The telecommunications industry is increasingly under pressure to reduce carbon emissions and improve transparency. Various government regulations have targeted the sector, while customers and partners are demanding more energy-efficient networks. While telcos have largely succeeded in reducing Scope 1 and Scope 2 emissions, progress in reducing Scope 3 emissions has been sluggish.
Not only do Scope 3 emissions typically account for over 80% of some telcos’ total carbon footprint, but they are also the most difficult to track. Upstream and downstream activities, such as supplier emissions supply chain transport and devices discarded, are not always as readily visible as emissions generation from direct operations.
Spurred by regulations such as the Corporate Sustainability Reporting Directive (CSRD), European telcos lead the charge in tackling this sustainability challenge, with many expected to lower overall Scope 3 emissions by the end of the decade. Among these forward-thinking organizations, Nokia stands unparalleled.
In its recent competitive assessment, ABI Research ranked Nokia first in addressing these indirect emissions. Nokia was both the top innovator and top implementer in the rankings, demonstrating its uniquely high level of success in reducing Scope 3 emissions. For these reasons, it’s worth taking a look at what the Finnish telco does right, helping the wider industry identify best practices.
Assessing Nokia’s Innovative Approach to Emissions Reduction
Nokia’s top innovation badge was determined after we evaluated it on the following criteria:
- Scope 3 Measurement and Reporting: Tracking Scope 3 emissions is one of telcos' biggest sustainability challenges. Nokia is well ahead of the curve in this aspect, ensuring suppliers are transparent about their emissions. In 2023, Nokia received emissions data from 63% of its suppliers via the CDP Climate Change Program.
- Supplier Engagement and Collaboration: Nokia has worked with the CDP for more than 12 years, helping ensure many of its suppliers comply with emissions reduction initiatives. The company has mandated that its final assembly suppliers achieve net-zero emissions by 2030 and a 50% reduction for the remaining suppliers. Nokia’s suppliers reduced Carbon Dioxide Equivalent (CO2e) by 143,000 tons in 2023 compared to the previous year.
- Strategy Delivery & Governance: Sustainability runs through the DNA of Nokia’s corporate culture. While the company’s overall Environmental, Social, and Governance (ESG) strategy is overseen by its Board of Directors, it also has an ESG function and a dedicated Sustainability Council to ensure emissions reduction is enacted at the operational level.
- Emissions Reduction Targets: According to its People & Planet 2023 report, Nokia plans to have net-zero Greenhouse Gas (GHG) emissions across its value chain by 2040. Before that, the company is targeting a 50% reduction by 2030, compared with a 2019 baseline.
- Research & Development (R&D): Products such as the AirScale Radio portfolio, new energy-efficient fiber access solutions, and chipset advancements showcase Nokia’s investment in energy-efficient solutions to reduce downstream carbon emissions.
How Nokia Enforces Emissions Reduction Across Its Value Chain
Nokia also scored first in the implementation criteria for telco Scope 3 emissions reduction. ABI Research assessed the following factors to reach this conclusion:
- Total Scope 3 Emissions: Nokia has been an industry leader in telco decarbonization over the last 5 years. It reported a 10.8% reduction in Scope 3 emissions in 2023 compared to 2022. Moreover, Nokia generated 35.2 million metric tons of CO2e less than in 2020.
- Purchased Goods and Services: Nokia scrutinizes its supplier's sustainability efforts through on-site evaluations and audits. For example, 635 supplier audits and EcoVadis assessments were performed in 2023. Nokia’s ability to hold suppliers accountable for emissions reductions has equated to 283 of them developing decarbonization targets. Another way Nokia reduces emissions from goods is with its compact ReefShark chip, which reduces material use.
- Upstream and Downstream Transportation: Efficient transportation of shipped goods is a cornerstone of Nokia’s sustainability aspirations. Strategies include a shift away from air transport, moving operations closer to customers, and considering the use of Sustainable Aviation Fuels (SAFs) for air travel. Additionally, the company leverages digital tools that enable it to optimize cargo space and minimize packaging materials when applicable.
- Use of Sold Products: Nokia’s greatest strides in reducing emissions come from its energy-efficient improvements in its product portfolio. This encompasses mobile networks, cloud services, and network infrastructure. Technologies such as Artificial Intelligence (AI)/Machine Learning (ML)-based optimization, intelligent software, and hardware advancements have been key contributions to decarbonizing Nokia’s value chain. To illustrate, the company’s 5G Massive Multiple Input, Multiple Output (mMIMO) base stations have achieved a 50% energy reduction compared to a 2019 baseline. Moreover, innovations within its ReefShark System-on-Chip (SoC) have equated to a 30% lower energy footprint for its AirScale Habrok mMIMO radios and up to 60% for its AirScale baseband portfolio.
- Other Emissions Categories: One overlooked aspect of sustainability is an organization’s ability to minimize air travel and employee commuting. In this regard, Nokia has achieved a 50% reduction since 2019, with remote work, meetings, and events being a staple since the COVID-19 pandemic.
The telecommunications industry has a long way to go in reaching net zero. Most telcos are in the early stages of mitigating Scope 3 emissions. And while ABI Research forecasts annual emissions to continue to increase throughout the rest of the decade, European telcos are a guiding force in setting a precedent for emissions reduction strategies. Nokia has been a clear front-runner in this race to net zero, outperforming both its European counterparts and household brands from the United States and Asia. Above all, Nokia exemplifies the essentiality of holding your supply chain partners accountable and developing innovative telco equipment that reduces their size and energy footprint.
Read the following Research Highlight or a more in-depth analysis of six telcos’ emissions reduction performances.: Which Telcos Are the Most Successful at Reducing Scope 3 Emissions?
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