India's Best Companies for CSR 2014: ITC

CSR : Here's how ITC's social outreach programme works

It is rare to find the top boss of a large enterprise being intimately involved with its sustainability initiatives. That's precisely where ITCBSE 2.27 % chairman YC Deveshwar differs from several other bosses of India Inc. He is not just hands on with the conglomerate's social projects but personally champions many of them.
Little wonder that the consumer goods-cigarette-hospitality firm's social investments have won plenty of accolades. The company has been able to generate sustainable livelihood opportunities for around 6 million people through its CSR initiatives. ITC has also achieved the unique global distinction of being carbon positive for nine successive years, water positive for 12 consecutive years and solid waste recycling positive for the last seven years.
The biggest reason for ITC's CSR success is the way almost all the major sustainability initiatives have been wedded to the company's core business, either providing an input source for a business or backward integration. As a result, divisional chief executives and their teams lead each of the initiatives, making them something more than just another CSR programme.
For instance, the famed e-Choupal initiative led by the agri-business division is a major sourcing base for the company's packaged food and FMCG business, while its social forestry programme supports the paper and paperboard business. ITC has, in the last few years, undertaken massive animal husbandry initiatives covering ten lakh milch animals which will form the base for the proposed foray into the dairy business early next year.

There's more to ITC's CSR initiatives than these backward linkages. In the last few years, the company has spent considerable money on developing renewable energy infrastructure. And now, renewable energy meets almost 38% of ITC's total energy requirements which is indeed remarkable considering the huge manufacturing base and hotels. The target is to increase this to 50% over the next five years. All the premium luxury hotels are certified green buildings making ITC the greenest luxury hotel chain in the world.
While addressing the company's annual general meeting in July, Deveshwar had said ITC's FMCG brands have anchored the development of competitive value chains benefitting some of the poorest regions of the country. "In conjunction with the company's social investment programme for integrated rural development, these brands have enabled the empowerment of millions of disadvantaged in India's villages by generating sustainable livelihoods' he said

The non-cigarette FMCG brands currently have an annual cumulative turnover of over 10,000 crore and it is Deveshwar's belief that this integrated rural approach will play a vital role in making ITC the country's largest non-cigarette FMCG firm. 

The most popular of ITC's CSR initiatives has been the Choupal programme, which has empowered farmers, raised rural income and developed the rural ecosystem. Farmers are provided with critical information and relevant knowledge on farm productivity, prices and markets through the e-Choupal digital infrastructure and also access to quality inputs for better productivity. Farmers are given training and the company has set up integrated rural service hubs called Choupal Saagars which offer multiple services under one roof. These include services such as procurement and storage, a store-front for agricultural equipment and personal consumption products, insurance, pharmacy and fuel station.

ITC's agri-business CEO S Sivakumar says that taken together, the e-Choupal programmes have had a transformational impact in many areas of rural India now that it covers 40,000 villages benefitting four million farmers. "The initiative has enabled farmers to raise productivity levels and income. There is a visible development in the e-Choupal villages with rising purchasing power, as well as infrastructure development arising out of increased economic activity," he said.

Similarly, ITC's social and farm forestry covers over 1.6 lakh hectares and has provided over 70 million man-days of employment to marginalised farmers and tribals whose wasteland was converted for pulpwood plantation. While ITCBSE 2.27 % has invested in R&D to create clonal saplings which would be disease resistant and grow much faster creating a dedicated supply base for its paper and paperboard business, the growers are also free to sell to the highest bidder in the open market.

ITC has covered 1.61 lakh hectares for soil & moisture conservation benefiting over 1.3 lakh people. ITC's livestock development programme in over 10,000 villages in eight states aims to boost milk productivity and provide additional income for farmers laying the foundation for the dairy business. "We have set up cattle development centres which provide the farmers an integrated package comprising artificial insemination, pre and post-natal care, healthcare and nutrition," said Sivakumar.

The company has created sustainable livelihoods for over 40,000 rural women as part of its sustainable livelihood and social empowerment programmes either through micro-enterprises, or assistance with loans to pursue income generating activities, including rolling incense sticks for its agarbatti business. ITC is also working big on waste recycling which is implemented by its paperboards and specialty papers division to focus on 'reduce-reuserecycle' approach to protect and restore the environment. The programme ultimately provides cost competitive raw material to several industries such as the paperboards and paper and has led to a cascading effect on improving the income of rag-pickers and municipal workers.
ITC'S CSR SPENDS
2012: Rs 58 crore 2013: Rs 78 crore 2014: Rs 107 crore
CSR SPENDS AS A PERCENTAGE OF AVERAGE NET PROFIT
2012: Rs 58 crore 2013: Rs 78 crore 2014: Rs 107 crore
CSR SPENDS AS A PERCENTAGE OF AVERAGE NET PROFIT

2012: 0.96% 2013:1.06% 2014: 1.2%
Source: ITC Sustainability Report 2014

By Writankar Mukherjee, ET Bureau | 5 Dec, 2014, 05.08AM IST