IOD SPECIAL TALKS - Practical Implementation of CSR in India

Thank you to all delegates for joining me today as we delve into a critical topic that shapes the future: 'Board Room Strategies for Net-Zero Commitment: Integrating CSR, Sustainability, and ESG Policies for a Greener Future'. I am truly honoured to stand before you today to discuss a matter of paramount importance, one that transcends business and reaches into the heart of global responsibility. The Net-Zero Commitment is not just a trend; it is a pledge to ensure that our organisations thrive in harmony with our planet.

I would like to start with this quote from Mr. Jamsetji Tata, one that has been guiding us for the last 15 decades, “For all of us at the Tata Group, taking care of the community is not just a byproduct but rather the guiding principle”. As many of you would know, 66% of the Tata Group's profits go back to the community, and through this, we have been supporting various community initiatives of importance across India. To give this further focus and impetus, we have launched Project Aalingana this year. Tata Group has also set itself very aggressive green goals around carbon neutrality, net zero, water, and circular economies. We have cascaded these down at Tata Communications, and we are going to contribute substantially to the achievement of the group's targets.

Our most important stakeholders are not just shareholding entities; they are people, they are our planet, and they are our communities.

Merely talking about CSR won't be enough to make substantial progress. Whereas embracing a broader sustainability agenda that encompasses the aspirations of all stakeholders will make the real impact. A well-integrated CSR and sustainability strategy is a profound commitment that balances the needs of our employees, communities, customers, suppliers, investors, and regulators. The S&P/Drucker Institute Corporate Effectiveness Index is designed to track stocks in the S&P 500 that consistently rank highly on proprietary management criteria. These companies create value through excellence across all stakeholder aspects, viz., employees, customers, society, innovation, and finally, high-quality earnings. And when we tracked the shareholder returns delivered by the companies on this index over the last decade, it was on average 200 basis points higher than the average of S&P 500 companies. This analysis by Bain & Co. is data-backed evidence that underlines the importance and benefits of having an integrated approach towards all stakeholders, including people, the community, and the planet.

At Tata Communications, this integration is not just a choice; it's a reflection of our dedication to a sustainable future. I strongly believe that this is the only way forward, an approach that brings various benefits such as balancing the needs of all stakeholders, optimizing value-based resource allocation, many-fold impact on the identified areas, enhanced brand image, and helping become a 'preferred supplier' for our customers.

Our most important stakeholders are not just shareholding entities; they are people, they are our planet, and they are our communities. These three pillars form the bedrock of our integrated CSR, sustainability, and organisational strategy. We are aligning our stakeholder goals with the UN sustainable developmental goals, addressing 12 of them in the current strategic plan. And here, I would like to add that people do not just include our own employees but also our customers and suppliers. For a geographically spread global company like us, every community has a global connotation. As far as the planet is concerned, though a communications technology company such as ours is not a great polluter, I think we, being at the forefront of technology, have a great opportunity to play a crucial role in helping our customers. We at Tata Communications believe that our commitment extends beyond profits; it's about creating a positive legacy for generations to come. It's not enough for us to minimize our own carbon footprint, but rather to go beyond the physical boundaries of our company and see what positive change and impact we can bring to the world around us.

For many years, the primary purpose of businesses has been to generate higher profits, scale, and returns. However, now, there is growing interest in how they got to where they are today and what they stand for, or, simply put, the purpose of the organisation. Businesses are being more carefully scrutinised by investors and other stakeholders for their attitudes towards climate change, their sustainability efforts and commitment to the local community, and their investments in future generations. Today, investors care as much about a company's approach to net zero as they do its business model, and potential employees may decide on joining a company based on its environmental, social, and governance (ESG) as well as its diversity, equity, and inclusion (DEI) policies. And there are many examples around us; the increased scrutiny that oil and gas and mining companies are under today is unprecedented. There is very stark and demonstrable evidence that millennials and younger talent prefer to join companies and may even work for lesser-paying but cleaner organisations rather than a company that is perceived to be polluting.

Now, is this heightened focus on the green credentials of a company misplaced? I do not think so. Let me give you an Indian example. As per a Carbon Disclosure Project report, Indian companies are on a path to a 2.8-degree Celsius temperature increase, whereas we all know that the Paris Agreement set the goal to limit the global temperature rise to 1.5 degrees by achieving net zero global emissions by 2050. So clearly, Indian organisations need to look at this much more critically and introspect what more they can do. The other point this data point makes is that not only is the assessment of corporate emission reduction targets and associated risks critical, but equally important is ensuring appropriate risk mitigation for the adverse impact of climate change.

As long as leading corporations are unaligned with climate goals and risks, the capital invested in them will continue to be at risk, which will directly impact shareholder returns. E.g., another piece of research from CDP mentions that 215 of the biggest global companies report almost $1 trillion at risk from climate impacts. And according to the PwC 2021 Global Investor ESG Survey, investors are also increasing their scrutiny of ESG risk management practices. 79% of investors agree that ESG risks are an important factor in investment decision-making, and almost half of investors (49%) are even willing to divest from companies that aren't taking sufficient action on ESG issues.

These are tell-tale signs that companies in India need to think more deeply about their sustainability strategies, and I am pleased to share that we at Tata Communications have taken the lead and embedded ESG aspects into our enterprise risk management framework. Incorporating ESG-related aspects into ERM is not just a matter of compliance for us; it is a strategic imperative for us to ensure long-term resilience, reputation management, and sustainable growth in a continuously evolving business landscape. ESG factors can pose risks to organisations, ranging from regulatory non-compliance to reputational damage. Integrating ESG into ERM allows for a comprehensive risk assessment, ensuring timely identification and mitigation of potential risks. With natural calamities becoming more common, these aspects of climate change related impacts also need adequate attention for long-term sustainability.

Let me share some stories of success that echo through our community and resonate with our customers. Our CSR projects are not just projects; they are closely aligned with our Net-Zero aspirations. Out of many projects, I would specifically like to speak about the two that are close to my heart.

Climate Resilient Village Program in Garo Hills, Meghalaya

Garo Hills is the largest district in Meghalaya, situated in the western part of the state. Soil erosion and loss of fertility are affecting economic growth, along with the loss of livelihoods for the inhabitants in remote locations. Initiated in 2022, the Climate Resilient Village Program (CRVP) is working on creating sustainable energy access and holistic development for the tribal Garo communities. The project is focused on creating development initiatives by providing clean energy access, health access, and transitioning the communities to a low carbon, clean cooking future, which will allow us to create a positive social impact.

As part of the project, clean energy access using solar energy has been provided to 350 remote households in the region. An entrepreneurial ecosystem has been set up for the maintenance of the solar grids, thus providing local livelihood opportunities to the youth of the area. The primary health care has also been strengthened by providing 24*7 power to the health centres through the installation of solar power of 7 KW. To create meaningful living conditions for the Garo women and reduce the dependency on firewood for cooking, the project has deployed improved cookstoves for 8,000 households; this has enabled an 80% reduction in smoke emissions and a 50% reduction in firewood consumption. The efforts have led to offsetting carbon emissions for Tata Communications to the tune of 16,000 tons annually. The electrified healthcare centres cater to 50,000 patients annually, and the electrified households have improved productivity and time for income-generation activities such as small businesses, handicrafts, and agriculture.

Nanner Lake Rejuvenation

'Nanneer' is a lake rejuvenation project of Nagan Thangal Eri (Nagan Thangal Lake), Thiruvallur. The lake was historically used for irrigation. Spread over 15.01 acres (6.08 ha) of land, approximately 75% of the lake area was silted, which reduced the water holding capacity of the lake. Only 25% of the water spread area was occupied by water even in the monsoon season, and the remaining 75% of the lake was silted heavily.

Nanneer aimed at rejuvenating and beautifying the lake for effective groundwater recharge. This project has benefited the nearby communities by providing a source of drinking water for domestic use. The project has also ensured the restoration of the lake with ecological restoration methods and the plantation of tropical dry evergreen forest plant species. The restoration work included lake deepening, plantations of indigenous trees, shrubs, and reeds, and the setting up of landforms such as bird islands to attract and enhance biodiversity.

To increase the green cover, more than 5000 trees of indigenous species have been planted. With the rejuvenation of the entire lake area of 15.01 acres, an estimated 24000 m3 increase in water holding capacity is projected, in turn ensuring continued groundwater recharge necessary to meet community needs. The restoration project in the long term will help to offset the carbon footprint and help us achieve Goal 13 of the Sustainable Development Goals set by the UN, which is 'Climate Action: Taking urgent action to combat climate change and its impacts'. The expected carbon offset in the next 10 years is approximately 710,500 kg of CO2. A Blue Green Center, basically an orientation centre, serves as an important space for community engagement programs and for environmental education in the surrounding schools. Nature trails lined with indigenous trees are designed for children and adults alike to go on educational eco-tours.

Because of these initiatives, 1,00,000 cubic meters of water (approximately 10 crore litres of water) were saved during the two monsoon cycles. This is the first time in the last 10 years that the community has experienced the lake with its full capacity of water.

On the product side, our offerings don't just reduce carbon; they redefine our customers' approaches. E.g., we save 16 times more carbon than we produce by providing products that aid our customers in reducing their footprint, and our goal is to increase this manifold. Our partnerships, like the one with F1 for remote production, showcase how our technology solutions can contribute towards the carbon neutrality aspiration of Formula 1. Another proud example is our collaboration with Lufthansa on sustainable aviation fuel, transforming air travel towards a greener horizon.

As we celebrate our achievements, we set our sights even higher. Doubling down on our CSR and sustainability commitments is not just a goal; it's a promise. In conclusion, our journey towards a net-zero commitment is not a solitary mission. It's a collective endeavour, a shared responsibility. This is a very august gathering, and if all of us come together on this mission, I am sure we can not only envision but actively contribute to a greener and more sustainable future. Finally, I would like to close with a Chinese proverb that could not be more apt in describing the alarming situation we are facing today, and it goes, "The best time to plant a tree was 20 years ago. The second-best time is now." Thank you for your attention, and thanks once again to the IOD for the recognition and providing this platform for me to share our journey at Tata Communications, something of which we are very proud.

Thank you.

*Excerpts from the ‘Keynote Address' delivered by Mr. A. S. Lakshminarayanan, MD & CEO, Tata Communications Limited at 'Plenary Session- II' of the 18^th International Conference on Corporate Social Responsibility, held on December 21, 2023 in Hotel Taj Lands End.