Environment and our operations

We strive to further reduce the environmental impact of our operations, focusing on the most significant environmental risks and opportunities for our business and stakeholders. These currently include climate change, the sustainable use of resources, and responsible waste management.

Energy and emissions

Climate change such as modified weather patterns is the biggest environmental challenge facing society and our business. These changes could have serious implications for the supply chain of our materials, as our products are mainly agricultural-based.

We are committed to tackling this issue and we are reducing our GHG emissions to support the Paris Agreement on global climate change, with the longer-term aim of transitioning our operations to net zero carbon energy supply.

The potential for financial impact associated with climate change is now well known, and concern is growing about its mid to long-term impact on business operations and financial market stability. The Task Force on Climate-related Financial Disclosures (TCFD) encourages companies to develop more effective climate-related financial disclosures.

With this in mind, in 2019, we began conducting climate scenario analysis. Our first round of analysis was based on two scenarios: a global temperature increase of two and four degrees Celsius. To limit within two degrees from industrial revolution era till the end of this century is the required target from Paris agreement and four degrees are expected figure if GHG reduction efforts continued in pace of business as usual in the world.

Two main risk factors were identified: ‘potential cost increases due to the raising of carbon taxes by government to further reduce GHG emissions’ and ‘the impact on leaf tobacco growing due to changes in environmental conditions’. Our conclusion was that we could mitigate these risks by continuing to implement climate-related initiatives and programs across our value chain so that our business operations would not be materially disrupted by financial impacts.

During the next stage, we will further develop our scenario analysis and improve governance system on this topic also. We will continue to use the results of the analysis to enhance engagement with our stakeholders and corporate value. Based on the climate-related risks and opportunities identified, we will continue to strengthen the resilience of our business strategy and optimize the way we disclose the information.

In our Group Environment Plan 2030 we have committed to reduce greenhouse gas emissions from our own operations by 32% (2030 versus 2015). We are on track to achieve the target. To date, this is through a combination of energy and emissions reduction initiatives, increasing the proportion of the energy we use that comes from renewable sources and production impacts. Going forward, the main programs to achieve the target relate to further improvements in energy efficiency renewable energy and vehicle fuel type and efficiency.

As part of our efforts to meet our energy and emissions target, we will double the proportion of renewable electricity that we use to 25% by 2030, in support of our goal of reaching 100% by 2050.

In our direct operations, the renewable electricity target will be achieved through on-site generation and the sourcing of third-party renewable energy.

Our Renewable Energy Task Team has carried out a factory-by-factory feasibility review of opportunities associated with solar, hydro, wind, and biomass power. We are assessing the feasibility of solar energy generation for our non-production sites too. Where possible, and where it makes business sense, we have included these opportunities in our business planning and in our feasibility study for the 2030 Science Based Target. The team has also reviewed options relating to zero or low-carbon energy tariffs and green energy certificates.

We are well on the way to achieving our 2030 renewable electricity target. By the end of 2019, 32.6% of electricity used in our international factories came from renewable sources (either purchased*1or generated on-site*2). Overall, 14% of the electricity we used in 2019 came from renewable sources. We have plans in place which will further increase the proportion of renewable electricity we use.

Through our Energy Opportunities Scheme, our factories have identified over 200 no- or low-investment projects. These avoid over 7,900 tons of GHG emissions and represent a cost saving of over 1.5 million U.S. dollars, with an average payback of three months.

Vehicle emissions are another important consideration for us, and we encourage all of our locations to select alternative, more environmentally friendly fleet vehicles.

As part of the JT Group Environment Plan 2030, we are committed to reducing emissions associated with our purchased goods and services by 23% between 2015 and 2030. We aim to achieve this through a 40% reduction in emissions from our direct leaf supply chain and reductions in non-tobacco materials such as packaging.

As such, we will continue to improve our existing curing barn projects and expand to more locations. We will reduce the amount of wood used for curing, while at the same time ensuring that the wood we use comes from renewable sources in Zambia and Tanzania, for instance.

Another initiative to reduce leaf-related emissions is further optimizing the use of crop inputs, such as fertilizers and crop protection agents, wherever possible. We will also be working with suppliers to reduce the amount of packaging associated with our non-tobacco materials.

In 2019 GHG emissions related to Purchased Goods and Services increased by 9.0% compared to 2015, due to increased leaf volume sourced from Zambia and Tanzania, both of which use wood for curing that currently is predominantly non-renewable. We expect that the impact of initiatives to reduce leaf-related emissions will be seen from 2022 onwards, with curing barn upgrades and the increase in proportion of renewable wood used for curing in Zambia and Tanzania.

SCIENCE BARSED TARGETS

Science Based Targets (SBT)

We have set a long-term GHG emission reduction target, which was approved as a science based target (SBT) by the Science Based Targets initiative (SBTi).

Read the press release (February 2019)

  • *1 We purchase electricity from renewable sources in Canada, Germany, Poland, Romania, Sweden, the Philippines, and Serbia.
  • *2 We generate electricity on-site from renewable sources in Nigeria, the Netherlands, the Philippines, and Turkey.

Natural resources

Water

Societal demand for water is increasing globally and water-related issues such as availability, quality, flooding, drought, or regulatory changes can have a major impact on society and our business.

Our tobacco and food manufacturing activities all use water. However, our main operation, the tobacco business, is not water-intensive and the water that is required for tobacco crops comes predominantly from rainfall.

As part of our ongoing program to address water-related risks to our business and further promote effective water management, by the end of 2019 we had completed water risk assessments at 75 of our 79 factories (95%).

In the JT Group Environment Plan 2030, we commit to supporting global water stewardship by reducing our water use and encouraging water risk management in our supply chain. We have set a target to reduce our tobacco business-associated water withdrawal by 15% by 2030 vs 2015. To calculate this target, we took into account site level water intensities and regional predictions for future water stress.

We plan to achieve the target by using less freshwater for factory site irrigation, reducing water use in our processes and improving leak control, using more recycled water, and improving cleaning practices. Based on 2019 results, we are ahead of target, through a combination of water efficiency improvement programs and the impact of production volume changes.

Water risk in our supply chain
Many of our raw materials require water in their production, and water is an important resource for many of our suppliers. To better understand water usage and water-related risk in our supply chain across the Group, by 2022 we plan to implement a water risk management process.

Forestry

Ensuring a sustainable wood supply and further contributing to forest conservation and rehabilitation are key objectives set out in the JT Group Environment Plan 2030.

We already have a number of programs and initiatives in relation to sustainable forestry and wood. Through our live barns initiative in Malawi, we are reducing the number of trees that are cut down to build curing barns, by constructing the barns from living trees.

In addition to our current programs and to further focus our efforts on sustainable forest management, we will have assessed the drivers for deforestation and forest degradation in communities where we source tobacco. We will also have action plans for improved wood resource use, forest conservation, and forest rehabilitation by the end of 2020. We are currently conducting surveys in Zambia and Tanzania to assess these drivers. Quantitative and qualitative results from these surveys will enable us to take focused, high-impact actions, where in our control and in alignment with our sustainability strategy.

Within the JT Group Environment Plan 2030, we have a target to replace all wood from natural forests in the tobacco curing process of our directly contracted growers with renewable fuel sources by 2030. To achieve this, we are implementing measures to reduce wood consumption in tobacco curing through barn improvements and upgrades in Zambia, Tanzania, and Brazil.

In 2019, we saw a reduction of around 30% in wood requirements vs 2015. We are also addressing the sourcing of wood required for curing. Through dedicated agroforestry programs, based on fundamental and scientific forestry research, we are seeing improvements in tree seedling production and woodlot establishment. This will ultimately lead to optimal tree growth and wood production.

Waste

From a societal and stakeholder perspective, waste, and particularly plastic waste, is of increasing concern. From a business perspective, all waste has a direct cost (handling and disposal) and an indirect cost (e.g. resource and processing costs).

Waste management is a key component of our Environment Plan 2030, and we have set targets for waste reduction. Across the JT Group we apply a ‘Reduce, Reuse, Recycle’ approach. We also set targets for waste reduction as we believe that reducing waste helps to conserve resources, which in turn helps to minimize our environmental impact and cut business costs.

By 2030, we will reduce waste associated with our tobacco business by 20% vs 2015. We will do this by improving resource efficiency and rolling out innovative solutions across different sites. Based on 2019 results, we are on track to achieve our waste reduction target. This is due to a combination of waste reduction programs and the impact of production volume change. Going forward, we are working on further reducing secondary packaging and tobacco waste, along with other waste reduction initiatives such as reuse of materials (e.g. tobacco packaging) and yield improvements.

Case studies

Sustainability is deeply embedded within our operations. We work hard to minimize our environmental impact by focusing on energy efficiency, GHG emission reduction, water efficiency, and waste reduction.

In Japan

Case study

A greener approach to procurement

In our Japanese operations, we have introduced ‘green procurement guidelines’ to ensure that the products and services we purchase cause minimal environmental impacts.

Based on these guidelines, our procurement system gives employees a list of green products and services they can purchase, including stationery, computers and other office equipment, and transportation services. We review and update this list periodically, based on the availability of new products and services, and monitor how many products and services are purchased based on these guidelines.

In 2019, we extended our green products and services list. For example, a green vehicles option and paper envelopes with a more environmentally friendly design were added. We also enhanced our internal control measures to further increase our green procurement rate.

Our procurement initiatives do not only include our own operations, but also our supply chain. We encourage our suppliers to establish an environmental management system, and monitor the implementation on a regular basis.

Case study

Building environmental awareness and expertise

We strongly believe in raising awareness of environmental issues among all of our employees. All employees receive environmental awareness training at least once per year, and we regularly publish updates and articles on our Company intranet.

To improve the environmental performance of our Japanese domestic business operations, we have appointed people responsible for environmental management at each of our business sites. These employees are trained in environmental management systems and the relevant regulatory requirements. We also offer a more advanced course for staff who are responsible for internal auditing and reporting environmental data. In 2019, around 200 employees took part in these training programs.

In addition, our internal auditors go through a certification process to ensure that we apply a consistent approach across all of our business sites.

Case study

Recognition of our GHG emissions reduction efforts

Our efforts to address climate change in Japan are recognized externally.

We are certified as an Eco Rail mark company by the Ministry of Land, Infrastructure, Transport, and Tourism in Japan. This group of companies is reducing GHG emissions through techniques such as modal shift – changing from trucking to container transportation via rail and sea – and improving truck-loading ratios.

The JT Kansai factory (tobacco manufacturing) received two awards from Kyoto City and Kyoto prefecture government for its emission reduction initiatives. The factory is proactively tackling the reduction of GHG emissions through implementation of projects such as high efficiency freezer installation and eco-friendly compressor use.

In December 2019, Nihon Syokuzai Kakou, a subsidiary of our processed food business, was selected as a leading company and awarded by Miyazaki prefecture government for its effort on GHG emissions reduction. Japanese way of working Kaizen, which involves all employees and keeps improving the day-to-day operations, helps us to achieve impressive results.

We continuously strive to further reduce our environmental impact by combining the Japanese way of Kaizen and innovation driven by technology.

In our international tobacco business

Case study

  • There are lots of programs and initiatives on both a global and local level, from the way we source raw materials to the way we ship finished products. Read more on JTI.com.