectively monitor and evaluate its commitment and performance.

Scoring

Indicators are distilled and translated into a single score for each category and subcategory, and the overall index, using a transparent and balanced system of weights, metrics, and scoring.

  • Weight: Each technical category, subcategory, and indicator is assigned a relative weight which represents its significance with regard to tobacco harm reduction.
  • Metrics: Each Commitment and Transparency indicator has metrics against which the company’s performance are scored. These metrics identify the necessary requirements the companies need to satisfy to achieve a full score for each indicator. Where the company is asked to fulfill more than one requirement to get a full score, the metrics description includes an ‘AND’ in capital letters to separate those requirements. Performance indicators are normalized and scored on a relative basis.
  • Score: The company is assigned a score for each indicator based on its performance against the specified metrics, normalization process, and any other adjustments, which is then calibrated according to the relative weight assigned.

Methodology

Appendix

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