Two companies, one standard: New supplier code for the BuyIn joint venture
One of the goals of the BuyIn procurement joint venture between Deutsche Telekom and Orange is to ensure a sustainable supply chain. To this end, both companies introduced a joint Supplier Code of Conduct (SCoC) in 2017. It specifies joint principles and values in the corporate responsibility area and sets forth strict ethical, social, ecological, and human rights expectations and requirements for suppliers.
This Code can obviously not replace the laws and regulations of countries where our suppliers are active. Rather, its aim is to facilitate compliance with these laws and regulations and guarantee that they are implemented faithfully and effectively. As of July 2017, the Code applies to all procurement activities of Deutsche Telekom, Orange, and the BuyIn joint venture, that is:
- All current contracts (new contracts)
- Contract changes such as extensions and additional negotiations
- Project negotiations (based on framework contracts of all types – except catalog call-offs)
- Individual orders
The Supplier Code is a fixed component of the General Terms and Conditions/General Terms and Conditions for Purchasing. All new suppliers must accept it within the scope of the supplier onboarding process.
Sustainability management at the BuyIn Joint Venture
Telekom has been procuring end devices such as telephones from the BuyIn company since 2011. The company is owned by Deutsche Telekom and Orange. By jointly procuring products, the two companies are able to order larger volumes and negotiate lower prices with their suppliers.
At the same time, both companies have a greater impact on the environmental and social performance of their suppliers thanks to their considerable market power. To this end, Deutsche Telekom and Orange have amended BuyIn's procurement processes in line with their sustainability strategies. Requirements on suppliers are listed in the Supplier Code of Conduct. The code contains demanding standards when it comes to ethics, anti-corruption policies and environmental protection. It prohibits child and forced labor and calls for the right to freedom of association. All suppliers of the joint procurement venture must officially accept the code's conditions. BuyIn also expects its suppliers to require their own suppliers to comply with the provisions set forth in the code of conduct. In case of violations, BuyIn reserves the right to demand that the supplier address the issues and to terminate the contract should the supplier continue in its failure to comply.
BuyIn uses the following tools to encourage compliance with its code of conduct:
- Mandatory statement of compliance with the code of conduct, even during the bidding process
- Requiring suppliers to fill out a questionnaire on sustainability as a prerequisite for entering into a business relationship
- Requiring suppliers to provide additional CR information via the information platform for sustainable supply chain management, EcoVadis
- Supplier audits as part of the Joint Audit Cooperation (JAC)
Two committees - the CR Steering Board and the CR Operations Committee - comprising representatives of Deutsche Telekom, Orange and BuyIn have been established to address internal sustainability management at BuyIn. The CR Steering Board meets every six months and is responsible for defining strategic priorities and sustainability goals. The CR Operations Committee is in charge of operative policy implementation. The committee meets at least once every two months to coordinate sustainability management activities.
Conflict-free Sourcing Initiative
Many of the metals used in smartphones and other ICT products, like tantalum, gold, tin and tungsten, are extracted in places like the eastern part of the Democratic Republic of Congo under inhumane and illegal conditions. The parties involved in conflict in the region use the profit for activities such as financing civil wars. Telekom is actively committed to making sure that the devices it sells or the technology it used in its network infrastructure do not contain raw materials sourced under problematic conditions. The company works together with its suppliers toward this goal and is involved in industry initiatives. One of these initiatives is the Conflict-Free Sourcing Initiative, which is committed to the responsible, conflict-free sourcing and procurement of raw materials. The initiative's main instrument is the Conflict-Free Smelter Program. This program involves inspecting metal processing facilities and smelters. The facilities are inspected by independent auditors who determine whether the raw materials used there come from sources that are not involved in financing civil wars. Audit records are created for each type of metal processed at the smelters and can be viewed by the public. Contact addresses are provided to make it easier to report cases of abuse at extraction facilities. The program also makes sure that people reporting cases of abuse can do so anonymously.
The Conflict-Free Sourcing Initiative was initiated 2008 by the Global e-Sustainability Initiative and the Electronic Industry Citizenship Coalition (EICC). Both global industry associations are committed to sustainable developments in the ICT and electronics industries.
We conduct social audits to find out whether our suppliers are fair in their relations with their employees, society and the environment. However, we do not commission all of these audits ourselves. We can use our resources more effectively by conducting joint audits together with other companies. We co-founded the Joint Audit Cooperation (JAC) in 2010 to make this possible. Ten telecommunications companies currently participate in the cooperation. Combined we have greater market power, giving us more influence when it comes to supplier compliance with environmental and social standards.
All audits conducted by the Joint Audit Cooperation are based on an approved, standardized procedure comprised of an on-site inspection at the supplier facilities and numerous consecutive measures. These help guarantee that our suppliers engage in corporate responsibility and make it possible for us to assess and encourage their sustainability performance. We follow up by assessing whether and to what extent the suppliers have conducted any recommended improvement measures. The audits are carried out by international auditing firms that are specialized in the specific social and environmental aspects in the respective country. These firms use a checklist based on the international standards for working conditions (SA 8000) and environmental management systems (ISO 14001).
Sustainable Procurement Stakeholder Dialog Day
Telekom engages in active dialog with its stakeholders in order to advance its sustainable procurement strategy. Telekom specifically involves suppliers, NGOs and representatives from the worlds of politics and science to help the company create a more sustainable supply chain. Since 2008, Telekom has been hosting a regular dialog event with its key stakeholders, Sustainable Procurement Stakeholder Dialog Day.
China is a heavy-weight player on the global procurement market for ICT products. Nevertheless, not all Chinese suppliers meet our sustainability criteria. This is why Telekom hosted a Sustainable Procurement Stakeholder Dialog Day in the Chinese city of Shenzhen to address this problem on site.
CR clause for suppliers
Our corporate social responsibility and anti-corruption clause, or CR clause, has been a permanent feature of our General Terms and Conditions for Purchasing since June 2013. In 13 paragraphs, the CR clause describes our ethical, social and environmental principles, how we require our suppliers to comply with these principles and how this is monitored through our supplier audits.
The CR clause expressly refers to current internal standards, the Code of Conduct and Deutsche Telekom's Social Charter and emphasizes their applicability for suppliers and sub-suppliers working with our Group. The clause gives Telekom the right to demand that suppliers provide information on human rights, labor and environmental standards as well as on activities they are performing to fight corruption and fraud within their sphere of responsibility and influence. It also gives Telekom the right to review the accuracy of this information. Every time a supplier signs an agreement with Telekom, they also place themselves under the obligation to use concrete measures to prevent and fight corruption, to make the goods and services they supply to Telekom more environmentally friendly and energy efficient and to provide information on the materials they use. We expressly list legal regulations and international standards that enforce supplier accountability and make these a component of the agreement. Last but not least, the CR clause regulates sanction options that Telekom can use to respond to violations of CR-related contractual terms.
Procurement Sustainability e-learning tool
Our Global Procurement Policy clearly regulates sustainability in our procurement practices. We offer the Procurement Sustainability e-learning tool to Procurement employees at our national companies to help them put the policy into practice effectively. During the training, employees learn about and are tested on important CR measures and processes. For example, the tool explains in detail the steps that need to be followed to introduce countermeasures in cases of violations (escalation process).
Sustainable Procurement Working Group
The Sustainable Procurement Working Group (SPWG) has served as an instrument for the comprehensive implementation of social and environmental standards in Procurement since 2007. In addition to representatives from all of the functional Procurement areas (such as Devices and IT) the SPWG also includes representation from the national companies and T-Systems International.