Sustainability has become one of the key challenges of our generation. Consumers, employees, and regulators are increasingly vocal about their expectations from businesses and want them to demonstrate how they add value to the society. They expect companies to be driven by purpose, operate with the highest levels of transparency and take care of the environment.

In this insight, we focus on presenting the framework that was developed to analyze the top telecom companies ESG strategies in the APAC region.

Key takeaways

• ESG reporting is currently complex, fragmented, and not necessarily aligned to the impact of the industry. This is hindering meaningful action and transformation, as well as limiting the industry’s ability to demonstrate its value to the society.
• According to GSMA intelligence estimates, operators are responsible for around 490 million tonnes of carbon dioxide equivalent (MtCO2e) per year, or approximately 1% of the total carbon emissions in 2021. In general, scope 3 emissions have the largest share and thus it becomes more important for the operators to quantify these emissions and act accordingly.

• Some metrics, such as emissions, e-waste, and workforce diversity, can be compared, but measurement of other criteria, such as data privacy and digital inclusion, is less consistent.
• High quality data and consistent measurement over time are important to instill trust in investors.
• Mobile operators will be well-positioned to enable ESG solutions for their consumers by first addressing and exposing their own organisation’s ESG impact, risks, and opportunities.

Methodology

The telcos have been ranked using an in-house ESG framework developed after discussions with leading industry experts, review of existing ESG literature, reports on major industry participants, industry sources and twimbit analysis.

Steps:

1. Shortlisted 80 network service operators across the Asia Pacific region by revenue
2. Developed informed perspectives on ESG through company reports, published anecdotes, contemporary literature, and press releases.
3. Rated and shortlisted top 10 telcos by screening on the twimbit ESG framework

ESG Framework:

We developed a framework to conduct a detailed evaluation and finalize rankings. The framework assesses how a telco performed based on 3 pillars, 15 parameters and 45 sub-parameters. We initially started off with 120 sub-parameters, but was reduced to these 45 after focusing on some key variables and based on availability of data from most of the operators. All the parameters had a different measure of rating (for e.g., YoY change, initiatives, media statements, telco with best coverage, inclusion etc.). Please reach out to us if you wish to access a more detailed review of the framework workings, the parameters, and ratings.

Top 10 ESG telcos

Exhibit 2 below shows the Top 10 telcos to ace the twimbit’s ESG ratings framework. The ratings are based on a maximum score of 10.

twimbit analysis

Leader in Environment category: Optus

The telecom industry is focusing on GHG emission and waste management. Optus in 2022 has taken tangible steps to achieve its goal for Net Zero carbon emissions by 2025, making good progress on its commitment to reduce absolute Scope 1 and 2 emissions by 2030 using Science-Based Targets. This year they also completed the first assessment of full Scope 3 emissions inventory, an initial step in identifying how they can abate Scope 3 emissions from its supply chain activities.

Best practice: Advocating mobile phone recycling

By hosting collection points in retail stores and including paid recycling satchels in pre-paid mobile bundles.

Leader in Social category: Chunghwa Telecom

Chunghwa Telecom transformed its “Corporate Social Responsibility Committee” into the “Sustainable Development Committee” in 2021, to set medium- and long-term targets for ESG, with set goals such as “green and low carbon, digital empowerment, integrity and transparency”. They continued to promote gender equality and raised percentage of female managers.

Best practice: Using pay parity to drive gender equality

Leader in Governance category: SK Telecom

Governance issues are less sector-specific; areas of focus for the telecoms industry match those of other industries including board diversity, bribery, and data breaches.

SK Telecom formed a Corporate Citizenship Committee (under BOD): As the highest decision-making body for sustainable management of SK Telecom, the Corporate Citizenship Committee was established to ensure that the company practices socially responsible management by making informed decisions about the company’s long-term corporate value, sustainability, and corporate social responsibility (CSR).

In particular, the Committee sets the direction of its promotional strategies and deliberates on its performance in the five key areas of sustainable management – customer-centered management, mutual growth, social value innovation, transparent ethical management, and environmental management. To comprehensively review the company’s mid- to long-term risks and opportunities, the Committee continuously communicates with its stakeholders and identifies major issues.

Limitations of the study

1. twimbit or the analyst does not make any warranty for the accuracy of the data as the information has not been vetted by telcos and therefore, liable for fluctuation.
2. The publication is solely for information purposes over a limited period to provide a perspective on the best ESG practices in Asian telcos
3. The companies might be addressing a few of the sub parameters but are not highly rated since they didn’t provide any quantifiable information regarding the same.

Analyst comments

Key lessons from our ESG leaders on how telcos can embrace ESG transformation:

Telecoms is the fundamental building fabric of the future of nation because digital is what would determine us. The good news for the telecom industry is that we understand the concerns regarding the environmental impact and have made progress in reporting ESG, but telecoms need to redefine what ESG means to them.

The true calling for every telco should go beyond just the ESG. Telcos have four clear additional opportunities to drive a higher purpose in business. Their reporting should include:

• Digital Inclusion: The impact and ability to drive equitable access both with geographical reach as well as the varied demographics of the nation.
• Cybersecurity: Its ability to ensure a secure environment for its citizens and businesses, beyond its own network and customer base.
• Data privacy / protection: Ensuring it safeguards the interests of the consumers with policies to support privacy as well as digital well-being.
• Reducing carbon impact across its customer base: Support its customers achieve their ESG goals.

The KPIs provide a lens through which the industry can identify and manage emerging opportunities and risk, while showcasing to stakeholders how their corporate purpose is realized.