Sustainability Report Review-

Maruti Suzuki India Ltd.

(MSIL)

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Overview:
MSIL which was established in 1981, completed 40 years of its existence during the last financial
year. MSIL enjoys a market share of 44.2 percent in the Indian passenger car market, which makes it a
major player in an industry which is often described as one of the most important pillars of a nation’s
economy and well-being i.e., Automotive. The sector holds great importance when looked from
sustainability point of view as well, as it is highly carbon intensive, and its products (automobiles)
impact the environment a great deal through-out their life cycle. So being a market leader of such an
industry places a great deal of responsibility on MSIL to implement right sustainability policies in its
functioning and report the outcomes of its activities fairly and holistically, so that its competitors are
forced to implement the same.
In this project, I have used the report of FY 2021-22 to analyse the various activities undertaken by
MSIL and the outcomes reported by it, from a sustainability perspective, keeping in mind the various
concepts that were taught to us as a part of ISDCS course.
Approach to Reporting:
MSIL adopted the integrated reporting after SEBI’s circular on 6 th Feb, 2017 which said that the top
500 companies can voluntarily adopt the IR from the FY 2017-18, so from FY 2017-18 MSIL started
publishing integrated reports instead of having a separate sustainability report.

The IR published by MSIL serves as a concise communication about the Company’s thoughts on
business, governance, performance (financial and non-financial) and prospects in the context of its
external environment. The report is based on the IR Framework developed by IIRC which focuses on
7 guiding principles to underpin the preparation and presentation of an IR, informing the content of
the report and how information is presented, and 8 content elements which are fundamentally linked
to each other. The non-financial information presented is based on the Global Reporting Initiative
standards and additionally aligns with the ‘Ten Principles of the United Nations Global Compact’
(which cover Human Rights, Labour, Environment and Anti-Corruption) and the National Guidelines
on Responsible Business Conduct issued by Ministry of Corporate Affairs of India, which are also
known as the NAVRATNA Principles.

The report covers the manufacturing facilities at Gurugram and Manesar, Research & Development
(R&D) facilities at Gurugram and Rohtak, Head Office at New Delhi, regional, zonal and area offices
across India, sales and distribution facilities and stockyards. Joint ventures and subsidiaries are
excluded.

Performance Highlights:

The report presents the last FY’s performance in 6 categories – Financial, Manufactured, Intellectual,
Human, Social & Relationship and Natural Capital, and compares them with the last year’s results. A
snapshot of the performance as far as the Natural Capital is concerned is shown in the Fig. 1.
While the company has highlighted the positive outcomes of the various activities it has undertaken,
some important parameters such as the equivalent carbon emissions, water consumption, dust
emission etc. are missing, which is an area of improvement for the organisation as it should display a
holistic and transparent picture of its performance to all its stakeholders.

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 Fig. 1 – Performance Highlights for the FY 2021-22

Value Creation Process:

The report presents the value created by the organisation as per the IIRC frameworks, presenting the
inputs in terms of 6 capitals, followed by the business model adopted by MSIL, wherein the vision,
strategy and the value chain has been described and finally the outputs are again captured as per the 6
fundamental capitals.
Input Output

Fig. 2 Natural capital deployed and produced by MSIL in FY 2021-22

It can again be noted that in input capital, the organisation has again only mentioned the positive
things and have missed some important figures such as the net electricity usage, water consumption
etc. On the output side too some important figures such as water wastage, net waste produced etc. are
missing. In addition to this only Scope 1 & 2 carbon emissions are reported, and the Scope 3
emissions are not accounted for, which can be one of the major contributors when it comes to
automobiles, this is another area of improvement for the company.

Triple Bottom Line Performance:

On the ‘Planet’ front, the performance can be described under different categories:
Climate Change Management: Report shows the intent of the organisation of moving towards
greener energy and over the last few years, has deployed CNG and smart hybrid technology in its
products (sales contribution increased from 20.5% to 27% from 2020-21 to 2021-22), has increased
the installed solar power capacity significantly (from 1.3 MWp in 2019 to 26.3 in FY 22). Recently it
announced the plan to invest 10,400 crores in Gujarat, to construct a plant for manufacturing of BEV
batteries and Electric Vehicles, which it aims to launch by 2025. A key activity undertaken by the
company is the increasing use of rail transport over road transport to dispatch vehicles has helped
avoid over 4,800 MT of CO2 emissions in the past eight years as it saved over 156,000 truck trips and

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over 174 million litres of fuel.

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The above-mentioned activities display the emphasis placed by MSIL on reducing the carbon footprint
through out its value chain and not just within its premises, which shows an approach focused on Life
Cycle Assessment (LCA) and aligning its strategies accordingly.
Contribution to Circular Economy: The company is focused on End-of-life vehicle management
and employs design for recyclability and recoverability (95% & 85% of the materials are recyclable
and recoverable respectively). On the same front the company has undertaken an initiative and
launched a vehicle dismantling and recycling facility to recover the re-usable material from obsolete
vehicles.
Optimising use of Natural Resources: The key highlight or initiative in this section is the usage of
100% of waste generated in steel being re-used as inputs, which reduces the consumption of new steel.
In addition to this it is also works on reduction of packaging materials by reusing, recycling, and re-
thinking (optimising design to reduce the quantity required).
Water Stewardship: On this front the company has taken initiatives towards water recycling and an
important step taken is at the service centres where they have started deploying the dry-wash
technique to reduce water consumption, which again shows that they are not constrained to their
manufacturing premises and take steps keeping the LCA impact in mind.

Stakeholder Engagement:

MSIL has deployed a strategic orientation when it comes to stakeholder engagement, wherein they
identify and prioritise stakeholders based on the co-dependence on each other, responsibility of the
company towards the stakeholders and the influence that the stakeholders can have on company’s
decision-making process. Then to make decisions that are aligned with maximum shared value
creation, they create a stakeholder materiality matrix, wherein the material issues (which are also
mapped to applicable goal out of the 17 SDGs) are categorised keeping in mind the needs of both
stakeholders and the company. A snapshot of the above-mentioned matrix is in the Fig. 3.
To make sure they timely engage with all the stakeholders, well defined activities and their respective
frequencies have been formulated which makes the whole process of engagement, a systematic one.

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 Fig. 3 – Stakeholder Materiality Matrix for the FY 2021-22

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Sustainable Supply Chain:

The Company has implemented a Comprehensive Excellence (CE) programme, through which it aims
to upgrade the performance of Indian Tier-1 suppliers on nine critical sustainability pillars, while
meeting the growing business needs. The 9 pillars are namely: Manufacturing and testing facilities,
Manufacturing process control, Maintenance capability, Human resource development, Tier-2
development, Top management focus on excellence, Safety management, Scale and capability for
future investment, Risk management.
A key initiative in supply chain taken by the company is ensuring that Tier-1 suppliers are informed
about upcoming Substances of Concern (SOC) control requirements in advance through the Green
Procurement Guidelines (GPG), which restrict the use of globally recognised SOC in parts,
accessories, raw material, and direct consumables. Tier-1 suppliers are required to strengthen SOC
management processes within their organisations and inform Tier-2 suppliers to comply with the
minimum SOC management requirements. Tier-1 suppliers are encouraged by GPG to establish an
Environmental Management System (EMS) at their facilities and promote EMS adoption among Tier-
2 suppliers.

Summary:

In this report we saw the sustainability activities undertaken by MSIL i.e. the reporting of the
sustainability activities, measuring the performance in terms of the 6 fundamental concepts, taking a
value creation approach etc. We also took an overview of the positives of the things reported and a
few negative points as well.
The company can be said to be doing decently as far as the initiatives towards sustainable
development taken by it are concerned, given that in the sustainability maturity curve they have
moved beyond the mandatory compliances and risk management to shared value creation, but that
being said, there is still a lot of scope for improvement, especially if we look for the work done by the
company in the area of biodiversity and ecosystem services, which is practically non-existent and
hence a point of concern as it is of significant importance in the area of sustainable development,
which should be undertaken by the company. Another concern is that they have not accounted for
Scope 3 emissions. Going forward these are something which MSIL can work upon, which will help
them in furthering their sustainable development goals.

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