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Supply chain management.

Processes and tools for evaluating suppliers are key aspects of supplier management at Telekom. These are, for example, valuable in identifying financial improvement potential and in monitoring progress in social and environmental areas. They also help Telekom identify possible risks in the supply chain and respond to them immediately.

We also rely on dialog with regard to sustainability in cooperation with our suppliers. For us at Telekom, it is important to know that our business partners are supporting new ways of achieving sustainable business practices. We need this information to be able to effectively improve the supply chain. In addition to our suppliers, our most important external stakeholders when it comes to procurement, our collaboration partners – organizations and NGOs – act as key supporters in designing a sustainable supply chain. We are also engaged in promoting improvements in ethical, social and environmental standards in industry initiatives such as the Global e-Sustainability Initiative (GeSI) and the Joint Audit Cooperation (JAC).

Advancing the E-TASC information system.

E-TASC, or the Electronics Tool for Accountable Supply Chains, is an online information system used throughout the industry for assessing the sustainability-related risks involved in supplier activities. As a member of the Global e-Sustainability Initiative (GeSI), Telekom played a key role in the development of this system and is also involved in its further development. GeSi is planning to provide additional useful features to buyers and suppliers and is working on making the system's structure more modular. The initiative is planning to introduce an audit tool that provides information on all audit activities, an information system on conflict minerals and a CO2 management system to check scope-3 emissions. GeSi is also planning to deal with the issue of fighting corruption in more detail and to simplify and restructure the questionnaire so that it can be used across industries. GeSi initiated a preparatory market study in late 2012 to help it make decisions regarding the implementation and design of the new E-TASC platform.

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E-TASC makes it possible for us to recognize current or potential CR risks in the supply chain early on and to respond to them appropriately. Suppliers use the system to provide detailed information on the social and environmental aspects of production at their companies and the management systems they employ, which gives them the opportunity to provide proof of their CR status to other business partners or the critical general public. A multilevel consulting and escalation process is planned for cases in which companies refuse to provide information or when disputes arise.

Supplier workshops for a more sustainable supply chain.

As part of Telekom's climate protection strategy, we are currently testing calculation procedures for scope-3 emissions, i.e., indirect CO2 emissions generated by our suppliers' production processes as well as through usage by consumers of the final product. In 2012, we conducted two workshops on the topic with top suppliers, Chinese supplier Huawei and the US-based telecommunications company, Cisco. At the workshops, we talked to these suppliers about how important this topic is to Telekom and discussed expectations on all sides. The goals of the long-term collaboration include obtaining information from these suppliers about CO2 emissions generated by their production processes, because these emissions also count toward our own scope-3 emissions. We plan to use the results of the workshop as the basis for introducing additional measures in the value-added chain. We are currently involved in negotiations with other suppliers such as Sony-Ericsson in order to permanently reduce our scope-3 emissions.

Last year's CR report

Preparations for developing selected suppliers completed.

Within the scope of supplier workshops and international initiatives, Telekom has been actively promoting sustainable value-added chains in the ICT industry for several years. In 2012 we prepared a program designed to support our suppliers even more when it comes to implementing socially and environmentally friendly as well as economically efficient business practices. The program covers essential risks regarding employee working hours, occupational health and safety, wages and working and living conditions.

We are planning to pilot the program in 2013 with selected suppliers and focus on working hours, occupational health and safety, and cooperative management. The pilot project will include conducting educational programs as well as setting up different communication channels for employees so that they can actively participate in the decision-making process. In addition to reducing potential risks, the program is expected to improve long-term cooperation with suppliers and help us learn more about local and culturally-influenced needs.

Sustainable Procurement Stakeholder Dialog Day.

The fifth Sustainable Procurement Stakeholder  Dialog Day took place on November 8, 2012, at Deutsche Telekom's Group headquarters in Bonn. 75 participants, including employees from different Telekom departments, selected suppliers and representatives of NGOs and from the worlds of politics and research, participated in the dialog event. Focus was placed on how to best pursue sustainably-oriented procurement policies at Telekom. Participants discussed ICT-specific opportunities and risks at three workshops and talked about ways in which sustainability can increase business as well as how to best incorporate CR into procurement processes. The very positive response we got from the participants strengthened Telekom's commitment to further establish the company as a CR leader and consistently integrate sustainability criteria into its procurement activities. The dialog also improved the suppliers' understanding of Telekom's sustainable procurement strategy and the challenges it entails.

Last year's CR report

Cosmote Romania evaluates 102 suppliers.

In 2012, 102 suppliers were evaluated by Cosmote Romania with respect to their collaboration during 2011. The evaluation process involves sending a detailed questionnaire to suppliers with specific questions relating to corporate responsibility and human rights. The completed questionnaire is returned accompanied by a letter confirming compliance with Cosmote Romania's Supplier Code of Conduct.

DELFIN Award 2012 for progress in sustainable development.

Sustainability and the drive to harmonize business, social and environmental interests are a long-term strategic principle for Magyar Telekom. The company strives to conduct all its operations in this spirit, and through its own example encourage suppliers to operate in a sustainable manner as well. With this in mind Magyar Telekom established the DELFIN Award in 2008 to promote the idea of sustainable development and honor progress made in this direction. DELFIN is an acronym of the Hungary phrase "Award for a committed, sustainable and innovative generation". Award recipients must exhibit exceptional performance in one of four categories: supporting equal opportunity and promoting anti-discrimination within and outside of the company; sustainable innovation; sustainability education and awareness; and investment and development in the area of climate protection. In 2012 one sustainable innovation prize went to Ericsson Hungary Communication Systems for its EARTH project, which delivers solutions to the question of how to reduce the energy consumption of wireless info-communication networks and enhance their energy efficiency.

Makedonski Telekom: Vendor Management System includes suppliers’ sustainability performance.

During the reporting period, Makedonski Telekom's Procurement Department introduced a vendor management system project with the aim of improving relationships between the company and its suppliers through more regular and optimized communications. One of the project's specific goals is to evaluate the performance of suppliers from a sustainability perspective. This includes a company-wide evaluation of a supplier's sustainability, financial, technical, commercial and administrative performance.