IDENTITY

MATERIALITY andSUSTAINABILITY

BUSINESS andSTRATEGIESGOVERNANCE

FINANCIAL INFORMATION /OTHERS

CSO interview“

 e will strive further by creating
Wand providing values unique to theJT Group. We wish to continue ourjourney to achieve sustainablegrowth, together with our stakeholders, local communities and thesociety that we are a part of.

”QTell us about sustainability highlights for 2022.

2022 continued to be a year of high uncertainty due tochanges brought to our society and consumer behavior
from COVID-19, unstable international political relations
due to the Russia-Ukraine war, and global inflation. As thewar triggered rising energy prices, concerns were initiallyvoiced that initiatives for climate change or investment in
ESG might slow down. However, 2022 was a year in which
we continued to see the importance and momentum ofsustainable growth through coexistence between society
and corporate organizations. Additionally, more than everbefore, corporate organizations are required not only toshow a conventional business plan, but to present to stakeholders and to society a comprehensive plan that integratesfinancial and non-financial aspects with sustainabilityperspectives.
At the Group level, we set out our new Group Purpose“Fulfilling Moments, Enriching Life” and communicatedthis alongside the 2022 full-year announcement. The new
purpose embeds our wish to continue to grow together
with society with awareness for enriching life. Furthermore,
2022 was the first year in which we integrated the operating
structure of our tobacco businesses into a single business.
This integration progressed steadily throughout the year.
As for the JT Group’s sustainability initiatives, we worked on
updating our materiality and we have disclosed the newGroup materiality in this report. To further drive our sustainability efforts, we updated the JT Group Environment Plan044

Japan Tobacco Inc. Integrated Report 2022

Hisato Imokawa
Senior Vice President, Chief Sustainability Officer

2030 at the beginning of 2022. Our Greenhouse Gas (GHG)
reduction targets have evolved into a more ambitious plan,
as we aim to reduce GHG emissions throughout the value
chain by 2050 to Net-Zero.
The Group’s sustainable growth depends on co-existingwith the society. We have extended various forms of aid tosupport local communities around the world. We provided
support for the recent earthquake in Turkey. As for theRussia-Ukraine war, we will continue to give priority to thesafety of our employees and their families, while providing
as much support as possible to the people facing difficulties
in Ukraine.

Q

Please tell us about your new materiality in comparison to the original materiality.

When we first performed the materiality assessment in2015, the awareness for ‘sustainability’ was very different. As
this was our first attempt, there were trials and errors. So,
perhaps the voices from our business side were not givena sufficiently full hearing. This time, we were conscious ofconnecting business strategy and sustainability, and we
paid attention to incorporating business-driven issues. We
also gave thorough consideration to the uniqueness of ourGroup. We have recently announced the JT Group Purpose
and we are at a turning point in terms of how we do business. With these factors borne in mind, our materiality wasthoroughly and comprehensively checked and updated.

surrounding our Group. We have therefore updated ourmateriality by always paying attention to our relationshipwith the society which we are part of, and by listening evenmore closely to the opinions of our stakeholders. It's notthat all topics were replaced but rather, some topics havedeveloped into several specific issues, while others have
evolved into more advanced topics. Or, as we worked on
the topics and rolled out our initiatives, the positions on thematrix have changed, as the initiatives yielded results. These
were rearranged as materiality topics.

Q ould you tell us about the JT Group Materiality
Cthat you have identified from the new materiality
matrix?

All topics are important, so we have repeatedly considered
what sort of priority should be given and what should be
the most important issues for the JT Group. The importanceof one specific topic can be identified by making a relative
comparison with others. But it is also true that one topic
on its own cannot cover the underlying importance of alarger issue. The environment, society, and the life of eachindividual are all intricately connected within the sameecosystem. Rather than simply identifying topic by topic,
we decided to specify five big groups of issues which areclosely connected. It may be a small thing, but this way ofidentifying materiality also represents the uniqueness of ourGroup. We checked and rechecked the issues one by one toestablish whether they are unique to the JT Group. We also
examined whether our initiatives for the issues would beunique to our Group. Bearing these in mind, we have shown
our commitment for all the topics materiality identified.
Furthermore, there is a common theme that is relevant toall the five topics of materiality. In my opinion, this is “peoplecome first”, be it human rights, the environment or the wider
society. People, the environment and the wider society are
all interconnected and we should respect them all. Our materiality is based on this premise. Please view our materiality
with these thoughts in mind.

Q lease tell us about the outlook for 2023 andP
the sustainability challenges ahead.

The key process of incorporating the new materiality into
our strategy, formulating specific initiatives, and setting
goals and targets will follow. At the Group level, we will continue to monitor and promote the JT Group Environment
Plan 2030. We will also continue to engage with our stakeholders, further develop human rights due diligence, andcontribute to our local communities with a view to gaining
insight into matters relating to social capital. Furthermore,in terms of sustainability initiatives for each business of theGroup, we will support our business functions in promoting
initiatives, setting goals, monitoring, and reporting onprogress.
The wave of regulation for sustainability disclosure whichstarted in Europe is evolving into a global movement.
Regulations governing the disclosure of sustainability
information are being considered in Europe, the UnitedStates, and Japan, and preparations are under way for theirenforcement. For example, in Japan, the focus of disclosure
regulations is on "climate change" for environmental issues
and "human capital" for social issues—both topics areamong the five topics of materiality that we have identified
this time. We believe that diversity of people is a source ofour competitiveness, and we will strive to foster a corporate
culture that embeds and respects diversity. As for improvingour impact on the environment, we will not only work on
existing initiatives concerned with climate change, withpreserving natural resources, or with providing sustainableproducts; we will also keep an eye on upcoming topics suchas biodiversity.
We are entering an era in which it is necessary for everyone
to accumulate knowledge and track records in sustainability,
be it those who develop frameworks, those who evaluate, or
those who are evaluated. We will strive further by creating
and providing values unique to the JT Group, and continue
our journey to achieve sustainable growth. We want to do
this together with our stakeholders and local communities
and the society that we are a part of.

Since we first set out our materiality, we have seen majorchanges in the business environment and social conditions

Japan Tobacco Inc. Integrated Report 2022045