Verizon Communications is an integrated telecommunications company. It provides wire line voice and data services, wireless services, internet services and published directory information. The driver for our meeting was to gain an understanding of its employee engagement and how its Verizon 2.0 strategy is evolving.
We questioned the group on the diversity of its board and how its oversees its ESG approach. Verizon highlighted that 30% of its board is currently female. It also explained that its Verizon 2.0 strategy included an ESG focus, which the board oversees. Its ESG strategy focuses on being:
• transformative – issues that could significantly change the impact of the business
• strategic – issues that represent risk or opportunity to the business
• fundamental – issues managed as part of its responsible business practice.
Within the strategy, the company focuses on SDG 4 (providing young people with relevant technology skills). To date, it has reached 1.7 million students through its Verizon Innovation programme. It also aligns with SDG 8 (reducing environmental impacts). From 2016 to 2017, Verizon achieved a 28% reduction in its carbon intensity.
We are supportive of the company’s Verizon 2.0 strategy and its commitment to ESG goals and targets. We have encouraged the group to be more explicit on how ESG strategic aims link to remuneration.
From 2016 to 2017, Verizon achieved a 28% reduction in its carbon intensity.
The group’s labour practices have received negative attention, including press allegations that it took part in ‘union busting’. We highlighted these issues and the decline in employee numbers from around 188,000 in 2015 to approximately 144,000 in 2018. The company advised that the decline in the number of employees has been the result of a business restructure. The decline has been manged via redundancy schemes and not backfilling natural attrition to reduce impacts on employees. The company has also become a signatory of the UN’s Global Compact, which includes a commitment to recognising the rights of collective bargaining. We welcome these steps and have encouraged Verizon to provide greater disclosure on how it manages its employees, including its annual Employee Opinion Scores.
The sector is subject to an increasing regulatory curve in relation to the use of data and data privacy. The group provides detailed disclosure on the number of data requests it receives from different governments in its global operations - a step we welcome. It also appears to be well positioned to manage emerging regulation; in particular, the California Consumer Privacy law, which aims to improve the privacy rights and protection of California residents. This should also position the company favourably if similar federal legislation develops in the US. We questioned what cyber security challenges the company faces. It advised that as its 5G wireless network expands it may be open to new cyber security threats. However, the group appears to have a robust approach to this risk, including extensive training for employees.
This was a positive meeting with Verizon. In addition to these previous points, we have also asked the company about its environmental targets. We will reassess the company at a later date to measure progress on the areas raised.