ITC Limited’s rising water consumption presents a significant challenge to its sustainability commitments, highlighting the need for innovative strategies to reconcile its growth objectives with resource conservation goals.
ITC Limited, a front-runner in sustainability among Indian conglomerates, finds itself grappling with a challenging predicament. While its reputation for embedding environmental, social, and governance (ESG) practices into its business model is exemplary, recent data brings attention to a rising trend in water consumption. Set against the backdrop of India’s stark resource scarcity, this trend warrants a critical analysis.
This report delves into ITC’s water consumption patterns, evaluating them in light of the company’s established sustainability achievements, ambitious future goals, and the broader context of India’s resource constraints. As ITC’s progress on this front could set a precedent for corporations nationwide, this analysis is of vital importance.
ITC Limited’s ESG Practices
ITC Limited, one of India’s leading multinational conglomerates, is well recognized for its commitment to environmental, social, and governance (ESG) practices. These practices have been seamlessly integrated into its diverse business operations. However, a critical evaluation of the company’s recent water consumption patterns reveals a possible conflict with its sustainability objectives.
India’s Resource Challenge: The Context of ITC’s Operations
India, despite hosting nearly 18% of the world’s population, struggles with a significantly smaller share of global natural resources. The country only possesses 2% of the world’s land mass, 4% of freshwater resources, and 2% of forest resources.
This disproportionate distribution puts a pressing demand for efficient and equitable resource consumption. Such a context becomes particularly significant for corporations like ITC, which have the dual responsibility of managing their own growth and setting an example for responsible resource utilization.
Significant Increases in Water Withdrawal
Surface and Groundwater Dependency
ITC, which sustained ‘AA’ rating by MSCI for the fifth consecutive year, primary sources of water are surface water and groundwater, both of which saw an increase in FY 2022-23. Surface water withdrawal rose by 0.74%, and groundwater withdrawal went up by 1.85%.
Third-Party Water: A Stark Spike
A significant concern arises from the sharp 35.71% rise in the use of third-party water, suggesting an escalating dependency that may pose sustainability issues in the long term.
ITC’s Sustainability Journey: Achievements and Challenges
Despite these concerns, ITC boasts an impressive record of sustainability achievements. The company that retained its CDP score of ‘A-‘ (Leadership Level) for climate change and water security for the second consecutive year, has the unique distinction of being the only enterprise of its size worldwide to sustain carbon-positive, water-positive, and solid waste recycling-positive statuses. Most notably, it has maintained its water-positive status for 21 years. However, recent water consumption data presents an upward trend that could challenge these accomplishments.
Rising Total Water Consumption and the Water Intensity Paradigm
Total Water Withdrawal and Consumption: A Cause for Concern?
ITC Limited’s total water withdrawal has seen a noticeable rise, indicating a need for scrutiny. In FY 2022-23, the company’s total water withdrawal reached 34.5 million kilolitres (kl), a 2.38% increase from the previous year’s figure of 33.7 million kl.
This increment suggests a growing reliance on water resources, necessitating an evaluation of ITC’s water management strategy, especially considering its ambitious goal of reducing specific water consumption by 40% by 2030.
Improved Water Intensity: A Silver Lining?
On the positive side, the company’s water intensity reduced by 12.65% in FY 2022-23, indicating an efficient use of water relative to its financial performance. However, this progress in water-use efficiency should not overshadow the need for absolute water consumption reduction.
Water Consumption & Intensity (including growth)
| Parameter | FY 2022-23 (A) | FY 2021-22 *B) | Growth from A/B |
|---|---|---|---|
| Water Withdrawal by Source (in million kilolitres) – Surface Water (i) | 27.1 | 26.9 | 0.74% |
| Water Withdrawal by Source (in million kilolitres) – Groundwater (ii) | 5.5 | 5.4 | 1.85% |
| Water Withdrawal by Source (in million kilolitres) – Third Party Water (iii) | 1.9 | 1.4 | 35.71% |
| Water Withdrawal by Source (in million kilolitres) – Seawater/Desalinated (iv) | 0 | 0 | N/A |
| Water Withdrawal by Source (in million kilolitres) – Others (v) | 0.1 | 0.1 | 0% |
| Total Volume of Water Withdrawal (in million kilolitres) (i+ii+iii+iv+v) | 34.5 | 33.7 | 2.38% |
| Total Volume of Water Consumption (in million kilolitres) | 14.5 | 11.7 | 23.93% |
| Water Intensity Per Rupee of Turnover (Water Withdrawal/Turnover) (kl/Crore INR) | 497 | 569 | -12.65% |
Please note that in the cases where there was zero withdrawal in both years (Seawater/Desalinated Water), the growth rate is not applicable (N/A).
This uptick, although not massive, signals a need for closer examination of ITC’s water resource management.
ITC’s Integrated Water Stewardship Programme
ITC has instituted a comprehensive water stewardship programme encompassing both demand and supply side management strategies. The Integrated Watershed Development Programme, undertaken by ITC, has progressively covered nearly 1.47 million acres of water-scarce land, providing benefits to over 400,000 individuals. The company has constructed more than 28,000 water harvesting facilities, which generated a storage capacity exceeding 48.9 million kl of water in various catchment regions, the company informed India CSR.
In order to decrease water utilization in agriculture, ITC initiated a focused demand side management programme, resulting in potential water savings surpassing 780 million kl. Furthermore, ITC has embarked on four river basin regeneration projects, including one in the Ghod river in Maharashtra, which achieved water positivity in a span of 5 years. ITC’s water stewardship programme aligns with the Indian Government’s initiatives, namely ‘Jal Shakti Abhiyan’ and ‘More Crop Per Drop’, the company said.
| Key Facts and Figures | |
|---|---|
| Programme | Integrated Watershed Development Programme |
| Total Land Coverage | 1.47 million acres of water-stressed area |
| Beneficiaries | Over 400,000 people |
| Water Harvesting Structures Built | Over 28,000 |
| Total Storage Capacity Created | Over 48.9 million kl |
| Water Savings (Demand Side Management Programme) | Over 780 million kl |
| River Basin Regeneration Projects | 4, including one in the Ghod River, Maharashtra |
| Alignment with Government Initiatives | ‘Jal Shakti Abhiyan’ and ‘More Crop Per Drop’ |
| Achievement | River Ghod turned water positive in 5 years |
ITC’s Future Commitments
ITC’s sustainability objectives for the forthcoming decade are ambitious and crucial. Apart from reducing specific water consumption, it aims to create a rainwater harvesting potential equivalent to over five times its net water consumption by 2030. While these targets demonstrate the company’s strong commitment to sustainability, they underscore the necessity for continuous efforts, innovative solutions, and thorough monitoring.
A Crucial Balancing Act
ITC Limited’s commitment to sustainability and its past accomplishments are indeed commendable. However, the increasing water consumption trends present a challenge that cannot be overlooked. The company needs to ensure that its growth does not compromise its dedication to environmental stewardship, particularly in light of India’s resource limitations. The coming years will be critical in assessing whether ITC can maintain its sustainability goals while continuing its expansion, thereby setting a precedent for other corporations in resource management.
