CASE STUDY 1 - BUSINESS ETHICS AND

CSR CASE STUDY ON ITC

Abstract

ITC is a sizable conglomerate with operations in hotels, speciality papers, apparel, foods, tobacco products,
and other industries. It is founded in India. The case addresses the company's sustainability activities. The
business adhered to the Triple Bottom Line principle, which contends that a company's performance should be
evaluated not just in terms of its financial performance but also in terms of its environmental and social
performance. Some of ITC's environmental and social programmes are described in the lawsuit. A few of the
accusations levelled at the business' sustainability measures are also mentioned in the case

Company Background

ITC is one of India's foremost private sector companies with a market capitalisation of over US $ 33
billion and a turnover of US $ 7 billion.
ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable
Companies by Forbes magazine, among India's Most Respected Companies by Business World and
among India's Most Valuable Companies by Business Today.
Its diversified business includes four segments: Fast Moving Consumer Goods (FMCG), Hotels,
Paperboards, Paper & Packaging and Agri-Business
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-
Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care,
Stationery, Safety Matches and other FMCG products.
ITC was incorporated on August 24, 1910, under the name Imperial Tobacco Company of India Limited.
As the Company's ownership progressively Indianised, the name of the Company was changed from
Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then
toI.T.C. Limited in 1974.
In recognition of the Company's multi-business portfolio encompassing a wide range of businesses -
Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers,
Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care.
The full stops in the Company's name were removed effective September 18, 2001. The Company now
stands rechristened 'ITC Limited.

Aim
To learn about the environmental and community initiatives undertaken by ITC.
To know about some of the criticisms against ITC and the company's responses to these criticisms.
To understand the triple bottom line philosophy.

Introduction

Ethics in philosophy is the study and evaluation of human conduct in the light of moral principles or it is the
inner-guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then
decide what is the “right” or appropriate way to behave.

“Business Ethics” can be defined as the critical, structured examination of how people & institutions should
behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of
self-interest, or (for firms) profits, when the actions of individuals or firms affect others or it is a specialized
study of moral right and wrong. It concentrates on moral standards as they apply particularly to business
policies, institutions, and behaviour.
"Business Ethics is the moral standards which guide the running and transactions of businesses". - Malcolm
Evans
 BUSINESS ETHICS AND CSR
CASE STUDY ON ITC

Business Ethics Philosophy of ITC

This source of motivation is described as "a dedication beyond the market" by ITC Chairman Y.C.
Deveshwar. According to him: "ITC thinks the drive to sustain rising shareholder value comes from its desire
to produce lasting benefit for the country. ITC puts this principle into effect by actively promoting the
competitiveness of the larger value chain, of which it is a member, as well as by pushing each of its businesses
toward global competitiveness."

ITC has a history of collaborating with communities and governmental organisations to improve farm
production and the rural resource base as corporate citizens with long-standing links in rural India. ITC's
pledges to agricultural R&D and knowledge exchange have touched on key components of competitiveness,
including effective farming methods and water and soil management.
ITC is dedicated to a national agenda that aims to increase agricultural productivity and social inclusion in the
rural economy. ITC thinks that market-linked solutions and innovations are more efficient and long-lasting
than capital-intensive techniques because of the urgency and size of these responsibilities.

Steps taken by ITC in favour of Business Ethics

Economic

A broad range of businesses, including FMCG (Fast Moving Consumer Goods), paperboards and
packaging, agriculture and food, lodging, and information technology.
A market capitalization of more than US$ 18 billion and a turnover of more than US$ 5 billion.
Over the past five years, the compound annual growth rate of total shareholder returns—measured in
terms of the growth in market capitalization and dividends—has been over 24%.
The FMCG industry supports the market reach, technology, and competitiveness of more than 170 small
and medium-sized businesses.
The ITC Group employs more than 26,000 employees directly.

Environmental

ITC has been "Water Positive" for seven years in a run (providing two times more potential for rainwater
collecting than ITC's net consumption), "Carbon Positive" for four years in a row (sequestering/storing
twice the amount of CO2 that the company emits).
Positive solid waste recycling (more solid waste is reused or recycled than is produced).
Every management system in the ITC for the environment, health, and safety complies with international
standards.

Scoial

Over 5 million people are employed by ITC's enterprises, which also provide the world's largest rural
digital infrastructure—the E-choupal initiatives—to over 4 million farmers.
ITC's watershed development effort supplies essential water to about 46,000 hectares of drylands and
moisture-stressed areas, greening nearly 96,000 hectares and generating an estimated 43 million person-
days of work for the underprivileged.
Among ITC's sustainable community development projects are programmes for integrated animal
husbandry, additional education, and women's empowerment.

E-Choupal

Choupal, which translates to "village gathering place" in Hindi, stands for "electronic" in this context,
making it a village meeting place on an electronic platform.
 BUSINESS ETHICS AND CSR
CASE STUDY ON ITC

It is a virtual marketplace where suppliers and buyers meet to conduct business.

E-Choupal services

Relevant & Real-time Information

Commodity prices, Local Weather, News
Customized Knowledge
Farm Management, Risk Management
Supply Chain for Farm Inputs
Screened for Quality, Demand Aggregation for Competitive Prices & Efficient Logistics
Direct Marketing Channel
Lower Transaction Costs, Better Value through Traceability
Products access at doorstep and at reasonable prices

E-Choupal Now Next 5 Years

States Covered 10 15

Villages Covered 40,000 1,00,000

No. of E-Choupals 6,500 20,000

Farmers e-empowered 4 million 10 million

Table 1.1 Future Plans

E-Waste

IT E-Waste is a subset of E-Waste and covers the following IT equipment.

Category Items

Computers Server / Desktop computer (CPU, Monitor, Keyboard and Mouse), Laptop, Notebook etc.

Printer & Accessories Printer, Scanner, Printer Cartridge, Toner, etc or similar items

Network Equipment Routers, Switches, Patch panel, Modem, Converter, VSAT equipments, etc

IT Accessories TV Tuner box, Floppy, CD and DVD, Pen Drive, External Hard disk, etc.

Associated Electrical Items Power cable, Data cable, UPS, etc or similar items

Table 1.2 ITC list of items under IT equipment

 BUSINESS ETHICS AND CSR
CASE STUDY ON ITC

ITC E-waste policy

All IT assets must have their lifecycles, from purchase to disposal, handled in a way that complies with
responsible environmental standards, as described in the IT E-Waste guidelines.

Extending the usable life of IT assets to delay/decrease the formation of E-Waste;

Responsible disposal processes adhering to legal standards and best practises; and
Preferential dealing with IT providers with strong E-Waste management processes

ITC's EHS Policy

The goal of ITC's EHS policy is to: • Contribute to sustainable development by establishing and enforcing
environmental standards that have undergone scientific testing and adhere to all applicable laws, regulations,
and codes of practice.

To consider the environment, occupational health, and safety while making plans and decisions.
To provide the right training and information dissemination so that all staff members may take personal
responsibility for the environment, health, and safety, put best practices into effect, and collaborate to
foster a culture of continuous improvement.
To instil in each employee a sense of responsibility for their own safety as well as the safety of everyone
else who might be impacted by their activities.
To offer and maintain working environments that are secure for staff members, guests, and contractors on
the company's property.
To make sure that all substances and materials that are deemed dangerous to human health and the
environment are handled, stored, used, and disposed of safely.
To lessen waste, preserve energy, and encourage material recycling whenever possible.
• To establish and put into place a system of recurring EHS audits to ensure adherence to the established
policy, benchmarked standards, and requirements of applicable laws, regulations, and codes of practice.
To proactively share information with business partners so that the value chain, of which ITC is a part,
may adopt top-notch EHS standards.

The ITC's way

ITC is a board-managed, professional company dedicated to building long-lasting value for the nation and its
shareholders. It has a strong organisational culture that is built in its fundamental beliefs in empowerment and
respect for others. Its corporate governance policies and systems are excellent, supporting its idea of creating
value across the board.

Corporate strategies of ITC includes:

Develop a portfolio of world-class companies that best combines organisational capabilities with
opportunities in home and international markets to create various drivers of growth.
Keep paying attention to the chosen portfolio of FMCG, hotels, paper, paperboards & packaging,
agribusiness, and IT.
Comprehensively compare each company's health based on its market position, profitability, and internal
vitality.
Ensure that each of its enterprises is of the highest calibre and competitive on a global scale.
Boost the portfolio's ability to compete through synergies created by combining the numerous talents and
skills found across ITC's various companies.
Establish distributed leadership inside the organisation by supporting each business's strong and well-
focused senior management teams.
 BUSINESS ETHICS AND CSR
CASE STUDY ON ITC

ITC's Vision and Mission

Vision :- Sustain ITC's position as one of India's most valuable corporations through world-class
performance, creating growing value for the Indian economy and the Company’s stakeholders.
Mission :- To enhance the wealth-generating capability of the enterprise in a globalising environment,
delivering superior and sustainable stakeholder value.
Core values :- ITC's Core Values are aimed at developing a customer-focused, high-performance
organisation which creates value for all its stakeholders: Trusteeship, customer focus, respect for people,
excellence, innovation, and national orientation.

Global Awards received by ITC for Business Ethics

ITC continuously works to compare its goods, services, and procedures to international norms. The Company
has received accolades on a national and worldwide level for its pursuit of excellence.

Over the years, ITC Chairman Y C Deveshwar has won a number of awards. Among them are noteworthy:

Year Award

The Padma Bhushan, one of the highest civilian awards in the country by the
2011 Government of India in recognition of his distinguished service of a high order to
the Nation.

2010 The U.S.-India Business Council (USIBC) Award for Global Leadership.

SAM/SPG Sustainability Leadership Award conferred at the International

2007
Sustainability Leadership Symposium, Zurich.

Business Person of the Year from UK Trade & Investment, the UK Government
2006
organisation that supports overseas businesses in that country.

2006 Inducted into the `Hall of Pride' by the 93rd Indian Science Congress.

2005 Honoured with the Teacher's Lifetime Achievement Award.

Manager Entrepreneur of the Year from Ernst & Young. 

2001 Retail Visionary of the Year from Images, India's only fashion and retail trade
magazine.

1998 Honorary Fellowship from the All India Management Association

1996 Distinguished Alumni Award from IIT, Delhi.

1994 Marketing Man of the Year from A&M, the leading marketing magazine.

1986 Meridien Hotelier of the Year.

Table 1.3 Honors and Awards received by ITC

 BUSINESS ETHICS AND CSR
CASE STUDY ON ITC

Criticism

Regarding a few of its sustainability projects, ITC received criticism as well. Some detractors claim that ITC's
sustainability activities are merely a part of its strategy to minimise the fact that it is a firm that harms people's
health because its primary businesses are cigarettes and leaf tobacco, both of which are harmful to human
health.

Conclusion

Over the years, the aforementioned company has carried out a number of CSR activities that have received
praise from all over the world. The case examines ITC's CSR initiatives and emphasises its strategy. Many
diverse policies, E-choupal, and the company's innovative methods and significant investments to reach the
"triple bottom line" are mentioned.

ITC has been following its code of conduct, business principles, and values religiously and should
continue to do so.
ITC has violated laws a couple of times, so they should apply appropriate checks and measures to make
sure this type of incidence remains relatively low or none.
ITC's main business is of tobacco, which is a harmful substance so they should try to open more areas of
revenue.

Reference

Singh, Rana Satyamev., Singh, Shubham Rajan., (2020) "Business Ethics". (21-09-2022)
Khattri, Shanu (2020). "Business Ethics and CSR case study on ITC". (21-09-2022)