The telecommunications industry has undergone a dramatic transformation in recent years. Starting out as primarily a provider of wired voice services, it has now become a crucial component of the global economy, serving as the backbone for various sectors and industries. According to Statista, the US telecom sector was valued at $589.9 billion in 2022. This revenue growth is what capitalists are interested in. But lately, they have been going beyond financial factors, according to a study conducted by Schroders. The company’s Global Investor Study 2022 revealed that 68% of financiers believe sustainable funding is the only way to ensure long-term profitability.
As such, the ESG (Environmental, Social, and Governance) framework has become an essential consideration for telecom companies, in addition to financial factors when making investment decisions. It is not just a nice-to-have, but a critical aspect for evaluating their operations and performance in the long-term.
This article will provide ESG insights from 3 of the most prominent companies in the field.
Insights from top-tier corporations
Based on GlobalData’s comprehensive ESG framework, the following is a thorough and structured examination of the impact of ESG on the operations and strategies of top-tier organizations.
Cisco
Cisco is committed to create an inclusive future for all, and its 2022 Purpose Report shows how this goal is being achieved. The study covers their commitments, goals, advancements, and impact on ESG issues that are critical to achieving Cisco’s purpose and of great interest to its stakeholders.
Environmental: As a leading technology firm, Cisco has pledged to achieve net zero greenhouse gas emissions across all scopes by 2040. The company set a target to decrease emissions in Scope 1 and 2 by 60% by the end of 2022, which was evaluated and approved by the Science Based Target initiative (SBTi). Additionally, they intend to reduce the use of virgin plastic by 20% and foam in product packaging by 75% while increasing the efficiency of product packaging cubes by 50% by 2025.
Social: Cisco has made significant efforts to support social causes and the communities in which it operates through its community programs and the Cisco Foundation. In 2022, the company made cash and in-kind contributions of $494 million toward various initiatives that promote education, digital inclusion, and economic development, and address critical social issues such as poverty and access to healthcare. They also contributed $377 million in-kind to Cisco Networking Academy.
Governance: Cisco maintains an online platform for reporting on its ESG performance. In 2022, Cisco made significant strides in diversity by achieving a 60% increase in representation of African American/Black employees at all levels, from entry-level to manager, compared to their FY20 base year. Building on this progress, the company has set ambitious goals to further increase representation by 25% at the entry to manager level and 75% at the director to VP level by FY23. Additionally, the company has pledged $159 million to support Historically Black Colleges and Universities in the United States.
Ericsson
Ericsson, a leading telecommunications company, is committed to maintaining high ESG standards. To ensure accountability and transparency, the company receives evaluations from multiple ESG rating organizations. Heather Johnson, Ericsson’s Head of Sustainability and Corporate Responsibility, stated that their “sustainability-driven solutions and partnerships create real impact for our customers and our stakeholders”. Ericsson’s sustainability efforts include initiatives such as reducing carbon emissions, promoting fair labor practices, and implementing strong governance standards. By adhering to these principles, the company aims to create long-term value for its shareholders and have a positive impact on society and the environment.
Environmental: Ericsson has set a long-term goal of achieving net zero emissions across its entire value chain by 2040. To accomplish this, the company is currently working to reduce its supply chain and portfolio emissions by 50% until 2030, with the aim of reaching net zero in the same year.
Social: As part of the World Economic Forum-aligned EDISON Alliance 1 Billion Lives Challenge, Ericsson has committed to empowering 1 million children and youth with digital learning and skills by 2025.
Governance: Ericsson further strengthened its ‘Ethics and Compliance’ program to establish a sustainable and effective anti-corruption compliance program, in light of recent news about payments to the terrorist group Isis in Iraq.
Nokia
Nokia believes that digitalization is an essential component of long-term sustainability. Additionally, the organization acknowledges that ESG factors are critical in creating value and new revenue streams. As an industry innovator, Nokia’s goal is to create new competitive advantages while also providing demonstrable benefits to the environment and society.
Environmental: As a member of RE100, a global initiative led by the Climate Group, Nokia has set a target to use 100% renewable electricity by 2025. In line with its Science Based Target Initiative (SBTi), Nokia has pledged to reduce greenhouse gas emissions by 50% from 2019 to 2030. They managed to reduce power consumption by 75%, by launching their next-generation AirScale 5G portfolio utilizing ReefShark technology. Nokia has also tested its Liquid Cooling AirScale baseband solution, which decreases energy consumption by up to 90% (compared to traditional gas air-conditioning systems), in partnership with KDDI.
Social: Nokia plans to bridge the digital divide through technology in both rural and urban areas, with the goal of positively impacting 1.5 million people by 2025.
Governance: As part of its commitment to gender equality and diversity, Nokia aimed to hire at least 26% of female employees by the end of 2021. The company has also signed the Women Empowerment Principle and is collaborating with UN Women on four new projects to promote gender equality and diversity.
Conclusion
Companies must take a holistic and multi-sectoral view of sustainability in order to create value for their stakeholders, including employees, customers, society as a whole, and the environment. As investors demand greater transparency and accountability on sustainability issues, it is important for businesses to develop innovative approaches and strategies to gain a competitive advantage while also benefiting society.
