How the Sustainable Networks programme can help benchmark sustainability progress

Sabre Konidaris

Hello, everyone. Welcome to the Analysys Mason podcast.

As part of our sustainability series, we'll be joined by business leaders from around the TMT landscape to hear their insights on sustainability, ESG and what it means to them, their organisations and the wider industry.

We have a treat for our listeners today as we'll be discussing what's going on in the realm of sustainability within Analysys Mason's consulting and research teams. My name is Sabre Konidaris, and I'm a Consultant with a focus on sustainability. I'm joined today by Maria Tunberg, who is a consulting Partner and expert in sustainability, as well as Research Director Simon Sherrington and Research Analyst Grace Langham. This podcast is a great opportunity for Maria and I to talk with the research team.

I heard on the grapevine that the research team a few days ago recorded a video in London about the launch of a new research programme. Would you be able to tell us a little bit about that?

Sustainable Networks research programme launch

Simon Sherrington

Yes, I'm glad the grapevine's working well!

Thank you for having us on this call, Sabre. It's really great to be able to announce the launch of our new Sustainable Networks research programme to the wider world. It's a project we've been working on for some months now. It's a brand new programme from Analysys Mason that's designed to help organisations create and build sustainable digital network systems. It's going to be an ongoing stream of research publications, databases and strategy analysis that focuses on a number of key areas of sustainability, areas like energy usage, greenhouse gas emissions, embodied carbon, materials use and circularity.

It's intended to help businesses, public sector organisations and other customers in the telecoms and technology sectors to identify strategies for improving their sustainability, benchmark their progress, and, in turn, help their customers to become more sustainable. So it's a really exciting development for us.

Maria Tunberg

Well, thank you, Simon. It's really interesting to hear your overview of the Sustainable Networks research programme. I was wondering if you could tell us a little bit more about how this programme fits into our wider sustainability research at Analysys Mason.

Simon Sherrington

Yes, sure. As you know, Analysys Mason has been working in the sustainability area for some time now. We've got an established consulting practice that we'll be talking about in a little while. We've been publishing sustainability-related analyses across a number of our research programmes. And as our listeners will know, we publish across a wide range of technology and telecoms-related topics. All of those have had aspects of sustainability creeping into them as it's become more and more important for our customers and the way they're running their businesses. It became apparent to us that it would be valuable for our customers if we could collate all of our data and insights into a single place and build a bank of knowledge and insight that would help our clients plan, evaluate and evolve their responses to the environmental challenges that we all face.

It also became clear to us that focusing our collective skills and knowledge on this topic would help our clients, wherever they are on their sustainability journey, to shape the next stage of their evolution and to understand the possibilities and implications of the big decisions they need to take. By creating this programme, we can help them achieve their sustainability goals.

Importance of sustainability in the TMT industry

Maria Tunberg

Thank you. So you gave several examples of why this programme is of interest to players in the TMT industry. But is there anything you would like to elaborate on? Why it is important that organisations in the TMT industry stay attuned to this programme and the happenings in the field?

Grace Langham

Yes, I think it's a really critical time for the industry when it comes to sustainability. The ICT sector accounts for a relatively small share of global greenhouse gas emissions and electricity consumption but these figures have been consistently rising to the point that the industry may not meet its ITU goals of reducing emissions by 45% by 2030.

If we look at new networks, architectures and technologies, these are important in meeting rising challenges in terms of quality of experience and leveraging new use cases for the industry. But they can also threaten an increase in emissions, energy and waste that conflicts with organisations' sustainability goals.

This doesn't help at a time when stakeholder expectations are rising, whether that's growing regulatory and policy pressures to disclose and align with stricter ESG requirements - which we expect in the long term is likely to affect most companies globally in some form. Or the fact that more and more investors are considering ESG factors in their investment decisions and also the shifting consumer buyer's behaviour. So, having good green credentials is, and will become, a more important part of retaining and attracting subscribers.

If we look beyond addressing these internal challenges as well, technology and telecoms companies have a unique opportunity to enable sustainability across various sectors. They have this kind of dual role, which involves not only reducing their own emissions and improving resource efficiency but also leveraging their technological capabilities to drive sustainability, and embracing sustainability can lead to other benefits for them. So that's looking at cost savings, new market opportunities and enhanced brand reputation as well.

As innovators and large consumer-facing companies, tech and telecoms companies are well-positioned to lead in sustainability, setting standards and best practices that can reverberate across various sectors. So, yes, I think sustainability is at a really critical point now in the industry.

Target audience for the Sustainable Networks programme

Sabre Konidaris

Definitely at a critical point, it sounds, Grace. Very interesting. You mentioned rising pressures impacting most companies globally. And so, with that in mind, I'd like to ask you, who exactly is the Sustainable Networks programme designed to help in this regard?

Grace Langham

The programme is designed to help companies throughout the networking value chain. By this, we mean telecoms operators, network equipment vendors, semiconductor companies, also digital infrastructure operators and data centre operators. We also want to adress financial institutes and regulators as well. For all these players, a detailed understanding of their progress to date and options for the future will be valuable in developing networks and services going forward.

Improving the industry's overall sustainability requires a unified effort from all stakeholders working towards common objectives - we can support that as well.

We recognise throughout the programme that each player has unique needs and challenges when it comes to sustainability. Whether an organisation is at the beginning of its efforts or is looking to enhance existing initiatives around emissions or energy and waste, the programme can provide valuable insights and support at all of these stages. This could be through establishing sustainability strategies, looking at optimising resource and equipment utilisation, setting up renewable energy contracts or implementing energy efficiency technologies that can align with their cost and resource barriers. Also looking at more circular economy principles or addressing and tackling the large problems surrounding customer and supplier chain emissions as well. So, throughout this programme, we want to address everyone within that value chain.

Programme deliverables overview

Maria Tunberg

Very interesting. So, there will be many different sorts of topics and perspectives that will be included in this programme. Could you also say a few words about what kind of deliverables this programme will include?

Simon Sherrington

Yes, perhaps we can both help with that one. I'll start with a broad brush picture, and then Grace can dig into some of the details.

We've designed the content in this programme and the types of deliverables to help organisations through three phases of their evolution. The first phase is understanding where they're at now in terms of their energy consumption, their carbon emission and their circularity. How are they performing? And in particular, how are they performing compared to their peers? I'm not going to say it's an easy task for organisations to measure their own performance, the amount of materials they're consuming and their energy consumption. It's a really big and challenging task. But having done that, you need to know how you compare with your peers. Are you doing better than them? Are you a market leader? Are you a laggard? So our first package of research products helps customers to understand where they are in the big scheme of things and how they compare with others.

Having understood where they're at, the next stream of products and services that we're providing are all designed to help them work out how to improve. What are the technologies they can invest in? How can they evolve their processes? What will be the implications of the decisions that they might make going forward?

The third package of products and services that we're developing within this programme then looks at once organisations in the telecoms and technology sector have got their own house in order, how they can take their sustainability out to the wider market. How can they help their customers to become more sustainable? It also looks at whether there are opportunities to commercialise that. Are there products, services or solutions that they can provide? So, taking organisations in the technology and telecoms sector through the whole journey.

Grace Langham

If I just add to that. As Simon says, we're looking at a broad range of things. Our research also leverages our extensive environmental KPI trackers, which cover leading global operators, network equipment providers, hyperscalers, public cloud providers and TowerCos. We're also adding to that with chipset companies. We're looking to add to this constantly and refreshing the data to reflect, what companies are reporting. Through this, we can compare the performance of players, identify market-leading approaches, as well as analyse factors that could either hinder or enhance sustainability in the networked economy as well.

I will take us through some of the other things that we'll be covering in the programme. We're looking to forecast reports, looking at embedded carbon emissions - which is a critical thing for the industry at the minute. We're looking at strategy reports looking at the sustainable impact of network architectures and technologies, as well as the opportunity companies have in terms of the enabling effect. We also regularly publish shorter insights, highlighting innovative sustainability strategies or trends that the industry is pursuing from either a technological, financial, or decision-making point of view as well.

We’ve published a range of things already, highlighting companies, sustainability progress and ambitions. That's a bit of a nutshell of what we're doing, but hopefully, that gives you a highlight into what's to come and what's already within the programme as well.

Maria Tunberg

Indeed, it does.

Simon Sherrington

We like to think it's a pretty ambitious agenda.

Effective strategies for environmental footprint

Maria Tunberg

I would be inclined to agree with that. I'm very excited to see how it develops and what comes out of it.

Some of the things you mentioned here, Simon, you talked about some different deliverables - from where telecom and tech players are at the moment, what can be improved, to how they can then help other customers externally. And Grace, you also mentioned several different kinds of deliverables from the programme. You mentioned the environmental KPI tracker, for example, and different insights around embedded carbon, which is very interesting indeed.

I know that you have been doing a lot of research in this area already, and I'm quite curious to hear what the most effective strategies for using environmental footprint are. Any sort of teasers or pointers you can give us at this point?

Grace Langham

Yes, I'll go first on this. I think it's a really interesting question. From what we've been researching at the minute, I think telecoms and tech players must take a holistic approach when it comes to addressing their environmental footprint. So, looking at emissions, energy and waste, across their networks and operations. Various strategies exist that companies are already implementing. So, looking at renewable energy, and intelligent energy management technologies. Also looking at recycling and things like that, that a lot of companies are already doing.

We find it's really important, to enhance environmental performance, the most significant impact will come from embedding environmental considerations into your routine business processes and making frameworks because, without that, it's very hard to actually get these different parts of the business to relate to sustainability and drive forward with their goals.

Simon Sherrington

Yes, I think that's really important. I think our conclusions, as Grace said, are that there are many different ways organisations can improve their sustainability. They need to take a trunk, root, branch, leaf level of granularity and look at their entire business and all of their operations - engineering, strategy, HR, procurement. Every different part of the business needs to think about sustainability and how it impacts on it, how that needs to be implemented, and needs to evolve going forward.

The structures within the business need to be such that pursuing the sustainability objectives is rewarded in one way or another. We like to say that, the sustainability objectives and processes need to be embedded so deeply within an organisation at all levels that it's as hard to reverse direction as it is for organisations to set out on the journey to become sustainable in the first place.

I guess in that context it would be quite useful to hear from you, Maria and Sabre about what consulting is doing because that's really where consulting can step in and help. How do you think about sustainability, and what sort of sustainability work do you do?

Consulting's role in sustainability

Sabre Konidaris

Yes, I'll answer this one. We view sustainability as a very important topic that's of growing relevance globally. We do so through the lens of a sustainability framework that we've put together. This framework has E, S, and G pillars: the environment, social, and governance. It was put together based on research from various avenues. It draws from research into the European Sustainable Finance Disclosures Regulation. This is quite an important element that we've woven into the framework. You're able to see this on our sustainability web page.

This framework has been quite successful in appealing to clients and framing their challenges. Certain topics within the framework may be more impactful material than others, depending on the exact context and the project type, given the country. What it has allowed us to do is anchor our approach and allow us to explain to clients where we see the big risks.

Using this framework, we've done a number of different things. We've done ESG initiative materiality and risk analysis, and this has fed into strategy development, for example. We've also done sustainability red flag reviews so that buyers and sellers of TMT assets can assess their ESG performance in areas of risk. We've even done stuff on the regulatory front doing regulatory benchmarking projects so that regulators can see where they stand relative to other leading jurisdictions, for example. So that's a little overview and how we think about it.

Grace Langham

That’s really interesting Sabre, and it shows that you guys have done a lot of stuff already within the ESG topic.

I want to know, who are your main clients for sustainability projects? Who has come to you for support already?

Clients in the sustainability space

Maria Tunberg

Yes, sure, Grace. We work with many different kinds of organisations within the TMT industry, but I could give you three examples of clients that we work with. This connects quite well with what Sabre was explaining in terms of what we do within the sustainability field.

Firstly, I'd like to point out players active in a transaction process. So, connecting to the ESG due diligence just mentioned.

Secondly, for public clients around the world, we see that regulators and other authorities within the digital economy are becoming more and more interested in understanding the sustainability of the industry and understanding the carbon footprint that we just spoke about. Both how the TMT industry impacts the environment, and also how TMT players can support other industries to become more resource-efficient, hence lowering their impact on the planet. So those public clients are someone we work with.

Finally, I would like to mention other private companies within our industry, because we see these organisations are very interested in both developing and also enhancing existing sustainability strategies, and the sustainability part of their work. We've done this kind of work for different kinds of digital infrastructure players, for example, data centres and tower companies.

So that provides you with some examples of the kind of clients that we're currently working together with regarding the sustainability topic.

Notable sustainability projects

Grace Langham

Yes, that's very interesting. Could you talk us through some examples of projects, the more specifics of the projects that you've done already? It'd be good to hear about that as well.

Sabre Konidaris

Yes, definitely. We've done a number of them. The sustainability work truly is international across the company, and we've done a lot across different teams and capabilities. I'll just talk us through a few examples.

We've done sustainability strategy development for a Nordic data centre operator, and ultimately, we had to devise a sustainability strategy for them. Our approach involved identifying competitors, regulators, customers and relevant ESG frameworks to inform their particular sustainability requirements. This involved us identifying priority initiatives and setting KPIs and milestones for these. These included things like energy efficiency and emissions reduction, as well as supply chain sustainability, which we see to be an increasingly important topic.

Another example of a project is an ESG due diligence project. So, to support a private equity firm, we did a buy-side due diligence of a TowerCo in the Philippines. Interestingly, the ESG segment of this was part of a broader due diligence approach where we did the commercial and technical due diligence. Phase two of this had the ESG focus, and we did an ESG materiality and risk assessment as well.

Another type of project is carbon savings analysis. We've done a lot of work looking at carbon emissions and linking back to Scope 3; we see this to be an increasingly intricate piece of analysis that we need to undertake. The client on this one was Cloudflare. They're a content delivery service provider that I'm sure everyone's aware of. We needed to quantify the reduction in carbon emissions from shifting enterprise network functions to the cloud instead of having them on-premises. This mostly focused on Scope 2 emissions and what we did was we pulled together all of our findings from desk research, industry intelligence and also quotes from Cloudflare on how their products work and what they consider to be important. We were able to break down the carbon savings from shifting enterprise to the cloud.

One last project is a sustainability market landscape assessment that we did for Intel. Essentially for them, we reviewed the market to understand how their position as a semiconductor would fit in and how they could better appeal to government and enterprise clients to enhance their position. We developed a framework for comparing competitive sustainability performance, such as energy efficiency. It involved benchmarking 20 Intel products against competitors to determine improvement areas.

So, we've done quite a number of different things for different types of clients. You can see more on our webpage, we have a list of project experience, so I would recommend looking at that as well.

Simon Sherrington

Fantastic. Thank you, Sabre. That's really interesting. There's quite a range of different project types there, different organisations and things you're doing for them. Some of them suggest a requirement for quite a deep integration within the organisations, particularly when you're thinking about developing a strategy for them.

So I wonder, in that context, what makes Analysys Mason unique in the market for sustainability work and how you engage with clients?

Analysys Mason's unique market position

Maria Tunberg

Well, that's a most relevant question. And actually, it's very easy to answer.

As a company, we have a long track record of working not only in the TMT industry but specialising particularly in this industry. We are TMT experts, right? Using that in-depth expertise enables us to understand how this increase in focus on sustainability affects the industry and how private players can best navigate this landscape of increasing sustainability regulations and customer demands in relation to sustainability. So basically, not only how you as an organisation can comply, but how you can turn these regulations and demands into opportunities.

Also, our TMT expertise enables us to understand the sustainability impact on the TMT industry and its individual players, and how these players, in turn, can then manage their impact.

I could provide you with an example of this. So, there is this increasing interest among TMT players trying to understand the carbon footprint of both existing and also potential new products and services. To do this both effectively and accurately, you need to have an in-depth understanding of the organisation itself before initiating any carbon calculations. So you would need to understand every detail of the operations, to understand what's happening throughout the value chain, to understand any legacy equipment, etc., to create this very solid foundation upon which you can then do the carbon calculations. Since we combine this in-depth knowledge of the TMT players and how they operate with the latest insights into the field of sustainability, this is really unique, and it's this combination that puts us in a special place, I believe, in the market of consultancy.

Sabre Konidaris

So that's a wrap on this podcast. It was great to learn from you, Grace and Simon about the Sustainable Networks programme. We hope you got something out of what Maria and I spoke about, on how we look at sustainability on the consulting side. So thank you, Maria, Simon and Grace, for this lovely chat.

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