Analysis of Vodafone Group PLC Sustainability Report

Analysis of Vodafone Group PLC Sustainability Report 2010-2011
Analysis of Vodafone Group PLC Sustainability ReportAnalysis of Vodafone Group PLC Sustainability Report
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Submitted By: Archana Ashar Deeksha Nigam Jay Karan Singh Chadha Richa Pandey Shwetank Sharma Vinay Arun NMIMS Batch 2011-2013 Submitted to: Prof. Sujata Mukherjee
TTable of Contents
1) Executive Summary ................................................................................................... 43 2) Methodology.............................................................................................................. 54 3) Introduction to Vodafone Group PLC ....................................................................... 65 4) Key Highlights of Vodafone Group PLC 2011 Sustainability report ....................... 76 5) Stakeholders............................................................................................................... 87 6) Triple Bottom Line Approach ................................................................................. 109 i) ii) iii) Social Indicators................................................................................................... 109 Environmental Indicators ............................................................................... 1211 Economic Indicators....................................................................................... 1312
7) Addressing the Challenges Faced .......................................................................... 1413 8) Corporate Governance Design............................................................................... 1514 9) Key Learning and Recommendation ..................................................................... 1817 10) References .......................................................................................................... 1918 1) Executive Summary ..................................................................................................... 3 2) Methodology................................................................................................................ 4 3) Introduction to Vodafone Group PLC ......................................................................... 5 4) Key Highlights of Vodafone Group PLC 2011 Sustainability report ......................... 6 5) Stakeholders................................................................................................................. 7 6) Triple Bottom Line Approach ..................................................................................... 9 i) ii) iii) Social Indicators....................................................................................................... 9 Environmental Indicators ................................................................................... 11 Economic Indicators........................................................................................... 12
7) Addressing the Challenges Faced .............................................................................. 12 8) Corporate Governance Design................................................................................... 13 9) Key Learning and Recommendation ......................................................................... 17 10) References .............................................................................................................. 18
1) Executive Summary
This report outlines the actions, processes and strategies adopted towards corporate social responsibility adopted by Vodafone Group PLC. It starts with the methodology used to analyze Vodafone Sustainability Report 20102011, gives a brief introduction on the company followed by the analysis of the CSR activities as well as the Corporate Governance Strategies of the company. To conclude, the key learning and recommendations are covered.
2) Methodology
This section outlines the methodology used to analyze the company. a) Stakeholder Theory The stakeholder view of strategy is an instrumental theory of the corporation, integrating both the resource-based view as well as the market-based view, and adding a socio-political level. This view of the firm is used to define the specific stakeholders of a corporation as well as examine the conditions under which these parties should be treated as stakeholders. b) Triple Bottom Line Approach The triple bottom line: economic, ethical and environmental bottom line evaluates a corporations performance according to a summary of the economic, social and environmental value the corporation adds. The narrowest meaning of the term is - a framework for measuring and reporting corporate performance against economic, social and environmental indicators. This includes clarifying the corporations purpose and taking into consideration all stakeholders. c) Corporate Governance Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. An important theme of corporate governance is the nature and extent of accountability of particular individuals in the organization.
3) Introduction to Vodafone Group PLC

Vodafone has come a long way since making the first ever mobile call in the on 1 January 1985. Today, they serve more than 371 million customers. In 25 years, a small mobile operator fromin Newbury has grown into a global business and the seventh most valuable brand in the world. They now operate in more than 30 countries and partner with networks in over 40 more. In an increasingly connected world, its no longer just about being able to talk and textsend SMSs. Vodafone understands that businesses need a communications partner with solutions that scale and adapt as their business needs change. Whatever their size and whatever their need, Vodafone is constantly looking for new, innovative ways to help their business customers grasp every opportunity in a simple and straightforward way. Vodafones commitment to the community in which they operate extends beyond the products and services they offer. The cornerstone of their commitment to global social investment is the Vodafone Group Foundation. Funded by annual contributions from the Vodafone Group, the Foundation and its network of 27 country foundations supports the community involvement activities of Vodafone and funds selected global initiatives directly.
4) Key Highlights of Vodafone Group PLC 2011 Sustainability report

In the report we look at various initiatives, taken up by Vodafone to create a sustainable society. The three core strategic focus areas for Vodafone now are now:
Vodafone is developing innovative solutions which deliver a triple bottom line: meeting critical societal needs, enabling more efficient use of resources with less waste, and doing better business in the process. Vodafone has won the Best Report award for three years in a row 2008-2010. In 2011 it was awarded the Best carbon disclosure report (not eligible for Best Report award after winning three years running)
5) Stakeholders
Vodafone lists specific stakeholder groups and reports on specific issues raised by them and how these were addressed. 2010-2011 Stakeholder Matrix
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Figure 1 2010-2011 Stakeholder Matrix
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Stakeholder Group Investors
Opinion Formers NGOs Consumers
Vodafones Engagement Vodafone meets with investors regularly through events, conference calls and one-to-one meetings to understand their concerns about sustainability risks and help identify potential future issues. Vodafone consults with experts on a wide range of issues to gain feedback about their policies and inform strategy about sustainability. Vodafone consults with NGOs when their campaign or focus is relevant to the business. They do this by organizing face-to-face meetings and meeting representatives at sustainability events. Engagement with consumers is through retail outlets, contact centers and customer research.
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Vodafone engages with industry peers through participation in industry forums on sustainability issues. These include GSM Association (GSMA) and GSM Europe, Global e-Sustainability Initiative, EU Corporate Leaders Group on climate change, World Business Council for Sustainable Development (WBCSD)
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Industry
Communities
Vodafone consults the local community to help them address thetheir concerns they may have with Vodafone networks and practices. Vodafone engages with regulators and governments on a wide range of issues relevant to business and contributes to consultations on sustainability issues. Vodafone gains feedback from employees through Global People Survey and informal internal communication channels and regular meetings Vodafone works closely with its suppliers to ensure they maintain high standards by conducting assessments and holding workshops to help them improve. It also collaborates with key network suppliers to help them cut climate impacts by improving the energy efficiency of their operations
Government
Employees
Suppliers
6) Triple Bottom Line Approach

The following diagram depicts Vodafones responsibilities and development of Triple Bottom Line with relation to the same.
People
Maintain high ethical standards in their own operations and those of their suppliers Ensure the safety of their employees and contractors Treat their employees fairly and help them develop their talent
Planet
Minimise environmental impacts from their operations and products Communicate transparently with communities and the public on network deployment and mobiles, masts and health, and comply with national and international guidelines on exposure to radio frequency fields
Profit
Earn the trust of customers by safeguarding privacy, promoting child safety online, offering accessible products and services, and ensuring pricing is clear, and marketing and mobile advertising is responsible
Applying Triple Bottom Line Approach
i) Social Indicators
(a) Empowering Women
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Vodafones Al Johara program enables Qatari women to learn entrepreneurial skills and earn a living by selling Vodafone products and services to their communities. In India, they support women in self-help groups by training them to become Vodafone retailers, providing finance management tools and offering information about health, hygiene and social issues via mobile. (b) M-Pesa Initiative M-Pesa enables people in emerging markets to send money to their families and pay for goods or services via their mobile phones. It is cheaper than wiring 10
Analysis of Vodafone Group PLC Sustainability Report 2010-2011 money, safer than carrying or sending cash, and combats the potential for corruption along the way. (c) Access to Medicine In emerging markets, Vodafone is using mobile to improve access to medicine by, for example, tracking and managing the supply of drugs to make sure they go where they are most needed. Vodafones Mobile Relationship Manager Service, used to manage supplies of malaria drugs, and is the first mHealth solution to be scaled up commercially on a national scale across Tanzania. (d) Mobile Payments to farmers Mobile payment solutions are helping farmers to obtain quick, secure payments for produce and save for seed, fertilizer or against unexpected risks. Vodafones services for farmers in Ghana, India and Turkey offer features such as weather alerts and up-to-date information on crop prices from local markets. More than 280,000 people in Turkey have signed up. (e) Code of Conduct Code of Conduct, rolled out in 2010/11, guides employees on how to implement these in practice and they have a duty to report any suspected breaches. In anticipation of the UK Bribery Act, due to come into force in July 2011, Vodafone also reviewed and reinforced anti-bribery programme with training to be rolled out across the Group. (f) Privacy Vodafone works closely with industry bodies, technical standards organizations, and application platforms and developers to set standards and create guidelines that can help build privacy into the design of new mobile applications, products and services however they may evolve in the future. Privacy by design is one of the seven Privacy Commitments Vodafone established in 2010/11. (g) Responsibilities towards Employees Engaging and Developing Employees through engagement activities in embedding The Vodafone Way the way they expect the employees to work together through a series of workshops, now completed by senior leaders across the Group. Employees define goals and identify development opportunities as part of annual Performance Dialogues with their managers, and Vodafone invested over 55 million in training in 2010/11. Their global leadership development programme for high-potential managers, Inspire, is now in its fourth year and 124 managers have completed the programme. (h) Promoting diversity and inclusion Vodafone aims to promote inclusive working policies and raise awareness among leaders as part of their global diversity and inclusion strategy. Its approach is tailored to meet the needs of each local market, but a priority across the Group is to improve gender balance within the teams and to increase the number of 11
Analysis of Vodafone Group PLC Sustainability Report 2010-2011 women in management. Over 250 of top senior leaders in 18 markets have now been trained on the business benefits of diversity, with a further 10 inclusive leadership workshops held in 2010/11.
ii) Environmental Indicators

a) Enabling Low Carbon Society Vodafone has set up a dedicated business to tap into the potential of Machine 2 Machine solutions to deliver significant efficiency and costs savings for their enterprise customers. They believe that the majority of M2M applications can also enable reductions in greenhouse gas emissions, and they have commissioned research to assess the benefits of specific applications for customers and the environment. Their target is to provide 10 million carbon-reducing connections by March 2013. To explore the potential of telecommunications technology to promote low carbon working and living on a wider scale, Vodafone continues to support research on how to create smart cities including: Amsterdam Smart City, focusing on technology use and behavioral change to achieve energy savings and CO2 emissions reductions in Amsterdam, the Netherlands City in Motion, in partnership with IBM, which aims to map the movement of people and traffic in a city using M2M to reduce CO2 emissions and identify joint business opportunities Megacities on the Move, a report by Forum for the Future and sponsored by Vodafone, which outlines six solutions b) Tackling Electronic Waste Vodafone has a strong record of recycling electronic waste (e-waste) from their networks in countries where they have been operating for several years. They are committed to increase capacity for responsible recycling and disposal of e-waste in emerging markets. As a first step, they have commissioned research to understand how e-waste is currently managed to assess how this can be improved. c) Cutting the environmental impacts Vodafones Environmental Principles encourage handset and accessory manufacturers to choose more sustainable materials, avoid hazardous substances and improve manufacturing efficiency. Many of their local markets also offer bespoke green products and accessories for sale in-store, and encourage customers to recycle their mobile phones. d) Network Innovation In Bihar Vodafone has deployed renewable solar power with a back-up diesel generator at 100 sites, and hybrid base stations that combine a diesel generator with a battery to reduce diesel use at a further 490 sites in Bihar.
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iii) Economic Indicators

a) Low-cost internet access Low-cost Vodafone branded internet-enabled handsets now available in 20 markets including Egypt, Ghana, India, Romania, South Africa and Turkey. The cheapest mobile internet-enabled handset, Vodafone 340, introduced at around US$30 50,000 already sold in Ghana alone. By March 2011, there had been 33 million downloads of Opera Mini including both the Vodafone customized and public version. b) Social Investment Fund In 2010/11, Vodafone provided nearly 1 million through Social Investment Fund (SIF) to support the development of products and services with high social value, including the Sanchar Shakti scheme and the Nompilo project. Over the last three years, the SIF has helped stimulate innovation in this area. As these types of products and services are increasingly becoming part of our mainstream business, they have decided to discontinue this separate fund and instead focus on partnering with others to target new ways to apply mobile technology to development needs. The commitment Vodafone made in 2010/11 as a founding member of the World Wide Web Foundation will continue with a donation of 1 million from the SIF over a three-year period. c) Workplace Initiatives Replacement of CRT monitors with more efficient LCD monitors. Workstations are configured to cut power in 30 minutes of inactivity. Substituting travel by video conference and alternate options is one of the initiatives taken. Virtualization of Servers- they reduce space and power requirements to run and cool the servers. d) Hybrid Solutions Diesel generators and battery working in alternate mode at 2200 sites to effectively reduce diesel consumption by 26, 28,548 liters. We have seen Vodafone has taken various initiatives worldwide to effective apply Triple Bottom Line Approach that will benefit the People, Environment and the Company to ensure a sustainable future.
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7) Addressing the Challenges Faced

a) Contributing to Development in Emerging Markets Growing the customer base by over 33 million in India alone in 2010/11 will be done through the fast, reliable networks and low-cost devices providing affordable access to telecommunications and, increasingly, mobile internet. b) Expanding access to Telecommunications One of the key challenges they face in expanding access in emerging markets is building a network that functions effectively and at low-cost in remote areas. Working with their network partners and equipment manufacturers, they are using innovative technology such as no frills base stations and on-site renewable energy (including solar and wind) to deploy networks capable of functioning without the power infrastructure they rely on in more developed areas. c) Supporting Health Services In the developing world, collecting field information is particularly difficult since many segments of the population are rarely able to visit a hospital, even in the case of severe illness. A lack of patient data creates an arduous environment in which policy makes can decide where and how to spend their (sometimes limited) resources. Vodafone helps achieve the same. d) Poor Recycling Practices Managing e-waste is more challenging in emerging markets where recycling facilities are often limited. Indeed, informal repair and recycling businesses in these markets consider e-waste a resource rather than an environmental issue, generating income by recovering valuable materials from old electronic equipment. But poor recycling practices using basic facilities can create risks to the environment and human health. Vodafone has taken active steps to manage e-waste in both its emerging and emerged markets and invested in R and D for the same. e) Child Safety As mobile internet use increases on smart phones, customers access online content that is outside our direct control. As a result, Vodafone provides guidance for parents and is working with handset manufacturers and software providers to develop a common set of principles for child internet safety. f) Reducing Carbon Footprint It is clear that Vodafone will not be able to meet their ambitious targets for reducing their carbon foot prints through efficiency measures alone and hence are exploring a range of options to close the gap, including investment in on-site and macro renewable energy generation, purchasing renewable energy from the grid and, as a last resort, the use of high-quality carbon offsetting. They recognize that the net carbon benefits of some of these options remain controversial and they continued to engage with stakeholders in 2010/11 to assess the most credible options.
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8) Corporate Governance Design

The Framework
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Figure 2 Corporate Governance Framework
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a) How does the team Achieve sustainability? The Group Executive Committee (ExCo) is responsible for Vodafones sustainability performance and receives a formal update on sustainability each year. A report is also made annually to the Vodafone Group Plc. Board. The Group Chief Executive has ultimate accountability for Vodafones sustainability performance. The Group Sustainability Director reports to the Group Director External Affairs (an ExCo member) and heads a team of experts who provide guidance and coordination to the managers and issue owners who implement sustainability initiatives. The chief executives of individual local markets have overall responsibility for sustainability and the Group Sustainability Director regularly meets members of their executive teams. Regular formal meetings are held with the regional CEOs and chief officers of key Group functions. The Group Sustainability team runs monthly teleconferences and annual global workshops for sustainability managers and issue owners from all the local markets to share best practices, ensure consistency across the business and drive progress towards
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Analysis of Vodafone Group PLC Sustainability Report 2010-2011 their strategic objectives. Innovation workshops aim to promote new thinking on specific issues. b) What is the role of the Board?
Hhas final responsibility for the management, direction and performance of the businesses Iis required to exercise objective judgment on all corporate matters independent from executive management Iis accountable to shareholders for the proper conduct of the business Iis responsible for ensuring the effectiveness of and reporting on the system of corporate governance c) The Board has a formal schedule of matters reserved to it for its decision and these include:

Group strategy and long-term plans Major capital projects, acquisitions or divestments Annual budget and operating plan Group financial structure, including tax and treasury Annual and half-year financial results and shareholder communications System of internal control and risk management Senior management structure, responsibilities and succession plans
d) Board meetings The Board meets at least eight times a year and the meetings are structured to allow open discussion. All directors participate in discussing strategy, trading and financial performance and risk management. Directors unable to attend a Board meeting because of another engagement are nevertheless provided with all the information relevant for such meetings and are able to discuss issues arising in the meeting with the Chairman or the Chief Executive. e) Appointments to the Board There is a formal, rigorous and transparent procedure for the appointment of new directors to the Board. Candidates are identified and selected on merit against objective criteria and with due regard to the benefits of diversity on the Board, including gender. f) Information and professional development From time to time the Board receives detailed presentations from non-Board members on matters of significance. Financial plans, including budgets and forecasts, are regularly discussed at Board meetings. The non-executive directors periodically visit different parts of the Group and are provided with briefings and information to assist them in performing their duties.
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Analysis of Vodafone Group PLC Sustainability Report 2010-2011 The Chairman is responsible for ensuring that induction and training programs are provided and the Company Secretary organizes the programs. The Board is confident that all its members have the knowledge, ability and experience to perform the functions required of a director of a listed company. g) Performance evaluation Performance evaluation of the Board, its committees and individual directors takes place on an annual basis. This year the Board undertook a formal self-evaluation of its own performance. The process was led by the Chairman and included a review of the administration of the Board and its committees covering the operation of the Board and its committees, agendas, reports and information produced for their consideration. Using questionnaires completed by all directors, the Chairman produced a report on Board performance which was sent to and considered by the Nominations and Governance Committee before being discussed with the Board members at a Board meeting. h) Re-election of directors Although not required by the articles of association, in the interests of good corporate governance the directors have resolved that, subject to the recommendation of the Nominations and Governance Committee, they will all submit themselves for re-election at each AGM. i) Independent advice The Board recognizes that there may be occasions when one or more of the directors feels it is necessary to take independent legal and/or financial advice at the Companys expense. There is an agreed procedure to enable them to do so. j) Stakeholder Engagement The feedback received from external stakeholders informs Vodafones judgment about sustainability priorities for business and helps to form an appropriate sustainability strategy.
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9) Key Learning and Recommendation

Vodafone is clearly at the head of environmental sustainability reporting. It is clear in its goals and how it will accomplish them concerning environmental, social and economic sustainability. The company is thorough with what it is doing to reduce its and its employees carbon footprint. The company commits to reducing the environmental impacts of a cell phone at every stage of its life style. From production to recycling, Vodafone uses its influence to promote reducing environmental impacts at all stages. Vodafone cares about its surroundings and all its employees. It shows this in all the programs and policies that it has implemented for all its stakeholders. The companies report was very precise in its social intent. Vodafone is committed to responding to issues of global significance and engage with local communities where ever it does business. Overall Vodafone was very specific in every category in the report. Some areas where Vodafone can further improve are given below: 1. Going ahead, they should pPro-actively increase the demand for green products, spread education and awareness rather than wait for the demand to be developed in the market. Vodafone should spread education and awareness about green products and their benefits rather than wait for the demand to be developed in the market. The sustainability report states that Vodafone will start addressing the demand as it increases. Forward integration A lot of initiative has been taken to backward integrate and ensure supplier compliance, however there was no mention of forward integration. Vodafone should also look at how their products are being sold. Increase on-site renewable energy stations Currently only 400 base stations in 16 markets have on-site renewable energy sources, this should be increased. Improve employee engagement index The employee engagement index has shown no improvement over the last 3 years, steps must be taken to address this.
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10)
References
1) http://www.vodafone.com/content/index/about/sustainability/reporting_our_perfo rmance/gri_index.html 2) http://microsite.vodafone.in/vodafone/sustainability/sustainability/index.html 3) http://www.slideshare.net/imyno8/gcsr-report-4865157 4) http://www.roberts.cmc.edu/PSI/PDF/Telecommunication2009.pdf
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Analysis of Vodafone Group PLC Sustainability Report 2010-2011