Vodafone 2024 Annual Report

Purpose (continued) 40 Vodafone Group Plc Annual Report 2024

Strategic report



Other information

Our Scope 3 GHG emissions decreased by 12% compared to the previous year. Since 2020, Scope 3 emissions have increased by 20%. Currently, one of the key drivers of year-to-year trends in our Scope 3 emissions is improvements in the quality of data inputs, emission factors or calculation methods. This year, we were pleased that more of the companies in which we hold an equity stake have shared their Scope 1 and 2 GHG inventory with us, indicating an increase in the maturity of GHG measurement. In particular, this year we observed a decrease in energy consumption by Vodafone Idea (India). Combined with a decrease in the carbon intensity of India’s electricity grid, this has driven a decrease in the emissions we finance through our investments (Scope 3 Category 15), which has resulted in a significant decrease in the Scope 3 GHG emissions from our investments. This year we have also observed a decrease in lifecycle emissions associated with devices that we purchase and sell to customers. The continued evolution of Scope 3 data sources and methodologies creates a significant challenge. Likewise, the low availability of product carbon footprint data remains a constraint on the calculation of accurate Scope 3 GHG emissions across the market. Improvements in data quality and availability will help us continue to move away from estimating using a spend-based methodology, towards methodologies that use more specific product carbon footprint data provided by our suppliers. We therefore continue to invest in improving our Scope 3 data models as better data sources become more accessible and available. We have also continued to collaborate with our industry peers through forums such as the Joint Alliance for CSR (‘JAC’) and GSMA to improve access to high quality carbon data from our common supply chain. Over time, these efforts aim to improve measurement and reduction of Scope 3 GHG emissions across our industry. To drive Scope 3 GHG emission reductions in FY24, we continued to engage with our suppliers on climate action through our procurement process, which includes a 20% weighting on ESG criteria (including 5% weighting on climate-related performance) during supplier selection. Vodafone is a member of JAC, a telecommunications industry organisation that promotes a consistent and simplified approach to engaging suppliers and supporting the transition of our industry towards net zero. Following its launch, our banking partners also continue to roll out an environmental supply chain finance programme, which offers financial incentives for our suppliers to disclose carbon data to CDP and take action to improve their environmental performance over time. We also progressed activities to improve the circularity of devices we sell, which helps reduce our Scope 3 GHG emissions and reduces e-waste. Although we are pleased that our Scope 3 emissions have decreased compared to the previous year, we recognise that they are 20% higher than our 2020 base year. This has primarily been driven by increases in our estimated emissions from two parts of our value chain: upstream supply chain (from purchased goods and services, and capital goods); and investments. In both cases, the accuracy and completeness of the underlying data used to calculate the emissions has improved since 2020. In relation to our upstream supply chain, the increase in emissions also correlates to an increase in procurement spend. The 20% increase in our Scope 3 GHG emissions compared to 2020 means we are not yet on track to achieve our goal of halving Scope 3 emissions by 2030 and achieving net zero across our full value chain by 2040. This year, we published our Climate Transition Plan, which outlines actions we plan to take to further drive Scope 3 emissions

On-site renewable generation We also continued to install and deploy new solar photovoltaic (‘PV’) systems at sites in Germany, the UK, Turkey, Egypt and Albania. This increased our annual on-site generation of renewable electricity to 21 GWh per annum. We are seeking to expand our current implementation of micro-grids in the DRC, as well as collaborating with partners to develop new innovative solutions for renewable energy generation. For example, in Egypt we have trialled a site powered solely from on-site solar and wind generation. To get the most benefit from our on-site renewables, we have carried out investigations into battery technology and have currently identified sodium-ion batteries as the most promising technology for energy storage. We have tested prototypes from a supplier with positive results and are looking to carry out similar tests with additional suppliers. Reducing diesel and petrol use for generators We used 76.3 million litres of diesel in FY24 (a 5.6% increase from FY23: 72.3 million litres) to fuel generators at sites that are off-grid or have unreliable grid electricity supply. Use of fuels in generators contributed 79% to our Scope 1 GHG emissions (FY23: 78%). Reducing diesel use continues to be particularly challenging in markets with unreliable grids (where electricity supply from the national grid is routinely interrupted due to insufficient generation), such as the DRC, South Africa and Egypt. This year we conducted further research into alternatives to diesel, including the feasibility and environmental credibility of hydrotreated vegetable oil (HVO), a bio-based fuel, with a view to establishing some proof-of-concept trials over the coming year. We are also testing hydrogen fuel cell technology in South Africa. The technology comprises a fuel cell, an electrolyser and low-pressure hydrogen storage whereby hydrogen is generated from water that is recycled through a closed circuit. The technology can generate hydrogen when renewable electricity is available – from the grid or small scale on-site renewable power generation – which can be used to power our mobile base stations when renewable electricity is not available. We also continue to connect off-grid sites to the grid where possible to minimise the use of generators. Electrification of our fleet We continued to increase the number of electric vehicles (EVs) in our company fleet (with EVs making up 58% of the fleet compared to 51% in FY23). We continue to improve the total cost of ownership for EVs and deliver cost savings that can be reinvested into fleet electrification and EV-charging infrastructure. This year, we introduced EV training and organised EV test drives to raise drivers’ awareness. In November 2023, we won Fleet Europe’s award for European Green Fleet Manager of the Year. Net zero value chain (Scope 3 emissions) We aim to halve the emissions from our full value chain by 2030 and bring them to net zero by 2040 (against a 2020 baseline). This includes our indirect (Scope 3) emissions, which we estimate to be 6.07 million tCO 2 e in FY24, 12% lower than the previous year), forming 90% of our total GHG emissions. We continued to strengthen the methodologies and underlying assumptions used for calculating our Scope 3 emissions data. In line with GHG Protocol standards, we recalculated our base year and previous years’ Scope 3 emissions to account for recent organisational changes, including the FY23 divestment of our operating companies in Ghana and Hungary, and our tower company, Vantage Towers. We also improved the accuracy of factors used in the spend-based calculation of the embodied emissions of the goods and services we procure. Using a spend-based methodology for calculating the emissions from parts of our upstream supply chain means that economic trends (such as foreign exchange rate fluctuations and inflation) can also affect the modelling of our Scope 3 GHG emissions.

Click to read more about Scope 3 emissions in our ESG Addendum: investors.vodafone.com/ esgaddendum

Read more about how we are improving Circularity on pages 41 to 42

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