Chairman's Statement

ITC’s Vision and Strategy

I have great pleasure in presenting ITC’s Sustainability Report 2012.

This is the 9th consecutive year of its publication. As in earlier years, the Report conforms to the stringent ‘G3’ guidelines of the Global Reporting Initiative (GRI) at the highest ‘A+’ level. It is also independently validated by M/s. Ernst & Young Pvt. Ltd. A transparent and voluntary disclosure, the ITC Sustainability Report presents the Triple Bottom Line performance of the Company. The Report encapsulates ITC’s vision, strategy and action in contributing to building a sustainable, inclusive and secure future for the larger Indian society.

This year, ITC was honoured with yet another global recognition for its exemplary sustainability initiatives. At the historic Rio+20 United Nations Summit, ITC was conferred the World Business and Development Award 2012 for its large-scale social and farm forestry programme. This Award is indeed a tribute to the efforts of thousands of tribals and poor farmers in rural India who have partnered ITC in enriching the country’s environmental capital whilst generating significant sustainable livelihood opportunities.

I am happy to once again reiterate the Company’s support to the principles underlying the United Nations Global Compact. It is a matter of great satisfaction that ITC’s unique and inclusive business models together with its focussed social investments contribute meaningfully to the Millennium Development Goals enunciated by the United Nations.

ITC’s enduring vision to create larger societal capital and sub-serve national priorities is manifest in its commitment to put Country before Corporation and the Institution before the Individual. It is this commitment that guides every thought and action in pursuing the Company’s super-ordinate goal of creating larger value for society. This vision has powered a multi-pronged competitive strategy to enhance economic contribution, enable world-class benchmarked environmental practices, contribute to climate change mitigation and adaptation, and integrate societal value creation in its business models.

ITC has been “Carbon Positive” for 7 consecutive years, sequestering twice its emissions. It has been “Water Positive” for 10 years, having created freshwater potential that is more than twice its consumption. For over 5 years now, ITC has been “Solid Waste Recycling Positive”. These milestones remain unparalleled globally, with ITC being the only enterprise in the world of its dimensions to have accomplished and sustained these environmental distinctions. It is also a matter of immense satisfaction that ITC’s businesses and value chains support sustainable livelihoods for more than 5 million people, many of whom represent the weakest sections of society.

The Challenges of Development

In the aftermath of the global economic crisis, which many say is the worst since the Great Depression of the 1930s, nations across the world are waking up to a new reality. There is an increasing realisation that this time around, the challenges are far more deep-rooted. It is now quite apparent that the economic model followed by the world for decades has not delivered growth with social equity.

Despite a century of economic progress, the inequities today are far more pronounced than ever. Recent OECD studies reiterate that income inequalities have actually widened in the last 30 years in a majority of advanced nations as well as emerging economies. According to the UN Human Development Report, nearly 2 billion people in the world still live in multi-dimensional poverty. With one-third of the world’s poor living in India, the challenges are equally daunting.

The 50-fold increase in world GDP over the last half century has also taken place at a huge cost to the environment. So much so that mankind today faces the threat of irreversible damage to the eco-system which has put the planet in peril in ways that have no parallel. Climate change and its impact on poor farmers in developing nations, the loss in biodiversity that alters nature’s balance, severe water stress that impacts food security and basic human needs, the alarming rate of natural resource depletion are all challenges that have put the world at the edge of a precipice, thus severely threatening the future.

Embedding Sustainability Into Business Strategy

ITC has consciously strived to deliver societal development in the context of its businesses through inclusive value chains that encompass the most disadvantaged sections of society, especially those residing in rural India. This approach has fostered innovative business models and an enduring engagement with rural communities to cocreate livelihood opportunities. Various initiatives have been put in place to transform rural communities into vibrant economic organisations, and empower stakeholders with enhanced incomes and livelihoods.

One of the most globally celebrated examples is the ITC e-Choupal which has empowered 4 million farmers in 40,000 villages, and is today the world’s largest rural digital infrastructure. In addition, ITC’s Watershed Development programme provides soil and moisture conservation to nearly 90,000 hectares of water stressed areas enhancing productivity and raising farm incomes. ITC’s vibrant food brands, Aashirvaad and Bingo, support such sustainable agri-value chains empowering thousands of farmers. Another path breaking initiative is ITC’s Social and Farm Forestry programme which utilises an extensive research-based clonal propagation programme and encourages plantations through poor tribals and small farmers in their private wastelands. This initiative has created over 56 million person days of employment while greening over 1,25,000 hectares as of March 2012. This is yet another example of creating sustainable value chains through the wood to fibre value chain implemented by ITC’s Paperboards business. Similarly ITC’s incense sticks brand Mangaldeep, is creating sustainable livelihood opportunities for rural women through competitive value chains. ITC’s Livestock Development programme, which has covered over 5,00,000 milch animals, supports a dairy value chain and contributes to additional livelihood opportunities for farmers. Further, the Company’s Supplementary Education Programme has benefitted nearly 2,70,000 children.

Towards a Cleaner and Greener Environment

ITC’s approach to address environmental challenges is governed by its low carbon growth strategy, integrated water management strategy and improved efficiencies in natural resource usage.

Apart from concerted efforts by all units to reduce energy consumption through stringent audits and benchmarking, ITC has significantly expanded its renewable energy portfolio. More than 38% of its energy consumption is now met from renewable sources and this is expected to touch 50% in the next 4-5 years. ITC has also spearheaded the green building movement in India. All its super premium luxury hotels are now LEED Platinum certified. Its first green building – the ITC Green Centre, is today the world’s highest rated green building with Platinum certification by the US Green Building Council. ITC’s new iconic property in Chennai – The ITC Grand Chola Hotel, is now the world’s largest LEED Platinum certified green hotel.

As part of its commitment to sustainable natural resource management, ITC has also implemented a number of measures in waste management to create a positive environmental footprint. Over and above the initiatives in waste recycling, ITC has also initiated a unique project – Wealth Out of Waste (WOW) – a recycling programme to create awareness on the ‘Reduce-Reuse-Recycle’ approach, and inculcate the habit of source segregation. Apart from augmenting scarce natural resources, the initiative also generates cost-effective raw materials for the paper, plastics, metal and glass industries.

For All Our Tomorrows

ITC has traversed a successful journey of more than a century. We believe we have created a future-ready corporation -- by significantly enhancing our competitive strengths to power the engines of growth for the Indian economy, and also by creating sustainable businesses for tomorrow by keeping societal value creation at the heart of our business strategy. This Vision to create larger societal capital is driven by strong Values of Trusteeship, Transparency, Empowerment, Accountability and Ethical Corporate Citizenship which are the cornerstones of its Corporate Governance philosophy.

ITC’s competitive capabilities that have enabled it to create world-class Indian brands, provide the strength to create larger societal value for all its stakeholders. This competitive vitality is manifest in its deep consumer insights, robust brands, trade marketing & distribution organisation, world-class manufacturing and vibrant human resources. Large investments in cutting-edge Research & Development aimed at creating the game-changers of tomorrow are further enriching this wide spectrum of competitive vitality. It is this amalgamation of Vision, Values and Vitality that forms the bedrock of our endeavour to create an exemplary Indian enterprise.

I hope this Report will inspire meaningful action to shape a better and secure tomorrow so that we can collectively weave a brighter future for the generations to come.

YC Deveshwar
Chairman, ITC Limited
September, 2012