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Message from the Executive Vice President“ he significance of designating ‘Fulfilling Moments,
TEnriching Life’ as the JT Group Purpose is in continuously
communicating to the world the reason for our existence
through our work to realize it.

”

Ideas behind the JT Group Purpose
Today’s complex interaction of macro and micro factors
amid unrelenting change in our society and economy isso far beyond imagining that it might seem presumptuousto assume that one can read ahead. Change is happening
across the board, with exponential advancement of scienceand technology, new kinds of pandemics, the rising scale ofnatural disasters, terrorism, international conflict, superpower moves to defend national security, rising protectionism,
inflation worldwide and marked fluctuations in exchange
rates. We know this will probably have both direct andindirect influence on our lives and senses of value, as well as
the businesses and status of the JT Group.
The Group has been building profits with the tobacco
business as its core, assisted by the pharmaceutical andprocessed food businesses. Repeated trial and error andthe courage to rise to any challenge with a forward-looking
view have made this possible, which is also proof that ourstakeholders appreciate the resulting value we offer. Will
this remain practical in this age of continuous, dramaticchange? If we were to continue doing things as we always

have, with familiar markets, consumers and competitors,
maintaining traditions of industry practice, “common sense,”
rules and customs, I fear it would be hard even just to copewith the scale of the global changes we face.
For the Group to be sustainable in this highly unpredictable
and complex society, we have to show anew the direction inwhich we should be moving. In other words, circumstances
dictated that we define the ideal society we envision, clarify
those parts of life that society can entrust to the Group withthe greatest confidence in our value, and show how we cancontribute. The new JT Group Purpose is the result of ourself-examination along these lines. As our CEO Masamichi
Terabatake says in his message, we decided we can offer ourgreatest value by “staying close to people in fulfilling moments through our products and services, and creating such
moments together.” To realize our Purpose, we continue toembrace evolutionary challenges by deepening our commitment to go beyond established ideas in our operations
and initiatives.

Kiyohide Hirowatari
Representative Director and Executive
Vice President

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Message from the Executive Vice President

Creating the JT Group Purpose
The short-term goals of the Group and the ideals we’reworking to achieve over the long haul may seem contiguous, but they’re difficult to directly connect in a given timeframe. Bridging this gap was the highest hurdle we faced
in designating the Group Purpose, because we had toconnect two perspectives—one of forecasting to improve
the Group’s value to our stakeholders and society throughinitiatives based on an awareness of the current social andbusiness environment, and the other of backcasting from
our imagined futures. The issues we identified in backcasting and the initiatives to resolve them are not exactly thesame as those the Group has to address in achieving its
nearer-term goals. While we are committed to contributing
to the sustainable development of society through ourbusiness operations as we build corporate value, we mustalso produce positive nearer-term results, specifically in theachievement of the performance projections we disclose forthe public and capital markets and the goals we set out inour medium-term business plans, necessary to securing thefunds for realizing our ideals.
In this context the task of designating our Purpose may
put pressure on each business division to choose whether
to prioritize initiatives to achieve short-term goals, or toaccelerate initiatives to embody our ideals over the longterm. To avoid this we put a lot of time into discussion, withparticular emphasis on two points—confirming that “JT’sideal future form is an extension of what we have achievedin our past and present initiatives,” and stressing that “currentinitiatives are not the only ways to become what JT hopesto be” given the diversifying range of values among people
at large.
Despite the hurdles ahead, our discussions have brought
positive results, not least our Business Purposes. As I mentioned, in designating and publicizing the JT Group Purpose
there has been concern about employees perceiving a gap030

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Significance of designating the JT Group Purpose
between long-term ideals and short-term challenges. On
the individual level, that boils down to what each of us can
do to realize the JT Group Purpose. Our Business Purposes
are a way of answering this question, outlining a path foreach employee and each business division in understanding
specifically what kinds of actions to undertake.

Creating the JT Group Purpose process
Building a project team

The future society we envision:
Identifying the values we cherish

Putting it into words (drafting the Purpose)

Stakeholder interviews(management, employees, specialists, consumers)

Town hall meetings (dialogue with employees)

RevisionManagement/Board of Directors meeting
resolutions

Designating the JT Group Purpose

In formulating the Group Purpose we put special thought into two factors: the future we envision for society and the values
the Group cherishes.

The future we envision

Cherished values of the JT GroupFirst, working from leading trends we considered what
could happen going forward, particularly in terms of changes in daily life and our sense of value. With the continuing
advancement of science and technology we can presume
a high probability of trending toward greater convenienceand rationality, in other words a more optimal society. But
as living creatures, humans don’t make decisions based
entirely on any measure of optimization. That understanding
brought us to a hypothesis: the pursuit of an optimal state
can place new limits on life, causing stress, and in reaction
people may begin to see greater value in the meaning andsignificance of inconvenience and irrationality, raising thepossibility of backlash. This kind of emotional reaction, to adifferent degree for each person, will diversify endlessly andremain in play because of what it means to each person.

Offering that value has been integral to JT Group operations
for decades. The long-term business plan the Company
instituted in 1968, as Japan Tobacco and Salt Public
Corporation, includes the phrase, “We enrich people’s lives
by offering fulfilling and delightful moments.” Since then, wehave undergone privatization, diversification and internationalization, and we now operate tobacco, pharmaceuticaland processed food businesses. All through these years, wehave asked ourselves what constitutes fulfilling moments.
The ability to enjoy such moments will grow even more
important to society going forward.

We believe that what may seem irrational or wasteful canlead to an awareness of fulfilling moments. By staying withthose moments, we believe, experiences of emotionalfulfillment build up, influence one another and enrich thelives of the people in society as a whole, the world and thefuture. We also think that the value the Group offers in that
context helps create a society and future of enrichment for
all, regardless of individual challenges, so that more people
can feel, “I had another good day today.”

The kinds of moments people feel are fulfilling will vary withchanging times and the social background of each individual, as diverse as the number of people in the world and continually changing. The fulfilling moments that people willneed in the future may be well served by the products andservices the Group is currently offering, or by completely different products. For the Group to continue leading this fieldwith the trust and full confidence of society, we will haveto continue evolving. We see this as a commitment that wemust meet in order to fulfill the Purpose of “Enriching Life.”
We realize that achieving the Purpose will take a long time,and not all we do in that regard will be clearly visible. To
that end we must respond to change, and any preset course
may require adjustment. What’s important in an uncertain
environment, I believe, is the will of the Group to become
its ideal self and help create the ideal society we envision.
That will help us find meaning in our daily tasks and greater
value in the results. Through continuing initiatives to realize
our Purpose, “Fulfilling Moments, Enriching Life,” we will
steadfastly communicate to the world the reason for ourGroup’s existence. This is the significance of designating theJT Group Purpose.

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Message from the Executive Vice President

Realizing the JT Group Purpose
To manifest the Group Purpose we have reorganized ourvalue creation processes with the basic understanding thatpeople’s lives and corporate activities are sustainable only
where the natural environment and society are sustainable.
Those conditions help us stay close to the moments inwhich each person feels fulfilled, and for that purpose weoffer a variety of products and services, taking advantageof the capital the Group has been building up for years aswell as its natural and social capital. In doing this we commit
to collaborating with our stakeholders and encouraging
everyone to collaborate with one another, so the fulfilling
moments of individuals can interact, coalesce, and help
build a society in which everyone feels fulfilled. The diagram

shown below, titled “Ideas for value creation,” is a visual
representation of the stories I’ve been telling.
For the Group to be a trusted actor in creating the kindof life-enriched society we envision, every member ofthe Group must consider the values behind our Purpose,
discover the meaning of their responsibilities from thatstandpoint, step up effort to evolve, and win the trust of ourstakeholders. Everything the Group does begins with ourfellow employees, so it’s essential that the understanding of
the Purpose reaches us all. I and our management team arecurrently putting extra effort into building that understanding. Specifically, in addition to internal communications toinform employees, we on the management team regularly
hold town hall meetings and visit offices and plants to sharedirectly, in our own words, our ideas, hopes and feelings
about the Purpose. It’s important to understand “fulfillingmoments,” but that concept is personal and can manifest in
many ways depending on time and place. In conversations
with employees we make it a rule to emphasize that there
is no fixed path for achieving the Purpose, and how wethink, act, and evolve are important. Our approach has been
generally accepted positively by employees who’ve participated in those meetings. We are encouraged in hearing
them say that the Purpose “agrees with the values I cherish,”or “now I have a road map.” At the same time we’re awareof comments like, “Applying the Purpose to specific tasks oractions is hard.” So we’ll continue to put effort into detailed
communications using specific examples and case studies.
Our journey to manifesting the JT Group Purpose has only
just begun, and discussion continues internally on specificideas for achieving that with its deeper meaning in mind.
In that effort we hope to make the Purpose as clear asa high-definition image. To realize the ideal society weenvision and help create, the entire Group is embracing thechallenge of constant evolution.

Dialogue session with employees

Ideas for value creation

A society in which people’s lives are enriched

Greater trust in and hopefor the JT Group

Collaboration

Offering more fulfilling moments createdthrough collaboration, interaction and coalescence,
and accumulation with stakeholders.

Stakeholders

JT Group
CapitalFinancial
Non-financial

Shareholders

Offering value

Initiatives torealize the JT
Group Purpose

Consumers
Employees

SocietyAccumulating capital

Masamichi Terabatake
Representative Director and President,
Chief Executive Officer032

Japan Tobacco Inc. Integrated Report 2022

Kiyohide Hirowatari
Representative Director and Executive Vice
President

Kei Nakano
Representative Director and Executive Vice
President

Japan Tobacco Inc. Integrated Report 2022

033