ESG and

technology,
media and
telecoms
A chance to
rethink strategy
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1 Strategy& I ESG and technology, media and telecoms

ESG and technology,
media and telecoms

Despite a growing and Technology, media and telecoms

businesses must assess strategies in the
significant body of thought context of ESG to transform themselves
and influence society
leadership on Environmental, This report intends to resolve this challenge by bridging

Social and Governance the gap between high-level ESG thinking and more
technical literature. It offers a framework to think through

(ESG), it remains an area and put in place business initiatives to address ESG and
identify growth opportunities.

many technology, media and The TMT sectors have significant potential to influence

telecoms (TMT) executives ESG because they permeate most other sectors,
providing the enabling technology, media content and

are grappling with. communication capabilities. For example, the rollout of

5G will not only allow all sectors to use less power to
transmit more data but also enable all appliances to be
connected and share information to optimise energy
use. Meanwhile, technology and social media giants
face changing expectations on their responsibilities in
providing communication and collaboration platforms
across industries, while navigating and protecting
user data privacy. These are a few of the many ways
TMT companies can position themselves within the
wider ESG narrative, using their prominent positions in
delivering cloud technology, social platforms, content and
communications devices and networks to become role
models for other sectors.

Authors: Christine Korwin-Szymanowska,

Rolf Meakin, Dan Dowling, and Hieu Vuong.

Strategy& I ESG and technology, media and telecoms 2

The importance
of ESG

Defining ESG
At its simplest, ESG provides an umbrella framework to consider a company’s
impact and dependencies on the environment and society, as well as the quality
of its corporate governance.

But there are no official, comprehensive definitions beyond those being

developed by the European Commission. What if a significant percentage
of what we call ESG today is not ESG tomorrow under country and regional
taxonomies? We detail below the next level down of each element of E, S and
G, and have laid out an innovative approach for developing a broad corporate
ESG strategy.

Figure 1 – Environmental, Social and Governance (ESG) definition

ESG provides an umbrella framework to consider a company’s impact and dependencies

on the environment and society, as well as the quality of its corporate governance

Environmental • Includes controls of: carbon emissions, impact on deforestation and nature loss,
Minimising the impact of over-consumption of non-renewable resources, and production of waste products
a company on nature • Also incorporates positive contributions such as the financing of environmental
improvements (e.g. green finance initiatives)

Social • Considers contributions to equality, trust and welfare in society (including improving
Contributions of a company to labour rights and diversity and inclusion) within a company's workforce, and across its
fairness in society supply chain and distribution
• Also includes product safety, respect for privacy and data security

Governance
Processes for decision making,
reporting and ethical behaviours
• Focuses on the quality and scope of reporting, the nature and type of accountability,
level of independent oversight, and ethical behaviours in a firm – on both ESG
and non-ESG matters
• Considers elements such as board structure, director and audit independence and
executive compensation

Source: Strategy& analysis

3 Strategy& I ESG and technology, media and telecoms

 67%
TMT businesses are responding to consumer
views on sustainability
Driven by factors such as climate change, social inequality and the impact of
COVID-19, and amplified through social media platforms, ESG has become
front of mind for all. PwC UK’s 24th Annual CEO Survey shows organisations
are increasingly focusing on purpose and sustainability. This year, 70% of UK
of respondents
CEOs told us they are concerned about climate change, compared to just 44% want businesses to
in 2019. And there are already positive signs of change, with 60% of UK CEOs
planning to increase their investment in sustainability and other ESG initiatives
operate sustainably
over the next three years. Around a third also noted they should be doing more Source: Nationally representative
to report on their purpose and values, and their organisation’s impact on its survey of UK consumers, PwC UK,
wider communities. February 2021

These concerns are further reflected in a PwC survey of UK consumers which

found that people care that businesses operate sustainably by minimising
their environmental and social impact. 67% of respondents reported that
ESG considerations are important for them. Contrary to popular belief,
older segments are even more concerned than millennials, demonstrating
that ESG worries are not limited to younger generations.

Figure 2 – Views on the importance of business operating in a sustainable

way, by age group

100%

26% 83%

71% 70%
7%
61%
57%
54%

67%

Total 18-24 25-34 35-44 45-54 55-64 65+

Neither / Don’t know Not important Important

Source: Nationally representative survey of UK consumers, PwC UK, February 2021

Strategy& I ESG and technology, media and telecoms 4

Stakeholders are demanding a greater focus on ESG
TMT companies are no longer answerable to just shareholders, but a new set
of stakeholders: customers, employees, suppliers, communities, the press
and regulators. Telecoms and technology companies, in particular, now have
to engage with many more stakeholders than they have been used to in the
past. In comparison, other topics on the corporate agenda while complex and
important are focused on narrower stakeholder sets.

Within their core stakeholder, their customers, there is also greater demand
for TMT businesses to provide ESG commitments and guarantees before the
contracting stage. This puts pressure on TMT companies to not only be clearer
about their ESG policies but also how they would record and report the data
and provide assurance.

Below, we summarise the breadth of stakeholders that a typical technology

company needs to consider when addressing ESG.

Figure 3 – ESG stakeholder environment – Technology company example

Customers Shareholders / investors

• Increasing demand for ESG-compliant
technology solutions and services,
from end users and corporate
customers
• Greater demand on ESG policies and
how data is recorded and reported to
provide assurance
• Demand is likely to grow across all
solutions and services
• Institutional investors are putting
pressure on companies to act on
climate change (e.g. shareholder
resolutions)
• Investors are increasingly including
ESG as a consideration for
investment decisions

Value chain partners Technology / senior management Communities / press

• Technology giants will increasingly
assess suppliers’ ESG policies as part
of partnership due diligence checks
• Suppliers that do not respond to ESG
adequately risk narrower partnership
opportunities across the value chain
• Corporate vision, mission and values
• Management decision in response to
ESG influences (e.g. climate change)
• Proposition and business model (e.g.
ESG growth opportunities)
• Companies are increasingly held to
higher standards in their interactions
with the public and communities
• Companies that do not meet standards
risk potential reputational impacts,
which may increase in frequency
and severity

Employees / unions Regulators

• ESG will be a significant lever for
talent management given changing
employee attitudes towards the
purpose of work
• Research shows that employee
satisfaction drives higher
productivity and is positively
correlated with shareholder returns
• Regulators are requiring that
technology companies embed
climate-related and net-zero
objectives within overarching strategy
• Regulators are demanding stronger
board governance (evidencing of
climate impact)

Internal stakeholders External stakeholders

Source: Strategy&

5 Strategy& I ESG and technology, media and telecoms

How should TMT
companies think
about ESG?

The chart below offers a framework for TMT companies to break down ESG into
more structured and manageable sub-elements.

Figure 4 – ESG framework for TMT companies

Dimensions Examples

Environmental Products & services • Product use (e.g. energy consumption from electronics, direct emissions from
Minimising the transportation of components, etc.)
impact of a • Product disposal (e.g. non-recycled electronics, localised pollution from hardware
company manufacturing, etc.)
on nature Supply chain • Deforestation and nature loss / pollution (e.g. site development, demand from
& distribution paper-based media and advertisement, etc.)
• Carbon emissions (e.g. raw material production, heavy computing and modelling, etc.)
• Non-renewable resource use (e.g. telco network energy usage, etc.)
Operations • Carbon emissions (e.g. offices, production facilities, data centres, etc.)
• Waste to landfill and incineration (e.g. decommissioning of telco sites)
• Business travel (e.g. airline and vehicle emissions from media shoots)

Social Products & services • Product safety (e.g. social media and mental health)
Contributions of • Customer privacy & data security (e.g. data collection and usage from technology
a company to platforms and providers)
fairness in society Supply chain • Labour rights (e.g. freedom of association, health & safety, fair wages, human rights,
& distribution modern slavery)
• Diverse & inclusive practices in the supplier base
Workforce • Diversity & inclusion across employee categories (e.g. gender, BAME), social mobility,
and pay equality
• Health & safety and wellbeing (e.g. programmes to support health & wellbeing,
fatalities, injuries, etc.)
• Human capital development (e.g. training provided, skills developed, etc.)

Governance Transparency • Accurate and timely reporting to stakeholders vs. recognised standards – on
Quality of processes corporate purpose, strategy, financial performance, and ESG tax benefits (e.g. from
for decision making, investments in ESG initiatives)
reporting and • Real-time data collaboration in the supply chain and develop joint reporting capabilities
ethical behaviours Accountability • Accountability for performance and risk management of leaders, across both ESG
and other decisions
• Alignment of pay to ESG outcomes
Independence • Appropriate independent oversight, incl. Board composition, diversity, remuneration,
and limiting controlling shareholders and concentrated voting rights
Ethical behaviour • Corporate governance: undertaking business in an ethical manner (e.g. avoiding bribery
and corruption)

Source: Strategy&

Strategy& I ESG and technology, media and telecoms 6

TMT leaders should then consider their level of ESG ambition, overall and for
each chosen sub-element, against the expectations of those stakeholders who
matter most to the long-term viability of their businesses.

A company’s ESG ambitions will determine whether they develop a strategy

that sits alongside their existing corporate strategy, or whether they develop
a new, ESG-aligned corporate purpose and strategy.

TMT companies need to adopt real-time

data collaboration in the supply chain
and develop joint reporting capabilities
to bring more transparency and
accountability in reporting.”

7 Strategy& I ESG and technology, media and telecoms

Taking action
on ESG

To avoid ending up with a long list of disjointed initiatives, TMT executives

should assess how impactful potential ESG actions are, and how easy
they are to implement. While businesses will want to estimate the return on
investment of any initiatives, a lot remains to be done on narrowing the gap,
real and perceived, between the historical way of measuring performance TMT businesses
(such as through return on equity or revenue growth) and the new, longer-
term concepts. can grow new
Figure 5 is an example of a prioritisation exercise for a technology and software customer segments
provider. Here, the company faces pressure from its customers and distributors
to improve its ESG offerings. By incorporating ESG initiatives into its product
and increase their
strategies (e.g. investing in developing green technologies and solutions),
it plans to grow new customer segments and increase its reputation with
reputation by
existing customers. incorporating ESG
initiatives into
product strategies.”

Strategy& I ESG and technology, media and telecoms 8

Figure 5 – Strategic ESG opportunities assessment framework
ESG strategic opportunity assessment framework

Environmental 1 Develop new green products Opportunities above

and solutions Develop new
Higher

the second dotted line

Minimising the 1 green products
should be prioritised
impact of a 2 Invest in green R&D projects and solutions
company 3 Switch to green energy providers Develop socially
on nature 10 responsible services
Energy efficient
4 Reduce employee travel 7 offices
ESG
5 Reduce use of paper and 18 Remuneration 14 governance
single-use plastic Suppliers’ framework
11 commitment
6 Walk / cycle to work schemes Green Transparent
2 R&D 16 processes
ESG Impact

7 Create energy efficient offices Workplace

13 diversity
Green
Social 8 Provide free devices/software support 3
energy
Contributions of a 9 Offer best-in-class employee training Hardware /
8 Reduce
company to fairness software support 4 travel
10 Develop socially responsible services
in society
11 Re-assess supply chain’s 15 ESG KPIs
D&I commitment
Improve
12 Socially responsible investments Cycle-to-work 12 SRI 17 board diversity
6 schemes
13 Improve workplace diversity
Lower

Reduce paper
Governance 14 Incorporate ESG into governance 5 and plastic Opportunities to be
Employee considered given
Processes for 15 Implement ESG KPIs 9 training
the high ease
decision making,
16 Adopt transparent financial processes
reporting and
Lower Ease of implementation / Higher
ethical behaviours 17 Improve board diversity
(based on capabilities)
18 Align remuneration approach to ESG

Environmental Social Governance Bubble size indicates ROI

Source: Strategy& analysis

9 Strategy& I ESG and technology, media and telecoms

ESG opportunities
for TMT businesses

In the TMT sectors, ESG has sometimes been seen primarily as a compliance
reporting task. However, its recent rise in prominence alongside an increasing
focus by investors, governments, regulators, customers and other stakeholders
means this approach is no longer sufficient. As intensive consumers of energy,
major employers and cross-border investors with high public profiles as creators,
publishers or distributors of content or as platforms used every day by millions of
consumers and businesses, TMT businesses are coming under greater scrutiny.

Strategy& I ESG and technology, media and telecoms 10

Technology and software companies have
the opportunity to create digital solutions
for others to manage emissions, supply
chains, and data.”

The opportunities for TMT companies vary by sector, with specific and general
initiatives to take depending on the business model (shown in figure 6 below).
While embracing ESG might create challenges for some, there will be significant
benefits for each type of business.

Figure 6 – ESG opportunities: TMT example

Environmental Social Governance

Consumption and Investment in and Equality Investment in projects Independent oversight Reporting standards
pollution / emissions usage of green energy and diversity and community impact and accountability and ethical behaviour

• Deploy software • Re-align incentive • Increase diversity • Support other • Visually display • Understand how
defined networks in supply chain and inclusion in the sectors with governance to go beyond
and roll-out 5G to (e.g. upstream workforce through infrastructure structure for traditional
reduce global suppliers and measurable actions (e.g. healthcare company’s ESG reporting and
carbon emissions joint businesses) • Support digital during COVID-19 agenda provide ESG
Telco operator by half a billion • Incentivise new school initiatives pandemic) • Disclose the relevant information
tonnes by 2030 renewable to enhance • Reduce digital C-Suite ownership to a wider set of
production education divide by rolling of specific ESG stakeholders
facilities via CPPAs out fibre and topics beyond investors
5G infrastructure • Share how the • Increase urgency
board and of action on
• Provide comms • Develop smart city • Set supply chain • Play a role in committees diversity and
tech and tools to and workplace requirements on ensuring social consider issues inclusion in the
Technology / enable remote solutions ESG targets stability (e.g. when reviewing workplace by
working • Create digital e.g. diversity Facebook/Twitter and guiding reporting gender/
software • Adopt server solutions for and inclusion and the US metrics and race ratios and
company virtualisation, others to manage Presidential targets, and pay gaps
consolidation and emissions, supply inauguration) monitor • Include hitting
better software chains, data etc. performance ESG targets
controls to against goals in c-suite
mitigate server • DC Infrastructure • Adopt supply • Provide access (e.g. Hitachi remuneration
inefficiency and Management Tools chain diversity to discounted or Sustainability evaluation
Hardware reduce carbon (DCIM) help • Upskill employees free devices to Strategy alongside
emissions by 80% improve energy in smart underprivileged
company / efficiency and manufacturing communities
Promotion other KPIs
Structure)
data centres reduce carbon
• Invest in net
biodiversity gain
capabilities and
• Use energy- reduce water • Decentralise news • Channel • Report on the
efficient buildings consumption and content investment into portion of BAME
and tools to • Invest in self- creation (e.g. BBC content that and women
decarbonise generation of uses personal covers socio- employed as
Media & studio and renewable energy videos/accounts economic impact directors/
advertising production and energy on the scene to and diverse producers as
facilities storage tech tell stories) communities well as in an
business • Serve as entire production
tastemakers and not just
and refocus on-screen talent
on ESG

Source: Strategy&

11 Strategy& I ESG and technology, media and telecoms

Telecom network operators can become trailblazers in managing efficient
and greener energy consumption using software-defined networks, 5G and
artificial intelligence to run networks more efficiently. Huawei, for example,
has estimated that the roll-out of 5G could help reduce global carbon emissions
by half a billion tonnes by 2030. Elsewhere, some telcos have made public The roll-out of 5G
pledges to achieve net zero, with Telefonica O2 pledging to achieve net zero
across its own operations (Scope 1 and 2) and cut supply chain emissions would help reduce
(Scope 3) by 30% by 2025.
global carbon
Telcos and data centre operators can also provide stimulus to investment
in green energy by energy providers and investors. Orange has recently
emissions by half
announced a 20-year Corporate Power Purchase Agreement (CPPA) for 100
GWh pa of renewable electricity with Total in France. As a result, Total has
a billion tonnes
committed to building 12 new solar plants with a total capacity of 80 MW by
2024. Orange has committed to reducing its direct CO2 emissions by 30%
by 2030.”
compared with 2015 and to have a 50% renewable energy electricity mix Estimated by Huawei (2019)
by 2025.

Technology and telecom companies have a key role in reducing global

emissions by providing the software tools and network infrastructure
to enable remote working. The likelihood of the UK adopting a hybrid
model of working post-pandemic accentuates the importance of this
role. However, as computing workloads increasingly move to the cloud,
enabling server virtualisation, better software controls and enhanced
computing efficiency, data centres need to become truly carbon-neutral,
going beyond utilising existing renewable energy facilities to provide the
stimulus through CPPAs for the construction of additional renewable
energy production facilities.

Strategy& I ESG and technology, media and telecoms 12

 257
Businesses such as Verizon, Microsoft and ITV are among 53 signatories to
the Climate Pledge, committing themselves to net zero carbon across their
businesses by 2040. Microsoft has gone even further, committing to be carbon
negative by 2030.

In social equity, 257 TMT companies have signed up to CEO Action for Diversity TMT companies
& Inclusion, committing themselves to a clear strategy and measurable actions
to improve inclusion in the workplace. These tangible actions and initiatives have signed up
are recorded on the CEO Action website and there is a strong representation to CEO Action for
from technology sector companies such as Cisco and Salesforce, as well as
telecoms and data centre organisations including, AT&T, Yondr and American Diversity & Inclusion
Tower. Advertising agencies such as WPP, Publicis and IPG as well as media Source: CEO Action for Diversity
platforms like Netflix have also signed up. And broadcasters such as the BBC & Inclusion (2020)
are adopting a decentralised approach to news reporting and content creation
by using personal video accounts of those on the ground to tell their stories.
In cultivating a broader media narrative and taking tangible, measurable steps,
there is an opportunity for these enterprises to influence public attitudes on
socio-environmental issues beyond their own workplaces.

During the COVID-19 pandemic, telcos have seized the opportunity to offer
support to society and front-line workers, with BT providing communications
infrastructure to the Nightingale hospitals and EE extending unlimited data
plans to key workers at no additional cost.

Creating positive social impact initiatives can generate new revenue streams.
An example would be Telenor, a mobile operator which launched mobile money
services such as Easypaisa (Pakistan) and Valyou (Malaysia), providing a safe
and cost-efficient banking solution for women, rural and migrant communities.

13 Strategy& I ESG and technology, media and telecoms

With social media becoming increasingly intertwined with our everyday lives,
technology giants have found themselves having to adopt new and undefined
social responsibility roles. Facebook’s role in helping to maintain social
stability in the run-up to the 2021 US Presidential inauguration highlights
the ever-changing expectations on technology companies to be more TMT businesses’
responsible and accountable as a result of their influential position. On top of
that, the issue of data usage and data privacy brings added complexity to the roles in ESG must
responsibilities that technology companies will be expected to adopt.
now extend beyond
An opportunity to influence other sectors on ESG their respective
Some TMT businesses might be forerunners in their commitment to net zero
and others may be influencing positive social impact, but these roles must sectors.”
now extend beyond their respective sectors.

TMT companies can be pioneers in encouraging other industries to adopt a

stronger commitment to ESG, particularly those in the media and advertising
sectors who have a strong ability to influence public opinion and sentiment
from a range of stakeholders.

With industries increasingly reliant on technology and telecoms players to

transform themselves, TMT companies must embrace the responsibilities of
leadership that come with their capabilities and market positioning. Only then
will they be able to convert potential into reality through the provision of ESG-
positive products and services for all.

Strategy& I ESG and technology, media and telecoms 14

Who to contact
Rolf Meakin
Strategy& Partner
PwC Global Telecommunications
Industry Advisory Leader
+44 (0) 7801 247 667
rolf.e.meakin@pwc.com

Dan Dowling
PwC Sustainability & Climate Change Director
PwC Lead of UK’s Cities
& Urbanisation Group
+44 (0) 7715 487 335
daniel.s.dowling@pwc.com

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