We use the ESG KPIs as a management tool in our CR activities. They help us to systematically improve our services, and some are included in our Annual Report due to their relevance in value creation. We reviewed the KPIs extensively during the reporting period and updated some of them in order to make sure that these KPIs continue to contribute to effective corporate management and meet the expectations of our stakeholders. Following this review, we changed the term CR KPI to ESG KPI as an indication of their role as a management tool for environmental, social and responsible governance within and outside of our Group. For the purpose of integrated financial and sustainability reporting, the KPIs also map the six types of capital addressed in these reports and therefore also reflect the essential aspects of the sustainable value of our company (see graphic).
The two ESG KPIs, Used Cell-Phone Collection and CO2 Emissions have been revised. For the sake of comparability, we will additionally report the previous KPI on cell-phone recycling this year. We are also currently piloting three new ESG KPIs to gauge the effectiveness of our social commitment and are preparing a revised version of our Energy Consumption ESG KPI .
In order to manage its CR performance, Deutsche Telekom uses seven key performance indicators, that apply throughout the Group: the ESG [i] key performance indicators (ESG KPIs):
- Socially Responsible Investment (SRI) ESG KPI
- CR Employee Satisfaction ESG KPI
- Sustainable Procurement ESG KPI
- CO2 Emissions ESG KPI
- Energy Consumption ESG KPI
- Social Commitment ESG KPI
- Used Cell-Phone Collection ESG KPI
All international subsidiaries of Deutsche Telekom are required to record data on the Group-wide ESG KPIs. These represent 99 percent of the Group's net revenue.
We extensively reviewed the KPIs in terms of relevance for management practices and updated some of them. The reference for comparison of the Used Cell-Phone Collection ESG KPI was changed from "number of customers" to "number of mobile phones in circulation." This makes it possible to more precisely illustrate the ratio of the number of cell phones sold to the number of those returned. When customers use the devices for longer periods of time, the environment benefits from this decision and, as a result, this has a positive impact on the KPI . We also adjusted our CO2 Emissions ESG KPI in line with our international climate protection target. We expanded the KPI to include all Group entities that participate in helping us realize our climate protection target. The extended scope affects the current volume of CO2 emissions as well as the figure recorded in 2008, on which our climate protection target is based. In 2014 we piloted three new KPIs to measure our social commitment and have begun reporting these externally for the first time in this report. Our activities are based on the methods employed by the London Benchmarking Group (LBG), which incorporate the aspects, "input," (effort/involvement), "output" (results) and "impact" (change).
- The Community Investment ESG KPI illustrates activities in which Deutsche Telekom was involved in the community either financially, through its employees, or through donating materials.
- The Beneficiaries ESG KPI reflects the number of people who got involved in community activities and the number of people in the target group that benefited from such activities.
- The Media Literacy ESG KPI reflects the number of people we have reached through programs addressing this topic. This KPI establishes a direct correlation between these activities and our core business.
In order to increase the relevance of the Energy Efficiency ESG KPI for management practices, we want to introduce an adjusted KPI for the target-oriented management of energy efficiency in all relevant corporate areas, including Technology, Procurement, and Sales, in the near future. One possible approach would be to calculate energy consumption per product group (customer equivalent). Despite these adjustments, we plan to continue to report on the previous ESG KPIs so that our readers will be able to compare the data.
ESG KPI reporting in the Annual Report
In our 2013 Annual Report, we forecast trends for three of our ESG KPIs – Energy Consumption, CO2 Emissions, and Sustainable Procurement – for the first time in compliance with the German Accounting Standard GAS 20. In the case of all three ESG KPIs, actual developments in the 2014 financial year exceeded our forecast. Both the Energy Consumption and CO2 Emissions ESG KPIs improved slightly instead of remaining constant as predicted. This is due to the fact that revenue grew more strongly and energy consumption less strongly than anticipated. The ratio between actual emissions and our climate target base year 2008 also improved as a result of extending the scope for the CO2 Emissions ESG KPI . The Sustainable Procurement ESG KPI increased more than planned as a result of further suppliers being audited for compliance with our social and environmental standards. In future, we expect these ESG KPIs to develop as follows:
- Over the next two years we expect our Energy Consumption ESG KPI to fall or fall slightly, i.e., a positive development. Network migration to IP technology and consolidation of the T-Systems data centers will be the main factors helping us to achieve major energy savings. These savings will be partly counterbalanced by the expansion of T-Mobile USA and the accompanying rise in energy consumption.
- Since our CO2 emissions are largely driven by our power consumption, the resulting positive trend is similar to the development described for the Energy Consumption ESG KPI . We will also strive to achieve a slight reduction in our CO2 emissions ESG KPI for the years 2015 and 2016. Our expectation for the Group units participating in the climate protection target is that, in 2020, CO2 emissions will lie 20 percent below the rate of the base year 2008 (excluding T-Mobile USA). The CO2 Emissions ESG KPI figure will, however, also include emission figures for T-Mobile USA. Since strong business growth will continue to increase power demand in the foreseeable future, the KPI will only improve slightly in the period up to the year 2016.
- In 2015 we expect to reach the forecast target of 75 percent for the Sustainable Procurement ESG KPI . In subsequent years, we assume that the ESG KPI will only rise slightly since audits focus on strategic suppliers and those with an increased CR risk.
Our Social Commitment ESG KPI shows that in 2014 our performance was again rated significantly higher than the level of importance attached by the public to the subject.
Demographics Management: Analysis of relevant performance indicators
Large companies like Deutsche Telekom employ up to four generations, some of whom have very different backgrounds, values and education. In view of the demographic shift, the way we live, work and learn is going to change considerably in the coming decades. Based on the age structure at our corporation, this is particularly going to impact Deutsche Telekom in Germany. We are prepared for this development because our company's success depends on the contribution of every person and every generation. For that reason, we have developed a comprehensive demographics management process that includes concepts for training, health, leadership and different working models. Our workforce structure management is aligned with demographic aspects.
To help us effectively conduct and manage our demographics management activities, we have intensified our monitoring of such HR indicators as well as of qualitative indicators with a high relevance for demographics. We consider it important to take both objective HR indicators as well as subjective assessments, e.g., from our employee survey, into account.