TM Forum

Catalyzing the Telco Transformation: ESG, Decarbonization, and the Path to Net Zero

This year’s Digital Transformation World conference highlighted the telecom industry’s decarbonization progress and pitfalls.

By John I. C. Gomes, Sébastien Meeus, and Olga Martynov

First published on noviembre 10, 2023
min read


Decarbonization is becoming even more urgent for telecommunications leaders. That was a key takeaway from the recent Digital Transformation World conference, “DTW23 – Ignite,” held in Copenhagen. The annual event, organized by TM Forum and supported by partners including Bain & Company, highlighted the growing momentum of environmental, social, and governance (ESG) initiatives and the crucial mission of achieving net-zero emissions in telecoms. The ESG and decarbonization imperatives ESG, particularly decarbonization, stands as the linchpin of the industry's future. About half of telcos expect to achieve net-zero emissions by 2030, according to a Bain and TM Forum survey of industry executives conducted this year (see Figure 1). Notably, 65% of telcos surveyed have developed net-zero blueprints in the last three years, with plans for refreshing them in the near future. Priorities include decarbonizing their own operations, addressing emissions of their suppliers and partners, and embracing circularity in their supply chains. Figure 1: Figure 1 Telcos are investing in decarbonization and are optimistic about their plans Figure 1: Figure 1 Telcos are investing in decarbonization and are optimistic about their plans Figure 1: Figure 1 Telcos are investing in decarbonization and are optimistic about their plans A strategic approach to energy supply and demand complexities is paramount. Telco leaders increasingly recognize that their decarbonization strategy must navigate energy supply and demand intricacies such as energy price volatility, renewable energy maturation, regulatory uncertainty, and technological evolution. Furthermore, a nuanced understanding of circularity in the telecom ecosystem has become imperative. Effective management of resources, from raw material procurement to product design and end-of-life recycling, holds the potential to significantly reduce environmental impact. Companies embracing circularity not only contribute to sustainability but can also cultivate a competitive edge in a rapidly evolving market. Achieving climate-neutral networks Cloud service providers (CSPs) and equipment manufacturers are spearheading transformative actions. These encompass adherence to Science-Based Targets Initiative (SBTi) goals, rigorous baseline measurement, legacy equipment decommissioning (e.g., copper), integration of energy-efficient solutions, adoption of renewable energies, leveraging artificial intelligence for energy efficiency, streamlined field work, and comprehensive climate-focused organizational training. Embracing artificial intelligence and machine learning in network optimization has proved instrumental in achieving meaningful energy savings for leading telcos. Predictive analytics and real-time monitoring can empower telcos to dynamically allocate resources, reducing energy consumption across their operations. Challenges hindering progress Cost pressure looms as the most significant hurdle for decarbonization, demanding a positive business case for substantial capital expenditure. Achieving net zero often requires robust customer buy-in, government incentives, and the intricate balancing of "people, planet, and profits." Inconsistent emissions measurement and information disclosure further complicate matters. Divergent regulations across markets and regions contribute to uneven progress. Nevertheless, the industry is starting to see how the convergence of technological advancement and regulatory support can be a powerful catalyst for sustainable transformation. Public-private partnerships, incentivizing innovation, and collaborative policymaking can accelerate the transition toward a climate-neutral telecom industry. Industry collaboration While progress can be achieved at the individual company level, collective action holds immense potential. Industry innovation showcased at DTW23 – Ignite has delivered hundreds of practical solutions to telco challenges around energy efficiency and people. Bringing together the best minds in the telecom industry to collaborate and cocreate will accelerate breakthroughs. We would argue that a unified industry framework is needed to set the reference points for climate neutrality. This includes agreeing upon common metrics of success, defining the components of a climate-neutral CSP, and illustrating the target state through benchmarks. Telcos can also pool resources for joint research and development initiatives focused on sustainable technologies or advocate for policies that support sustainability. If managed effectively, collaborative efforts in setting industry standards for climate neutrality will amplify the impact of individual initiatives and deliver better business results, thereby accelerating the transition toward a sustainable future. Despite the industry’s decarbonization progress and urgency on display at DTW23 – Ignite, it’s also clear that more work needs to be done—and faster. We remain steadfast in our commitment to decarbonization and ESG initiatives, and we invite all stakeholders to join us on this transformative journey. Together, we are the architects of a sustainable telecom industry, forging a path toward a greener, more connected world.

Decarbonization is becoming even more urgent for telecommunications leaders.

That was a key takeaway from the recent Digital Transformation World conference, “DTW23 – Ignite,” held in Copenhagen. The annual event, organized by TM Forum and supported by partners including Bain & Company, highlighted the growing momentum of environmental, social, and governance (ESG) initiatives and the crucial mission of achieving net-zero emissions in telecoms.

The ESG and decarbonization imperatives

ESG, particularly decarbonization, stands as the linchpin of the industry's future. About half of telcos expect to achieve net-zero emissions by 2030, according to a Bain and TM Forum survey of industry executives conducted this year (see Figure 1). Notably, 65% of telcos surveyed have developed net-zero blueprints in the last three years, with plans for refreshing them in the near future. Priorities include decarbonizing their own operations, addressing emissions of their suppliers and partners, and embracing circularity in their supply chains.

Telcos are investing in decarbonization and are optimistic about their plans

A strategic approach to energy supply and demand complexities is paramount. Telco leaders increasingly recognize that their decarbonization strategy must navigate energy supply and demand intricacies such as energy price volatility, renewable energy maturation, regulatory uncertainty, and technological evolution.

Furthermore, a nuanced understanding of circularity in the telecom ecosystem has become imperative. Effective management of resources, from raw material procurement to product design and end-of-life recycling, holds the potential to significantly reduce environmental impact. Companies embracing circularity not only contribute to sustainability but can also cultivate a competitive edge in a rapidly evolving market.

Achieving climate-neutral networks

Cloud service providers (CSPs) and equipment manufacturers are spearheading transformative actions. These encompass adherence to Science-Based Targets Initiative (SBTi) goals, rigorous baseline measurement, legacy equipment decommissioning (e.g., copper), integration of energy-efficient solutions, adoption of renewable energies, leveraging artificial intelligence for energy efficiency, streamlined field work, and comprehensive climate-focused organizational training.

Embracing artificial intelligence and machine learning in network optimization has proved instrumental in achieving meaningful energy savings for leading telcos. Predictive analytics and real-time monitoring can empower telcos to dynamically allocate resources, reducing energy consumption across their operations.

Challenges hindering progress

Cost pressure looms as the most significant hurdle for decarbonization, demanding a positive business case for substantial capital expenditure. Achieving net zero often requires robust customer buy-in, government incentives, and the intricate balancing of "people, planet, and profits." Inconsistent emissions measurement and information disclosure further complicate matters. Divergent regulations across markets and regions contribute to uneven progress.

Nevertheless, the industry is starting to see how the convergence of technological advancement and regulatory support can be a powerful catalyst for sustainable transformation. Public-private partnerships, incentivizing innovation, and collaborative policymaking can accelerate the transition toward a climate-neutral telecom industry.

Industry collaboration

While progress can be achieved at the individual company level, collective action holds immense potential. Industry innovation showcased at DTW23 – Ignite has delivered hundreds of practical solutions to telco challenges around energy efficiency and people. Bringing together the best minds in the telecom industry to collaborate and cocreate will accelerate breakthroughs.

We would argue that a unified industry framework is needed to set the reference points for climate neutrality. This includes agreeing upon common metrics of success, defining the components of a climate-neutral CSP, and illustrating the target state through benchmarks.

Telcos can also pool resources for joint research and development initiatives focused on sustainable technologies or advocate for policies that support sustainability.

If managed effectively, collaborative efforts in setting industry standards for climate neutrality will amplify the impact of individual initiatives and deliver better business results, thereby accelerating the transition toward a sustainable future.

Despite the industry’s decarbonization progress and urgency on display at DTW23 – Ignite, it’s also clear that more work needs to be done—and faster. We remain steadfast in our commitment to decarbonization and ESG initiatives, and we invite all stakeholders to join us on this transformative journey. Together, we are the architects of a sustainable telecom industry, forging a path toward a greener, more connected world.