BUSINESS andSTRATEGIESMATERIALITY andSUSTAINABILITYIDENTITY

GOVERNANCE

FINANCIAL INFORMATION /OTHERSThe Group’s sustainability initiatives
Improving our environmental impact

Our approach
Climate change and other environmental issues are of increasing societal concern. Our operations impact theenvironment through resource usage, emissions, and waste generation, as do most industries. The environment
also directly impacts our business. As a global organization, we recognize that we have a key role to play in reducing
our impacts in own operations and across our value chain. Our sustainable business practices allow us to conserve
resources, reduce waste, manage costs, and meet the growing consumer demand for eco-friendly products.
4 Read more about our approach in the JT Group Environment Policy.

Road map to Net-Zero
Addressing climate change is nothing new for the JT Groupand we’ve achieved a lot over the last decade. Now, we have
set up science-based targets and a Net-Zero commitment

to accelerate our efforts. We will achieve Carbon Neutrality
within the JT Group’s own operations by 2030, and Net-Zerothroughout the entire value chain by 2050.

How the JT Group plans to achieve Net-Zero
Short term (by 2025) /Medium term (by 2030)

Long term (by 2050)

Achieve Carbon Neutrality for JT Group operations

Achieve Net-Zero GHG emissions across the entire value chain

By reviewing and enhancing existing initiatives

By implementing initiatives to further reduce GHG emissions

Objectives

Key initiatives

The JT Group Environment Plan 2030
Our JT Group Environment Plan 2030 sets objectives andtargets to address our key environmental risks and opportunities across three focus areas: energy and Greenhouse Gas(GHG) emissions, natural resources, and waste. The targets
for GHG emissions reduction by 2030 are in line with science-based thinking and in 2022 the JT Group attained validation of its targets from the Science Based Targets initiative

Energy reduction and efficiency measures
Switching from fossil to renewable fuels
Installation of off-grid power systems, e.g. solar Procurement of green electricity

Scope 1 and 2(SBTi). The JT Group Environment Plan 2030 includes
qualitative and quantitative targets. We regularly disclose
our progress toward targets and our environment-related
activities on JT.com.













Scope 3

Continue and enhance energy reduction and efficiency measures
Expand the installation of off-grid power systems, e.g. solar
Increase the proportion of fuels that come from renewable sources Identify further options for the procurement of green energy

Establish collaborative relationships with business partners
and implement measures to reduce Scope 3 emissions,with focus on Category 1 (purchased goods and services)

Evolve and further roll out measures to reduce all categories of
Scope 3 emissions in collaboration with business partners

Scope 3

4Read more about our targets and progress in the JT Group Environment
Plan 2030.

9,420(1,000 tons CO2e)Achieve

Carbon Neutrality
by 2030

Achieving Net-Zero in our entire value chain by 2050
We have now set new targets to help decarbonize our business operations. We are making steady progress toward achieving
our 2050 goal – see our road map on P. 79.
TargetEnergyEmissions

Progress

We will increase the proportion of renewable electricity
that we use to 50% by 2030 and 100% by 2050.
We commit to reducing absolute Scope 1 and 2 GHG
emissions by 47% in line with a 1.5°C reduction pathway
by 2030 from a 2019 base year.
We commit to reducing absolute Scope 3 GHG emissions
associated with purchased goods and services by 28% by2030 from a 2019 base year.

The proportion of renewable electricity that we used in
2022 has increased by 24% from the 2019 base year.
Our 2022 Scope 1 and 2 emissions have reduced by
16% from the 2019 base year.

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Reduce absolute Scope 3 GHG emissions associated with purchased
goods and services by 28% by 2030 from a 2019 base year

Purchased goods and services

Scope 1 and 2

Achieve

28% reduction

735

Net-Zeroby 2050(1,000 tons CO2e)

Scope 1 and 2

Reduce absolute Scope 1 and 2 GHG emissions by 47% in line witha 1.5°C reduction pathway by 2030 from a 2019 base year

47% reduction
Carbon Neutralization using carbon removal offsets

2019

2022

2030

2050

Note: These are the plans as of May 31 2023, and they are subject to revision in accordance with future business strategies

Our 2022 Scope 3 emissions associated with purchased
goods and services reduced by 11% from the 2019 baseyear.

Environmental management system and reporting
In our more complex operations, we align our approach toenvironmental management with internationally recognized
standards – ISO 14001 and ISO 50001. In our smaller and lesscomplex operations in Japan, we have implemented our own“JT Green System.” We use external disclosures and ratings

Scope 3agencies, such as CDP, to review our approach and performance. We have been conducting climate scenario analyses
since 2019, and we endorsed the Task Force on Climaterelated Financial Disclosures (TCFD) recommendations in
2020. Read the results of our latest scenario analysis on P. 80.

Conservation of biodiversity
For the JT Group, the conservation and enhancement of
biodiversity starts with understanding how our business canimpact, and can be impacted by, biodiversity and ecosystemservices, such as pollination, soil fertility, water purification,and climate regulation. Our biggest impact is in the directleaf supply chain. So this is where we focus.
In Brazil, we have partnered with the LIFE Institute, adopting
the LIFE methodology for business and biodiversity. Thismethodology enables a clear and objective analysis of
impacts (positive and negative), risks and opportunities ina business’s relationship with biodiversity. It also enables

evidence-based environmental investment decisions.
We have used the LIFE methodology to evaluate our direct
impacts, including those of more than 10,000 integrated
farmers, for six years.
JTI Brazil participated and presented our efforts, as a LIFE
partner, at the UN Biodiversity Conference, COP15, inMontreal in December 2022. It was recognized as the only
case involving such a huge group of suppliers applying biodiversity metrics together. We aim to be the first company inthis sector and agribusiness to attain LIFE certification.

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MATERIALITY andSUSTAINABILITYIDENTITY

BUSINESS andSTRATEGIESGOVERNANCE

FINANCIAL INFORMATION /OTHERSThe Group’s sustainability initiatives

Improving our environmental impact
Climate change
Climate change is the biggest environmental challenge facing society and our business. The effects of climatechange, such as global warming and modified weather patterns, will have serious implications for our supply
chain, given that our products are mainly agriculture-based, but also for our own operations based in various locations around the world. We are committed to tackling this issue. That’s why we are reducing our Greenhouse Gas(GHG) emissions to support the global action to address climate change, with the longer-term aim of achieving
Net-Zero carbon emissions from our value chain. In February 2022, we committed to being Carbon Neutral for ourown operations by 2030. We also aim to achieve Net-Zero for our entire value chain by 2050. In support of this, wehave set more ambitious 2030 science-based reduction targets and in 2022 they were validated by the Science
Based Targets initiative (SBTi) as being in line with the 1.5°C scenario.

Scenario analysis
Transition risk: Carbon pricing
Increases in carbon tax may increase procurement costof tobacco leaf and other materials and services. It may
also lead to additional company expenditure due to tax
increases for the Group’s direct operations. If a carbon tax is
imposed on raw or secondary materials, or services used ineach phase of the agricultural value chain (e.g. agricultural

ImpactOur approach to addressing climate-related risks is aligned with the recommendations of the Task Force on Climate-related
Financial Disclosures.
Indicator

Governance

Description

Climate-related issues are of strategic importance to our business. Through our business-wide
enterprise risk management process, we have identified climate-related risk as one of ourenterprise-level risks for our tobacco business, which also needs to be considered in local risk
inventories and assessment processes. Board oversight is critical and climate-related issues, especially those that may have impacts on business strategy, are brought up in quarterly Board-level

Mitigation planchemicals, agricultural machinery, processing machinery,storage and distribution), then the JT Group will bear the
additional cost and/or transfer cost to the price of finishedgoods.
See the Details of Climate Scenario Analysis.

In our climate scenario analysis, we assumed that under a 4°C scenario, carbon tax will increase to 3,884 4,640 JPY/ton of GHG emissions. Based on a 2°C scenario, it would rise to 13,488 - 15,106 JPY/ton of GHG
emissions in 2050, based on the IEA World Energy Outlook 2018. In real terms, the potential financial impact
would be at least 700,000,000 JPY based on a 4°C rise and at least 7,500,000,000 JPY based on a 2°C rise. We
calculate financial impact by multiplying forecast GHG emissions in 2050 in regions where carbon taxes may
exist, by the carbon tax level in those locations. GHG emissions in 2050 are predicted based on our expected
reduction in emissions and the Company’s sales growth.
We manage this risk by reducing our energy consumption through capital investment and energy saving
programs, as well as renewable energy programs (onsite generation of renewable energy, purchasing green
energy). We are also decarbonizing our fleet and engaging with suppliers to understand their climaterelated risks and develop appropriate mitigation measures, following the JT Group Environment Plan 2030.

meetings. See P. 102 for ESG-related index to executive remuneration.

Strategy

4Our corporate governance position and structure can be found on the JT website.

Physical risk: The impact on crop growth conditions

Through climate scenario analysis performed in 2019, we identified two main risks: ”potential
cost increases due to governments raising carbon taxes to further reduce GHG emissions“ and”the impact on leaf tobacco growing due to changes in environmental conditions.” Our plan is
to mitigate these risks by continuing to implement climate-related initiatives across our value

Changes in atmospheric carbon dioxide levels could affect tobacco leaf growth. There is also a risk of shifts in the presence
and prevalence of tobacco crop pests and diseases related toclimate change. Other risk factors include water scarcity andhigher-than-average temperatures and unusual precipitation

chain and address areas for improvement.

patterns. All of these could impact the availability and qualityof key natural resources for the JT Group, including tobacco
leaf. Such issues could occur in one or more of our tobacco
sourcing countries. As a result, the cost of sourcing tobacco
leaf would increase.

4See the JT website for general information on environmental initiatives and Risk factors (P. 116).

Risk management

We consider climate-related risks and identify risk mitigation and management approaches
through our enterprise risk management (ERM) process.
We also include these risks in local risk inventories, assessment processes, and action plans, which
are partly based on our ongoing country-level climate scenario analysis.
We will compare business-wide risks from local assessments and identify the most critical ones.
4See the Country-Based Climate Scenario Analysis.

Metrics and targets

Our Group Environment Plan 2030 includes a commitment to reduce GHG emissions from ourown operations by 47% (2030 versus 2019). We have also set a longer-term GHG emissions
reduction target, as well as targets for renewable electricity, backed by our Group-wide climate
scenario analysis.

ImpactWe assume that, based on a 2°C rise, the potential financial impact would be at least 32 billion JPY.
If temperatures rise by 4°C, we could see a financial impact of up to 37 billion JPY.

Mitigation plan

We manage this risk by implementing action plans to reduce the financial impact on our business. Thesemay include shifting leaf growing regions based on the climate-related impacts we identified and implementing climate change adaptation measures (e.g. smart agriculture and breeding). We may also introduce
measures to improve yield in growing regions, and to mitigate increased costs and a potential decrease inprocurement volumes.
Primarily, to date, we have managed this risk by building strong relationships with our suppliers and having
a geographically diversified supply chain (for example, the JT Group sources tobacco leaf from more than
30 countries).

4Read more about the JT Group Environment Plan 2030, Environmental data/External verification and Data calculation,
consolidation methods on JT.com.

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IDENTITY

MATERIALITY andSUSTAINABILITY

BUSINESS andSTRATEGIESGOVERNANCE

FINANCIAL INFORMATION /OTHERSThe Group’s sustainability initiatives

Investing in people

Our employees are assets to the Company; their skills and spirit are the driving force behind everything weachieve. We are recognized as an “employer of choice” around the world, and our positive workplace culture andenvironment help us to attract, retain, and develop talented individuals. We are also taking further steps toengagement survey targeting more than 50,000 employees
worldwide – using, for the first time, the same questions
across all our JT Group businesses globally. The survey response rate was 92%, which is 17% higher than the externalbenchmark. Overall, the Employee Satisfaction (ESAT) score(“How happy are you working at this company?”) was 77, below the Global Top 10% benchmark of 81. We can infer thatthe impact of major internal and external changes in theworking environment, such as transformation in Japan andchanges in working patterns due to the COVID-19 pandemic
have contributed to the low ESAT score. Given this result,
we recognize that improving employee engagement is anurgent issue and will implement initiatives at the executive
level with a focus on clear and transparent communication.

create a diverse, equitable and inclusive culture where everyone can feel comfortable and be themselves.

Diversity, equity and inclusion

The JT Group human resources management philosophy
We believe that highly motivated employees with diverse
skills and talent form the foundation of the JT Group’s
success and contribute to our sustainable growth. In lightof this, the JT Group proactively takes steps to secure longterm engagement and employee satisfaction.

TREAT ALLEMPLOYEES FAIRLYAND RESPECTFULLYENSURE
TRANSPARENCY OF
RULES AND
STANDARDSPROVIDE ALL JT
GROUP EMPLOYEESWITH GROWTHOPPORTUNITIES

Motivated employees with diverse talent are the bedrockof our success. The JT Group has employees of over 100
nationalities, and establishing a diverse, equitable andinclusive workplace for all our employees to enjoy their workand perform to the best of their abilities is therefore a toppriority for us. We respect different backgrounds and values,
such as age, gender, sexual orientation, disability, ethnicity,religion, and nationality, as well as experience and expertise.
We believe that a diverse workforce brings a rich mix ofviewpoints and perspectives, which can inspire new ideas,lead to solutions to complex issues, and drive our businessforward. Our continuous efforts to promote a diverse,
equitable and inclusive culture in our workplace have beenrecognized by numerous awards externally.
4Read more about our external recognition on P. 128.

Developing and retaining talent
Today’s business environment is evolving rapidly, and the
COVID-19 pandemic created additional pressures. To attract,develop, and retain motivated employees with diverse
talent, we provide all JT Group employees with growth
opportunities, in addition to remaining flexible, for example
by adapting to remote ways of working.
We have implemented various global and regional learning
programs to upskill our diverse employees. Many of ourcourses are offered online, enabling employees to develop

Gender equality: Women in leadershipnew skills even remotely. We constantly invest in our
employees, including at a managerial level, to ensure all
employees flourish in their careers.
We believe that providing many different development
and career opportunities combined with flexible ways ofworking is essential to improve employee engagement,
which leads to long-term employee retention, increased
productivity, and improved quality of work.

Employee engagement
We measure the effectiveness of the Company’s people-come-first culture through an annual employee
engagement survey at the regional or department level,
and a Group-wide survey every three years. The feedback
we receive from employees helps us to understand our

082Japan Tobacco Inc. Integrated Report 2022

strengths, progress, and areas for improvement. It also helps
us to make the JT Group an even better place to work, sothat we can attract and retain the best talent.

We are committed to promoting gender equality in our
workplace to attract, develop and retain diverse skills andtalent. To further empower women, we hold workshops for
top management and line managers, as well as training andseminars for female employees. Our new Group-wide target
for women’s representation in leadership is to reach 25% by2030. We find it desirable that this should be more than 40%
over time.

New Ways of Working (N-WOW)
Recognizing that different people have different working
styles and needs, we promote a workplace environmentthat allows all employees to fulfill their potential. N-WOW isa movement to boost flexibility and employee retention.
In July 2021 our tobacco business set out its N-WOW global
guidance for the employees, which became a global policy
in July 2022, adopting a hybrid way of working that focuseson outcomes rather than time spent in the workplace.
Employees now have the flexibility to work up to 50% of
their time per month away from the office, benefit from flexible core hours, and work up to 10 days abroad, among othermeasures which redefine where and how work is done. In
Japan, we introduced full-time flexible working and no-limit
remote working in February 2020. Our approach towards new
ways of working is still evolving.

A family-first approach
In 2021, we introduced a new family leave policy for our
tobacco business. The policy grants 20 weeks of paid familyleave, regardless of gender, sexual orientation, age, or
location, when an employee becomes a parent via naturalbirth, surrogacy, or adoption. In Japan, we have provided
paid parental leave and paid spouse maternity leave, andalso financial support with childcare costs.
In addition to childcare, in some countries with an aging
population, we offer support for employees who lookafter senior family members. We will continue to work on
expanding programs to foster employees' well-being.
4Read more about investing in people on JT.com.

In 2022, we conducted a Group-wide employee

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IDENTITY

MATERIALITY andSUSTAINABILITY

BUSINESS andSTRATEGIESGOVERNANCE

FINANCIAL INFORMATION /OTHERSThe Group’s sustainability initiatives

Investing in people: Health and safety

Our approach
We believe that our employees have the right to be protected from work-related injuries and illnesses. We are
therefore responsible for providing a safe working environment and promoting a culture which prioritizes healthand safety.
We focus on creating safe workplaces, building safety competence, and developing our safety culture. Our
health and safety standards always meet—and usually exceed—the legal requirements. Their scope extends
beyond our employees to cover contractors and visitors to our operations.

In 2022, we trained 2,194 employees. Due to the pandemic,
some of the driver risk assessments and training wereconducted remotely, but we also organized on-the-roadtraining for high-risk drivers where possible. We plan to train
a further 4,300 drivers in 2023.
In the sales division of our Japanese operations, we have set“prevention of vehicle accidents during sales activities” as apriority issue within our Occupational Health and Safety Plan.

Supporting employee well-being
Our Health & Safety Policy
Our Health & Safety Policy is driven by the following guiding principles:  nPeople come first	The health, safety, and well-being of our employees,
their families, and the communities in which we operate
are at the heart of everything we do.
  nSafety is everyone’s responsibility	Everyone shares the responsibility for a safe and healthy
workplace, and we each have a role to play in making it
happen.
  nNothing we do is worth an injury

	We aim to create an injury- and illness-free workplace
where everyone goes home safe and healthy after
each day’s work and where business results shall neverconflict with safety performance.
  n

We do the right thing	All our offices, sales operations and factories should
always comply with all national and local laws andregulations. Where the local legislation and regulatory
framework do not provide adequate controls, we will
adopt our own standards to protect the health and safetyof our employees, contractors and visitors.

Our health and safety commitment
We strive for zero harm among our employees and to carryout all our business activities in a safe manner.
Our publicly available Health & Safety Policy establishes ouroverall intentions and direction for maintaining health, safety
and well-being in the work environment. The Policy applies to

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all employees (direct and indirect) worldwide, and to contractors and visitors on site.
In our international tobacco business, all locations must

Employee well-being is essential for us to develop andexample, we have recruited on-site health staff at 11 key

retain motivated employees and enable them to fulfill theirlocations across the country, to help employees take carepotentials. We run a variety of well-being programs acrossof their physical and mental health. Since the onset of thethe Group, such as ergonomic assessments and ensuring

COVID-19 pandemic, we have continued to offer employees

general occupational hygiene.

one-to-one interviews with our health staff via video calls.
We have also continued to run online programs focusing on

have their own Health and Safety Policy reflecting the

To design these programs, we gather well-being data from

Corporate Safety vision and principles, including commit-

our local offices. In 2018, we expanded our data scope by in-ments to the prevention of incidents, compliance with local

troducing new rules requiring all local offices to report their

In 2020 we set up a Company-wide walking challenge

legal requirements, workers consultation and participation

occupational health cases to our headquarters. This allows

program. It’s a sponsored walk-run in collaboration with theon safety matters and continuous improvement. The policies

us to understand our global risks and develop a consistentglobal non-profit organization TABLE FOR TWO, and using

must be signed by senior management, yearly reviewed,

approach to occupational health, while strengthening our

the health management portal site Pep Up. This initiativeand communicated to all staff and contractors.

existing protection measures.

has created a range of opportunities to promote health,

Local managers are responsible for investigating report-

Efforts to reduce the risk of traffic accidents
In some countries with poor infrastructure and traffic
management, our people are more at risk of being involved
in road traffic accidents. With this in mind, in 2019, we rolled
out a new driver safety policy and implementation guidelines across our international tobacco business. Considering
the growing number of female employees, the policy
also includes maternity protection for female drivers, e.g.
special safety belts, additional rest time. Focusing on driver
behavior, the new guidelines require local offices to conduct
a risk assessment to identify high-risk drivers. They must also
send periodic progress reports and action plans. In 2020,
we completed a driver safety compliance assessment. The
results showed that our markets and leaf origins comply
80% on average with our global guidelines. In 2021, this average increased to 85%. The assessments also allowed us to
identify best practices that were then integrated into a new
Driver Safety standard. This will be published in Q2 2023.

ed issues and identifying the causes. If the issues are
attributed to the work or workplace, we take appropriate
measures immediately to protect employees’ well-being
and prevent recurrences.
In our Japanese operations, in addition to occupational safety and health activities, we are building a comprehensive
health support system under the leadership of our CEO. For

sleep, diet, and exercise.

contribute to society, and revitalize the organization. We’ve
run this event in each of the three years since its inception
and twice in 2022, May and October. 6,009 of our employees
took part. For every 8,000 steps one of our employees
completes in a day, we donate one meal to a developing
country. In the 2022 financial year, we raised 1,858,860 yen
for TABLE FOR TWO.
These programs have had a positive impact on employee
productivity and the absenteeism rate in Japan, which has
recently been below 1%.
We are pleased to announce that JT was named as a “White
500” company for the seventh year running. This award
is presented by Japan’s Ministry of Economy, Trade, andIndustry. It recognizes large enterprises that are making
outstanding progress towards better well-being among
their employees.
4Read more about targets and progress for health and safety on JT.com.

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IDENTITY

MATERIALITY andSUSTAINABILITY

BUSINESS andSTRATEGIESGOVERNANCE

FINANCIAL INFORMATION /OTHERSThe Group’s sustainability initiatives

Improving our social impact

Respect for human rights

For our Group to grow sustainably, it is vital for us to contribute to the sustainable development of our society. The

We respect human rights across our value chain and recognize the International Bill of Human Rights and theInternational Labour Organization’s Declaration on Fundamental Principles and Rights at Work. The JT Group
Human Rights Policy follows the framework provided by the UN Guiding Principles on Business and Human Rights.

JT Group Community Investment Policy determines a common goal across the JT Group: “To contribute to the development of inclusive and sustainable communities.” We believe that everyone should have the opportunity to participate in society, and that inclusive societies are better for business. In line with our community investment policy,
and as a responsible local community member, we work with a wide range of stakeholders to resolve social issues.

Our focus areas
Through long-term partnerships with local and international organizations, we have 522 community investment
programs in 65 countries. Based on global and local needs,
these programs help communities to become more inclusive, sustainable, and resilient. We focus on three specificissues:A five-pillar strategy
1. Reducing	inequalities, e.g., helping underprivileged
people gain access to food and education.
2. Improving	
community resilience in disaster-prone
areas, e.g., providing access to clean water.
3. Protecting	
the environment, e.g., protecting andreinvigorating forests and green public spaces.

Measurement and management

1. Embed
2. Identify and prioritize
3. Respond
4. Measure
5. Report

Our human rights due diligence

To measure the social impact of our efforts, we use theBusiness for Societal Impact (B4SI)* Framework provided by
Corporate Citizenship.
In 2022, we invested around 51 million US dollars in corporate community investment in countries where we operate.
We encourage more accurate reporting and measurement
to ensure all of our programs deliver social impact according
to our policy.

Our human rights strategy is based on five pillars listed to
the right. This circular approach provides a systematic wayof conducting ongoing due diligence and is in line with the
UN Guiding Principles on Business and Human Rights, theOrganisation for Economic Co-operation and Development(OECD) guidelines, and the Food and Agriculture
Organization (FAO) guidance on responsible agricultural
supply chains.

* B4SI is the global standard in measuring and managing corporate social impact

Volunteering opportunities

In line with the UN Guiding Principles, we have madehuman rights due diligence an essential and integrated
part of our business. This enables us to identify and assess
actual and potential human rights risks. Embedding humanrights due diligence – which is in part informed by ourwidely applied Human Rights Impact Assessments – is our
responsibility. It helps us to prevent adverse impacts on

people and ensure the highest standards of behavior are
upheld within our business and value chain. In 2022, we
assessed two new markets: Bolivia and the Philippines. We
also conducted three leaf supply chain impact assessments
in Brazil, Indonesia and Tanzania.
4Read more about respecting human rights on JT.com.

JT Group Human Rights Report

Volunteering brings mutual benefits for employees, ourbusiness, and the community. It also enables our teams to
make a positive impact in the communities where they live
and work by sharing their skills and knowledge.

volunteering activities. We do this by organizing programsand events, or by providing the necessary resources (funds
through corporate matching, employee time, in kind, or
employee donations).

We actively encourage our employees to take part in

4Read more about improving our social impact on JT.com.

In 2021, to coincide with the 10th anniversary of the UN
Guiding Principles, we published our first standalone JT
Group Human Rights Report, which examines the potential
JT Group human rights risks arising from our worldwide
operations. The report identifies nine salient human rights
issues. It sets out how we are going about improving our
performance.
4Read the JT Group Human Rights Report.

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