There are over eighty telecoms operators globally that turn over $1 billion or more in revenues every year. As major companies, service providers (SPs) have a role to play in reducing global carbon emissions. So far, they have been behind the curve. In the Corporate Knights Global 100 of the world’s most sustainable corporations, only five of them are telcos (BT, KPN, Cogeco, Telus and StarHub) and none of them are in the top 30.
STL Partner’s October 2021 report Telco roadmap to net-zero carbon emissions: Why, when and how explores the aims, visions and priorities of SPs in their journey to become more sustainable companies.
Service providers (ISPs) have committed to net-zero but within different time frames
Source: STL Partners
STL’s Partners’ report seeks to understand the practical steps service providers are undertaking to reduce their carbon footprints. This includes discovering how they define, prioritise and drive initiatives as well as the governance and reporting used to determine their progress to ‘net-zero’. Each SP’s journey is unique; STL Partners explored how regional and market influences affect their journey and how different personas and influencers within the organisation approach this topic.
Some of the leading SPs have significantly reduced carbon emissions over the last 5 years
Source: Company sustainability reports of AT&T, Verizon, Orange Group, KDDI, BT, Bell Canada, SK Telecom, Singtel, Swisscom, Rogers Communications, MTN, Virgin Media, Telefonica, STL Partners analysis
Different elements of sustainability are moving at different speeds.
Some SPs have been actively pursuing bold sustainability agendas for years. However, there has been a more recent and universal development across the industry, inspired and spurred by national governments’ and high-profile corporations’ pursuit of ‘net-zero’ commitments. This has catalysed many SPs into action.
Sustainability efforts across SPs nonetheless remain highly variable and fragmented. While some SPs are taking committed and ambitious actions around carbon emissions, many others are still trying to determine what they need to be measuring and reporting in the first place. All have their own unique challenges, though even the most ambitious SPs are still struggling with the circular economy and its impact on scope 3 emissions in particular.
Pressure to ramp up efforts around sustainability stem from many parties:
- Employees: who want their personal values to align with the corporate values of their employer
- Investors: who believe that the long term economic costs of climate change will have a negative impact on share value
- Regulators and public policy makers: who are mandating that companies make efforts to reduce their carbon footprints
- Consumer customers: who want to purchase products and services from green companies
- Enterprise (including public sector) customers: who have their own carbon emission reduction targetsthat they want to hit and want SPs, as suppliers, to ensure they work with them to achieve this
Microsoft carbon emissions targets
Source: Microsoft blog, January 2020
What do we mean by scope 1, 2 and 3?
Many SPs making commitments to becoming a net-zero company will have specific carbon reduction targets which have been validated by the Science Based Targets initiatives (SBTis). Targets are considered ‘science-based’ if they are in line with what the latest climate science deems necessary to meet the goals of the 2015 Paris Agreement – limiting global warming to below 1.5°C above pre-industrial levels.
For most SPs, scope 1 (e.g. emissions from the fleet of vehicles used to install equipment or perform maintenance tasks on base stations) and scope 2 (e.g. the electricity they purchase to run their networks) makes up less than 20% of their overall footprint. These emissions can be recorded and reported on accurately and there are established methodologies for doing so.
Scope 3, however, is where 80%+ of SP carbon emissions come from. This is because it captures the impact of the SP’s whole supply chain, e.g. the carbon emissions released from manufacturing the network equipment that they deploy. It also includes the carbon emissions arising from supplying customers with products and services that an SP sells, e.g. from shipping and de-commissioning consumer handsets or servers provided to enterprise customers.