Non-tobacco materials, other products, and services

Non-tobacco materials include packaging, filters, and cigarette-related materials. We also have a number of suppliers for factory machinery and logistics, including freight. We manage the sourcing of these centrally. Other products and services that flow through our supply chain include marketing-related services, facility management, IT, and other professional services, which are sourced globally, regionally, and locally.

We develop strong partnerships with our key suppliers in order to achieve mutual long-term success. Our strategic relationships are built on shared values and objectives. This allows us to find sustainable solutions together, ensure a stable supply in a dynamic environment, and adapt to innovative technologies.

Our approach

With people, operations, and a supply chain that stretch across the entire globe, we are keenly aware that our business doesn’t operate in a vacuum. We also know that the social, ethical, and environmental footprint of our products cannot be dissociated from our suppliers.

As such, one of our core sustainability targets is to screen our key suppliers*1 against environmental, social, and governance (ESG) criteria by 2023.

By the end of 2021, 100% of our key suppliers had been screened accordingly. To structure and further improve our screening methodology, our international tobacco business is now implementing a new onboarding solution.

In 2021, we have developed a thorough new supplier screening process. We also selected and initiated the discussion with the right business partners to kick off a pilot implementation in 2022.

Working with the right suppliers

We aim to achieve high standards of integrity across our business operations and supply chain. We can only achieve this through close cooperation with our suppliers. We are just as committed to following social and environmental due diligence in our non-leaf supply chain. All of our suppliers are required to comply with our Supplier Standards.

Our Group-wide supplier screening process ensures that we apply enhanced due diligence. Prior to entering into a commercial relationship, our key suppliers*1 go through a detailed qualification and selection process including screening and onboarding. This process allows us to learn more about the supplier and understand any gaps versus our standards and requirements. In particular, it highlights any potential risks relating to compliance, human rights, environment, and health and safety.

If any risks are identified through this process, we offer support and collaboration on how to mitigate the risks and make necessary improvements. We follow progress on a yearly basis and, if there is no improvement after an agreed duration, we may consider terminating our relationship with the supplier.

In 2020, we revised the JT Group Supplier Standards into a global, Group-wide Supplier Standards, reflecting an increase in transactions with overseas suppliers. We have been embedding these standards into all new requests for proposals and contracts, to ensure that all of our suppliers are aware of our requirements.

In our tobacco business in Japan, we screen key suppliers using our supplier database, which lists companies according to their D-U-N-S® Numbers*2. In 2021, we built on this process by reassessing the key suppliers identified as high-risk in our 2020 assessment. We also helped these suppliers to make improvements.

Moving towards ‘One Team’

As part of our ‘One Team’ initiative, the non-leaf supply chain of our tobacco business is working together to optimize the Group’s procurement activities. These ‘integration’ initiatives include optimizing procurement costs, aligning suppliers and standardizing specifications for both ready-made cigarettes and Reduced-Risk Products [Reduced-Risk Products are Products with the potential to reduce the risks associated with smoking]. For Reduced-Risk Products, joint work on global supply chain optimization is already underway.

Engaging with suppliers on sustainability practices

Sustainable packaging solutions are a key focus area for us, and we cooperate closely with suppliers in this area to identify, assess, and implement new solutions.

In 2021, we also began a new project to develop a supplier engagement framework on sustainability. This will help us to capture progress, identify areas for improvement, build on action plans, share learnings, and best practices, and introduce a more holistic, end-to-end approach to sustainability.

Looking forward

To prepare for the future, our international tobacco business is currently developing an automated internal report, showing sustainability relating to both finished goods and components. The aim is to make the way we gather and report sustainability data as transparent and efficient as possible.