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Sustainable procurement strategy.

  • CR clause a permanent feature of our General Terms and Conditions for Purchasing since June 2013.
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NGOs and the media continue to uncover violations of employee rights, environmental protection standards and human rights along the supply chains for phones, laptops and other ICT products. As one of the largest telecommunications service providers worldwide with suppliers in more than 80 countries, Telekom takes this issue seriously. Telekom uses effective management tools to make sure its suppliers and manufacturers provide humane working conditions and are involved in effective environmental protection.

Sustainability in procurement activities at Deutsche Telekom.
Methods, tools and stakeholders.

Tools and methods
for promoting
sustainability in
procurement activities
Supply chain management
  • Prequalification questionnaire
  • Supplier selection process
  • Supplier assessment
  • Supplier workshops
Risk management
  • E-TASC
  • Social Audits
  • Improving supplier competence
  • Escalation process 
Communication & training
  • Procurement portal
  • Online training tool
  • Reports on sustainability
    in our procurement activities
  • Stakeholder  Dialog Day
Rules & regulations
  • Procurement Practices
  • General Terms and Conditions for Purchasing,e.g., CR clause
  • Social Charter 
  • Statement on Extractives 
Strategy to promote sustainability in procurement activities
 
Sustainable
Procurement
Working
Group

Tasks: Incorporation of sustainability into procurement, ongoing development of a sustainable procurement strategy and implementation of core measures; measurement and management based on key performance indicators; support for escalation processes; sharing information on best practices and business cases.

 
Stakeholder 

Internal: Employees, purchasers, other workgroups (“sustainable products,” etc.)

External: Suppliers, sustainability-oriented investors, NGOs

 
Management approach.

One of Telekom’s aims is to constantly improve the sustainability of its value chain. We have laid the foundation for this with our sustainable procurement strategy. We adhere to principles for socially and environmentally friendly procurement throughout the Group and manage our processes with the help of internal and external performance indicators and management tools.

Fundamental norms and standards.
Telekom has created social and environmental minimum standards for its corporate governance through its Guiding Principles and voluntary commitments. We also require our suppliers to comply with these standards. We use the following documents to guarantee compliance:

With our Social Charter , we have made a commitment to complying with the fundamental principles and standards set forth by the International Labour Organization (ILO) and the Organisation for Economic Co-operation and Development (OECD) as well as with the Universal Declaration of Human Rights and the UN Global Compact 

Commitment to sustainable procurement.
Our strategy for realizing sustainable procurement practices is based on our CR strategy and has been effectively incorporated into our procurement processes. The Sustainable Procurement Working Group (SPWG) develops recommendations on how to best implement our sustainable procurement strategy and assists our employees in their procurement decisions. The heads of the CR and Procurement divisions together carry general responsibility for the topic of "realizing sustainable procurement practices." We have also specified sustainable procurement requirements for the BuyIn joint venture

We have incorporated our sustainability principles into the Group’s Global Procurement Policy to provide orientation for our buyers. The accompanying Procurement Practices provide instructions on how to conduct procurement transactions in Germany. We use an online tool to train our employees. A revised version of this tool will be available in 2014. Our buyers can, for example, use the tool to learn how to implement our sustainability principles in their daily business activities.

Management with the Sustainable Procurement CR KPI.
We use the Sustainable Procurement CR KPI to measure and manage our sustainable procurement performance. This KPI measures the ratio between the procurement volume we receive from suppliers whose compliance with social and environmental criteria has been verified through self-assessments, E-TASC or social audits, and our total procurement volume. Our goal is to cover 75 percent of the whole procurement volume by 2015.

The large procurement volume purchased from individual suppliers had a significant impact on the results of our Sustainable Procurement KPI for 2013. Our decision to switch over to a new E-TASC platform also had an impact on the KPI results. The old platform was deactivated in late 2013. However, not all of the suppliers registered there could be registered on the new tool before the end of the year. Their data was therefore not available when we calculated the KPI for 2013.

Sustainability ranking rates supplier management activities.
Each year, leading rating agencies such as the Sustainable Asset Management (SAM) Group rate the sustainability performance of large companies. In the 2013 SAM rating, Deutsche Telekom scored 88 out of 100 in the supplier management category (2012: 83 points), ranking the company among the industry leaders.

Sustainable Procurement Working Group with new structure and new tasks.

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 2013 we revised its composition and tasks.

Since December 2013, 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. Headed by Central Procurement with advisory services from the CR department, the SPWG acts as the sustainability ambassador for Group Procurement. At the same time it serves as a platform for the exchange of best practices among the national companies.

The working group's tasks include supporting international Procurement units in implementing sustainability requirements by providing suitable tools. These include audit timetables, supplier self-assessment questionnaires and concepts for corrective measures. If a supplier fails to meet Telekom's requirements, the SPWG supports the responsible buyers. By providing benchmarks and other decision-making tools, it helps them to provide suppliers with guidance and motivation. It is also involved in supplier development projects and develops performance indicators for the assessment of our sustainability performance in Procurement. 

CR clause added.

The corporate social responsibility and anti-corruption clause, or short CR clause, was added to our General Terms and Conditions for Purchasing in June 2013. Since then, Corporate Procurement and T-Systems have been using the clause in all of their supplier agreements. The clause will be introduced at the European national companies in 2014. 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 the use of practices such as audits.

The CR clause expressly refers to current internal standards, the Code of Conduct and Telekom’s Social Charter  and enforces 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 conducting 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.