I have great pleasure in presenting ITC's Sustainability Report 2015.
This is the 12th year of its publication. As in earlier years, this Report, prepared as a pro-active disclosure of ITC's triple bottom line performance, is independently assured and based on the international guidelines recommended by the Global Reporting Initiative (GRI). It is a matter of great satisfaction that this Report once again conforms to the highest "In Accordance - Comprehensive" level of reporting prescribed in the latest G4 guidelines of GRI.
I am also happy to once again reaffirm ITC's commitment to the principles of the United Nation's Global Compact. It is indeed heartening that the Company's large-scale social investments continue to make a meaningful contribution to the country's progress towards achieving the UN Millennium Development Goals.
One of the most enduring images that shocked the world in 2015 was of the "boat people refugees"-- thousands of men, women and children desperately fleeing poverty, persecution and conflict in a perilous journey across the Mediterranean to seek asylum in the European Continent. Equally of concern have been the recent events of extreme weather that continue to worsen with every passing year -- be it the scorching heat wave in India that has already claimed more lives in any single year in the last decade or the continuing four-year drought in California that has demonstrated the vulnerability of people in even the world's richest nation.
These are vignettes of a world in peril and of a deep-rooted global malaise that threatens the future of mankind.
For over a century, the world has witnessed remarkable progress. Man conquered space, eliminated dreaded diseases, and shrunk the globe into a borderless virtual society. World GDP expanded over 60-fold in the last 50 years. Yet, a grossly unequal world got created. Less than 1% of adults in the world own 44% of global wealth, while the bottom 70% own just 3% of the world's wealth. It is obvious that the economic model pursued by the world for decades failed to deliver growth with equity. The consequences are dangerous. Apart from wide-spread global poverty, an entire generation of 600 million youth today stare at a jobless future. The resultant frustration, disillusionment and despair not only fuel social unrest but make them vulnerable to the lure of crime and even terrorism. Unstable societies cannot foster sustainable economic growth. It negates the tremendous advancements made in science and technology miring the world in a state of constant conflict and uncertainty.
The race for material wealth creation over the last century also paid scant attention to the imperative need for environmental replenishment. Today, the world consumes natural resources at a rate that is one and a half times the earth's capacity to regenerate. At this pace, we will bequeath future generations a barren planet in less than 30 years from now. The spectre of climate change is no longer an issue of the future. It is here and now, posing the greatest threat to poor farming communities who are the most vulnerable to the vagaries of nature.
India's socio-economic challenges mirror the global conundrum. If at all, our problems are even more acute. Nearly 300 million people need critical support to move out of endemic poverty. Every year 12 million young people join the workforce. With gainful opportunities, they will be a source of exponential growth. Without adequate opportunities, they will be a source of explosive disaster. India is set to cross China in 2025 as the world's most populous nation. How do we ensure food security, water security, energy security and livelihood security for these teeming millions? How will the conflict for food, fuel, feed, forests and fibre be resolved from the scarce land resources? We have 17% of the world's population, but only 2.4% of arable land, 4% of water and 1% of forest resources. It is obvious that we need a new model of economic growth that will simultaneously fuel economic growth, create sustainable livelihoods and replenish and preserve the environment. And that is indeed a tall order.
No single section of society can enable such transformational change of epic proportions. A confluence of efforts is therefore required from all sections of society -- be it Government, Business or other sections of Civil Society.
It is my strong belief that Business can play an immensely constructive and meaningful role. Businesses possess the innovative capability, creative capacity and entrepreneurial vitality to engender transformational change by harnessing these strengths to co-create much larger societal value. They are also present in the front-line of economic activity with numerous touch points in society, enabling a synergy of financial and managerial resources to deliver impactful solutions.
The seed of unleashing this transformative capacity for the larger good of society lies in defining a super-ordinate purpose of business. It is this fundamental belief that has helped shape ITC's Vision & Strategy in building a sustainable enterprise of tomorrow.
Close to two decades ago, when I assumed office as Chairman, the Company was confronted with formidable challenges. The early diversification efforts had either failed or were languishing, the businesses were not competitive enough in an emerging liberalised economic environment, and the Company's reputation was sullied by a public smear campaign triggered by a hostile takeover attempt. It was critically important to create a new future for the organisation by redefining a vision that could invigorate and inject new life to every sinew of the enterprise.
Inspired by the opportunity to serve larger national priorities, we articulated a super-ordinate Vision to make ITC a National Champion by not only repositioning the organisation for extreme competitiveness but by also making societal value creation the bedrock of our business strategy. We committed ourselves to abiding Values, with Trusteeship at its core, ensuring that we put Country before Corporation and the Institution before the Individual. The focus was on spurring innovative strategies that would enable us to make a growing contribution to building economic, environmental and social capital for the nation. It was our aspiration that this triple bottom line approach would manifest not only in sustained wealth creation for all our stakeholders, but also in the simultaneous generation of sustainable livelihoods as well as augmentation of precious natural resources.
A multi-pronged strategy was put into play to enable a new dimension of growth that would be sustainable and inclusive. Leveraging enterprise strengths, and by matching internal competencies with the opportunities of an emerging economy, multiple drivers of growth were launched through a chosen portfolio of vibrant businesses. Relentless efforts were made to create world-class Indian brands that would help in capturing and retaining more value for the Indian economy. The vitality of such brands also serve as market anchors to enhance the competitiveness of the entire value chain, including that of farmers and rural communities.
To ensure a positive environmental footprint, ITC adopted a low-carbon growth strategy which focusses on enhanced use of renewable energy sources as well as reduction in specific energy consumption. At the same time, the Company also invested in enlarging its positive footprint through increased carbon sequestration by expanding forestry projects in wastelands. Endeavours to reduce specific water consumption and augment rainwater harvesting activities both on site and off site at watershed catchment areas contributed to the imperative need to ensure water security. Focussed initiatives to minimise waste generation, maximise reuse & recycling and use external post-consumer waste as raw material in its units contributed to maximising and optimising resource efficiency.
To accomplish the goal of securing sustainable livelihoods, the Company's Social Investments Programme has identified three important stakeholder groups: (a) rural communities in the Company's operational areas which face enormous challenges in ensuring the sustainability of their farming systems; (b) communities residing in close proximity to our production units which require sustainable solutions to help generate additional income streams; and (c) Central and State governments, that encourage Public-Private-People Partnerships to demonstrate scalable and replicable models of development. Interventions have been appropriately designed to respond to the unique multi-dimensional development challenges of such communities in order to accomplish the overall goal of creating sustainable livelihoods. The footprint of ITC's CSR projects promoted under the Social Investments Programme is spread over 14 states covering 71 districts.
To guide ITC's proactive action for superior Triple Bottom Line Performance, a comprehensive set of Sustainability Policies has been adopted. A comprehensive CSR policy has also been crafted to define the framework for the Company's Social Investments Programme. The Board Committee on CSR and Sustainability reviews, monitors and provides strategic direction to the Company's CSR and sustainability practices. The Committee formulates, reviews and monitors the CSR Policy and recommends to the Board the annual CSR Plan of the Company in terms of the Companies Act, 2013. An internal Sustainability Compliance Review Committee has also been constituted to monitor and evaluate compliance with the Sustainability Policies of the Company.
Today, I draw immense satisfaction that the vision and strategy adopted to pursue sustainable and inclusive growth have enabled the Company to be a global exemplar in sustainability. ITC's businesses and value-chains generate sustainable livelihoods for around 6 million people, many of whom represent the weakest in society. Relentless pursuit of environmental excellence has also led ITC to be the only Company in the world of comparable dimensions to be carbon positive for 10 years now, water positive for 13 years in a row and solid waste recycling positive for the last 8 years.
The theme for this year's Sustainability Report - Creating Sustainable Livelihoods - highlights the Company's progress in contributing to this very important priority for developing countries like India. Over 65% of India's population is below 35 years of age, and therefore significantly large numbers will progressively enter the work-stream every year. Creation of sustainable livelihood opportunities is thus a crying priority. The Hon'ble Prime Minister has highlighted, on more than one occasion, the critical need to generate jobs across all sectors of the economy. The flagship schemes announced, such as Make in India, Skill India and Digital India, are all aligned to help create growing livelihood opportunities in the near future.
Over the years, ITC has made a far-reaching contribution to the national cause of livelihood creation, particularly in rural India. The Company's integrated rural development programme has helped create a vibrant rural eco-system empowering farmers, enriching the environment and raising rural incomes. These innovative interventions have reached meaningful scale given the core focus on empowerment and co-creation, development of institutional frameworks and capacity building at the grass-roots.
ITC's celebrated e-Choupal initiative, that empowers farmers by leveraging the power of the Internet as well as through a host of services related to know how, best practices, relevant weather information, transparent discovery of prices and many more, has till date empowered 4 million farmers in 40,000 villages.
The Company's Afforestation programme enables poor tribals and small farmers to transform private wastelands into green plantations. It has so far greened nearly 2,00,000 hectares and generated close to 90 million person days of employment. By 2017-18, ITC plans to augment this programme with an additional 92,000 hectares.
ITC's Integrated Watershed Development programme provides soil and moisture conservation to over 2,00,000 hectares and has generated over 4.7 million person days of employment benefitting more than 1,60,000 families. By 2017-18, the watershed development programme is projected to cover an additional 1,82,000 hectares.
The Company's Livestock Development programme has created off-farm livelihood options for over 4,60,000 cattle owners and has provided animal husbandry services to over 11,00,000 milch animals. This programme will extend services to an additional 6,30,000 milch animals by 2017-18.
The Women's Empowerment programme has created sustainable livelihood opportunities for over 43,000 women so far, with plans to include 25,000 more women in the programme by 2017-18.
The Primary Education programme aims at increasing enrolments, minimising drop-outs, and providing infrastructural support to government schools. It has benefitted nearly 4,00,000 rural children, helping them to build a better future. By 2017-18, this programme is envisaged to reach out to an additional 1,45,000 children.
ITC's Vocational Training programme equips youth with necessary skills and makes them more employable in the formal sectors of the economy. The programme has benefitted over 19,000 youths so far. In the next 3 years, another 33,000 youths will be covered under this programme.
Improving the quality of life of rural households, ITC's Health & Sanitation initiative in alignment with the Government's `Swacch Bharat' campaign, has constructed over 8,000 family toilets. The Company plans to construct 8,250 more toilets by the close of FY 2018.
By adopting a 360 degree approach to enriching rural eco-systems, ITC has put in place long term drivers that will contribute meaningfully to the national priority of employment generation and sustainable growth.
Climate change is undoubtedly one of the most daunting challenges confronting society today. While ITC's large scale initiatives in afforestation, sustainable agricultural practices and watershed development have helped in making rural communities in our catchment areas more secure, the Company has also pursued an extensive low carbon strategy in its operations. This is manifest in our efforts to continuously enhance energy efficiency and conservation as well as invest in cleaner and renewable energy sources. Today, more than 43% of the Company's total energy consumption is from renewable sources. Several ITC Hotels and manufacturing facilities are powered by renewable energy. It is our aspiration to increase the share of renewable energy to 50% by 2020. Pioneering the movement for 'green buildings', several of the Company's properties are now LEED® certified. All premium luxury hotels of ITC have earned the LEED® (Leadership in Energy and Environmental Design) 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 and enjoys a 5 Star GRIHA rating, the highest national rating for green buildings. The ITC Green Centre in Gurgaon is the highest rated green building in the world. The ITC Green Centre in Manesar has earned the LEED® Platinum certification, as well as the BEE 5 Star rating from the Government of India.
ITC continuously strives to improve processes and systems to minimise its environmental impact as far as possible, create a work environment that is safe, healthy, productive and fair for its employees and proactively engages with its suppliers and partners to maximise value for all stakeholders.
Recognising the need for collective action to shape a shared future that is more sustainable and inclusive, ITC has partnered the Confederation of Indian Industry to set up a Centre of Excellence for Sustainable Development to help build the enterprises of tomorrow. The Centre champions the adoption of sustainability practices by raising awareness, building capacity, enabling thought leadership and recognising excellence.
While ITC has achieved significant milestones in its sustainability journey, the road ahead will continue to be challenging. For companies like ours, deeply rooted in India's soil, we recognise the need to play a much larger role in creating growing societal value for the country given the colossal socio-economic challenges. Therefore, it is not only crucial to build extreme competitiveness in an increasingly global Indian market, but to also ensure that growth strategies foster sustainable growth. Unfortunately, we compete in a market where many have not adopted a broader canvas of contributing to larger societal goals, but are largely focussed on the narrow pursuit of financial competitiveness alone. Therefore, our commitment to building Responsible Competitiveness entails a far larger mobilisation of resources, organisational energy and creativity. Regrettably, markets, as they are structured today, do not prize companies that create larger societal value but continue to predominantly reward financial value creation alone. A paradigm change will take place only when consumers, investors, and civil society make an enlightened choice in favour of products and services of sustainable companies. This will unleash strong market drivers to support corporates that innovate to deliver larger sustainable and inclusive value. Preferential government policy and incentives in favour of such companies will lend even further support to companies that sub-serve larger national priorities.
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. Towards this, significant investments have 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 world-class Indian brands; 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.
This Sustainability Report is once again a dedication of our pledge to contribute to a secure, sustainable and inclusive future. I would like to thank all our stakeholders for their support and encouragement in making this a meaningful journey towards a promising tomorrow.