Vodafone provides telecommunications solutions and services for individuals and businesses. The company’s product portfolio includes wireless voice, messaging, and data services, in addition to internet access. The company operates globally and is rapidly expanding its networks in emerging markets.
By 2020, information and communication technology (ICT) enabled solutions offer the potential to reduce annual global emissions by an estimated 9.1 gigatons carbon dioxide (CO2)equivalent, or 16.5% of the total projected CO2 equivalent for 2020.1
Vodafone aims to help transform society by using its products and technology to offer low carbon solutions and boost economic development. For example, the company’s machine-to-machine technology (M2M) allows both wireless and wired systems to communicate with other devices. In fiscal year 2013, this technology supported 9.5 million M2M connections. These connections primarily enable smart metering and fleet management, which, in turn, generates energy and fuel savings for Vodafone’s customers.
Emerging markets and mobile data are expected to drive global telecommunication companies’ revenue growth through 2017. Telecommunications operators in emerging markets will benefit from rising gross domestic product and growth of mobile penetration.2
Vodafone has a large presence in emerging markets; in fiscal year 2013, 68% of its 404 million customers resided in these markets. Emerging market growth in the telecommunication sector is expected as a result of migration from rural to urban areas, increased technological penetration into rural areas, and higher average incomes combined with lower costs of services and handsets.
Energy use is anticipated to rise due to the growth in the number of mobile users as well as the increase in number of devices per user. Despite this growth, energy efficiency improvements in the devices themselves and wireless telecom infrastructure are expected to reduce the overall carbon footprint per user by 20% in 2020 from a 2007 baseline.3
Vodafone works to reduce the energy consumption of its 248,000 base stations through a variety of techniques, such as replacing outdated components with efficient equipment, installing batteries that can operate at higher temperatures, increasing the temperature at which air conditioning is triggered, installing hybrid generators, and expanding the use of wind and solar electricity generation. In fiscal year 2013, Vodafone reduced the carbon emissions per base station nearly 40% from a 2007 baseline.
In fiscal 2013, the monetary fines associated with breaches of environmental regulations were 63% higher year-on-year. Unfortunately, the company does not provide an explanation of the breaches or how the company plans to prevent violations in the future. Portfolio 21 has asked the company to improve the transparency of its reporting on this indicator.
Despite the energy efficiency improvements across Vodafone’s network, the company’s absolute CO2 emissions increased year-on-year. In addition, the company reported that it is unlikely to meet its goal to reduce CO2 emissions 50% by 2020 (2006 baseline) in mature markets through energy efficiency alone. Unfortunately, the company does not discuss why it will likely miss its reduction target or what steps it will take to ensure the greatest possible reductions. Portfolio 21 has asked Vodafone to establish comprehensive initiatives and report on results of its efforts.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 5/31/14 and may not reflect current opinions or subsequent events.