In the Australian summer of 2019, I was driving the thousand-kilometre journey back home for the holiday season. It was during one of the worst wildfires the world has ever seen, where land the size of the entire United Kingdom was burnt. I did not expect to be travelling home seeing endless stretches of blackened landscape and smoky sky that year. I did not expect to see street signs melted on the side of roads that year. I did not expect to wear a mask indoors to avoid constant coughing that year. Many people did not expect that wildfire that year. This was my first experience of an extremely severe weather event and while I acknowledged the presence of climate change, living through it highlighted to me the urgency of taking action before irreversible damage is done.
Society and the Earth’s climate are changing. A digital transition is transforming society and the economy through the adoption and diffusion of digital technologies, such as information and communication technologies (ICTs), artificial intelligence (AI) and blockchain. Similarly, a green transition is under way, shifting to a low-carbon, circular and resilient economy and society that minimises the environmental impacts and maximises the climate benefits of human activities. The question remains, can a simultaneous and synergistic twin transition be realised? With a suitable societal structure, I am concerned but optimistic.
At the core, policy needs to embed environmental impact into the financial systems that drive industry
The communications industry has a direct and indirect role in facilitating a successful twin transition. As an industry with significant climate impact, therein lies opportunity to manage and minimise that impact directly. Additionally, the communications industry serves as an enabler and enhancer of innovation, productivity, efficiency, connectivity and inclusivity across various sectors and domains, such as health, education, agriculture and finance. Leveraging this potential can enable and accelerate the green transition, such as by monitoring and measuring environmental indicators, optimising and integrating renewable energy sources, or enhancing the resilience of systems and communities.
Global climate targets and the Paris Agreement
The global climate targets are the goals and commitments that countries and other actors have agreed or pledged to achieve in order to limit the rise of global average temperature and avoid the worst impacts of climate change. The most important and ambitious global climate target is the one set by the Paris Agreement, which aims to keep the global temperature rise well below 2°C above pre-industrial levels and pursue efforts to limit it to 1.5°C by the end of this century.1 To achieve this target, countries have submitted their nationally determined contributions (NDCs), which outline their plans and actions to reduce greenhouse gas emissions and adapt to climate change. The NDCs are expected to be updated on an ongoing basis. However, the current NDCs are not sufficient to meet the Paris Agreement target, and there is a significant gap between projected emissions and the emissions required to achieve the 2°C or 1.5°C goal of 15.1 and 22.9 gigatonnes of CO2 respectively.2
Another global climate target is the one set by the United Nations Framework Convention on Climate Change (UNFCCC), which is the parent treaty of the Paris Agreement and the main international framework for addressing climate change. The UNFCCC has a long-term objective of stabilising greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. The UNFCCC also has a subsidiary target of reducing greenhouse gas emissions by at least 45 per cent from 2010 levels by 2030 and reaching net zero emissions by 2050, as recommended by the Intergovernmental Panel on Climate Change (IPCC) in its Special Report on Global Warming of 1.5°C.3 The UNFCCC also supports and monitors the implementation of the NDCs and other climate actions by countries and by non-state actors, such as cities, regions, businesses and civil society organisations.
Figure 1: List of countries by climate action policy status
Source: Climate Action Tracker4
Global policies are currently not sufficient to meet global climate targets. Climate Action Tracker shows that there are no countries on track to meet the 2030 and 2050 targets laid out in the Paris Agreement to limit the rise of global average temperature to 1.5°C above pre-industrial levels.5 Strong policy that has the capacity to evolve as behaviours and social systems change is needed to lay the bedrock for industry to build and adopt a twin transition. At the core, policy needs to embed environmental impact into the financial systems that drive industry. A carbon cost that charges the polluter is an effective way to introduce this and many nations have already implemented such a feature to various degrees. Taxing carbon is an effective method to meet the targets set out in the Paris Agreement, either by motivating industry to adapt to a low carbon posture or as a funding source to offset emissions through sustainability initiatives. While at its core a carbon cost presents as a financial penalty to industry, it also presents industry, both the communications sector and more widely, with a unique opportunity to adopt digital transitions that enable and accelerate their own green transitions.
Figure 2: Overview of Greenhouse Gas Protocol scopes and emissions across the value chain
Source: World Resources Institute
To meet the targets set, a standard for measuring greenhouse gas emissions is required. The Greenhouse Gas Protocol categorises greenhouse gas emissions into three scopes.6 Scope 1 emissions are direct emissions from sources owned or controlled by an organisation, such as fuel combustion or refrigeration. Scope 2 emissions are indirect emissions from the generation of electricity, heat or steam purchased by an organisation. Scope 3 emissions are all other indirect emissions that occur in the value chain of an organisation, such as raw materials, transportation, waste disposal and business travel. For the communications industry, which is largely service based, scope 3 emissions also include the indirect emissions from service providers, such as emissions for the energy required to power a home gateway.
A broader approach to sustainability
Sustainability is not only limited to climate action. Control of hazardous materials, water use, waste disposal, plastics, recycling requirements, sustainable materials and modern slavery paint a more holistic picture of sustainability. There exist many groups targeting these aspects of sustainability.7 Preventing further environmental catastrophes, such as the Bhopal gas tragedy8 or the Aral Sea crisis9 is critical to engendering sustainability in our global society.
These groups, goals, recommendations and conventions are all starting points that help inform future legislation on sustainability. As the science evolves, policies and regulations should also evolve with it and consider a more holistic view of sustainability.
As the wave of sustainability approaches, the communications industry has a key role to play as both an enabler and participant in the sustainability journey. It is the glue in society that connects everyone and everything. As a participant, the communications industry contributes about 0.4 per cent of total greenhouse gas (GHG) emissions as part of the industry’s operating activities (scope 1 and scope 2 emissions).10 Key to this is timely life-cycling of technology.
Analysis from France found that while shutting down the country’s 2G and 3G networks would increase embedded emissions in the short term due to the need to purchase new devices, this would be offset within six months
Source: TU/World Bank. Measuring the Emissions & Energy Footprint of the ICT Sector: Implications for Climate Action, 2024
Supporting technology migration
All too often the ICT sector delays turning off and decommissioning old equipment. This can be for a number of reasons, including maintaining legacy services, capital expenditure constraints and limited technology replacement options. Additionally, a life-cycle event serves as one of the key moments when the industry can change direction and incorporate a simultaneous digital and green transition at a similar cost profile. As evidenced in the earlier example, support to reduce the friction of technology migration has a significant and near-immediate benefit to the communication industry’s carbon emission profile.
One risk posed by the life cycle of ICTs is the often rapid obsolescence driven by technological innovation, market demand or consumer preference which can be a significant impact for sustainability. By considering the environmental, social and climate impacts and implications of the life cycle of ICTs, the industry can design and deliver ICTs that are more durable, repairable, reusable, recyclable and energy-efficient, and that can support the transition to a low-carbon, circular and inclusive economy and society. For example, the industry can use green materials, processes or technologies to manufacture ICTs that have lower environmental footprints, such as less energy consumption, water use or toxic emissions. The industry can also offer ICTs that have longer life spans or that can be easily repaired, upgraded or refurbished to reduce the amount of electronic waste that is generated and disposed of. The reuse or recycling of ICTs, or their components or materials, can create new value and reduce the demand for new resources. The industry can also ensure that ICTs are compatible and interoperable with other ICTs or sectors, to enable the sharing, exchange and integration of data, information or services.
Figure 3: Digital solution net zero acceleration opportunity
Source: World Economic Forum
In addition to having a direct impact on sustainability, the communications industry also has a role to play in enabling the carbon avoidance of other industries. For example, as part of Boliden’s digital transformation, introducing computer vision technology enhanced the safety and efficiency of their mining operations.11 (Examples like this demonstrate that an estimated 20 per cent of emissions avoidance can be achieved through a digital transition in the energy, materials and mobility sectors.12)
Figure 4: Potential technologies to assist with decarbonisation
Source: World Economic Forum13
The targets have been set by the Paris Agreement, the milestones have been confirmed by the UNFCCC, and the measurement method has been set by the Greenhouse Gas Protocol. The next step is to encourage industry adoption.
Carbon pricing initiatives
The strongest method governments can use to encourage adoption is to reorient the competitive landscape with a carbon cost that the polluter pays. As published by the World Bank in the carbon pricing dashboard, of the top ten national carbon compliance mechanisms, all cover 50 per cent or more of that jurisdiction’s GHG emissions and nine use a carbon tax as their chosen instrument.14 Many countries have already adopted a carbon pricing initiative. According to the World Bank, as of August 2024 there are 75 carbon pricing initiatives implemented. These include 36 emissions trading systems and 39 carbon taxes at different levels of jurisdiction, such as national, subnational or regional.15 The carbon pricing initiatives cover about 24 per cent of global greenhouse gas emissions and generate about US$104 billion in revenue annually.16
Figure 5: Jurisdictions with carbon taxes or emissions trading systems implemented, under development or under consideration
Source: World Bank
A secondary method to drive industry to adopt sustainable commitments is through investment. There has been a growing trend in financial markets of offering green bonds. These are debt instruments that are issued to finance projects or activities that have environmental or climate benefits. Green bonds offer cheaper finance for several reasons. The first is that green bonds can attract a wider and more diverse pool of investors, such as those who are interested in environmental, social and governance criteria, or those who want to align their portfolios with global climate targets. This can increase the demand and lower the risk premium for green bonds, resulting in lower borrowing costs for the issuers. Green bonds can also enhance the reputation and credibility of the issuers, as they signal their commitment and contribution to global climate action and sustainable development. This can improve the issuers’ access to capital markets and reduce their financing risks, as well as create positive spillover effects for their other financial products. A third reason is that green bonds can provide incentives and opportunities for the issuers to improve their environmental performance and management practices, as they have to comply with certain standards and reporting requirements for green bond issuance and verification. This can lead to operational efficiencies, cost savings and innovation for the issuers, as well as mitigate their exposure to environmental and regulatory risks. These are some of the reasons why green bonds offer cheaper finance for the issuers, as well as environmental and social benefits for investors and society.
The growth of greenwashing
While industry adoption of climate targets is growing, greenwashing is also posing a rising risk. Analytical obfuscation is where an entity may report metrics that are manipulated and misrepresented to present information that appears aligned to climate action, whereas the entity may not be reducing its absolute climate risk at all. In the communications industry for example, internet service providers reporting a reduction of kilograms of CO2 emissions per bit per second. It is entirely possible that overall emissions are in fact increasing year on year with this type of metric, as long as the service speed increases at a greater rate. Also, reporting on the energy intensity of end user devices needed to deliver services may be misleading. Factoring emissions by service volume during a period of high customer growth has the potential to appear as if emissions are reducing whereas the increase in service volume will increase emissions overall. While these manipulations of metrics seem convenient, they are a step backwards in terms of the net zero emissions target.
In summary, a ‘twin transition’ need not be considered as two opposing counterparts but as a synergistic coupling where a thriving digital transition enables further avoided emissions in a global green transition. The communications industry is well positioned to enable significant avoided emissions as the digital transition continues. While the mechanisms via industry look promising, policies, however, are largely insufficient with the global climate set to exceed the required temperature ceilings. The critical misstep in regulation of failing to introduce effective carbon cost structures further aggravates this issue.
Microsoft Copilot was used in the creation of this article for the purposes of research, image generation and refinement of writing tone.
