Interview: Supply chain sustainability driven more by awareness than third party certifications

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In this interview under our ‘Corporate Sustainability Series’, Sanjib Bezbaroa (Head, Corporate Environment Health & Safety at ITC Ltd.) talks about the drivers for sustainability, emission reduction targets and the status of green procurement in ITC.

Sanjib Bezbaroa heads the Corporate Environment Health & Safety department at ITC Ltd. and leads the sustainability initiatives  on the  product and services front, including supply chain, besides being responsible for Sustainability Reporting of the organization.  He is an Electrical Engineer with over 20 years experience in power plant engineering and commissioning, covering both generation as well as transmission & distribution systems. He is also a Chartered Engineer and a Bureau of Energy Efficiency Certified Energy Auditor.

Every organization has a different definition of sustainability involving different aspects (environmental, social, and labor), how does ITC define sustainability in its business construct?

Fundamentally, ITC aims at conducting business with the super ordinate goal of creating societal value for which different strategies are employed: 

  • One is that you create the best value proposition for the customer, which is in any case the traditional way of doing business.
  • Second is focusing on creating sustainable livelihoods. Generally when people talk of sustainability, there is talk about environmental and other social issues such as diversity, child labor, etc but not about the creation of sustainable livelihoods. In a country like ours, where you have such disparity of income and such limited resources to work with, we feel the creation of sustainable livelihoods plays a very important part. 
  • Third is towards creating a positive environmental footprint through efforts aimed at augmenting the fast depleting natural resources that India has.

 

What is the management structure in ITC and where does the sustainability department fit in?

ITC has a Board of Directors, whose primary role is that of trusteeship to protect and enhance shareholder value through strategic supervision. The Board sets strategic goals and seeks accountability. The Board also provides direction and exercises appropriate control to ensure that the Company is managed in a manner that fulfills stakeholders’ aspirations and societal expectations. The Central Management Committee’s (CMC) role is strategic management of the Company’s businesses within Board approved direction / framework.   All business plans are required to be approved by the CMC and sustainability dimension is a necessary component of these plans and is required to be reviewed and approved before the business plans are approved.

There are specialized corporate functions, which provide direction and assistance to businesses in achieving sustainability goals and targets.  They also monitor performance of each business unit and report back to the CMC on these aspects.

How are the carbon reduction targets being set by ITC? Does ITC have any particular carbon reduction targets/sustainability targets for 2010 or for the long term? How much of it has been achieved so far?

Our carbon strategy is as follows:

  • First: By constantly improving upon our specific energy consumption, i.e. amount of output per unit of energy consumed. The product is defined by the customer’s requirements, and after that is defined, we try to do it in the most energy efficient way by benchmarking the specific energy consumption both nationally and internationally
  • Second: By maximizing the renewable energy portfolio for as much of the processes as possible. 31% of our total energy consumption is met from renewable energy sources and we have policies and strategies to ensure that it continuously increases. We are reasonably confident that in 3-4 years time it will be 50%.

Progress on these fronts for each and every unit of ITC is monitored and forms part of the annual report back to the CMC. That is the way we have been working and it has been successful for us. 

In what processes has ITC started to use renewable energy?

Main utilization of renewable energy has been for process power. If you look at the pulp and paper industry, you do have opportunities to use a lot of biomass energy, which we try and maximize. We also have consciously invested large amounts in wind power for our hotels and other factories. Similarly, now we are trying to tap solar sources. While solar will work in some regions, wind would be feasible for others. Identifying the feasibility of such opportunities is part of the support that corporate functions provide to businesses.

ITC claims to be a carbon positive corporation, what are some of the key measures being undertaken for the same?

The strategy of reducing energy and increasing use of renewable energy  has a third dimension to it- carbon sequestration, which is achieved through our social and farm forestry projects. Through our initiatives we are actually doing forestry on land areas that have historically been wasteland, without green cover. These are converted into plantations through interventions at the grassroots level with the help of NGOs, in terms of building the social infrastructure and providing technical know-how.  These serve as carbon sinks, which help us, offset our emissions.

Apart from providing sustainable source of raw materials for our Paperboards business and providing over 40 million person days of employment to marginal sections of society, these plantations sequestered 3695 kilotons  of CO2, during 2009 –10, thereby consolidating our 'Carbon Positive' status –for the 4th year in a row.

How much additional investment was required to put sustainability measures in place?

It is a difficult question because all this is integral to our business process and not a separate activity. As I have said earlier, when any business comes to the CMC for approval of their annual business plan, the sustainability elements have to be built into their business plan. It is part of our business proposition. We do not believe that we will make more money if we do not take care of sustainable livelihoods, and do not take care of creating more environmental capital; it just does not go through.

For example-The new hotel at Gardenia that has come up in Bengaluru, which is the highest platinum rated LEED certified hotel in the world, it, was something that was factored in from the design stage itself. So now if you ask how much more it would have cost if you had not done it is a difficult question to answer.

Do you have any employee educative programs to make them more aware about sustainability measures in the office?

Sustainability for everybody within an organization means different things because everybody has a different role to play. It is not something that is just top driven and left at that. We have elaborate training and awareness programmes on the theme of sustainability for the employees. It is an ongoing process.

A lot of companies now have started adopting supply chain sustainability; does ITC have any programs for Sustainable Sourcing as well?

If you look at our pulp and paper business model, we addressed the issue of sustainable supply chain much before most people even were talking about it. Similarly if you talk of wheat or soya or the other agro commodities that we procure, we have a very long-term equation with the farmers and we use this to try and influence change. We will be looking at doing more work in this area for our other businesses also. It is definitely a part of our business plan and we will be focusing more on this area. 

Does ITC have a Supplier Code of Conduct? Are there any specific criteria being used for vendor selection?

In our opinion the problem of sustainability in India is bit different from what has been traditionally insisted upon by foreign companies sourcing from developing countries.  Close, and in most cases long time working relationships with our vendors allows us to appreciate the barriers that have to be overcome by the various SMEs that form part of our supply chain. We do not entirely believe that their greening / sustainability is ensured by third party certifications and instead follow the route of education and support.

Is there any process or audit that is being done by you to check whether the vendors are actually sourcing their things in a sustainable manner while providing for you?

We have a system of checks that ensure certain aspects of sustainability, such as labor rights, the social elements of it, no employment of child labor, and standards of health and safety. But it is not the entire sustainability story. There is much more to it. If you ask me if there is a system to verify whether a supplier is a 100% on green power, neither it is feasible and nor can I impose such a requirement on a supplier. However, at the same time, we do work with our suppliers to ensure that their energy footprint is reduced and that way while they benefit we also benefit. We provide the managerial expertise and the exposure to knowledge and technical know-how to enable them to make that transition. It is also a cultural issue for somebody to be willing to make these changes and investments. It is a process, which is definitely underway and will be getting more of our attention in the years to come as our internal system becomes stronger and more robust. We will definitely be working more in this area.

Are tools like Risk Assessment/ Life Cycle Assessment being used in your supply chain processes? 

Yes we do. In fact we have formally started the processes of calculating the carbon footprint and Life Cycle Analysis in certain product categories. When you start any initiative, you normally target those issues which you feel would benefit the most and would have a larger impact. Then you try to take it across everything else. On that basis, we have identified product categories; we have carried out the pilot LCAs and developed confidence about the tools that we are going to employ.

In fact, when you look at LCA, it has got to do with supplier sustainability, because when you are looking at the carbon footprint of a product or in terms of any environmental impact, the maximum impact could either be at the transportation stage, at the supply stage or at the production stage, which is what is directly under our control. So by utilizing these tools we will be able to focus on where action needs to be taken, which will yield the maximum benefits.

PSPD division has also joined the GFTN (Global Forest and Trade Network)—what does this entail specifically on sustainable forestry front?

GFTN is a WWF initiative to eliminate illegal logging and improve the management of valuable and threatened forests, while encouraging sustainable forest management practices and minimising the forest footprint of industries trading in or procuring forest goods. ITC’s Paperboards and Specialty Papers business, a pioneer in ECF (Elemental Chlorine Free) technology and the only producer of ozone-bleached pulp in India, is now a member of WWF GFTN. These initiatives will not only provide environment assurance to our customers who exercise their preference for environmentally responsible products, but also strengthen ITC’s green credentials in an emerging carbon sensitive economy.

We believe that industry should support such initiatives and the consumer should be made aware of the advantages of such partnerships. It is also important that the customer recognizes and rewards the manufacturer for such practices because it is often not the most cost effective option. 

Do you have any case studies to showcase where you have helped in increased sustainability in the supply chain?

Yes.  ITC’s Paperboards Mill at Bhadrachalam manufactured over 360,908 tonnes of paperboards in 2008-09, using 532,254 tons of pulpwood, apart from waste paper and some special imported pulp. This pulpwood is sourced largely from renewable plantations in agricultural lands and private wasteland owned by farmers and does not deplete natural forests. We ensure traceability of all the wood used in the manufacturing process and we do not buy wood-based raw materials from unidentified sources. More importantly, the total area brought under forest cover as a result of these initiatives is now around 110,000 hectares besides providing over 48 million person days of employment.

This interview was conducted by Roselin Dey, Editorial Team, India Carbon Outlook.

Author: Roselin Dey