ITC SUSTAINABILITY REPORT 2016 GRI - G4 COMPLIANT, IN ACCORDANCE - COMPREHENSIVE

Over the last few decades, the amount of waste generated has gone up considerably as a direct consequence of increasing population, rapid & unplanned urbanisation and higher consumption levels. Around ^*62 million tonnes of Municipal Solid Waste (MSW) is being generated across urban India every year, with large metros such as Mumbai alone generating over 7000 tonnes a day. However, we as a country are struggling to provide efficient waste management services and adequate infrastructure to attend the increasing quantum of waste, with continued and indiscriminate dumping of waste at open sites. While unavailability of recyclable/reusable waste adds burden on natural resources to meet the fresh demand, inappropriately managed waste dumped at landfill sites also cause contamination on land, water and air, which eventually has an adverse effect on the quality of life. The recently notified Solid Waste Management (SWM) Rules, 2016 and Plastic Waste Management (PWM) Rules, 2016 come as an effort towards addressing the issue of waste management, which has assumed critical dimension in our country.

As per several reputed studies, MSW typically consists of organic compostable matter (40% by weight), ash, stones & debris (40%), glass, paper, metals, textile & leather (13%) and plastic wastes (7%). A 2016 Report by Federation of Indian Chamber of Commerce and Industries (FICCI) on the Plastic Industry states plastic consumption in India as 12.8 million tons per annum, which translates to generation of approximately 5 million tons of plastic wastes per annum. Plastics today are an integral part of modern life and have made it possible for the benefits of development to reach the poorest and needy. Their economic and environmental utility in providing insulation benefits, protecting product integrity when used as packaging, etc. have been transformational and gaps in the MSW management system should not colour public perception about the utility of plastics. Plastic wastes, although smaller in overall composition, have tended to attract greater public concern due to their visibility. In most municipalities, contractors engaged in collection and transportation are paid for the volume of waste dumped at the landfill sites, which in a sense incentivises landfilling and discourages waste segregation.

PWM Rules 2016 adopt the concept of Extended Producer Responsibility (EPR) for plastic packaging and Producers, Importers and Brand Owners who introduce products with plastic packaging in the market are now responsible for working out a waste collection system through their own distribution channel or through the local body concerned. ITC believes that the approach to address the issue of collection, segregation and management of plastic waste needs to be integrated with the overall MSW management system. Such an effort will avoid duplication of systems not only between MSW and plastic waste management streams but also between different Producers, Importers and Brand Owners, which, otherwise, will significantly add to the existing challenges of cost-effectiveness of MSW management system. Also, in the Indian context, where the unorganised sector has significant scale and contributes for 2/3rd of the Fast Moving Consumer Goods (FMCG) sector volumes of post-consumer packaging, effectiveness of an EPR approach modelled on an isolated waste collection system is unlikely to be effective. The key to success of a comprehensive MSW management system is the ability to collect and segregate different post-consumer waste streams, which is fundamental to achieve value realization from each waste stream and prevent littering/landfilling.

Within the boundary of ITC Units, focussed efforts are made towards resource conservation by minimising waste generation and improving efficiencies on waste segregation &recycling/reuse. ITC also has direct experience on MSW management as its Well-being out of Waste (WOW) program, has been operating as a CSR initiative for over a decade.

^*Report of the Task Force on Waste to Energy, Planning Commission

WOW initiative is focused on creating scalable solutions to collect, segregate & recycle/reuse different streams of municipal solid waste, and providing sustainable livelihoods for people working as rag pickers.

Based on learning from own experience, ITC has crafted the following approach on the aspect of waste management.

Waste Generation

In 2015-16, ITC Units generated 745149 tonnes of waste (7,91,227 tonnes in 2014-15). This 5.8% decrease in total waste generated over last year was primarily due to use of coal with low ash content, which led to reduction in fly ash in Bhadrachalam Unit of the Paperboards and Specialty Papers Division. This Unit, which accounted for 79.8% of the total waste generated in ITC during 2015-16, reported a decrease of 5.7% in waste generation as compared to previous reporting period.

Business-wise break-up of wastes generated in ITC:

In order to continually improve performance on resource conservation, all ITC Units have developed systems to track and monitor the specific waste generation (waste generated per unit of product/ service). Considering the three Units of Paperboards and Specialty Papers Business contributed around 90% of the total waste generated by ITC (given in the table below) specific focus has been laid on monitoring the performance of these Units. Specific waste generation of these Units are as follows:

The significant variation in the specific waste generation as indicated above is primarily due to the ash quantity owing to the availability of type of fuel for a particular unit.

Historically, due to limited options for recycling of lime sludge (a waste generated from chemical recovery process in Bhadrachalam Unit), some amount was being utilised by cement plants, with the major quantity stored in lagoons within the premises, incorporating adequate precautions to prevent adverse impacts on soil and ground water. In 2014-15, the Unit tied up with cement plants for disposal of lime sludge and post disposal of 14,000 tonnes through this arrangement, around 2.5 lac tonnes of lime sludge was estimated to be still accumulated in these lagoons. In 2015-16, another 67,000 tonnes of waste was recycled through cement plants. The balance quantity in the lagoons is estimated to be 1.8 lac tonnes and it is expected that the entire amount of accumulated lime sludge will be disposed within the next 3 years. Similarly, around 4,900 tonnes of historically generated mixed plastic waste, generated during pulp recovery from waste paper, was stored in-house at Kovai Unit and was disposed to cement plants during the current reporting period. As on date, there is no onsite storage of plastic waste and the Unit has tied up with cement plants for all such plastic wastes generated in the Unit.

Segregation of Waste and its Destination

Of the total waste generated by ITC in 2015-16, only 3.2% by weight can be categorised as hazardous waste as per Indian statues. 91.7% of this hazardous waste was recycled by authorised external agencies, and the balance 8.3% was disposed of or stored completely in accordance with applicable statutes. All ITC Units have established systems and procedures to verify the relevant authorisations and licenses of agencies used for transporting, recycling or disposing the hazardous wastes, in compliance with applicable regulations and norms. Further, Corporate EHS periodically verifies the compliance in each of the ITC Units. During 2015-16, apart from hazardous wastes transported to external treatment sites by authorised transport agencies as applicable, no other hazardous wastes were transported between locations owned or managed by the organisation.

The table below depicts the final destinations of the total hazardous wastes generated during 2015-16:

During 2015-16, out of the total non-hazardous waste generated in ITC Units, 99.91% waste was reused/ recycled. The details of the destination for the major waste categories, which contributed to more than 85% of the total non-hazardous waste generated in ITC units in 2015-16, are given below:

Waste Recycling

ITC strives to maximise resource efficiency encouraging all its Units to take steps to eliminate the creation of waste in the first place thereby reducing waste generation. Since generation of waste cannot be completely eliminated due to limitations in processes and technology, all ITC Businesses/ Units endeavour to work towards 100% recycling of generated waste. 'Segregation at source' along with focused attention on identifying and tracking of all waste streams till its final disposal have helped us to recycle 99.7% of the total waste generated within the units, during 2015-16.

Units that recycled more than 99% of generated waste

Waste Used as Raw Materials

To further expand the company's waste recycling footprint, the Paperboards and Specialty Paper Units at Kovai and Bhadrachalam use post-consumer waste as raw materials. Efforts at ITC Units to recycle the entire waste generated along with utilisation of externally generated waste paper as a source of fibre in the above mentioned Paperboards and Specialty Paper Units, have helped the company to maintain its solid waste recycling positive status for the 9th consecutive year (refer the table below).

ITC has also been collaborating with local municipal agencies to work on sustainable management of community waste. "Wealth Out of Waste (WOW)", a recycling programme initiated in April 2007 by the Paperboards & Specialty Papers business of ITC, has evolved into a corporate level program with scope enhanced to "Well-being out of waste".

The WOW movement today extends to 400 municipal wards of Hyderabad, Chennai, Bengaluru, Coimbatore and some towns of Telangana covering over 5 million citizens and now manages municipal solid wastes for over 11,00,000 households. The Programme creates sustainable livelihood for 10,000 rag pickers and waste collectors by propagating source segregation at each of the households. Similar programmes are operational in 9 districts of Saharanpur, Hooghly, Kolkata, Munger, Guntur, Madurai, Pune, Thiruvallur and Haridwar also. The primary focus is on door-to-door collection of household waste, segregation at site in order to re-cycle and minimise the load at municipal landfills.

ITC intends to continually expand its coverage and include its supply chain members into the reporting boundary. With this intent, ITC started accounting for the waste generated from the operations of exclusive third party manufacturing (TPM) Units catering to the notebook segment of ITC's Education and Stationery Product Business as well as ATC Limited, ITC's associate company from 2013-14. TPM Units for Cigarette Business have also been included in the reporting boundary from the year 2014-15. Performance of these Units is detailed below.

In context of PWM Rules 2016 and the adopted concept of EPR on plastic packaging, Industry has a critical role to play in providing a holistic solution to MSW management. An effective EPR model needs to be complemented with a national level accounting of plastic packaging introduced into the market by a Producer, Importer or Brand Owner, against which the integrated MSW and plastic waste management programs should be rolled out to offset the plastic packaging used against the plastic wastes recycled or used for energy recovery as per approved methodologies, in a phased manner.

With learning from our direct experience on MSW management, we strongly believe that the following elements are essential for a comprehensive solution to MSW management:

a) Public-Private Partnership (PPP) programs on MSW management should be rolled out across the country, initially in urban centres, that integrates MSW and plastic wastes management. These PPPs must be driven to primarily meet the interests of the unorganized waste picker communities and all incomes generated should be channelized towards betterment of their livelihoods.

b) A significant portion of plastic wastes in India constitute multi-layered laminates and light weight plastics, which represent the visible part of plastic wastes getting littered or ending up in landfills, as low realization from these categories of plastics do not make it viable for waste pickers to collect and segregate them. Energy recovery from these plastic wastes can be achieved by using them as an alternative fuel (replacing coal/coke) in sectors such as the cement, steel and power. While use in the cement sector is an established practice, this end-of-life treatment option will become financially viable and sustainable only when these plastic wastes also obtain value realization based on their quality and calorific value.

c) Wet organic waste should be processed for production of bio-gas, with manure as a by-product. By and large, municipal wet organic waste in India remains under-exploited barring some isolated small scale efforts at composting or gasification. We are convinced that the technology for large scale gasification of these wastes for conversion to fuel is matured and the business model is viable. Solid residues, post gasification of wet organic wastes also serve as manure which creates one more potential revenue stream, thereby improving financial viability and independence of the integrated model.

d) Land, transportation and other infrastructure support should be provided by Urban Local Bodies for collection, sorting and pre-processing of different waste categories.

e) Behavioural change at the individual waste generator level for waste segregation at source requires sustained engagement and regulatory backing.

While Industry can facilitate setting up of MSW management systems through capacity building, knowledge sharing and initial set-up support, the system itself must operate on a business for profit model, with all value created going to the stakeholders running the system. In our opinion, financial viability of integrated MSW and plastic wastes management models is what will drive its uptake across the country and determine its scalability.

ITC is fine-tuning its strategy for tackling the issue of post-consumer waste management through collaboration with government, municipal corporations, NGOs, communities and other stakeholders within a boundary where significant influence can be exercised.