A thorough environmental, social and corporate governance strategy is no longer an asset; it is a must. In fact, lending with ESG conditions is at all-time highs, with assets expected to hit the $41 trillion mark by the end of 2022, well and truly moving from an investment niche into the mainstream. .
Shocking figures from BCG recently revealed that telecommunications companies were responsible for twice as much carbon emissions as the civil aviation industry. Since then, telcos have launched a plethora of initiatives to help green their industry and achieve carbon neutrality, and it’s clearly not too soon.
However, the priority should not only be to tackle the sustainability gap and move towards net zero, but that the position of the telecommunications sectors at the forefront of technology means that our industry is uniquely well placed to drive greener businesses. With that in mind, here are five key ESG trends in telecommunications that will define 2023.
5G advances sustainability – by design
Much has been said about the powerful technological change that 5G networks can bring to individuals, businesses and society, but a little less has been said about how 5G is intrinsic to sustainability by design.
It is true that the higher data demands enabled by 5G will lead to increased energy needs – possibly as much as double by 2030, with the entire ecosystem having to meet the total energy consumption. of Sweden by then.
But that’s why a third of wireless operators are committed to energy efficiency initiatives in line with the Paris agreement, and there’s a real awareness of that in our industry, with 83% of network who consider energy efficiency very important or extremely important in the network. transformation.
It’s not just the creation of these next-generation networks that needs to be greened: 5G is also expected to have a positive impact on sustainability in other traditionally carbon-intensive industries.
The low latency, huge data capacity and throughput made possible by 5G means that manufacturers can transform the factory into a more productive, less energy-consuming factory with networks of IoT sensors and data analytics that can predict and prevent downtime and manage hardware smarter.
These same principles of low energy consumption and high performance will lead to more sustainable and smarter cities, as planning can be optimized to create green civic spaces with maximum efficiency. And in sectors like agriculture, increasing connectivity without sacrificing battery life should help farmers deploy better crop diagnostics, as well as reduced fertilizer use and smart irrigation systems to save water.
A holistic approach to net-zero – lifecycle view
The increase in electronic and manufacturing waste around the world not only contributes to climate change due to emissions and landfill, but it can also pollute the soil or other ecosystems in the environment near sites. production or waste.
Throughout 2023, the circular economy will become even more crucial to solving these problems.
Manufacturers and operators will need to work together to eliminate waste at the source, as well as reduce the impact of waste around core components.
According to the GSMA, some good first steps include applying environmentally responsible design principles alongside thorough reliability documentation and regulation, as well as channeling greater recycling of components and raw materials into remanufacturing processes.
This includes the reuse and repurposing of existing network equipment: the focus should be on expanding the global used equipment market through greater stakeholder cooperation.
The wider supply chain must incorporate circular principles; it’s not only better for the environment, but it’s also good business. Here, life cycle assessments – i.e. technical assessment of products from cradle to grave – can shed light on the exact footprint of the use of all resources, including water and carbon. .
A strong enthusiasm for connected solutions serving social causes
Better connectivity opens the doors to better social programs everywhere. In a recent study, the United Nations found that it is connectivity, rather than urban migration, that will most effectively contribute to the development of rural areas globally. There are few sectors or services that will not benefit from better connectivity.
Thus, in 2023, we anticipate that involvement in social causes such as improving education with distance learning or health care via teleconsultations will become a key axis of development.
By creating wider access to essential services in typically isolated rural areas, opportunities in these places improve and citizens are no longer cut off from the wider global economy.
While some advances have been made here, one problem with remote services is that local internet connections aren’t up to the job of providing them – but with the relatively simple process of rolling out 5G connections, that barrier doesn’t exist at all. just not.
Poor connectivity in rural or remote areas hampers the ability to enforce law in those areas. Take, for example, illegal logging and poaching in Costa Rica’s rainforests, among the most biodiverse regions on the planet. To combat this problem, Rainforest Connection installed moisture-proof sensors that could recognize the sounds of chainsaws or other signs of logging, connected by 5G.
We believe sustainability cannot be separated from economics. So, at STL, we have been striving to ensure zero liquid discharge at all our facilities in India, with the ambitious goal of becoming water positive by 2030.
Aurangabad, a city of artistic silk fabrics in Maharashtra, India, has not historically suffered from a water deficit, but today, with the amount of industries operating in the region, it does. . The water table is so low that extraction is not permitted by law. To solve this problem, we partnered with the World Bank Water Group to create groundwater recharge – and at the same time create green cover in Aurangabad around our operating units. Although the financial benefits are not immediate, the efforts will contribute to closing the water deficit in the region and therefore reduce the expenses related to the gap between water demand and supply in the future.
A focus on impact investing (social bonds, ESG bonds, blended finance models)
Simply put, impact investing means investing in beneficial social or environmental impact in a way that investors also generate a financial return, covering types of social bonds, ESG bonds and blended finance models .
According to the Global Impact Investing Network, impact investing has passed the $1 trillion mark this year, and it is unlikely to slow down. Investors today are already evaluating companies based on their ESG ratings before making investment decisions, and the fact that companies are increasingly required to disclose their ESG status means this is becoming a key topic. for board discussions. The UK continues to be the center of global impact investing, but we expect this to expand to more activity in other territories.
Climate finance, meanwhile, is gaining traction — with a record $31.7 billion invested in fiscal year 2022 — while green bonds, debt securities intended to finance environmentally friendly projects , are becoming increasingly attractive proposals.
And the Securities and Exchange Board of India has just launched social stock options, which means NGOs can sign up for service stock options – another major indicator of the financial interest in social causes – designed to be a mutually beneficial arrangement that is a source of revenue for corporate financiers while bringing new funding to NGOs.
Stronger global frameworks emphasizing transparency
From the creation of sustainability reporting standards by the IFRS Foundation in the financial sector to the aforementioned social stock option by SEBI and a slew of tech and climate finance announcements at COP 27, we we expect even more of an international and collaborative focus on transparency across supply chains and finance throughout 2023.
But there are many examples of global sustainability partnerships, including in the telecommunications industry. For example, the European Union Commission on Fiber Deployment, the EuropaCable Sustainability Forum, aims to ensure that the cables and wires that power digital connectivity are environmentally friendly and standardized.
Meanwhile, the European Commission imposes sustainability standards globally, and anything imported into the European Union must meet this set of 22 standards.
This ambitious effort by the EC will help combat “greenwashing”, where companies exaggerate their green credentials. But just as GDPR has forced organizations to get their data in order, the emergence of new sustainability standards offers companies the opportunity to stay ahead of regulations and improve their own transparency and disclosure, leading to a greener industry but also to cost savings through greener technologies. Business.