Samuel Bevan

Hello, I'm Sam Bevin, Investment Director in the Emerging Market Debt team at abrdn. You are listening to abrdn's Sustainability Inspires Podcast, discussing all things relating to sustainability.

Today we'll be talking about investing towards meeting the 2030 Sustainable Development Goals and how business strategy can be aligned to these. I'm delighted to have with me here as a guest Sima Varsani, Group head of Sustainability at Helios Towers, a leading telecommunications infrastructure company with tower sites across Africa, including frontier countries such as Tanzania, Democratic Republic of Congo, Ghana and Senegal.

Helios Towers is a company that abrdn are very familiar with as we follow it for our SDG-aligned EM debt and EM equity portfolios. As a bit of background, Sima joined Helios Towers in early 2020 and has previously held sustainability roles in consultancy as well as the GSMA, which is the Mobile Industry Association, Vodafone and Sainsbury's as well. So, Sima, welcome to our podcast.

Sima Varsani

Thanks Sam. Great to be speaking to you today.

Samuel Bevan

And we're really lucky to have you here today. I know we're getting very close to you going on maternity leave. So, the important question, are you ready to have a newborn and a toddler under one roof?

Sima Varsani

I don't think I will ever be ready for that. So, I'm just I'm just going to go with the flow.

Samuel Bevan

I'm really interested to know how coming from a classics degree from Cambridge University has led you to a career specialising in sustainability.

Sima Varsani

I mean, yes, studying Latin and Ancient Greek at university, it doesn't kind of, it's not vocational. I did I really didn't have a clue what I wanted to do when I left university. I started a temp job at a niche actuarial recruitment company and during my time there, I stayed actually a lot longer than I had initially anticipated. But while I was there, I did a lot of writing for the trade press I became interested in SRI and corporate responsibility, and I got a job as a copywriter at a sustainability reporting and communications agency. And there I was writing 50, 60,000 word GRI reports. And this for me was the best foundation for understanding the breadth, the interconnectedness and the nuance of corporate sustainability. And that's been the foundation that's proven really useful over various roles in corporate consulting, not for profit over the last oh, I think it's over 30 years now.

Samuel Bevan

So yeah, so I would say a long career specialising in sustainability management, particularly in the corporate sector. So, I'm interested in your conversations with investors in particular how they focused on sustainability and, what kind of questions you are most often asked, and whether the focus has changed over your career as well.

Sima Varsani

I'd say the focus has changed considerably and it's really only been in my role at Helios that I've had really meaningful conversations with investors around sustainability and we prefer to call it sustainable business. I think there's much more widespread acknowledgment today versus even five years ago that what has historically called non-financial data, non-financial information, when it's actually material to a business, invariably has a financial impact. At Helios we like to proactively engage with our investors as well. So, we've spoken to our investors as part of materiality reviews, reporting reviews and for feedback. So, for example, when we were setting our carbon target back in 2021 and I'd say that climate change and carbon has probably been the biggest area investor questions over the last 12 to 18 months. For a business like ours, investors generally appreciate the inherent and widespread social and economic development that comes with connectivity, particularly in our markets. The challenge is reducing carbon while expanding that connectivity. Now the telco sharing model is at its core reducing environmental impact of the industry as it reduces the needs of the multiple towers. But we work in incredibly diverse and complex geographies, so reducing carbon while expanding connectivity in markets which have limited or non-existent electricity is a real operational challenge. So, I guess I could give you the example of DRC, a population of around 100 million, one of the fastest growing markets, the mobile globally mobile penetration is still really low. So, it's really imperative for us as a business to roll out our network, to drive co-location on our towers. But in terms of the country itself, it's about ten times the size of the UK. It's got 1% around 1% of the tarmac roads and on average we get about, well, 6, maybe 7 hours of grid electricity in a day. And now ironically, the DRC actually has one of the cleanest grids in the world due to the country's hydropower generation. So really for us all for when we're talking to investors it's about bringing telling our story, bringing awareness of all operating context in our market to life, to really set the context for our sustainable business ambitions.

Samuel Bevan

Great to hear the on the ground examples there. And so, you joined in 2020, and I know a big part of your role has been embedding sustainability into the business. So, can you walk us through how you've done that?

Sima Varsani

Sure. And I guess the company was doing lots of things around sustainability before I joined, so I certainly can't take credit for too much. But I guess one of the first things that I did was look at creating a sustainable business strategy. So initially I was brought on and we were discussing setting up a sustainability strategy, but we realised very quickly that it made much more sense for us as a business to have an integrated strategy rather than have the business strategy on their side and a separate sustainability strategy on the other. So that was that was really the first key step. And it was making sure that I guess there was governance around that. Now, Tom, our CEO, he led a refresh of that strategy as he became CEO last year and we have a set of 2026 targets which look simultaneously at business growth, digital inclusion, developing safe local teams, climate action. All of these things are working together for our long term success, and these targets are embedded across business functions. So, for example, carbon isn't something that sits within my small sustainability team. Actually, it's driven by our Engineering and our Operations teams as they have the greatest influence over reducing scope one and two emissions. So, it really is about embedding where it's where each team can have the greatest influence over the value that we're creating will be impacts that we're having and making sure that that is embedded in terms of day-to-day business processes. And I'd also say and we I feel very fortunate that sustainable business is championed by the board, by our executive leadership team. And I think over the last few years that's what's really helped to make that for the business, to make such great progress on a number of topics in a very short space of time. So earlier this year we incorporated an impact scorecard as part of our long-term incentive plan, and that includes KPIs on carbon, on gender, on population coverage. And it really is a really strong reflection, I think, of a leadership commitment to these social and environmental topics.

Samuel Bevan

Yeah, I'm really encouraged to hear you talk to 2026 targets because the near-term targets that we can measure the company against, when you talk about net zero, we hear 2050 all the time, but it's so far in the future that it's hard to really quantify how you get there. So, having those nearer-term targets gives us a bit more to focus on in the in the in the mediate. I would like to maybe shift the topic a little bit to the SDGs. And so how Helios Towers thinks about them in 17 different SDGs and within them 169 sub-indicators so can feel quite overwhelming as investors to know where to start. So how do you kind of step back as a business and think about which ones are important to us?

Sima Varsani

So, I think it's our approach is to look at actually not necessarily how important they are to us, but actually where can we as a business drive the greatest impact. So, we did a mapping exercise back in 2020. We refreshed it last year and that really involved reviewing all 169 indicators and assessing which ones are the ones that we contribute to through our core business. Now, the result of that exercise can be seen in our Annual Report supplement and the way we've disclosed it is to map it against our material issues, the KPIs that we have and the SDG indicators, you know 169 indicators are targeted at countries and governments. So, for us it was really important to show which KPIs, which data points we're using in our business to actually help drive decision-making. I guess we were working, we're part of the mobile industry and so we're fortunate in the fact that mobile industry is unique in that it can contribute positively to all 17 sustainable development goals. You know, there's numerous examples of how mobile can help drive health, education, gender. It's allowed millions of people in our markets who have never had a bank account. It's enabled them to access financial services for the very first time. I mean, these are just a few examples. The GSMA, the Industry Association, produces an SDG impact report every year which evidences how mobile is contributing to each of these goals. But I think the key takeaways each year, it's showing that mobile’s contribution is increasing on a on a year on year basis.

Samuel Bevan

Yeah, on top of that, like there's a lot of data around how increasing internet penetration has a massive growth multiplier effect for these developing countries and Helios is operating in countries with very low mobile connectivity relative to OECD countries. When I think about how abrdn thinks about the SDGs and aligning them for all portfolios, the first question we always ask is, does the company meet an unmet need and how does it provide a solution to this unmet need? And I think the case is really clear for Helios Towers in terms of the essential infrastructure you're building out in these countries that are lacking access. And it clearly aligns with SDG 9.C. We then go on to think about how we quantitatively assess that, so in terms of materiality for the business, and again, it's clear for Helios in terms of the discretionary CapEx that is going towards adding new sites and improving rural connectivity and we can really track that with this company. And lastly, and what I want to ask you about is around measuring impacts, because there are 20, 30 SDG targets to be met. And I think it's a crucial part of SDG investing is getting the data from the companies we invest in and measuring the impact. So, what sustainable data do Helios provide and how is this evolved over time and how do you go around collecting this data?

Sima Varsani

I mean, firstly, Sam I agree, measuring impact is crucial. I strongly believe the data that you collect should not just be useful to reflect your progress, but actually it should be driving better decision making. And I think that's why having an integrated sustainable business strategy is very helpful because we have, you know, 2026 targets, such as having 250 million people coming onto the coverage footprint of our towers, at least 30% gender diversity. We've got our carbon targets, the percentage of local employees, number of rural sites. These are really all top-line indicators for our performance on a number of areas, including our growth target of 22,000 towers by 2026. We also have a number of other new KPIs and data points that we track and monitor internally, but we also include in our reporting and in terms of evolution, I really think our focus on improving reporting year on year has helped us to look at additional data that can be useful for decision making, as I said at the beginning.

Samuel Bevan

So, we can only report on the data we get from companies and part of our engagements with mobile providers has been around getting data around rural connectivity. So, this is a world at progress. And I would definitely note that in terms of the data provided Helios is streets ahead of some of their peers. And you know, we need to see this progress happening across the board. Maybe just in terms of so see you're operating across Africa and in countries that are very early stage in terms of their development and that some investors might deem particularly risky. You've mentioned the DRC and obviously, it's particularly volatile history in that country in particular. So, I'm interested to hear what are some of the biggest challenges that you face in terms of integrating sustainability in these countries?

Sima Varsani

Sure, and I guess maybe when we think about integrating sustainability, as you mentioned, there's just huge opportunity. So, we're operating in countries where the need for mobile is acute. And when we talk about sustainability, expanding connectivity there, it is changing lives, driving real social and economic development, I guess when you can often see attention grabbing headlines for some of our markets. What I would say is of businesses being resilient and of course our primary focus is always to make sure that our people and our partners are safe, but ultimately, we're classified as an essential service. So, its continuing operations is critical for all of our stakeholders. So, we give you an example, the eastern DRC border has experienced conflict on and off really since we started operations there a decade ago. This hasn’t impacted our business. Conflicting parties have actually called truces so that we can enable so that we actually can access our sites. Just it really reflects how critical mobile is because there is it's the only form of connectivity there. Of course, governance is another key area of focus for us. We recognize that there are elevated risks in some of our markets. So, we've spent a long time creating a culture of ethics, integrity and embedding robust processes and procedures to ensure that our business is conducted at the highest ethical standards. And I guess we're bringing in globally recognized international accreditations and standards. So, for example, I think we're the only company in Africa to hold ISO accreditations for quality environment, safety, and anti-bribery. Now we hold these for our own businesses, but our approach is to also work with our partners to encourage them to raise, raise standards and to get these ISO accreditations as well. So, it's it really is trying to have that multiplier impact in the markets as we as we work.

Samuel Bevan

I'm also thinking around so powering these tower sites generally, some of them in rural connections I imagine don't have connections to the electricity grid. So, how do you go about powering these sites and how do you make that more green?

Sima Varsani

So, we have been working over the last number of years to reduce our reliance on diesel as you said, we work in markets with which have really varying access to electricity. Even when you do have access to electricity, that access is not always reliable. So, we do have generators as backup power sources on all of our sites. In terms of digital inclusion, we can have the tower, but that tower has to be powered. So, we actually need to make sure that you know, that there are backup power sources in place. We spend a lot of the focus from our operations and engineering teams looking at power configurations which do help to reduce carbon. Now for us, diesel is the largest operating expenditure on the site, so it makes sense from a financial perspective, but also a carbon perspective to reduce that reliance and replace it with grid connections wherever possible. Batteries, solar. Now one of the things that investors often then ask me is, you know, why can't you put more solar on all of your sites? Now the continent isn't always sunny, and it isn't always appropriate to put solar on. However, we are really challenging ourselves at the moment to use more batteries, to use more solar to support the load on our sites. Now, with co-location and having more tenants on our towers, which is our business model, that power load increases. So, it's a complex configuration that the engineers work on to actually make sure that we're meeting the load. We're trying to do that in a low-carbon way.

Samuel Bevan

So, we ask all our guests what we call the crystal ball question. So, looking into the future and I'm interested to hear what you think it holds for Helios Towers.

Sima Varsani

If only I had a crystal ball right now in terms of the future for the business. And I guess what I can say without having a crystal ball is the focus is really the delivery of our 2026 strategy growth to 22,000 towers, which should support a quarter of a billion people in our regions coming under the coverage footprint of our towers. You know, when we look at the low levels of mobile penetration in our markets, coupled with the massive population growth forecast, the demand for mobile and mobile Internet is exponential. So, I think it's really just about continuing to do what we're doing.

Samuel Bevan

Yeah, yeah, completely understood. Maybe moving to you and some of your personal journey through sustainability. So, can you tell us something that is particularly inspired you about sustainability, whether it's a book, a film, or an experience that you've had?

Sima Varsani

At the end of last year, I had a fantastic opportunity to spend six weeks in Tanzania. I really wanted to get a feel for our business on the ground, so I took my laptop and my family and went to work from our office in Dar es Salaam. That for me was a fantastic experience. It was incredible to get to know my colleagues, the culture, to meet, to meet customers, to speak to our partners, to see children using a computer room that we built for our school near one of our towers. So, that was an experience that genuinely brought new sustainable business of Helios Towers to life. And I realised that while I spend a lot of time, I sit in London, and I talk about climate action. It’s my colleagues that are experiencing climate change on a daily basis, and they've been adapting, they've been putting in solutions and mitigations for a lot longer than I've been talking to them about our carbon footprint. So, it was a really enriching and humbling experience which has helped to shape how I think and how I approach my job.

Samuel Bevan

Yeah, I think it's, as you’d mentioned, a really great opportunity as part of our investment process. We do try to get out and go visit the countries that we invest in on the ground. As you say, being based in London, you don't necessarily get to experience what is being experienced by the locals. So, the only way you can go live it is this get out there and visit the companies that you're investing in, and the governments you’re investing in on the ground.

Sima Varsani

Yeah, and absolutely. And so, I managed to go to Malawi, which is just next door. And it's just incredible to see how, you know, countries that are even so close are all so different and so diverse. And that's the real kind of diversity of our business.

Samuel Bevan

I think that also you mentioned that you do work with local communities in terms of getting Internet access to schools in rural areas and also helping to provide electricity for rural areas that may be off the grid. Can you talk a little bit about some of the projects?

Sima Varsani

Sure. So about 40% of all of our portfolio is rural sites. Now, we know in terms of context that rural communities are less likely to use mobile or less likely to use mobile Internet. So of course, I guess our call is to expand connectivity to these underserved areas. But what we also recognise is that there are lots of other barriers to digital inclusion, such as lack of digital skills. And so, we're working on strategic community investment programs, which are helping to build digital skills and education in these rural areas. So, across a number of our markets, Ghana, Tanzania, Senegal, for example, we've got projects where particularly where we've got towers near schools. And so, we're going to be going to those areas anyway where we either build classrooms or refurbish classrooms and actually donate laptops or computers and make sure, you know, teachers are trained, students are trained. It's not necessarily just on digital skills, actually, what we found is that it helps them that, you know, the wider education piece. For the school in Ghana that I visited last year, we realised that we've created an ICT lab for that one school. But actually, there were seven neighbouring schools that are also coming and using it because it's a resource that is so welcome and so appreciated that actually the impact has been significantly larger than we had initially anticipated. So, I know the leadership team is really proud of and we want to do more of these projects that are all focused on investing in our communities and looking for long-term impact. So, it's something that we want to new projects that we want to support on an ongoing basis rather than just putting in a classroom or putting in an ICT lab and then walking away. It's how can we then have we develop that relationship so that we really understand the difference that digital skills are making to those students and to those communities.

Samuel Bevan

It's super interesting. I think we're nearing the end of the podcast now, but maybe we can touch on one final question and that being said, what do you think the next big sustainability issue is for the financial industry and what should we be watching out for?

Sima Varsani

So personally, I don't see a next big issue. I think we'll continue to see much more mainstreaming of issues such as climate, climate action, decent work, human rights, gender, etc. I think what's key for the whole industry is to consider how can we help companies to embed social environmental issues in strategy and in decision-making, but also to understand the play-offs between social, economic, environmental impacts. So, it would be it would be helpful for the financial industry, investors and rating agencies to just further appreciate the nuance between companies and their operating context. So, for example, we've spoken a lot about the huge infrastructure requirements in our markets. We are unable today to set a science-based target, not with the growth of not with the growth of the business. Now, some investors and rating agencies might see that as a negative, but actually when you look a little bit deeper to understand why our operating context and the fact that we're looking to promote a just transition for individuals and communities and our markets, I think, you know, looking at companies without additional nuance would be very helpful. I mean, we've also seen, you know, there's a raft of upcoming legislation. We've seen the recent release of the ISSB standards, and I think that will be onerous for many companies. I mean, I think generally the sustainability community has really welcomed the additional focus on integrating sustainability and strategy and governance and risk. Personally, I think it would be great if the financial industry and regulators can support companies to actually embed the principles into their business and realise the benefits so that this doesn't end up becoming a compliance exercise or tick box exercise.

Samuel Bevan

Yeah, and I think that's a really important takeaway, is that companies really should be focusing on the areas where they can have the biggest impact rather than trying to tick every single box that regulators put in front of them. So yeah, Sima, thank you so much for being with us today. It's been such a pleasure speaking to you. Best of luck for the rest of your pregnancy. Thank you to everyone listening. This has been abrdn's podcast, Sustainability Inspires, aiming to get you inspired and get involved. Many thanks for listening. You can find all our podcasts on our website. Goodbye for now.

Disclaimer

This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for informational purposes only and should not be considered as an offer, investment recommendation or solicitation to deal in any of the investments or products mentioned herein and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication and do not necessarily reflect those of Abrdn. The companies discussed in this podcast have been selected for illustrative purposes only or to demonstrate our investment management style and not as an investment recommendation or indication of their future performance. The value of investments and the income from them can go down as well as up and investors may make back less than the amount invested. Past performance is not a guide to future returns, return projections or estimates, and provide no guarantee of future results.

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