European telecommunications companies are making significant strides toward a sustainable future, driven by a combination of economic pressures, regulatory requirements, and stakeholder expectations.

According to the latest report from International Data Corporation (IDC), titled European Telcos’ Journey to a Sustainable Future, the sector is increasingly adopting green initiatives and investing in energy-efficient technologies and renewable energy sources.

The report highlights that European telcos are motivated by energy costs, which have seen significant increases in recent years. For instance, Orange’s energy expenditure rose from €579-million in 2021 to €1-billion in 2023. As data consumption and the need for robust network infrastructure grow, these companies are focusing on reducing their operational expenses through sustainable practices. Telcos are offering services and solutions to help customers reduce carbon emissions and minimize the use of raw materials.

A notable aspect of IDC’s report is the introduction of the Sustainability Technology Value Framework. This framework outlines best practices and strategies that can help companies enhance their sustainability efforts and achieve measurable outcomes. The framework evaluates a company’s effectiveness in creating business value through three pillars:

Company Performance — Footprint

This pillar examines an organisation’s infrastructure, operations, and processes aimed at minimizing environmental impact. Examples include:

* Minimising GHG Emissions: Telcos aim to reduce greenhouse gas (GHG) emissions across three scopes: Scope 1 (direct emissions), Scope 2 (indirect emissions from energy production), and Scope 3 (all other indirect emissions in the supply chain). Tele2 stands out as the leading telco in carbon reduction, having achieved a 97% reduction in Scope 1 and 2 emissions since 2019, making it the first European telco to reach this milestone.

* Upgrading Legacy Infrastructure: Telcos are investing in upgrading outdated network infrastructure with energy-efficient technologies such as 5G and fiber optics. Deutsche Telekom has completed the shutdown of its 3G network in Germany as of 2021 to focus on enhancing its 4G and 5G networks.

Tech as an Enabler — Handprint

This focuses on the sustainability of the organization’s products and solutions, assessing how these offerings help customers reduce their carbon emissions and minimize the use of raw materials. Examples include:

* IoT Sustainability Solutions: The use of IoT technology for environmental monitoring, resource conservation, smart grids, and pollution tracking to enhance sustainability and efficiency. In May 2024, Vodafone Germany using IoT and smart sensors to create digital twins of natural sites to monitor temperature, soil humidity, air pressure, and watering cycles of the trees.

* Repair, Return, and Refurbishment Programs: These programs enable customers to extend device lifespans and reduce e-waste via repair, return, and refurbishment services. In March 2024, Orange Belgium launched an online store for reconditioned smartphones, expanding its range of refurbished handsets to more than 8,500 units, reinforcing the operator’s commitment to a green and circular economy.

Tech4Good — Heartprint

This considers the company’s broader impact on the community, including outreach to rural areas and underprivileged communities. Examples include:

* Expanding Network Coverage to Rural Areas: These programs aim to increase digital access to bridge socio-economic gaps. With its two European FiberCos, Orange committed to expand fiber coverage in rural areas, with an additional 5,1-million connections added as of the end of 2023.

* Promoting Digital Inclusion: Developing accessible services and platforms to empower underprivileged communities. BT aims to deliver full-fiber services to 6,2-million homes and businesses in rural communities and to help 25-million people in the UK to improve their digital skills by 2026.

“European telcos are not only motivated by economic considerations, but also by a commitment to regulatory compliance and the growing demand from investors and customers for sustainable business practices,” says Masarra Mohamed, senior research analyst at IDC. “Telcos are leading the way in integrating sustainability into their operations and offerings, aiming to reduce their environmental impact while ensuring long-term economic viability.”

Other key findings from the report include:

* Energy Cost Savings: European telcos are investing heavily in energy-efficient technologies and renewable energy sources to manage rising operational expenses. For example, TIM has set ambitious targets to source 100% renewable electricity by 2025.

* Investor Engagement: Enhanced access to capital is a primary driver for telcos’ ESG and sustainability initiatives. According to IDC’s Global Sustainability Readiness Index Survey, the primary driver (36%) for ESG and sustainability-related initiatives among telcos is to enhance access to capital. Notable examples include Orange’s €500 million sustainability-linked bond issuance and Telefónica’s €850-million green bond for financing energy-efficient network infrastructure.