Virgin Media O2: How a bigger business aims to deliver a bigger impact on society and sustainability
EXCLUSIVE: edie’s content editor Matt Mace speaks to Virgin Media O2’s head of climate and nature Rob McCann and head of corporate responsibility Simon Davis to discuss the joint venture and the creation of the company’s new ESG strategy, which aims to make sustainability the “coalface” of the corporation.
In June 2021, Virgin Media O2 was formed. The 50:50 joint venture between the Liberty Global group and Telefonica combined two of the most instantly recognisable technology and media brands in the UK.
Now, as one of the largest telecommunications firm in the UK with almost 50 million customers, the company has published a revamped sustainability strategy reflecting the new size and stature of the organisation.
The company’s Better Connections Plan is the first wide-ranging sustainability strategy since the merger of Virgin Media and 02.
Virgin Media O2 will now aim to reach net-zero carbon across its operations, products and supply chain by the end of 2040 and is committing to both the Science Based Targets initiative’s (SBTi) framework and the Carbon Trust’s recently launched ‘Route to Net Zero Standard’.
The company has also confirmed it will use its gigabit broadband and 5G mobile networks to power technology and services that will help prevent 20 million tonnes of carbon from entering Earth’s atmosphere by the end of 2025.
For the company’s head of climate and nature Rob McCann and head of corporate responsibility Simon Davis, this wide-ranging and ambitious new strategy was made possible by “hitting the ground running” on day one, with both believing that as the company has grown, so too has its desire to help society and the planet.
“I think the new strategy is a reflection of the last couple of years and the big issues that we’re facing and operating in, from the climate emergency to the pandemic and now the cost of living crisis,” McCann tells edie. “There’s a lot of pressure on communities across the UK and both businesses prior to the merge played a key role in connecting people and supporting disadvantaged communities.
“We recognise that if our business is to be successful, we need to make sustainability a part of what we offer but we also need to use our strategy to reflect the opportunity that we have as a bigger company to have a bigger impact in responding to those challenges.”
McCann was part of Virgin Media’s sustainability team prior to the merger, while Davis was heavily involved in O2’s corporate responsibility set-up. Both are in agreement that the internal set up at Virgin Media O2 has made the rollout of the new sustainability strategy relatively straightforward.
Under the structure of this new business, McCann, Davis and the rest of the team report into Nicola Green, the chief communications and corporate affairs officer, who has taken up a leadership role of the broader ESG ambitions of the company. This, in turn, has embedded the aims of Better Connections Plan into the wider commercial and board-level aspirations of Virgin Media O2.
For Davis, the rollout of the new strategy was made possible, not just by the internal structure at the organisation, but also because of the commonalities of the two previous companies. Coming together, Davis argues, will allow them to act as a “disrupter”, but one that is already embedded into the market.
“If we look back at Virgin Media and O2, they were two separate approaches to sustainability, but there were also a lot of commonalities in terms of our material issues,” Davis says. “So when we actually all cam together on day one and looked across our plans and legacy programmes, there was a really nice fit in terms of what we had been focusing on and what we wanted to focus on.
“There’s always a battle to fight in terms of integrating these plans and focus areas, but we’d already fought those battles across the two organisations in the past. Our success there has really allowed us to kick on with this new strategy.”
Alongside the carbon targets, which were commonplace across both Virgin Media and O2 prior to the merger, the new plan features ambitious new measures to use the scope of Virgin Media O2 to avoid emissions and help customers embrace the circular economy.
The company has confirmed it will use its gigabit broadband and 5G mobile networks to power technology and services that will help prevent 20 million tonnes of carbon from entering Earth’s atmosphere by the end of 2025.
On its products and services, Virgin Media O2 has set a goal to help consumers deliver 10 million “circular actions” by the end of 2025. Measures range from using the existing O2 Recycle network for older or unwanted devices to using take-back schemes for routers and set-top boxes, of which already nine million have been refurbished since 2014.
More broadly, Virgin Media O2 has pledged to become a zero-waste business by the end of 2025. More than 95% of its operational waste will be recycled, with the remainder being sent to energy from waste facilities.
While both Davis and McCann note there have been “no bumps on the road” in rolling out the strategy so far, they do realise that their own personal skillsets are having to evolve in order to help deliver on the new targets.
One such area, Davis notes, is that of green finance.
The global green finance market has grown by more than a hundred-fold over the last decade, from $5.2bn in 2012 to more than $540bn in 2021. Green bonds account for the largest share of the green finance market, with issuance increasing from $2.3bn in 2012 to $511.5bn in 2021. Cumulative green bond issuance totalled $1.4trn over 2012-21, representing 93.1% of green finance across the decade.
Elsewhere, green loans have risen from $342m in 2017 to more than $78bn in 2021, a nearly 200-fold increase in just four years.
Yet this boom in growth has seen sustainability professionals having to take more notice of the terminologies and finance offerings available to help facilitate the net-zero transition.
As sustainability and finance speak converge – more companies are using the ESG terminology than CSR – so to will the skills required by sustainability professionals to translate the necessity to embrace sustainability and alleviate the climate crisis into datapoints that finance departments and banks can understand.
“One interesting area that both Rob and I have been working on with our finance teams is around sustainable financing. We’re looking at how we can essentially fund the joint venture and this strategy and we realise that the money we access needs to be from sustainable sources.
“So relatively new things like green bonds or sustainability-linked loans are areas of interest and from my perspective, this is a certainly a new. But it’s a discipline that I can see evolving and being a key role for us going forward. We need to support our finance teams.”
As this skillset develops, McCann is looking forward to seeing how the carbon avoidance targets can help showcase the company’s increased appetite and abilities to help combat to pressing societal and planetary needs, something that may not have been possible if the joint venture did not take place.
“This isn’t just a standalone ESG strategy on the side, but actually it really does deliver value for the business,” McCann adds. “When I look at the targets around decarbonisation and carbon avoidance, I guess that ultimately wouldn’t have been presented to Virgin Media in the in the same way without that kind of network and technology from O2.
“Similarly, the fixed network is enabling millions of people to work from home and save money, so the two companies have combined really well to amplify this bigger picture. We have a much bigger customer base combined with a bigger network, which means that we reach more people. We’re trying to reflect the increased size with increased ambition and solutions.
“For that we need to ensure that our sustainability team is the real coalface of the business and influencing the way that decisions get made. I think we’ve been set up to do just that.”