JT Group Sustainability Report FY 2018

Introduction
This Basis of Reporting document outlines the scope, and the way wedefine, calculate, and consolidate, notably for the business divisionsof Compliance, Human Resources(HR), Workplace Health and Safety,
Environment, and Community Investment. We aim to update theBasis of Reporting document each year, and to expand the list of datain the future.

Key
DEFINITIONSIn this section we clarify the meaning we attach to
specific terms used as part of our performance data
points.

SCOPE
This section states the scope of the data (correct
for the business structure of the JT Group as ofDecember 31, 2018) and any exclusions, if applicable.
We report data for the entire JT Group, including
subsidiaries, wherever possible. In the middle of2015, the JT Group withdrew from the beveragebusiness. As a result, we excluded this business from
historic reported data from 2015, or stated otherwise
where that was not possible or appropriate. We use
the following scope notations:

DATA CALCULATION,CONSOLIDATION METHOD, AND
ASSUMPTIONSIn this section we provide information for the
calculations, formulas, consolidation method, andany assumptions or estimates used.

ASSURANCEIn this section we provide, where applicable,
information on the standard against which specificindicators are assured and the level of assurance orverification.

*A The entire JT Group, including subsidiaries:

our international tobacco, Japanese domestic
tobacco, pharmaceutical, and processed foodbusinesses*B Solely our Japanese domestic tobacco andpharmaceutical businesses: Japan Tobacco Inc.
(JT)
(excludes our international tobacco business,processed food business, and subsidiaries of all
businesses)*C Our Japanese operations, including subsidiaries

of Japanese domestic businesses: Japan
Tobacco Inc. (JT) and Japanese domestic Group
companies (excludes our international tobacco
business)*D Our Japanese domestic tobacco andpharmaceutical businesses - Japan Tobacco Inc.
(JT); and our international tobacco business Japan Tobacco International (JTI)*E Solely our international tobacco business: Japan
Tobacco International (JTI)

Any data without annotated scope in this reportcovers the entire JT Group including subsidiaries: *A.

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BA S I S OF REPORT I NG

Compliance
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSCO MP LI AN CE

CO MP LI AN CE

NON-DISCRIMINATIONThe number of reported cases is counted based on exported data from our Reporting Concerns Mechanism.

406-1
Total number of incidents of discrimination and corrective actions taken

DEFINITIONS
An incident of discrimination is described as an act of treating an employee differently by imposing unequalburdens or denying benefits, rather than treating each employee fairly, based on individual merit. Discrimination
can also include cases of harassment, which is defined as comments or actions that are unwelcome, or should
reasonably be known to be unwelcome, to the person toward whom they are addressed, which has the purpose
or effect of violating an individual’s dignity or creating an intimidating, hostile, degrading, humiliating, or offensive
environment.

SCOPE
The scope of this data covers the entire JT Group, including subsidiaries (*A).

DEFINITIONS
We have defined our main areas of impacts on society as anti-bribery and corruption and anti-competitive
behavior.

SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS

H U M A N R ES O U R CES | W O R K P LA CE H EA LTH A N D S A F ETY | E NV IR O N ME N T | C O M MU N IT Y I N V ESTM EN T | OT H ER DE F I NI T IO N SDATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSNUMBER OF REPORTED CASES OF GRIEVANCES ABOUT IMPACTS
ON SOCIETY

The number of reported cases is counted based on exported data from our Reporting Concerns Mechanism.

The number of grievances are counted based on exported data from our Reporting Concerns management
system.

NUMBER OF REPORTED CASES OF GRIEVANCES ABOUT LABOR PRACTICESOther data
NUMBER OF REPORTED CASES OF GRIEVANCES ABOUT HUMAN RIGHTS
DEFINITIONSFor JT and Japanese domestic Group companies, we include cases related to harassment*, and human relations.
For our international tobacco business, we include cases related to child labor, harassment*, discrimination,
physical threats and violence, and data privacy.

SCOPE

DEFINITIONSFor JT and Japanese domestic Group companies, we include cases relating to improper work instructions,management’s work attitude, colleagues’ work attitude, personnel assessment, personnel transfers, overtime
pay, retirement issues, labor contracts, labor conditions, work environment, and smoke environment. For ourinternational tobacco business, we include cases relating to breach of HR policies and procedures, conflict ofinterest, retaliation, unlawful dismissal, inappropriate behavior, non-respect for employee safety, and severe
disrespectful behavior.

SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).

The scope of this data covers the entire JT Group including subsidiaries (*A).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSDATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSThe number of grievances is counted based on exported data from our Reporting Concerns Mechanism. Excluded
from the data for our international tobacco business are HR cases that are classified as confidential.

The number of reported cases is counted based on exported data from our Reporting Concerns management
system.

NUMBER OF GHE REQUESTSNUMBER OF REPORTED CASES OF FRAUD AND MISUSE
OF COMPANY ASSETS
DEFINITIONSFor JT and Japanese domestic Group companies, we include relevant cases related to personal and businessintegrity, as well as other company rules and regulations. For our international tobacco business, we include
cases relating to fraud and theft of the JT Group and third-party assets, misuse of IT resources, and the cases ofintellectual property infringements recorded under the Reporting Concerns Mechanism.

SCOPE

DEFINITIONSThe number of gifts, hospitality, and entertainment (GHE) requests, including those reported via our GHE
application portal.

SCOPE
The scope of this data covers solely JTI (*E).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Data is collected and collated through our GHE application portal.

The scope of this data covers the entire JT Group including subsidiaries (*A).

2*

Including sexual and bullying

3

DEFINITIONSBA S I S OF REPORT I NG

BA S I S OF REPORT I NG

PERCENTAGE OF EMPLOYEES WHO RESPONDED TO COMPLIANCE SURVEY

Human resources

The percentage of employees who responded to our annual compliance survey, conducted online, or by a paperquestionnaire.

The scope of this data includes JT and JT Japanese domestic Group companies (*C), excluding Torii
Pharmaceutical.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The data is calculated based on an assumption that all employees with a valid corporate email address receive
an invitation to complete the survey, and all employees who do not have an email address receive a paperquestionnaire.

HUMAN R ES O UR CES

CO MP LI AN CE

SCOPE

102-8
WORKFORCE INFORMATION
DEFINITIONSWorkforce consists of people working for the Company at the end of 2018 as follows:›› Full-time employee is defined according to national legislation and practice regarding working time (such as
national legislation that defines “full-time”as a minimum of 9 months per year and a minimum of 30 hours perweek).
›› Part-time employee is defined as an employee whose working hours per week, month, or year, are less than‘full-time’, as defined above.

PERCENTAGE OF ELIGIBLE EMPLOYEES WHO PARTICIPATED IN THE JT
GROUP CODE OF CONDUCT TRAINING›› Supervised worker is defined as an individual who performs regular work on-site for, or on behalf of, theorganization, but is not recognized as an employee under national law or practice.
›› Permanent contract is defined as a contract for an indeterminate period.
›› Temporary contract is defined as a contract for a limited duration or determinate period.

The number of employees who underwent training, namely e-learning regarding the JT Group Code of Conduct.

SCOPE

SCOPE

For the breakdown of supervised workers, the scope is only JT and Japanese domestic Group companies (*C).
Workforce information broken down by the JT Group businesses includes entities where an SAP system has not
yet been introduced, to ensure consistency with JT Annual Report.

The scope of this data includes JT and Japanese domestic Group companies (*C), excluding Torii Pharmaceutical.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The training data is calculated based on an assumption that all employees with a valid corporate email address
receive electronic communications regarding the JT Group Code of Conduct.

C O M P LIA N CE | W O R K P LA CE H EA LTH A N D S A F ETY | E N V IR O NM EN T | C OM M UN I T Y IN V E ST MEN T | OTH E R D EF I NI T I O NS

DEFINITIONSCurrently, the gender breakdown of temporary part-time employees cannot be provided by JT and Japanese
domestic Group companies, as we calculate this number based on full-time equivalent.
The gender breakdown of supervised workers cannot be disclosed, because we do not record this kind of data.
No substantial portion of our work is performed by workers who are legally recognized as self-employed, orby individuals other than employees or supervised workers, including employees and supervised workers ofcontractors.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The figures are calculated based on exported data from our HR systems.

102-9
PERCENTAGE OF TOTAL [ELIGIBLE] EMPLOYEES COVERED BY COLLECTIVEBARGAINING AGREEMENTS
DEFINITIONS
An employee is covered by a collective bargaining agreement if the employee declares their intentions to be partof a trade union and pays periodical union dues.

SCOPE
The scope of this data includes JT and Japanese domestic Group companies (*C), including 23 Group companies
and excluding 33 Group companies. Data from our international tobacco business is excluded, because the law insome of the countries where we operate prohibits us from investigating whether an employee is unionized.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Data is calculated as of the end of 2018, using data held in our HR systems.

45

The number and rate of turnover by region: JT and JTI (*D), and includes permanent full-time and part-time
employees, and temporary full-time employees.

202-1

The number and rate of new employee hires by gender: the entire JT Group including subsidiaries (*A), andincludes permanent full-time and part-time employees, and temporary full-time employees.

Ratios of standard entry‐level wage by gender compared to local minimum wage at significant locations ofoperation

The number and rate of new employee hires by region: JT and JTI (*D), and includes permanent full-time and parttime employees, and temporary full-time employees.

DEFINITIONSDATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS

Significant locations for this indicator are defined as JT Tokyo HQ, JTI Geneva HQ, JTI Moscow, and JTI Trier
factory. Tokyo and Geneva are our headquarters, and Moscow is the HQ office of the JTI Russia market – thismarket has the highest number of employees in our international tobacco business.

Employees transferring from another JT Group company are excluded, and not classified as a new employee hire.

Standard entry-level wage is defined as the theoretical lowest wage in the location and is therefore equal to, or
lower than, the actual lowest wage paid in the entity. Local minimum wage refers to compensation per hour orother unit of time for employment allowed under law. For Tokyo, we use the official minimum wage of the Tokyo
metropolitan area.

Turnover rate is calculated as the total number of turnover, divided by the total number of employees at the end of
the year, for the defined scope above.

Data for these indicators is collected in our HR systems. The turnover and new employee numbers are based onexported data from our HR systems, at the end of the year.

New employee hire rate is calculated as the total number of new employee hires, divided by the total number of
employees at the end of the year, for the defined scope above.

401-2

SCOPE

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant
locations of operationC O M P LIA N CE | W O R K P LA CE H EA LTH A N D S A F ETY | E N V IR O NM EN T | C OM M UN I T Y IN V E ST MEN T | OTH E R D EF I NI T I O NS

For Geneva, there is no official minimum wage. Therefore we can’t calculate the ratio.

For our international tobacco business, the scope includes permanent full-time and part-time employees, andtemporary full-time employees. In JT, the scope includes only permanent full-time and part-time employees.
Temporary full-time employees are excluded.

HUMAN R ES O UR CES

HUMAN R ES O UR CES

MARKET PRESENCE

The number and rate of new employee hires by age: JT and JTI (*D), and includes permanent full-time and parttime employees, and temporary full-time employees.

For Moscow, we use the official minimum wage of Moscow City. For Trier, we use the official German minimum
wage.

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Economic

DEFINITIONS
Significant locations for this indicator include JT Tokyo HQ, and JTI Geneva HQ.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSSCOPEFor the data reported under JT Tokyo HQ, the basis for calculation is hourly minimum wage and monthly entrylevel wage. For the data reported under JTI Trier factory, the basis for calculation is hourly minimum wage andhourly entry-level wage. For the data reported under JTI Moscow, the basis for calculation is yearly minimum
wage and yearly entry-level wage.

For data reported under Tokyo, the scope is solely JT (*B). The scope of data reported under Geneva is solely JTI(*E).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Benefits for temporary part-time employees in Geneva have been stated pro rata.

Labor practices and decent work
LABOR/MANAGEMENT RELATIONSEMPLOYMENT

401-1
Total number and rates of new employee hires and employee turnover by age group, gender, and region

DEFINITIONSMinimum notice periods regarding operational changes, including whether these are specified in collective
agreements

DEFINITIONSNew employee hires are defined as the number of new employees joining the Company.

Minimum notice periods are defined as those required, if any, by law in the country where the operational change
occurs.

Employee turnover is defined as the number of employees who left the Company for any reason, voluntarily ornot. Employee age is classified in three groups: under 30, between 30 and 50, and above 50 years of age. Regions
are defined as the geographical business areas specified within the JT Annual Report.

SCOPE

SCOPE
The scope of this data is detailed below, and excludes employees in entities where an SAP system has not yet
been introduced.
The number and rate of turnover by age: JT and JTI (*D), and includes permanent full-time and part-time
employees, and temporary full-time employees.
The number and rate of turnover by gender: the entire JT Group including subsidiaries (*A), and includes
permanent full-time and part-time employees, and temporary full-time employees.
6

402-1

We disclose significant operational changes that have substantial consequences for a large proportion of
employees.
The reported information corresponds to closures or withdrawal from business publicly announced in 2018 or
earlier, but which had not been completed yet during the reporting period.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Notice periods are disclosed for each specific case of operational change. Notice periods are calculated anddisclosed in two different ways: the number of months between the announcement of the closure and the first
redundancies, and the number of months between the announcement of the closure and the closedown.

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For our international tobacco business, the following definitions are used for employee categories:

TRAINING AND EDUCATION

404-2

DEFINITIONS
We consider skills management programs that take account of employees’ needs and future career opportunities,
as well as requirements of the business.

SCOPE
We disclose global development programs within JT and JTI (*D).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS›› The Vice President and Director-level employees are categorized as Management.
›› Persons of Manager level and Associate level are categorized as Employees.

HUMAN R ES O UR CES

HUMAN R ES O UR CES

Programs for skills management and lifelong learning that support the continued employability of employees andassist them in managing career endings›› Employees that are members of the Executive Committee are categorized as Executive Officers.

SCOPE
The scope of this data includes the entire JT Group including subsidiaries (*A), excluding employees in entities
where an SAP system has not yet been introduced. Akros Pharma Inc., Fuji Foods, and Saint-Germain America
are included in the data by position and gender, but excluded from the data by age group and gender. The
data consists of permanent full-time and part-time employees, and temporary full-time employees. We store
information only for the gender and age of our employees.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The figures are calculated based on exported data from our HR systems.

The examples of programs are included in our GRI index and the Report.

EQUAL REMUNERATION FOR WOMEN AND MEN

404-3

DEFINITIONS
We consider an employee to be receiving regular performance and career development reviews if the employee
has an opportunity to have their development and business objectives, as well as competences, evaluated by theirsuperior at least once a year.

SCOPE
The scope of employees is the entire JT Group including subsidiaries (*A), and it includes permanent full-timeand part-time employees, and temporary full-time employees, but excludes employees in entities where an SAP
system has not yet been introduced. However, the breakdown by positions include only JT and JTI (*D).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Data is calculated as the total number of employees who received a performance and career development
review in 2017 divided by the total number of employees at the end of 2017. New hires joining in Q4 2017 in
our international tobacco business are excluded from the data, as they were not eligible for a 2017 performance
review.

405-2

C O M P LIA N CE | W O R K P LA CE H EA LTH A N D S A F ETY | E N V IR O NM EN T | C OM M UN I T Y IN V E ST MEN T | OTH E R D EF I NI T I O NS

Percentage of employees receiving regular performance and career development reviews, by gender and by
employee category

Ratio of basic salary and remuneration of women to men by employee category, by significant locations ofoperation

DEFINITIONS
Significant locations for this indicator include JT Tokyo HQ, and JTI Geneva HQ.
Unless specifically stated, the following definitions are used for employee categories for JT:›› Executive Officers are persons who are appointed by the Board of Directors, are assigned certain
responsibilities, and delegate relevant authorities in accordance with the Rules Defining the Extent of
Responsibility and Authority.
›› Management is defined as persons in positions of supervision or management according to national legislationand practice, and excluding Executive Officers.
›› Employees are persons who are not in management positions.
The following definitions are applied for employee categories for our international tobacco business:›› Vice President›› Director›› Manager›› Associate

DIVERSITY AND EQUAL OPPORTUNITY

405-1
Composition of governance bodies and breakdown of employees per employee category according to gender, agegroup, minority group membership, and other indicators of diversity

SCOPE
In JT Tokyo HQ, the scope includes permanent full-time and part-time employees, and temporary full-time
employees. In JTI Geneva HQ, the scope includes permanent full-time employees, and excludes those who are
not paid in CHF, and members of the Executive Committee.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSDEFINITIONS

The figures for both JT Tokyo HQ and JTI Geneva HQ are calculated based on ‘annual base salary.’

Employee age is classified in three groups: under 30, between 30 and 50, and above 50 years of age. For JT andJapanese domestic subsidiaries, the following definitions are used for employee categories:

In JT Tokyo HQ, each of the categories defined above (Executive Officers, Management, and Employees) includes
multiple grades. We select grades that include both female and male employees to calculate the ratio of annual
base salary of women to men. Then, those pay ratios are consolidated into the above three categories based on
the weighted average of employees within each grade. For JTI Geneva HQ, we calculate the average annual basesalary by gender for each employee category defined above. This average is used to calculate the ratio of annual
base salary of women to men within each category.

›› Executive Officers are persons who are appointed by the Board of Directors, are assigned certain
responsibilities, and delegate relevant authorities in accordance with the Rules Defining the Extent of
Responsibility and Authority.
›› Management is defined as persons in positions of supervision or management according to national legislationand practice, and excluding Executive Officers.
›› Employees are persons who are not in management positions.

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Other employee-related data

TOTAL NUMBER OF TALENT PARTNERSHIP PROGRAM EXCHANGESDEFINITIONSDEFINITIONSIn JT and Japanese domestic subsidiaries, an employee is categorized at a position of management if theemployee is in a position of supervision or management, according to national legislation and practice, but
is not an Executive Officer. In our international tobacco business, an employee is categorized at a position ofmanagement if the employee is Director level or Vice President level. However, the ratio of our international
tobacco business doesn’t include Vice President, as our target only includes directors, not Vice president.

Total number of our Talent Partnership Program exchanges is defined as the sum of employees who aretransferred as functional or development assignees from JT to JTI, or vice versa, at the end of the year.

HUMAN R ES O UR CES

HUMAN R ES O UR CESPERCENTAGE OF MANAGEMENT POSITIONS HELD BY WOMEN AT THE END
OF THE YEAR

SCOPE
The scope of this data includes JT and JTI (*D).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Data is calculated as the sum of the number of functional assignees and development assignees seconded
between JT and JTI at the end of 2018.

SCOPE
The scope of this data includes the entire JT Group including subsidiaries (*A), excluding employees in entities
where an SAP system has not yet been introduced. Data consists of permanent full-time and part-time
employees, and temporary full-time employees.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSC O M P LIA N CE | W O R K P LA CE H EA LTH A N D S A F ETY | E N V IR O NM EN T | C OM M UN I T Y IN V E ST MEN T | OTH E R D EF I NI T I O NS

Data is calculated as the total number of women holding a management position at the end of the year, divided
by the total number of employees who had a management position at the end of the year. In JT, employees who
were in management positions, but who have been reassigned to pre-retirement positions, as they are reaching
the mandatory retirement age, are excluded from the calculation.

PERCENTAGE OF MANAGEMENT POSITIONS HELD BY INTERNAL HIRES
DEFINITIONSIn JT and Japanese domestic subsidiaries, an employee is categorized at a position of management if theemployee is in a position of supervision or management, according to national legislation and practice, but is not
an Executive Officer.
We define internal hires as current employees who would be reassigned to a new position by promotion orinternal transfer. In our international tobacco business, an employee is categorized at a position of management if
the employee is Director level or above.

SCOPE
The scope of this data is the entire JT Group including subsidiaries (*A), and it excludes employees in entities
where an SAP system has not yet been introduced. Data consists of permanent full-time and part-time
employees, and temporary full-time employees.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Data is calculated as the total number of management positions filled by internal hires in 2018, divided by the
total number of management positions filled in 2018.

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Workplace Health and Safety
relevant Japanese authority as such. In our international tobacco business, health and safety data is collected
at individual sites and locations, and reported internally on an ongoing basis. Calculation is performed in thefollowing manner:

ASSURANCE›› Number of fatalities: the sum of all fatalities within our defined scope.

Our international tobacco business commissioned an independent services body to provide limited-level
verification over occupational health and safety performance data, and underlying data management systems.
Assurance was carried out against the International Standard on Assurance Engagements (ISAE) 3000.
Absenteeism data in the finished goods manufacturing sites and tobacco processing facilities is out of scope ofthe verification.

Labor practices and decent work›› Number of LTIs: the sum of all LTIs within our defined scope.
›› LTI rate: the number of LTIs divided by 200,000 hours worked within our defined scope.
›› Absenteeism rate: total actual absent days divided by theoretical working days within our defined scope.

Other data
VEHICLE ACCIDENTS AND VEHICLE ACCIDENT FREQUENCY RATE

403-2

DEFINITIONS

related fatalities, by region, and by gender

DEFINITIONS
We define lost-time incidents (LTIs) as the sum of lost-time injuries, lost-time illnesses/occupational diseases.
Lost-time injury is a work-related injury that results in an individual being unable to work on a subsequentscheduled workday or shift. Lost-time illness/occupational disease is a work-related illness/occupational disease
resulting in an individual being unable to work on a subsequent scheduled workday or shift.
Fatality is a death resulting from a work-related injury or illness/occupational disease. We record and report thefollowing fatalities:›› Fatal occupational injuries and/or fatal work-related ill-health cases that occur on, or across the immediate
external perimeter of, our site/office to our employee while he/she is on duty, a contractor while he/she isworking for us (including on-site third-party operations), or a person visiting our site/office.
›› Fatal occupational injuries or work-related ill-health cases that occur while an employee is away from our site/
office, but on company business (i.e., while on duty).
›› All fatal accidents involving members of the public that are associated with the JT Group’s own operations and/or associated with a JT Group employee while she/he is on duty.
Absenteeism is, in JT(B*) medical leave, sick leave, and absent from work without notification for permanent leave(excluding paid leave) for temporary full-time employees. Part-time employees are excluded as out of scope.

SCOPE›› Number of fatalities: Group-level data (*A) covers number of fatalities of employees, contractors, and third
parties resulting from an incident involving an asset, such as a facility, or a vehicle being driven for businesspurposes.
›› Number of LTIs: Group-level data (*A) covers employees, contractors, and supervised workers. Currently, in ourinternational tobacco business,lost-time illness/occupational disease only covers reported cases from the U.K.
and Brazil markets.

C O M P LIA N CE | H U M A N R ES O U R CES | EN VIR O N M EN T | CO MMU NI TY I N V E ST ME NT | OT H ER DE F I N IT I O NS

OCCUPATIONAL HEALTH AND SAFETY

Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-W O R KP LACE HEALT H AN D S AF ET YW O R KP LACE HEALT H AN D S AF ET YOVERVIEW OF WORKPLACE HEALTH AND SAFETY DATAOur Japanese domestic operations define a vehicle accident as any incident that results in death or an injury to an
employee and/or third party, and if no injury occurs, any property damage that requires an insurance claim.
Our international tobacco business defines a vehicle accident as any incident involving a fleet vehicle that results
in a death or an injury to an employee and/or third party, and if no injury occurs but property damage results, fromone of the following events:›› collision between vehicles in motion›› collision of fleet vehicle with stationary object›› single-vehicle incidents (events that involve a driver/rider overturning, spinning, skidding, and/or running off theroad)›› collision with pedestrian›› collision with animal.

SCOPE
The scope of data covers:›› Number of vehicle accidents: covers vehicles and motorcycles used by our employees on company business in
JT and our international tobacco business (*D).
›› Vehicle accident frequency rate: covers the number of vehicle accidents per million kilometers driven in JT and
our international tobacco business (*D).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Vehicle accident data is collected at individual sites and locations, and reported internally on an ongoing basis.
Calculation is performed in the following manner:›› Number of vehicle accidents: sum of all vehicle accidents within our defined scope.
›› Vehicle accident frequency rate: the number of vehicle accidents divided by million kilometers driven within our
defined scope. While our international tobacco business uses actual data for kilometers driven, JT calculates it
based on the volume of fuel used by type.

›› LTI rate: Group-level data (*A) includes employees and supervised workers.
›› Absenteeism rate: we cover JT(*B).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
In our Japanese domestic operations, health and safety data is reported to headquarters by individual functionsand Group companies on an annual basis, while serious incidents are reported immediately. The number reported
is based on the number of health and safety related events that were submitted to, and are recognized by,

12

13

Cigarette and tobacco-related factories include all our leaf processing, cigarettes, and tobacco productmanufacturing facilities.

SCOPE
The scope of this data is JT and JTI (*D), excluding markets, R&D, non-tobacco material processing factories, andother support services.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Certification information is collected at individual factories. The percentage is calculated as the number of certified
factories and locations, divided by the total number of all factories within scope.

Environment
OVERVIEW OF ENVIRONMENTAL DATAEN V I R O N MEN T

W O R KP LACE HEALT H AN D S AF ET Y

DEFINITIONSBA S I S OF REPORT I NG

BA S I S OF REPORT I NG

PERCENTAGE OF CIGARETTE AND TOBACCO-RELATED FACTORIESCERTIFIED TO OHSAS 18001 SAFETY MANAGEMENT STANDARD

SCOPE
We use an operational control approach to determine the scope and boundaries of our environmental datareporting, which covers the entire JT Group including subsidiaries (*A), as well as some affiliates, and some
contract manufacturers that meet specific criteria. Thus, coverage of environmental data is wider than other *Alevel data shown in the other sections of the Sustainability Report.
We restate our environmental data, in accordance with our recalculation policy, to take account of significant
changes to our business, such as acquisitions, divestments etc. We do this so as to allow a fair comparison ofenvironmental performance over time. We carried out such a recalculation exercise in 2018, hence data for years
prior to 2018 have been restated.

ASSURANCEC O M P LIA N CE | H U M A N R ES O U R CES | W O R K P LA CE H E ALT H AN D S AF ET Y | CO M MU N IT Y I N V ESTM EN T | OT HE R DE F IN I TI O N S

We commissioned an independent body to provide assurance of Group-wide energy, and Scope 1 and Scope
2 greenhouse gas (GHG) emissions. We also commissioned them to provide assurance of certain categories of
Scope 3 GHG emissions: namely, Category 1, purchased goods and services in our Japanese domestic tobacco
business; Category 1, leaf-related emissions; and Category 6, business travel in our international tobacco
business. In addition to GHG emissions data, our water withdrawal, wastewater discharged and waste generation(including each of the sub-categories, i.e. waste recycled, incinerated, with/without heat recovery, and land filled),
have been externally assured. Within our international tobacco business, the proportion of renewable electricity
was also verified.
Assurance was provided against ISO14064-3 for GHG emissions data and ISAE3000 for the other data.

Environmental
ENERGY

302-1

305-3

Energy consumption within the organization

Other indirect GHG emissions (Scope 3)

305-1

305-4

Direct GHG emissions (Scope 1)

GHG emissions intensity

305-2

305-5

Energy indirect GHG emissions (Scope 2)

Reduction of GHG emissions

DEFINITIONS
We measure energy consumption and GHG emissions using the World Resources Institute/World BusinessCouncil for Sustainable Development Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard(2004 revised edition) and Greenhouse Gas Protocol: Corporate Value Chain (Scope 3) Accounting and ReportingStandard as guidance.
We report GHG emissions across three areas:›› Scope 1: direct GHG emissions from corporate activities, such as burning of fossil fuels at factories.
›› Scope 2: indirect GHG emissions from consumption of purchased electricity, heat, or steam.
›› Scope 3: other indirect emissions, including from the manufacture of products bought from other companies.
The reporting unit for energy consumption is terajoules, and for GHG emissions is 1,000 metric tons CO2
1415

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSFor GHG reporting, we adopt a market-based approach and in Japan we use GHG emission conversion factors set
by the Act on Promotion of Global Warming Countermeasures, 2009. In other countries, we use GHG emission
conversion factors provided by the International Energy Agency for 2009, the U.K. Department for Environment,
Food and Rural Affairs, along with supplier-specific GHG emission conversion factors, where electricity is sourced
from low carbon energy sources.
For calculating Scope 3 GHG emissions, emissions factors come from a variety of sources, including emissions
factors from third-party databases and our own life cycle assessments.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Waste data is collected at our sites and locations, and is reported by handling method, primarily from invoices. If
a site is unable to report volume of waste generation, we use extrapolations based on actual data from a similarsite or location to provide estimated data. Production, floor area, or FTE data are the main benchmarks used to
calculate intensity metrics that are used in the extrapolation process.

EN V I R O N MEN T

EN V I R O N MEN T

We calculate energy consumption, and Scope 1 and 2 GHG emissions, based on actual energy consumption at
our sites and locations from invoices and meters. Where this information is not available, we use extrapolations
based on actual data from a similar site or location to provide estimated energy consumption, which is then used
to calculate associated GHG emissions. Production, floor area, or full-time equivalent (FTE) data are the main
benchmarks used to calculate intensity metrics that are used in the extrapolation process.

BA S I S OF REPORT I NG

BA S I S OF REPORT I NG

equivalent. GHG emissions intensity is reported in metric tons CO2 equivalent per million cigarettes equivalent,
which covers Scope 1 and 2 GHG emissions of our Japanese domestic tobacco and international tobacco
businesses only.

Other data
PERCENTAGE OF ISO 14001 CERTIFIED CIGARETTE AND TOBACCORELATED FACTORIESSCOPEThe scope of ISO 14001 data is cigarette and tobacco-related factories, including subsidiaries, such as nontobacco materials manufacturing factories, within our Japanese domestic tobacco and international tobacco
businesses only.

303-3

303-4

Total water withdrawal by source

Total water discharge by quality and destinationC O M P LIA N CE | H U M A N R ES O U R CES | W O R K P LA CE H E ALT H AN D S AF ET Y | CO M MU N IT Y I N V ESTM EN T | OT HE R DE F IN I TI O N S

WATER AND EFFLUENTS

DEFINITIONS
We record and report water withdrawal and water discharge at our sites and locations, and take into
consideration the framework on water reporting set out by CDP.
We report total water withdrawal and breakdown by source, and total water discharge and breakdown bydestination.
The reporting unit for water withdrawal and water discharge is 1,000 m3.

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Water withdrawal data and water discharge data are collected at our sites and locations from invoices and/or
meters. If a site is unable to report volume of water withdrawal, we use extrapolations based on actual data froma similar site or location to provide estimated data. Production, floor area, or FTE data are the main benchmarks
used to calculate intensity metrics that are used in the extrapolation process. In the absence of water discharge
data, it is assumed that water discharge will be equivalent to water withdrawal.

WASTE

306-2
Total weight of waste by type and disposal method

DEFINITIONS
Our sites manage their waste based on the following waste hierarchy: reduce, reuse, recycle, and recover. If thesemethods are not feasible, a site will dispose of its waste (disposal being incineration without energy recovery, or
landfilling).
We report total waste generation and breakdown by disposal method that includes both non-hazardous andhazardous waste.
The reporting unit for waste generation is 1,000 metric tons.

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BA S I S OF REPORT I NG

BA S I S OF REPORT I NG

Community investment
LOCAL COMMUNITIESGRI 413-1

CO MMUN I T Y I N V EST MEN T

CO MMUN I T Y I N V EST MEN T

Society
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The figures are calculated based on data from our community investment database and market reports, andchecked against financial reports. All financial data is converted from local currency to Japanese Yen at the timeof payment, using internally agreed exchange rates.

Percentage of operations with implemented local community engagement, impact assessments, anddevelopment programs

DEFINITIONS
Implemented local community investment programs are defined as investments in projects that improve thequality of life of people where we operate in an impactful way.
All community investment programs have a recorded output defined following the LBG criteria (www.lbg-online.
net).
C O M P LIA N CE | H U M A N R ES O U R CES | W O R K P LA CE H E ALT H AN D S AF ET Y | EN V I R O N ME NT | OT H ER DEF I N I TI O N S

In 2018, we assessed impact of our community investment programs in 23 markets, and we are continuously
improving our impact assessment methodology.
An operation is defined as a country in which we have a business presence. Investments in communities that
relate to tobacco leaf production are specifically excluded from this indicator.

SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The figures are calculated based on data from our community investment database, and data sourced directlyfrom markets, which is cross-referenced with our finance systems to confirm that the program was implemented.

Economic
ECONOMIC PERFORMANCEGRI 201-1
Direct economic value generated and distributed [community investment]

DEFINITIONS
The value of community investment is the total sum of inputs as defined by the LBG criteria (www.lbg-online.net).
Investments include employee time, cash, in-kind, and management cost contributions for the programs included
in indicator 413-1 that are provided to benefit a community, and JT International S.A.’s annual endowment to the
JTI Foundation.
The calculation of time and management cost is based on the LBG methodology. For all Japan-based employees,
an average hourly rate provided by the Japanese government is used. For our international tobacco business, costof time is based on an average hourly rate calculated using a weighted average salary (including bonuses) acrossall work groups (excluding the Executive Committee) based on data for the year up to December 31, 2018. Cashcontributions are calculated based on the gross monetary value donated. In-kind contributions are calculated
taking into account depreciation for the goods or services provided.

SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).

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BA S I S OF REPORT I NG

BA S I S OF REPORT I NG

Other definitions
DEFINITIONSGRI 206-1

Voluntary Codes are defined as codes/commitments made with third parties. An example of such a voluntarycode is the self-regulatory marketing standard of Tobacco Institute of Japan (TIOJ) with which our tobacco
business in Japan fully complies. The JT Group Global Marketing Standards and other internal policies are notcovered as part of voluntary codes.

Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes

OT HER DEF I N I T I O N S

OT HER DEF I N I T I O N S

ANTI-COMPETITIVE BEHAVIORSCOPECUSTOMER, HEALTH AND SAFETY

GRI 416-2
Total number of incidents of non-compliance with regulations and voluntary codes concerning the health andsafety impacts of products and services during their life cycle, by type of outcomes

GRI 417-2
Total number of incidents of non-compliance with regulations and voluntary codes concerning product andservice information and labeling, by type of outcomes

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Violations against voluntary codes resulting in significant fines are reported through an internal reporting
mechanism, and in accordance with internal reporting requirements.

AGRICULTURAL LABOR PRACTICES
Percentage of directly contracted growers observed against Agricultural Labor Practices.

DEFINITIONSIn JT, we observe directly contracted growers through site visits and/or questionnaire surveys. In our international
tobacco business, we observe them through site visits.

GRI 417-3

SCOPE

Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing
communications, including advertising, promotion, and sponsorship, by type of outcomes

The scope of this data includes JT and JTI (*D).

SOCIOECONOMIC COMPLIANCE

C O M P LIA N CE | H U M A N R ES O U R CES | W O R K P LA CE H E ALT H AN D S AF ET Y | EN V I R O N ME NT | C O MM U NI T Y I NV ESTM EN T

MARKETING AND LABELINGThe scope of this data covers the entire JT Group including subsidiaries (*A).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Observation data is collected in individual markets, and reported internally. The percentage is calculated as thenumber of directly contracted growers being observed by site visits or via questionnaire surveys, divided by the
total number of directly contracted growers.

GRI 419-1
Monetary value of significant fines for non-compliance with laws and regulations concerning the provision anduse of products and services
Monetary value of significant fines, and total number of non-monetary sanctions for non-compliance with laws
and regulations

DEFINITIONS
Significant fine/Significant monetary fine is set at a level that may have a certain impact on the financial
position of the JT Group. A significant fine is a fine which is reported to the designated functions of ourorganization, in accordance with the internal reporting requirements. We do not report on decisions imposing thefine, penalty, or warning if they are confidential, or not final. Neither do we report about pending actions.

SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).

DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Information concerning significant fine/significant monetary fine is reported through an internal reporting
mechanism, and in accordance with internal reporting requirements.

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