Environment
Environmental issues are of increasingsocietal concern and have brought many
challenges to our society. Today we arefacing the consequences of climate changesuch as melting ice caps, rising sea levels,and changing weather patterns. We all needto address these issues and, as a globalorganization, we recognize that we have a
key role to play in reducing ourenvironmental impact.
As with most industries, the environment
has a direct impact on our business. We also
know that our operations impact theenvironment, through resource usage,
emissions, and waste generation, and we
strive to minimize this impact.
By implementing sustainable businesspractices, we are able to conserve resources,
protect biodiversity, reduce waste, manage
costs, and meet the growing consumer
demand for more sustainable products bringing benefits to both the environmentand our business.
This approach is explained in the JT Group
Environment Policy.

Environmental

Environment and our

Product stewardship,

Environmental data /management

operations

circularity and waste

External verification

Read more

Read more

Read more

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Our latest CDP submission can be found here

In setting specific goals and initiatives for ‘the JT Group Sustainability Targets’, we placed

importance on the relationships and ties with the revised materiality, while also including past
initiatives. In pursuing our materiality ‘Living with the Planet’, we set targets related to environmental
issues.
Please refer to the following for targets related to ‘Living with the Planet’.

Read more on Environment and our operations.
* Read more on Improving our social impact.

The JT Group Sustainability Targets updated with following the initiatives of JT Group Environment
Plan 2030, which was the original target set for 2023.
Read more about our progress toward JT Environment Plan 2030

Copyright© Japan Tobacco Inc. All rights reserved.

Environmental management
In our more complex operations, we align our approach to environmental management with theinternationally recognized standards ISO 14001 and ISO 50001.* In our smaller and less complex
operations in Japan, we have implemented our own “JT Green System”, which promotes a simple
and consistent approach.
ISO 14001 encourages businesses to think more broadly about environmental issues – not only
those associated with their direct operations, but throughout their entire value chains. ISO 50001
provides a framework for our energy management system and helps us to continually improve ourenergy performance.
We are also working to streamline and better integrate our environmental and energy management
systems with other business considerations, such as quality, occupational health and safety, andbusiness continuity.
To objectively review our approach to environmental management and our overall performance, we
use external disclosures and ratings agencies, such as CDP and the Dow Jones Sustainability Index(DJSI).

ISO 14001 certification
We use ISO 14001 as the framework for our environmental management systems to manage
significant environmental aspects, mitigate risks, and optimize opportunities. We track the
proportion of our cigarette and tobacco-related factories that are certified to ISO 14001. Seedata for the current and past certification of our factories.
*ISO 14001 and ISO 50001 are the internationally recognized standards for environmental
management systems and energy management systems, respectively. These standards do notprescribe absolute performance requirements. Rather, they provide us with a framework to help
build effective management systems that deliver continual improvement in environmental andenergy performance.

CDP 2023 A List and Supplier Engagement Leader 2023

We achieved a place on CDP's prestigious “A List” for both tackling climate change and water
security in the 2023 CDP environmental disclosure program. This is the fifth consecutive year to belisted in the Climate Change A list. In addition, CDP recognized us as Supplier Engagement Leader
2023 in addressing climate change for the fifth consecutive year.

We are honored that the
JT Group has beenrecognized on CDP’s A
List and for the fifth
consecutive year. This
inclusion reflects ourcontinued efforts to
reduce ourenvironmental footprint
and expand ourtransparency indisclosing information.
In February 2024, wehave set the JT Group
Sustainability Targets
with specific goals andinitiatives. In setting thetargets, we placed
importance on therelationships and ties
with the JT Group
Materiality.
‘Living with the Planet’ is
one of the five material
issues and a key aspectin the JT Group
Materiality. We have set

targets such as ‘Emission
reduction’ or ‘Protecting
water’ for this material
issue.
We aim to achieve thesustainable relationshipbetween nature, people,
and businesses throughefforts to improve theimpact of our activities
on the environment.
These targets will
support our goals ofcontributing to thesustainable developmentof society by further
fulfilling our
responsibilities andmaintaining the trust of
our stakeholders.

Hisato Imokawa
Chief Sustainability Officer(As of January 31, 2024)

Our latest submission to the CDP can be found here.

A greener approach to procurement
Green procurement is critical to improving environmental performance. We established a
Sustainable Procurement department in June 2020. This department leads sustainability-related
initiatives, mainly for packaging and other relevant categories, supports sustainability activities toachieve the JT Group sustainability targets, and engages with suppliers on sustainability topics
through close collaboration.
In our Japanese operations, we have green procurement guidelines to ensure that the products andservices we purchase cause minimal environmental impact. These guidelines include lists of green
products and services, such as stationery, computers, and transportation services. We review andupdate the guidelines periodically, based on the availability of new products and services, andmonitor how many of the listed products and services we purchase.
Our green procurement approach is not only about purchasing goods and services. We also
encourage and work with our suppliers to improve their overall environmental management andperformance. Energy efficiency is one of the key criteria for the purchase of goods and services in
our Global Supply Chain division. In 2021, we launched the Green Mobility Program in our tobacco
business. The purpose of the program is to help decarbonize our fleet and reduce emissions
associated with work-related and private travel. The program is supported by our Green Mobility
Handbook and communications campaigns across the business. In 2022, we concluded work listing
the key Non-tobacco materials suppliers that contribute significantly to our carbon footprint. In 2023
we will focus on suppliers' climate change programs together and support them to build climatechange management programs where necessary.

Building environmental awareness and expertiseAcross the Company, we strongly believe in the importance of raising awareness of environmental
issues among all employees. To do this, we run training and awareness campaigns every year, andwe regularly publish articles and updates on our Company intranet.
To improve the environmental performance of our operations, we have appointed personnel
responsible for environmental management at each of our business sites. These employees aretrained in environmental management systems and the relevant regulatory requirements. We alsooffer a more advanced course for staff who are responsible for internal auditing and reporting
environmental data.
In addition, our internal auditors go through a certification process to ensure that we apply aconsistent approach across the JT Group.
As a further step to raise awareness of environmental issues and our sustainability initiatives, wehold regular Sustainability Awards and Sustainability Days.
There are also many other activities and events at global and local levels, including information
sessions on emissions, resources, and waste.
Currently we are enhancing our sustainability communications, increasing awareness andengagement of employees on sustainability matter.

Related links
Environment

Environmental

Environment andProduct

Environmental

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circularity anddata / Externalverification

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Environment and our operations
Tackling climatechangeEmissions
reduction/Rene
wable energy

deforestation,

Water

Biodiversity

Designing forEnhancingbiodiversity - No

Protecting

circularity Waste reduction

no conversion

Packaging,product andSustainableagriculture

deviceCase studies

We strive to further reduce theenvironmental impact of our operations,focusing on the most significant
environmental risks and opportunities forour business and stakeholders. These
currently include climate change, thesustainable use of resources, andresponsible waste management.

Tackling climate change
Climate change is the biggest environmental challenge facing society and our business. The effects
of climate change, such as global warming and changing weather patterns, could have serious
implications for our supply chain - given that our products are mainly agriculture-based - and also
for our own operations.

We are committed to tackling this issue and we are reducing Greenhouse Gas (GHG) emissions
across our entire value chain to support global action on global climate change, with the longer-term
aim of achieving Net-Zero GHG emissions from our operations.
The JT Group supports the Paris Agreement to limit global warming to well below 2 degrees Celsius.
Our statement on the Paris Agreement can be found here.

Task Force on Climate-related Financial
Disclosures (TCFD)
The potential for financial impact associated with climate change is now well known, and concern is
growing about its mid- to long-term impact on business operations and financial market stability. We
officially endorsed the recommendations of The Task Force on Climate-related Financial Disclosures(TCFD) in December 2020.
A key aspect of the TCFD recommendations relates to the identification, assessment andmanagement of climate-related risks and their integration into overall risk management. With this inmind, we conducted climate scenario analysis. Our analysis was based on several scenarios: aglobal temperature increase of 1.5℃, 2℃ and 4℃. This approach is in line with the expectations of
the TCFD.
Six main risk factors were selected for analysis. As the outcome we identified two main climaterelated risks: “potential cost increases due to governments raising carbon taxes to further reduce
Greenhouse Gas (GHG) emissions” and “the impact on leaf tobacco growing due to changes inenvironmental conditions”.

Governance
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-levelmeetings.
Our corporate governance system can be found here.

StrategyThrough climate scenario analysis, we identified two main risks: “potential cost increases due togovernments 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 bycontinuing to implement climate-related initiatives across our value chain and address areas for
improvement.
See the JT website for general information on environmental initiatives.

Risk Management
We consider climate-related risks and identify risk mitigation and management approaches throughour 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.

Metrics and Targets
We have set a target to reduce GHG emissions from our own operations by 47% (2030 versus 2019).
We have also set a longer-term GHG emissions reduction target, as well as targets for renewableelectricity, backed by our Group-wide climate scenario analysis.
Read more on Environment, Environmental data / External verification andData calculation, consolidation methods.

Details of Climate Scenario Analysis
We reviewed various risk factors with the potential to have a substantive financial or strategic
impact on our business. This process identified two main risks:
1 Potential cost increases due to the raising of carbon taxes by governments to further reduce
GHG emissions
2 The impact on leaf tobacco growing due to changes in environmental conditions
Our conclusion was that we could mitigate both risks by continuing to implement climate-related
initiatives and programs across our value chain. This would mean that our business operations
would not be materially disrupted by financial impacts.

Transitional Risks

Category

PolicyRisk nameEmerging regulation
Carbon pricing

Parameter

Time horizon

Magnitude of impact

Carbon tax

Long-term

Medium-low

Explanation of impact / Impact (100 million yen) /Description of responses

Physical Risks

CategorTime

Magnitude ofhorizonimpactRisk nameParameter

ChroniChange in growing environment of

Change in yield of tobacco leaves by

Long-

c

tobacco leaf

climate change

term

y

MediumExplanation of impact / Impact (100 million yen) /Description of responses

Country-based Climate Scenario Analysis
To further understand climate-related issues and potential risks at a more granular level, we havecarried out a program of country-level climate scenario analysis in our tobacco business.
In the initial phase, from 2020 to 2022, we completed climate scenario analyses for eleven countries. We prioritized countries where we have a combination of leaf sourcing, manufacturing andmarkets. We used consistent risk modelling and global warming scenarios across all three years.
We assessed potential exposure and vulnerability to climate-related issues for leaf sourcing,processing, manufacturing and markets, using the following indicators: river flooding, sea level rise,heat stress, rainfall variability, water stress, drought, hurricanes, extreme rainfall and frost. We
assessed potential exposure using climate modelling based on scientific research and literature,
and assessed vulnerability through interviews with local employees. For our analysis we used threewarming projections called Representative Concentration Pathways: RCP2.6, RCP4.5 and RCP8.5.

Emissions reduction/ Renewable energy
We are expanding our sustainability ambitions across the entire value chain and accelerating ourefforts to reduce GHG emissions. To date, this has been through a combination of energy andemissions reduction initiatives, increasing the proportion of the energy we use that comes fromrenewable sources and production impacts. Going forward, the main programs to achieve the target
relate to further improvements in energy efficiency, renewable energy, and vehicle fuel type andefficiency.
As part of our efforts to meet our energy and emissions target, we will increase the proportion ofrenewable electricity that we use to 50% by 2030, in support of our goal of reaching 100% by 2050.
In our tobacco business, 50% 2025 and 100% by 2040.
In our direct operations, the renewable electricity target will be achieved through on-site generationand the sourcing of third-party renewable energy.
We are continually working to identify renewable energy opportunities. Where possible, and where it
makes business sense, we have invested in renewable energy generation opportunities and willcontinue to invest in opportunities that increase our use of renewable resources. Renewable energy
opportunities are included in our business planning and in our feasibility study for achieving Carbon
Neutrality in own operations by 2030 and Net-Zero GHG emissions across the entire value chain by
2050. In a drive to accelerate the reduction in our GHG emissions, we are taking advantage of zeroor low-carbon energy tariffs and green energy certificates, and we have entered into a powerpurchase agreement for renewable energy. See our road map to achieving Net-Zero GHG emissions.

Progress toward quantitative target
By the end of 2022, 31% of the electricity used in our tobacco business came from renewablesources (either purchased or generated on-site), and 24% of the electricity we used in the JT Group
in 2022 came from renewable sources. Moving forward, we have plans in place which will further
increase the proportion of renewable electricity we use.

Through our Environment Opportunities Scheme, our factories have identified 269 projects between
2015 and 2022. These avoid over 7,000 tons of GHG emissions and represent a cost saving of over
US$2 million, with an average payback of three months.
Vehicle emissions are another important consideration for us, and we encourage all of our locations
to select alternative, more environmentally friendly fleet vehicles and change the way in which travelis planned, improve the style of employees’ driving and commuting etc. Within our tobacco
business, we have launched our Green Mobility Program, designed to reduce emissions associatedwith our fleet.

Greenhouse Gas emissions in our supply chain
As part of the JT Group Sustainability Targets, we are committed to reducing Greenhouse Gas(GHG) emissions associated with our supply chain. We recently updated our absolute Scope 3 GHG
emissions target: to reduce our GHG emissions associated with purchased goods and services by
28% between 2019 and 2030 and to achieve Net-Zero GHG emissions for our entire value chain by
2050.
In Japan, we have a long-standing relationship with tobacco growers, which brings benefits to our
suppliers, our business, and our planet. Working closely with leaf growers and our machinery
supplier, we have developed an innovative drying machine which improves fuel efficiency in the
tobacco curing process - reducing both the use of non-renewables and GHG emissions. In addition,
the new machines help growers to save costs and improve quality, directly impacting our businessand improving the environmental impact associated with our tobacco value chain. By the end of2022, our leaf growers were using a total of 828 of these drying machines across Japan. We plan toexpand the program by implementing a new curing system to make the process even moresustainable.
We continue focusing our efforts on improving curing efficiency, through barn furnace upgrades andnew heat exchange designs. These not only optimize tobacco leaf quality, but also reduce wood fuelconsumption. In addition, we are addressing the production of wood resources required for tobacco
curing through dedicated agroforestry programs and tree-growing initiatives in Tanzania andZambia, for instance.
Please see other detailed efforts on JT International sustainability website.

Progress toward quantitative target
In 2022 GHG emissions related to purchased goods and services decreased by 11% comparing to
2019. This is driven mainly by lower emissions associated with tobacco leaf and non tobacco
materials. This is the result of initiatives including curing efficiency improvement, renewable wood
production and packaging weight reduction.

Science Based Targets
Greenhouse Gas (GHG) emissions reduction
targets for 2030 from our operations havebeen validated by the Science Based Targets
Initiative (SBTi) as being in line with the
1.5℃ global warming scenario.

Protecting water
In the JT Group Sustainability Targets, we commit to supporting global water stewardship byreducing our water use and encouraging water risk management in our supply chain. We have set atarget to reduce our tobacco business-associated water withdrawal by 33% by 2030.
Societal demand for water is increasing globally and water-related issues such as availability,
quality, flooding, drought, or regulatory changes can have a major impact on society and ourbusiness.
Our tobacco and food manufacturing activities all use water. However, for our main operation, thetobacco business, the water that is required for tobacco crops comes predominantly from rainfall,
while tobacco processing and manufacturing are not water-intensive.
As part of our approach to good water stewardship, we committed to carrying out water risk
assessments at 100% of our factories. In 2020, we completed the first risk assessments at all of ourfactories, and we are now working on our program of reassessments. Our water risk assessments
consider water availability and quality, changing legislation, natural disasters such as flood anddrought, and future water stress. From the assessments, we develop action plans to reduce risk andimprove overall water management and security. We have been recognized by CDP as an A List
company, the leadership level for Water Security in 2023.
We will continually support global water stewardship by reducing our water withdrawal and byencouraging water risk management in our supply chain.
Please see other detailed efforts for water stewardship on
JT International sustainability website.

Progress toward quantitative target

Based on 2022 results, we successfully achieved our water withdrawal target ahead of ourschedule. The Original target was set for 2023. From 2015 to 2022, we reduced the water
withdrawal associated with our tobacco business by 23% - well ahead of our target of 15% by 2030.
We achieved this by implementing water efficiency improvement programs. We have set even more
ambitious goals in the JT Group Sustainability Targets.

Biodiversity
Responsible management of biodiversity is important for the JT Group. Our focus is onconservation of biodiversity during tobacco growing, where our biggest impact is. One of the JT
Group Principles in Leaf Tobacco Production is to reduce environmental impact and ensure efficientuse of natural resources while striving to conserve biodiversity. Biodiversity is also included as afocus area in the Leaf Sustainability Framework. We endorsed
the Declaration of Biodiversity by Keidanren, which is an ambitious action guideline thatsummarizes specific biodiversity-related activities in Japan.
Please see the JT Group Biodiversity Statement

Biodiversity risk assessment

for more of our commitment and ambitions.

In 2022, we have conducted an initial risk assessment of our impact and dependency on biodiversity
for our tobacco business, with reference to TNFD v0.3 and the International Union for Conservationof Nature 2021 (IUCN 2021)’s guidelines. The scope of the assessment covers our own operations,
upstream activities, and downstream activities.
When carrying out the impact assessment, we firstly broke down our business activities to raw
material sourcing, manufacturing, and disposal and evaluated the impact of each activity. On top of
that, since biodiversity is closely related to locations and specific countries’ natural resources, weanalyzed our main countries with operational activities with scope and severity and calculated thequalitative impact score accordingly. This has helped us to identify the top geographical locations
where we possibly have the highest impact. During the assessment, we referred to data fromENCORE*, National Biodiversity Index (NBI), and Environmental Performance Index (EPI).
Regarding dependency, we have used the same methodology as we assessed our impact and haveidentified the areas and geographical locations with the highest level of dependency.
Through the impact and dependency analysis, we have identified that we do have risks of
biodiversity. Possible impacts on terrestrial ecosystem use, water pollutants and soil pollutants
were identified in the tobacco supply chain. Regarding dependency, the prevention of flood andstorm, land stabilization, water supply are possible areas with high dependency on ecosystemservices.
Looking ahead, we will further carry out both qualitative and quantitative risk assessment covering
the whole group step by step, with the aim to define our main focus areas, objectives, plans andtargets to address the issues. Our phase 2 risk assessment covering the whole group is to becompleted in September, 2023.
*Natural Capital Finance Alliance (Global Canopy, UNEP FI, and UNEP-WCMC) (2022). ENCORE:
Exploring Natural Capital Opportunities, Risks and Exposure. [On-line], [December, 2022], Cambridge,
UK: the Natural Capital Finance Alliance. Available at: https://encore.naturalcapital.finance.

DOI:

https://doi.org/10.34892/dz3x-y059.

Biodiversity conservation actions
When moving forward with our actions based on the risk assessment, we are embracing ScienceBased Targets for Nature（SBTN） guidance on the mitigation hierarchy following the AR3T
framework. The following initiatives are the examples of our approaches:
Avoid
We are working to replace Highly Hazardous Pesticides (HHPs) with safer and more environmentallyfriendly options across the company.

In January 2022, we updated our internal standards for Crop Protection Agent (CPA) residue. The
HHP limits are now applied to all processed tobacco from crops transplanted in 2022. If, throughour analysis, we detect that the residue level of HHP Criterion 1 pesticides exceeds the LoQ, we do
not purchase the tobacco. We formally communicated this to all our tobacco suppliers in February2021.
In addition, we made it clear to our suppliers that we expect them to avoid environmental
contamination and, also importantly, to protect people and animals from exposure to hazardous
CPAs. We stressed that using less hazardous CPAs is as critical as wearing the correct personal
protective equipment.
ReduceIn 2022 we introduced a new sustainability governance model with a focus on product stewardship,
circularity and waste. It aims to manage the safety and the environmental and social impacts of our
products and their packaging at all stages of their life cycle - and to avoid waste through productcircularity or reduce it by operating an effective waste management system.
We will reduce the environmental impact of our products and packaging through:■

Design solutions■

Facilitating responsible collection and disposal■

Consumer awareness and education

More specifically, we will reduce our packaging (including plastic) and ensure that the remaining is
88% reusable or recyclable by 2025, rising to 100% by 2030. In total, recycled content will accountfor 20% of our tobacco business packaging by 2025.
Regenerate
In Zambia, we are taking proactive approaches to of biodiversity regeneration and forest
conservation. The Shishamba Forest Livelihoods Project in Zambia is an initiative for thesustainable management of Miombo woodland. It includes, among other things, the promotion ofwoodland conservation practices such as fire management and assisted natural regeneration. Local
communities are empowered to use and manage forest resources responsibly and sustainably.
RestoreWe are partnering with the Wildlife Research and Environmental Education Society and the National
Bank for Socio-Economic Development to restore over 300 hectares of permanent-protection areas
in Brazil with the participation of our contracted growers. This area includes parts of a National
Nature Reserve as well as land owned by tobacco growers.
The restoration work started in 2018, when we replaced 35 hectares of pine trees in the Pirai do Sul
National Forest with native species to help restore the natural landscape. We also trained 33 local
college students in ecological restoration.
More than 195 hectares have been restored on 200 small farms in Permanent Preservation Areas,by planting some 140,000 seedlings of native species and installing 200,000 meters of fences toprotect them. Only six hectares remain to meet our restoration target.
We are also restoring 75 hectares of the Meia Lua Natural Reserve, in the municipality of Ponta
Grossa. The Project was audited and approved by funding partner, the National Bank of Socioeconomic Development (BNDES), in November 2022 and is scheduled to be completed in May 2023.
Transform
We have formed partnership with the LIFE Institute, an international non-profit standard-settingorganization, since 2017 to measure and improve our impacts on biodiversity.
The LIFE Methodology for Business and Biodiversity has helped our tobacco leaf business in Brazil
to enhance its sustainability performance and deepen its understanding of and commitment tobiodiversity. An important benefit of the partnership with LIFE is reflected in information
management: organization and standardization of environmental data allows investment decisions
to be based on evidence, so that investments bring greater environmental benefits and lower risks
to the company.
Our partnership with the LIFE Institute, together with other companies, led to the launch of LIFE
Coalition for Business and Biodiversity : a group of leading companies which share the ambition of
scaling up biodiversity conservation at a global level through LIFE solutions. This group provides agreat opportunity to exchange best practice experiences to mitigate impacts related to themethodology's indicators: carbon footprint, water use, waste generation, land use, and energy use,
all leading to biodiversity conservation.
Read more on Supply Chain and see other detailed efforts for biodiversity on
JT International sustainability website.
Each of the JT Group business will perform assessment to evaluate impact on its dependency on
the ecosystem, including biodiversity aspects as set in the JT Group Sustainability Targets.
Assessments for the tobacco business will be performed by 2024 and by 2025 for thepharmaceuticals and processed foods businesses.

Forestry
Ensuring a sustainable wood supply andcontributing to conserving and rehabilitating
forests are key objectives set out in the JT
Group Sustainability Targets. One of ourtargets is to achieve Zero net deforestationof managed natural forests in the entire
tobacco business supply chain by 2030. Our
focus is to establish and monitor woodlots
with higher productivity and usability,
securing a sufficient, renewable supply ofwood for tobacco production while also

reducing wood consumption throughimproved curing efficiency. Due to theimportance of forestry conservation for ourbusiness and the whole society, we are
currently reviewing our environment plan to
update our targets.

Progress toward quantitative target
Improvements in tree planting and wood production
Based on our 2022 tree planting activities in Tanzania, Zambia, and Brazil, we estimate 98%
renewable wood supply in crop year (CY) 2029, based on actual tree planting captured with
Agroforestry App in CY2022 (Nov 2021 – Feb 2022).
Improvements in tree seedling production
An improved adoption of our Minimum Forestry Standards (MFS) has already shown results inenhanced tree seedling quality and uniformity. Quality tree seedlings are the basis for a successful
woodlot establishment and optimized tree growth potential.
Please see other detailed efforts for forestry on JT International sustainability website.

Waste Reduction
From a societal and stakeholder perspective, waste, and particularly plastic waste, is of increasing
concern. From a business perspective, all waste has a direct cost (handling and disposal) and an
indirect cost (e.g. resource and processing costs).
We consider waste impacts on each stage of our operations from receiving materials and services
to post-consumer waste of our product and packaging. That’s why waste management is a key
component of the JT Group Sustainability Targets. Across the JT Group we apply a “reduce, reuse,recycle” approach. We have also set targets for waste reduction as reducing waste helps toconserve resources, which in turn helps to minimize our environmental impact and cut businesscosts.

Progress toward quantitative target
Based on 2022 results, we have reduced waste associated with our tobacco business by 22% since2015. We successfully achieved our waste reduction target ahead of our schedule. The Original
target was set for 2023. This was driven predominantly by waste reduction initiatives (e.g.
production yield improvement) and waste reuse programs (e.g. tobacco cases reused).
We will aim to further reduce our environmental impact by realizing the targets set in the JT Group
Sustainability Targets, which focus on resource recycling.
Read more on Product stewardship, circularity and waste.

Designing for circularity - Packaging, product and device
The JT Group has set a target to reduce its packaging (including plastic) and ensure that theremaining is 88% reusable or recyclable by 2025, rising to 100% by 2030.
Please see other detailed efforts on JT International sustainability website.

Sustainable agricultureAs set in the JT Group Sustainability Targets, JT Group's direct contract leaf tobacco farmers will
eliminate the use of HHPs (High Hazardous Pesticides) classified as Class 1 by 2024, and all HHPs
by 2040. By 2030, 100% of our directly-contracted growers will have adopted our Good Agricultural
Practices (GAP) Protocol.
For more information, please visit JT International sustainability website.

Case studies
Sustainability is deeply embedded within our operations. We work hard to minimize ourenvironmental impact by focusing on energy efficiency, Greenhouse Gas (GHG) emissions reduction,water efficiency, and waste reduction. Many programs and initiatives are already in place, bothglobally and locally. These include everything from the way we source raw materials to the way weship finished products. Read more about our local and global activities:
In our Japanese business operations (Japanese website)
In our tobacco business

Related links
Environment

Environmental

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Product stewardship, circularity
and waste
We are committed to achieving continuous improvement in the sustainability of our products andpackaging.
In 2022 we introduced a new sustainability governance model with a focus on product stewardship,
circularity and waste. It aims to manage the safety and the environmental and social impacts of our
products and their packaging at all stages of their life cycle - and to avoid waste through productcircularity or reduce it by operating an effective waste management system.
We will reduce our packaging (including plastic) and ensure that the remaining is 88% reusable orrecyclable by 2025, and 100% by 2030. Our tobacco business will reduce packaging and achieve
85% recyclability by 2025, rising to 100% by 2030. In total, recycled content will account for 20% of
our tobacco business packaging by 2025.
Read more about product stewardship, circularity and waste on
JT International sustainability website.

RRP return/collection scheme
In 2019, we published company-wide internal guidelines for RRP waste management and recycling.
These guidelines help markets to determine and implement appropriate initiatives.
We encourage consumers to recycle or dispose of our RRP products safely. In some markets weoffer return schemes adapted to local needs.

Case study

Ploom - Return scheme in Japan

In Japan, we launched a program in 2019 tocollect used Ploom devices, capsules andcartridges via convenient collection boxes ataround 300 shops in Tokyo. In 2020, thisprogram was extended to include additional
tobacco players and it was launchedthroughout Japan in 2021. Since then,around 1,200 collection points have been
established in all 47 prefectures.

Case study

Biomass plastic as a raw material for the
packagingA by-product of rice milling is crushed rice:
rice that is broken during the milling process
and can no longer be used for
manufacturing. In a first for the industry, we
are now using the domestic carbon-neutral
biomass plastic RiceResin®*, which contains
10% crushed rice generated by our Group, asa raw material for the packaging of some ofour cooked rice products. In addition tousing RiceResin®, we have reduced theamount of petroleum-based plastic in our
packaging by around 4.2% compared toconventional products. We have done this bymaking the exterior film even thinner.

* RiceResin® is a registered trademark of Biomass Resin Minamiuonuma Co., Ltd. Old rice that is not edibleand crushed rice generated during rice milling are upcycled into plastic using new technology.

Various information on Environment and our product can be found at the followings.
For the goals set forth in the Tobacco Business Sustainability Strategy, Read about
Product stewardship, circularity and waste (Environment).

About our reportingOur referenced guidelines(GRI), notes
on data (BoR), and scope of our data(*A-E).

Read more

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Environmental

Environment andProduct

Environmental

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circularity anddata / Externalverification

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Environmental data / Externalverification
Energy

GHG

Water

Waste

ISO 14001

Environment data verification statement
Independent Assurance Statement for the JT Group

Environmental data
Group-wide Scope 1 and 2 GHG data, some Scope 3 GHG data, energy, proportion of renewableelectricity, water withdrawal, water discharge and waste-related data have been externally assured.
The calculation methodology and scope are outlined in our Basis of Reporting.

Energy
Energy Consumption (Terajoules)

2019

2020

2021

2022

Fossil fuels purchased and consumed

5,957

5,525

5,789

5,662

Electricity (non-renewable) purchased

2,741

2,500

2,389

2,236

72

64

47

36

1,380

1,561

1,686

1,765

518

722

841

853

862

840

846

912

Total energy sold

-0.005-0.004-0.007-1.080

Total

10,151

9,650

9,912

9,697

Steam / heating / cooling and other energy(non-renewable) purchased

Total renewable energy purchased or
generated- Total renewable electricity purchased or
generated- Total renewable energy purchased or
generated excluding electricity

Energy Consumption Breakdown

2019

2020

2021

2022

Non-renewable fuel consumed

5,950

5,525

5,789

5,662

Renewable fuel consumed

860

838

844

910

3,321

3,271

3,248

3,063

19

16

31

64

Electricity, heating, cooling and steam sold

-0.005-0.004-0.007-1.080

Total

10,151

9,650

9,912

9,697

Proportion of renewable electricity (%)

2019

2020

2021

2022

Total

14%

20%

23%

24%

(Terajoules)

Electricity, heating, cooling and steam
purchased for consumption

Self-generated electricity, heating, cooling and
steam

GHG
GHG emissions

2019

2020

2021

2022

CO2

344

314

328

317

HFCs

25

25

24

23

Total (Scope 1)

368

339

351

340

Scope 2

367

318

296

277

Total (Scope 1 + 2)

735

657

647

617

Purchased goods and services

7,793

6,298

5,958

6,960

Direct leaf supply

1,854

1,530

1,776

1,702

Third-party tobacco materials

3,970

2,823

2,318

3,319

- Others

1,970

1,945

1,864

1,940

Capital goods

393

322

311

265

153

149

156

145

Upstream transportation and distribution

398

375

382

385

Waste generated in operations

18

15

14

11

Business travel

223

65

51

63

Employee commuting

54

50

45

57

(1,000 tons CO2e)

Fuel-and-energy-related activities(not included in Scope 1 or 2)

GHG emissions

2019

2020

2021

2022

Upstream leased assets

1

0

0

1

Downstream transportation and distribution

289

302

294

252

Processing of sold products

1

1

1

1

Use of sold products

13

16

24

25

End of life treatment of sold products

78

90

87

95

Downstream leased assets

1

1

0

0

Franchises

5

5

6

7

Total (Scope 3)

9,420

7,690

7,331

8,269

2019

2020

2021

2022

100

100

101

111

0.2

0.1

0.2

0.2

484

468

483

489

584

569

584

600

(1,000 tons CO2e)

Out of scope emissions(1,000 tons CO2e)

Direct CO2 emissions from the combustion of
biomass

Indirect CO2 emissions from the combustionof biomass

Biogenic CO2 emissions generated elsewherein the value chain

Total (biogenic)

Water
Water withdrawal by

2015

2016

2017

2018

2019

2020

2021

2022

1,398

1,575

1,466

1,570

1,631

1,712

1,783

1,937

0

0

0

0

0

0

0

0

Rainwater

59

60

66

58

41

31

29

1

Groundwater

5,535

5,653

5,493

5,610

5,652

5,485

5,112

4,718

0

0

0

0

0

0

0

0

3,574

3,289

3,272

3,246

2,881

2,791

2,780

2,632

0

0

0

0

0

0

0

0

10,567

10,576

10,297

10,485

10,206

10,019

9,705

9,289

source (1,000 m³)

Fresh surface
water

Brackish surface
water/seawater

Produced/process water

Municipal supply

Wastewater fromanotherorganization

Total

Water discharge bydestination (1,000 m³)

Fresh surface
water

Brackish surface
water/seawater

Groundwater

2015

2016

2017

2018

2019

2020

2021

2022

2,425

2,414

2,599

2,744

2,907

2,842

2,692

2,566

0

0

3

18

19

6

6

0

1

2

1

0

8

12

12

6

3,504

3,259

3,111

3,112

2,772

2,767

2,765

2,682

0

0

0

0

0

0

0

0

5,930

5,675

5,715

5,875

5,707

5,626

5,475

5,253

Municipal/industrial treatment
plant

Wastewater fromanotherorganization

Total

WasteWaste generation

2015

2016

2017

2018

2019

2020

2021

2022

91

94

93

93

96

93

94

90

16

15

14

14

14

11

9

8

6

6

6

7

5

5

6

6

Landfilled

18

18

18

19

16

17

15

12

Total

131

132

131

133

131

126

123

116

(1,000 tons)

Recycled
including waste
composted

Incinerated withheat recovery

Incinerated
without heatrecovery

Packaging
Reusable & Recycable Packaging Weight breakdown (1,000

2021

2022

Reusable & Recycable Packaging Weight

209

202

Non Reusable & Recycable Packaging Weight

31

35

Total

240

238

tons)

[tobacco business]

2021

2022

Recycled Materials Weight

31

36

Non Recycled Materials Weight

166

162

Total

197

197

Packaging composition

2021

2022

Reusable or Recyclable Packaging (%)

87%

85%

16%

18%

Packaging Recycled Content breakdown (1,000 tons)

Recycled Content (%)[tobacco business]

ISO 14001 certified (Scope: Cigarette and tobacco-related factories (includingGroup factories))

Total factories

Certified
factories

Certified (%)

2015

2016

2017

2018

2019

2020

2021

2022

41

40

43

43

46

47

47

44

34

32

33

34

36

36

36

33

83%

80%

77%

79%

78%

77%

77%

75%

Related links
Environment

Environmental

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Environmental

management

our operations

stewardship,
circularity anddata / Externalverification

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