Tuesday, June 21, 2011

We said, we have, we won't, we will: Vodafone's materiality shift

In this second post about materiality, I look at an old favorite Vodafone. The first thing that strikes you this year is the shift from their trademark "We said, We have, We will " which was still present though not pronounced in the 2009/2010 report. It's a shame to see that go, but I guess it had a good run of six years or so. For those who want a little nostalgia, see the first in the series here. This year, Vodafone have moved more toward an issues-based reporting approach grounded in what seems to me to be the first exposure of Vodafone's new strategy and communication on sustainability.

The three core strategic focus areas for Vodafone are now: (1) responsible and ethical behavior; (2) eco-efficiency and (3) creating sustainable societies, the third being a reflection of Vodafone's indirect impacts through new core business offerings. Which is what sustainability at its best is all about, of course.

In the online report, creating sustainable societies is introduced by an array of videos which are well worth looking at. One is about how Vodafone's partnership with Isotrak vehicle tracking system enables transport companies to reduce fuel usage. Another is about how Eiman, aged 30 with seven children, who never completed her schooling, is now one of Vodafone's first saleswomen in Al Johara in Doha. She received the "red suitcase" full of Vodafone goodies which helped her to become a businesswoman and financially independent. (Watch this video, it's inspiring). A further clip shows how William Ndirangu, who runs a shoe cleaning business in Muranga, Kenya, transformed his business through use of the Vodafone M-PESA system through which William can make all his financial transactions including receiving payments from customers. Yet another clip shows Mfaume Hedemi, the district malaria coordinator in Lindi, Tanzania, which is one of the most malaria infested areas in the region. Malaria kills one child every 30 seconds in Africa. Vodafone partnered with Novartis and IBM to develop a system called "SMS for life" in which local clinics update their malaria drugs stocks so that drugs to treat malaria can be available whenever and wherever they are needed, especially in remote areas. There are more.... but I will leave you to discover the others. The message is clear. Vodafone is develping 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.   

But I digress.... back to materiality... oops... that WAS materiality... well anyway...

Vodafone's CSR Reports have always been a good exercise in materiality. Not surprising, then, that they have won three CorporateRegister Reporting Awards (CRRA) in the Best Materiality category. Vodafone doesn't disappoint with their most recent 2010/2011 Sustainability Report and online here, you can find their curvy materiality matrix in full splendor (it does not appear in the printed summary report). To create the matrix, Vodafone uses a tool developed specifically for the ICT industry by the Global e-Sustainability Initiative (of which Vodafone is a member). The assessment is done at Group level with input from teams in Vodafone's local markets

Top right issues are headed up with low carbon solutions, products and services for development and "our carbon footprint". This might surprise you actually. A telecomms company whose main material issues are low carbon solutions? What about this access and connectivity, health risks and radiation safety, electronic waste, product lifecycle and takeback or what Annie Leonard calls obsolesence or "design for the dump" etc? Wouldn't you think that these issues would be higher on the materiality grid for Vodafone?  As can be seen from the sustainable societies stories above, Vodafone sees its future, and that of its stakeholders, in a low carbon society. Just a look at the new M2M technologies which are transforming our lives and our language (how long before telematics starts to become part of YOUR daily vocabulary?). In order to compete effectively in such a society, Vodafone must first and foremost ensure it is at the cutting edge of low carbon solutions, not just selling more ARPU, but partnering with the platforms that can make this technology meaningful in changing the way people do things. Vodafone plans to roll-out 10 million M2M connections by 2013 in smart metering and smart logistics, and this is just the start.  Vodafone's competitive ground has shifted and it is now standing firmly in sustainability territory. That's why it's Vodafone's most material issue. 

This is clearly a shift in Vodathinking - last year's materiality matrix was rather different with climate change, energy and renewables being up there in the number one slot.
Looking back a little further to the 08-09 report, we can see that carbon didn't figure pretty much anywhere in the top materiality stakes and the high-flying issues were about access to communications, privacy and pricing, with direct environmental impacts (energy usage) somewhere in the middle.  See below.

This is an indication of how materiality changes from year to year and how a study of materiality maturity (my term - you saw it here FIRST!)  gives a good indication of where a company is on the compliance - direct impacts - indirect impacts continuum. Material issues change as a result of new thinking on business strategy and external market dynamics, or the relative strength of stakeholder feedback in any given year. It is important to review material issues in depth. Some issues will remain constant (at Vodafone, mobile phones, masts and health is always highly material and has remained in the same position on the matrix for the past three years), but others will change in the light of new internal and external context.

An examination of three years of materiality at Vodafone shows that issues move from primarily addressing defensive-type topics relating to stakeholder concerns (2008), through an understanding that climate change is perhaps as much as it is cracked up to be and an appreciation of climate change impacts on the Vodafone business (2009) to the full embracement (ok, my word, sorry English, but I like it) of an aspirational strategy which is truly aligned with sustainability principles (2010). This is a fascinating materiality maturity evolution. I will take a bet that low carbon solutions stays up top in 2011 as well. (You can pay me in Chunky Monkey).

Related to the materiality discussion, one of the nice things about Vodafone's reporting is the detailed disclosure about from their stakeholder engagement feedback. Vodafone lists specific stakeholder groups and report on specific issues raised by them and how these were addresed.  In 2010/2011 for example, there were 20 meetings with investors who raised a long list of issues. This input is crucial to defining materiality and in my experience, engagement always brings insights which the business benefits from hearing. Overall, nice Vodaformance on materiality.

This was Post Number Two on Materiality.  The first was here. But watch this space. We're not done yet!

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices   Contact me via www.twitter.com/elainecohen  on Twitter or via my business website www.b-yond.biz/en  (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

1 comment:

PerrineB said...

Thanks for this really excellent post Elaine (I have already said that on Twitter but I've got to write it here too!)
A great example of how sustainability influences business strategy and vice versa. And how issues evolve.
You've definitely coined it with the term 'materiality maturity'.

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