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BT is a corporate responsibility leader in the UK, but it’s a different story in its growth markets in Asia
With £20bn in annual revenue and operations in 170 countries, BT is one of the world’s largest telecommunications companies and the dominant telecom operator in the UK. The former state enterprise known as British Telecommunications, which was privatised in 1984, also enjoys a huge reputation for corporate responsibility. It has occupied the top place in the Dow Jones Sustainability Index’s ranking of telecommunications companies for eight consecutive years, and has won a host of other ethical business awards.
BT invested £23m on community programmes last year, which amounts to 1% of pre-tax profits. But its responsible business work goes much further than this. Initiatives to reduce energy consumption and waste saved it £365m between 2004 and 2008, according to Janet Blake, the company’s global head of corporate social responsibility. She says BT’s ethical credentials supported bids for contracts from corporate customers and governments worth £2.2bn in 2008, up from £1.8bn in 2007. She says: “Given the total revenue of £20bn last year, £2.2bn in new business due to CSR credentials translates into 11% of turnover, which is quite significant.”
Corporate responsibility programmes have also helped BT to attract and retain talent, Blake says. A survey last year found that 66% of employees felt more proud to work for the company as a result of its responsible business activities.
However, BT’s aggressive corporate responsibility push in the UK and other developed nations is yet to be replicated to the same extent in emerging markets such as India, China, South Africa and Brazil. BT is expanding into these markets rapidly. But while serious issues such as climate change are at the forefront of the company’s initiatives in the UK, philanthropy for now is the focus of its corporate responsibility initiatives in emerging markets.
BT has championed action to fight climate change in the UK since 1992 when it set its first carbon reduction target. The company has pledged an 80% reduction in its carbon intensity – carbon dioxide emissions per unit of contribution to national wealth – from its UK operations by 2016, from the base year 1996. This is more aggressive than its global target of 80% emissions reduction by 2020, although both are among the toughest self-imposed targets in UK business. UK legislation requires businesses to achieve 80% reduction by 2050.
BT uses a carbon intensity target, based on its contribution to gross domestic product, to ensure its climate change strategy aligns with its bold global expansion plans. BT has grown massively outside the UK in recent years; it has made more than 20 acquisitions in the past three years around the globe. “These acquisitions brought us not only a considerably bigger global presence but also a larger carbon footprint,” says Blake. “Last year, we went through a huge exercise to capture data on the carbon and environmental impact of our global businesses, which will help us to plan the 80% reduction by 2020.”
BT earned 17% of its revenue from outside the UK last year. That’s up from 15% in 2007 and 13% in 2006. Revenue from Asia grew 66% in 2008. BT is already the largest foreign telecoms company operating in India, reflecting where the future lies. And Asia is where multinational companies need to assume a leading role to set examples of corporate responsibility.
India is certainly a key market for the company. BT has a licence from the Indian government to operate international and domestic long distance telecommunication services to corporate customers. More than 70% of BT employees in Asia are based in India and the company estimates that revenue from India will hit £250m this year. But BT’s corporate responsibility efforts in the country currently lag behind its leadership in this area in the UK.
In the UK, BT has a battery of about 50 fulltime corporate responsibility executives. The team is responsible for managing a range of initiatives in climate change, sustainability, employee engagement, supply chain ethics and community investment.
Most impressive are BT’s climate change programmes, an area where it leads UK business. BT has reduced its carbon emissions by 58% since 1996 and is on track to meet its goal of 80% reduction by 2016. Nearly all the electricity the company uses in the UK comes from green sources such as renewable energy.
BT plans to build its own wind farms to meet at least 25% of energy needs by 2016. This will be the biggest investment in wind power in the UK by a company not in the energy sector, if new government rules do not halt the project.
The company is an influential member of the climate change taskforce of the UK business group CBI. Chief executive Ben Verwaayen chairs the taskforce, which has pledged to help UK households halve energy use by 2020. BT plans to contribute towards this target by offering energy efficient products and services for its 15 million UK consumers. It has launched a range of home phones designed to consume half the electricity that normal phones use.
A carbon impact assessment service was launched in the UK and the US in 2007 to help the company’s government and corporate customers to assess and measure their carbon footprint and identify ways to reduce their emissions. The tool is now being made available globally.
BT has conducted energy audits at 10 data centres in the UK, and three in Europe, to identify how it can further reduce energy use. For example, in a data centre in Italy it is using water from wells to cool the site instead of conventional air conditioning.
Europe and US second
Outside the UK, BT has green electricity contracts in Ireland, Belgium, Italy and Germany. The company’s US headquarter in El Segundo, California, will soon be powered by 2,000 solar panels, reducing CO2 emissions by 290 tonnes a year.
BT has invested in environment management systems in European operations to improve environmental performance and has achieved ISO 14001 certifications in Ireland, Belgium, Italy and Germany, as well as the UK. It hopes to obtain the certification for its US operations this year, with the Netherlands next in line.
But BT’s green progress outside Europe and the US has been slower than expected. BT has set up a roadmap for establishing environmental management systems in all countries where its operates. But the company has yet to put these systems in place in India.
Three years since it expanded into Asia, BT is yet to implement a comprehensive strategy for low-carbon growth. Instead, the company is relying on a recently completed study of its global sites by Ernst & Young to identify opportunities for using renewable energy in various countries. BT is currently reviewing the findings before announcing green plans for the region.
Blake says fast-moving climate change legislation has helped drive rigorous carbon reduction targets in the UK. Lack of legislation in many countries in Asia makes it difficult to pursue such targets, she says. “When you have got legislation and where you have more rigorous carbon accounting activity, businesses are more aware. And you have more opportunities to use renewable energy in those countries.”
Blake worries that widespread distrust of Indian business since the Satyam fraud scandal will hold back efforts on climate change in the country. She explains: “Question marks about the integrity of leadership make it more difficult for leaders to take risky decisions.” She says green decision-making is seen as risky in India, where sustaining economic growth is such a high priority. The “transformational leaders” needed to tackle environmental problems may not emerge when stakeholders doubt the motives of business, she fears.
Charity not climate
Instead of climate change, BT employees’ involvement with corporate responsibility in Asia means supporting a couple of community projects with NGOs. BT has no dedicated corporate responsibility executive in Asia. A few local executives from other functions double up as corporate responsibility leads in the region. All programmes and directions flow from the head office in London. A marketing executive in Australia acts as the corporate responsibility lead for Asia-Pacific supported by a handful of members in country offices, nominated by country managers, who volunteer their time for corporate responsibility activities as and when needed.
“BT’s approach is to embed CR responsibilities within the division. We don’t want corporate responsibility to be seen as a separate and disconnected activity. It’s a deliberate decision to let individuals handle it alongside their normal roles,” Blake says.
She adds that decision-making on responsible business programmes is centralised, as BT has a vertical business structure and customers are managed globally by the respective business units.
BT counts mainly philanthropic projects as its corporate social responsibility initiatives in India. For example, it supports Katha Information Technology & E-Commerce School in New Delhi and St Crispin’s IT Training Centre in Pune, near Mumbai. Both provide IT education to disadvantaged children.
The company, in partnership with Cisco, funds the Lifeline project in north India. Run by the UK-based NGO One World, Lifeline provides agriculture-related information to farmers through a telephone helpline at a nominal cost. Lifeline has improved crop quality and animal care, with some farmers increasing their profits by as much as 150%, says Naimur Rahman, south Asia director of One World.
Another initiative, Lifelines Education, provides a helpline for teachers and students in the states of West Bengal and Rajasthan. BT calls these programmes Digital Inclusion initiatives.
Last year, the company launched BT Sustainable Development Index in India in partnership with Globe Scan, an independent public opinion and stakeholder research company. BT says the index will demonstrate the extent to which the corporate sector in India is moving towards or away from sustainability over time and it will enable Indian organisations to benchmark their own corporate responsibility strategies, ensuring that resources and efforts are channelled in the right direction. The initiative also demonstrates BT’s desire to understand stakeholder expectations in India and raise awareness among Indian businesses of social and environmental concerns.
The index rates Indian companies’ performance on 12 areas of sustainability based on views of local opinion leaders. But the results of the first index report announced in November not only point to disappointing performance of Indian companies, but also indicate opinion leaders’ poor understanding of businesses’ role in sustainable development.
For example, opinion leaders have rightly given the lowest rating to Indian companies’ performance on corporate governance, climate change, land use and displacement, private-public partnership, solid waste and natural resources management. But at the same time, they have ranked these issues as the least important areas that drive perceptions of industry. In other words, these issues do not affect industry image.
For opinion leaders, the most important sustainability issues for companies included long-term economic growth, healthcare and inclusive employment practices. Incidentally, opinion leaders have given highest ratings to Indian companies on these three aspects. Water resource management is the only area that opinion leaders said was a critical shortcoming among Indian companies.
The index’s results show a disturbing trend in India where corporate social responsibility mostly means charity for the majority of local companies. Corporate social responsibility awards, which have mushroomed in Asia, are invariably given for companies’ charity efforts. Civil society is almost non-existent. So there is virtually no pressure on companies to perform on governance, disclosure, human rights, diversity, ethical supply chain, responsible land use, water management, waste management, pollution control or climate change.
“Philanthropy alone is not enough as it isn’t necessarily a sustainable practice. Multinational companies such as BT have an opportunity to share their knowledge and experience of sustainable CSR activity to help raise the standards of practice in India,” says Mary Longhurst, managing director of UK-based Epoch Strategic Communications, who is in India to study corporate responsibility trends in emerging markets.
Will BT take on the leadership role and set out to educate Indian stakeholders and companies on broader issues of corporate responsibility? Blake says: “There is a delicate balance between educating and creating the right environment for those companies to learn. Making assumptions that what works elsewhere will also work in India would be arrogant.”
Blake says BT will be taking the sustainability index framework to various forums where Indian companies will be able to learn what works in other parts of the world and then create solutions that are appropriate for India.
BT has built a solid corporate responsibility reputation in the UK on the strength of well-rounded sustainability programmes and by taking lead on issues such as climate change. If the company wants to be recognised as a global leader in sustainability, it needs to introduce the same level of standards in its global operations, especially in emerging markets.
BT at a glance
- Revenue in 2008: £20.7bn
- 34% from major corporate clients
- 24% revenue from consumers
- 16 million customers in 170 countries
- Customers include 60% of Fortune 500 companies.
- Non-UK revenue growth in 2008
- Asia 66%
- Americas 19%
- Europe (excluding UK) 15%
- Paid £8.6bn to suppliers worldwide in 2008
- Employs 111,900 staff (91% in the UK)
Key targets for outside the UK
- Reduce CO2 emission intensity by 80% against 1996 levels by December 2020.
- Complete the review and data collection of all energy consumption at BT locations globally.
- Develop a strategy and implementation plan to deliver the global carbon intensity target, of 80% reduction by 2020, from the 1996 baseline.
- Define a roadmap for establishing an EMS in all countries by September 2007 (delayed).
- Complete the review and data collection of:
- all refrigeration gas installed and lost in operational estate globally;
- all fuel tanks installed at global locations; and
- all waste and recycling information and processes in BT locations globally.
All targets to be achieved by March 2009 unless stated otherwise.