In an era where sustainability is becoming a cornerstone for innovation, the technology, media and telecommunications (TMT) sector stands at the forefront of this transformative wave, facing unique challenges and embracing unprecedented opportunities for growth.

For Moog, the global precision engineering company, sustainability offers a world of opportunity.

“Some of our end markets are not the cleanest industries from a carbon standpoint, but our technology can be very clean,” explains Hamish Ferguson, Moog’s chief sustainability officer. “We see opportunities in everything from electrification in construction to driving machine efficiency in industrial manufacturing.”

Most technology companies feel the same way, according to our global survey, which examines how businesses and investors are tackling the opportunity in sustainability.

Nearly eight out of 10 (79%) executives in the sector say their organisation prioritises investment into sustainability initiatives ‘for the purposes of growing profits and the business’.

As TMT companies position themselves to seize the opportunities of a transitioning economy, they face many of their own unique sustainability challenges – from understanding and navigating their network of suppliers to gauging the right way to communicate about sustainability and scanning the ever-evolving regulatory horizon.

Keeping pace with investors’ needs

Investors are a driving force behind the technology sector’s sustainability transformation, our survey shows.

More than half of technology industry executives (55%) say attracting investment by making environmental commitments is their greatest opportunity in sustainability, ahead of any other option, and 50% say ‘meeting demands of investors’ is their top priority.

Regulation is less of an influence. So far, policymakers have not subjected the technology industry to the same degree of sustainability regulation as, for example, the finance sector. Only 15% of respondents from the technology sector say they prioritise sustainability investments in areas where they have the most urgent regulatory obligations, compared with 26% who prioritise opportunities for profit and growth.

Even so, the need for investors to ensure their portfolios are sustainable means that TMT companies must keep pace with rapidly evolving reporting standards. “There are new [reporting] regulations, and refinements to regulations, coming out all the time,” says Ferguson. Staying up to date is “like trying to hit a moving target on a galloping horse”.

Tapping the opportunity to access new markets

Customers are another driving force: 49% of tech sector respondents say meeting the demands of customers is a top priority for their sustainability investments, more than any other industry.

This was the case for Moog, which first felt the push towards sustainability from its strategic customers, Ferguson recalls. “They were asking us, ‘what are you doing in this space and how are you performing?’.”

Now, customers are demanding more sustainable products, Ferguson says. The aviation industry, for example, has made a commitment to net zero carbon emissions by 2050 and Moog’s customers in the sector expect more energy efficient components.

But demand for sustainable products also offers technology companies an opportunity to enter new markets, where their expertise and equipment can be applied in new ways. Half of technology executives we surveyed say ‘entering new markets’ is a top sustainability priority.

Moog has spotted an opportunity to enter the market for construction machinery, for example. ‘Skid loaders’ are diggers with a small footprint that makes them ideal for urban construction. They are traditionally diesel powered, but emissions restrictions in many European cities mean these can no longer be used. “We can provide a solution that removes that diesel powertrain. All the movement is powered by a battery pack,” explains Ferguson.

Communications services company BT Group, meanwhile, has spotted an opportunity to repurpose assets to meet sustainability-driven demand. “We've got 60,000 on-street cabinets that are currently used for our residential broadband network,” explains Edward Heaton, legal director, corporate transactions, and deputy company secretary.

“We are now trialling converting those into electric vehicle charging points. This solves a lot of problems because they're already connected to the grid with resilient power supplies.”

Gaining visibility into technology’s complex supply chains

While customers are demanding sustainable products, investors and regulators are increasingly scrutinising technology companies’ business practices. In fact, says Ferguson, the two are “hand in glove. You can’t say your product is sustainable if your operations are not”.

TMT companies rely on complex supply chains, and our survey suggests that many are struggling to ensure that those are sustainable. Six out of 10 say greater transparency throughout their value chain, including suppliers and customers, would be most useful in helping them pursue opportunities in sustainability, making it the most common answer.

Moog is currently undertaking a double materiality assessment, as required by the EU’s Corporate Sustainability Reporting Directive, to establish what sustainability issues are most relevant for its operations and supply chain. Ferguson is working with the company’s procurement division to identify frameworks to assess its suppliers’ performance on these issues.

Like many technology companies, Moog already has controls to eliminate conflict materials from its supply chain. But, Ferguson says, tackling supply chain sustainability more holistically means “we’ve got to be able to do a much broader assessment. The double materiality assessment will help give us some focus”.

At BT Group, legal teams have been instrumental in establishing supply chain sustainability controls, says Heaton. "We’ve embedded robust contractual protections in our supplier agreements to make sure [sustainability obligations] have got real teeth and that we've recourse against [suppliers] if they fail to live up to the standards that they're signing up to.”

The fear of greenwashing

Although they are pursuing opportunities in sustainability, TMT companies may be hesitant to make bold claims about their progress.

More than half of the technology executives we surveyed (54%) rank ‘damaging our reputation by being perceived as greenwashing’ in their top three sustainability risks, compared with 42% of respondents in all sectors.

This may be partly inspired by fear of legal penalties. TMT executives are less confident in their organisation’s ability to comply with greenwashing regulation above most other sustainability-related areas of compliance, even though to-date specific regulation on greenwashing has been limited.

BT Group’s Heaton says the company is cautious about making sustainability-related commitments in public. “Circularity is an area where we've been quite mindful of that,” he says. “We’re doing a lot of work around how we build the routers that we send out to customers and the origin of the plastics that we use.

“We could have put out a big, attention-grabbing target about where we want to be as a circular organisation in five years’ time. But we don't want to set ourselves up for failure or force ourselves into actions that don’t turn out to be the right thing holistically.”

Heaton adds that simply following regulation may be not enough to avoid reputational risk, as what is permitted today might be frowned upon tomorrow. “Even if you're completely compliant now, you still can't be entirely confident that you won't be subject to criticism in the future,” he says.

BT Group is therefore pursuing an ethics-based approach in areas such as artificial intelligence (AI), where the risks to society are still being evaluated. “Our AI ethics code is a live document,” he says. “It’s going to evolve as the technology evolves, just as the legislation will.”

Ferguson agrees that, while regulation can be a useful guide, businesses must be led by an intrinsic commitment to sustainability.

“Regulation offers a way of systematically, consistently and objectively disclosing your sustainability performance,” he says. “But the reason I'm in this job is to make a significant difference. If you don't have those values, as an organisation or as an individual, I think it's easy to compromise.”