OL 326-ITC LTD- Milestone One PDF

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ITC LTD: Toward a Triple Bottom Line Performance Armando Salazar Southern New Hampshire University

Introduction of ITC Limited ITC Limited was established in 1910 in Kolkata India and is a diversified conglomerate with businesses comprising of foods, personal care, cigarettes and cigars, branded apparel, education and stationary products and many others (Indian Tobacco Company Limited, 2020). Upon creation, it operated under the name of Imperial Tobacco Company of India Limited. As the company’s ownership progressively Indianized, the name of the company was change to India Tobacco Limited in 1970. The first six decades of the company’s business was primarily devoted to the growth and consideration of the cigarette and leaf- tobacco businesses. In 1974, the company changed their name to ITC Limited. The reason for the name change was an effort to shed the cigarette tag and diversify into non-tobacco goods and services. ITC has been criticized for using direct and indirect advertisements to promote their tobacco products, despite India’s tobacco ban. Some of the criticisms include displaying advertisement billboards and posters, glamourizing cigarette smoking to target youth, using brand variant extensions, point of sale marketing minors by placing cigarettes in close proximity to candy and snacks, and indirectly targeting women. ITC has legally challenged tobacco control laws on two occasions. In 2003, they challenged implementation of the Cigarettes and Other Tobacco Products Act and appealed against prohibition of smoking in public places (Indian Tobacco Company Limited, 2020). In 2016, ITC Limited challenged expansion of Pictorial Health Warnings to 85% in a court case filed with a retailer, farmer, and smoke. They also had to shut down its cigarette factories on two occasions as a response to government initiatives. This was ITC Limited’s primary corporate responsibility issue. Some of ITC’s strengths include establishing multi-specialty hospitals in India. In March 2017, the media reported that ITC was given shareholder approval to explore health care services

(Indian Tobacco Company Limited, 2020). ITC entered into the hospitality sector with hotel business in 1975. ITC chose the hospitality sector for its potential to earn high levels of foreign exchange, creating a demand for tourism, and to generate large-scale direct and indirect employment. ITC also entered the paperboard business in 1979. The main reason for getting involved in other business ventures was to shed their past, controversial issues with tobacco use. Analysis of Social Responsibility ITC Limited biggest revenue comes from the tobacco industry. When the company was first established, it often went against the laws in place surrounding tobacco use and advertisement to youth. Today, they have a compliance plan in place to make sure they are no longer going against the government’s rules and restrictions. The company measures its performance on their “Triple Bottom Line.” This is defined as contributing to building economic, social, and environmental capital toward enhancing societal sustainability (Corporate Social Responsibility Policy, 2021). Some of these efforts include supporting rural development, promoting education, providing preventative healthcare, and creating livelihoods for people in urban and rural India. They are also in compliance with the Tobacco Control Act. This act was signed into law by President Barack Obama on June 22, 2009 (Tobacco Control Act of 2009, 2020). This Act gives the FDA authority to protect public health by regulating tobacco products. These regulations include establishing tobacco products standards, reviewing tobacco products before they hit the market, restricting tobacco product marketing and advertising, and strengthening warning labels. ITC Limited social responsibility has certain gaps in their strategy plan. One gap is the lack of initiatives for sustainable development. This is primarily due to external and internal stakeholders, like the government, that wants to control and enforce policies that foster

sustainable development. The positive impacts to their stakeholders include their stance on encouraging education, providing healthcare, and jobs to the people in India that are in a disadvantage in society. Then negative impacts are only focusing on areas around the company and not expanding to other rural locations that don’t have opportunities. ITC Limited has really evolved since their beginning. At first, they would go against the government and solely relied on the tobacco industry as a way to be successful. This came with huge consequences. They often found themselves in court, which resulted in them being shut down. They had a negative perception from other businesses and the general public that still lingers today. With the expansion of their business ventures, they are realizing that social responsibility is needed, and they want to re-create their image as a good-hearted company. Some of the factors that may have influenced this transition is the Indian Tobacco Ban, The Tobacco Act, and the Master Settlement Agreement, which imposed restrictions on the sale and marketing of cigarettes to youth. Today, I would say that the company is consistent with regard to social responsibility when being compared to others in the industry. The presence of regulation and law associated to protection of environment in India aligns with the company’s societal sustainability efforts. Ethical Decision Making ITC Limited implements their decision-making process through their board of directors. They created two different committees that help with submitting their decisions to the board for final approval. These committees are the CSR and Sustainability committee and the corporate management committee. (Corporate Social Responsibility Policy, 2021). Every year, the CSR and Sustainability Committee creates a CSR plan outlining the CSR programs to be carried out during the financial year and the budget for the proposed plan. The board considers and approves the CSR plan and modifies it if need be. The Corporate Management Committee assigns the task

of implementation of the CSR plan with specified budgets and timeframes. They review the implementation each quarter and issue necessary directions from time to time to ensure orderly and efficient execution. They also provide status updates once every six months to the board. They base the ethical decision-making process around its impact on sustainable growth for their community and make sure to meet all laws and governance set by the nation of India. The only gap is not including all of the nation of India, but I believe in time, they will.

References Indian Tobacco Company Limited. (2020, February 5.) Retrieved from https://tobaccotactics.org/wiki/indian-tobacco-company-limited/...