Historians remind us that electricity powering up telegraph and telephone lines played a key role in the industrial revolution of the 19th century. Nearly 200 years later, electricity and telecommunications remain key players. This time, the sustainability of the planet is at stake, and T-Mobile US has some bright ideas.
It's little wonder that T-Mobile US — which sourced 100% of its electricity with renewable energy as early as 2021 — ranks highly on IBD's 2024 list of the 100 Most Sustainable Companies.
But T-Mobile's environmental commitment didn't stop there. It was the first U.S. wireless operator to set the ambitious goal of reaching net-zero emissions for its entire carbon footprint by 2040.
The third-largest telecom operator in the U.S., after AT&T and Verizon, is also committed to energy efficiency and recycling measures that benefit both shareholders and the planet.
T-Mobile US ranked among the top 10 in our overall list of sustainable stocks. And it ranked first in the Communications Services category. Read all the stories in our full special report.
How The 100 Most Sustainable Companies List Was Created
Public companies that made our 2024 100 Most Sustainable Companies list combine strong climate management scores from Morningstar Sustainalytics with superior IBD technical and fundamental stock ratings. They are well-positioned for investors concerned about the climate transition.
To build IBD's 2024 list of the 100 Most Sustainable Companies, we started with Morningstar's U.S. and global Low Carbon Transition Leaders Indexes. These new indexes provide exposure to companies from each sector taking the most action toward transitioning to a low-carbon economy. Morningstar Sustainalytics provides an overall climate management score of 0 to 100. This indicates the strength of a company's systems for managing its exposure to the low-carbon transition. A score of 46 to 55 is average, 56 to 75 is strong, and 76 to 100 is very strong.
We sorted the constituents of the Morningstar U.S. and global Low Carbon Transition Leaders Indexes using IBD technical and fundamental stock ratings. The result is a list of companies with a stock price of $10 or more and which have sufficient data to create an IBD Composite Rating.
We further qualified the list by removing those companies that did not meet or beat the S&P 500 in the past five years and which had an IBD Relative Strength Rating below 70. We selected the companies with the highest IBD Composite Rating and ranked them by climate management score. The IBD Composite Rating was used to break any ties. To check current stock ratings and charts, visit the IBD Stock Checkup page. Read all our stories on green stocks in the 2024 100 Most Sustainable Companies special report.
Read More About The Other Top Winners On Our Most Sustainable Companies List: NRG Energy And Moody's
T-Mobile's Pursuit Of Sustainability
It was in 2018 that T-Mobile launched its plan to source 100% of its electricity needs with renewable energy. What most impressed analysts is that the company was able to achieve this sourcing by 2021, even after its acquisition of Sprint in 2020 hugely expanded its electricity needs.
"We've led the industry with science-based targets and commitment to 100% renewable energy," said Brigitta Witt, T-Mobile's vice president of social impact and sustainability. "But being a bigger company now means we have an even greater opportunity and responsibility to drive positive impact through our actions, our partners and the innovation rooted in our 5G technology."
To achieve the 100% milestone, T-Mobile developed a renewable-energy strategy. This includes virtual power agreements, retail agreements, a Green Direct program and unbundled Renewable Energy Certificates for projects across the U.S. As a result, the company has invested in enough wind and solar power annually to account for every unit of electricity consumed.
"Thanks to renewable-energy certificates, the T-Mobile network is powered by 100% renewable electricity and serves as the cornerstone for our industry-leading environmental commitment to reach net-zero emissions for our entire carbon footprint by 2040," said T-Mobile CEO Mike Sievert. "We were the first in U.S. wireless to set this ambitious goal and are making notable progress."
T-Mobile's Aggressive And Proactive Approach
Compared with its peers, T-Mobile has taken an aggressive and proactive approach to sustainability, according to Calvert Research & Management.
The company's 100% renewable energy sourcing set a significant benchmark for the entire telecom sector. T-Mobile "peers are still working toward similar goals," said Calvert ESG research analyst Jason Qi.
Qi notes that T-Mobile is the first in U.S. wireless to set a science-based net-zero emissions goal, aiming for net-zero carbon emission across its entire value chain. The Science Based Targets Initiative has approved the company's carbon-reduction goals. And T-Mobile reports it has achieved a 30% reduction in its total carbon footprint.
Its renewable energy commitment is in large part responsible for this achievement but is far from being the only factor.
T-Mobile's Bottom Line: Energy Efficiency
The most effective way to reduce emissions is by using less energy from the start, T-Mobile says.
And with the global economy now in a computing-centric era, T-Mobile has invested significantly in energy efficiency of data traffic. The company has achieved a 62% reduction in energy consumption, in terms of megawatt-hours per petabyte of data traffic on its network since 2019.
Following the merger with Sprint, the company has reported an 11% decrease in total energy consumption from 2022 to 2023. It expects to meet its efficiency goal of a 95% reduction in energy consumption by 2030 from its 2019 levels.
These reductions are the result of T-Mobile's multiyear initiative to evaluate its network and strategically decommission redundant cell sites. This helps retire older generations of technology. The telecom operator also continues to trial promising software and artificial intelligence. This will optimize energy consumption in its network equipment based on traffic load, weather and other conditions.
Modern Data Centers, Network Facilities
Also helping T-Mobile's energy savings in 2023 was its focus on modernizing data centers and network facilities. The company has implemented hot and cold aisle containment at more than 20 sites. This cuts the amount of energy those sites consume, according to the company's 2023 corporate responsibility report.
Calvert research has identified renewable energy investments and energy efficiency as key ways that telecom companies' sustainability practices can materially impact their financial performance.
"Telecom companies operate large networks that require significant energy," Qi said. "By investing in renewable energy and improving energy efficiency, leaders can substantially reduce operating cost over time."
Climate risk mitigation in and of itself can also protect the bottom line, according to Calvert. "The telecom sector operates large-scale communication infrastructure," Qi said. "Investments in network resilience against climate-related risks, such as extreme weather, help mitigate potential financial losses."
From a climate management standpoint, Morningstar Sustainalytics gives high marks to T-Mobile's management of its climate risk and opportunities. The telecom operator has a climate management score of 68. This places it in the "strong" category, well above the average score of 46 to 55.
With a three-year EPS growth rate of 29%, T-Mobile also has an IBD EPS rating of 93. The company has an IBD Composite Rating of 94 and a Relative Strength Rating of 89.
For The Full List And Details On The Methodology, See IBD's 100 Most Sustainable Companies For 2024
Extending Sustainability Through Circularity
Among the notable sustainability actions noted by Morningstar Sustainalytics is T-Mobile's engagement with suppliers to help reduce upstream emissions. For this, the telecom operator relies on working with products to close the loop for a more circular economy.
"We have millions of customers who use millions of products to keep them connected to their world, which is why the product life cycle of these devices and accessories needs to be sustainable," T-Mobile says in its 2023 sustainable report.
The principles of circularity help transform the life cycle of the company's products. Products and materials are used longer or repurposed into new products. These processes, T-Mobile says, have a direct impact on the emissions tied to manufacturing new products from raw materials and the disposal of current products.
"Only using what we need, and being smart about what we use, results in lower emissions across our value chain and beyond," T-Mobile said. "We reduce extraction, manufacturing and waste disposal emissions, while also supporting ecosystems that help carbon-absorbing plant life to thrive."
The process starts with infusing sustainability principles in the company's product design. That can lengthen the life of a product and reduce waste. The company also works proactively to improve the recyclability of its packaging. As for distribution, T-Mobile partners with vendors across its supply chain to reduce its overall carbon footprint. Finally, the company seeks to recycle and reuse electronic devices and accessories to help preserve intensive materials and precious metals.
The telecom operator says in a 2023 report that 10 million of its customer devices have been collected to be reused, resold or recycled.
