By Puneet Chhatwal – MD & Chief Executive Officer & Beejal Desai – Senior Vice President and Legal & Company Secretary of the Indian Hotels Company Limited (IHCL)
Historically, sustainability has referred to an approach that protects or conserves the environment. This has now expanded to include the aspect of social sustainability and economic sustainability practices. These three pillars of sustainability are required to ensure social, economic and environmental equality.
However, this concept of sustainability is not new for the Tata Group, which has embraced the challenges of addressing many developmental challenges by contributing to growth and jobs, reducing poverty, mitigating climate change, ensuring food security and environmental sustainability, while successfully running businesses.
Since inception, a sustainable soul has been at the heart of the 150-year-old Tata group, with the visionary founder, Jamsetji Tata sowing the seeds of corporate conscience that are today visible in initiatives taken by the different arms of the group. At the Indian Hotels Company Ltd (IHCL), the Tata Group’s way of doing business finds expression not just in the business of hospitality but also in how it explores new frontiers in sustainability. The Tata values are at the core of IHCL’s operations with initiatives across the value chain and in local communities to share the values created with all stakeholders.
As one of Asia’s leading hospitality companies with more than 190 hotels across 80 locations worldwide, IHCL has always adopted the path of sustainable growth. Taking advantage of its multilocational business presence, IHCL takes a 360-degree view of sustainability, addressing not just the environment, but also the community to shape a common future through environmental stewardship, social responsibility and business performance. From maximising renewable energy to developing skills in local communities, and initiatives for employee wellbeing, the aim is to ensure a shared future of sustainable growth for all stakeholders in a global atmosphere of unprecedented challenges and countless opportunities. The challenge is in bringing together disparate efforts and diverse stakeholders to create a meaningful, sustainable impact.
IHCL supports the UN Sustainable Development Goals, with particular emphasis on Goal 12 for resource consumption and optimisation towards environmental sustainability and Goal 8 for decent work and economic growth towards social sustainability. The Group also participates in the United Nations Global Compact (UNGC), a voluntary pact to adopt sustainable and socially responsible business policies through a principle-based framework.
Caring for the environmental soul
The hospitality sector is seeing discussions on the impact on the environment of energy and water consumption, waste creation and disposal. These issues are at the fore when it comes to formulating inclusive business strategies for environmental sustainability. Today’s IHCL guests make active choices in making the world a better place and prefer an environmentally friendly hotel that is ‘green’ conscious.
IHCL’s operations cover several places of cultural and historical importance, across different geographies that range from major cities to protected forests, from the mountains and hills to the coastal beaches. The potential environmental impact arises from the creation of waste, the use of plastics, discharge of sewage, energy and water usage, as well as CO2 emissions from operations. Its presence in remote locations may have implications for the environment due to the high tourist footfall.
To combat these, IHCL makes environmental stewardship the basis of its operations and strives to assimilate a ‘green’ thought process into the daily operations and thinking of all stakeholders.
As the international drive towards renewables continues to accelerate and discussions about water security gain prominence across industries, IHCL has taken a proactive stance to these global concerns by phasing out single-use plastic, exploring renewable energy and strengthening water security. Its business ecosystem focusses on sustainability with a continuous pursuit of excellence in the operation of facility management systems and priority to procuring local, sustainable materials.
IHCL has seen significant results from initiatives to eliminate plastic across its hotels. Just the elimination of plastic straws has led to a reduction in emissions. It is estimated that more than two million straws have been eliminated from the ecosystem avoiding 3,410kg CO2-eq emissions. Another initiative is the Waste To Innovation challenge that was launched during the annual Earth Hour event. It has other plans to create a sustainable environment, including an advanced laundry system.
With the rationalisation of costs of renewable energy, economically viable environment-friendly options have begun to be widely available for the hospitality industry. IHCL has begun integrating renewable energy into its ecosystem, with fuel consumption from renewable sources showing a big jump. Energy conservation measures and usage of alternate fuels such as biogas, PNG and CNG, has helped reduce emissions. Expansion of the renewable energy quotient has led to avoiding 65,200kg CO2-eq of IHCL’s total greenhouse gas (GHG) emissions. Progress is evaluated by continuous measurement of energy and water consumption, GHG emissions and renewable energy adoption.
IHCL has collaborated with EarthCheck since 2008 for benchmarking of its environment and social performance. EarthCheck Certification is the world’s leading environmental certification and benchmarking programme for the travel and tourism industry. Since 2008, 78 IHCL hotels have achieved EarthCheck Certification and generated significant savings. Eight are Platinum Certified, 63 Gold Certified and EITHT hotels are Silver Certified, cementing the company’s position as a world leader in responsible tourism.
Nurturing the social soul through affirmative action
Enabling local cultures and communities to thrive is necessary for social sustainability to be effective. IHCL has historically contributed towards the betterment of the underprivileged and socially disadvantaged communities, providing support to livelihoods, art and culture, with efforts to integrate the community as distributors, suppliers of goods and services, or employees.
A good example of the practice of preserving the culture of Indian traditions while supporting communities is what IHCL does at its Taj palaces – Taj Lake Palace in Udaipur; Umaid Bhawan Palace in Jodhpur; Rambagh Palace in Jaipur and Taj Falaknuma Palace in Hyderabad – weave in a taste of Indian tradition mixed with authentic experiences by working with local artisans and non-government organisations (NGOs). At Umaid Bhawan Palace, guests are welcomed with the signature Rajasthani Khama Gani greeting, ‘Khamaghani’ followed by a grand Maharaj welcome –they are welcomed by a fleet of horses from the royal stables, a symphony of war drums and trumpets, followed by a shower of rose petals and rose water and the traditional Indian aarti and tikka garland. Guests are then treated to performances by local dance troupes known as Langa, followed by a group who perform the traditional Ghoomar dance.
With opportunities for livelihoods expanding in the travel and tourism industry, IHCL works to build capabilities and further livelihoods of the economically weaker sections and low-income groups of women and young people, communities from scheduled castes and scheduled tribes, the differently-abled and traditional artisans.
IHCL is aligned with the Skill India movement and has training programmes that help disadvantaged youth people find employment in the hospitality sector.
IHCL has skilled and certified more than 20,000 less privileged young people who have dropped out of school since 2008, by providing more than 90 per cent of such job placement opportunities across the Indian hospitality industry. Each year, the programmes enable livelihoods for more than 3500 people including youth who have dropped out of school, women, artisans and differently-abled beneficiaries.
“Shaping a common future through excellence in business performance, customer delight, environmental stewardship, and social responsibility is at the core”
The Taj Tata Strive Programme is a tripartite collaboration between Taj, Tata Strive and CII which aims to provide financial, infrastructural and skill support to the underprivileged to achieve a sustainable livelihood. IHCL enables communities in the areas it functions in, creating opportunities where the skills of the local communities can be put to best use, supporting the revival of local art and traditions to ensure a win-win situation for all concerned. To take one example, Varanasi is one of the oldest living cities in the world and an integral part of its rich historical and cultural heritage is the intricately woven handloom Banarasi silk saree. IHCL is facilitating social change, which not only promotes the centuries-old traditional art of weaving Varanasi saris but also increases entrepreneurship opportunities for the weavers who have been involved in handloom weaving for generations. Taj has spearheaded a Livelihood Support Programme for the handloom weavers.
The company commissions these weavers to create silk sarees. These sarees are worn by the front office and housekeeping staff at all of its luxury and palace hotels in India and abroad. In a game-changing move, Taj it has also initiated a female weavers’ training programme in Sajoi village to facilitate sustainable livelihood opportunities in Varanasi since December 2016. In a historic first, Taj is breaking the mould of what is considered a male-dominated industry, heralding the first time that women have become involved in the Varanasi handloom sector. Additionally, more than 100 indigenous artisans, craftsmen and culture troupe members are supported year on year through the provision of exhibition spaces
Initiatives to enable other communities include efforts such as ‘Walk with the Pardhis’ for Taj Safaris in Panna National Park in the central state of Madhya Pradesh. This one-of-its-kind collaboration with Last Wilderness Foundation and Panna Forest Department is an inclusive tourism model for enabling alternative livelihood opportunities for the Pardhi community. Panna National Park, a wildlife reserve, had suffered devastating effects of poaching wherein the Pardhi community, known for their jungle knowledge, was used for the unlawful activities. Strict anti-poaching laws led to a significant increase in tiger numbers but left the Pardhis to look for alternative sources of income. This initiative will offer an alternative to poaching and a new livelihood for future generation of Pardhis by channelling the community’s age-old knowledge of the forests into promoting wildlife conservation.
IHCL’s Taj Public Service Welfare Trust was founded in the aftermath of the Mumbai terror attacks in 2008. The objectives of the Trust are to extend assistance to victims of terror, natural disasters, members of the armed forces and other services who demonstrate bravery in their line of work, and family members of all these affected persons. The Taj Mahal Palace Mumbai hosted a Black Tie Charity Ball on the eve of its anniversary on 15 December 2018. A similar event was held at Delhi as well. The galas brought together well-known members of the Mumbai community for a charitable evening coupled with jazz, music and fine food. All the proceeds from these events were donated to the Taj Public Service Welfare Trust (TPSWT).
Recently, IHCL has also begun supporting Heritage Sites through the promotion of cleanliness in more than 30 public spaces across locations in India. These include the Gateway of India in Mumbai, the National Rail Museum in New Delhi and Dashashwamedh Ghat in Varanasi.
Strengthening the economic soul
At IHCL, the aim is to create shared value practices that balance resources and rewards to ensure long-term benefits in he community. It is about embracing social and environmental change and using the business and using that integration to drive economic value.
IHCL’s associates are the core of the business and the most valuable assets. There is immense importance placed on fostering their growth through various programmes for employee development. Industry-leading steps, such as including fertility treatments under medical cover, eliminating break shifts and providing daycare centres in the hotels for the children of staff, are all part of a commitment to employee wellness.
Shaping a common future through excellence in business performance, customer delight, environmental stewardship, and social responsibility is at the core of all employee efforts. As sustainability goals evolve in a constantly changing world, IHCL’s commitment to creating shared value for stakeholders, communities and the planet remains the foundation of all its efforts to ensure ‘luxury with a sustainable soul’.
IHCL: Ensuring good governance
The Tata Group is recognised globally for its ethical and transparent business practices, as well as exemplary corporate governance across the board. An embodiment of the idea of ‘leadership with trust’, the Tata brand has, for years, signified the creation of long-term stakeholder value.
IHCL is driven by the Group’s core values of integrity, responsibility, excellence, pioneering, and unity in all aspects of its functioning and organisational priorities.
The core of IHCL’s service ethos is TAJ-ness, based on the three broad pillars of:
- Trust – that its guest bestow on it
- Awareness – of what is happening around it and its responsibility to the Indian hotel industry
- Joy – that IHCL takes in providing service
At IHCL, disclosures and transparency form the cornerstone of good governance. IHCL has adopted the Tata Business Excellence Model (TBEM) to drive excellence and track progress on the company’s strategic objectives. The model aims to enhance fairness and accountability in delivering the IHCL promise. The board periodically reviews the TBEM update, offering its valuable suggestions on how best to achieve functional excellence.
IHCL abides by the Tata Code of Conduct (TCOC), in line with its philosophy of adhering to governance standards of responsibility, transparency, integrity and desire to preserve the human rights of every individual and the community. TCOC covers various aspects, such as being an equal opportunity employer, treating people with dignity and respect, prohibition of bribery and corruption, gifts and hospitality, conflict of interest, financial reporting and records, among others.
The board of directors has a key responsibility to establish the ‘tone from the top’ through the right attitudes, actions, and communications to promote ethical behaviour. This is communicated and reinforced through IHCL’s policy and procedure manuals, systems of internal controls, hiring practices, as well as through a highly proactive approach towards handling grievances and identification of key fraud risks.
The IHCL board of directors is active, well-informed and independent. It is responsible for the overall conduct of the company and has the powers, authorities and duties vested in it respectively pursuant to the relevant laws of India and the articles of association of the company.
IHCL ensures quality leadership by following a rigorous screening process for appointment of members to the board. While it ensures diversity of backgrounds through experience, talents, competencies, characteristics like independence, integrity, high personal and professional ethics are a top priority. At IHCL, the board:
- Has final responsibility for the management, direction and performance of the Hotel Group and its businesses
- Is required to exercise objective judgement on all corporate matters, independent from executive management
- Is accountable to shareholders for the proper conduct of the business
- Is responsible for ensuring the effectiveness of and reporting on the hotel group’s system of corporate governance
The board has a formal schedule of matters reserved to it for its decision and these include:
- Group strategy
- Annual budget and operating plan
- Major capital projects, acquisitions or divestments
- Group financial structure, including tax and treasury
- Annual and half-yearly financial results and shareholder communications
- System of internal control and risk management
- Senior management structure, responsibilities and succession plans
The board is consistently evaluated on its efficacy through a process that is bespoke in its formulation and delivery, going beyond the processes mandated by regulatory authorities setting out clear objectives aligned to the provisions of the Act, guidance note on board evaluation issued by the Security and Exchange Board India (SECI) and the corporate governance requirements prescribed by listing regulations. The nomination and remuneration committee (NRC) maintains its oversight on it.
IHCL engages with stakeholders prior to the implementation of policies or actions that could impact them. It interacts regularly with the community, through public hearings and meetings with various groups, such as senior citizens groups, and local leaders.
The forums of the annual general meeting, analyst meetings and investor roadshows serve to interact with investors and are used to address issues of performance, long-term strategy and growth plans.
At IHCL, stakeholder democracy is an essential part of corporate governance. The corporate governance framework ensures the equitable treatment of all shareholders, including minority ones. The company has constituted a stakeholder’s relationship committee that assists the board of directors in servicing and protecting various aspects of interest of shareholders, debenture holders and other security holders, having the mandate to review and redress stakeholder grievances.
A robust system of internal controls exists to ensure efficacy, integrity, and quality of financial reporting. All operating hotel units and corporate office functions are audited annually to evaluate areas of weakness and scope of improvement; compliance with policies and TCOC, safeguarding of assets and risk management.
The company has an enterprise risk management process in place and the audit committee is assisted in its oversight role by the internal audit team. A whistle-blower policy enables employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the TCOC.
IHCL’s coporate social responsibility (CSR) thrust is building on the Group’s legacy of ‘giving back to society’. It is skilling India’s underprivileged youth towards improving their employability. It is actively involved in promoting unique traditional heritage through arts and handicrafts, through partnerships with local organisations around its various properties. It is also involved in disaster relief and rehabilitation programmes.
IHCL has been proactive in strengthening corporate governance at the company. It embraced the Kotak Committee recommendations as approved by SEBI in March 2018, ahead of time, taking governance practices at India Inc a step further. It is among the first and only Indian hospitality brands to have adopted integrated reporting – a more strategically driven shift from compliance-based reporting to a governance-based one.
About the Authors:
On the 6th of November, 2017, Mr. Puneet Chhatwal joined IHCL as the Managing Director and Chief Executive Officer. He is a global professional with over three decades of leadership experience at highly-acclaimed hotel groups in Europe and North America.
Prior to this, Mr. Chhatwal was the Chief Executive Officer and Member of the Executive Board of Steigenberger Hotels AG – Deutsche Hospitality. He was also the Chief Development Officer of The Rezidor Hotel Group – Carlson Hotels Worldwide. Mr. Chhatwal is a graduate of both Delhi University and Institute of Hotel Management, Delhi. He has completed an MBA in Hospitality from ESSEC, Paris and an Advanced Management Program from INSEAD. Mr. Chhatwal has won awards including the prestigious Carlson Fellowship and was rated as one of Europe’s 20 extraordinary minds in Sales, Marketing and Technology – HSMAI European Awards 2014. He was also the First Alumni included in the ESSEC-IMHI Hall of Honor 2014.
Mr. Beejal Desai has over 34 years of rich, extensive & cross functional experience and specialises in the areas of Legal, Secretarial, Corporate Governance, Compliance & Investor relations. He has worked in leadership positions across diversified sectors including Hospitality, Pharmaceuticals, Forging, etc.
He holds an LLB degree and is a fellow member of Institute of the Company Secretaries of India, besides attending Harvard leadership programme. He has pioneered digitisation of various legal & compliance projects within the organisation. He has won several National & International awards, notably Golden Peacock Award for Excellence in Corporate Governance – 2019 by Institute of Directors, London, Best Company Secretary – Leisure & Hospitality – Asia 2019 from Ethical Boardroom, London & Best Corporate Governance in India & Asia from Ethical Boardroom, London for two consecutive years in a row in 2018 & 2019 respectively, he was also conferred a certificate of excellence in Corporate Governance from Institute of the Company Secretaries of India and Best All India Investor Relations Award 2017.