ESG framework of Coromandel International Limited

Harnoor Kaur Hora IPM/2230/02

Indian Institute of Management, Bodh Gaya
Environmental Economics
Dr. Suresh KG
Introduction
Coromandel International, named initially Coromandel Fertilisers, makes fertilizers, pesticides,
and specialty nutrients and was founded in the 1960s. The crop protection products are
advertised in India and international geographies, offering technical and formulation products.
As a top agro-solutions provider in India, Coromandel strongly emphasizes sustainable practices
and provides environment-friendly products to support agriculture. Its focus is on improving
farm productivity and resource efficiency through Seed-to-Harvest solutions offering safe and
eco-friendly products to farmers. The company strives to transform agriculture by enhancing
sustainability throughout its value chain and ecosystem. It is committed to proactively investing
in its systems, processes, and technologies to improve its performance while minimizing adverse
environmental and societal effects.

The beliefs of the Murugappa Group- Responsibility, Quality, Passion, Integrity, and Respect
- guide the organization in leading with ethics and transparency and form the foundation of
Coromandel’s ESG framework.

Business Model of Coromandel International

Exhibit A: Portfolio and services offered

1. Coromandel International follows an integrated approach to agribusiness. The

company provides fertilizers and agri-inputs and offers advisory services and
 knowledge transfer to farmers, which helps educate them and help them produce
sustainably.

2. The company tailors its product offerings to suit the specific needs of different crops
and regions and ensures that farmers receive products optimized for their local
conditions, enhancing the effectiveness of the inputs.

3. Coromandel International's supply chain management is crucial to its business

model. The company must ensure a steady supply of raw materials, efficient
production processes, and timely distribution to meet farmers' demands, especially
during peak agricultural seasons. For this reason, it follows an optimal system that
considers the demand, profitability, capital investment, needs for space, and other
factors to maximize profits.

4. The company has an extensive distribution network that reaches farmers across various
regions of India. The company utilizes a mix of dealers, distributors, and retailers to
ensure its products are accessible to farmers in both rural and urban areas.

5. Coromandel International's financial model includes managing costs, optimizing

pricing strategies, and maintaining profitability while ensuring its products remain
affordable for farmers and emphasizing sustainability.

6. The primary customer segments for Coromandel International are farmers and
agricultural enterprises, and its products are targeted at helping these customers
optimize their crop yields and achieve better agricultural outcomes, which are as per
their needs.

7. Coromandel International's value proposition revolves around offering high-quality

agricultural inputs that contribute to increased crop productivity, improved soil health,
and sustainable farming practices.

8. The company invests in research and development to develop innovative products

and solutions tailored to the Indian agricultural landscape. This includes creating new
fertilizers, crop protection solutions, and technologies that align with changing farming
practices and environmental concerns.
 9. Coromandel collaborates to stay updated with the latest agriculture along with various
stakeholders, such as government agencies, research institutions, and industry
associations.

ESG Framework

Coromandel’s ESG framework is built on three pillars that serve as the foundation for its
strategic responses and highlight its potential for value creation. The three strategic pillars are:

1. Protecting the Planet

2. Minimizing Resource Use

3. Inclusive Growth

The business prioritizes responsible growth for farmers and empowering communities through
strategic and tactical interventions while also enhancing the quality of soil and crops. Its
operational initiatives and value chain fulfill its commitment to minimizing resource use and
conserving the planet's limited resources.

Exhibit B: ESG framework

Source: Annual report FY2022-23

The company’s range of products and services covers the entire crop life cycle, from seed to
harvest, including plant nutrition, and also provides farm advisory services. The ESG Framework
minimizes its operations' adverse impact on the planet and people. It has divided its operations
into five strategic pillars supported by specific themes that guide the organization’s sustainability
roadmap. This involves waste management and wise use of natural resources to lessen the
environmental impact. In addition, it carries out focused interventions to promote social
advancement in its operations. These need-based programs add to the company's dedication to
encouraging a sustainable future. ·

To protect the planet, the company has taken the following measures:

 Coromandel’s ongoing efforts focus on enhancing environment management practices to

minimize the impact of its activities on the biodiversity surrounding its facilities. For this,
it develops a comprehensive plan to mitigate its manufacturing operations' effects on the
local biodiversity surrounding the plants. It bolsters the green cover around its
manufacturing facilities to ensure ecological well-being. It also implements nature-based
solutions that aid in adjusting to climate change and provides supportable livelihood
opportunities.

 As India's foremost producer of Agri-solutions, Coromandel prioritizes reducing

greenhouse gas (GHG) emissions from its manufacturing plants. For this purpose, it aims
to minimize Scope and 2 GHG emissions (direct and indirect greenhouse gas emissions
by either sources owned/controlled by the company or the consumption of used
resources) and become carbon neutral.

 The business has created a thorough Product Stewardship strategy to promote responsible
crop care techniques, lessen its carbon footprint, and meet rising demand. It also wants to
add safer crop protection products with green or blue labels to its line-up.

It focuses on minimizing the use of resources by adopting the following measures:

 It strives to lower operational water intensity in its goods and include water recycling
solutions to maximize water resources in its production operations. To run the
 desalination plant, harvest rainfall rather than using groundwater. It works with
suppliers to cut its carbon footprint using cutting-edge technology and ethical business
practices.

 It also prioritizes minimizing energy consumption throughout the manufacturing process

and is committed to reducing its dependence on fossil fuels by increasing the utilization
of renewable energy sources. It believes in and commits to recycling and reuse practices.

 They’ve established a wide-ranging waste management policy that reduces hazardous

waste generation within their manufacturing plants. The company successfully achieved
100% ERP for plastic waste generated at its manufacturing plants. It involves taking
comprehensive measures to manage the entire lifecycle of the plastic products produced,
including their collection, recycling, and proper disposal.

The company ensures inclusive growth by implementing the following measures:

 Ensuring employees' safety, health, and well-being is extremely important to

Coromandel. It supports a culture that encourages open communication and gives
employees proper channels to raise their concerns.
 To closely monitor operations and reduce the TRIFR, or the Total Recordable Injury
Frequency Rate, and LTFR, or Lost Time Injury Frequency Rate; it has efficient
procedures and safety performance indicators. Its goal is to maintain a track record of
zero serious injuries and fatalities, ensuring the well-being of employees.
 The company has established a comprehensive human rights policy to reinforce fair
employment practices and is dedicated to promoting gender diversity.

Suggestions to improve environmental performance

1) Water-positive company
 Implementation: It can become water positive by implementing precision
agriculture, sustainable sourcing, ecosystem restoration, and other water
conservation methods in collaboration with various stakeholders.
 Impact: Being an agribusiness company, Coromandel has the potential to become
a water-positive company. Being a water-positive company, the company would
 work on conserving and replenishing water sources than the consumption or
depletion level.
2) Firefighting system
 Implementation: A successful firefighting system can be adopted through proper
risk assessment planning, designing and installing a plan, and providing the
employees with the appropriate knowledge.
 Impact: It affects the environment by contributing to water pollution, depleting
groundwater levels, and using chemicals that affect water quality and soil health.
Society is affected as an efficient system that would ensure safety and employee
well-being and build a resilient community. Firefighting systems contribute to a
company's ESG strategy by improving safety, safeguarding assets, and complying
with sustainable governance principles through regulatory compliance, risk
management, and transparency.
3) Scope three emissions
 Implementation: Coordination with suppliers, consumers, and other stakeholders is
frequently necessary to reduce emissions collectively over the entire value chain.
 Impact: It focuses on emissions associated with activities outside the reporting
organization's direct operational control but are related to its value chain. A
comprehensive sustainability strategy must address Scope 3 emissions because they
influence the environment outside the organization's core operations.
4) LED-based Energy sources
 Implementation: A detailed audit of the company’s operation and implementation of
proper plans per the company’s needs must be carried out before the performance.
This would depend upon the profit and saving the implementation offers and the areas
for LED lighting.
 Impact: The company can preferably use LED-based Energy sources and thrusts on
efficient energy utilization/renewable energy to reduce carbon footprint.
5) Circular Economy Practices
 Implementation: A closed-loop system for product materials can be established by
Coromandel in collaboration with suppliers and clients. This includes recovering and
recycling product parts after they end their functional lifespans.
  Impact: By promoting Circular Economy Practices, the company can develop
strategies to minimize waste through product design, reuse, and recycling.
6) Deposit and refund policy
 Implementation: It can adopt a deposit and refund policy on its recyclable plastics
products. Being a market leader with high-profit margins than most of its competitors,
it can either cut down on some of its profits in the short run to implement this policy
(or increase the prices without compromising on profits). Considering the price-
sensitive customers, cutting down on profits initially would be a better option.
Furthermore, as the products are purchased in bulk, the customers would be
incentivized to return the reusables to get back a high amount of money.
 Impact: As Coromandel is one of the major market shareholders in the agri-produce
sector, raising prices won’t impact its market share drastically. Additionally, this
would lead to waste reduction and resource conservation, offering the company cost-
saving and efficiency.
7) Eco-friendly packaging
 Implementation: several products the company offers have a long shelf life and can
be packed in reusable material such as jute, glass, or aluminum cans. Testing the
reactivity of different products with all kinds of reusable packaging and changing
plastic packaging to other eco-friendly alternatives would be a great initiative.
 Impact: The use of eco-friendly jute packaging, metal cans, and cardboard-
plastic packaging for suitable products would be an initiative that helps reduce plastic
waste by a significant percentage. It would also minimize plastic weight, lower
carbon footprints, and conserve resources while protecting soil and water.

Conclusion
With nearly six decades of history, Coromandel International has steadfastly committed to
transparency, ethics, and sustainability. These core values have been the foundation of the
company's journey, reflecting a business strategy and a broader responsibility to society and the
environment. Rooted in five fundamental pillars - Respect, Quality, Passion, Integrity, and
Responsibility - the company's ESG (Environmental, Social, and Governance) policy
exemplifies a holistic approach to responsible business. The company has an ESG score of 55,
which is better than the industry average. The company's twin focus on Protecting the Planet and
Minimizing Resource Use while promoting equitable growth is noteworthy, but the company
still holds room for improvement. Several measures, such as changes in packaging material, the
use of LED-based energy sources, and firefighting system, may only seem like they serve the
environment on a micro level. Still, it actually correlates with all the components of ESG. Other
measures, such as water zero or circular economy and deposit and refund policy, impact the
environment on a vast scale and takes years to implement successfully. These procedures, which
range from small-scale adjustments to significant changes, would increase the company’s ESG
scores and also help improve the environment in the long term.

Reference
1. https://www.coromandel.biz/sustainability/environment/
2. https://www.coromandel.biz/wp-content/uploads/2023/07/Integrated-Annual-Report-FY-
2022-23.pdf
3. https://www.coromandel.biz/wp-content/uploads/2021/07/InvestorPresentationApr21.pdf
4. https://www.sustainalytics.com/esg-rating/coromandel-international-ltd/1008757071