I have immense pleasure in presenting ITC's Sustainability Report 2017. This is the 14th consecutive year of its publication.

A journey that has witnessed significant milestones in the Company's aspiration to be a global exemplar in Sustainability. An aspiration that continues to inspire Team ITC to seek innovative solutions to contribute to a more secure, sustainable and inclusive future.

As in earlier years, this Report has been prepared in accordance with the stringent 'G4' guidelines of the Global Reporting Initiative (GRI) at the highest 'In Accordance - Comprehensive' level, and has been independently assured by M/s Ernst & Young Pvt. Ltd.

I am also happy to once again reaffirm ITC's support to the principles underlying the United Nation's Global Compact. It is a matter of great satisfaction that ITC's sustainability strategy together with its focused social investments have achieved outcomes that contribute meaningfully to the Nationally Determined Contribution (NDC) commitments made by India to the United Nations Framework Convention on Climate Change. ITC's multi-dimensional social initiatives also contribute to the objectives set in the UN Sustainable Development Goals (SDGs).

• The Next Horizon for a Sustainable World

  Global reports emanating from several multilateral institutions over the last few months weave a stark reality that is of extreme concern. The trend is not new. The writing has been on the wall for some time now that the world has traversed an extremely unsustainable growth path. And that this momentum, if continued, can become a serious threat to mankind. The concern today is that solutions are not outpacing the challenges. There is no doubt that attempts are being made by the comity of nations, led by the United Nations, to shape a new future through a set of ambitious Sustainable Development Goals (SDGs). The Paris UN Climate Agreement has also attempted a brave agenda to combat climate change. Yet, the scale and severity of the challenges beg the question whether the proposed actions will indeed be adequate and more so, whether the speed of execution befits the urgency that is called for.

  The statistics are formidable. The United Nations' 'World Population Prospects: The 2017 Revision' Report reveals that, with roughly 83 million people being added to the world's population every year, the planet will be inhabited by close to 9 billion people by 2030. In 1950, global population was at 2.5 billion. The pressure that will befall on resources such as food, energy, habitations and livelihood is obvious and to say the least, alarming. The Earth Overshoot Day in 2017 is likely to be in early August, implying that for over 4 months in a year, the world is now collectively consuming more from nature than what the planet can renew. In other words, these are also the resources of the future that are being snatched away from our children and grandchildren.

  'The State of the Global Climate' brought out by the World Meteorological Organization confirms that 2016 was indeed the warmest in recorded history of the planet, with temperature soaring 1.1°C above the pre-industrial period. The Report also said that carbon dioxide in the atmosphere reached new highs at 400.0 ± 0.1 ppm at the end of 2015. Severe droughts and floods also displaced hundreds of thousands of people. The fury of climate change continues unabated and exacerbates the plight of the poor manifold.

  In Davos this year, the world also woke up to a shocking report by Oxfam that the wealth of only 8 individuals equalled that of almost half of humanity - roughly 3.7 billion people in the world. It is well acknowledged that such income inequities, among people and nations, are at the root of growing social unrest, criminal activity and even terrorism. Fuelling such inequities even further is the global unemployment rate which is expected to rise even further according to the reports of the International Labour Organisation.

  India's challenges are no less daunting. The country is home to one-third of the world's poor. A colossal number of jobs are required to engage the 12 million who join the workforce every year. Environmental resources are under huge stress. With 17% of the world's population, the country has only 2.4% of world's land, 4% of global water resources and 1% of forest resources. According to the World Bank, by 2030, India's per capita water availability may shrink to half from the 2010 level, which will push the country from the 'water scarce' category to a 'water stress' category. The need to replenish our environmental resources has never been more critical and urgent.

  The global sustainability challenges, and those faced by populous emerging economies like India, call for an altogether new paradigm of growth. The new horizon for a sustainable world will be one where growth must create jobs and livelihood opportunities of an unprecedented level. Technology has to be an enabler of livelihood opportunities across the value-chain. At the same time, growth models must embrace the need to replenish the environment and combat climate change.

• The Role of Business

  Undoubtedly, the challenges confronting the world today cannot be resolved by any single section of society and will require a collaborative effort of government, business and civil society. It has been my firm belief that businesses can indeed play an extremely meaningful role. With their diverse managerial capability, superior innovative capacity and entrepreneurial vitality, corporates can bring about transformational change in society through productive utilisation of scarce societal resources. The entrepreneurial capability that businesses employ to create winning products and services can be channelled to create larger societal value, enabling a multiplier contribution to sustainable and inclusive growth.

  The transformative energies of business can be unleashed when corporates redefine their value proposition by focusing on a larger purpose that contributes to societal value creation rather than shareholder value alone. It is this belief that helped ITC shape its Vision & Strategy in building a sustainable enterprise of tomorrow.

• ITC's Sustainability Vision & Strategy

  Inspired by a patriotic fervour to serve larger national priorities, ITC redefined its Vision two decades ago to make societal value creation the bedrock of its business strategy. The need to sustain global competitiveness in economic value creation, whilst simultaneously creating larger societal value, has led to innovation in business models that seek to synergise the building of economic, ecological and social capital as a unified strategy. This Triple Bottom Line approach has, over the years, spurred innovation in strategy and execution to deliver significant outcomes.

  Leveraging the Company's innovative capacity, enterprise strengths and its presence in rural communities, ITC has designed and implemented large-scale programmes to create sustainable livelihoods, empower local communities, enrich the environment and address the challenges of climate change. It is a matter of great satisfaction that the Company is today a global exemplar in sustainability. ITC has sustained its position as the only Company in the world to be carbon positive (12 years), water positive (15 years) and solid waste recycling positive (10 years). The Company's Businesses and value-chains generate sustainable livelihoods for over 6 million people.

• Sustainability Policies: A Guiding Framework

  High impact outcomes require strategies that create societal value by leveraging the core capabilities resident in the context of a company's businesses. It is then that outcomes achieve meaningful scales, are replicable and sustainable. To ensure that outcomes are consistent, ITC has also put in place policies, processes and systems that provide a guiding framework to achieve the overarching Vision to subserve national priorities. Critical societal challenges are identified through extensive stakeholder engagement including rural participatory appraisals. Multi-stakeholder partnerships with Government, NGOs, Educational Institutes, Research Organisations and local communities help in collaborative designing and implementation of programmes ensuring more meaningful outcomes.

  A comprehensive set of Board-approved Sustainability Policies has been adopted to guide pro-active action for superior Triple Bottom Line performance. A CSR policy, outlining programmes, projects and activities guides the Company's social investments. A Board Committee on CSR and Sustainability has been in place for several years now to review, monitor and provide strategic direction to the Company's sustainability efforts. In addition, the Corporate Management Committee of ITC is supported by a Sustainability Compliance Review Committee for regular monitoring of initiatives and evaluating compliance with the Sustainability Policies of the Company.

  To bring sustainability issues centre-stage and rally industry to embrace the larger cause of societal value creation, ITC has joined hands with the Confederation of Indian Industry to establish the CII-ITC Centre of Excellence for Sustainable Development as a focal point for thought leadership, building capacity, raising awareness, information dissemination and recognising exemplars in sustainability.

• Creating Sustainable Livelihoods

  Over the years, ITC has made a far-reaching contribution to the cause of livelihood creation, particularly among the weakest in rural India. The Company's integrated rural development programme has helped create a vibrant rural ecosystem empowering farmers, enriching the environment and raising rural incomes. The mosaic of comprehensive interventions by ITC includes the globally acknowledged ITC e-Choupal initiative which has empowered 4 million farmers, large-scale afforestation and watershed programmes, animal husbandry and livestock development initiatives, primary education, vocational training, women's empowerment as well as health and sanitation programmes. These together make a meaningful contribution to sustainable livelihood creation, improving the quality of life of people whilst also enriching the natural resource base.

  ITC's Social Investments programme converges well with the Prime Minister's clarion call of 'Sab ka Saath, Sab ka Vikas' for inclusive development. Many of the Company's social interventions are in alignment with the Government's flagship programmes. The celebrated ITC e-Choupal initiative, which empowers farmers and raises rural incomes by leveraging digital technology and customised extension services, is a manifestation of 'Digital India' and the endeavour to 'Double Farmer Income'. The Company's Vocational Training programme, which focuses on providing youth with market-linked skills to make them industry-ready and employable, resonates with the Government's 'Skill India' vision. ITC's Health & Sanitation programme contributes to the Government's 'Swachh Bharat' campaign by promoting a hygienic environment through prevention of open defecation.

  ITC's Social Investments programmes implemented in 182 districts across 26 states, together make a meaningful contribution to the creation of societal value and sustainable livelihoods.

• ITC's Environmental Stewardship

  ITC has been at the vanguard of environmental stewardship by pursuing innovative strategies that ensure a low-carbon growth path. In addition to its large-scale Afforestation and Watershed Programmes, the Company's climate change mitigation contribution is also manifest in greenhouse gas reduction programmes, renewable energy investments, construction of green buildings and so on.

  Currently, more than 48% of the Company's total energy requirement is met from renewable energy sources such as biomass, wind and solar. This is particularly commendable given its large-scale operations in manufacturing and hospitality. Several of ITC's factories, premium luxury hotels and the ITC Infotech Park in Bengaluru meet close to 100% of their electricity requirements from renewable energy.

  ITC's water stewardship is manifest in the implementation of a long-term strategy for water security for stakeholders at identified high water stress areas. All the Units of the Company have made a focused effort to reduce intake of water by conducting water audits, benchmarking and adopting leading practices.

  The Company has pioneered the movement for green buildings in India. Its first environmentally efficient construction - the ITC Green Centre in Gurugram, headquarters of ITC's Hotels Division - is the highest ranked LEED® Platinum green building in the world. All its premium luxury hotels have earned the LEED® Platinum certification, making ITC Hotels the 'Greenest Luxury Hotel Chain' in the world. The ITC Grand Chola is the world's largest LEED® Platinum certified green hotel. It was also awarded India's first 5 Star GRIHA (Green Rating for Integrated Habitat Assessment) rating by the Ministry of New and Renewable Energy. The ITC Sankhya Data Centre in Bengaluru is the first such facility in the world to receive LEED® Platinum certification. Several of ITC's facilities are LEED® certified as well. ITC has 22 green buildings in its portfolio to date.

  The Company's 'Well-being Out of Waste' (WOW) initiative promotes resource conservation and recycling. WOW creates awareness about the importance of 'Reduce-Reuse-Recycle' in protecting and restoring the environment among the general public, school children and corporates. Besides addressing the growing concern of post-consumer waste management, this programme also inculcates the habit of source segregation and provides recyclables for a number of industries. This programme has covered over 64 lakh citizens, 25 lakh school children and 2000 Corporates and created sustainable livelihoods for 13,500 rag pickers and waste collectors.

• Towards a New Paradigm of Responsible Competitiveness

  A higher rate of economic growth is a critical pre-requisite for social equity. Yet, growth by itself may not ensure the creation of societal value. Therefore, strategies must cognise the need to ensure extreme competitiveness whilst at the same time spurring innovation to simultaneously create societal value. At ITC, we have called this paradigm of growth 'Responsible Competitiveness' - an integrated approach that builds competitiveness whilst at the same time ensuring that the environment is nourished and not plundered, and sustainable livelihoods are created along the entire value chain.

  ITC's aspiration to be a National Champion is manifest in its Vision and Values as well as in the Vitality of its human capital, dedicated to building an exemplary enterprise for the country. We recognise that the Company's capacity to create societal value will crucially depend on the continued robust growth of its businesses. Tomorrow's world will belong to those who create, own and nurture intellectual capital. It is for this reason that ITC has tirelessly invested in creating world-class Indian brands - Indian Trademarks that will capture and retain value within the country for the larger good of the nation. Significant investments have also been made to create superior intellectual capital through a world-class ITC Life Sciences and Technology Centre; in brick and mortar industrial infrastructure; in iconic hotels; in talent management and in an efficient marketing and distribution network that will together lend renewed strength to the Company in the years to come.

  ITC's journey to create an Enterprise of Tomorrow has been fulfilling, though there are yet many more milestones to cross. It is the Company's avowed mission to pursue superior Triple Bottom Line performance, whilst remaining committed to its values of Trusteeship, Transparency, Accountability and Ethical Corporate Citizenship, which are the cornerstones of ITC's Corporate Governance philosophy.

  This Sustainability Report is a reaffirmation of our pledge to contribute to a secure, sustainable and inclusive future for the nation. I would like to thank all our stakeholders for their support and encouragement in making this a meaningful journey towards a promising tomorrow.

  Y C Deveshwar Chairman, ITC Limited