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The tactics creating supply chain decarbonization impact for BT Group 

Telecommunications company BT Group is making progress on cutting emissions in its vast supply chain through approaches including collaboration, fostering SME action and climate clauses for key suppliers. 

BT Group is a British multinational telecommunications company, operating across 180 countries worldwide. The company set its first carbon reduction target in 1992, to coincide with the United Nations’ first Earth Summit in Rio de Janeiro, Brazil, and has been at the forefront of business climate leadership over the ensuing decades. It has been ‘A’ rated on climate by CDP for the last eight years running and has a Science Based Targets initiative (SBTi)–approved target to reduce its operational carbon emissions by 87% by end of March 2031.  The company has also set a target to reduce its supply chain emissions by 42% in the same time period. BT Group ultimately aims to decarbonize its entire value chain by 2041.  

With a vast network of suppliers and customers, BT Group’s value chain emissions constitute a staggering almost 94% of its total emissions. This is higher than average, with value chain emissions usually accounting for up to 90% of company’s emissions. The company’s own operations account for just 6.4% of its end-to-end emissions

Figure 1: Breakdown of BT Group’s end-to-end carbon emissions

Value chain – or scope 3 – emissions, are broadly categorised in two ways. Downstream supply chain emissions, representing 20.2% of BT Group’s emissions, are generated when a company’s products – such as customers’ WIFI routers – are used and disposed of. Upstream Scope 3 emissions – 73.4% of the company’s emissions – stem from the goods and services it procures from suppliers, such as baseboard units and cabling.  

Engaging each individual supplier in its network of 11,400 on climate action is near impossible. However, BT Group already managed to cut upstream supply chain emissions by 20% since 2017, with these emissions reductions pertaining to Scope 3 categories 1-8. The company has also cut overall Scope 3 emissions by 21% in that time.  

What can other companies learn from the action BT Group has taken on supply chain decarbonization?
 

BT Group is engaging directly with Tier 1 suppliers and has baked strict rules into contracts for its biggest suppliers. 

Building on this approach, climate clauses now commit some of BT Group’s key suppliers, selected based on spend and/or carbon intensity, to make measurable carbon savings during the length of their contracts.  For new contracts over £25 million, suppliers must commit to net zero science-based emission target and report on their progress. Contracts over the £25m threshold cover the vast majority of BT Group annual total contract spend.

Acting in isolation can only get a company so far, so a second approach that has proved invaluable for the company has been working together with partners. Most notably, BT Group worked with the Exponential Roadmap Initiative, Ericsson, Telia Company, IKEA and Unilever to set up the 1.5 Supply Chain Leaders Initiative to drive climate action throughout global supply chains.

BT Group worked with its supplier, strategic partner and fellow member of the Exponential Roadmap Initiative, Ericsson, in 2023 to see if they could collaborate to reduce embodied carbon emissions – those arising from carbon-intensive materials and processes used to make its products – through engagement with key suppliers.  

Ericsson had already set a supplier climate target for 350 high-emitting and strategic suppliers, which required each to set their own 1.5°C aligned climate targets. Manufacturing partner Flex is one of these. In 2021 Flex, which produces baseband units for BT Group, committed to reducing its Scope 1 and 2 emissions by 87% by 2030 with SBTi – and requiring its own preferred suppliers to set emissions reductions targets by 2030.

At the beginning of 2022 one of Flex’s factories in Poland switched to 100% renewable energy. As a result, Flex Poland reduced its Scope 2 carbon emissions (those associated with purchased electricity, steam, heat or cooling) by 11,000 tonnes, while BT Group saw a 14-tonne reduction in embodied carbon emissions from hardware produced at the factory.

BT Group also works with its sector peers, for example through GSMA and JAC, the Joint Alliance for CSR. Together with other telecoms operators who are members of JAC, the alliance has issued best practice examples that suppliers can adopt to take climate action. Working together to encourage suppliers to disclose to CDP is another way the industry is collaborating. 

A third approach BT Group has taken, to engage the thousands of smaller companies in its supply chain beyond the most high-emitting and strategic suppliers, is to support small and medium-sized enterprises (SMEs) through the SME Climate Hub,the SME climate initiative of We Mean Business Coalition. Nearly 8,000 businesses have made a net zero commitment through the SME Climate Hub and are using its tools and resources to take climate action.

The Hub now provides SME decarbonization guidance in Spanish and Arabic. alongside the original English offering.  Through the Hub, BT Group and other large corporates can engage all the companies in their supply chain – calling on them to reduce emissions and supporting them to take the necessary actions to decarbonize in line with science – including overcoming their own challenges.

Advocacy and accountability to drive supplier decarbonization

Beyond engagement with individual suppliers, advocating for government policies to accelerate progress can play a key role in supply chain decarbonization. Switching production facilities to green energy, as Flex has done, is usually the fastest way for suppliers to decarbonize, but in certain geographies the infrastructure isn’t there yet to support this shift. BT Group gives the example of manufacturing suppliers in parts of Asia and Africa, where renewable energy infrastructure is still developing. As a signatory to the Fossil to Clean campaign letter organised by We Mean Business Coalition, BT Group stands among more than 200 of the world’s most ambitious companies in calling for an end to the fossil fuel era and a tripling of renewable energy worldwide.

Companies within global supply chains have a role to play in staying accountable by reporting publicly and annually on their emissions reduction efforts. With suppliers across 100 countries, ensuring quality and consistency of reporting is important for BT Group. The company strongly encourages suppliers to disclose their climate impacts through CDP and make use of key resources for reporting on supply chain decarbonization such as the SME Climate Hub and Exponential Roadmap’s 1.5°C Business Playbook and Supplier Engagement Guide  

What’s next?  

BT Group’s journey towards decarbonization underscores the importance of collaborative action. By leveraging partnerships, advocating for policy changes, supporting businesses within their supply chain, and fostering transparency and accountability, BT Group shows how companies in their sector and beyond can tackle supply chain emissions. 

Resources 

• Access best-in-class tools and examples on supplier engagement
• Learn about the 4 A’s of Climate Leadership