CSPs under growing pressure to comply with enterprises' sustainability objectives

Communications service providers (CSP) say they are seeing a clear shift in the way enterprise customers are addressing sustainability requirements in RFPs, with sustainability emerging as a key strategic pillar over the past few years.

Jérôme Goulard, Chief Sustainability Officer at Orange Business, said an increasing number of customers now include environmental, social, and governance (ESG) criteria on the same level as technical performance or price in their RFP scoring.

“Frequently requested requirements include the estimated CO2 impact of our products and services, our commitments and action plans to net zero, and (increasingly) a designated sustainability manager to monitor related KPIs during contract execution,” Goulard said.

Sarwar Kahn, Head of Digital Sustainability at BT, said the UK-based group has also seen an increase in business customers setting sciencebased net zero targets.

“As a result many of them are looking into the emissions impact of their supply chain. As we are regarded as a strategic supplier due to the importance of connectivity, many of our customers are approaching us part of existing contracts or in RFPs to explore” BT’s sustainability credentials, Kahn commented.

Deutsche Telekom’s enterprise unit T-Systems similarly noted that there is an increasing requirement to help corporate clients become more sustainable, from consulting and strategy to the operation of innovative technologies.

According to a spokesperson, T-Systems “helps in making decisions when it comes to climate neutrality and environment, as well as combining ecological measures with progress and business success.”

Angela Vacca, Senior Research Manager for Customer Insights & Analysis at IDC, observed that as companies recognize the business benefits of a digital-first strategy, sustainability is “gaining center stage, especially across European companies operating in the manufacturing, transport, and utilities industries.”

According to IDC, pending on sustainability is expected to grow by 23.8% CAGR to 2026 in Europe, driven by strong regulation, stakeholders’ increasing expectations, and initiatives to cut costs due to the energy price hikes brought on by the Russia-Ukraine War,” the research company said.

IDC predicts that overall European spending on digital transformation will exceed $550 billion in 2023, a year-on-year increase of 15.9% from 2022, and will continue to grow with a CAGR of 16.6% from 2021 to 2026.

Sustainability credentials

CSPs are naturally keen to build their own sustainability credentials in order to meet the demand from enterprises to support ESG objectives.

Goulard said Orange Business has several credentials “to demonstrate our strong commitments and recognitions around sustainability.”

Here, he points to the CSP’s EcoVadis “Platinum” score, meaning it is in the top 1% with a score of 82/100. The EcoVadis Rating covers a broad range of non-financial management systems including environmental, labor and human rights, ethics and sustainable procurement impacts.

Orange also has an A rating from the Carbon Disclosure Project (CDP) and an ISO 14001 certification for some of its main sites around the world.

“In addition, we have launched a program called CALIPSO (CALculation of Impact Products & Services at Orange Business) to estimate the carbon footprint of our solutions for inclusion in customers RFPs. This requires expertise in CO2 methodologies across various domains (network, application development, LAN, collaboration services, mobile, etc.) where no official ‘standard’ exists today,” Goulard added.

BT has achieved similar EcoVadis and CDP ratings. According to Kahn, 100% of customers now request credentials data, while 55% ask for service-specific emissions and 20% are seeking carbon-neutral products.

“In my view based on the trends over the last 15 months, new regulations, such as CSRD in the EU, mandatory disclosure requirements in the UK, as well investor-based ESG assessments, are causing an increase in customers engaging us on sustainability. We expect this to grow exponentially,” Kahn said.

Tools of the trade

CSPs are also developing sustainability-focused tools and services to help customers in different industry sectors.

T-Systems said its Low Carbon Mobility Management Service for the logistics sector “provides direct feedback and information about the impact of fuel consumption and CO2 emission. This enables an improvement of driving behavior and eco-friendly route planning: it reduces air pollution, saves costs and increases traffic safety.”

The service provider also offers Airport Collaborative Decision Making for transportation, enabling a “better coordination between the airport, air traffic control, ground handling services and airlines. It reduces CO2 emission and fuel reduction through improved pre-departure sequencing. This also saves time and reduces delays in air traffic flow management.”

Other services include the Cloud Shopfloor Intelligence Service to provide digital transparency of the entire production process in the manufacturing sector.

In addition, T-Systems worked with 20 municipal administrations in Spain to develop Syrah Sustainability, a configurable dashboard that allows public and private organizations to define, visualize, measure, and monitor sustainability indicators in order to meet the Sustainable Development Goals (SDGs) defined by the United Nations.

BT recently unveiled new tools to enable multinational customers measure and optimize the carbon impact of running applications and cloud workloads across their network. The Carbon Network Dashboard is designed to provide a real-time view of power consumption, while the Digital Carbon Calculator helps customers estimate their network’s carbon footprint.

According to Kahn, “with customers hosting more of their applications across multiple clouds, networks are now increasingly vital for all elements of business performance, including carbon impact. Our new tools empower customers to reduce their Scope 3 emissions by optimizing their network or scheduling digital workloads when renewable energy is available, helping them to achieve their net zero goals.”

Cleaning the wider supply chain

Telcos are also applying pressure on their own suppliers to help reduce their scope 3 emissions, according to a new report from MTN Consulting. A typical telco has thousands of suppliers, across hundreds of categories of products and services, with Deutsche Telekom clocking up more than 25,000 in 2022 (using a broad definition) while the smaller Singtel has in excess of 5,000, notes MTN Consulting. The research company estimates that telcos spent a total of about $1.241 trillion in 2022 on external purchase of products worldwide.

But not all purchases have equal environmental impact. Network infrastructure, which accounted for only $236B of the total spend, accounts for a disproportionate share of the carbon footprint, with hardware suppliers tending to dominate.

Examples in the report of the operators taking action include Deutsche Telekom, for which carbon footprint is a key criterion when procuring technology hardware and software. Telefonica, meanwhile, has held an annual sustainability-related conference for its top suppliers since 2010. And Airtel has incorporated sustainability topics into its annual supplier event, Airtel Confluence.

However, MTN Consulting points out that the industry lacks a unified framework for telecom sustainability reporting or uniformly adhered-to targets. And when it comes to applying pressure on suppliers, often telcos rely on one-on-one interactions via climate questionnaires, working groups, and training sessions — an approach the consulting firm warned is "not scalable or sustainable."

For now, the pressure on vendors looks set to grow. And even though not every telco puts huge store on improving its carbon footprint, as MTN Consulting points out “vendors with low scores may still win bids, but they will win more with higher green grades.”