ITC Report & Accounts 2014
Business Responsibility Report

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The Directors present the Business Responsibility Report of the Company for the financial year ended 31st March, 2014, pursuant to Clause 55 of the Listing Agreement with Stock Exchanges. The Company also publishes annually, a comprehensive Sustainability Report, based on the GRI guidelines. These Reports are available on the Company's website —


General Information

Financial Details

Alignment to National Voluntary Guidelines (NVG) on Social, Environmental & Economic Responsibilities of Business

Commitment to Sustainable and Inclusive Growth

ITC's sustainability initiatives are inspired by the opportunity to create enduring value through the enlargement of its contribution to the national economy. It is the Company's deep conviction that businesses possess the transformative capacity to create far larger societal value by leveraging its entrepreneurial vitality, creativity and innovative capacity. This Vision is manifest in the unique models fashioned by the Company to enable the creation of large scale sustainable livelihoods and the augmentation of natural resources.

This Triple Bottom Line commitment of the Company to simultaneously build economic, social and environmental capital has spurred innovation to orchestrate a symphony of efforts that address some of the most challenging societal issues including widespread poverty and environmental degradation. These concerted efforts of the Company over several years have led to the creation of sustainable livelihoods for around 6 million people, many of whom represent the most disadvantaged in society.

While ITC's pioneering work in empowering rural India is a global exemplar, it has also spearheaded several initiatives to achieve new benchmarks in environmental excellence. Recognising that climate change is a threat that particularly makes rural communities extremely vulnerable, the Company has adopted a low carbon growth strategy that encompasses large scale afforestation, increasing use of renewable energy and the continuous quest to maximise natural resource efficiencies across all its operations.

ITC is the only company of comparable dimensions in the world to be carbon positive for 9 years, water positive for 12 years and solid waste recycling positive for the past 7 years. Its environmental stewardship is also reflected in all its luxury hotels being LEED® Platinum Certified and renewable energy constituting over 38.1% of its total energy consumption.

Business Responsibility Policies and Guidelines

The Company has aligned its policies and guidelines with the principles enunciated under the National Voluntary Guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business. The context of the NVG principles is fully embodied in the Sustainability Policies adopted by the Company and encompasses Life-cycle Sustainability, Stakeholder Engagement, Responsible Advocacy, Product Responsibility, Responsible Sourcing, Freedom of Association, Diversity and Equal Opportunity, Prohibition of Child Labour and Prevention of Forced Labour, Human Rights beyond the Workplace and Environment, Health and Safety.

Principle 1 :
Corporate Governance for Ethics, Transparency and Accountability

A Board approved policy provides the framework for ITC's corporate governance philosophy, which is anchored in the values of trusteeship, transparency, ethical corporate citizenship, empowerment, control and accountability. ITC believes that since large corporations utilise societal resources, governance processes must ensure that they are utilised in a manner that meets the aspirations of stakeholders. ITC embeds sustainability principles in its business strategies, and coupled with corporate governance processes, seeks to ensure superior "Triple Bottom Line" performance.

The practice of Corporate Governance in ITC takes place at three interlinked levels:

Strategic supervision By the Board of Directors
Strategic management By the Corporate Management Committee
Executive management By the Divisional/Strategic Business Unit (SBU) Chief Executive, assisted by the respective Divisional/SBU Management Committee


The three-tier governance structure ensures that:
(a) Strategic supervision (on behalf of the shareholders), being free from involvement in the task of strategic management of the Company, can be conducted by the Board of Directors with objectivity, thereby sharpening accountability of management;
(b) Strategic management of the Company, uncluttered by the day-to-day tasks of executive management, remains focused and energised; and
(c) Executive management of a Division or Business focuses on enhancing the quality, efficiency and effectiveness of the business.

ITC's governance framework enjoins the highest standards of ethical and responsible conduct of business to create value for stakeholders.

For more details on ITC's governance structure, please refer to the section, "Report on Corporate Governance", in the Report and Accounts.

Strategic Supervision of Business Responsibility Practices

The CSR and Sustainability Committee of the Board reviews, monitors and provides strategic direction to the Company's CSR and sustainability practices towards fulfilling its "Triple Bottom Line" objectives.

The Committee also reviews, endorses and monitors the annual CSR and Sustainability Plan of the Company, including the expenditure towards social development and corporate social responsibility programmes of the Company.

The governance structure requires that compliance with the Sustainability Policies of the Company is regularly monitored and evaluated by the Sustainability Compliance Review Committee (SCRC), set up by the Corporate Management Committee (CMC) and the report of the SCRC is reviewed by the CMC every quarter. The CSR and Sustainability Committee of the Board supervises the implementation of the Sustainability Policies. The Company's CSR Plan delineating the CSR Programmes to be carried out during the financial year and the specified budgets thereof, is recommended by the CSR and Sustainability Committee for the Board's approval. The CMC assigns the task of implementation of the CSR Plan within specified budgets and timeframes to such persons or bodies as it deems fit. The CSR and Sustainability Committee currently comprises the Chairman of the Company and five Non-Executive Directors, three of whom are Independent Directors. The Chairman of the Company is the Chairman of the Committee. The names of the members of this Committee and the number of meetings held during the year are provided under the section, 'Report on Corporate Governance' in the Report and Accounts.

Principle 2 :
Sustainability of Products & Services across Life-Cycle

The Company's strategic intent to create enduring value by investing in new engines of growth is powered by its strong and competitive capabilities in R&D, innovation and technology and an array of institutional strengths including deep consumer insights, brand building capability, trade marketing and distribution infrastructure, focus on quality and world-class manufacturing practices, strong rural linkages and outstanding human resources.

ITC endeavours to embed the principles of sustainability, as far as practicable, into the various stages of product or service life-cycle, including procurement of raw material/service, manufacturing of product or delivery of service, transportation of raw materials and finished goods, and disposal by consumers. The Board approved policy on "Life-cycle Sustainability" details the Company's approach in this respect. Further details on this Policy can be accessed from the ITC portal – and will be available in the ITC Sustainability Report 2014. Delivering best-in-class quality of goods and services forms the bedrock of ITC's pursuit of sustainable value creation. This commitment to excellence in quality is manifest in its portfolio of world-class brands, and is driven by unwavering attention to efficiency of design, processes, sourcing and distribution in order to provide superior and differentiated offerings to customers. Some of these elements are discussed briefly below:


Maximising Resource Efficiency

Sustainable Consumption

Beyond Boundaries

Product Labelling

Responsible Sourcing

Reporting on Sustainability Initiatives

Principle 3 :
Well-being of Employees

ITC believes that its competitive capability to build future-ready businesses and create enduring value for stakeholders is enriched by a dedicated and high-quality human resource pool. Therefore, nurturing quality talent and caring for the well-being of employees are an integral part of ITC's work culture, which focuses on creating a conducive work environment that helps deliver winning performance. Individual Board approved policies on "Diversity and Equal Opportunity", "Freedom of Association" and "Environment, Health and Safety", among others, guide management approach on the specific elements of ITC's superior work practices.


Equal Opportunity

Affirmative Action

Supporting People with Disabilities

Learning and Development

Principle 4 :
Stakeholder Engagement

The Board approved Policy on Stakeholder Engagement provides the approach for identifying and engaging with stakeholders that include shareholders, customers, employees, farmers, suppliers, communities, civil society and the government.
ITC believes that an effective stakeholder engagement process is necessary for achieving its sustainability goal of inclusive growth. Accordingly, ITC anchors its stakeholder engagement on the following principles:
a) Materiality – Prioritised consideration of the economic, environmental and social impacts identified to be important to the organisation as well as its stakeholders.
b) Completeness – Understanding key concerns of stakeholders and their expectations.
c) Responsiveness – Responding coherently and transparently to such issues and concerns.

The Company has put in place systems and procedures to identify, prioritise and address the needs and concerns of its stakeholders across businesses and units in a consistent and systematic manner. It has implemented mechanisms to facilitate effective dialogues with all stakeholders across businesses, identify material concerns and their resolution in an equitable and transparent manner. These measures have helped ITC develop strong relationships, which have withstood the test of time. These collaborative partnerships with communities are manifest in its programmes such as watershed development, social forestry, animal husbandry services and women's empowerment. These initiatives augment the natural resource base of the nation and create sustainable rural livelihoods. Further details on this policy can be accessed from the ITC portal – and will also be available in the ITC Sustainability Report 2014.

Principle 5 :
Human Rights

ITC has a well-defined Board approved Policy on Human Rights across its value chain. The Company requires its employees and business partners to subscribe and adhere to this Policy. The policy and its implementation are directed towards adherence to applicable laws and to uphold the spirit of human rights, as enshrined in existing international standards such as the Universal Declaration and the Fundamental Human Rights Conventions of the International Labour Organisation (ILO).
ITC encourages and guides its supply chain partners to be human rights compliant in their operations. ITC plays a positive role in building awareness on human rights for its key stakeholders and encourages respect for human rights of the local communities with specific focus on vulnerable and marginalised groups.

Further details on this policy can be accessed from the ITC portal – and will also be available in the ITC Sustainability Report 2014.

Principle 6 :
Protection and Restoration of the Environment

ITC is a global exemplar in environmental sustainability and takes pride in being carbon positive, water positive and solid waste recycling positive for many years. The Company has contributed to building environmental security by not only ensuring efficient use of resources but also by augmenting precious natural resources. Board approved policies on Life cycle assessment of products and services, Environment, Health and Safety and Responsible Sourcing provide the necessary direction towards climate change mitigation and adaptation efforts as well as natural resource replenishment initiatives. Such efforts include implementation of a low carbon growth strategy across its businesses, integrated soil and water conservation programmes and the creation of large-scale sustainable livelihoods amongst the marginalised sections of society.

The Company has sought to align with the NAPCC (National Action Plan on Climate Change) of the Government of India to respond to the challenges emerging from the threat of climate change. Some of the measures implemented include continual improvement in specific energy consumption (energy consumed per unit of production), enhanced use of renewable energy and expansion of forestry projects to improve ITC's positive carbon footprint.

The Company has computed its Green House Gas inventory in line with the ISO 14064 standard, which has been assured at the highest "Reasonable Level" by a third-party assurance provider.


Resource conservation, waste segregation and recycling

Water Management Stewardship

Cleaner production methods, use of energy efficient and environment-friendly technologies

Implementation of Environment, Health & Safety Management Systems

Principle 7 :
Responsible Advocacy

The Board approved Policy on Responsible Advocacy provides the framework for the necessary interface with Government/Regulatory Authorities on matters concerning the various sectors in which the Company operates. ITC works with apex industry institutions that are engaged in policy advocacy, like the Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, Associated Chambers of Commerce and Industry of India and various other forums including regional Chambers of Commerce. ITC's engagement with the relevant authorities is guided by the values of commitment, integrity, transparency and the need to balance interests of diverse stakeholders.

The Company, for its social development projects, organises meetings with the local administration and state governments to seek their participation and involvement. Their expert advice and counsel are also sought and approvals obtained, where required, for the planned interventions. The Company also engages in public-private-partnerships (PPP) with the state governments for such projects. The CII-ITC Centre of Excellence for Sustainable Development also interacts with the Government and policy makers to promote sustainable development and inclusive growth through corporate action.

Principle 8 :
Supporting Inclusive Growth and Equitable Development

ITC believes that in the strategic context of business, enterprises possess, beyond mere financial resources, the transformational capacity to create game-changing development models by unleashing their power of entrepreneurial vitality, innovation and creativity. In line with this belief, ITC has crafted unique models to generate livelihoods and environmental capital. Such Corporate Social Responsibility (CSR) projects are far more replicable, scalable and sustainable, with a significant multiplier impact on sustainable livelihood creation and environmental replenishment. The Company's CSR programmes are guided by the Board approved Corporate Social Responsibility (CSR) Policy.

ITC's high impact social development projects are aimed at enhancing environmental and natural capital; supporting rural development; promoting education; promoting healthcare, providing sanitation and drinking water; creating livelihoods for people, especially those belonging to the disadvantaged sections of society, in rural and urban India; preserving and promoting traditional art and culture and promoting sports.

Committed to catalysing change at the grassroots, ITC's CSR strategy aims at building capacity and creating empowered village institutions that can bring about transformational change in rural India. In all CSR Programmes of the Company, interventions are undertaken through collective community participation and Community Based Organisations (CBOs) have been formed especially for the purpose. ITC's ultimate aim is to enable these CBOs to function autonomously and play an active role in the development process. All projects are planned and implemented through CBOs, which formulate village micro-plans in consultation with NGOs, while ITC provides the required technical and managerial inputs. All decisions regarding interventions, rules/regulations and monetary transactions are collectively taken by the CBO members independently with the NGOs and ITC's Social Investments Team playing only an advisory role, if required. The primary reason for making the CBOs responsible for the governance of projects is to empower them to function independently and thus become active vehicles of development in the area. The projects promoted under the CSR Programmes are spread over 61 districts across the country and the interventions reach out to more than 6.40 lakh households in over 9,000 villages.

ITC's Social Investments Programme includes the following initiatives:

Natural Resource Augmentation and Sustainable Livelihood creation through Social and Farm Forestry

Integrated Watershed Development Programme - Contributing to Sustainable Agriculture

Improved Agriculture Practices Programme – Enhancing Farmer Incomes

Livestock & Dairy Development – Providing Supplementary Incomes

Economic Empowerment of Women - Providing Social Dignity to Rural Women

Supporting Primary Education & Skills Development - Community Development

Principle 9 :
Providing Value to Customers and Consumers

As an organisation which upholds and makes significant efforts to ensure good governance, ITC's businesses comply with all relevant laws of the land. The Company's uncompromising commitment to providing world-class products and services to customers is supported by its concern for the safety of its customers/consumers. ITC's overall approach on this vital aspect is guided by its Board approved Product Responsibility Policy.

Product Responsibility

Marketing Communication

Responsiveness to customers