COVID-19 and geopolitical issues have triggered drastic changes to our daily life and to our social environment. As we continue to face challenges from the pandemic, we should take initiative and act swiftly. Changes are also seen within ESG, as ESG investment is gaining increasing momentum. With both of these factors, we are entering a period of transformation regarding how corporations are managed. Some may take a pessimistic view of the turbulent times, while others would see the changes as opportunities. Needless to say, the mindset of our Group belongs to the latter.

Pursuing the JT Group’s 4S model is about pursuing the sustainability for a foundation as well as the universe where we can exist and be utilized. Based on the 4S model, we have a history of proactively transforming our Group and are equipped with the ability to transform. It is my belief that disruptive environmental change is an arena where we can show our true strength. Here in lies the essence of our Group’s sustainability.

The role of a CSO is to promote sustainability management as a whole group, while anticipating where and how we want to be in the future. I consider myself as part of an ecosystem with a very long-time axis. My role is to persistently strive for new initiatives, to collaborate with a diverse range of partners, and to proactively embed a universal perspective in which we believe. In other words, the role of a CSO is to look ahead to the year 2050, 2100 or even beyond, and to expand or to create the structures we need to enhance our Group’s capability and assets, offering both financial and non-financial value.

2022 marks a year of significant transformation for our tobacco business, our core business. It is also the starting point of the transformation of the entire Group. As the Group CSO, my wish is to embed sustainability into the root of our management. I hope that all our employees will take actions that will lead us to the sustainable growth of our society and our business, and I look forward to driving this change together.

We have outlined three basic requirements that apply across the whole Group, while each business has set out its own focus areas. The following are some of our initiatives and progress in 2021.

Improving our environmental impact

In the updated JT Group Environment Plan 2030, our target is to achieve net zero greenhouse gas (GHG) emissions by 2050 throughout our value chain. We will continue to work on improving our environmental impact. Our GHG emission target has been revised accordingly. Our initiatives are recognized by external parties. We were recognized by CDP, securing a place on its prestigious ‘A List’ for tackling climate change and acting to protect water security for the third consecutive year.

Improving our social impact

We have long-term partnerships with local and international organizations, with around 400 community investment programs in 60 countries. These programs help communities to become more inclusive, sustainable, and resilient. In response to the COVID-19 pandemic, precautionary measures were put in place, while we continued to provide opportunities for our employees to engage with their communities.

Respecting human rights

Our approach to human rights’ due diligence is collated and described in this report and is based on our Group Human Rights Policy, our commitment to respecting human rights and our past and current initiatives. In 2021, we issued our first JT Group Human Rights Report.

Investing in people

The effect of the COVID-19 pandemic persisted throughout 2021. We continued to find flexible ways to work, primarily through remote working. We prioritized the safety and well-being of our employees and their families, by organizing or providing information about COVID-19 vaccinations. As reported in the previous report, we have set out a Group-wide target for representation of women in leadership and we continue to work on diversity initiatives.

Governance

Corporate governance is one of the priority agendas for the JT Group and we work proactively to fulfill this requirement. To ensure sustainable profit growth, we believe it is essential to further secure a strong commitment of the Group’s management. In this light, we are introducing an ESG-related index for director remuneration, starting from FY2022.

Business progress

Each business has set out focus areas with sustainability targets. In our tobacco business, we are reporting on the target progress for Reduced-Risk Products to reflect our resource allocation and focus on HTS (heated tobacco sticks). In leaf supply chain management, Agricultural Labor Practices (ALP) remains our core program. Preparatory work is underway for the program to be extended to additional sourcing countries.

We are also working to establish frameworks for pursuing sustainability initiatives.

Sustainability Advisory Forum

In order to discuss our sustainability issues and challenges, we have held regular Sustainability Advisory Forums since 2020. CSO is the Chairman of the forum, and heads of the JT Group businesses and functions attend.

Materiality

Since we first set out our material issues, external circumstances and the business environment in which we operate have changed. Bearing this in mind, we started to update the Group’s materiality in 2021. The new materiality will take into account the changes that our Group has gone through as well as current ESG issues. We will of course engage our stakeholders throughout the process.