JT Group Sustainability Report FY2016

Basis of reportingIntroduction
This Basis of Reporting document outlines the scope and the way we define, calculate, andconsolidate specific compliance, human resources (HR), health and safety, environment, andcorporate community investment related data within the JT Group Sustainability Report FY2016
and associated GRI Index. We aim to update the Basis of Reporting document each year and to
expand the list of data in 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 of December 31, 2016) and any
exclusions if applicable. We report data for the entire JT Group including subsidiaries, wherever possible. In the middle of 2015
the JT Group withdrew from the beverage business. 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:*A = the entire JT Group including subsidiaries (i.e.,international tobacco, Japanese domestic tobacco, pharmaceutical, andprocessed food businesses)*B = solely Japan Tobacco Inc. (JT) (includes Japanese domestic tobacco and pharmaceutical businesses, and excludes
international tobacco business, processed food business, and subsidiaries of all businesses)*C = Japan Tobacco Inc. (JT) and Japanese domestic Group companies (includes subsidiaries of Japanese domestic businesses,
excludes international tobacco business)*D = Japan Tobacco Inc. (JT) and Japan Tobacco International (JTI)*E = solely Japan Tobacco International (JTI) (our international tobacco business)
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSIn this section we provide information for the calculations, formulas, consolidation method, and any assumptions or estimates
used.
ASSURANCEIn this section we provide, where applicable, information on the standard against which specific indicators are assured and thelevel of assurance or verification.

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Compliance
HUMAN RIGHTS – NON-DISCRIMINATIONGRI G4-HR3 – Total number of incidents of discrimination andcorrective actions taken
DEFINITIONS
An incident of discrimination is described as an act of treating an employee differently by imposing unequal burdens 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).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSThe number of incidents are counted based on exported data from our Reporting Concerns management system.

HUMAN RIGHTS – GRIEVANCE MECHANISMSGRI G4-HR12 – Number of grievances about human rights impacts
filed, addressed, and resolved through formal grievance mechanisms
DEFINITIONS
A case is defined as ‘filed and addressed’ once it is received and recorded in our compliance system, as actions to investigate
each case begin immediately. A case is defined as ‘resolved’ once it is closed, irrespective of what the final response to the caseis and its outcome. Formal grievance mechanisms include both internal reporting procedures and external channels, for example,
a third-party hosted telephone hotline. For JT and Japanese domestic Group companies, we include cases related to sexual
harassment, moral harassment, and human relations. For our international tobacco business, we include cases related to childlabor, sexual harassment, moral harassment, discrimination, physical threats and violence, and data privacy.
SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSThe number of grievances are counted based on exported data from our Reporting Concerns management system.

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SOCIETY – ANTI-CORRUPTIONGRI G4-SO4 – Communications and training on anti-corruption policies
and procedures
DEFINITIONSThe number of employees are counted to include those who received communications on anti-corruption policies and how toreport corruption matters, including email reminders and material published through internal communication channels such as
our intranet and company magazine. The number of employees who underwent training includes those who undertook e-learning
courses and employee induction training content related to anti-corruption policies and how to report corruption matters.
SCOPE
The scope of this data covers solely JTI (*E).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSThe number of employees who underwent the anti-corruption training or to whom anti-corruption policies were communicatedis calculated based on the assumption that all employees with a valid corporate email address receive electronic training orcommunications on anti-corruption policies and how to report corruption matters.
Percentage is calculated using the above numbers divided by the number of employees as of the end of 2016, exported from our
HR system.

SOCIETY – GRIEVANCE MECHANISMS FOR IMPACTS
ON SOCIETY
GRI G4-SO11 – Number of grievances about impacts on society filed,addressed, and resolved through formal grievance mechanisms
DEFINITIONS
We have defined our main areas of impacts on society as anti-bribery and corruption and anti-competitive behavior.
A case is defined as ‘filed and addressed’ once it is received and recorded in our compliance systems, as actions to investigate
each case begin immediately. A case is defined as ‘resolved’ once it is closed, irrespective of what the final outcome to the caseis. Formal grievance mechanisms include both internal reporting procedures and external channels, for example, a third-party
hosted hotline.
SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSThe number of grievances are counted based on exported data from our Reporting Concerns management system. Cases recorded
as related to corruption and anti-competitive behavior make up this indicator.

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LABOR PRACTICES AND DECENT WORK – LABORPRACTICES GRIEVANCE MECHANISMSGRI G4-LA16 – Number of grievances about labor practices filed,addressed, and resolved through formal grievance mechanisms
DEFINITIONS
A case is defined as ‘filed and addressed’ once it is received and recorded in our compliance systems, as actions to investigate
each case begin immediately. A case is defined as resolved once it is closed, irrespective of what the final outcome to the caseis. Formal grievance mechanisms include both internal reporting procedures and external channels, for example, a third-party
hosted hotline.
For 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 issue, labor contract,labor conditions, work environment, and smoke environment. For our international tobacco business, we include cases relating tobreach of HR policies and procedures, conflict of interest, 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).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSThe number of grievances is counted based on exported data from our Reporting Concerns management system. Excluded fromthe data for our international tobacco business are HR cases that are classified as confidential.

OTHER DATA
Number of reported cases of fraud and misuses of company assets
DEFINITIONSFor JT and Japanese domestic group companies, we include relevant cases related to personal and business integrity as wellas other company rules and regulations. For our international tobacco business, we include cases relating to fraud and theft of
JT Group and third-party assets, misuse of IT resources, and the cases of intellectual property infringements recorded under theReporting Concerns management system.
SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONSThe number of reported cases is counted based on exported data from our Reporting Concerns management system.

Number of GHE requests
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.

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Number of employees who underwent GHE training
DEFINITIONSThe number of employees who underwent training, including e-learning and email reminders regarding GHE Policy contents.
SCOPE
The scope of this data covers solely JTI (*E).
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 GHE policies.

Percentage of employees who responded to compliance survey
DEFINITIONS
The percentage of employees who responded to our annual compliance survey, conducted online or by a paper questionnaire.
SCOPE
The scope of this data includes JT and Japanese domestic Group companies (*C).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The data is calculated based on an assumption that all employees with a valid corporate email address receive the invitation tocomplete the survey, and all employees who do not have an email address receive a paper questionnaire.

Percentage of eligible employees who participated in JT Group Code of
Conduct training
DEFINITIONSThe number of employees who underwent training, namely e-learning regarding the JT Group Code of Conduct.
SCOPE
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.

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Human resources
GRI G4-10 – Workforce information
DEFINITIONSWorkforce consists of people working for the company at the end of 2016 as follows:• Full-time employee is defined according to national legislation and practice regarding working time (such as national legislationthat define “full-time”means a minimum of nine months per year and a minimum of 30 hours per week).
• Part-time employee is defined as an employee whose working hours per week, month, or year are less than ‘full-time’ as defined
above.
• Supervised worker is defined as an individual who performs regular work on-site for, or on behalf of, the organization but is notrecognized 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.
SCOPE
The scope of this data covers the entire JT Group including subsidiaries (*A). For the breakdown of supervised workers, the scopeis only JT and Japanese domestic Group companies (*C). Workforce information broken down by JT Group businesses includes
non-SAP entities to ensure consistency with JT Annual Report FY2016.
Currently, 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, or by individuals otherthan employees or supervised workers, including employees and supervised workers of contractors.
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The figures are calculated based on exported data from our HR systems.

GRI G4-11 – Percentage of total [eligible] employees covered bycollective bargaining agreements
DEFINITIONS
An employee is covered by a collective bargaining agreement if the employee declares his intentions to be part of a trade unionand pays periodical union dues.
SCOPE
The scope of this data includes JT and Japanese domestic Group companies (*C), including 22 Group companies and excluding
24 Group companies. Data from our international tobacco business is excluded because the law in some 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 2016, using data held in our HR systems.

7ECONOMIC – MARKET PRESENCEGRI G4-EC5 – Ratios of standard entry level wage by gender comparedto local minimum wage at significant locations of operation
DEFINITIONS
Significant locations are defined as JT Tokyo HQ, JTI Geneva HQ, JTI Moscow, and JTI Trier factory. Tokyo and Geneva are ourheadquarters, and Moscow is the HQ office of the JTI Russia market – this market has the highest number of employees in ourinternational tobacco business.
Standard entry-level wage is defined as the theoretical lowest wage in the location and is therefore equal to, or lower than, theactual lowest wage paid in the entity. Local minimum wage refers to compensation per hour or other unit of time for employment
allowed under law. For Tokyo, we use the official minimum wage of the Tokyo metropolitan area. For Moscow, we use the official
minimum wage of Moscow City. For Trier, we use the official German minimum wage.
SCOPE
Significant locations of operations have been identified, as mentioned above, at Group level including subsidiaries (*A). For
our international tobacco business, the scope includes permanent full-time and part-time employees and temporary full-time
employees. However, there is no official minimum wage in Geneva; therefore, it will be disclosed as N/A. In JT, the scope includes
only permanent full-time and part-time employees. Temporary full-time employees are excluded.
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
For the data reported under JT Tokyo HQ, the basis for calculation is hourly minimum wage and monthly entry-level wage. For thedata reported under JTI Trier factory, the basis for calculation is hourly minimum wage and hourly entry-level wage. For the datareported under JTI Moscow, the basis for calculation is yearly minimum wage and yearly entry-level wage.

GRI G4-EC6 – Proportion of senior management hired from the local
community at significant locations of operation
DEFINITIONS
Significant location of operation for this indicator is chosen based on the number of employees. In 2016 our biggest market interms of employees was the Russian market. Geneva HQ and Tokyo HQ are not included as they are not representative for thisindicator due to the high proportion of senior management.
Senior management is defined as:• all people that report directly to the General Manager (including himself/herself)• all people that report to the head of Marketing and Sales• the Head of IT, who reports to the Chief Financial Officer• the Security Director and Anti-Illicit Trade Director who report to the Head of Legal.
SCOPE
This indicator includes both full-time and part-time senior managers, but currently all senior managers are full-time employees.
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The proportion is calculated as the number of management hires from the local community as of the end of2016 divided by the total management as of the end of 2016.

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LABOR PRACTICES AND DECENT WORK –EMPLOYMENTGRI G4-LA1 – Total number and rates of new employee hires andemployee turnover by age group, gender, and region
DEFINITIONSNew employee hires are defined as the number of new employees joining the company.
Employee turnover is defined as the number of employees who left the company for any reason, voluntarily or not. Employee age
is classified in three groups: under 30, between 30 and 50, and above 50 years of age. Regions are defined as the geographicalbusiness areas specified within our Annual Report.
SCOPE
The scope of this data is detailed below, and excludes employees in non-SAP entities:• The number and rate of turnover by age: the entire JT Group including subsidiaries (*A), and includes permanent full-time andpart-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-timeand part-time employees and temporary full-time employees.
• The number and rate of turnover by region: the entire JT Group including subsidiaries (*A), and includes permanent full-time andpart-time employees and temporary full-time employees.
• The number and rate of new employee hires 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 new employee hires by gender: the entire JT Group including subsidiaries (*A), and includes permanent
full-time and part-time employees and temporary full-time employees.
• The number and rate of new employee hires by region: the entire JT Group including subsidiaries (*A), and includes permanent
full-time and part-time employees and temporary full-time employees.
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Employees transferring from another JT Group company are excluded and not classified as a new employee hire.
Data for these indicators is collected in our HR systems. The turnover and new employee numbers are based on exported datafrom our HR systems, at the end of 2016.
Turnover rate is calculated as the total number of turnover divided by the total number of employees at the end of 2016 for thedefined scope above.
New employee hire rate is calculated as the total number of new employee hires in 2016 divided by the total number of employees
at the end of 2016 for the defined scope above.

GRI G4-LA2 – Benefits provided to full-time employees that are notprovided to temporary or part-time employees, by significant locationsof operation
DEFINITIONS
Significant locations for this indicator include JT Tokyo HQ and JTI Geneva HQ.
SCOPE
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.

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LABOR PRACTICES AND DECENT WORK – LABOR/MANAGEMENT RELATIONSGRI G4-LA4 – Minimum notice periods regarding operational changes,
including whether these are specified in collective agreements
DEFINITIONSMinimum notice periods are defined as those required, if any, by law in the country where the operational change occurs.
SCOPE
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 2016 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 and disclosed in two
different ways: the number of months between the announcement of the closure and the first redundancies, and the number ofmonths between the announcement of the closure and the closedown.

LABOR PRACTICES AND DECENT WORK –TRAINING AND EDUCATIONGRI G4-LA10 – Programs for skills management and lifelong learningthat support the continued employability of employees and assist themin managing career endings
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 that have wider coverage within JT and JTI (*D)
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The report includes examples of programs that apply within JT and JTI.

GRI G4-LA11 – Percentage of employees receiving regularperformance and career development reviews, by gender and by
employee category
DEFINITIONS
We consider an employee to receive regular performance and career development reviews if the employee has an opportunity tohave their development and business objectives as well as competences evaluated by their superior at least once a year.
SCOPE
The scope for the percentage of employees receiving regular performance and career development reviews is the entire JT Group
including subsidiaries (*A). However, the scope for the breakdown by gender and employee category is JT and JTI (*D). The scopeof employees includes permanent full-time and part-time employees and temporary full-time employees, but excludes employees
in non-SAP entities.
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DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Data is calculated as the total number of employees who received a performance and career development review in 2015 divided
by the total number of employees at the end of 2015. New hires joining in Q4 2015 in our international tobacco business are
excluded from the data as they were not eligible for a 2015 performance review.

LABOR PRACTICES AND DECENT WORK –DIVERSITY AND EQUAL OPPORTUNITYGRI G4-LA12 – Composition of governance bodies and breakdownof employees per employee category according to gender, age group,
minority group membership, and other indicators of diversity
DEFINITIONS
Employee age is classified in three groups: under 30, between 30 and 50, and above 50 years of age. For JT and Japanese
domestic subsidiaries, the following definitions are used for employee categories:• 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 legislation and practiceand excluding Executive Officers.
• Employees are persons who are not in management positions.
For our international tobacco business, the following definitions are used for employee categories:• Employees that are members of the Executive Committee are categorized as Executive Officers.
• The Vice President and Director-level employees are categorized as Management.
• Persons of Manager level and Associate level are categorized as Employees.
SCOPE
The scope of this data includes the entire JT Group including subsidiaries (*A), excluding employees in non-SAP entities. Akros
Pharma Inc., Fuji Foods, and Saint-Germain America are included in the data by position and gender, but excluded from the databy 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.

LABOR PRACTICES AND DECENT WORK – EQUAL
REMUNERATION FOR WOMEN AND MEN
GRI G4-LA13 – Ratio of basic salary and remuneration of women tomen by employee category, by significant locations of operation
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 and Japanese domestic subsidiaries:• 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 legislation and practiceand excluding Executive Officers.
• Employees are persons who are not in management positions.
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The following definitions are applied for employee categories for our international tobacco business:• Vice President• Director• Manager• Associate.
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 ASSUMPTIONS
The figures for both JT Tokyo HQ and JTI Geneva HQ are calculated based on ‘annual base salary.’
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 base salary by gender for each employee category defined above. Thisaverage is used to calculate the ratio of annual base salary of women to men within each category.

OTHER EMPLOYEE-RELATED DATA
Percentage of management positions held by women at the end of2016
DEFINITIONSIn JT and Japanese domestic subsidiaries, an employee is categorized at a position of management if the employee is in a positionof supervision or management according to national legislation and practice. In our international tobacco business, an employee
is categorized at a position of management if the employee is Director or Vice President level.
SCOPE
The scope of this data includes the entire JT Group including subsidiaries (*A), excluding employees in non-SAP entities. Dataconsists 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 women holding a management position at the end of 2016 divided by the total numberof employees who have a management position at the end of 2016. 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 thecalculation.

Percentage of management positions held by internal hires
DEFINITIONSIn JT, an employee is categorized at position of management if the employee is in a position of supervision or management
according to national legislation and practice. We defined internal hires as current employees who would be reassigned to a
new position by promotion or internal transfer. In our international tobacco business, an employee is categorized at a position ofmanagement if the employee is Director level or above.
SCOPE
The scope of this data includes JT and JTI (*D), excluding employees in non-SAP entities. Data consists of permanent full-time andpart-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 2016 divided by the total number ofmanagement positions filled in 2016.
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Total number of talent partnership program exchanges
DEFINITIONS
Total number of our Talent Partnership Program exchanges is defined as the sum of employees who are transferred as functionalor development assignees from JT to JTI or vice versa at the end of 2016.
SCOPE
The scope of this data includes JT and JTI (*D).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
Data is calculated as a sum of the number of functional assignees and development assignees seconded between JT and JTI at
the end of 2016.

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Health and safety
OVERVIEW OF HEALTH AND SAFETY DATAASSURANCE
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 of the verification.

LABOR PRACTICES AND DECENT WORK –OCCUPATIONAL HEALTH AND SAFETYGRI G4-LA6 – Type of injury and rates of injury, occupational diseases,
lost days, and absenteeism, and total number of work-related fatalities,
by region and by gender
DEFINITIONS
We define lost-time incidents (LTIs) as a sum of lost-time injuries, lost-time illnesses/occupational diseases, and fatalities. Losttime injury is a work-related injury that results in an individual being unable to work on a subsequent scheduled workday or shift.
Lost-time illness/occupational disease is a work-related illness/occupational disease resulting in an individual being unable towork 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 the following 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 is working 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 oncompany 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 associatedwith a JT Group employee while she/he is on duty.
SCOPE
The scope of the following data includes the entire JT Group including subsidiaries (*A), which covers all companies and sites:• Number of fatalities: Group-level data is for employees only. For our international tobacco business, we also report the numberof contractor fatalities and third-party fatalities resulting from an incident involving an asset, such as a facility or a vehicle being
driven for business purposes.
• Number of LTIs: Group-level data covers employees, while data for contractors and supervised workers is captured by JT
domestic Group companies and our international tobacco business. Currently, outside of Japan, lost-time illness/occupational
disease only covers reported cases from the U.K. and Brazil markets.
• LTI rate: Group-level data includes employees and supervised workers in our international tobacco business.

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The scope of the following data includes JT and global supply chain manufacturing units within JTI:
• Absenteeism rate: JT (excluding Japanese domestic Group companies) defines absenteeism as medical leave, sick leave,
and absent from work without notification for permanent full-time employees and permitted leave (excluding paid leave) for
temporary full-time employees. Part-time employees are excluded as out of scope. In the finished goods manufacturing sites
and tobacco processing facilities in our international tobacco business, absenteeism refers to the hours an employee is paid but
not present at the workplace due to illness supported with a medical certificate. Statutory holidays, training, and business trips
are excluded. An employee who is sent to another location for a long-term business trip may only be considered absent if he/she is included in the presence hours in the receiving location.
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
In our Japanese domestic operations, health and safety data is reported to headquarters by individual functions and Group
companies on an annual basis, while serious incidents are reported immediately. The number reported is based on the numberof health and safety related events that were submitted to and are recognized by relevant Japanese authority as such. In ourinternational tobacco business, health and safety data is collected at individual sites and locations, and reported internally on an
ongoing basis. Calculation is performed in the following manner:• Number of fatalities: a sum of all fatalities within our defined scope.
• Number of LTIs: a 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: absence hours as defined above, divided by total theoretical working hours within our defined scope.

OTHER DATA
Vehicle accidents and vehicle accident frequency rate
DEFINITIONSOur 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, from one 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 the road)• 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 our Japanese
domestic operations and international tobacco business.
• Vehicle accident frequency rate: covers the number of vehicle accidents per million kilometers driven in our international
tobacco business.
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.

15Percentage of cigarette and tobacco-related factories certified to
OHSAS 18001 safety management standard
DEFINITIONS
Cigarette and tobacco-related factories include all our leaf processing, cigarettes, and tobacco product manufacturing facilities.
SCOPE
The scope of this data is JT and JTI (*D), excluding market, R&D, non-tobacco material processing factories, and other 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 andlocations divided by the total number of all factories within scope.

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Environment
OVERVIEW OF ENVIRONMENTAL DATASCOPE
We use an operational control approach to determine the scope and boundaries of our environmental data reporting, 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 *A level data shown in the other sections of the
Sustainability Report.
ASSURANCE
We commissioned independent bodies 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; andCategory 6, business travel in our international tobacco business. Assurance for our Japanese domestic tobacco business wasprovided against ISO 14064-3 and ISAE 3000 (revised) in our international tobacco business.
In addition, water withdrawal, water discharge, waste generation, and percentage of recycled waste of our international tobacco
business have also been verified.

ENVIRONMENTAL – ENERGYGRI G4-EN3 – Energy consumption within the organization
GRI G4-EN15 – Direct GHG emissions (Scope 1)
GRI G4-EN16 – Energy indirect GHG emissions (Scope 2)
GRI G4-EN17 – Other indirect GHG emissions (Scope 3)
GRI G4-EN18 – GHG emissions intensity
GRI G4-EN19 – Reduction of GHG emissions
DEFINITIONS
We measure energy consumption and GHG emissions using the World Resources Institute/World Business Council 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 Reporting Standard 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 equivalent. GHG emissions
intensity is reported in metric tons CO2 equivalent per million cigarettes equivalent, which covers Scope 1 and 2 GHG emissionsof our Japanese domestic tobacco and international tobacco businesses only.

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DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
We calculate energy consumption and Scope 1 and 2 GHG emissions based on actual energy consumption at our sites andlocations from invoices and meters. Where this information is not available, in our international tobacco business, 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.
For GHG reporting, in Japan we use GHG emission conversion factors set by the Act on Promotion of Global WarmingCountermeasures, 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 thirdparty databases and our own life cycle assessments.

ENVIRONMENTAL – WATER AND EFFLUENTS ANDWASTEGRI G4-EN8 – Total water withdrawal by source
GRI G4-EN22 – Total water discharge by quality and destination
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 by destination.
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 isunable to report volume of water withdrawal, we use extrapolations based on actual data from a 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.

ENVIRONMENTAL – EFFLUENTS AND WASTE
GRI G4-EN23 – Total weight of waste by type and disposal method
DEFINITIONS
Our sites manage their waste based on the following waste hierarchy: reduce, reuse, recycling, and recovery. If these methods 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 and hazardous waste.
The reporting unit for waste generation is 1,000 metric tons.
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 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.

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

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investment
SOCIETY – LOCAL COMMUNITIESGRI G4-SO1 – Percentage of operations with implemented local
community engagement, impact assessments, and development
programs
DEFINITIONS
Implemented local community investment programs are defined as investments in projects that improve the quality of life ofpeople where we operate in an impactful way.
All community investment programs have a recorded output defined following the LBG criteria (www.lbg-online.net).
In our Japanese domestic market, impact assessment methodology is currently being developed. In 2016, five out of nine
centrally managed community investment programs were assessed using trial methodology. Our international tobacco businessis in the process of developing an impact assessment on key projects, and enabling our partners to employ impact specialists andinvesting in third-party evaluation. In the U.K. market, impacts are fully recorded.
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 directly from markets,
which is cross-referenced with our finance systems to confirm that the program was implemented.

ECONOMIC – ECONOMIC PERFORMANCEGRI G4-EC1 – Direct economic value generated and distributed[community investment]
DEFINITIONS
The value of corporate 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 G4SO1 that are provided to benefit a community, and JT International S.A.’s annual endowment to the JTI Foundation.

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The calculation of time and management cost is based on the LBG methodology. For all Japan-based employees, an averagehourly rate provided by the Japanese government is used. For our international tobacco business, cost of time is based on anaverage hourly rate calculated using a weighted average salary (including bonuses) across all work groups (excluding the
Executive Committee) based on data for the year up to December 31, 2016. Cash contributions are calculated based on the grossmonetary 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).
DATA CALCULATION, CONSOLIDATION METHOD, AND ASSUMPTIONS
The figures are calculated based on data from our community investment database and market reports, and checked against
financial reports. All financial data is converted from local currency to Japanese Yen at the time of payment, using internallyagreed exchange rates.

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