The JT Group Materiality and Sustainability

Overview

In order to support the sustainability of our society and the business of the JT Group, we have set out the JT Group Purpose, which shows the direction for our organization. The Group’s management principle is to pursue the 4S model. As nature, society, and people’s lives are intertwined, sustaining our ways of living and the activities of businesses will depend on the sustainability of the environment and society in which we exist. We recognize that the strive to realize sustainability for nature, society and our business is fundamental to the Group’s management.

Based on this, the JT Group’s sustainability strategy, with the JT Group Purpose as its starting point, identifies five key issues that form the foundation of sustainability management as the JT Group Materiality. We then developed the JT Group Sustainability Targets; a set of 24 targets and initiatives that steer our sustainability performance. Our Board is involved in setting and overseeing the sustainability strategy, while progress against our targets is reviewed and assessed on a regular basis.

As part of the implementation process, we conduct annual reviews of our sustainability targets, making updates to ensure they continually evolve. In our most recent update, we focused on demonstrating how initiatives under each target contribute to the wider sustainability of the JT Group’s business.

We remain strongly committed to supporting the sustainable growth of our society and the Group’s business within it. Through our sustainability strategy, we will continue to create value in order to realize the JT Group Purpose of “Fulfilling Moments, Enriching Life.”

Read more about the JT Group Sustainability Targets and FY2025 results

The JT Group Materiality

We started our materiality assessment in 2013, and in 2015 for the first time through interviews with our external and internal stakeholders, we completed our original materiality assessment to cover the entire JT Group.

Since we selected our original materiality, external circumstances and the business environment in which we operate have changed. In 2021, we began updating the Group’s materiality framework and reported about the revised materiality in the 2022 Integrated Report. By identifying and analyzing our materiality topics through interviews with internal as well as external stakeholders, we have selected and prioritized our materiality topics and updated the materiality matrix accordingly. We then organized the material issues of the Group into 5 groups to set out the JT Group Materiality.

Our materiality is based on the concept of double materiality, taking into account the significance to and impact on our stakeholders and the society, and the significance and impact to the JT Group for sustainable growth. The whole process was conducted in accordance with the advice of an external consultant.

Updating the materiality matrix - the process

In revising our materiality, a project team was formed comprised of members responsible for sustainability strategy and Enterprise Risk Management (ERM). External advisers were also part of the project team. In identifying materiality topics, ERM risk factors were fed into the short-list of potential material issues, which were then adjusted during the analysis process. A cross-check was also performed between ERM risk factors and the final short-list of material issues. The project team presented a revised draft materiality, which was then approved by the JT Board of Directors.

The JT Group Materiality was updated through the following four phases.

Phase 1: Identifying materiality topics

Phase 2: Stakeholder interviews and desktop searches

Track record of stakeholder interviews, surveys

Phase 3: Plotting the matrix and prioritizing

• As with our original matrix, we first set out the materiality matrix of our business, which was subsequently expanded to include the entire Group.
• We visualize the individual material topics by plotting priorities of significance to and impact on our stakeholders on the vertical axis and priorities of significance to and impact on our Group’s long-term business on the horizontal axis.

Phase 4: Identifying the issue groups

Selecting priority topics or issues for the JT Group as well as for our stakeholders for sustainable growth of the Group and our society. Then arranging the topics into five groups with similar issues or expected effects, namely, preserving our environment, product and services, people, supply chain management and governance.

Reviewing the JT Group Materiality

We have been reviewing our Group Materiality periodically with annual reviews performed in 2024 and 2025. When reviewing our Group Materiality, we take advice from external advisers and examine macro trends through desk-top searches to see if there are any drastic changes in our business environment in comparison to the prior year. We cross-check these external factors against the state of our own business or our strategy, to see if it would be necessary to update any of the five key issues of materiality or each of the material topics on the materiality matrix. The review of the Group Materiality in 2026 commenced in the second quarter. We plan to perform annual review of our materiality, as well as the sustainability targets set on the basis of our materiality.

Sustainability governance