Consumer expectations
One of the five topics of the JT Group Materiality is ‘Value creation that exceeds consumerexpectations’.
We are committed to create products and services that exceeds consumer expectations.
■

We will develop innovative products and services and provide a variety of situations to ourconsumers to experience our products.
- Develop and offer RRP (Reduced-Risk Products)- Develop innovative original drugs- Develop food products in response to diverse consumer values and interests■

We will also research, explore and create future business seeds centered on theamong others

concept of ‘Fulfilling Moments’.
See more about our products and services of our tobacco, pharmaceutical, and processed foodbusiness, or our strive for product stewardship, circularity and waste.
Please also refer about the product and services of our tobacco business on
JT International sustainability website.

TobaccoPharmaceutical
Processed food

Copyright© Japan Tobacco Inc. All rights reserved.

Supply chain policies andstandards
All of our suppliers* are required to comply with our JT Group Supplier Standards. We selectsuppliers based on quality, service, and cost, which is reflected in our JT Group ResponsibleProcurement Policy. Our contracted tobacco leaf growers and merchants must also adhere to theJT Group Principles in Leaf Tobacco Production.
Although we work with many different suppliers, our leaf supply chain due diligence processprovides us with a 360° view of the entire supply chain at farm level. This process includes:■

Supply Chain Impact Assessments■

Our Agricultural Labor Practices (ALP) program■

Our ARISE (Achieving Reduction of Child Labor in Support of Education) program■

Grower Support Programs* includes tobacco suppliers.

The JT Group
Responsible
ProcurementPolicyThe JT Group
SupplierStandards

The JT Group
Principles inAgricultural

Leaf Tobacco

Labor Practices

Production

The JT Group Responsible Procurement Policy

With the JT Group Purpose “FulfillingMoments, Enriching Life”, we will continue
enriching lives through our businesses andendeavors with our growing customers andpartners. To realize this purpose, the JT
Group operates procurement in the manneras stated in the JT Group Responsible
Procurement Policy.

1. Implementation of compliance■Acting in a manner to comply with the legislation and regulations relating to procurement as well
as social norms.

■Providing appropriate measures to protect all information provided to us by our suppliers forprocurement activities.

■

Operating procurement activities in an appropriate and sincere manner that follows the JT Group
Code of Conduct.

2. Environment
The JT Group operates procurement in a manner to pay due consideration to the environment inaccordance with the basic principle of the JT Group Environment Policy.

3. Supplier selection
Our supplier selection is based on our review of a supplier’s quality, price, and service. In particular,
the JT Group will consider the supplier’s historical success with respect to the delivery of goods andservices to be supplied to the JT Group, as well as the supplier’s capability to ensure ongoingdelivery of these requested goods and services. In addition to these criteria, the JT Group willconsider the following:■

The supplier’s compliance with relevant laws and regulations for each country and region.

■

The supplier’s policies that respect human rights and social norms.

■

Whether the supplier has appropriate measures to pay due consideration to the environment.

■

Whether the supplier has appropriate measures to protect confidential information, tradesecrets, and any other information provided by business partners.

■

Whether the supplier has appropriate measures that ensure business continuity, free from any
operational and financial instability.

Reporting Concerns

The JT Group Supplier Standards
Wherever we operate, we expect our business partners to share our commitment to the highest
standards of business integrity, legal compliance, and responsible business practice. At the Grouplevel, our Responsible Procurement Policy sets this expectation. It clarifies that when selecting
suppliers, we take account of candidates’ compliance with relevant laws and regulations, andrequires that we consider human rights, the environment, and other social responsibilities.
The JT Group Supplier Standards

NOTEJapan Tobacco International (JTI), which is the international operation of the JT Group, has specificselection criteria for suppliers which are consistent with those of the JT Group. For more
information, please refer to JTI's policy.
JTI Supplier Standards

The JT Group Principles in Leaf Tobacco Production
The JT Group conducts business following
our management principle, the 4S model,
under which “we strive to fulfill ourresponsibilities to our valued consumers,
shareholders, employees and the wider
society, carefully considering the respective
interests of these four key stakeholder
groups, and exceeding their expectations
wherever we can.”We secure a stable supply of quality tobaccothat meets required standards at best costthrough direct-procurement of leaf fromgrowers. We then process this leaf tobacco*1

at our designated factory (hereinafter the“leaf tobacco production”).

To pursue our above-mentioned management principle in leaf tobacco production, we haveestablished, and abide by, the following JT Group Principles in Leaf Tobacco Production in origins
where we do business.

Our principles■

Sustainable leaf tobacco production following the JT Group’s Code of Conduct.

■

Adherence to the JT Group Environment Policy, which aims to reduce environmental impacts andensure efficient use of natural resources while striving to conserve biodiversity.

■

Endeavor to produce leaf tobacco that satisfies consumers’ requirements.

■

Strive to improve quality and integrity of leaf tobacco production through promotion of Good
Agricultural Practice (GAP)*2.

The JT Group, together with our contracted growers, will promote:1 Compliance with applicable national and local legislations
2 Respectful treatment without applying any unlawful discrimination, abuse, or harassment of any
kind to workers and prohibition of use of child labor and/or use any form of forced orcompulsory labor to workers
3 Reasonable measures to create and maintain a safe and healthy working environment
4 Proper management of seed and varieties
5 Consideration for the environment in leaf tobacco production through conservation of forestry,soil, water resources, biodiversity, and ongoing improvement of energy efficiency
6 Adoption of techniques including Integrated Pest Management (IPM)*3 practices, aiming at
reduced use of CPAs in the control of diseases, infestation of harmful insects and weed control
7 Management practices which contribute to avoiding Non Tobacco Related Material (NTRM) orany other contaminants
8 Sustainable grower incomes through responsible pricing principles and practices
9 Management of transportation and storage practices that ensure quality and integrity of leaf
tobacco is maintainedIn order to achieve these objectives, we educate and train relevant employees in the JT Group, ourcontracted growers and any people involved in our leaf tobacco production on an ongoing basis.
In addition to leaf procured directly from contracted growers, we also purchase leaf tobacco fromthird party suppliers*4. In these cases, we conduct business in accordance with the JT Group
Responsible Procurement Policy and we will also encourage such suppliers to follow the JT Group
Principles in Leaf Tobacco Production.

NOTE*1 Leaf tobacco processing:
To separate the lamina portion of tobacco from the stem and pack tobacco for storage andtransportation.
*2 Good Agricultural Practice (GAP):
Agricultural practices which produce a quality crop while protecting, sustaining, or enhancing theenvironment with regard to soil, water, air, animal and plant life, and which aim at ensuring sustainable,
economically viable production of usable tobacco.
*3 Integrated Pest Management (IPM):
A sustainable approach to managing pests, diseases, and weeds by combining biological, cultural,physical, and chemical tools in a way that minimizes health and environment risks.
*4 Third-party supplier:A supplier who supplies processed packed tobacco to manufactures or any non-tobacco producer whoproduces green leaf for onward sale to a tobacco manufacture.

Agricultural Labor Practices
Our Agricultural Labor Practices (ALP), launched in 2013, define the standards we expect of ourcontracted tobacco growers for safe working conditions, fair treatment, working hours, provision
against forced labor, and freedom of association. They also describe our stance against child laborand measures to eliminate it. Our farming experts, who are all fully trained on ALP, observe labor
practices during farm visits, report on their findings, give advice to growers and agree improvement
programs. We have continued implementing ALP with our directly contracted growers as well aswith indirectly contracted growers through our tobacco merchants.
Agricultural Labor Practices 2017

Related links
Supply chain

Supply chain

SustainableNon-tobacco

policies andstandards

farming practices
and farmer

materials, otherproducts, andlivelihoods

services
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