As of January 2022, the Company has introduced a new operating model that unifies our former Japanese-domestic tobacco business and international tobacco business. The Board of Directors approved this reorganization as a necessity for the Company’s mid- and long-term growth. Further, our Outside Directors expressed strong support for it as well, emphasizing that this will facilitate the evolution of the initiatives we have been taking as a global company along more forward-looking lines.

At the same time, we made decisions on measures to reinforce our competitiveness in the domestic market, including an early voluntary retirement program. The Board of Directors instructed Executive Officers to communicate the new measures to everyone in the Company in ways that will fuel motivation, assuring that employees affected by the new measures, especially those retiring early, are fully provided with care, and emphasizing that the success or failure of the new operating model depends on the awareness and actions of not just the management team but of each and every employee going forward.

While the Company will work to ensure sustainable growth on the strength of a unified tobacco business, it is important to clearly show our road map for success. In February 2022, we publicly announced the goals we aim to achieve by 2027. Ahead of this announcement, the Board had received reports from executive officers on the status of RRP-related markets, product development, customer response to our products, and business risks. I understand that the tobacco business is steadily implementing global initiatives, and I hope to see yet further progress as we enhance investment under Business Plan 2022.

I believe that ensuring the Company can achieve sustainable mid- and long-term profit growth – while assuring stakeholder interests and contributing, ultimately, to the development of our economy and society – necessitates further reinforcing corporate governance. In this context, the effectiveness of the Board of Directors, which is responsible for supervising all the Company’s businesses, is especially important. For that reason, we assess the effectiveness of the Board every year, and proactively work to address any challenges revealed from the assessment results, so as to make our corporate governance practices even better. An Outside Director commented that the Company’s Board is already far more effective than those of many companies, and yet we will commit ourselves to facing the challenges identified by our assessments and continue working to improve.

We also place high value on our discussions with stakeholders, including those representing the capital markets, as well as a range of monitoring results, and continually create opportunities to hear shareholder opinions through dialogue about our ESG responsibilities. The suggestions we receive through these initiatives lead to discussion by the Board on how to improve. For example, in fiscal 2021 we decided to revise our KPI related to executive remuneration so as to encourage sharing with investors at a deeper level, and strengthen our commitment to growth over the medium and longer terms.

• For details about assessments of Board effectiveness and our initiatives for improvement, see PDF.
• For details about executive remuneration, see PDF.

Our businesses are rooted in interaction with the society in which we operate. This is why, for our sustainable growth, it is essential to contribute to social development through our business operations. Based on this understanding, the Company has made it a standard practice to involve the Board of Directors in the processes of setting sustainability goals, discussing specific measures to achieve them, and managing their progress. I believe this has borne impressive fruit, such as new targets for greenhouse-gas emissions, environmental goals concerning our products and packaging, and our target ratio for women in management, as well as the JT Group’s recent first report on human rights, which summarizes our initiatives in this area, especially regarding our tobacco business. The Group’s progressive initiatives have met with resounding support from our Outside Directors, and I myself feel confident about them as well.

At the same time, I recognize the strong interest the capital markets are demonstrating in what the Company is working to achieve over the long term and our strategies for success. The Board maintains close contact with our Executive Officers to ensure that any insights are applied to our operations.

In light of our changing environment, popular interest in the sustainability of our businesses as well as the society wherein they operate will only grow. The JT Board of Directors will continue our utmost effort, through dialogue with our stakeholders, to help build a better society in which the Group can sustainably grow.