Verizon: the telecoms giant's attempts to secure a sustainable supply chain

Verizon Communications may have had its origins in Bell System, America's original telephone company. But today the largest mobile network in the US – with 144 million customers for its broadband, TV and wireless data services – has more in common with the tech giants of our age than the clunky rotary dial telephones, switches and copper wires that dominated telecommunications only a few decades ago.

Supply chain sustainability

Verizon's sustainability journey began in 2009. Chief sustainability officer and vice-president of supply chain operations James Gowen had already been working on energy efficiency improvements in the company's supply chain, with responsibility for $2.5bn in procurement.

"I did all the purchasing, I was responsible for transportation and I paid the electricity bill," said Gowen. "I had the biggest opportunity to make a change. I was not an environmentalist by trade, but in the last three and a half years, I have gained a tremendous respect for sustainability and I've seen a transformation in myself."

That year, Verizon established the industry's first energy standards for its supply chain that required new equipment be at least 20% more energy efficient than the equipment it replaced.

Gowen said this was "low hanging fruit" but the impact on the industry was far-reaching as other telecom companies began using the new, more energy-efficient components.

Last year, Verizon went further by establishing a new supply chain goal to devote 40% of supplier spending by 2015 to firms that measure and set targets to reduce carbon emissions.

"This was not about checking off a box and making sure we did what regulators would want us to do, or what NGOs would be encouraging us to do," said Gowen, "We wanted to do things that made sense for our business."

Tackling carbon

Verizon's largest source of carbon is its electricity demand, which produced over 5m metric tonnes of CO2 in 2012, accounting for 91% of its GHG emissions. Emissions from the telecoms sector are indirect and covered by international agreements, such as the Kyoto protocol or EU Emissions Trading System. But Verizon's carbon intensity, measured in terabytes per metric tonne of CO2, has according to the company reduced by 37% since 2009, when it set a target to halve its carbon intensity by 2020.

"The challenge we faced was that our wireless traffic is growing exponentially with handsets, tablets and anywhere devices. How could we grow efficiently and sustainably? That's what we focused on with the carbon intensity metric, not absolute reductions, but growing as efficiently as possible. A 37% reduction was the easy part, now the tougher part is ahead of us."

Since Verizon set its carbon intensity target in 2009, data on the company's network has increased by 50% but electricity usage has only increased 2%. However, energy efficiency can only take the company so far.

The case for solar power and fuel cell systems

Last month, Verizon announced it would invest $100m in solar energy and fuel cell systems this year, which will generate enough electricity to power 19 of its facilities in the US. Gowen insists this is not greenwash and that similar investments have already demonstrated reductions in energy costs and carbon.

"I could easily have said this is the right thing to do, but it would not have flown without a business case," he said. "We looked at a 10-year business plan and made sure that the net present value and a return on investment were positive before we even went to our chief financial officer and made the case for it."

Superstorm Sandy also made the case very strongly for Gowan and his team. As high winds battered the east coast and a 14-metre storm surge flooded New York, knocking out the power grid for millions of people, Verizon's Garden City switching and administrative centre on Long Island, a 800kWh fuel cell system installed 10 years ago, kept the lights on.

"I had a very unfair advantage while making my case to the CFO," he said. "During Superstorm Sandy, that system never went down and it helped cement our case for resiliency to natural disaster as the natural gas did not get turned off and those fuel cells kept running."

With around 195,000 global employees and customers worldwide making an estimated 1bn calls a day and sending 780bn texts a year, Verizon can be compared to Google or Microsoft as demand for data services boom. But its 35,000 vehicle fleet turns it into a tech company with a trucking company bolted on, as their services require real people to maintain the cables to homes and businesses.

BBQ solutions

Verizon's fleet is mostly still powered by fossil fuels that produced 387,723 tonnes of CO2 last year. But it is half way to its 2015 target to run 15% of its fleet run on alternative energy. The company would probably do more with the right signals from policymakers and speedier deployment of infrastructure for alternative fuels, said Gowen.

In 2012, Verizon saved 207,653 gallons of fuel from reduced idling time and introduced the Magic Bus, an idea that came from an employee. Technicians in Manhattan are now transported by bus rather than individual vehicles to customer sites. It has taken 250 vehicles off of the NYC streets and will save more 100,000 gallons of gas annually.

The Magic Bus might be a drop in the ocean of oil guzzled by Verizon's fleet. But it's still 645 tonnes of avoided carbon emissions and 250 parking spaces freed up in congested Manhattan, said Gowen. It's also just the kind of example of employee engagement the company has actively encouraged with its internal Green Team initiative.

"I get more emails from staff at Verizon encouraging us to do more. We want people talking about it at their BBQs and bringing solutions back to work and we want them to take ideas from work and bring them to the backyard BBQs. That's the home run –that's beyond anything that Verizon could ever do and that's how you create social change."

No silver bullet

Verizon has managed to implement these changes without slipping from the top 20 Fortune 500 companies.

"Shareholder response has been very strong," he said. "They are a very targeted audience that care about how they invest when it comes to 'green' companies. But more importantly, shareholders have been our customers who outsource their data or telecoms requirements to us and they want to make sure that they are dealing with a green company.

"There's no silver bullet but what customers and shareholders are concerned about is how you position yourself for the future from a disaster recovery perspective and from a financial situation – and that's the story that Verizon really has its hands around."

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