Chris Tuppen

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Chris Tuppen
The BT Business Case for CSR

• Head of Sustainable Development and Corporate
  Accountability

Mark Smith
Investor Relations Manager
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Forward-looking statements - caution

• Certain statements in this presentation are
  forward-looking and are made in reliance on the
  safe harbour provisions of the US Private
  Securities Litigation Reform Act of 1995. These
  statements include, without limitation, those
  concerning expectations regarding customer
  growth, investment plans, strategy, and the
  benefits of new initiatives the possible or
  assumed future results of operations of BT and/or
  its lines of business expectations regarding
  product volume, revenue targets and/or growth,
  capital expenditure, network infrastructure and
  savings, customer satisfaction, free cash-flow,
  market share, cost reductions and cash savings,
  productivity improvements, and profitability.
• Although BT Group believes that the expectations
  reflected in these forward-looking statements are
  reasonable, it can give no assurance that these
  expectations will prove to have been correct.
  Because these statements involve risks and
  uncertainties, actual results may differ
  materially from those expressed or implied by
  these forward-looking statements.
• Factors that could cause differences between
  actual results and those implied by the
  forward-looking statements include, but are not
  limited to material adverse changes in economic
  conditions in the markets served by BT and its
  lines of business future regulatory actions and
  conditions in BTs operating areas, including
  competition from others in the UK and other
  international communications markets selection
  by BT and its lines of business of the
  appropriate trading and marketing models for its
  products and services fluctuations in foreign
  currency exchange rates and interest rates
  technological innovations, including the cost of
  developing new products and the need to increase
  expenditures for improving the quality of
  service prolonged adverse weather conditions
  resulting in a material increase in overtime,
  staff or other costs developments in the
  convergence of technologies the anticipated
  benefits and advantages of new technologies,
  products and services, including broadband and
  other new wave initiatives, not being realised
  the timing of entry and profitability of BT and
  its lines of business in certain communication
  markets significant changes in market shares for
  BT and its principal products and services to
  the extent that BT chooses to sell assets or
  minority interests in its subsidiaries,
  prevailing market levels for such sales general
  financial market conditions affecting BTs
  performance and the reintegration of Concert. BT
  Group undertakes no obligation to update any
  forward-looking statements, whether as a result
  of new information, future events or otherwise.

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BT Group
Consumers
SMEs
Multi Site Corps
ISPs
OLOs
BT Global Services
BT Retail
BT Wholesale

• BT Retail - Customer centric distribution
  division
• BT Global Services - includes all international
  activity
• BT Wholesale - Network service and solutions

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Key deliverables

• Build on network centric ICT capability
• Create convergent MOBILITY solutions
• Deliver on BROADBAND
• Defend TRADITIONAL business rigorously
• Drive for COST LEADERSHIP

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Our strategy is working
Long term

• Defend traditional
• Improved service
• Aggressive creative marketing
• Price innovation
• Reduce costs / improve margin

partnership
with our
customers

• Grow New Wave
• Broadband
• Mobility
• ICT
• Global Solutions

21st
Transformation
Century
Network
Delivering Shareholder Value
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CSR in BT
1929 First telephone for the partially deaf 1983
Consumer Liaison Panels introduced 1984 BT
privatised Universal Service Obligation
enshrined in law 1992 First Environment
Report 1992 Malicious Calls Bureau
established 1994 First external verification
of reporting 1994 Forums for disabled
employees 1999 First Social Report
produced 1999 ISO140001 for UK
operations 1998 Statement of Business
Principles sent to all employees 2001
Sourcing with Human Dignity introduced
2001 First sustainability report 2003
2,000,000 children involved in BT education
roadshow 2004 BT awards worlds
biggest green electricity contract
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A Foundation of Values
The business case for sustainable development
wont work unless it generates real, lasting
trust with all a companys principal
stakeholders. ... You cant add value
without values.
Just Values
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A Synergy with Commercial Strategy
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Summary Framework
1st Generation
2nd Generation
3rd Generation
INNOVATORS
Sustainability SolutionsMarketplace
DiversityStrategic RelationshipsBid Support
Market Place Innovation
Value Drivers
Employee Motivation
Cost Reduction
Licence to Operate / Reputation
Risk management
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Risk management
3 year time horizon
gt80

• Most significant risks
• Breach of integrity
• Climate change
• Diversity
• Geography of jobs
• Health and Safety
• Supply Chain

4n
61-80
41-60
LIKELIHOOD
12n
8n
7n
16n
9n
17n
2n
21-40
15n
11n
6n
1n
3n
5n
n net risk taking account of mitigation strategy
14n
lt20
10n
13n
Group material risks guideline
Group significant CSR risks guideline
IMPACT
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Licence to Operate / Reputation
0.31
0.46
0.42
-0.06
Model based on BT Retail internal data
(Residential Customers)
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Cost Reduction

• Energy 62 reduction in CO2 (since 1991)
• Transport 38 reduction in CO2 (since 1992)
• Waste 24 reduction(since 2000) 26
  recycled

600m savings over ten years
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Employee Motivation
Knowing about BTs social responsibility
reputation .
49
34
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More proud to work for BT
No effect
No opinion
2 BT should focus purely on financial
performance
Did BTs reputation for social responsibility
influence your decision to apply / accept a
graduate placement?
17
79
Yes
No
4 No opinion
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Market Place Innovation
CSR Proposition Development
Generate Revenue
CSR elements Proposition Development
Create Differentiation
In 2003/4 financial year CSR credentials
supported 1b large bids tenders
Customers Suppliers
Build Strengthen Relationships
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BTs website on CSR
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Our purpose is to improve communications. Our
CSR programme is vital to encourage our
customers to buy from us, investors to put their
trust in us and the best people to work for us.
Sir Christopher BlandChairman
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(No Transcript)
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CSR Health Checks
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Health Check Template
PROGRAMME
CONTACT Objectives of the
Programme Progress since last health
check Summary Impacts
Recommended Actions
Summary of Conversation
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Ethical Purchasing in BT

• Forced labour
• Freedom of Association
• Health and Safety
• Child Labour
• Wages
• Working Hours
• Discrimination
• Regular Employment entitlements
• Harsh / inhumane Treatment

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Implementing GS18

• BT Group Procurement Scorecard
• Buyers awareness training
• Automated risk assessment process
• commodity / country / violations
• Contractual commitments
• Supplier evaluation / engagement / partner /
  webcast
• Assessors training course
• On-site assessment
• BTs Supplier award for CSR

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Key Performance Indicators
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Project Cleanfeed
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The UK Digital Divide
2009
2008
21st Century Network- key milestones
Broadband dialtone available tomost customers
2007
Mass PSTN migration reaches more than 50 of
customers
Large scale non PSTN service migration begins
2006
Mass PSTN migration begins 17 new product
launches/enhancements based on re-usable
capabilities New operations service management
capability in place
2005
Broadband available to 99.6 Strategic vendors
announced Broadband growth on MSAN/combo
cards First new service launches based on
re-usable capabilities
2004
PSTN transformation trial Deep fibre
trial Converged network Service
creation Experience development centre
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Climate Change

• BT annual consumption 2100 GWh
• From October 2004
• New green up from 47 GWh to 1000 GWh (no
  carbon)
• 1100 GWh CHP (low carbon)
• CO2 emissions will now be 80 down on 1991
  baseline

The actions of leading companies such as BT are
living proof that significant cuts in greenhouse
gas emissions need not come at the cost of
economic growth." Tony Blair