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Sustainability strategy for procurement.

  • Telekom purchases goods and services for about EUR 2 bn from emerging and developing countries.
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  • New Group policy implemented at 59 international subsidiaries.
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Under its CR strategy Telekom is also working toward becoming the industry leader in terms of sustainability in procurement and supply chain management. The fact that we were once again at the top this year in renowned sustainability rankings is proof that we are well on track in this respect.

Compared to our competitors, we hold a leading position when it comes to the sustainable management of our supply chain. We intend to solidify this position and expand it further. The basis for this is the strategic integration of sustainability into our procurement activities.

Sustainability in procurement activities at Deutsche Telekom.
Methods, tools and stakeholders.

Tools and methods
for promoting
sustainability in
procurement activities
 
Sustainable
Procurement
workgroup

Internal: Developing standards, KPIs; internal communication, central point of contact and first escalation level

External: External communication, dialog sessions with suppliers, NGOs, investors, scientific community

 
Stakeholder 

Internal: Employees, purchasers, other workgroups (Climate Change Group, “sustainable products,” etc.)

External: Suppliers, sustainability-oriented investors

 
Procurement volumes and regions.

We work with suppliers in over 50 countries. We procured a total of EUR 2 billion in goods and services from emerging and developing countries in 2011. That is the equivalent of some 11 percent of Telekom's total procurement volume. In contrast, 1.9 percent of Telekom's procurement volume came from emerging and developing countries in the previous year—goods in the amount of EUR 398 million. This increase can primarily be attributed to an increase in order volumes in eastern European countries.

Close collaboration with stakeholders in these countries plays a significant role in making sure the production conditions meet Telekom's environmental and social standards. We consider it our duty to ensure basic social and environmental standards, particularly in emerging and developing countries.

CR Report from the previous year

Sustainable Procurement CR KPI.

We use the Sustainable Procurement CR KPI, to identify how much of our procurement volume throughout the Group comes from suppliers who are audited or who provide voluntary information on E-TASC.The Sustainable Procurement CR KPI has applied throughout the Group since early 2011. The KPI will be calculated and managed centrally at company level. The audited volume identified via this channel came to 38 percent Group-wide during the reporting period.

A detailed description of the CR KPI can be found under Strategy & management.

Procurement joint venture with France Télécom-Orange.

The partners Deutsche Telekom and France Télécom have pooled their procurement activities in the areas of devices, mobile communications networks, large parts of their fixed-network equipment, and service platforms in a 50:50 joint venture.
In addition, the two companies intend to launch pilot projects to explore other areas for inclusion in the joint venture at a later stage, including IT infrastructure and further IT areas. The inclusion of additional fixed-network components remains to be reviewed by the German Federal Cartel Office. The joint venture, which has been named BUYIN is expected to generate an annual run rate of EUR 1.3 billion through procurement savings after three years of implementation.

Deutsche Telekom and France Télécom have agreed on joint sustainability criteria to be met by suppliers. The companies plan to draft a joint supplier code of conduct for BUYIN in 2012 based on these criteria.

Positioning within the organization.

The Corporate Procurement Strategy department has been responsible for developing concepts and methods for achieving sustainability in our procurement practices since 2010. The Sustainable Procurement Working Group continues to provide assistance when it comes to realizing sustainability in our procurement activities throughout the Group. Experts from the CR area work together with representatives from Telekom's major procurement areas on this international committee.

We are driving Group-wide implementation of the sustainable procurement strategy with increased assistance from the CR Manager Network as part of our international implementation of the CR strategy.

Sustainable procurement strategy.

Telekom places importance on more than just financial aspects when it comes to procurement. Ecological and social criteria need to be taken into consideration as well. This has been laid down in our Group-wide Sustainable Procurement Strategy designed to implement sustainability in our procurement activities, which was approved in 2007 and revised in 2010. All guidelines and processes dealing with improving sustainability in the supply chain are based on this strategy. For example, the entire life cycle of products and services is analyzed for potential environmental impact before any sourcing decisions are made. Telekom also acknowledges its social responsibility with this strategy, i.e., regarding fair payment and the observance of basic human rights.

Guidelines for a sustainable supply chain.

The Group Global Procurement Policy plays a significant role among the various sustainable procurement regulations. It was approved for Deutsche Telekom in November 2010 and rolled out at numerous international subsidiaries from March 2011 to early 2012. Out of 71 German and international subsidiaries that are planning to implement the policy, 59 had done so with an official decision being passed by their managing boards by late January 2012. We will be continuing to roll out the Global Procurement Policy at the remaining twelve international subsidiaries throughout the remainder of this year.

Our Procurement Practices are a detailed guideline for our purchasers in Germany and serve to further specify the general policies contained in the Global Procurement Policy. A fully revised version of these was published in August 2011. Besides numerous additions and further details, such as provisions for selecting new suppliers, the Procurement Practices have also been restructured to harmonize more effectively with the Global Procurement Policy. We will continue to update the guideline in accordance with changing conditions at Procurement.

T-Systems Slovakia approved its own procurement policy in November 2011 to help support local suppliers. These measures will supplement existing Group-wide Telekom guidelines and policies and form the basis for a procurement policy that is in line with local conditions.

CR Report from the previous year

Binding rules of conduct.

Deutsche Telekom requires all of its suppliers to comply with the Code of Conduct and the policies contained in the Social Charter .

Our Fraud Policy  is designed to fight corruption and also applies to all supplier relationships. We demand that our suppliers, for their part, apply these standards to their own sub-suppliers. We conduct regular social audits to make sure that our suppliers comply with the mandatory minimum standards specified in the Code of Conduct, the Fraud Policy  and the Social Charter .

Download : Code of Conduct
Download : Fraud Policy
Download : Social Charter

In 2011, T-Mobile Netherlands completely integrated compliance with the Social Charter  and environmental criteria into OneSource, its contract management system, thereby making this a mandatory requirement for cooperation.

 

 

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Deutsche Telekom adopted its Social Charter  in 2003. As an integral element of Deutsche Telekom's Code of Conduct, the Social Charter  is based on the values of the UN Global Compact  and the policies passed by the International Labour Organization (ILO) and the OECD Guidelines for Multinational Enterprises.

It contains Group-wide guidelines on

  • Human rights and working conditions
  • Environmental protection
  • Equal opportunities
  • Health and safety at work
  • The right to set up and join a trade union

The principles described in the charter apply to all Telekom business units worldwide. In the charter, which is an integral part of our General Purchasing Terms and Conditions, we require all suppliers to comply with these basic principles as far as possible.

Group-wide rules for procuring raw materials.

Sustainable procurement of raw materials in the ICT industry comes with considerable challenges. Many valuable metals are used in making phones, cell phones, computers and other ICT products. These valuable raw materials are often extracted in emerging and developing countries under problematic conditions.

One example of this is the metal tantalum, which is extracted from coltan and is present in many products that are sold or used by Telekom. We do not directly purchase raw materials or the metals extracted from them. Nevertheless, we consider it our duty to minimize the harm caused to people and the environment in connection with extracting these substances and to completely put a stop to these consequences in the long term. We work on this in close collaboration with our suppliers.

We approved the Statement on Extractives  in 2009 as an addition to our Coltan statement, which we published in 2005. The Statement on Extractives  requires that all supply chain participants comply with the minimum standards specified in the Social Charter. The purpose of this decision is to make sure that both our direct suppliers as well as their sub-suppliers minimize the social risks that come with extracting raw materials. We require our suppliers to officially state that they will comply with the Deutsche Telekom Statement on Extractives .

In addition, we actively support the efforts of the industry association Global e-Sustainability Initiative (GeSI). One of the initiative's goals is to increase transparency in the raw materials extraction process and minimize the negative social and environmental impact of raw material extraction.

Download : Coltan Statement
Download : Statement on Extractives

 

 

Participation in the German Global Compact Network.

Telekom also contributes to improving social conditions along the supply chain through its participation in the German Global Compact Network (DGCN). In 2011, Telekom participated in selected DGCN meetings and discussed the issue of balancing business and human rights with other companies.

In order to be able to effectively assess whether a company has implemented the Guiding Principles on Business and Human Rights, which were drafted by UN Special Representative John Ruggie, DGCN developed the Human Rights Due Diligence—Organizational Capacity Assessment. This tool was the focal point of the DGCN meeting that we hosted in May 2011. We will be using the tool throughout the course of 2012 to analyze to what extent the Guiding Principles on Business and Human Rights have been implemented at Telekom. The results are expected to reflect a general assessment of the situation at a corporate level and help us determine our further course of action.

CR Report from the previous year

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DGCN has offered three training courses for companies on human rights since 2008. An informal workgroup on business and human rights was founded based on these courses. In the workgroup, eleven multinational companies get together to discuss the progress being made and the challenges involved in human rights protection in the supply chain. The workgroup meets at least twice a year. Telekom also makes a significant contribution in supporting DGCN's activities with its expertise and recognized CR performance.

Update on the 2010/2011 CR program.
Sub-targets Status of implementation/measures
Increase share of procurement volume (first supply level) reviewed using E-TASC and other risk assessment tools   Implementation underway.
  • Increase in procurement volume reviewed using E-TASC and supplier audits from 36 percent (2009) to 55 percent in 2010. Target for YE 2011: 70 percent; target for 2011 not met because overall order volume declined. Number of suppliers registered in the system has not changed; the order volume covered by E-TASC has declined
  • Clear increase in risk-covered procurement volume via E-TASC planned for 2012.
  • The plan is to address all suppliers with order volumes of more than EUR 100,000 via E-TASC
Internationalization of sustainable supply chain management processes   Target achieved.
  • Expansion of Sustainable Procurement Working Group (SWPG) to more heavily involve international subsidiaries in 2011. T-Mobile Netherlands has been a member of SPWG since 2010 and T-Systems China (Shenzhen procurement office) has been a member since late 2011.
  • International subsidiaries including T-Mobile USA to be informed and included in the sustainable procurement efforts by the strategic procurement (CPR) area. SPWG provides support where necessary
 

2010/2011 CR program

The current 2011/2012 CR program can be found in the "Strategy & management" section.

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