Sustainability Report on ITC

Corporate Social Responsibility

ITCs overarching aspiration to create significant and sustainable societal value,
inspired by a vision to subserve a larger national purpose and abide by the strong
value of trusteeship, is manifest in ITCs CSR initiatives that embrace the most
disadvantaged sections of society, especially in rural India, through economic
empowerment based on grassroots capacity building. Towards this end, the
Company adopted a comprehensive CSR policy in 2014- 15 conceived to address
the major development challenges being faced by the Nation.

Management Approach
According to the World Economic Forum (WEF) Report on Global Risks 2015, the
evolving risk landscape indicates a shift over the past few years from economic
risks to environmental risks ranging from climate change to water crises. The
challenges related to environment and ecosystems especially due to climate change
are complex, long-term and interrelated, especially in terms of its impact on water
and availability of other natural resources. This in turn has wide-ranging
implications on ITC and its stakeholders. In order to address these challenges,
environmental best practices have been deeply integrated into ITCs operations on
the basis of which, the Company strives to maximise the efficiencies of natural
resource usage across its Businesses. Furthermore, for continuous improvement on
environmental performance, during 2014-15 ITCs Businesses have set voluntary
targets in terms of specific energy reduction, specific water intake reduction,
specific waste generation, etc. Accordingly targets have been set at the
Business/Unit levels for maintaining this performance. An organization-wide
integrated sustainability data management system supplemented by standard
operating procedures for measurement and recording provides the platform to
monitor the data of each business on resource utilization and environmental impact
vis--vis production.

Energy
Continued economic progress and business sustainability are today challenged by
natural resource depletion with its consequent impacts on long term energy
security. Energy availability, accessibility and price volatility are expected to be
amongst the biggest developmental challenges for India, where around 600
million1 people lack reliable access to electricity. Extreme energy price volatility
has been identified as a significant global risk in the World Economic Forum
(WEF) Report on Global Risks 2015, which will exert even more pressure on
developing economies like India. ITC has mapped its challenges on the basis of
existing as well as the evolving energy scenario and has strategized its response.
Air Emissions
The adverse impact on the environment due to air emissions is complex, long-term
and inter-related. Climate change caused by Greenhouse Gas (GHG) emissions has
already begun to change precipitation patterns across the globe including in India,
thereby disrupting yields in primarily rain-fed Indian agriculture. Since most of
ITCs businesses depend significantly on agri-inputs, disruption in crop yields and
consequent competition for agricultural commodities, has wide-ranging
implications on ITC and its stakeholders. Recognising the fact that is necessary to
play an active role on the issue of climate change, ITC has focused on
progressively increasing its renewable energy share and enhancing sequestration of
GHGs aligned with Government of Indias National Action Plan on Climate
Change. Another aspect linked with rapid industrialisation and urbanisation is the
problem of air pollution in terms of emissions of SO2 , NOX and particulate matter
that has become a very serious health issue across almost the entire urban
landscape in India. This not only has huge adverse impacts on health of human
beings but also on the biodiversity of a region. ITC has continued to invest in
reducing air emission levels through focus on cleaner technologies/ combustion
efficiency improvement while simultaneously reducing specific energy
consumption and increasing ITCs renewable energy share. ITC has mapped the
various challenges arising from GHG and other air emissions that may impact its

own operations or its stakeholders and devised strategies driven by Board approved
policies addressing the various dimensions involved.

Water Management
Global water requirements are projected to exceed available sustainable water
supplies by 40% by 20301 . The issue of water crisis plagues large parts of the
world including Africa, parts of North America and Asia. India is particularly
vulnerable to water stress given the rapid urbanisation and industrialisation at a
time when rainfall patterns are seeing disruption and snow fed rivers are being
threatened both by retreating glaciers and geopolitical pressures on diversion of
headwaters of rivers originating in the Tibetan Plateau. ITC has sought to engage
actively with multilateral agencies like the World Business Council for Sustainable
Development (WBCSD), World Resources Institute (WRI), International Water
Management Institute (IWMI) etc. to share experiences and also improve
understanding of the complex social and technical issues related to water. ITC has
also actively supported the development of the India Water Tool as a working
group member, an activity coordinated by the WBCSD. This tool permits a first
level analysis of water risks across the country, an issue that is becoming
increasingly real in the Indian context. ITC, through its deep and longstanding
relationship with rural India has first-hand insights of what water scarcity and
climate change means to the marginal farmers of India. As a proactive and
responsible Corporate citizen, ITC has invested significantly in integrated
watershed and soil management programmes that focus on institution building and
participative management of water resources by farmers. As a next step ITC is in
the process of fine tuning a long term strategy for ensuring water security at the
localised watershed level for all stakeholders and for all operating units located at
identified high water risk areas.

Recycling and Waste Management

The issue of waste management has assumed critical significance for the country
today. Over the last few decades, the amount of waste generated has gone up

considerably as a direct consequence of increasing population, rapid and unplanned

urbanization, higher consumption levels and inadequate infrastructure. However as
a country, appropriate waste management mechanisms have not received adequate
focus. As a result, most of the waste being generated today finds its way to
landfills, causing a severe strain on the ecology. Heaps of unattended waste,
foraged by cattle and rag-pickers alike, have become a common sight both in urban
and rural areas of the country. Apart from the increasing pressures on natural
resources, the issue of burgeoning waste also contributes to soil and ground water
contamination and Greenhouse Gas (GHG) emissions, which are threatening the
quality of life throughout India.

Raw Materials
All ITC Units continue to pursue efficient use of natural resources through
extensive process management initiatives focused on waste elimination/reduction.
Moreover, as most of ITCs businesses are vertically integrated, this provides the
Company unique opportunities for exercising greater control over waste
minimization. Such integration facilitates optimum utilization of raw materials,
recycling/ reuse of wastes as well as efficient logistics. For addressing the impacts
outside the boundary of operations, life cycle assessment study of ITCs products
are progressively being taken up with the objective of making such studies an
integral part of product design and development. In addition, Board approved
policies of ITC supplemented by a Code of Conduct for Vendors and Service
providers provide the direction for sustainable sourcing of raw materials to ensure
their long-term availability. Please refer to Supply Chain section of this Report
for further details.

Biodiversity
Given the essential eco-system services that biodiversity areas provide, especially
to rural households, ITC recognises that its preservation and nurture is crucial for
the longterm sustainability of farming communities. ITC has, accordingly,
implemented several initiatives in its operational areas for the in situ revival and

nurture of native flora and fauna. This will not only preserve the nations rich
biodiversity, but also ensure a sustainable future for communities residing in the
Companys catchment areas. For the second consecutive year, ITCs Agri Business
Division has partnered with reputed international organisations like EarthWatch
Institute, UK to implement the Biodiversity Risk and Opportunity Assessment Tool
(BROA) in its crop growing regions. This tool identifies impacts and dependencies
of business operations on the biodiversity of identified agricultural landscapes, and
in the assessment of various risks and opportunities. The BROA tool has been
implemented in Karnataka (Mysuru District) and Andhra Pradesh (West Godavari,
Nellore, Prakasam and Guntur Districts) covering 5 landscapes till date. An article
on this initiative was published in the International Journal of Biodiversity &
Endangered Species, Spain 2014. The article also featured as a case study in the
India Business & Biodiversity Initiative (IBBI) report published by the CII-ITC
Centre of Excellence for Sustainable Development and the Ministry of
Environment, Forest & Climate Change.

Labour Practices & Decent Work and Human Rights

ITC operates in a diversified, ever-changing, highly competitive global landscape.
This in turn necessitates the development of a strong, customer responsive worldclass enterprise premised on a commitment to employee well-being that goes
beyond just conforming with relevant local laws to complying with global
standards. ITC is committed to conducting business in a manner that reflects its
high ethical standards. It expects its employees and business partners to subscribe
and adhere to this philosophy, which honours all pertinent laws and upholds the
spirit of human rights as enshrined in existing international standards.

Social Investments Mission Sunehra Kal

ITC believes that the performance of business enterprises must be measured in
terms of the value they create for society. Enterprises that embed sustainability in
their business strategies can deliver substantial stakeholder value through
innovative development models that simultaneously create sustainable livelihood

opportunities and a positive environmental footprint. The Company firmly believes

that such an approach unleashes strong drivers for achieving development with
social equity.

Recommendations
ITC has been forefront in creating value for the future while creating profit and
welfare for people in most sustainable way. The schemes and programs it has been
following and going to start has been a solid proof that the company is determined
for a greener, happier and resourceful future.