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  • 2016 Corporate Responsibility Report
2016 Corporate Responsibility Report

Sustainable procurement strategy

Non-governmental organizations (NGOs) and media continue to uncover violations of human and employee rights as well as environmental standards along the supply chain for phones, laptops and other ICT img products. As one of the largest telecommunications service providers worldwide with more than 30,000 suppliers in over 80 countries, we take this issue seriously. We use effective management tools to make sure our suppliers and manufacturers provide humane working conditions and are involved in effective environmental protection.

Managing sustainability in procurement processes

We continue to make our supply chain more sustainable and 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.

SUSTAINABLE PROCUREMENT STRATEGY

Fundamental norms and standards
We have defined minimum social and environmental standards for our corporate governance through our Guiding Principles and voluntary commitments. We also require our suppliers to comply with these standards. Our CSR and anti-corruption clause forms an integral part of our supplier agreements to ensure compliance. The clause makes reference to the following Group policies:

In addition, our collaboration with suppliers is based on the following principles:

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 img) and the Organisation for Economic Co-operation and Development (OECD img) as well as with the Universal Declaration of Human Rights and the UN Global Compact img

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) ensures Group-wide, i.e. international, compliance. The members of the SPWG img are available to assist our employees in all sustainability-related procurement matters. The heads of the CR and Procurement departments are jointly responsible for the implementation of sustainable procurement practices. They report directly to the Board of Management member for Human Resources and Finance, respectively. Our escalation process calls for decisions to be made at Board of Management level in serious cases. We have also specified all necessary requirements to ensure sustainable procurement 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 procurement practices set forth in the policy provide specific guidelines for procurement in Germany and serve as recommendations for our subsidiaries. An e-learning tool is available to our employees throughout the Group for training purposes. Our buyers can, for example, use the tool to learn how to implement our sustainability principles in their daily business activities. Our new buyer handbook provides an overview of which CR criteria need to be taken into account during which part of the procurement process. We use random sampling to review acceptance of our CSR and anti-corruption clause among our suppliers.

KPI img to promote sustainability
We measure and manage our sustainability performance in our procurement activities with the Sustainable Performance ESG key performance indicator (ESG KPI). 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 img or social audits, and our total procurement volume. Our goal is to cover 80 percent by 2020.

Scores in sustainability ratings
Every year leading rating agencies measure the sustainability performance of large enterprises. Deutsche Telekom scored 98 out of 100 points in the supply chain management category of the 2016 RobecoSAM img Corporate Sustainability Assessment. We were able to make improvements from the previous year and are currently among the industry leaders.

Progress

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110 participants in international sustainability dialog

Around 110 interested parties from ICT img companies, NGOs, scientific institutes and auditing firms met in Nanjing, China under the motto: "How sustainability can accelerate the delivery of business benefits." The event was organized by the Joint Audit img Corporation (JAC), a collaboration of 13 telecommunications service providers of which Deutsche Telekom is a founding member. Participants talked about how to best realize sustainability along the ICT supply chain as well as its benefits for companies. The discussion included approaches on how to assess the entire product life cycle in consideration of social and environmental criteria.

The event made one thing perfectly clear: Sustainability along the supply chain pays off. Responsible employee relations not only help improve employee satisfaction, but also reduce employee churn rates, increase product quality, minimize rework and up productivity.

JAC is planning to further improve sustainability along the supply chain by intensifying audit activities and encouraging suppliers and other relevant stakeholders to share their experiences more actively.

Training and handbook on sustainable procurement

The topic of sustainability in day-to-day business was a focal point of our training activities for buyers in 2016. New employees attended a four-day training where they learned about processes and tools for sustainability. In addition, 561 employees took advantage of our Sustainable Procurement e-learning tool in 2016. We are planning to rework and update our online training offer in 2017.

We created a new buyer handbook during the reporting period. It provides an overview of which CR criteria need to be taken into account during which part of the procurement process. The handbook helps our buyers quickly identify where to apply sustainability processes, where to find the right documents and who to contact with questions.

Our training activities go beyond our own employees. We also offer sustainability training to our business partners and suppliers through our supplier development program.

Procurement process