A renewed focus on a company’s purpose and attractiveness for employees

Companies should move away from just managing their human capital to developing places where talent wants to work. An article from the Harvard Business Review suggests that the most essential keys to nurturing an ideal workplace include letting people be themselves and unleashing the flow of information throughout the company. Organisations should also bring out the best in every employee and stand for something more than shareholder value. Employees should be able to perform tasks that they feel are meaningful. Finally, companies should set rules that employees buy into. Since human capital management is a skill in itself, we only want to highlight the need for companies to become better at it, since talent is becoming scarcer and product innovation imperative.

Develop and grow cybersecurity expertise

Telecom companies need to further develop cybersecurity expertise as this could become an integral part of their service offering. Since many services are scalable, the telecom operators need to grow to provide these services at a profit margin that is sufficient. Growing these businesses could also entail mergers and acquisitions. For example, in 2019 Orange acquired a 100% equity interest in UK-based cybersecurity solution provider SecureData, as well as 100% of European cybersecurity operator SecureLink. Similarly, in 2020 Telefonica acquired cybersecurity company Nozomi Networks through its venture capital arm Telefónica Innovation Ventures.  

Alternatively, relevant services can be offered through ventures. Telecom operators such as KPN and Telefonica have set up smaller ventures that develop new technologies.  

More consistent disclosure and enhanced accountability

Finally, companies need to develop robust procedures with respect to ESG target-setting and accountability. They should also report impact data in a consistent way to help foster a sector-wide drive to improve social engagement.

• Comparable disclosure
  • Take digital inclusion as an example, 92% of the 25 leading global mobile operators today are reporting on their digital inclusion initiatives, according to a recent report by GSMA, an industry organisation representing mobile network operators globally. But GSMA also concludes that the reporting schemes lack consistency. Moreover, only 20% disclose information on the affordability of devices or data plans, the absence of which can harm digital inclusion efforts.
  • Therefore, more consistent reporting schemes both within a company and across companies will play an essential role in increasing the comparability of digital inclusion data within the sector, as well as the comparability of wider ESG performance. A good way to do that is to adhere to popularly recognised disclosure frameworks such as SASB and GRI, and follow (sub)industry guidance such as that from the GSMA.
• Ensuring accountability
  • Since the social ESG factor is in general softer than the environmental ESG factor it can be harder to measure the former. It is therefore important to establish relevant mechanisms that can hold telecom operators accountable to promote social engagement. For example, companies can design KPIs measuring digital inclusion, employee belongingness, and cybersecurity service growth that are easy to quantify.

The social ESG factor is a very relevant factor for telecom operators. This article argues that for the telecom sector, promoting digital inclusion, enhancing company attractiveness, and further developing cybersecurity services are three promising strategies that bring opportunities. These opportunities will facilitate company revenue growth, improve ESG scores, and create a positive impact on society. Finally, the backbone to both mitigating ESG risks and realising ESG opportunities is to hold companies accountable through more consistent and transparent industry-wide disclosure.