Integrated report

Message from the Chairperson

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Doing all we can to create a better future for the JT Group and our society as a whole

Mutsuo Iwai


I was elected to chair the Board of Directors of Japan Tobacco Inc. effective from the beginning of fiscal 2022. To keep building our corporate value, especially in an environment of constant, drastic change, it is vital that now, more than ever, we take our decisions and actions to the next level. Just as all our directors make the most of their respective skills and expert knowledge, I too will tap into my experience as deputy chair up to fiscal 2021 and as a leader in the Group’s tobacco and processed food businesses for years before, and do my utmost to help cultivate our corporate value over the mid to long term.

In meetings of the Board in fiscal 2021, we discussed an ideal operating model for sustainable profit growth, business strategies to that end, and corporate governance practices to help sustain them. We also considered ways to help make our society more sustainable, an essential condition for our own sustainable growth. Please let me now share some of what came out of those discussions.

A stronger operating model for the tobacco business

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.


2027 goals for RRP and HTS

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.


Revision of Shareholder Return Policy

For sustainable profit growth over the mid to long term, Company policy balances profit growth with shareholder returns, with highest investment priority placed on growth of the tobacco business. In order to fully embody this established principle and moreover demonstrate our resolve to build shareholder returns through profit growth, we on the Board have revised our shareholder return policy. In discussion, we agreed that it is important to follow through on our strategy to attain our mid-term goals for RRP and HTS, and promptly show results that contribute to sustainable profit growth.

Stronger corporate governance

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.


Building sustainability for our businesses and our society

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.