Sustainability Report 2011

Policy- The Company’s commitment in the area of economic performance is encapsulated in its Vision statement, which is ‘to sustain ITC’s position as one of India’s most valuable corporations through world-class performance, creating growing value for the Indian economy and the Company’s stakeholders’. ITC’s Mission is ‘to enhance the wealth generating capability of the enterprise in a globalising environment delivering superior and sustainable stakeholder value’.

The Company’s strategy is to ensure that each of its Businesses is world-class and internationally competitive in the Indian global market in the first instance and progressively in the offshore global markets.

ITC, as a premier ‘Indian’ enterprise, consciously exercises the strategic choice of contributing to and securing the competitiveness of the entire value chain of which it is a part. This philosophy has shaped the Company’s approach to business into ‘a commitment beyond the market’.

Goals and Performance- At the enterprise level the Company’s goals include -

Sustaining ITC’s position as one of India’s most valuable corporations.

Achieving leadership in each of the Business segments within a reasonable time frame.

Achieving a Return on Capital Employed (ROCE) in excess of the Company’s cost of capital, at all times.

Please refer to the ‘Report of the Directors and Management Discussion and Analysis’ section of the Report and Accounts 2011 (available on www.itcportal.com) for a detailed discussion on the Company’s market standing in each of the business segments.

Context- Please refer to the ‘Report of the Directors and Management Discussion and Analysis’ section of the Report and Accounts 2011 for a detailed discussion on the business environment, opportunities, key challenges, etc. pertaining to each of the Company’s Businesses (available on www.itcportal.com).

ITC strives to maximise natural resource usage efficiencies across its operations and also endeavors to create positive environmental externalities. This is achieved by appropriate mechanisms such as framing requisite policies, systems that verify compliance and a work environment that fosters innovation.

Focus areas- The Company focuses on the following aspects in its drive to continuously improve environmental performance.

Moving beyond Statutory compliance – with respect to emissions, effluents and waste.

A low carbon growth path – reduce specific energy consumption, increase contribution from renewable energy sources and increase carbon sequestration.

Maximise water usage efficiencies and rainwater harvesting

Minimise waste generation, achieve 100% waste recycling and use external waste as raw material, where possible.

Responsibility- It is the overall responsibility of the Divisional/Strategic Business Unit (SBU) Chief Executives, through the members of their Divisional Management Committees, General Managers and Unit Heads, to ensure implementation of Policies and Corporate Standards on Environmental Performance, including institution of various committees and designating specific responsibilities.

The Corporate EHS Department is responsible for reviewing and updating Corporate Standards on Environmental issues, verifying compliance and providing guidance and support as required.

Management- Quantified targets and objectives are defined for each business unit, to ensure progress on all applicable environmental aspects, progress against which is reviewed through annual Corporate and 3rd party audits. Performance of each business unit is reviewed at the Central Management Committee level, which is the apex management body for the organisation.

Awards- The large number of awards and certifications listed in this Report are a testimony to ITC’s commitment and progress towards creating positive environmental externalities.

Context- ITC Businesses have internalised good environmental practices and no instances of statutory infringements have been recorded across all businesses. Progress has also been recorded on key aspects such as reduction in net carbon intensity (increase in turnover and profits and further increase in sequestration over emissions), increase in rainwater harvesting potential created and improved waste recycling.

ITC will endeavour to extend these learning’s down the supply chain where we believe that significant opportunity to influence and change, exists.

ITC understands that it is exposed to risks related to climate change. Protection of our assets in coastal areas has been reinforced in anticipation of increased severity of storms and cyclones, which may occur. Disruption in road and rail traffic by such extreme events may also affect individual unit’s output, which has been taken care of by appropriate contingency and insurance plans. Higher surface temperatures (increased air conditioning costs) and disruption in water supplies are other anticipated risks. ITC has started a conscious movement towards green buildings by construction of the ITC Green Centre at Gurgaon which in 2004 was the largest platinum rated LEED certified building in the world. All new construction by ITC now incorporate validated green attributes and efforts are underway to have existing buildings and factories also meet validated green norms.

Our Agri Businesses accounts for a significant part of our turnover and these can be affected by disruptions in rainfall patterns as are anticipated due to climate change. The impact will be felt not only by the agri commodity business but several other businesses like Cigarettes, Foods, Paperboards, which are critically dependent on agri-supply chains for raw material. Accordingly the impact will be across a significant part of the supply chain.

Of all the approaches that address the complex inter-relationships between natural resources and their impact on agricultural productivity, the integrated watershed development approach has emerged as the most successful strategy. ITC has adopted this approach as the basis of its own model. Reflecting its commitment to the Triple Bottom Line, ITC’s model converges its social and environmental goals with the demands of its supply chains.