Pursuing "fulfilling moments" for sustainable growth
We view the essence of the JT Group's sustainability strategy as a collection of strategic investments designed to maintain and expand our growth options, enabling the continued realization of our purpose of "Fulfilling Moments, Enriching Life" long into the future. We do not view sustainability as a peripheral activity. Rather, we trust it represents a core management decision that is fully integrated into our business strategy, risk management and capital allocation.
Our approach to sustainability
The environment surrounding companies is characterized by uncertainty, with geopolitics, technological innovation, regulatory trends and shifting social values all intricately intertwined. These discontinuous and structural changes pose business risks while also serving as catalysts for new value creation and growth opportunities. Rather than responding passively to changes in our operating environment, the JT Group has continued to evolve by transforming itself and moving forward. We believe that sustaining growth lies in continuously evolving the value of "fulfilling moments" in line with changes in society and the times, and carrying that value into the future.
In this context, if I were to express the essence of the JT Group's sustainability strategy in my own words, I would say it is "a collection of strategic investments designed to maintain and expand our growth options, enabling us to continue realizing our purpose of 'Fulfilling Moments, Enriching Life' long into the future." We treat sustainability not as a peripheral activity but we consider it as a management decision that is integral to business strategy, risk management and capital allocation.
When discussing sustainability, concerns are sometimes raised that the return on investment is difficult to quantify, or that it may conflict with growth. However, we do not view sustainability as "sacrificing the present for the sake of future generations." In a world of uncertainty and conflict, we believe that sustainability is about enhancing resilience and managerial flexibility, enabling companies to continue growing whilst adapting to environmental changes.
In periods of uncertainty, organizational capabilities that enable learning from change and rapid course correction, are more important than setting out a perfect plan. Sustainability is not about striving for perfection, rather it is about being able to look ahead and protect our future growth options. At the heart of our management decision-making is the constant question of whether a decision is narrowing our future growth options.
For example, initiatives relating to the environment and human rights are not factors that constrain business growth; they are prerequisites that determine future business continuity, market access and our ability to raise capital. By appropriately internalizing externalities, we convert potentially significant and uncertain future costs into manageable investments. We view this not as an idealistic act, but as an extremely rational and conservative management decision designed to safeguard long-term corporate value.
Furthermore, with a view to balancing the realization of our purpose with the strengthening of our medium- to long-term competitiveness, we regard sustainability as both a "prerequisite" and an "accelerator" for growth. This concept of sustainability is not a mere abstract discussion. Instead, we have developed and are implementing our own sustainability strategy to translate it into concrete management decisions and investment allocations.
Outline of our sustainability strategy
We have set our JT Group Purpose, "Fulfilling Moments, Enriching Life." This guides the Group's direction toward ensuring the sustainability of our society and our businesses. In pursuing our management principle, the 4S model, and by realizing the JT Group Purpose, we have identified the Group's priority material topics. Specifically, we have identified five groups of material topics, which we refer to as the JT Group Materiality. These are "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." In 2024, we set 24 specific targets and initiatives for these material topics. The JT Group Purpose, the JT Group Materiality and the related JT Group Sustainability Targets are the backbone of our sustainability strategy.
Sustainability strategy outline
the JT Group Purpose
based on the JT Group Materiality
The Group targets are reviewed annually to ensure they are kept updated. This year's review has resulted in several updates. The Board of Directors is involved in the formulation and implementation of the sustainability strategy. We communicate the progress and outcomes of our initiatives to stakeholders, as appropriate, via our website and Integrated Report.
Sustainability governance
We have set out a governance structure in which the Board of Directors is involved in setting and managing the sustainability strategy as well as updating the sustainability targets. Reviewing and identifying the JT Group Materiality, as well as setting group-wide sustainability policies for key strategic issues such as the environmental policy or human rights policy, are matters subject to resolutions by the Board of Directors. The Board also receives regular reports on the establishment, review and progress of the JT Group Sustainability Targets.
At the executive management level, we have held regular Sustainability Advisory Forums since 2020 to discuss the Group's sustainability issues across our corporate functions. The Chief Sustainability Officer (CSO) chairs the forum, which is attended by the heads of all business units and corporate departments of our Group. In 2025, three forums were held to discuss and share information on topics such as updating and progress of the JT Group Sustainability Targets, progress on various climate change initiatives and targets, compliance with the EU Corporate Sustainability Reporting Directive (CSRD) and the Sustainability Standards Board of Japan (SSBJ) standards, non-financial data management, and stakeholder engagement, among others.
All matters discussed at the Sustainability Advisory Forum in 2025 were reported to the CEO and Board Directors with Executive Management responsibilities. Significant matters related to sustainability (those requiring resolution or reporting to the Board of Directors) were reported to the full Board of Directors, including non-executive directors.
Update and progress on the JT Group sustainability targets
Launched in February 2024, the JT Group Sustainability Targets now serve as a shared framework that guides the Group's initiatives and underpins both internal implementation and dialogue with stakeholders. At the same time, we recognize the need to demonstrate more clearly how each target supports the JT Group's medium- to long-term growth and value creation. With these challenges in mind, we have updated the targets focusing on those of greatest interest to stakeholders, clarifying the objectives, context and expected impact of our initiatives. We aim to clearly position our sustainability initiatives not as a future cost, but as manageable investments made today. Where prior targets have been achieved, we revised their ambition and scope to acknowledge last year's results and to define a more advanced next stage. Through continuous improvement of our targets, we will ensure steady implementation of our sustainability strategy across the organization.
As for 2025 performance of our sustainability targets, progress has been broadly on track with solid momentum. For example, under our materiality "Living with the planet" the Group made steady progress toward our target to tackle climate change, reducing Scope 1 and 2 emissions over the year. We remain on track to meet the target set for 2030. Renewable-energy adoption increased, supported by cumulative improvements in energy efficiency. These efforts not only reduced our environmental impact but also strengthened our business foundation by stabilizing energy costs and enhancing our ability to comply with future regulations. However, reducing emissions across the entire value chain, including Scope 3, remains a significant challenge. Scope 3 emissions are inherently more difficult to manage than Scope 1 and 2 emissions because they are more susceptible to factors such as abnormal weather or fluctuations in procurement volumes due to annual variability. Looking ahead to 2030, we will continue to manage these emissions appropriately, including reviewing our policies as necessary in response to changing circumstances.
In relation to our goal to promote DE＆I(Diversity, Equity & Inclusion), which relates to our materiality "Investing in our people and supporting their growth," there was positive progress toward greater representation of women in senior positions. The percentage of women in managerial positions within the JT Group improved rising from 24.9% in the prior year to 26.4%. This is solid progress, demonstrating the results of our ongoing efforts in talent development and appointments. We believe that creating an environment where diverse talent can demonstrate their capabilities enhances the quality of organizational decision-making, leading to innovation and the strengthening of the medium- to long-term competitiveness of our business.
As for targets linked to our materiality "Responsible supply chain management," such as supplier screening and supply chain due diligence, good headway was made in 2025 in terms of both the coverage and quality of our initiatives. ESG screening of key suppliers was carried out almost comprehensively across the entire Group, and we worked to identify risks associated with key suppliers. Furthermore, we achieved our target of conducting human rights monitoring, including the monitoring of child labor, across 100% of our directly contracted growers. In doing so we have confirmed that our mechanisms for identifying human rights related risks and implementing prevention and remediation actions are functioning effectively. In particular, responses to salient human rights risks, including child labor, have been advanced from both preventive and corrective perspectives, strengthening our capacity to respond at the operational level.
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Future challenges and outlook
We consider sustainability not as a passive response to societal demand or as a peripheral activity. We view sustainability as a management tool that enables us to retain our options for growth, maintaining and expanding our operational flexibility even during periods of high uncertainty. This approach will become increasingly important as we look ahead to future anticipated changes in the external environment.
Currently, against a backdrop of rising geopolitical tension, shifts in policy stances and the emergence of energy and resource constraints, there is a significant shift in the conditions underpinning sustainability. Companies are being challenged more than ever to explain, in their own words, not only what they are working on, but also the rationale for initiatives in light of the business and its risk appetite, and how initiatives will create value in the future.
Addressing climate change is not just about considering how we can help mitigate climate change by setting medium- to long-term targets for GHG emissions reductions, there is growing interest in the practical and financial considerations involved in adapting to climate change. For example, considering how extreme weather conditions or changes in the natural environment might affect our raw material procurement, operations, logistics and cost structures. These are not just environmental issues̶these are management challenges directly linked to our business resilience, capital efficiency or competitive advantage. We are therefore proceeding with our response accordingly.
On this note, the JT Group places great importance on integrating sustainability not just within the framework of regulatory compliance, but as an integral part of the management foundation that underpins long-term value creation. We view our response to upcoming disclosure regulations such as the SSBJ and CSRD, which will come into full effect within the next few years, not merely as a matter of compliance, but as an opportunity to establish an information infrastructure which can contribute to informed management decision-making.
Currently, a dedicated team is working in collaboration with relevant functions to identify and clarify data points and their definitions required for regulatory compliance, with a view to design and launch a data platform. The aim of this initiative is not only to ensure accurate disclosure, but also to identify future risks and opportunities at an earlier stage, thereby enhancing the quality and speed of decision-making at both management and operational levels.
Furthermore, regarding non-financial information in areas such as the natural environment, society, human resources and the supply chain, coverage of information and data required by disclosure regulations will not be the end of the journey. We will be organizing and utilizing this information so it can be leveraged as a management resource, to evaluate and strengthen the resilience and growth potential of our business. We will be positioning non-financial data from a more holistic perspective, with an eye on information that may become increasingly important in the future or on indicators useful for management decisions. I believe that non-financial information will contribute to the long-term enhancement of corporate value.
For many sustainability initiatives, short-term results are difficult to see. However, appropriately internalizing externalities and converting uncertain and potentially disruptive future costs into manageable investments today, leads to reduced future risks and stable business operations. Consequently, we believe this contributes to the maintenance and enhancement of corporate value through the stability of medium- to long-term cash flows and improved capital efficiency.
Going forward, we will strive to quantify and visualize the effects of these non-financial initiatives wherever possible, and to further deepen our dialogue with investors. In this process, we intend to actively pursue collaboration with companies and partners possessing specialist expertise, rather than attempting to achieve this on our own.
In an era of increasing we believe that what is important is not to pursue short-term solutions, but to make a series of management decisions that make our business more resilient and able to adapt to future conditions. Without losing sight of our fundamental aim of enhancing the sustainability of both our business and society, we will continue to position sustainability as a foundation that supports and drives our business growth, and pursue our initiatives accordingly.
For us, continuing to evolve the value of "fulfilling moments" in line with changes in the times and society, and carrying it forward into the future, represents growth itself for the JT Group. As Chief Sustainability Officer, I am firmly committed to sustainable growth that connects "fulfilling moments" to the future, while continuing to engage in ongoing dialogue with our stakeholders.
Integrated Report
2026