Respecting human rights
Our human rights

Our approach

strategy

and progress

Governance andHuman Rights

stakeholder

Impactengagement

Assessments

We operate in parts of the world where human rights are at risk, and are therefore exposed to humanrights-related issues, such as forced labor, child labor, bribery, and corruption.
Our sustainability strategy is driven by three absolute requirements that are at the heart of everything
we do. One of these requirements is respecting human rights.

Our human rights strategy
We respect human rights across our value chain and recognize the Universal Declaration of Human
Rights, the International Bill of Human Rights and the International Labor Organization’s Declaration on
Fundamental Principles and Rights at Work. Our JT Group Human Rights Policy, which was approved by
JT Board of Directors, follows the framework provided by the UN Guiding Principles on Business andHuman Rights (UNGPs). This means avoiding infringing the rights of others and addressing any
adverse impacts of our global operations.
Our commitment to human rights is reinforced by our Board of Directors through our Code of Conduct.
Our Reporting Concerns Mechanism helps us ensure that we listen to and act on the grievances of
those whose human rights might be impacted by our activities. Through this legitimate, fair, andaccessible mechanism, we encourage employees and suppliers to speak up on human rights, without
fear of retribution, about any concerns they may have.
Our suppliers and growers throughout the world are obliged to respect human rights by adopting andmaintaining internationally recognized labor standards regarding child labor, rights of workers, andworkplace health and safety. They do this in line with the JT Group Responsible Procurement Policy, JT
Group Supplier Standards, and Agricultural Labor Practices (ALP).
Our human rights strategy is based on ve pillars: Embed, Identify and Prioritize, Respond, Measure,and Report. This circular approach provides a systematic way of conducting ongoing due diligence andis in line with the UNGPs, the Organisation for Economic Co-operation and Development (OECD)
guidelines, and the Food and Agriculture Organization guidance on responsible agricultural supply
chains.

Our human rights due diligenceIn line with the United Nations Guiding Principles (UNGPs), we have made human rights due diligencean essential and integrated part of our business. This enables us to identify and assess actual andpotential human rights risks, as stated in our JT Group Human Rights Policy.
Embedding human rights due diligence – which is in part informed by our widely applied Human Rights
Impact Assessments – is our responsibility and helps us to prevent adverse impacts on people andensure the highest standards of behavior are upheld within our business and value chain. As part ofthis program, we are committed to assessing 100% of our high-risk countries by 2025, in our tobacco
business.

The United Nations
Guiding Principles on
Business and Human
Rights make the pathway
clear: companies have a
responsibility to respect
the rights of those they
impact through theirbusiness operations andsupply chains.
As a Company, we haveembraced our obligation
to respect human rights
and are committed totackling the challenges
this will bring. We havemade solid progress andwill continue the work on
our journey of continuous
improvement.

Charlie Watson,
Director, Human Rights, JT
International

Our approach and progressEmbed
Our approach
We are working hard to embed human rights thinking in our Company culture, and to improve
employees’ understanding of the human rights implications of business decisions. To do this, we
provide regular training and continuously share information about human rights and the JT Group
Human Rights Policy.
The training involves an online human rights e-learning module, which is available in 25 languages. We
also provide printed communication materials to increase employee awareness and strengthen theirunderstanding of human rights.

Our progress
In 2019, we relaunched our human rights e-learning module globally to target the employees who had
not completed the training in the rst phase. To train employees without computer access, we
integrated a section on respecting human rights into our face-to-face Code of Conduct training in
Malawi, Ethiopia, Zimbabwe, and Bangladesh. This section will be included in all future Code of
Conduct trainings in our other markets.
Employees in our Japanese operations have completed an online human rights e-learning module,
which was offered in Japanese, English, and Chinese. The scope of the training included our subsidiarycompanies in China and Thailand (processed food business) and the U.S. (pharmaceutical business).

Identify and prioritize
Our approachWe conduct Human Rights Impact Assessments (HRIAs) to identify and assess actual and potential
human rights risks. In line with the United Nations Guiding Principles (UNGPs), our HRIAs focus on thegreatest risk to people, both within our own Company and through business relationships with our
suppliers, from farm to store. As a result of the HRIAs, we aim to address the identi ed risks of therights-holders, meet our stakeholder expectations on respecting human rights, and mitigate against theoverall risks to people and the business.

Our progress
As part of our commitment to assess 100% of high-risk countries by 2025 in our tobacco business, wehave completed nine HRIAs across our entire value chain in the last two years: Dominican Republic,
Egypt, Ethiopia, Kazakhstan, Kyrgyzstan, Malaysia, Mexico, Myanmar, and Tanzania. This demonstrates
our approach to prioritizing, which involves considering where our greatest risks to people lie. It also
shows our willingness to go into countries with reported human rights violations and assess the on-theground reality.
Over the last year, we have also conducted HRIAs in our tobacco leaf supply chain in various markets,
including Ethiopia and India. These assessments provide a more comprehensive understanding of thehuman rights impacts within one speci c part of our value chain – our tobacco supply chain andtobacco growing business – and the challenges that tobacco growers face in their communities.
In Bangladesh, we carried out a post-acquisition Human Rights and Environmental Health and Safety(EHS) Assessment. The purpose was to identify actual and potential impacts on people across all ve
segments of JTI operations: Leaf, Processing, Manufacturing, O ces, and Sales and Distribution.
As suggested by our External Human Rights Advisory Board, in 2019, we introduced a self-assessment
questionnaire to evaluate the human rights pro le of more countries, to increase the scope and impactof our human rights due diligence. Following the same methodology as our HRIAs, this smartly
designed survey targets our lower ranked high-risk countries that have not been prioritized for HRIAs inthe short term.
Piloted in Morocco and Colombia, the questionnaire is designed to identify human rights risks topeople, so that we can act on that information and meet our responsibility to respect human rights.
Effectively assessing human rights impact requires building the know-how of the colleagues involved in
the assessment.
To further increase our human rights due diligence work, we also enhanced our inclusion of humanrights in our internal audit methodology starting in one pilot country, Egypt, this year. Our internalauditors received guidance on how to further integrate human rights into their standard audit. The
ndings made by the internal audit - such as some related to health and safety - were then shared with
our human rights team prior to the HRIA. This helped create a more targeted and effective impact
assessment. Each nding was formalized into recommendations for improvement, as part of a humanrights action plan approved by the local management in Egypt.
In our Japanese operations, we started conducting due diligence in our processed food business in
China and Thailand in 2019, with the support of KPMG AZSA Sustainability. This followed the review of
three of our business operations – our Japanese domestic tobacco business, pharmaceuticalbusiness, and processed food business – in 2017 and 2018, supported by Ernst & Young. In those threebusiness operations in Japan, we identi ed the risks unique to migrant workers as key. Please see ‘Our
progress in Asia, including Japan’ for more details about how we addressed the risks concerning thismost vulnerable group.
To identify the most important current and potential risks, we rst conducted self-assessment
questionnaires in all seven of our subsidiary companies in China and Thailand. The questionnaires
covered a broad spectrum of human rights issues and aimed to identify the greatest potential risks in
our operations. These included forced labor and environmental health and safety, especially withregards to vulnerable groups such as migrant workers.
Based on the results of the questionnaires, three out of seven subsidiary companies were identi ed as
potentially high-risk for human rights. We therefore decided to carry out site visits in these speci ccompanies to examine the risk in more detail. As a result, we identi ed occupational health and safety,
working conditions, and social security as risks, and we put robust action plans in place to addressthese. These plans were agreed between the general managers of these companies, our human rights
team, and KPMG Azusa Sustainability.

RespondOur approach
HRIAs are a means to an end, not an end in themselves. We need to act appropriately on theinformation generated from the assessments, in order to meet our responsibility to respect humanrights.
We develop action plans to address issues identi ed through HRIAs and self-assessment
questionnaires. These plans enable us to drive improvements and integrate human rights into ourexisting management processes in a consistent manner. The plans have de ned responsibilities, clear
timelines for implementation, and key performance indicators to monitor progress.

Our progress
Since 2018, we have developed fteen action plans for speci c countries, each with an agreed timeline.
A total of 20 Human Rights Champions were appointed within these countries, as part of a network.
The responsibility of this network is to ensure that action plans are managed and implemented by eachcountry, and respect for human rights is rmly established in the business.
The Human Rights Champions are selected by the local management, typically from departments inwhich human rights improvements are required. The Champions manage the implementation of theaction plans locally, on top of their usual roles. Our head o ce provides the Champions with training
materials on the UN Guiding Principles on Business & Human Rights, as well as support with speci cpoints within the action plans.
In 2019, we carried out a review of our high-risk countries, including a more detailed analysis on whichcountries have the greatest risk to people. Previously, we identi ed our high-risk countries using
publicly available geopolitical data on human rights. We decided to improve this process by integrating
additional criteria regarding JTI’s operations and impact into our overall matrix.
The criteria included the number and type of JTI operations in each country, historical data on humanrights cases in our operational grievance mechanism or Agricultural Labor Practices Program, thehealth and safety performance of JTI operations in each country, and our salient issues. This
improvement to the process ensures we have a much more accurate picture of our potential risks ineach country, and that we are able to prioritize our actions where they are needed most.

Our progress in Asia, including Japan
Since 2018, we have established action plans for 21 key sites in Japan*C, covering all of the heado ces of our Japanese operations. We have also agreed action plans for seven of our subsidiarycompanies in the processed food business in China and Thailand, as high-risk countries outside ofJapan.
In addition to local efforts, our Japanese headquarters has improved our corporate guidelines toaddress the potential risks relating to migrant workers, identi ed as the most vulnerable group throughour HRIAs. The number of migrant workers in Japan has increased rapidly in the past few years.
Consequently, there was a need for common, Group-wide guidelines regarding the hiring and labor
management of migrant workers, aligned with the international norm, the United Nations Guiding
Principles (UNGPs).
We now offer our external Reporting Concerns Mechanism in ve languages – Japanese, English,
Chinese, Vietnamese, and Nepali – to give migrant workers easier access to reporting channels.
We also launched a new scheme, in which central management regularly checks the employment
status of migrant workers across our entire Japanese operations. By making sure we have the most upto-date information, we can better protect this vulnerable group and address any potential and actual
risks.

Case study

Identifying our salient issues
To strengthen the focus of our policies and programs on human rights areas that matter most, it is
crucial to have an understanding of our respective salient human rights issues. The concept of salience
focuses on the risk to people, not to the business, and impacts are prioritized according to their severity
and likelihood. The risks that are viewed as most salient are likely to converge as a risk to the business.
To identify the salient human rights issues in our value chain, in 2019 we conducted an assessmentwith the support of Mazars. This exercise included a review of relevant internal policies and procedures,
and a workshop with internal stakeholders.
A total of sixteen human rights issues important to JTI were presented and discussed. The idea was tounderstand which speci c activities associated with our business may put human rights at risk, so that
we can proactively identify those issues to prioritize. Forced & Bonded Labor, Child Labor, and Living
Wage were among the seven human rights issues identi ed as salient.
To ensure that our ongoing human rights program and due diligence processes already target thesesalient issues, we have integrated them into our HRIA methodology and self-assessment
questionnaires. These issues are now also included in our methodology for identifying high-riskcountries, which helps us to prioritize our due diligence process based on where our greatest potential
impacts lie.
Going forward, our overall goal is to achieve appropriate and effective action plans for each salientissue in order to mitigate the risks for both the rights-holders and JTI. We will conduct further research
into our salient issues to deepen our understanding of risks and opportunities for improvement.

Governance and stakeholder engagement
Given the breadth of the JT Group’s operations around the world, it was critical to establish an
appropriate governance structure. We believe it is important to embed respect for human rights
throughout our entire organizational structure. This is driven by our dedicated human rights team,which is responsible for raising awareness and improving engagement internally.
Our Business Ethics Committee *E also has an important role to play, as it provides overall governanceto ensure that rights-holders’ concerns are listened to and addressed effectively.
To ensure an effective due diligence system is in place, it is critical to link impact assessments toeffective governance structures that ensure accountability for acting on the ndings. For this reason,
the establishment of a Human Rights Champions Network was central to our governance structure in
2018. This network comprises employees from the countries in which we have conducted HRIAs, andfacilitates the sharing of guidance and best practice on human rights.
To advance the rights of our stakeholders, it is important that we listen to the advice, concerns, andcriticisms of people outside the JT Group. Therefore, we have continued to take counsel from our
Human Rights External Advisory Board.
To further strengthen our external engagement, we have partnered with Business for Social
Responsibility (BSR), Mazars, EY, and KPMG Azusa Sustainability. These organizations provide
technical support with our ongoing human rights due diligence approach and overall human rights
strategy.

Human rights external advisory board*E

Our Human Rights External Advisory Board plays a vital role in providing us with a broad external
perspective in the human rights area. Made up of international experts on business and human rights,
the Board advises us on all issues that the members consider relevant for the implementation of ourhuman rights strategy. The panel of experts guides us with their expertise and challenges us where
they believe we need to improve, helping to strengthen our efforts to deliver on our human rights
commitments.
In 2019, we implemented several key changes to our due diligence strategy based on the Advisory
Board’s expert guidance and recommendations. These changes included, among many others:■

Developing our new country-level prioritization matrix, after the Board identi ed a need to add a‘salient issues’ lens to the prioritization criteria■Creating a smart self-assessment questionnaire as a means of engaging with more countries onhuman rights■

Appointing Human Rights Champions from the core business and operations, rather than from
Corporate Affairs or Human Resources, to ensure more effective action plan implementation

Board members include:■

Paul Bowden (Professor of Law, The Nottingham Law School)■

Donna L. Westerman (Sustainable Purchasing Leadership Council)■

Rona Starr (Association for Professional Social Compliance Auditors)■

Jonathan Drimmer (Paul Hastings)■

Richard Karmel (Mazars)

MeasureWe are committed to continually measuring the effectiveness of, and improving where possible, ourapproach to respecting human rights.
Since we started our HRIAs in 2018, we have been measuring the effectiveness of our Action Plans.
Each Action Plan we develop includes an individual set of key performance indicators to measure theeffectiveness of our improvements over time. More broadly, as we expand our HRIAs globally, we willmeasure the overall effectiveness of our HRIA responses collectively.
There are various ways to measure the effectiveness of our responses in our leaf supply chain. One ofthem is the number of issues which we may observe during subsequent crop cycles. Read more on
our approach.

ReportOur understanding of our obligations under the United Nations Guiding Principles (UNGPs) is to ‘know
and show’ that we are aware of the potential human rights related risks to which we may be connected,
and that we are taking appropriate steps to manage those that occur. The UNGPs encourage corporatetransparency to the bene t of a broad set of stakeholders and we are committed to this level oftransparency and disclosure.

In 2019, we published our human rights correspondencewith Human Rights Watch, the UN Human

Rights Council, and The Guardian on our website.

Programs
To address our human rights issues, markets put in place their own customized corrective measuresthrough human rights action plans. We also have programs that can be applied globally to ensure a
consistent approach across the Group. Read more:
Code of Conduct
JT Group health and safety
Agricultural Labor Practices
Our ARISE (Achieving Reduction of Child Labor in Support of Education) program
Community Investment
Diversity and inclusion

JTI UK Modern Slavery Statement
JTI UK, the JT Group’s U.K. subsidiary, has been publishing a Modern Slavery Act Statement since
2017.
JTI UK Modern Slavery Statement (JTI UK Website)

Human Rights Impact Assessments
Our HRIAs focus on impacts to people within our main operations and value streams. Key activities
during an impact assessment include visiting and observing farming, processing, manufacturing, andsales and distribution operations. During the assessments, we conduct a series of interviews with
employees and workers, as well as representatives of suppliers, clients, and partners.
At the end of the assessment, we write a report and discuss recommendations for improvement withlocal management. Our head o ce then works closely with the local team to address any issues raised
and improve the situation. The following list of key ndings includes one human rights risk identi ed ineach of our assessments, to demonstrate the wide range of issues our stakeholders may face.

Read more about key ndings and how we are
addressing them by selecting a country
Asia, Americas

Africa, Middle East Europe

Bangladesh (2019)

Kazakhstan & Kyrgyzstan Egypt (2019)

Dominican Republic(2018)(2019)

Ethiopia (2019)

Malaysia (2018)

Malawi (2019)

China (2019)

Mexico (2018)

Tanzania (2018)

India (2019)

Myanmar (2018)

Zimbabwe (2019)Japan (2017/2018)

Thailand (2019)

Switzerland (2017)

Case study

Using leverage with our leaf merchants
The United Nations Guiding Principles recommend the following:

UN Guiding Principle 13 (b):The responsibility to respect human rights requires that business enterprises seek to prevent or
mitigate adverse impacts that are directly linked to their operations, products or services by
their business relationships, even if they have not contributed to those impacts.
UN Guiding Principle 19 (b) (ii):
In order to prevent and mitigate adverse human rights impacts, business enterprises should
integrate the ndings from their impact assessments (…) and take appropriate action.
Appropriate action will vary according to (…) the extent of its leverage in addressing the adverse
impact.
With this in mind, we have been receiving Agricultural Labor Practices reports from major
suppliers since 2016. Through these, we recognized Crop Agents Protection management
challenges in Zimbabwe. We have been looking for solutions beyond providing PersonalProtective Equipment, which led us to initiate a Highly Hazardous Pesticide response.
In May 2018, we received a letter from the United Nations O ce of the High Commissioner for
Human Rights that highlighted several alleged human rights violations such as child labor,
health and safety, and a variety of labor rights abuses in tobacco growing in Zimbabwe.
Although we have no operations in Zimbabwe and only purchase tobacco leaf through leaf
merchants (third-party suppliers), we were still connected through our business relationship.
This meant that we had to use the commercial leverage we have with our suppliers to preventthe harm from occurring. We therefore worked alongside some of our biggest leaf merchants –Alliance One International, Inc. (AOI), Premium Tobacco International DMCC (Premium), andUniversal Leaf Tobacco Company, Inc., CONTRAF-NICOTEX-TOBACCO GmbH – to encouragethem to adopt and implement the United Nations Guiding Principles on Business and Human
Rights (UNGPs), and where necessary to change their business practices, not just in Zimbabwe
but globally.
All of our suppliers engaged positively and made the following commitments:

■Eliminate the use of the most hazardous pesticides to human health – Highly Hazardous
Pesticides Criteria 1 – by the end of 2021■

Develop a human rights policy approved at the most senior level of their organization andmake it publicly available■

Develop an industry-wide grievance mechanism■

Focus their efforts on six key issues identi ed as having the potential to cause the most
severe harm and that are most likely to occur: exposure of workers to hazardous
substances, land rights, child labor, gender discrimination, freedom of association, andenvironmental impacts

We also engaged in open dialogue with the Zimbabwe Ministry of Labor, the Tobacco Industry
and Marketing Board, the Tobacco Research Board, and the National Employment Council for
Agriculture and Tobacco.
We will monitor the commitments our suppliers have made and continue to work together withthem to ensure the best possible outcome for those impacted.
Read our full correspondence
Human Rights.

with the United Nations O ce of the High Commissioner forCase study

Eliminating Highly Hazardous Pesticides Criteria 1
in our supply chain
Our objective is to phase out the use of Highly Hazardous Pesticides (HHPs) Criteria 1 from our leaf
supply chain by the end of 2021.
HHPs Criteria 1 are pesticide formulations that meet the criteria of hazard classes 1a and 1b of theWorld Health Organization Recommended Classi cation of Pesticides by Hazard.
Our suppliers have committed to an assessment by country to identify any HHPs Criteria 1 which arestill registered, recommended, or used in tobacco production. They will also identify available
alternatives, prioritizing Bio-CPAs (Crop Protection Agents). There will be a special focus on eliminating
HHPs Criteria 1 Pyrethroids insecticides, which are still legally used in several countries.

External recognition
We were categorized as a ‘leader’ by the Global Child Forum in their latest study, conducted incollaboration with the Boston Consulting Group. This benchmark report analyses just under 700 of theworld’s largest companies and how they are safeguarding children’s rights as part of their businessvalue chain.
We are proud that the study recognizes the concrete actions we have taken to embed respect forchildren’s rights in our supply chain, notably through our agship child labor elimination program ARISE.

Going forward

Our work to promote and respect human rights will evolve and adapt to the changing economic andpolitical context of the countries where we operate. Our approach to human rights due diligence isongoing, as the risks to human rights may change over time. We will continue to act where actions arenecessary and focus on our human rights priority areas.
In 2020, we will continue to prioritize countries based on a set of risk-based criteria in order to assess
our most high-risk countries rst. Going forward, we are committed to assessing actual and potential
human rights risks in at least six countries each year and will continue to embed respect for humanrights within the business.
In our Japanese operations, we will carry on monitoring the progress of our Human Rights Impact
Assessment action plans and provide the necessary support to ensure that they are implemented.
Given the increase in migrant workers since Japan’s immigration policy was revised in April 2019, we
will continue to pay special attention to this particularly vulnerable group.
In 2020, we will start introducing an enhanced supply chain management system. The new system will
re ect our revised Supplier Code of Conduct, which is aligned with the JT Group Human Rights Policy
and the United Nations Guiding Principles.

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

Read more

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