Roadmap to creating and executing winning Scope 3 strategies

Executive Briefing Service, Sustainability

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Scope 3 represents the bulk of telcos’ greenhouse gas emissions which arise from operators’ upstream and downstream activities and are the hardest to address. In this report, we present three steps that telcos can take to successfully measure and curtail their value chain emissions.

Telcos must address Scope 3 emissions

The term Scope 3 first came into use in 2011, when the Greenhouse Gas (GHG) Protocol released its Corporate Value Chain (Scope 3) Accounting and Reporting Standard, effectively extending the way companies can account for their carbon footprint. Prior to this, organisations used to calculate only their direct emissions and the emissions resulting from the generation of purchased energy. This approach left out most emissions that arise from upstream and downstream activities in organisations’ value chains, vastly underestimating the size and scope of emissions that companies are responsible for. The Scope 3 Standard, therefore, provided a useful framework and a standardised approach for companies to accurately measure and report the entirety of their GHG inventory. The graphic below is an overview of the GHG Protocol scopes and emissions across the value chain.

Scope 3 accounts for the majority of telcos’ emissions and arises from their value chain activities

Source: Greenhouse Gas Protocol

The GHP Standard distinguishes 15 distinct Scope 3 categories. Over time, companies should aim to report on as many of the 15 categories as possible to maximise insight into their value chain emissions. In STL’s sustainability scorecard, we have reviewed data from 61 companies ranging from telecoms operators to vendors and technology players to give an overview of which categories of Scope 3 emissions companies are most commonly tracking. So far, 48 companies (67%) track and report on their Scope 3 emissions across fewer than nine categories, with 35% of operators reporting on only four categories of Scope 3 emissions. Our findings around the distribution of these emissions reporting categories are summarised in the graph below.

Percentage of companies analysed that report on given Scope 3 emissions category

Source: Sustainability Scorecard, STL Partners

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In most cases, Scope 3 represents the bulk of telco emissions. According to a survey conducted by the Joint Alliance for CSR (JAC), an association of telecom operators aiming to verify, assess and develop the CSR implementation across the manufacturing centres of ICT suppliers, 84% of the 26 JAC members now have anywhere between 70% and 100% of their total carbon emissions falling under Scope 3. The difficulty not only lies in the volume of these emissions, but also in the fact that telcos do not have direct control over them. This makes it extremely challenging to accurately quantify and influence these emissions.

The good news is that the telecoms industry is continuing to embrace net-zero and science-based targets around materially reducing Scope 3 emissions. According to the GSMA, in 2023 “62 operators representing 61% of the industry by revenue and 46% by connections had committed to a science-based target of rapidly decreasing their direct and indirect emissions by 2030”. This represents an increase of 12 operators since the previous year’s report. It is likely that given the looming regulatory, societal and consumer pressures, the rest of the industry will follow.

However, setting net-zero targets and reporting on them is only half the battle and does not necessarily translate into a materially lower carbon footprint. Because Scope 3 emissions, by definition, arise from value chain activities, there can be a tendency for organisations to adopt a more passive approach about the issue because if the entire industry is decarbonised, then all telcos have to do is wait and Scope 3 will take care of itself. A different approach is to get into the driver’s seat and play an active role in tackling these emissions. In this report, we argue in favour of the latter strategy. We provide practical recommendations on how telcos can devise and execute winning Scope 3 reduction strategies. We discuss “best” and “next practice” initiatives drawing inspiration from leading telecoms operators as well as our own research.

Table of Contents

  • Executive Summary
  • Introduction
    • As telcos curtail their direct greenhouse gas pollution, they must address the more complex Scope 3 emissions
  • Telcos must become proactive participants in Scope 3 emissions reduction
    • The free-rider problem will slow progress
    • By passively waiting, telcos risk leaving money on the table
    • How can telcos proactively address Scope 3 emissions?
  • Step 1: Choose a reporting framework(s) and set targets
    • Commit to the framework(s)
    • Aim for early adoption
  • Step 2: Develop a system for measurements and progress tracking
    • Start small and prioritise accuracy over breadth
    • Choose a calculation method that makes sense for each emissions source
  • Step 3: Embed Scope 3 into all levels of decision-making and operations
    • Actively engage partners and suppliers
    • Rethink established procurement paradigms
    • Adopt sustainable design and circular economy principles
    • Align KPIs and incentive mechanisms with net-zero goals
  • Conclusion
  • Index

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Ani Keshishyan


Ani Keshishyan

Senior Consultant

Ani is a senior consultant at STL Partners and has been working on a diverse range of projects, mainly in the areas of 5G, automation, and edge computing. She has worked on consulting engagements aimed at helping clients define strategic opportunities, carry out competitor evaluations, develop go-to-market strategies and more.