Technology, media, and telecommunications (TMT) companies get proactive with sustainability reporting

Cross-functional ESG council

To drive strategic attention to ESG, more than half (54%) of TMT respondents report that their company already has a cross-functional ESG council, committee, or working group. Most of the rest say they’re in the process of establishing one (figure 1).

Figure 1. Establishment of a cross-functional ESG council or working group in the TMT industry

The cross-functional aspect is important because accountability for ESG extends throughout the organization and is often most effective when it meaningfully involves the business’s commercial functions. Typically, business lines own the development of targets, strategies, and solutions. They also have significant market insight and can identify new ways to further ESG objectives.

ESG council meeting frequency

Half of the ESG councils in TMT companies are meeting on a quarterly basis, according to our survey. Another 39% of councils aim to meet at least once a month (figure 2).

Figure 2. Meeting frequency of ESG council or working group in the TMT industry

Meeting frequency reflects how quickly the conversation around ESG is maturing, driven in large part by two key movements, among others:

• The EU has passed several laws, including the Corporate Social Responsibility Directive, which are much broader than the SEC’s proposed rule and have the potential to require global reporting by non-EU companies, including US parents.
• Investors continue to raise expectations on climate and ESG matters. And record numbers of companies are signing on to net-zero pledges. Those companies signing on to these pledges may then turn to their supply chains and require certain measurements and net-zero pledges of their vendors. These actions have an impact on even private companies not subject to SEC or EU rules.

Several of the rules and laws in this area will require limited or reasonable assurance to be provided by a third party. That, in addition to requested ESG data from customers, increases the need for governance and rules around the relevant data to enhance accurate and complete reporting.

Board-level oversight of ESG

Among the TMT executives in our survey, 50% say their company has a board-level ESG or sustainability committee—an indication of ESG’s importance in the industry. However, it’s nearly as common for the compensation committee or nominating and governance committee to have oversight over ESG-related matters (figure 3).

Figure 3. Primary responsibility for oversight of ESG at the board level in the TMT industry

A number of respondents indicate ESG oversight is shared across two or more board-level committees, likely because ESG is a broad topic that spans multiple items on the board’s agenda. For instance, ESG metrics for executive compensation may sit with the compensation committee. The governance component of ESG may fall under the purview of the nominating and governance committee. And ESG disclosure reporting is likely a concern of the audit committee.

Preparation for future regulatory and disclosure requirements

Most TMT executives indicate their company is taking steps to get ready for future regulatory and disclosure requirements. A majority (61%) say they’re making extensive preparations, and another 7% say they’re already prepared (figure 4).

Figure 4. Preparations for potential increased ESG regulatory or other disclosure requirements in the TMT industry

Reporting on greenhouse gas, or GHG, emissions is a central focus for many organizations. At 69%, TMT ties with consumer products as the industry most prepared to disclose details of their Scope 1 GHG emissions. 83% of TMT executives say they’re prepared for Scope 2 GHG disclosures, while 34% say they’re prepared to disclose their Scope 3 GHG emissions.

Business outcomes due to enhanced ESG reporting

In a separate Deloitte survey, 37% of technology executives reported that their organization is already dealing with a scarcity of resources such as water and energy, 38% said that they were feeling the cost of climate change mitigation, and 42% said that their operations had been affected by climate-related disasters or weather events. Enhanced reporting requirements can encourage action on these fronts, which may explain why 56% of the TMT executives in our sustainability survey expect enhanced ESG reporting to bring increased efficiencies and ROI (figure 5).

Figure 5. Expected business outcomes due to enhanced ESG reporting in the TMT industry

Still, those aren’t the only business benefits survey respondents expect. About half of the industry executives in our survey point to reduced risk, premium product pricing and arguably most importantly, enhanced stakeholder trust as likely outcomes. Trust in a company by its stakeholders has the potential to drive performance. Stakeholders’ trust in an organization may highlight key performance indicators that drive overall increased financial performance. Trust can also help elevate customer and brand loyalty, which may lead to increased workforce engagement and therefore increased productivity and retention.