Case study

Telstra

Telstra is Australia’s leading telecommunications and technology company that operates in the Asia Pacific, USA, and Europe. For two years, Telstra used clauses inspired by The Chancery Lane Project (TCLP) to drive greenhouse gas (GHG) emissions reductions in line with their target of a 50% reduction in GHG emissions, including scope 3, by 2030. 

Climate clauses are now being rolled out to all our major suppliers making up 80% of Telstra’s supply chain spend.

Simon Antony, Program Manager for Sustainability and Responsible Procurement at Telstra

Use 

Telstra combined multiple TCLP and industry clauses to solidify action on their environmental goals.

Telstra’s use of these clauses started by communicating their requirements to suppliers and then introducing them into tenders. As carbon reporting amongst suppliers multiplied fourfold, Telstra anticipated receptivity of stronger climate commitments and began using climate clauses in contracts. 

Telstra uses one standard emissions reduction clause, which includes carbon reporting and reduction elements, in various contracts. The reporting element requires suppliers to report their GHG emissions annually via the Carbon Disclosure Project. The GHG emissions reductions element requires the target to align with those of Telstra, insofar as appropriate. At the heart of the contract is a specific climate target to achieve in the contractual timeframe. By the end of 2023, 56 suppliers, part of the top 200 suppliers making up 80% of Telstra’s supply chain spend, signed up to these new clauses committing them to disclose and reduce their absolute emissions in alignment with Telstra.

Supplier engagement

Telstra took a collaborative approach with their suppliers, involving them in the drafting of contractual documents and working together on their climate journeys. 

Telstra uses various methods to undertake positive supplier engagement:

  • Hosting supplier webinars to discuss contractual clauses.
  • Involving suppliers in the drafting of documents, and making this process educational, i.e. explaining targets, learning about different sectors, and customising targets to suit certain suppliers.
  • Sharing information and fostering communication. 

Telstra noted the significance of industry-wide collaboration. Telecommunications companies harmonised methods of assessing and reporting through the Scope 3 Guidance for Telecommunications Operators, which recommends TCLP’s resources. This document provides opportunity for effective and efficient information flows, helping the industry as a whole to move concurrently towards net zero. 

Current impact 

Throughout the industry, Telstra found many other organisations eager to incorporate climate goals into their contracts. Industry-wide collaboration is a vital catalyst bringing suppliers into the equation. 

Interestingly, organisations not yet ready to contract and meet climate commitments have asked to work on a pathway instead. This implies that even if the ability is not there, the appetite for climate contracting is growing, and organisations are eager to learn and establish a plan for how they can participate in these conversations and agreements. 

In determining when to impose climate obligations, Telstra considers the size and nature of organisations with whom they contract. This helps achieve maximum impact through targeting highly emitting agreements. Contracts that warrant use of the standard emission reductions clause are known as ‘material contracts’, which have a significant spend. 

Future impact 

Telstra intends to roll out their standard emissions reduction clause across all major suppliers; which make up approximately 80% of Telstra’s supply chain spend.

Simultaneously, Telstra is working on building a pathway for smaller organisations to be part of these discussions by supporting and educating them through their climate journey. This is supported by supplier governance and third-party sustainability initiatives. 

Key takeaways 

  • Use of a standard emissions reduction clause: This standard clause includes carbon reporting and reduction elements. Combined, these elements facilitate decarbonisation within a specified timeframe. 
  • Supplier engagement: This includes taking a collaborative approach with their suppliers, involving them in the drafting of contractual documents and working together on their climate journeys to realise mutual goals. 
  • Industry-wide collaboration: The appetite for climate contracting in the industry ignites effective and efficient knowledge-sharing. This helps the industry collectively move towards net zero. 
  • Maximising impact: Telstra targets areas that will deliver the largest carbon savings. They do this by identifying and prioritising ‘material contracts’, that have a significant spend.

Simon also comments: 

Launching our new standard emissions reduction clause helps us do the right thing for the world around us. So far, 56 suppliers have signed up to these contractual commitments, showing a clear sense of responsibility and urgency to act – irrespective of size. Although we still have a long way to go, climate clauses vitalise and expedite our climate action, making it impactful and genuine.

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