Interview: Vodafone's green strategies
Vodafone's group head of corporate responsibility, Chris Burgess, outlines the carrier's green strategies.
As the world's largest international operator, and probably the most recognisable brand in the global carrier community, Vodafone is arguably obligated to take a leading stance on issues of corporate responsibility. Certainly it makes sense for it to do so from an image management perspective; the widest global footprint is something any carrier would be pleased to boast about but the largest carbon footprint offers less scope for promotion or plaudit. So it was perhaps not altogether surprising when, in April this year, Arun Sarin - now retired as Vodafone's CEO - made public the firm's pledge to halve its carbon footprint. An ambitious plan, the initiative calls for the carrier to cut carbon emissions from the 2006/07 level of 1.23 million tonnes to 615,000 tonnes by 2020.
Before settling on its target, Vodafone had investigated a range of carbon offsetting strategies but decided in the end to focus on direct emissions cuts. And since the firm generates 80 per cent of its emissions by powering its networks worldwide, energy efficiency is a core focus.
Chris Burgess is the group's director for corporate responsibility (CR). His team, established at the beginning of the decade, has been working on energy efficiency initiatives for four years, he says. In this time energy efficiency has evolved from being a CRled programme to one that is "pretty much embedded into the engineering and technology approach," he says. "Climate change as an issue is one of the most integrated CR related issues that we manage as a company."
And nowhere is it more tightly integrated - as is the case with all profit making organisations - than with the firm's accountants. In one sense this is entirely logical as the more energy efficient a company is, the more cost efficient it will be as a result. And Burgess is quick to point out that cost is king: "The vast majority of the energy efficiency initiatives we look at have an initial investment. And, like any investment, we look at how quickly that's going to pay back; what the return is going to be on it," he says.
"So it's not a given that every energy efficiency initiative will automatically get over the hurdles. We have to look at them as we would look at all investment decisions within the business."
It follows, then, that the energy efficiency projects currently being pursued most enthusiastically by Vodafone are those that offer both environmental and financial payback. 'Free cooling' is close to the top of the list, says Burgess. Of the 80 per cent of Vodafone's emissions that are generated by network power consumption, one quarter derives from the cooling systems used to keep network equipment at operating temperatures.
Free cooling uses fresh air to keep those temperatures at the right level, rather than energy intensive, powered air conditioning systems. "Free cooling is now a default across the new kit that's being implemented," Burgess says. "It's also important to be able to allow the temperature in a base station cabinet to rise without fear of that damaging the equipment or significantly reducing its life."
By Vodafone's estimations, average energy use in some existing base stations (depending on the climate conditions at the site) can be cut by more than ten per cent if the temperature is allowed to rise by 4??C to 25??C. For new equipment, temperatures of 35??C can be tolerated and further savings can be made. Vodafone's Portuguese operation installed technology to allow for operation at 35??C during 2007/08 and free cooling at this temperature will be deployed group - wide during 2008/09.
One project that by contrast is being less ardently pursued - because "the economics don't work very well at this stage," says Burgess - is the use of renewable energy to power cell sites. What the firm refers to as "micro - generation" of renewable energy sees solar panels, fuel cells or miniature wind turbines - or a combination of the three - deployed on a site by site basis.
But there is a sliding scale of hierarchy, he says. While micro - generation may not be suitable across the majority of Vodafone's portfolio, it may well have uses in markets like India, where Vodafone established a presence through the purchase of domestic operator Essar last year. "In India there will be a lot of base stations that are not connected to the power grid and we're using diesel to power those," says Burgess.
"But diesel is going up in price very rapidly, there are issues around security and there are logistical problems involved in getting the diesel out to the site. In this scenario, those small scale renewables start to become reasonably attractive," he says.
While Vodafone has a number of its own green projects on the go, it relies - as do all operators - on its vendor partners for environmental advances in technology. A few years ago, says Burgess, carriers were having to pressure the vendors into paying due attention to environmentally - led efficiency concerns. "It just hadn't been a focus for suppliers up to that point," he says. "It was more about price, reliability and the quality of the product.
But there is less and less need for us to lean on them now because they've really got the message and they see it as much more of a key differentiator for them in terms of their own products.
So now it's a case of working together positively rather than us trying to exert pressure. "While the network is by far the most energy - intensive element of Vodafone's operation, the firm still racked up 246,000 tonnes of CO2 emissions during 2006/07 in other areas, including transport, air travel, data storage and waste. Air travel generated 41,000 tonnes during the period and, as a telecommunications firm, Vodafone is looking to exploit its own technologies to replace some physical meetings with virtual substitutes.
Old habits die hard, though, and Burgess concedes that instigating this kind of change can be a slower process than he would like. "I would have to say that I'm slightly disappointed that it's taken us a while to embrace some of these practices. It's not because the facilities haven't been available, it's just that people become used to certain behaviours."
The number of video - and teleconferencing facilities at Vodafone's sites have more than trebled in the past three years and the firm estimates that this has saved 1,449 tonnes of CO2 emissions in 2007/08. It is also important for communications providers to be seen to be following their own advice. Carriers can offer enterprise customers enhanced cost management through communications innovation and, as environmental concerns move ever more to the fore, it offers an extra strand to the sales pitch. "This is something we are increasingly interested in," says Burgess. "It's about how we can apply the technology that we have as part of the sales message to say that, as well as giving you a good communications solution, this can help you in terms of your own emissions. "I wouldn't say at this stage that it's the dominant sales message and it probably won't be for a little while, but I think it is going to play an increasing role," he says.
The days when mass market consumers make communications purchasing decisions based on green criteria remain firmly on the horizon, in Burgess' opinion. And when it does happen, he thinks it unlikely that carriers' green credentials will play a deciding role in selection. "I think the thing that may impact is what you can do with your phone from a green point of view. A range of companies are working on different applications whereby you could use your phone to remotely control appliances at home. To reset your thermostat, for example, to influence the way the energy in your home is being consumed from your handset," he says. "I can foresee it, but we've got a little way to go yet."
The green rating of the handset - as a physical product - is likely to be more of a focus for consumers. And, despite Vodafone being an operator, Burgess suggests one of the firm's biggest challenges in environmental terms is handset based. Vodafone is working with other organisations on the development of a solar powered handset charger for emerging markets and is also keen to see a bigger industry push towards universal chargers.
"It would be far better if, every time you changed your phone, you didn't have to change your charger," he says. "Apart from all the environmental impacts that come with the manufacture of a charger, it also means that you can sell the phone in a smaller box, which decreases the shipment and distribution and packaging. There are a lot of benefits there."
On its home turf of network operation, Vodafone's principal environmental test will be how it manages its Indian operation. Today the Indian network is excluded from the group's 50 per cent emissions reduction pledge yet it will likely be one of the most significant contributors to those emissions.
As Burgess says, a larger proportion of the network is off the power grid than in Vodafone's other operations and the scale and rate of growth of the business is much larger.
"We haven't yet got a full handle on the current energy usage in India," Burgess admits. "We're just getting our heads round what the projections are likely to be. Once we get more of a grasp on that, we can start setting some performance targets in that area."
Green strategies are a work in progress in the mobile industry, and will very likely always remain so; there will never come a point when the task can be judged as completed. But the public setting of goals is key to moving individual firms forward, as well as the sector as a whole. 2020 may seem a long way off, but Vodafone will have to demonstrate its progress as each year passes.