ITC Limited: a sustainable investment decision

Learning outcomes Learning objectives are as follow: Case overview/synopsis The case examines whether a long-term, fundamentals-oriented fund should invest in the stock of ITC, a diversified Indian company with its largest business segment being cigarettes, after considering the relevant sustainability issues. The fund manager analysing ITC’s sustainability implications in June 2025 faces a dilemma in the presence of both favourable and unfavourable information and opinions concerning ITC’s sustainability. Being a tobacco products manufacturer, ITC is perceived as a “sin-stock”, while it is rated more favourably by the ESG rating agencies. While the company has an impressive track record of sustainability initiatives, does it adequately address the core issues? Should that matter to a fund catering to investors interested in financial returns? If sustainability is relevant to economic value, how should it be evaluated? The case illustrates the difference between impact and financial materiality. It also facilitates an understanding of how sustainability issues impact firm value and their implications for stock selection decisions in investment portfolio management. Lastly, it provides an opportunity to discuss the theoretical perspectives underlying a company’s sustainability-related activities, including the shareholder wealth maximisation objective, stakeholder concerns, and an organisation’s need for legitimacy. Complexity academic level Suitable for graduate or undergraduate level students in business management. Suitable courses include Sustainable Finance, Corporate Finance and Investment Analysis and Portfolio Management.