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Enterprise contracts give greater weight to telcos’ sustainability credentials

Large and medium companies are seeking information about telcos’ sustainability measures when awarding contracts, but the industry lacks a standardized approach to presenting data.

Joanne TaaffeJoanne Taaffe
11 Jan 2024
Enterprise contracts give greater weight to telcos’ sustainability credentials

Enterprise contracts give greater weight to telcos’ sustainability credentials

Large and medium enterprises are exerting greater pressure on CSPs to up their sustainability game, as we examine in this excerpt from our recent report The sustainable telco: navigating the maze of Scope 3 emissions.

“[At Colt] over 80% of the customers give ESG quite a substantial weighting within the RFP, and that weighting is anything from about 15% to 25%,” says Kelsey Hopkinson, VP of Environmental, Social & Governance (ESG) at Colt.

Not only are more customers requesting information, but they are also asking increasingly complex questions, says Hopkinson.

BT reports a similar trend. Its customers increasingly ask for detailed information on the footprint of a service based on every minute of a call, or every megabyte of data used. Gathering accurate, comparable supplier data may be the biggest headache for CSPs, but customers also represent a large and complex piece of the puzzle.

“It’s been a big change that customers are asking for [this sort of detail] and it can be up to 30% of an RFP,” says Gabrielle Ginér Head of Environmental Sustainability at BT.

But it’s worth the effort. Telcos with large enterprise-focused businesses say their sustainability practices and reporting have helped them win contracts, even when their services are not the cheapest. This was the case for Orange, says Jean-Benoit Besset, EVP for Orange Group, Corporate Societal Responsibility, which won a contract to provide connectivity to a French organization, which had given sustainability a huge 60% weighting in an RFP.

B2B customers are not only looking at a telco’s Scope 1 and 2 emissions, which will feed into their own Scope 3 reports.

Scope 3 RFP

In total, 45% of respondents to our survey of 68 sustainability executives, working for 50 principally large telecoms operators worldwide, said that more than a quarter of their large and medium-sized enterprise customers request information about their company’s Scope 3 emission targets as part of their RFP (see chart above).

In addition to providing detailed information to large enterprises, there are moves to educate smaller enterprises with less purchasing clout and fewer internal sustainability resources.

In 2020, BT, Ericsson and Telia, for example, teamed up with Unilever and Ikea to encourage the cross-industry development of a net zero supply chain initiative. Part of this initiative includes a SME climate hub platform to give smaller companies information and tools to help them lower their emissions.

Standardizing customer information

Amid the demand from enterprise customers to understand and reduce their CO2 emissions, many telcos are creating dashboards to provide them with information on the carbon footprint of the services they buy. However, dashboards are far from being as standardized and simple to use as, for example, the nutritional guides consumers find on food items.

Indeed, Colt’s Hopkinson warns that the industry risks confusing customers unless it adopts a standardized approach to sharing data about emissions: “Comparing apples with apples is so important. The last thing we want is to all be off in our silos working on something and all coming up with a slightly different answer.”

Having already produced its own manual prototype of a carbon calculator, Colt concluded “we want to be part of the solution not part of [the] confusion when it comes to assigning carbon emissions to a product and a service for the customer,” says Hopkinson.

As a result, it has asked GESi members to work on developing an approach. “We all need to work closer together as an ecosystem and as a sector to really define what those kinds of frameworks and calculators look like, what the inputs are and what the outputs are,” says Hopkinson. “The last thing you want is to deliver something to the customer and then have all of that fine print at the bottom with lots of exceptions and assumptions. It just needs to be much simpler.” Colt is not alone in its concerns. “When we’re all measuring things differently it becomes very difficult for consumers to make informed decisions. I’d like to see more collaboration,” says Telstra’s Program Manager, Sustainability and Responsible Procurement , Simon Antony.

Download our report The sustainable telco: navigating the maze of Scope 3 emissions to find out more.