Lucror Analytics ESG Assessment Interview Company Telecom Italia Industry Media & Communications – Telecom Services Description Telecom Italia (TI) is the incumbent telecommunications operator in Italy. The company has market-leading positions in fixed line and mobile (where it also operates under the budget Kena brand). The company is also active in Brazil (as TIM Brasil), with over 50 mn mobile lines and an increasing presence in fixed line. TI was created in 1994 through the merger of a group of Italian telecommunications operators, and is listed on the Borsa Italiana. Vivendi, which owns a 24% stake in the company, lost Board control to activist shareholder Elliott Management Corporation in March 2019. TI is in the process of selling its network division and has received two offers. www.telecomitalia.com/tit/en.html Website 1. Some guiding questions to help with your assessment: a. What is your assessment of the environmental and social factors as a whole, and why? b. What are some other environmental and social factors that are important for this company and industry? - - reduce their carbon footprint collection of vast amounts of user data, ensuring data privacy and robust cybersecurity measures is paramount. Instances of data breaches or privacy violations can result in significant reputational damage and legal consequences. Maintaining a positive work environment, providing fair wages, opportunities for professional growth, and promoting diversity c. What are some of the ESG trends/outlook of this industry? - - Environmental Sustainability: Reduce carbon footprints, sustainable practices Energy Efficiency and Emissions Reduction: The telecom industry was working to improve energy efficiency in data centres, networks, and other infrastructure to decrease greenhouse gas emissions. Efforts were being made to optimize power consumption and reduce electronic waste Supply Chain: Suppliers adhering to sustainable practices Data Privacy: Demonstrate transparency in data handling Workplace Diversity + Inclusion CSR Initiatives Disclosure + Reporting: More transparent in reporting (clear metrics and data) ESG topics Environment (Greenhouse gas emissions, energy management, biodiversity efforts, etc) Assessment - Collaboration with third parties for adopting ESG standards From 2022, to accelerate the reduction of greenhouse gas emissions, we have included two new targets in the ESG Plan: a 47% reduction in upstream and downstream emissions occurring in the value chain (Scope 3) by 2030, and Net Zero emissions (Scope 1+2+3) by 2040. - a circular economy target to reduce and valorise waste (Circular Economy Ratio 2€/kg by 2025); • a target for green products and smartphones to encourage customers towards more sustainable choices (≥70% green products and smartphones by 2025). To measure our Company’s CO2 emissions, we apply the “GHG Protocol” - Scope 1: fossil fuel consumption to power heating and trigeneration plants in the exchanges and Data Centers Scope 2: purchase of electricity needed to power our infrastructure and offices Scope 3: generated upstream and downstream of our production activities Purchase electricity from renewable sources and self produce Resource Consumption: Paper, Plastic, Water Offset Co2 emissions generated by website Collaboration on projects for preservation of biodiversity - Change Inside-Out: Practices for sustainable office Social (Workplace safety, employee training, etc) Retirement plan Reskilling programs (with the megatrend) Welfare programs for employee (including families) Women Project Inclusivity (disabled, ethnicity, religion) We are among the founding members of “Parks - Liberi e uguali” [Parks - Free and Equal], a non-profit association that promotes Diversity Management as a source of value and a competitive advantage Filling the gender gap Few Key Points to Note: - - Does the company structure show the flow of communication to manage the issues? Is the structure tight? Are the commitments relevant to the operations enabling meaningful change? KPI’s: What is the industry standard and are their targets ambitious? In what aspects are they doing better than their peers and in what ways are they not? What other KPI’s should they include? Is there third party organisations engaged to provide independent assurance and reliability of the content of the report? Pre-Step: Understand WHERE and WHAT industry is the company operating in? → (1) What are the material ESG issues for the industry and (2) what are the ESG issues companies face operating in the region? - - reduce their carbon footprint collection of vast amounts of user data, ensuring data privacy and robust cybersecurity measures is paramount. Instances of data breaches or privacy violations can result in significant reputational damage and legal consequences. Maintaining a positive work environment, providing fair wages, opportunities for professional growth, and promoting diversity Consumer Megatrends (Example) Circular Economy and Plastic Waste Supply Chain: Value chain carbon emissions (Scope 3), Human Rights Sustainability Labels and Greenwashing *What to look out for? 1. How MEANINGFUL are the disclosures? 2. Are they assessing their impact on the environment and society? 3. Do they talk about their pitfalls and how they address them? a. Nestle: Faced human rights issue on child labour but it chose to address it showing transparency. 4. Do they have KPIs and are they meaningful to the business? Step (1): Frameworks and Standards: Using the right frameworks which is apt to the industry and the business the company is in. Frameworks? Step (2): Materiality Assessment: Analyse the material ESG issues and understand the Impact VS Importance Matrix. Step (3): Oversight and Implementation: Does the company structure show the flow of communication to manage the issues? Is the structure tight? a. Nestle brings an external party to bring in new perspective. Step (4): Sustainability Goals and Objectives: What are the commitments? Are the commitments relevant to the operations enabling meaningful change? Are the goals diverse? (not just climate change but also biodiversity, water, supply chain. Also include social goals for the community). Is there change inside out? Step (5): Milestones and KPI’s: Report should talk about how they are progressing on their goals? What is the industry standard and are their targets ambitious? In what aspects are they doing better than their peers and in what ways are they not? What other KPI’s should they include? a. Nestle: Reported on the progress towards their commitments over the past 3 years. What should we look out next? Has their progress been meaningful, and do you think they would be able to reach their targets? Any restatements of data that might distort YOY comparison? Step (6): Transparency and Traceability: Is there third party organisations engaged to provide independent assurance and reliability of the content of the report? Did the company make/note changes in their methodology and calculations which provides accountability and transparency?
