Tag: net-zero

How to embed sustainability across a telco

Why telcos must embrace sustainability

On a macro level, the need to focus on sustainability is clear. We need to use the world’s finite resources more efficiently. They are depleting, and this is an existential threat to us and the planet. Governments and businesses are beginning to understand that the onus is largely on them to bring about the necessary changes. Telecoms operators have a vital role to play in this effort, as outlined in our vision for the Coordination Age.

For businesses, the need to embrace sustainability is no longer abstract, and the consequences of not doing so are now material. Telcos are acknowledging that their future success is linked closely to their ability to be credible and resilient with regards to sustainability. Increasingly, a more sustainable company is going to be a more valuable company. We can already see this; companies that are focusing more of their efforts on sustainability are performing better financially. Things will continue to shift in this direction. Each year sustainability is moving higher up the global agenda and climate action is becoming ever more imperative.

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All telecoms’ stakeholders have a vested interest in sustainability:

  • Customers – primarily enterprises – but also some consumers, want to purchase sustainable products so they can demonstrate progress towards their own net-zero targets or rest assured that they are taking responsibility and contributing towards a sustainable future. Nearly all operators we spoke with for this research reported rising demands to prove sustainability credentials in customer request for proposals (RFPs).
  • Employees want to work for a company that is sustainable and gain a sense of purpose from contributing to their company’s sustainability A recent survey from IBM found that 67% of respondents are more willing to apply for jobs with environmentally sustainable companies, and 68% are more willing to accept positions from such companies.
  • Governments are increasingly more prepared to help companies that are sustainable in the form of tax incentives, grants, loans and subsidies. The US government recently announced nearly US$400 billion in federal funding as part of its Inflation Reduction Act, much of which is aimed at tackling climate change. The European Commission has also adopted a package of proposals labelled The European Green Deal, and there are talks of further measures being adopted in response to US legislation.
  • Regulators will also increasingly favour companies that are sustainable and hurt companies that are not. Governments have their own ambitious net-zero targets, for instance the UK targets net-zero by 2050. They are likely to begin enforcing stricter regulations as they try to meet these targets.
  • Ultimately, all of this means that shareholders and investors are beginning to put pressure on companies to be sustainable, because the consequences of avoiding it will be too costly to a business over the long term.

There may be some very short-term gains to be made by sidestepping and ignoring sustainability, but these will quickly disappear. Even in the medium term, companies that cannot demonstrate concrete progress on sustainability will struggle to compete.

As Figure 1 demonstrates, getting to net-zero is not straightforward. Telcos that still have low hanging fruit to capture, such as AT&T and T-Mobile, can make faster progress, but those that are further along in their journeys such as BT and Telefónica must now work towards more incremental gains. Other operators risk facing rising challenges in sustainability depending on their strategies, as illustrated by Softbank which has pursued an aggressive M&A strategy to expand beyond telecoms since 2019. This reinforces the importance of ensuring buy-in and commitment at the C-suite and across the whole organisation.

Comparing carbon emissions of major telcos

Source: STL Partners

This report focuses on how to embed sustainability across key telco areas, including the sustainability team, the C-suite, network operations and IT, procurement, the consumer and enterprise units and the finance unit. Each section identifies key actions that these units can take and associated KPIs they can adopt in order to catalyse and measure progress. The research is based on interviews with eight telecoms operators globally as well as extensive analysis of telecoms sustainability initiatives.

Table of contents

  • Executive Summary
  • Why telcos must embrace sustainability
  • Sustainability team: Direction and agenda
    • Developing sustainability targets and agenda
    • Working towards sustainability targets
    • Facilitating and coordinating change
  • C-suite: Vision and structure
    • Vision building
    • Structure
    • Incentives are crucial to delivery on commitments
  • Sustainable network operations and IT
  • Sustainable procurement
    • Circular economy
    • Identifying sustainable suppliers and educating SMEs
    • Fair working practices
  • Sustainability in enterprise and consumer units
    • Delivering services in more sustainable ways
    • Sustainability-enabling products for enterprise
    • Helping consumers become more sustainable
  • Sustainability is now integral to telco finance and investment
    • Future proofing telcos
    • Green finance
    • Appealing to ESG investors
  • Index

  • Related research

  • Driving sustainability in telco metro networks
  • Telecoms sustainability scorecard
  • Net-zero enablement use case directory

Driving sustainability in telco metro networks

Against the backdrop of the recent energy crisis, there is a new sense of urgency around energy consumption and sustainability. Enterprises are doubling down on their green targets, in many cases accelerating plans for an ambitious endgame – net-zero emissions. As we have covered extensively in previous reports, the telecommunications industry is not an exception to this. In this report we explore how telcos can drive sustainability in their metro networks.

Telecoms operators face a particular challenge in that they have experienced and anticipate future high levels of growth in traffic (20% to 40% per annum). Furthermore, consumption patterns are changing with even higher levels of traffic growth originating and terminating within the metro network. The metro network (sometimes referred to as access and aggregation) is the section of communications service providers’ (CSPs) network between the last-mile access and the core backbone. STL Partners estimates that metro network traffic will increase threefold to 2030. This is driven by:

  • growth in demand for increasingly immersive user services
  • proliferation in high-bandwidth connections to machines, vehicles and sensors
  • the deployment of multi-edge compute (MEC) infrastructure and applications
  • the need to support next-generation services to support the above.

In light of CSPs’ net-zero commitments, the significant growth in traffic across the metro network makes it imperative to drive down energy use and associated emissions (including embedded greenhouse gas emissions) to make the metro network sustainable. The challenges faced in the metro network are not dissimilar from those faced by cloud providers – massive growth in scale coupled with ambitious sustainability commitments. While cloud providers have already been addressing these challenges, operators have typically been further behind. Our research, therefore, sought to address the question:

How should operators better incorporate energy and sustainability goals into their metro networks: applying cloud principles and lessons from leading operators?

To understand telcos’ sustainability efforts, we conducted an interview programme with key decision-makers at Tier-1 and Tier-2 operators across North America and Europe. We focused our conversations on telco networks and how they are designed, built and maintained to address both near and long-term sustainability challenges, with a special interest in operators’ metro networks.

In the interviews, we asked operators about their strategies to reduce Scope 1 to 3 emissions, which are defined as:

  • Scope 1 emissions: Direct emissions from day-to-day operations, e.g. fuel combustion, coolant leakages
  • Scope 2 emissions:Indirect emissions from electricity suppliers, e.g. to power metro networks and facilities-supporting infrastructure (heating, aircon, uninterruptible power supply, etc.)
  • Scope 3emissions: Indirect (non-energy) emissions e.g., embedded carbon from suppliers of equipment and services (e.g., civil works, equipment in metro locations, trucks).

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Classification of greenhouse gas emissions reporting

The interviews confirmed our initial hypothesis: sustainability is a growing concern for operators and there is significant work to do:

  • All operators in our interview programme confirmed that they are on a path towards decarbonisation, but where they are on their journeys varies significantly from operator to operator and from region to region.
  • European operators tend to have more established approaches to sustainability and are particularly focused on energy use given the current energy crisis affecting the region:
    • Going green is both a cost imperative as well as ‘the right thing to do’ for European operators, in addition to the stringent regulatory environment in which they operate.
    • On the one hand, this is a positive change as it has raised the profile of energy efficiency which is now increasingly seen as an executive-level agenda item.
    • However, there is also a hidden impact: telcos are pushing hard on energy and Scope 2 But at the same time, this has deferred the operators’ efforts to reduce their embedded (Scope 3) emissions which is the biggest contributor to their overall carbon footprint (Scope 3 accounts for 80% to 95% of most operators’ total emissions).
  • The North American operators were less focused on the cost of energy, and therefore in reducing it through greater efficiencies, but nonetheless were aware of the need to meet the ambitious net-zerotargets that they have set.

In this report, we will discuss our learnings from closely watching the industry and speaking to the leaders driving operators’ efforts. The four main sections of this report discuss what we are referring to as common practice, best practice, and next practice strategies and actions that operators are pursuing to meet their sustainability goals, with a particular emphasis on their activities within the metro network. For operators to meet their targets, they will need to go beyond the low-hanging fruit of common practice and focus on the additional initiatives they will need to start adopting. Operators already undertaking best practice initiatives should focus on next practice. Less mature operators should take lessons from those further ahead in their net-zero strategies and aim to cover the best practice initiatives of their peers. All operators can also borrow concepts from other industries, notably cloud providers. Ultimately, without taking on the tougher challenges in their access and metro networks, operators will miss their net-zero goals.

 

Table of contents

  • Executive Summary
  • Introduction
  • Common practice: Where are metro network operators focusing their sustainability efforts?
  • Best practice: Applying cloud principles to metro networks
  • Next practice: What future measures need to be incorporated into current thinking?
  • Recommendations for operators: Identifying the right tools and methodologies

 

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