Socially responsible investment

SRI img investment products consist of securities from companies that have passed an audit based on environmental, social, and governance (ESG img) criteria. The development of demand from socially responsible investors for T-Shares serves as an indicator we can use to assess our sustainability performance.

With our ESG KPI “Socially Responsible Investment (SRI)”, we measure how the financial markets perceive our CR activities.

The concept behind the United Nations’ Sustainable Development Goals (SDGs) continues to attract attention on the part of investors. With a view, in part, to evaluating our operations in light of the SDGs, we have introduced a process for assessing the impacts of projects, products and measures.

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T-Shares in sustainability ratings and indexes KPI

As part of our CR strategy, we have taken part successfully for many years in ESG img ratings, which we select based on reputation, relevance, and independence. When rating agencies give high marks to our social and ecological commitment, the T-Share img is included in the financial market's sustainability indexes.

In 2021, the T-Share was again listed on leading sustainability indexes, including S&P Global’s prominent, and CSA-based, DJSI img World and DJSI Europe. Our shares were also listed yet again on the FTSE4Good Index img (for the tenth year running) and the UN Global Compact 100 Index. We are also listed on the Euronext Indices.

The table below presents a selection of other T-Share listings.

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Reporting against standards

 

Task Force on Climate-related Financial Disclosures (TCFD img)

  • The most important key figures for measuring and managing climate-related opportunities and risks

ESG KPI “Socially Responsible Investment (SRI)” KPI

The Socially Responsible Investment (SRI img) ESG KPI img indicates the proportion of shares in Deutsche Telekom AG held by investors who take, among other criteria, environmental, social, and governance criteria into account for their investment strategy („SRI Investment“).

And our commitment for more sustainability pays off: As of September 30, 2021, 12 percent of all T-Shares were held by investors who partially take environmental, social, and governance criteria into account for their investment strategy; 10 percent were held by investors who manage their funds primarily in accordance with SRI aspects.

Our ambition: increase KPI

Reporting against standards

 

Task Force on Climate-related Financial Disclosures (TCFD img)

  • The most important key figures for measuring and managing climate-related opportunities and risks 

German Sustainability Code

  • Criterion 1 (Strategy)
  • Criterion 7 (Control)

Sustainable capital investments & bond issues

Our contribution to the SDGs

In the past years, sustainability criteria have become increasingly important, both politically and economically, with respect to capital investments. And we are among those seeking to make our capital investments increasingly sustainability-oriented. This applies both to money that we invest and to bonds that we issue for the purpose of raising borrowed capital for investments. To this end, our “Sustainable Finance” working group, working in close consultation with our Group units Corporate Responsibility and Treasury (financial management), regularly evaluates financing models that are attractive and sustainable.

Sustainable capital investments with the Telekom Pension Fund (Telekom-Pensionsfond) and DT Trust
We invest the Telekom Pension Fund’s (only available in German) assets in keeping with our sustainability principles. Besides financial aspects, we have also been factoring in – since 2013 – ecological and social principles, as well as guidelines for good corporate governance, in selecting these investments. This encompasses:

  • Targeted efforts to achieve the Sustainable Development Goals (SDGs) by exercising our rights to have a say in decisions as a shareholder
  • General ban on all investments in companies that manufacture or do business with “controversial weapons” (e.g., anti-personnel mines, cluster munitions, nuclear weapons, biological or chemical weapons)
  • Ban on investments in companies that have repeatedly violated the principles of the UN Global Compact

We pursue a best-in-class approach and therefore focus on investments in companies that are the best in their sector in terms of sustainability performance. Our aim is to reconcile attractive profit expectations with sustainable values.
As a result of this orientation, the Telekom Pension Fund’s sustainable capital investment strategy has been honored by experts: We won the “Equity Strategy” category in the Institutional Assets Award 2020 & 2021 awarded by the specialist publishing house of the German newspaper Frankfurter Allgemeine Zeitung. The award recognizes successful investment strategies that have been implemented in a particularly coherent manner.

Since 2019, Deutsche Telekom’s capital investments (DT Trust) have also been geared toward ecological and social standards. The DT Trust is based on the criteria for the Government Pension Fund Norway (Norges Bank). Among other things, we exclude companies that violate human rights, manufacture certain weapons, or whose core business is considered harmful to the environment.

Sustainable bond issues
In March 2021, our Board of Management approved a framework for sustainability-oriented bond issues – the “Sustainability-Linked Bond Framework.” This financing instrument will enable us to offer investors the opportunity to support our commitment in the fight against climate change. The interest rates for bonds that fall within the Framework are tied to the achievement of the pertinent defined climate targets: In cases in which we do not achieve our targets, we promise to pay higher interest rates.

EU taxonomy: compliance in 2021

The EU Taxonomy Regulation is the outcome of a significant, forward-looking European regulatory initiative. It aims to promote investment flows from the finance sector to businesses that are involved in environmentally sustainable activities. The taxonomy is intended to help the EU to implement the European Green Deal, creating a common understanding of the environmental sustainability of activities and investments. The regulation also lays down corporate reporting obligations in regard to these economic activities. For companies affected by the CSR Directive, this entails new reporting obligations for the 2021 reporting year in regard to taxonomy-relevant environmentally sustainable economic activities.

Six environmental objectives 
Criteria were set out in EU legislation in mid-2021 for the first environmental objectives of the taxonomy, “climate change mitigation” and “climate change adaptation.” The taxonomy’s other environmental objectives are “the sustainable use and protection of water and marine resources”, “the transition to a circular economy”, “pollution prevention and control”, and “the protection and restoration of biodiversity and ecosystems.”

To be covered by the taxonomy, an economic activity must contribute substantially to one of these six environmental objectives while at the same time avoiding any negative impact on other objectives (the principle of “do no significant harm” or DNSH principle). The company must also meet minimum social safeguards. The diagram below provides a summary of the taxonomy requirements:

Requirements of the taxonomy

Substantial contribution
Do no
significant harm
Compliance with
minimum safeguards

Substantial contribution
to at least one of the six environmental objectives of the EU taxonomy:

  1. Climate change mitigation
  2. Climate change adaptation
  3. The sustainable use and protection of water and marine resources
  4. The transition to a circular economy
  5. Pollution prevention and control
  6. The protection and restoration of biodiversity and ecosystems

Do no significant harm
An activity can only be considered to contribute to one of the six objectives if it has no other significant negative environmental impact (DNSH principle).

Compliance with minimum safeguards
The minimum safeguards are social requirements in accordance with

  • the OECD Guidelines for Multinational Enterprises,
  • the UN Guiding Principles on Business and Human Rights,
  • the Core Labour Standards of the International Labour Organization (ILO),
  • and other requirements of European legislation.
For more information please click on the buttons

Implementation at Deutsche Telekom 
For Deutsche Telekom, as a company in the information and telecommunications industry, the following two of the economic activities currently listed in the EU taxonomy img are relevant:

A complete overview of the economic activities that form part of the EU taxonomy to date is available in the EU Compass.

The EU taxonomy KPIs are applicable to the two environmental objectives that have been published to date: “climate change mitigation” and “climate change adaptation.” We are allocating them to the objective “climate change mitigation.”

The table below shows the taxonomy-eligibility of our economic activities for this reporting year in absolute figures and as a percentage of the Group’s total turnover, capital expenditure, and operating expenditure. 

Based on the provisions of the EU taxonomy, the total figures for the Group that are relevant for this calculation in the reporting year are EUR 108.8 billion (turnover), EUR 35.7 billion (capital expenditure), and EUR 0.5 billion (operating expenditure). The definition of turnover from the EU taxonomy is equivalent to net revenue in our Group. The relevant capital expenditures were determined on the basis of the consolidated statement of financial position and are calculated by adding together the following key line items: additions and changes in the composition of the Group under property, plant and equipment, intangible assets (excluding goodwill), and right-of-use assets. The disclosures on capital expenditure do not form part of a capital expenditure plan according to the EU taxonomy guidelines. The definition used in the EU taxonomy for calculating relevant operating expenditure encompasses costs that relate to research and development; building remediation measures; short-term leases; maintenance and repair; and any other direct expenditures relating to the day-to-day maintenance of property, plant and equipment which are presented in the consolidated income statement under other operating expenses. Since we classify our data centers as non-current assets, no direct expenses are incurred in this context. The reported disclosures on capital expenditure and operating expenditure are directly assigned at the level of product groups to either the operation of data centers in accordance with economic activity 8.1. or the provision of ICT img solutions in accordance with economic activity 8.2. 

An aggregate view of the taxonomy-eligibility of both economic activities provides very low proportions in the reporting year of turnover (1.8 %), capital expenditure (0.1 %), and operating expenditure (2.1 %).

EU taxonomy KPIs – taxonomy-eligibility of the economic activities of the Deutsche Telekom Group  

Deutsche Telekom Group in 2021            
    Turnover Capital expenditure Operating expenditure
    millions of € % millions of € % millions of € %
Relevant total figures for the Group   108 794 100.0 35 665 100.0 473 100.0
Of which: taxonomy-eligible 8.1. Data processing and hosting 160 1.1 14 0.0 0 0,0
8.2. Data-driven solutions for GHG emissions reductions 836 0.8 17 0.1 10 2.1
Total 996 1.8 31 0.1 10 2.1
Of which: not taxonomy-eligible 106 798 98.2 35 634 99.9 463 97.9
 


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Reporting against standards

     

Global Reporting Initiative (GRI) 

  • GRI 201-2: (Economic Performance)  

 

EU taxonomy: industry view and outlook

Further development
The EU taxonomy img does not currently include criteria for the economic activity “Provision and operation of a network infrastructure for telecommunications.” This means that the key part of our business model is not yet covered by the taxonomy. As a result, we cannot currently describe our core business as taxonomy-eligible. Suitable EU taxonomy criteria with which we could describe our contribution to climate protection as taxonomy-aligned do not yet exist either. We therefore lobby in a range of business and industry associations for the inclusion of suitable, relevant criteria in the EU taxonomy to describe our core activities. Among other initiatives, we have taken on leadership of the Sustainable Finance working group in the European Telecommunications Network Operators’ Association (ETNO), and we represent the ICT img industry in the EU Platform on Sustainable Finance. We are also active within the European Round Table (ERT), and at national level we are part of the econsense network and several other organizations and stakeholder dialogs related to the EU taxonomy. We have set out our position in a range of position papers, for example, here with ETNO.

The telecommunications industry is a key building block for the EU Green Deal. IT solutions and products that run on our networks help companies and private individuals to reduce their CO2 emissions. These include, for example, web and video conferencing, and also “smart” solutions such as smart cities and smart buildings. Services such as these help achieve energy efficiency and reduce CO2. We therefore think that, for the European Union to meet its climate and energy goals, it is essential to reflect the importance of telecommunications networks when further developing and refining the taxonomy. 

The EU taxonomy also addresses economic activities that are relevant, for example, for our fleet and building management activities, but that are not within Deutsche Telekom’s core business. These include the installation, maintenance, and repair of energy-efficient devices, of electric vehicle charging stations, of devices for measuring, regulating and controlling the overall energy efficiency of buildings, and of renewable energy technologies. Activities in these areas largely relate to our capital expenditure and our operating expenditure. It will not be possible to gauge whether the associated turnover of the providers of these services are taxonomy-aligned until early 2023, when our business partners publish reports with the relevant information. Until then, we cannot report any capital expenditure and operating expenditure relating to the procurement of products from taxonomy-aligned economic activities as being taxonomy-eligible. 

The table above shows the taxonomy-eligibility of our economic activities for this reporting year in absolute figures and as a percentage of the Group’s total turnover, capital expenditure, and operating expenditure. As of the 2022 reporting year, we will also report the amount and the proportion of our economic activities that are taxonomy-aligned. Below, we explain our approach to the two economic activities that are currently relevant to us.

Minimum social safeguards
The minimum social standards outlined above must be met for the assessment of the taxonomy-alignment of our activities that is to take place in the 2022 reporting year. As a responsible company, we have made an express commitment to upholding the UN Guiding Principles on Business and Human Rights adopted by the United Nations Human Rights Council in 2011 (Ruggie Principles). The obligation to respect human rights is anchored in our core regulations – i.e., our Guiding Principles and our Code of Human Rights & Social Principles policy statement, both of which have been approved by the Board of Management. Our regulations embody our commitment to complying with the principles laid down by the International Labour Organization (ILO img), the Organisation for Economic Co-operation and Development (OECD img), the Universal Declaration of Human Rights, and the UN Global Compact. We provide transparent reporting on this in the section “Human rights”.

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Taxonomy activity 8.1: Data processing, hosting and related activities

The economic activity “Data processing, hosting and related activities” covers “Storage, manipulation, management, movement, control, display, switching, interchange, transmission or processing of data through data centers, including edge computing”, and pertains to group J.63.1.1. of the same name in the European registry of sectors. Of our Group-wide business activities, our Systems Solutions operating segment (T-Systems) comes under this sector. To evaluate whether activities are taxonomy-eligible, we consider T-Systems’ global business, including data centers operated by other companies in which we lease space (“third-party data centers”). Taxonomy-eligible turnover can be clearly and transparently assigned to specific data centers using a suitable ratio. To do so, we use the proportion that a data center makes up of the total number of T-Systems server IDs. Capital expenditure and operating expenditure can be calculated specifically for all data centers using the relevant IT systems. This analysis shows that a large proportion of the revenue from our Systems Solutions segment is taxonomy-eligible. To avoid double counting under the EU taxonomy img, T-Systems’ cloud solutions are not compiled and reported here; they are only included under the economic activities for data-driven solutions.

Based on the relevant total figures for the Group, the taxonomy-eligibility of our business activities for data processing and hosting stands at 1.1 percent (turnover). We do not provide figures for capital expenditure and operating expenditure assigned to this economic activity here due to the lack of materiality. In order to also include a view of taxonomy-eligibility from a segment perspective, we additionally report the KPIs in respect of Systems Solutions. The taxonomy-eligible portion, determined using the same calculation logic, is 36.6 percent in relation to net revenue of the segment, and 4.2 percent in relation to capital expenditure.

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Reporting against standards

     

Global Reporting Initiative (GRI) 

  • GRI 201-2 (Economic Performance)

Taxonomy activity 8.2: Data-driven solutions for GHG emissions reductions

We apply the definition of the economic activity “Data-driven solutions for GHG emissions reductions” to those solutions and products in the Group that are “predominantly aimed at the provision of data and analytics enabling GHG emission reductions”, which means that they have clear potential to enable users to save CO2. In this context, we are guided by the key levers of the established ESG KPI imgEnablement Factor” and by other solutions with clear potential to enable users to save CO2 within the ESG KPI “Sustainable Revenue Share” and the #GreenMagenta label. These include first and foremost the following services from among our Group-wide business activities: web- and video-conferencing tools, workplace and cloud solutions, and connected car. We mainly provide these services in the Germany operating segment, in our major subsidiaries in the Europe operating segment, and in the Systems Solutions operating segment. We therefore focus on the relevant companies when evaluating the taxonomy-eligibility of activities. 
To avoid double counting under the EU taxonomy img, T-Systems’ cloud solutions are only reported under this economic activity, and not under data processing and hosting.

The very specific selection of economic activities for this taxonomy environmental objective means that only a small proportion of the Deutsche Telekom Group’s turnover (0.8 %) and operating expenditure (2.1 %) is taxonomy-eligible. As the capital expenditure that can be assigned to this narrowly defined economic activity has little relevance for the business model and is very small, we will forgo detailing the investments more closely here due to their lack of materiality.

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Reporting against standards

     

Global Reporting Initiative (GRI) 

  • GRI 201-2 (Economic Performance) 

Investor communication

We have observed that investors are increasingly incorporating SRI img approaches in their investment strategies. In addition, investors, analysts and rating agencies are increasingly inquiring about our CR activities. To meet these requests, we use different formats – both in our reporting and in direct dialogue.

We annually publish this Corporate Responsibility Report and a non-financial statement in the annual report. We also offer ESG img information for financial market players on our company website, under “Responsibility”, and on our investor relations portal, under “Socially Responsible investments”. In addition, we provide social indicators in our HR Factbook.

We strive to engage in personal dialog with investors and regularly hold national and international information events as SRI roadshows. We also regularly take part in SRI conferences or meetings, and, upon request, present our CR strategy as best practice. In addition, we provide information to interested investors in conference calls, and answer numerous direct inquiries. This year, we again carried out our investor dialogs – such as our SRI roadshows – online, due to the coronavirus pandemic.

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Taxes

The Group Tax department is responsible for ensuring that the Deutsche Telekom Group pays taxes at the national and international level in accordance with the applicable laws. 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 Group has an efficient tax structure within the framework of German and foreign tax laws as applicable in each country (avoidance of any unnecessary tax burden not prescribed by law). The goal is to achieve sustainable tax efficiency for the Group. In the view of Group Tax, transparent, trust-based cooperation with local tax authorities – for example, in connection with operationally advisable company reorganizations – plays an essential role in any efforts toward that goal.

In addition, Group Tax undertakes to contribute as much as possible to the success of Deutsche Telekom’s operations, e.g., by providing detailed advice regarding new business models or innovative technological developments. In such matters, it focuses particularly on directly clarifying any unresolved issues related to tax law, as well as on providing practical solutions to meeting all applicable tax requirements.

The company’s “Tax Compliance, Sustainable Tax Efficiency, Tax as Valued Business Partner” tax strategy has been approved by the Deutsche Telekom Board of Management.

For detailed information on the work of Group Tax, its principles, and its responsible approach to taxation, please refer to the detailed document “tax strategy.”

Further information with regard to taxation of Deutsche Telekom
Additional information with regard to our taxes – for example, about our country-based reporting, and additional details about tax rates – are provided in the documents „Country-by-Country Report 2020“ and “Cash Tax Rate Reconciliation.”

In addition, Deutsche Telekom participates in initiatives aimed at developing a comprehensive approach to determining and publishing meaningful information about tax payments by enterprises and enterprise groups. The aim is to give a full and differentiated view of the various contributions to the financing of the public domain that are made in connection with or otherwise result from enterprises and entrepreneurial activities. In this context, for some years now, Deutsche Telekom has determined “Total Tax Contribution” figures for our key European national companies in the telecommunications sector. This approach is explained in greater detail in the document on Total Tax Contribution, which also contains the respective information relating to our Group. Deutsche Telekom also intends to collect and publish such information in the coming years, and to extend its scope to additional national companies.

Reporting against standards

 

Global Reporting Initiative (GRI)

  • GRI 207-1 (Taxes)
  • GRI 207-2 (Taxes)

Research and development

As a future-oriented telecommunications business, we support and participate in ongoing research. We collaborate with various universities. For example, we established a professorship for software engineering (with a focus on blockchain) at the CODE University of Applied Sciences in Berlin. We invest in various fields of research such as the Internet of Things img (IoT). We invested a total of 33 million euros in research and development within the Group in 2021.

We promote young and innovative business ideas. In the framework of our hubraum technology incubator, start-ups benefit from our experience, receive financial support and obtain access to exclusive technologies. We bring young participating companies together with relevant business units within the Group, for the purpose of testing innovative technologies and new business models and bringing them to the market. In 2021, our technology incubator collaborated with about 100 start-ups.

With our Deutsche Telekom hubraum 5G “Sustainability Award,” we highlight efforts by industry and start-ups to bring about a sustainable world. The award honors projects with a focus on the sustainability of 5G networks, such as projects in the areas of smart infrastructure and AI-controlled (AI = artificial intelligence) energy management.

In the year under review, hubraum, in cooperation with Bundesverband Deutsche Startups (German start-ups association), produced a study of AI-oriented start-ups in Germany that highlights the promise and strengths of the German AI ecosystem. The study's key results include the finding that young AI companies, while enormously ambitious, tend to lack resources and impetus for growth. At the same time, the study also found that women are underrepresented in the AI sector, and that this situation needs to change, in light of the need for participatory, unbiased AI systems – and of the insight that diversity in AI-developer teams reduces bias in the resulting AI systems. In this regard, the study was able to offer a positive outlook, by reporting that 81 percent of AI start-ups believe that AI-technology development needs to take account of ethical issues. Click here to find out more about current hubraum projects.

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