ISO 26000: The Environment

Lessening
environmental
impactThe JT Group has establisheda wide range of policies andinitiatives that limit theenvironmental impact of its
commercial activities.

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Report20 | JT- CSR- CSR
Report20132013| The Environment

Working towards sustainability
The JT Group’s
environmental
agenda is to operate
in a sustainable andefficient manner overthe long-term.

The JT Group utilizes agricultural products
worldwide and recognizes that its global
activities have an environmental impact.
From the procurement of raw ingredientsand materials, to the manufacturing anddistribution of products, the aim is to lessen
this impact by promoting sustainability.

Minimizing the environmental impact, and thepromotion of the efficient use of resources,is achieved through focusing activities onlowering greenhouse gas (GHG) emissions
and reducing water consumption and wastegeneration. Biodiversity conservation andconsideration of local ecosystems are also
addressed in a number of ways.

The JT Group’s environmental principles
and policies are set out in its Environmental
Charter, which has led to the implementationof numerous programs that reduceenvironmental impact across the entire valuechain.

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Meeting the challenges of environmental management
Environmental Charterand Environmental
Action Plan
The JT Group has established anEnvironmental Charter which defines theapproach to preserving the environment.
A series of practical steps have been
designed to limit environmental impact, andare contained in an Environmental Action
Plan (EAP) which outlines the planning,implementation and management ofenvironmental programs. Activities andgoals in the EAP are tailored to the individual
challenges and circumstances of the Group’sfactories, offices and other sites.

the medium term plan of 2009 – 2012, were
all attained except for the GHG emissions per
million cigarettes. The global recession andan increase in taxes in Japan, contributed toa lower than planned emission reduction per
million cigarettes.

The EAP targets for GHG emissions, water
consumption and waste generation, covering

JT Group EAP1: Reduction Targets and Results
Index

Medium-Term Target (FY2009 - 2012)2

FY2012 Results2

Greenhouse gas (GHG)
emissions3

10% reduction by FY2012

Reduced by 10%

11% reduction in GHG emissions per million cigarettes by FY2012

Reduced emissons per million cigarettes by 6%

Water consumption

12% reduction by FY2012

Reduced by 31%

Waste generation

15% reduction by FY2012

Reduced by 21%

Tobacco product factories

Amongst the JT Group, 55 major entities are monitored for EAP assessment.		
Reference year for the medium-term target and the FY2012 results is FY2007.		
GHG emissions indicated in the table above, cover Scope 1 and Scope 2 set in the GHG Protocol.		

123

When calculating CO2 emissions in relation to electricity usage, we use conversion factors set in the 2005 GHG Protocol
for domestic operations in Japan, and the 2003 Protocol on a country by country basis for the international operations.

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Reducing greenhouse gas emissions
Observing the GHG Protocol
In order to better understand its environmental impact, and sothat it can measure reductions over the long-term, the JT Grouphas begun calculating the amount of GHG emissions it generates
throughout its entire value chain. Measurements are in line withScope 3 set in the GHG Protocol: an international guideline forcalculating emissions.

JTI factory in Trier, Germany

The JT Group aims to reduce GHG emissions throughefficient energy use and a shift to low carbon fuels.
In 2012, the scope of measuring GHG emissions wasexpanded across its entire value chain to monitor
the environmental effects of energy use. The Group
continually assesses ways to integrate low-energy
methods and processes into its operations. This includes
measuring, recording and reporting energy efficiency
across functions, from R&D and manufacturing tomarketing and sales. For example, the introduction ofenergy-saving equipment and the operational optimizationof machines are widely observed in production sites.
Additionally, the Group has made significant efforts toincrease transportation efficiencies, utilizing vehicles that

consume less fuel. In some of the factories and offices cogeneration systems are in place and the conversion fromstandard fuels into low-carbon fuels is also encouraged.

Under the GHG Protocol, three scopes have been set to calculate
and report on GHG emissions:• Scope 1: All direct GHG emissions from corporate activities, suchas burning of fossil fuels at factories;• Scope 2: Indirect GHG emissions from consumption ofpurchased electricity, heat or steam;• Scope 3: Other indirect emissions (divided into 15 categories).
This includes the extraction and production of purchasedmaterials and fuels, transport-related activities in vehicles not
owned or controlled by the reporting entity, electricity-related
activities not covered in Scope 2, outsourced activities, waste
disposal and more.

In Japan, energy-saving vending machines have been
installed on various sales sites. Additionally, the switch toLED lighting in offices is now widespread, as traditional
light bulbs are replaced with LED bulbs as part of theregular office equipment renewal cycle.

The total Scope 3 GHG emissions of the JT Group in FY2012, iscurrently being verified and is expected to comprise the major
portion of the total GHG emissions of the Group’s entire value
chain. This reaffirms the importance of efforts to reduce emissions
across the chain.

As a result of these initiatives, GHG emissions havedecreased by 10% compared with 2007.

The Group is set to reduce its GHG emissions by continuously
monitoring environmental performance across its entire chain ofbusiness operations.

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Combating resource depletion
through forestation and conservation
One way in which the JT Group limits its
environmental impact is through forest
regeneration and conservation programs.
Replanting trees and preserving areas ofexisting woodlands support biodiversity
within ecosystems and aids farming
communities in particular. Additionally, trees
hold soil in place, thus preventing soil erosion
and reducing the flood vulnerability of localcommunities. This also makes sense froma business perspective as the JT Group willcontinue to use wood from forests as aresource in the future.

Investing in a secure future for growers and theircommunities by planting trees today
In many of the countries where the JT Groupsources tobacco, people depend upon wood forbuilding, cooking and the heat needed to curetobacco leaf. Over time, increasing populations
have placed pressure on tree resources, resulting
in large areas of deforestation. While the amount ofwood used in producing tobacco is a small portionof the total used each year, the JT Group is focusedon renewing these natural resources as part ofits broad approach to sustainable agriculture.
Therefore, the Group has reforestation programs

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in Malawi, Zambia and Tanzania, operated inpartnership with Washington State University, withthe aim of restoring deforested areas. Training
farmers to plant a mix of native, exotic andnaturalized species of trees helps ensure that there
is fuel and timber today, and for future generationsof growers and their communities. These carefully
managed wood lots also contribute to a better
habitat for wildlife, while protecting soil and waterresources.

Curbing deforestationin Malawi withLive BarnsLive Barns is an initiative launched in
Malawi in February 2013, aimed atavoiding deforestation and contributing
to soil conservation in tobacco growingcommunities.
A Live Barn in practice

The Malawi tobacco industry has traditionallyused wood-based barns in the curing andstorage of tobacco green leaf from the field.
The JT Group is in the process of phasing out
this old barn system, because it cannot besustained within the context of Malawi’s highrate of deforestation.
The Live Barns concept eliminates theneed for wood or timber and the cutting oftrees. Conventional barns use poles for theirconstruction and maintenance, while Live
Barns are built in the wood lot using live trees.
Seedlings are planted right where the barn will
stand, and a barn is erected once they are fullygrown.
Seedlings of different kinds of fast-growing
naturalized tree species are used, which cansupport a roof after three or four years ofgrowth. The roof is thatched from natural

grasses and is protected with a watertightcovering to keep out the rain. The Live Barns
project will initially involve approximately 300
farmers, who will grow 65,000 trees in thefirst year before extending the initiative to 15
other districts. Ultimately, over 14,000 barns
will be established and over three million trees
planted.
The Live Barns initiative complements theJT Group’s forestation program, which isdeveloped in partnership with Washington
State University and Total LandCare, a nonprofit organization (NPO) that aims to improve
the livelihoods of local communities.

Protecting water sources
Water is an essential element
used in manufacturing manyof the JT Group’s products.
Consequently, the Groupis focused on reducing theamount of water it uses, whileincreasing water recycling
methods.

TableMark’s Uonuma Mizunosato Factory in Japan

Cooling boiled ‘UDON’ noodles as part of theproduction process

Maintaining water quality to reduce pollution
TableMark Co., Ltd., a subsidiary of JT,
operates primarily in the processed foodbusiness in Japan. Its Uonuma Mizunosato
Factory is located in Uonuma, in the Niigata
prefecture. This is an area renowned for anabundance of high-quality water, and wasofficially selected as one of Japan’s 100 Best
Water Areas. The factory produces 21,000
units of frozen ‘UDON’ noodles and 6,000
packs of cooked rice every hour. The qualityof the water used greatly enhances the flavorof the rice and noodle products, which areboiled in this water during the production
process. To avoid water pollution and reduce
impact on the environment, TableMark
established a water quality monitoring
committee together with the city of Uonuma
and the local fishermen’s association before

making the factory operational. The Company
also installed water purification equipment,such that TableMark not only meets local
environment effluent regulations, but applies
its own stricter criteria, which exceeds local
regulations by a factor of ten.

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CSR Report
Report 20132013 || 2525JT GroupReducing, Reusing and Recycling

Tobacco shipping cases

Reusing materials in thetobacco business
PET bottles in beverage production

The JT Group sets waste
generation targets by adopting
and promoting the 3R
measures: Reduce, Reuse andRecycle.

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Reducing the use of raw materials
In its beverage business, the JT Groupprocures from its suppliers plastic PET bottles
as beverage containers which are produced
using a reduced amount of raw materials.
These PET bottles are still robust enough not
to be affected by heat deformation or theeffects of impact, while ensuring the qualityof the contents.

The business has adopted different bottle
sizes as part of its efforts to reduce theamount of plastic used. New 280ml and500ml bottles have been introduced, resulting
in savings on plastic amounting to 530 tons
in FY2012.

In 2007, JTI initiated a shipping case reuse program
across its global supply chain, which reduced thepurchase of new cases by 460,000 in 2011. The
offset to JTI’s cigarette production waste in 2012is estimated at over 12%, with significant costsavings despite the additional logistics required tomatch supply with demand.
In Malawi, JTI reduced the amount of coal usedin its boilers by 23% by burning woody tobacco
stems, which also resulted in the reduction of
CO2 emissions. Additionally, tobacco waste that is
not burned is being put to good use, after testing
demonstrated it can improve soil. JTI continues
to investigate further opportunities for redefining
waste as a usable resource, including a current,
factory-wide assessment of all its waste materials.

Innovating to limit waste
Helping a local
farming community
Thai Foods International Co., Ltd. (TFI), a subsidiaryof TableMark, is part of the processed foodbusiness that produces yeast extracts and othernatural seasonings.
Yeast broth, a by-product of the manufacturing
process, is rich in essential organic and inorganicsubstances. Identified as an aid to growing
agricultural products, the broth has been supplied
to local farmers as a fertilizer. Following theinstallation of a concentration facility, concentrated
yeast broth can now be packaged and delivered toareas outside the immediate locale, so that evenmore farmers can benefit from this nutritious byproduct.
The recycling of yeast broth as an organic fertilizer
contributes to decreasing waste from TFI’s
production processes. It also reduces farmers’
reliance on chemical fertilizers thus reducing theCO2 emissions generated during the production ofchemical fertilizers.

The Recycle Plaza JB disposal facility

Working with thebeverage industry torecycle used beveragecontainers
Proper disposal and recycling of used drink
containers is an ongoing problem within thebeverage industry. The Japan Beverage (JB) groupis part of the JT Group’s beverage business,
responsible for operating beverage vending
machines throughout Japan. The Company
has taken a proactive measure to ensure theappropriate disposal and recycling of containers,

by establishing the JB Environment Network,
comprised of 18 major beverage companies inJapan.
In 2003, the JB Environment Network createdthe Recycle Plaza JB, a core disposal facility forrecycling used beverage containers. The facility
takes care of the intermediate disposal of cans,bottles and PET containers from Tokyo andsurrounding prefectures in Japan.
After separating the used containers, manually
and with the aid of machinery, aluminum and steel
cans are reprocessed by furnaces into high-purity
aluminum and steel pellets. The purity of theserecycled metals allows them to be sold to themetal industry and used as raw materials in the
manufacturing of aluminum and steel products.
Glass bottles are shipped to a glass processor,and PET bottles are sent to appropriate recycling
companies.
In addition, JB has organized a broader Recycle
Network consisting of over 180 third party waste
disposal institutions and recycling companies
across Japan.
In 2012, the annual throughput at Recycle Plaza
JB was 8,869 tons, with a recycling rate of 87%.
The total amount of throughput since 2003 has
exceeded 71,500 tons.

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