Many companies, including telecom operators, have been voluntarily producing annual
environmental, social and governance (ESG) reports based on various standards for some time. The Global Sustainability Standards Board (GSSB) Global Reporting Initiative (GRI) largely guides ESG reporting, with other metrics and standards added over time. Initially, ESG reporting was entirely voluntary, and companies would independently decide what areas, goals, and metrics to report. The benefit of this was that it allowed for focused sustainability reporting where operators could highlight areas or goals where they were investing and making positive progress. The downside of this approach was that it assumed the reported areas were the only areas where a company was having an impact, which enables negative impacts to go unreported. With sustainability becoming a greater priority for organizations in recent years, a new challenge has emerged. How can stakeholders, investors, employees and potential customers compare one company to another on sustainability given the significant differences in reporting between companies?
United Nations SDGs:
Reporting on sustainability changed in 2015 when the United Nations announced the
Sustainability Development Goals (SDGs). Many operators made commitments to support the SDGs, which meant a section reporting progress towards the SDGs was added into the annual ESG reports being produced by organizations. Although the SDGs shed light on specific standards, there is no clear structure for reporting. It soon became clear that the SDGs did not apply equally to all industries, and different industries would require different metrics for each goal.
In the telecom industry, the lack of standardization meant that operators independently decided on which SDGs to report, with the decisions being driven by local, regional, national, and individual operator priorities. This resulted in telecom operators reporting on progress toward various SDGs and metrics. The significant differences between sustainability reports makes any kind of comparison problematic.
Competition & Comparison:
Sustainability is a major consideration for investors, clients, customers, employees and analysts today, which has led to rating companies, media outlets, analysts, and commentators releasing lists, such as “Top 10 Most Sustainable Telcos” or “Top 5 Telcos for Sustainability in Path to Net Zero”. These lists are now being used as a differentiator by telecom operators, eager to highlight their sustainability achievements, which is driving a competition to be seen as a sustainability leader. It is not always clear what criteria are being used to generate these lists, but the desire to be highly rated for sustainability has prompted some thought leading telecom operators to reconsider how they do their reporting. They may consider if they should evolve their current sustainability reporting to include goals and metrics that are more commonly reported throughout the industry, even if that means expanding their reporting to include data and metrics that are beyond their current priority areas for sustainability investment.
There is a mounting body of evidence that these lists and their associated ratings and rankings matter because they are influencing customers, investors, employees, and regulators. 90% of Gen X consumers said that they would be willing to spend an extra 10% or more for sustainable products, compared to just over 34% two years ago.” Investment organizations, ranging from equity firms to pension funds, increasingly have a percentage of their capital allocated for “sustainable investments”. Sixty-two percent of personal investors take sustainability into account in their portfolios.
What are organizations doing about it?
Leaders in the telecom industry are now more carefully considering sustainability reporting, and whether or not it should be standardized across the industry. Implementing this approach for the SDG reporting section of an operators ESG report would require a template of the most reported SDGs and associated metrics for the telecom industry, which would enable consistent measurement of progress towards the SDGs over time and more accurate comparisons. An industry template may also reduce any perception of greenwashing, or reporting only “good news,” which can happen when only a small set of SDGs are reported, or on the flip side, an operator not highlighting significant progress on goals and metrics they hadn’t previously considered to report.
