3 minute read 12 April 2023

TMT companies could play a lead role in the quest for net zero

A survey of US C-level executives reveals both progress and challenges for the industry’s carbon reporting ambitions

Susanne Hupfer

Susanne Hupfer

United States

Nicholas Wyver

Nicholas Wyver

United Kingdom

Achieving net zero1 is an ever-more pressing priority for businesses, and many in the TMT industry have set more ambitious deadlines than others have. According to Deloitte’s 2022 CxO sustainability study, which surveyed more than 2,000 C-suite executives worldwide, nearly three-quarters (72%) of TMT CxOs plan to achieve net zero by 2030, versus 64% of non-TMT CxOs.2

TMT companies are holding themselves to high standards, as well. As of February 2023, 623 of the 4,614 companies that have committed to developing net-zero targets with the Science-Based Targets Initiative (SBTi)—a coalition for voluntary emission-reduction target setting—were from TMT, making it the largest industry segment represented.3

TMT leaders appear more concerned about climate change than their counterparts in other industries: 70% reported their company is “very worried” (vs. 61% of leaders in other industries).4 But they also signal more optimism: 54% of surveyed TMT leaders strongly agreed that, by taking immediate action, their companies can help limit the worst impacts of climate change and move toward an improved future (vs. 46% of leaders in other industries).5

Regulatory pressure is likely increasing the impetus to act. In the United States, regulators have proposed a new Environmental, Social, and Governance (ESG) rule that would mandate more rigorous disclosures on greenhouse gas (GHG) emissions, environmental risks, and mitigation actions.6

Anticipating these new ESG disclosure requirements, US companies are advancing from net-zero commitments to action. According to Deloitte’s 2022 sustainability action report, many US TMT leaders surveyed are prioritizing ESG governance and disclosure:7

  • Fifty-four percent said their company has already established a cross-functional ESG council or working group to drive strategic attention to ESG, and another 42% are in the process of establishing one.
  • Ninety-one percent of TMT leaders surveyed said their company is preparing for increased ESG disclosure requirements—with 61% preparing extensively. Another 7% said they’re already prepared.
  • Nine in 10 TMT leaders said they’ve enhanced their internal goal setting and accountability mechanisms in recent months.

These increased requirements necessitate understanding a company’s GHG emissions, namely Scope 1 (emissions a company makes directly), Scope 2 (emissions it makes indirectly, such as when buying electricity for heating and cooling buildings), and Scope 3 (emissions it’s responsible for indirectly across the value chain, for example, from buying supplies or from customers’ use of its products).8 Most TMT executives surveyed said their companies are prepared to disclose Scope 1 (69%) and Scope 2 (83%) emissions—outpacing industries overall (see chart). Indeed, on Scope 2 disclosures, TMT outpaces all other industries surveyed.

Scopes 1 and 2 aren’t enough to quantify a company’s environmental impact, though. Scope 3 emissions are estimated to account for more than 70% of some companies’ carbon footprints—and perhaps up to 88% in the technology sector.9 Only a third (34%) of surveyed TMT leaders said their company is prepared to disclose Scope 3 details—on par with other industries. There’s growing international pressure to measure Scope 3, however, existing and future UK and EU regulations that require companies of a certain size to disclose Scope 3 targets could impact large US companies with overseas subsidiaries.10

What makes Scope 3 disclosures so complex? Many companies struggle with data availability and quality. For TMT—and all industries surveyed—a chief hurdle is lack of confidence in the data received from upstream and downstream vendors. Fifty-three percent of TMT executives cited this challenge. The second-biggest challenge (47%) is a lack of consistent industry standards, methodologies, and estimation approaches. TMT leaders appear to be more acutely aware of this issue, as only 38% of executives overall rated it as a top challenge. The third-biggest challenge (41% of TMT leaders) is lack of data availability.

Given that one company’s Scope 3 emissions are other companies’ Scope 1 and 2 emissions, TMT may have a vested interest–and an economic opportunity–in helping companies across industries achieve more accurate and thorough reporting. Some technology companies are creating solutions that track emissions and enable companies to advance decarbonization efforts.11 The market for these types of climate risk digital solutions was estimated to be worth US$880 million in 2021 and projected to surpass US$4 billion by 2027.12

TMT companies are starting to anticipate strategic business value from enhanced ESG governance, controls, and disclosure, as well. Top benefits that TMT leaders surveyed cited are improved ROI (56%), increased employee retention (52%), risk reduction (51%), increased stakeholder trust (48%), and elevated brand reputation (45%).13

Considerations for TMT leaders

Understand the Scope 3 landscape. While mandatory Scope 3 reporting may not have reached the US yet, the industry has an opportunity to focus on solving some of the systemic hurdles. Consider European standards and requirements as a model.

• Prioritize suppliers and evaluate their data governance maturity. Have you defined sustainability KPIs and benchmarks for your company’s data and that of your suppliers?14 Do you know which suppliers are responsible for most of your Scope 3 emissions?

Assess your company’s readiness for Scope 3 reporting. How will you ensure accurate, thorough reporting from your external vendors?15 Have you considered sustainability tracking tools?

Collaborate on system-level changes. Consider helping suppliers develop their own net-zero road maps and reporting strategies,16 and looking for opportunities to join standards workgroups. Ultimately, it may be productive to take a comprehensive systems approach, recognizing that today’s industries will likely transform into complex, interconnected net-zero systems.17

  1. The United Nations describes “net-zero” as “cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, by oceans and forests for instance.” See: United Nations, “For a livable climate: Net-zero commitments must be backed by credible action,” accessed Aug. 11, 2022.View in Article
  2. Jennifer Steinmann, Derek Pankratz, et al., Deloitte 2022 CxO Sustainability Report: The disconnect between ambition and impact, Deloitte Insights, 2022.View in Article
  3. Deloitte analysis of SBTI data in late February 2023 revealed that the Technology sector has 443 signatories, Telecommunications has 112, and Media has 68. See: Science Based Targets, “About Us: The Science Based Targets initiative (SBTi),” accessed February 24, 2022.View in Article
  4. Jennifer Steinmann, Derek Pankratz, et al., Deloitte 2022 CxO Sustainability Report: The disconnect between ambition and impact.View in Article
  5. Ibid.View in Article
  6. Emily Abraham et al., “Executive summary of the SEC’s proposed rule on climate disclosure requirements,” Heads Up 29, Issue 2 (2022): pp. 1-5.; Veronica Poole and Kristen Sullivan, Tectonic shifts: How ESG is changing business, moving markets, and driving regulation, Deloitte Insights, October 29, 2021; Gina Miani et al., “The ESG regulatory whirlwind: Accountability on the horizon,” Heads Up 28, Issue 7 (2021) pp. 1-7.View in Article
  7. Jon Raphael and Kristen Sullivan, “Sustainability action report: Survey findings on ESG disclosure and preparedness,” Deloitte, December 2022. Deloitte commissioned an online survey in August and September 2022 of 300 executives at publicly owned companies with a minimum annual revenue requirement of US$500 million or more, as well as conducted interviews to increase the total sample size to 100 in each of the following industries: consumer products; financial services; life sciences and health care; oil and gas; and TMT (technology, media, and telecommunications).View in Article
  8. Deloitte, “Scope 1, 2 and 3 emissions,” accessed February 24, 2022.View in Article
  9. According to the US Environmental Protection Agency (EPA), about 12% of GHG emissions in the information technology sector are due to operations, and 88% are due to value chains. See: Center for Corporate Climate Leadership, Emerging Trends in Supply Chain Emissions Engagement, US Environmental Protection Agency, June 2018; Deloitte, “Scope 1, 2 and 3 emissions.”View in Article
  10. Rosalind Fergusson, Melanie Purdie, and David Strachan, “Transition Plan Taskforce consultation on ‘gold standard’ transition plans,” Deloitte, January 18, 2023; Marcel Meyer, “What is the TCFD and why does it matter?,” Deloitte, accessed February 27, 2023.View in Article
  11. BloombergNEF, “Tech giants launch emissions tracking tools for Scope 3,” April 7, 2022; Ron Miller, “Microsoft joins Salesforce, Google and IBM in offering sustainability tracking products,” TechCrunch, May 17, 2022; James Temple, “Half of the world’s emissions cuts will require tech that isn’t commercially available,” MIT Technology Review, May 18, 2021.View in Article
  12. Alice Saunders and Ryan Skinner, “Market size and forecast: Climate risk digital solutions 2021-2027 (Global),” Verdantix, November 30, 2022.View in Article
  13. Jon Raphael and Kristen Sullivan, “Sustainability action report.”View in Article
  14. Peter Vickers et al., Using technology to get on top of Scope 3 emissions,” Deloitte, accessed February 27, 2023.View in Article
  15. Deloitte, “Tackling your value chain emissions: Why reducing your Scope 3 emissions is vital to reaching net zero,” accessed Aug. 23, 2022.View in Article
  16. Ibid.View in Article
  17. Scott Corwin and Derek Pankratz, Leading in a low-carbon future, Deloitte Insights, May 24, 2021; Andy Marks, “A Business Blueprint for a Low-Carbon Future,” CIO Journal, Nov. 2, 2021. View in Article

The authors would like to thank Jeff Loucks, Jaime Austin, Gautham Dutt Avaru, Shubham Oza, Prodyut Ranjan Borah, Andy Bayiates, Blythe Hurley, Grace Huang, and Melissa Fincke-Bosmafor their help in producing this article. And a special thanks goes to Michael Steinhart for providing invaluable input and guidance throughout the project.

Cover image by: Jaime Austin.

Technology, Media & Telecommunications

Deloitte’s Technology, Media & Telecommunications (TMT) industry practice brings together one of the world’s largest group of specialists respected for helping shape many of the world’s most recognized TMT brands—and helping those brands thrive in a digital world.

Paul H. Silverglate

Paul H. Silverglate

Partner | US Executive Accelerators | Deloitte & Touche LLP
Christie Simons

Christie Simons

Global Semiconductor Center of Excellence Leader | US A&A TMT Leader | Audit & Assurance Partner
Robert Kerr

Robert Kerr

Audit & Assurance Partner


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