Media and telecoms can lead the charge in sustainability

Grit Young looks at how the technology, media and telecommunications sector is balancing big energy demands with growing sustainability goals, stronger leadership and a push for greener progress

The technology, media and telecommunications (TMT) sector faces something of a conundrum in relation to sustainability.

On the one hand, it plays a key role in facilitating the transition to a low-carbon economy; on the other, it is responsible for an increasing proportion of global emissions.

This poses a particular challenge for a sector that has long been seen as one of the cleanest industries due to its low level of direct emissions. Its impact largely arises due to electricity consumption.

In a 2022 report, the UK parliament’s POST Research Team found that the industry accounted for an estimated four to six percent of global electricity use.

Increased focus translates into action

Set against that backdrop, the findings of the EY State of Sustainability report must be seen as very heartening. Some 80 percent of respondents reported a significant increase in focus on sustainability in their business in the last year, while 81 percent said stakeholders are increasingly inquiring about their organisation’s sustainability impact.

This has translated into concrete actions, with 71 percent of the organisations surveyed having an approved and implemented sustainability strategy in place.

Almost the same number (70 percent) described their focus and actions on sustainability as established or industry-leading, while just 10 percent said it was at a basic level.

In addition, a significant majority (71 percent) have carried out risk and materiality assessments to identify the key sustainability issues which the business needs to address.

In 60 percent of cases, the sustainability strategy is aligned with the business’s overall corporate vision. That alignment is critically important as it reduces the prospect of sustainability efforts falling by the wayside in the face of competing business priorities.

A significant proportion of respondents have seen an immediate return for those efforts, with 59 percent saying they have had a positive impact on the bottom line. In some cases, at least, this appears to have come as a welcome but unexpected bonus, with just 12 percent citing the ability to increase profits as a driver of sustainability efforts.

Interestingly, despite the sector’s growing emissions footprint and the increasing importance of the issue to stakeholders, only 13 percent said their sustainability efforts were motivated by a desire to do good for the environment.

The key drivers were the views of customers, with 85 percent of respondents saying the sustainability of their products or services was very or extremely important to customers and 75 percent saying the same for their business operations. Meeting the expectations of existing customers appears to be the primary focus, with just 10 percent pointing to enhanced appeal to more customers as a key driver.

Access to capital and finance was another key factor, with 59 percent of respondents linking this with an ability to demonstrate that their business is more sustainable.

Legislative and regulatory compliance was some way down the list, being cited by 28 percent of respondents.

It should be noted that the research for this study was carried out prior to the publication of the EU Omnibus Package which has proposed significant changes and delays to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This may result in an even lower priority being placed on regulatory compliance.

Progress towards net zero

A refreshing degree of realism was in evidence in relation to the ability to achieve net zero targets. While 60 percent of respondents said they have a net zero science-based target in place, 28 percent said it was not at all likely or quite unlikely that they will achieve it. Just over half rated their success prospects as very or extremely likely. Those findings, while disappointing, were expected as only 36 percent of respondents said their organisation had a clear roadmap to achieve net zero.

In the absence of a strategy or plan, a successful outcome is very unlikely.

Much of the TMT industry provides services rather than goods, which makes road mapping and articulating strategy and efforts more difficult to do tangibly. This challenge may explain the respondent’s view of their organisation’s roadmap and strategy (or lack thereof).

Also disappointing is the 12 percent of organisations that do not have a goal at all. There does appear to be some recognition that businesses could and should be doing more with 35 percent of respondents saying they don’t believe their organisation is taking the issue seriously enough.

More positively, 50 percent of respondents said it was very or extremely likely that their organisation could reach net zero by 2030 if such a target were imposed on them.

In that context, 29 percent of respondents said they are looking to improve their position on sustainability by merging with or acquiring another company. The issue is also influencing M&A decisions with 30 percent saying they are increasingly assessing the sustainability status of target companies.

Organisations are also reaching into their supply chains in their efforts to improve sustainability performance with almost two-thirds of respondents rating their level of engagement with suppliers in relation to ESG impacts and dependencies as either established or market leading.

Leadership and accountability

On a much more positive note, more than two-thirds (70%) of TMT businesses have appointed a dedicated individual with responsibility or accountability for driving the sustainability agenda. Very encouragingly, 60 percent of respondents say that the individual is at C-suite level, with the managing director or CEO taking the lead in 64 percent of cases.

Furthermore, 66 percent have set KPIs that are aligned with sustainability measures, while 64 percent report clear accountability for measurable targets set related to sustainability. 44 percent of respondents say those targets are backed by incentives for employees to prioritise sustainability objectives.

Businesses are also enlisting external expertise to bolster their sustainability efforts, with 50 percent already having third parties engaged to provide assurance of sustainability reporting, results and measures. In comparison, 55 percent of respondents say their organisation will be consulting external sustainability/ESG advisors in the next six to twelve months to help improve its sustainability approach.

The high level of commitment at senior leadership level, along with the use of third-party advice, indicates an appreciation for the importance of the issue and the need to accelerate progress in both improving sustainability performance and preparedness to meet reporting requirements.

Overcoming the challenge

TMT organisations face a mounting challenge in relation to their sustainability performance. The increasingly energy-hungry nature of new technologies such as AI and blockchain, along with the infrastructure required to support them, means that the industry must seek ever more innovative solutions if it is to achieve any meaningful progress on sustainability.

The increased focus on sustainability in the past year, along with the leadership role being played at the C-suite level, is therefore a very encouraging sign. However, greater investment is required in the systems that underpin compliance efforts, while many businesses still need to establish clear sustainability targets and roadmaps for achieving them.

Grit is a partner at EY-Parthenon and Technology, Media & Entertainment and Telecommunications Industry Leader for EY Ireland