Who’d have thought that two decades after the connectivity boom at the turn of the century, sustainability and net-zero would be the key drivers of innovation within the telecommunications industry? It stands to reason that one of the most technologically advanced sectors on the planet should be leading the charge on environmental initiatives, particularly when that industry is responsible for a staggering 3% of humanity’s total carbon emissions.
But what shape do those environmental initiatives take? More than 90% of a telco’s average network operating budget is spent on energy, making them some of the most energy-intensive companies in their respective geographic markets. That energy, at least for now, comes at great cost to our planet. It’s one of the reasons global telecom network providers are expected to rollout nearly 121.9 GW of cumulative distributed renewable energy generation technologies by the end of the decade, but this is just one spoke in a very large wheel.
Telcos can, and should, be looking at a variety of ways to limit their impact on the environment, including investment in renewable sources of energy and ways to make their operations more energy efficient. But the unsung hero of the ‘E’ in Environmental, Social and Governance (ESG) might well be sustainable sourcing and its role in creating circular supply chains.
The case for sustainable sourcing
According to the UN, sustainability means “meeting the needs of the present without compromising the ability of future generations to meet their own needs”, and one of the central pillars holding up this ideal is the ability to reuse what would otherwise be wasted and create more “circular” supply chains.
Of all the moving parts that make up a company’s ESG strategy, supply chain management arguably has the greatest short-term impact on the environment. Supply chains can be monitored and tweaked in a near-constant state of optimization, factoring in everything from shipping and logistics to the sourcing of materials and how they are manufactured. How a telco chooses to source its materials and ship them around the world can have an enormous impact on its environmental footprint.
Take the current global shortage of fiber optic cabling for instance. Demand for fiber-to-the-home (FTTH) rollouts has reached an all-time high, putting immense pressure on the fiber production process. Raw materials such as helium and polymers are in short supply, extending production lead time in places like the US to more than a year in some cases. That’s barely sustainable in terms of business, let alone the environment. Those service providers that are able to source fiber optic material they need will still be struck by other factors like talent shortages, rising energy costs and global supply chain disruption. The industry needs to start thinking more seriously about sustainable sourcing as a way of relieving this pressure, and thankfully that’s already beginning to happen.
Creating a sustainable economy
There are almost 30,000km of optical fiber cables connecting us around the world. Not only do these data highways and their respective hubs require a lot of energy to run, they also require a lot of materials to maintain. Parts of the fiber optic data highway need to be removed and replaced at regular intervals to keep our phone lines buzzing and our laptops pinging. No matter how good a telco’s supply chain is with regard to the manufacturing of handsets and other devices, this tends to be where things break down. Perhaps if telcos could circle this particular square, they might be able to offset some of the burden they are currently placing on the environment – while lifting their bottom line.
Telcos need to look at the environmental impact in the round. Partnering with manufacturers that embrace sustainability initiatives, such as product life cycle assessments (LCA), green and durable product designsand “zero waste to landfill” strategies, will not only help the environment, but make it easier to weather global supply chain issues. Similarly, opting for ‘hub and spoke’ style supply chains will help to streamline inventories, reduce costs and improve lead times, while greatly reducing carbon emissions.
Winning hearts and minds
Subscribers are another reason telcos need to place sustainable sourcing at the top of their ESG agenda. Now, more than ever, sustainability matters to people. According to a post-pandemic survey by Deloitte, roughly a third of the world’s consumers claim to have switched brands due to an ethical or environmental concern. Of all of those concerns, which include everything from carbon footprints to human rights, waste reduction was number one. Waste isn’t something typically associated with the telecommunications industry, because all of its interactions with customers tend to be digital. A customer can hold a product and decide that its design or packaging is wasteful, but subscribing to a mobile network is a far less tactile experience.
But that doesn’t mean telcos are off the hook when it comes to waste produce. A 2021 survey revealed that almost half (46%) of telco subscribers say that sustainability is now either “important” or “essential” when it comes to their choice of provider. It’s clear that in order to win over hearts and minds, telcos are going to need to do more than greenwash their agenda with paper-straw gestures. To secure tomorrow’s subscribers, the industry needs to turn its attention to sourcing, supply chain structure, as well as lowering its energy consumption.
The telecom industry still has a great distance to travel when it comes to achieving net-zero, but by spreading their effort across their supply chains, as well focusing on their energy efficiency targets, telcos can move the ESG needle further and faster, winning tomorrow’s subscribers and securing their bottom lines long into the future. Sustainable sourcing is going to play an increasingly important role in ESG initiatives around the world, and the telco industry is no exception.
