Vodafone is helping itself by helping customers to reduce energy use, according to group corporate responsibility director, Chris Burgess
Jobs in ethical business do not come much bigger than director of corporate responsibility at Vodafone. Chris Burgess, who holds this role, has come a long way since he audited environmental reports for a living 15 years ago. But lately his work has got a lot harder, as business looks to save money in the downturn.
Five posts in Vodafone’s corporate responsibility teams have been lost this year, resulting in three people leaving the business. The group team, which Burgess leads, now has seven people. The team coordinates the group’s corporate responsibility work.
Despite the lay-offs, Burgess is confident that his work remains central to the company. “Like every part of Vodafone we’ve slimmed down in terms of size. But we have not been disproportionately impacted compared to the organisation as a whole,” he says. Vodafone announced in February it was cutting 500 jobs in the UK, where the group corporate responsibility team is based, in a bid to save £1bn over the next two years.
Burgess says his team can afford to be smaller now because corporate responsibility is increasingly integrated across the business. He says: “We have to do less handholding within the organisation than we did previously.” The degree to which the supply chain function, for example, has taken over its social and environmental issues has “increased enormously over the last three or four years”, he says. “We don’t need a significant resource within a central team to manage that.”
Nor is Burgess worried about the size of his team’s budget. He says: “There is pressure on the budget, yes, but not pressure to the extent that we’re crippled and can’t move forward on projects. We can do what we want to do.” Other departments face exactly the same challenge, he says: “That’s just part of doing business at the moment.”
This is a common story for today’s corporate responsibility departments, where jobs are being lost and individuals that remain must work smarter with fewer resources.
Companies with strong reputations for corporate responsibility understand they must stay focused on non-financial goals despite cost-cutting and changes in personnel.
Ambition
Changes at Vodafone in recent years do not appear to have dented the brand’s ambition to be a leader in responsible business. Simon Propper, managing director of Context, a consultancy, says of the company: “What’s remarkable is that in 18 months they have had a change of chief executive and change of corporate responsibility director and nevertheless continued with the same energy and rigour to pursue sustainability.”
Burgess took over as corporate responsibility director at Vodafone in November 2007, replacing Charlotte Grezo, the architect of the mobile phone company’s responsible business strategy, when she left for Lehman Brothers. Propper, who advises Vodafone and used to work with Burgess as a consultant at Deloitte in the 1990s, says his former colleague inherited a “great legacy”, but says Burgess has built on these strong foundations by increasing Vodafone’s emphasis on climate change and identifying the commercial opportunities of being a responsible business.
Since taking the role, Burgess has introduced an ambitious climate change strategy for Vodafone. Last year he won board approval for a target to reduce carbon dioxide emissions by 50% by 2020, applicable across the group and operating companies, from 2006-07 levels. This year he has secured board-level support to radically develop the company’s climate change efforts: instead of focusing on how to manage its direct impacts, Vodafone will focus on how to leverage its brand to influence customers to reduce energy use.
Burgess says: “One of the things I’m pleased about is changing the company’s mindset about what we can do … to have a bigger impact on sustainability rather than just reduce our own footprint.” This has involved “getting the customer-facing part of the organisation to look more deeply at these issues and understand that there’s a commercial opportunity in this space”, he says. Developing low-carbon products is the main aspect of this work. Simple as this may sound, it has taken several years for Vodafone to reach a position where it can approach responsible business in this way.
Evolution
When Burgess joined Vodafone in 2002 the group was trailing corporate responsibility leaders of the day such as BP, BT, Shell and Unilever. Burgess was the third person to join the new team, which had been formed in 2001. It was headed by Grezo (ex-BP), who was supported by Nick Hughes (ex-Amaco and BP).
Burgess recalls: “The first couple of years it was pure catch-up: we didn’t have the systems, the processes, the KPIs [key performance indicators], the means of gathering information from the operating companies.” Getting the basics in place took until 2003-04, Burgess says, who calls this period phase one of the company’s corporate responsibility development.
In phase two, the company looked to cut its direct social and environmental impacts. Burgess recalls: “It was predominantly an internal focus. We knew what the issues were; it was about improving performance in those areas.”
Reducing operational impacts remained the major focus of the company’s corporate responsibility work until the end of 2007. Yet in this period Vodafone also started to move from taking a risk management approach to sustainability towards seeing social and environmental problems as commercial opportunities. The company’s much praised M-Pesa mobile banking service, for example, began during this period.
Reputation boost
Burgess says M-Pesa may not make Vodafone much money, but it does boost the brand’s reputation. “In almost every meeting I do it comes up because it has almost achieved iconic status as the commercial and social win-win,” he says. M-Pesa allows users to deposit, withdraw and transfer money using their mobile phones. The service has grown from a 100,000-person pilot in Kenya to having 6 million customers in Kenya, Tanzania and Afghanistan.
M-Pesa reflects Vodafone’s broader strategy in emerging markets – by far the major source of future growth for mobile – of targeting middle and lower income consumers, not just the wealthy. The experience has sparked innovation, such as low-cost handsets and new tariffs, says Burgess. It has also given Vodafone a strong development story to tell, as research highlights the causal link between mobile use and economic growth.
According to Propper, Vodafone’s experience in emerging markets opened the eyes of top executives to responsible business. The size of the commercial opportunity in these markets has helped leadership buy into the idea of enhancing the affordability and social benefits of the products Vodafone sells, he says.
Like many brands, Vodafone’s focus on turning social and environmental problems into commercial opportunities has intensified in the past two years because of rising public interest in climate change. This is enabling Burgess to take the brand into what he calls its third phase of corporate responsibility development. He explains: “Phase one was catch-up. Phase two was reducing the negatives. Phase three is about enhancing the positives.”
Right now Burgess and his team are working out exactly how big an opportunity climate change represents for Vodafone. “The size of the opportunity at the moment is still a bit hazy,” he says.
To get a clearer picture, the group corporate responsibility team is analysing the findings of a recent report – Smart 2020: Enabling the low carbon economy in an information age. The research, published in June 2008, finds that the information and communications technology sector could reduce global greenhouse gas emissions by as much as 15% by 2020. Vodafone helped to fund the project through its membership of the Global eSustainability Initiative, an ICT industry group promoting sustainable development.
The report highlights energy savings to be made from replacing real products with virtual ones (sending emails instead of paper letters, for example). But it finds that by far the biggest opportunities for ICT to reduce emissions are in using new technology to monitor energy use and so allow customers to reduce waste.
Low-carbon benefits
Using the report as a starting point, Burgess says: “We are looking at how to enhance existing products or develop new ones which will have low-carbon benefits.” For example, Vodafone has a small business working on what it calls “machine to machine” technology. Applications include smart meters. These allow electricity companies, for example, to monitor energy use in real time over a wireless network. The technology can also be used to monitor transport logistics, where it can help to reduce the distance vehicles travel and so cut fuel use.
Molly Webb, head of strategic engagement at the Climate Group, which worked on the Smart 2020 report, says: “Mobile companies have the opportunity to provide services that give users feedback about their energy-consuming activities along with the tools to do something about it. This opportunity will only grow.”
These opportunities exist in consumer markets, Webb says. “Mobile phone applications can support consumers in being more climate-friendly. For example, personal travel assistants that allow users to see the optimal public transportation route home or services that send reminders about offsetting flights can help reduce an individual’s carbon footprint.”
Burgess sees an opportunity for Vodafone to exceed consumer expectations of how their mobiles can help the planet. The brand’s research finds that mobile is low down on the list of sectors consumers believe should be doing more to address climate change. “But analysis of longer-term trends suggests that is going to change in the next two to three years. So we’re getting the consumer-facing part of the organisation to accelerate existing programmes to recognise this is something that’s coming down the track,” Burgess says.
Having already won a solid reputation for responsible business, especially in emerging markets, Vodafone appears ready to help customers reduce energy use. Despite their recent troubles, Burgess and his group corporate responsibility team seem to be well-placed to take on their 2020 challenge.
About Chris Burgess
Chris Burgess became Vodafone’s corporate responsibility director in November 2007, replacing Charlotte Grezo.
His strong interest in the environmental side of responsible business in part explains Vodafone’s increasing focus on climate change in his time as corporate responsibility director.
Burgess met Vodafone’s executive committee twice last year to make the case for an ambitious 50% greenhouse gas emissions reduction target.
Former colleague Simon Propper says of Burgess: “His style is to be diplomatic and to make a very well-argued business case. I wouldn’t say he’s a shouter or campaigner. He works very effectively within a business framework.”
Mobiles and development
Research commissioned by Vodafone into the socio-economic impact of mobiles in India found that states with high mobile penetration rates can expect to grow economically faster than those states with lower mobile penetration rates – by 1.2% a year more on average for every 10% increase in the penetration rate.
The link between high mobile use and economic growth is a causal one, according to a report – India: The impact of mobile phones – which was published in January. An earlier report into the impact of mobile phones in Africa found that the economic growth impact of mobile is large in both developed and developing countries, but about twice as important for poorer countries.
Reporting blues
Chris Burgess spoke to Ethical Corporation as he was putting the finishing touches to Vodafone’s latest corporate responsibility report.
He admits the reporting process is “painful”, but adds: “It’s highly valuable. The value to a company is the internal value. I don’t kid myself about the size of the readership of our report, or the quality of the reading of that report. For me, the corporate responsibility team and the company, the value is having that focus on progress and whether we are looking at the right issues.”
He agrees that many companies have started to develop corporate responsibility strategies based on what they perceive as a need to report on their non-financial impacts. He says: “Reporting has been the tail wagging the dog, but that’s not necessarily a bad thing. To produce an effective report pushes a company down a particular path, and the benefits to the company and society flow from there.”
Vodafone does not report against the Global Reporting Initiative guidelines for non-financial reporting, although it does reference these at the back of its corporate responsibility report. Burgess says: “We report what we think we should report and then see how that scores against GRI. We would do what we were doing whether GRI existed or not.”