In order to steer its CR performance, Deutsche Telekom uses eleven ESG key performance indicators (ESG KPIs) that apply throughout the Group:
- Socially Responsible Investment (SRI) ESG KPI
- Sustainable Procurement ESG KPI
- CO2 Emissions ESG KPI
- Energy Consumption ESG KPI
- Used Cell-Phone Collection ESG KPI
- Community Investment ESG KPI
- Beneficiaries ESG KPI
- Media Literacy ESG KPI
- Social Commitment ESG KPI
- Employee Identification with CR Commitment ESG KPI
It is mandatory for all Deutsche Telekom national companies that participate in the data collection process to record the Group-wide ESG KPIs. These represent 99 percent of the Group's net revenue.
We are able to provide an updated value for the Employee Identification with CR Commitment ESG KPI in this report, having conducted our employee survey, which provides the required information, in 2015. The next survey is scheduled for 2017.
As of this report, we will only be reporting on the Used Cell-Phone Collection ESG KPI based on the new definition. The reference parameter used to calculate the ESG KPI was changed during the previous year from "number of customers" to "number of cell phones in circulation."
We conducted successful pilot tests of new ESG KPIs to measure the effectiveness of our social commitment (Community Investment, Beneficiaries and Media Literacy) in the previous year and then included them as a permanent part of our ESG KPI set. Our stakeholders responded particularly well to the focus on effectiveness and clear relevance of the Media Literacy ESG KPI to our core business. The PwC audit company also conducted an independent assurance engagement of the three new ESG KPIs, initially for Germany.
We launched an internal pilot project at the end of 2015 to push the revision process for the Energy Consumption ESG KPI. The model currently favored is to stop using revenues as a reference value. The relationship between revenues and energy consumption is not direct enough and is subject to a number of different factors such as regulation, competition and market saturation.
All ESG KPIs will be systematically reviewed in 2016, just like they were last in 2014. We will be analyzing any need for adjustment based on changing internal and external general conditions. Key internal criteria are the relationship to our core business and strategy, but also steering relevance, i.e., the question to what extent the ESG KPIs can help us effectively assess the success of key sustainability topics. External factors such as SRI ratings, the United Nations' Sustainable Development Goals and implications taken from other general guidelines are taken into consideration as well. We also expect the significance of impact measurements both at and outside our company to grow. We have been conducting these types of measurements with our Media Literacy ESG KPI, for example. There are also plans to expand our Sustainable Procurement ESG KPI since we achieved and even exceeded the target associated with this KPI in 2015. We will involve our national companies in the review process right from the start. When the German and international CR managers meet at the CR Managers Meeting in spring 2016, the ESG KPI review will be on the agenda. Similar to the last review, an internal pilot test of the new KPIs will be conducted and these will be incorporated into our regular data processes based on the results. The new KPIs will then be gradually included in our external reporting activities.
We also report on selected ESG KPIs in the Deutsche Telekom Annual Report. Forecasts on the further development of three ESG KPIs (Energy Consumption, CO2 Emissions and Sustainable Procurement) according to German accounting standard DRS 20 are also included in the report. We reviewed the forecasts made in the 2014 Annual Report for our 2015 Annual Report.
As expected, the figure for the Energy Consumption ESG KPI decreased in the reporting year compared with 2014, a trend that is even stronger than anticipated. As revenues increased, electricity consumption throughout the Group remained stable, and actually fell in Germany, in 2015. In view of the lightning rise in worldwide data traffic and the continuing network build-out, this stable trend is a success and has only been possible due to the progress we have made in energy efficiency.
We had assumed there would be a slight decline in the CO2 Emissions ESG KPI for 2015, i.e., a slight improvement. This is consistent with the actual trend, which is in particular due to the aforementioned stable development in electricity consumption and the slight fall in emissions from fuel and natural gas consumption. In the case of the Sustainable Procurement ESG KPI, which stands at 78 percent, we actually exceeded the target forecast for 2015. In 2016 and 2017, we expect these ESG KPIs to develop as follows:
- Over the next two years we expect our Energy Consumption ESG KPI to fall, i.e., a positive development. This trend is based on the ratio between the slight savings in power consumption and increasing revenues. We expect the reductions in power consumption in particular as a result of our network migration to IP technology in Germany, improved network utilization in general, and the consolidation of T-Systems data centers in various countries. These savings are expected to be partly counterbalanced by the expansion of T-Mobile USA and the accompanying rise in electricity consumption.
- The developments in electricity consumption are also the main drivers of the trend in our CO2 emissions. We therefore also expect our CO2 Emissions ESG KPI to fall slightly in 2016 and 2017. Our expectation for the Group units participating in the climate protection target is that, in 2020, CO2 emissions will lie 20 percent below the rate of the base year 2008 (excluding T-Mobile USA).
- In the coming years we expect our Sustainable Procurement ESG KPI to rise slightly above the figure achieved in the reporting year.
The trend in the Social Commitment ESG KPI reflects the German public's growing expectations of our company's social commitment, whereas Deutsche Telekom's performance receives the same rating as the previous year. Public expectations of our commitment have increased significantly – influenced primarily by the issue of refugees, which is the subject of heated public discussion at present.
We use the Employee Identification with CR Commitment ESG KPI to determine the degree to which our staff identify with, or how satisfied they are, with our CR commitment. It is based on our Group-wide employee survey, which is carried out every two to three years. Evaluation of the survey showed a marked upward trend in both areas.