Introduction
The Indian telecom sector presently faces a complex situation when considering ESG and sustainability. Within the concept of ESG, ‘green telecom’ encompasses various aspects, including the greening of telecom networks, the manufacture of environmentally friendly telecom equipment, the environmentally conscious design of telecom buildings, and the safe disposal of telecom waste. The expansion of telecommunications infrastructure necessitates a greater amount of electricity, which is obtained from the grid and through the burning of fossil fuels such as diesel. Unfortunately, both sources contribute to the emission of greenhouse gases, resulting in adverse environmental consequences. Though the telecom industry has similar problems as other sectors in terms of energy usage, it possesses a unique ability to assist other industries in lowering their emissions. Thus, a thin line must be drawn, and the advantages of the telecom industry to other industries must be considered while attempting to lessen its environmental impact.
There is currently no legislation that specifically addresses the industries within the telecom sector and their ESG concerns. The government of India recently passed the Telecommunications Act 2023, however, there are no specific sustainability provisions. The expansion of Digital Bharat Nidhi under the 2023 Act to include research and development projects, is welcome as it will keep the discourse open for future amendments on sustainability. At COP28, Prime Minister Modi announced India’s net zero emission target deadline as 2070, 20 years after that of the European Union. The Union Telecom minister Ashwini Vaishnaw has described the sector, as a gateway to the government’s Digital India Programme, with at least 8 large investment firms seeking to invest. Therefore, as industry guidance, government attention, and voluntary activities grow, sector-specific ESG legislation may eventually be enacted as a result of mounting pressure and rising stakeholder and customer expectations.
The Telecom Regulatory Authority of India (TRAI) plays a crucial role in driving telecom operators to adopt sustainability strategies and initiatives. In 2011, it issued guidelines recommending that rural towers and 50% of urban towers be hybrid-powered by 2020. In addition, the regulator recommended that all telecom services, equipment, and products in the network be evaluated and given a “Green Passport” certification based on performance and energy requirements. Accordingly, the Telecommunication Engineering Center (TEC) concluded the first stage of the establishment of the Green Passport Lab in 2021 with the goal of standardizing test protocols and telecom equipment certification based on Energy Consumption Rating (ECR).
Further, in an attempt to introduce legislation, the TRAI conducted consultations in 2017 for formulating a Green Telecom Policy. Some private entities including Reliance, Airtel, and Tata have submitted their opinions to the consultations on ideal practices in the domain.
In light of this, the Indian telecom industry has implemented various sustainability initiatives to align with ESG targets and promote a greener environment. For instance, Airtel aims to reduce its greenhouse gas (GHG) emissions by 50.2% by FY2031 and achieve net zero emissions by 2050. It also plans to decrease its Scope 3 GHG emissions by 42% by FY2031. Reliance JIO has set a goal to become a net zero company by 2035 and has received an ‘A-‘ rating for its environmental leadership. Vodafone Idea (VI) is also prioritizing energy efficiency and emission reduction in its sustainability efforts. Overall, the Indian telecom industry is recognizing the importance of considering societal and environmental impacts in their business strategies and is actively working towards integrating sustainability into their operations.
The need for ESG in the telecommunications sector
The telecom industry has a substantial impact on the environment, with global energy consumption for operators already reaching 2% – 3%. This makes them one of the most energy-intensive businesses in their respective regions, leading to an increase in their carbon footprint and potential harm to the environment. Additionally, socially conscious investors are becoming more concerned about the environmental impact of telecom companies, which can affect their reputation and position in the market. The COVID-19 epidemic has resulted in an increased demand for digital communications and fast internet speeds, which has increased the energy consumption of telecom infrastructure. As a result, waste and CO2 emissions are greatly increased by the information and communication technology (ICT) sector and telecom companies. With data traffic expected to grow by approximately 60% annually, telecom providers must manage network capacity while adopting environmentally friendly practices on a large scale. Furthermore, electronic and manufacturing waste from the industry can contaminate nearby ecosystems and contribute to climate change.
According to a recent MSCI report from April 2021, investments totalling USD 1136 billion have been made in ESG mutual and exchange-traded funds within the communications sector. The study highlights that Europe, with its well-established ESG adoption, accounted for half of these funds. In contrast, industries like information technology, healthcare, and financials had a larger share, indicating the various approaches to ESG investment and the potential for further growth. Notably, the telecoms industry has witnessed a rise in the issuance of green bonds by companies like NTT, Orange, Telefónica, Verizon, and Vodafone, emphasizing their commitment to sustainable objectives in order to access funding. In this respect, ESG reporting plays a vital role in fostering long-term, sustainable, and resilient mindsets that appeal to investors. This resilient thinking is particularly significant in the current landscape where industries confront substantial and unpredictable obstacles stemming from climate change. Moreover, it mitigates risks linked to inadequate ESG management, such as reputational harm and social stigma, which can lead to a decrease in market capitalization.
The current situation
One of the main priorities for the Indian telecom industry is the adoption of green energy solutions. In order to satisfy TRAI’s quality requirements, telecom towers are currently implementing diesel-free sites and increasing grid power availability. A coordinated strategy incorporating energy consumption, renewable energy sources, and CO2 reduction techniques is necessary to create a green network. Grid power variations and interruptions are being addressed by solutions like solar MPPT controllers, rectifiers, and Lion batteries. Using energy-efficient upcycling techniques to update current configurations offers a chance to advance the goal of carbon-free emissions. Operators prioritize energy efficiency in network infrastructure, especially in base stations because of their significant energy usage. Furthermore, the introduction of 5G in India has resulted in an increase in data traffic, making it more difficult to provide telecom and tower firms with reliable and sustainable energy. In order to manage the switch to 5G, edge computing, IoT, and related technologies, power-on-demand must be stabilized. Indian telecom firms have begun implementing ESG policies and starting sustainable initiatives. Operators should embrace their role as sustainability fighters and work with clients and partners to migrate to green energy and reduce consumption of energy, rather than viewing sustainability as an expense. In order to accomplish these goals, technological developments and the incorporation of sustainability into company practices are essential.
In the last ten years, the telecom industry in India has experienced remarkable growth, with mobile telephony bringing about a revolution in the country. The increasing popularity of cell phones and wireless communication devices has led to a significant rise in the number of mobile base trans receiver stations (BTSs) being installed nationwide. As a result, there is a growing need to utilize renewable energy efficiently to cater to the needs of the expanding population. For instance, Airtel has taken steps to address this issue by replacing its old Diesel Generator (DG) with a hybrid model that combines solar power and DG at multiple network sites. Furthermore, the company has entered into power wheeling agreements to procure green energy for its network operations. Similarly, Vodafone Idea (Vi) has implemented solar solutions at more than 2400 sites and has also signed power purchase agreements for solar, wind, and hydro power totalling over 26MW across India.
In addition to being vital to the telecom sector, data centers also significantly impact on overall energy consumption. Telecom industries are constantly looking for methods to make their data center operations more sustainable and energy efficient. This entails using renewable energy sources like solar and wind power in addition to adopting energy-efficient technologies like server virtualization and data center consolidation into operation. In order to maximize power efficiency and minimize energy waste, telecom businesses are also investing in cutting-edge power management tools and technologies, like machine learning and artificial intelligence.
For instance, Airtel has implemented various strategies to enhance energy efficiency in their data centres. These include optimizing lighting and uninterrupted power supply (UPS), monitoring power usage effectiveness, and introducing new cooling solutions. They have also installed rooftop solar plants at 31 locations in their data centers and main switching centers, with a total capacity of 1.78 MWp. This initiative has led to an estimated reduction of 1,354 tons of CO2 emissions.
In response to public health concerns surrounding electromagnetic emissions, the Department of Telecommunications (DoT), and the cellular industry, undertook a joint initiative aimed at addressing emission concerns surrounding mobile tower installation and their functioning. The DoT has formulated standardised guidelines for the operation and location of mobile towers for all local civic bodies and state government. It has also been successful in reducing the EMF emissions by 90% from the antennas of the mobile towers. Further, The Telecom Enforcement Resource & Monitoring (TERM), conducts periodic audits of the towers to ensure compliance with safety norm.
3. International perspectives and global best practices for ESG in the telecommunications sector
Technology advancement, particularly within the telecom sector presents both risks and opportunities in the international efforts to arrest climate change. An issue the telecom industry faces, in particular is its requirement for unhindered internet access which has a significant carbon footprint. According to a summary report by BEREC, despite the steady rise of internet traffic, high efficiency gains of new gen technology has helped data centres and communications consume less energy. Unfortunately, the report indicates that this is now changing with efficiency gains showing signs of inability keep up with the sectors growth requirements. The primary reasons is an accelerating demand for new technologies and data, which is creating a ‘rebound effect’ ( i.e. when the development of new technology leads to shifts in consumption trends, cancelling out energy efficiency savings). One way to counter this is innovation and steady progress on renewable energy.
In order to achieve this, the GSMA formulated a “Climate Action Toolkit’’ for mobile operators, providing advice on methods to decarbonise, such as creating targets which calculate cardon reduction and managing individual climate risks. In its 2022 Mobile Net Zero Report , the GSMA highlights that operators covering 44% of all international cell phone connections, including industry revenue of around 63%, have commitments to science based targets with a large proportion also looking to achieve net zero targets before 2050.
On the issue of the international rollout of 5G, the data being transferred is likely to consume 90% less energy, despite it creating a pressure on operator’s energy usage. The GSMA in its 2021 Net Zero report on mobiles, stated that retiring legacy equipment and the use of AI in powering down networks during quiet periods, can assist in reducing energy consumption. With regards to broadband, transitioning to fibre optic infrastructure from the older energy consuming cooper will help in sustainability as it uses less energy. The industry outlook is much brighter, when these initiatives are coupled with ongoing shifts to renewable energy,
Interestingly, within the telecom sector, the measures of some industries, have led to the reduction of energy consumption, without even aiming to achieve sustainability. This is something Indian industries can learn from, given that there is a broad misconception that reduction in energy through adopting sustainable practices will lead to cost inflation. An example being network infrastructure sharing by some UK Mobile Network Operators (MNO). Although there are varied levels of network sharing, the largest four MNOs in Britain (Vodafone, O2/Telefonica, EE and Three) engage in this, and there is a concerted effort underway for coverage in rural areas. This practice is extremely environment friendly due to reduction in energy requirements, as only a single site is required to run services for two MNOs. It also simultaneously reduces the latent quantities of manufacturing requirements (which consist of precious metals, rare earth elements) and infrastructure maintenance externalities.
On the international front, a multilateral organization called the UN Framework Convention on Climate Change (UNFCCC) was constituted in 1992 to tackle climate. It has 198 signatories (including India) to achieve its goal of stabilising atmospheric emission concentrations to prevent the effects of climate change brough on by human activities. The UNFCCCs most notable achievement was in 2015, when it adopted the Paris Agreement – a legally binding treaty mandating the contracting states to limit climate warming to well below 2°C, and ideally to 1.5°C.
The contracting states are required to make continued efforts towards the 2°C goal, through plans via nationally determined contributions (NDCs), for which the Agreement also provides a periodic review mechanism of 5 years. Although there are no legally binding emissions target, countries must pursue domestic mitigation measures to achieve the NDCs.
3.1 The Technology Mechanism
The global ICT industry is increasingly viewed as a core component of sustainable development, as an important factor supporting sustainable economic growth of a country. Especially, the telecommunications industries’ technology and innovation, considering its indefensible role and function. In fact, the importance of the role of technology development and transfer in improving climate change resilience is enshrined in Article 10 of the Paris Agreement which is something the Indian telecom sector can make use of. The Article establishes a long-term vision of international collaboration and cooperative action amongst contracting states for reduction in GHG emissions where it was decided that the UNFCC’S Technology Mechanism would assist in realising the goals of the agreement whilst augmenting innovative practices. It is worth noting that the Technology Mechanism was implemented at the 2010 UN Climate Conference under the UNFCCC as aiding instrument for the developing world to access technology that would mitigate the effects of climate change.
Furthermore, the agreement provisions that the Financial Mechanism of the Convention will facilitate a collaborative approach for research and development including technology access specifically in the early stages of the technology cycle and to developing economies. Since 2001, over 85 developing countries have undertaken ‘technology needs assessments’, to determine their climate action priorities. As the Indian telecom sector grows, with various legislative changes underway, the government in collaboration with industry must overcome various barriers to technology transfer that the country faces.
3.2 Science-based targets
The Science-Based Targets initiative (SBTi) presents businesses with a well-defined route to GHG emissions reductions in accordance with The Paris Agreement goals ( limiting global warming to below 2°C and, ideally, 1.5°C). One of the incentives of this is that business can market their sustainability commitment to climate conscious investors, clients and business partners among others. The initiative is presented as a scheme which is usable by corporates to ensure that their targets are considered ‘science based’. This is done through a certification method wherein a planned target is certified as being in sync with scientific methods to achieve the Paris Agreement’s goals. Initially, businesses agree to setting a science-based target, during which their target undergoes a scrutinization process and is developed further to meet the SBTi’s criteria’s, post which it is then validated. On completion of this process, the target is required to be monitored annually via a progress tracker. Businesses can avail the support of the SBTi technical expertise.
Moreover, it is noteworthy that a “multi-stakeholder” partnership involving the SBTi, the Global Enabling Sustainability Initiative (GeSI), the GSMA, and the International Telecommunications Union (ITU) resulted in the development of a target-setting strategy that is “ICT sector-specific.” Guidance was released to help ICT businesses, specifically mobile network operators (MNOs), fixed network operators, and data centre operators, to set science-based emissions reduction targets because the ICT sector poses a variety of challenges when it comes to reducing emissions. The recommendation outlines specific actions that should be taken between 2020 and 2030 to bring decarbonization into compliance with the Paris Agreement’s trajectory. These include transition to climate neutral electricity supply, continued implementation of plans that are energy efficient, and public awareness building through policy advocacy so that end users are climate consciousness.
The BSR and The Global e-Sustainability Initiative
Various international organizations such the Business for Social Responsibility (BSR) and the Global e-Sustainability Initiative (GeSI) advocate for creation and implementation of global best practices in operating businesses sustainably. These organization have made collaborative initiatives with a broad range of global stakeholders to inculcate a business minded approach to sustainably.
The BSR advocates the imperatives of transition to a ‘net zero economy’ by engaging with its partners (public and private sectors). Some of its work includes developing sustainability reporting frameworks, the objective of which is to enhance ‘sustainability reporting’. The BSR has also spearheaded development of the Corporate Colocation and Cloud Buyers Principles. These are a set of six principles that customers of cloud services and ‘colocation data centres’, can request their providers to meet as part of the business terms and/or overall rights, for which priority will be given to those who incorporate these. Furthermore, the BSR contributes to research and development in the field for instance it released a working paper titled Best Practices Colocation Data Centres: A Guide to Maximizing Renewable Energy Mix. In addition to addressing ideas to help colocation data centre owners and users approach the potential and risks associated in maximizing the consumption of renewable energy, the paper offers best practices.
Likewise, to achieve the objectives outlined in its Digital with Purpose report, firms that take part in GeSi’s Digital with Purpose initiative must adhere to four “universal commitments.” This includes reaffirmation of the UN 2030 Sustainable Development Goals, along with planned action items such as a target reduction of 50% in greenhouse gas emissions by 2030. This also incorporates several ESG measures, such as the dedication to increased cooperation and transparency while utilizing technology to back these commitments.
Some suggestions
International experience has demonstrated that the telecom industry can significantly reduce its carbon footprint through various activities across the value chain. These activities include the manufacturing of electronic components, telecom network equipment, and handsets, as well as their operational lifespan and proper disposal. It has been observed that 80% of energy consumption by telecom operators is for network operation, with 90% of that energy being used for the radio network and 10% for the core network. Base stations consume the highest amount of energy, which is required for their operation and to maintain the equipment’s temperature within the operational range. While energy from the grid results in lower emissions compared to diesel generators, many base stations are located in areas with poor grid power availability and rely on diesel power. Service providers can take a number of steps in order to decrease their carbon footprint such as installing outdoor base stations, using intelligent remote air-conditioning control, sharing passive and active infrastructure, sharing backhaul, adopting green shelters, replacing air conditioners with forced air cooling or HFC-free cooling systems, optimizing radio planning to reduce the number of base transceiver stations (BTSs), sharing passive and active infrastructure, adopting energy-efficient technology, and involving renewable energy sources. Recycling is another way to lower emissions from the mobile device life cycle.
The deployment of 5G networks can be made more environmentally friendly through the use of technology. While 5G may lead to increased emissions overall, it is more energy efficient per GB of data compared to 4G. Telecom operators can implement solutions such as AI/ML-based network element switching, IoT-enabled smart metering, fuel monitoring, and Open RAN to improve energy efficiency and create a green network. It is important for operators to continue efforts to stabilize energy consumption while expanding network reach.
To address emissions from the supply chain, operators can focus on bringing suppliers into the realm of sustainability. Implementing a responsible sourcing framework and assessing suppliers based on sustainability criteria before onboarding can help. Operators can also collaborate with suppliers for product design innovations and work together to set sustainability goals.
Telcos can promote sustainability as a way of working by enhancing sustainability reporting and ESG ratings. By making sustainability a central theme in the thought process of every employee, from technicians to CxOs, telcos can embed sustainability in product design, customer service, and strategic decision-making. Sustainable operations can contribute to reducing emissions from Scope 1 and 2. Telecom operators have already recognized this opportunity and set ambitious yet achievable goals for energy efficiency and circular economy practices. By focusing on these concepts, operators can successfully achieve sustainability in their operations.
Conclusion
In conclusion, Indian telecommunications companies have announced their commitment to ESG and have initiated several sustainability projects, although they are still in the early phases. Instead of considering ESG as a mere expense, these companies should play a role in promoting sustainability. They should collaborate with customers and partners to adopt green energy and reduce energy consumption. Technological advancements and integrating sustainability into business operations will be crucial in attaining these objectives. Once they have established their own sustainability practices, telecom operators should also explore sustainability as a potential source of revenue.
Authors and Designation:
Neil Dawes Bhutani, Managing Partner, DawesCo LLP
Disclaimer:
“This document is solely for informational purposes. Nothing contained herein is, purports to be, or is intended as legal advice. The reader should seek legal advice before acting on any information or view expressed herein. We endeavour to accurately reflect the subject matter, without any representation or warranty, express or implied, in any manner whatsoever in connection with the contents of this.”
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