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An introduction from Lord Stern…

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2

Main Points

▪ A major shift in the global economy is underway

▪ Leading companies are already mainstreaming

sustainability into their core business

▪ Tata is uniquely positioned to take advantage of these

new models for growth

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As growth slows across in China and the OECD, India’s trajectory

remains uncertain

SOURCE: OECD Data, World Bank data

2.32.3

3.83.2

6.3

9.39.2

10.4

7.47.58.0

5.5

2006-2014 2015-2017 projected1996-20051985-1995

ChinaOECD India

Average GDP growth rates

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1. Growing political

economy issues

Political economy trends

raise questions about the

model for future growth

– Global anti-trade

sentiments

– Uncertainty regarding the

future of work

– Growing inequality

– Reduced trust in

corporations

The overuse of our planet’s

resources continues to get

worse…

Global growth remains precarious due to growing short term political

economy pressures and long term environmental constraints

2. Massive environmental

constraints

…while four trends in particular

pose a serious challenge to our

existing model of economic

growth:

– Growing resource demand

– Growing resource insecurity

– Rapid urbanisation

– Environmental degradation

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Political economy uncertainties raise questions about India’s model for

future growth

Increasing

protectionism

Currency wars

Instability from

loose monetary

policy

Automation could

eliminate 45% of

current jobs

“Gig economy” is

changing firm-

employee

relations

Corporate profits

at cyclical high

Digital economy

challenging

traditional tax

regimes

Top 1% own more

than the bottom

99% combined

Growing evidence

suggests

inequality is a

drag on growth

SOURCE: McKinsey Global Institute, Oxfam

Glo

ball

y

Future of workAnti- trade

sentiments

Reduced trust in

corporations

Growing inequality

1

How will India

participate in global

value chains to drive

growth

Will automation at

scale prevent India

industrialising with its

service model?

How will Indian

business build trust

with its customers?

Will India’s income

distribution support

sustained growth?

Qu

es

tio

ns

for

Ind

ia

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6

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

July

June

September

August

May

December

November

October

SOURCE: http://www.overshootday.org/newsroom/past-earth-overshoot-days/

Earth Overshoot Day from 1970-2015

The overuse of our planet’s resources continues to get worse…

1972 – Limits of Growth

1983 – Greens elected into

German Parliament

2015 – Papal encyclical

1986 – Chernobyl

2005 – Hurricane Katrina

Second Indonesian haze

1997 – First Indonesian haze

2011 – Fukushima

Last northern white Rhino

1987 – Brundtland Commission

1992 – Rio Earth Summit

2009 – Copenhagen

Climate Summit

1984 – Bhopal Disaster

Earth Overshoot Day marks the date when humanity’s demand for ecological resources

and services in a given year exceeds what Earth can regenerate in that year

2

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…while four trends in particular pose a serious challenge to our existing

model of economic growth

Up to 3 billion more

middle-class

consumers will

emerge in the next 20

years, driving energy

consumption up by

roughly 1/3

Depletion of known

reserves driving costs

up e.g., copper price

rises due to 1% p.a

decline in ore grades

Current urban

migration & income

growth trends mean

~1.6bn people will

occupy crowded or

inadequate or

housing by 2025

Majority of urban

population is in cities

with air pollution at

least 5x higher than

WHO guidelines

SOURCE: McKinsey STAC center, McKinsey Global Institute and Growth Within: A circular economy vision for a competitive Europe, New Climate Economy

1 Ernst & Young report The Paris Agreement: what it means for India

Glo

ball

yIn

In

dia

India is projected to

grow by 255m by

2040, the largest

absolute growth in the

world

From 2015 to 2030

India will need to

spend an ~£20b on

adaptation1 to manage

strained water supplies.

India’s cities are

vulnerable to natural

disasters due to a

combination of rising

sea levels & changing

wind patterns

Only 2 of India’s 148

largest cities had

passable air quality

in 2014.2

Growing resource

insecurity

Growing resource

demand

Rapid urbanisation Environmental

degradation

2

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8SOURCE: Growth Within: A circular economy vision for a competitive Europe

Drivers of current

unsustainability…

..by transformation of housing practices

and the built environment

… but opportunity to capture

positive trends…

Population growth:

9.6b people by 2050

Urbanization: 4.2bn

people by 2020; 70%

of 2050 population

19 new megacities1 by

2020

Cities account for 70%

of global energy

demand and

greenhouse gas

emissions

Only 2 of India’s 148

largest cities had

passable air quality in

20141

Urban sprawl in India is

estimated to reduce

GDP by 5.7% or %80b

annually2

Shared spaces – e.g. AirBnB had

$56m impact in San Francisco in 2012

alone

Innovative technology: 3D printing

used in construction

▪ e.g., WinSun built 10 houses in 24

hours using 30-60% less material

and costing €5k per house

Factory-based industrial processes

used in construction cutting costs by

30% and delivery times by 50%

These growing environmental threats are a trigger of industry change, and

innovation offers hope of seizing the growth opportunity – e.g. Real Estate

1 Indian Central Pollution Control Board

2 New Climate Economy Report, 2014

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Further opportunities exist from industry change in Agriculture

SOURCE: FAO

Drivers of current

unsustainability…

..by transformation of agricultural

practices

▪ Population growth:

9.6 billion people by

2050

▪ Urbanization: 70% of

2050 population

▪ Diet shifts: more

wealth = more protein

… but opportunity to capture

positive trends…

▪ 1/3 of all food

produced is lost before

consumption

▪ Complete loss of

Earth’s top soil within

60 years if

degradation rates

continue

▪ Nutritional content of

vegetables have

fallen; increasing

prevalence of obesity

▪ Innovative technology – 75%

reduction in input costs through

adoption of precision agriculture1

▪ Regenerative farming practices –

increasing organic land 6% p.a in

Europe

▪ Restoration of nature capital –

e.g., restoring degraded land in

Loess, China, lifted 2.5m people

out of poverty and increased per

capita grain output by 60%

▪ Digital supply chain – IT/big data

to improve inventory management

e.g., Tesco using local weather

forecasts

1 E.g. whole-farm management approach leveraging IT, big data, remote sensing and satellite

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10

Investors are beginning to understand the potential to outperform through

investing in companies positioning themselves for these new markets

SOURCE: Carbon Disclosure Project; Global Insights World Industry Service (Capex data); McKinsey analysis

S&P 500 companies rated as climate change leaders1 performed better:

1 Companies in CDP’s Climate Performance Leadership Index

18%

50%

21%

Higher RoE than low scoring peers

Lower volatility of earnings over the past decade

than low-scoring peers

Stronger dividend growth than low scoring peers

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11

Stocks with high exposure to sustainability have positive financial and

valuation characteristics

SOURCE: Morgan Stanley

NOTE: Number of stocks in each exposure category: Zero: 2,048; Low exposure1: 348; High exposure2: 438

1 Low exposure = lower than median; Average exposure of these stocks to sustainability themes = 4%

2 High exposure = higher than median; Average exposure of these stocks to sustainability themes = 21%

High

Exposure2

11.3%11.2%

Zero

Exposure

Low

exposure1

9.9%1.04

0.78

Low

Exposure1

Zero

Exposure

1.07

High

Exposure2

Current ROE 5 year beta

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Main Points

▪ A major shift in the global economy is underway

▪ Leading companies are already mainstreaming

sustainability into their core business

▪ Tata is uniquely positioned to take advantage of these

new models for growth

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The best companies serving this opportunity by tackling three horizons

Leading companies are acting on all three horizons simultaneously

Horizon 3

Horizon 2

Optimising within

today’s business

model, e.g.

upgrading

product

Horizon 1

Preparing for and

influencing the

next business

modelGreening today’s

products and

supply chain

▪ Reducing

emissions

along value

chain

▪ Reducing

resource

consumption

▪ Changing

products

through

innovation

▪ Collaborating

with industry

▪ Moving to a

service model

▪ Changing

consumer

behaviorExam

ple

s

Embedding

sustainability

to create

value

▪ 10-15 year

systemic view

▪ Clear link to

shareholder

value creation

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Unilever has placed sustainability at the heart of its strategy, reaping

significant economic rewards

Horizon 3

Horizon 2

Horizon 1

▪ Unilever will be

carbon negative

in its operations

by 2030

▪ Unilever

achieved €200m

annual cost

reduction from

sustainability

initiatives

▪ Unilever spent

2.1% of 2014

revenue in R&D

to build

sustainable

brands

▪ Unilever aims to

change the

hygiene behaviour

of 1bn consumers

by 2020.

In 2014, this

initiative reached

313 million

people and

resulted in a 7-

20% increase in

sales across

different brands

▪ Sustainable

living brands

grew at 2x the

rate last year

compared to

other brands

▪ €400m total

savings

through eco-

efficiency since

2009

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MORE

GROWTH

MORE

TRUST

LOWER

COSTS

LESS

RISK

OVER

€600mcumulative cost

avoidance made since

2008

30%

60%of our agricultural raw

materials were sustainably

sourced by 2015

No. 1employer in 34 countries

Sustainable Living brands

grew 30% faster than the

rest of the business

Unilever’s Sustainability Framework helps unlock

value from sustainability for better business

performance

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▪ The BMW i3 is an

all-electric

vehicle

leveraging

lithium-ion high-

voltage battery

for emission-free

city driving.

▪ BMW is starting

to offer mobility

services:

– DriveNow: Car

sharing service

– ParkNow: App-

&web-based

parking service

▪ The BMW’s i-

Series uses 25%

renewable raw

materials &

recycled

plastics in the

interior

▪ 95% of the

materials can be

recycled

Horizon 3

Horizon 2

Horizon 1

SOURCE: Company websites; Spiegel Online; Car and Driver Blog, The Telegraph

▪ BMW Group

achieved its best

ever sales in

2015 (up by 14%

from 2014) and

set new UK

records.

▪ The i-Series sold

3,000+ electric

vehicles, growing

sales +80% from

2014

BMW has undergone a structured end-to-end sustainability

transformation

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Dow is maximizing growth from science-driven sustainable innovation

Horizon 3

Horizon 2

Horizon 1

▪ Natural capital

commitment

through Seadrift,

will use

reconstructed

wetlands for waste

water treatment

and yield >$200

million in NPV.

▪ In 2014, Dow

reduced 110

trillion BTUs of

energy

consumption

▪ In 2014 Dow

reused 344m

lbs of by-

products in

manufacturing

▪ In 2014, Dow

generated $13b

in revenue from

products highly

advantaged by

sustainable

chemistry

SOURCE: Dow sustainability reports, Dow annual reports, company website

▪ Dow developed a

more effective

Reverse Osmosis

purification system

that delivers:

– 40% better

water

purification

with

– 30% less

energy.

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18

Embed

sustainability to

create value

Set up

organization to

succeed

✔

Engage with the

external world✔

Make a more

sustainable

value chain

✔

Ten critical actions to drive sustainable value creation

Take a 10-15 year systemic view

Use the 3 Horizon approach

Explicitly link to shareholder value creation

✔

Drive sustainability through tier 1 & 2 suppliers

Implement a Circular Economy strategy: Zero waste, Design

for remanufacturing

Make your brand portfolio mission-driven

Shift the dialogue with regulators towards industry transformation

Use clear metrics and KPIs to track progress

Provide incentives for hitting sustainability targets

Use leadership to embed sustainability values into the

culture

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What do leading companies NOT do?

✗

✗

✗

✗

Make claims that they cannot deliver

(“greenwashing”)

Treat sustainability as CSR

Hold sustainability as a CEO “pet Davos

topic”

Get too far out ahead of the curve (e.g.,

Beyond Petroleum)

✗ Be half-baked

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Main Points

▪ A major shift in the global economy is underway

▪ Leading companies are already mainstreaming

sustainability into their core business

▪ Tata is uniquely positioned to take advantage of these

new models for growth

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Tata is strongly placed to create value in this new environment

Geographic

Footprint

Portfolio

Ownership

Model

▪ Tata’s presence in India enables it to harness

potentially rapid Indian growth

▪ Tata’s global presence positions it to capitalize on

demands for global infrastructure investment that

‘lock in’ to smart systems

▪ Tata’s diverse portfolio is conducive to cross sector

sustainability measures

▪ Tata’s portfolio covers digital & hardware

industries, both of which are required to pioneer

cutting edge smart systems

▪ Tata is 66% owned by the Tata Foundation which

means it is able to take a longer term, systemic

view

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22

There is a huge market opportunity from viable growth

Circular industrial

systems

ResidentialBuilding

Total opportunityIndustry Area

Energy

Production

Automotive

Became 100% circular? What would it be worth? What would it cost?

Became the world leader in renewable infrastructure development?

What if Tata…

Became the world leading shared mobility platform?

Became the world leader in smart, affordable housing development?

$2trn+

$410b

$1trn

$165b

Total power investment per annum

Opportunity for improvingmunicipal water systems

Opportunity fromnew car economy2

Opportunity from affordable housing

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23

Tata has already made significant progress across a number of key

elements of its business

Horizon 3

Horizon 2

Horizon 1

▪ Jaguar Land

Rover’s

REALCAR2 builds

lightweight auto

bodies using

lower-cost,

energy efficient

sources, with an

increased amount

of aluminium scrap

from post-

consumer waste

streams.

▪ Tata Power

Company’s Club

Enerji has saved

~3.06m units and

sensitized 3.5m

citizens

▪ Jaguar Land Rover

reduced energy

use by 32% per

vehicle produced

Tata aims to be

amongst the 25

most admired

corporate and

employer

brands globally,

with a market

capitalization

comparable to

the 25 most

valuable

companies in

the world.

SOURCE: Tata Sustainability Group report

▪ Tata’s HIsarna pilot

plant has reduced

CO2 by reducing

pretreatment of the

iron ore

▪ Tata Power

company will install

the first floating

concentrated

solar PV plant in

India.

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24

Questions for discussion

▪ What the major opportunities for Tata that also drive sustainable

development in India and globally?

▪ How well-prepared is Tata for the major sustainability-risks it will face

over the next 15 years?

▪ What are the real-world trade-offs between business performance

and sustainability?

▪ What new business models are needed to get after these

opportunities?

▪ What should Tata stop doing around sustainability in order to create

greater focus?

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25

APPENDIX

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The Sustainable Development Goals: Inclusive growth in an environmentally

sustainable way

The 17 new, universal goals for global prosperity aimed at transforming the world by 2030:

▪ Zero poverty

▪ Wide, interconnecting targets

United Nations Sustainable Development Goals (SDGs)

Integrates private sector

Strong focus on growth

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27

There is a huge market opportunity from viable growth

Water Infrastructure Management

Residential Building

$45trn

$410b

$1trn

Total opportunityIndustry Area

Energy

Production

Automotive

Improve community-based water systems by working with Piramal Sarvajal to install smart, data-driven water infrastructure in Indian urban slums

Partner with organizations like Mera Gao Power to install low-cost solar powered microgrids to rural Indian villages.

WRI estimates the Indian market for this at $2b/year1

What if Tata…

Launch a ride sharing platform to develop sector in India

Develop best in class electric vehicle for Indian urban

businesses and consumers

Integrate biomimicry design concepts into architectural design of new structures to optimize sustainable building efficiency

- For example using REGEN’s EnviroGrid, a wireless energy management system based on insect’s swarm logic which cuts electric costs by 5-10% or more

$165b

Total power generation installed by 2040

Opportunity for improvingmunicipal water systems

Opportunity fromnew car economy2

Opportunity from affordable housing

Source: Alpha Beta analysis 1 MIT Technology Review 2 includes automotive vehicles, car sharing and electric and hybrid vehicle market sizes