Safaricom’s Sustainability Report Showcases Its Commitment To Becoming A Purpose-Led Tech Company – Here Are Highlights From The Report And Launch

The 12^th Safaricom Business Report was launched in early October 2023 at the Michael Joseph Centre. The report focused on how Safaricom is ensuring sustainability within the company’s value chain. It also showcases its goals to be transformative and to be a purpose-led technology company by 2025.

The purpose-led journey includes:

Being net-zero by 2050. Delivering clean energy and reducing emissions.
Decarbonising by leveraging technology to ensure a greener future
Creating a circular economy to create less waste
Ensuring diversity and inclusivity by hiring more women and people with disabilities
Sustainable investing in local communities where Safaricom is operating
Enabling pathways to ethical governance by creating digital tech societies

Safaricom envisions a future where humanity, nature and technology coexist. This is a Nairobi where buildings are capped with solar panels—with a city that predominantly relies on renewable energy. Safaricom is leading the way with passion, progress and purpose.

Safaricom invited like-minded business leaders along with senior management within the company to the launch event. CEO Peter Ndegwa promised to showcase the impact and sustainability journey that the company has been on, including applying for the Sustainable Linked Loan.

How Safaricom expresses its transformation and purpose-led journey

Safaricom CEO Peter Ndegwa broke down the ways in which the company ensures that it meets its goals.

1. The design and delivery of products

This includes how to combine the roles of technology and innovation to solve social and customer challenges. This includes Lipa Mdogo Mdogo, a layaway purchase program to enable low-income customers to access smartphones.

2. Safaricom Foundations

With the Safaricom Foundation and the M-PESA Foundation, the company has scalable programs that they deliver to society. These foundations have impacted all 47 counties in health, education, environment, and economic empowerment, all while supporting the UN Sustainable Development Goals (SDGs).

The company empowers communities with the right tools and technology to enable them to meet their full potential and transform lives. This is closely linked to philanthropic support with the mantra of “leave no one behind”. This is achieved with the Ndoto Zetu program which addresses societal needs. Kenyans in need make applications through the Safaricom Foundation to achieve these goals.

3. Commitment to transparency and accountability

The 12^th Safaricom Sustainable Business Report is a display of the company’s transparency and maintains its credibility. This is also shown by the company receiving its Ksh. 15 billion Sustainability Linked Loan which it acquired due to its sustainability efforts. The Loan was also announced during the 2023 Africa Climate Summit. It’s the largest Environmental, social, and corporate governance (ESG) Linked Loan facility ever given in East Africa. It will enable the company to create more diversified investment opportunities. In addition, it will support transformative investments in emerging tech such as AI and services that allow the company to manage its ESG footprint. The Loan will also help the company meet its commitments made in the sustainability report.

Safaricom sees itself as a champion of social equity and a proponent of ethical practices. The sustainability report is a commitment to transforming lives and driving positive change. Developing solutions that address societal challenges at scale is a key part of ensuring transformation.

The new role of sustainability

Safaricom board chair, Adil Khawaja stated that sustainability is no longer just about environmental responsibility. It’s about creating a comprehensive framework that encompasses ESG considerations beyond compliance and corporate social responsibility. Sustainability is necessary for any company’s long-term success. The rapidly changing global landscape has necessitated a broader perspective. To this end, Safaricom established an ESG committee to underscore the dedication to sustainability and ensure ESG factors are considered during decision making, including risk management and value creation.

45% of the Safaricom board is made of women and 40% of senior leadership is held by women. The diversity of the company doesn’t just focus on gender but on diverse perspectives to make decision-making richer. This also strengthens corporate governance and transparency standards. Safaricom has aligned these sustainability goals since 2016. These sustainability standards will continue to be integrated into development, operations and individual employee objectives.

The journey has been met with challenges. The rapidly changing technology landscape and the evolving expectations of stakeholders present numerous socio-economic challenges which require significant interventions.

Safaricom hopes to be a catalyst for change in Kenya and Ethiopia, where it has set up a branch of its operations.

The importance of technology for humanity

The chief guest of the launch was the executive director of Alliance for Science, Dr Sheila Ochugboju. Dr Ochugboju was in 2021 recognised as Africa’s 100 most influential women. She is the leader of an organisation that is at the forefront of global advocacy on frontier innovation. It accelerates action towards achieving SDGs.

Alliance for Science enables the uptake of scientific and technological solutions. The organisation’s strapline is science for humanity. The linkage of technology with humanity is a key part of the new age of sustainability. Businesses play a role in helping the world meet its global goals with their practices and products.

The challenge is to make the leap from an innovative idea to the normalisation of the technology and bridge the gap. According to Dr Ochugboju, Safaricom is bridging that gap. The sustainability report illustrates the three things that it takes to make the leap:

Vision
Ambition
Courage

A business has to make a commitment to articulate what it wants to do for the people, how they want to live and how technology helps achieve those goals. The earlier articulation of Safaricom’s vision for the future of Nairobi means the company is ensuring its practices align with accomplishing that vision.

Global ambitions such as SDGs need data for a company to measure when it’s on the right track. Safaricom and other technological companies that incorporate SDGs to improve communities can use the data to see what they’re doing appropriately and what they need to course correct. Safaricom can work with organisations like the Alliance for Science to ensure social development.

Alliance for Science looks at SDGs with regard to the goals that form the foundations of life on Earth. How to have a healthy biosphere to protect life on land, and water and contribution to a healthy climate future. Companies can ask themselves how are they generating profit responsibly. Safaricom is ambitious in trying to meet targets by 2025. Inviting other partners to show how technology is part of a solution to sustainability is a great step in showing how the company is committed to transformation.

Kenya Commercial Bank CEO Paul Russo breaks down ambition as having three pillars. The first is people, technology, and partnership. The second pillar is governance, policy, and process. Finally, the third is under transparency and reporting. A company achieves its credibility and aligns its goals with intentionality towards sustainability.

What companies need to do to meet SDGs by 2030

UN Secretary-General Antonio Guterres issued a statement during the UN General Assembly. In it he mentioned the SDGs. They carry the hopes, dreams and expectations of people. They provide the surest path to ensuring companies live up to their obligations and the Declaration of Human Rights. Only 15% of targets are on track and many are reversing. SDGs need a global rescue plan.

Mastercard found a way to implement SDGs. The control resides with the end customer. In the Nordics, Mastercard delivered a carbon calculator. No matter where a user spends, the calculator shows the end user their monthly carbon footprint and how much they can offset their footprint. For example, if this is by planting trees, a certified entity ensures the trees are maintained to the full end-to-end life cycle. Mastercard intersects customer behaviour, customer awareness and corporate responsibility, but ultimately gives the power to the end customer.

Executive Director of UN Global Compact Kenya Judy Njino further emphasised the UN Secretary General’s words that companies aren’t doing enough to meet SDG targets. Companies now need to focus on scale and ambition. All positive strides companies have made that are incremental are no longer enough. Safaricom’s bold vision is a step forward in ensuring companies are accelerating their efforts to meet global SDG targets. Global Compact is a company that provides support to companies with unique programming helping them to scale and align corporate strategies with SDGs.

The Sustainability Linked Loan

Safaricom is meeting the scaling requirements of the UN to meet the SDG targets by acquiring the sustainability-linked loan. This is a fund provided by a consortium of banks that ensures Safaricom meets its sustainability goals. The Ksh. 15 billion loan ensures that Safaricom isn’t subjected to high market rates when meeting sustainability requirements.

Michael Mutiga Chief Business Development and Strategy Officer for Safaricom spoke about how the company can leverage its balance sheets to support other sectors. How can the company support merchant and device financing, democratise access, and improve communities? The sustainability-linked loan had three measures to meet:

Emissions
Access
Governance

The measures will be in place for the seven years of the loan and much longer than that. The loan’s interest rates are tied to the borrower’s sustainability performance, specifically their ESG targets. Meeting these targets leads to reduced interest payments. This reinforces Safaricom’s commitment to ESG initiatives, transforming lives and ensuring sustainability is at the heart of everything.

Every company has financial and ESG goals. Most companies look at these separately. Sustainable financing ties the two goals and provides incentives or penalties for not achieving sustainability goals. Sustainable financing drives economic development and addresses climate change, inequality, and other social challenges.

Tools within sustainable financing like sustainability-linked loans, sustainable bonds, green bonds, and blue bonds help companies meet their ESG goals. Every sustainability finance tool focuses on two things. The company’s goals are either activity-based or behavioural. This then means that a company takes a green bond or green loan to directly fund a green project, such as a solar plant or pivoting to renewable energy. Behaviour-based activities are funded by a tool like the sustainability-linked loan. It rewards or penalises a company depending on whether they have met its sustainability goals. Safaricom is being measured against a metric where they’re performing tasks such as digital inclusion, and reducing emissions.

Every company deals with scope one and scope two emissions. They’re easier to control. Scope three is the supply chain, where 70% of emissions come from. Financiers can help companies and suppliers alleviate some of their carbon emissions. Banks like Stanbic have up to Ksh. 5 trillion available for sustainable financing for the continent.

Sustainability Linked Loan financiers and arrangers

Birju Sanghrajka, head of corporate, commercial and institutional banking for East Africa Standard Chartered Bank. Standard Chartered was the lead arranger for the Sustainable Linked Loan. The bank will mobilise $300 billion in sustainable finance to aid the transition to net zero around the world.

KCB ensures eco-efficiency through the green agenda by ensuring performance is approached holistically through sustainability reporting and policies.

Stanbic Bank CEO Joshua Oigara released its sustainability report where they identified three key impact areas and set goals for the next three years with green financing representing 10% of total loans by December 2023. The bank also ensures that 30% of procurement will be allocated to marginalised groups by 2025. It also set up a climate risk framework by August 2023.

Absa Bank was also another facilitator of the loan. It’s also committed to sustainability by deploying Ksh. 6 billion to sustainable investment financing to accelerate climate transition and advance inclusive growth by 2025.

SMEs and sustainable financing

Absa Bank CEO and MD Abdi Mohamed stated the previous model of businesses only operating within their verticals to accomplish their goals has evolved. Now all businesses have to work together to solve social and environmental problems on a wider scale. Companies have to get into complex partnerships to ensure that they are mitigating these problems, such as climate change, the COVID-19 pandemic, or geopolitical conflict.

SMEs require more education, awareness and support with regard to sustainability. Absa Bank and the UN Global Compact network are looking for more ways to include SMEs in sustainable financing programs. Kenya has the best membership drive in Africa for the UN Global Compact network. Sustainable funding for SMEs has to be accessible and at the right cost. All partners within the ecosystem will then be able to meet their intended profit margins.

How organisations can access the Sustainable Linked Loan

Safaricom has a catalytic effect on larger portions of the country. When the company does one thing, other companies take part in what they have launched. Safaricom takes bets regarding mobile money, internet connection, and fintech which makes it clear that more companies will sign up for sustainability financing.

Companies that want to get sustainability financing need to ask themselves whether they want to do more good or less harm or both. More good means activities such as diversity and inclusion while harm reduction includes reducing carbon emissions. Companies need to have intent, transparency, and method of execution. Having these visions is what enables companies to partner with the consortium of banks to get their sustainability financing.

Challenges facing sustainability

KCB was awarded the most sustainable bank by the Kenya Bankers Association in 2022. However, CEO Paul Russo, it is difficult to balance profitability and sustainability. Aligning an entire institution to become green can be challenging. Changing the culture requires intention.

Banks are also looking to gender balance the companies supported by sustainability loans. Finding SMEs that are more insular regarding climate change is a blind spot more banks need to stop the gap. Inasmuch as there are UN SDGs, more localised data is required to outline better specifics on how local companies can be financed sustainably.

Many companies find the 2025 sustainability goals cumbersome. However, they need to be more ambitious. Stanbic CEO Joshua Oigara pointed out that positivity drives progress. Following in Safaricom’s footsteps can seem like a daunting task for companies following in its footsteps. Companies come up with multiple reasons and excuses why they can’t focus on sustainability. However, driving forward and remaining on the course, for his institution, is one of the few ways they can ensure more partnerships. Older generations also have a slower transition to change compared to the youth. Presenting more opportunities for the youth can create new markets and opportunities for change. Creating more capabilities brings about more sustainable enterprises. Few SMEs are not ready for sustainable financing. Technology is one of the few ways the banks can democratize access to fund SMEs.

Digital transformation and sustainability

Safaricom CFO Dilip Pal spoke as a panellist at the launch highlighting why digital transformation is necessary for sustainability. Creating awareness of the importance of digitisation shows how it can be impactful in transforming lives. Digital transformation is an ongoing process that doesn’t have an end goal. It is the reduction of waste and assurance of efficiency. Audits and validation create credibility. Safaricom has made good progress but a lot more can be done. What drives Safaricom is being purpose-led in its goal to achieve sustainability.

More banks focus on affordable financing rather than sustainable financing. However, sustainable loans may be better for companies. This is because using key performance indicators provides a better outline on how achieve transformation. One of Safaricom’s KPIs is to ensure more users have access to 4G phones. Finance isn’t particularly innovative but technology and product development allows for more transformational risks.

Incentives drive targets and performance. Sustainability-linked loans carry incentives when the company meets its sustainability targets. The company focuses less on interest and more on innovation.

How sports can make SDG impact

The KCB CEO talked about how The KCB volleyball team became the African Champions. The teams are facilitated fully and paid as KCB staff. KCB also contains chess, football and rugby teams. Most players are from lower-income areas. The biggest impact is that they can become providers of sport and talent building. Talanta Hela is funded by corporations and the government to commercialise skills for lower-income talents to provide dignified livelihoods.

Safaricom has spent over Ksh. 1.4 billion in sports since the company was started. The company goes across all sports. It’s the biggest passion point for Kenyans, especially football. Running Chapa Dimba has discovered and showcased talent. Overlaying technology used in European football is helping players meet more opportunities with talent scouts. Safaricom is collecting data from local young players to showcase their talents to international talent scouts. This creates a pipeline of opportunities for young players aged between 16 and 20 in international sports.

The Safaricom Sustainable Business Report

Karen Basiye Director of Sustainable Business and Social Impact and the Foundations of Safaricom presented the Sustainable Report 2023. It showed Safaricom’s story of transformation and purpose. The report is the roadmap guiding the company along the path. The key materials include governance, business ethics and risks, the regulatory environment, digital platforms, environmental stewardship, innovation and partnerships, and finally, customer and employee relations.

Leveraging technology changes lives, creates shared values, drives positive change and develops solutions that address societal challenges at scale. Safaricom and its partners continue to invent and create unique opportunities through products, services and solutions to improve quality of life and contribute to sustainable livelihoods. The total value created for the Kenyan society in the year under review is Ksh. 909.5 billion. This is 15 times greater than the financial profit made in the same year.

The company sustained 236,674 direct and indirect jobs. For the wider economy, the company contributed to 1.2 million jobs nationwide. The journey to sustainability puts the planet, people and purpose before profit

Governance, Business Ethics & Risk

Governance is the bedrock of Safaricom’s sustainability journey. Board diversity is currently at 45% female, which is a testament of Safaricom’s commitment to diversity. To build board capacity, the directors underwent intensive training in anti-money laundering and counterterrorism financing. This is necessary for their oversight and fiduciary roles.

The board created an ESG committee, a first for Safaricom. As part of the commitment to ethical business, Safaricom entered multiple collaborations with financial institutions, telcos, and system integrators to co-create fraud management controls and reduction initiatives. Safaricom also upgraded to a robust revenue assurance process. All products, innovations and systems developments guarantee safety and data privacy.

The regulatory environment

Safaricom operates in a highly regulated landscape. In 2022, the company attained a 95% quality of service assessment. This surpassed the regulatory measure of 80%. As a result, this shows the quality of service and reflects the commitment to delivering top-notch services to bridge the digital connectivity gap. Safaricom achieved this by progressing the universal service fund. 43 locations and over 200,000 homes are connected in Phase 1, and 33 locations and 990,000 people are connected in Phase 2.

Digital Platforms

These are pathways to changing lives. DigiFarm is a platform where 1.6 farmers are signed up. In addition, over 10% of them are now actively engaged. The Huster Fund has 16 million subscribed. It has also disbursed Ksh. 24 million. This is economic empowerment. Safaricom’s 5G network coverage is expanding countrywide ensuring that no one is left behind.

Safaricom runs Africa’s largest fintech platform, M-PESA. It was the world’s first mobile money transfer from SIM to SIM. It also empowered 30 million customers to transact, save or borrow money from their cell phones. By 2021, M-PESa had driven financial inclusion by 83.7% of the adult population. M-PESA generated Ksh. 117 billion in revenue in the 2023 financial year.

Environmental stewardship

It’s a commitment to sustainability. Safaricom recorded a 3.7% drop in its carbon footprint in 2023. The company accomplished this by applying solar power in 1432 sites and energy efficiency measures resulting in 370 tonnes of CO2 equivalent avoided.

Under water management, there was a 9.9% water use reduction due to better practices in facilities.

45.9% of waste material is recycled while 49.4% is composted. Unfortunately, approximately 4% of waste is taken to dumpsites due to the nature of the waste. At the end of the reporting year, Safaricom has grown 1.3 million trees in partnership with the Kenyan Forestry Service and community forest associations. Additionally, these trees help Safaricom offset its carbon footprint. They benefit the community by supporting tree nurseries and beekeeping, which impacts 2000 people directly and 10000 people indirectly. These trees will be part of Kenya’s forest cover and meet the president’s directive to achieve net zero carbon emissions by 2050.

Innovation and partnerships

Innovation is the vehicle for sustainable growth. Zeraki Learning is an affordable education service for high school students. It leverages informative video lessons from trained teachers. It had 352,925 downloads in 2023.

In agriculture, Safaricom supported the government’s rollout of the fertiliser. This is a subsidy program where 3.2 million farmers countrywide are able to access affordable fertiliser.

In addition, Safaricom has the My County app which is a citizen access channel. The platform allows people to pay for county services. It also helps citizens report, engage and access tools. It also helps manage revenue for counties. The app is available in 11 counties.

M-PESA GO is a way for parents to oversee their children’s use of mobile money. By the end of the financial year of 2023, the app had 2.9 million children’s accounts. It trains children in responsible cash use, spending, and saving.

M-Gas is a pay-as-you-go energy solution that enables Kenyans to access affordable, clean and reliable energy. Over 360,000 Kenyan households can buy gas through a smart meter which leverages Safaricom’s connectivity.

Customers and employees

Safaricom reached more customers by providing services at lower entry price points. The company also provides content and family plans in response to customer needs. This led to a growth of 800,000 additional customers. The company also saw a 17.9% increase in Home Fibre customers. There are now 275,000 homes and over 275,000 businesses connected to Fibre Optic Network.

Employee diversity is a key metric for Safaricom. Women in senior leadership now make up 40%. There are also 3% of persons with disabilities. Safaricom hopes to achieve 50% female leadership by 2025, and 5% employees with disabilities.

The other main takeaways from the 2023 Safaricom business report are:

6 million people were positively impacted by the Safaricom Foundations.
98% compliance of all employees and business partners to the Code of Ethics
45% female representation in the Board Leadership
Also, 40% of women in senior management leadership
3% of the workforce is people with disabilities
Incorporating marginalized people within the supply chain. 5.92% of total procurement is from businesses and suppliers owned by women, youth, and persons with disabilities
Enforcing a zero-harm and safe work environment
About 12,000 tonnes of electronic waste are recycled.

You can find the full report here.