{"id":11738,"date":"2016-11-04T17:31:11","date_gmt":"2016-11-04T21:31:11","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/how-a-40b-diversified-indian-industrial-conglomerate-is-at-the-forefront-of-dealing-with-climate-change\/"},"modified":"2016-11-04T17:31:11","modified_gmt":"2016-11-04T21:31:11","slug":"itc-40b-diversified-indian-conglomerate-at-the-forefront-of-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/itc-40b-diversified-indian-conglomerate-at-the-forefront-of-climate-change\/","title":{"rendered":"ITC: $40B diversified Indian conglomerate at the forefront of climate change"},"content":{"rendered":"

ITC is one of India largest companies with a $40B market cap and leading positions in Fast-Moving Consumer Goods (FMCG), Hospitality and Paper[1]. India is the world\u2019s third-largest emitter of greenhouse gases and recently committed via INDC to cut its greenhouse gas emissions per unit of GDP by about 35% by 2030 compared to 2005 levels[2].<\/p>\n

Key Climate Change risks for ITC <\/strong><\/p>\n

\"exhibit-1\"<\/a><\/p>\n

Exhibit 1: Illustrative Climate Change risks by Business Sector according to the UN[3]<\/p>\n

The most direct impact of climate change on ITC would be from the INDC commitments. This will result in future regulatory pressure around energy usage and gas emissions<\/em><\/strong>. There will also be effects around changing consumer preferences for sustainable products<\/em>, water scarcity<\/em><\/strong> and the increased likelihood of extreme weather events<\/em><\/strong>. A second order effect will be the increased need for industrial companies like ITC to maintain a social license to operate<\/em><\/strong>[4]<\/p>\n

Given this context, ITC has made several fundamental shifts in its business model to ensure it can deal with climate change and maintain a social license to operate.<\/p>\n

Mitigation Strategies:<\/strong><\/p>\n

Low carbon growth path \u201350% renewable energy share by 2020:\u00a0<\/strong>ITC was one of the early movers in the renewable energy space in India making a public statement about a goal of low carbon growth path. Renewable energy usage in the past 10 years has steadily climbed from 25% to 47.3% today \u2013 well on target to hit the goal of 50% by 2020[5].<\/p>\n

\"exhibit-2\"<\/a><\/p>\n

Exhibit 2: Renewable energy utilization in ITC\u00a0[5]<\/p>\n

Carbon positive primarily through a social afforestation program:<\/strong>In order to ensure a supply of raw pulp for its paper division, ITC has built a unique wasteland development program which enables farmers who own wastelands to grow commercially viable pulpwood plantations . Today ITC\u2019s Afforestation Program covers over 2,26,000 hectares and helped sequester 5,121 KT of CO2 – far above its emission levels.<\/p>\n

This program has helped ITC stay Carbon positive for the last 11 years<\/strong> \u2013 one of the few companies to have such a robust track record.<\/p>\n

\"exhibit-3\"<\/a><\/p>\n

Exhibit 3: GHG emissions\u00a0in ITC\u00a0[5]<\/p>\n

Water positive: <\/strong>ITC is keenly aware of how water availability in a rain-fed nation like India is on a sharp downward slope and this could have catastrophic implications on its raw materials supply chain especially in the food business. Consequently, ITC has an integrated watershed management program \u2013 which has helped it say water positive for the last 14 years.<\/p>\n

Organisation-wide focus on tracking and transparency:<\/strong>In keeping with the principle that one cannot track what is not measured accurately \u2013 there is a organization wide integrated sustainability data management system and ITC publishes an annual sustainability report. ITC limited is the only industrial Company in India to score a perfect 100 on Climate Disclosure Leadership Index (CDLI) disclosure requirements for sustainability[6]<\/p>\n

Adaptation Strategy:<\/strong><\/p>\n

Preparation for adverse weather events:<\/strong> ITC is aware of the increased likelihood of extreme weather events disrupting its supply chain. Significant effort has been made on preparing ITC manufacturing units located in the coastal or river facing area for such events and Business continuity plans made to compensate any interruption of production from these facilities.<\/p>\n

Going forward:<\/strong><\/p>\n

While ITC has done a good job of anticipating how climate change will affect its operations I believe in can do more from a internal perspective. Specifically<\/p>\n

Technology innovation in its manufacturing operations: <\/strong>Most of the strategies that ITC has implemented so far\u00a0are externally focused \u2013 by creating forest, watershed area etc. However, it seems little has been done by ITC to improve internal emission standards etc. On a specific note I think ITC could set targets for greenhouse gas emission reduction targets by business unit keeping in mind growth projections.<\/p>\n

Adopt a \u201cdesign to sustainability\u201d approach[7]: <\/strong>Fundamentally, ITC is a manufacturing company and sells products that are consumed. No visible move has been made by ITC to make its packaging more sustainable. Perhaps, ITC could start using recycled material in its packaging or have incentives for recycling the paperboard they produce.<\/p>\n

Create a chief sustainability officer position: <\/strong>ITC currently has a Board-approved Sustainability Policies with a Sustainability Compliance Review Committee to oversee it. I would recommend to create a strong signal and importantly bring this issue to the fore they create a Chief sustainability officer position that would be on the overall group management board to ensure a sustainability lens on all major decisions of the company.<\/p>\n

What do you think about ITC’s approach to climate change?<\/p>\n

Word count: 745 words<\/p>\n

Sources<\/strong><\/p>\n

[1]http:\/\/www.itcportal.com\/about-itc\/profile\/
\n[2]United Nations Global Compact, U. N. (2011). Adapting for a Green Economy. – https:\/\/www.unglobalcompact.org\/docs\/issues_doc\/Environment\/climate\/C4C_Report_Adapting_for_Green_Economy.pdf
\n[3]http:\/\/www.wri.org\/blog\/2015\/06\/infographic-what-do-your-countrys-emissions-look
\n[4]Ernst & Young (2012). How should business approach carbon neutrality?. – http:\/\/www.ey.com\/Publication\/vwLUAssets\/Carbon_neutrality\/%24FILE\/EY-carbon-neutrality.pdf
\n[5]ITC(2016). Sustainability Report – http:\/\/www.itcportal.com\/sustainability\/sustainability-report-2016\/sustainability-report-2016.pdf
\n[6]CDP(2015). CDP Climate Change Report India Edition – https:\/\/www.cdp.net\/en\/reports\/downloads\/790
\n[7]Mckinsey(2015). How companies can adapt to climate change – http:\/\/www.mckinsey.com\/business-functions\/sustainability-and-resource-productivity\/our-insights\/how-companies-can-adapt-to-climate-change<\/p>\n","protected":false},"excerpt":{"rendered":"

How a $40B Diversified Indian Industrial conglomerate is at the forefront of dealing with climate change by being carbon positive, water positive and using 50% renewable energy.<\/p>\n","protected":false},"author":1931,"featured_media":12203,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-11738","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nITC: $40B diversified Indian conglomerate at the forefront of climate change - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/itc-40b-diversified-indian-conglomerate-at-the-forefront-of-climate-change\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ITC: $40B diversified Indian conglomerate at the forefront of climate change - 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