In this section

Health and safety > P.25
Responsible employer > P.27
Employee development and talent management > P.28
Equality and diversity > P.29

03 Our people
A large part of how we dobusiness relates to how weattract, retain, and treat ouremployees, and how we keepthem safe at work.
Our approach to humanresources is grounded in
our “4S” model. We provide
all JT Group employeeswith growth opportunities,
adopt transparent rules andstandards, treat all employees
fairly, respect diversity, andseek a variety of talent.
Our employees are a criticalcontributor to our successand by following thisapproach, we aim to provide
workplaces where they can
thrive and develop.

24 | JT Group Sustainability ReportHealth and safety
To the JT Group, effective health and safety management means not only complying with all relevant legislation but also establishingsystems to minimize risks for employees, contractors, and visitors to our operations.
Group-wide, we have a uniform understanding of the importance of health and safety, and this is reflected in individual policies
within our business units that are tailored to specific business needs. Although each business has its own policy, there are a numberof common factors to our approach, including maintaining effective management systems, using systematic risk assessments to
identify workplace risks, and investing in continual performance improvement.

Health and well-being team in Brazil

HealthIn our international tobacco business, we launched a wellness
strategy in 2013 that defines our approach to worker health,hygiene, and well-being. The strategy consists of four pillars
for improvement of health management and performance:
reaction, risk assessment, control and management, and wellbeing. The initial focus has been on understanding absence
through ill health by determining health risks in our supply chain
and manufacturing operations so that we can make informed
decisions on worker protection. Future focus areas include
exposure control and risk management, developing competence
among our employees, and developing global well-being
programs that address the reasons for employee absence.
We will also focus on business resilience through pandemicplanning and endemic disease programs, such as for HIV/AIDS.
We are taking the model of our successful Action Against AIDS
program in South Africa and have initial plans to roll the initiativeout across our operations in Malawi, Tanzania, and Zambia.
Here, prevalence of HIV and AIDS are among the highest rates
globally.

Safety in our Japanese domestic
businesses
In 2013, we renewed our five-year Occupational Safety Hazard
Prevention Plan *B that sets a target to eliminate occupational
accidents in JT by 2017. With one lost time incident (LTI) acrossour 13 Japanese tobacco-related manufacturing facilities in
2013, we are close to achieving zero LTIs. Our ongoing focus

Training is an essential part of achieving our goal, and amajor training program in our Japanese domestic tobacco
manufacturing operations is Kiken Yochi training, or risk
prediction training. The training brings together small groups of
employees to identify operational risks, determine root causes,and develop risk mitigation approaches and goals for their own
factory.

Safety in our international
tobacco businessIn our international tobacco business, our safety strategy targets
work-related injuries and aims to build a sustainable safety
culture. Twenty-one of our manufacturing sites are certified to
the OHSAS 18001 safety management standard, and in 2013
the first of our research and development facilities achieved
certification. Our target is to certify all manufacturing, researchand development, and tobacco leaf supply chain operations
to ensure we have a consistent and systematic approach to
improving workplace safety.
Key safety initiatives that we are implementing include
Safety Culture and Fleet Safety Programs. Our Safety Culture
Program engages and encourages employees to adopt safe
workplace behaviors. It includes safety leadership training,safety observation, and dialogue processes, and establishes
task-teams for specific safety topics. The Fleet Safety Programprovides defensive driver training and web-based safe driver
training, as well as setting objectives to reduce road trafficcollisions. These programs have contributed to a downward
trend in work-related injuries. As our business grows, wewill review and revise these programs to ensure all high-risk
activities continue to be targeted for safety improvement.

JT Group Sustainability Report | 25

03

Our people

The health of our employees is directly linked to theirproductivity and satisfaction at work. Within JT *B, we provide afull-time medical staff of 14 doctors and 34 public health nurses
across 11 office locations. They provide legally required medical
examinations as well as health checks and consultations to help
employees with lifestyle-related health issues.

is on eliminating all recordable incidents, and we developed
new ‘Safe Working Guidelines’ for our tobacco manufacturing
operations in 2013.

Japan Tobacco Inc.*B

2011

2012

2013

Occupational accident frequency rate*1

1.13*30*3

4.44

Occupational accident severity rate*2

0.012*3

0*3

0.031

Total number of fatalities

0

0

0

Total number of lost time incidents (LTIs)

25

20

31

1,000,000 x (Number of lost time incidents/Total working hours)
1,000 x (Number of work loss days/Total working hours)*3
Please note that 2011 and 2012 data for occupational accident frequency rate and accident severity rate represented production sites only; however, 2013 data
includes all JT operations*B due to improvements in the scope of reporting*1*2

International tobacco business *E

2011

2012

2013

Number of fatalities

2

2

3

Number of lost time incidents (LTIs)

76

68

58

LTI rate (LTIs per 200,000 hours worked)

0.32

0.29

0.22

Number of vehicle accidents

1,757

1,508

1,362

8.4

7.1

6.1

Vehicle accident frequency rate (accidents per million km)

In our international tobacco business, safety performance in certain areas can be challenging due to vast differences in safety cultures
within the geographies in which we operate. In 2013, across the international tobacco business, there were three fatalities. We had
58 lost time incidents (LTIs), the lowest number since measurement began in 2003. The number of vehicle accidents was reduced
by around 22%, and our vehicle accident frequency rate was reduced from 8.4 to 6.1, which again is the lowest in the international
tobacco business’s history. We will continue to improve our safety performance until we achieve our vision of an injury-free work
environment. Further details can be found within the JTI Environment, Health & Safety (EHS) report on www.jti.com.

26 | JT Group Sustainability ReportEmbedding safety in new
acquisitions: Sudan
Following the 2011 acquisition of Haggar
Cigarette and Tobacco Factory in Sudan,
one of our first priorities was to improvea safety record that fell far short of ourstandards. With support from regional andglobal safety leaders, a four-year safety
roadmap was devised, starting in early2012 with the urgent need to provide
Personal Protective Equipment, and ensure
it was used. The roadmap also includes
implementing safety procedures, safety
leadership training, incident reporting andinvestigation, and regular progress review
meetings. In a short period, the intensive
safety focus started to pay off, with LTIs
reduced from 23 in 2011 to nine in 2012
and two in 2013.

Car fleet safety in Russia
In Russia, our vehicle fleet consists of
1,800 vehicles travelling some 38 million
kilometers each year. Following a study by
our safety team, we discovered that 45%
of our fleet accidents were speed related.
In response, we initiated a fleet safety
program in 2012. The program includes
GPS monitoring of our vehicle fleet, whichallows us to record vehicle speeds anddriver behavior such as accelerating,braking, and overtaking. Combined withregular driver training, the program has
halved the vehicle accident frequency (VAF)
rate from 8.7 in 2011 to 4.11 in 2013 andreduced total accidents from 347 to 150
accidents. The program has also received aState Traffic Police commendation.
VAF rate = number of fleet vehicle accidents/
distance in kilometers travelled by all vehicles x
1,000,000 kilometers

Responsible employer

Working with Trade Unions

Communicating with employees

We have a long history of positive industrial relations. Across the
JT Group, industrial relations are based on individual countries’
labor laws, and we aim for open and constructive relations
with Trade Unions and Works Councils. Dialogue with Trade
Unions is generally undertaken within the jurisdiction of our local
operations, and typical engagements cover aspects of company
management, strategy and planning, as well as operational
issues.

Across the JT Group, we communicate with our employees
irrespective of whether or not a Trade Union is in place tokeep them informed on important company matters. We
use many communication methods from notice boards andface-to-face meetings to web-based channels and electronic
communications for our sales forces in the field.

In JT *B, 99.9% of our employees in non-management positions(and 74.8% of contract and part-time employees) are covered bycollective bargaining agreements. In our international tobacco
business, Trade Unions or Local Works Councils represent
the workforce in 21 countries. These groups generally exist
to facilitate employee–management dialogue, and several
groups also negotiate on behalf of the workforce. In 12 ofthese countries, the majority of the workforce is unionized andmembership is voluntary in all but two. In two of our operating
countries, employee negotiations are carried out at an industry
level so there is little direct company involvement.

Employee Engagement Survey

One method of communicating with employees and receiving
their feedback is our Group-wide Employee Engagement
Survey (EES), conducted regularly across the JT Group. The
EES gathers employees’ views on their working environment,
our way of doing business, and the business unit or function
they belong to. Each function uses the results of the survey todevelop initiatives to improve the workplace, make operations
more effective, and further motivate employees.
In 2013, 96.1% of our workforce in Japan *C participated in thesurvey.

In line with the relevant European Directive, we also have a
voluntary European Works Council agreement in place. Our
European Works Council operates as an employee informationand consultation body for transnational issues relating to ouroperations in Europe. The Council has regular meetings eachyear and is made up of employee representatives and membersof management.

JT Group Sustainability Report | 27

03

Our people

The JT Group operates a strategic framework that acknowledges employees as a cornerstone of our success. We invest in our
employees accordingly and encourage collaboration across our diverse workforce, which spans more than 70 countries. Two criticalfactors that support this approach are ongoing engagement with our employees and positive industrial relations. Communication
is key to being a responsible employer, and we engage in an open dialogue with employees and their representatives to generatemutual respect.

Employee development and talentmanagement
Our employees contribute to the success of the JT Group and in return we provide an open, fair, and stimulating work environment
in which they can pursue their goals and improve their skills and abilities. This is reflected in our human resources policies, which
establish the Group-wide goal of providing growth opportunities for all employees and ensuring we have the right person to fill theright position at the right time. We see this approach as an investment in the future success and growth of the JT Group.

Development process
For the JT Group, dedicated communication between
managers and employees is a critical part of the employee
development and talent management process. Performanceappraisals are important means for employee development,setting an employee’s development objectives as well as
business objectives. These are based on needs identified
during the previous year or those required to deliver successful
performance in the future. In 2013, 97.9% of our workforce *B
received performance appraisals. In our international tobacco
business, the number of employees who received performanceappraisals has steadily increased over the years to approximately
15,700 in 2013.
To help develop our existing workforce, our policy is to fill open
positions with internal candidates who have the right experience
for the job. In our international tobacco business, we filledapproximately 90%* of all management positions with internal
candidates in 2013.
Enabling employees to explore opportunities or roles acrossfunctions, business units, or internationally is another key part ofdeveloping talent within the JT Group. It provides opportunities
for career progression and helps to meet the changing needsof our global organization. In our international tobacco businessin 2013, 3,999* employees changed positions internally,
representing around 15% of our international workforce.

JT/JTI Talent Partnership Program

To develop the global capabilities of our workforce and help
develop our future business leaders, we established the JT/
JTI Talent Partnership Program in 2006. The Program builds
employees’ skills and experiences by exposing them to thedifferent working styles and cultures between our Japanese
domestic and international tobacco businesses. The Programis a long-term investment for the Group and allows the transfer
of technical skills and brand knowledge as well as building
relationships between the JT Group’s two largest business
units. In 2013, 162 employees from JT were working within theinternational tobacco business, up from 136 employees in 2012.

Training
Employee training is provided through a mixture of on-the-job
learning, formal internal and external training, and e-learning.
Due to the diverse nature of our international tobacco business,
we operate a number of centralized training academies toensure we provide a consistent approach to training regardlessof geographical location. These include training academies forleadership development, Manufacturing operations, Consumer
and Trade Marketing, Corporate Affairs, Human Resources,and IT.
*Data note: data relates to our international tobacco business and excludes
locations not currently on our SAP HR Management System, amounting to3,033 people in 2013

External recognition
In a number of countries, we have received recognition for our employee practices.

Top Employers 2013

Investors in People

Belgium
Czech Republic
Denmark
FranceGreeceJordanRussiaSouth Africa
Tanzania

Italy
the Netherlands
PolandSwitzerland
U.K.

TurkeyU.K.
WWDF

Great Places to Work 2013
Ireland
Italy

Spain
TurkeyIn addition to these awards and certifications, a number of the JT Group’s entities were also recognized in local best employer awards
and ratings.

28 | JT Group Sustainability ReportEquality and diversity
We are proud of our diverse workforce and the way that it contributes to and shapes the culture of the JT Group. Employing a diverse
workforce is a strong source of competitiveness within an international marketplace and supports our goal of sustainable growth. In
2013, we employed more than 110 nationalities across our global workforce. Beyond national diversity, we value diversity of opinion,
allow people to express their own personalities, and believe in creating a work environment that fosters creativity and innovation.
We have a commitment to equal opportunity and anti-discrimination, and this is reflected in our Codes of Conduct and humanresources policies. We recruit strictly based on talent and regardless of an individual’s race, nationality, creed, religion, gender, sexual
orientation, or physical ability.

Gender diversity
The JT Group maintains an open approach to diversity. We takea gender-neutral approach to recruitment in order to appeal
equally to all potential employees irrespective of gender or any
other measure of diversity. We do not apply diversity quotas in
our hiring processes and recruit solely on ability. While we havea gender-neutral approach to recruitment, we want to ensurethat we create workplaces that are attractive to women and put
in place measures to ensure that we attract, support, and retain
female employees across the Group.
In JT *B, we established a Diversity Development Department in2013, with the aim of promoting working environments in which
diverse workforces can thrive. Although diversity covers various
factors, the current focus of the department is female

representation. Female representation within management
increased from 1.4% in 2013 to 2.2% at the end of March 2014.
We have set ourselves a target to triple this figure by 2018, andachieve 10% female management by 2023. To support thisgoal, we have established a dedicated section on our intranet
and hold seminars on female empowerment in the workplace.
During the recruitment process for spring 2014, females
accounted for more than 30% of new hires.
In our international tobacco business, the overall ratio of
men to women was 70:30 in 2013. Female representation atVice President and Director level stood at 11.1% and 25.9%,
respectively.

Female35

1Management excluding Executive Officer

1,924

261

Non-management

22,702

7,909

Executive Officer

Data note: data excludes locations not currently on our SAP HR Management System, amounting to 3,033 people in 2013

Generational diversity
In addition to gender diversity, we work to create a culture that takes advantage of inter-generational learning and experience sharing.
Our policies and practices do not discriminate on the basis of employee age or generation, and we adopt ways of working that areappropriate to all generations represented in our workforce.

3%

Breakdown of employees bygender and age group *D (%)
Male
Under 30 years old

17%

14%

From 30 to 50 years old
Over 50 years old
Female8%

Under 30 years old

2013

From 30 to 50 years old
Over 50 years old
Data note: data excludes locations not
currently on our SAP HR Management
System, amounting to 3,033 people in 2013

15%
43%

JT Group Sustainability Report | 29

03

Our people

Number of employees by position and gender in 2013

Male

*D