Sustainable business leaders understand how strong environmental performance drives improved financial results; many others are still missing out

About a year ago my colleagues were involved in a project with the Global e-Sustainability Initiative to understand how digital technology can put achievement of the UN’s sustainable development goals (SDGs) within our collective reach. They reported on a myriad of benefits to society, not least of which was how digital solutions can unlock $9 trillion in economic benefits globally and enable a 20% cut in global CO2 emissions.

The results of my recent engagement with CDP (formerly the Carbon Disclosure Project) therefore came as no surprise to me. We found that, just by examining the top 100 carbon emitting firms reporting to CDP, a $447 billion business opportunity in potential growth and savings – driven by regulatory change and the physical and related impacts of climate change – was recognised and disclosed. Incredibly however, 42% of these top 100 emitting companies have yet to quantify (or at least report on) the business value of such climate-linked opportunities.

This was just one of the important findings in our analysis and report, available at cdp.net/telco-value. Through our partnership with CDP, we analysed almost 2,400 company responses to understand and highlight the link between superior, progressive environmental performance in telecommunications firms, and the associated financial results.

Whilst sustainable business leaders have disclosed the $447 billion business opportunity mentioned above, we also found that many firms (telecommunications giants amongst them) already captured and reported over $1 trillion in revenue from low-carbon products and services in 2016 alone.

In one example, Deutsche Telekom attributed 39% of 2015 revenue (excluding the USA) to sustainable products and services, through a rigorous and disclosed screening process; this translated into €15.8 billion in sales for just this one firm. Other telecommunications providers are disclosing significant contributions to society: Verizon estimates its solutions offset 98-144% of emissions from the company’s operations in 2015, whilst Vodafone has enabled its customers to save 1.9 tonnes of GHG emissions for every one tonne it generates.

It is not only a revenue imperative that telecommunications firms are starting to act on. We identified $699 billion in environmental risk through just one year of CDP responses we analysed, yet many firms have only a cursory understanding of such risks that could impact their businesses. Some things are changing; during our research for example, one telecommunications executive told us that their firm had recently completed a global climate change vulnerability assessment and now understands where their physical assets are most vulnerable and where action is required. Overall however, our research re-emphasised to me that progress on identification and financial analysis of sustainability risks is far too slow.

These risks are an enormous corporate blind spot for the telecommunications sector and beyond, and it is one that investors are increasingly worried about. Our partner in the research, Hermes Investment Management, and many of its peers, largely agree that disclosure of environment-linked opportunities and risks in detailed, financial terms is still insufficient. This view has crystallised in the investor community over the past two to three years, and all but one of the nine executives we interviewed as part of this engagement agreed that investor queries on climate change adaptations and opportunities have become increasingly detailed, specific and linked to financial value.

Our report, supported by decades of other research, demonstrates there is real financial value in acting on environment-focussed opportunities, as well as showing the significant potential financial losses from doing nothing. At cdp.net/telco-value we offer three practical actions for telecommunications providers to get started on understanding, quantifying and communicating the financial value of their environmental performance.

Have a read and let me know – is your business doing enough?