Position Statement

Anti-Bribery and Anti-Corruption

This position is in alignment with the Code of Conduct of Asian Paints Limited.

At Asian Paints we are committed to maintaining highest ethical standards while undertaking fair business operations, following the best practices of corporate governance, upholding the Company’s reputation, and implementing and enforcing effective systems to detect, counter and prevent bribery and corruption.

·         We uphold zero tolerance position towards bribery and corruption.

·         We have zero tolerance towards giving or offering to give, directly or through a third party, undue incentive to a  public servant or any business partner intending to obtain or retain business or an undue advantage in the course of our business.

·         We prohibit bribery and corruption in all our business dealings and in all forms like cash, gifts, entertainment, hospitality, kickbacks, etc.

·         We maintain complete books of accounts and records that accurately and fairly reflect the transactions of the Company.

We encourage our stakeholders to report suspected event of bribery and corruption by blowing the whistle under the Asian Paints Whistle Blower Policy available at https://www.asianpaints.com/WBPolicy.html.

We are committed to continuously reviewing and updating our policies and procedures. Therefore, this statement is subject to modification. This position statement shall be reviewed once in three (3) years.

Human Rights

This position is in alignment with the Code of Conduct of Asian Paints Limited.

At Asian Paints we strive to respect and promote human rights by upholding the Universal Declaration on Human Rights of the United Nations in our relationships with our employees, suppliers, and business partners. We expect our employees, business partners and suppliers to avoid causing or contributing to human rights infringements through their business actions, including encouraging or permitting child labour. We respect the employees’ right to privacy within the ambit of law. We are not concerned with employee conduct outside the work environment unless such conduct impairs work performance or creates a conflict of interest or adversely affects Company reputation or business interests.

Specific requirements relating to human rights, inter alia, include:

·           providing our employees with safe and humane working conditions, and maintaining compliance with all applicable laws, rules, and regulations including but not limited to fair compensation, hours worked, equity, safety, etc.

·           respecting employees’ right to freedom of association and recognition of employees’ right to collective bargaining, where allowed by law

·           prohibiting forced labour/employ people involuntarily under threat of penalty, including forced overtime, human trafficking, debt bondage, forced prison labour, slavery, or servitude

·           prohibiting child labour

·           ensuring no discrimination on the grounds including, but not limited to age, disability, gender, sexual orientation, political or other opinion, ethnic or social origin or religion

·           zero tolerance towards sexual harassment or harassment in any form across our operations and our value chain

·           right to privacy within the ambit of law.

We follow the laws and regulations pertaining to human rights and conduct regular training sessions to instil the key principles of our Code of Conduct including topics of human rights for creating awareness.

We encourage our stakeholders to report suspected human rights violations by blowing the whistle under the Asian Paints Whistle Blower Policy available at https://www.asianpaints.com/WBPolicy.html.

We shall undertake due diligence on Human Rights on a regular interval to identify, prevent and mitigate adverse human rights issues.

We are committed to continuously reviewing and updating our codes, policies, and procedures. Therefore, this statement is subject to modification. This position statement shall be reviewed once in three (3) years.

Tax Governance

Asian Paints believes in complying with laws in letter and spirit.

Asian Paints recognises payment of tax as an integral element of its corporate responsibility and is committed to being tax compliant. Our responsible tax strategy (both direct and indirect taxes) consists of ensuring compliance with applicable tax laws in India and the countries that it operates in, thereby avoiding tax risks.

We are committed to complying with statutory tax obligations and compliances in all the jurisdictions in which we operate in a responsible manner. This includes:

a.       Paying correct and appropriate taxes and levies in each of the jurisdiction where point of taxation is triggered and where it operates in accordance with the prevailing tax regulations.

b.       Filing accurate, timely tax returns as well as settling tax obligations as required.

c.       Disclosure of required details to the tax authorities.

d.       Complying with all applicable taxation rules and regulations.

e.       Taking decisions on tax matters by relying upon reasonable interpretation of the tax provisions, regulations, and rules of the country in which the Company operates.

f.        Filing of country-by-country reporting within timeline and support the OECD’s (Organization for Economic Cooperation and Development) work on Base Erosion and Profit Shifting (‘BEPS’).

The Tax compliance is monitored by the Taxation function within the overall control and governance framework of the Company. We are committed to continuously reviewing and updating our policies and procedures. Therefore, this statement is subject to modification. This position statement shall be reviewed once in three (3) years.

NET ZERO CARBON EMISSIONS

Reducing GHG emissions is not only a business imperative for us at Asian Paints, but also forms a vital part of our environmental stewardship. Aligning our emissions management strategy with the global goals of minimizing carbon footprint and mitigating climate change risks, we have streamlined our processes to move closer to this common goal.

Over the last 10 years, we have been working on reducing our Scope 1 and Scope 2 emissions primarily through our initiatives around renewable energy and energy efficiency. We have been able to reduce our absolute Scope 1 emissions by 43% and absolute Scope 2 emissions by 47% by 2022-23 from the baseline year of 2013-14, translating into a 74% reduction in Scope 1 and Scope 2 emissions intensity. The 62.2% of renewable electricity share in 2022-23 is the testimony of the journey we have travelled so far. We have also been working on reducing our carbon footprint in the value chain through multiple initiatives under product stewardship, sustainable packaging, and greening of our logistics.

We are committed to continuing our efforts in reducing scope 1 and scope 2 emissions and aim to reduce the emissions intensity by 75% by 2025 and 80% by 2030. In this regard, we shall pursue the following measures that would steer us towards achieving this goal:

1. Continue to increase the share of renewable energy in our operations. We have set a target to achieve 75% renewable electricity share by 2025 and aspire to achieve 100% by 2030.

2. Our efforts in energy efficiency have resulted in a gradual decline in our total electricity consumption over the years. We aim to reduce our specific electricity consumption (KWh/Kl) by 48% and 53% by 2025 and 2030 against the baseline year of 2013-14.

3. Switch to greener fuels in our operations.

During the year 2022-23, we inventoried our Scope 3 emissions. The results of our emission inventory indicate that Scope 3 emissions contribute to almost 97% of our overall emissions.

While we continue to take measures to reduce our Scope 1 and 2 emissions to meet our 2025 and 2030 targets, we believe that it is vital to address the Scope 3 emissions in order to transition to low carbon. We aim to achieve this through the following key focus areas:

1. Sustainable optimization of products and services: We have been working on formulation optimization and efficiency to reduce the overall carbon footprint of the products. This essentially means reducing emission intensive raw materials through formulation and process innovations.

2. Lesser carbon-intensive raw material alternatives: We continuously evaluate alternatives for existing raw materials such as alternate grades, alternate chemistries as well increased renewable/bio-based content, suppliers with efficient operations. Alternates with lower embodied carbon are prioritized for implementation. We target to significantly increase renewable/bio-based raw materials by 20% and 30% by 2025 and 2030 respectively. Similarly, we strive to increase the recycled content in our plastic packaging to 30% by 2025 and 60% by 2030.

3. Sustainably Advantaged Products: Our Sustainably Advantaged Products are products which are more sustainable than current norm for the industry and bring tangible sustainability benefit to our customers. These include products which provide resource efficiency benefit in use-phase by reducing surface temperature, offer longer lasting performance, provide health and well-being benefits, etc. We have a well-entrenched Product Stewardship agenda to advance development of Sustainable products as part of ESG commitments.

4. Engagement with Suppliers to reduce emissions: Our Code of Conduct for Business Partners (the Code) acts as the foundation for driving the ESG agenda in our value chain. Through our recently developed sustainable supply chain framework, we plan to sensitize, assess and engage with our suppliers on ESG issues including climate change. A major step towards achieving this goal would be to develop collaborative partnerships with suppliers to promote sustainability in their operations. We encourage our suppliers to transition to the use of renewable energy sources and work with us to increase the use of renewable raw materials.

5. Transportation and distribution: We focus on reducing our logistics footprint through greener modes of transport as well as upsizing of trucks employed for transporting our material. We adopted multimodal transportation focusing on rail and sea dispatches, employed cleaner fuel-powered vehicles, etc. We collaborate with leading FMCG/FMCD industries for load pooling and reverse logistics synergies. We look for opportunities that National Logistics policy provides to augment these initiatives further and embrace green logistics.

Structured interventions focusing on Category 1 and Category 4 Scope 3 GHG emissions, while making continuous improvement in our Scope 1 and Scope 2 emissions will enable us to systematically decarbonize our value chain, and contribute to climate change mitigation.

Biodiversity and No Deforestation

Recognizing our interdependencies with the local biodiversity, we are committed to biodiversity conservation which is also underpinned by our Environment Policy. We are aligned with the United Nations Sustainable Development Goals (SDGs) of promoting, preserving, and protecting our biological ecosystems.

Our manufacturing plants are in notified industrial areas and not in proximity to any protected areas for biodiversity conservation. Hence, our own operation has a minimal impact on biodiversity. However, we have undertaken several biodiversity initiatives at our facilities:

• Enhancing Biodiversity in and around our manufacturing plants:

o Impact of our operations on biodiversity is assessed as part of an EIA study mandated by statutory requirements at the project planning stage.

o Our factories undergo biodiversity and ecology studies and undertake biodiversity interventions through a Natural Capital Action Plan (NCAP).

o Based on the site-specific NCAP, we work towards protecting and enhancing the natural ecosystems in and around the Company's operations by preserving or restoring habitats and supporting local biodiversity conservation initiatives.

o Measures include growing native plant species within our facilities, creating dense plantations, protecting wildlife, enriching habitat for species and providing community awareness programs. Our long-term objective is to enhance the site's biodiversity value and work with local communities.

• No - Deforestation:

o We operate only from sites that are notified industrial areas devoid of impacting forests & deforestation and away from ecologically sensitive areas.

o We comply with legal requirements for green belt development within our facility. We also take up afforestation activity outside the facility in collaboration with communities.

• Biodiversity in our value chain:

o Upstream - Suppliers: We are dedicated to sourcing raw materials sustainably to promote environmental and social stewardship. We evaluate our suppliers on environmental and social criteria including potential impacts on biodiversity.

o Downstream – Product Stewardship: Through our sustainable products, we aim at reducing carbon footprint and waste, mitigating indirect impact on biodiversity. Our Research and Technology team focuses on minimizing the impact of our products on the environment, as well as adverse health effects. This includes substituting substances that have or are suspected to have, an adverse impact on the environment or on human health. Our durable products protect last longer and avoid resource consumption and waste generation.

o Downstream – Packaging: Safe disposal of plastic packaging is an important indirect downstream impact on biodiversity, particularly the presence of microplastics in the environment. We have been ensuring the collection and safe disposal of our packaging waste through the Extended Producer Responsibility (EPR) approach since 2018 as well as augmenting use of recycled plastic in our packaging.

• Other ecosystem services:

o We work in collaboration with communities to improve the availability of water in the ecosystem near our plants by increasing the infrastructure to harvest rainwater.

o We implement integrated watershed development in villages nearby to our factories to improve their water security. We undertake initiatives like pond cleaning, desilting, check-dams, irrigation canal lining, training farmers on micro-irrigation systems, and integrated pest and soil health management.

o Also, all our manufacturing plants are Zero Liquid Discharge facilities.

o We follow the classical ‘3R’ strategy of Circular Economy for waste management: Reduce, Reuse and Recycle. Waste generated is inventoried periodically and disposed of in compliance with applicable government regulations. Our manufacturing units are equipped with appropriate waste storage facilities thereby avoiding any threats posed to our surrounding environment.

We recognize that our success is intertwined with the health and well-being of ecosystems, and we are dedicated to making a positive difference. Further details on our Biodiversity initiatives, as well as environmental performance, can be read in our Integrated Annual Report and ESG Report.

Supplier Engagement

Asian Paints is committed to operating in a manner that has positive impact on both people and the planet. We continuously work to create synergistic and symbiotic value across our value chain to reduce negative impacts and promote a brighter future in a collaborative manner.

We recognize the integral role that our suppliers play in achieving our sustainability strategy and our ability to ensure secure supply to our customers. Supplier management programs are in place to drive continuous improvement of existing supply chains and develop meaningful collaboration opportunities.

We deploy a well-defined stage-gate process for evaluation and onboarding of prospective suppliers which assesses suppliers on quality, delivery, price competitiveness and ESG criteria. Suppliers are assessed on legal compliance as well as critical social and environmental criteria such as comprehensive environmental policy, implementation of the management system as well as self-declaration on key Human Rights.

Sustainable Supply Chain framework:

Our Sustainable Supply Chain framework (herein after referred to as “Framework”) helps assess legal compliance as well as adherence to internationally recognized environmental, social, and corporate governance standards. The foundation of the framework is our Code of Conduct & our Responsible Procurement Policy for Business Partners and includes processes for risk management and supplier performance. The framework enables us to evaluate our suppliers on the expectations set-out in our Code, on the categories that include, but not limited to Environment, Labor and Human Rights, Business Integrity and Ethics, and Sustainable procurement.

Code of Conduct for Business Partners:

Our Code of Conduct for Business Partners (herein after referred to as “Code”) lists out our expectations from suppliers in terms of their Environmental, Social and Governance performance. We expect our suppliers to acknowledge the Code and operate in a manner consistent with the values and expectations set therein.

Responsible Procurement Policy:

The Responsible Procurement Policy guides our internal procurement decision-making process and enables our efforts to protect the environment and promote socially responsible conduct throughout our supply chain. This policy applies to the sourcing of products and services by Asian Paints Limited from all its suppliers, contractors, logistics partners and service providers along the value chain (hereinafter referred to as Suppliers); local as well as international.

Expectations from Suppliers:

We encourage our Suppliers to reduce their environmental footprint as well as social and governance risks in all their operations. We also encourage our suppliers to innovate and develop new products requiring less intensive material and energy consumption, promoting circularity and resource efficiency.

We expect our Suppliers to participate in our Supplier Sustainability Program in a transparent manner and work towards improving their sustainability performance and reducing ESG risks.

Assessment and Implementation:

For assessment under this framework, we have adopted a two-tier approach, to effectively drive sustainability and address risks:

All suppliers: This represents all business partners with whom we have a business relationship.

• We expect all our Suppliers to acknowledge the Code. As of 30th April 2023, 1279 existing vendors have acknowledged the Code which includes more than 65% of RM suppliers by spend-value.

• Environmental & social criteria are part of suppliers screening process

• Suppliers’ disclosure of ESG criteria and performance

Critical Suppliers: This represents the business partners who fall in the top quartile (75%) of value by spend or suppliers that have significant ESG footprint

• Critical suppliers shall be assessed on a comprehensive ESG criteria. The assessment shall be done through a third party and may include site audits. For Suppliers who are certified under international standards such as SEDEX or EcoVadis, site assessment can be exempted depending on the performance and self-disclosure. We intend to assess 20% of the total critical suppliers in FY 2023-24.

The assessment shall encompass ESG criteria pertaining to Environment Stewardship, Human Rights due diligence, Business Integrity, and Sustainable procurement. We expect our Suppliers to develop corrective actions and implement the same within reasonable timeframe and facilitate follow-up audits in case of non-compliance with any of the guiding principles of our Code. Depending on the nature of the non-compliance or failure to appropriately remedy the same, we reserve the right to suspend or terminate any relationship with the noncompliant Supplier.

Periodic assessments through the Framework will help us assess maturity and progress of our strategic and critical suppliers and shall pave way for collaboration with suppliers.