Management & facts

With our Supplier Code of Conduct, we place our suppliers under an obligation to uphold the principles and values anchored in our Code of Conduct and in the “Code of Human Rights & Social Principles”. As of 2020, suppliers of solutions involving artificial intelligence (AI) must also comply with the requirements of our AI Guidelines. Deutsche Telekom suppliers are also under the obligation to do everything necessary to prevent active and passive forms of corruption. We expect our suppliers to impose the same requirements on their subcontractors too.

The Supplier Code of Conduct forms part of our General Terms and Conditions for Purchasing, but does not, of course, supersede the laws and regulations of countries in which our suppliers operate. Rather, it is designed to facilitate compliance with these laws and regulations and ensure that legal requirements are implemented faithfully and effectively. Since 2014, we have offered online compliance training for our suppliers.

When selecting business partners, we conduct compliance business assessments based on the risk of compliance violations. In addition to suppliers, and development and joint venture partners, this applies in particular to certain consultants, such as sales agents. We have created a separate policy for partnerships with them (Consultant Policy).

The ESG KPI  “Procurement Volume Without CR Risk” – for which the target is 95 percent by 2025 – measures the procurement volume from direct business partners for whom, in the period under review, checks by an established external service provider turned up no negative media reports. It also includes suppliers for whom such reports were identified and who took suitable action to correct the issues involved. The procurement volume so assessed for risks accounted for a 99.7 percent share of the total relevant volume in 2021 (previous year: 99.6 percent). This ESG KPI, along with the ESG KPI “Procurement Volume Verified as Non-Critical”, is calculated with respect to the reviewed Group-wide procurement volume shown in the Group’s standardized procurement-report system (not including the category “Network Capacity” and not including T-Mobile US).

The ESG KPI  “Procurement Volume Verified as Non-Critical” – target for 2025: 60 percent – measures the share accounted for by suppliers checked for social and ecological criteria by means of dedicated reviews – e.g., via EcoVadis , the Carbon Disclosure Project (CDP ), social audits, supplier visits, or our Supplier Development Program. In 2021, such CR-verified suppliers accounted for a share of 60 percent (previous year: 62 percent). This ESG KPI, along with the ESG KPI “Procurement Volume Without CR Risk”, is calculated with respect to the reviewed Group-wide procurement volume shown in the Group’s standardized procurement-report system (not including the category “Network Capacity” and not including T-Mobile US). 

To be able to enter into a business relationship with us, suppliers have to register on our supplier portal and undergo a qualification process. Those who do so are fully informed of Deutsche Telekom’s fundamental principles and values – also regarding corporate responsibility and sustainability.

As a rule, our supplier management runs through a five-step cycle. The aim is to minimize risks in the supply chain and encourage our suppliers to improve their practices.

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If a supplier cannot meet the sustainability requirements anchored in our Supplier Code of Conduct to our satisfaction, we initiate an escalation process.

Our procurement organization is primarily responsible for this process – with support and advice from Group Corporate Responsibility. We hold discussions with the supplier to make our requirements clear to them. If the discussions held on various levels do not lead to the desired outcome, the responsible decision-makers consult with each to reach agreement about how to proceed with the supplier. In the worst case, this could lead to the business relationship with the supplier being terminated.

Everyone who identifies irregularities in our supply chain regarding compliance with laws, internal guidelines, and standards of conduct, can report these – and can do so anonymously if they wish – using our Tell me! portal.

In Procurement, we work with a comprehensive supplier risk monitoring scheme. We subject our entire supplier portfolio to an extended risk analysis. Specialized companies evaluate all suppliers with regard to financial, CSR and compliance risks.

Suppliers that present especially high levels of risk are also monitored with regard to global risks (e.g., natural disasters, political risks). For this purpose, we use EcoVadis  and carry out special audits on location. Our aim is to address deficits together with the supplier and take appropriate corrective action. Only if no solutions are possible do we have to cut ties with suppliers.

In 2021, we conducted a total of 88 supplier reviews – 71 of which were on-site reviews (social audits) and 17 mobile surveys. 34 direct and 54 indirect suppliers were involved in the checks.

For the on-site reviews, we let the supplier know the approximate time of our visit in advance (“semi-announced audit”). This is necessary to make sure that relevant contacts in key functions are present for the audit. The mobile surveys give our suppliers’ employees the opportunity to provide anonymous information about the social and ecological situation at their company. The surveys are primarily used to gain an initial impression of the local working conditions in order to then initiate further measures as needed, such as specific on-site reviews (social audits).

	Number of reviews	Number of findings	Number of completed finding
Social audits  (by external audit firms)	71	402	643 (190 findings from 2021 and 453 outstanding findings from previous audits)
Mobile surveys *	17	-	-
EcoVadis  (2014–2021)	363	-	-
CDP  supply chain **	268	-	-
Total	719	-	-
* Mobile surveys with selected suppliers, in particular to assess the situation of workers at the operating sites ** The CDP supply chain program is used for direct suppliers with high emission intensity.

We focus our audit activities on strategically important and particularly risky suppliers. They are routinely audited every two to three years. This group includes roughly 250 of our 20 000 or so active suppliers. Together, they cover around 80 percent of our procurement volume. These audits give us transparency about the risks in large parts of our supply chain.

The majority of the audits are conducted within the scope of Joint Audit Cooperation (JAC). The audits cover the following areas:

• Labor standards
• Social standards
• Living standards
• Environmental requirements

The JAC Guidelines require, among other things, that our suppliers:

• Pay a fair wage that enables employees to enjoy a decent standard of living;
• Respect the right to freedom of association and collective bargaining, and provide a healthy, safe working environment and
• Do not exceed a 48-hour working week and a weekly maximum of twelve hours’ overtime, and grant at least one free day after six consecutive days of working.

Compliance with all these requirements is reviewed regularly during our on-site audits. This also includes inspection of the features and quality of the working, sleeping, and cafeteria areas.

Deutsche Telekom does not require its suppliers to obtain external environmental or social certification. But if suppliers cannot show any environmental and social responsibility certificates, we do expect equivalent management systems to be used. Our auditing experience shows, however, that the majority of our relevant manufacturing suppliers have an external certificate or equivalent management systems.

Verification of important social and ecological aspects as well as fundamental human rights during our audits is in line with internationally recognized guidelines and standards such as the ILO  core labour standards, the UN Guiding Principles on Business and Human Rights, and the OECD  Guidelines for Multinational Enterprises.

In the audit program, which has been established and is controlled at Group level, a total of 71 on-location audits were carried out in 2021.

As in previous years, we concentrated our auditing activities on suppliers in Asia, Latin America, Oceania, Africa, and Southern and Eastern Europe.

Audited suppliers included manufacturers in the areas of IT hardware, software and services as well as networks and devices.
All violations identified in the course of such audits enter into a correction and measures plan, and the timely implementation of measures is regularly monitored. In the audits carried out in the period under review, no serious transgressions in the areas of working conditions and other basic human rights – such as discrimination, forced labor and child labor – were found. In addition, no cases of bribery or corruption, and no critical violations of general compliance rules, such as rules governing the right to intellectual property, were found.

• Of the 71 suppliers we audited in 2021 (10 of which were in accordance with the validated audit processes of the Responsible Business Alliance ), around 39 percent (28 audits) were direct suppliers and 61 percent (43 audits) were tier 2, 3, and 4 suppliers – that is, indirect suppliers.
• The audits carried out in 2021 revealed a total of 402 violations of Deutsche Telekom’s supplier requirements. These findings break down as follows: 174 cases regarding occupational health and safety, 72 cases regarding working hours, 65 cases regarding environmental protection, 20 cases regarding working conditions, 48 cases regarding wages and remuneration, 11 cases regarding corporate ethics, 6 cases regarding freedom of association, 4 cases regarding disciplinary measures and 2 cases regarding discrimination. In addition, the violations included 16 transgressions that needed to be addressed on a priority basis and additional 143 serious findings. A total of 643 violations were corrected in 2021, including several open improvement measures from previous years. Examples of critical violations in 2021 and improvement measures can be found in the table below. As in previous years, most violations (43 percent) were linked to occupational health and safety (2020: 45 percent), followed by violations linked to working hours (2020: 15 percent). At 16 percent, environmental violations constituted the third-biggest issue (2020: 14 percent).

We collaborate as partners with our suppliers to make sure they are able to meet our high sustainability criteria.

Since 2018, we have continued the former Deutsche Telekom supplier development program as an industry approach (Sustainable Development Program, SDP). Telefónica and Swisscom have since joined this program. We expect more telecommunications providers and other ICT  companies to join us in the near future. The diagram shows the areas in which we audit the suppliers participating in our program. Based on these audits, we work with the respective supplier to develop a plan for remedying any issues. All activities and findings are documented so that we can gage the effectiveness of the measures employed.

Our suppliers come from various industries and countries. To capture the diversity of our more than 20 000 suppliers, the following graphic depicts the types of suppliers we commission; the overview includes the share of our expenditure (CapEx and OpEx) attributable to them and their geographical distribution.

Since as early as 2016, we have been disclosing our activities to bring on board suppliers as part of CDP’supplier engagement rating. This rating assesses how well companies have been able to integrate the topic of climate protection into their supply chain. In 2021, we were awarded an A rating, as in the previous year. This has secured our place on the Supplier Engagement Leader Board. An important step in achieving this was calculating the supplier-specific emission intensities based on supplier responses to the CDP  Supply Chain Program. This involved calculating the ratio between a supplier’s overall emissions (Scopes 1 and 2 and Scope 3 for the upstream supply chain) and the supplier’s overall sales.

The ESG KPI  “CDP Supply Chain Program” indicates the degree to which our procurement volume from carbon-intensive suppliers is covered by the CDP Supply Chain Program. In 2021, 72 percent of the procurement volume was covered by the CDP Supply Chain Program.

The percentage of audited procurement volume decreased from 23.2 percent in the previous year to 20.6 percent in 2021. At the same time, the percentage of procurement volume covered by EcoVadis  increased sligthly to 38 percent.

We require our suppliers to protect the environment and use resources responsibly. This requirement is enshrined both in our “Code of Human Rights & Social Principles” and in our Supplier Code of Conduct.

As a form of verification, we request our suppliers to disclose information about their activities and we perform supplier audits (social audits). In these audits, we check whether our suppliers use an environmental management system, including a waste management system, and review how they manage their energy and water consumption. In addition, we always check whether there is a management system in place to address the issue of conflict resources.

When selecting suppliers and products, we review and evaluate, for example, the use of hazardous and conflict materials – especially in light of the OECD  Due Diligence Guidance for Responsible Supply Chains. In 2021, we reviewed and adjusted our sustainability criteria. As of 2022, the new criteria are also being applied to selected (high-volume) invitations to tender for supply of IT and network hardware products, and entering into supplier selections, with a weighting of 20 percent.