ITC's Vision and Strategy
I am delighted to present ITC’s Sustainability Report 2011.
Published for the 8th consecutive year, this Report is a transparent and voluntary disclosure of the Company’s multi-dimensional Sustainability Initiatives. It is an expression of ITC’s enduring commitment to contribute and provide leadership to building a sustainable, secure and inclusive future for the larger Indian society.
This Report has been independently verified by M/s. Ernst & Young and conforms to the stringent ‘G3’ guidelines of the Global Reporting Initiative (GRI). It is ‘GRI checked’ and qualified at the highest ‘A+’ level.
I am also happy to state that the Company’s initiatives and practices support the principles underlying the United Nations Global Compact (UN-GC). ITC’s large scale sustainability initiatives continue to contribute meaningfully to achieving many of the Millennium Development Goals enunciated by the United Nations. These include focussed programmes to create sustainable livelihoods that improve the quality of life of rural communities, particularly women and children.
It is a matter of great satisfaction that ITC’s focus on creating larger societal value has enabled its businesses to generate sustainable livelihood opportunities for over 5 million people, many of whom represent the weakest sections of society. In addition, its commitment to contribute to climate change mitigation and to the creation of natural capital has led to a symphony of efforts making ITC the only enterprise in the world of comparable size to have achieved and sustained the three global environmental distinctions of being water positive (for 9 years), carbon positive (for 6 years), and solid waste recycling positive (for 4 years).
The year gone by has been witness to a series of tumultuous social upheavals across the world. In more ways than one, this widespread global unrest is a reflection of the growing intolerance of civil society with economic models that have failed miserably in ensuring social equity. While there is little doubt that the world has created enormous material wealth over the last century, it is a painful reality that almost half of the world lives in some form of poverty. Today, the richest 1% of adults control 43% of the world’s assets. The bottom 50% have access to only 2% of the world’s assets. The 2010 Human Development Report of the UNDP says that around 1.75 billion people, living in as many as 104 countries, are in a state of ‘multi-dimensional poverty’, a new indicator that reflects acute deprivation in health, education and standard of living. This iniquitous balance has created a vulnerable and fragile social order putting future generations at enormous risk.
Compounding this further, there has been utter disregard of the environment in the race for faster and higher growth. The World Economic and Social Survey 2011 says that 25 countries have completely lost their forests and 29 countries have less than 10% forest cover. The world has lost 50% of its wetlands since 1900. This imminent collapse of the globe’s ecosystem will cause serious distress to the world’s living systems. Further exacerbating these challenges is the ominous threat of climate change and global warming, exposing the planet to unforeseen peril.
It is abundantly clear that business cannot succeed in societies that fail. Indeed, the limits to future growth will be defined more by vulnerabilities flowing from social inequities, environmental degradation, and climate change than by any other economic factor. Therefore, in enlightened self-interest, businesses must play a more meaningful, involved and active role in the creation of a more sustainable and inclusive future. With its numerous touch points in society, businesses can deliver significant social value given their wide array of enterprise capabilities including financial, human and other strategic resources.
For India, the developmental challenges are even more acute. It is estimated that over 400 million people live in multi-dimensional poverty, surviving on less than $1 a day. In addition, with 17% of the global population, India possesses only 2.4% of land-mass, 4% of water resources and 1% of forest resources. It is estimated that almost half of the total 600 districts in the country face severe water-stress. This will aggravate the challenges of food security and impact India’s agricultural sector which provides sustenance to almost 55% of the country’s work force.
The challenge therefore, before business and industry, is to not only sustain profitable enterprises as growth engines for the economy but to contribute meaningfully to building social equity. And this it must do by pursuing innovative business strategies that synergise the creation of sustainable livelihoods and the preservation of natural capital with the building of shareholder value.
ITC’s belief that businesses can bring about transformational change to create a more sustainable future led to a conscious redefinition of its abiding Vision, a decade and a half ago, to make societal value creation a primary purpose of its business strategy. We believe that sustainable corporations can create larger societal value by not only serving their consumers through competitively superior value propositions but by innovating business strategies to ensure that it simultaneously leads to the creation of sustainable livelihood opportunities and a positive environmental footprint. This 'Triple Bottom Line' approach to creating larger 'stakeholder' value, as opposed to merely ensuring uni-dimensional 'shareholder value', is the driving force that defines ITC’s sustainability vision and its growth path into the future.
Innovation inspired by this super-ordinate goal to sub-serve larger societal needs lies at the heart of ITC’s business strategies. As a result, ITC has crafted unique business models that synergise long-term shareholder value creation with enhancing societal and environmental capital. This approach manifests itself through several unique initiatives such as ITC’s globally acknowledged e-Choupal programme that has significantly raised rural incomes and is today the world’s largest rural digital infrastructure. Similarly, ITC’s Social and Farm Forestry programme, which utilises an extensive research-based clonal propagation programme, encourages plantations through poor tribals and small farmers in their private wastelands generating significant livelihoods and natural capital. Details of these initiatives are provided in the respective Chapters in this Report.
In addition, ITC’s Sustainability Vision is vigorously pursued through a dedicated social investment programme titled 'Mission Sunehra Kal' that aims to empower stakeholder communities to conserve and manage their social and environmental capital.
These endeavours are focussed in two strategic areas : (a) diversifying farming systems as a strategy for sustainable agriculture and climate change mitigation by broad basing the farm-based livelihoods portfolio of the poor; and (b) expanding off-farm income opportunities to reduce the disproportionate dependence of rural households on land. This deep engagement with rural communities has enabled ITC to contribute to the creation of sustainable livelihoods by building community assets that support sustainable agriculture as well as off-farm livelihood opportunities.
ITC’s business-linked sustainability initiatives together with its social investment programmes have enabled a transformational change in rural India given the scale and reach of these interventions. The figures speak for themselves. For example, the ITC e-Choupal initiative has benefited over 4 million farmers in 40,000 villages; ITC’s Social & Farm Forestry programme has greened nearly 1,14,000 hectares including wastelands creating over 51 million person days of employment; ITC’s Watershed Development Initiative has supported sustainable agriculture by irrigating over 64,000 hectares of water-stressed areas; ITC’s Animal Husbandry Programme has reached out to nearly 5,00,000 milch animals; ITC’s Women Empowerment Programme has created over 37,000 sustainable livelihoods, and ITC’s Supplementary Education Programme has educated over 2,47,000 children.
Mission Sunehra Kal is also engaging with several State Governments to deliver quality projects of high social value through intensive public-private-people partnerships.
In line with our vision to pursue a pro-active low carbon strategy, a multi-pronged approach has been adopted to address the accelerated impacts of climate change. While the large-scale afforestation initiatives help in sequestering twice the carbon emitted from the Company’s operations, the propagation of sustainable agricultural practices and watershed development help adapt to the harsh realities of climate change. These actions are complemented by our effort to continuously enhance energy efficiency and conservation as well as invest in cleaner and renewable energy sources.
As a testimony to its low carbon philosophy, ITC continues to provide inspiration to the ‘green buildings’ movement in India. I am delighted to announce, that today, all ITC premium luxury hotels have been accorded the LEED (Leadership in Energy and Environmental Design) Platinum certification. This achievement makes ITC Hotels the ‘greenest luxury hotel chain’ in the world, positioning ITC, once again, at the forefront of global environmental stewardship.
Today, more than 35% of the company’s total energy consumption is from renewable sources. In keeping with its commitment to utilise an increasing component of renewable energy, ITC has set up a 14 MW wind energy unit in Chennai. It has also recently commissioned a 21 MW plant in Karnataka and a 2.5 MW plant in Rajasthan.
Plans are afoot to further step up our investments in wind energy and explore solar energy as another viable source, in order to further enhance our renewable energy portfolio. Investments have also been made in ‘green boilers’ to tap biomass based energy.
ITC’s Wealth-out-of-Waste programme, that promotes recycling and source segregation is today supported by over 3 million citizens including 500,000 school children and over 1500 commercial organisations and has helped create awareness amongst consumers on the benefits of the Reduce- Reuse-Recycle approach.
In addition, a beginning has also been made in carrying out detailed Life Cycle Analysis (LCA) in a few of our businesses. This will help enhance their environmental responsibility efforts. The possibility of extending the Company’s sustainability practices to some of the supply chain network partners in the near future is also being explored.
ITC’s strategies for climate change adaptation and sustainable livelihood creation are aligned to the Indian Government’s National Action Plan on Climate Change.
As ITC moves into the future, its strategy of creating multiple drivers of growth will continue to be powered by its enterprise strengths including deep consumer insights, world-class Indian brands, an extensive trade marketing & distribution organisation, world-class manufacturing, vibrant human resources, and above all by its commitment to creating larger societal value. In addition, its large-scale investments in cutting-edge R&D will create new game changing business opportunities that will further enhance its wide spectrum of competitive vitality.
ITC’s Corporate Governance framework ensures the highest standards of ethical and responsible conduct of business to create enduring value for all stakeholders. The cornerstones of its governance philosophy are enshrined in the strong values of trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship.
In our endeavour to promote adoption of sustainable business practices amongst a larger section of industry, ITC, in partnership with the Confederation of Indian Industry has supported the creation of a unique institution – the CII-ITC Centre of Excellence for Sustainable Development. The Centre provides thought leadership, promotes awareness and builds capacity of Indian enterprises on issues of sustainable development and inclusive growth.
It is my belief that ITC’s relentless endeavour to create new benchmarks in sustainable business practices will lend it a unique source of competitive advantage in the years to come. The Company’s Triple Bottom Line performance will continue to inspire proactive action from all our employees and drive continuous improvement in our sustainability practices to progressively attain and exceed evolving global standards in this sphere.
ITC’s sustainability philosophy draws upon its deep commitment to build an exemplary Indian enterprise that can progressively contribute to building a secure, sustainable and inclusive future for all our shared tomorrows. At the same time it strives to humbly contribute to strengthen the Government’s endeavours in ensuring sustainable economic development with equity.
I have great pleasure in dedicating this Report to all our stakeholders and the nation.
Chairman, ITC Limited