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  • 2016 Corporate Responsibility Report
2016 Corporate Responsibility Report

ESG key performance indicators

The ESG KPIs help us steer our CR activities. They enable us to improve our performance on an ongoing basis. Because they are relevant to our supply chain, we also address them in our Annual Report. For the purpose of integrated financial and sustainability reporting, the KPIs 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 diagram).

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ESG KPIs

We use fifteen Group-wide ESG img key performance indicators (KPIs) to steer our CR performance.

All of Deutsche Telekom's national companies that participate in the CR data collection process are under the obligation to record our Group-wide ESG KPIs. These national companies represent 99 percent of the Group's net revenue.

Calculation of the Employee Identification with CR Commitment ESG KPI is based on an employee survey that is conducted every two years. The next survey is scheduled for spring 2017, which is why no values are available for 2016.  

All ESG KPIs were systematically reviewed in 2016, just like they were last in 2014. We analyzed any need for adjustment based on changing internal and external general conditions. The internal analysis particularly focuses on three factors: relevance to our core business, contribution to implementation of our strategy and relevance to steering our performance, all questions as to how effective each ESG KPI will be in supporting our key sustainability efforts in the future. In 2016 we also analyzed the extent to which the UN Sustainable Development Goals (SDGs) relevant to our company are already covered by our ESG KPIs. In cases where we found coverage lacking, we looked into defining a new KPI and including it in our external reporting activities.

Based on this review, we decided to include five new ESG KPIs in our external reporting.

We are also planning to expand our Sustainable Procurement ESG KPI in the medium-term since we already achieved and even exceeded the target associated with this KPI as planned for 2015.

Silke Thomas

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ESG KPI reporting in the Annual Report

We also report on selected ESG img KPIs in the Deutsche Telekom Annual Report. Forecasts on the further development of three ESG KPIs (Energy Consumption, CO2 Emissions and Sustainable Procurement) according to German accounting standard DRS 20 are also included in the report. We reviewed the forecasts made in the 2015 Annual Report for our 2016 Annual Report.

The Energy Consumption ESG KPI is calculated by setting electricity consumption in relation to revenue. The trend for this KPI img was positive in 2016. It decreased year-on-year as expected. Despite increasing revenue, energy consumption decreased throughout the Group in the reporting period. Given the unabated rapid growth in data traffic and ongoing network build-out, this result was achieved only through further gains in energy efficiency. We anticipate a positive development in our Energy Consumption ESG KPI for the years 2017 and 2018, with a declining trend in 2017 and a further slight decrease in 2018. This development is the result of slight savings in electricity consumption coupled with a slight increase in revenue. We expect to achieve further reductions in electricity consumption above all as we migrate our networks in Germany to IP img technology and merge T-Systems data centers in various regions. Most of these savings are likely to be counterbalanced by the expansion of T-Mobile US and the accompanying rise in electricity consumption.

We had assumed there would be a slight decline in the CO2 Emissions ESG KPI for 2016, i.e., a slight overall improvement. In fact, CO2 emissions sank by 5 percent in the reporting period. This positive trend is mainly attributable to falling emissions from electricity consumption and from fuel consumption for our vehicle fleet. Our electricity consumption is the main driver of our CO2 emissions. We therefore also expect a slight downward trend in our CO2 Emissions ESG KPI in the years 2017 and 2018. One of the goals we have set ourselves as part of our integrated climate strategy for the year 2020 is to reduce CO2 emissions throughout the Group (excluding T-Mobile US) to 20 percent below the figure for the base year 2008. Shutting down outdated PSTN technology will be a major contribution in these efforts. We will be able to shut this technology down as soon as migration to IP has been completed.

In the case of the Sustainable Procurement ESG KPI, we exceeded the prior-year figure by an even greater margin than forecast. The share of the procurement volume that has been risk-assessed already amounts to 83 percent. Over the next two years, we expect our Sustainable Procurement ESG KPI to remain stable at a high level.

We measure the impact of our social commitment with a set of three ESG KPIs. The Community Investment ESG KPI maps our social commitment in terms of financial, human, and material resources. The Beneficiaries ESG KPI measures the huge number of active contributors as well as the broad target group they reach. The Media Literacy ESG KPI highlights the high percentage of projects and activities promoting the competent handling of media. It is highly relevance to us in controlling terms as it correlates closely with our core business.

We use the Employee Identification with CR Commitment ESG KPI to determine the degree to which our staff identify with, or how satisfied they are, with our CR commitment. This is based on the Group employee survey (excluding T-Mobile US), which we conduct every two to three years; the next is scheduled for spring 2017. This ESG KPI will therefore not be reported until the next financial year. The figure for both aspects was 78 percent in 2015.

We use the Socially Responsible Investment ESG KPI to determine how the finance markets rate our sustainability activities. This indicator measures the proportion of T-Shares held by investors whose investment strategy is based not only on economic but also on the ecological and social aspects of corporate governance. In spring and fall 2016 we held a number of Socially Responsible Investment (SRI img) roadshows, at which we offered to answer critical questions from our investors. In addition, we attended SRI conferences, organized conference calls and web conferences, and answered numerous direct queries from rating agencies, analysts and investors.

Our efforts to achieve greater sustainability are also paying off with investors. At the end of 2016, around 20 percent of T-Shares were owned by investors who take SRI criteria at least partly into account in their investment decisions. Almost 2 percent of T-Shares were held by investors who give priority to SRI aspects when managing their funds.