BTPLC Annual Report 2006 - Business review

Corporate social responsibility

Managing social, ethical and environmental issues in a way that grows shareholder value and helps BT and our customers be more sustainable is very important to us.
     The Dow Jones Sustainability Indexes rank companies for their success in managing social, ethical and environmental factors for competitive advantage. During the 2006 financial year, BT was ranked as the top telecommunications company in the Dow Jones Sustainability Index for the fifth year in a row.
     We also hold the Queen’s Award for Enterprise in recognition of our contribution to sustainable development and we were ranked equal 4th in Business in the Community’s 2005 Corporate Responsibility Index.
     This section of the report, together with the broad statement on social, environmental and ethical matters included in the Report of the directors, provides information in response to the Association of British Insurers’ disclosure guidelines on social responsibility.
     More detailed disclosures on BT’s implementation of social, ethical and environmental policies and procedures are available online in our independently-verified Social and Environmental Report 2006 which has been prepared in accordance with the 2002 Global Reporting Initiative (GRI) sustainability reporting guidelines and assured against the AA1000 Assurance Standard.

CSR governance

The Board reviews our CSR strategy, performance and risks annually and is kept informed of new developments that may impact on its duties.
     A Board committee – the Community Support Committee – oversees community, charitable and arts expenditure and the strategy for maximising our contribution to society. The committee, chaired by Sir Christopher Bland, consists of representatives from BT businesses, three non-executive directors and two independent members who have a reputation for excellence in this field.
     An executive committee, the Corporate Social Responsibility Steering Group, oversees the implementation of our CSR strategy and programme. This includes risk assessment, target and objective setting and public accountability. BT also takes advice from an independent panel of CSR experts.
     During the 2006 financial year, our CSR strategy was substantially revised and updated to focus on three principal issues – climate change, sustainable economic growth and an inclusive society. Embedding CSR into our commercial operations remains an important part of our strategy. As part of this process, we have carried out a number of ‘health checks’ in our commercial operations to identify specific social, environmental and ethical risks and opportunities.
     We have important relationships with a wide range of stakeholders around the globe, including employees, customers and suppliers and engage with them in a number of different ways.
     As part of our CSR performance measurement, we have 12 CSR KPIs (key performance indicators) which cover our relationships with our stakeholders, as well as our environmental performance and our contribution to digital inclusion and business integrity. Details of our performance against these are published in our annual social and environmental report.
     Our CSR team co-ordinates and monitors CSR performance, identifies potential issues and opportunities that could affect the business and supports BT’s commercial activities.

Social, environmental and ethical risks

During the 2006 financial year, we further developed our knowledge and understanding of our CSR risks. In the context of CSR, our most significant risks continue to be:

•	breach of the code of business ethics
•	climate change
•	diversity
•	health and safety
•	outsourcing
•	privacy
•	supply chain working conditions.

Each of these risks has an owner and mitigation strategy in place (more detail on these risks can be found in our online social and environmental report). These risks are not regarded as material in relation to the BT group and, consequently, are not included in Group risk factors.

CSR business opportunities

We have measured the link between customer satisfaction and CSR performance for a number of years and our current customer satisfaction models indicate a positive correlation. Customers who believe that BT takes its responsibility to society and the community seriously are more than twice as likely as other customers to be ‘very’ or ‘extremely’ satisfied with BT.
Long-term sustainability trends are creating market opportunities for us – the use, for example, of teleconferencing and flexible working to reduce the need to travel and provide more flexible lifestyles.
Increasingly, BT has to address social and environmental matters when bidding for business. In the 2006 financial year, bids to the value of £1.3 billion required us to demonstrate expertise in managing these issues.

Procurement

Through our supply chain initiative, Sourcing with Human Dignity, we seek to ensure that the working conditions in our supply chain meet internationally recognised human rights standards, and to investigate potential social and environmental shortcomings. We monitor and set published targets for our relationships with suppliers; in the 2006 financial year, for example, 89% of suppliers were satisfied with their working relationship with us.

Environment

During the 2006 financial year, we achieved re-certification under the revised ISO 14001 standard – the international standard for environmental management systems – for our operations in the UK and Spain. We requested withdrawal of our certification in Ireland, pending reorganisation and will seek re-accreditation during the 2007 financial year.
Although BT is one of the largest consumers of industrial and commercial electricity in the UK, and the growth of broadband continues to increase our electricity use, our electricity consumption increased by less than 1% in the 2006 financial year. The green energy contract we signed in the 2005 financial year means that almost all our UK electricity needs are met from environmentally friendly sources, including wind generation, solar, wave and hydroelectric schemes.
The following table shows BT’s CO₂ emissions as defined in the Greenhouse Gas Protocol and therefore includes not only CO₂ emitted directly by BT, but also that emitted in the production of the electricity purchased by the Group.

CO₂ emissions

	2006	2005	2004	2003

Total (UK only – million tonnes)	0.64	0.76	0.92	0.96
% below 1996	60%	53%	42%	40%
Tonnes per £1m revenue	33	41	50	51

During the 2006 financial year, we received an income of £3.2 million from our recycling activities, offset against the £8 million we spent managing our waste contracts, recycling our waste and sending waste to landfill.

Waste

	2006	2005	2004	2003

Total waste (tonnes)	102,005	110,622	107,303	117,688
Total waste recycled (tonnes)	42,340	37,421	27,626	27,809
% recycled	42%	34%	26%	24%

During the 2006 financial year, our commercial fleet – still one of the largest in the UK – increased by 1.7%, but our fuel consumption decreased by 1%.

Transport

	2006	2005	2004	2003

Number of vehicles (UK only)	32,516	31,969	32,663	33,979
Fuel consumption (million litres)	51.38	51.97	53.85	56.12

Digital inclusion

Following research that showed that, if not addressed, the digital divide would, by 2025, become even wider, particularly among older and disabled people, we are working with Age Concern to support their digital inclusion strategy. This includes providing support to develop further their network of Silver Surfer clubs and providing training for volunteers and staff.
The EverybodyOnline initiative continues in a number of the most deprived communities around the UK, successfully demonstrating that digital inclusion makes a positive difference.
Internationally, our Lifelines India initiative helps developing world farmers access essential advice and information over a digital network.

Community investment

We commit a minimum of 1% of our UK pre-tax profits to activities which support society. We provided a total of £21.3 million designed to benefit society in the 2006 financial year, of which £2.5 million was charitable donations.
     Our community investment strategy aims to help individuals and communities make a better world through communications skills and technology. Examples include an education programme which provides free resources for teachers, pupils and parents, and in-school activities with drama groups and BT volunteers, both in the UK and internationally. To date, we have involved over two million pupils at more than 12,000 schools. We also helped Comic Relief, Children in Need and the Disasters Emergency Committee run successful telethons which raised millions for good causes around the globe.
     ChildLine, a UK charity, answers 2,500 calls every day but many hundreds more go unanswered. We are working with ChildLine on a campaign to ensure that every child’s call for help is answered.
     Our response to major world disasters included sending a specialist team to the Pakistan earthquake disaster zone to install emergency satellite telephone equipment.

Disability services

Our age and disability action team promotes equal access to a wide range of products and services. We work directly with older and disabled people and their representatives to raise awareness of BT’s inclusive approach and are continuing to develop our processes to ensure that new products and services are accessible by as many disabled people as possible.
Our age and disability action website, for example, now includes information about broadband in British Sign Language. BT is the first commercial organisation to provide online information in this format, opening up access for deaf people.

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