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Telcos can boost revenue through decarbonisation efforts
Reducing carbon emissions by working remotely and digitisation can increase telco revenues.
As the pressure on companies to achieve net-zero emissions grows, telecommunications companies have a unique opportunity to boost their revenue and enhance their operating models. A recent report by Bain & Company outlines four key areas of significant business opportunity for telcos that take full advantage of decarbonisation.
First, climate change will likely increase the usage of telecom services, which could boost telcos' revenue. Second, telcos should be able to make operational improvements to reduce their costs, more than offsetting the operational cost pressure that will come from higher usage of their services.
Third, there is evidence that consumers are willing to pay a premium for greener services, and telcos can create additional revenue streams through new products and services that play a significant role in helping companies decarbonise. Lastly, telcos can count the reductions in emissions from their customers as offsetting their own carbon footprint.
However, most telcos are far from decarbonising their own operations, let alone developing new revenue streams from helping customers reduce their emissions. Telcos only started considering the operational impact of emissions in recent years, and most employees tasked with implementing sustainability initiatives have limited familiarity with sustainability terminology and best practices.
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The processes and tools required for measuring and tracking sustainability metrics are also new and evolving, and adoption has been limited, according to the report.
To achieve net-zero emissions and capture the business opportunity that climate change presents, telcos need to focus on three things: do their research, develop a blueprint, and adapt the operating model. Leading companies jumpstart the process by creating a checklist of critical questions that need to be addressed before kicking off the decarbonisation effort.
With this baseline information in hand, companies are better positioned to set clear emissions reduction targets and define a clear plan to create business value through decarbonisation. Executing the plan will require modifying the company's operating model, which is the most complex task on the list.
Bain & Company recommended that telcos move quickly and follow through on their decarbonisation commitments to strengthen their company and catalyse wider efforts to overcome the climate challenge.
Telco executives can use their public decarbonisation commitments to set the tone and encourage partners to follow their lead. They could also pressure suppliers to reduce emissions through financial incentives or penalties, or by making it clear that the telco will switch to greener suppliers if the current supplier doesn't step up its decarbonisation efforts.
Furthermore, telcos can work together in industry groups to reduce Scope 3 emissions, such as by coordinating to increase network equipment reuse and recycling and implementing shared technology standards that allow for software upgrades to extend equipment life cycles.
"As customers use telecom services to reduce their own emissions, telcos can track these reductions and count them as offsetting the telco's own carbon footprint—an emerging metric called Scope 4 emissions," the report read.
"These avoided or reduced emissions have the potential to support a stronger market valuation for telcos as they become more widely tracked and recognised," it added.
