ESG (Environmental, Social and Governance) is becoming a popular acronym in the business world. But what does it mean, and how does it affect telcos?

This blog discusses the importance of ESG ratings, what they are and their impact on the telecommunications industry. Telecommunications companies naturally share increasing social and environmental risks. These include factors such as energy use, emissions, impact on equipment life, water use, privacy, network stability, human resource management and corporate citizenship. It is important for telecommunications companies to consider these factors in order to maintain their reputation and meet the expectations of their diverse customer base. More than just a good practice metric, ESG ratings are increasingly important as an indicator of an organisation’s future success.  

What is ESG?

ESG (Environmental, Social and Governance) is a rating used to assess a company’s performance in areas related to environmental impact, social responsibility and corporate governance. Telecommunications companies face increasing social and environmental risks, including energy use, emissions, impact on equipment lifespan and water consumption. Other risks include data protection, network stability, human capital management and corporate citizenship. 

While these factors may seem overwhelming, it’s important for telecom companies to take note of them in order to maintain their reputation and meet the expectations of their diverse customer base. ESG ratings not only reflect good practice, but they are also important indicators of a company’s long-term sustainability and ability to navigate risks and capitalise on opportunities in a rapidly changing business landscape. 

Who uses it and why?

ESG ratings are used by a wide range of stakeholders, including investors, analysts, regulators and consumers. Investors use ESG ratings to identify companies that are well-positioned to deliver long-term returns, while analysts use them to evaluate a company’s overall performance. Regulators use ESG ratings to assess the environmental and social impact of a company’s operations, and consumers use them to make more informed purchasing decisions. Ultimately, it is linking good business practice and success in a transparent and inspirational way. Who wouldn’t want to get on board with that? 

Telecom companies are particularly exposed to ESG risks and opportunities. For example, the increasing demand for mobile data and the rollout of 5G networks is driving the need for more energy-efficient infrastructure and sustainable sourcing of raw materials. At the same time, telecoms companies also face significant social and governance risks, such as data privacy concerns and the need to foster a diverse and inclusive workforce.   

As awareness of the importance of sustainability grows, ESG ratings are becoming a key factor in purchasing decisions. With a weighting of 10-20% in such decisions, it is more important than ever for telecoms companies to focus on sustainability. Companies such as Colt, Telstra, T-Mobile, Orange and Telefonica are in the top 10 most sustainable telcos and have set ambitious targets for reducing their carbon emissions. They are investing in renewable energy sources and services to help achieve those goals.

How are we helping?

Here at TXO, we are committed to helping our customers achieve their sustainability goals, through our green marketplace and through services that extend the life of telecommunications equipment. 

We are proud to have received a gold rating from EcoVadis, an independent third-party organisation that evaluates companies on their environmental, social and ethical performance. This rating recognises our commitment to reducing our environmental footprint, promoting fair labour practices and ethical behaviour and ensuring strong corporate governance adherence.

What are you waiting for, improve your ESG rating through TXO’s sustainable services by contacting our friendly team. We’re here to help!