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O2 Business Professional Woman of the Year Awards in Ireland
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| We want corporate responsibility to sit in the mainstream of our business. |
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Engaging actively with stakeholders that are affected by the business is an important part of our corporate responsibility agenda.
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| Managing CR | Corporate governance | Risk management | How we are judged | Materiality | Reporting guidelines |
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Reporting on corporate responsibility
Corporate responsibility informs how we operate as a company and how we relate to society at large. Our objectives are expressed through explicit corporate responsibility targets for the business, which are outlined here. Through this we aim to take full account of the social, environmental and ethical impact of our operations, within a risk management and governance system, and to make a positive contribution to our business and society.
Engaging actively with stakeholders that are affected by the business is an important part of our corporate responsibility approach.
This is our second corporate responsibility report. In addition, our Annual Report and Annual Review contain information on our corporate responsibility approach and on how we manage corporate governance.
Managing corporate responsibility
We want corporate responsibility to sit in the mainstream of our business. We have therefore decided to absorb the work of the former Corporate Responsibility Advisory Council into the work stream of the Executive Committee, where Directors already individually champion different aspects of corporate responsibility.
In addition, we have devolved day-to-day management of corporate responsibility to our individual operating business units, each of which now has a designated Corporate Responsibility Manager. The corporate responsibility activity across the Group is monitored through the monthly Corporate Responsibility Forum that brings together practitioners from across the business. Starting in June 2004 our corporate responsibility activities are reported to the Executive Committee every quarter and to the main Board twice a year.
Corporate governance
When O2 was first formed in November 2001, we made it a priority to establish a lead in corporate governance. The work we have done over the last two years means we now have a system of governance that is robust and among the best.
It is important to get this right. Corporate responsibility can only flourish in an environment where internal control and governance procedures are rigorous and well-managed within a wide-reaching risk management system.
Risk management is about identifying, measuring and controlling issues that could damage our revenues, assets, brand, reputation and value. It is also about identifying opportunities to enhance those things and differentiate ourselves from competitors. Companies that manage risk well are generally regarded as more likely to prosper for the good of their customers, employees, suppliers, investors and society generally.
The social disclosure guidelines of the Association of British Insurers (ABI) and the Turnbull Internal Control Guidance on the Combined Code oblige companies to state how they are managing risk. We fully support these requirements and have published the ways that we meet them in our Annual Report. An overview of how we manage social, environmental and ethical risks in reference to the ABI guidelines is available in our Annual Report and here in this report.
How we manage risk
To ensure that our own risk-management procedures are thorough we explicitly assess the value at risk and our appetite for specific risks. A Group-wide risk register is mirrored by separate risk registers for each of the operating businesses and headquarters functions.
Individual Directors within the Group have responsibility for the different risks we face and are responsible for devising and implementing remedies where possible. They are encouraged to assess the social, environmental and ethical impact of our actions in managing risk. All new appointees to the Board take part in appropriate training for their role including those risks of social, environmental or ethical nature.
Risks are assessed by the Executive Committee every month and twice a year by the Board, which currently comprises four Executive Directors, seven Non-executive Directors and a part-time Chairman.
Our internal audit team reviews the implementation of the risk management policy at all levels of the Company and reports independently to the Audit Committee of the Board. We have a fast-track risk management system which enables us to deal quickly and effectively with any risks that are material to our business.
Senior management, including Directors, have the responsibility for managing risks, which includes those of social, environmental and ethical nature. Risk management is taken into account in determining their remuneration. But with management of risk occurring at many different levels within the Group, other employees also have explicit corporate responsibility objectives to meet.
How we are seen and judged
How we are judged is very important to us. We welcome the fact that we continue to be rated highly by investors.
We are represented in some of the main sustainability indices and funds. For a second year running we were included in the Dow Jones Sustainability Indexes World – which ranks the top 10 per cent of 2,500 companies around the world – and became the leading company in the wireless communication sector. We are also included in the Dow Jones Indexes Stoxx, the FTSE4Good listing of the top 100 UK companies, the FTSE4Good Global Index and are also members of the Brussels-based Ethibel investment and sustainability registers.
In 2003/04 we improved our position in the UK-based Business in the Community Index on Corporate Responsibility which this year saw 139 companies take part, including 56 of the top 100 UK-listed companies. Overall we were ranked 32nd and were the leading mobile communications company with an improved score of 91.21 per cent against 82.49 per cent in the preceding year. We improved our score in all assessed categories and recorded above-average scores in all areas.
Areas highlighted for some improvement include increased training in corporate responsibility for all employees including Directors; inclusion of social, environmental and ethical criteria in product development; focusing our measurement and reporting on diversity within our business; enhancing our ethical supply chain work; improved reporting on waste; expansion of our certified environmental management and health and safety systems. Our actions responding to these are described in greater detail in this report.
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| Managing CR | Corporate governance | Risk management | How we are judged | Materiality | Reporting guidelines |
Defining material issues
We strongly believe that non-financial aspects of a business's performance are increasingly regarded as material. We aim to address matters that people care about and that affect our business through this report. In line with the AA1000 Assurance Standard's materiality principle this report includes information about our corporate responsibility performance.
We identified issues relevant to our business by following research activities that focused on corporate responsibility matters:
- Research of O2 opinion leaders through one-to-one interviews;
- Research of some 300 employees through interviews, focus groups and online surveys;
- Sector-wide research of the British public;
- A dedicated conference for some 30 corporate responsibility practitioners within O2 that included stakeholder mapping; and
- Media reviews and publicly available opinion leader research.
Through our research activities we aimed to capture the opinions of stakeholders who have an interest in or affect the performance of our business. We have chosen the Five-Part Materiality Test developed by AccountAbility to help us determine the issues that are material to our business and should be disclosed in future reports. This year the exercise was exploratory and carried out as a desk review. Going forward the intention is for the mmO2 Corporate Responsibility Forum to examine the practical adoption of the Five-Part Materiality Test.
During the year the reporting process has involved detailed reports about our engagement with employees to our Executive Committee. A future target is to systematically capture other stakeholder engagement and when appropriate include this information in our regular corporate responsibility reports to the Board. The disclosure of relevant corporate responsibility objectives and targets covering material issues to our business has been subject to approval by the Executive Committee. To ensure that we will meet our objective of creating a credible report, the process has been reviewed by our external assurance providers. We have adopted this approach to continuously improve the quality and usefulness of our annual corporate responsibility reporting.
The table below describes examples of areas that would be captured through the Five-Part Materiality Test.
| Table 1. Five-Part Materiality Test (source: AccountAbility) |
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Test 1: Direct short-term financial impacts |
Short-term financial impacts resulting from aspects of social and environmental performance |
- E.g. Pricing regulation |
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Test 2: Policy-based performance |
Policies that are core to our business rather than add-ons |
- E.g. Corporate governance, Customer care, Procurement, Environmental, and Employee policies |
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Test 3: Business peer-based norms |
Issues that our peers are deeming to be important |
- E.g. Siting of communication masts and antennae
- Research into potential health effects of mobile communications
- Distraction driving
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Test 4: Stakeholder behaviour and concerns |
The practical definition of relevance to stakeholders in terms of reasonable evidence of likely impact on their decisions and behaviour |
- Ethical sourcing of Coltan for the handsets we sell
- Siting of communication masts and antennae
- Research into potential health effects of mobile communications
- Adult content and other inappropriate material on mobile phones and contacts made via mobile phones
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Test 5: Societal norms |
Regulatory and non-regulatory |
- Adult content and other inappropriate material on mobile phones and contacts made via mobile phones
- Personal safety issues relating to mobile phones
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Reporting guidelines
This report covers all of our core activities that are fully owned, excluding our joint ventures, associates, and O2 Netherlands, which was sold in June 2003, for the year ended 31 March 2004. The report has been independently verified by our external assurance providers, Ernst & Young.
In choosing how best to present our activities we have followed two sets of widely accepted guidelines. We use the Business in the Community (BITC) Reporting Guidelines to highlight four main areas of activity – marketplace, environment and sustainability, workplace and community. Once again we have added a section on health because we know it is an area of concern to some of our stakeholders.
In addition we report against the Global Reporting Initiative (GRI). We have included signposts in each of the sections of this report to make it easier for readers to cross-refer our performance to the GRI. A full reference to our compliance against GRI is available here.
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| Managing CR | Corporate governance | Risk management | How we are judged | Materiality | Reporting guidelines |
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| ENGAGING WITH EMPLOYEES |
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| An extensive survey of our employees' attitudes revealed a number of things they would like us to do better > |
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| Do we consult fully enough with communities on where we put our masts? |
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| Manx Telecom employees staged a custard pie contest to support the Mighty Oaks Appeal, raising £3,500 towards the building of a new 12-bed hospice. |
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