Performance in the 2008 financial year
Access to communications
Access to communications offers the single greatest opportunity for Vodafone to make a strong contribution to society, with a considerable body of research showing that telecommunications – and mobile communications in particular – has the potential to change people’s lives for the better, by promoting economic and social development. During the 2008 financial year, Vodafone continued its focus on mobile payment services and own brand handsets for emerging markets as follows:
- Vodafone has continued with the ambition of extending access to communications in emerging markets by increasing the portfolio of own branded handsets that introduce higher levels of technological development and affordability so that more people are able to use more services. The Group has shipped more than 10 million of these new handsets to more than 30 markets during the 2008 financial year.
- Over two million people in Kenya have used the Vodafone M-PESA/Vodafone Money Transfer mobile transaction service since its launch in February 2007, with an average of 200,000 more signing up each month. Customers can pay in and withdraw cash at local agents, transfer money to other mobile users via SMS and buy prepaid airtime credit. Vodafone M-PESA/Vodafone Money Transfer is being used by customers for a wide range of money transfer transactions, with the majority of transaction values being below €20. Partnering with local mobile operator Roshan, Vodafone is piloting a similar scheme in Afghanistan and plans further launches in India and in other African countries.
The Group is also finding ways to make mobile phones easier to use, particularly for customers who are elderly, deaf, hard of hearing, blind, visually impaired or have other disabilities. Examples include a speaking phone for the visually impaired and special data tariffs for deaf customers. The Group is currently conducting a strategic review of how best to address those issues and will announce the development of a centre of excellence during the 2009 financial year.
Safe and trusted internet experience
Vodafone’s reputation depends on earning and maintaining the trust of its customers. The way the Group deals with certain key consumer issues directly impacts trust in Vodafone. These include responsible marketing, clear pricing, protecting customers’ privacy and developing a mobile advertising proposition that customers find acceptable. During the year, Vodafone has re-drafted its responsible marketing guidelines to ensure that customers can continue to trust the Group’s services in new areas such as mobile advertising, social networking and digital marketing.
During the 2008 financial year, the Group’s research has shown that parents are increasingly concerned about what their children see on the internet and it is anticipated that those concerns will be transferred to children’s use of mobile devices as parents become more aware of mobile internet.
Vodafone’s initiatives in these areas include:
- All mobile operating companies that offer age-restricted content have implemented parental controls. These block access to age-restricted content on the Vodafone live! domain to those under 18 years of age. Internet filters are offered by eight operating companies, which also enable parents to prevent their children accessing inappropriate age-restricted content on the internet via their mobile phones. The mobile operating companies that have not implemented the filter will remove individual access to the internet completely on request.
- Vodafone is leading a pan-European ICT Education Initiative in partnership with other ICT companies and European Schoolnet, to develop online education resources. These will help teachers understand new mobile and internet technology and encourage their students to use it responsibly.
- Vodafone is a founding member of the Mobile Alliance against Child Sexual Abuse Content, launched by the GSMA in February 2008 to prevent users from accessing websites identified as hosting child sexual abuse content.
- A representative from Vodafone chaired the UK Home Office taskforce to develop industry guidelines on social networking. Vodafone will develop its own social networking guidelines for operating companies based on the industry guidelines to inform the way access is offered to services like Bebo, Facebook, Flickr, MySpace and YouTube.
Privacy and freedom of expression
In response to concerns raised about privacy and freedom of expression on the internet, Vodafone continued to participate in a multi-stakeholder engagement initiative to agree principles for companies on these issues. More than 20 academics, investors, companies and non-governmental organisations are now involved in this process.
The Group launched mobile advertising activities in 11 markets, adopting a conservative approach to content and privacy issues. Vodafone has begun to monitor conformance with the Group’s global guidance on advertising and is reviewing feedback on areas where the guidance should be clarified, adapted or modified.
Vodafone recognises that climate change is likely to result in profound consequences for the environment, society and the economy. Limiting the Group’s contribution is a priority and during the year the Group announced that by 2020 it will reduce its CO2 emissions by 50% against the 2007 financial year baseline of 1.23 million tonnes. The Group is currently gathering data about the carbon footprint of its newly acquired businesses in India and Turkey, and climate change targets for these businesses will be announced in due course.
The Group reviewed the options for achieving this target, including carbon off-setting as a last resort, and concluded that the most effective strategy is to cut CO2 emissions directly. The target is expected to be achieved principally through operational changes and technological innovation to improve energy efficiency in the networks. Renewable energy will be used when and where possible.
In addition, as part of the climate strategy, the Group announced that it will also be focusing on developing products and services which will help customers limit their own emissions. This is expected to include exploring consumer related solutions such as solar-powered or universal chargers as well as improving understanding of how mobile technology can enable lower emissions through more efficient traffic management, logistic planning and scheduling and the remote monitoring of utility meters.
Energy use associated with the operation of the network accounts for around 80% of the Group’s carbon dioxide emissions. In 2006, the Group set a target to reduce CO2 emissions per unit of data transmitted by 40% by 2011. This target has been achieved in 2008, three years in advance, with network carbon dioxide emissions per unit of data transmitted decreasing by 50% from 0.034 Kg/Mb to 0.17 Kg/Mb. In the 2008 financial year, Vodafone’s energy use was 2,996 GWh, equating to 1.45 million tonnes of carbon dioxide.
Sustainable products and services
Vodafone is developing programmes aimed at making delivery of its products and services more sustainable. The key focus during the 2008 financial year was on the reuse and recycling of handsets and accessories, and network equipment.
Mobile phones, accessories and the networks on which they operate require upgrading, replacement and decommissioning. The Group complies with the EU’s Waste Electronic and Electrical Equipment directive through its handset recycling programmes in all operating companies where it applies. The Group has also worked with suppliers to ensure substances prohibited by the ‘Restriction of the use of certain Hazardous Substances’ directive are phased out. During the 2008 financial year, 1.33 million phones were collected for reuse and recycling through collection programmes in 16 mobile operating companies, achieving the Group’s target. 11,849 tonnes of network equipment waste was generated, with 96% of this sent for reuse or recycling, exceeding the target of 95%.
Mobile phones, masts and health
Vodafone recognises that there is public concern about the safety of Radio Frequency (“RF”) fields from mobile phones and base stations. The Group contributes to funding of independent scientific research to resolve scientific uncertainty in areas identified by the World Health Organisation (“WHO”). The WHO established an International EMF Project in 1996, which records global research into mobile phones, masts and health and prioritises research needs. In 2006, they identified the following three main areas for additional research: long term (more than 10 years) exposure to low-level RF fields, possible health effects of mobile use in children and dosimetry (the way levels of RF absorbed are calculated).
Vodafone requires manufacturers of the mobile devices it sells to test for Specific Absorption Rate compliance when used both against the ear and against, or near, the body, using the US FCC Test procedure. Vodafone is actively engaged with the IEC Standards Organisation in developing a new global protocol for body worn phones and expects a new standard, which better reflects customers’ use of mobile devices, to be adopted later this year. The Group’s long term programme of engagement, with a range of stakeholders, aims to reduce levels of concern amongst the public and to demonstrate that Vodafone is acting responsibly.
Responsible network deployment
Vodafone’s mobile services rely on a network of radio base stations that transmit and receive calls. The Group recognises that network deployment can cause concern to communities, usually about the visual impact of base stations or health issues concerning RF fields. During the year, the Group reviewed and updated its policy on responsible network deployment. In addition, nine mobile operating companies have signed up to national industry codes of best practice on network deployment.
By cooperating with other mobile operators to share sites, the Group is reducing the total number of base stations required. This lowers costs, enables faster network deployment and reduces the environmental footprint of the network without loss of quality or coverage. Vodafone has active or passive network sharing agreements in 17 countries. In India, in partnership with Bharti Airtel and Idea Cellular Limited, the Group announced the creation of Indus Towers, an independent mobile infrastructure company that will provide infrastructure services to all telecommunications operators on a non-discriminatory basis.
The Group has conducted audits of network deployment contractors in all its local operating companies to verify adherence to the global responsible network deployment policy. As an example, more than 1,000 site audits took place in Turkey, one of the newest operating companies and the focus of significant network deployment during the year.
Vodafone aims to comply with local planning regulations but is sometimes found to be in breach. This is normally related to conflicting local, regional or national planning regulations. During the 2008 financial year, Vodafone was found in breach of planning regulations relating to 423 mast sitings. Fines levied by regulatory bodies or courts in relation to offences under environmental law or regulations were approximately £61,000.
The Group continues to implement Vodafone’s Code of Ethical Purchasing, which sets out environmental and labour standards for suppliers.
The Group increased its CR capability in China by training all supply chain employees, establishing two CR qualified auditors within the Group’s offices in Beijing and Hong Kong and embedding CR in supplier selection and management using the Group’s global qualification process. A project with two strategic Chinese suppliers was implemented to manage CR risk within sub-tier suppliers.
A total of 488 suppliers, including 63 strategic global suppliers, have been assessed using the Group’s supplier evaluation scorecard in which CR accounts for 10% of the total. The scorecard evaluates the supplier’s CR management systems, public reporting and approach to managing their suppliers. Seven site evaluations of high risk suppliers have been completed.
The duty to report programme provides suppliers with a means to report any ethical concerns. Twelve incidents were reported in relation to managing the global supply chain in the 2008 financial year. All have been investigated and resolved satisfactorily.
The Vodafone Group Foundation and its network of 21 local operating company and associate foundations have continued to implement a global social investment programme.
During the 2008 financial year, the Company made a charitable grant of £24.0 million to the Vodafone Group Foundation. The majority of foundation funds are distributed in grants through operating company foundations to a variety of local charitable organisations meeting the needs of the communities in which they operate.
The Vodafone Group Foundation made additional grants to charitable partners engaged in a variety of global projects. Its areas of focus are: sport and music as a means of benefiting some of the most disadvantaged young people and their communities, and disaster relief and preparedness.
In addition, operating companies donated a further £12.9 million to their foundations and a further £4.2 million directly to a variety of causes. Total donations for the year ended 31 March 2008 were £44.9 million and included donations of £3.8 million towards foundation operating costs.