Letter from the Telefónica Chairman
Dear friend,
For the seventh consecutive year, Telefónica presents to its stakeholders its annual Corporate Social Responsibility (CSR) report. In this report we give an account not so much of the company's financial results -which are fully detailed in the financial Annual Report- but rather of the manner in which we achieved our financial aims in 2008. That is the basic reason for this report: an exercise in full transparency open to all.
2008 was a good year for Telefónica in terms of CSR for several reasons. First, as was underlined in our latest Management Summit, because we have set a goal of becoming sector leaders by 2011, through an advance on three fronts: greater innovation (new avenues and engines of growth), greater transformation (maximum operating efficiency across all areas), and a significant contribution to environmental sustainability.
By including business sustainability as one of our strategic lines of action for 2011, we have incorporated commitment to the community as part of the company's core business and, as a result, defintively embedded corporate social responsibility into the way we do business and the income statement. This link allowed us in 2008 to improve our customer satisfaction index, which averaged 6.91, 0.15 points higher than the previous year. It also helped us improve the working environment and commitment index of our employees, which averaged 69%, a 3 percentage point rise on 2007. And, finally, it meant we were able to boost our global corporate reputation index in the communities where we work, thanks to progress made under all headings (offering, innovation, good place to work, integrity, support for social causes and environmental protection).
Second, 2008 was a good year for CSR because we made significant advances in implementing internal systems and processes that guarantee the integrity of our management practice. The Human Resources, Reputation and Corporate Responsibility Committee of the Telefónica S.A. Board of Directors was responsible for driving forward and monitoring all these processes. More than 60,000 employees trained in our Business Principles, nearly 360 actions to ensure compliance with these principles and signature of the declaration "Human Rights: a Call to Action", sponsored by the UN Global Compact to mark the 60th anniversary of the Universal Declaration of Human Rights. There was, too, the rollout of our internal procedures to extend our ethical principles into the supply chain and to protect children and adolescents in their use of technology. Also, new processes were introduced to manage risk, protect data and bring people with disabilities into the workforce… All of these are good examples of how Telefónica is making steady progress on measures to instil integrity into the way we do business. These efforts were once again recognised by our rankings in the world's two most important Corporate Social Responsibility indexes: The Dow Jones Sustainability Index (DJSI) and the FTSE4Good.
Third, 2008 was a year when we laid unparalleled emphasis on valuing the positive impact for society of our products, services and solutions. This 2009 report contains a section dedicated to describing the more than 60 programs that the company has implemented to bridge the digital divide, in other words, inequalities that may arise between those people and communities that use information and communications technologies (ICT) as part of their everyday lives and those that either have no access to ICT or lack the knowledge or ability to make use of them. To compile this list, we have grouped together Telefónica's programs according to the four main causes of the digital divide: the economic divide, the training divide, the geographic divide and the divide generated by health and disability.
Telefónica has invested over 370 million euros in narrowing the digital divide: 275 million in Universal Service Funds (including the 104 million euro net cost in 2007 of providing Telefónica's universal service in Spain), nearly 15 million euros in ICT training projects and over 80 million euros in programs to bridge the economic and geographical divide.
Fourth, 2008 was a year when Telefónica's underlined its commitment to social and cultural action programs. Based on the LBG measurement model, in 2008 the company invested nearly 115 million euros in these projects. Among the social programs, I would like to highlight the Telefónica Foundation's Proniño initiative, which, for the third successive year, doubled the number of children it supported in school as part of its fight against child labour: today more than 107,000 children can look forward to a better future thanks to the joint work of the Telefónica Foundation and more than 100 NGOs operating in Latin America. Building on Proniño, the Foundation is taking forward EducaRed (a program aimed at improving the quality of education through the use of ICT) and Voluntariado Corporativo (which already involves nearly 22,000 Group employees, who this year gave over 340,000 hours to charity work).
Finally, I believe 2008 was a good year for CSR because we continued to improve the model for reporting and communicating our successes. For one thing, we can be proud to say that Telefónica does not just have a CSR report, but a complete CSR management system. In fact, the Telefónica S.A. CSR report is only the culmination of reports already published in 17 countries, realising our strategy of pursuing CSR in two aspects: global (through the multi-lateral intitiatives of the United Nations, GRI and indexes such as the DJSI) and local (responding to the demands of stakeholders in each country). For another, because to ensure the relevance and rigour of the information reported, we have sought external verification by our auditor, applying the most demanding global criteria: GRI and AA1000AS. Finally, by publishing Telefónica's CSR report together with the Telefónica Foundation report for the first time this year, we are laying a particular emphasis on the social impact that the Group has on the community.
Also, this year, too, I want once again to underline Telefónica's firm commitment to the United Nations Global Compact and to the fulfilment of its principles. The initiative reflects the key role that Corporate Social Responsibity plays in the company's approach -an approach that acknowledges multiple stakeholders, that is simultaneously global and local, and that is both voluntary and designed to promote excellence in business ethics. Our commitment is this year shown by the publication of a printed supplement detailing our compliance with the Global Compact.
In addition, we have published two other special reports to address in detail issues of particular importance to our stakeholders: environmental perfomance and performance in relation to climate change, and the projects that are helping to achieve the Millennium Goals.
I am sure that you will find the report of great interest. It sets out the degree of compliance with our 2008 CSR targets and the targets set for 2009-2011. We believe that we are making progress every year. And this progress is to a great extent thanks to those, such as you, who put their faith in us and spur us on to continuous improvement.
Yours sincerely
César Alierta,
Executive Chairman, Telefónica S.A.
For the seventh consecutive year, Telefónica presents to its stakeholders its annual Corporate Social Responsibility (CSR) report. In this report we give an account not so much of the company's financial results -which are fully detailed in the financial Annual Report- but rather of the manner in which we achieved our financial aims in 2008. That is the basic reason for this report: an exercise in full transparency open to all.
2008 was a good year for Telefónica in terms of CSR for several reasons. First, as was underlined in our latest Management Summit, because we have set a goal of becoming sector leaders by 2011, through an advance on three fronts: greater innovation (new avenues and engines of growth), greater transformation (maximum operating efficiency across all areas), and a significant contribution to environmental sustainability.
By including business sustainability as one of our strategic lines of action for 2011, we have incorporated commitment to the community as part of the company's core business and, as a result, defintively embedded corporate social responsibility into the way we do business and the income statement. This link allowed us in 2008 to improve our customer satisfaction index, which averaged 6.91, 0.15 points higher than the previous year. It also helped us improve the working environment and commitment index of our employees, which averaged 69%, a 3 percentage point rise on 2007. And, finally, it meant we were able to boost our global corporate reputation index in the communities where we work, thanks to progress made under all headings (offering, innovation, good place to work, integrity, support for social causes and environmental protection).
Second, 2008 was a good year for CSR because we made significant advances in implementing internal systems and processes that guarantee the integrity of our management practice. The Human Resources, Reputation and Corporate Responsibility Committee of the Telefónica S.A. Board of Directors was responsible for driving forward and monitoring all these processes. More than 60,000 employees trained in our Business Principles, nearly 360 actions to ensure compliance with these principles and signature of the declaration "Human Rights: a Call to Action", sponsored by the UN Global Compact to mark the 60th anniversary of the Universal Declaration of Human Rights. There was, too, the rollout of our internal procedures to extend our ethical principles into the supply chain and to protect children and adolescents in their use of technology. Also, new processes were introduced to manage risk, protect data and bring people with disabilities into the workforce… All of these are good examples of how Telefónica is making steady progress on measures to instil integrity into the way we do business. These efforts were once again recognised by our rankings in the world's two most important Corporate Social Responsibility indexes: The Dow Jones Sustainability Index (DJSI) and the FTSE4Good.
Third, 2008 was a year when we laid unparalleled emphasis on valuing the positive impact for society of our products, services and solutions. This 2009 report contains a section dedicated to describing the more than 60 programs that the company has implemented to bridge the digital divide, in other words, inequalities that may arise between those people and communities that use information and communications technologies (ICT) as part of their everyday lives and those that either have no access to ICT or lack the knowledge or ability to make use of them. To compile this list, we have grouped together Telefónica's programs according to the four main causes of the digital divide: the economic divide, the training divide, the geographic divide and the divide generated by health and disability.
Telefónica has invested over 370 million euros in narrowing the digital divide: 275 million in Universal Service Funds (including the 104 million euro net cost in 2007 of providing Telefónica's universal service in Spain), nearly 15 million euros in ICT training projects and over 80 million euros in programs to bridge the economic and geographical divide.
Fourth, 2008 was a year when Telefónica's underlined its commitment to social and cultural action programs. Based on the LBG measurement model, in 2008 the company invested nearly 115 million euros in these projects. Among the social programs, I would like to highlight the Telefónica Foundation's Proniño initiative, which, for the third successive year, doubled the number of children it supported in school as part of its fight against child labour: today more than 107,000 children can look forward to a better future thanks to the joint work of the Telefónica Foundation and more than 100 NGOs operating in Latin America. Building on Proniño, the Foundation is taking forward EducaRed (a program aimed at improving the quality of education through the use of ICT) and Voluntariado Corporativo (which already involves nearly 22,000 Group employees, who this year gave over 340,000 hours to charity work).
Finally, I believe 2008 was a good year for CSR because we continued to improve the model for reporting and communicating our successes. For one thing, we can be proud to say that Telefónica does not just have a CSR report, but a complete CSR management system. In fact, the Telefónica S.A. CSR report is only the culmination of reports already published in 17 countries, realising our strategy of pursuing CSR in two aspects: global (through the multi-lateral intitiatives of the United Nations, GRI and indexes such as the DJSI) and local (responding to the demands of stakeholders in each country). For another, because to ensure the relevance and rigour of the information reported, we have sought external verification by our auditor, applying the most demanding global criteria: GRI and AA1000AS. Finally, by publishing Telefónica's CSR report together with the Telefónica Foundation report for the first time this year, we are laying a particular emphasis on the social impact that the Group has on the community.
Also, this year, too, I want once again to underline Telefónica's firm commitment to the United Nations Global Compact and to the fulfilment of its principles. The initiative reflects the key role that Corporate Social Responsibity plays in the company's approach -an approach that acknowledges multiple stakeholders, that is simultaneously global and local, and that is both voluntary and designed to promote excellence in business ethics. Our commitment is this year shown by the publication of a printed supplement detailing our compliance with the Global Compact.
In addition, we have published two other special reports to address in detail issues of particular importance to our stakeholders: environmental perfomance and performance in relation to climate change, and the projects that are helping to achieve the Millennium Goals.
I am sure that you will find the report of great interest. It sets out the degree of compliance with our 2008 CSR targets and the targets set for 2009-2011. We believe that we are making progress every year. And this progress is to a great extent thanks to those, such as you, who put their faith in us and spur us on to continuous improvement.
Yours sincerely
César Alierta,
Executive Chairman, Telefónica S.A.