Supply chains are the biggest climate headache for European telecom operators


While the European telecommunications sector makes progress in reducing its direct carbon emissions, cleaning up the supply chain remains a challenge.

Scope 1 emissions, those emitted directly by a company’s activity, represent just 3.2% of the carbon footprint generated by Europe’s 15 largest telecom operators by market capitalization, according to S&P data. Global Market Intelligence. Scope 2, indirect emissions linked to the purchase of energy, represent approximately 24.6%. Most company emissions fall under Scope 3, emanating from operations up and down their supply chains, including emissions caused by customers’ use of company products or services.

Not only is Scope 3 the biggest source of emissions, it’s also the hardest to measure and mitigate, climate and industry experts said. “Telecommunications companies need robust models to consistently and accurately measure Scope 3 emissions across the value chain,” said Praveen Shankar, UK and Ireland TMT manager at the consultancy. worldwide Ernst & Young.

Size and range

The 15 largest European telecommunications operators issued 36.6 million tonnes of CO2 equivalent in terms of Scope 3 emissions in 2020, compared to 1.6 million Scope 1 emissions, according to data from S&P Global Trucost. Deutsche Telekom AG, Vodafone Group PLC, Orange S.A. and Telefonica SA have the largest range 3 emissions due to their size.

“The biggest challenge is the vast supply chain. When you’re using big tech items produced by multiple vendors, the key is to collaborate with those vendors,” said Dexter Galvin, global business and supply chain director. procurement at CDP. , a non-profit organization that operates a global disclosure system through which companies report on their environmental goals and emissions.

Some providers are better equipped than others to make the necessary investments for going green.

“We have identified a ‘long tail’ of [small and medium-sized enterprise] suppliers who need help measuring and reducing their carbon emissions,” said Steven Moore, climate action manager at the GSMA, a telecommunications industry association. “The GSMA is working with its members to encourage more industry suppliers to disclose their carbon emissions and set targets through the CDP global reporting platform.”

Multinationals

Companies with operations spanning the continent also face unique hurdles. Vodafone already uses 100% renewable energy to power its European network and aims to be carbon neutral in many European countries before 2030. However, it could face greater hurdles in Africa and Asia, regions that have moved more slowly to reduce reliance on fossil fuels to power their power grids.

Telenor ASA aims to be carbon neutral in the Nordics by 2030, but in Asia it has only committed to a 50% reduction in emissions.

“It’s relatively easier to achieve carbon neutrality when the country’s grid shifts towards more renewables,” Galvin said.

BT Group PLC based in the UKbased in Finland Elisa Oyj and based in the Netherlands Koninklijke KPN NV are among the few European telecommunications operators to meet 100% of their electricity needs from renewable sources. This has helped them achieve climate neutrality in their own operations by offsetting some remaining Scope 1 emissions, such as those from car fleets, through the purchase of carbon credits or certificates.

Open the way

A few companies are leading the way in measuring and reducing Scope 3 emissions.

Swisscom AG, a telecommunications company 51% owned by the Swiss government, aims to become climate neutral across the entire value chain by 2025, 15 years ahead of a typical commitment to the telecommunications sector. To achieve this, it plans to reduce its overall emissions by 90% and switch to a fleet of electric vehicles by 2030. The remaining emissions will be offset by carbon credits. The company claims that all of its devices and subscriptions are climate neutral today and powers its network with 100% renewable energy.

A Swisscom spokesperson told S&P Global Market Intelligence that the company aims to recover 1 million tonnes more CO2 than it uses. “This target allows for a positive CO2 contribution that is four times our company’s emissions,” Swisscom said in an emailed comment.

Sweden’s Telia Co. AB (publ) has pledged to become net zero across the entire value chain by 2030.

Netherlands-based KPN has committed to being net zero in Scope 3 by 2040. The company has been climate neutral on Scope 1 and Scope 2 since 2015 KPN’s interim target is to reduce Scope 1 and Scope 2 emissions to zero by 2030, eliminating the need for it to offset the remaining carbon emissions from today with renewable energy certificates.

UK-based Liberty Global PLC, which has a strong presence in European markets, is the only company among its peers that has not yet made a Scope 3 commitment, although it is considering establishing one. This year. Liberty Global aims to reduce its Scope 1 and Scope 2 emissions to net zero by 2030.

Accelerate action

Broadly speaking, experts say telecom operators are addressing carbon emissions with increasing urgency. To reduce Scope 3 emissions, companies are pushing suppliers to adopt science-based targets and improve transparency around their emissions.

“Sustainability is increasingly being integrated into many telecom company projects,” said Ernst & Young’s Shankar. “It’s starting to become an integral part of the overall business strategy.”

For example, BT requires its suppliers to comply with environmental and human rights sourcing standards. BT suppliers with a contract value over £25m must set a science-based net zero target. The contracts also include a carbon reduction clause, with 10 BT suppliers already signed up and many more to come, the company said.

Deutsche Telekom includes sustainability criteria in its supplier selection process, which is currently weighted at 10%, although the company wants to increase this criterion to 20% for all tender processes.

“There is always more that can be done, but it is clear that there is a will throughout the sector to stay at the forefront of the debate, to be a leader in the conversation and to continue to push limits to accelerate action,” the GSMA said. Moore.

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S&P Global Trucost is part of S&P Global Sustainable1.

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