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Corporate Governance of ITC

Corporate Governance of ITC

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Published by: saggy1188 on Mar 06, 2010
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ITC's Vision and Strategy
It is a great pleasure to present ITC’s fifth Sustainability Report.This Report, independently verified by Ernst & Young, is a transparent and voluntarydisclosure of ITC’s endeavours to achieve higher levels of Triple Bottom Line performance as our contribution to creating an inclusive and sustainable future for India.ITC has forged unique business models that synergise longterm shareholder value creation with the superordinate purpose of enhancing societal capital.India mirrors the world in the myriad challenges it faces on account of the growingincome inequities and environmental degradation. Economic models that have led businesses, over many decades, to focus only on the uni-dimensional objective of creating financial value, with scant attention to the depletion of natural resources and theincreasing disparities in incomes, have led to an imminent crisis that has the potential toseriously destabilise growth and progress. Global warming is a clear manifestation of thisreality. Widespread acts of violence and social unrest arising out of the growingmarginalisation of large populations is yet another expression of this crisis. Asresponsible corporates, we cannot ignore these unfolding threats which can seriouslyimpact the future of our businesses, the economy and indeed the nation. It is in our enlightened self-interest to take proactive action, and to take it now.Whilst global challenges of this dimension can be met only by all sections of society joining and aligning forces, we strongly believe that business and industry are uniquely positioned to make an invaluable contribution. Private enterprises have created assets andfacilities that constitute a front line engagement with civil society. Their physical presence in communities around their catchments gives them an opportunity to directlyengage in synergistic business activities that can create livelihoods and add to preservation of natural capital. More than financial capital, private enterprises possess thecrucial managerial capability to ensure efficient delivery of social projects at lower incremental costs.
ITC has forged unique business models that synergise long term shareholder valuecreation with the superordinate purpose of enhancing societal capital. Accordingly, wemeasure our accomplishments not only in terms of financial performance but also by thetransformation we have consciously triggered to augment the natural and societal capitalof the nation. This aspiration to achieve Triple Bottom Line benchmarks springs from our vision to contribute to the national goal of sustainable and inclusive growth. Thiscommitment finds expression in our sustainable development philosophy, whichrecognises the need to not only preserve but also enrich precious environmental resourceswhile providing a safe and healthy workplace for our employees.ITC’s globally acknowledged e-Choupal initiative enhances farm productivity, providesmarket linkages and enables the creation of a virtual co-operative that empowers smalland marginal farmers through higher incomes and freedom from exploitativeintermediaries. Today, 6500 e-Choupals covering 40,000 villages benefit over 4 millionfarmers. Similarly, our Social Forestry initiative has greened over 80,000 hectares andcreated cumulative employment of 35 million man days. At the same time, these plantations provide a reliable source of wood pulp for the long term competitiveness andsustainability of our Paper business.Our valued stakeholders will be happy to know that for six years in a row, ITC has been a‘Water Positive’ Company, and for three consecutive years todate, we have sustained our ‘Carbon Positive’ status, notwithstanding the large growth in our businesses. Today, wehave generated three times more freshwater harvesting potential than what we consumeand sequester almost twice the amount of carbon we emit. This year, we have alsoachieved the 100% benchmark in recycling solid waste in several of our operations. Thismakes us the only company in the world, of our size and diversity, to have achieved thesethree milestones. We also draw immense pride that ITC’s businesses today help ingenerating more than 5 million livelihoods across value chains that touch the lives of many who live at the margin. Over the last three years, Total Shareholder Returns,measured in terms of increase in market capitalisation and dividends, grew at acompound rate of 34% per annum, placing ITC among the foremost in the country interms of efficiency in servicing financial capital.Our strategy to embed a direct linkage between business objectives and societal goals hasreceived worldwide acclaim, be it in the form of awards (listed elsewhere in this Report)or in the recognition ITC has received as an exemplar in the implementation of sustainable development practices. We believe our efforts to facilitate the transformationof Rural India by empowering small and marginal farmers and by improving the qualityof life of rural communities, particularly women and children, will contribute toachieving many of the Millennium Development Goals enunciated by the United Nations.ITC’s ‘Mission Sunehra Kal’, which encompasses our sustainable developmentinitiatives, will continue to provide thrust to the three identified areas of intervention,namely, (i) natural resource management, which includes wasteland, watershed andagriculture development; (ii) sustainable livelihoods, comprising genetic improvement inlivestock and economic empowerment of women; and (iii) community development, withfocus on primary education, health and sanitation.
Recognising the need to encourage more corporates to embrace sustainability, providethought leadership and build capacity, ITC together with the Confederation of IndianIndustry, has launched the CII-ITC Centre of Excellence for Sustainable Development.The Centre seeks to address the institutional void in developing the requisite capabilityamong Indian industry to pursue sustainability goals. This year, ITC joined the United Nations Global Compact, the world’s largest global corporate citizenship initiative and Iam happy to state that our initiatives and practices support the principles of the GlobalCompact.In an increasingly connected and global world, stakeholders including consumers andinvestors, have raised the bar of expectation from corporates not only in terms of world-class quality of products and services, but also in terms of their response to issues of ethics, transparency and sustainability concerns.The cornerstones of ITC's governance philosophy are trusteeship, transparency,empowerment and accountability, control and ethical corporate citizenship.The cornerstones of ITC’s governance philosophy are trusteeship, transparency,empowerment and accountability, control and ethical corporate citizenship. We believe insetting exemplary standards of ethical behaviour, both internally within the organisation,as well as in external relationships. In addition, given the primacy of the consumer in our  business strategies, ITC has invested significantly in cutting edge R&D, continuoustechnology upgradation, intensive consumer engagements to gain insights and a relentlessfocus on quality to build trusted consumer brands which stand among the ‘best in class’.These will not only enhance the competitiveness of our businesses, but also create strongfoundations for a secure and sustainable future for the Company.We believe that we must lead by example, and therefore, are constantly engaging withstakeholders and communities in India and abroad to help shape a larger SustainabilityAgenda for Business. Last year, at the Annual General Meeting of the Company, I had proposed the creation of an institutional framework to develop, measure and rate the CSR impact made by companies (see AGM Speech 2007 at www.itcportal.com). This wouldnot only encourage transparent sustainability reporting, but would also create a visiblerating symbol in the form of ‘Trustmarks’ which would enable consumers to make a preferred choice for the products and services of companies that have put in placemeaningful corporate action for social development. Such a strong and positive marketresponse to corporate sustainability practices will encourage more and more companies to join the movement. I am happy to see a concerted action by many organisations tomainstream sustainability practices through voluntary guidelines, creation of environmental, social and governance ratings and through the institution of awards torecognise such efforts.ITC’s Sustainability journey has inspired us to renew our commitment to consciouslydirect the collective endeavours of our employees across all businesses, functions andlocations to continuously improve sustainability practices to ultimately attain and exceedglobal standards.

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