Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Welcome to your CDP Water Security Questionnaire2023

W0. Introduction
W0.1(W0.1) Give a general description of and introduction to your organization.
JT Group is a leading global tobacco company and our products are sold in over 130 markets.
We are also active in pharmaceutical and processed food business and we expect them toestablish a foundation for future profit contribution, as we strive for sustainable growth.
Headquartered in Tokyo, JT is listed on the Tokyo Stock Exchange and our company
comprises three main business units: Tobacco business: headquartered in Geneva,
Switzerland since 2022, manufactures and offers tobacco products all over the world. Ourleading brands are Winston, Camel, MEVIUS and LD in combustibles, as well as Ploom and
Logic in RRP (Reduced-Risk Products). Pharmaceutical business: Our pharmaceuticalbusiness focuses on the R&D, manufacturing, and sale of prescription drugs, concentrating on
three specific therapeutic areas: Cardiovascular, Renal and Metabolism (CVRM); immunology;
and neuroscience. Processed food business: Our processed food business handles the frozen
and ambient food business, mainly for frozen noodles, frozen okonomiyaki (Japanese savory
pancakes); and packaged cooked rice, and the seasonings business, focusing on seasonings
including yeast extracts.

W-FB0.1a/W-AC0.1a(W-FB0.1a/W-AC0.1a) Which activities in the food, beverage, and tobacco and/or
agricultural commodities sectors does your organization engage in?
Agriculture
Processing/Manufacturing
Distribution

W0.2(W0.2) State the start and end date of the year for which you are reporting data.
Reporting year

Start dateEnd date

January 1, 2022

December 31, 2022

1

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

W0.3
(W0.3) Select the countries/areas in which you operate.
Algeria
AndorraArmenia
Austria
Azerbaijan
Bangladesh
BelarusBelgium
Bolivia (Plurinational State of)BrazilBulgaria
Cambodia
CanadaChina
Colombia
Czechia
Denmark
Egypt
Ethiopia
FinlandFranceGeorgia
Germany
GreeceHong Kong SAR, China
Hungary
Indonesia
Iran (Islamic Republic of)
Ireland
Italy
Japan
JordanKazakhstan
Kyrgyzstan
LebanonLithuania
MalawiMalaysia
MexicoMongolia
MoroccoMyanmar
Netherlands
2Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Nigeria
NorwayPhilippines
PolandPortugal
Republic of Korea
Republic of Moldova
Romania
Russian Federation
SerbiaSingapore
Slovakia
South Africa
South Sudan
Spain
Sudan
SwedenSwitzerland
Taiwan, China
Tajikistan
ThailandTunisia
TurkeyUkraineUnited Arab Emirates
United Kingdom of Great Britain and Northern Ireland
United Republic of Tanzania
United States of America
Viet Nam
Zambia

W0.4(W0.4) Select the currency used for all financial information disclosed throughout
your response.
JPY

W0.5
(W0.5) Select the option that best describes the reporting boundary for companies,
entities, or groups for which water impacts on your business are being reported.
Companies, entities or groups over which operational control is exercised3

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

W0.6
(W0.6) Within this boundary, are there any geographies, facilities, water aspects, orother exclusions from your disclosure?
No

W0.7(W0.7) Does your organization have an ISIN code or another unique identifier (e.g.,
Ticker, CUSIP, etc.)?
Indicate whether you are able to provide a unique identifier foryour organization.

Provide your unique
identifier

Yes, an ISIN code

JP3726800000

W1. Current state
W1.1(W1.1) Rate the importance (current and future) of water quality and water quantity to
the success of your business.
Direct use
importance
rating
SufficientVitalamounts of goodquality freshwater
available for use

Indirect use
importance
ratingPlease explain

Important

Water is vital for JTG as we cannot operate ourbusiness without water. Many of JT Group’s
operations are water intensive. In particular, ourprimary use of freshwater is for manufacturing
products within our processed food business.
These processes require a significant quantity ofgood quality freshwater. Across our businesssegments, we aim to locate operations in waterrich areas. If an operation is located in a waterscarce area, we aim to cut down on water use inorder to reduce water risks, both in our businessand in communities within which we operate.
Across our business segments, good quality
freshwater for indirect use is also important to us.
Our primary indirect use of freshwater is for
growing agricultural products such as tobacco
leaf, but it is also important in the manufacture ofpaper, card and other materials. We do notforesee changes in the business processes for4

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

which we / our suppliers depend on water. For
instance, our dependency on water is not likely tolessen significantly for the processing of foodproducts or the growing of tobacco leaves in the
future.
Sufficientamounts ofrecycled,
brackish and/or
produced water
available for use

Important

Important

Recycling water is important for both direct andindirect use as it contributes to reducing water
withdrawn and discharged, as well as reducing
costs for our operations. Some of JT Group’s
direct operations use recycled water within the
production process as well as for sanitary
purposes. Within our tobacco business, a numberof operations located within water-scarce areas
use recycled water. Recycled water is also
important in indirect operations, for example, inthe manufacturing of paper, card and othermaterials. This is unlikely to change in the future.
Recycled water will continue to be important forour business as the forecast is that access tofresh water will reduce globally. However, most of
the water used in our manufacturing processes isfresh water. Therefore, although the importance ofrecycled water is high, it is considered that its
importance continues to be lower than that for
fresh water.

W-FB1.1a/W-AC1.1a(W-FB1.1a/W-AC1.1a) Which water-intensive agricultural commodities that yourorganization produces and/or sources are the most significant to your business byrevenue? Select up to five.
Agriculturalcommodities% of revenue
Produceddependent on
and/orthese agricultural sourced
commodities

Please explain

TobaccoMore than 80%

91.0% of JT Group’s revenue is relevant to our
tobacco business that significantly depends on
tobacco, our key agricultural commodity. The
remainder of the revenue comes from ourpharmaceutical business (3.1%), our processedfood business (5.9%) and others (0.1.%). Tobacco
accounts for a significant proportion of revenue
and so it will be the only commodity presented inthis response.

Sourced5

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

W1.2
(W1.2) Across all your operations, what proportion of the following water aspects are
regularly measured and monitored?
% ofFrequency of Method ofsites/facilities/operations measurement measurement

Please explain

Water
withdrawals –total volumes

100%

Monthly

Water
withdrawal data
are collectedfrom all JT
Group sites
using actual
data, wheneverthey areavailable, or
using
extrapolation
where actual
data are notavailable.

Water withdrawal
data are collectedfrom all JT Groupsites using actual
data, whenever they
are available, orusing extrapolation
where actual data
are not available.
Total volumes aremonitored monthly
at processing andmanufacturing
facilities.

Water
withdrawals –volumes bysource100%Monthly

Water
withdrawal data
are collectedfrom all JT
Group sites
using actual
data, wheneverthey areavailable, or
using
extrapolation
where actual
data are notavailable.

Water withdrawal
data are collectedfrom all JT Groupsites using actual
data, whenever they
are available, orusing extrapolation
where actual data
are not available.
Volumes by source
are monitored
monthly forprocessing andmanufacturing
facilities.

Water
withdrawals
quality

100%

Monthly

Monitoring istypically bydirect sampling
and analysis.

Water withdrawal
quality data areassessed at JT
Group facilities
where water quality
is an important
aspect for our
production. The
monitoring

6

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

frequency is decided
by individual
facilities. Where
water quality is
critical for
production andproduct quality, we
typically monitor thismonthly. At otherlocations, the qualityof water withdrawn
is periodicallymonitored.
Monitoring istypically by direct
sampling andanalysis.
Waterdischarges –total volumes

100%

Monthly

Water discharge
data arecollected fromJT Group sites
using actual
data, wheneverthey areavailable, or
using
extrapolation
where actual
data are notavailable.

Water discharge
data are collectedfrom all JT Groupsites using actual
data, whenever they
are available, orusing extrapolation
where actual data
are not available.
Total volumes aremonitored monthly
for processing andmanufacturing
facilities.

Water
discharges –volumes bydestination

100%

Monthly

Data in relation Data in relation toto waterwater discharge
discharge
destination are
destination arecollected from all JT
collected from all Group sites,
JT Groupe sites, whenever available.
wheneverIf the destination isavailable. If the not known, it isdestination is not assumed that the
known, it iswastewater is sent
assumed thatfor municipal
the wastewater treatment. In theis sent forabsence of volume
municipal
data, it is assumed

7

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

treatment. In the that water dischargeabsence ofis the same as water
volume data, it is withdrawal. Volumes
assumed thatby destination arewater discharge monitored monthly
is the same asfor processing andwater
manufacturing
withdrawal.
facilities.
Water
discharges –volumes bytreatment
method100%

Monthly

The data aremainly collectedfrom sites where
actual data are
available and insome cases,
extrapolated forsites where
actual data are
not available.

Final treatment
method isdetermined at JT
Group site level bydestination of water
discharged. The
data are mainlycollected from sites
where actual data
are available and insome cases,
extrapolated forsites where actual
data are notavailable. Volumes
by treatment method
are monitored
monthly forprocessing andmanufacturing
facilities.

Water
discharge
quality – bystandard
effluent
parameters

100%

Monthly

Water discharge JT Group’s
is monitored at
operations are
our factories
located in
before and after jurisdictions thaton-sitehave regulatory
treatment, where requirements withinstalled. In 2018 differing water
our Tobacco
discharge
businessparameters. The
introduced anmonitoring
internal
frequency is decided
guidance with a by individuallist offacilities dependent
parameters and on local regulatory
minimum
requirements andexpectationssite procedures. for8

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023(concentrations) production facilities,
for direct
this is typicallydischarge inmonthly. Our
natural waters,
factories areagainst which
required to monitor
factories monitor water discharge
such discharges. before and after onRelated tosite treatment,
exceedances of where installed. In
standard effluent 2018 our tobacco
parameters, we business of JTI
collect data from introduced ana site when it
internal guidance
does not meetwith a list of
the water
parameters anddischarge
minimum
parameters
expectationsprescribed in the (concentrations) for
relevant local
direct discharge inregulations.
natural waters,
against which
factories monitor
such discharges. In
relation to
exceedances ofstandard effluent
parameters, data
are collected from asite when it does notmeet the water
discharge
parametersprescribed in theregulations relevantto that location.
Waterdischarge
quality –emissions towater (nitrates,
phosphates,
pesticides,
and/or otherpriority
substances)

Not monitored

This is not currently
monitored. JT Group
is currently
assessing themateriality of thesedischarge
parameters for oursites.

9Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Water
discharge
quality –temperature

100%

Monthly

Monitoring is
Monitoring is
conducted byconducted byreviewing local
reviewing local
regulation andregulation andputting in place putting in place thethe relevant
relevant monitoring
monitoring
requirements.
requirements.
Where temperature
Where
is a regulatorytemperature is a prescribed
regulatoryparameter and/or aprescribed
critical variable inparameter
water discharged,
and/or a critical we monitor thisvariable in water monthly, in-line with
discharged, we other wastewater
monitor thismonitoring. At othermonthly, in-line locations, thewith othermonitoring
wastewater
frequency varies
monitoring. At
between monthly
other locations, and annually.
the monitoring
frequency varies
between monthly
and annually.

Water
consumption –total volume

100%

Monthly

We apply theWe apply thefollowing formula following formula forfor waterwater consumption:
consumption:
Water consumption
Water= Water withdrawals
consumption =- Water discharges.
Water
Water withdrawal
withdrawals and discharge are
Watercollected using
discharges.
actual data, or using
Water
extrapolation where
withdrawal and actual data are notdischarge areavailable. Total
collected using
volumes are
actual data, or
calculated monthly
usingfor processing andextrapolation
manufacturing
where actual
facilities.

10Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

data are notavailable.
Water
100%
recycled/reused

Monthly

Water
recycled/reused
data aremonitored at JT
Groupe’smanufacturing
facilities and leaf
operations using
actual data.

Water
recycled/reused
data are monitored
at JT Group’s
manufacturing andprocessing facilities.
Frequency ofmonitoring ismonthly. Where
possible this ismonitored by direct
measurement.

The provision of 100%
fullyfunctioning,safely managed
WASH services
to all workers

Monthly

Fully functioning Fully functioning
WASH services WASH services areare deemed todeemed to be
be provided
provided where awhere a facility
facility is providing
is providing
workers withworkers withdrinking water anddrinking water
sanitation facilities,
and sanitationand the facility
facilities, and the hasn’t received any
facility hasn’t
upheld claims fromreceived any
workers relating to
upheld claims
their access tofrom workers
drinking water or
relating to their sanitation facilities.
access to
Dedicated
drinking water or departments at sites
sanitation
monitor functioning
facilities.
and management of
wash services atleast once a week
and implement
improvements if
required. We
monitor by direct
inspection, forexample, when we
carry out
assessments/auditsof our locations and11

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,2023

by checking claims ifthey arise.

W1.2b(W1.2b) What are the total volumes of water withdrawn, discharged, and consumed
across all your operations, how do they compare to the previous reporting year, andhow are they forecasted to change?
VolumeComparis(megaliters/ye on withar)previous
reporting
year
Total
9,289
withdrawals

About thesame

Primary reason FivePrimary reason Pleasefor comparison year
for forecast
explainwith previous foreca
reporting year st
Increase/decrea Lower
se in businessactivity

Investment in
Water
water-smart
withdrawal
technology/proce is about thesssame - 4%
reduction(reduction of
5% or lessisconsidered
as about thesame basedon JTG
thresholds).
Production
decreasedby a small
amount in2022
compared to2021, water
withdrawals
reflect thischange.
These data
points arerecorded in
our internal
datasystem. For
future years,
water
withdrawals

12Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

are
expected todecreasedue toongoingwater
efficiency
initiatives forexamplereplacementof
equipmentwith lesswater
consumingorprocesses
improvement, withinvestment
in watersmart
technologie
s in ourfactories.
This
forecasted
reduction isin line with
our target to
reducewater
withdrawal
associatedwith ourtobaccobusiness by
15%compared to
2015.
Total
5,252.8
discharges

About thesame

Increase/decrea Lower
se in businessactivity

Increase/decrea
se in efficiency

Waterdischarge isabout thesame as inprevious13

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

years (4%lower).
About thesamemeans that
there is lessthan a 5%change frompreviousyear.
Production
decreasedby a small
amount in2022
compared to2021, water
discharges
slightlyreflect thischange. For
future years,
water
withdrawals
andthereforewater
dischargeareexpected todecreasedue toongoing
improvemen
ts inequipment
and otherwater
efficiency
measures,in line with
our target to
reducewater
withdrawal
associated14Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,2023

with ourtobaccobusiness by
15%compared to
2015.
Total
consumpti
on4,036.2

About thesame

Increase/decrea Lower
se in businessactivity

Increase/decrea
se in efficiency

Total Water
consumptio
n is about
the same less than
5% lowerthan theprevious
year(reduction of
5% or lessisconsidered
as about thesame basedon JTG
thresholds).
This mostly
follows thedecrease inwater
withdrawals
which havedecreasedby a greater
proportionthandischarges.
For futureyears, water
withdrawals
andthereforewater
dischargeareexpected todecreasedue to15

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

ongoing
improvemen
ts inequipment
and otherwater
efficiency
measures,in line with
our target to
reducewater
withdrawal
associatedwith ourtobaccobusiness by
15%compared to2015.
Efficiency
measureswill result in
lesswastage of
ourwithdrawnwater,as aresult our
total
consumptio
n ispredicted to
fall.

W1.2d
(W1.2d) Indicate whether water is withdrawn from areas with water stress, provide theproportion, how it compares with the previous reporting year, and how it is forecasted
to change.
Withdrawa
ls are fromareas withwater
stress%Compariso Primary
withdraw n withreason for
n frompreviouscompariso
areasreporting n with
with
year
previous

Fiveyear
forecast

Primary Identificati
reason on toolfor
forecast

Pleaseexplain16

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

water
stressRo Yesw1

1-10

reportingyear
About thesame

Other,
pleasespecifyNosignificant changeingeographic
withdrawalpatterns

About
the
same

Maximu WRImAqueduct
potential
volumereductionalreadyachieved

JT Group
assessed
all sites
within our
directoperations
using WRI
Aqueduct.
All sitesthat wererated hightoextremely
high risk inthe"Baseline
Water
Stress"mapping
were
considered
to be inwater
stressedareas. We
also
includedlocations in"Arid andLow Water
Use"
areas.
JT Group
has not
acquired
any new
sites thisyear,
Dominican
Republic
wasdivested,
but it was

17

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

not locatedin an areaof waterstress.
Generally,geographic
withdrawal
pattenshave notchangedsignificantly.
We
calculated
our fiveyear
forecast by
extrapolati
ng from ourthree year
forecast of
water
withdrawals, which is
updatedannually.
JT Group
does notplan
significant
changes in
the natureorgeographic
al spreadof ourbusiness
operations
over thenext 5years. As aresult, ourwithdrawals fromwater
stressed18

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

areas arenotforecasted
tosignificantly change.

W-FB1.2e/W-AC1.2e(W-FB1.2e/W-AC1.2e) For each commodity reported in question W-FB1.1a/W-AC1.1a,do you know the proportion that is produced/sourced from areas with water stress?
Agriculturalcommodities

The proportionof thiscommodity
produced inareas with water
stress is known

The proportionof thiscommodity
sourced fromareas with water
stress is known

Please explain

TobaccoNot applicable

Yes

Tobacco is the key raw material in our
products. Tobacco is predominantly rainfed,
with some localized irrigation required incertain regions in which we operate.
JT Group partially owns a small amount ofland which is used for tobacco production.
The quantity of tobacco grown on JT Group
owned land is immaterial, both in absoluteterms and in proportion to the amount that issourced from directly contracted growers
and third party suppliers. This production
volume accounts for only about 0.1% of total
tobacco volume. As a result, JT Groupconsiders produced volume to be notapplicable within this disclosure.
The tool used to identify water stressed
areas is the WRI Aqueduct tool. This tool
has more granular data at a higher
resolution than any equivalent tool that JT
Group has awareness of. According to WRI
Aqueduct website, the tool has been usedby hundreds of thousands of users globally.
The assessment of baseline water stress isin line with the JT Group internal risk
assessment methodology we have

19

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

developed and implemented since 2016.
Any supplier sites that are located in areasthat are rated medium to extremely high riskin the "Baseline water stress" category
within Aqueduct were considered to be inwater stressed areas.

W-FB1.2g/W-AC1.2g(W-FB1.2g/W-AC1.2g) What proportion of the sourced agricultural commodities
reported in W-FB1.1a/W-AC1.1a originate from areas with water stress?
Agriculturalcommodities% of total
Please explain
agriculturalcommodity
sourced from areas
with water stress

Tobacco1-10

While water stress is likely to increase in some regions inwhich the Group operates, analysis has not identified any
substantial risks in any region in the coming years. The
overall proportion is therefore unlikely to change significantlyin the coming years. Aqueduct assessment found that water
stress in Turkey could increase by 1.4 times by 2030. The
volume of leaf supplied by Turkey is currently about 2% of
the Group's total volume, therefore while this is not a
substantial business risk, this is one of the trends in water
stress which will be most closely monitored by JT Group in
the future.
Leaf tobacco is procured from raw material suppliers basedin Turkey, the USA and other countries, where water stressvaries by location. So, if the proportion of leaf tobaccoprocured were to change, the volume procured from stressedregions could also change. Where possible, JT Groupsources from multiple areas within a country to reduce thepotential impacts of current and future water stress.
Using metric of tobacco sourced from water stressed areas
and other assessments such as our risk assessment, weknow that water stress is increasing globally. This is one
reason why supplier water risk is included in our Environment
Plan 2030. We have a commitment in the JTG Environment
Plan 2030 that by 2022 we would have implemented a waterrisk management process in our manufacturing supply chain.
This has now been implemented across the Tobacco
business manufacturing supply chain. Using Verisk

20

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Maplecroft risk indices, to date, the tobacco business has
assessed over 2,500 of its key suppliers, in relation to waterrelated risks, including water quality, water stress, flood,
drought and climate change. Tobacco business has now
expanded the scope of water-related risks, to include waterpollution, and has integrated water-related risk into its corebusiness processes, through inclusion in the ‘Suppliers ESG
Screening and Risk Management Process’.
In terms of tobacco leaf suppliers, JTI is one of seventobacco companies who have worked together to refresh andrevise the Sustainable Tobacco Program (STP). Two
manufacturers joined the program in 2022, widening andstrengthening the STP network. The STP is an industry-wide
platform enabling businesses to collaborate on human rights,
environmental issues, and other sustainability challenges,
and to drive sustainable agriculture through a continuous
improvement process. Water is one of the 8 focus areas of
the STP.

W1.2h(W1.2h) Provide total water withdrawal data by source.
Relevanc Volume
Compariso Primary reasone(megaliters/yea n withfor comparisonr)previous
with previous
reportingreporting year
year
Fresh surface
water, including
rainwater, waterfrom wetlands,
rivers, and lakes

Relevant

1,938

HigherPlease explain

Increase/decreas An overseas
e in businessfactory in our foodactivitybusiness uses thewater including
rainwater andriver water forsome purposes,
for example,
production,cleaning andcoolingfacilities/machinery.
In 2022, theproduction
volume ofproducts that use

21

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,2023

a lot of river water
increased slightly.
Brackish surface
water/SeawaterNot
relevant

Groundwater –renewable

Relevant

Groundwater –non-renewableNot
relevant

JT Group
production andoffice spaces
require water thatis non-saline.
Currently, it is not
economicallyfeasible for JT
Group to source
brackish/saline
water and thendesalinate thewater, hence wewithdraw solely
non-saline waterfrom othersources.
4,719

Lower

Investment inwater-smart
technology/process

JT Group invest in
new technologies
at our factories toreplace older, lessefficientmachinery, withmore efficientones. This is inline with our water
withdrawal
reduction target of
15% by 2030.
All water
withdrawn from
Groundwater
sources isrenewable. Our
water risk
assessment
highlights any
sites where
significant water
scarcity risks arepresent. At thesesites, JT Group
does not source
22

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,2023

any water fromgroundwater.
Produced/Entrain
ed waterNot
relevant

Third party
sources

Relevant

No water enters
our organizationalboundary as aresult of our
production. The
growing andfarming of
Tobacco leaves
does not generate
any significant
volume of water.
2,632

Lower

Increase/decreas In the foode in businessbusiness that
activity
consumes themost water in thegroup, theproduction
volume ofproducts that use
a lot of municipal
water decreased.
We alsounderstand thatthird party
sources are not
located in water
stressed areas.

W1.2i(W1.2i) Provide total water discharge data by destination.
Relevanc Volume
Compariso Primary reasone(megaliters/yea n withfor comparisonr)previous
with previous
reportingreporting year
year
Fresh surface Relevant
water

2,566

About thesame

Please explain

Increase/decreas Discharge to fresh
e in businesssurface is about theactivitysame (less than 5%change year onyear). Any year-onyear change isrelated to the23Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

reduction of wateruse due to production
volume changes at
those factories where
we discharge waterto fresh surface
water, however the
year-on-year
difference is minimal.
BrackishRelevant
surfacewater/seawater

0.2

Much lower

Increase/decreas JT Group have one
e in businesssite which discharges
activitywater to brackishsurfacewater/seawater,
making thisdischarge destination
relevant. The volumeof discharge is much
lower (-97%) in 2022
compared to 2021
due to a reduction in
production volume atthat site. 2021 wasan unusually highyear at this site forboth production
volume and water
withdrawal/discharges.

Groundwater

5.6

Much lower

Increase/decreas This destination ise in businessrelevant as three
activitysites discharge waterto groundwater. The
volume is much lower(-53%) in 2022
compared to 2021,
this is due to a
reduction in water
use at those factories
where we discharge
water to groundwater
due to a production
volume decrease at
several of thesesites.

Relevant24

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Third-party
destinations

Relevant

2,681

About thesame

Other, please
specify
No significant
change toproduction
volumesThis figure has notchanged significantly
year-on-year (lessthan a 5% change
year on year), withaverage production
volumes at most ofthese sites notchanging significantly
enough to comparedto the previous year
to create a significant
change in discharge
amounts.

W1.2j(W1.2j) Within your direct operations, indicate the highest level(s) to which you treat
your discharge.
Relevan Volume
ce of(megaliters/ytreatme ear)nt leveltodischarge
Tertiary
Relevant 67
treatment

Comparis Primary
on ofreason fortreatedcomparison
volumewith previous
withreportingprevious year
reportingyear
Higher% of your
Pleasesites/facilities/opera explain
tions this volume
applies toIncrease/decre 1-10
ase inbusiness
activity

One JTG
site inBrazil(reported in2021) hasawastewater
treatment
plant that
includes a
Biological
Aeratedreactor,
Secondary
Sedimentat
ion andchlorination
. Two

25

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

additionalsites inJapan havetertiarytreatmenton siteleading to
the large
increase indischarge
compared
to 2021.
The sites
complywith local
regulatory
standards
andminimumwaste
waterparameters
set by JTG,
whicheverare morestringent.
On-sitetreatment
systemsareinstalledwhenrequestedby localregulationoradequate
treatment
is notensured bycommunal
waste
water
treatment
systems
according26

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

to JTG's
voluntarysetparameters.
Secondar Relevant 3,856
ytreatment

Lower

Increase/decre 11-20
ase inbusiness
activity

SeveralJTG sites
have
wastewater
treatment
plantsusing
secondarytreatment
including
aerobic
treatmentofwastewater. The sites
complywith local
regulatory
standards
andminimumwaste
waterparameters
set by JTG,
whicheverare morestringent.
On-sitetreatment
systemsareinstalledwhenrequestedby localregulationoradequate
treatment

27

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

is notensured bycommunal
waste
water
treatment
systems
accordingto JTG's
voluntarysetparameters.
Primary
Relevant 250
treatment
onlyHigherIncrease/decre 1-10
ase inbusiness
activity

SeveralJTG sites
have septic
tanks
which treat
wastewaterto aprimarylevel before
discharging
third tothirdparties forfurthertreatment.
The sites
complywith local
regulatory
standards
andminimumwaste
waterparameters
set by JTG,
whicheverare morestringent.
On-sitetreatment
systems28

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

are
installedwhenrequestedby localregulationoradequate
treatment
is notensured bycommunal
waste
water
treatment
systems
accordingto JTG's
voluntarysetparameters.
Discharg Relevant 246
e to thenaturalenvironment
without
treatment

Lower

Increase/decre 1-10
ase inbusiness
activity

Some JTG
sites
discharge
wastewater
untreatedto thenaturalenvironme
nt. Forexample, a
JTG site inGermanydischarges
a smallamount ofcooling
water backinto theground via
an on-sitelagoon.
Discharges
are lower in

29

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

2022
compared
to 2021,
this ismainly due
todecreased
production
at one ofour site in
Bangladesh. Thedischarge
complieswithregulatory
requirements and is
below thecriteria set
by JTG for
Waste
water
parameters.
Discharg Relevant 834
e to athird party
without
treatment

HigherIncrease/decre 71-80
ase inbusiness
activity

71% of JT
Group sites
discharge
wastewater
to a thirdparty
without
treatment
including
all officeand R&Dsites. Thisis thentreated by
the thirdparty.
These sites
are inareas
where the30

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

communal
waste
water
treatment
systemsareadequate
to meetJTG'svoluntary
waste
water
treatment
requiremen
ts.
Other

Not
relevant

No siteshavedischarge
treatmentthat is notincluded in
the above
options
therefore"Other" isnotrelevant to
JTG.

W1.3
(W1.3) Provide a figure for your organization’s total water withdrawal efficiency.

Row
1

Revenue Total water withdrawal
volume (megaliters)

Total water withdrawal
efficiency

Anticipated forward
trend

2,658

0.2861449026

Decreasing

9,289

W-FB1.3/W-AC1.3(W-FB1.3/W-AC1.3) Do you collect/calculate water intensity for each commodity
reported in question W-FB1.1a/W-AC1.1a?
Agricultural Water intensity
Water intensitycommodities information for thisinformation for thisproduced commodity sourced commodity

Please explain

31Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Tobaccoiscollected/calculatediscollected/calculated

Not applicable

Yes

Tobacco is the key ingredient inour products. Tobacco is
predominantly rainfed, with someirrigation required in certain
regions in which we operate.
The quantity of Tobacco that JT
Group produce is immaterial bothin absolute terms and in proportion
to the amount that is sourced fromsuppliers. JT Group partially owns
a small amount of land which is
the only source of self-produced
tobacco. This production volume
accounts for only about 0.1% of
total tobacco volume (99.9%
comes from third party suppliers).
As a result, JT Group considers
produced volume to be notapplicable within this disclosure.
The water intensity metric tracked
by JT Group is total water
abstracted (m3) per million
Cigarettes produced.
The intensity metric is companywide including our suppliers. We
collect data on water
withdrawal/abstraction volumes
from our production sites using ourinternal data system CR360 on
annual basis. Water abstraction
data from our contracted growers
is collected directly from these
suppliers based on an
engagement exercise lastundertaken in 2020, while datafrom our non-contracted growers
is estimated. Volumes of tobacco
sourced from these noncontracted growers have not32

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,2023

changed significantly since thisexercise was undertaken.

W-FB1.3b/W-AC1.3b(W-FB1.3b/W-AC1.3b) Provide water intensity information for each of the agriculturalcommodities identified in W-FB1.3/W-AC1.3 that you source.

Agricultural commodities
TobaccoWater intensity value (m3/denominator)
215.85

Numerator: Water aspect
Freshwater withdrawals

Denominator
Other, please specify
millions of cigarettes

Comparison with previous reporting year
About the same

Please explain
The intensity metric decreased by 1% compared to 2021, which considered about thesame based on JTG approach (less than 5%). This is due to water efficiency projects
being implemented in both the leaf processing and cigarette production phase which
has reduced the water withdrawals required.
We anticipate reduction in water intensity as we implement water efficiency programs.
We have a strategy in place to reduce water intensity; The JT Group Environment Plan
2030 has a target to reduce water withdrawal associated with our tobacco business by
15% from 2015 to 2030.
We have an Annual and Strategic Planning (ASP) process which is carried out annuallyand measures progress against annual targets for the next three years.
Sites are required to set specific actions showing how they can contribute to achieving
our longer-term targets relating to water efficiency at the site, business and company
level.
The intensity metric is used internally to gauge the success of the group's water
reduction efforts, including targets such as our 2030 target to reduce absolute water
withdrawal by 15%. If water intensity falls, it indicates that our water policy andassociated efforts are providing a genuine benefit to our water stewardship.
With our withdrawal reduction target in place, it is predicted that water intensity will
steadily decrease in future years due to the planned implementation of water withdrawal
reduction initiatives. These initiatives include wastewater re-use projects, replacing older
33

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

technology with newer, more efficient options, and engagement with staff on water
reduction initiatives.
As an example, Jordan is the world's second most water-scarce country and water istherefore a resource that must be managed carefully. We studied our water use anddistribution systems and found several opportunities for improvement, stressing a clear
message that every drop counts. The water recovery project introduced innovations sothat we now use water efficiently and maximize recovery and recycling of used water.
As a result, some 3,500 cubic meters of water are recovered each year, reducing ourneed to withdraw water.
We also do not foresee a major change over the next few years in the volume of our leaf
procurement/cigarette production, and as such the denominator of our metric is likely tostay approximately the same. Combined with a fall in the numerator, the intensity metricis predicted to decrease in coming years.

W1.4(W1.4) Do any of your products contain substances classified as hazardous by aregulatory authority?
Products
containhazardous
substances
Row No1Comment

Fine quality tobacco is by far the main ingredient in tobacco products.
Many of our brands also contain small quantities of other ingredients added
to the tobacco blend to maintain an overall product quality and consistency
over time. None of JTI’s tobacco products contain any hazardous
substances as per Candidate List of Substance of Very High Concern for
Authorization above 0.1% by weight (EU Regulation)

W1.5(W1.5) Do you engage with your value chain on water-related issues?
Engagement
Suppliers

Yes

Other value chain partners (e.g., customers)

Yes

W1.5a
(W1.5a) Do you assess your suppliers according to their impact on water security?
Row 1
Assessment of supplier impact
Yes, we assess the impact of our suppliers

Considered in assessment
34

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Basin status (e.g., water stress or access to WASH services)
Supplier impacts on water availability
Supplier impacts on water quality
Procurement spend

Number of suppliers identified as having a substantive impact
9% of total suppliers identified as having a substantive impact
Less than 1%

Please explain
We use Aqueduct and Maplecroft tools to conduct water stress analysis on both ourdirectly contracted growers and external suppliers. The impact was determined to be
substantive if the water stressed area was "high" or "extremely high".

W1.5b(W1.5b) Do your suppliers have to meet water-related requirements as part of yourorganization’s purchasing process?
Suppliers have to meet specific water-related requirements
Row 1

Yes, water-related requirements are included in our supplier contracts

W1.5c(W1.5c) Provide details of the water-related requirements that suppliers have to meetas part of your organization’s purchasing process, and the compliance measures inplace.

Water-related requirement
Reducing total water withdrawal volumes% of suppliers with a substantive impact required to comply with this waterrelated requirement100%% of suppliers with a substantive impact in compliance with this water-related
requirement
100%

Mechanisms for monitoring compliance with this water-related requirement
Supplier self-assessment

Response to supplier non-compliance with this water-related requirement
Retain and engage

35Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Comment
JT Group supplier standards require all suppliers to optimize use of resources (including
water) and minimize wastewater.

W1.5d(W1.5d) Provide details of any other water-related supplier engagement activity.

Type of engagement
Innovation & collaboration

Details of engagement
Encourage/incentivize innovation to reduce water impacts in products and services% of suppliers by number
76-99% of suppliers with a substantive impact
76-99

Rationale for your engagement
The tobacco business engages with directly contracted tobacco leaf growers, under the
6 pillars of the Leaf Integrated Sustainability Framework*. Water-related aspects (i.e.
water use, management, protection and conservation) are addressed in a holisticmanner at least 7 times throughout the crop season when each contracted grower isvisited by the Extension Services teams. This way, we can positively influence theadoption of best agricultural practices for water use and management, to mitigate impact
of water stress and reduce the risk of water pollution.
*Leaf Integrated Sustainability Framework Pillars: Crop Production, Resource
Management, Climate Change, Human Rights, Grower Livelihoods, Leaf Integrity

Impact of the engagement and measures of successWe deploy programs aligned with Principles of Sustainable Agriculture. Throughproviding extensive training and promoting Good Agriculture Practices (GAP), our
Minimum Agronomic Standards (MAS), soil and water management and conservation
practices to our growers, they are able to improve yield and quality, and also achieve
beneficial outcomes with regards to water security, such as reduced use, more efficientmanagement, conservation and protection. To measure success, we record number of
GAP/MAS training participants and conduct follow up surveys. Metrics used to measuresuccess of the training are growers’ improvement in yield, quality and integrity of
tobacco, monitored through our MAS observation and monitoring system.

Comment
The Target Crop Calendar that forms part of MAS stipulates that tobacco seedlings areplanted at a preferential period in the crop year so that the maximum plant water36

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

requirement is most likely to correspond with consistent and adequate rainfall, reducing
the need for extraction of local water supply for irrigation.

W1.5e(W1.5e) Provide details of any water-related engagement activity with customers orother value chain partners.

Type of stakeholder
Other, please specify
Communities where we operate

Type of engagement
Innovation & collaboration

Details of engagement
Encourage stakeholders to work collaboratively with other users in their river basins
toward sustainable water management

Rationale for your engagement
For many of the communities in which we operate, water remains a precious and scarce
resource. That's why in December 2019 we launched our Global WASH (Water andSanitation, Hygiene) initiative, with the ambitious goal of providing access to clean waterand sanitation and hygiene for one million people by the end of 2025. Likewise, it iscritical (vital) that we help communities to become more resilient.
Water is vital for JT Group’s operations; it is also equality important (vital) for thecommunities in where we operate. Through this engagement we strive to promote
inclusive and resilient society.
Our local teams, who have partnered with international and local organizations
specializing in water and sanitation, hygiene, were able to work with relevant
stakeholders in each river basin to bring innovative and sustainable solutions tailored tothe specific WASH management needs of each area.

Impact of the engagement and measures of success
Since the launch of the JTI Global WASH initiative, we have reached over 400,000
people - over 40% of our goal. This is our primary measure of success in thisengagement, reaching 1,000,000 beneficiaries.
Collaborating with local teams alongside international organizations specializing in
WASH, we have been able to bring innovative solutions tailored to the specific needs ofcommunities of each area.

37

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

W2. Business impacts
W2.1(W2.1) Has your organization experienced any detrimental water-related impacts?
No

W2.2(W2.2) In the reporting year, was your organization subject to any fines, enforcement
orders, and/or other penalties for water-related regulatory violations?
Water-related
Comment
regulatory violations
Row No1

In the reporting year, JT Group was not subject to any fines,
enforcement orders, or other penalties for water-related regulatory
violations.
Our risk assessment procedures ensure that compliance risks are
identified early and are appropriately mitigated.

W3. Procedures
W3.1(W3.1) Does your organization identify and classify potential water pollutants
associated with its activities that could have a detrimental impact on water
ecosystems or human health?
Identification andclassification ofpotential waterpollutants

How potential water pollutants are identified and classified

Row Yes, we identify and JT Group use their own internal standards to identify and classify
1classify our potential potential pollutants. These standards represent the Group’s policy
water pollutants
relating to the identification and classification of pollutants. The Group’s
internal standards prescribe the minimum requirement to always meet
local/national/international legislation requirements. Where legal
requirements are not available, the internal standards are primarily
guided by external frameworks such as the EU Water Framework
Directive, in addition to internal and external expert advice.
The internal standards on water pollutants set the expectations andconcentration thresholds for a variety of water parameters.
Our processes for identifying and classifying pollutants are given below.
We identify any discharge as a pollutant if it is not within the basethresholds. Some example metrics/indicators used for discharge in38

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

natural waters are:BOD 25mg/l;
COD 110 mg/l;
Hydrocarbon concentration 10 mg/l.
Based on these metrics, we classify different pollutants based on therisk that they present to the business, local communities andecosystems.
The internal standard is reviewed when necessary.
Similarly, JT Group engages with various stakeholders such as internal& external experts and growers themselves to provide insight into
pollution risks around the Group’s water use, and to assist in identifying
potential water pollutants with the potential to impact water ecosystems
and human health.

W3.1a(W3.1a) Describe how your organization minimizes the adverse impacts of potential
water pollutants on water ecosystems or human health associated with youractivities.

Water pollutant category
Nitrates

Description of water pollutant and potential impacts
Nitrate—the oxidized form of dissolved nitrogen— is the main source of nitrogen forplants. It occurs naturally in soil and dissipates when the soil is extensively farmed.
Thus, nitrogen fertilizers are applied to replenish the soil.
Nitrate contamination occurs in surface water and groundwater, leaching into the soil
and from there into the water supply from various sources including fertilizers. However,
nitrogen is extremely soluble and can be leached into groundwater from where it enters
into watercourses. This can cause a nutrient boost in the environment which can thenalter the ecological balance, often linking to excessive algae growth.

Value chain stage
Supply chain

Actions and procedures to minimize adverse impacts
Provision of best practice instructions on product use
Upgrading of process equipment/methods

Please explain
Reducing Nitrate pollution can be achieved through simple management practices.
Because Nitrates are extremely water soluble, farmers are encouraged to prioritize
practices that minimize risk of nitrate pollution.
JTG works with growers to deploy soil management and water conservation initiatives.
39

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

All leaf suppliers are expected to follow Good Agricultural Practices, an international
standard which supports our commitment to sustainable farming through a cycle ofcontinuous improvement. In addition, most of our contracted growers are required to act
in accordance with our Minimum Agronomic Standards (MAS).
We have direct relationships with thousands of growers and engage with them on
fertilizer management. This includes providing trainings and customized fertilizer
application recommendations, optimizing the quantity, rate and timing of fertilizers
applied to minimize fertilizer run-off into watercourses. We employ 547 Agronomy
Technicians in our tobacco business, each providing extension services to ourcontracted growers. They visit each grower multiple times during the cropping cycle toensure the growers understand how to implement best practices.
To measure success, Agronomy Technicians record MAS observations which are thenanalyzed to select the right improvement measures. We track the effectiveness of our
response using internal evaluation of KPIs and on-site investigations.

Water pollutant category
Phosphates

Description of water pollutant and potential impacts
Phosphates originate from many sources, including sewage and manure, and are also
found in many artificial fertilizers.
In a similar way to nitrate excess phosphate in watercourses can cause a nutrient boost
which often equates to excessive algae growth. The algae may then produce toxins thatadversely affect the aquatic ecosystem, reducing oxygen levels, impacting fish stocks
and leading to loss of species and degradation of the waterway.

Value chain stage
Supply chain

Actions and procedures to minimize adverse impacts
Provision of best practice instructions on product use
Upgrading of process equipment/methods

Please explain
Reducing Phosphate pollution can be achieved through simple management practices.
Farmers are encouraged to prioritise practices that minimize risk of Phosphate pollution.
JTG works with growers to deploy soil management and water conservation initiatives.
All leaf suppliers are expected to follow Good Agricultural Practices, an international
standard which supports our commitment to sustainable farming through a cycle ofcontinuous improvement. In addition, most of our contracted growers are required to act
in accordance with our Minimum Agronomic Standards (MAS).

40

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,2023

We have direct relationships with thousands of growers and engage with them on
fertilizer management. This includes providing trainings and customized fertilizer
application recommendations, optimizing the quantity, rate and timing of fertilizers
applied to minimize fertilizer run-off into watercourses. We employ 547 Agronomy
Technicians in our tobacco business, each providing extension services to ourcontracted growers. They visit each grower multiple times during the cropping cycle toensure the growers understand how to implement best practices.
To measure success, Agronomy Technicians record MAS observations which are thenanalyzed to select the right improvement measures. We track the effectiveness of our
response using internal evaluation of KPIs and on-site investigations.

Water pollutant category
Pesticides

Description of water pollutant and potential impacts
Pesticides can contaminate surface waters and groundwater through runoff from treatedcrops, plants, and soil. If their concentrations are above critical thresholds, they can beharmful to the wider environment. Pesticides could cause imbalances in ecological foodchains and could leak into surface and groundwater used as sources of drinking water
for humans and livestock.
Rainfall, drainage, microbial activity, application rate, soil temperature as well as
mobility, solubility and half-life of pesticides are some of the factors responsible for therisk of movement of pesticides residues to water. Substances may runoff into streams,
rivers or water bodies and results in water pollution.

Value chain stage
Supply chain

Actions and procedures to minimize adverse impacts
Beyond compliance with regulatory requirements
Provision of best practice instructions on product use
Reduction or phase out of hazardous substances
Requirement for suppliers to comply with regulatory requirements
Upgrading of process equipment/methods

Please explain
Improved, responsible use and management of Crop Protection Agents (CPAs;
pesticides) can be achieved through management practices. We have direct
relationships with thousands of growers and engage with them on fertilizer
management. This includes providing trainings and customized CPA application
recommendations, optimizing the quantity, rate and timing of CPAs applied to minimize
risk of watercourses contamination. We employ 547 Agronomy Technicians in our
tobacco business, each providing extension services to our contracted growers. They
visit each grower multiple times during the cropping cycle to ensure the growers
41

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

understand how to implement best practices.
We have updated our internal standards for CPA residue. The limit for HHP Criterion 1(pesticides that present the greatest hazards to health or environment) is now set at thelowest concentration at which they can be reliably detected.
HHP limits are now applied to all processed tobacco from crops planted in 2022. If we
detect that the residue level of HHP Criterion 1 pesticides exceeds this we do notpurchase the tobacco, which was communicated to all supplier in February 21.
In 2022 we also started to address Criteria 2 to 7 HHPs by identifying CPAs within thesecriterium.
We have collaborated with various industry players to improve management of CPAs
beyond our supply chain, conducting dedicated studies on CPA use and management.
These management practices minimise the water pollution risk of pesticides.

W3.3(W3.3) Does your organization undertake a water-related risk assessment?
Yes, water-related risks are assessed

W3.3a(W3.3a) Select the options that best describe your procedures for identifying andassessing water-related risks.

Value chain stage
Direct operations

Coverage
Full

Risk assessment procedure
Water risks are assessed as a standalone issue

Frequency of assessment
Annually

How far into the future are risks considered?
More than 6 years

Type of tools and methods usedTools on the market
Databases

Tools and methods used
WRI Aqueduct
WWF Water Risk Filter
FAO/AQUASTATRegional government databases
42Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Other, please specify
Internal company methods, External consultantsContextual issues considered
Water availability at a basin/catchment level
Water quality at a basin/catchment level
Stakeholder conflicts concerning water resources at a basin/catchment level
Impact on human health
Implications of water on your key commodities/raw materials
Water regulatory frameworks
Status of ecosystems and habitats
Access to fully-functioning, safely managed WASH services for all employees

Stakeholders considered
Customers
Employees
Investors
Local communities
NGOs
Regulators
Suppliers
Water utilities at a local level
Other water users at the basin/catchment level

Comment
JT Group’s risk assessment methodology has been developed by incorporating relevant
information which could influence our approach to future water management and water
stewardship. The information includes that gained from the WRI Aqueduct and WWFDEG and other tools (such as GEMI Local Water Tool etc.), as well as site information.
We integrate these data with other publicly available information with help from subject
matter experts to implement our overall risk assessment approach.
Our water risk assessment considers risks across the following categories:• Physical water scarcity (Quantity and quality – including potential impacts on humanhealth)• Economic water scarcity (Regulatory, economic and infrastructure risks)• Flooding• Wastewater (regulatory risks and risks of contamination from sites and 3rd parties)• Future trends

Value chain stage
Supply chain

Coverage
Full

Risk assessment procedure43

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Water risks are assessed as a standalone issue

Frequency of assessment
Annually

How far into the future are risks considered?
More than 6 years

Type of tools and methods usedTools on the market
Databases
Other

Tools and methods used
WRI Aqueduct
WWF Water Risk Filter
FAO/AQUASTAT
Maplecroft Global Water Security Risk Index
Regional government databases
Internal company methods
External consultantsContextual issues considered
Water availability at a basin/catchment level
Impact on human health
Implications of water on your key commodities/raw materials
Water regulatory frameworks
Status of ecosystems and habitats
Access to fully-functioning, safely managed WASH services for all employees

Stakeholders considered
Customers
Employees
Investors
Local communities
NGOs
Regulators
Suppliers
Water utilities at a local level
Other water users at the basin/catchment level

Comment
Water risk management has been implemented in relation to the tobacco business’s
manufacturing supply chain. Using Verisk Maplecroft risk indices and WRI Aqueduct, todate, the tobacco business has assessed over 2,500 of its key suppliers, in relation towater-related risks, including water quality, water stress, flood, drought and climatechange. Tobacco business has now expanded the scope of water-related risks, toinclude water pollution, and has integrated water-related risk into its core business

44

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

processes, through inclusion in the ‘Suppliers ESG Screening and Risk Management
Process’.

W3.3b(W3.3b) Describe your organization’s process for identifying, assessing, andresponding to water-related risks within your direct operations and other stages ofyour value chain.
Rationale forapproach to risk
assessment

Explanation of
Explanation ofcontextual issues stakeholders
considered
considered

Decision-making process
for risk response

Row The water risk tools The Group’s risk
-Customers & Investors For water risk assessment
1
selected wereassessment
It is vital the Groupof our own operations,chosen based onprocedure,meet the expectations once the data is compiled,expert advice from a including the site- of customers anda report is written
mix of internal
level
Stakeholders in respect highlighting risks ofexperts and external questionnaire,to management ofconcern and requiringconsultants. The
provides an inwater and water related additional
tools selected are all depth picture of a risks. This could pose a countermeasures/further
considered to be
wide range ofbusiness risk should
investigation. Each location
market-leading, best contextual issues the Group fail to do so. then establishes an action
practice tools.
with the ambition
plan, considering whether
The tools mentioned of being able to-Employees
the concern identified
are used within the effectively address Ensuring their accessrepresents a risk to thefirst stage of riskeach one if/when to fully-functioning,asset or its operations;assessment which related risks aresafely managed WASH what is that risk; whether
is data gathering.
identified.
services is an essential further investigation or
WRI Aqueduct andpart of the Group’s
assessment of the risk is
the WWF Water
The contextual
responsibilities as an
required; whether existing
Risk Filter aid
issues considered employer. Not doing so countermeasures areunderstanding of the are:exposes the Group to
appropriate and adequate;
context in the- Water availability legal and regulatory
and what additional
region/area where a at a
non-compliance risks. countermeasures aresite is located, anbasin/catchment
required. Typically, theinternal company
level-Local communities &water risk assessment
questionnaire is
Other water users at
process for a site spans
used to understand - Water quality at a the basin/catchment
several months. Following
site-specificbasin/catchment
level
completion of the initial
information, whilelevel
The Group share same assessments the Groupdesk-based
water resources as
carry out a reassessment
research using- Stakeholder
these groups, and it is of the risk at a frequency
databases such as conflicts
therefore ourdetermined by the risk level
FAO/AQUASTAT
concerning water responsibility topreviously identified,and Regional
resources at amaintain the watersignificant operational
government
basin/catchment
quality and to notchanges, legislative45

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

databases further
level
contribute to waterchanges, etc.
enhances
scarcity throughunderstanding and - Implications ofexcess/unsustainable
In line with the Group’s
the “local” approach water on your key withdrawal practices,
Environment Plan 2030, JT
to risk mitigation.
commodities/raw particularly in areas of Group has recently
Water risksmaterials
severe water stress.
developed aidentified arecomprehensive approachclassified as relating - Water regulatory -NGOs
to assess and manage
to either water use, frameworks
Their insights are vital ESG risks in the supply
flooding, waterin identifying potential
chain, including water
scarcity, wastewater - Status ofwater pollutants that
related issues throughdischarge, group
ecosystems andcould have impacts on inclusion in the Suppliers’
reputation, or future habitats
water ecosystems and ESG Screening and Risk
trend. These risks
human health.
Management Process. ,are categorized into - Access to fullyTo date, we have assessedrisk ranking groups functioning, safely -Regulators
over 2,500 of our key(High, Medium-high, managed WASH
The Group works with suppliers. We initially use
Medium-low, andservices for all
regulators to keep
Maplecroft Risk Indices toLow) after scoredemployees
abreast of newassess baseline risks
based onregulations andrelating to water
information gained - Impact on human regulatory changes with generation, stress and,through the data
healthwhich the Group need from 2021, pollution.
gathering
to comply.
External consultants thenprocesses, covering These issues werescreen risks identified. We
criteria such as
selected based on -Suppliers
intend to introduce a further
frequency, severity, these being the
The group’s suppliers
assessment using
and ability to adapt. most relevant tolargely consist of
Ecovadis scoring.
JT Group assesses contextual issues growers whose
risks across both its to our operations livelihoods are
direct operations
and supply chain. dependent on income
and its supply chain. These issues are from tobacco
This is based on
the most
agriculture. These
commitments within relevant/moststakeholders are often
the JT Group 2030 likely to have an
directly exposed to any
Environmental Plan associated risk for water-related risks thatto assess all risks
our operations or arise so are one of theacross not just thein our supply
fundamental
Group’s own
chain.
considerations of theoperations, but its
risk assessment.
full value chain.
Maplecroft Risk
-Water utilities at a
Indices are used as
local levelthe first stage of our
These stakeholders
water risk
manage the water
assessment in the
resources which aresupply chain. We
important/vital to the46

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

use the index toassess risks relating
to water generation,
stress and pollution.

Group’s operations andgrowers.

W4. Risks and opportunities
W4.1(W4.1) Have you identified any inherent water-related risks with the potential to have asubstantive financial or strategic impact on your business?
Yes, only within our direct operations

W4.1a(W4.1a) How does your organization define substantive financial or strategic impact
on your business?
The JTG definition for substantive impact focuses on 3 key areas (which can be considered inisolation or combination):i) Financially: a materiality threshold of anything with an impact or estimated impact of 1 billion
Yen. Financial risk is judged by combining the following two factors: "magnitude of possible
impact" on our business and "likelihood of its occurrence."ii) Strategic: Attention from shareholders who have a 1% or larger share in the business.
iii) Attention in the mainstream media (national or international outlets, such as press,
television, etc.).
This definition of substantive risk applies to the assessment of risk in both our direct operations
and in our value chain. Examples of risks considered against this definition include access to
sufficient quantities of good quality freshwater and recycled water. Impacts could include costsof additional technical control measures, business interruption, brand perception or reputational
damage etc. The above definition of substantive impact was developed in 2017 to be in linewith other enterprise-wide risk definitions.

W4.1b(W4.1b) What is the total number of facilities exposed to water risks with the potential
to have a substantive financial or strategic impact on your business, and what
proportion of your company-wide facilities does this represent?
Total number of % companyfacilities
wide facilities
exposed tothis represents
water risk
Row 1
1

1-25

Comment

In 2021 our factory in Turkey had a significant risk offlooding due to heavy rainfall and poor water discharging

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Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

systems from the roof of the leaf storage warehouse.
Some affected materials were reused after drying andbefore losing their form.
This rainfall’s financial impact is related to destroyedmaterials (tobacco) only.

W4.1c(W4.1c) By river basin, what is the number and proportion of facilities exposed towater risks that could have a substantive financial or strategic impact on yourbusiness, and what is the potential business impact associated with those facilities?

Country/Area & River basin
TurkeyOther, please specify
Kukuk Menderes

Number of facilities exposed to water risk
1

% company-wide facilities this represents
Less than 1%% company’s total global revenue that could be affected
Less than 1%

Comment
In 2021 our factory in Turkey had a significant risk of flooding due to heavy rainfall andpoor water discharging systems from the roof of the leaf storage warehouse. Some
affected materials were reused after drying and before losing their form.
This rainfall’s financial impact is related to destroyed materials (tobacco) only.

W4.2(W4.2) Provide details of identified risks in your direct operations with the potential tohave a substantive financial or strategic impact on your business, and your responseto those risks.

Country/Area & River basin
TurkeyOther, please specify
Kukuk Menderes

Type of risk & Primary risk driver
Acute physical48

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Other, please specify
Severe weather events

Primary potential impact
Reduction or disruption in production capacity

Company-specific description
Some of our facilities are located in areas which could be exposed to change inprecipitation patterns that may cause increased frequency/severity of flooding. If a flood
was to occur this could lead to loss of production capacity which in turn could lead tolosses in sales and therefore revenue.
An example of this occurring is in 2021 our factory in Turkey had a significant risk offlooding due to heavy rainfall and poor water discharging systems from the roof of theleaf storage warehouse. The event impacted stored tobacco some of which wasdestroyed leading to a financial loss. Some affected materials were reused after drying
and before losing their form.

Timeframe
More than 6 years

Magnitude of potential impact
Medium-highLikelihood
More likely than not

Are you able to provide a potential financial impact figure?
Yes, a single figure estimate

Potential financial impact figure (currency)
1,168,450,000

Potential financial impact figure - minimum (currency)

Potential financial impact figure - maximum (currency)

Explanation of financial impact
Financial impact was calculated based on potential loss of production capacity of atypical factory such as the Turkey factory due to flooding resulting in loss of sales. If aflood like the one that occurred at our site in Turkey in 2021 were to occur in the future,
the potential final impact is 1.168 billion yen assuming our typical factory is shut down
for 7 days due to flood event. Calculation was done as Tobacco business revenue
2315.2 divided by 38 finish goods factories / 365 * 7 = 1.168

Primary response to risk
Increase capital expenditure

Description of response49

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,2023

As part of our water risk assessments of factories, we consider changing flood risks that
could result from climate change. The outputs of these assessments are used todetermine our mitigation measures.
These include, for example, business continuity plans, physical flood mitigation
infrastructure and insurance coverage. For example, in 2021, in our factory in Turkey,
we installed a new drain system and reinforced existing drainage channels.
In the future, these improvements will reduce the risk of flooding and therefore reduceany potential impacts on production capacity.

Cost of response
404,748,000

Explanation of cost of response
As part of our water risk assessments of factories, we consider changing flood risks that
could result from climate change. The outputs of these assessments are used todetermine our mitigation measures.
These include, for example, business continuity plans, physical flood mitigation
infrastructure and insurance coverage. For example, in 2021, in our factory in Turkey,
we installed a new drain system and reinforced existing drainage channels.
In the future, these improvements will reduce the risk of flooding and therefore reduceany potential impacts on production capacity.
Cost of management includes cost associated with water risk assessment (6.748 millionyen), physical flood mitigation infrastructure (33 million yen) and flood insurance
premiums (365 million Yen). Total cost to mitigate the risk is 6,748,000+ 33,000,000 +
365,000,000 = 404,748,000.

W4.2c(W4.2c) Why does your organization not consider itself exposed to water risks in its
value chain (beyond direct operations) with the potential to have a substantive
financial or strategic impact?
Primary reason
Row Risks exist, but
1
no substantive
impactanticipatedPlease explain
Through JT Group’s ESG supplier screening and risk management
processes using Maplecroft risk indexes,we have not to-date identified
water-related risks in our supply chain that represent a potential
substantive financial or strategic impact. As we deem water as important to
our indirect operations, we have assessed over 2,500 of our key suppliers.
We initially use Maplecroft Risk Indices, to assess baseline water-relatedrisks relating to water quality, generation, stress and, since 2021, pollution.
External consultants then screen risks identified. We intend to introduce afurther assessment level in the coming years using Ecovadis scoring.
This process allows us to identify key suppliers that pose a substantive risk
to our tobacco business.
Currently, we have not identified suppliers with water-related risks thatmeet or surpass our threshold of ‘substantive impact’. This is defined inthree ways:
50

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023• Financially: a materiality threshold of anything with the potential to impact
profitability by 1 billion Yen• Attention from shareholders: issues raised by shareholders who have a
1% or larger stake in the business, whether positive or negative.
• Attention in the mainstream media: news articles in the mainstream or
national media, whether positive or negative

W4.3(W4.3) Have you identified any water-related opportunities with the potential to have asubstantive financial or strategic impact on your business?
Yes, we have identified opportunities, and some/all are being realized

W4.3a(W4.3a) Provide details of opportunities currently being realized that could have asubstantive financial or strategic impact on your business.

Type of opportunity
Markets

Primary water-related opportunity
Increased brand value

Company-specific description & strategy to realize opportunity
The JT Group's main business is the tobacco business, but water resources are alsoessential to our processed food business. We believe that further strengthening water
reduction efforts will help fulfil our responsibilities as a water-reliant company andultimately lead to an opportunity to increase the value of our corporate and productbrands. Although we have confirmed through water risk assessment that stable water
can be procured for a long period of time, conservation of forests that recharge water is
an important issue for processed foods and societies that rely on good water resources.
For this reason, the JT group has been conducting afforestation and forest conservation
activities (JT Forest) since 2005 in Japan, where most of processed food's site arelocated. In 2022 We have concluded the agreement with 9 forests in Japan which
covered 1,570ha. We are contributing to climate change issues and water resource
conservation in the watershed through proper forest management. Specifically, in
addition to financial contributions, employees are taking part in volunteer activities heldat JT Forest and providing products manufactured by processed food. In addition, weare strategically developing products to promote environmental activities, such as selling
products that show that part of the package sales is used for tree planting and forest
conservation activities.

Estimated timeframe for realization
1 to 3 years

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Magnitude of potential financial impact
MediumAre you able to provide a potential financial impact figure?
Yes, a single figure estimate

Potential financial impact figure (currency)
334,000,000

Potential financial impact figure – minimum (currency)

Potential financial impact figure – maximum (currency)

Explanation of financial impact
The survey results from the Consumer Affairs Agency show that consumers who choose
eco-friendly products and services increased by about 2% in one year, and the change
in environmental awareness of consumers is reflected in the market reliably andsignificantly. We believe that the ratio is increasing year by year. Here, we calculated
the effect of increasing our market share by 1% against 2% (33.4 billion yen) of the total
sales (about 1,670 billion yen) of Japanese frozen food companies.

W5. Facility-level water accounting
W5.1(W5.1) For each facility referenced in W4.1c, provide coordinates, water accounting
data, and a comparison with the previous reporting year.

Facility reference number
Facility 1

Facility name (optional)
Factory 1

Country/Area & River basin
TurkeyOther, please specify
Kukuk Menderes

Latitude38.196571

Longitude
27.349252

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Located in area with water stress
Yes

Total water withdrawals at this facility (megaliters/year)
221.75Comparison of total withdrawals with previous reporting year
Lower

Withdrawals from fresh surface water, including rainwater, water fromwetlands, rivers and lakes
0

Withdrawals from brackish surface water/seawater0

Withdrawals from groundwater - renewable
221.75

Withdrawals from groundwater - non-renewable0

Withdrawals from produced/entrained water0

Withdrawals from third party sources0

Total water discharges at this facility (megaliters/year)
44.89

Comparison of total discharges with previous reporting year
Much higher

Discharges to fresh surface water
44.89

Discharges to brackish surface water/seawater0

Discharges to groundwater0

Discharges to third party destinations
0

Total water consumption at this facility (megaliters/year)
176.86Comparison of total consumption with previous reporting year
Lower

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Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Please explain
Water withdrawals at our factory in Turkey, were 10% lower than in the previous
reporting period. This is despite the site’s production volume increasing significantly inthat timeframe (5%).
This results from our ongoing water efficiency initiatives under our water policy andcontributes to our 2030 goal for a global 15% reduction in water withdrawals. Water
discharge increased due to an increase in FTE on site.
For example, improved technology and a new green production and office building havemeant that our factory in Turkey reduced water consumption by 480 cubic meters andcan collect 20 cubic meters of rainwater for reuse each year.
This building consumes 72% less water and 81% less energy than typical factorybuildings in the country. The building has received Leadership in Energy andEnvironmental Design (LEED) certification.

W5.1a(W5.1a) For the facilities referenced in W5.1, what proportion of water accounting data
has been third party verified?
Water withdrawals – total volumes% verified
76-100

Verification standard used
ISAE 3000

Water withdrawals – volume by source% verified
Not verified

Please explain
While internal controls are in place for each water aspect of this question, the third-party
verification covers total water withdrawals and total water discharges.

Water withdrawals – quality by standard water quality parameters% verified
Not verified

Please explain
While internal controls are in place for each water aspect of this question, the third-party
verification covers total water withdrawals and total water discharges.

Water discharges – total volumes% verified
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Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

76-100

Verification standard used
ISAE 3000

Water discharges – volume by destination% verified
Not verified

Please explain
While internal controls are in place for each water aspect of this question, the third-party
verification covers total water withdrawals and total water discharges.

Water discharges – volume by final treatment level% verified
Not verified

Please explain
While internal controls are in place for each water aspect of this question, the third-party
verification covers total water withdrawals and total water discharges.

Water discharges – quality by standard water quality parameters% verified
Not verified

Please explain
While internal controls are in place for each water aspect of this question, the third-party
verification covers total water withdrawals and total water discharges.

Water consumption – total volume% verified
Not verified

Please explain
While internal controls are in place for each water aspect of this question, the third-party
verification covers total water withdrawals and total water discharges.

W6. Governance
W6.1(W6.1) Does your organization have a water policy?
Yes, we have a documented water policy that is publicly available
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2023

W6.1a
(W6.1a) Select the options that best describe the scope and content of your water
policy.
ScopeContent

Please explain

Row Company- Description of the scope1
wide(including value chain
stages) covered by thepolicyJT Group considers water and water related issues
critical to its business as well a fundamental resourcefor direct operations and suppliers. Water and climate
related issues could have a substantive impact on
our business and value chain. Our company-wide “JT
Description of businessGroup Environment Policy” specifically addresses
dependency on water
water aspects. It is publicly available on JT’s website
Description of businessand shared by all our businesses company wide. Our
impact on water
JT Group Environment Plan 2030 includes a target toCommitment to align with
reduce water use associated with our tobacco
international frameworks,
operations by 15% by 2030.
standards, and widelyTo achieve the target, we set annual water targets forrecognized water initiatives
our direct operations. The policy also includes
Commitment to prevent,education and encouragement of our employees andminimize, and control
suppliers to reduce environmental impacts andpollution
optimize the use of natural resources including water.
Commitment to reduce
In addition, our Human Rights Policy also recognizes
water withdrawal and/or
the human right to water and sanitation and JT Group
consumption volumes insupports the UN SDGs. We align our management
direct operations
systems with international standards ISO14001 andCommitment to reduce
ISO50001.
water withdrawal and/or
consumption volumes insupply chain
Commitment to safely
managed Water, Sanitationand Hygiene (WASH) in
local communities
Commitment to stakeholder
education and capacity
building on water security
Commitment to water
stewardship and/orcollective action
Commitments beyond
regulatory compliance
Reference to company
water-related targets

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Acknowledgement of thehuman right to water andsanitation
Recognition ofenvironmental linkages, forexample, due to climatechangeW6.2(W6.2) Is there board level oversight of water-related issues within your organization?
Yes

W6.2a
(W6.2a) Identify the position(s) (do not include any names) of the individual(s) on theboard with responsibility for water-related issues.
Position ofindividual orcommittee

Responsibilities for water-related issues

Director on
board

JT Group considers water-related issues to be strategically important for ourbusiness. As such, high level board oversight is critical. The person directly
responsible for water-related issues is the Chief Sustainability Officer (CSO) of JT.
This position reports directly to Representative Director and Executive Vice
President of JT on corporate, sustainability management, pharmaceutical andprocessed food business. The Representative of Director and Executive Vice
President is Member of the Board also serving as Executive Officer. They are
directly responsible for developing and implementing strategies and plans for
Sustainability Management, including water related issues. In 2023, directors madea decision to update the water-related targets in the JT Group Environmental Plan
2030.

W6.2b
(W6.2b) Provide further details on the board’s oversight of water-related issues.
Frequency thatwater-related
issues are ascheduled
agenda item

Governancemechanisms into
which water-related
issues areintegrated

Please explain

Row Scheduled 1
some meetings

Monitoring
implementation andperformance

JT Group considers water-related issues to be
strategically important for our business. As such,high level board oversight is critical, so waterrelated issues are discussed in Board levelmeetings 4 times a year as part of environmental
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Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Providing employee
incentives

planning. Our governance mechanism contributes
to the Board’s oversight of water problems including
following measures;
Reviewing and
1) Review of Annual and Strategic Planning (ASP)
guiding annual
2) Approving the annual operation plan, whichbudgets
includes the yearly environmental plan.
Reviewing and3) Review of previous year performance as part ofguiding businessthe Board meeting in May
plans4) Review of Sustainability Strategy
Reviewing and
The governance mechanisms are implemented
guiding corporate
within the four processes above, which contribute toresponsibility strategy
the oversight of water-related issues.
Reviewing andguiding major plans ofaction
Reviewing andguiding risk
management policies
Reviewing andguiding strategy
Setting performance
objectives

W6.2d(W6.2d) Does your organization have at least one board member with competence onwater-related issues?
Board member(s)Criteria used to assess competence of board member(s) on
have competence on water-related issues
water-related issues
Row Yes1

Our board has members with expertise in the area of sustainability,
environment and society including water-related issues, and we havedisclosed board member’s skills matrix. This matrix is based on board
members' past experience and the knowledge they have developed
through this experience.

W6.3(W6.3) Provide the highest management-level position(s) or committee(s) withresponsibility for water-related issues (do not include the names of individuals).

Name of the position(s) and/or committee(s)Chief Sustainability Officer (CSO)58

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Water-related responsibilities of this position
Assessing future trends in water demand
Assessing water-related risks and opportunities
Managing water-related risks and opportunities

Frequency of reporting to the board on water-related issues
Quarterly

Please explain
1) CSO is in charge of JTG Sustainability Management. This position reports directly to
Representative Director and Executive Vice President who is directly responsible fordeveloping and implementing strategies and plans, including water-related issues.
2) CSO is responsible for water-related issue management and more broadly,
sustainability management. The Sustainability function monitors and assesses waterrelated issues, coordinates activities, gathers data and provides information to the JTG’s
Board of Directors. For example, water withdrawal KPIs are reported to the Board of
Directors as part of assessing progress and future trends towards JTG’s group 2030
Environment Plan. Water-related management and performance are reported to theBoard 4 times a year so that the Board can understand the progress and future trends tothe target and provide oversight.

W6.4(W6.4) Do you provide incentives to C-suite employees or board members for the
management of water-related issues?
Provide incentives for management of water-related issues
Row 1

Comment

Yes

W6.4a(W6.4a) What incentives are provided to C-suite employees or board members for the
management of water-related issues (do not include the names of individuals)?
Role(s)entitled toincentive

Performanceindicator

Monetary Chief
Reduction of
rewardSustainability water
Officer (CSO) withdrawals –directoperations
Improvements
in wastewater
quality – direct
operations

Contribution of incentives Please explain
to the achievement of yourorganization’s watercommitments
Our CSO is individually
evaluated on theirachievement of performancetargets through theperformance of their duties
that lead to the sustainableprofitable growth of theCompany. Performancetargets are set at the

The evaluation of CSO,
which reflects selected
performance indicators, isconducted once a year
based on the results ofthe entire JT Group. For
indicators related to longterm plans, such as water
withdrawal reduction

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Reduction ofwater pollution
incidents

beginning of the fiscal year
through a meeting with theGroup CEO, and are
evaluated at the end of the
Increasedfiscal year and linked toaccess tomonetary reward. Progress
workplace
WASH – supply against the water withdrawal
reduction targets in the JT
chain
Group Environmental Plan
2030 is used as aperformance indicator. In
addition, in compliance withthe commitments made in
the JT Group Environment
Policy, quantitative targets
are included for ensuringthat wastewater quality
complies with environmental
laws and regulations in eachcountry under an effective
environmental management
system structure, preventing
water-related incidents andregulatory violations, andaddressing environmental
issues in the value chain,including access to WASH.
NonNo one ismonetary entitled to
rewardthese
incentives

targets, the threshold isthe value for the year on
the reduction line, and forindicators related tocompliance with therespective national laws
and regulations for
wastewater quality, thethreshold is zero cases of
exceeding the standard
throughout the year.

Currently, there is not aformal non-monetary
incentive provided for Csuite members.

W6.5(W6.5) Do you engage in activities that could either directly or indirectly influence
public policy on water through any of the following?
No

W6.6(W6.6) Did your organization include information about its response to water-relatedrisks in its most recent mainstream financial report?
Yes (you may attach the report - this is optional)
integrated2022_E_all.pdf

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W7. Business strategy
W7.1(W7.1) Are water-related issues integrated into any aspects of your long-term
strategic business plan, and if so how?
Are waterLong-term Please explain
related issues time
integrated?
horizon(years)Long-termbusiness
objectives

Yes, waterrelated issues
are integrated

11-15

Our Group environment plans contain commitments
and objectives relating to improved water efficiency andthe identification and mitigation of water-related risks.
The JT Group Environment Plan 2030 introduced in2019 (11 year timeframe, or 15 years from 2015baseline) has a target to reduce water withdrawal
associated with our tobacco business by 15% from2015 base year. To better understand water risk anduse in our supply chain, by 2022 the Group has
implemented a water risk management process in our
manufacturing supply chain. This allowed the Group toeffectively make long term decisions whilst maintaining
tangible objectives and targets.
The Annual and Strategic Planning (ASP) process iscarried out annually and measures progress against
annual targets for the next three years.
Sites are required to set specific actions showing how
they can contribute to achieving the longer-term
objectives of the Group relating to water efficiency andwater risk assessments, at the site, business andcompany level. As such, our environment plans form an
integral a part of the Group’s overall business plan.
In the tobacco business, a country-level climatescenario analysis (CSA) is currently being undertaken.
This includes assessing water-related issues such as
drought and flood risk. To date, JT Group haveconducted CSA in 11 countries and developed actionplans as a part of the ERM process.

Strategy forachievinglong-term
objectives

Yes, waterrelated issues
are integrated

11-15

In addition to opportunities such as improving water
efficiency by saving water, increasing market
opportunities such as refining brand value andincreasing ESG investment by conserving water
resources, physical risks due to droughts and floods,
water pollution, legal regulations and public Water61

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related issues, such as risks associated with
reputational impacts of policy changes, are integrated
into strategies for achieving long-term objectives. To
address the above-mentioned water-related issues, JT
Group established the JT Group Environment Plan
2030 in 2019 (11 year timeframe, or 15 years from 2015baseline) with a view to supporting the water risk
assessment (WRA), promote WRA in the supply chain
toward achieving it, and take appropriate measuresagainst detected risks. By integrating water-related
issues into strategies for achieving long-term objectives
the JT Board will also have a process for reviewing the
integrated plan to ensure it is consistent with the longterm environmental strategy of the business, requestingchanges (if necessary) and approving the plan. This
enables the board to make effective long-term decisions
in keeping with specific goals and objectives.
Financialplanning

Yes, waterrelated issues
are integrated

11-15

Water related plans and programs are incorporated into
JT Group’s Annual and Strategic Planning processes,
which includes both capital and operational financial
planning. Where capital expenditure is required inrelation to water related projects (e.g. upgrading
facilities to reduce water consumption, improving
wastewater treatment), this is requested and authorizedthrough the Business Approval Process (BAP). The
BAP can be used for CAPEX planning with paybacks
beyond 11 years, hence this is considered in thetimeframe 11-15 years.

W7.2(W7.2) What is the trend in your organization’s water-related capital expenditure(CAPEX) and operating expenditure (OPEX) for the reporting year, and the anticipatedtrend for the next reporting year?
Row 1
Water-related CAPEX (+/- % change)
29

Anticipated forward trend for CAPEX (+/- % change)
63

Water-related OPEX (+/- % change)
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Anticipated forward trend for OPEX (+/- % change)-6

Please explain
CAPEX significantly increased in 2022 compared to 2021 due to implementation of large
projects in Canada, the Philippines, Russia, Greece and Sudan related to water-reuse,
waste-water improvement, leakage elimination and roof drainage systems. Anticipatedforward trend for CAPEX is a 63% increase next year comparing to this year due toplans to upgrade equipment such as cooling towers. OPEX has not changed in 2022
compared to 2021. This cost mostly relates to wastewater services and sewer utilities
and water supply costs which have not significantly changed as there have been no
major changes in our group operations. Anticipated forward trend for OPEX is a further
reduction in spend.

W7.3(W7.3) Does your organization use scenario analysis to inform its business strategy?
Use ofscenario
analysisRow Yes1

Comment

2019 we conducted climate scenario analysis (CSA) for our tobacco business.
The process was aligned with TCFD and involved our Directors on Board. We
used 2DS (2°C Scenario) model to assess emissions reductions including inputs
of current and anticipated emissions to develop our climate targets, included in
our Environment Plan 2030. We then updated our targets to be more ambitious
to align with a 1.5 degree scenario. We also use CSA to identify locations that
could be at higher future water supply risks to inform sourcing decisions andbusiness expansion, and our water reduction targets and actions.
We are undertaking country-level CSA including water-related issues across allstages of the JTI value chain.
By the end of 2022 we conducted CSA in 11 countries, which feed into waterrelated action plans as part of our ERM process and the results fed back to thesites in those countries to they can be used to inform their Annual Strategic
Planning process for the next 3 years.

W7.3a(W7.3a) Provide details of the scenario analysis, what water-related outcomes wereidentified, and how they have influenced your organization’s business strategy.
Type ofscenario
analysisused
Row Climate1
relatedParameters,
assumptions,analyticalchoices

Description of possible water- Influence on business
related outcomesstrategy

2DS
RCP 2.6

Increased flooding at various
production sites and in our leaf

JT Group conduct water risk
related climate scenario

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Nationallysupply chain for example inanalysis for both its own
determinedJapan (where our group HQ is factories and key tobacco
contributions
located). Acute Risk: We
growing sites. This analysis(NDCs)
conducted scenario analysis
identifies sites that are likely to
Aqueductusing external data such as
experience climate changeRCP4.5, 8.5
reports by Japan Meteorological induced flooding and are at
future projection Agency. As an example
higher flooding risk in future.
outcome, we identified that
The tool used to conduct thisclimate change may increase
analysis is the WRI’s Aqueduct
precipitation, typhoon intensity Tool, supplemented withand occurrence of large tropical extensive site-level research bycyclones in Japan. These risks independent water security
could impact the volume andexperts. JT Group implemented
quality of tobacco leaf wethe assessment process withprocure, which could result in
the intention of identifying
disruption of our production site possible climate-related water
operations. In addition, therisks and implementing
demand for water may become appropriate mitigation actions.
higher, as the amount of water We used the CSA results toavailable for withdrawal
consult with local teams anddecreases due to increased
understand what mitigationwater risks. In particular, theoptions are being looked at orprocessed food business, which currently implemented touses a large amount of water in understand resilience.
its business activities, is
Adaptation and mitigation
vulnerable to variable water
actions identified through theprices as supplies areassessment are incorporated
potentially affected.
into the three-year annual andstrategic planning processes.
An example of resilience in ouroperations through risk
mitigation can be found at oneof our factories in North
America. The factory roof was
identified as needing upgradingin the short term to withstandhigher winds and rainfall
caused by extreme storms.
This work is ongoing and is
expected to be completed in
2023.
Through our CSA, we havealso identified some tobacco
growing regions which are likely
to experience climate-related
64

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2023

water impacts in the future.
The assessment has also
informed the inclusion ofclimate-related risk as anenterprise level risk through ourbusiness.

W7.4(W7.4) Does your company use an internal price on water?
Row 1
Does your company use an internal price on water?
No, and we do not anticipate doing so within the next two years

Please explain
Water does not represent a significant expense to JT Group’s business, as a result, wedon’t plan to introduce internal price of water.

W7.5(W7.5) Do you classify any of your current products and/or services as low water
impact?
Products
and/orservicesclassified as
low water
impactPrimary reason for not
Please explainclassifying any of your current
products and/or services as
low water impact

Row No, and we do Important but not an
1
not plan toimmediate business priority
address thiswithin the next
two years

Our tobacco and processed food
manufacturing activities all use water.
However, for our main operation, thetobacco business, the water that isrequired for tobacco crops comes
predominantly from rainfall, while tobacco
processing and manufacturing are notwater-intensive. Therefore we haven’t
planned to have the low water impact
products within the next two years.

W8. Targets
W8.1(W8.1) Do you have any water-related targets?
65Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Yes

W8.1a
(W8.1a) Indicate whether you have targets relating to water pollution, water
withdrawals, WASH, or other water-related categories.
Target set in this Please explain
category
Water pollution

Yes

Water withdrawals

Yes

Water, Sanitation,and Hygiene(WASH) services

Yes

Other

No, and we do not There are no further water aspects which areplan to within the highlighted/prioritized in the JT Group Environment Plan
next two years
2030. The targets given relate to the most substantial
water aspects of the business.

W8.1b(W8.1b) Provide details of your water-related targets and the progress made.

Target reference number
Target 1

Category of target
Water withdrawals

Target coverage
Business division

Quantitative metric
Reduction in total water withdrawals

Year target was set
2018

Base year
2015

Base year figure
4,004,340.47

Target year
2030

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2023

Target year figure
3,403,689.4

Reporting year figure
3,087,636.77% of target achieved relative to base year
152.6183412942

Target status in reporting year
Achieved

Please explain
The target was calculated by analyzing site level intensities against peer factories,
taking into account predicted future water stress for the region in which each site is
located.

Target reference number
Target 2

Category of target
Water, Sanitation and Hygiene (WASH) services

Target coverageCountry/area/region

Quantitative metric
Increase in the proportion of local population using safely managed drinking water
services around our facilities and operations

Year target was set
2019

Base year
2019

Base year figure0

Target year
2025

Target year figure
1,000,000

Reporting year figure
400,000% of target achieved relative to base year67

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

40

Target status in reporting year
Underway

Please explain
For many of the communities in which we operate, water remains a precious and scarce
resource. That’s why in December 2019 we launched our Global WASH (Water andSanitation, Hygiene) initiative, with the ambitious goal of providing access to clean waterand sanitation and hygiene for one million people by the end of 2025.
Since the launch of the initiative, we have reached over 400,000 people – over 40% of
our goal. Our WASH initiative has been changing the lives of people in Mexico, Bolivia,
Ethiopia, Indonesia and Bangladesh. Thanks to our local teams who have partneredwith international and local organizations specializing in water and sanitation, hygiene,
we were able to bring innovative solutions tailored to the specific needs of each area.

Target reference number
Target 3

Category of target
Water pollution

Target coverage
Company-wide (direct operations only)

Quantitative metric
Increase in proportion of wastewater that is safely treatedYear target was set
2021

Base year
2021

Base year figure0

Target year
2022

Target year figure
100

Reporting year figure
100% of target achieved relative to base year
10068

Japan Tobacco Inc. CDP Water Security Questionnaire 2023 Wednesday, July 26,
2023

Target status in reporting year
Achieved

Please explain
To reduce water pollution, the JT Group aims to maintain 100% compliance with
discharge standards (one of the indicators of legal compliance). Maintaining 100%
compliance with discharge standards is one of the indicators for evaluating legal
compliance; 100% of our wastewater in 2022 met discharge standards as in 2021. Notethat we have answered 0 in the "base year" column to make the automaticallycalculated "% of target achieved relative to base year" column value 100%.

W9. Verification
W9.1(W9.1) Do you verify any other water information reported in your CDP disclosure (notalready covered by W5.1a)?
Yes
Independent_Assurance_Statement_Environment.pdf

W9.1a(W9.1a) Which data points within your CDP disclosure have been verified, and which
standards were used?
Disclosure
moduleData verified

Verification
standard

Please explain

W1 Current
state

Total Water
Withdrawal
Total Water
Discharge

ISAE 3000

These data points were verified under
ISAE3000 (Revised) by Bureau Veritas.

W10. Plastics
W10.1(W10.1) Have you mapped where in your value chain plastics are used and/or
produced?
Plastics
mapping
Row Yes1

Value chain Please explain
stage
Directoperations

We know where plastics materials are used in our product andpackaging and work together with suppliers to reduce plastics and69

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2023

Supplychain

improve packaging structures. Information on the volumes of plastic
packaging is disclosed in subsequent questions

W10.2(W10.2) Across your value chain, have you assessed the potential environmental andhuman health impacts of your use and/or production of plastics?
Impact assessment

Please explain

Row Not assessed – but we We continue to build internal capacity to conduct Life Cycle
1
plan to within the next Assessments (LCA) to assess environmental impact of our producttwo years
and packaging and to identify areas for improvement. Pilot LCAs werealready conducted for certain product categories.

W10.3(W10.3) Across your value chain, are you exposed to plastics-related risks with thepotential to have a substantive financial or strategic impact on your business? If so,
provide details.
Risk exposure
Row Not assessed – and1
we do not plan towithin the next two
years

Please explain
We use plastic for packaging, RRP devices and accessories. This
represents a relatively small quantity of plastic which does not pose asubstantive impact on our business according to our definition ofsubstantive impact given earlier in this disclosure (W4.1a).

W10.4(W10.4) Do you have plastics-related targets, and if so what type?
Targets
in place
Row Yes1

Targettype

Target metric

Plastic
packaging

Reduce the total
weight of plastic
packaging used and/or
produced

Please explain

As a part of our JTG Environment Plan wehave a target: We will reduce our packaging(including plastic) and ensure that theremaining is 88% reusable or recyclable by
Increase the proportion 2025, rising to 100% by 2030.
of plastic packaging
that is recyclable inpractice and at scale
Increase the proportionof plastic packaging
that is reusable

W10.5(W10.5) Indicate whether your organization engages in the following activities.
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2023

Activity
appliesComment

Production of plastic
polymers

No

JTG doesn’t produce plastic polymers.

Production of durable plastic
components

No

JTG doesn’t produce durable plastic components.

Production /Nocommercialization of durable
plastic goods (including
mixed materials)

JTG doesn’t produce or commercialize durable plastic
goods (including mixed materials)

Production /commercialization of plastic
packagingNo

JTG doesn’t produce or commercialize plastic packaging

Production of goods
packaged in plasticsYes

JTG uses plastic packaging materials for some products.
Use of plastic packaging is necessary to sustain quality of
product and shelf life. We are continuously looking foralternatives to reduce and replace plastic and have donesome progress already. For instance, we have reduced thethickness of polypropylene overwraps. In 2021, thisreduced our use of fossil-based plastic by around 500 tons,
and cut our GHG emissions by up to 769 tons of CO2e.
We completed the global rollout of this initiative in 2021 for
combustibles and continued implementing it for RRPs in
2022. We are looking into no plastic substitutes forpolypropylene film. Information on the volumes of plastic
packaging is disclosed in subsequent questions.

Provision / commercialization No
of services or goods that use
plastic packaging (e.g., retailand food services)

JTG doesn’t provide or commercialize services or goods
that use plastic packaging (e.g., retail and food services)

W10.8(W10.8) Provide the total weight of plastic packaging sold and/or used, and indicate
the raw material content.

Plastic
packagingusedTotal weight ofplastic packaging
sold / used during
the reporting year
(Metric tonnes)

Raw material
content
percentages
available toreport% virginfossilbased
content

Please explain

29,134% virgin fossilbased content

100

Our products use plastic
packaging which currently
consists of non-recycled71

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content. In the future, JT Groupintends to shift towards using
packaging from renewable orrecycled sources.

W10.8a(W10.8a) Indicate the circularity potential of the plastic packaging you sold and/or
used.

Plastic
packaging
used

Percentages
available toreport forcircularity
potential% of plastic
packaging thatis technicallyrecyclable

Please explain% technicallyrecyclable

53

53% of the plastic that is used in JT Grouppackaging is technically recyclable. These
plastics are widely recycled in most countries,
but we cannot be sure that the collection, sorting
and recycling occurs widely in all countries inwhich we sell our goods. A 30% recycled ratewould be considered "recyclable in practice andscale".

W11. Sign off
W-FI(W-FI) Use this field to provide any additional information or context that you feel isrelevant to your organization's response. Please note that this field is optional and is
not scored.

W11.1(W11.1) Provide details for the person that has signed off (approved) your CDP water
response.
Row 1

Job title

Corresponding job category

Chief Executive Officer (CEO)

Chief Executive Officer (CEO)72