Human Rights Consideration Across the Supply Chain

ITC provides products and services of superior quality and value by sourcing technologies, equipment and inputs from reputed international and Indian manufacturers and vendors. ITC ensures that common values, relating to Human Rights performance, are shared across the entire supply chain because ITC is committed to the importance of a socially responsible and an accountable supply chain.

Policy: ITC endeavours to ensure that all its service providers/ vendors incorporate high standards of human rights, safety, health, labour practices and environment in their operations as practiced by the Company.

Implementation: The responsibility for implementation of this policy rests with the Divisional Chief Executive/ SBU Head of the concerned business.

Monitoring & Audit: The Internal Audit function of ITC conducts periodic audits to ensure that such clauses form part of the investment contracts signed during the audit period.

Compliance during 2005-06: As a large and multi-product enterprise whose products are benchmarked nationally and internationally, ITC's main supply chains can be grouped into three distinct categories:

• ITC's major businesses are vertically integrated across several Divisions. A substantial part of the supply chain is therefore internal through strategic backward linkages. Common values relating to Human Rights performance are shared across this supply chain.

• The agriculture sector is a major supplier of inputs for its agri-based businesses. Agricultural commodities are procured entirely from state controlled trading platforms and the open market.

• Only a small proportion of ITC's business consists of supply chains comprising Indian manufacturers and local service providers. The execution of ITC's Human Rights policies is obligatory for all such service providers operating within ITC's establishments. The HR managers of the units concerned ensure compliance of these policies. ITC managers are positioned at significant outsourced manufacturing sites to ensure that these service providers follow Company mandated policies.

During the year under consideration, the total number of service providers was 2,638 of which 802 operated within the Company's premises and 1,836 worked off-site. All contracts, both on and off site, included important clauses on Human Rights, environment, health and safety. No contracts were cancelled during the year as a result of non-compliance with ITC's Human Rights clauses.

The Company is currently preparing a detailed set of guidelines for phased implementation of this policy over the next 3-5 years to ensure that all agreements, contracts or purchase orders will seek confirmation that the service providers will not utilise child labour, any form of forced labour, and provide a healthy and safe workplace free from discrimination at the time of contracting and thereafter. It will also ensure that a detailed assessment of the implementation of these policies will be taken up prior to the selection of major service providers.