ESG (Environmental, Social, and Governance) in Telecoms and Technology - Thematic Research

ESG (Environmental, Social, and Governance) in Telecoms and Technology - Thematic Research

Summary

ESG (environmental, social, and governance) is the most important strategic theme of the decade. Companies must perform well in all areas of ESG; being a laggard in any one of the 12 pillars outlined in GlobalData’s ESG framework will hurt their brand reputation and, ultimately, profits. Increasingly, ESG will also play a growing role in attracting both investment and talent.

Key Highlights

• For decades, the reigning philosophy of business management was the one promulgated by economist Milton Friedman, who favored free-market principles and minimal regulation. Friedman’s view was that corporations were solely responsible to their shareholders and bore no responsibility to anyone or anything else, including the environment. While this view was never universal, it held great sway among corporate managers even as environmental awareness grew and governments adopted environmental protections.
• The financial crisis of 2007 cast a shadow over Friedman’s free-market doctrine. The public began to question profiteering by big business and put pressure on regulators to tighten controls. At the same time, the consequences of climate change became more apparent, leading many to demand that companies be more transparent about their environmental impacts.
• A new market mechanism is emerging that promises to drive progress, which we call the ESG action feedback loop. In short, companies act on ESG and win stakeholder support (e.g., from customers, partners, employees, and investors). This drives a reputational and competitive advantage, which incentivizes further action and participation.

• This report looks at the impact of ESG on the telecom and technology sectors. Its foundation is GlobalData's ESG Framework, which was to help companies build trust with society and set them on a path towards a sustainable future.
• Companies can use this framework to assess their sustainability policies, performance, and progress. It will help them identify and mitigate factors that contribute to negative consequences and pursue actions to improve ESG performance. It provides a checklist for CEOs to ensure their management policies and practices address all aspects of sustainability.

• All significant technology companies have a stated commitment to ESG, but their goals, delivery, and reporting can vary substantially. To date, the technology sector has been a leader in ESG as it is at the cutting edge of combining the digital economy and delivering 21st-century employment and governance standards. Technology is also core to many aspects of recording and measuring ESG performance and enabling ESG as a service up and down the value and supply chains.
• Technology companies that understand, engage with, and prove ESG initiatives and targets will remain in the game: it is not a question of if or when—it is existential, and it is happening now.
• This report provides detailed analysis of the progress made by telecoms and technology companies on ESG and identifies the areas that require further attention.