BT Group plc (BTA) Earnings Call Transcript & Summary

Good afternoon, and welcome everybody. I'm Ed Petter, BT's Group Corporate Affairs Director. Thank you for joining us for our ESG Manifesto briefing, either virtually or here in [indiscernible]. Given the focus of today's session, I felt -- it felt relevant to point out that like all of our buildings in our Better Workplace program, this new headquarters is built to the highest sustainability specifications and powered with 100% renewable electricity. Now if you haven't already, you can download today's presentation from our website, or for those in the room, you can use the QR code on the flyers on your table. Now a year ago, we launched the BT Group manifesto, which set out how we'll accelerate growth through technology that's responsible, inclusive and sustainable. Our manifesto is underpinned by a number of commitments outlined here on this slide, which we will refer to today. Since then, those parts of my team that lead on social impact and sustainability have been working with colleagues across the business to embed the manifesto into our plans. Today, you'll hear from Philip Jansen, our Chief Executive, who will talk about the progress we've been making on the manifesto. Sara Weller, one of our Board members and the new Chair of the Digital Impact and Sustainability Committee will focus on the governance aspects of the manifesto. And we'll then hear an update on each of the manifesto pillars and the way in which we're integrating the manifesto into the business. Philip will close the presentation section of this briefing by sharing his priorities for the future, after which, we'll open up for your questions. And with that, Philip, over to you.

Thanks, Ed. Hello, everybody. Thanks for coming. I appreciate you joining us today. I'm going to keep my comments relatively brief so that we can hear in more depth from the team before we move to the Q&A that Ed mentioned. I wanted to touch on 3 things: first, how we advance our manifesto agenda, not only as an ESG platform but as an integral part of the BT Group growth strategy; second, how our manifesto supports a caring and robust response to the cost of living crisis; and third, I want to sum up the progress we're making, not just in terms of specific projects, but by embedding the manifesto into the fabric of the BT Group. So let's start with growth. This is the BT Group strategic framework, which many of you will have seen before. It sets out our purpose, we connect for good, our ambition to be the world's most trusted connector of people, devices and machines. It also covers our values, which guide how we do business. And finally, the strategic pillars that drive our growth. Now the Manifesto is essentially the root map for our third strategic pillar over on the right-hand side of this chart. And whilst it reflects our desire to be decent corporate citizens, it is unashamedly about commercial growth, too. We believe there is competitive advantage in focusing on the ethics of technology development, building trust and sales through a more responsible approach. We believe that greater inclusivity will give us the colleague and customer bases we need for the future, and we've been clear that in our collective ability to live and work more sustainably will determine the type of society and markets which companies like ours operate. Now we all know that people, business and society as a whole are under immense pressure as rising costs impact every aspect of life. And Marc Allera went into some detail on our support for U.K. consumers during last week's Consumer business briefing. I won't repeat everything that he said. But I do just want to mention some of the steps we're taking to stand by our customers, to stand by our colleagues and to stand by the country as a whole. Starting with customers. Consumers on universal credit can get discounted broadband from BT and EE with our Home Essentials package. In fact, we have more customers on social tariffs than the rest of the market combined. And you may have seen, we recently launched EE Basics, which mirrors the offer for eligible mobile customers. We've been market leaders on social tariffs and the customer fairness agenda for a long time. protecting 1 million vulnerable customers from price rises on Home Essentials and other products. We're also helping people across the U.K. even if they're not BT or EE customers. Openreach's Connect the Unconnected scheme waives connection fees for vulnerable customers via their communications provider. Secondly, we're looking after our colleagues. In April, we gave the highest pay rise for frontline colleagues in more than 20 years. That's GBP 1,500, which is an average of 5% across the group but up 8% for those on the lowest salaries. On Monday, we announced our intention to make another GBP 1,500 cost-of-living pay rise for all U.K. colleagues earning GBP 50,000 or less, which is 85% of our U.K.-based people. Prospect and CW, our union partners, are supportive and will be putting this to their members for a vote. Of course, we also have a range of benefits available to help our colleagues contain all sorts of household costs from transport to insurance to high street shopping. And just as we did during the pandemic, we also recognize our wider responsibility to the country as a whole. And so despite facing intense cost pressures ourselves, we are continuing to make landmark investments in the digital infrastructure, that's full fiber and 5G, that the U.K. desperately needs. We continue to engage with local communities through a number of programs focused on digital skills to help people into the workplace and improve their economic prospects. In total, last year, more than 33,000 people took part in our work-ready program. And we're particularly focused on supporting young people who are suffering the highest rates of unemployment, and you'll hear more about this in a few minutes. With our charity partner, Home-Start, we've also gifted laptops and connectivity to some of the families that are worst affected by the cost of living crisis. So despite the extraordinary headwinds in the 12 months since its launch, we've made deep and sustained progress on the objectives we set out in the Manifesto. In a moment, others will take you to -- take the stage to run you through the detail. You'll notice that in every area, we're doing 2 key things: first, addressing the basics; and second, making sure that Manifesto is part of the BT Group's growth strategy. We're forging ahead towards net zero and we're also launching new commercial solutions to support our business customers on the same journey. We set ourselves stretching diversity targets. And now we're linking those targets to the way we foster the digital talent, our business and our industry more broadly needs. We've built robust systems to manage risk across BT Group. We're also developing commercial differentiation in the way we address issues such as data ethics. Now what we hope you take away from today is a sense of the many steps we're taking to help with the cost of living crisis and insight in the way we're embedding the Manifesto and an understanding of the way we are weaving together our ESG and growth strategies. So this is a real group effort led by the individuals you see here but, really, crucially supported by 100,000 colleagues worldwide. Now we are very fortunate that is overseen by a committee that brings some of our most experienced Board members together with key members of my executive team. That is chaired by Sara Weller. So now let me hand over to her to say a little bit more about governance.

Thank you, Philip, and good afternoon, everyone. So I'm Sara Weller. I'm delighted to welcome you here today in my capacity as the new Chair of the Digital Impact and Sustainability Committee, or the DISC as we call it internally. The BT Manifesto is led from the top of the organization, as you just heard from Philip, and it provides the committee with a clear remit, and I'm really excited about the work we're going to do on DISC, building on the equivalent work that I led at Lloyds Banking Group. So Slide 11 outlines the BT Group Board structure, including the DISC. The DISC provides oversight and direction to our digital impact and sustainability strategy, which is broadly encompassed in the manifesto. My own retail experience means that as well as overseeing the ESG agenda, per se, I'm well placed to ensure that the committee offers support of the business, develops new converged products and services, enabling our business units to draw on the best practice, build ambition and energy across the group. ESG is embedded in the group's reward approach and will remain so as we progress our triennial review of the remuneration policy. Progress against specific KPIs is therefore reported on -- at the DISC and to the Remuneration Committee. In addition, climate risk is firmly part of the group's risk framework with oversight through the Board, Audit and Risk Committee, of which I'm also a member. So hopefully, you can see that our oversight of the ESG agenda is thoroughly integrated across all of our governance structures. Slide 12 shows the dashboard that we use to track progress on the manifesto, applying the same rigor we used to track all other aspects of our business performance. And this is the first time we've shared this dashboard externally. You will already be familiar with how we track progress on many of the goals such as FTTP, but for some, a more subjective approach is needed. For example, under our responsible pillar, we draw in the views of experts, internal and external, to appraise our performance. We're in good shape overall, and we'll talk through some of the things we're going to do to focus more strongly on as part of the updates that you're about to hear. So, right, time for some specifics and for you to hear from some of the team who are driving the work forward. Given the breadth of our ESG agenda, we decided to focus on specific aspects of each of the 3 Manifesto pillars guided largely by their materiality. So under the responsible pillar, Lauren will describe how BT is embedding its responsible tech principles to build trust and growth. Under the inclusive pillar, Mark will talk to you about the group D&I context. He'll then spotlight the digital units talent agenda. And then the sustainable pillar, Sarwar will explain how BT Group is reducing its carbon emissions and becoming circular before spotlighting how sustainability is fueling growth in our B2B business. So without further ado, let me welcome Lauren.

Thanks so much, Sara, and hello, everyone. I'm Lauren Kahn, Responsible Tech and Human Rights Director for BT Group. As Philip has already said, at BT, our ambition is to be the world's most trusted connector of people, devices and machines. And we know that it's not enough to simply minimize harms. It's imperative that we also connect for good. Our responsible tech principles outlined here on the slide ensure that our tech is always for good, that is empowering people and improving their lives as well as accountable, fair and open. And we're committed to applying these principles across our entire value chain, each and every time we develop, use, buy and sell technology. They are the premise on which we build customer trust. And today, I'd like to talk to you about the 2 sides of the trust coin: how we're managing risk to build trust and how we're leveraging trust as a growth opportunity. Our group risk framework gives us the tools to be smart with risk, enabled by the right culture, leadership and governance. And there are 3 areas of risk that I'd like to talk about today that cut across our business and our value chain. These are technologies, geographies and user groups. Firstly, technologies and specifically data and cybersecurity. Our networks and the data that flow through them are the core of our business and protecting these assets is vital. Take a look at these stats and you'll get a sense of the scale of the challenge facing us along with our response capability. EE blocks up to 4 million scams a week, and our global network of security centers, protect BT from 200,000 cyber attacks a month. We already employ some 3,000 cybersecurity professionals and we have an 80 strong team of ethical hackers, constantly probing our own security. Not all of them are IT specialists either. Some are behavioral psychologists adept at finding our personal information via telephone scams and using this to break passwords. Reflecting the growing importance of security to our business, our CTO, Howard Watson, who we have here today, has seen his role expand to Chief Security and Networks Officer. I'll now move on to high-risk geographies. We serve customers in 180 countries, and our supply chain spans 100 countries. Risk management is critical, and we use tools such as crisis gaming to stay on top of global changes such as rising energy costs, sanctions, natural disasters and geopolitical conflict. We also conduct regular audits of our suppliers, and we use digital technologies such as AI and blockchain to monitor labor practices in our supply chain. Finally, and very importantly, we think carefully about particular groups of users who might be impacted by technology. And as a company serving families all across the country, children are a key focus for us. Now more than ever, children's lives play out in the digital world. Research from Ofcom last year showed that 90% of children have their own mobile by age 11, and 80% had at least 1 potentially harmful experience online in the past year. And that's why we recently carried out a group-wide assessment of our impact on children's digital rights and safety, and on the back of that, created a robust action plan. Of course, we don't do all of this alone. We work with children, with parents and caregivers and expert organizations. For example, EE PhoneSmart, the first phone safety license for children, has been created with Internet Matters and other experts such as Home-Start and ChildNet. Our greatest risks managed well are also a commercial opportunity and a differentiator. Data and cybersecurity, which are becoming a key part of our growth story across the group, are a good example. More and more of our customers want to understand our security capabilities, and we leverage our internal security expertise to offer security solutions to customers in businesses and governments across the world. Our credentials build trust, and trust builds custom. For example, we've invested in Silicon Valley cybersecurity company, Safe, to provide our customers with objective assessments of the cyber protections and to quantify the financial cost of their cyber risk. We've also embedded AI technology into our Eagle-i platform for multinational customers. And this uses self-learning and automation to predict, to detect and to neutralize threats before they can make an impact. And we're helping our consumer customers to stay safe in their homes and their digital lives through our EE Security offering. We're also innovating with data safely and ethically to help unlock value for our business units, for our customers and for society. Our new AI accelerator is a great example of responsible innovation in action. New automation helps us expedite checks on the quality and the effectiveness of new machine learning models, which are really the building blocks of artificial intelligence. And in turn, this helps us deploy AI more rapidly but without sacrificing the ethical, the privacy and the security checks needed to make this work responsibly. And this capability will help us unlock millions of pounds of value for the group. Our active intelligence solution is another example of driving value while remaining a trusted custodian of individual's data. Through our mobile network, we are able to create anonymized crowd movement analysis, and this can help give public sector and our government customers really rich behavioral insights such as determining catchment areas for regional airport passengers. We were also very proud to support the Department for Health and Social Care with evidence-based analysis that helped inform the local and the national response to the pandemic. This is harnessing data for public good but it's also good for business. Revenue from our active intelligence solutions have grown more than 90% in a year. So to conclude, being responsible is about risk and opportunity. We are being smart about risk to build trust, and we're actively leveraging that trust to drive commercial growth in areas where we have a strong right to play. I'll now hand over to Mark who'll spotlight some of the work that we are doing in the digital unit as part of the inclusive pillar. Thanks.

Thank you, Lauren. Good afternoon, everybody. I'm Mark Murphy. I'm the Director of HR for our digital unit, and I had the pleasure of meeting many of you when we held our Digital business briefing back in March. It won't surprise anybody to learn there's a major digital talent shortage in the U.K., which, in turn, presents a major barrier to unlocking the full potential of new technologies and for the economy and society. If we just take AI, while the AI industry has the potential to boost the U.K. economy by as much as 10% of GDP by 2030, 35% of companies are either experiencing now or foresee a related skills gap in their business in the next 2 years. And the problem isn't just one of scale. There is a major lack of diversity in the digital talent pool. Only 20% of data and AI professionals in the U.K. are women. At BT Group, we firmly believe the future of tech must be inclusive and diverse for everyone to benefit. This is the right thing to do for a fairer digital world and also key to growing our customer base by ensuring our tech works for more people. So today, I'm going to focus on 2 things: firstly, looking in, what we're doing to become a more digital, diverse and inclusive business; and secondly, looking out, how we're helping to drive the scale and diversity of talent in the wider digital ecosystem. Back in 2020, we set ourselves challenging and stretching targets on the makeup of our workforce for 2025 and for 2030. We've increased the representation of women and ethnic minority colleagues at almost every career level over the past year and our gender pay gap remains below the industry benchmark. But there's more to do, particularly on Back talent at all levels and on disability representation, where we're seeing a reduction at every career level, except in our graduate population. We must continue to match our efforts in recruitment with a joined up approach to retention supported by an inclusive culture. To create an inclusive culture, our diversity and inclusion strategy has 5 clear strategic priorities outlined here on the slide. Building on our workforce targets, we're looking to reflect the same ambition in how we show up externally through our products and our customer experiences. As we think about consistency of approach, we're giving our colleagues high-quality training to help them develop the sort of inclusive habits we know will help to differentiate us. For example, to ensure all colleagues are knowledgeable about disability-related issues and language, we've worked with disability experts like the Global Disability Innovation Hub to develop a wide range of awareness raising initiatives. These have covered topics including neurodiversity, introduction to disability and digital accessibility. I'll talk more in a little bit about how we're improving outcomes for disadvantaged groups in society and using this as a lever to attract diverse talent into our business. And finally, we've fostered an external reputation through transparency in areas such as pay gap reporting on ethnicity. Working with our partners, [ Rubik and AKD ], we're running a mentoring program for colleagues that matches ethnic minority talent with external mentors to introduce a different perspective and to really build confidence. So let's now look at what we're doing in digital. Specifically, I'd like to bring to life how we're tackling the 2 challenges of scale and diversity in our own digital talent pipeline. We founded Digital last year, bringing together 7 organizations from across BT Group. To give a sense of scale, we're made up of over 4,000 colleagues, although around 80% of our work is carried out today by external subcontractors. We're on a mission to double Digital's productivity and transform the way that we work. We're partway through a significant in-sourcing program, taking on 700 of our planned 2,800 colleagues by 2024. Now we know we can't achieve that if we don't acquire and retain the diverse skills and talent that are needed to make that happen. So we're building a world-class training offer and we're working with partners to access a pool of digital talent and help them develop to ensure we win in the longer term. As we talked about in some detail in March, we're building a digital campus, a one-stop shop learning and community opportunity. And as you can see from the slide, it spans everything from the basics through to more advanced skills like cloud infrastructure. It's landed really well so far, and we've seen great engagement both from our own colleagues and from partners such as Salesforce, Amazon, Google and others who are part of the campus offering. We're also working with a fantastic set of partners to access a wider pool of digital communities, including 10,000 Black interns, Code First Girls, Women Returners. And for the first time, we had a presence at the Black Tech Fest this year. We've also just joined the Hidden Disabilities Sunflower scheme, which is a commitment from the business to support individuals with nonvisible disabilities. We have been for many years and continue to be a major source of U.K. apprenticeships, working with leading U.K. universities and investing in a range of entry schemes. We're not alone in needing to deepen the pool of digital talent. And as I said earlier, the future of our industry is critically dependent on diversity. That's why last year, we committed to build a future talent pipeline for both BT Group and the U.K. that is truly reflective of society. Last month, we convened AI-Ready Nation, bringing together industry policymakers, higher education and digital training providers and learners to identify key challenges and find solutions. And we're making sure this is not just a talking shop. It's also about concrete investment and practical action. First, we plan to open source our own investments. For example, we're making digital campus available outside of BT next year. And second, we're looking for opportunities for our partners to help amplify and accelerate even further. Our fantastic partnership with Avado Learning FastFutures scheme is a great example of this. We're coming together with some of the U.K.'s largest employers to support diverse young people into digital roles, aligning with the U.K. government skills agenda. We co-founded this initiative during the pandemic. And to date, it supported 5,700 young people to build their networks, gain experience and accelerate their careers. And as you can see, the FastFutures community is extremely diverse. And our people get actively involved too in all aspects of the program, giving expert input on curriculum design, running career talks and mentoring over 250 participants so far this year. So to sum up, we're rapidly becoming a more digital, diverse and inclusive business. We're helping to build a diverse ecosystem, and we're working to create a virtuous circle between the two. I look forward to your questions later on. And in the meantime, I'll pass to Sarwar, who will talk in more depth about our sustainability pillar. Thank you.

Thank you, Mark. Hi, everyone. I'm Sarwar Khan Global's Head of Digital Sustainability. We all know the transition to a low-carbon society needs to happen much faster. In this update, I'll talk about 2 things: how we're getting into good shape here in BT and then 2 big cutting-edge areas we're engaging with customers on. This slide recaps on the longer-term ambitions we've set. But let me first ground that in the 5 priorities we're going after. On carbon emissions, we've committed to being net zero for our operations in 2031 and for our full value chain in 2041. We also want to help our customers on their own journey towards net zero and a more circular world. All of this is founded on transparency and on a sound contribution to public debate in areas such as the transition to electric vehicles. We've made significant progress in cutting carbon emissions and have reduced our carbon emission intensity by 55% since the base year in FY '17. Getting to net zero is about decarbonizing our fleet, our estate and our networks. We're aiming to convert the majority of our van fleet, the U.K.'s second largest, to electric or zero-emission vehicles by 2030. We've already added more than 1,500 electric vehicles to the fleet, and to spur progress, we have launched the U.K. Electric Fleets Coalition to advocate for a progressive public policy. We are decarbonizing our estate by downsizing and consolidating many of our offices into new ones, which are designed to minimize environmental impact through energy-saving features. BT accounts for around 1% of the U.K.'s electricity usage. So building energy-efficient networks that are renewably powered and switching off legacy networks play a key part in tackling climate change. As well as energy-safe, full fiber networks are more resilient to the impacts of physical risks such as flooding and increased temperature, and this leads to fewer faults and fewer truck rolls. So you can see that modernizing our networks is a massive boon to sustainability. So we're making good progress. But when we look at BT's end-to-end carbon emissions, only 6% comes from our own operations. And that brings the focus on to Scope 3. With 70% of our total emissions coming from our supply chain and the remainder from customers using our products and services, we've hardwired carbon reduction into our supply contracts and we are asking them to report to the Carbon Disclosure Project so we can better track and act on emissions. Thanks to these, we've already cut our supply chain emissions by 28% since FY '17. As we look at the customer use of our products, decarbonization of the grid and improving the energy efficiency of our products, we'll accelerate the journey to net zero. And this takes me to our closely related focus on circularity. Now this is 1 of 2 areas I'll now focus on to show we're building from the work to get BT into good shape to engage our customers. The transition to a circular economy is key to decouple business growth from resource consumption whilst helping customers reduce their environmental impact. We've set an ambitious new goal to build towards a fully circular BT by 2030 and our full ecosystem by 2040. Now we're not starting from scratch. The rate at which people return routers and set-top boxes to us for reuse and recycling rose by 7% to 65% in Q1 this year. We're also stepping up activity on the mobile side and have expanded our 2-hour repair service at a number of stores. Our Eco program, which takes in our old network equipment, has reused and recycled over 280 tons of kit so far this year. Now we've also had some exciting new developments this year. We announced a new sustainability partnership with Cisco, which is enabling B2B customers to return their own network devices for reuse and recycling. Now earlier this month, we joined the Eco Rating Initiative for mobile devices launching in Q4. This will help customers to make more informed and sustainable choices. And there's another exciting launch coming in Q4, a new Hub and TV box with a more sustainable design with up to 85% recycled plastic using 23% fewer materials by weight and plastic-free packaging. So really good progress on building more sustainable business practices, and we'll work to embed this throughout BT in the year ahead. Now let me turn to those practices that are helping us to grow the business. Our B2B customers are prioritizing sustainability. Around 60% have already set some form of carbon reduction target. And we know 50% of all telco RFPs are expected to include sustainability as standard by 2025, up from only 5% last year. For us, sustainability will be the tipping point in winning and losing business. And we're already seeing it make a difference through some of our recent contract wins, for example, with Atos, DHL and ABB. But we know we need to do more. And that's why we're embedding sustainability by design, helping solve our customers' sustainability challenges. And there's 3 key parts to this. So the first is helping customers track energy and carbon emissions across their networks in real-time enabling, them to reduce their Scope 3 emissions. We're creating customer dashboards that will help them to do that. The second is helping customers to choose sustainable products from BT. Our partnership with Cisco enables end-of-life returns, and the BT eco-Sim for mobile customers offers 2 current examples. And finally, we're supporting customers to drive down their operational emissions, Scope 1 and Scope 2. In partnership with QiO, we've co-developed an AI capability that can help customers to optimize energy efficiency and reduce carbon emissions in their own operations. So to summarize, we're accelerating towards net zero and a circular world and supporting a low-carbon economy that fuels growth for BT and for our customers. So I will now hand back to Philip to close the session.

Thanks, Sarwar. Right. You've heard about the progress we're making. But of course, there's obviously so much more to do on every front. So what are my top priorities for the coming months? Well, firstly, within the responsible strand of our Manifesto, it's all about security. As Lauren said, the threat of cybercrime grows exponentially, and BT Group is in the front line of the fight at all levels, from protecting the nation against rogue actors to safeguarding our most vulnerable consumers. It is actually a thriving part of our business, but only because we work day and night to ensure that the sophistication of our detection and armory matches the evolving tactics of the ever-present cyber criminals. Second for me, inclusion. Mark ran through some of the great work we're doing already, but I'm absolutely determined we pick up the pace and we intensify our efforts even further. And this will be a huge area of focus for Athalie Williams, our new Chief Human Resources Officer who joins us tomorrow. And finally, within the area of sustainability, as Sarwar outlined, we're looking hard at circularity. Now that's not easy, but we're looking across our operations, our products, our services, our major network transitions and how these can contribute to a more circular and sustainable world. So to conclude, we're stepping up our support for our customers, our colleagues and the country through the challenges of today's economic climate. We are making real strides in embedding the Manifesto into what we do, how we measure it and into the culture we're building, including reward. And lastly, we're more determined than ever to bring together our 2 overarching and complementary aims: to build a modernized growing BT Group, whilst at the same time, living up to our ultimate purpose. We connect for good. So with that, I'd like to go to Ed to who will call it back the Q&A.

Thank you very much. I'm going to -- what I'm going to do, everybody, if it's okay, is invite the presenters back up on to the stage. And whilst we do that, I'm delighted also that we have in the room some ExCo members with us. We have some deep subject matter experts here as well. So I'm hoping that we have any questions that you may have covered in one way, shape or form. For those of you joining on the WebEx, I think protocol, please, if you could raise your hand, that will be signal to me and we will come to you for a question. In the room, again, please, if you can raise the hand. We've got microphones dotted around. If you could just wait for a microphone to come to you and if both on the WebEx and also in the room if you could just announce yourselves -- introduce yourselves even, and we will take it from there. I'll start with the gentleman on the table here, and then we'll go to Carl Murdock-Smith after that.

It's Maurice Patrick from Barclays. A question please on -- I guess it's a BT question but also wider industry one. So you talked about leveraging trust and putting ourselves at the heart of the customer world when it comes to data privacy and security. I think when it comes to most telecom, [indiscernible] is the #1 issue in privacy and security. You're not the only people to be doing that to try and put yourselves at the heart of the customer. Many different verticals are doing it as well. I just wondered, do you benchmark yourself how much you are doing to help the customers compared to some of your peers in different verticals, maybe different telcos? If you think you're doing enough and if you need to dedicate more resources to that over the coming years in what feels like an area regulators and governments are only looking more at.

Look, it's an absolutely crucial area, right? The whole -- it's wider than that. It's the security, safety and how one packages it all together with the whole cyber area is really complicated. So there is no question that BT is extremely well positioned on it. I mean, we have so much data. We cover so much of the world. So we -- as you know, 180 countries. So we see an enormous amount of things that other people just simply can't see. That's the first advantage. So we've got scale and we've got scope and we've got access to the data. But that -- with that comes huge responsibility. And so I think I'm very confident we are more than competitive in what we have and in what we do. The question is how do you handle the privacy and the security and what philosophy and what principles do you stand by. I'm going to ask Howard and Les to talk in a minute actually on this because it's -- Lauren might want to pick it as well. But the need to look after people who are vulnerable, who may not know they're vulnerable, right, or who are being targeted and don't know they're being targeted and there are easy ones that you can talk about, the elderly are one group, for example. So we have the data on that, obviously, and also children who are being exploited online and targeted, terrorism, all those things are data, right? And we are in a very privileged position to work with some government bodies to deal with those things, MFI, MI6, it is no secret. So again, that's a competitive advantage. So we charge for that. And actually, there are people that Les works with who are working on that every single day, it's shows how we connect for good part. If you then go all the way to the other part, which is for a large global customer, and we have multiple ones of those and some are more sensitive than others. So the European Union, for example, you can think of the complications there. We see an awful lot of data. We've got to work out where is the data going? In which countries does it flow through? And why? So I would reassure you that we're reasonably sophisticated, but you're only good as the source data you get and how you manage it. So versus other people, I feel really good about it, but it's really challenging. And it's an ever-changing landscape. So it's much bigger than just the pure data, if that makes sense. So I think, Howard, do you want to just give a perspective? And Les, I'd love you to give up a feeling for what we do and maybe Jean -- this, I'm sure Pete have got a question, we might do all in one go. This is a security data privacy, the whole gambit is hugely important to what you just heard about. So I'll let these guys chip in with their thoughts and maybe we'll get a follow-up question, stay on this subject for a little while. Is that all right? Maybe as a follow-up from you if I answered it fully. Howard.

So Maurice, you mentioned benchmarking. So we are strong advocates of what's called the CAF framework, which the National Cybersecurity Center have encouraged industry to follow, that we've had independent scoring of that done. I'm not sharing the comparators. I guess that's something that's clearly we keep quite secret. Don't forget also that Ofcom quite recently adopted what they've done in the financial service, as it is called TBEST, where they effectively ask us to employ some independent ethical hackers agreed by those to have a go at perimeter. And so we undertook that with them just over a year, about 1.5 years ago. And then I would say what I believe differentiates us and certainly Les could talk more about this. in protecting the BT network and our customers' data is the quality of the ethical hackers we have in our Red team. We have them assessed by a boutique cybersecurity team, NCC Group, their firm that they are world-class in their ability, state -- nation-state type level of capability. And it drives me crazy because I never quite know what they're doing at any one time and with a Chinese wall so that Les is aware, but I'm not. And often, we look at whether our SecOps team, how quickly do they detect the activity that's being done there. And in most cases, they do. If we find that they don't, then there's a whole set of remediation activity. I mean, a great example, just over 2.5 years ago, we looked at identity and access management. And I decided, based on some -- a little bit of work the Red Team had done to force every single 1 of 107,000 employees to have a 12-digit password, drove everybody crazy across the organization. And then I'm also checking that password against known words. So it rejects it if you've got city words in there. And so again, that was all about just improving the overall security hygiene. So we're very, very obsessed with that. I would -- another area where I would say, and it relates to Philip's point about our customers, we are leading the industry on eliminating scam and stopping out of that fixed line or that -- the mobile phone. Quite a bit yet to do as many of us, I'm sure you're aware. But in terms of the technology we're deploying particularly recently on SMS scams, you saw the numbers earlier. So we're quite proud of the progress that we're making there. The key challenge here, and I report up to the Board twice a year on cybersecurity as part of our group risk, portfolio of risks, and we still rate ourselves as red. But fundamentally because the threat landscape is continuing to increase massively. We were -- we've done a lot of remediation, initially worried about the potential threat as a result of the Russia-Ukraine conflict, I haven't seen anything on the back of that, as has nobody else, really. They're so focused on using their cyber capabilities to support the conflict, but we've done lots of work to ensure we're ready if that landscape changes. So big challenge, but we're confident of our capability. And Les, do you want to add anything to that briefly?

Les, what we should do. Let -- no go ahead. We have this protect our data, help protect our customers' data and then do good things with data, right? So Les just give you a perspective on some of the things that you do. And I will spare his [indiscernible], we have an independent assessment to benchmarks on some of his people. And you'd expect when you're doing the kind of work that I inferred, we've got fantastic people in his team.

Yes. So Les Anderson, BT Group CSO. So I mean we have a philosophy of principal, which is defense in depth for BT, but also its cyber operations made surgical by data analysis, so we can have sharp, focused forensic operations because we've got a finite size of a team. And so we need to be -- have indicators and warnings about where we should go. So as part of that defense in depth, Howard's talked about Red Team. So within my workforce, my colleagues, we have very experienced offensive security cybernauts. So they don't simulate, they don't sample. They actually emulate and be a nation state attacker, a series criminal group, a terrorist, a hacker or an insider. And then we let them loose on the BT enterprise, but from the premise that I have to assume that we're breached. So I want them to go and find where the breaches are before somebody else, a bit nefarious, can find those breaches and exploit. And it's probably one of the most powerful forces in the armory as part of defense and depth. And as Howard said, we have an amplifier. When Red does well and against Blue, then Blue needs to do better. If Blue finds Red, Red needs to be better. And then we have a different color called Purple. So sometimes when the Red team is doing its thing and finding alarming incidents, then we have to sort of spawn a real incident and get 2 parts of those teams, some Red, some Blue to actually do the remediation. So that's the first part. The second part is, I mean, my heritage is from the security services. Probably quite a few of you know that already. And so embedding ourselves with agencies that Philip's talked about, but also with -- partnering with industry across many sectors to share information in a justified proportion in a necessary way means that what we're trying to all collectively do is raise the bar of entry for bad people to do badness to whichever company and that's really, really important. So I've got people who are embedded at the National Cybersecurity Center so we can exchange in real-time at the pace of an incident what's actually happening. The last thing I'll probably say is all of what I've said is great and it's necessary and it's been very effective for BT. But we also need to do the basics really, really well because the baddies are going to go for the low-hanging fruit. And so you have to be absolutely certain that you've got your defenses as good as it possibly can be.

I'm conscious of getting around other questions. Maurice, I hope that gives you a pretty full answer. I think I said Carl next at the front. Thank you, Les. Get Carl a microphone. Thank you.

Carl Murdock-Smith from Berenberg. Firstly, I just wanted to ask some follow-up questions on the diversity targets on Page 21. Simply looking at those numbers, there seems to be quite a discrepancy in the kind of ambition levels between Openreach and the rest of the group. So looking at the gap, for example, on the percentage of women between last year and 2025, it looks like for the rest of the group, you're targeting 11 percentage point increase whereas at Openreach, it's less than 2%. And it's similar on ethnic minorities as well in terms of the rest of the group is far more ambitious than Openreach. So I was just wondering if you could kind of talk about why the targets aren't quite as stretching for Openreach as for the rest of the group.

And might, if it's okay, just refer Catherine Colloms. [indiscernible] Catherine, who's the Corporate Affairs Director for Openreach can probably address the Openreach part of that call.

Look, I think we knew as Openreach when we started looking at these targets, we had a long way to go. When we first looked at this, we had something like 3% of frontline engineers is female. And we have a very large workforce, and that workforce has been accelerating as we've been hiring to fulfill the full fiber ambition. So the workforce is nearly sort of 34,000, 35,000 now. So we are very ambitious about what we're trying to do at the front line. So we have a target of 20% frontline engineers both on a higher basis but also on actually physically retained in the business by 2025. We're making good progress against that. So we were at 16% last year, We'll outturn at sort of closer to 17%, 18% this year. So we're getting close to that 20%. And we're -- actually we're seeing a huge pipeline of women coming through. We've done some really good pieces of work and research and campaigns to try and get more women coming through. We did a big campaign called Watch Me, which was really successful targeting lots of different people on social media to try and think about a career in engineering. We've also changed our adverts in terms of the language in hiring. So we did a piece of work called In Plain Sight, which basically looks at the terminology. And women are offput by certain things that we put into our adverts. So women actually don't like the concept of engineering, at least the way we describe being an engineer can be very appealing to some. It's very appealing naturally to a male workforce. It's less appealing to women. And similarly, some of the stuff we talked about, Working at Height, I think it felt a bit intimidating. So interestingly, when we did different job adverts, we saw hugely different uptake and interest in a broader and more diverse range of people in particular, women applying. So look, we do have slightly different targets. We still have the same targets when it comes to senior management. So we have a 50% target at senior management and closer to 35%, 40% on that. But the frontline is tough. We started from a sort of 3%, very low benchmark and we're actually doing really well and accelerating through towards that 20% target and hope to be above that before 2025.

Great, Catherine. Thank you very much. Can I get -- sorry, Carl, do you want to just -- we'll let Carl do one follow-up and then we'll come to the gentleman at the front table.

No, it was actually a clarification. So on the chart, it says by 2030, women will make up 13%. You mentioned 20% frontline, 50% management. So what's dragging it down to 13% that's quoted on the chart?

I think it's total -- let me come back to you and I'll look at the numbers separately, Carl. So the ambition is 20% hires, and then 20% at the front line, but let me come back and I'll share the numbers with you.

Can we switch down to the front, please?

It's Andrew Lee from Goldman Sachs. So some really clear targets laid out in a very succinct fashion today. One of the things we see, though, within ESG investments and ownership of sectors is that telcos under-indexes within ESG portfolios relatively meaningfully at the moment. And I guess that may also be paralleled in perceptions about your ESG friendliness and your support to the wider economy from governments. So I guess the question is, how are you seeing the progress in what you're doing in terms of showing to investors more broadly, I'm sure there's some ESG investors in the room and to the government, that what you're doing can save energy in terms of the shift to fiber, for example, what you're doing can reduce the need to travel, people do meetings, et cetera, and actually raising the profile of telcos intersect between other sectors as an ESG-friendly sector?

I'll give it maybe to someone else. I mean it's a really good question, by the way. We haven't quite got the perfect answer. I'll tell you why. What we did at the beginning was to say what kind of company do we want to create and why, our role in society, all stuff that we talked about it today. And hence, the target sort of appeared, right? And the targets are calculated based on solid thinking. And they're very ambitious. And what they have then done is they've created the exact conversation we have with Catherine. I mean, the detail actually went into of the advert to work at -- so you're forcing people to do things differently because you're trying to achieve something that is very different to what you currently get. So I think the great news is we've got the targets. We've got the conversations, whether on diversity or sustainability, happening at every level. And everybody knows about it. So it's a proper comment. It's not seeing on the sizing or we must do something about sustainability or diversity or inclusion. So it really is embedded as a thought within our growth plan. That's the biggest victory. Now we may not hit every single target. So once we've got the plan and the philosophy and the principles and the stuff you've seen today, we're then more -- like delivery and then communication. So I think we -- you're right, I get -- in my conversation with investors, it's not high enough up in the agenda. And when it is, people feel slightly disappointed because we take 1% of electricity off the grid and we're actually very energy-consumptive. Now we have talked quite a lot about the new stake. So when you're in an all-IP world, full fiber, 5G, no more copper, we have 4,500 exchanges. We'll end up with 1,100 and we'll be losing. I mean, Howard's target is half the power, right? Now whether we actually make half the power, I don't know yet, it depends on lots of things. But then you're into what we're actually selling and what we're providing, the routers, the mobile phones that we sell. They have a footprint. And so forth, we're doing more and more on the recycling, more on the concept of circularity. As I said in my remarks, it's really quite difficult but it doesn't mean we're not going to have a really good go at it. And I think we will -- we are seeing, I think, BT, by people in the telco sectors, reasonably forward thinking. But the sector itself is still seen as a slightly disappointing sector. And so I don't think we can sell all but we've got a plan. Does that make sense?

Sara, I don't know you've got the experience of seeing other businesses and other sectors. I don't know you've got a reflection on BT in this sector.

Well, I do think that there is a very substantial opportunity to explain to people why digitization is part of a more sustainable future. And I think it is fair to say that we have not pulled together all of the strands of that conversation in a way that makes the argument compelling. But I do think we have many of the pieces of the jigsaw to do that. And as we get further on this road and our ability to demonstrate what we've done ourselves gets better, it's easier to have that conversation with others. It's difficult to do at the beginning but you've got to earn your stripes. But I think it's a year since we launched the Manifesto. We are into that journey now. And one of the challenges, I think, for those of us involved in the DISC Committee and the conversations inside the business is how do we start to bring the evidence of what we've done together to make the argument more compelling and more holistic and more cohesive. Because I really do think that for all these reasons, lower energy, less traveling, more remote, there are lots of things in here that actually telco can be part of the solution, not part of the problem. But that's a story of not yet used together, I think.

I'm going to -- I've got some questions on the WebEx, I think so we could go to the first ones of those, please, if you could just introduce yourself in advance of the question, please.

The next question is coming from Robert Grindle from Deutsche Bank.

Philip, you highlighted that BT held more customers on social tariffs than all of the operators in the U.K. But according to Ofcom, take-up is low, less than 5% of eligible customers. But what do you think the barriers are here to take-up? And what more can BT do to help?

Yes. I think there are lots of different barriers. Many of them are to do with awareness, but also, being completely frank with you, the GBP 15 product has a relatively low speed. And so what you've got to remember here, which is as it should be, because it's a loss maker for us. So I think there are a number of factors, a, it's awareness; and b, it's actually appeal. So people albeit on very, very challenging situations financially still want to have great connectivity. So your broadband connection on your mobile phone, is very, very high up on the list of needs. So look, we're working really hard to communicate it as much as we possibly can. As I said earlier, we're the vast majority of social tariffs. And we're going to keep doing more. But at the same time, just again, economically, there has to be a balance between what the cost is and the volume of people who are on it. So if, for example, let's say, another 1 million went on it for the whole country, the pricing is unlikely to stay at GBP 15 because it's just not economic for the whole industry to do it. That's why we're making the biggest contribution. And I say, again, we're bigger than everybody else combined. That is a financial contribution we're making because we think it's the right thing to do, but it has to be proportionate to everything else we're doing. So we watch it very carefully.

The next question is coming from [ C.E. Heath ] from Citi.

I wonder if you can update us where we're with the Huawei swap out for the mobile business. And we recently have the FTC now buying the Chinese vendor equipment. I wonder if there is any risk that U.K. government could take a more cautious stance on the Chinese vendors, which could apply the fixed side of the business. If that's the case, I'd appreciate if you can give us the -- your market share of the Chinese vendor in your fixed broadband and also whether you have the contingent plans, you've let's say, we have banned Huawei of BT effects.

I'm going to ask Howard to answer this one. Howard.

Yes. And I'll address both the mobile and fixed question. First of all, we don't have any ZTE anywhere in the BT network. However, we do have Huawei. And so we've been working really closely, as many people in the room here know, with government and NCSC on the right time scales for Huawei. You'll remember that we spoke about a GBP 500 million extra cost back in January 2020. We are spending that money. We're still within that envelope. Now if you think about -- and the good news here is that, I would say, finally, the designated vendor declaration came out 2 months ago. And actually, where we had worked closely with DCMS on some requirements and clarifications in that pretty much without exception, they were adopted into that legislation. So I mean, the fundamental requirements really fall into the access network and the mobile core. So the first requirement is that for both the fixed network -- sorry, for both the FTTP network and for 5G that by July of 2023, we need to have less than 35% of customers or households served by those networks. We are on track to meet both of those targets. There is, associated with mobile, a second 35% target, which is that our traffic routed -- our 5G traffic routed by Huawei is sub-35%. We've already met that milestone. So from an access network point of view, we're in good shape to meet the milestones there. There is a further requirement, again, on the access network, which is that Huawei is removed by December 2027. And we have, again, that in our medium-term plan to slowly -- having got to the 35% continue to then reduce the number of Huawei cell sites that we have down to 0 by that date. And then the only other remaining area is the mobile core. We now have just over 6 million customers that we've migrated onto a new Ericsson core. And we've -- the data has now been set as December 2023. So we're on track to meet that. We have an earlier deadline for 5G customers on the Huawei mobile core. So -- now in hand, now clear what we need to do, and it's great to have that clarity and to reassure that it's within the financial envelope that we quoted back in January 2020.

So our next question is coming from Chris Lewis from Lewis Insight.

On the issue of inclusion, in terms of the way you interact with your customers, much of the industry focuses on mobile first, digital first and yet this is excluded for many of your disabled customers and elderly customers. Can you talk a bit about how you're building inclusion and accessibility into every way in which you interact with your customers going forward?

Mark, do you want to have a go at the inclusion question?

Yes, happy to. I mean, I think the opportunity we've got is to make sure that we have -- I mentioned in my section the work that we're doing internally to raise awareness and understanding of the breadth of the inclusion agenda amongst our colleagues and making sure that we're building that into our product thinking, our design thinking and in the way that we operate internally. Inevitably, the stronger that we are internally with that type of capability and appreciation and empathy, the better our products will be in the way that we interact. We have, for many years, provided services to the partially sighted to the hard of hearing and so on, and that's been a core part of telco for some time. Increasingly, as we develop new products and services through our digital capability, through the product and design thinking, as I referred to, our ambition is to strengthen and make far more intuitive the way that we interact with customers and being able to facilitate that more in a digital channel share than a more analog way in many ways supports that ambition. It's not enough on its own. You've got to have a variety of offering clearly.

Chris, it's Philip here. For those who don't know, Chris is visually impaired. I used to play football with him, and amazing ability to hit football despite seeing far less than I could. He's better than me. But anyway, Chris, I think to your point, for how we're handling if you're driving up bulk customers in the Consumer division, how are we thinking about those people who may have challenges, whether it be visually or hearing or other situations, we do spend a lot of time. Very happy to show you some of the things we do on that. And actually, some of the technology advances we've got like, I mean, digital voice, for example, is really, really good at helping people with all kinds of hearing challenges. So through a whole range of different spectrums, you can adjust digital voice very, very specifically to tune into specific hearing profiles. And so for the visually impaired as well, we do an awful lot to make sure we are able to help people as much as we possibly can. If there's anything you see we're doing that could be improved, please tell us, Chris. Because I've been around call centers and seeing what we do, and we have specialist people who are targeted for groups of -- customers who may not be dealt with in the normal way with our normal products. So Chris, feel free to come up and look at that at some stage. I'm not quite sure who the expert is in the company, but we do have a big team to do that.

Can I ask just Deborah who's the Chief HR Officer, just to say a couple of words just to conclude this answer.

Thanks, everyone. Thanks for the great question, Chris. I mean, I just want to say a few words about D&I more broadly. So you all know we have some incredibly ambitious goals in the D&I space. We did a thorough review earlier this year on what do we need to do better in terms of how we achieve those goals. One of the key findings is that our commercial agenda is not informed enough by our D&I work. And so all the fabulous network groups, of which we've got 11, we're not really driving the commercial agenda with those network groups. So one of our actions for the coming year is to ensure that the commercial business case, the D&I, is really understood, and we pull from the network groups how we inform our products, our developments, our services.

Very good. Thank you. Have we got any other questions? This gentlemen here. Can we get the microphone back there.

It's Adam Fox Rumley from HSBC. I had 2 quick questions, please. Within the presentation, you gave a few examples of recent contract wins where I think it was your emissions commitment that you said made a difference. I'd love to hear if you can be a little bit more specific on kind of how you were able to differentiate and what allowed you to win in there? And then the second question was maybe a bit broader. Are there specific challenges related to audit and reporting of a lot of these metrics? I mean, you mentioned the supply chain that goes to 100 countries, but you operate in 180 countries. So is the audit -- does the audit of these ESG metrics vary in any way beyond the standard audit that you have to go through?

Sarwar, do you want to start with the global question?

Yes, absolutely. I mean, when it comes to the recent contract wins, I think I'd call out 2 specific areas, actually. The first one is around our commitment to 100% renewable electricity globally that includes for our networks and data centers. And in that particular case as part of the overall contract development process, there was a specific question around whether we supply 100% renewable electricity and that contributes to a customer's Scope 3 emissions. So taking that into account has an impact in terms of the organization's overall net zero ambitions. So that for us was a differentiator. The second example is actually looking at the broader scope of what customers are looking at, particularly in RFPs, is not just climate. What we're seeing is a focus in other areas. And in one of the contracts, there's a big focus on EcoVadis. So being able to provide an EcoVadis rating and where we stand in the ranking because EcoVadis takes a step beyond climate. It looks at things such as ethics, human rights and our policies around that. So that's another example of what customers are looking for and where it really makes that big difference in the contract space.

And on the audit question, I'm going to get [ David Wyles ] to just come in say a few words. There's a microphone just at the front here, David. Do you want to just -- sorry, just to introduce yourself for the people.

Yes. Hi, everyone. I'm [ David Wyles ] and my job is as Director of Risk Compliance and assurance for the company. Just a couple of comments really about the data and information that we put out there. We do spend a lot of time internally doing checks and balances on data that doesn't have to be externally audited. So you mentioned a number of countries, for example, that data is checked by our teams internally to make sure that it is fair, accurate, reasonable and presented fairly. Obviously, external auditors do look at other data that we put out and check it's not inconsistent with their knowledge, but they're not currently required to go through a process of formal auditing some of that data. It is becoming much more popular for people to, if you like, ask their external auditors to conduct that activity. And all -- I'm sure you've all been studying the base announcements and about how data that goes along with financial statements will probably need further looking at and more detailed auditing. So I think at the moment, we do a lot internally. We don't hire people externally to do it. But the general thrust is that other data, ESG-type data will be more formally audited by our external auditors over time.

Very good, David. Have we got any other questions in the room? Lady down the front, just 2 seconds. We'll get the microphone to you. Thanks, Nina.

Gaia from BlackRock. So I have a question. Sometimes there is a disconnect between what is going on in the ground, talking about employees and what is being reported to the Board. So the question is, how is the Board -- to what extent is the Board aware and involved into employee satisfaction, culture, engagement? We've discussed a lot about diversity and inclusion, but I think culture and engagement is quite important.

Sara, you should do that. And I'll have a go after you.

Okay. Yes. Well, I think the first answer to your question is very. I mean, it's an organization of over 100,000 people, but there is a very, very close interest taken from the Board to what's happening throughout the business. And we validate that in all sorts of different ways. I mean, Philip does colleague Board sessions quite often. Usually, I sit in and it's a very direct conversation with colleagues about the organization. We have a particular director who takes a focus on that. We visit outlets. We watch the engagement scores very closely, not just at an overall level, but we dig into those by division, by cohort. So Howard and I are partaking in a disability network session on Friday, where we talk to the individual network about what they see as the priorities for them and how are we doing about delivering. So I think the answer is we take a lot of interest. We do it both by formalized metrics that come up to us, but also we delve sort of down into the organization. And there are some things that culturally, I think the organization wants to do more of and it wants to move from a position where it's relatively long-standing telco with a lot of old systems and processes to a modern technology company that has greater agility and smarter working. And that's a big journey for colleagues. So it's very important for the business commercials, but we have to take colleagues with us on that journey. So there's a lot of touch points to how we measure along the way. So I worked in a number of FTSE 100 businesses. Many of them back, you've been very focused on it. I would say BT is in a very strong position in the priority it gives to its colleagues and their voice around the Board.

Yes. I'm glad, Sara. I think that is true. I mean, BT has lots of challenges and Sara mentioned a few, which is the transition away from the history to the future. And the best proxy for that is fiber and 5G away from copper and 4G and -- but also the big technological changes that were implied by Mark's presentation in Digital. So we've got lots of challenges to get to where we want to get to for you. But in terms of the ESG agenda, if you put that as a category. We take it very seriously. And I don't think transparency of reporting is any problem at all. It's what we're doing. So honestly, I really believe, and as Sara says, we have this colleague Board, which we set up 3 years ago. So [ Debbie ] run it with me, Sara attends, another Board member is the sort of deputy chair of it and it gets us straight direct to the colleagues, and it rotates every 2 years in terms of people. And so we hear directly. It's really good. We obviously have our union partners, so we hear directly from them as well. So the engagement is really strong. The communication channels are very strong. I do what's called PJ live with all staff. We do every quarter, roughly, is it? Once a month, okay. So I get actually, it's a pleasure doing it now after Monday. It's okay. But so I think we never walk away from having direct conversations with our employees, and we have all the reports you expect on engagement. So I know what the engagement over the last year, for example, has changed dramatically down because of the pay challenges. So it's actually making the change we want to make rather than the reporting that I think is the real challenge. And everyone's nodding. We know what we want to do. But remember, we've got a lot of great people, but we've got a lot of people who are finding it hard to embrace the changes that BT needs to make. And so what I'm trying to say to you all today is in this area, the Manifesto, we got some really clear thinking. We've got great policies and principles and philosophies and targets and plans, which got to execute really well, and we've got to take our people with us. And that is not easy, right?

Have you got any other questions in the room. Lady in the front here.

This is [ Pilar Bike ] from Credit Suisse. I have a couple of questions. So the first one is you were mentioning 100% renewable electricity. But what is actually the exposure you have to the overall energy in terms of renewable? Then in terms of the Scope 3 reduction, there must be a big number of suppliers. So how are you actually measuring that they are fulfilling all the requirements and how do you actually track this? And how restricted you are with this? So are you planning to just get some of them out if they are not fulfilling this process? And then fiber and 5G are more efficient, but the traffic has been growing. So do you have actually an estimate on how much is actually reduced when you -- will you place this traffic growth in it?

I'm going to ask Howard, I think, to do 2 bits of that. So Howard, I think do you want to talk -- why don't you have a go at all 3 and see the answers -- 1 and 3. And then Scope 3, Sarwar.

Okay. Good questions. So first of all, in terms of renewables, I mean, clearly, we buy from 100% renewable -- we buy 100% renewable electricity. Now, of course, some of that is through purchase of [ regos ] which essentially then get invested back into that. Now, however, what we've also been doing significantly over the past 1.5 years is increasing the number of power purchase agreements that we have in direct renewable sources. I mean, some may know that BT for a long -- quite a long time, we've had onshore wind both in Scotland and Wales and other parts of the country. That was the investment we made some time ago, representing 12% of our annual demand, something like that. So we've continued to increase the number and quantity of PPAs. I'm not going to say the exact percentage because we're trying to negotiate some more right now. And so I don't want necessarily to give away the total amount that we're looking at there. And then clearly, what we do is we then buy in the spot market, either season ahead, month ahead or, indeed, day ahead. So if you look for FY '23, the year we're in now, we are overall 85% already purchased in the spot market. Fair to say some of that was loaded into H1 because the market has been a bit more volatile looking into what we're using in what's known as the winter season in the energy market. And of course, there, we've now got the advantage of the government support scheme, at least between now and the end of March. Interestingly, so far in October and November, the price -- the spot market price of energy has been well below the GBP 211 in the government support scheme. It has changed this week. We've had 3 days of prices up at GBP 300. So it's still great volatility there. I mean, all you need at the moment is a day -- like 3 days ago, we virtually no wind, and at 5 p.m., the spot price for 30 minutes was GBP 1,000. So good that we are well hedged against that risk. Next year, we've got more work to do. We're at 50% hedged, as we've already mentioned. And we're -- this is why we're continuing to look at the PPA market. Good to see that we've had clarity now in the autumn statement on windfall tax because that's meant that generators who are looking at offering PPAs, we think they'll shift a bit more of their output towards PPAs because overall, it could reduce the windfall tax burden on them. So it's a good time for us to go in and look at adding to that portfolio for next year. So we're working through that right now. To your -- I forgot the third question.

Fiber.

Yes, yes. So I mean, the thing about both FTTP and 5G is they are far more efficient at delivering gigabytes, let's say. And of course, that efficiency actually improves as you get more and more customers off the older networks onto the FTTP and the 5G. I mean, I think I shared some statistics in the Networks briefing that FTTC is about 2.4 watts per line, FTTP is 0.3 watts per line. So a big efficiency if we can move customers across from one to another. Same with 4G to 5G. I'm particularly excited about 3G at the moment. One of my most interesting statistics is if you look at a radio mass, 2% of mobile data goes over the 3G infrastructure yet it consumes 37% of the power. So the faster I can switch the 3G infrastructure off, and we're aiming to do that starting in January '24, then we start to shift that power onto that -- or the usage onto the newer electronics. And so as -- interestingly as demand goes up, you get a better and better efficiency. We have a great track record of reducing our consumption. And in our planning, we continue to see that, particularly on the back of legacy removal.

And Sarwar, do you want to just talk Scope 3?

Yes, absolutely. I mean the Scope 3 question is a great one, actually. There is a lot of complexity associated with collecting accurate data for reporting on Scope 3. We do a couple of things. The first one is we're reporting to -- or we use the methodology from the Greenhouse Gas Protocol to develop our Scope 3 emissions. We're also reporting to CDP our supply chain emissions on a spend basis. So any suppliers can request that data from us, and we'll report that back on an annual basis. But we are trying to move more towards a sophisticated model where we're working directly with our suppliers and partners to obtain the life cycle assessment data for each of the devices that they supply to us. So you would see -- in my presentation, you'd have seen a percentage of the emissions comes from the customers using our products. But we rely heavily on the suppliers being able to perform the analysis, being able to give us the carbon footprint data. And we're crunching those numbers and starting to develop more accuracy around that. So in the future, the example I gave with regards to the energy and carbon dashboard, it will be very much based on suppliers providing that data in terms of what's going into the embodied emissions and beyond that. And that will give us a much more accurate representative of what overall emissions are within the supply chain. Hopefully, that answered the question.

Carl, I think you have a follow-up or another?

Carl from Berenberg again. Philip, I bet you would have thought it would have come a lot quicker, the question about kind of Monday's announcement, but you set yourself up for it 2 questions ago. So I thought I'd have to follow up. So yes, if you could make a couple of words about the agreements and also, I suppose, what the final pieces of the jigsaw were. And then secondly, I'd also like to ask, I suppose, one stakeholder we've not talked about too much today are politicians. Obviously, we'll have a general election at some point in the next 2 years or so. And the Labor Party's policy on telecoms could involve changes to your pricing on a more mass market basis both at a retail and a wholesale basis. And I'd like to understand what your relationship's like with politicians, particularly of the Labor variety?

Sure. Well, you asked for a couple of words on the Monday's announcement. All good.

Onto the harder question then.

No, all joking side, it's obviously been a very difficult time for everybody at BT through the last, I guess, 8, 9 months because nobody wanted the situation we found ourselves in, where our people felt the right thing to do was to withdraw labor and go on strike. So it's obviously impacted the company in a number of ways, right? So yes, we lost a few customers. That, I'm not that worried about. We'll get them back. It's not a problem. Service went down. We'll get that back. I'm not really worried about it. I am worried about the divisiveness that it's created in the company. So just again, you know me all well. I'm very hopefully transparent, honest. It's disappointing that we've had this sort of divisive occurrence in our company. So we need to move forward now and sort of get back to connecting for good. And so through COVID, the BT Group did extremely well. The colleague base were 100% behind the purpose and what we're trying to do, and it was -- the driving change was easier when you've got people who are marching all behind you. So we've had a little stutter in the year, which is why that's important to solve it, right? So it's not about the money. I've not been in to see. No, not in disagreement about the pay. We just can't get to the same place on it. What I've been trying to do, and Debbie has been leading the charge for us, is to find a way of talking to unions about transforming the business for the future. So and you'll see in the announcement we made, it's all about how we create a really bright future for BT that embraces all the challenges, but also takes advantage of the opportunities, and there are plenty. And that does mean a lot of change, right? And so people look at it from a cost saving point of view, it's in the announcement about GBP 3 billion of cost savings. And yes, that has some implications for people and jobs. But it's much more about getting to the growth areas and doing the things that we want to do, where we're delivering for customers and not trying to stay too much in the past. So that's the main message that I'm really pleased about is that with CW, when I spoke to [ Andi Cole ] last night, and with the prospect, Mike Clancy, there is a good reset where we say, right, let's move forward now. And so I'm more interested in what we do on the change agenda than what we're actually doing on pay. But I'm going to talk about pay. So that's the really good news. On pay, I'm also really happy with where we are because what we've done, I think, is we've looked after the people who need it most, right? So we know our colleagues are struggling and as everybody is. So I'm delighted that we've come up with something which effectively brings forward a pay award that would have happened in April to January. And then let's say, look, it's really fair. It combines with a very generous one before at the time and then let's review again in September. So I think everybody can see a situation where they've done well out of that. And we think we can afford it in the envelope of delivering our long-standing target of GBP 7.9 billion EBITDA, right? So -- and I'll repeat on that, that's to be able to have a shot at that still, given all the headwinds everyone knows we've had, I'm really pleased about. So look, it's great that we've reached agreement. It's going to go to a ballot. I'm hopeful that will get approved, and then we move on to a more brighter pitch, hopefully.

And on labor, Carl, I've got to have responsibility for the political engagement. I would say if you think back to 2019, where the leadership of the labor party going into election was looking to nationalize parts of BT, I think we can say fairly safely, we're in a much better place with labor than we were under previous management. I think there is -- which is different to lots of businesses I've worked for, unanimity across the political parties about what we are playing a significant part in which is the investment in digital infrastructure. All political parties of every persuasion in every part of this nation want investment in digital infrastructure. And I think when you -- and when they all want that, I think then we are in a much better place than we might be in certain other sectors where there is more divisiveness across political parties about what you do with certain industries, I think we're in a pretty different place to that. And so I think when -- and we've had engagement in the last 2 weeks with labor, when they really think through the implications for investment and what they want to see happen, it supports a leveling up agenda, it supports a regional agenda, it supports an environmental agenda. When you put all those pieces together I think we feel in a pretty good place, actually, I think, relatively with the politicians.

Can I add one thing, Carl. Ed, you're absolutely right. We are engaging with them, obviously. I mean, we all can see where the wind is heading. So in the conversation I had with them, they are exactly the described. I think they can see what BT's role is in the country and how important it is in the U.K., I think we've got a good track record of engaging with policymakers well over the last few years and getting the assistance and help we need to do the right thing for the country and all our customers. At the end of the day, we look at the social tariff exempt what we're getting at, there was a comment about that. That is not a policy. That was a few statements, and I've specifically had a conversation about that, and I was really encouraged about the way in which they were looking around not the social tariff, the digital infrastructure. And the last one is what's the social tariff as opposed to start there. So I think there's lots to happen on the conversations. But so far, given where we were 2.5 years ago, where we were going to be nationalized, we're in good shape with the Labor Party for now.

Have we got any other questions in the room? If we haven't, Philip, anything you want to say in conclusion?

Look, thank you for coming. Thank you for joining online. I hope we've given you a sense of how we're thinking about this particular part of the very important strategy of the company. It is not a separate entity. It really is embedded in the strategy of the group across all the divisions. And I'd just like to say the commitment of the Board and the commitment of the ExCo is 100%. I don't have anybody when I look around the people I deal with who are not sure about what we've shown you today. It's really getting 100,000 people marching the same direction and grappling with some of the really, really difficult issues, which are not only a BT's agenda, but the wider societal issues that we all face. So we are committed to it. The nice thing for me is I can see it. It's a plan integrated across the whole company and we just got to put our foot on the gas and do more of it. So I really appreciate you taking the time engaging on what is a topic that I think is really important. So thanks for coming. Thank you.

Thank you very much. Indeed, the IR team will pick up any further follow-up questions, won't you, Marc? Thank you very much. Thank you.