Tobacco business
The industry can be divided in two product categories: combustible products and RRP (ReducedRisk Products).
We believe that the RRP adoption trend will continue, as these products have potentially less risk forthe adult consumer.
To create fulfilling moments and a better future, we have articulated a clear strategy for the tobacco
business, prioritizing management resources towards HTS (heated tobacco sticks), the main RRP
growth driver, and combustibles, the largest, most profitable category across the tobacco industry.
The combination of the JT Group’s tobacco businesses into a single business segment issupporting this prioritization of resources, globalizing the Group’s knowledge and expertise, driving
increased agility, and accelerating strategic decision-making.
This strategy, moreover, confirms the tobacco business as the core business of the JT Group andstrengthens its role as the main source of profit growth for the medium and long terms.

Our tobacco principles

Smoking and health

For more details on our approach to responsible marketing, please refer to ourGlobal Tobacco Marketing Principles.
In the following four strategic focus areas, we cover our approach to sustainability across ourtobacco business.

Our tobacco business value chain

The four strategic focus areas of our sustainability
strategy

Consumer expectations (RRP)
Product stewardship, circularity and waste(Environment)

Supply chain

Optimizing the regulatory environment

PeopleTackling the illegal trade

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TobaccoInformation byRRP (Consumerbusinesssegment

expectations)

Supply chain

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Smoking and health
We recognize that cigarettes are a legal but controversial product. People smoke for pleasure but
there are real risks that come with that pleasure. Accordingly, we believe that tobacco products
should be appropriately regulated.
We also believe in the freedom of adults to choose whether they want to smoke and that no one
should smoke unless he or she understands the risks of doing so. These risks distinguish tobacco
from most consumer goods and they place upon the industry a real responsibility. It's aresponsibility for which JTI we expect to be held accountable, together with governments and therest of society.
Our positions on smoking and health are available on our websites, as are the lists of ingredients weuse in our products.
Our attitude to smoking
Our attitude to smoking (in Japanese)

Related links
Tobaccobusiness

RRP (Consumerexpectations)

Product
stewardship,Supply chain

circularity andwasteenvironment(Environment)

Tackling illegal
trade

PeopleOptimizing theregulatory

Smoking andhealthCopyright© Japan Tobacco Inc. All rights reserved.

RRP (Consumer expectations)
The RRP category is composed of different segments including HTS (heated tobacco sticks),
Infused (infused tobacco capsules), E-Vapor and oral. As announced in 2021, we prioritize theallocation of resources to HTS, with the other segments viewed as exploratory opportunities.

Reducing health impact through RRP
While it is still too early to understand the long-term health effects of RRP, factors, including theelimination of combustion and the lower level of toxicants found in the vapor, suggest there ispotential for them to reduce the risks associated with smoking.
That’s why we’re committed to ensuring that all our RRP fulfill this potential. We pride ourselves onan open approach that embraces scrutiny from consumers, regulators and the scientific community,
and we regularly present our findings at scientific conferences and in peer-reviewed journals.
Our approach is supported by the most up-to-date under-standing of the subject and grounded inevidence-based observations.
As part of our joint venture with Altria, we will combine our scientific and regulatory expertise to
jointly prepare a PMTA and MRTP for the Ploom version to be launched in the U.S. The parties
currently expect to submit the PMTA and MRTP by the end of 2025.
Read more about the science behind RRP at www.jt-science.com

RRP sourcing
We have established a dedicated supply chain for our RRP, building strong supplier partnerships that
support business expansion and meet the demands of our increasingly sophisticated portfolio.
In addition to our in-house production capabilities, we source from different global manufacturers.
These include the world’s largest Electronics Manufacturing Service (EMS) companies, which arerenowned for their high quality and technology.
We are committed to carrying out social and environmental due diligence in our RRP materials. We
are a supporter member of the Responsible Business Alliance (RBA) and fully embrace its visionand mission.
RBA is the world's largest industry coalition dedicated to corporate social responsibility in global
supply chains. RBA members commit and are held accountable to a common Code of Conduct andutilize a range of RBA training and assessment tools to support continuous improvement in thesocial, environmental and ethical responsibility of their supply chains.
Read more about responsible procurement on JT International sustainability website.

Various information on Consumer expectations can be found at followings.
Read about progress towards targets
Read more about RRP outlook, RRP return/collection scheme, and other details about our RRP
products in the Integrated Report 2022.
Read about product stewardship, circularity and waste on
JT International sustainability website.

Related links
Tobaccobusiness

RRP (ConsumerProductexpectations)stewardship,
circularity andSupply chain

Optimizing theregulatoryenvironment

waste(Environment)

Tackling illegal
tradePeople

Smoking andhealth

Copyright© Japan Tobacco Inc. All rights reserved.

Supply chain
Building sustainable supply chains
As part of the Group’s continuous improvement efforts, we constantly review our global supply
chain and our market operating models for efficiencies and better effectiveness.
Within the global supply chain, we explore opportunities to rationalize our manufacturing footprint
and our leaf-sourcing channels, as well as logistical routes, closer collaboration with suppliers, andSKUs portfolio simplification.

Aspirational goal
We will reduce environmental and social risks, and enable transparent and responsible
practices across our supply chain.

Targets and Progress
AGRICULTURAL LABOR PRACTICES
TargetWe will implement our Agricultural Labor Practices (ALP) program in all sourcing countries
by 2025.

Progress
In 2022, 100% of our directly contracted growers and 98% of our leaf merchants' growers
were covered by ALP; leaf merchants data come from reporting entities only, excluding Indiaand China. 83% of our volumes were covered by ALP and 94% of our supplying entities
reported against ALP.

SUPPLIER SCREENING
Read about Supplier screening progress towards targets

GREENHOUSE GAS EMISSIONS
TargetWe commit to be Carbon Neutral for our own operations by 2030 and achieve Net-Zero
Greenhouse Gas emissions across our entire value chain by 2050. In support of this, by2030, we will reduce emissions from our own operations (Scope1 & 2) by 47% and emissions
associated with leaf and non-tobacco materials (Scope3 Category1) by 28%, against a 2019base year.

Progress
Since 2019, we have reduced greenhouse gas emissions from our own operations (Scope1 &2) by 16%, and greenhouse gas emissions from our leaf and non-tobacco materials (Scope3Category1) have reduced by 13%.

WATER AND WASTE
TargetWe will reduce water withdrawal by 15% and waste by 20%, in relation to our own operations,
between 2015 and 2030.

Progress

Since 2015, we have reduced water withdrawal by 23% and waste by 22% in relations to ourown operation.

FORESTRY
TargetWe will replace all wood from natural forests used in the tobacco curing process of ourdirectly contracted growers with renewable fuel sources by 2030.

Progress
Based on our 2022 tree planning 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).

Sustainable farming practices and farmer livelihood

Non-tobacco materials, other products, and services

Reducing our environmental impact in the tobacco value
chain
Read more about our targets on 'Greenhouse gas emissions', 'Water and Waste', and 'Forestry'.
Read more about our approach to environment on JT International sustainability website.

Related links
Tobaccobusiness

RRP (Consumerexpectations)

Productstewardship,Supply chain

circularity andwasteOptimizing theregulatoryenvironment(Environment)

Tackling illegal
tradePeople

Smoking andhealth

Copyright© Japan Tobacco Inc. All rights reserved.

Non-tobacco materials, otherproducts, and services
Non-tobacco materials include packaging, filters, and cigarette-related materials. We also have anumber of suppliers for factory machinery, spare parts, and logistics, including freight. We manage
the sourcing of these centrally. Other products and services that flow through our supply chain
include marketing-related services, facility management, IT, and other professional services, which
are sourced globally, regionally, and locally.
We develop strong partnerships with our key suppliers in order to achieve mutual long-term
success. Our strategic relationships are built on shared values and objectives. This allows us to findsustainable solutions together, ensure a stable supply in a dynamic environment, and adapt toinnovative technologies.
Various information on Non-tobaccos material can be found at followings.
Read about supplier screening towards targets
Read more about responsible procurement on JT International sustainability website.

Related links
Supply chain

Supply chainpolicies andSustainable
farming practices

Non-tobacco
materials, otherstandards

and farmer
livelihoods

products, andservices
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Optimizing the regulatoryenvironment
Read about Engagement progress towards targets
Read about our views on specific regulatory topics

Related links
Tobaccobusiness

RRP (Consumerexpectations)

Product
stewardship,Supply chain

circularity andwaste

Optimizing theregulatoryenvironment(Environment)

Tackling illegal
trade

PeopleSmoking andhealth

Copyright© Japan Tobacco Inc. All rights reserved.

Tackling illegal trade
The illegal tobacco trade is no trivial matter - taken as a whole it constitutes the third largest‘supplier’ of tobacco in the world, and the estimated loss of tax revenues around the globe isapproximately USD 40 billion. That means that for every 1% we can ‘take back’ from the criminals,
governments are effectively increasing their revenue by USD 400 million.
We firmly believe in our right to protect our brands, trademarks and business from criminal activity,and during the three-year period 2020 to 2022 our Anti-Illicit Trade Operations (AITO) team hasassisted LEAs with seizures of over eight billion illegal cigarettes or grams of illegal tobacco.
It’s essential that we - and the tobacco sector as a whole - are able to continue to play a role in thefight against illegal trade, working in partnership and cooperation providing authorities with industry
expertise and quality information on criminal operations, locations and methods.

Aspirational goal
We will ensure the Company is included in policymaking leading to fair and balanced
regulation and enhance our cooperation with governments to combat illegal trade.

TargetWe will engage in dialogue with law enforcement agencies, with the goal of exchanging
intelligence regarding illegal tobacco products, in order to support the reduction of illegal
tobacco products.

Progress

In 2022, our Anti-Illicit Trade team provided 2,000 intelligence reports to law enforcement
agencies and advised 1,956 law enforcement officers on counterfeit recognition.
Read more about our latest progress on the JT Group's tobacco business sustainability
strategy.

Read about What we’re doing to fight illegal trade

Related links
Tobaccobusiness

RRP (ConsumerProductexpectations)stewardship,circularity andSupply chain

Optimizing theregulatoryenvironment

waste(Environment)

Tackling illegal
tradePeople

Smoking andhealth

Copyright© Japan Tobacco Inc. All rights reserved.

Product stewardship, circularity
and waste (Environment)

Aspirational goal
We will be a total tobacco company offering consumers an even greater choice of products
by focusing on quality, innovation, and reduced-risk potential.

TargetWe will reduce the environmental impact of our products and packaging through design
solutions, facilitating responsible collection and disposal, and consumer awareness andeducation. More specifically, we will reduce our packaging (including plastic) and ensure thatthe remaining is 85% reusable or recyclable by 2025, rising to 100% by 2030. In total,
recycled content will account for 20% of our tobacco business packaging by 2025.

Progress
We have carried several initiatives looking at design solutions and responsible collection anddisposal, and consumer awareness and education.
In 2022, our efforts led to 82% reusable or recyclable packaging and 18% recycled content ofpackaging.

Read more about our environmental initiatives on Product stewardship, circularity and waste

Related links
Tobaccobusiness

RRP (ConsumerProductexpectations)stewardship,
circularity andSupply chain

Optimizing theregulatoryenvironment

waste(Environment)

Tackling illegal
tradePeople

Smoking andhealth

Copyright© Japan Tobacco Inc. All rights reserved.