The JT Group materiality and sustainability

Overview

The JT Group’s management principle is the 4S model. We believe that as nature, society and people’s lives are intertwined, sustaining our ways of living, and the activities of entities, will depend on the sustainability of the environment and society in which we exist. In pursuing this principle and by realizing the JT Group Purpose, we will contribute to the sustainability of our environment and our society.

The JT Group Materiality is the foundation of our sustainability management. We have revised our materiality and identified five material topics, namely “Living with the planet” “Value Creation that exceeds consumer expectations” “Investing in our people and supporting their growth” “Responsible supply chain management” and “Good governance”. Based on the revised materiality, we have been working on specific goals and initiatives for the Group. The JT Group Sustainability Targets have been set, consisting of a total of 25 items. These targets will be re-visited regularly so that they can evolve further.

Our group will contribute to sustainable planet and society, by realizing our purpose, moving forward with 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 of the ecosystem. On this basis, we have looked at our past environmental initiatives. We did so from the perspective of the ecosystem, considering the aspect of biodiversity as well as the impact that our business may have on the ecosystem. To resolve any of negative impact beyond the resilience of 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, through initiatives in each of our businesses of tobacco, pharmaceutical, and processed food.

Read more about ‘Value creation that exceeds consumer expectations’

  • * Reduced-Risk Products (RRP): Products with the potential to reduce the risks associated with smoking

“Investing in our people and supporting their growth”

We believe that each employee is the starting point for all the activities in realizing our purpose and the 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 to further 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 the rapid 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, the economy 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 in which we operate have changed. In 2021, we began updating the Group’s materiality framework by identifying 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 to and impact on our stakeholders and the society, and the significance and impact to the JT Group for sustainable growth. The whole process was conducted in accordance with the advice of an external consultant.

In 2023, we re-examined the JT Group Materiality, taking advice from external consultants and advisers, in view of setting the JT Group Sustainability Targets. We checked to see if it would be necessary to update any of the 5 topics of materiality or each of the materiality topics on the materiality matrix, whether there were any sudden or drastic changes in these elements in comparison to the prior year. We will be re-examining our materiality every year, as well as the targets set on the basis of our materiality.

Updating the materiality matrix - the process

In revising our materiality, a project team was formed comprised of members responsible for sustainability strategy and Enterprise Risk Management (ERM). External advisers were also part of the project team. In identifying materiality topics, ERM risk factors were fed into the short-list of potential material issues, which were then adjusted during the analysis process. A cross-check was also performed between ERM risk factors and the final short-list of material issues. The project team presented a revised draft materiality, which was then approved by the JT Board of Directors.

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 business challenges.
  • 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 ERM* 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 the individual 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 our business, which was subsequently expanded to include the entire Group.
  • We visualize the individual material topics by plotting priorities of significance to and impact on our stakeholders on the vertical axis and priorities of significance to and impact on our Group’s long-term business 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 sustainable growth 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 and people’s lives are intertwined, sustaining our ways of living, and the activities of entities, will depend on the sustainability of the environment and society in which we exist. In pursuing this principle and by realizing the JT Group Purpose, we will contribute to the sustainability of our environment and our society.

The JT Group Materiality is the foundation of our sustainability management. We have revised our materiality and identified five material topics, namely “Living with the planet” “Value Creation that exceeds consumer expectations” “Investing in people and provide motivation” “Responsible supply chain management” and “Good governance”. Based on the revised materiality, we have been working on specific goals and initiatives for the Group. The JT Group Sustainability Targets have been 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 and proposals to a wide range of companies facing sustainability issues. Materiality is the starting point of prioritizing your sustainability issues and a vital process which could influence on mid- to long-term sustainability initiatives of a firm. Our role was to provide feedback to the JT Group post its materiality selection. By looking at the process that the Group has taken 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 by one. The stakeholder interview was thoroughly conducted with high awareness 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 programs for 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 the implementation of the ALP program from own operations to third party suppliers in 2015. The program has evolved through continuous learning and engagement with all the stakeholders (growers, International Labour Organization, OECD, own operations, third-party suppliers etc.). ALP today is a part of the broader Leaf Supply Chain Due Diligence process. We continue to deliver 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 to further strengthen the efforts against mapped challenges in our leaf supply chain.

Team leader, sustainability, food business planning division, processed food business, JT Inc.

In the processed food business, we strive to pursue the JT Group Purpose ‘Fulfilling Moment, Enriching Life’ through food experience. To support the Group Purpose, we have set our business purpose ‘Bringing Joy to the Meals and Fun to the Table’. This business purpose will be the cornerstone in working through the challenges faced by our society in relation to food. We want to make this journey together with all our stakeholders, be it our colleagues or our consumers, while pursuing to provide value that only our firm can deliver. The five topics of materiality identified will act as an important guide as we strive to accelerate our initiatives.

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 of sustainability, I strongly felt the need to work jointly, not only within the JT Group but also with all the stakeholders. Setting our materiality is the beginning of our journey. We will continue to engage with various stakeholders and accelerate our efforts together. Moreover, we will monitor the progress of the initiatives in place, and by capturing changes in the social and business environment, 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 2023, three forums were held. We discussed and shared information about sustainability issues such as setting the JT Group Sustainability Targets, checking the progress of our GHG emissions reduction targets, our human rights initiatives and governance, sustainability issues of each business, EU Corporate Sustainability Reporting Directive, and stakeholder engagement, among others. Discussions at the forum are appropriately reported to the CEO and Board of Directors.

Progress of our sustainability initiatives in 2023

The JT Group Sustainability Targets comprise of new, revised and carried-over targets. We have extracted carried-over targets to show 2023 progress as illustrated below. We will start reporting the FY2024 progress and results for all the JT Group Sustainability Targets in 2025.

FY2023 results for the JT Group Sustainability Targets

FY2023 progress of the JT Group Environment Plan 2030and progress by each business segment using previous reporting formats can be found below.

These results have been reported to the Board of Directors of JT.
　　

Tobacco business:
Focus areas, aspirational goals, targets and progress, related SDGs

　　

Pharmaceutical business:
Focus areas, aspirational goals, targets and progress, related SDGs

　　

Processed food business:
Focus areas, aspirational goals, targets and progress, 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 and its environment. We have mapped related SDGs against our initiatives for sustainable business, and identified the nine SDGs to which our business can best contribute.