• Act responsibly. Enable sustainability.
  • 2015 Corporate Responsibility Report
2015 Corporate Responsibility Report

Sustainable Finance

Companies that rely on sustainable business practices are more competitive in the long term, which is why investors who are interested in sustainability tend to focus on long-term yields instead of short-term profit. Socially responsible investment (SRI img) can be an important component when it comes to securing capital for Deutsche Telekom AG in the long term.

SRI investment products consist of securities from companies that have passed an audit conducted in accordance with environmental, social, and governance (ESG) criteria. This is why the development of demand for T-Shares from socially responsible investors serves as an indicator for assessing our sustainability performance. With our Socially Responsible Investment ESG KPI img we measure how the financial markets perceive our CR activities. Investors concerned with sustainability often refer to ratings published by specialized SRI analysts. For this reason the rating given to our company by SRI analysts has an impact on our ability to win over and retain socially responsible investors and achieve our goal of keeping our company's medium and long-term cost of capital at a low level.

We use different formats – both in our reporting as well as in direct dialog – to inform SRI analysts and investors of our CR activities.

At the end of 2015, around 21 percent of T-Shares were owned by investors who consider SRI img criteria in their investment decisions at least to some extent. Two percent of T-Shares were held by investors who give priority to SRI aspects when managing their funds. Increasingly, our efforts toward more sustainability and social commitment therefore pay off in terms of reputation.

Investor communication expanded
We have been publishing relevant Deutsche Telekom ESG KPIs in our Annual Report for several years now, also providing forecasts regarding their future development. Financial market players interested in sustainability can also review ESG information in the Socially Responsible Investment (SRI) section of our investor relations portal. Interested parties can also find additional information on these topics in the SRI facts info box provided as a supplement to this CR report.

In addition to our reporting activities, we also engage in targeted dialog with investors. Our CR and Investor Relations (IR) units, for example, conducted joint SRI roadshows on the topic in June and December 2015. They also held special conference calls to keep interested investors informed and responded to numerous direct requests for information made by analysts and investors, covering the entire spectrum of ESG criteria, from climate protection and human rights to data privacy and diversity.

Deutsche Telekom's ESG (environmental, social and governance) performance is assessed within the scope of CR ratings, which provide investors with valuable information for their investment decisions. As in previous years, the T-Share was once again listed in important sustainability ratings in 2015. We appeared in RobecoSAM's DJSI img World and DJSI Europe Index for the first time since 2012. In addition, rating agency oekom singled us out as the world's best telecommunications company in terms of ecological and social performance in 2015. A top score of 100 points can be achieved in the CDP img Carbon Disclosure Leadership index. We improved slightly once again from 98 to 99 points, thereby gaining a firm foothold as industry leader for the DACH region (Germany, Austria, and Switzerland). We were also listed as industry leader in the Carbon Performance Leadership Index in 2015. The STOXX Global ESG Leaders Index listed Deutsche Telekom for the fifth year in a row. During the last financial year we ranked 2nd in the telecommunications industry and 3rd among all German companies in the ranking conducted by rating agency Sustainalytics, on which this index is based. Once again, our share was listed on the FTSE4Good img index and the UN Global Compact img 100 index in the reporting year.

More and more people are recognizing the significance of CR for a company's core business. This can also be seen in the international trend toward tighter integration of financial and non-financial reporting. Sustainability aspects that are very important to corporate added value, such as environmental protection, employee needs and sustainable products, are being included in traditional management reporting.

Deutsche Telekom has been working on integration in its annual report for several years now. These efforts can be seen in the increasing inclusion of CR topics in central business processes such as procurement, product development and innovation. In this context, we are also working on a more standardized format for reporting on our company's financial and non-financial performance. This is in line with SRI img investor expectations, and our efforts received the Econ Award for Corporate Communications in 2015. Our report received Gold in the Annual Report category in 2014. One decisive factor in the jury's decision was effective integration of the topic of sustainability.

Various sections of our Annual Report make reference to how sustainability contributes to value creation in our corporate processes. We have been reporting on our ESG KPIs in our Annual Report since 2011. Additional qualitative trend forecasts for the following two financial years have been included for our Energy Consumption, CO2 Emissions and Sustainable Procurement ESG KPIs since 2013. As a result, we were once again in a position to compare forecasts and actual KPI img trends in our 2015 Annual Report and in this year's CR Report. Further information on this can be found in the ESG KPIs section.

To further push integration, we evaluated sustainability topics in this year's materiality process based on their significance for the success of our business. In addition to assessing their impact on sales and revenues, we analyzed their influence on the efficiency of our business processes, employee productivity, our ability to innovate and improving our reputation. As a result, we identified 18 sustainability topics that are highly significant to the success of Deutsche Telekom's business. These topics were integrated even more tightly into key sections of our Annual Report.

The Group Tax department is responsible for ensuring that the Deutsche Telekom AG Group pays taxes and duties at national and international level in accordance with the applicable statutory provisions. This involves utilizing the scope available for optimizing taxes on the one hand, and living up to the social responsibility of a multinational company on the other.

Group Tax makes sure that the Deutsche Telekom Group complies with all its tax obligations in Germany and abroad, in particular that it pays the taxes in accordance with the local laws and regulations applicable to the individual Group entities. This includes the Group's income taxes, which must also be regularly reported in our IFRS financial statements, as well as VAT and income tax on salaries payable within the context of customer transactions and for Group employees. Group Tax also ensures that the corporation has an efficient tax structure within the framework of German and foreign tax law as applicable in each country, i.e., that the Group does not carry any unnecessary tax burden. The goal is to achieve sustainable tax efficiency for the Group, something in which transparent, reliable cooperation with local tax authorities is deemed to be indispensable.

In addition, Group Tax also has the ambition to contribute as much as possible to the success of Deutsche Telekom's operations, e.g., by providing detailed tax advice regarding new business models or innovative technological developments. In such matters, the department is particularly focused on immediately clarifying any unresolved tax law-related issues as well as providing practical solutions to meeting all applicable tax requirements.

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