How a circular economy can help enable ‘green telco’

The world has gone through massive transformation in recent times. With consumers adopting digital channels, employees working from home and meetings becoming virtual, the telecommunications sector has played a pivotal role in making this transformation possible. However, being the instrument of change at a global scale has caused an unprecedented demand for digital communications, which has forced the telecommunications sector to consume more energy than ever. This trend is expected to continue resulting in sustainability being a key action area for telcos.

For telcos, waste – apart from emissions – contribute significantly to their carbon footprint. This is where circular economy principles can help telcos achieve their sustainability targets - by reducing waste. Circular economy, as a concept, emphasises preserving the value of products, materials, and resources for as long as possible by maximising the product life cycle and minimising waste at the same time. In fact, circular economy contributes to the achievement of several of United Nation’s Sustainable Development Goals (SDGs). It is directly linked to SDG 12 on sustainable consumption and production and indirectly helps achieve seven of the remaining 16 SDGs.

Several telcos have already started embracing circularity across their supply chain, operations and products and service. However, adopting circular economy principles comes with its own challenges:

1. Economic challenges: Financial challenges, such as difficulty accessing capital, low incentive to invest, and high initial cost and low return on investment and high prices of sustainable materials.
2. Complex Supply Chain: Significant coordination among companies across the telecom value chain and a substantial amount of reverse logistics.
3. Lack of knowledge: The lack of knowledge on how to build an integrated and holistic approach for collaboration and specific circular economy practices.
4. Consumer behaviour: The awareness and willingness among consumers to act on reducing their environmental footprint.

However, KPMG professionals have identified a few steps by which telcos can adopt circular behaviours and potentially realise tangible benefits as well.

1. Evaluate existing business models to incorporate circularity: Telcos must depart from a linear economy that uses an extractive approach. Instead, they can incorporate circularity in their business models to promote a regenerative and restorative economy.
2. Find partnerships or alliances that enable circularity across the value chain: The transition into a circular future will require significant partnerships across industries, along with key collaborations with NGOs, suppliers, investors, business customers and consumers to create a circular model across the value chain.
3. Set ambitious goals and track progress: Telcos need to set milestones for goals targeted at reducing, reusing and recycling, and attaching these goals to timelines.
4. Market ‘Circularity’ as an integral part of a sustainability strategy: The strength of marketing can be used in support of green telco, to craft appealing stories and increasing consumer awareness on the topic.

This article was originally published by Markus Kreher, EMEA Head of Media and Head of TMT, KMPG in Germany. If you are interested in finding out more, please contact Sarah Noel, Campaign Manager, Corporates.