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ESG is not an advantage, it is a necessity.

PPF Telecom Group

14/10/2022 | 8 minutes to read

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PPF Group’s telecommunications arm emits 859,000 tonnes of carbon dioxide annually, two-thirds of which is produced by its suppliers. The Group’s goal is clear – it wants to halve this figure by 2030. “In the future, working with our suppliers to reduce their emissions will be important. It may even be necessary to choose our suppliers according to their carbon footprint,” says Marek Sláčík, head of PPF Telecom Group’s foreign operations, also responsible for the Group’s ESG strategies.

PPF Telecom Group recently published its first ESG report. But why? There are no standards for evaluating companies in this area.

For the Group, it is not just the reporting that is important, but the philosophy itself. Sustainability is an essential part of how we think about business. Our companies were involved in a range of sustainable activities before the concept of ESG came along, and so the report is a way of showing what we are already doing and want to achieve. The societies and environments where we do business are changing, and if we want to be successful in ten or fifteen years’ time, we need to respond to these changes. We also know that we need to prepare for the time when ESG reporting becomes mandatory. Simply collecting the data is a major undertaking for a company of our size.

Did you produce an overall ESG score with the report, or did you just assess your current situation and set goals for the future?

We will submit a rating in a future step. For now, we have built a strategy that we want to pursue to develop sustainability in our business and have committed to concrete goals and plans for the coming years.

Could you be more specific?

The company has committed to halving its greenhouse gas emissions by 2030 and moving towards carbon neutrality. For the first time ever, we have mapped our own carbon footprint. Today, it is about 859,000 tonnes of carbon dioxide per year, which means that we want to get that figure to somewhere around 430,000 tonnes within eight years. We were already doing a lot of sustainable activities before the ESG wave started. We are just now defining a formal strategy and targets at the group level for these activities and will report on them regularly.

In the report, you separated greenhouse gas emissions into three categories. Why?

Because we think this will be important over time. And it’s a best practice. At the start, we can focus only on ourselves and consumption, which are the first two categories, but if we really want to meet our reduced emissions targets by 2030, we will also need to reduce consumption through our entire supply chain and the life cycles of our products. We have found that up to two-thirds of emissions are not produced by PPF Telecom Group directly but collectively by its suppliers, for example, from using mobile phones or servers. It will be important in the future to work with suppliers to reduce their emissions or even choose suppliers based on their carbon footprint.

How do you specifically plan to reduce the Group’s greenhouse gas emissions?

We are definitely planning further energy saving measures, and we are talking about purchasing green energy and contracting our electricity needs from energy source operators through long-term PPA contracts. We are also thinking about investing in our own solar power plants. CETIN, for example, already uses almost 70 percent renewable energy in Serbia. Electronic waste is another major environmental concern linked to the entire telecommunications industry. Our companies are already promoting phone recycling and reducing the volume of waste produced. We already have several projects running in this area, now we want to support them with a strategy at the group level.

To summarise this part, how much will it cost you?

That’s a premature question for now. We have several projects and ideas on the table, but we are not yet able to quantify the total cost.

How does PPF Telecom Group approach social issues  – S?

The letter S looks at areas where the business has some significant societal or economic impact. In our case, it means the construction of modern telecommunications infrastructure and providing high quality, safe and affordable services to as many people as possible, including in rural and sparsely populated areas. We are committed to providing state-of-the-art 5G technology to at least 50 percent of the population by 2024 and 80 percent by 2027. Our responsibility in developing digital literacy and looking after our employees is also significant.

I confess that I expected you to mention more non-profit activities for this category. Do you think that developing a 5G network, which you promised in the spectrum auction, can be considered a social responsibility?

The purpose of telecommunications is to connect people and businesses, to support the digitalisation of society and the economy. From this perspective, our work has a clear and positive impact on society. The Covid-19 pandemic, which hopefully we have seen the worst of, has clearly shown the importance of digital connectivity, yet no-one seems to want to guess what this time may have looked like without digital infrastructure. We also run a range of educational projects, which is exactly the type of community service you are talking about. I wanted to say though that we feel it is important for our business itself to be sustainable and that we remain successful from a financial point of view. At PPF, the mindset that sustainability and profitability go hand in hand is a key approach. Otherwise, without profitable businesses, we will certainly not achieve sustainability. Sometimes I feel that not everyone realises this.

What about the last letter – G?

When it comes to governance, our companies’ functions, processes and reporting behaviours must meet all standards. Nothing changes there for us. What we need to do in this area is incorporate the principles of sustainability into managing our supply chain.

Many telecommunications companies are also specifying targets to include more women in management. Is that the path you want to take?

It’s not really a question of choice but when, although we may be a little behind the curve in this since our industry is very technical and is traditionally associated with a male domain. Building infrastructure is about installing technology on pylons, excavating and so on, so it is a challenge. On the commercial side of our business, where it’s more about the relationships with our customers, and in marketing, we’ve been quite successful with career growth for women.

But do you have specific targets, for example, for having at least one woman in management in each country?

We have goals, but we start from the bottom. First, we want to support the careers of the women who already work for us to move up to higher levels of management.

There is some discussion as to whether it is worthwhile for some companies not to address ESG and face public scorn but be more profitable. Does that make sense to you?

I don’t think so. Already now, when the rules have not even been harmonised, companies are competing through ESG in the bond market, for example. In this context, we absolutely cannot afford to be left behind.

Do you expect PPF Telecom’s first ESG report to have positive effects on the company’s performance?

The expectation that companies should actively contribute to solving current social and environmental problems is growing, and we are already seeing action in our markets on environmental protection as a way for companies to define themselves against the competition. In other words, we are also seeing ESG-related activities as opportunities to further develop our business.

Many companies say that the emphasis on ESG has brought them lower interest rates. Do you feel the same way?

As far as financing is concerned, our report puts us among companies that can tap into so-called ‘green money’. That’s also why we saw the move as inevitable. When we started reporting a year ago, an ESG strategy could still give someone a financial advantage over their competitors. Today, ESG is standard among our competitors. But companies that don’t try to improve themselves with ESG reporting may find it more difficult to access funding. Going against the tide may work in the short term, but in the long term, the pressure will be so enormous that any company which ignores ESG will not survive. And it isn’t just about the European Commission or banks or investors, but mainly about the customers and employees who will consider how responsibly a company behaves. A lot of people are already doing this now.

You mentioned that the rules for ESG haven’t been set up yet. Who will you get a rating from?

A number of rating agencies are operating on the market today, so we will target those that our investors are using the most. We are also following the preparations for the new European CSRD, which will make non-financial reporting mandatory from 2026, so for the year 2025 already. This will clarify areas for reporting and create uniform standards for companies to disclose key information. Several areas still have uncertainties, but I expect that by mid-decade at the latest, clear rules will have been set for all aspects of ESG.

PPF Telecom Group Sustainability Report

Author: Ondřej Souček

Source (Czech only):

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