WEBVTT X-TIMESTAMP-MAP=LOCAL:00:00:00.000,MPEGTS:0 1 00:00.873 --> 00:06.688 Welcome to Deloitte's ESG in TMT series. To better understand our industry's 2 00:06.888 --> 00:11.359 role in today's most pressing environmental, social, and governance issues, 3 00:11.559 --> 00:14.348 we will be interviewing inspiring leaders from across 4 00:14.548 --> 00:17.499 Technology, Media, and Telecommunications. 5 00:17.699 --> 00:22.991 Thank you, really thank you very much for being with us today and speak about 6 00:23.191 --> 00:31.051 the ambitious sustainable business developments of Vodafone. You are leading 7 00:31.251 --> 00:36.456 that initiative, you are heading the sustainable business for Vodafone Group and 8 00:36.656 --> 00:45.420 you have set quite a high level of standards in terms of reporting and you have 9 00:45.620 --> 00:54.828 set a really ambitious targets and goals for that. So, it's really a pleasure to have 10 00:55.028 --> 01:03.056 you with us today. With sustainable business means business means growth and 11 01:03.256 --> 01:10.530 my first question is really around it is important for the world, but also for the 12 01:10.730 --> 01:16.184 business and do you see actually growth coming from ESG at Vodafone? 13 01:16.384 --> 01:20.362 Wonderful. Thank you Ariane and thank you very much for inviting me. 14 01:20.562 --> 01:26.640 It's great to be here and a real pleasure. So, firstly, let me agree with you that 15 01:26.840 --> 01:31.608 sustainability or ESG or delivering the sustainable development goals is 16 01:31.808 --> 01:35.200 important for the world. Frankly, we have no other option than to go there, 17 01:35.400 --> 01:40.816 but what's more, it's also really a moral imperative for companies. It's really an 18 01:41.016 --> 01:45.763 integral part of the role of business in society. It's absolutely the right thing to do, 19 01:45.963 --> 01:49.260 and that it also makes business sense. It's to some extent of who knows, 20 01:49.460 --> 01:56.051 but a really nice one. So, I tend to think about driving value through 21 01:56.251 --> 02:00.696 sustainability in three ways. So, on the one hand you have avoiding that you 22 02:00.896 --> 02:05.036 lose money by keeping your license to operate. So, ensuring sound responsible 23 02:05.236 --> 02:10.581 business practices underpinned by proper governance, compliance mechanisms, etc., 24 02:10.781 --> 02:13.932 especially for the things that are really material for your business and where 25 02:14.132 --> 02:19.245 you can even go for a leadership ambition. Secondly, it's saving money by doing 26 02:19.445 --> 02:23.684 things more efficiently and so energy efficiency, for example, is a case in point. 27 02:23.884 --> 02:30.251 We have about 10% of our OPEX spend is on energy. So, by having managed to 28 02:30.451 --> 02:35.284 keep our energy use more or less flat this by the 1000% increase in data traffic, 29 02:35.484 --> 02:42.732 that clearly there is a big business case. Then thirdly, which is the really the big 30 02:42.932 --> 02:47.764 prize is finding new value pools. So, business model innovation, new product 31 02:47.964 --> 02:51.682 offers, etc., and that's where the real growth lies to your question and the 32 02:51.882 --> 02:57.211 opportunity also to have a really positive impact on society and clearly for digital 33 02:57.411 --> 03:02.055 and connectivity, there is this huge chance and opportunity to increase the 34 03:02.255 --> 03:07.162 speed and the scale with which we deliver the ESDG. So, let me maybe bring it to 35 03:07.362 --> 03:13.891 life with a few examples. There's no better way than to make a point. So, closing 36 03:14.091 --> 03:17.983 the mobile gender gap. So, we have set ourselves a target to connect 37 03:18.183 --> 03:24.335 an additional 30 million women living in Africa and Turkey to mobile by 2025. 38 03:24.535 --> 03:30.187 So, for Vodafone as well as growing our base that means that actually we have 39 03:30.387 --> 03:35.397 where we see that women have lower churn, we see that they have a higher 40 03:35.597 --> 03:39.702 Net Promoter Score, so they're more likely to recommend Vodafone, etc. 41 03:39.902 --> 03:45.262 So, clearly there's a business case. For the world for women, it has shown as 42 03:45.462 --> 03:50.850 improved social outcomes across health, education, financial inclusion, etc. 43 03:51.050 --> 03:57.580 So, we have a service called Mum & Baby. It's basically text messages with 44 03:57.780 --> 04:02.295 information about maternal and baby health, and we've actually seen as a result 45 04:02.495 --> 04:09.332 of that an increase in vaccinations by 650,000 and increase in breastfeeding, etc. 46 04:09.532 --> 04:16.772 So, really a huge positive impact for society as well, and that's one example. 47 04:16.972 --> 04:22.553 Maybe another one is a is M-PESA, which is probably one of the best examples 48 04:22.753 --> 04:28.445 out there of creating shared value. So, business impact is there's a huge trend 49 04:28.645 --> 04:33.633 towards more digital forms of payment in Africa, the value of transactions 50 04:33.833 --> 04:39.386 process per day is expected to reach over 3 billion and for us, for Vodacom's 51 04:39.586 --> 04:43.485 international markets, M-PESA accounts for 20% of service revenue. 52 04:43.685 --> 04:48.625 So, we've got now over 50 million M-PESA customers and we did a piece of 53 04:48.825 --> 04:54.494 research, which showed that in Kenya, we estimated that nearly 200,000 54 04:54.694 --> 04:59.397 women were able to switch from subsistence farming to business or sales as 55 04:59.597 --> 05:02.722 their primary occupation as a result of having these platforms. 56 05:02.922 --> 05:07.917 So, that's a brilliant story, but just to very briefly mention also one from an 57 05:08.117 --> 05:12.233 environmental point of view, there was a huge opportunity with our corporate 58 05:12.433 --> 05:17.073 customers to offer what we call Digital for Green services. So, we've set 59 05:17.273 --> 05:22.328 ourselves a target of helping our customers reduce or enabling them to reduce 60 05:22.528 --> 05:27.513 350 million tons of carbon emissions between now and 2030, which is the 61 05:27.713 --> 05:31.989 equivalent of the annual emissions of a country like Italy and that's through 62 05:32.189 --> 05:36.813 smart energy, smart logistics, smart agriculture. We have one story in 63 05:37.013 --> 05:41.890 Guadalajara, which I love where we connected I think 13,000 LED lights to smart 64 05:42.090 --> 05:46.949 systems and they saved, they reduced their energy consumption by 68%. 65 05:47.149 --> 05:54.533 So, those are really value and growth opportunities in real tangible terms. 66 05:54.733 --> 06:03.340 It's fascinating. Thank you for those very tangible examples. 67 06:03.540 --> 06:12.420 Moving to the stakeholders, we have seen a large movement of more and more 68 06:12.620 --> 06:19.372 direct interactions with stakeholders and discussion. Have you seen those 69 06:19.572 --> 06:25.703 changes, obviously, but what are the new things that you have observed 70 06:25.903 --> 06:29.133 in your relationship with stakeholders? 71 06:29.333 --> 06:35.352 It's a really good question. I mean the changes have been huge and there is a lot 72 06:35.552 --> 06:39.609 more stakeholder interaction clearly, when there's external stakeholder groups 73 06:39.809 --> 06:43.436 that are new, that also creates internal stakeholder groups that are new and 74 06:43.636 --> 06:46.647 that you engage with. So, it becomes a much richer conversation. 75 06:46.847 --> 06:52.149 I think clearly the role of business in society has been changing, but it's seen 76 06:52.349 --> 06:57.176 a huge acceleration through COVID, especially with stakeholder communities 77 06:57.376 --> 07:02.493 like investors. So, investors' interest in ESG, environmental, social, and governance, 78 07:02.693 --> 07:07.680 issues had increased dramatically over the last two years. Clearly there's a huge 79 07:07.880 --> 07:12.864 increase in sustainable assets and their management, but also lots of investors 80 07:13.064 --> 07:16.756 in our company are publicly committed to integrating ESG in their own 81 07:16.956 --> 07:22.272 investment portfolios and processes. Many of the large investors are making 82 07:22.472 --> 07:27.175 AGM voting decisions based on our performance and our disclosures, say, 83 07:27.375 --> 07:32.568 for example, SASB. They're scrutinizing our ESG performance much more. 84 07:32.768 --> 07:36.735 So, I have a lot more conversations with analysts and investors now than we had 85 07:36.935 --> 07:41.208 two to three years ago. They also ask questions from Nick Read, our CEO, and 86 07:41.408 --> 07:46.429 Margherita, our CFO, at the results presentation. So, they're asking questions. 87 07:46.629 --> 07:51.268 They're asking questions in a different way. It's broadened very much from 88 07:51.468 --> 07:56.396 mainly governance tools, so environmental issues and increasingly social issues, 89 07:56.596 --> 08:00.860 and also what is really fascinating and that doesn't necessarily come through in 90 08:01.060 --> 08:05.036 some of the indices, etc., but apart from the risk side, they're also really asking 91 08:05.236 --> 08:10.841 about the opportunity side. So, I think that group of investors is a really new 92 08:11.041 --> 08:14.656 stakeholder that we engage with much more actively and which then also 93 08:14.856 --> 08:18.582 means engagement inside the company with the finance function, etc., 94 08:18.782 --> 08:23.828 but I think also for the other communities, the engagement has stepped up. 95 08:24.028 --> 08:33.165 So, if you think policymakers at EU level, equitable, sustainable, the twin digital 96 08:33.365 --> 08:37.373 and green transition, it is central in Commission President from the Leyen's agenda. 97 08:37.573 --> 08:41.946 So, there is also a huge movement there towards more mandatory reporting, 98 08:42.146 --> 08:48.501 due diligence, etc., which always ups the requirements, but also the rigor with 99 08:48.701 --> 08:53.811 which we do these things. Corporate customers, again the number of 100 08:54.011 --> 08:59.457 conversations I have with my counterparts in our corporate clients who just 101 08:59.657 --> 09:05.215 like us are putting more requirements around ESG on their suppliers. 102 09:05.415 --> 09:11.289 It's been fascinating to the point that sometimes a piece of work can depend on 103 09:11.489 --> 09:16.522 whether you've got a certain score on CDP or on EcoVadis or all of these things. 104 09:16.722 --> 09:22.736 So, it really makes a tangible difference. And I would say maybe lastly also civil 105 09:22.936 --> 09:28.139 society, much more active and much more active in a different way. So, not only 106 09:28.339 --> 09:33.453 making their voice heard, but also class actions, legal actions against companies 107 09:33.653 --> 09:39.876 on their due diligence, etc. So, those are really big shifts and require much more 108 09:40.076 --> 09:44.379 rigor in how we do this with, of course, also the backing of our colleagues, 109 09:44.579 --> 09:49.326 our people who've been asking every single big all-hands meeting we have, 110 09:49.526 --> 09:52.132 they ask about purpose, they ask what we do on the planet, etc. 111 09:52.332 --> 09:56.756 So, much, much more in-depth engagement I would say across the board. 112 09:56.956 --> 10:07.201 Talking about impact on society, how do you measure actually because 113 10:07.401 --> 10:11.883 it's not an easy one, how do you measure and track the impact you have 114 10:12.083 --> 10:14.855 on society with your products and services? 115 10:15.055 --> 10:22.216 That is indeed not an easy one and it's a difficult question. We've done studies 116 10:22.416 --> 10:27.932 like the one that I mentioned on M-PESA's impact on society, but we recently 117 10:28.132 --> 10:34.765 did some work with your teams to understand how we can put impact on the 118 10:34.965 --> 10:40.236 SDGs through our purpose much more up front and at the heart of our products 119 10:40.436 --> 10:44.905 and really make sure that it nearly is embedded in the design of the products 120 10:45.105 --> 10:48.798 because that gives you much more quality data than post factum doing a 121 10:48.998 --> 10:53.914 survey. So, it's about being much more targeted on exactly how we tend to 122 10:54.114 --> 10:58.713 affect a positive impact on society and to measure that with the SDG as a guide. 123 10:58.913 --> 11:04.649 So, it also changes the conversation about targets because suddenly you're 124 11:04.849 --> 11:09.936 thinking not only about reach, but also about the overall benefit of products and 125 11:10.136 --> 11:15.849 how they deliver to society. So, with your team, one of the brilliant case studies 126 11:16.049 --> 11:24.621 I think that we did was in the UK, we provided half a million free data SIMs to 127 11:24.821 --> 11:28.390 schools to distribute to pupils who were struggling to get online during the 128 11:28.590 --> 11:33.931 lockdown. You say, yeah, of course, that's a good thing, but then you don't 129 11:34.131 --> 11:38.018 really know the tangible impact of this. So, we were guessing in this particular case. 130 11:38.218 --> 11:43.693 You helped us with the methodology to establish that each SIM card 131 11:43.893 --> 11:48.352 has the potential to access about 60 days of schooling that would 132 11:48.552 --> 11:53.399 otherwise have been out of reach and lost, which equates again to a learning 133 11:53.599 --> 11:57.769 time equivalent of the third of a GCSE grade. So, it becomes more tangible. 134 11:57.969 --> 12:07.403 It's always hard to quantify and to make hard, but at least it brings it to life 135 12:07.603 --> 12:10.431 and it makes it much more tangible. 136 12:10.631 --> 12:20.701 So, obviously telcos have ESG impacts through all their value chain and 137 12:20.901 --> 12:27.866 starting from the supply channel. How do you drive those changes 138 12:28.066 --> 12:29.515 throughout the supply chain? 139 12:29.715 --> 12:38.965 Yes, again, all work in progress clearly, but if you think that Vodafone has over 140 12:39.165 --> 12:45.030 20 billion supply chain spend annually, we again have a huge platform for impact 141 12:45.230 --> 12:50.123 and we very much take a life cycle approach to the relationship with our suppliers. 142 12:50.323 --> 12:53.989 So, when we set our science-based target on environment, for example, 143 12:54.189 --> 12:58.200 the target is by 2030 to fully eliminate the emissions from our own operations 144 12:58.400 --> 13:04.958 and to half the emissions from Scope 3 of which a large part is supply chain. 145 13:05.158 --> 13:10.291 So, one of the things we did was, and that was even before we set the SDG, 146 13:10.491 --> 13:16.482 we changed the tender process and allocate now 20% of the assessment of new 147 13:16.682 --> 13:23.423 vendors to environmental and diversity and inclusion scores and that really 148 13:23.623 --> 13:29.711 helps move the needle because here is a very big supply and it's also changed 149 13:29.911 --> 13:33.762 the conversation because it's a different level of engagement with these big 150 13:33.962 --> 13:38.165 companies in our supply chain, which then also leads to partnership, etc., etc. 151 13:38.365 --> 13:45.285 So, we're now working with the 100 biggest ones to join us on our road to net 152 13:45.485 --> 13:50.773 zero and encourage them to also set them as BT aligned to 1.5 degrees to report 153 13:50.973 --> 13:56.226 under CDP to provide product-specific data because that will help us measure 154 13:56.426 --> 14:02.727 our Scope 3 correctly. So, it's a conversation that has started and is really a joint 155 14:02.927 --> 14:08.128 effort, which it's nice to see and then we've also got in the contracts and the full 156 14:08.328 --> 14:13.488 life cycle as awards, etc., but I think that up-front piece is really powerful. 157 14:13.688 --> 14:21.305 Maybe my last question talking about collaboration because here we are 158 14:21.505 --> 14:28.632 talking about collaboration and usually it's really a systemic issue. Do you see 159 14:28.832 --> 14:35.302 a better partnership? Do you see better alliance? Do you see how do you 160 14:35.502 --> 14:41.166 work better together with all your counterparts? 161 14:41.366 --> 14:49.070 Yes, again work in progress, but I think what has really made a difference is, and 162 14:49.270 --> 14:55.335 that again was accelerated by COVID, is this social contract mindset. So, working 163 14:55.535 --> 14:59.495 differently and thinking about your role in society differently and starting from 164 14:59.695 --> 15:04.703 what society needs and then helping with the build back better. So, we need to 165 15:04.903 --> 15:08.617 keep up that momentum and we don't only need to keep up the momentum, 166 15:08.817 --> 15:13.478 but actually really radically accelerate because whilst the mindsets are now in a 167 15:13.678 --> 15:17.124 better place, to be honest, the world is in a much worse place, right, with lots of 168 15:17.324 --> 15:21.620 people having slipped into poverty with biodiversity collapsing, etc. So, we've 169 15:21.820 --> 15:26.706 got some good pockets of collaboration already and there's even this review of 170 15:26.906 --> 15:31.031 competition law, which is necessary also to encourage collaboration between 171 15:31.231 --> 15:34.896 companies. So, we have partnerships with the companies, with the UN 172 15:35.096 --> 15:40.310 bodies, with NGOs, with the full industry, with other sectors more across the 173 15:40.510 --> 15:46.567 whole value chain and each of these collaborations are different, but I think it's 174 15:46.767 --> 15:51.352 important that they all start from very concrete objectives, that they set very 175 15:51.552 --> 15:56.895 real tangible outcomes, that they have a very clear how it's going to be 176 15:57.095 --> 16:00.926 delivered. We have enough talk about the worry in the world, but now actually 177 16:01.126 --> 16:07.318 we need to roll out the programs at scale and at speed, and therefore, that's 178 16:07.518 --> 16:13.173 what leads to success and collaboration will be very different depending on 179 16:13.373 --> 16:20.510 what you're trying to achieve. So, we just started a big program with the 180 16:20.710 --> 16:28.630 UN Broadband Commission around closing the gap, the digital divide, but also 181 16:28.830 --> 16:32.606 the gap to access to affordable phones, and that's really tangible, 182 16:32.806 --> 16:35.942 'OK, what concretely are we going to do?' But then on the other hand, 183 16:36.142 --> 16:42.280 we have the change to face alliance, which is more about bringing 184 16:42.480 --> 16:46.678 a collaboration around diversity and having those debates and shaping them 185 16:46.878 --> 16:52.274 with other players in the market. So, different setups for different aims, 186 16:52.474 --> 16:56.226 but very much oriented to how can we have impact at scale and 187 16:56.426 --> 17:01.941 what is the unique contribution of each of the collaborators as such? 188 17:02.141 --> 17:09.518 Thank you so much, Dorothee, for your transparency and your 189 17:09.718 --> 17:13.289 amazing energy to what's coming good. So, thank you so much 190 17:13.489 --> 17:17.782 for being with us today and talk soon. 191 17:17.982 --> 17:21.864 Yes, thank you very much, Ariane. Take care. 192 17:22.064 --> 17:33.000 (end)