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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 — www.itcportal.com.
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.
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.
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.
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.
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 – www.itcportal.com 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:
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.
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 – www.itcportal.com and will also be available in the ITC Sustainability Report 2014.
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 – www.itcportal.com and will also be available in the ITC Sustainability Report 2014.
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.
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.
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:
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.
The Company is a pioneer in optimising resource use and efficiency, especially that of common natural resources such as water and air. Life-Cycle Assessment studies have been carried out for some of the Company's products to assess the impact across the value chain. Resource efficiency is integrated into product and process design and is a critical component in the creation of physical infrastructure, operations phase, logistics and waste management.
Vendors/service providers and large outsourced manufacturing facilities are encouraged to follow practices detailed under the ISO 9001, ISO 14001, OHSAS 18001 and ITC's Corporate Environment Health and Safety (EHS) Guidelines. Contract manufacturing agreements provide for compliance with ITC's Guidelines on issues related to EHS, human rights and labour practices. Most of the outsourced manufacturing units of the Foods Business are HACCP (Hazard Analysis and Critical Control Point) certified and are working towards improvement in energy efficiency. These interventions are some of the examples of ITC's sustainability practices being extended to its supply chain network partners. 
ITC endeavours to integrate sustainability in the procurement process for its products and services across its diversified business portfolio. The Board approved policy on "Responsible Sourcing" encourages resource efficiency in the supply chain and provides guidance to supply chain members and partners to adopt sustainable practices. Further details on this Policy can be accessed from the ITC portal – www.itcportal.com and will be available in the ITC Sustainability Report 2014. 
The Company's policy on "Diversity and Equal Opportunity" is premised on its fundamental belief that diversity at the workplace creates an environment conducive to engagement, alignment, innovation and high performance. The Policy provides for diversity and equal opportunities to all employees across the Company, based on merit and ability. The policy also ensures a work environment that is free from any form of discrimination amongst its employees in compensation, training and employee benefits, based on caste, religion, disability, gender, sexual orientation, race, colour, ancestry, marital status or affiliation with a political, religious or union organisation or majority/minority group. 
The Company's talent management strategy is focused on building a future-ready talent bank in the organisation to ensure a pipeline of high-quality managerial talent, specialists and business leaders. ITC's talent engagement approach focuses on attracting and nurturing quality talent, supported by significant investments in learning and development. ITC's talent brand, "Building winning businesses. Building business leaders. Creating value for India.", reflects its commitment to develop leaders to power its engines of growth, enhance organisational capability to compete and win in the market place and create enduring value. 
The Company has undertaken several water conservation and harvesting initiatives to enhance its positive water footprint. These include adoption of benchmarked practices to achieve zero effluent discharge in the Company's operating units and the establishment of rainwater harvesting structures both within the Company's premises and in the catchment areas of its operations. These initiatives not only lower fresh water intake but also maximise groundwater recharge, reduce run-off and provide precious water to farmers. Most of ITC's units have achieved reduction in their specific water intake (water withdrawn per unit of production) and many units have recycled their treated effluents in-house and achieved a zero effluent discharge status. ITC has initiated pilot studies to work towards water security for all stakeholders within the local watershed context of its business units. 
The Company is a pioneer in the green buildings movement, which commenced with the establishment of the ITC Green Centre at Gurgaon in 2004, the then largest LEED® Platinum rated building in the world. The latest achievement in this category is the LEED® Platinum certification for ITC Grand Chola, the 600-key super-premium luxury hotel complex in Chennai, which is the world's largest LEED® Platinum certified green hotel. ITC Grand Chola has also secured a 5 Star GRIHA rating, the highest national rating for green buildings in India. The Company incorporates validated green attributes while setting up new infrastructure. Efforts are underway to have existing buildings and factories meet these validated green norms. The recently commissioned ITC Green Centre at Manesar has been certified as a LEED® Platinum rated building (for commercial interiors). In addition, it has also been awarded the BEE 5 Star rating by the Bureau of Energy Efficiency, Government of India. 
The Company's Watershed Development Programme promotes local management of water resources by facilitating community-based participation in planning and executing watershed projects. The total area covered under the watershed programme cumulatively stands at 149,000 hectares. During the year, the Company signed three new MoUs with the Government of Maharashtra for Satara district and the Government of Madhya Pradesh for Sehore district to implement the Government's Integrated Watershed Management Programme. With this, the total area to be brought under soil and moisture conservation through public-private-partnership projects has increased to over 158,000 hectares. 
Reinforcing ITC's watershed development programme, the Company's agricultural interventions promote a combination of bio-mechanical solutions for optimising water management and enhancing land productivity to create a stable agricultural regime. These include building group irrigation wells to create a water sharing culture, promoting water-saving technologies like drip/sprinkler irrigation, propagating better agronomic practices through demonstration plots and application of organic manure through composting methods. 
Livestock constitute the second most important activity after agriculture in rural areas of India. The programme for genetic improvement of cattle through artificial insemination to produce high-yielding cross-bred progenies has been given special emphasis as it reaches the most impoverished and has the potential to enable them to live with social and economic dignity. Through the year, 261 Cattle Development Centres (CDCs) were functional in over 10,000 villages, which facilitated 2.55 lakhs artificial inseminations, thus taking the total to 13.37 lakhs artificial inseminations performed till this year. 
ITC's Women's Empowerment Programme, which creates supplementary incomes for rural women, is aimed at providing social dignity and economic independence to rural women through micro-enterprises and self-employment. The programme currently supports 1,682 operational Self Help Groups (SHG) with 20,230 members and cumulative savings of Rs 3.52 crores. 31,034 women are self-employed, while 7,731 women are engaged in micro enterprises. Additionally, 3,800 poor women are meaningfully engaged through the agarbatti rolling programme, currently operational in the states of Bihar, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Madhya Pradesh and Maharashtra.
Over 30,000 new students were covered through Supplementary Learning Centres and Anganwadis during the year, taking the cumulative number of students covered under this programme to over 336,000. Infrastructure support was provided to 47 primary schools during the year, taking the total number to over 1,011. As part of skill development initiatives, more than 2,400 youths were covered this year, of which 38% belonged to the SC/ST communities, thus contributing to the Company's affirmative action commitment. 
ITC is committed to providing products and services that offer best-in-class quality and user experience.With a continually growing portfolio of businesses that use agri/farm products, ITC endeavours to use sustainably sourced ingredients in products and internationally accepted standards of manufacturing in relevant businesses. The Company adopts stringent hygiene standards, benchmarked manufacturing practices and robust quality assurance systems for its products and the declared product shelf-life is determined based on independently validated studies. 
All businesses of the Company comply with all regulations and relevant voluntary codes concerning marketing communications, including advertising, promotion and sponsorship. The Company's communications are aimed at enabling customers to make informed purchase decisions through factual and truthful disclosure of information. ITC also makes efforts to educate customers on responsible usage of its products and services.