Sustainability has become an essential business issue. Taking a more ethical stance can give companies a competitive advantage, and responsible digital usage can be central to that. By giving more discerning consumers the sustainable products and services that they desire, while controlling their own energy demands, telcos and other service providers can drive positive business outcomes.
Consumers are increasingly sensitive to issues around sustainability, ethics, and brand purpose. A study by the NYU Stern Center for Sustainable Business found that sustainability-marketed products are responsible for more than half of the growth in consumer packaged goods from 2015 to 2019. This growth continues despite the COVID-19 pandemic. A 2020 Deloitte survey of UK consumers found that 43% of consumers now choose brands due to their environmental values, and 34% for their ethical credentials.
Our post-pandemic purchase behavior is not just driven by ethical and health concerns. Many of us have become very price sensitive. The EY Future Consumer Index found that 64% of consumers say they won’t buy products that they don’t feel they need, even if it means they miss out on the latest trends.
There is an opportunity for companies in the ICT sector to develop products for these consumers who are now more price-sensitive and environmentally conscious. An EY survey found that 51% of UK consumers believe that service providers who communicate a clear message about sustainability stand out from their competitors. All things being equal, 79% would choose a sustainable product over an unsustainable one.
It is an approach that combines both the need for technology companies to do business from an ethical standpoint as well as the consumer who wants a different way of using tech tools and services. It is an issue that centers on how to make a genuine shift towards a sustainable future. It could become an important marketing differentiator and a key selling point for ICT companies.
According to Ericsson, digital technologies are responsible for around 1.4% of global greenhouse gas emissions, and the energy required to power global ICT is increasing year by year. That should not be surprising since we use more high-bandwidth and data-hungry tools and apps than ever. This is an area where the world’s technology companies of all shapes and sizes could address their own operations and strive towards more environmental and green business practices.
One way that service providers could begin to do this is to reassess IT equipment procurement and potentially invest in more refurbished equipment. At Orange, we have implemented a program called OSCAR to industrialize the purchase and resale cycle for reconditioned IT and network equipment. We are targeting 20% of equipment reconditioned by 2025. Offering our customers reconditioned devices is good for the environment and for the wallet.
Another way service providers can enhance their image as a digitally responsible provider is by reducing overall energy consumption in data centers and networks. This is likely to become critical as 5G is rolled out worldwide, and data volumes increase. The world’s big four tech companies, Google, Apple, Facebook and Amazon, have already begun using digital technologies like artificial intelligence (AI) to reduce operating costs in their data centers dramatically.
As a whole, the telecoms industry has taken note: in Europe, a new Science-Based Target (SBT) roadmap for the telecoms industry includes emissions reductions for mobile, landline, and data center operations that align with the goals of the Paris Climate Agreement. The move supports the commitment made by the GSMA to getting the mobile industry to achieve net-zero carbon emissions by 2050 and the ITU’s standard calling for the ICT industry to reduce greenhouse gas (GHG) emissions by 45% from 2020 to 2030.
ICT sector companies, including telcos and mobile operators, should recognize that this need for more responsible digital usage is not solely about reducing costs and improving brand image. There is industry regulation coming that may force service providers to change their ways, for instance, the 2020 EU Circular Economy Action Plan.
Technological efficiency is part of this regulation. The purpose of the ‘circular economy’ is to make more of what is currently available, rather than just replacing products regularly. For mobile devices and smartphones, for example, the regulation could mean stricter standards around short-life, low-end mobile devices. It could mean this segment of the market is effectively killed off as higher specs and more expensive materials are forced on manufacturers, reducing profit margin and the appetite to produce such products.
Service providers can get ahead of the curve and introduce their own initiatives to pre-empt forthcoming regulation. For example, Orange France has launched a program called “re” designed to encourage the recycling, recovery, and reconditioning of used mobile phones.
A more responsible approach to digital consumption can be turned into a net positive by ICT service providers. There is the potential for optimizing costs, which always makes good business sense. But as consumers’ attitudes shift and become more discerning, it is in the telcos’ best interests to address them. If you do not promote a philosophy of responsible digital usage, you could risk losing customers to your competitors who are more proactive in this area.
For customers who have limited disposable income but value a company’s ethics, offering responsible, sustainable, or alternative consumption models like sharing and renting options could be attractive. Service providers that demonstrate a genuine commitment to a sustainable future could reap the commercial rewards.
