Global affairs and regulations continued to evolve rapidly in 2018.
Reduced-Risk Products meanwhile have shown strong growth over the last few years and we have witnessed a surge in this new category.
Although the risks surrounding our business have increased, new opportunities have emerged, as the tobacco
industry goes through a period of significant transformation.
In the meantime, we have seen major societal and business shifts towards sustainability around the world.
Corporations are showing greater awareness for environmental issues triggered by climate change, a greater
respect for human rights that extends to a corporation’s supply chain, and a sustained uptake in Environmental
Social and Governance (ESG) initiatives. Society now expects corporations to be proactive about creating a
sustainable and inclusive future.
Sustainability at our Group
Our management principles and our approach to sustainability are governed by our 4S model, under which we strive to fulfill our
responsibilities to our valued consumers, shareholders, employees, and the wider society, carefully
considering the respective interests of these four key stakeholders, and exceeding their expectations wherever we can.
We engage with our stakeholders and work on
our sustainability issues to fulfill our responsibility as a member of society. The JT Group prioritizes investments in
its business: we invest in our products and services, our production facilities, in innovation, our people, and, at
times, through acquisitions. These investments enable our business to create value, which is distributed to our
stakeholders in a balanced manner. Our ethos is to grow together, in a viable
fashion.
With sustainability at the heart of our management, early 2019 saw a reorganization of our organizational structure. We
created a Sustainability Management Division at the JT Group head office in Tokyo, and appointed a dedicated Senior Vice
President for
Sustainability. This reflected our focus in 2018 as our sustainability strategy was formulated.
We outlined three ‘absolute requirements’ for sustainability, which apply to the whole Group:
Respect for Human Rights, An Improved Social and Environmental Impact and Good Governance and Business Standards. Our
core business, tobacco, has already set out its four focus areas, and each remaining business division will establish
its own focus areas. Our pharmaceutical division and processed food business are currently defining their own
approaches. Both our sustainability strategy and the philosophy of our 4S model is perfectly aligned with the objectives
of the United Nations’ Sustainable Development Goals (SDGs) which seek to achieve 17 global goals, for the realization
of sustainable and inclusive society.
RESPECT FOR HUMAN RIGHTS
continues to be a priority for our Company. We have been building upon an important step forward we made in
2016, when we set out the JT Group Human Rights Policy. A Group-wide e-learning module enabled employees to
gain a better understanding of this subject. We then initiated our human rights due diligence process, an
ongoing management procedure for assessing human rights impacts, acting on the findings, tracking responses,
and communicating our progress. We continue to work hard to embed this process into our organization’s
Plan-Do-Check-Action (PDCA) cycle.
IMPROVING OUR ENVIRONMENTAL IMPACT
is critically important, as we seek to manage our business while simultaneously protecting the environment.
The greenhouse gas (GHG) reduction target within our current plan, the ‘JT Group Long-Term Environment Plan
2020’ was achieved in 2017, three years ahead of target. Beyond 2020, we have set out a new plan, the ‘JT
Group Environment Plan 2030’. This outlines clear objectives for energy and emissions, natural resources
(water and forestry), and waste. We will continue to engage with stakeholders such as CDP and have set and
obtained approval for Science Based Targets for reducing our GHG emissions as well as employing scenario
analysis. All this is to better understand the impact of climate change on our business and to integrate
these findings into our organizational structure.
To serve the needs of society in the areas in which we operate, we consider IMPROVING OUR SOCIAL IMPACT to be an
integral part of the JT Group’s sustainability strategy. We specifically target three areas: reducing inequalities,
improving community resilience, and protecting the environment. By offering volunteering opportunities to our employees,
we can help make communities more sustainable and inclusive.
GOOD GOVERNANCE AND BUSINESS STANDARDS
is a priority for the JT Group management as we seek to continuously improve our framework for corporate
governance. To enforce our supervisory function and improve the transparency of our business, in March 2019
we welcomed one additional new external director, and one additional new external auditor and supervisory
board member. An advisory panel on nomination and compensation* was also established, comprised mostly of
external directors. These initiatives will help us to ensure transparent, fair, timely and effective
decision-making.
Within ‘PRODUCTS AND SERVICES’, we will be a total tobacco company offering consumers an even
greater choice of products
by focusing on quality, innovation, and reduced-risk potential. Specifically, we will lead in providing the widest range
of consumer choice in the Reduced-Risk Products category.
Employees are one of the key stakeholders of our 4S model and investing in OUR PEOPLE lies at the heart of what we do.
Our efforts in this area have been recognized by a number of external institutions. Our Japanese operations was
certified for a third consecutive year as an ‘Outstanding Company in Health and Productivity Management 2019 White 500’,
a program that recognizes large companies that strategically engage in improving employee well-being. We were also
recognized as a ‘Nadeshiko Brand 2019’ for our initiatives in encouraging women’s empowerment in the workplace. I am
also pleased to announce that our international tobacco business was certified as a Global Top Employer in 53 countries
around the world, and a Global Top Employer for the fifth consecutive year.
Sourcing a sustainable supply of quality tobacco leaf at an optimum cost is essential for the sustainability of our
business. In 2018, our Agricultural Labor Practice (ALP) program, the core program for managing our leaf SUPPLY CHAIN,
showed solid progress: 96% of our directly contracted growers were observed against ALP, while 96% of our leaf merchants
reported on ALP. Through ARISE (Achieving Reduction of Child Labor in Support of Education), we continued to tackle
issues fundamental to eliminating child labor in our leaf supply chain.
The REGULATORY ENVIRONMENT surrounding the tobacco industry is becoming increasingly challenging; the way in which we
operate in this heavily regulated environment is a key concern to our business. We will ensure that the Company is
included in policymaking leading to fair and balanced regulation which meets societal concerns and supports business
growth.
ILLEGAL TRADE is another factor that can seriously affect the sustainability of our business. We work hard to combat all
kinds of illegal trade and will continue to engage in dialogue with law enforcement agencies to help reduce the presence
of illegal tobacco products around the world.
Working towards a sustainable future
Sustainability calls for our management to have a broad long-term perspective, and to ensure the business continues to
create value, thus ensuring the sustainability of our business and of society, over the long term. If all corporations
make similar efforts, our society can grow and flourish. With the full rollout of our sustainability strategy, the JT
Group is moving into a new phase. Our Group will act as one, and together with our stakeholders, we will jointly move
towards sustainable growth.
