ITC :: Sustainability Report 2007

I have immense pleasure in presenting ITC’s fourth Sustainability Report. We take pride that we were among the first ten companies in the world to adopt the revised reporting procedure as per the G3 guidelines of the Global Reporting Initiative. This Report, assured by PricewaterhouseCoopers Pvt. Ltd., is a transparent disclosure of ITC’s economic, social and environmental performance.

ITC is inspired by its vision to make a meaningful difference through the enlargement of its contribution to the national economy. We have pledged to sustain our position as one of India’s most valuable corporations, powered by a relentless commitment to world-class performance and creation of enduring value for the Company’s stakeholders and the Indian economy. It is our unwavering belief that the larger purpose of business is to serve society - through cutting-edge innovation that delivers the best value to the consumer and the shareholder, backed by exemplary governance that embodies the spirit of trusteeship. Over the last 3 years, Total Shareholder Returns, measured in terms of increase in market capitalisation and dividends, grew at a compound rate of 32% per annum, placing ITC among the foremost in the country in terms of efficiency in servicing financial capital. ITC aims to sustain its premier market standing and leadership position in each of the business segments.

It is this abiding vision that has driven innovation in ITC to forge unique business models that synergise long-term shareholder value creation with the superordinate purpose of enhancing societal capital. As a result, we measure our accomplishments not only in terms of financial performance but also by the transformation we have consciously engendered to augment the natural and social capital of the nation. This aspiration to achieve Triple Bottom Line benchmarks springs from our vision to contribute to the national goal of sustainable and inclusive growth.

We believe that our corporate strategy, which embraces societal development as an integral part of our mission of wealth creation for our stakeholders, ensures the long term sustainability of our business enterprise unleashing in the process strong multipliers that contribute to making national progress more inclusive and equitable. This commitment finds expression in the Company’s sustainable development philosophy, which recognises the need to not only preserve but also enrich precious environmental resources while providing a safe and healthy workplace for its employees.

The last few decades have been witness to a massive depletion of natural resources and bio-diversity, the increasing adverse impact of climate change and a dramatic rise in poverty and population. World-wide, growing concerns on Sustainability have driven cross-border initiatives to find urgent solutions to arrest the deterioration in our natural and social capital. The Nobel Peace Prize this year lauds the efforts for combating climate change. Elsewhere, Governments of advanced and developing nations are deliberating on the need to bridge the increasing inequities that threaten to erode valuable human capital in many countries.

" Apart from embedding into our business models a direct linkage between business objectives and societal goals, we are also engaged in implementing various other sustainable development initiatives to make a meaningful contribution towards social empowerment and genderised development. "

Globally, there is a greater realisation by business leaders that the limits to sustainable growth will be determined less by access to financial capital and more by the commitment to preserve and augment social and ecological capital. It is also evident today that investors and other stakeholders expect the highest standards of ethics, transparency, sensitivity and responsiveness from corporates. It is my belief that stakeholders, including consumers, will increasingly raise the bar of expectation in relation to corporate response to issues of sustainable development. It is therefore, in the enlightened self interest of business to pursue sustainability in corporate strategies and business operations.

In consonance with our belief and the need to promote greater awareness and acceptance of sustainability amongst corporates, ITC together with the Confederation of Indian Industry, has launched the CII-ITC Centre of Excellence for Sustainable Development. The Centre seeks to address the institutional void in developing the requisite capability among Indian industry to pursue sustainability goals. The Centre has already taken various initiatives to help transform Indian businesses by providing thought leadership, promoting awareness and building capacity.

The developmental challenges for India are large. Nearly 27% of the world’s poor live in India, and 60% of India’s workforce, who reside in Rural India, are engaged in agriculture which barely contributes 18% of the nation’s GDP. Sustainable growth demands that this disadvantaged section of society is brought into the mainstream economy. Economic policies will necessarily have to be inclusive if they are to be sustainable, and as a parallel, corporates have the responsibility to craft business models that innovate to ensure sustainable growth with social equity. ITC’s e-Choupal and social forestry programmes represent just two of the stellar examples of this philosophy in action.

Apart from embedding into our business models a direct linkage between business objectives and societal goals, we are also engaged in implementing various other sustainable development initiatives to make a meaningful contribution towards social empowerment and genderised development. The thrust of these initiatives, christened ‘Mission Sunehra Kal’, is in three areas: (i) natural resource management, which includes wasteland, watershed and agriculture development; (ii) sustainable livelihoods, comprising genetic improvement in livestock and economic empowerment of women; and (iii) community development, with focus on primary education and health and sanitation.

At ITC, we are committed to conducting our business operations with sincere respect for the environment. These endeavours, which bear testimony to ITC’s abiding commitment, have earned us several prestigious national and international awards (listed elsewhere in this Report). Such recognition has further reinvigorated and encouraged us to reinforce our commitment to consciously direct the collective endeavour of our employees across all businesses, functions and locations to continuously improve sustainability practices, to ultimately attain and exceed global standards.

For five years in a row now, we have achieved and sustained our status as a ‘water positive’ organisation, creating nearly four times more water than the Company’s net consumption. Internationally benchmarked specific consumption of water and scaling up of rainwater harvesting in several moisture-stressed districts of India have enabled ITC retain this enviable position.

We have also been ‘carbon positive’ for the last two years. This status has been achieved on the basis of several energy conservation measures, usage of carbon neutral fuels and carbon sequestration through large-scale agro-forestry programmes.

We continue to strive towards achieving a ‘zero solid waste’ discharge status, having recycled over 90% of solid waste produced during the year. This makes us, to the best of my knowledge, the only business enterprise in the world of our size and complexity to accomplish these three dimensions of environmental excellence – an extremely challenging task given the fact that we are continuously expanding our manufacturing operations.

In addition, through a concerted effort to develop innovative value-chains across our diverse businesses, we are today instrumental in creating and sustaining livelihoods for nearly 5 million people, many of whom represent the weakest sections in rural India. The ITC e-Choupal and Choupal Saagar infrastructure - a combination of digital, human and physical assets - already serve over 4 million farming families and is acknowledged in the Government of India’s Economic Survey as an efficient delivery channel for rural development and public-private partnership. Similarly, ITC’s social farm forestry strategy enables the creation of substantial employment both on-farm and off-farm. Besides converting private wastelands into productive assets, it simultaneously addresses serious issues relating to climate change, biomass depletion, soil erosion, water security, ecological balance and biodiversity.

ITC continues to strive to contribute to the Prime Minister’s vision of responsible corporate action for sustainable and inclusive growth. This Report, as an exemplar in the pursuit of Triple Bottom Line, is a tribute to that vision. We feel privileged to be able to make a difference and be recognised for the contribution we have made. Our abiding vision, the strength of our outstanding human capital, and our commitment to creating sustainable value will continue to inspire us to achieve even greater success in the future.