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Sustainability is integral to our business
Financial Express - 12 Dec 2007

YC Deveshwar is a man with a mission. The ITC chairman has not only expanded the company portfolio from tobacco to fast moving consumer products, but has also done it in a socially and environmentally sustainable manner. At the recent CII-ITC Sustainability Summit held in New Delhi, he talked to FE'sRajiv Tikoo about his concept of vision, values and vitality.

The summit was organised by the CII-ITC Centre of Excellence for Sustainable Development. Excerpts from the interview:

How is the annual summit shaping up?

I think there is significant progress. We are just into our second event, but it's getting better qualitatively as well as quantitatively.

More companies are participating and competing for the summit awards.

You seem to be very passionate about the summit. The fact that you are the chairperson of the advisory council of the CII-ITC Centre can't be the sole reason.

I take interest because the idea of sustainability is very important for our society as well as the world. You can see, for example, global warming has made even the developed world talk about inclusive and sustainable growth.

What does the summit seek to achieve?

The idea is to tap experiences of people and create networking opportunities for building a repertoire of experiences and convert it into knowledge tools so that you can make better advancement towards sustainability.

How is ITC living it up as an example?

I can say it with considerable pride that ITC is the only company in the world of its size and complexity or diversity that is water positive.

ITC is not only water positive, but it also creates five times more freshwater resources than it consumes. ITC sequesters twice the amount of carbon that is emitted out of its operations. And it is nearly zero solid waste disposal company. Besides, our e-choupal and our other social initiatives create sustainable livelihood for millions of small and marginal farmers. So, this is our contribution in terms of triple bottomline. And, of course, ITC's financial success is well known.

Why has the expansion of e-choupal initiative slowed down?

E-choupal can function only in those areas where we buy commodities. So we have gone wherever soya, wheat, coffee and cashew are grown. Now we are getting into horticulture. It increases the scope of expansion of e-choupal for us.

In the meantime we are now completing our full strategy in areas, which have an e-choupal network. We are enlarging the role of the hubs that service e-choupals and are setting up choupal sagars. We need to get land, settle ownership issues and obtain legal clearances and permission to build, which is taking time. It's not that we have slowed it down, but you know that it takes time in our country.

So, are you preparing for big retail expansion like others?

It's much more than retail. What is modern retail? It brings two things-choice and convenience-to the consumer. We are bringing these benefits to small and marginal farmers.

When he is selling his produce, he has a choice of selling it either to us or to erstwhile mandis.

When he is buying, we are also giving him a choice. We are bringing to him multiple suppliers of seeds, pesticides, fertilisers, etc. We are also giving him information on weather and prices. So his choice is enlarged.

Isn't everyone targeting the bottom of the pyramid market?

Though this is the bottom of the pyramid (BOP) market, there is a big difference. Targeting the BOP is assuming that there is a market and exploiting it. Our model is to help the farmer increase his purchasing power and empower him so that he becomes part of the market. Our model is to enlarge the size of the cake and also aim for a larger share of the cake.

So, is this corporate social responsibility (CSR) for competitive advantage?

We are working with a philosophy that we will deal with the entire value chain from the seed to the stomach. The first step of our supply chain is to get farmers to be competitive and to produce quality products at cheaper rates for us to be competitive internationally.

We are not starting from just buying raw material. We are starting from making our raw material better in quality and cheaper in cost through enhancement of the productivity of the small farmer. So sustainability is an integral part of our business. It's in our enlightened self-interest.

Are you taking CSR beyond its conventional definition?

CSR is already there, but now we are talking about how to mobilise consumers. A small part from the sale of our products goes into a fund that we have set up. We draw money from it to undertake water harvesting pro grammes, social farm forestry, children's education and women's empowerment, etc. So if you are buying ITC products, you are contributing to the fund. If it catches the imagination of consumers, then our competitors will also have to do it. We want to get the attention of the consumer to create competition for CSR. The big idea is how to create a bigger market for CSR.

Are your products still cost competitive?

Our products have to be cost competitive. It can't be otherwise. We can't ask people to pay more. We say that all things being equal (our products may be even superior), here is one more reason why you should buy our products.

What is the response of your shareholders and board of directors to your approach?

You see, if you are able to deliver results in the short run, then every body supports you. There is a prob lem if you stop producing results in the short run. That is why there is a need for level playing field. It's a pity that there is no way to differentiate between companies that are doing a good job for the society and those companies that are not doing such a good job.

So, how can markets reward responsible companies in India?

We need to bring awareness among the civil society. Governments must also frame enabling policies. Our balance sheets deal with corporate governance norms to protect the shareholder, but businesses don't work for only shareholders. They also impact the society.

So we are saying that please make disclosures not only of financial status but also of social capital and natural capital.

How would you like it to be done?

Why can't we rate businesses for their sustainability contributions? There should be some guidelines like those of the Global Reporting Initiative. Or, let us develop new standards here. We need to build institutional frameworks. Let us have Trust Marks for each sector of the economy and rate industries according to the contribution they make to the society. Then those ratings should go on to their products. Let people get an informed choice.

But how are you able to internalise sustainability in the first place without an enabling external environment? What is it that you have and others don't?

There are three components that are very important for any company-vision, values and vitality. Vitality is the new concept here. I have talked about it earlier, though. It's the ability to translate your vision and values into something productive. Vitality means the capacity to juggle more than one ball-to deal with the short run, the medium run and the long run. ITC is able to do this because we also work for the short run. Today if you are doing well only in the long run and your short run is bad, you get punished. You will not be there to deal with the long run. That is why we say that we need to build an enabling environment in our society that places value on the long run.

So, will it make you unsustainable in the long run if the policy and the competition do not move in the same direction as yours and at your pace?

I hope not. It will only make us work harder. My organisation has a system of distributed leadership. So it will be our collective capacity to deal with these three dimen sions-short, medium and long-that will decide our sustainability.

You keep on expanding your portfolio of products. Are you also planning to trim it at some stage?

Well, if it's not an appropriate part of our portfolio... You see, I am not personally wedded to any of these products. I do not want to give up something in the interest of the short run, if it is beneficial for ITC in the long run. At the same time, if I can with a small operation make the body fitter and deal with the balance of the short, the medium and the long run, I might do it. I want to be allowed to do the long run, even if it requires in the mean time to sacrifice some part of the body to be able to carry on rather than extinguishing it.