A new report by global management consultancy, Arthur D. Little has found that telecoms operators in the Middle East and North Africa (MENA) region have largely ignored the potential benefits of adopting environmentally sustainability practices in their products and operations strategies.
The new report, entitled Telecoms Operators in a Carbon Constrained World, contacted 34 operators in the region, getting responses from 12, who combined serve an estimated 64 million customers. The consultancy firm also carried out a quantitative assessment of energy usage and carbon emissions for each company taking part in the survey, and used assigned KPIs to each of the operators for energy and CO2 per customer.
The prognosis for the region’s operators are not good, according to the report. While cost reduction are bringing on some forms of energy conservation, and regional operations of global operators with strong environmental policies are also leading to drives to reduce energy, “the regional operators themselves do not attach strong strategic significance to reducing CO2 emissions,” the report said.
Key findings from the report noted that few operators take a proactive or leadership role on carbon management, as most see it as a cost centre rather an a strategic activity, while carbon and energy management is rarely integrated in the organisational structures of processes of the operators.
At the same time, while most MENA telecoms operators are engaging in environmental friendly initiatives, the researchers did not find one with a green product strategy. And those that have put some emphasis on energy and carbon saving initiatives for cost saving and operational efficiency reasons, are far from achieving their savings potential.
Thomas Kuruvilla, Managing Director of Arthur D. Little Middle East, concluded: “I doubt operators are aware of the significant value creation potential in ‘green initiatives.’ Energy represents 20% of the industry’s operating costs, and the opportunity for a further 20% reduction represents a 4% cut in operating costs. Assuming a change of operating profit from 30% to 33%, the study finds that operators can expect 10% additional value creation by increasing their energy efficiency.”
LESS ENERGY, BUT MORE CO2
One interesting finding by the report comes from its analysis of how much energy and CO2 emission MENA operators record per customer it serves.
“We found significant disparity between operators in the region in terms of their energy consumption per customer. Some are comparable to the global best player. Others use significantly more kilowatt hours per customer. The surveyed regional fixed operators all ranked better than the benchmarked global leaders with regards to total energy consumption per customer,” the report said. “However, on CO2 emissions per customer, most of the regional operators performed worst than the benchmarked global leaders.”
There are two main reasons why comparable energy consumption does not translate into comparable emissions, the researchers said. One is the increasing trend, among global leaders, to adopt renewable energy and green electricity. The other is the difference in the fuel used and efficiency of energy production between Europe and the MENA region.
The report concludes that for telecoms operators in the MENA region, a more proactive approach to carbon and energy management can create significant value for the organisation through realising cost saving and revenue generation opportunities. “The market is open for regional sustainability leaders to emerge and capture a first mover advantage, subject to specific execution conditions,” the report said.
Malek Al Malek, Executive Director, Dubai Internet City, said: “The impact of energy and carbon emissions on the environment is a global challenge. We hope the report`s findings bring telecom operators one step closer to achieving
sustainable development for the region’s economy.
“The report identifies opportunities that telecom operators can explore to not only demonstrate their commitment to global sustainability but also incorporate energy and carbon management into their business models. Partnering with Arthur D. Little on this sustainable development initiative – the first of its kind in the region – marks our belief that the ICT industry must take a leading role in innovation for the low-carbon economy.”
One area that might help is regulation, but that is still “at an embryonic stage in MENA,” the report said. “In the absence of a developed regulatory framework, operators do not attach significance to this aspect of their emissions. However, the situation could change radically and swiftly, depending on the outcome of the United Nations Climate Change Conference in December 2009, aimed at forging a unified approach to CO2 emissions regulations.”