Under Pressure

Why Telecom Providers Must Navigate Muddy Waters of ESG Requirements  

The need for more corporate responsibility has evolved for today’s corporations and the next generation of business leaders in the form of environmental, social and governance (ESG). Investors, activists, and regulators are now requiring proactive, community-structured commitment and accountability that is designed to step above shareholder returns.

Today’s global capital markets aren’t interested in more marketing from companies in every industry. Instead, they are demanding sustainability and eco-friendly business practices as well as a reasonable return. Global telecom providers and their executives are now hearing this call, and the industry is being more proactive in this movement. 

Although ESG metrics are still trying to find their proper place in today’s standardized financial reporting, that hasn’t stopped telecom providers and other industry institutions from making promises and illustrating the proactive nature of their ESG standards. 

What’s needed at this critical step is the ability for companies across all industries to truly quantify their company’s present position relative to investor objectives of integration, values, and impact in the areas of governance over environmental and social contexts. American stakeholders AND shareholders aren’t interested in window dressing and empty promises only for the benefit of a feel-good investor report. They want to know that companies are holding themselves accountable to the promises and commitments they’re making in these key areas.

Proxy Advisor Pressures

Many telecom providers, specifically, have felt their fair share of pressure to adopting more ESG-forward practices. Whether through a reduction of energy use or gender pay gap reporting, shareholders have certainly brought pressure on a large number of telecom providers over their supply chain strategies, environmental and sustainability impacts, and certainly gender-diverse practices. This focus has led to a significant overhaul of many business processes alongside the appointment of a new addition to the C-Suite—the Chief Sustainability Officer (CSO). Other companies, inside and out of telecom, continuously look at leaders in this movement and have started to replicate their operational changes.

However, making promises about ESG commitments and holding true to them are apparently two different stories for some. Many companies are being pushed into making ESG improvements and commitments, especially through institutional investors and oversight organizations such as Institutional Shareholder Services (ISS).

This has led some to wonder if these proxy advisors have become too focused on ESG issues, have conflicted, and have broadly too much power over the operation of America’s largest telecom providers. (Source: The Globe & Mail)

Telecom Providers as Role Models

Telecom providers have the opportunity to truly bring about change—not just in their marketing but in the way they go about doing business. In fact, as business models have had to adapt to this new landscape and changed customer behaviors, there has been evidence of the incorporation of ESG elements across the telecom industry.

These moves recognize it is not solely about making money and preserving the bottom line, but that telecom providers have been working toward having a positive societal impact. There is no doubt that these newly implemented strategies have the potential to drive increased valuations, which pushes up the appetite of investors, but they also attract more qualified people into telecom companies who are extremely committed to the corporate cause.

As more service providers stay committed to their ESG promises, everyone will win in the end, including customers, stakeholders, investors, the environment, and certainly employees. These companies will truly serve as models of operation in the future—only if promises and commitments are delivered. 

ABOUT THE AUTHOR

Rashida Salahuddin is President and CEO of the Corporate Citizenship Project. Born and raised in Los Angeles, Ms. Salahuddin has spent most of her career in Public Affairs working for a diverse array of companies including in Financial Services, Entertainment, and Energy. She is spearheading the Corporate Citizenship Project to address the challenges and ethical issues she has seen firsthand in the field of corporate governance. For more information, please email [email protected] and visit www.corporatecitizenshipproject.com.