5G is where operators will be devoting most resources over the next decade. The massive investment required for deploying 5G plus the energy challenges associated with running 5G will ensure that 5G dominates operators’ carbon footprint. Retrofitting or replacing legacy operations is harder to justify (both economically and environmentally) than adopting best practice with new 5G and 5G-ready networks.
Although airlines and energy companies are bigger contributors in terms of carbon emissions, the telecoms industry is not far behind accounting for an estimated 250 MTCO globally (c. 0.8% of global emissions). There will be increasing stakeholder pressure for 5G networks to be demonstrably sustainable by-design and in-operation. Well-intentioned best-efforts and token initiatives in annual reports will not impress increasingly savvy investors, government, regulators, advocacy groups, customers and employees. Evidenced action and detailed disclosure will. This is no longer a question of social and corporate responsibility; it is becoming a business imperative with financial consequences.
- Governmental and regulatory pressure will mount: 5G is a technology already under scrutiny, and this will only increase as wider environmental concerns move to the fore in the wake of the coronavirus crisis. While in some countries the sustainability ambitions of the government have lagged those of the multinational telcos who operate there, this is changing with the new US administration and greater global multilateral action. One example of this is the new EU rules on sustainable investing which is imposing increased reporting requirements on sustainability-focused asset managers. Another example is the new obligations on all companies under the Non-Financial Reporting Directive due in 2022.
- Advocacy groups are targeting big emitters with legal action: In an ongoing legal case a group of climate activists are suing Shell, citing the ‘great danger for humanity’ that the company poses. They are demanding that the oil company cut its total carbon dioxide emissions by 45% by 2030. This type of action will become more frequent as firms and industries that are complacent become increasingly targeted.
- Stakeholders will take their business elsewhere: employees, customers and investors now all expect telcos to set ambitious sustainability targets and report on progress on meeting these. There are growing expectations not just from younger generations but from all demographics. People want to work for and buy services from companies with a clear purpose that includes meeting climate commitments. Investors will want to earn a risk premium from assets seen as underperforming on emissions. These all carry very real financial consequences.
- Operating costs will mount, putting further pressure on margins: Energy costs already account for 5-7% of telco opex. Telcos will need to contain other operational costs linked to poor energy management: for example, reduced maintenance, security and insurance.
40% of enterprises we surveyed thought that 5G energy efficiency should be the first or second priority for telecoms operators when deploying 5G networks
See our other in-depth research on 5G and energy management: