Environmental Impact

The Company’s business operations impact the environment in three areas:

• release of greenhouse gases;

• consumption of water, both from surface and sub-surface sources; and

• generation of solid wastes from its operations.

ITC has implemented world-class strategic initiatives to minimise its environmental footprint in each of these areas of global concern.

Global Warming: In order to mitigate the effects of its activities on global warming, the Company follows a two-fold strategy:

• reduce specific energy consumption in its operations through improved technology and processes; and

• sequester greenhouse gases, especially carbon dioxide, through large-scale forestry programmes.

These efforts have greened 65,000 hectares of land, helping ITC sequester more carbon dioxide than its emissions. The total CO2 sequestered in 2006-07 was 2025 kilotons, which is 177% of emissions, giving us the unique achievement of being a ‘carbon positive’ corporation for two years in a row. By 2012, the Company plans to green 100,000 hectares. It would not only lead to sustainable sources of raw materials for its expanding Paperboards business and provide millions of mandays of employment to marginalised farmers, but also help consolidate ITC’s carbon positive status.

Water Conservation: India accounts for 18% of the world’s population but has only 4% of global fresh water resources. In order to mitigate the negative impact on fresh water depletion due to its operations, ITC has adopted a three-fold strategy:

• minimise the consumption of fresh water per unit of output in all its businesses;

• minimise/eliminate discharge of treated effluents to prevent damage to the environment in any way; and

• create rainwater harvesting potential within the Company’s units and in socially relevant areas.

Water intake in our units increased by only 0.8% over last year, despite a significant increase in production. Rainwater harvesting within the units has seen a significant increase between 2002-03 and 2006-07 - from 0.24 MKL to 0.5 MKL. In addition, the Company has systematically invested in creating additional rainwater harvesting capacity through external watershed development projects in water stressed areas. This recognises the critical need to ameliorate water scarcity in rural India which is home to more than 72% of our population with agriculture as their mainstay. Nearly 67% of the cultivated area face severe moisture stress for 5 to 10 months a year.

From 3 projects covering 60 villages during 2001-02, ITC’s watershed development projects now cover 450 villages in 23 districts, benefiting 21,399 farmers. A total of 1,530 water harvesting structures have been created, providing critical irrigation to 14,287 hectares of farmland.

As a result of these measures, ITC has sustained its status as a ‘water positive’ Company for the past five consecutive years. Compared to the net fresh water consumption of 6.2 MKL in 2006-07, the Company has created potential storage of 23.6 MKL through its rainwater harvesting efforts, nearly 4 times that of our net consumption. The total area covered by watershed projects has risen to 27,000 hectares providing farmers and rural communities critical water resources for farming and consumption.

Our endeavour to sustain our 'water positive' status and contribute meaningfully to the country’s effort in mitigating water scarcity problems gives us the stimulus to envisage a goal of bringing a total of 50,000 hectares under soil and moisture conservation in the next five years.

Solid Waste Management: A three-pronged strategy guides the Company’s endeavour to reduce solid waste and achieve a ‘zero solid waste’ status within the next two years:

• Reduction of waste per unit of output;

• Ensure recycling of all wastes generated by our operations; and

• Maximise reuse of the wastes as raw material.

As a result of these initiatives, more than 93% of all solid wastes generated was recycled in 2006-07. Several of our units have already recycled over 99% of the solid wastes generated.

Social Impact
We derive immense satisfaction from the fact that our business strategies aimed at maximising our societal contribution provide livelihoods to over 5 million people, many of whom comprise the poorest in rural India.

ITC has partnered the Indian farmer for close to a century, and is now engaged in elevating this partnership to a new paradigm. The ITC e-Choupal initiative is a powerful illustration of the Company’s commitment to empower the small farmer and thus engender rural transformation. Through these rural partnerships, ITC touches the lives of nearly 4 million villagers across India. In the next 5 years, ITC aspires to empower over 10 million rural Indians in 100,000 villages.

ITC is also engaged in several other CSR initiatives in the economic vicinity of its operating locations. The Company’s Sustainable Livelihoods initiative strives to create alternative employment by promoting non-farm incomes. The thrust of the Company’s social sector investments, christened 'Mission Sunehra Kal', is on:

• natural resource management, which includes wasteland, watershed, and agricultural development;

• creating sustainable livelihoods, comprising genetic improvement in livestock and economic empowerment of women and,

• community development, with a focus on primary education, health and sanitation.

Details of these initiatives are presented in the various chapters of this Report, and reflect our commitment and pride in being "Citizen First".