Activating Climate Change Management in the ICT Industry

Challenges and opportunities in the pursuit of a low-carbon transition
Activating Climate Change Management in the ICT Industry
Publ. date 13 Sep 2022
With the expected growth of the Communication Services industry, concerns related to energy use, product sustainability, and CO2 emissions are expected to increase, too. For this reason, these issues naturally form part of the top priorities of materiality matrixes of organizations in the industry. Developing a climate strategy provides a great opportunity to activate materiality on these topics and ultimately, reduce companies’ impact on the environment. This article explains how organizations can improve their longevity and resilience by identifying and assessing climate risks and opportunities associated with their business and provides practical steps for developing a corporate climate strategy.

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Identifying climate priorities in the communication services industry

For many years, the climate impact of the Information and Communication Technology (ICT) industry has gone relatively unnoticed but the effects are gradually gaining more attention. The industry accounts for 3 to 4% of global CO2 emissions which is about twice that of civil aviation. With the unprecedented demand for digital communication during the pandemic and the deployment of these tools throughout the workplace, digital global data traffic is expected to grow at around 60% per year and subsequently, the industry’s contribution toward global CO2 emissions will increase. The consumption of purchased electricity accounts for a large part of the carbon footprint of companies in the industry, thus, only sufficient energy efficiency improvements and renewables can offset the footprint growth effect.

Purchased goods and services as well as usage of the company’s own products and services are other major factors contributing to a telecom company’s climate footprint and some of the largest contributors to their Scope 3 GHG emissions. One way for operators to reduce Scope 3 emissions is to improve the energy efficiency of user devices provided to customers and integrate climate performance metrics into sourcing decisions.

The climate issue has become an urgent one for telecommunication network operators to consider and reducing GHG emissions through energy consumption reduction, energy efficiency, sustainable sourcing practices, as well as environmental product sustainability is at the core of the industry’s material priorities.

By applying materiality activation and through the implementation of climate strategies, the industry can address these issues and reduce the negative industry effects on human health and climate.

Challenges and opportunities associated with the transition toward a low-carbon industry

Challenges are real but not insurmountable.

  • Although there are diverse challenges to integrating climate activities within the industry, they are overcomeable. The lack of industry-wide agreed standards and definitions for the design of low-carbon products, product return issues, poor awareness of the environmental hazards of e-waste, and limited collaboration across the value chain feature among the list of main challenges posed by the transition toward a low-carbon economy in the industry.
  • Financial challenges such as limited capital resources and high prices of sustainable materials are another challenge. However, the past few years have seen an increase in the creation of debt and equity instruments in favor of the low-carbon economy across private and public markets.

Opportunities are waiting to be unlocked.

  • Capturing value loss is one of the main opportunities for telco companies willing to pursue climate initiatives. This is reflected in a joint study by Accenture and Telia which shows that the global telco industry can, by applying circular principles, unlock value that amounts to $45-80 billion annually by 2030.
  • Other major opportunities include: stimulating innovation and driving business differentiation, capturing new business opportunities throughout the whole value chain, decreasing the necessity to extract new raw materials and other natural resources and consequently lowering energy consumption, waste disposal and CO2 emissions.

Drawing climate strategy inspiration from industry leaders

 

Deutsche Telekom demonstrates a strong climate corporate governance

The company is among the pioneers in the field of climate strategy with the CEO himself overseeing climate-related issues on the board and the whole board being responsible for determining climate change targets and with regularly updates on the progress that are being made towards these targets.

Deutsche Telekom is committed to implementing the Task Force on Climate Related Disclosures (TCFD) requirements and using it as a guide on the organization’s climate journey. As a first step, the company conducted a gap analysis to see to which extent the measures in place already comply with TCFD recommendations. Then, a climate risk analysis was performed using IPCC scenarios on an initial exemplary basis of 500 Deutsche Telekom sites in Germany. The outcomes of these analyses have influenced the strategy of the organization whether it comes to its decision to reinforce its offering of sustainable products and services, adopt a TCO approach to understand climate costs along the value chain, or limit energy consumption in its own operations.

AT&T differentiates through robust targets and supply chain engagement

In line with the TCFD recommendations, the company’s climate strategy and transition plan focus on three areas:

  1. Mitigating impacts by aiming to reach carbon neutrality across Scope 1 and Scope 2 by 2035 in its own operations and engaging with suppliers to have 50% of them setting an SBT on their own Scope 1 and 2 emissions.
  2. Seizing opportunities by scaling efficiencies and enabling low-carbon technologies to enable business customers to reduce their own emissions significantly.
  3. Managing climate-related risks by better understanding and addressing physical and transition risks by means of diverse tools such as a Climate Change Analysis Tool.

Applying key learnings from the ICT sector to get started on the development of a Climate Change Strategy
 

(1) Determine where your organization currently stands on its climate journey

Assess where your company currently stands in its climate journey by making an inventory of all the objectives, targets, metrics, programs, policies, and practices that aim to reduce the company’s impact on the climate and vice versa.

(2) Understand the climate-related risks and opportunities relevant to your organization

Develop a concrete understanding of inside-out/societal impacts related to climate mitigation and outside-in/business impacts related to climate adaptation using the TCFD recommendations.

(3) Develop (or strengthen) the climate strategy

Implement a strong corporate governance of climate-related risks and opportunities and an effective risk management approach, and set metrics and targets for both climate mitigation and adaptation in line with stakeholders’ expectations and the TCFD recommendations

(4) Start value chain conversations on shared climate priorities

The climate challenge requires collaboration to maximize the value created for every unit of resource. In this way, engaging in collaboration across industries, along with key NGOs, suppliers, investors, and business customers to create a low carbon transition across the value chain is essential.

The downloadable Corporate Climate Strategy Checklist at the top of this article is a helpful tool for organizations to get a good view of climate-related risks and opportunities, develop or strengthen a corporate climate strategy, and keep stakeholders engaged along the way.

Interested in learning more about developing a strong climate strategy?

If you would like to know more or require assistance with working on your climate strategy, net-zero and/or science-based targets, or TCFD, get in touch with Gijs-Jan Groeneveld at gijs-jan@finchandbeak.com or call +31 6 28 02 18 80 to discuss how Finch & Beak can support you.

Photo by Beth Macdonald on Unsplash

About Marie Cloarec

Enthusiastic young professional aiming to support companies in improving their commitment to sustainability. | marie@finchandbeak.com

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