Sustainability’s Efforts and Values

Environmentally friendly practices are here to stay and are now key metrics investors use in evaluating businesses, even though companies take different paths and practices in measuring and communicating what they do to protect the planet and why they do it. Environmental, social, and governance (ESG) reporting is a fact of life for publicly traded businesses, with 98% of S&P 500 companies and 90% of Total Russell 1000 companies publishing ESG reports in 2022, according to the Governance & Accountability Institute, Inc.

Global asset managers are using ESG frameworks to evaluate the environmental impact of companies as one of several factors in the companies they invest in, enabling them to evaluate how resilient they are to climate events and how well they are developing and implementing practices for increased efficiency. At the end of the day, such things as more power efficient equipment and reductions in packaging are not only good for the environment, but also improve the corporate bottom line.

Fiber broadband is and will play a significant role in reducing carbon emissions in the years to come. A prime example: transitioning legacy copper and coax networks to fiber directly reduces carbon emissions by tens of thousands of tons annually by enabling work from home (WFA) and thereby eliminating commuting time, according to a 2023 estimate by RVA Market Research and Associates.

The glass core capable of carrying hundreds of terabits of data per second today is created out of silicon dioxide, an abundant and easily accessible material that makes up 10% of the earth’s crust. In comparison, copper must be mined and processed into a pure form that requires lots of effort and energy, with deep mines, big trucks, and lots of digging.

Between production and operation over its lifecycle, copper wiring has a carbon footprint that is 85,000 times higher than fiber. Shutting down legacy copper networks and migrating to all-fiber solutions has become a priority for service providers, since it enables them to reduce cost and drastically lower yearly carbon emissions. In 2023, altafiber stated that its legacy copper network made up 36% of its greenhouse gas emissions, making it a prime target for replacement, while the company’s fiber network only produced 6% of its emissions.

Copper’s value as a metal makes it a target for theft, a common problem for service provider legacy networks. On the other hand, fiber has demonstrated its durability over time, with the first cables put into service over 50 years ago continuing to be used today. Electronics upgrades have continued to increase the data carrying capacity of fiber while at the same time becoming smaller and more power-efficient with each generation.

For example, the first commercial 400 Mbps optical circuit from Ciena deployed in the mid-1990s took 10 full racks of equipment in a central office with its associated power and cooling requirements. Ciena today delivers 800 Gbps across a single fiber using a fraction of the power and space of a single 1U shelf, with terabyte speeds available in the future using the same physical footprint without having to replace or augment the existing media.

Additional carbon reduction benefits come from fiber’s durability. Fewer interruptions and service calls mean less truck rolls for repairs and less emissions from fossil fuel maintenance vehicles.

Hardware manufacturers in the fiber broadband ecosystem have a relatively clear path for environmentally friendly practices, even though they differ on how they implement and present those policies to their customers and stakeholders as it provides differentiators against their competitors.

“The approach we have decided to take to sustainability is a collaborative one,” said Martha Galley, Chief Sustainability Officer (CSO), Calix. “My job is to align and make sense of our comprehensive strategy based upon the current market and the regulatory demands across the business units, all of which participate in various projects around sustainability. Some of those are outward facing, like our product pillar. Some of them are inward facing. Being a sustainable company has to do with our infrastructure, our use of power, etc. Second is to amplify, making sure that our story is thoroughly told well and accurately. When you put something in a regulatory report, it has to stand up to the audit.”

The third part of Galley’s job is augmentation of existing sustainability policies and practices. As a part of Calix’s executive leadership team, the CSO can find additional opportunities within and across the company that are appropriate to incorporate into the company’s own five pillars of sustainability: technology innovation, cultural and social impact, supply chain, enterprise, and partnership. Each pillar contributes to the vision and practices of sustainability.

“First and foremost, technology innovation,” said Galley. “Our entire product portfolio has responsibility for improving along three dimensions, including durability, efficiency, and recyclability. If something is thrown away, it’s obviously not very environmentally friendly. Is the technology durable for the environment? Are our outdoor devices [and] systems going to stand up to the weather conditions, for example? But the most important aspect of durability for us is our software-enabled network. Every 91 days, our customers get more capability, more value, because upgrades to the operating system are released three times a year. The bottom line about all of it is that we believe that our fundamental architecture is durable because value gets added and you’re not throwing those systems away.”

Calix’s efficiency work leverages iterative improvements on hardware to build more density into its access systems while lowering power consumption. More cards per rack footprint and lower power helps customers save money through lower operational costs for data center space and electric bills as well as impacting the environment.

“We’re assessing right now the recyclable content of our systems and we’ll set targets for increasing and improving it by working with our upstream supply chain partners we manufacture with,” said Galley. “We’re also interested in ensuring that our customers have an opportunity to keep their communities healthy by ensuring that electronic systems don’t end up in landfills. We’re starting with a referral program around electronics recyclability, but we’ve been thinking about a program that Calix would drive. That’s in its very early stages.

Cultural and social impact starts at home with making Calix a great place to work through creating and maintaining a great corporate culture. The company is sharing its best practices with its customers to help them retain their employees and better engage with the communities they serve.

Nobody is taking supply chains for granted in the post-pandemic era. “This is about reducing risks,” said Galley. “We’ve done a tremendous amount to lower the risk and make sure we’re compliant with [Build America] requirements and to provide a sustainable product and service for our customers. We’re working with our supply chain partners, many of whom are quite adept. They’re larger organizations, they’ve been in [overseas] markets where the sustainability requirements are even higher than they are in the United States. We’ve learned things from them in terms of reducing our carbon footprint.”

Under Calix’s sustainable enterprise pillar are things many organizations look at, such as moving the IT organization into LEED-certified buildings for lower power and water utilization, converting to electric vehicles in India, as well as other projects that will reduce carbon footprint.

“The last piece, I think, is the most intriguing and the one that differentiates us the most, and that’s sustainable partnership,” said Galley. “It’s table stakes to be a responsible company. But what we like to think of is that we’ve got a purpose in conjunction with our customers. And that purpose is to help them make their communities better places to live and work.”

A part of its sustainable partnership philosophy is providing value-added services for their customers to sell. Calix was among the first to champion value-added services as a logical complement to fiber broadband connectivity. “Our customers make a little bit of money on providing those services to their subscribers,” said Galley. “It’s an ‘all boats rise’ model, and from my standpoint, that’s just about the most sustainable type of a business model that you can have. We believe that that sustainable partnership is good for subscribers, for BSP customers, and Calix, and in the cases where we provide branded services for those partners in our value chain as well.”

Other equipment manufacturers have their own approaches based upon their business lines and historic involvements in different markets. Harmonic’s methodology comes from 25 years of operation that started in the cable and broadcast world and now includes video, broadband, and media solutions. The company’s Corporate Social Responsibly (CSR) 2022 report highlights include 100% of electronic waste recycled, nearly 23% of its electricity obtained from renewable sources, and 22% reduction of corporate energy consumption at its three main sites between 2019 and 2021.

To broadband customers, Harmonic’s eco-friendly message is founded on its virtualized core software in its broadband portfolio, keeping heavy network lifting within the central office data center on COTS hardware, with relatively light hardware at the subscriber premise.

“The fundamental benefit of the virtualized core is that you’re pulling complicated network functions out of purpose-built devices in the field,” said Dan Gledhill, Senior Vice President of Broadband Business Operations at Harmonic. “You’re centralizing them on incredibly cost-efficient and power efficient servers that get the benefit from standard processor curves that you see from Intel and the other leading enterprise silicon manufacturers. The result is that we end up with an architecture that has low power consumption devices at the edge of the network, because again, they’ve been simplified with this virtualized core. All the actual heavy lifting is done by an incredibly efficient, virtualized core technology that the operator deployed.”

Last year, Vodafone and Intel published a paper on the power savings found using Harmonic’s approach in the service provider’s legacy cable plant, with an initial 28% reduction in power consumption by shifting functions to a virtualized headend and another 10% or more savings coming from adopting a cloud approach. Successive generations of architecture would also increase throughput substantially from 100 Gbps downstream using older models of cable tech to over 500 Gbps with cloud-based network architectures.

Why mention cable if the focus is on fiber? The world is full of legacy devices and media. Wholescale rip-and-replace is impractical for many operators, so there will have to be coexistence between fiber and older devices. The cable industry already uses fiber in most of its network and is increasingly using more for greenfield and competitive builds.

“One of the strategies we take is this really wide breadth of edge devices that have extended range such that you’re both able to deploy them in more remote locations and you’re able to fully utilize the capacity of those devices to get more power efficiency,” said Gledhill. “If you’re using a single operational core and basically just mixing and matching these edge devices however you see fit to design a network that doesn’t have a bunch of unutilized capacity, doesn’t require a bunch of extra devices within the network, and also ensuring that the operators have the flexibility to reutilize whatever existing infrastructure may be available.”

Gledhill said that the Vodafone/Intel findings were the “basis” of a reduction in power consumption of its technologies, with other opportunities available for more reductions as more tools are brought to bear. “What we layer on top of that goes much further than what they actually wrote about,” he said. “They’re using a subset and focused on specific use cases that they see in their ecosystem, not necessarily what we focus on generally. We get to talk about use cases that will find the long-term operational efficiency, things like availability and reliability. We are very, very proud of the fact that our architecture and our solution have five nines availability and additionally, it leverages really intelligent analytics to achieve that level of performance.”

Intelligent analytics enable service providers to process all the data from the network and direct an operator to areas of improvement. Field service teams can be deployed with precision instead of a “shotgun blast” of truck rolls to pinpoint an issue, leading to fewer and more efficient use of teams and vehicles.

Working with existing service providers such as Vodafone that have legacy cable plant and can’t simply rip-and-replace existing infrastructure to migrate to fiber is a reality Harmonic and others have to work with in terms of capital costs and service providers being able to optimize their networks as budgets and schedules permit. It also means implementing an open ecosystem approach that can work seamlessly with existing DOCSIS varieties and other residential fiber equipment.

“One of the major advantages that we enable and promote is an open ONU concept,” said Gledhill. “Very frequently when you’re talking to a fiber home vendor, there’s an ecosystem mandate to have the infrastructure on the network side dictate the in-home devices. We break that, we allow operators to utilize third party ONUs, which facilitate the hardware best-in-class, whether that means the lowest cost, the best Wi-Fi, the lowest power consumption, we give [service providers] the option and the flexibility to leverage whatever they may have in their footprint today, so that they’re not ripping and replacing and creating additional new waste. Plus going forward, they get to select their preference based on considerations like how green a solution might be. It’s a story about flexibility both on the network side and in the actual consumer front.”

Large service providers approach sustainability from a less hardware-centric view and emphasize a more holistic method. They’re looking for reductions in carbon emissions and waste and increasing resilience against climate change events that impact their operations. Such firms also tend to be more precise in terms of how they measure their overall carbon emissions, defining them as Scope 1 and Scope 2. Scope 1 emissions include direct emissions from sources owned or controlled by the company, such as its vehicle fleet. Scope 2 emissions include indirect emissions that result from the generation of purchased energy.

For example, AT&T’s 2022 Sustainability Summary repeats the company’s goal to be carbon neutral by the end of 2035 and actively working with its suppliers and customers to help reduce their environmental impact as well. By the end of 2022, AT&T had reduced its carbon emissions by more than 41% when compared to a 2015 baseline.

Beyond its own greenhouse gas emissions, AT&T has gotten 50% of its suppliers to set their own reduction targets and continues to support a gigaton of customer emission reductions through its own innovations and those of its partners, such as integration of AT&T IoT solutions into Salesforce Net Zero Cloud to make it easier for customers to monitor assets in real time and identify emissions reduction opportunities.

Waste management, through reduction and recycling, is another AT&T goal. AT&T’s Sustainability Summary calls for a move to a circular economy, embedding sustainability throughout the lifecycle of a product or service. The company is seeking a 30% reduction in waste it sends to landfills by 2030, based on a 2019 baseline. It has identified many materials that it works with that can be reused or repurposed. For instance, fiber optic cable scrap can be shredded and milled to serve as components for roofing materials.

More moves toward a circular economy by AT&T include recovering and reusing electronic devices, such as mobile phones, internet gateways, and television set top boxes. For devices that can’t be reused in their entirety, individual parts may be extracted for reuse and the remaining plastics and metal are recycled.

Lumen Technologies’ 2022 ESG report documents similar effort, with the company reducing its Scope 1 and Scope 2 emissions by 25% since it started third-party verification documentation in 2018, with savings coming from companywide efforts including energy-efficiency initiatives, renewable energy procurement, and real estate consolidation.

Larger service providers, including altafiber, AT&T, and Lumen, conduct regular or ongoing physical climate change risk assessments to identify threats and mitigation opportunities from events such as flooding, storms, hurricanes, and wildfires.

Altafiber has seen the results of its assessments firsthand. Its climate assessment mapping of Hawaii using publicly available data showed the highest fire risk around Lahaina prior to the 2023 wildfire. “It was fascinating to see how accurately that risk map correlated with where this terrible wildfire event occurred,” said Nadja Turek, Sustainability Director, altafiber, during an August 2023 Fiber for Breakfast podcast. “The data that’s out there is very good and really informative.”