The JT Group’s management principle to pursue the 4S model. We believe that sustainability of our ways of living and the activities of entities will depend on the sustainability of the environment and society in which we exist. This is based on our humbleness that human activities, our ways of living and the activities of entities are all part of the ecosystem. Moreover, we will not only pursue our own sustainability but also the sustainability of our society, so that we can continue to be a company that can help shape the future. The JT Group’s sustainability management is to take initiatives in carrying out all activities to achieve this goal.

The framework for this is our Group’s sustainability strategy. Specifically, 1) With the JT Group Purpose as the starting point, 2) the JT Group Materiality has been identified as the priority material issues for the Group, and 3) based on that materiality, the JT Group Sustainability Targets have been formulated. This is the backbone of our sustainability strategy. Materiality is the foundation for managing our business. By setting targets and initiatives based on materiality, our Group will strive for sustainable growth for nature, society and our business.

In 2023, we identified five topics of materiality: “Living with the planet,” “Value creation that exceeds consumer expectations,” “Investing in our people and supporting their growth,” “Responsible supply chain management” and “Good governance.”

With the revised materiality, we reorganized and incorporated the original three absolute requirements of sustainability* into the Group materiality. At the same time, we elevated some of the business focus areas or business-driven issues to the Group level. For example, “Value creation that exceeds consumer expectations,” which relates to products and services, and “Responsible supply chain management,” which relates to our business and stakeholders, were incorporated. “Investing in people” had already been selected by all businesses as a focus area and was thus elevated to the Group materiality as “Investing in our people and supporting their growth.” Eventually, we identified the current five topics of materiality.

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The JT Group’s three absolute requirements of sustainability: “Respecting human rights,” “An improved social and environmental impact,” and “Good governance and business standards”

In setting the targets and initiatives based on the JT Group Materiality, we placed importance on setting targets that reflected our identity. We first looked at what our goals should be or where we should be heading. We reflected upon discussions surrounding the revision of materiality, analyzed changes in the environment surrounding our Group as well as possible changes to come, and thereby worked out our goals and initiatives in accordance with each material topic. In parallel to this exercise, we revisited and updated past targets set by each business. Targets created using this approach were reviewed by external experts before being finalized.

The JT Group Sustainability Targets not only incorporate past targets set by each business by maintaining or updating them, but also include new targets. The JT Group Environment Plan 2030 has also been integrated into the JT Group Sustainability Targets by maintaining or updating past targets. I believe we have been successful in wholistically setting various sustainability targets under one roof.

Firstly, it is quite different in terms of the flow and interrelations of “Purpose” to “Materiality” and “Sustainability Targets.” In total, there are 25 targets—9 new targets, 10 revised targets and 6 targets that were maintained. I trust we have been able to come up with an evolved set of targets that can accommodate diverse sustainability topics.

In terms of new targets, for example, in relation to “Living with the planet,” we believe that as nature, society and people’s lives are intertwined, sustaining our ways of living, and the activities of entities, will depend on the sustainability of the environment and society in which we exist. Looking ahead and to maintain biodiversity, we wanted to comprehensively understand the impact of our business on the ecosystem. We have therefore set a target for “Biodiversity impact assessment,” and as a first step, we will assess the impact and dependence of each of our businesses on the ecosystem. We have also added targets related to pesticides, which cannot be overlooked from the perspective of their impact on the ecosystem.

As for “Investing in our people and supporting their growth,” we clarified our stance on the Group’s human capital and have set a number of targets which are going to aid in expansion. Regarding “Responsible supply chain management,” we have set a target for “Grower living income,” as we believe it is necessary to work together to address social issues faced by our suppliers and their communities. By 2025, we will measure living income in our direct tobacco leaf supply chain origins.

2023 results for those targets carried over to the new targets are more or less on track. I believe the targets are manageable against the respective goals.

When we consider the group of social issues, we look at those issues that have surfaced and are visible to us. However, the issues may be inter-related so working on the essence of the issues to find solution is necessary. I trust that by focusing on the essence of the issue, the issue itself will change and evolve. The task is therefore not complete by merely setting targets. It is important to revisit and update them on a regular basis. We have a framework whereby our CEO as well as the Board of Directors are involved in setting and managing the sustainability strategy, so using this framework, we will revisit and update the JT Group Sustainability Targets so that they can continue to evolve.

Moreover, looking at sustainability trends in general, statutory disclosure of sustainability information will be commencing in various jurisdictions. The integration of financial and non-financial information, the collection and the management of the data, and how we utilize data would have to be more sophisticated. Through the exercise, I hope to find capabilities that we have not noticed or realized yet. I’m sure such findings will help to elevate our sustainability management. You asked me about future challenges. You asked me about future challenges. I would say that there will be many more “expectations” to come.

With the Purpose as a starting point and based on materiality, we have set sustainability targets that will serve as the center of our sustainability management. I will strive to pursue sustainability management so that our organization will continue to be needed by stakeholders in the future.