TATA GROUP SUSTAINABILITY STRATEGY

Leadership with trust

Mathew AshleyBill O’Brien

Rachel ReiterKevin Richards

EXECUTIVE SU

MM

ARYGoal

Develop a ten year strategy to continue Tata’s profitable growth and sustainability leadership while addressing: Tata’s growing global presence Evolving definitions of sustainability Increasing demand for measurement and transparency

Recommendations

Simplify Tata’s internal definition of sustainability and articulate it through a credo Create a separate subsidiary to coordinate, communicate, and expand

sustainability efforts across every business unit Establish a “multi-local” strategy tailored to the unique challenges and

opportunities of each country and business

2

CURREN

T SITUATIO

N

3

The status quo has risks Future funding is loosely defined Employee standards inequity

Role clarity Overlapping efforts

As Tata grows globally, how can the company preserve its unique tension between profit and purpose to meet evolving definitions of sustainability?

Steel TeleCom Tea

International Consulting Hotels

Motors Power Chemicals

CSR silos are usually the norm

Many independent initiatives and organizations

Tata Trusts

Tata Relief Committee

Innometer

TQMS

Innoverse

Annual Management Workouts

Tata Protocol for Internal Assessment

Tata Index for Sustainable Human Development

Tata Steel

Tata Power

Tata Consulting Services

Indian HotelsTata Motors Tata Chemicals

Tata Tea

Tata International

Tata Nano

CII Energy Mgmt Award

EMS standards

EARTH Project

Ongoing community

service

Community literacy

Tata Swach (H20 purifier)

Employee generation

Animal husbandry

Community development

IIP Certification

Tata Swach (H20 purifier)

Measurement and transparency Inadequate stakeholder

communication

Innovation Center

Carbon mapping

Community literacy

Health & wellnessRecycling

program

Tetley Tea Rainforest

Certification

Ethical Tea Partnership

(ETP)

Combat Climate

Change (3C’s)

TCCI

Green Globe collaboration

Sustainability council

Imported Coal

SUSTAIN

ABILITY DEFIN

ITION

&

CREDO

4

“Corporate Sustainability is a local, national, and global endeavor for creating long-term economic, social, and financial growth for the enterprise and its stakeholders.”

1) Everything we do within Tata can be re-examined through a sustainability lens.

2) Sustainable initiatives strive to add value to Tata's enterprise and shareholders over a reasonable time frame.

3) Social philanthropy and development initiatives are a core competency and should be treated as an essential output of the organization.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

5) Tata's sustainability development should be managed with the same rigor, focus, and precision as other Tata business.

6) All sustainable initiatives should be transparent, measurable, and auditable to all stakeholders.

7) Our businesses should inspire new sustainable ideas, and our sustainability efforts should inspire new business ideas.

8) Sustainable thinking and implementation is a key skill that every future Tata manager should possess.

9) Tata's companies will encourage their business partners and stakeholders to achieve sustainable business practices.

10) Our initiatives should lead environmental, economic, and social development in India and the world. Our efforts go beyond a "compliance" mindset and accomplish what was once thought impossible.

The Tata Credo

Sustainability Definition“Corporate Sustainability (CS) is integral to value-creation in our business through the enhancement of human, natural, and social capital complementing their economic and financial growth in order to give the enterprise an enduring future and also help create and serve a larger purpose, at all times. It facilitates accountability to all stakeholders as a systemic practice.”

Goals of Tata’s corporate communication on sustainability Simple and easy for employees to understand Flexible for changing and differing definitions of sustainability Creates a “roadmap” for employees and stakeholders Inspires new thinking for existing businesses and processes Articulates Tata’s aspirations for sustainability

1) Everything we do within Tata can be re-examined through a sustainability lens.

2) Sustainable initiatives strive to add value to Tata's enterprise and shareholders over a reasonable time frame.

3) Social philanthropy and development initiatives are a core competency and should be treated as an essential output of the organization.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

5) Tata's sustainability development should be managed with the same rigor, focus, and precision as other Tata business.

6) All sustainable initiatives should be transparent, measurable, and auditable to all stakeholders.

7) Our businesses should inspire new sustainable ideas, and our sustainability efforts should inspire new business ideas.

8) Sustainable thinking and implementation is a key skill that every future Tata manager should possess.

9) Tata's companies will encourage their business partners and stakeholders to achieve sustainable business practices.

10) Our initiatives should lead environmental, economic, and social development in India and the world. Our efforts go beyond a "compliance" mindset and accomplish what was once thought impossible.

TSS VALUE CREATIO

N

5

ORG

ANIZATIO

NAL CH

ART BREAKO

UTS

6

ORG

ANIZATIO

NAL CH

ART BREAKO

UTS

7

Create New Markets Internal Consultants: Facilitation & subject matter expertise Innovation Center: Creates new products or new markets for existing products Financial Planning: Funding, budgeting, agreement with shareholders Internal Audit: EVA in collaboration with TQMS Climate Change Task Force: Internal conservation across all business units

ORG

ANIZATIO

NAL CH

ART BREAKO

UTS

8

Build Intellectual Capital Management Training: Rotations & development Climate Change Task Force: Grow environmental CSR Innovation Center: Improving business practices

ORG

ANIZATIO

NAL CH

ART BREAKO

UTS

9

Monetize CSR Knowledge Financial Planning: External fundraising External Audit/Measurement: Outside credibility External Consultants

ORG

ANIZATIO

NAL CH

ART BREAKO

UTS

10

Strengthen Brand Communications: Publicize CSR efforts in receptive markets Trust/Endowments: Protect & grow company culture of philanthropy External Audit & Measurement: Company-wide CSR report

ORG

ANIZATIO

NAL CH

ART BREAKO

UTS

11

Attract & Retain Talent Trust/Endowments: Protect & grow company culture of philanthropy Management Training: Rotations & development Communications: Employee engagement Financial Planning: Employee incentives Innovation Center: Improving business practices

IMPLEM

ENTATIO

N

12

If managed properly, TSS can address and overcome traditional barriers to implementation and common CSR challenges.

A silo mentality develops (Robert Sutton)

Make TSS part of BU strategic plan & operating review

Incentivize BU managers

TSS is under-resourced & overcommitted

Project prioritization committee

Budgeting process

Hiding place for ineffective managers

Management rotationsHR training/retrainingRecognize & reward success

Corporate culture diluted Continue to support innovation from “ground up”, everyone part of success

Tata’s Stars

Financial Planning

MU

LTI-LOCAL STRATEG

Y

13

Growth opportunities should fit Tata’s values while staying sensitive to economic, environmental, and social considerations in local communities.

Tata Values

Carbon footprint

Recycling Water

purification Ethical

sourcing

Human rights

Gender rights

Education Literacy Health,

HIV/AIDs Fair wages

Country

Unites States

China

EU

Brazil

Canada

Gulf CC

South Africa

Sri Lanka, Thailand, Vietnam

Challenge & Opportunity

Education, Regulations, Green investments

Gov., Pollution, Human Rights, Economy

Safety nets, Green Movement

Deforestation, Natural resources

Safety nets, Green Movement

Oil rich, Cultural views, Gender roles

HIV/AIDS, Developing economy

Developing economy, Government stability, wages

INITIATIVE EXAM

PLE

14

END OF LIFE VEHICLES (ELV) PROJECT

Leverage business knowledge in target markets Measure returns and costs across all businesses Coordinate business unit interactions

1) Everything we do within Tata can be re-examined through a sustainability lens.

3) Social philanthropy and development initiatives are a core competency and should be treated as an essential output of the organization.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

7) Our businesses should inspire new sustainable ideas, and our sustainability efforts should inspire new business ideas.

Tata ELV Services

Tata Credo AlignmentMulti-Local Implementation

TSS Facilitation of Initiative

Steel International Motors

Power Chemicals

ELV processing is already mandatory in the EU

By combining expertise across businesses, Tata can create an ELV initiative in the EU and new markets

The estimated value of an ELV-processed vehicle is $267, which could be split between Tata and the customer

Communication and marketing to promote initiative

Secure NGO support

INITIATIVE EXAM

PLE

15

CSR SOFTWARE CONSULTING

Finance and audit function provides measurement and transparency

Develop “human” software in Innovation Center and through inter-company collaboration

5) Tata's sustainability development should be managed with the same rigor, focus, and precision as other Tata business.

6) All sustainable initiatives should be transparent, measurable, and auditable to all stakeholders.

9) Tata's companies will encourage their business partners and stakeholders to achieve sustainable business practices.

10) Our efforts go beyond a "compliance" mindset and accomplish what was once thought impossible.

Tata CSR Consulting

Tata Credo AlignmentMulti-Local Implementation

TSS Facilitation of Initiative

Leveraging Tata’s CSR core competency into a sustainability software consulting practice

Developing Tata Consulting Services group specializing in Enterprise Carbon Accounting (ECA) software

Test and develop new market for “human” sustainability software

Future value creation through external CSR consulting beyond software

Climate change group leveraged for CO2 tracking software

Seek out potential clients across existing business

Consulting Steel Power

Telecom International

EXTERNAL RISKS

16

External Risk Credo TSS Multi-Local Strategy

Continued Global Recession ü üMarket Indifference ü üStakeholder Obstructions ü üEvolving Definition of Sustainability ü ü ü

If implemented correctly, our recommendations can create value by anticipating outside change and giving Tata the structure and capability to continue profitable sustainability.

TIMELIN

E & ACTIO

N PLAN

17

Next Steps Discuss TSS idea with key leaders Begin work on standards for employee

equality across countries

If preliminary feedback is positive, hold an offsite leadership meeting to finalize credo, TSS plans, budget, and communication strategy.

Investigate initiative feasibility Investigate legal/tax/reporting implications of

subsidiary

Costs and Returns

Initial investment for TSS and initiatives: $52M– TSS assumed to have up to 500 headcount– Total Tata 2009 investment in social initiatives: $159M (Graham, “Too Good To Fail”, 2010)

Additional expenditures of $20M - $60M per year as staged initiatives roll out Minimum 10% return projected if Tata brand value increases by $4M per year

QUESTIONS? THANK YOU

Leadership with trust

INITIATIVE EXAM

PLE

19

ENERGY EFFICIENCY INITIATIVES

Leverage business knowledge in target markets Measure savings and costs across all businesses Coordinate business unit knowledge sharing

1) Everything we do within Tata can be re-examined through a sustainability lens.

2) Sustainable initiatives strive to add value to Tata's enterprise and shareholders over a reasonable time frame.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

6) All sustainable initiatives should be transparent, measurable, and auditable to all stakeholders.

9) Tata's companies will encourage their business partners and stakeholders to achieve sustainable business practices

Tata Energy Efficiency Initiatives

Tata Credo Alignment

TSS Facilitation of Initiative

Steel International Motors

Power Tea

Tata Steel leads group on energy efficiency programs and has several innovative pilot programs

Reduce its carbon footprint in existing and new markets

Projected to save $3.1 million in fuel costs, savings from other energy programs $17.9 million with initial roll out in India, EU, China and expanding to other markets

Communication and marketing to promote initiatives Ensure alignment with Climate Protocol Secure NGO support

INITIATIVE EXAM

PLE

20

COMBATTING CLIMATE CHANGE (3C’s)

Integrate Power Sustainability Council into TSS Measure returns and costs across all businesses Coordinate business unit interactions

1) Everything we do within Tata can be re-examined through a sustainability lens.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

5) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

10) Tata's companies will encourage their business partners and stakeholders to achieve sustainable business practices.

Tata Power Initiative

Tata Credo Alignment

TSS Facilitation of Initiative

Steel Consulting Motors

Power Chemicals

Diversify energy mix and develop strategies to meet the expanding demand for power over the next ten years

Work with government stakeholders to develop alternative energy technology

Carbon footprint reduction opportunities through the use of nuclear, wind, solar and hydro

Communication and marketing to promote initiative

Secure governmental support

INITIATIVE EXAM

PLE

21

STRATEGIC REORGANIZATION FOR TEA GROUP

Integrate Tetley sustainability initiatives throughout Tea Group

Measure returns and costs across all businesses Coordinate business unit interactions

2) Sustainable initiatives strive to add value to Tata's enterprise and shareholders over a reasonable time frame.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

5) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

9) Our businesses should inspire new sustainable ideas, and our sustainability efforts should inspire new business ideas.

Tata Tea Group

Tata Credo Alignment

TSS Facilitation of Initiative

Tea International

Power Chemicals

Transparent reporting of ethical sourcing through the Rainforest Alliance Certification (RAC) in Western European and North American

Renewable packaging through Life-Cycle Analysis

Fair Trade certified products and standards

Communication and marketing to promote initiative

Share Tata Chemical competency in sourcing , packaging, and distribution to Tata Tea

INITIATIVE EXAM

PLE

22

TATA “GREEN CHEMISTRY” INITIATIVE

Integrate Innovation Center into TSS Measure returns and costs across all businesses Coordinate business unit interactions

1) Everything we do within Tata can be re-examined through a sustainability lens.

3) Social philanthropy and development initiatives are a core competency and should be treated as an essential output of the organization.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

7) Our businesses should inspire new sustainable ideas, and our sustainability efforts should inspire new business ideas.

Tata Chemical Initiative

Tata Credo Alignment

TSS Facilitation of Initiative

Steel International Tea

Power Chemicals

Flue gas treatment, carbon absorption and nano glass coating for insulation

Entered into the bio-fuels market in 2007

Fresh produce sourcing, packaging, and distribution

Innovation Center

Center for Agriculture and Technology

Communication and marketing to promote initiative

Share competency in sourcing , packaging, and distribution to Tata Tea

INITIATIVE EXAM

PLE

23

HOTEL CONSERVATION INITIATIVE

Work with other Tata companies to discover conservation best practices

Set up conservation measurement system for hotels

Tata Hotel Conservation Initiative

Tata Credo Alignment

TSS Facilitation of Initiative

Indian hotels is pursuing an internal project known as EARTH

There are best practices from other hotel chains and Tata companies that can be leveraged for near-term immediate savings

Long term goal should be LEED certification for new hotels

Total annual savings/profit for 8 targeted hotels = $1M

Communication strategy for hotel customers to get help with conservation efforts

Leverage Climate Change task force

Tea Consulting

Hotels Power

1) Everything we do within Tata can be re-examined through a sustainability lens.

2) Sustainable initiatives strive to add value to Tata's enterprise and shareholders over a reasonable time frame.

4) Sustainable creativity and knowledge should be shared across all Tata organizations and outside of our company.

5) Tata's sustainability development should be managed with the same rigor, focus, and precision as other Tata business.

9) Tata's companies will encourage their business partners and stakeholders to achieve sustainable business practices.

FINAN

CIAL VALUATIO

N

24

FINAN

CIAL VALUATIO

N

25

FINAN

CIAL VALUATIO

N

26

FINAN

CIAL VALUATIO

N

27

DECISIO

N AN

ALYSIS MATRIX

28

DECISIO

N AN

ALYSIS MATRIX

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CURREN

T ORG

ANIZATIO

NAL

CHART

30

TQM

S INN

OVATIO

N M

ATRIX

31

TQM

S COM

MU

NICATIO

N

STRUCTU

RE

32

TQM

S COLLABO

RATIVE RESEARCH

33

TQM

S FACILITIES FOR LEARN

ING

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TIME, D

IFFICULTY, IM

PACT, & RISK

35

Estimated Break-Even Timing

Impl

emen

tatio

n D

ifficu

lty

Size = Profit Impact

Sustainability Software

Consulting $71.6M

Tata Tea Certification

$12.5MELV Recycling

$1.4M

Truck/ Trailer Expansion

$6.9M

Hotel Conservation

$3.9M

Steel Plant Energy

Efficiency $23.6M

Low/ Low

Market RiskEconomic/ Political

Medium/ High

Medium/ High

Medium/ Medium

Low/ Low

Low/ Medium