Sustainability
JT Group purpose can be found in FY2022 Integrated Report, pages 1-3
Read more about JT Group Materiality
Read more

JT Group Sustainability Targets

Top management message

Materiality and sustainability

Latest NewsNEW December 11, 2023

JT makes it on the Dow Jones
Sustainability Asia Pacific Index for
the Tenth Consecutive Year.
Read moreLatest NewsNEW June 9, 2023

FY2022 online content and FY2022 Integrated
reportare now available.

Please check our progress toward targets-Tobacco business-Pharmaceutical business-Processed food business-JT Group Environment Plan 2030

Download all (zip)Latest NewsNEW February 2024

JT Group recognized on CDP’s
climate change A List and water
security A List.
Read more

Our way of doing business

The JT Group Materiality
As nature, society, and people's lives are intertwined, sustaining our ways of living, and the activities
of corporate entities, will depend on the sustainability of the environment and society in which we
exist.
In realizing the JT Group Purpose, we are contributing to that sustainability through our commitment
to working on the issues identified in our materiality.

Living with theValue Creation that

Investing in People

Responsible Supply

PlanetExceeds

and Provide

Chain Management

Good GovernancePreserve a
harmonious
relationship between
our environment,
people, and corporate
organizations
through initiatives toimprove our impact

Consumer

Motivation

Expectations

Invest in people toCreate diverse

support theirproducts anddevelopment withservices beyond

attention to diversity,

consumerand enhance human

expectations

capital by fostering a
corporate culture thaton our environment

Read more
Read moremaximizes
individuality andability of each person

Read more

Tobacco business

Create a sustainable

Enhance our

supply chain capable

governance byof withstanding

improving oursudden changes instakeholder

the businesssatisfaction andenvironment, bycontinue to be atackling social issues

trustworthy corporatesuch as respecting

entityhuman rights orpreservation of ourenvironment

Read more

Read more

Read more

Creating fulfilling moments.
Creating a better future.

Products and services
We will be a total tobacco company offering
consumers (The word, consumers, used in
the context of the tobacco business means
adult consumers. Minimum legal age forsmoking varies in accordance with thelegislation in each country.) an even greater
choice of products by focusing on quality,
innovation and reduced-risk potential.
Reduced-Risk Products

Supply chain
We will reduce environmental and social
risks, and enable transparent andresponsible practices across our supply
chain.
Supply chain- Supply chain policies and standards- Leaf supply chain - Raw material
sourcing- Non-tobacco materials, other products,
and services

Pharmaceutical businessRespecting science, technology and people, we will contribute to patients' lives.

Read more

Processed food business
Bringing Joy to Meals and Fun to the Table

Read moreSustainability Archive

External recognition

External verification

Previous issues of the JT GroupAwards and recognitions for efforts in

Our data has been externally verified.

Sustainability reporting.

sustainability.

Read more

Read more

Read more

Copyright© Japan Tobacco Inc. All rights reserved.

Top management message
Our new Group purpose can be found in FY2022 Integrated Report, pages 1-3

Message fromCEO

CSO interview

Message from CEO
Realizing the JT Group Purpose“Staying close to diverse, ever-changing
consumers and society, the JT Grouprealizes “fulfilling moments” through our
evolving business operations, without
limiting ourselves to what we are now.”

Masamichi Terabatake
Representative Director and President,
Chief Executive Officer
Read more about the message from our CEO in
FY2022 Integrated Report, P22-27

CSO interview

HisatoImokawa
Senior Vice President
Chief Sustainability Officer

Looking back over 2022, could you tell us aboutsome of the key sustainability highlights?
2022 continued to be a year of high uncertainty due to changes brought to our society andconsumer behavior from COVID, unstable international political relations due to the situation in
Russia and Ukraine, global inflation, and extreme fluctuations in exchange rates. Looking at global
sustainability trends, as the situation in Russia and Ukraine triggered rising energy prices, concerns
were initially voiced that initiatives for climate change or investment in ESG might slow down.
However, far from seeing a halt in the drive for sustainability, 2022 was a year in which we continued
to see the importance and momentum of sustainable growth through coexistence between society
and corporate organizations. Additionally, more than ever before, corporate organizations are
required not only to show a conventional business plan, but to present to stakeholders and tosociety a comprehensive plan that integrates financial and non-financial aspects with sustainability
perspectives.
At the Group level, we set out our new Group purpose “Fulfilling Moments, Enriching Life” andcommunicated this alongside the FY2022 full-year announcement. The new purpose embeds ourwish to continue to grow together with society with awareness for enriching life. Furthermore, 2022
was the first year in which we integrated the operating structure of our tobacco businesses into asingle business. This integration progressed steadily throughout the year.
As for the JT Group’s sustainability initiatives, we worked on updating our materiality and we havedisclosed the new Group materiality in this report. To further drive our sustainability efforts, weupdated the JT Group Environmental Plan 2030 at the beginning of 2022. Our greenhouse gas
reduction targets have evolved into a more ambitious plan, as we aim to reduce greenhouse gas
emissions throughout the value chain by 2050 to Net-Zero.

Furthermore, in testament to our belief that the Group's sustainable growth depends on coexistencewith the society that we are a part of, we have extended various forms of aid to support local
communities around the world. Following the recent earthquake in Turkey, we provided emergency
assistance including disaster rescue and relief supplies through humanitarian aid organizations.
With regard to the situation in Russia and Ukraine, we will continue to give priority to the safety of
our employees and their families, while providing as much support as possible to the people facing
difficulties in Ukraine.

Please tell us about your new materiality incomparison to the original materiality.
We carried out our first materiality assessment in 2015. At that time, awareness of "sustainability"
among our stakeholders in general was not at the level that it is today. It was also our first attempt
to set out our materiality, and there was an element of trial and error. We realize now that perhaps
the voices from our business side were not given a sufficiently full hearing in the first materiality.
This time, from the perspective of sustainability and our business, we were conscious of theinterconnection with business strategy, and we paid particular attention to incorporating businessdriven issues. In addition, we gave thorough consideration to the uniqueness of our group. We haverecently announced a group purpose and we are at a turning point in terms of how we do business.
With these factors borne in mind, our materiality was thoroughly and comprehensively checked andupdated.
Since we first set out our materiality, we have seen major changes in the business environment andsocial conditions surrounding our group. We have therefore updated our materiality by always
paying attention to our relationship with the society which we are part of, and by listening even moreclosely to the opinions of our stakeholders.
It is not the case that all the topics plotted in the previous materiality matrix have been completely
replaced. Rather, due to changes in the social and business environment, some topics havedeveloped into several specific issues, while others have evolved into more advanced topics. Or, as
we worked on the topics and rolled out our initiatives, the positions on the matrix have changed, as
the initiatives yielded results and the importance or impact to stakeholders and to the JT Groupchanged. These were rearranged as materiality topics as we were conducting the latest materiality
assessment.

Could you tell us about The JT Group Materialitythat you have identified from the new materiality
matrix?

All topics are important, so we have repeatedly considered what sort of priority should be given andwhat should be the most important issues for the JT Group.
The importance of one specific topic can be identified by making a relative comparison with others.
But it is also true that one topic on its own cannot cover the underlying importance of a larger issue.
The environment, society, and the life of each individual are all intricately connected within the same
ecosystem. Rather than simply identifying topic by topic, we decided to specify five big groups ofissues which are closely connected. It may be a small thing, but this way of identifying materiality
also represents the uniqueness of our Group. We checked and rechecked the issues one by one toestablish whether they are unique to the JT Group. We also examined whether our initiatives for theissues would be unique to our Group. Bearing these in mind, we have shown our commitment for all
the topics materiality identified.
Furthermore, there is common theme that is relevant to all the five topics of materiality. In my
opinion, this is “people come first”, be it human rights, environment or the wider society. People,
environment and the wider society are all interconnected and we should respect them all. Our
materiality is based on this premise. Please view our materiality with these thoughts in mind.

Please tell us about the outlook for 2023 and thesustainability challenges ahead.
We have announced the new materiality, but our work is not over yet. The key process ofincorporating the new materiality into our strategy, formulating specific initiatives, and setting goals
and targets will follow. At the Group level, we will continue to monitor and promote the JT Group
Environmental Plan 2030. We will also continue to engage with our stakeholders, further develop
human rights due diligence, and contribute to our local communities with a view to gaining insights
into matters relating to social capital. Furthermore, in terms of sustainability initiatives for eachbusiness of the Group, we will support our business functions in promoting initiatives, setting goals,
monitoring, and reporting on progress.
The wave of regulation for sustainability disclosure which started in Europe is evolving into a global
movement. Regulations governing the disclosure of sustainability information are being consideredin Europe, the United States, and Japan, and preparations are under way for their enforcement. For
example, in Japan, the focus of disclosure regulations is on "climate change" for environmental
issues and "human capital" for social issues - both topics are among the five topics of materialitythat we have identified this time. We believe that diversity of people is a source of ourcompetitiveness, and we will strive to foster a corporate culture that embeds and respects diversity.
As for improving our impact on the environment, we will not only work on existing initiatives
concerned with climate change, with preserving natural resources, or with providing sustainableproducts; we will also keep an eye on upcoming topics such as biodiversity.
We are entering an era in which it is necessary for everyone to accumulate knowledge and trackrecords in sustainability, be it those who develop frameworks, those who evaluate, or those who areevaluated. We will strive further by creating and providing values unique to the JT Group, andcontinue our journey to achieve sustainable growth. We want to do this together with our
stakeholders and local communities and the society that we are a part of.

Copyright© Japan Tobacco Inc. All rights reserved.

The JT Group materiality andsustainability
Overview

Materiality

Sustainability

Sustainability

Sustainability

Targets

Advisory Foruminitiatives

The JT Group’s management principle is the 4S model. We believe that as nature, society andpeople’s lives are intertwined, sustaining our ways of living, and the activities of entities, will dependon the sustainability of the environment and society in which we exist. In pursuing this principle andby realizing the JT Group Purpose, we will contribute to the sustainability of our environment andour society.
The JT Group Materiality is the foundation of our sustainability management. We have revised ourmateriality and identified five material topics, namely “Living with the planet” “Value Creation thatexceeds consumer expectations” “Investing in people and provide motivation” “Responsible supply
chain management” and “Good governance”. Based on the revised materiality, we have beenworking on specific goals and initiatives for the Group. The JT Group Sustainability Targets havebeen set, consisting of a total of 25 items. These targets will be re-visited regularly so that they canevolve further.
Our group will contribute to sustainable planet and society, by realizing our purpose, moving forwardwith specific initiatives set as sustainability targets based on our materiality.
Read more

about JT Group Sustainability Targets

Setting the JT Group Sustainability Targets“Living with the planet”

We believe that people's lives, society, corporate activities, and the activities of all people are part ofthe ecosystem. On this basis, we have looked at our past environmental initiatives. We did so fromthe perspective of the ecosystem, considering the aspect of biodiversity as well as the impact thatour business may have on the ecosystem. To resolve any of negative impact beyond the resilienceof our ecosystem, we have established the following sustainability targets.

Read more about ‘Living with the planet’“Value creation that exceeds consumer expectations”
We strive to provide value that exceeds the expectations of a wide range of consumers or society
with innovative products and services.
We have set the following sustainability targets with the aim of realizing their aspirations, throughinitiatives in each of our businesses of tobacco, pharmaceutical, and processed food.

Read more about ‘Value creation that exceeds consumer expectations’“Investing in people and provide motivation”
We believe that each employee is the starting point for all the activities in realizing our purpose andthe importance of human resources will continue to grow in the future. We have set the following
sustainability targets with the aim of tackling multiple themes from multiple angles in order tofurther expand the group's human resources.

Read more about ‘Investing in people and provide motivation’“Responsible supply chain management”
Our supply chain is essential for our business. It is crucial for our supply chain to be resilient to therapid changes in the business environment. As part of the key initiative, we perform supplier
screenings and supplier due diligences. We are also committed to addressing the social issues
faced by our suppliers and the communities in which they operate. It is important that we work
jointly to solve these issues and we have set the following sustainability targets.

Read more about ‘Responsible supply chain management’“Good governance”
Good governance is the foundation for improving the satisfaction of various stakeholders and for
our Group to continue to be a trustworthy corporate entity. We believe that this is the basis for all our
activities. We strive to realize sustainable profit growth and continuous improvement in corporate
value over the mid- to long-term, while also contributing to the development of our stakeholders, theeconomy and to the whole society. With this in mind, we have established the following
sustainability targets, taking into account the characteristics of each of our businesses.

Read more about ‘Good governance’

Updating the JT Group materiality
We started our materiality assessment in 2013, and in 2015 for the first time through interviews with
our external and internal stakeholders, we completed our original materiality assessment to cover
the entire JT Group.
Since we selected our original materiality, external circumstances and the business environment inwhich we operate have changed. In 2021, we began updating the Group’s materiality framework byidentifying and analyzing our materiality topics. Through interviews with internal as well as external
stakeholders, we have selected and prioritized our materiality topics and updated the materiality
matrix accordingly. We then identified issue groups for the Group materiality consideration to set out
the JT Group Materiality.
Our materiality is based on the concept of double materiality, taking into account the significance toand impact on our stakeholders and the society, and the significance and impact to the JT Group forsustainable growth. The whole process was conducted in accordance with the advice of an
external consultant.

Updating the materiality matrix - the process
The JT Group Materiality was updated through the following four phases.
Phase 1: Identifying materiality topics■

Identify topics that may have impact on the sustainable growth or sustainability challenges of
our Group, bearing in mind the changes in our external operating environment and the businesschallenges.

■

Identify topics by researching and analyzing a wide range of information including but not limited
to sustainability disclosure standards or framework such as SDGs, SASB or GRI, risk factors
found through our enterprise risk management process, or materiality of our competitor firms,
among others.

Phase 2: Stakeholder interviews and desktop searches■

Integrate internal and external stakeholder opinions by conducting interviews and surveys, using
the topics identified in the phase 1 process.

■Prioritize the topics for our external and internal stakeholders through desktop analysis of
information issued by external rating agencies, global mega-trends or media reports, ensuring
there are no gaps and that all relevant topics have been included.

■

Conduct interviews with a wide range of stakeholders to maintain quality of the materiality
assessment, bearing in mind that the priority of materiality topics may vary depending on theindividual stakeholder.

Track record of stakeholder interviews, surveys■

Primarily senior vice presidents of corporate and business functions of the Group:
119 SVPs or others in similar positions■

Suppliers, customers, NGOs, other external parties: 27 cases■

Investors, banks: 38 cases■

Employees and others: Approximately 450 cases

Phase 3: Plotting the matrix and prioritizing■As with our original matrix, we first set
out the materiality matrix of ourbusiness, which was subsequently
expanded to include the entire Group.

■

We visualize the individual material
topics by plotting priorities ofsignificance to and impact on our
stakeholders on the vertical axis andpriorities of significance to andimpact on our Group’s long-termbusiness on the horizontal axis.

Phase 4: Identifying the issue groups
Selecting priority topics or issues for the JT Group as well as for our stakeholders for sustainablegrowth of the Group and our society. Then arranging the topics into five groups with similar issues
or expected effects, namely, preserving our environment, product and services, people, supply chain
management and governance.

The JT Group materiality
The JT Group’s management principle is the 4S model. We believe that as nature, society andpeople’s lives are intertwined, sustaining our ways of living, and the activities of entities, will dependon the sustainability of the environment and society in which we exist. In pursuing this principle andby realizing the JT Group Purpose, we will contribute to the sustainability of our environment andour society.
The JT Group Materiality is the foundation of our sustainability management. We have revised ourmateriality and identified five material topics, namely “Living with the planet” “Value Creation thatexceeds consumer expectations” “Investing in people and provide motivation” “Responsible supply
chain management” and “Good governance”. Based on the revised materiality, we have beenworking on specific goals and initiatives for the Group. The JT Group Sustainability Targets havebeen set, consisting of a total of 25 items.
Read more

about the JT Group Sustainability Targets

Identifying materiality: Stakeholder comments

Through the process of updating our materiality matrix and identifying the five topics of high priority
materiality, we engaged with a variety of stakeholders in order to gather their views and opinions.
Here are some in their own words:

External stakeholder

We provide advice andproposals to a wide range ofcompanies facing
sustainability issues.
Materiality is the starting
point of prioritizing yoursustainability issues and avital process which could
influence on mid- to longterm sustainability initiativesof a firm. Our role was toprovide feedback to the JT
Group post its materiality
selection. By looking at theprocess that the Group hastaken in selecting its
materiality, we learned that
not only was the firm
concerned with its own
business issues, but it also
took into consideration issues
that our society is currently
facing, checking them one byone. The stakeholderinterview was thoroughly
conducted with highawareness for the challenges

to the JT Group in identifying
its materiality.

Leaf supply chain
due diligence
director,
tobacco business,
JT International

Agricultural Labor Practices(ALP) is the of key programsfor our leaf supply chain
management and integral
part of our Leaf Supply Chain
Due Diligence process. The
ALP program started in 2012,by launching ALP guidance,with minimum expectation
vs. Child Labor Elimination,
Improving Rights of Workers
and Health and Safety
conditions on a farm level.
JTI extended theimplementation of the ALP
program from own operations
to third party suppliers in
2015. The program hasevolved through continuous
learning and engagementwith all the stakeholders(growers, International
Labour Organization, OECD,own operations, third-party
suppliers etc.). ALP today is apart of the broader Leaf
Supply Chain Due Diligenceprocess. We continue todeliver against JT Group ALP
target ‘we will implement
ALP in all sourcing countries
by 2025’. A significant
progress made is full ALP
implementation in newly
acquired businesses in
Bangladesh and Ethiopia.
Supply chain management
was a very high material
issue in our original
materiality assessment. JTI’s
latest materiality assessment
emphasized the need tofurther strengthen the efforts
against mapped challenges in
our leaf supply chain.

Team leader,sustainability,food businessplanning division,
processed foodbusiness, JT Inc.

In the processed foodbusiness, we strive to pursue
the JT Group Purpose‘Fulfilling Moment, Enriching
Life’ through food experience.
To support the Group Purpose,
we have set our businesspurpose ‘Bringing Joy to theMeals and Fun to the Table’.
This business purpose will be
the cornerstone in working
through the challenges facedby our society in relation to
food. We want to make thisjourney together with all our
stakeholders, be it ourcolleagues or our consumers,
while pursuing to provide
value that only our firm candeliver. The five topics ofmateriality identified will act
as an important guide as we
strive to accelerate ourinitiatives.

Hisashi Hamada
materiality project
leader, sustainability
management
division, JT Inc.

In updating our materiality, I
gave a great deal of thoughts
to the relationship between
the environment, society,people's lives, and corporate
activities. For the pursuit ofsustainability, I strongly felt
the need to work jointly, notonly within the JT Group but
also with all the stakeholders.
Setting our materiality is the
beginning of our journey. We
will continue to engage withvarious stakeholders andaccelerate our efforts
together. Moreover, we will
monitor the progress of theinitiatives in place, and by
capturing changes in thesocial and businessenvironment, I hope that ‘our’materiality can be updated
jointly and flexibly with our
stakeholders in the coming
future.

Sustainability Advisory Forum
Since 2020, we have held regular Sustainability Advisory Forums to discuss the Group’s
sustainability issues. With our Chief Sustainability Officer acting as Chairman, the forum is attended
by heads of the JT Group’s businesses and corporate functions. In 2022, two forums were held. We
discussed and shared information about sustainability issues such as updating the Group’smateriality, checking the progress of and revisiting our Group Environment Plan 2030 including ourwork on climate change, progress on enterprise risk management, integrated reporting, andassistance for Ukraine, among others. Discussions at the forum are appropriately reported to the
CEO and Board of Directors.

Progress of our sustainability initiatives in 2022

Progress of the JT Group Environment Plan 2030

or KPI progress by each business segment

are reported to the Board of Directors every year.
Focus areas, aspirational goals, targets and progress of each business for 2022 are shown below.

Tobacco business:
Focus areas, aspirational goals, targets andprogress, related SDGs

Pharmaceutical business:
Focus areas, aspirational goals, targets andprogress, related SDGs

Processed food business:
Focus areas, aspirational goals, targets andprogress, related SDGs

Contributing to the SDGs
The JT Group supports the Sustainable Development Goals (SDGs) adopted by the United Nations.
Through our business activities, the JT Group will contribute to the SDGs related to our business andits environment. We have mapped related SDGs against our initiatives for sustainable business, andidentified the nine SDGs to which our business can best contribute.

Copyright© Japan Tobacco Inc. All rights reserved.