CORPORATE RESPONSIBILITY REPORT 2017 ON THE CLIMATE PROTECTION “A- TEAM“ SAY GOOD-BYE TO NERVE-RACKING PARKING SPACE SEARCHES published on April 19, 2018
SYSTEMATICALLY FIGHTING HUNGER REMOVE OBSTACLES - OFFER OPPORTUNITIES SAY GOOD-BYE TO NERVE-RACKING PARKING SPACE SEARCHES
2 CONTENTS 5 7 11 13 14 15 27 30 32 34 40 43 47 51 ABOUT THIS REPORT AWARDS INDEPENDENT ASSURANCE REPORT THE GERMAN SUSTAINABILITY CODE STATEMENT BY THE CHAIRMAN OF THE BOARD OF MANAGEMENT CR STRATEGY CR CONTROLLING AND IMPACT MEASUREMENT VALUES AND GUIDING PRINCIPLES SUSTAINABLE FINANCE SUSTAINABLE DEVELOPMENT GOALS (SDGS) ADDED VALUE AND MATERIALITY STAKEHOLDER MANAGEMENT COMPLIANCE REPRESENTING POLITICAL INTERESTS 53 HUMAN RIGHTS 55 57 59 60 63 67 77 78 82 84 RISK AND OPPORTUNITY MANAGEMENT DATA PRIVACY AND DATA SECURITY CUSTOMERS & PRODUCTS SERVICE QUALITY INFRASTRUCTURE EXPANSION SUSTAINABLE PRODUCTS & SERVICES CONSUMER PROTECTION AND SECURITY Consumer and youth protection Cyber security Mobile communications and health (EMF)
3 86 87 89 90 96 98 SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Raising awareness Building skills Encouraging implementation ENGAGEMENT@TELEKOM 101 CULTURAL AND SPORTS SPONSORSHIP 104 EMPLOYEES 105 COURAGE TO TRY 106 AGILE AND FLEXIBLE: PROMOTING NEW MANNERS OF COOPERATION 111 OCCUPATIONAL HEALTH AND SAFETY 114 TRAINING AND DEVELOPMENT 121 DIVERSITY AND EQUAL OPPORTUNITIES 124 SUPPLIERS 125 SUSTAINABLE PROCUREMENT STRATEGY 127 SUPPLY CHAIN MANAGEMENT 130 2017 audit results 132 RESOURCE SCARCITY AND RAW MATERIALS SOURCING 133 CLIMATE & ENVIRONMENT 134 CLIMATE STRATEGY 136 141 143 147 CO 2 emissions Renewable energy Energy efficiency Sustainable products 148 CIRCULAR ECONOMY 150 OTHER ENVIRONMENTAL TOPICS
4 151 FACTS & FIGURES 152 ECONOMIC INDICATORS 152 154 157 158 161 162 164 Socially responsible investment Suppliers Sustainable products Network development Data security and protection Financial performance indicators Financial personnel indicators 169 ENVIRONMENTAL INDICATORS 169 173 177 183 185 187 189 Energy Renewable energy CO 2 emissions Enablement Factor Mobility Used cell-phone collection and waste volume Other environmental data 191 SOCIAL INDICATORS 191 194 197 199 200 203 206 208 211 214 216 Social involvement Employee satisfaction Diversity Compliance and human rights Demography and company pension scheme Training and development Health and safety Headcount and part-time work Fluctuation and workforce management Ideas management Digital collaboration 217 IMPRINT 218 DISCLAIMER
ABOUT THIS REPORT 5 ABOUT THIS REPORT "Act responsibly. Enable sustainability." is the title of our 2017 CR Report. We chose this title to emphasize our commitment to sustainable activity along the entire value chain and to highlight the potential that our products and services hold when it comes to addressing environ- mental, economic and social challenges. Deutsche Telekom has been involved in CR reporting for more than 20 years. The CR Report – in addition to the non-financial statement we published in the 2017 Annual Report – is our primary medium for informing our internal and external stakeholders about our challenges and progress as a responsible, sustainable company. REPORTING PERIOD, SCOPE OF APPLICATION AND TARGET GROUPS All quantitative information, indicators, and descriptions of key events and activities refer to the year 2017. Any deviations are marked accord- ingly. The 2017 CR Report is a Group report that includes many national companies in which Deutsche Telekom holds a majority stake. It also follows up on the 2016 CR Report. This report is specifically addressed to Deutsche Telekom stakeholders. These include analysts and investors, CR ranking and rating agencies, non-governmental organizations, customers, employees, business part- ners and representatives from the fields of business, science, research, education and politics. Progress during the reporting period. The report also includes information on “CR facts” and specific informa- tion for investors and rating agencies. This is background information on a variety of topics that can be accessed directly from the text via links. Readers can also access the "CR facts" section at any time by clicking on the footer. A download area, search and dialog functions and an interactive benchmarking tool make it even easier to navigate the report. What's more, the info cart lets readers select different con- tent and create a customized PDF file. This year we are also publishing a CR brochure entitled "DIGITALIZA- TION – CREATING ENDLESS OPPORTUNITIES". DeutscheTelekom's online magazine, "We Care", also offers a range of interactive informa- tion on important social challenges. SELECTION OF KEY TOPICS FOR THE 2017 CR REPORT To identify the key topics for the report, we conducted a comprehensive materiality process. The process is a regular component of our annual CR reporting activities that helps us identify the topics with maximum relevance for us and our stakeholders. STRUCTURE OF THE CURRENT ONLINE REPORT The online 2017 CR Report has been structured as a progress report. It focuses on key developments during the reporting period, which are discussed in five central reporting sections: LOOKING BACK ON DEUTSCHE TELEKOM’S CR REPORTING Deutsche Telekom has been reporting on its sustainability activities in various publications since 1996. From 2003 through 2006 we pub- lished a combined annual HR and Sustainability Report. An interim report issued in 2007 formed the transition to our current CR reporting. Since 2008 the Telekom Group has been publishing a comprehensive CR Report each year. Customers and products Society Employees Suppliers Climate and environment OUR ONLINE REPORT: FOCAL POINTS AND CONTEXT We have been publishing our CR Report exclusively online since the 2010/2011 reporting year to meet the requirements and user prefer- ences of our stakeholders. The online 2017 CR Report has been availa- ble since April 19, 2018 in German and English. Each of the five main sections begins with an introduction and an overview of relevant events and developments on that topic. The subsequent pages are structured as follows: These are complemented by three additional sections: The Strategy and management section describes the management of CR processes and the Group-wide integration of Deutsche Telekom's CR strategy. The majority of our national companies whose CR activities are described in this report have their own profile page. The profile pages can be found under the "National companies" menu option. Sustainability relevance: explains what makes the topic significant to In the Indicators section, consolidated and commented indicators sustainable development and to Deutsche Telekom's long-term business success. provide information about our progress in the past few years. Management approach: how Deutsche Telekom approaches key sustainability topics, what its goals are and how it intends to achieve them.
ABOUT THIS REPORT 66 ADDITIONAL SOURCES FOR CR-RELEVANT CONTENT In addition to this online 2017 CR Report, we also use the non-financial statement published in our Annual Report to provide information on how we assume responsibility in society. Further information about our current CR activities can be found under the "Responsibility" menu option of the Deutsche Telekom website. The national companies pro- vide information about their CR commitment on their Internet portals and in their own publications. IMPLEMENTATION OF HIGH INTERNATIONAL REPORTING STANDARDS Deutsche Telekom's 2017 CR Report 2017 complies with the interna- tionally recognized guidelines (GRI Standards) of the Global Reporting Initiative (GRI). It also serves as a Communication on Progress (CoP) from Deutsche Telekom as part of the United Nations Global Compact. You can find an overview of specific measures being used to implement the Global Compact principles here. Deutsche Telekom also issues an annual, detailed Declaration of Conformity with the German Sustainabil- ity Code. ASSURANCE ENGAGEMENT Selected indicators from the 2017 CR Report for Germany and our national companies Magyar Telekom (Hungary), Slovak Telekom (Slova- kia), OTE and Cosmote (Greece) and T-Mobile US were audited as part of an assurance engagement by auditing firm PricewaterhouseCoopers (PwC). In accordance with the GRIStandards, all of the indicators marked in the GRI Indexwere audited by an independent auditing firm. The independ- ent assurance report can be found under the Assurance report menu option. All of the audited content in this report is identified with the sym- bol and will apply unchanged until the next CR report is published.
ABOUT THIS REPORT AWARDS 7 AWARDS We are very pleased about being listed in renowned sustainability rank- ings and ratings and about the numerous awards and certifications we have received during the reporting period. Our national companies were also recognized for their CR commitment. You can find an over- view of this on the profile pages of the national companies. We discuss our current position in ratings and rankings in the "Strategy and man- agement" section. AWARDS AND CERTIFICATES Strategy and management Deutsche Telekom AG For its uniform sustainability management, Deutsche Telekom won the German Sustainability Prize in December of 2017. We received the Silver for the "Standing by our convictions" CR brochure, as part of our integrated corporate communication. Deutsche Telekom received the Extel award "Leading Investor Relations Team in Europe" for the fourth time in a row. Other Extel awards in 2017: European ranking for all industries:#1 Overall, #3 Professional, #1 CEO, #1 CFO German ranking for all industries:#1 Overall, #3 Professional #1 CEO, #1 CFO, Ranking for the telecom industry:#1 Overall, #1 Professional #1 CEO, #3 CFO Deutsche Telekom AG PHonored with the Building Public Trust Award from auditing company PriceWaterhouseCoopers (PwC) for exemplary reporting as best com- pany in the "SDGs" (Sustainable Development Goals) category for the 2016 Annual Report Deutsche Telekom AG Named one of 2018 World’s Most Ethical Companies by the Ethisphere Institute Deutsche Telekom AG Telecom industry winner in the oekom Corporate Responsibility Review 2017 Deutsche Telekom AG Winner in two categories at the Econ Awards 2017. We received the Platinum Award for the third time in a row, this time for our 2016 CR Report. Institutional Investor: "Most Honoured company"Deutsche Telekom was selected the winner in all categories for this year's ranking by trade jour- nal Institutional Investor in the area of All-Europe Executive Team. Deutsche Telekom AG German Investor Relations Prize 2016: 1st place: IR Performance (DAX30) 3rd place: IR Professionals (DAX30) Deutsche Telekom AG IR Magazine Award: No. 1 in the telecom industry Inclusion in the Bloomberg Gender-Equality Index (GEI) 2018, which measures gender equality in the areas of internal company statistics, employee policy, external support and social commitment, and gender- conscious product offerings.
ABOUT THIS REPORT AWARDS Customers 88 Deutsche Telekom AG TÜV Rheinland: rating of "good" for Deutsche Telekom customer service Deutsche Telekom AG Several first places in the 2017 Connect reader survey (edition: 7/2017) Deutsche Telekom AG Deutschland Test 2017: Best Online Service Deutsche Telekom AG Deutschland Test 2017: Best Service App Deutsche Telekom AG Deutschland Test 2017: Service King Network Deutsche Telekom AG TÜV NORD confirms that Deutsche Telekom offers the best mobile communications quality in the categories Call Connection, Call Stability and Call Quality. Deutsche Telekom AG Deutsche Telekom receives multiple awards as best mobile communi- cations operator with an overall grade of 1.9 (good). Deutsche Telekom AG First place in the "Mobile Communications Networks" category of the Car Connectivity Award. Deutsche Telekom AG CHIP (edition 1/2018): Winner in the "Mobile Internet", "Telephony" and "Availability" categories and overall winner with a grade of 1.4. Deutsche Telekom AG A rating of "very good" in the Connect mobile communications test 2018 Society Teachtoday Three Comenius EduMedia Seals presented by the scientific associa- tion Gesellschaft für Pädagogik und Information (GPI) (Society for Education and Information) for Teachtoday: The entire initiative was recognized in the "Didactic Multimedia Products" category, the obstacle course in the "Computer Games That Encourage Competence" cate- gory and Scroller magazine in the "General Multimedia Products" category. Media magazine “Scroller” Our media magazine “Scroller” was also recommended by Stiftung Lesen, the German Reading Foundation, to promote safe, competent media use. Handbook GermanyHandbook Germany was recognized at the Film Festival Cologne by the MEDIA & MIGRATION NRW 2017 project in the "Best Commitment by an Initiative/Institution" category. Deutsche Telekom AG For its commitment to supporting millions of Syrian refugees, the GSM Association recognized Deutsche Telekom with the GLOMO Awar- d2017in the "Outstanding Contribution to the Mobile Industry" category.
ABOUT THIS REPORT AWARDS Employees 99 Deutsche Telekom AG Named Best Training Provider in Germany 2017 by "Capital" magazine. Deutsche Telekom received the highest marks for both its vocational training and its cooperative study program. Deutsche Telekom AG Online Talent Communication Study 2017: second place for the four examined online channels of Career Website, Online Job Solicitation, Social Media Appearances and Mobile Career Website. Deutsche Telekom Services GmbH Deutsche Telekom Services GmbH received Gold at the Pillar World Awards 2017 for the "Time-to-Change" project in the "Employer of the Year" category and silver in the "Best Products & Services of the Year” category. Deutsche Telekom AG Deutsche Telekom is awarded first place for the Telekom Team Recruit- ing Website in the Career Website category by HR Excellence Award 2017.Deutsche Telekom Services Europe is awarded third place for "FEA Robot on Track for Digitalization" in the "Work 4.0" category. Deutsche Telekom Services GmbH Gold for the “Time-to-Change" project in the "Human Resources Achievement of the Year" category and Silver for "IT-based solution self- service for job references” in the "New Products and Services from All Over the World" category by the Golden Bridge Awards 2017: Deutsche Telekom AG German Business Award in Health: Receipt of the Excellence Seal for Deutsche Telekom's integrated company health management and rec- ognition of the "Active Workplace" project with the "Innovative Company Health Promotion Activities" special prize. Deutsche Telekom AG Ideas Management Award 2017 bestowed by the German Institute for Ideas and Innovation Management: Second place in the "Best Idea 2017 from Production and Technology" category and third place in the "Best Idea 2017 from Management and Administration" category (one employee idea for each category). Deutsche Telekom AG First place Female Recruiting Award 2017 Deutsche Telekom AG First place: Corporate Health Award 2017 in the "Service Provision, IT and Communication" category for the fourth time.
ABOUT THIS REPORT AWARDS 10 Deutsche Telekom 2017 In the year 2017, Deutsche Telekom made it into the final round in the CO Avoidance as a Contribution to Climate Protection category. 2 Makedonski Telekom Gold Award for outstanding performance in company health management by the Macedonian National Society for Work Safety. T-Systems Singapore T-Systems Singapore was honored in the "Managing Health at Work" category at the Asia Best Employer Award 2017. T-Systems Singapore Singapore Health Award 2017: T-Systems Singapore won the Corporate Merit Award Suppliers Deutsche Telekom AG CDP A list in Supplier Program category Climate and environment Deutsche Telekom AG CDP A list (climate protection ranking)
ABOUT THIS REPORT INDEPENDENT ASSURANCE REPORT 1111 INDEPENDENT ASSURANCE REPORT Independent Practitioner’s Report on a Limited Assurance Engagement on Sustainability Information* To Deutsche Telekom AG, Bonn Within the scope of our engagement we did not perform an audit on external sources of information or expert opinions, referred to in the Report. We have performed a limited assurance engagement on the disclosures denoted with in the Corporate Responsibility Report of Deutsche Telekom AG, Bonn (hereinafter: “the Company”), for the period from1 January 2017 to31 December 2017 (hereinafter: “Report”). Our engage- ment in this context relates solely to the disclosures denoted with the symbol . Responsibilities of the Executive Directors The executive directors of the Company are responsible for the prepara- tion of the Report in accordance with the principles stated in the Sus- tainability Reporting Standards of the Global Reporting Initiative (here- inafter: “GRI-Criteria”) and for the selection of the disclosures to be evaluated. This responsibility of Company’s executive directors includes the selec- tion and application of appropriate methods of sustainability reporting as well as making assumptions and estimates related to individual sus- tainability disclosures, which are reasonable in the circumstances. Fur- thermore, the executive directors are responsible for such internal con- trol as they have considered necessary to enable the preparation of a Report that is free from material misstatement whether due to fraud or error. We conducted our assurance engagement in accordance with the Inter- national Standard on Assurance Engagements (ISAE) 3000 (Revised): Assurance Engagements other than Audits img or Reviews of Historical Financial Information, issued by the IAASB. This Standard requires that we plan and perform the assurance engagement to allow us to con- clude with limited assurance that nothing has come to our attention that causes us to believe that the disclosures denoted with in the Company’s Report for the period from1 January 2017 to31 December 2017 have not been prepared, in all material aspects, in accordance with the rele- vant GRI-Criteria. This does not mean that a separate conclusion is expressed on each disclosure so denoted. In a limited assurance engagement the assurance procedures are less in extent than for a reasonable assurance engagement and therefore a substantially lower level of assurance is obtained. The assurance proce- dures selected depend on the practitioner’s judgment. Within the scope of our assurance engagement, we performed amongst others the following assurance procedures and further activities: Obtaining an understanding of the structure of the sustainability organization and of the stakeholder engagement Independence and Quality Control of the Audit img Firm We have complied with the German professional provisions regarding independence as well as other ethical requirements. Inquiries of personnel involved in the preparation of the Report regarding the preparation process, the internal control system relat- ing to this process and selected disclosures in the Report Our audit firm applies the national legal requirements and professional standards – in particular the Professional Code for German Public Audi- tors and German Chartered Auditors (“Berufssatzung für Wirtschaft- sprüfer und vereidigte Buchprüfer“: “BS WP/vBP”) as well as the Stand- ard on Quality Control 1 published by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany; IDW): Requirements to quality control for audit firms (IDW Qualitätssicherungsstandard 1: Anforderun- gen an die Qualitätssicherung in der Wirtschaftsprüferpraxis - IDW QS 1) – and accordingly maintains a comprehensive system of quality con- trol including documented policies and procedures regarding compli- ance with ethical requirements, professional standards and applicable legal and regulatory requirements. Identification of the likely risks of material misstatement of the Report under consideration of the GRI-Criteria Analytical evaluation of selected disclosures in the Report Performance of web conferences and telephone interviews as part of the inspection of processes and guidelines for data collection at the following locations: Deutsche Telekom AG PASM img GmbH Strabag SE T-Mobile US Inc. Practitioner´s Responsibility Our responsibility is to express a limited assurance conclusion on the disclosures denoted with in the Report based on the assurance engage- ment we have performed. Comparison of selected disclosures with corresponding data in the consolidated financial statements and in the group management report
ABOUT THIS REPORT INDEPENDENT ASSURANCE REPORT 1212 Evaluation of the presentation of the selected disclosures regarding sustainability performance Assurance Conclusion Based on the assurance procedures performed and assurance evi- dence obtained, nothing has come to our attention that causes us to believe that the disclosures denoted with in the Company’s Report for the period from1 January 2017 to31 December 2017 have not been prepared, in all material aspects, in accordance with the relevant GRI- Criteria. Intended Use of the Assurance Report We issue this report on the basis of the engagement agreed with the Company. The assurance engagement has been performed for pur- poses of the Company and the report is solely intended to inform the Company as to the results of the assurance engagement. The report is not intended to provide third parties with support in making (financial) decisions. Our responsibility lies solely toward the Company. We do not assume any responsibility towards third parties. Düsseldorf, 19 April 2018 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft Hendrik Fink ppa. Pia Schnück Wirtschaftsprüfer (German Public Auditor) *PricewaterhouseCoopers GmbH has performed a limited assur- ance engagement on the German version of the Corporate Responsi- bility Report and issued an independent assurance report in German language, which is authoritative. The following text is a translation of the independent assurance report.
ABOUT THIS REPORT THE GERMAN SUSTAINABILITY CODE 13 THE GERMAN SUSTAINABILITY CODE Each year, as part of its Corporate Responsibility report, Deutsche Telekom publishes a comprehensive declaration of conformity with the German Sustainability Code. The German Sustainability Code aims to make companies' sustainability performance transparent and compara- ble under a binding framework. Deutsche Telekom's declarations of conformity can be viewed here. The German Sustainability Code was approved by the federal govern- ment's Council for Sustainable Development. Deutsche Telekom was one of the first companies to accede to the Sustainability Code.
STRATEGY & MANAGEMENT STATEMENT BY THE CHAIRMAN OF THE BOARD OF MANAGEMENT 14 STATEMENT BY THE CHAIRMAN OF THE BOARD OF MANAGEMENT the question of what corporate responsibility means in the digital age. Timotheus Höttges, Chairman of the Board of Management, Bonn, Deutschland As optimistic as we are, we cannot ignore the fact that some people fear negative consequences of digitalization. For this reason, we're exploring Within our Group, this means above all strengthening our employees to handle change, realigning our skills and promoting lifelong learning. Moreover, we want to encourage social debate: via our Group’s "Digital Responsibility" portal and together with partners in the "Charter of Digital Networking " initiative. Last but not least, it is important to strengthen users' trust through consistent commitment to data security and data privacy. Building bridges for a sustainable future is a matter of principle for me. With this in mind, I would like to reaffirm our commitment to the principles of the United Nations Global Compact and the German Sustainability Code. Tim Höttges Dear Readers, The year 2017 ended with a real highlight for Deutsche Telekom: In December, we received the German Sustainability Award for our holistic sustainability management. I am pleased that this award recognizes not only our many years of work, but also how we are using the opportuni- ties offered by digitalization for a better future. This positive conclusion to the year was important for me. For looking back at the year, there was again great cause for concern in 2017: persistent armed conflicts forcing people to flee their homeland. Politi- cal rhetoric exacerbating conflicts rather than defusing them. Burgeon- ing nationalism focusing on division and not on cooperation. And fatal ignorance as regards the consequences of climate change, threatening to undo the hard-won progress of recent years. But anyone who just decides to sit back and do nothing is drawing the wrong conclusions. I feel very strongly that standing by our convictions has seldom been more important than today. This applies not only to us as individuals; it is particularly relevant to Deutsche Telekom as a company. The values for which Deutsche Telekom stands must be defended. We are a European undertaking, and believe in the European vision of shared prosperity and social security. It is not for nothing that our brand motto is Life is for sharing. We want to enable sharing through digitalization in Europe and beyond. We stand for optimism as well, for in order to leave a world worth living for the next generation, we must stride into the future with courage and curiosity. The biggest driver for this is digitalization. It will enable progress in the fight against climate change, in medicine and education, creating more livable cities and inventing new products for a more sustainable every- day life. So what is our role as Deutsche Telekom? We are "enablers": In this way, we want to make our contribution so that digitalization can unleash its full potential for more sustainable development. We are laying the foundation for this with our investments: Each year, we invest more than five billion euros in Germany alone, especially in expanding our networks. At 455,000 kilometers, we already operate Germany's largest fiber-optic network. But our responsibility does not end with providing technical access alone. The key to equal participa- tion of all in the knowledge and information society is media literacy – especially today, in times of fake news, filter bubbles, cyberbullying and hate comments. Hence, this is one of the focal points of our social commitment.
STRATEGY & MANAGEMENT CR STRATEGY 15 CR STRATEGY Deutsche Telekom aims to be the leading telecommunications provider in Europe. This corporate vision is the basis for our approach as a responsible company (CR approach) and our CR mission. CURRENT ORGANIZATIONAL STRUCTURE Our Group CR strategy also provides our national companies with a framework for their sustainability measures. The central components are our three CR action areas. They provide a framework for the focal topics of our sustainability management activities. Our CR program states which specific goals we wish to achieve with which measures. We monitor our progress using key performance indi- cators (KPIs). An integrated governance structure helps us to closely interlink strate- gic management and operational implementation of our CR strategy throughout the Group. Overall responsibility for sustainability lies with the Deutsche Telekom Board of Management. Our Group Corporate Responsibility (GCR) unit is a key driver for change within our company. Within the organization, it reports to the Chief Human Resources Officer. The duty of the GCR is to further develop our corporate culture with a focus on sustainable innovation and social responsibility. Another pillar of our CR governance structure is the HR Leadership Team (HR LT). The team is an advisory and decision-making body for the Human Resources (HR) Board department. It makes decisions on Group-wide policies and guidelines, CR positioning, and the strategic focus of the CR department. Members of the HR LT are managers at the level below the Chief Human Resources Officer. In addition, the CR Board, composed of the heads of key Group units, supports the CR department when it comes to CR management and strategy enhancement. The CR managers from the different business units and national compa- nies are responsible for implementing our CR strategy. They collaborate intensively within the international CR Manager Network, where they coordinate their activities and share best practices. CR GUIDELINE INTRODUCED AT EUROPEAN NATIONAL COMPANIES Our CR Policy provides the formal, mandatory framework for the sustainability management activities at all Group units. We introduced the policy at Group Headquarters, Telekom Deutschland and T-Systems back in 2014 and at the majority of the European national companies (in the fixed-line and mobile communications area) at the end of 2017. The USA plans to adopt a CR Policy in 2018.
STRATEGY & MANAGEMENT CR STRATEGY 1616 many are employed at an OHSAS 18001-certified workplace. Some 93 percent of employees in Germany are employed at an ISO 14001-certified workplace. Internationally, we are at 83 percent cover- age. Our goal is to cover all companies that have more than 50 employ- ees by the end of 2018. Furthermore, we have additional certificates outside of Germany for our health, safety and environmental manage- ment systems, with which we cover 99 percent of our international employees. ACHIEVING MORE TOGETHER: INTERNATIONAL COLLABORATION How can international corporations put sustainability strategies into practice across borders? Deutsche Telekom employs CR managers for the relevant business segments and national companies to reach this goal. Through the CR Manager Network, CR managers attend regular face-to-face and online meetings to share best practices and discuss new challenges, thereby jointly promoting essential CR issues. The central Group Corporate Responsibility (GCR) department is responsi- ble for managing the network. Since the 17th CR manager meeting in May 2017 in Bucharest, topics have been increasingly discussed in workshops, which our international colleagues help shape. The workshops lead to working groups and regular online meetings in order to jointly promote key topics. The 18th CR manager meeting took place on November 15 in Bonn within the framework of the UN Climate Conference. It was connected to the event "The Impact of ICT on climate change – curse or blessing", which was hosted by GCR. GERMANY'S MOST SUSTAINABLE LARGE COMPANY 2017 For its uniform sustainability management, Deutsche Telekom won the German Sustainability Award in December of 2017. The jury commended Deutsche Telekom's pioneering role, stating: Deutsche Telekom AG is setting the bar with its sustainable supplier management, enabling massive energy savings for its customers with its core operations and itself contributing to more energy efficient data transmission with various measures. 2017 CR PROGRAM As part of its CR program, Deutsche Telekom specifies targets to be implemented throughout the Group in the relevant processes of its core business. The CR program defines specific measures and a timeline for imple- mentation. We also provide information on the implementation status of various goals in the CR program. Detailed information on the ESG KPIs, which we use to quantify our performance in each area, is provided in the CR Report. BE SMARTER! - NEW SUSTAINABILITY STRATEGY 2016 - 2020 AT MAGYAR TELEKOM Magyar Telekom aims to make sustainability an integral part of our business. We therefore developed a new sustainability strategy for the period from 2016 to 2020 that was influenced by the expectations of responsible investors, EU directives, industrial and corporate trends, local conditions, and consumption patterns. Climate protection, educa- tion, and digitally enabled sustainability will be the major focus of the strategy until 2020. Our strategy continues to remain valid and no major update was therefore needed. Climate Protection – Our goal is to help our customers become climate conscious. Our ambitious objective is to generate revenue from our climate protection activities while at the same time reducing our actual CO emissions below 100,000 metric tons. This enables us to enhance our activities directed toward decreasing emissions and specifically build on our “green” services. 2 Education – Our goal is to directly or indirectly reach 100,000 people in Hungary through our training program by 2020 with the objective of educating the public and our customers. We are focusing primarily on programs aimed at eliminating the digital gap and expanding the suc- cession pool in industry. Digitally enabled Sustainability – As a sustainable digital company, Magyar Telekom enables its customers to use sustainable digital ser- vices. We strive to pursue responsible marketing and activities that enable and inspire others. Awareness in the public domain of Magyar Telekom as a sustainable company is projected to reach 50 percent. CERTIFIED HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT SYSTEM: ALMOST ALL WORKPLACES COVERED We want to make sustainability a component of all our business pro- cesses and of our employees' everyday lives. Our integrated health, safety and environmental (HSE) management system assists with this at the Group level. The management system helps us systematically to plan, implement and improve our HSE processes. This promotes the health of our employees and has a positive effect on their performance. It is also beneficial when it comes to bidding on new projects, since an increasing number of potential customers now require their suppliers to provide HSE certificates. Our Group-level HSE management system is covered by an umbrella certificate based on the international standards OHSAS 18001 for occupational health and safety and ISO 14001 for environmental management. For some units, it also covers international standard ISO 90001 for quality management. Some of the national companies are not covered by an umbrella certificate because they have their own cer- tifications which are, in part, even more comprehensive. This is the case in Greece, for example. This national company has an integrated man- agement system, which in addition to the above-mentioned standards, also covers the international standards ISO 50001 for energy manage- ment and ISO 27001 for data security. Telekom Deutschland also has an environmental certification. Through our compliance with legal regulations, we already meet the essential requirements for OHSAS 18001 certification in Germany. All employees in Germany and 99 percent of employees outside of Ger-
STRATEGY & MANAGEMENT CR STRATEGY 17 CR PROGRAM 2017 STRATEGY AND MANAGEMENT Goals Scheduled completion date Measures Status Advance CR governance Ongoing Gradually implement the Group Corporate Responsibi- Group Corporate Responsibility Policy introdu- Embrace corporate values, accompany the transformation process Promote the Sustainable Deve- lopment Goals (SDGs) lity Policy at the national companies Drive the integration of CR into the Group's central business processes Integrate CR into the Group strategy ced at the majority of European national subsidi- aries. Implementation of the CR Policy in the USA is slated for 2018. Ten key ESG KPIs reported in the non-financial statement Four new ESG KPIs established: CR-Qualified Top 200 Suppliers ESG KPI CDP Supply Chain Coverage ESG KPI Social Innovation ESG KPI PUE value also shown as KPI for the first time and complemented by a target value Awarded the German Sustainability Award 2017 Ongoing Promote new forms of collaboration at the Group Group-wide implementation of programs and for- Participate in dialog on topics relevant to society Regularly review all KPIs for the benefits they provide, make them mandatory throughout the Group with tar- get values mats - virtually or as face-to-face events, inclu- ding the annual "Guiding Principles Day" 18 CR manager meeting held in Bonn as part of the UN Climate Conference. Dialog on digital responsibility with experts from business, science, politics and society expanded via telekom.com and social media Ongoing Expand measures for SDG target achievement In-depth reporting of our potential for contribu- Integrate key SDGs into CR processes and reporting Use of SDGs for dialog with customers and employees intensified, also in terms of product assignment Set up impact measurement tion to the 17 UN goals (SDGs) in the annual report and the CR Report. Shown as a separate section of the CR report for the first time Pilot project started to measure the impact of our contributions to the SDGs ESG KPI and other indicators allocated to the Sustainable Development Goals. Findings: Prioritized SDGs effectively covered by ESG KPIs or supplementary indicators. Employees made aware of the SDGs Engagement in cross-industry initiatives such as UN Global Compact, GSMA, and Econsense (SDG 17) The 2015 Annual Report received the "Building Public Trust Award" as the best company in the SDG category
STRATEGY & MANAGEMENT CR STRATEGY 18 CR PROGRAM 2017 STAKEHOLDER INVOLVEMENT Goals Scheduled completion date Measures Status Ensure systematic stakeholder engagement Ongoing Stakeholder engagement strategy based on the prin- Stakeholders involved through different ciples of the Global Reporting Initiative (GRI G4). formats, including dialog with experts from business, science, politics and society on digital responsibility via Deutsche Telekom's YAM platform; international sustainability dialog held by the Joint Audit Corporation (JAC); the supplier development program; the "We Care" magazine; the Magenta Security Congress; the Cyber Security Summit; the "1001 truths - trust and opinion-forming online” activity day; revision of the "Fakten zu Mobilfunk und Gesundheit” (Facts about Mobile Communications and Health") brochure; SRI roadshows and the in- house climate conference as part of COP23 at our Service Headquarters in Bonn Establish a materiality process Ongoing Conduct annual materiality analysis (materiality Materiality analysis conducted for 2017 processes) Materiality process further developed pursuant to the Global e-Sustainability Initiative (GeSI) methodology.
19 STRATEGY & MANAGEMENT CR STRATEGY CR PROGRAM 2017 CLIMATE PROTECTION Goals Scheduled completion date Measures Status 2 Reduce CO emissions throug- hout the Group by 20 percent compared to 2008 (absolute figures) 2020 Roll out climate protection activities internationally Group-wide climate protection target approved Introduce Group-wide monitoring New CO 95g CO 2 target for newly acquired cars (average of 2 /km for newly acquired vehicles by 2020) Migrate network infrastructure to energy-efficient IP technology Consolidate data centers Develop an integrated climate protection strategy and adapt it to climate change developments 2020 Reduction of CO emissions 2 Increased share of renewable energy Increase energy efficiency and introduce two new KPIs to show the ratio between our energy consumption and carbon footprint to transported data volume Identify and use business potential from climate- friendly services ("enabling") as well as opportunities in terms of product development and offers (establish sustainable product portfolio) Record Scope 3 emissions throughout the Group 2016 Develop methods to measure company and product- related CO reporting process 2 emissions and integrate these into the by Group Board of Management in 2013 Annual status report to Board of Management implemented Emissions from networks in Germany are higher than projected; we will analyze the effects and other measures to meet our target; already on track: an expansion of our commitment to rene- wable energy Change of method to calculate the climate target based on a market-based approach, in order to take renewables into account Around twelve million lines switched over to IP in Germany. The PUE value in T-Systems Deutschland data centers is 1.54. In 2017 we showed the PUE value as a KPI for the first time and complemented it with a target value. 2017 saw Greece (OTE), Hungary, Albania, Austria and the Netherlands use 100 percent electricity from renewable energy sources The share of electricity from renewable energy sources came to an average of 10 percent above the relevant country mix throughout the Group in 2017. 2 than the amount generated by our company Enablement factor: In Germany we enabled our customers to generate around 70 percent less CO (factor: 1.7:1). In Europe (including Germany), our customers' potential savings in 2017 were significantly higher than in the previous year (factor 1.2, 2016: 0.95). According to an analysis conducted in 2017, we generated 40 percent of our total revenue in 2016 with sustainable products (39 percent in 2015) Scope 3 emissions fully recorded and reported for business in Germany and almost all national companies (since 2015); in 2017 also reported for T-Systems
STRATEGY & MANAGEMENT CR STRATEGY CR PROGRAM 2017 MANAGEMENT SYSTEMS 2020 Goals Scheduled completion date Measures Status Implement an occupational health, safety and environmen- tal management system in compliance with ISO 14001 and OHSAS 18001 at all national companies with more than 50 employees. Ongoing Implement an integrated management system based 100 percent of employees in Germany and 99 on both standards and harmonize the different management process levels at the national companies percent of employees outside Germany work in a workplace that is OHSAS 18001 certified. Some 93 percent of employees in Germany are emplo- yed at an ISO 14001-certified workplace. Internationally, we are at 83 percent coverage. Furthermore, we have additional certificates out- side of Germany for our health, safety and envi- ronmental management systems, with which we cover 99 percent of our international employees. SUSTAINABLE CONSUMPTION AND LIFESTYLE Goals Scheduled completion date Measures Status Evaluate products and solutions regarding their contribution to sustainability Ongoing Overall, we have carried out in-depth analyses for 17 product groups with regard to their sustai- nability benefits and the corresponding business potential (as at end of 2017). According to an analysis conducted in 2017, we generated 40 percent of our total revenue in 2016 with sustainable products (39 percent in 2015); Implement the criteria and indicators developed in collaboration with external and internal stakeholders in company processes Integrate product-based sustainability controlling in business processes and ensure Group-wide harmonization Integrate the topic of sustainable products into corpo- rate processes and develop a comprehensive strategy Analyze products in terms of how they contribute to sustainability and what this can do for our business; include results in customer communication Participated in industry-wide solutions to evaluate products and solutions in terms of sustainability Ensure stakeholder engage- ment and customer information 2020 Conduct regular stakeholder dialog on specific topics Regular stakeholder dialog on specific topics Develop sustainability-related customer orientation conducted policies Drive international standardization, e.g., via seals of quality or certification in the ICT sector Get more products certified with the Blue Angel and TÜV Green Certified Product environmental labels All DECT phones from our Sinus series as well as all phones from the Speedphone series bear the Blue Angel environmental label. The Media Receiver Entry and Media Receiver 201 received the Blue Angel. Sustainability award for our commitment and role as pioneer and multiplier for climate protection Integrate life cycle assessment and usage behavior (sustainable consumption) 2020 Tap efficiency potential in the product life cycle and enhance products and solutions to include sustain- ability criteria Successful advancement of lease model for devices (e.g., Media Receiver) to increase recycling share and length of use Blacklist on environmentally harmful materials (not prohibited by law) contained in our products Workshops conducted with suppliers on the voluntary materials blacklist, which was develo- ped in cooperation with the Fraunhofer Institute for Reliability and Microintegration (Fraunhofer IZM)
STRATEGY & MANAGEMENT CR STRATEGY CR PROGRAM 2017 2121 SUSTAINABLE INNOVATION AND ENTREPRENEURSHIP Goals Scheduled completion date Measures Status Develop innovative, sustainable business models 2020 Establish general requirements to promote innovation In 2017 hub:raum invested up to 300,000 euros in the sustainability field and identify and evaluate young companies and start-ups (partnering) Promote innovative business ideas through hub:raum program in six start-ups (seed funding). Prototype pro- gram launched by hub:raum to promote the development of innovative 5G use cases in Europe. Promotion of innovations through our internal innovation program „UQBATE“ SOCIALLY RESPONSIBLE INVESTMENT Goals Scheduled completion date Measures Status Increase share of socially responsible investors in freely tradable stock Ongoing Further enhance rating results Again included in RobecoSAM World and Direct dialog with investors at SRI roadshows and in Europe Index SRI calls Improve communication with investors regarding our sustainability efforts Two "Socially Responsible Investment (SRI)" roadshows held in France and the US At the end of 2017 around 18 percent of T-Shares were owned by investorswho consider SRI criteria in their investment decisions at least to some extent. Three percent of T-Shares were held by investors who give priority to SRI aspects when managing their funds. Interested investors were informed through dedicated conference calls and participation in SRI conferences; numerous direct queries from rating agencies, analysts and investors were answered
STRATEGY & MANAGEMENT CR STRATEGY 2222 CR PROGRAM 2017 SUSTAINABLE SUPPLY CHAIN Goals Scheduled completion date Measures Status Increase the share of suppliers that will be audited for sustai- nability Ongoing Weighting sustainability aspects at 10 percent for bids Target of increasing the share of suppliers Supplier Code of Conduct (SCoC) Supplier risk analysis Supplier surveys and self-assessments Supplier evaluation and development Escalation process for violations audited for sustainability to 80 percent by 2020 was already achieved in 2016 Share of suppliers audited for sustainability in 2017: 81 percent 109 suppliers participated in the CDP Supply Chain program (this covers 66.4 percent of our procurement volume) CR-Qualified TOP 200 Suppliers ESG KPI and CDP Supply Chain Coverage ESG KPI further developed Supplier Code of Conduct revised, widening its scope by coordinating with and using Orange S.A. above and beyond our procurement joint venture "BuyIn" Increase the share of CR- classified suppliers among our TOP 200 suppliers Implement a sustainable procurement strategy Ongoing Use self-assessments, audits, sustainability workshops CR-Qualified TOP 200 Suppliers ESG KPI for suppliers, and supplier development programs developed as a management tool Ongoing Develop our Social Charter into the Code of Human Rights & Social Principles Incorporate sustainability principles into the Group's Global Procurement Policy Stakeholder engagement Established escalation procedure for serious cases Group-wide implementation by the Sustainable Procu- rement Working Group (SPWG) Employee training courses E-learning tool "Sustainability in procurement" revised and updated; used in the procurement joint venture "BuyIn" Participation in a dialog event on sustainability in supply chains held by the Joint Audit Coopera- tion Share of suppliers audited for sustainability in 2017: 81 percent Improve sustainability in our supply chain Ongoing Introduce the Supplier Code of Conduct Supplier development program expanded from (also applicable for the "BuyIn" joint venture) 11 to 14 companies Continue the supplier development program Anti-corruption training for suppliers in Germany
STRATEGY & MANAGEMENT CR STRATEGY CR PROGRAM 2017 SOCIAL COMMITMENT 2323 Goals Scheduled completion date Measures Status Integrate people into the know- ledge and information society Ongoing Expand efforts to promote media literacy and the res- Teachtoday flagship project continued. ponsible use of media Results: Relaunch of the medienabersicher.de website, showing all of the initiatives to improve media literacy Teachtoday media obstacle course on tour again in Germany. "Media, sure! But secure." competition on the theme of "Do the media influence opinion?" Teachtoday activities day run on "Safer Inter- net Day", teaching 60 schoolchildren about security, data protection, duration of cell phone use and cyberbullying Training for media scouts run by Teachtoday at the "Media 2017" German Youth Confe- rence in Rostock Further internationalization of the Teachtoday online platform. The platform is currently available in the following languages: German, English, Romanian, Polish and Croatian. Two issues of new "Scroller" magazine for children published in German and English; first interac- tive issue published in German and Arabic. In 2017, 82 open youth work projects fostering digital skills were funded through the initiative. Total funding in 2017: around 600,000 euros. "Yes, I can!" initiative: more than 1,200 projects funded since 2009 with a volume of more than 6 million euros. The initiative was taken on by the Deutsche Telekom Stiftung foundation in January 2017 Continue to expand "Yes, I can!" initiative as a flagship project Offer work integration programs for refugees Involvement in refugee aid refocused toward integration on the job market: Deutsche Telekom offered up to 100 training positions, and places on entry-level training schemes and cooperative Bachelor's and Master's programs. Six applicant days held for future interns Through recruiting measures, collaboration with the Federal Employment Agency, com- munication via social media, volunteer wor- kers and refugees who already work for the company, we have increased the ratio of appli- cants to job offers from roughly 2:1 to 5:1. “Internship PLUS direct entry" initiative conti- nued: 38 places offered. Four of the new employees on this program are supporting customer service with their Arabic language skills as part of the "Telekom hilft!” (Telekom helps!) team or by answering questions through the Arabic Twitter hotline that was established in this context. "Welcome" scholarship program run by Deutsche Universitätsstiftung supported to help students seeking refuge in Germany.
2424 STRATEGY & MANAGEMENT CR STRATEGY CR PROGRAM 2017 SOCIAL COMMITMENT Goals Scheduled completion date Measures Status Ongoing provision of free WiFi to refugee reception centers. Ongoing provision of buildings as refugee accommodation and to as offices for the Ger- man Federal Office for Migration and Refu- gees. More than 500 civil servants working for the Group temporarily supported the German Federal Office for Migration and Refugees (BAMF). DTAG employees involved in volunteer refu- gee work, e.g. the eStart program of coopera- tion partner Volunteer Vision, received sup- port. As of December 2017: 63 Deutsche Telekom employees supported one refugee each as language tutors. Ongoing evaluation of engagement@telekom activities 379 volunteering projects completed, involving 28,477 employees and 58,660 hours volunteered Continue to improve transparency regarding the effec- Effectiveness of social commitment measured tiveness of our social commitment by conducting ongoing effectiveness measurements through the Social Commitment ESG KPI, Community Investment ESG KPI, Beneficiaries ESG KPI and Media Literacy ESG KPI
STRATEGY & MANAGEMENT CR STRATEGY 25 CR PROGRAM 2017 NETWORKS Goals Provide broadband to around 80 percent of the German population. Scheduled completion date 2018/19 (target adjusted) Provide LTE coverage to 95 percent of the population in Germany 2018 Set up additional base stations Continue LTE 1800 and LTE 800 network build-out Ensure that migration to IP in Germany is largely completed by the end of 2018 2018 VDSL vectoring build-out Migration to IP technology Measures Status Expand fiber optics infrastructure and equip/upgrade Expansion of vectoring structure continued street cabinets with vectoring technology October 2017: The first two of 7,600 nearshore areas in Germany were converted to fast vecto- ring technology (Moitin near Rostock and Bad Grund in the Harz region). LTE coverage Provided for 94 percent of the population in Germany (by the end of 2017) Network coverage provided for around 93 per- cent of the population (by the end of 2017) Around 75 percent of European transmitter masts equipped with LTE Two or more frequency bands are active in almost every fourth LTE loca- tion (ensuring more extensive reach and higher speeds). Around 70,000 lines weekly migrated to IP. The IP rate for business customer lines was signi- ficantly more than 50 percent by the end of 2017. Thanks to the use of IP-based vectoring techno- logy, 3.5 million households in almost 50 cities could enjoy speeds of up to 100 MBit/s by the end of 2017. Around 16.5 million households in Germany (69 percent) had switched to IP technology by the end of 2017 As well as Croatia, Montenegro, FYRO Macedo- nia and Slovakia, 100 percent migration to IP has now also been completed in Hungary.
STRATEGY & MANAGEMENT CR STRATEGY 2626 CR PROGRAM 2017 EMPLOYEES Goals Establish human resources policies adjusted to different life phases Be the first DAX-30 company to achieve a quota of 30 percent for women in middle and upper management Scheduled completion date Measures Status Ongoing Continue to improve work-life balance offer Enhanced support for employees caring for Promote part-time study programs (Bologna@Tele- kom) family members through new advisory services and arrangement of assistance; 20 parent-and-child offices installed at a total of 15 locations Flexible working hours models expanded; life- time work account offer expanded to all emplo- yees. 9,000 lifetime work accounts set up by the end of 2017. 2020 Ensure equal opportunity, freedom from discrimination Percentage of women in managerial positions and competitiveness Introduce target quotas along the entire talent pipeline Design and implement Managing Diversity module for manager training Improve work-life balance Provide room for development and advancement Ongoing Introduce new forms of internal and external collabora- tion, agile work and improved service orientation and encourage entrepreneurial thinking and action Participate in the discourse on relevant topics within society in a structured way throughout the Group increased from 19 percent (February 2010) to 25.4 percent (December 2017) Quota development monitored, measures alig- ned, evaluated and redesigned where necessary Mentoring program to prepare employees for positions on the supervisory boards of German and international affiliated companies continued. Ten out of a total of 64 participants were appoin- ted to supervisory board positions; Mentoring program for experts and managers during parental leave: successful start of third round with a total of 31 experts and managers (by the end of 2017) Group-wide Future Work program to establish a pioneering concept for a communicative work environment that promotes innovative strength and agility further advanced Digital learning formats expanded, e.g. Magenta- EINS; 37 percent of all training hours were com- pleted online; Continuation of communities of practice as a form of collaboration that spans across functions and hierarchies; 30 communities established at T-Systems to date Advanced training to become a Cyber Security Professional: altogether, eleven graduates suc- cessfully completed this training in the first year. The fourth round started at the end of Septem- ber 2017 with twelve participants.
STRATEGY & MANAGEMENT CR CONTROLLING AND IMPACT MEASUREMENT 27 CR CONTROLLING AND IMPACT MEASUREMENT Deutsche Telekom's CR Controlling department plays a key role in con- trolling our CR activities. Controlling has been supported by an IT-based data collection system for the past eight years. The system makes sure that ESG (environmental, social and governance) data and KPIs are promptly and transparently recorded and reported. It supports stand- ardized, mandatory processes at the Group and national level and ena- bles Group-wide benchmarks. This IT support lets us focus on content analysis of ESG data and helps us measure early on in the process to what extent we have reached our CR targets and if we need to make changes. We especially use ESG data to calculate our ESGKPIs, with which we measure and control our CR performance throughout the Group. CR Controlling is also responsible for recording other performance indica- tors with sustainability relevance. These are published in the perfor- mance indicator section as well as in the CR report's interactive bench- marking tool. We further defined the focus of the CR Controlling department in 2017 by refining the KPI system for controlling based on internal and external requirements: We incorporated two new ESG KPIs in 2017 for measuring our pro- gress in creating a more sustainable supply chain: the CR-Qualified Top 200 Suppliers ESG KPI and the CDP Supply Chain Coverage ESG KPI. Suppliers who fulfill our strict sustainability criteriaare included in our CR-Qualified TOP 200 Suppliers list. This list contains 200 sup- pliers who were qualified based on our criteria. They receive prefer- ential treatment when we award projects. The new CR-Qualified Top 200 Suppliers ESG KPI shows how many of these suppliers under- went a risk assessment in the past year. The CDP Supply Chain Coverage ESG KPI measured the percent- age of procurement volume from emission-intensive suppliers who took part in the CDP Supply Chain Program in 2017. The number was 66 percent. Our goal is to cover 70 percent of our procurement volume with suppliers who take part in the CDP Supply Chain Program. The ESG KPI Energy Consumption and the ESG KPI CO Emissions 2 have no longer been reported since 2017. After a transition phase in 2016, these were entirely replaced by the Energy Intensity ESG KPI and the Carbon Intensity ESG KPI. We also adopted the Social Innovation ESG KPI in 2017. We use this KPI to record the number of downloads of our mobile app "Sea Hero Quest", which was developed to fight dementia. We now thus have another indicator for measuring ICT's contribution to solving social challenges, in addition to the Enablement Factor ESG KPI. We use the PUE value, among other things, to ascertain the energy efficiency of our network infrastructure. Due to its high relevance, the PUE value is for the first time also mentioned in the Indicators section of this CR report as a KPI with a target value. Impact measurement is another topic of focus for our CR Controlling department. Our aim is to continuously improve and quantify the contri- butions made by our business activities to solving social challenges. This chapter describes the current project status and results on the top- ics "Broadband expansion", "Media literacy" and "Contribution to human rights". ESG KEY PERFORMANCE INDICATORS ESG KPIs (key performance indicators) are used as management tools for our CR involvement. They enable us to improve our performance on an ongoing basis. As they are relevant to our supply chain, we also address them in our Annual Report. We use 13 KPIs that are valid Group-wide to manage our CR perfor- mance: Socially Responsible Investment (SRI) ESG KPI Sustainable Procurement ESG KPI Sustainable Revenue Share ESG KPI Energy Intensity ESG KPI Carbon Intensity ESG KPI Renewable Energies ESG KPI PUE ESG KPI Enablement Factor ESG KPI Take Back Mobile Devices ESG KPI Community Investment ESG KPI Beneficiaries ESG KPI Media Literacy ESG KPI Employee Identification with CR Commitment ESG KPI All of Deutsche Telekom's national companies that participate in the CR data collection process are obligated to record our Group-wide ESG KPIs. These national companies represent 99 percent of the Group's net revenue.
STRATEGY & MANAGEMENT CR CONTROLLING AND IMPACT MEASUREMENT 2828 ESG KPIs cover types of capital 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). ESG KPI REPORTING IN THE ANNUAL REPORT We have included selected ESG KPIs in our Annual Report since 2011. We published the following KPIs in 2017 within the framework of our combined non-financial statement. A detailed description of each KPI can be found in the Indicators section, which can be accessed with the following link. Socially Responsible Investment (SRI) ESG KPI Sustainable Procurement ESG KPI Sustainable Revenue Share ESG KPI Energy Intensity ESG KPI Carbon Intensity ESG KPI Renewable Energies ESG KPI PUE ESG KPI for Germany Enablement Factor for DT Group in Germany ESG KPI Community Investment ESG KPI Beneficiaries ESG KPI Media Literacy ESG KPI IMPACT MEASUREMENT AND MANAGEMENT Our goal is to strengthen our foundation for conscious business decisions and continuously improve the social impact of our products, solutions and measures. That is why we illustrate the contributions made by our business activities to solving social challenges in the "impact measurement" focal point of our Controlling department. This way we also fulfill the expectations of our external stakeholders. We evaluate various methods and select suitable approaches per topic for the impact measurement. We make sure that the selected methods and assumptions are traceable, are based on solid data and are valid for several years. The topic of impact measurement is not entirely new to us. We have been employing business impact measurement in strategic action areas since 2015. Based on the Total Impact Measurement and Management (TIMM) framework developed by PwC, we have begun to methodically document and financially assess the results of our busi- ness activities on the environment, society and the economy. To ensure transparency and comparability of the results, we use conven- tional external frameworks to describe the effects of our contributions. Some examples of this are the Sustainable Development Goals (SDG) and the United Nations Universal Declaration on Human Rights, the National Action Plan on Business and Human Rights and the UK Mod- ern Slavery Act. Furthermore, in addition to the perspective of our inter- nal stakeholders, we also take into account the external stakeholder groups, such as the investment company RobecoSAM, which assesses companies in issues of sustainability. We also participate in cross-secto- ral committees on impact measurement, such as the econsense initia- tive or GSMA, which represents the mobile communications industry. In 2017 our CR managers and experts attended a workshop together with the German Institute for Development Evaluation (DEval) to discuss cur- rent scientific methods as well as approaches and focal points for Deutsche Telekom. After we analyzed our impact in the broadband expansion and media literacy areas in 2015, we selected human rights as the next topic for a more in-depth impact measurement. We have already seen initial results during the reporting year, which we describe in the Our contribution to respect for human rights section. These two approaches are described in more detail in the drop downs below. In the coming years, we want to broaden our focus and, in addition to examining the social impact of our activities, also take a closer look at the positive effects of our products and services and other strategic focal points. IMPACT MEASUREMENT: RESULTS OF THE BROADBAND EXPANSION AND MEDIA LITERACY PROJECTS In 2015 we conducted an exemplary analysis, based on strategic core topics, of the social contribution that we made with products (Broad- band Expansion) and services (Media Literacy). We made sure that the underlying methodology could also be transferred to subsequent years. Broadband expansion Deutsche Telekom has a strong positive effect on society thanks to its broadband expansion activities and is helping achieve the UN's sustain- ability goals. The company's network expansion is creating new jobs,
STRATEGY & MANAGEMENT CR CONTROLLING AND IMPACT MEASUREMENT 2929 The following diagram illustrates our approach: and hence new income. It is also facilitating access to digital services, such as those in the health care sector. Improved network coverage therefore especially benefits people in urban areas and smaller towns. The quantitative analysis shows that more than 50 percent of our expen- ditures for network expansion went to construction (civil engineering). This sector hence benefits most from our investments. The analysis also showed that for every million euros that we invest in broadband expan- sion, about 20 new jobs are created along the entire value chain, most of which in the German construction industry. Media literacy We analyzed the Teachtoday initiative in the strategic topic area of media literacy. This initiative contains an online platform as well as competitions and conferences on media use by children and teenagers. A positive social effect is also evidenced here. That is because the learning methods employed with Teachtoday appeal to multiple senses. According to PwC's results, such methods are more than twice as effec- tive as learning methods that only appeal to one sense. In line with the TIMM framework, we also use the so-called educational function for analyzing the value contribution. The analysis shows that for every euro we invest in media literacy measures, the Social Return on Investment is more than two euros. This means that society benefits twice from our expenditures on specific media literacy measures. The following diagram illustrates our approach: IMPACT MEASUREMENT: OUR CONTRIBUTION TO RESPECT FOR HUMAN RIGHTS Due to the ever-increasing importance of the topic among our custom- ers and in society in general, we focused our impact measurement on human rights in 2017. We examined not only our own companies but our partners along the supply chain as well. We began identifying the important effects of our human rights commit- ment during the reporting period. Some of the issues we examined were salaries and benefits, working hours regulations, continuing edu- cation as well as maintaining a high standard of health protection, diver- sity, integrity, compliance and environmental protection. In developing and newly industrialized countries, the focus of our activities is on improving working and living conditions, fighting discrimination and forced labor and helping promote respect for human rights. Our commitment to human rights is not limited to our role as a responsi- ble employer in our international subsidiaries. We also pursue a partner- ship-based approach to supplier management. We regularly verify the effect of our activities by means of human rights impact assessments, employee relations policy reviews and on-site inspections at our suppli- ers' place of business. Everyone involved benefits from our commitment to protecting the rights of workers – even in the business respect. That's because better working conditions have a positive effect on employee satisfaction, loyalty and motivation and decrease the staff churn rate, thereby increasing productivity and improving product quality. We will further specify the above-mentioned interdependencies in 2018. We will then integrate the results into our strategic orientation, including suitable metrics and reports, if possible.
STRATEGY & MANAGEMENT VALUES AND GUIDING PRINCIPLES 30 VALUES AND GUIDING PRINCIPLES Corporate responsibility (CR) is based on shared values. To solidify our value-based corporate culture, we convey the basic values of our com- pany to all employees through binding Guiding Principles. We use vari- ous measures such as the annual "Guiding Principles Day" to remind employees of these values again and again, entrenching them in our everyday work. And the measures have been successful. According to our pulse survey in November 2017, 77 percent of our employees believe that the Guiding Principles are applied to our everyday work. The approval rating has therefore continued to remain at the same high level as in 2016. Our Code of Conduct and our Code of Human Rights & Social Princi- ples (formerly: Social Charter) are other tools that we use to ensure that our Group and our partners show corporate responsibility in their con- duct. Our compliance management system, which makes sure that our business activities are in compliance with laws and regulations, is based on these documents. PROUD TO BE T – OUR GUIDING PRINCIPLES DAY CONDUCT FOR BUSINESS" COMMITMENT TO THE GERMAN "CODE OF RESPONSIBLE In September 2017 we held our eighth International Guiding Principles Day throughout the Group. The Guiding Principles were introduced in 2009 with the objective of defining a common system of values for all Deutsche Telekom employees worldwide. This year the focus was not on one individual Guiding Principle. Instead, every employee worldwide was asked to reflect what we can be proud of at Deutschen Telekom. Under the motto "Proud to be T", all employees could upload short videos to the internal Telekom social network and share their personal "pride stories" prior to Guiding Principles Day. A contribution was made to a charitable organization for each shared video. On the actual Guiding Principles Day, work pride was a much-discussed topic throughout the entire day and a montage of the video contribu- tions was shown. In addition to a central event in the foyer of Deutsche Telekom Headquarters in Bonn, there were keynote speeches about what we can be proud of as Deutsche Telekom. The event's opening was transmitted live, while the individual keynote speeches were recorded for later viewing. In addition to the many different team activi- ties, central international activities also took place, all in connection with the event's motto. In total, more than 30 interactive keynote speeches took place world- wide. In addition, more than 200 videos were uploaded, thanks to which EUR 7 500 were donated to the Deutschland Hilft (Germany Helps) action group. We were among the first to sign the German Code of Responsible Conduct for Business, which was presented to the public in November 2010. All of the members of our Board of Management signed the code, making an express commitment to responsible corporate governance in line with the principles of the social market economy, to fair competi- tion, cooperation with employee representatives, business excellence and sustainability. We have incorporated this commitment into our actions and have assumed a leading role in putting our commitment into practice. In the spirit of the code, we feel obligated to engage in sustainable business practices and responsible corporate governance for the good of the people. We are continuously working to ensure that these requirements are implemented in our core business and our supply chain. In addition, we take responsibility for our employees and our social environment. We work to guarantee respect for human rights without exception. We use our products and services to connect people and to increase the productivity of many processes. In this way, we help ensure that Germany and Europe can continue to make strides in international com- petition and that our well-being can continue to grow. Our smart digital solutions are creating new ways to effectively address social challenges such as climate change. Our goal is to simplify our lives for the long term. Our network helps us implement this broad social mission by acting as a lifeline: fast, reliable, secure and easily accessible to every- one. Just like all of our activities, these efforts are focused on people. We provide transparent information on our plans and technologies, engage in fair practices and are always open to dialog.
STRATEGY & MANAGEMENT VALUES AND GUIDING PRINCIPLES 3131 2 In line with the code, we continue to expand our leading position as a sustainable company as well as our ongoing efforts to optimize our value-added processes. To do so, for instance, we are increasing the energy and resource efficiency of our networks, services and products. In this way we are reducing the environmental impact and CO emis- sions produced by our business activities. In 2014 our Board of Man- agement approved a Group-wide climate protection target for 2020. Building on this work, we have been implementing an integrated cli- mate strategy since 2015. We also offer our customers sustainable products and services and encourage our over 30,000 suppliers to do business with an equal focus on sustainability. To assist this process, we engage in various activities such as a systematic supplier develop- ment program and complete audits and training measures. We also train our buyers on sustainability criteria in procurement. In these efforts – just like in everything we do involving our diverse stakeholders – we primarily rely on partnership and dialog. As a responsible employer, we see an opportunity in digitalization to continue to improve employee cooperation. Our future work concept explains our vision of the working world of the future. The concept makes room for virtual collaboration and other new ways of working. Digital learning and working methods are also part of the future stand- ard. Employees can enroll in our Massive Open Online Courses (MOOCs) or continue their education with learning games and short learning units when they are on the road. In 2017 more than 30 percent of all learning hours at our company were completed in digital form, a number we hope to increase to 60 percent in 2020. Our working world has also become more appealing in the spatial sense. We successfully completed our reconstruction activities at the Group headquarters in Bonn and at the Hamburg and Frankfurt locations in 2017. We want our employees to have their say at our company – regardless of their position in the corporate hierarchy – and promote an active feedback culture to this end. We use the advantages of digitalization for this as well; for example, with our social network YAM, which has about 115,000 users Group-wide. Our employees can not only obtain compre- hensive information on YAM but can also engage in cross-hierarchical dialog and raise topics that are important to them for discussion within the Group. Another key element of our feedback culture is our Group- wide employee survey. Digitalization not only affects cooperation but our employees' health as well. We started a three-year joint project with BARMER in 2017 that examines how corporate health management will have to change in a digital working world of the future. Our social commitment, however, is not just to our customers, partners and employees. We feel it is our responsibility to support the develop- ment of media literacy in our community. Our efforts in this area include the Teachtoday initiative, which promotes safe and competent media use. For example, around 120 children discussed the topic of data pri- vacy at our 2017 Summit for Kids. We also redesigned our website www.medienabersicher.de in 2017, where we present our activities for increasing media literacy and protecting minors. All our efforts regarding CR were rewarded in 2017, when we were named the winner of the German Sustainability Award in the Large Enterprises category.
STRATEGY & MANAGEMENT SUSTAINABLE FINANCE 32 SUSTAINABLE FINANCE Companies that rely on sustainable business practices are more com- petitive in the long term. Analysts from Deutsche Asset & Wealth Man- agement and researchers at the University of Hamburg collaborated to analyze more than 2,000 studies on the topic. Their conclusion: The business case for sustainability has a sound empirical basis, and the vast majority of the studies analyzed pointed to a positive relationship between sustainability and financial performance. This is why investors who are interested in sustainability tend to focus on long-term yields instead of short-term profit. Socially responsible investment (SRI) can be an important component when it comes to securing capital for Deutsche Telekom AG in the long term. Our contribution to the SDGs parties can find additional information on these topics in the CR rating info boxes provided as a supplement to this CR report. In addition to our reporting activities, we also engage in targeted dialog with investors. For example, the CR and Investor Relations (IR) depart- ments jointly held several Socially Responsible Investment (SRI) road- shows, for instance in France and the USA, at which we offered to answer critical questions from our investors. We also held conference calls to keep interested investors informed and responded to numerous direct requests for information. In addition, we attended SRI confer- ences, organized conference calls and web conferences, and answered numerous direct queries from rating agencies, analysts and investors. SRI investment products consist of securities from companies that have passed an audit conducted in accordance with environmental, social, and governance (ESG) criteria. This is why the development of demand for T-Shares from socially responsible investors serves as an indicator for assessing our sustainability performance. With our Socially Respon- sible Investment ESG KPI we measure how the financial markets per- ceive our CR activities. Investors concerned with sustainability often refer to ratings published by specialized SRI analysts. For this reason the rating given to our company by SRI analysts has an impact on our ability to win over and retain socially responsible investors and achieve our goal of keeping our company's medium and long-term cost of capital at a low level. An increasing number of investors are responding favorably to the concept behind the UN's Sustainable Development Goals (SDGs). This is especially true with regard to the future orientation of the SDGs. It appeals to investors who are interested in companies engaging in more transparent reporting on their long-term strategic orientation and prioritization. In order to measure and quantify the effects of our activi- ties, we started an Impact Measurement pilot project in 2017. This way we want to make our contribution to achieving the SDGs transparent. We use different formats – both in our reporting as well as in direct dialog – to inform SRI analysts and investors of our CR activities. More and more investors and rating agencies are interested in receiving infor- mation on our CR activities. Investors not classified as SRI investors, like Morgan Stanley, JP Morgan, Société Générale and HSBC are beginning to organize SRI conferences as well. Deutsche Telekom is regularly invited to present our CR strategy and commitment as best practice at these conferences. We covered the entire spectrum of ESG criteria: governance structure, data protection and data security, corporate responsibility controlling, sustainable supply chain, human rights, climate protection and busi- ness impact measurement. CURRENT POSITION IN RANKINGS AND RATINGS Deutsche Telekom's ESG (environmental, social and governance) per- formance is assessed within the scope of CR ratings, which provide investors with valuable information for their investment decisions. 2 emissions in an extremely transparent and detailed manner. As in previous years, the T-Share was again listed in leading sustainabil- ity indexes such as the DJSI World and the DJSI Europe Index from RobecoSAM in 2017. In addition, the rating agency oekom once again singled us out as the world's best telecommunications company in terms of ecological and social performance. We qualified for the A list of internationally leading companies in the CDP climate protection ranking for the second time in 2017. CDP commends companies that report their CO In addition to making it onto the A list, we were also included in the STOXX Global Climate Change Leaders Index. We were also listed in the STOXX Global ESG Leaders Index for the seventh year in a row – as well as in the iSTOXX SD KPI since 2017. Once again, our share was listed in the FTSE4Good index and the UN Global Compact 100 index in the reporting year. We were deemed to be an investible stock by the Fair World Fund for the first time in 2017. The Fund focuses on the topic of "development, international fairness and sustainability". At the begin- ning of 2018 we were also named one of the most ethical companies worldwide by Ethisphere, an institute that promotes ethical business methods. We are the only German company among the 135 com- mended companies. INVESTOR COMMUNICATION COMBINED NON-FINANCIAL STATEMENT IN THE ANNUAL We have been publishing important Deutsche Telekom ESG KPIs in our Annual Report for several years. Financial market players interested in sustainability can also review ESG information in the Socially Responsi- ble Investment (SRI) section on our investor relations portal. Interested REPORT In 2014 the European Parliament and the EU member states adopted a directive that expands the reporting obligations of large, capital-market- oriented companies. The CSR Directive obligates such companies to
STRATEGY & MANAGEMENT SUSTAINABLE FINANCE 3333 report on important non-financial aspects, such as environmental, social and employee concerns as well as protection of human rights and com- bating corruption and bribery. Germany enacted this directive as national law in 2017 under the CSR Directive Implementation Act. We have also defined a best-in-class approach. Our investment manag- ers select companies that boast the best sustainability performance in their respective sectors in which to invest. A decision was also made to effectively support the Sustainable Development Goals (SDGs) as shareholders with voting rights (shareholder engagement). The investment managers will be selected based on their expertise in ESG issues. With this approach we aim to align attractive expected returns and sustainable value orientation with each other. By investing in stable values, we want to fulfill our fiduciary responsibility to our employees regarding capital investment. Our goal is also to avoid reputation risks and larger risks of loss. Deutsche Telekom's combined non-financial statement is contained in the management report of the 2017 Annual Report. TAX POLICY GUIDELINES The Group Tax department is responsible for ensuring that the Deutsche Telekom AG Group pays taxes and duties at the national and international level in accordance with the applicable statutory provi- sions.Group Tax makes sure that the Deutsche Telekom Group com- plies with all its tax obligations in Germany and abroad, in particular that it pays the taxes in accordance with the local laws and regulations appli- cable to the individual Group entities. This includes the Group's income taxes, which must also be regularly reported in our IFRS financial state- ments, as well as VAT and income tax on salaries payable within the context of customer transactions and for Group employees. Group Tax also ensures that the corporation has an efficient tax structure within the framework of German and foreign tax law as applicable in each country, i.e., that the Group does not carry any unnecessary tax burden. The goal is to achieve sustainable tax efficiency for the Group, something in which transparent, reliable cooperation with local tax authorities is deemed to be indispensable. In addition, Group Tax also has the ambition to contribute as much as possible to the success of Deutsche Telekom's operations, e.g., by pro- viding detailed tax advice regarding new business models or innovative technological developments. In such matters, the department is particu- larly focused on immediately clarifying any unresolved tax law-related issues as well as providing practical solutions to meeting all applicable tax requirements. The tax strategy – Tax Compliance, Sustainable Tax Efficiency, Tax as Valued Business Partner – was also adopted by the Deutsche Telekom Board of Management. SOCIALLY RESPONSIBLE INVESTMENT STRATEGY FOR DEUTSCHE TELEKOM PENSION FUNDS We are fully committed to sustainable finance. Correspondingly, we also apply our sustainability principles to the assets of the Telekom Pension Fund. We have pursued a sustainable investment strategy for the selec- tion of these capital assets since 2013. In addition to financial aspects, we also take into account ecological and social principles as well as guidelines for good corporate governance. In 2017 we refined our investment strategy. We specified the list of negative criteria we employ and added to it best-in-class strategies and approaches to commitment. Accordingly, excluded from investment are companies that manufacture or do business with so-called controversial weapons (for example, anti-personnel mines, cluster ammunition, nuclear weapons, biological or chemical weapons). Also prohibited are investments in companies that have repeatedly violated the principles of the UN Global Compact.
STRATEGY & MANAGEMENT SUSTAINABLE DEVELOPMENT GOALS (SDGS) 34 SUSTAINABLE DEVELOPMENT GOALS (SDGS) The member states of the United Nations (UN) adopted the 2030 Agenda for Sustainable Development in 2015. The Agenda's aim is to enable economic development and prosperity – in line with social jus- tice and while taking into account the ecological limits of global eco- nomic growth. The Agenda applies equally to all nations of the world. All emerging and developing economies as well as industrial nations should play their part. The core of the 2030 Agenda comprises 17 Sustainable Development Goals (SDGs). They officially went into effect in January 2016. The SDGs cover all three dimensions of sustainable development – social, environmental and economic – for the first time. Politicians, civil society and the business community must cooperate closely in order to achieve these ambitious goals. As such, companies are also called upon to make concrete contributions. Deutsche Telekom has accepted this task and emphatically supports the Sustainable Development Goals. Many of our products, services, and activities that we present in this section already allow us to make such a contribution. OUR CONTRIBUTION TO THE SUSTAINABLE DEVELOPMENT GOALS Information and communication technology (ICT) has the potential to help achieve the SDGs. This was the result of a study conducted in July 2017 by the International Telecommunication Union, a special agency of the United Nations. When used correctly, ICT can accelerate innova- tion and change, thereby supporting sustainable development. We want to utilize this potential. Our network infrastructure offers the technological foundation for diverse and innovative approaches for solving social and ecological challenges - and hence also for achieving many SDGs. That's why we believe we can make the biggest impact on SDG 9: "Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation." The following chart illustrates the “enablement-effect” of our business activities: Our network infrastructure as well as our products and ser- vices lay the foundation for contributions to further Sustainable Devel- opment Goals, in particular to number 2, 3, 4, 7, 11, 12, 13 und 15. As a responsible employer (SDG 8), we greatly value employee partici- pation and a working environment that is fair and respectful; we encour- age diversity and support our employees on their journey toward the digital working world. Furthermore, many of our products, services and activities make a concrete contribution to achieving additional SDGs. Our e-health services, for example, help improve medical care (SDG 3). Our broadband expansion is giving many people access to digital edu- cational media (SDG 4) and is actively involving us in the construction and expansion of high-quality infrastructure and promotion of innova- tion (SDG 9). Many European cities are able to use our Smart City solu- tions to reduce traffic, control their street lighting in a needs-based and energy-efficient manner and increase security (SDG 11). Our customers can use our Smart Home solutions to more effectively monitor, control and reduce their energy consumption. These and many other solutions help to reduce emissions and thereby significantly contribute to climate protection (SDG 13). And our cloud solutions make it possible to reduce energy consumption and conserve other resources as well (SDGs 12 and 13). The following overview illustrates our contribution to the SDGs and refers to specific examples from the current CR report. Since 2016 we have also been highlighting our contribution to the SDGs in our Annual Report. We indicate passages in our management report (a part of the Annual Report) that are relevant for the SDGs with a corresponding icon. We've decided to use this icon in this CR report as well. Achieving more together: Cooperation for sustainable development We cannot overcome global challenges alone. That is why we are com- mitted to many initiatives, both within our own industry and in other sec- tors. The following institutions have started committees, working groups and initiatives with direct SDG relevance and in which we are involved: UN Global Compact, GSMA (an association representing the interests of mobile operators worldwide), GeSI (Global e-Sustainability Initiative) and Econsense.
STRATEGY & MANAGEMENT SUSTAINABLE DEVELOPMENT GOALS (SDGS) 35 OUR CONTRIBUTION TO THE SUSTAINABLE DEVELOPMENT GOALS Many of our products, services and activities contribute to achieving the SDGs. In the area of the SDGs 3, 4, 5, 8, 9 and 13 this contribution is especially significant. They are: Good health and well-being, quality education, gender equality, decent work and economic growth, innova- tion and infrastructure, reduced inequalities, responsible consumption and climate action. SDG Target Our contribution Find out more Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all We are committed to sustainable growth, provide excellent working conditions for our current and future employees and keep working toward a more sustainable supply chain. Responsible and agile employer Protecting human rights Four new additions to supplier development program Build resilient infrastructure, promote inclusive and sustaina- ble industrialization and foster innovation We keep pushing the network infrastructure build- out forward and adding more innovative, sustaina- ble products to our portfolio. End hunger, achieve food security and improved nutri- tion and promote sustainable agriculture Our efficient Smart Agriculture ICT solutions allow for higher harvest yields while reducing the use of resources such as seeds, water, fertilizers and energy. What's more, our narrow-band radio communications also help maintain biodiversity. Network expansion New 5G communications standard Sustainable product portfolio M2M communication: Digitalization opportunities Supporting start-ups: creating space for ideas Use narrowband technology to combat bee mortality Ensure healthy lives and pro- mote well-being for all at all ages We promote health with our e-health solutions for the improvement of medical care and a number of health measures for our employees. Digital healthcare The Sea Hero Quest dementia study Occupational health and safety Mobile communications and health (EMF) Ensure inclusive and quality education for all and promote lifelong learning We invest heavily in the training and development of our approx. 225,000 employees. In addition, we pro- mote the development of media skills. The Deutsche Telekom Stiftung foundation supports a large number of STEM projects. Training and development e-learning portfolio Teachtoday Deutsche Telekom Stiftung Partner for "Deutschland sicher im Netz" and BAGSO Integrating refugees in the labor market
STRATEGY & MANAGEMENT SUSTAINABLE DEVELOPMENT GOALS (SDGS) 36 Achieve gender equality and empower all women and girls We are committed to the systematic promotion of women in management, supervisory boards and STEM professions. Our employees benefit from a number of different offers we provide to improve their work-life bal- ance. We expressly expect our suppliers to ban gender discrimination. Employee diversity and equal opportunities Women's STEM Award Encouraging diversity in education Commitment to increasing the number of women in managerial positions Flexible working hours models expanded further Supplier Code of Conduct Ensure access to affordable, reliable, sustainable and mod- ern energy for all Our integrated climate strategy increases the share of green energy of our total energy consumption. More green energy at European national companies Renewable Energy ESG KPI Make cities inclusive, safe, resilient and sustainable Our innovative solutions help shape the transforma- tion of cities into intelligent urban spaces (smart cit- ies). Smart City Ensure sustainable consump- tion and production patterns We continually work on offering more sustainable product solutions and promoting more sustainable production patterns in the supply chain. At the same time we are committed to avoiding waste and to the recycling of valuable natural resources. Sustainable product portfolio Sustainable supply chain Responsible procurement of raw materials Waste reduction and recycling Used cell-phone collection Recovering tantalum Take urgent action to combat climate change and its impacts We help protect the climate with measures con- ducted at the Group (energy efficiency and use of renewable energy) as well as with our sustainable products and services based on our integrated cli- mate strategy. Protect, repair and promote sustainable use of terrestrial ecosystems Our efficient Smart Agriculture ICT solutions allow for higher harvest yields while reducing the use of resources such as seeds, water, fertilizers and energy. We also conduct projects to protect biodiversity. We require our suppliers to protect the environment and use resources responsibly. Climate protection strategy Climate protection measures Sustainable product portfolio Energy-efficient networks Energy efficiency in buildings Climate-friendly mobility Connected agriculture Protecting biodiversity Supplier Code of Conduct End poverty in all its forms everywhere By expanding our networks, we create the conditions for economic and social participation, among other things providing access to education - the lack of which is one of the main causes of poverty. We expect our suppliers to pay the minimum wages as set forth in the ILO Convention. We have explicitly formulated this in our Supplier Code of Conduct. Social commitment Net expansion Supplier Code of Conduct
STRATEGY & MANAGEMENT SUSTAINABLE DEVELOPMENT GOALS (SDGS) 37 Ensure availability and sustain- able management of water and sanitation for all Our efficient Smart Agriculture ICT solutions help reduce water consumption and use of fertilizers. Also, our Smart Metering solution allows for exact measure- ment and control of water consumption. Smart Home Reduce inequality within and among countries We employ adequate measures to connect the unconnected, providing access to the digital world for all. Diversity and equal opportunities Teachtoday Deutsche Telekom Stiftung The Yes, I can! initiative Deutschlandstiftung Integration/"Geh Deinen Weg" (German Foundation for Integration/Go your own way) The Welcome scholarship program Internship PLUS direct entry Accessible products and services Conserve and sustainably use the oceans, seas and marine resources We help reduce water consumption in agriculture and in private households through the use of ICT. Smart Home Promote just, peaceful and inclusive societies We have clearly expressed our commitment to com- plying with ethical principles and current legal stand- ards. This commitment has been incorporated in our Guiding Principles and Code of Conduct. We also operate a comprehensive compliance management system. All our activities are compliant with legal reg- ulations and our Binding Corporate Rules on Privacy. Compliance Privacy and data security Strengthen the means of imple- mentation and revitalize the global partnership for sustaina- ble development We collaborate with associations, institutions and companies at the national and international levels. Overview of memberships and collaborations Sustainable Finance
STRATEGY & MANAGEMENT SUSTAINABLE DEVELOPMENT GOALS (SDGS) 3838 WE'RE DOING SOMETHING! - EMPLOYEE COMMUNICATION SDG Benchmark We started a poster campaign in the summer of 2017 to create aware- ness of the SDGs among out employees. To this end, we first distributed posters at our Bonn headquarters and hung them in high-traffic zones. In addition to illustrating all the SDGs, the posters also show Deutsche Telekom's contribution to achieving the goals. The posters are available for download here. Our network infrastructure, products and services indirectly contribute to the achievement of SDG number 1. Product innovations for maintaining biodiversity and for improving agriculture through NB-IoT (Narrowband Internet of Things). eHealth and NB-IoT roll-out Health rate Accident rate Employee satisfaction Media Literacy ESG KPI Percentage of women in total workforce Percentage of women in middle and upper management Based on our business activities, number 6 is not among the priority SDGs. ALLOCATING THE SUSTAINABLE DEVELOPMENT GOALS Renewable Energies ESG KPI TO OUR BENCHMARKS Our commitment to sustainability also includes making a positive contri- bution to achieving the SDGs. In particular, we contributeto goals no. 3: Good health and well-being, 4: Quality education, 5: Gender equality, 8: Decent work and economic growth, 9: Industry, innovation, and infra- structure, 11: Sustainable cities and communities, 12: Responsible con- sumption and production and 13: Climate action.We record environ- mental, social and governance (ESG) performance indicators as part of our CR controlling system. The following overview shows that our KPI system can be applied to the SDGs and also makes our positive contri- butions measurable and visible. We have strong control parameters for those SDGs that are very relevant to our business model in particular. The clear SDG relationship that exists today will continue to be refined by means of our control and monitoring activities. Sustainable Procurement ESG KPI CR-Qualified Top 200 Suppliers ESG KPI Employee Satisfaction KPI Social Performance Report Network expansion in Germany Expenditures for research and development
STRATEGY & MANAGEMENT SUSTAINABLE DEVELOPMENT GOALS (SDGS) 39 COMMENDATION FOR OUR COMMITMENT For its commitment to the UN's goals, the consulting firm Pricewater- houseCoopers honored Deutsche Telekom with the Building Public Trust Award for exemplary reporting practices. The jury selected Deutsche Telekom as best company in the "SDGs" (Sustainable Devel- opment Goals) category for its 2016 Annual Report. According to the jury, Deutsche Telekom does the best job of systematically analyzing the contribution that its products, services and activities make to fulfill- ing global sustainability goals. With this new prize category, the panel of experts takes into account current national and international reporting developments. Sustainable Procurement ESG KPI CR-Qualified Top 200 Suppliers ESG KPI Refugee assistance: number of apprentice and internship positions, number of corporate volunteering projects and more People with disabilities Smart Innovation (pilot phase) NB-IoT roll-out Sustainable Revenue Share ESG KPI Take Back Mobile Devices ESG KPI Sustainable Revenue Share ESG KPI CR-Qualified Top 200 Suppliers ESG KPI Waste Online billing Recovered copper cables Energy Intensity ESG KPI Carbon Intensity ESG KPI Renewable Energies ESG KPI PUE ESG KPI Enablement Factor ESG KPI CDP Supply Chain Coverage ESG KPI Based on our business activities, num- ber 14 is not among the priority SDGs. Product innovations for maintaining biodiversity and for improving agriculture through NB-IoT (Narrowband Internet of Things) Security Awareness Index Compliance-relevant tip-offs (for example "Tell me" portal) Annual transparency report Public-private partnership infrastructure expansion Cooperation in the area of societal engagement: Community Investment ESG KPI and Beneficiaries ESG KPI Socially Responsible Investment ESG KPI Listing in ratings and rankings
STRATEGY & MANAGEMENT ADDED VALUE AND MATERIALITY 40 ADDED VALUE AND MATERIALITY Which sustainability topics are relevant for our revenue development, capacity for innovation and reputation? Which topics matter to our stakeholders, for example our shareholders, customers and employees, as well as the public? In what areas and in what ways do our business operations impact society and the environment? We need to know the answers to these questions if we want to be successful in financial and ecological terms as well as in the eyes of society, which is why our mate- riality process is not solely based on our own perspective but also takes into account the needs and interests of our stakeholders. BUSINESS ACTIVITIES AND ORGANIZATION With 168 million mobile communications customers, around 28 million fixed-network and around 19 million broadband lines, we are one of the leading integrated telecommunications companies worldwide. We offer our consumers fixed-network/broadband, mobile, Internet, and Internet- based TV products and services, as well as ICT solutions for our busi- ness and corporate customers. We have an international focus and are represented in more than 50 countries. With a staff of some 217,300 employees throughout the world, we generated revenue of 74.9 billion euros in the 2017 financial year, around 67 percent of which was gener- ated outside Germany (December 31, 2017). We believe that economic, social, and ecological aspects can be recon- ciled; sustainability is the guiding principle behind all our actions. A range of sector-specific and general conditions are crucial to the suc- cess of business activities. These include first-rate quality at reasonable costs – in data privacy and security, in customer service, in network build-out and in materials procurement – as well as qualified staff and good working conditions within our own Group as well as at our suppli- ers. It is also important to consider the potential consequences of cli- mate change for our business activities: for example, to construct our network infrastructure in such a way that it is protected from severe weather conditions, changes in temperatures and higher wind speeds. We also help our customers reduce their carbon footprint with innova- tive products and services. Furthermore, we want to reduce the Group’s CO build-out that this requires. We do everything we can to ensure that our actions are socially acceptable, even beyond our core business. For us, this means conducting ourselves in a way that is ethical and compliant with the law and informing and involving our stakeholders in a transpar- ent way. emissions despite rapid growth in data traffic and the network 2 You can find additional information on our business development in the 2017 Annual Report. As illustrated in the diagram, our Group consists of five operating segments. We strive to make an effective contribution to sustainable development along all parts of our supply chain. MATERIAL SUSTAINABILITY TOPICS: SYSTEMATIC PROCESS BASED ON RECOGNIZED METHODS We systematically identify which topics are of particular importance in defining Deutsche Telekom's sustainability management and sustaina- bility reporting focus from the perspective of our stakeholders as well as from an internal corporate perspective. The analysis is based on knowl- edge from previous year's results and assesses these in the light of recent developments. Since 2015, we implement this materiality process at our company in compliance with the methodology of the Global e-Sustainability Initiative (GeSI). This methodology covers 55 topics that are material to the ICT industry. These can be placed into nine categories: digital inclusion, employee relationships, climate change, circular economy, sourcing and manufacturing, customer relationships, freedom of expression and privacy, governance and management, and local community and envi- ronment impacts. The advantage of using the GeSI methodology is that it allows us to focus on our core business as an ICT service provider. The materiality topics have been developed to pertain to a variety of companies and are therefore recognized in the industry
STRATEGY & MANAGEMENT ADDED VALUE AND MATERIALITY 4141 Material topics from the stakeholder perspective In our continuous online survey, our stakeholders can not only rate top- ics according to their importance but also assess our performance in the respective areas (click herefor the online survey). In the survey, stakeholders are asked to rate the topics that have been identified through our internal materiality process. This ongoing, logical process makes it possible to achieve comparable results. To help us identify which aspects are most material for our stakeholders, we assessed the results of the survey for the period from January 1, 2016, through December 31, 2017. The assessment was based on evaluations sub- mitted by 218 people: 93 customers 55 employees and potential employees or employee representatives 17 analysts and investors 15 participants from the worlds of science, research and education 19 NGO representatives 4 suppliers 3 representatives from regulatory authorities and political decision- makers 12 employees who associated themselves with none of the groups mentioned In addition to giving stakeholders a chance to rate the importance of topics and assess our performance, the survey also includes open- ended questions. You can find our stakeholder feedback from the reporting period here. Stakeholders also have the opportunity to assess our performance in different areas. Our stakeholders rate our performance high in the key areas of privacy, data security and cyber safety. In contrast, they see potential for improvement in the topics of open sourcing and conflict materials (as of December 2017). Material topics from the corporate perspective New developments that are of importance to our sustainability engage- ment are also evaluated internally. We hold workshops at the Group when required so that various topics can be weighted internally. Most recently in November 2015, numerous experts from different depart- ments, including Human Resources, Innovation and Communications, participated in one of these workshops. They went through the 55 GeSI topics and identified those that had the most impact on five key value drivers behind our business success from a corporate perspective (see below). These value drivers are also based on the GeSI methodology: Technology and innovation: Our customers' increasing demand for secure, encrypted services has made topics like data security and cyber security two of the most significant drivers of innovation at our company. Revenue growth: We are able to tap new markets and reach out to new customers through network expansion. High service qualityis decisive when it comes to customer satisfaction and therefore has a direct impact on winning over customers and customer loyalty. Customer inquiries about sustainable products are still limited in number but continue to grow, which is why this topic has been iden- tified as an important driver Business operations: Which topics have a positive impact on busi- ness processes or help reduce costs? Above all comprehensive employee involvement and fundamental requirements such as data security, service quality, stakeholder involvement and compliance have an impact here. Employee relations: The topics of talent acquisition, employee retention, development and downsizing, employee involvement, employee health, safety and well-being as well as diversity and anti- discrimination also have a big impact on employee satisfaction and productivity. A service-oriented corporate culture (service quality), ethical business practices and transparency as well have a positive impact on employee relations Reputation: A high degree of transparency and extensive reporting create lasting trust in Deutsche Telekom. Topics such as business practices, service quality, privacy and supply chain labor standards, on the other hand, can pose risks to our reputation. If the media negatively reports on our brands, products or services in connection with these topics, this can damage our reputation. The next workshop on internal weighing of topics is slated for the third quarter of 2018. RESULTS OF THE MATERIALITY ANALYSIS In our materiality analysis topics are rated as "very relevant," "relevant," "less relevant" and "not relevant." We translate their weighting results onto a 100-point scale. Here are the results of the analysis. The overall result The following illustration shows how all of the topics were rated by our stakeholders and from a corporate perspective on a scale of 0 to 100. Top topics for Deutschen Telekom's sustainable business development We consider all topics that achieved more than 70 points on average in the materiality process to be top topics. They are presented on a scale of 60 to 100 below.
STRATEGY & MANAGEMENT ADDED VALUE AND MATERIALITY 4242 # Material aspects GRI aspects Management ap- proach 1 2 3 4 5 6 Data security Customer privacy Customer privacy Privacy Customer privacy Ensuring effective data privacy Service quality Stakeholder engage- ment Ensuring excellent service quality Cyber safety Customer privacy Protecting ourselves and our customers ICT solutions for a low- carbon economy Products and services Developing sustainable products and services Talent acquisition, employee retention, development and staff reduction Employment, training and education Preparing ourselves for the digital working world MATERIAL ASPECTS MATCHED WITH GRI ASPECTS The following overview indicates which GRI aspects can be matched with the material areas of the stakeholder survey. 7 Employee involvement Labor/management relations Shaping change at the company 8 Climate change miti- gation Freedom of associ- ation and collective bargaining How we protect human rights Emissions Protecting the climate Energy 9 ICT and child safety Customer health and safety Protecting consumers and minors 10 Socially relevant applica- tion of ICT products and services 11 Network expansion Products and services Developing sustainable products and services Indirect economic impacts Expanding our infra- structure 12 Transparency and reporting Identified material as- pects and boundaries Report profile 13 Ethical business practi- ces and compliance Socioeconomic compliance Ensuring integrity and compliance 14 Supply chain labor standards Anti-corruption Procurement practices Forced or compulsory labor Supplier social assessment Improving sustainability in the supply chain How we protect human rights Managing sustaina- bility in procurement processes Ensuring integrity and compliance 15 Employee health, safety and wellness Occupational health and safety Promoting the health of our workforce 16 Inclusion of stakeholders Stakeholder engage- ment Fostering stakeholder engagement 17 Employee diversity and anti-discrimination Non-discrimination Diversity and equal opportunity How we protect human rights Supporting diversity
STRATEGY & MANAGEMENT STAKEHOLDER MANAGEMENT 43 STAKEHOLDER MANAGEMENT As a company, we are constantly balancing the expectations of a variety of stakeholders when managing our business. That is why our success depends on recognizing the interests and demands of our internal and external stakeholders and meeting and addressing these whenever pos- sible and reasonable. Stakeholders also expect to be kept informed of how companies are responding to their requirements. We go even fur- ther by actively surveying our stakeholders and involving them in our corporate activities. Engaging in dialog with our stakeholders helps us identify trends early on, which fosters our innovation processes. At the same time, this strengthens existing alliances and creates new opportunities for part- nerships. This is particularly important in terms of our sustainability tar- gets, which we can only achieve in collaboration with partners from the worlds of politics (political advocacy), society, science and research, and industry. Analysts, investors and their representatives Private investors Funds, asset managers and analyst (SRI) rating agencies Analyst organizations and associations Institutional investors Public authorities Consumer organizations and segment-specific interest groups Telekom Supervisory Board members Business sector and its representatives DAX-listed companies Other large corporations Small and medium-sized enterprises Trade and industry associations Cooperation partners Competitors Science, research and education CR and sustainability research institutions Political and business research institutions Universities Schools Day care centers Student organizations and university associations ICT, sociology and design research institutions NGOs and special interest groups Humanitarian organizations and charities Business ethics groups Multi-thematic organizations Churches and their relief organizations as well as other religious and social groups Foundations Environmental protection organizations Media CR and sustainability Players from politics and business Education Radio broadcasters, daily press, press agencies Online media and social networks Publishers Journalist associations/media groups ICT and communications Customers, potential customers and their representative Youngsters and young adults Families Middle-aged people Senior citizens Small and medium-sized enterprises Large corporations Politics Players at national level Embassies and consulates Supervisory and regulatory authorities Communities and their representatives International organizations Players at EU level
STRATEGY & MANAGEMENT STAKEHOLDER MANAGEMENT 4444 Employees, potential employees and their representative Employees Managers Board of Management Applicants and prospective employees Trade unions and works council Employees and students Endowed chairs Apprentices/trainees Suppliers Auditors and certification bodies Sub-suppliers Consultants First-tier suppliers Employees, potential employ- ees and their representatives Data Security Privacy Cyber safety ICT Solutions for a Low-Carbon Economy Employee involvement Suppliers Privacy Cyber safety Mitigating climate change Talent acquisition, retention, development and staff reduction Data Security Analysts, investors and their repre- sentatives All top-subjects of the materiality analysis 2017 Stakeholder- Groups Top 5 Subjects: Media All top-subjects of the materiality analysis 2017 Analysts, investors and their representatives Cyber safety Privacy ICT Solutions for a Low-Carbon Economy Employee involvement Mitigating climate change Customers, potential custom- ers and their representatives Data security Employee involvement Privacy Cyber safety ICT Solutions for a Low-Carbon Economy Science, research and education Employee involvement Socially relevant application of ICT products FOSTERING STAKEHOLDER ENGAGEMENT We systematically encourage stakeholder engagement in our corporate activities. In 2011 we developed a strategy for stakeholder engagement in order to manage our various activities throughout the Group. The strategy is based on the three AA1000 principles developed by the NGO AccountAbility: materiality, inclusivity, and responsiveness. We reviewed compliance with these principles in 2013. In addition to the annual stakeholder survey, we use various formats such as memberships and events to enter into dialog with our stake- holders. We also use the information of our NGO radar as well as infor- mal exchange to inform our stakeholders about our requirements. and services Cyber safety ICT Solutions for a Low-Carbon Economy Privacy The feedback that we receive from our stakeholders through various channels is incorporated into our CR activities. We regularly ascertain what our stakeholders think of our activities and modify our CR strategy, if needed. To this end, we primarily use our materiality process and CR topic monitoring. NGOs and special interest groups Privacy Cyber safety Socially relevant application of ICT products and services Transparency and reporting ICT and child safety FEEDBACK FROM THE STAKEHOLDER SURVEY Our ongoing stakeholder survey (To the survey) includes not only weighting topics (2017 results) and assessment of our sustainability performance but open-ended questions as well. Below is a summary of the most important feedback results for the 2017 reporting year, which we use to advance our CR activities. Politics Privacy Cyber safety Socially relevant application of ICT products Stakeholder recommendations on how Deutsche Telekom can further improve its corporate responsibility: Raising awareness of sustainable consumption among its and services Transparency and reporting ICT and child safety customers (the "a new cell phone every year" principle goes against the sustainability principle Implementation of a renewable energies strategy Active marketing of products with a good carbon footprint
STRATEGY & MANAGEMENT STAKEHOLDER MANAGEMENT 4545 Requirements concerning the sustainability of Deutsche Telekom products: Energy efficiency Reusability Use of recycled materials Requirements on network expansion: Nationwide basic service with fast Internet Expectations on sustainability rating in the supply chain: Stricter analysis of sustainability risks in the supply chain Suggestions for strengthening commitment to sustainability among employees and in the corporate culture: Promotion of employee networks Establishment of an open and non-discriminatory corporate culture Transparent communication especially with regard to target agreements Harsher consequences for misconduct Dialog 10. Sustainability Day at Magyar Telekom 1001 truths Expertise in the CR Report: You can ask Deutsche Telekom experts questions on selected topics, such as at sustainable products & services Magenta Security Congress In-house climate conference within the framework of COP23 at Bonn Headquarters Cyber Security Summit SRI roadshows Evaluating and implementing the EMF Policy Information Teachtoday promotes media literacy Good to know: Internal CR newsletter for employees Data protection tips with our one-pager The We Care website: Publication of a new edition of the magazine FORMATS FOR STAKEHOLDER ENGAGEMENT OVERVIEW OF MEMBERSHIPS AND COLLABORATIONS The type and extent of our stakeholder engagement is based on the results of a case-related relevance analysis. Stakeholder relevance var- ies depending on the topic. In the sustainable finance area, for example, our investors are the most important stakeholders, which is why we are in regular communication with them. Of course, our customers play a decisive role in the development of sustainable products. The more rele- vant a stakeholder group is to the topic or project concerned, the more intensive stakeholder engagement can be. Depending on the intensity, we make a distinction between three types of engagement: information, dialog and participation. Business and industry associations American Chamber of Commerce in Germany Bundesvereinigung der Deutschen Arbeitgeberverbände (BDA, Confederation of German Employers' Associations) BITKOM industry association European Telecommunications Network Operators’ Association (ETNO) Forum Nachhaltige Entwicklung der Deutschen Wirtschaft e.V. (econsense, Forum for Sustainable Development of German Business) Stakeholder involvement formats Partizipation Stakeholder survey Development programs for suppliers YAM: information, discussion and awareness-raising Pilot project: making impact measurable Strengthening our corporate culture, encouraging a speak-up culture Collaboration for the protection of minors Cooperating in the name of security Co-designing Deutsche Telekom products and services in the think tank GSM Association (GSMA) International Chamber of Commerce (ICC) Bundesverband der Deutschen Industrie e. V. (BDI, the Voice of German Industry) Climate protection and environmental organizations B.A.U.M. e.V. environmental management organization Global e-Sustainability Initiative (GeSI) Stiftung 2° – Deutsche Unternehmer für Klimaschutz (2° Foundation – German CEOs for Climate Protection) Sustainability Leadership Forum (in collaboration with B.A.U.M.) European School of Management and Technology (ESMT) (Sustainable Business Roundtable) Global Compact Global Compact LEAD Caring for Climate Joint Audit Cooperation (JAC) Deutsches CSR-Forum (German CSR Forum) Civic and aid organizations Bündnis für Verbraucherbildung (alliance for consumer education) Charter der digitalen Vernetzung (Charter for Digital Networking) Deutschland sicher im Netz (Making Germany safe on the Net, DsiN) London Benchmark Group Bundesnetzwerk Bürgerschaftliches Engagement (National Network for Civil Society)
STRATEGY & MANAGEMENT STAKEHOLDER MANAGEMENT 46 CCCD – WIE Aktion Deutschland Hilft e.V. (Germany's Relief Coalition) Deutsches Rotes Kreuz (German Red Cross) DKMS Deutsche Knochenmarkspenderdatei gemeinnützige Gesellschaft mbH (German Bone Marrow Donor Center) Lebenshilfe e.V. aid organization SOS-Kinderdorf e.V. (SOS Children's Villages) Nummer gegen Kummer youth counseling line TelefonSeelsorge crisis counseling helpline Deutsche Telekom Stiftung (Deutsche Telekom foundation) Deutschlandstiftung Integration (German Foundation for Integration) Bundesarbeitsgemeinschaft der Senioren-Organisationen (BAGSO – German Association of Senior Citizens' Organizations) Friedrich-Ebert-Gymnasium Bonn (a secondary school in Bonn) Code of Responsible Conduct for Business GIZ Private Sector Advisory Board
STRATEGY & MANAGEMENT COMPLIANCE 47 COMPLIANCE At Deutsche Telekom AG we feel it is highly important that all of our employees and governance bodies comply with our values, rules of con- duct and applicable laws at all times. Deutsche Telekom's central com- pliance organization (Group Compliance) plays a key role in establish- ing corporate governance structures and a corporate culture based on integrity. It promotes a culture and a set of values characterized by com- pliance at the company and encourages managers and employees to live these values. As a result, Deutsche Telekom's understanding of what compliance means far exceeds pure legal compliance in business activity, i.e., compliance with laws and internal regulations, and focuses on the integrity of employees and governance bodies. GOALS MEASURES MEASURING SUCCESS § Ensuring integrity and compli- § Compliance organization § "Tell me!" whistleblower portal ance throughout the Group and among business partners § Compliance risk assessment § Transparent corporate culture § Code of Conduct § Compliance audits § Policies § Consulting § Training § Communication campaigns § Business partner audits § Case studies § Punishing misconduct § Reporting ENSURING INTEGRITY AND COMPLIANCE We have clearly expressed our commitment to complying with ethical principles and current legal standards. This commitment has been incorporated in our Guiding Principles and Code of Conduct. We have introduced a comprehensive compliance management system. This is a way to effectively combat risks and make sure conduct throughout the Group is based on integrity and complies with our principles and regu- lations. All activities related to compliance management fulfill legal reg- ulations and our Binding Corporate Rules on Privacy. This policy regu- lates how personal data is handled at Deutsche Telekom. Responsibility for the compliance management system lies with the top management level at Deutsche Telekom in the Board department for Data Privacy, Legal Affairs and Compliance. In addition, there is a member in each company of Deutsche Telekom at the Management or Board level who is responsible for compliance. The Chief Compliance Officer of Deutsche Telekom AG is responsible for the Group-wide structure, advancement and implementation of the compliance management system. This individual also heads up the Group Compliance unit. We also have compliance officers (COs) at each of our operating segments and national companies These individuals are responsible for ensuring that the compliance management system and our compliance goals are implemented on site. Goals of the compliance management system At Deutsche Telekom, compliance refers to following the rules and doing the "right thing", which means compliance requires all employees to act with integrity. Within the meaning of our five Guiding Principles and Code of Conduct, integrity, and therefore compliance, forms the basis of all our business decisions and activities. It defines the behavior of all our employees when dealing with customers, employees and colleagues, investors, managers and Deutsche Telekom's general envi- ronment. The goals of our compliance activities are based on these principles, the relevant regulations and legal standards as well as on our strategic objective of becoming the leading European telecommunications provider. Specifically, the purpose is to avoid compliance violations and business decisions that are not made with integrity. In addition, compli- ance should be integrated early on and permanently into business processes. This reduces liability risks for the company. Furthermore, compliance contributes to ensuring that our customers perceive us as a reliable partner. We ensure implementation of our overarching compli- ance goals in business activities by systematically applying the compli- ance management system in the areas of prevention, identification and response. Focus on prevention Each year, we carry out a Group-wide Compliance Risk Assessment. This helps us identify and assess our compliance risks and define focal points for conducting effective preventative measures, which are com- piled in our compliance program. The goal is to make sure that the conduct of our employees is ethical and compliant at all times, which is why we have set forth clear expecta- tions on employee conduct in our Code of Conduct. We have intro- duced compliance-related Group policies for this purpose, such as reg- ulations on anti-corruption measures, gifts, invitations, and events, as well as on handling consultants and agents. A policy database makes it easy for our employees to access and follow our policies (Group-wide implementation of the Code of Conduct). Besides regular compliance training sessions, we also carry out com- prehensive anti-corruption training (see GRI 205-2). We specifically address managers to act as multipliers to further raise awareness of compliance. Their feedback is analyzed carefully and used to initiate additional training sessions or other measures, if necessary. Employees can also visit the "Ask me!" portal to have their compliance questions answered. The “Ask me!” advisory team gives answers in
STRATEGY & MANAGEMENT COMPLIANCE 4848 case of behavioral uncertainties. The portal contains an FAQ with exem- plary cases and reliable information on laws, internal policies, and behavioral standards. We have also introduced various measures to promote a culture of compliance at our company. RENEWED COMPLIANCE MANAGEMENT CERTIFICATION In 2017, we once again had our compliance management system certi- fied with a focus on anti-corruption measures. This is our way of ensur- ing that we can confront risks consistently and that we have established effective processes in the company. After 10 companies were audited in Germany in 2016, we had 12 international companies certified in 2017. Identification and monitoring Despite the best preventative measures, we are not always able to pre- vent breaches of law or serious violations of internal regulations at the company. We have created the Tell me! whistleblower portal to uncover non-compliant conduct. Our employees as well as external parties, e.g., business partners or customers, can use the portal to report miscon- duct (Protecting whistleblowers). Deutsche Telekom thoroughly investi- gates all reports within the limits of the legal framework and punishes such activity appropriately. We have introduced a Group-wide reporting process to control and monitor these activities, including regular inter- nal and external audits of our compliance management activities. Compliant interaction with business partners and suppliers Our Code of Conduct specifies proper conduct for all of our employees. With our Code of Human Rights & Social Principles (a successor to the Social Charter), we make a commitment to protecting and promoting human rights including compliance with the ILO's core labor standards. Our Supplier Code of Conduct stipulates that our suppliers as well as their sub-contractors must comply with the principles and values set forth by our Code of Conduct and the Code of Human Rights & Social Principles that places suppliers under the obligation to take all steps necessary to prevent and punish active and passive forms of corruption. The Code of Conduct is part of the General Terms and Conditions for Purchasing but does not replace the laws and regulations of countries where our suppliers are active. Rather, its aim is to facilitate compliance with these laws and regulations and guarantee that they are imple- mented faithfully and effectively. We have been offering e-learning on compliance to our suppliers since 2014, as well as providing them with a compliance guideline. We select our business partners based on compliance criteria and con- duct risk-oriented compliance business assessments. This applies to customers and suppliers as well as consultants (Consultant Policy), sales agents, development partners, and joint venture partners. STREAMLINED, EASIER, BETTER: A REVISED CODE OF CONDUCT Integrity, respect and compliance with the law – this is the principle on which Deutsche Telekom’s business activities are based. Our Code of Conduct sets forth the central reference framework for legally compliant and moral conduct. We revised the Code in 2017, with the goal of focus- ing on issues of compliance and integrity and finding a positive way to raise employee awareness of, and motivation to tackle, these issues. The revised Code of Conduct continues to provide an overview of our understanding of values and of the basic principles that guide our actions. In some places, this overview provides more detail by referring to internal policies and regulations. The Code of Conduct makes a sig- nificant contribution to our business success by providing a fixed foun- dation for our business activities. The certification focused on processes in Procurement, Sales, HR, and Mergers & Acquisitions, as well as on events, donations, and sponsor- ships. The potential danger of corruption is greatest in these areas. The auditors completed their audit of the effectiveness of our compliance management system, and the system passed with flying colors. We doc- ument details regarding audit content and corporate departments that have undergone anti-corruption audits in our audit report. Certificates and audit assessments play an ever-increasing role, for instance in bidding processes and decisions to award bids, offering a clear advantage whenever we are in competition with other companies. External auditors previously certified our compliance management system with a focus on anti-corruption measures and anti-trust law in 2010 and 2013. STRENGTHENING OUR CORPORATE CULTURE, ENCOURAGING A SPEAK-UP CULTURE A compliance management system is only effective if it is actually imple- mented in everyday activities. This is why we started the Transparent Company Culture initiative in 2016 with the intention of encouraging integrity and a speak-up culture within our company. We conducted a large-scale employee survey in this context in the spring of 2017 to find out more about Deutsche Telekom's corporate culture and how it is being lived – especially with a view towards compli- ance topics. About 52,000 employees in 25 national and international Deutsche Telekom companies took part in the online survey. There were also one-to-one interviews and discussions with focus groups. The European School of Management and Technology (ESMT Berlin) and Hertie School of Governance were our research partners in this extensive study. The initiative was supported by an expert committee created specifi- cally for this purpose. The committee was comprised of Deutsche Telekom employees as well as representatives from non-governmental organizations, the business and scientific communities and society. The experts' task was to guide and assess the study. The results are positive overall. The vast majority of employees is committed to Deutsche Telekom's rules and is not willing to act in an unethical manner. The strengths of the compliance culture include, among others, the clarity of the rules, the willingness of employees to report misconduct and the ethical conduct of direct supervisors. An admitted weakness is the fact that there is a small group of employees who are willing to break the rules. Identified weaknesses were intensely dis- cussed by the Board of Management and included in a set of measures for further strengthening the value-oriented compliance culture at Deutsche Telekom.
STRATEGY & MANAGEMENT COMPLIANCE 4949 The Speak-up Culture initiative: Constructive criticism expressly wanted One measure from the Transparent Corporate Culture initiative is that the Speak-up Culture initiative will continue to be implemented with various focal areas. The goal of the campaign is to encourage objection within the company where this is necessary. Employees should be encouraged to correctly and successfully address grievances in critical situations, just as managers should be open to hearing these griev- ances. An environment should also be created wherein "critical minds" can voice their opinions. Both classroom and online courses will be offered, nationally and internationally, to this end. WITHOUT BORDERS: WORLDWIDE COOPERATION FOR COMPLIANCE Different legal practices and cultural values in the countries where Deutsche Telekom is active represent a significant compliance chal- lenge. The increasingly dynamic development of global markets and intensified international competition also influence our compliance strategy. In line with the Group's international orientation, we discuss strategic issues with an international compliance advisory team twice a year. The team is a trend-setter of sorts for designing and implementing balanced compliance structures at Deutsche Telekom. We have also been pro- moting Group-wide compliance cooperation for years through meetings of the representatives of all compliance organizations from our interna- tional subsidiaries. Compliance Days in Warsaw: Be together – Talk together – Create together The International Compliance Days took place for the 13th time in May 2017. Under the motto "Be together – Talk together – Create together", around 100 compliance officers from more than 20 countries met in Warsaw, Poland. During the two-day event, experts discussed current compliance topics such as digitalization and veto rights and attended workshops where they worked together on further refining these topics. Deutsche Telekom rated one of the most ethical companies in the world in 2018 The Arizona-based Ethisphere Institute ranked Deutsche Telekom as one of the world's most ethical companies in 2018. We received this honor upon our first attempt, since this is the first time that we took part in this survey. In Germany, we are the sole recipient of this honor. Ethisphere commends the excellent performance of companies with the highest ethical competence worldwide. In addition to Deutsche Telekom and T-Mobile US, the ethics institute recognized another 133 companies in 23 countries and 57 industries as "2018 World’s Most Ethical Companies". PREVENTING AND FIGHTING CORRUPTION We take many different actions and measures to prevent and fight corruption. The compliance risk assessment forms the foundation of our compliance management system. It helps us identify and evaluate compliance risks and develop appropriate preventive measures. We have established an annual process for this purpose Group-wide. It identifies responsible officers and defines clear assessment criteria that are documented in a traceable manner. The companies that will take part in the compliance risk assessment are selected using a model cen- tered on how developed and complete their compliance programs are. 73 companies participated in the assessment process in 2017. Our Group risk map is a key component of the compliance risk assess- ment that we use to assess risks that are particularly significant to our company. The risk map enables Deutsche Telekom's companies with their various business models to conduct systematic risk analyses. It currently covers 27 core risk categories ranging from corruption and anti-trust law violations to violations of the Group Code of Conduct. Each national company can add additional categories specific to their business needs. This involves defining which specific threat each risk poses to the national company and stating which measures have already been implemented to mitigate this risk. If necessary, additional measures are developed to reduce the risks to a manageable level. Responsibility for conducting the compliance risk assessment lies with the respective national company. Our central compliance organization provides support and advice in these matters. The national companies' managing boards are informed of the results of the compliance risk assessment. Subsequently, the compliance pro- gram for the following year is defined, including specific measures and responsibilities. The managing board then passes a formal resolution to approve the program. The compliance program measures are moni- tored closely. Investigation of suspected corruption based on clear criteria- Deutsche Telekom has specified clear criteria for investigating sus- pected cases of corruption. We start investigations if a violation of legal or internal regulations is reported with a sufficient degree of detail. Any tips that meet this requirement are investigated thoroughly. Any viola- tions we uncover are punished appropriately. In some cases employ- ment relationships have even been terminated for good cause. Claims for damages may also be asserted. Any weaknesses identified in the internal control system during the investigation are systematically ana- lyzed and remedied. "TELL ME!" PORTAL: 146 REPORTS RECEIVE In 2017, 146 compliance-related reports were made to Deutsche Telekom via the "Tell me!" portal (108 reports were made in the previ- ous year). 24 of those are still being reviewed for plausibility and investi- gations are being made into 66 plausible reports (as of January 16, 2018). 43 of these were confirmed as actual misconduct and were punished accordingly. 12 cases are still in the investigation phase. In confirmed cases, we impose systematic sanctions that are proportion- ate to the act and the guilt of the perpetrator and are in line with applica- ble legal provisions. Most of the tip-offs received in 2017 related to potential cases of commission fraud, manipulation of targets, misappro- priation, theft and fraud. In principle, we always follow up on all compliance-relevant tip-offs, even those that reach us through other channels. INVOLVEMENT IN ANTI-CORRUPTION INITIATIVES Deutsche Telekom AG regularly joins forces with national and inter- national organizations that deal specifically with compliance-related issues, including combating corruption. As a member of associations
STRATEGY & MANAGEMENT COMPLIANCE 50 and organizations such as the Compliance & Integrity forum of ZfW (Center for Business Ethics), DICO (Deutsches Institut für Compli- ance e.V. - German Institute for Compliance), Bitkom (Federal Asso- ciation for Information Technology, Telecommunications and New Media), Deutsche Telekom makes use of the opportunity to exchange ideas and experiences related to compliance. Thanks to this collaborative approach and exchange of experiences, Deutsche Telekom AG not only makes a valuable contribution to anti-corrup- tion within the Group, but also to initiatives in this field worldwide. Deutsche Telekom AG uses the findings to work on continually improving its compliance management system. MAJOR ONGOING LITIGATION Deutsche Telekom is party to several proceedings both in and out of court with government agencies, competitors and other parties. The proceedings mentioned in the 2017 Annual Report are of particular importance from Deutsche Telekom's point of view.
STRATEGY & MANAGEMENT REPRESENTING POLITICAL INTERESTS 51 REPRESENTING POLITICAL INTERESTS The political sector and regulatory authorities influence the develop- ment and availability of the network infrastructure, technologies and services. This directly impacts the competitiveness of telecommunica- tions companies as well as business in general, which relies on having a fast network infrastructure as well as state-of-the-art telecommunica- tions services. Networks and services are also of considerable impor- tance for maintaining a sense of community in society, which is why we engage in active, ongoing dialog with all interested stakeholders from the spheres of politics and society. LOBBYING TOOLS Our partners from parliaments, governments and non-profit organiza- tions need to uphold their independence and integrity. This principle is codified in Deutsche Telekom's Code of Conduct. Donations to political institutions, parties and political representatives are not allowed, for example. Instead, we place importance on factual communication, com- petence, credibility and integrity. As a result, politicians and stakehold- ers feel that the information we provide is authentic and credible and refer to this information when forming their own opinions. Deutsche Telekom is registered in the official transparency register for lobbyists in Brussels. Within the context of our collaboration efforts in associations and other bodies, we feel that we are under the obligation to comply with all ethical codes and legal provisions. INVESTMENT INCENTIVE NEEDED FOR BROADBAND NETWORKS Having a high-performance, reliable and secure broadband infrastruc- ture is the basis of success for all business sectors and is a key factor in making a business location attractive. Deutsche Telekom has been investing extensively in infrastructure for fixed-line and mobile (fiber- optic) Internet for years, making a considerable contribution and show- ing more commitment than any other company to providing full-area coverage, particularly in rural areas. In view of the ambitious broadband goals at both the national and Euro- pean level, the main purpose of telecommunications and regulatory pol- icies needs to be improving planning security and, in particular, the financial power of companies willing to invest in the market. This is the only way to fully tap private network expansion potential using all availa- ble technologies. In areas where broadband roll-out is not economically feasible, it is up to the public sector to develop far-sighted technology and provider-independent incentive programs to help effectively finance these efforts. Legal frameworks and regulatory practice need to actively support private-sector investment in new fiber-optic networks and pre- vent unnecessary financial burdens and red tape for the network opera- tors investing in networks. Regulatory intervention needs to be restricted to proven market failure to keep it from unnecessarily limiting innovation. Open access must be embraced as a basic principle so that competition and free choice for consumers are guaranteed in connection with all network expansion projects. In view of the fact that the Internet and telecommunications market are converging rapidly and in light of the growing market power of a few global Internet players, sector-specific regulation of telecommunica- tions is creating more and more of an imbalance. The same laws and regulations that apply to telecommunications companies also need to apply to Internet companies providing the same services. The objective here must be to create equal competitive conditions and enable fair distribution of the financial burden involved in broadband expansion. PROTECTING THE OPEN INTERNET As part of the EU Telecoms Package, regulations on network neutrality were adopted at the EU level and went into effect on April 30, 2016. The new regulations particularly address permitted traffic management, once again raise transparency requirements and limit commercial prod- uct and service differentiation on the Internet. Deutsche Telekom remains committed to preserving an open Internet. Content and services will continue to be available online in accordance with the best effort principle, meaning they will be available to the extent permitted by the available resources. Deutsche Telekom will continue to expand and optimize its infrastructure so that we are able to cope with rapidly increasing amounts of data traffic and constantly upgrade our network. This is the only way for us to meet our customers' increasing demands and live up to the requirements of online content and applica- tion providers who also want to provide their services in high quality in the future. However, telecommunication networks cannot be operated without an effective network management system. Building on the best effort Internet, Deutsche Telekom is developing an innovative network architecture – so-called 5G networks – which can better and more flexibly meet the various transmission quality require- ments of the various services. We thereby fulfill business and regulatory requirements and enable innovation in the services we offer on our net- works. Content will in no way be controlled, however. Deutsche Telekom supports Internet freedom and does not influence user or provider con- tent in any way. Deutsche Telekom will continue to take a non-discrimi- natory approach to marketing services with different quality-of-service levels in competition with other network operators. This gives consum- ers greater choice and guarantees a high quality level.
STRATEGY & MANAGEMENT REPRESENTING POLITICAL INTERESTS 5252 CONSUMER DIALOG Deutsche Telekom aims to become the leading European telco. That is why we again gave high priority to consumer-related topics in 2017. Main topics included the following: Maintaining consumer data privacy, such as in the online advertising business, Improving comprehensive, cross-technology protection of young people at national and EU levels (in particular by advancing a comprehensive, Group-wide minimum standard within the EU and ongoing dialog with organizations involved in the protection of minors both nationally and at EU level), Improving customer service standards, Improving consumer protection in telecommunications (e.g., during ongoing IP migration and when switching providers for fixed-line and mobile connections), and Our efforts to provide better transparency for our customers (e.g. the data protection one-pager). Within the scope of ongoing IP migration in the fixed-line network, Deutsche Telekom has switched most of its customers to IP, especially in the last three years, and has undertaken numerous user-friendly measures to make the migration as easy and seamless as possible for customers. Deutsche Telekom is also continuing its commitment in issues of provider switching, with the goal being to make it easier for both fixed-network and mobile consumers to switch providers without any service interruptions. In all these areas, Deutsche Telekom stands for a constructive and solution-oriented approach that is geared to both the consumers' interests and the interests of our company.
STRATEGY & MANAGEMENT HUMAN RIGHTS 53 HUMAN RIGHTS As an international player, the Deutsche Telekom Group assigns high priority to human rights compliance, especially since the ICT sector is frequently criticized for deficiencies in its supply chain. That is why we have established comprehensive social standards at Deutsche Telekom and implement these using appropriate methods. We attach particular importance to granting the right to collective bargaining and supporting diversity and equal opportunities. We expressly require our suppliers to assume responsibility as a way of making sure human rights are also protected outside of our Group. GOALS MEASURES MEASURING SUCCESS § Ensure protection of human § Human rights due diligence § Contact point for human rights rights within the Group program § Implement the obligation to protect human rights in the value chain § Human Rights & Social Perfor- mance Report § Effectiveness analyses HOW WE PROTECT HUMAN RIGHTS Deutsche Telekom has made an express commitment to the UN Guid- ing Principles on Business and Human Rights published by the United Nations Human Rights Council in 2011. These principles require busi- nesses to systematically identify the impact their operations have on human rights, and to prevent, mitigate or compensate these where nec- essary. In order to meet these requirements, we have developed an extensive program to implement the UN Guiding Principles and intro- duced an ongoing process comprised of several interconnected meas- ures and tools (see diagram). The obligation to respect human rights is anchored in Deutsche Telekom's basic policies, the Guiding Principles and the Code of Human Rights & Social Principles (formerly Social Charter). The Deutsche Telekom Employee Relations Policy and Diversity Policy are also important in this context. Tools for assessing potential impact on human rights We use two tools to assess compliance with our Code of Human Rights & Social Principles: first, each year we prepare a central Human Rights and Social Performance Report, in which 103 fully consolidated compa- nies of Deutsche Telekom participate. This report did not record any violations of our guidelines and principles during the period from Janu- ary to December 2017. We have also been offering a central contact point for human rights issues since 2013. This contact point can be reached via various channels, for example the public e-mail address firstname.lastname@example.org. People can also use our anonymous whistle- blower system, which allows them to submit their information anony- mously. All contact options are listed on our Tell me! whistleblower por- tal, the purpose of which is to resolve violations of legal regulations and internal policies. We look into all tip-offs and reports received and intro- duce countermeasures as soon as the information is identified as plau- sible. You can find out how we handled the reports we received in 2017 here. We also continued the process launched in 2013 to integrate human rights issues into the due diligence activities conducted in the context of mergers and acquisitions. Based on need, we also introduce special evaluation processes to assess employer-employee relations in the national companies with which we implement our Employee Relations Policy. In this context, we also take into account the results provided by our Human Rights & Employee Relations Cockpit. This is a tool to measure progress at our national companies on the basis of five indicators pertaining to human rights: (source: semi-annual pulse survey) 1. Employee satisfaction (source: semi-annual pulse survey) 2. Willingness to recommend Deutsche Telekom as an employer 3. Health rate (source: HSE img cockpit) 4. Number of employees giving notice (source: HSE cockpit) 5. Human rights risks at national companies (according to Maplecroft Human Rights Risk Index) Our national companies are classified according to a traffic-light system for their results in each indicator: green (requirements met), yellow (requirements partially met) and red (requirements not met). The results are then discussed with the regional managers at the national compa- nies and measures like human rights impact assessments and employee relations policy reviews are arranged as necessary. Human rights in the supply chain We expressly require our suppliers to assume responsibility as a way of making sure human rights are also protected outside of our Group. To this end, we supplemented our sustainable procurement strategy with
STRATEGY & MANAGEMENT HUMAN RIGHTS 54 supplier management to improve our sustainability performance in our supply chain and ensure respect for human rights. The detailed results of our Group-wide auditing program are available here. SOCIAL CHARTER BECOMES CODE OF HUMAN RIGHTS & SOCIAL PRINCIPLES In 2017 we revised our Social Charter and renamed it Code of Human Rights & Social Principles, which was adopted by the Board of Manage- ment in November 2017. This update underscores our commitment to protecting human rights and to the goals of the German National Action Plan on Business and Human Rights adopted by the Federal Govern- ment in 2016. There were only some minor content changes. Among other things, a statement was incorporated summoning all employees to respect and promote human rights and social principles. We also changed some of the wording. The human rights principles are now mentioned more explicitly, and our existing processes and strategies explained in more detail. The reason for the revision was primarily the increased expectations of governments, NGOs and other stakeholders. Additionally, the Code of Human Rights & Social Principles is our com- mitment to complying with the guidelines and the Declaration of Princi- ples concerning Multinational Enterprises and Social Policy issued by the International Labour Organization (ILO), the Organisation for Eco- nomic Co-operation and Development (OECD), the Universal Declara- tion of Human Rights as well as with the UN Guidelines for Business and Human Rights and the UN Global Compact. REPORTS AND INQUIRIES TO THE CONTACT POINT FOR HUMAN RIGHTS We established a contact point for human rights at Deutsche Telekom in 2013. Between January 1 and December 31, 2017, the contact point received seven reports related to human rights, submitted either directly to the contact point or through the (anonymous) whistleblower portal. Not all of these tip-offs were deemed plausible. Most of the inquiries and reports related to the topic of "compliance and verification of human rights at Deutsche Telekom". A few reports related to the topic of ongoing professional education. We also received several fundrais- ing and support questions, which we forwarded to the appropriate col- leagues. Of course, all reports were treated as confidential.
STRATEGY & MANAGEMENT RISK AND OPPORTUNITY MANAGEMENT 55 RISK AND OPPORTUNITY MANAGEMENT For us, comprehensive risk and opportunity management also means considering the opportunities and risks arising from ecological or social aspects or from the management of our company. To this end, we actively and systematically involve all relevant stakeholders in the pro- cess of identifying current and potential risks and opportunities. We also participate in a number of working groups and committees. In par- allel with our ongoing monitoring of ecological, social and governance issues, we systematically determine our stakeholders' positions on these issues. The key tools we use here are: our year-round open online materiality survey for all stakeholders; our bi-monthly NGO report, which systematically analyzes press publications of the NGOs relevant for us; our involvement in working groups and committees, countless national and international business associations, and social organizations, e.g., GeSI img, BID, Bitkom, Econsense, and BAGSO; stakeholder dialog for- mats organized by us, such as this year’s ICT and Climate Stakeholder Day under the motto "The impact of ICT on climate change – curse or blessing"; and our various publications, such as the press reviews and newsletters. We have identified the following as our main sustainability management issues: REPUTATION How we deal with sustainability issues also entails both opportunities and risks for our reputation. A high level of service quality is one of the most important factors for improving customer perception. Customer satisfaction has been embedded in our Group management as a non- financial performance indicator to underline the importance of this issue. Transparency and reporting help to promote the trust of other external stakeholders in our Group. Our annual and CR reports also serve this purpose. However, issues such as business practices, data privacy and work standards in the supply chain and conduct in relation to human rights also entail reputation risks. If our brands, products or services are connected with such issues in negative media reports, this can cause substantial damage to our reputation. As part of our sustaina- bility management activities, we continuously review such potential risks and take measures to minimize them. We also ascertain how our products and services make a positive contribution to sustainability in order to enhance our reputation. CLIMATE PROTECTION We pursue an integrated climate strategy, which means focusing not only on the risks that climate change poses for us and our stakeholders, but also on the opportunities it presents. By 2030, ICT products and services will have the potential to save up to ten times as much in CO 2 emissions in other industries as the ICT sector itself generates (accord- ing to the GeSI SMARTer2030 study). This creates an opportunity to save 20 percent of global CO emissions in 2030 and to keep worldwide emissions at 2015 levels with simultaneous economic growth. The addi- 2 tional revenue potential here amounts to 6.5 trillion US dollars, 2.0 tril- lion US dollars of which is for the ICT industry alone. Further, ICT solu- tions can save a total of 4.9 trillion US dollars in costs. To give a specific example: The broadband rollout in Germany has the potential to save an aggregate amount of 19 million metric tons of CO between 2012 and 2020. What's more, the economic momentum triggered by rolling out broadband can create an aggregate number of 162,000 new jobs and increase GDP by 47 billion euros between 2015 and 2020. We are sup- porting this trend by evaluating our product portfolio to identify sustain- ability benefits. In addition, we want to continuously improve the ratio of the emissions that our products and services save to those generated by our own value chain. In 2016, for example, we saved 33 percent more emissions in Germany than we produced. 2 2 Among the risks that climate change harbors, meteorological extremes are one we are already experiencing. This is having a direct effect on our stakeholders, e.g., our customers, suppliers, and employees. We can take preventive action in this area by reducing our own CO emis- sions, which is one of the reasons we set ourselves the goal of achieving a 20 percent reduction in our Group-wide emissions – leaving aside our United States operating segment – by 2020 (baseline: 2008). Climate protection also carries financial risks, whether from the introduction of a levy on CO emissions or an increase in energy costs. The measures we are taking to counter these risks include measuring our own energy efficiency and finding ways to improve it. Further, in 2016 four of our subsidiaries (Magyar Telekom in Hungary, OTE in Greece, T-Mobile Netherlands, and Hrvatski Telekom in Croatia) covered 100 percent of their electricity requirements with renewable energy, while a further two (T-Mobile Austria and T-Systems Netherlands) almost met this target, thus reducing climate risks. 2 SUPPLIERS We see more sustainability in our supply chain as an opportunity – for our reputation and our business success. Apart from the general risks associated with our global procurement activities, we can be exposed to country- and supplier-specific risks. These include, for example, the use of child labor, the conscious acceptance of environmental damage or inadequate local working and safety conditions. We reduce these risks by systematically reviewing our suppliers. Our partnerships with suppli- ers that comply with international sustainability standards ensure a high level of product quality and reliable procurement. We have a special development program in place to help strategic suppliers introduce business practices that are both socially and ecologically acceptable while remaining economically efficient. This program again showed measurable successes in the reporting period and has three major advantages: It has a positive impact on our suppliers’ working condi- tions, enhances their profitability, and makes the economic relevance of sustainability clear for both sides, i.e., for our suppliers and for the Group alike. For instance, better working conditions at our suppliers
STRATEGY & MANAGEMENT RISK AND OPPORTUNITY MANAGEMENT 5656 reduces the number of work-related accidents as well as the staff churn rate. That, in turn, ensures high product quality and increases productiv- ity, while at the same time lowering costs for recruitment and training. Thus, not only are we strengthening our suppliers’ profitability and CR performance, we are also significantly reducing identified risks. HEALTH AND THE ENVIRONMENT Mobile communications, or the electromagnetic fields used in mobile communications, regularly give rise to concerns among the general population about potential health risks. This issue continues to be the subject of public, political, and scientific debate. Acceptance problems among the general public concern both mobile communications net- works and the use of mobile devices such as smartphones, tablets and laptops. The discussion also has repercussions for the build-out of mobile communications infrastructure and the use of mobile devices. In the fixed network, it affects sales of traditional IP and DECT (digital cordless) phones and devices that use Wi-Fi technology. There is a risk of regulatory interventions, such as reduced thresholds for electromag- netic fields or the implementation of precautionary measures in mobile communications, e.g., amendments to building law or labeling require- ments for handsets. Over the past few years, recognized expert organizations such as the World Health Organization (WHO) and the International Commission on Non-Ionizing Radiation Protection (ICNIRP) have repeatedly reviewed the current thresholds for mobile communications and confirmed that – if these values are complied with – the use of mobile technology is safe based on current scientific knowledge. The expert organizations, cur- rently the ICNIRP, regularly review the recommended thresholds on the basis of the latest scientific findings. We are convinced that mobile communications technology is safe if specific threshold values are complied with. We are supported in this conviction by the assessment of the recognized bodies. Our responsible approach to this issue is manifested in our Group-wide EMF Policy, with which we commit ourselves to more transparency, information, partici- pation and financial support of independent mobile communications research, far beyond that which is stipulated by legal requirements. We aim to overcome uncertainty among the general public by pursuing an objective, scientifically well-founded and transparent information policy. We thus continue to see it as our duty to maintain our close and suc- cessful dialog with local authorities, over and above the statutory requirements. This also applies since our longstanding collaboration with municipalities to expand the mobile network was enshrined in law in 2013; previously, this collaboration was based on voluntary self- commitments by the network operators.
STRATEGY & MANAGEMENT DATA PRIVACY AND DATA SECURITY 57 DATA PRIVACY AND DATA SECURITY Almost half of the German population (48 percent) has been victim to Internet crime - for example through viruses, Trojans or computer worms. These were the findings of a survey conducted by TNS Emnid on behalf of Deutsche Telekom in February 2016. Few users – whether they are using the Internet for private or professional purposes – are aware that every click leaves behind data traces online that can poten- tially be traced. Hackers can take advantage of this to collect specific data and identify vulnerabilities in hardware and software. Our custom- ers' trust is the basis for our business as an ICT company, which is why data privacy and data security are of utmost importance to us. GOALS MEASURES MEASURING SUCCESS § Guarantee effective data § Board department and Group § Annual Group data privacy audit to measure the standard of data privacy within the Group § Risk-based annual audit pro- gram and ad-hoc controls § Certification privacy and create trust unit for Data Privacy § The Telekom Security business unit" § Independent Data Privacy Advisory Board § Privacy and security by design through our Privacy and Secu- rity Assessment procedur § Transparent communication and annual reporting § Employee training courses ENSURING EFFECTIVE DATA PRIVACY The highest standards of data privacy and data security are core charac- teristics of our brand identity. In 2008 we created a Board of Manage- ment department for Data Privacy, Legal Affairs and Compliance as well as the Group Privacy unit. This has given us the necessary capacities for effective data protection. The responsible Board member is advised by the independent Data Privacy Advisory Board, which comprises renowned experts from politics, science, business and independent organizations. The Board was founded in February 2009. At the beginning of 2017 the new Telekom Security business unit com- menced operations. The new unit combines the security activities from various Group areas, thereby reinforcing our portfolio of cyber security solutions. We are also committed to improving the political framework conditions to ensure comprehensive data privacy. At the 2015 national IT summit we signed the "Charter for the Promotion of Trustworthy Communica- tions" together with the German Federal Minister of the Interior and other organizations. Its main purpose is to make sure that the encryp- tion of private communication becomes standard. Consistent transparency toward the public In 2008 we were the first DAX-30 company to publish an annual data privacy report. In 2016, we decided to stop publishing this report and instead provide the relevant information on the Internet at www.telekom.com/en/corporate-responsibility/data-protection-data- security/data-protection, where we now provide up-to-date and impor- tant information about developments related to data protection and secure handling of personal data. Since 2014, we have also been publishing an annual transparency report. In the report we disclose our obligations to cooperate with German and international security agencies. The section on protecting consumers and minors elaborates on how we ensure the safety of our products and services. Regular employee training courses Telecommunications companies are obliged to provide new employees with information on data privacy regulations. We go above and beyond these legal requirements. Every two years, we train all of our employees in Germany and commit them to data privacy and telecommunications secrecy. Corresponding requirements for our national companies are in place. We have also introduced specific training in the customer and human resources departments, where the risk of data abuse is higher. This training includes online courses for independent learning, presen- tations on data privacy and face-to-face courses on specific topics such as data protection at call centers. This helps us make sure that all employees have in-depth understanding of the relevant data privacy pol- icies. Annual review of measures through audits and certifications We conduct an annual Group data privacy audit to measure and improve the general data privacy standards throughout the Group. 30 percent of the Group employees, who are randomly selected, are asked to participate in an online survey. The Group data privacy audit is sup- plemented by self-assessments completed by the data privacy officers at the national companies on implementation of the requirements defined in our "Binding Corporate Rules on Privacy." Based on the results, the Group Privacy department identifies need for action at the respective departments and requires them to implement improvement measures. To this end, the Global Data Privacy Officer holds personal meetings with the responsible directors, managers and data privacy officers at the different departments. The Group Privacy department supports implementation of the improvement measures by providing information and advice and conducts a follow-up evaluation. Unusual audit results are taken into consideration when planning the follow-up audit.
STRATEGY & MANAGEMENT DATA PRIVACY AND DATA SECURITY 58 We also have our processes and management systems as well as prod- ucts and services certified by external, independent organizations such as TÜV, DEKRA and auditing firms. The technical services company TÜV Nord confirmed once again this year that Deutsche Telekom's IT systems are secure. IMPLEMENTATION OF THE EU GENERAL DATA PROTECTION REGULATION The EU General Data Protection Regulation took effect in May 2016. After a two-year transition period, the regulation will be binding as of May 25, 2018. Since laws always require interpretation as to how they should be implemented in day-to-day life, the Group Privacy department has now prepared uniform rules for the entire Group: the Binding Inter- pretations. They were compiled in collaboration with data privacy experts in the national companies. The Binding Interpretations include specific recommendations and best practice examples to implement the EU regulation. For example, they explain what a customer consent must entail, or how customer data has to be deleted, if this is requested by the customer. Over the next few years, we will be collecting further practical experience and further developing these interpretations. Our data privacy training will also be adapted to include the new content. PUBLICATION OF INTERNATIONAL TRANSPARENCY REPORT Telecommunications companies are legally obligated to cooperate with security agencies. This includes surveillance measures to record telecommunications connections or disclosure of customer information. Deutsche Telekom has been publishing an annual transparency report for Germany since 2014, which covers the types and amount of informa- tion we disclose to security agencies. The transparency report was expanded to include all the national companies in 2016. The interna- tional transparency report was last published in February 2017. International legal framework conditions differ considerably. In some countries it is illegal to disclose security measures, while in others surveillance is directly conducted by the authorities without the involvement of telecommunications companies. You can find more information on the local situations in the various country reports at www.telekom.com/transparency-report. We consider it the responsibility of the authorities to ensure transpar- ency regarding security measures and called for improved online secu- rity in the context of a ten-point program in January 2015. Until our requests are met, we strive to provide the necessary transparency within the legal possibilities.
CUSTOMERS & PRODUCTS 59 CUSTOMERS & PRODUCTS We are building the network for the gigabit society. Digitalization means making our lives more efficient, comfortable and sustainable. Our aim is to offer these advantages to as many people as possible, while keeping them safe from the potential dangers of the Internet.
CUSTOMERS & PRODUCTS SERVICE QUALITY 60 SERVICE QUALITY As a service-oriented, responsible company, we feel obliged to respond to our customers' needs and expectations. That's why we have set up a comprehensive customer relationship management system. We encour- age dialog with our customers by giving them opportunities to quickly and easily contact us at any time via the communication channel of their choice: e.g., online, via app, phone or e-mail or at a Telekom shop. goal for 2018 is to increase this number by at least one point. The TRI*M index for consumers in Germany was 57 points in 2017 com- pared to 59 points the previous year. This result was three points below expectations. We were able to again improve our customers' willingness to recommend us in 2017 compared to the previous year, adding another 0.04 points for a score of 7.40 points. GOALS MEASURES MEASURING SUCCESS § Comprehensive service for our customers and a high degree of customer satisfaction § New service orientation: more § TRI*M method reliable, direct and personal § Technical service and customer § Telekom Digital Share § Expansion and improvement of service from one source digital service offering § More transparency and flexibi- lity through additional digital service options ENSURING EXCELLENT SERVICE QUALITY We want to offer a reliable, high-quality service that satisfies all of our customers. In order to achieve this goal, we reoriented our customer service in 2017 and combined our customer service and technical ser- vice. This will enable optimal coordination and alignment of our service processes from beginning to end - from the initial contact with the hot- line to problem resolution. Our landline and mobile communications customers have been able to reach us around the clock in Germany since 2013 using our service numbers, including for Internet and TV questions. Our online channels are becoming more and more important. More than 40 percent of all service inquiries at Telekom Deutschland are solved by support pro- vided by our overarching online platforms (as of the end of 2017). In order to improve convenience for our customers when they have service questions, we expanded our digital offering with new functions in 2017. For example, you can now arrange the relocation of a line using an app or track the arrival of a Deutsche Telekom technician. Measuring customer loyalty and willingness to recommendour products and services to others We use the TRI*M index to precisely gauge customer loyalty and regu- larly participate in benchmarkings. The basis for the census is a cus- tomer survey in all markets where we are active. The benefit for the Deutsche Telekom Group consists in data aggregation across all coun- try values, excluding the USA. The index itself is calculated from four individual issues (competitive edge, performance, continued use and recommendation). In the 2017 reporting year the Group-wide TRI*M was 68.6points compared to the previous year's value of 70.2. The TRI*M index for Germany was 59 points, compared to the previous year's 60 points. That means we didn't attain our goal of a slight increase. One of the reasons for this is that our service provision for business customers was deemed to be capable of improvement. Our The results for our customers' satisfaction and loyalty are in part tied to our managers' variable salary components and thus play a role in their performance assessments. NEW SERVICE ORIENTATION: DOING EVEN MORE TO MEET OUR CUSTOMERS' NEEDS We took another important step in 2017 with our service reorientation in order to create a service that is oriented to our customers from A to Z. To this end, we merged our customer service and technical service. Some 36,000 Telekom employees are now part of our service unit. Our focus is on the needs of our customers. We are simplifying our pro- cesses and offer contact options, contact persons and solutions from one source. This is significantly aided by personal advisers who provide advice on relocations and changes of provider as well as by the per- sonal callback service. For example, the personal callback service allows customers to speak with the same customer adviser within five days of the initial contact. Deutsche Telekom's voice portal logs the cus- tomer's request for a callback and forwards it to the corresponding cus- tomer adviser. The callback will then be initiated within one hour, and frequently sooner. Our service reorientation is already showing initial success. Since 2017 we've had about 20 percent more technicians available for customers. We also systematically evaluate our customers' inquiries and complaints to identify the root of the problem and make improvements. Additional improvement measures planned for 2018 Our goal is to achieve a zero cancellation rate for appointments with our technicians. In cases where an appointment needs to be unexpectedly canceled nonetheless, the customer will be promptly informed of this and a new appointment will be scheduled. We will also be gradually shortening the appointment time frame. This will prevent customers from having to keep entire days free for the technician's appointment. In order to improve quality and increase efficiency even more, we want to prevent empty trips in the field and continue to increase instances where issues are resolved during initial contact. We want to wow our customers with our service – and not only during the problem resolution process but a lot earlier, if possible.
CUSTOMERS & PRODUCTS SERVICE QUALITY 6161 OUR INNOVATIONS FOR BETTER SERVICE We want to improve our service continuously and on all channels: personal, by telephone, online and via app. In addition to improving existing contact channels, we are also working on innovative new service offers. In order to improve our "classic" phone service, we have been offer- ing an alternative to the hotline waiting queue since March 2017, at the request of our customers. Callers can request a callback if the wait times are very long. Many online services can also be used via the MagentaSERVICE app. It combines our entire service offering for mobile communica- tions and landline customers, allowing our customers to do things such as check their data usage or manage their contracts, for exam- ple. In 2017 we expanded the app with a range of functions. A line relocation can now be arranged without having to personally con- tact customer service, for example. What's more, customers who want to make an appointment can use the app to find the nearest Telekom Shop. Our digital incident assistant – an automated text chat that can engage in text-based dialog with customers – was refined in 2017 to become a digital service assistant. It is now able to automatically answer questions about cables, installation and incidents with regard to telephony, Internet and TV. In addition to providing infor- mation about technical topics, the digital service assistant can now also tackle questions about e-mail, WLAN and smartphones. At IFA 2017, we presented, by way of live text chat, the newly added possi- bility of being forwarded to a customer adviser if the chatbot is una- ble to definitively resolve the issue. At the end of 2017 we launched the Arrival Control service, whereby the customer receives a link to a website via text message where he/ she can track a technician's process steps until their appointment with said technician. For example, the customer can see whether the technician is still with the prior customer and when he/she is scheduled to arrive. AWARDS FOR OUR SERVICE TÜV Rheinland: a "good" rating for Deutsche Telekom’s service For the fifth time in a row, the TÜV-Rheinland awarded Deutsche Telekom's customer service, technical service and Telekom Shop sales organization the coveted "tested customer satisfaction" quality seal based on a representative survey. Some 2,670 customers in Germany were polled for the study in a representative random sampling. The three service organizations earned high marks in the areas of reliability, competence and friendliness, in particular. Focus Money’s DEUTSCHLANDTEST 2017: Online Service The market research institute Statista conducted the BEST Online Service study on behalf of DEUTSCHLANDTEST. The goal of the survey was to find out which companies earned the highest marks from customers with regard to the quality of digital customer dialog. Deutsche Telekom was awarded BEST Online Service both within the telecommunications sector as well as across sectors. Deutsche Telekom also nabbed BEST Online Service in the Scope of Offer and Service Quality category. DEUTSCHLANDTEST 2017: Best Service App DEUTSCHLANDTEST decided to find out what the "Best Service App" is. To this end, 46 apps from five sectors were evaluated by 2,000 surveyed users.Deutsche Telekom's MagentaSERVICE APP was the winner in the telecommunications sector and earned second place in the overall ranking. Deutsche Telekom also won the Functional Scope category. DEUTSCHLANDTEST 2017: Service King For the third time in a row, DEUTSCHLANDTEST surveyed customers' service experiences in 34 branches nationwide. Deutsche Telekom was the winner in the Telecommunications category for the second time in a row, with customers thereby confirming that Deutsche Telekom offers excellent service. Customers in the 40 largest German cities were surveyed for the test. A total of over 300,000 votes were recorded and evaluated. CHIP hotline test 2018 for fixed-line and mobile telecommunications In collaboration with Statista, one of the largest market research compa- nies, CHIP completed a major hotline test in 2017. Over an eight-week time frame (end of June – start of September 2017), the new customers hotlines of a total of 141 companies from 12 branches were tested. More than 8,600 tests were carried out and subsequently summarized in rankings. The testing focused particularly on the topics of customer service, availability, wait time and transparency. Deutsche Telekom was rated as "very good" overall for its mobile new customers hotline and was the test winner in the Customer Service category. The fixed-network new customers hotline was also rated as "very good" in the overall assessment.
CUSTOMERS & PRODUCTS SERVICE QUALITY 6262 Distinction with the International Business Excellence Award 2017 In 2017 Deutsche Telekom once again received the International Business Excellence Award in the Customer Experience & Voice of the Customer category. It also won the Telecommunications and Informa- tion category this year for the Voice of the Customer program, our inter- national customer contact analysis. The program collects customer feedback across all channels of contact. More than five million feed- back responses are collected this way every year, which are used to optimize customer service. The system is already in use in twelve European countries. One Silver and two Bronze Loyalty-360 Customer Loyalty Awards Deutsche Telekom was honored for its Voice of the Customer program at the 2017 Loyalty-360 Awards. We received a Bronze Award for the Customer Experience & Engagement and the Measurement categories. Deutsche Telekom also won a Silver Award in the 360-Degree Award category. The program provides international customer contact analysis used to collect customer feedback across all channels of contact. More than five million feedback responses are collected this way every year, which are used to optimize customer service. The system is already in use in twelve European countries.
CUSTOMERS & PRODUCTS INFRASTRUCTURE EXPANSION 63 INFRASTRUCTURE EXPANSION Our network infrastructure enables economic performance and partici- pation in the knowledge and information society. As a result, demand for faster, full-coverage data services is immense. That is why we con- tinue to rapidly expand our infrastructure and improve transmission speeds with new, secure technology. GOALS MEASURES MEASURING SUCCESS § 95 percent LTE coverage by § Integrated network strategy § Network coverage status 2018 § 80 percent VDSL vectoring coverage by 2018/19 § Migration to IP EXPANDING OUR INFRASTRUCTURE The data volume generated globally will increase tenfold by 2020 com- pared to 2013, according to a study conducted by US-based IT com- pany EMC. That would mean 44 billion gigabytes in the networks a year instead of 4.4 billion. The amount of digital data being produced in Germany alone is expected to grow from a current 230 billion gigabytes to 1,100 billion. Networks need to be continually expanded to be able to handle this volume. We have been the largest investor in this area in Germany for years now and will continue to drive network expansion. The main objectives of our pan-European integrated network strategy (INS) form the basis for these activities: growth, efficiency and quality. We will continue to expand our networks, increase the efficiency of our systems and further strengthen our role as a leader in network quality. Our integrated net- work strategy is in line with the network expansion goals specified by the EU Commission and the German federal government (digital agenda and broadband strategy). Deutsche Telekom's integrated network strategy (INS) for Europe is based on the four pillars of LTE, fiber optics, VDSL vectoring and hybrid. In addition to expanding the LTE mobile network, fiber-optic expansion in combination with VDSL vectoring technology is the short and medium-term focus of Deutsche Telekom's INS for Germany. We have defined two targets in implementing our INS in Germany that we plan to have achieved by 2018. One, we expect to be able to provide 95 percent of the population with LTE. Secondly, progress of the fiber- optic network roll-out should allow VDSL vectoring lines with band- widths of at least 50 Mbit/s for around 80 percent of all households in 2018/9. This is subject to regulatory changes. Upgrading our network architecture We intend to make our networks faster and more efficient. To do this, we are going to deactivate all analog PSTN (public switched telephone net- work) platforms that we no longer need and switch our entire telephone network to IP-based lines. We will also rely on fiber optics when updating our network architecture in order to meet our customers' demands for fast network connections. Using the fiber optic-based VDSL vectoring technology speeds up download data transmission rates to up to 100 Mbit/s and even up to 40 Mbit/s when it comes to upload transmission rates. But vectoring requires more energy. In order to lower this consumption, we are work- ing on control solutions for the energy-saving operation of our facilities. The combination of IP technology and VDSL vectoring is already con- siderably more energy-efficient than conventional PSTN technology. Irrespective of the expansion and renewal of our infrastructure, we aim to operate our networks in the most stable and failure-free manner possible. NEW COMMUNICATIONS STANDARD: NETWORK REVOLUTION INSTEAD OF EVOLUTION The current LTE communications standard is a fourth generation stand- ard (4G). LTE is continually developing and can fully meet the require- ments of consumers for ever greater bandwidth. We assume that the 4G LTE technology will most likely also become a foundation for a future 5G standard. 5G is currently being discussed and developed in the industry. This will allow us to meet the growing requirements of consum- ers in the future as well. However, 5G will be able to do much more - the new functions will be interesting first and foremost for industry. That's because 5G will enable new business models which are still inconceivable according to current standards. This includes innovative solutions for the healthcare sector and automotive industry. All in all, 5G will provide 1,000 times higher capacity depending on the application, 10 times better speed and 10 times faster response time (latency) in comparison with conventional technologies.
CUSTOMERS & PRODUCTS INFRASTRUCTURE EXPANSION 6464 Advances on the road to 5G We made further progress with respect to response time in the 5G network in 2017. After we cracked the record latency of one milli- second in 2016, we are now also able to guarantee stable low response times in the 5G network. Industrial applications that rely on a high degree of precision in particular need this reliability. At the Mobile World Congress in Barcelona in February 2017, we demon- strated this using an industrial robot whose response times were always exactly eight milliseconds. We were able to prove the industrial sustainability of 5G and the advantages for the energy sector in another practical test in the spring of 2017. In cooperation with the Berlin-based electricity sup- plier Stromnetz Berlin and telecommunications company Ericsson, we investigated use cases in the electricity grid within the scope of the 5Grid project. The results showed that highly flexible communi- cations networks will soon be available with 5G, which can adapt to the most varied of requirements. Such electricity grids are needed for the shift towards wind and solar energy. 5G can thus become a key driving force behind the energy revolution in Europe. DSL 16.000 FTTC with VDSL vectoring FTTC Download up to 16 Mbit/s up to 100 Mbit/s up to 200 Mbit/s Upload up to 2.4 Mbit/s up to 40 Mbit/s up to 100 Mbit/s Vectoring compensates for electromagnetic interference that arises between the copper lines on the way to the customer's home. The tech- nology allows for faster data transmission with speeds of up to 100 Mbit/s. The technology for this is installed in cable distribution boxes. In October 2017, we switched the first two of 7,600 nearshore areas in Germany to fast vectoring: Moitin near Rostock and Bad Grund in the Harz region. Nearshore areas are households that are supplied over street cabinets at a distance of at most 550 meters from the main distri- bution frame (the central service installation for households and compa- nies in the area). The German Federal Network Agency decided in 2016 to approve vectoring expansion in the vicinity of Deutsche Telekom's main distribution frames (nearshore vectoring). Together with Ericsson and South Korean telecommunications com- CONTINUING EXPANSION OF THE LTE MOBILE NETWORK pany SK Telecom, we developed the first intercontinental 5G trial network in the world and presented it in the spring of 2017. To this end, we set up what is called network slices (virtual networks) for Deutsche Telekom and SK Telecom in the regions where the two network operators operate. Network slicing enables an operator to offer a network service internationally. Customers would then not need to conclude individual contracts with operators in various countries. Both companies demonstrated this in a test run, during which they set up network slices for, among other things, aug- mented reality (AR) which allows an augmented perception of reality – for example through smartphones. In September we used the new mobile communications standard 5G New Radio (NR), the future mobile communications component of 5G, for the first time throughout Europe. In Berlin-Schöneberg our network transmitted data over a 5G connection with more than two gigabits per second and a latency of three milliseconds during a field test. This represents an important development step on the road to the worldwide introduction of 5G. CONTINUING EXPANSION OF THE FIBER-OPTIC NETWORK We continued to expand our use of LTE mobile network technology in the Deutsche Telekom network throughout Europe in 2017. In late 2017, average network coverage was at 94 percent of the population, putting our European national companies in line with their target cover- age. Network coverage at the end of 2017 was around 93 percent of the German population. Our goal is to achieve 95 percent by the end of 2018. Around 75 percent of European transmitter masts are currently equipped with LTE. Two or more frequency bands are active in almost every fourth LTE location, ensuring more extensive reach and higher speeds. FASTER INTERNET ACCESS ON BOARD Together with satellite operator Inmarsat, we are planning to provide airline passengers in Europe with even better Internet access on airline flights. We are currently establishing the European Aviation Network (EAN) within the scope of a strategic partnership with additional part- ners. EAN is the first integrated solution worldwide that consists of a satellite and a complementary LTE-based ground network. Other part- ners are telecommunications company Nokia and aerospace specialist Thales. Telekom already operates the largest fiber-optic network in Europe with a length of 455,000 kilometers. However, demand for higher band- widths is constantly increasing. In view of this trend, we continue to expand our fiber-optic network in order to secure our business success in the long term. Our goal is to provide 80 percent of Germany's popula- tion with a minimum of 50 Mbit/s by 2018/2019 – subject to regulatory changes. Deutsche Telekom and Nokia completed the project's ground network at the start of 2018. To this end, 300 antenna locations were installed and the network was connected live. At the same time, Inmarsat and Thales advanced the satellite communication for the EAN. The satellite was launched in the summer of 2017 and has completed its tests in orbit in the meantime. Now it's ready to support on-board Internet ser- vices. To reach this goal, we are using FTTC (fiber to the curb) technology and are expanding FTTH (fiber to the home) as well. In the scope of the FTTC expansion, fiber optics are laid to the gray street cabinets on the curb. From there we can supply our customers with large bandwidths via existing lines by means of VDSL vectoring. With FTTH, the fiber-optic cables are really taken into the customer’s home. The EAN service has been functional since the end of 2017 after com- pleting successful flight tests. Our first customer, airline group IAG, has already equipped multiple airplanes with EAN hardware and launched an internal pilot project. The EAN service is slated to be commercially available for passengers starting in the summer of 2018. The European- wide introduction of EAN for the entire IAG fleet will take place in 2019.
CUSTOMERS & PRODUCTS INFRASTRUCTURE EXPANSION 6565 PAN-EUROPEAN NETWORK (PAN-NET) IS TAKING SHAP To date, our European national companies have operated their own infrastructures and developed their services independently. However, the switch to IP technology – to be largely completed by 2018 - will make it possible to develop new services together and share them across borders. We hope to tap into this potential by creating a pan- European network. Individual services such as text messages, voicemails and e-mails will be made available to all countries in the pan-European network as "product building blocks." Our Pan-Net cloud will serve as the basis for this. Every national company can then use the building blocks to create an offer that suits their local market and customer requirements. We can also use this technology to offer new solutions throughout Europe within just a few days. The Pan-Net cloud is an association of data centers distributed through- out Europe. After we started up operations in the first of these data cent- ers in Hungary in 2016, another center followed in Poland in 2017. Greece should be added to this list at the end of 2018. We founded a new company for management and control of the new infrastructure in 2015: Deutsche Telekom Pan-Net, headquartered in Slovakia. SWITCH TO IP TECHNOLOGY ADVANCES Thanks to IP technology, phone calls are no longer transmitted via analog channels or using ISDN technology but in the form of data pack- ets over the secure Deutsche Telekom network, a method that has been the standard in online and mobile communications services for some time now. The switch to IP-based lines is the basis for faster Internet connections. At the same time, energy use with IP technology is consid- erably lower than with the network technology previously used. The switch therefore also helps us decrease our CO2 emissions By the end of 2017 we had switched about 16.5 million lines in Ger- many, that is around 69 percent, to IP. We continue to convert about 70,000 connections every week. After placing our focus on consumer lines for some time, we began increasingly focusing on business cus- tomers in 2016. The IP rate for business customer lines was significantly more than 50 percent by the end of 2017. Thanks to the use of IP-based vectoring technology, 3.5 million households in almost 50 cities could surf the Internet with up to 100 MBit/s by the end of 2017. In the other EU countries we also increased the number of IP lines. In Croatia, Montenegro, Macedonia and Slovakia, all lines have already been switched to IP. Hungary followed at the end of 2017. The plan is to complete the switch in Greece and Romania by 2018. AWARD FOR MOBILE NETWORK IN GERMANY TÜV NORD confirms that Deutsche Telekom offers the best mobile telecommunications network quality Instead of a testing snapshot, as is common to most tests, we have had the quality of our net- work tested throughout the year for years now. Testing vehicles record measurement data for speech and data services as part of continuous testing. They record the network quality, also compared to our competitors’ mobile communications networks. This is done to ensure more transparency. The result is that we rank the best in the categories of call set-up, call stability and voice quality. The professionals at TÜV NORD CERT extensively tested the "quality comparison from the customer's perspective" process (QCCP). They confirm the neutrality of the recording and processing of test data and have issued the TÜV Service Check certificate for the "Test and Evalua- tion Process according to QCCP Standard" without restrictions. Deutsche Telecom receives multiple awards as best mobile communications operator Stiftung Warentest (edition: 06/2017) The consumer organization Stiftung Warentest once again confirmed in 2017 that Deutsche Telekom has the best mobile communications network in Germany. Stiftung Warentest tested the networks in Germany on freeways, highways and in city centers. Our performance was the best, with an overall rating of 1.9 (good). A Telekom LTE signal could be obtained in 97 percent of the test regions in rural areas. First place in the 2017 Connect reader survey (edition: 7/2017 We are the best mobile communications operator and the best landline provider. This was once again the conclusion of the annual choice of the readers of the trade journal Connect. Our products and services won additional important prizes: mobile network operator (three competitors) network operator - prepaid cards (three competitors)mobile communications provider (18 competitors)landline provider (eight competitors)cloud services (seven competitors)mobile network operator, Austria (three competitors) Car Connectivity Award (edition: auto motor und sport 22/2017; edition: CHIP 11/2017) Readers of auto motor sport and CHIP honored us with first place in the Mobile Networks category of the Car Connectivity Award. Two-thirds of the 16,300 sur- veyed readers rated us the best cell phone network for cars. This marks the fourth time in a row that we impressed the magazine's technology and car enthu- siasts. Chip (edition: 1/2018) We also won the CHIP mobile communications test. The testers criss-crossed the country by car in order to comprehensively test the network coverage and quality of the mobile communications networks of Deutsche Telekom, Vodafone and O2. We won in many categories, including Mobile Internet, Telephony, and Availability, and again clinched the overall victory with a rating of 1.4.
CUSTOMERS & PRODUCTS INFRASTRUCTURE EXPANSION 6666 Connect mobile network test (edition: 1/2018) We were also the overall winner of the Connect mobile network test 2018, with a rating of "very good". The testing examined the voice and con- nection quality during phone calls as well as data communication via mobile Internet. The measure- ments were taken in various locations, such as cities and small towns as well as in trains
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 67 SUSTAINABLE PRODUCTS & SERVICES We can also use our products, services, and activities to participate in contributing to ecological and social challenges, as was made clear in a comparison with the 17 sustainability goals (SDGs) set forth by the United Nations. That's because information and communications tech- nology (ICT) allows industries, service providers and consumers to be more sustainable. By way of example, according to the GeSI #SMARTer2030 study, greenhouse emissions could be reduced by 20 percent by 2030 through targeted use of ICT. Furthermore, ICT also offers great market potential: The study estimates that $6.5 trillion of additional revenues will flow from ICT-enabled services in 2030. Sus- tainability not only involves protecting the environment but also has further relevance when it comes to ICT. Technology can contribute to reduced resource consumption, for example. Within the scope of the "Smart City" projects, i.e. the implementation of digital technology in cities, it can help reduce traffic or improve traffic flow, and hence reduce emissions, for example through Parking Apps, or make street lighting more energy-efficient. But ICT can do even more. It is also the precondition for sustainable economies. In our current consumer model, products are usually discarded after use. This leads to the loss of valuable resources while garbage piles grow. The idea of a circular economy, where resources return to the production process through recycling, offers a promising solution. The idea of a shared economy goes a step further than this. This is a "share instead of own" concept, which reduces the amount of consumer goods per person. What's more, repairing objects increases their life cycle. Both save valuable resources. Many shared economy concepts like car sharing or city bikes wouldn't even be possible with- out digital networking. As a telecom company, we are doing our part to decrease resource consumption of ICT products. In our leasing model for routers and media receivers discarded devices are refurbished for reuse. This extends their life cycle. And with our cell phone collection program, we make sure that valuable resources are returned to the value chain. Thanks to solutions like cloud computing our customers can also do without their own servers, thereby conserving resources. In addition, ICT helps stabilize electricity networks, simplify workflows and further improve medical care. As a modern technology company, we want to help shape the develop- ment of products and services that contribute to sustainability. That is why we continuously expand our offer of sustainable products and inno- vative ICT solutions for private and business customers. GOALS MEASURES MEASURING SUCCESS § Increase the share of sustaina- § Creating a sustainable product § Increasing the share of sustai- ble products and services of the overall portfolio portfolio nable products in total sales § Product certification (e.g., Blue § Used cell phone collections Angel ecolabel) § Promoting innovation DEVELOPING SUSTAINABLE PRODUCTS AND SERVICES We are committed to systematically using the sustainability potential of ICT. Our primary focus in these efforts is on machine2machine com- munication, smart home technology and e-health. Sustainable products are also an important pillar of our integrated climate strategy. Managing the issue of sustainable products calls for systematic meas- ures to be implemented throughout the supply chain. Thus, our meas- ures already start with procurement. This is how we make sure that sus- tainability criteria are complied with along our supply chain. We aim to have our products certified by recognized environmental labels such as the Blue Angel and the TÜV "Certified Green Product“ label. The strict requirements of these labels help us see how we can further improve our products. They also help us inform our customers of the benefits of choosing sustainable products. At the end of a product's life cycle, we contribute to its reuse or recycling. For example, we regularly carry out used cell phone collection campaigns. Sustainable solutions for today and tomorrow Our services contribute to the increasing digitization of workflows and business processes, resulting in decreased consumption of resources. Some examples of this are our cloud computing offers, which eliminate our customers' need for their own servers and storage media. At the same time, we want to give as many people as possible the chance to participate in the information society and to use the opportunities it offers. We facilitate use of modern communication media for people with age-related or physical disabilities, for example. We develop prod- ucts and services that meet their needs and continue to work on improv- ing user friendliness. Throughout the Group, Deutsche Telekom also offers various subsidized rates to provide low-income customers and people with disabilities with cost-efficient phone and data rate plans. When developing new, sustainable ICT solutions, we also cooperate with various partners and communicate with our stakeholders. We are always thinking one step ahead in everything we do. We aim to develop new solutions primarily through innovation cooperations. In addition, we invest in extensive research, for example in the field of machine2machine communication. We invested a total of 57.7 million euros in research and development throughout the Group in 2017. We also finance professorships, collaborate with universities and encour- age innovative business concepts with our start-up incubator, hub:raum.
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 6868 Making progress measurable We measure our progress by means of various KPIs. For example, we use the Sustainable Revenue Share ESG KPI to measure the share in sales of products and services that are classified as sustainable based on a risk-benefit analysis. In 2017, 40 percent of our overall sales in Ger- many and Europe was generated with such products. We have defined performance goals, e.g., sales goals, as internal monitoring tools in cer- tain fields such as e-health and Smart Home. We measure the impact of our collection campaigns with our Used Cell Phone Collection ESG KPI. CONTINUED ANALYSIS OF THE SUSTAINABILITY BENEFITS OF OUR PRODUCTS One building block of our integrated climate strategy is to analyze the sustainability benefits of our product portfolio. In 2014 we began ana- lyzing our portfolio together with external experts based on sustainabil- ity criteria (analysis). We measure the result with the Sustainable Reve- nue Share ESG KPI. The share of such products was already at 40 per- cent in 2017 (excluding T-Mobile US). 40% of revenue with products and services that offer sustainability benefits Examples of sustainability benefits include reduced CO thanks to virtual meetings instead of business trips, improved medical care by means of e-health solutions and resource conservation by replacing physical devices with digital solutions (e.g. phoning via a laptop instead of a fixed-line phone). emissions 2 Overall, we have carried out in-depth analyses for 17 product groups with regard to their sustainability benefits and the corresponding busi- ness potential (as of year-end 2017). We have illustrated the benefits of some selected products based on all three pillars of sustainability (ecological, social and economic).
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 6969 To date, there is no industry-wide established system that provides cus- tomers with sustainability information about ICT products and services. We have started to create just such a system using our product analyses – that is, to find out which sustainability contributions our products can make at all. Future plans also include keeping our customers better informed of these sustainability benefits, thereby sharpening our com- petitive edge. PILOT PROJECT FOR ANALYZING THE SUSTAINABILITY OF OUR PRODUCTS Studies such as GeSI #SMARTer2030 show that information and com- munication technology solutions (ICT) can make an important contribu- tion to sustainable development. Many of our products offer economic as well as social and ecological benefits. Quantifying this added value and hence making it measurable is a challenge, since many of the social benefits of our products are only indirect. But we are tackling this challenge and testing various approaches. In addition to building a sustainable product portfolio, we have been participating since 2015 in the industry-wide Sustainability Assessment Framework (SASF) pilot project conducted by the Global e-Sustainability Initiative. The goal of this project is to develop a tool that can be used to evaluate a large vari- ety of ICT products based on their sustainability. The results will also help determine sustainability risks along the value chain. The SASF evaluation criteria are not limited to environmental aspects but also include social criteria such as compliance with human rights and cus- tomer requirements such as cost transparency and data protection. With this comprehensive approach, SASF is setting new standards for product evaluation in the ICT sector. We have been contributing to the development of SASF since the begin- ning and took part in the pilot study – an initial hands-on test – in 2016. In 2017 we began testing whether and how SASF can be integrated into our management processes. We will be continuing this testing in 2018. In addition, we also examine and evaluate other approaches for assess- ing the sustainability benefits of our products and services. PHASE 2 M2M COMMUNICATION: OPPORTUNITIES OF DIGITALIZATION Machines and products are becoming increasingly intelligent. Cars can communicate with repair shops, containers with logistics service providers. The technology that makes this possible is called machine- to-machine communication, or M2M. By 2020 the number of M2M connections around the world is expected to increase to 2.5 billion. Machine-to-machine communication is an important area of growth for us. M2M can help ideally coordinate the processes of various devices, vehicles and entire industrial facilities. This helps increase industrial productivity, ensure efficient logistics, reduce energy consumption and conserve resources. We also support the German federal government's Industry 4.0 initiative through our involvement in machine-to-machine communication. The initiative's objective is to maintain Germany's competitive edge in the technology sector. New wireless technology allows for innovative applications Our networks are the basis for a number of M2M applications, as mobile network technology is the key transmission channel of every M2M
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 7070 connection. In this respect, the NarrowBand Internet of Things (NB-IoT) is gaining significance. As opposed to broadband applications, which enable transmission of large amounts of data, narrowband technology is specifically designed to reliably transfer very small data packages. Benefits of NB-IoT include its low energy requirements, extensive reach and low-cost device networking. NB-IoT is particularly suitable for use in logistics. When tracing transport containers, all that is needed is for the current position to be transferred about once an hour. Only very small amounts of data need to be transferred in small data packages – and not necessarily in real time. NB-IoT is even used for protecting biodiver- sity, in a technology that beekeepers can use to protect their bees. We were pioneers in aiding the development of uniform NB-IoT stand- ards and continue to drive it. NB-IoT is now available in more than 600 locations in Germany. More than 200 of our business customers in vari- ous sectors use this technology (as of year-end 2017). We are also lead- ers in the launch of NB-IoT in Europe and North America: we are already active in seven European markets and the USA with the technology. Our narrowband network should be available nationwide in the USA and in many European countries by the end of 2018. The port of tomorrow In 2017 we continued our involvement in the smartPORT logistics (SPL) pilot project for the port of Hamburg. The goal of the project is to improve HDV traffic flows at the port of Hamburg and in its vicinity. All relevant traffic and infrastructure data is collected and analyzed in real time for this purpose. Results can be used to inform users about waiting times, alternative routes or parking. The project is increasingly being integrated into commercial operation. EU project AEOLIX: A platform for more efficient and climate-friendly logistics chains The port of Hamburg is a part of the EU project AEOLIX. The goal of this project is to build a new ICT platform that networks numerous, previ- ously isolated individual logistics systems across the EU. At the same time, practical services will be developed and tried out in 11 European test zones. T-Systems is participating in test zone 1: Intermodal Logis- tics in the Hamburg – Frankfurt Transportation Corridor. This zone will test a smartphone app that helps truck drivers drive in an ecologically responsible manner. Some 958,230 metric tons of CO in ongoing customer projects MAN Telematics and SchmitzCargoBull Telematics as well as in additional new projects (e.g. AEOLIX) by analyz- ing driving profiles and ecodrive functions. The project will run until 2019. could be spared 2 AUTOPILOT – autonomous driving services for more efficiency The goal of the EU project AUTOPILOT is to test autopilot services on the market. This also includes self-driving cars in short-distance traffic, self-parking cars and real-time car sharing. Such solutions are particu- larly efficient and environmentally friendly, resulting in an estimated 10 percent fewer CO emissions as compared to conventional driving prac- tices. The project will run from 2017 to 2019. Thereafter the services will be incorporated into regular operations. T-Systems is the project partner of AUTOPILOT and supports analyses on the feasibility and market launch of the new services. 2 Connected Car: Preventing traffic jams with connected cars T-Systems has been developing and operating Daimler's Connected Car platform (Daimler vehicle backend) worldwide since 2013. The platform is the technical basis for the Live Traffic service, which provides drivers with real-time traffic information, thereby helping them avoid traffic jams. Live Traffic prevents about 30% of traffic jams per vehicle. This means that the approximately 5 million vehicles equipped with Live Traffic consumed about 6.2 million liters less fuel. This translates into CO savings of about 15,000 metric tons. 2 DEUTSCHE TELEKOM AND FRAUNHOFER IML INAUGURATE THE TELEKOM OPEN IOT LABS Deutsche Telekom and the Fraunhofer Institute for Material Flow and Logistics (Fraunhofer IML), based in Dortmund, have founded the "Telekom Open IoT Labs". At the new facility, up to six scientists from Fraunhofer IML, and three IoT experts from Deutsche Telekom, will work together to develop and test Internet of Things (IoT) solutions and bring them to market maturity. The collaboration is aimed at optimizing pro- cesses in the manufacturing, logistics and aviation sectors. The Labs will be open to other companies interested in collaborating with Deutsche Telekom and Fraunhofer to develop application-specific IoT prototypes. Telekom Open IoT Labs will thus add an industrial-IoT component to Deutsche Telekom's existing network of R&D facilities. Prototypes for holistic IoT solutions In a first step, the two partners will work jointly with interested compa- nies to identify requirements for IoT solutions. They will then design and create relevant applications, developing and producing hardware, soft- ware and connectivity prototypes. Efforts will be concentrated on pro- ducing solutions that can later be launched for mass-market use. In work carried out to date in cooperation with Würth Industrie Service, for example, a prototype of a service button for the area of C-parts manage- ment was developed. This service button will optimize the reordering process for "C parts" such as screws, nuts and washers by applying nar- rowband IoT (NB-IoT) technology. Paving the way with NB-IoT Initially, the Deutsche Telekom / Fraunhofer team plans to concentrate on solutions based on NB-IoT radio technology. That technology is emi- nently suited for IoT applications in logistics, for example. The logistics sector has been digitalizing especially rapidly, because its companies have numerous business processes for which IoT solutions can provide significant added value in the short term. Logistics companies are using digital technologies to enhance transparency in their supply chains, as well as precision and efficiency in control of ship, rail and truck trans- ports, and of their internal material flows.
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 7171 Deutsche Telekom is already offering NB-IoT commercially throughout all of Germany. The Group also has a complete-coverage NB-IoT network in place in the Netherlands. In other European markets, such as Austria, Czech Republic, Greece, Hungary, Poland and Slovakia, Deutsche Telekom is expanding the existing coverage to additional cities. SMART CITIES: INNOVATIVE SOLUTIONS FOR SMART URBAN SPACES 2 emissions come from cities – an The majority of the worldwide CO effect that is being intensified by increasing urbanization. At the same time, cities can also be the driving force behind and the origin of sus- tainable solutions. Deutsche Telekom wants to use innovative solutions to help bring about sustainable transformation of cities. Some examples of this are intelligent, energy-saving street lights and connected waste containers that measure their fill level and report this to the public utility company. In order to bundle these approaches, we opened a European Smart Solutions Center (ESC) headquartered in Budapest in 2017. The ESC advises cities on the use of EU funding and develops Smart City solutions and platforms. What's more, we participate in numerous inter- national projects on this subject. We have already installed Smart City solutions in 18 cities in 10 European countries. mySMARTLife in Hamburg The city of Hamburg, together with the cities of Nantes and Helsinki, were awarded the EU lighthouse project mySMARTLife in 2016. Numerous measures intended to launch the Smart City transformation are slated to be implemented by 2021. The core topics of these lighthouse projects are increased use of renew- able energies, climate-friendly living and environmentally friendly mobil- ity. For example, use of electric vehicles will be promoted in the Ham- burg-Bergedorf project region. Intelligent street lighting will also be employed. All projects involve active citizen participation. The Hamburg project proposal was backed by a total of 14 partners, including the bor- ough of Bergedorf, HafenCity University, the HAW Hamburg university of applied sciences, electricity grid operator Stromnetz Hamburg, public transport operator Verkehrsbetriebe Hamburg-Schleswig-Holstein and Volkswagen. The project is subsidized as part of the European Union's Horizon2020 research and innovation program. The project results will be compared to other lighthouse projects in the EU. The project will also examine which measures can be implemented in the next mySMARTLife project cities – Varna (Bulgaria), Bydgoszcz (Poland), Rijeka (Croatia) and Palencia (Spain). Kick-off for Smart City Bonn Bonn was added to the Smart City project as another partner city during the reporting period. In November 2017, we began connecting street lighting and waste containers with intelligent sensors and measuring air quality. The street lamps can now be dimmed and, with the help of motion sensors, automatically become brighter when pedestrians approach. The public utility company is also notified when a bulb is damaged or needs to be replaced. This technology saves up to 60 percent of the street lamps' operating costs. Additionally, we measure the fill level in a number of recycling containers using installed sensors. The municipal garbage service need not come for the container until it is actually full. Another sensor measures the air quality of the inner city. We also pro- vide the associated analysis software. 2 PARK AND JOY – Digital park management Preventing traffic jams and reducing CO emissions – these goals pose major challenges to cities and communities. Digital applications can be of help here, as they can be used to improve traffic flows and lower harmful emissions with a small amount of administrative effort. One example of this is the PARK AND JOY app, which we launched in Ham- burg in October 2017. Some 100 parking spaces have been equipped with sensors there, and the plan is for this figure to increase to 11,000 within the entire inner city area by the end of 2019. This will allow the app to immediately show drivers where there are empty parking spaces and navigate them to the exact spot. What's more, users can directly pay their parking fee using the application. PARK AND JOY can be down- loaded for free in app stores. Bonn, Duisburg, Dortmund, Darmstadt and Moers are also planning to introduce PARK AND JOY in 2018. Hackathon: Idea competition on life in the city Implementing ideas for a liveable city of the future – that was the topic of Hackathon: Smart Public Life in the fall of 2017 in Bonn. A total of 220 developers, designers and concept developers from 10 countries took part in the competition in small teams, including both profession- als and amateurs. Their task was to implement their own program idea within 24 hours by using the potential of the Internet-of-Things to create a liveable, smart city of the future. The Hackathon was a great opportu- nity to make new contacts and enhance skills. The best teams were given the chance to refine their project idea later on in the Telekom Incubator. Navigation stick for the visually impaired in Czech Republic As a socially responsible company, T-Mobile Czech Republic aims to support visually impaired people. We have been cooperating with the Czech Technical University to develop a unique navigation solution for the blind. Connecting up global navigation satellite systems (GNSS) and wireless data transfer networks has created one of the most advanced orientation solutions for visually impaired people. T-Mobile Czech Republic has supported the development of this navigation solution by providing connectivity in 3G and 4G, data SIM cards and modems. The newly developed navigation stick for blind people is con- nected to a smartphone and the navigation center. Based on a 2G-4G app, the service enables navigation data, voice communication and images to be transferred. It also utilizes a camera for orientation in build- ings where GNSS does not work. A testing phase was completed in 2017. After a redesign and various improvements, a complete prototype of a new-generation stick has been completed. This new improved stick is being tested in 2018. We plan to launch the product at the end of the year. Smart Cities in Croatia In May 2017, Hrvatski Telekom installed the first smart payphones in the Croatian city of Zadar. The payphones are intended to provide all the local information required by citizens and the increasing number of tourists, while they are simultaneously given a broad range of next-gen- eration innovative ICT services. The solution provided by the Croatian Postal Bank enables citizens to pay securely using their credit and debit cards.The City of Rijeka, in partnership with Ericsson Nikola Tesla, Hrvatski Telekom, Smart RI, Autotrolej and Rijeka promet installed two smart bus stops for Rijeka's citizens and numerous tourists. The smart stops offer a range of functionalities for a more efficient and enjoyable experience on city transport. They represent the world's technological breakthrough to the smart cities of the future.In collaboration with its partner EcoMobile, Hrvatski Telekom kicked-off a pilot-project for a
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 7272 smart electronic record system for municipal waste collection in Velika Gorica. This system will optimize business operations at the Municipal Centre VG Goričanka and bring savings for citizens. Smart Cities in Romania In Bucharest, Romania, Telekom successfully rolled out the first inte- grated Smart City project in 2016. It combined four technologies: smart parking, WiFi connectivity, city safety, and smart lighting, all integrated through an Internet of Things platform. Telekom Romania launched a second Smart City project in Constanta, and a third one in Piatra Neamt, in 2017. The solutions are part of the “Smart Street” concept, and they address urban needs such as efficient lighting, public safety, internet access, efficient parking, and electrical recharging for cars. They also enable the municipalities to provide use- ful information for citizens in real time, and to monitor environmental factors such as air quality. A parking lot in Constanta with 50 places was equipped with sensors that allow drivers to track the availability of parking places in real time. In addition, the municipality can monitor the level of occupancy, and based on the statistics generated make an evidence-based decision on where parking lots should be supplemented. The pilot project in Piatra Neamt foresees implementation of several innovative components, including a smart piece of street furniture. The solar-powered park bench will enable visitors at the park to charge their mobile devices and they can connect to the Wi-Fi internet services. As in Constanta, a Smart Lighting solution has been installed that offers the ability to reduce the light output according to predefined scenarios, resulting in lower energy consumption. The project also includes imple- mentation of a station that charges two electric cars simultaneously. In 2017, COSMOTE was one of the first providers in Europe to imple- ment the technology for the Narrowband Internet of Things (NB-IoT) in the city of Patras. This was a first in Greece and the Smart Parking, Smart Lighting and Air Quality solutions were installed at a selected location in the city center of Patras. GRNET: The OTE Group provided the Greek Research and Technology Network (GRNET) with ICT solutions (data center and cloud infrastruc- ture) so that 31 interconnected hospitals were able to offer more effi- cient services to their patients and reduce operational costs. The project also helps the research community by allowing controlled and anony- mous access to large volumes of imaging data to meet the needs of medical research. Energy Management: The COSMOTE Energy Management service was implemented at several buildings in the Municipalities of Patras and Agios Dimitrios using remote intervention to monitor the energy con- sumption at these buildings in real time. The service is expected to con- tribute to protecting the environment, improving the quality of city life, and reducing operational costs. After installing the service in five municipal buildings in the Municipality of Agios Dimitrios, the annual energy savings are estimated to be about 66 MWh, and CO metric tons. emissions are projected to be reduced by some 55 2 e-Fuel Management Service: The e-Fuel Management service is an integrated solution, launched in 2017 by COSMOTE in order to offer monitoring of fuel consumption in corporate vehicles and hence reduce operating expenses. DIGITAL HEALTH CARE: OPPORTUNITIES FOR THE BEST MEDICAL CARE INNOVATIVE SUSTAINABLE PRODUCTS AND SERVICES LAUNCHED IN GREECE In 2017, the OTE Group launched and developed several products and services to help customers improve their sustainability performance. The Group also successfully implemented some significant projects with the same objective. A number of examples are listed below: A uniform telehealth platform permits cross-case, standardized data sharing among healthcare providers. Telemedicine assistance systems can support patients and their families in everyday tasks, help bridge long distances to medical personnel and optimize the care process. We are helping shape the digital healthcare system with numerous pilot projects. Smart City Applications: Smart city applications were enriched by the OTE Group in 2017 so as to offer local communities the benefits of smart technologies. The Smart City portfolio includes applications for Parking, Lighting, Air Quality Monitoring, Waste Management, and Building Energy Management. Over the next two years, the OTE Group is also expanding its Narrowband IoT network which will cover 95% of the population. This will enable it to reinforce the use of smart city appli- cations. Chalkida is the first city in Greece to have a complex of smart pilot systems installed: Smart Parking, Smart Lighting, Air Quality and Waste Management, together with an integrated smart city platform. These applications will facilitate the process of finding parking spaces and contribute to decongesting traffic and reducing the city's energy con- sumption. It will also provide useful information on air quality and opti- mize waste collection. The project was conducted in 2017. For example, we are involved in developing a solution for antibiotic treatment consultation at the St. Georg Hospital in Leipzig. The pri- mary goal is to enable fast, secure data exchange between doctors, patients and health insurers. The State of Saxony sponsored the pro- ject with over EUR 1.2 million at the beginning of 2017. It will run until mid-2019. The Saxony Psychotraumatology Telemedicine Network is set to sustainably improve the integrated treatment chain for post-trau- matic stress disorders and support digital mental health interven- tions. Telematic communication and interoperability should support consultation and treatment early on and should, above all, be tai- lored to the circumstances. The goal is to enable straightforward and location-independent access to the treatment network, make expertise universally available and guarantee cross-institution docu- mentation and coordination of the healthcare process. The EU and the State of Saxony will be funding the innovative project, which will run until 2020, with EUR 1.4 million.
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 7373 Best Smart Home Network We received the Best Smart Home Network award at the Broadband World Forum 2017. This award honors our smart home end-to-end solu- tion and the hardware integration. Since September some 200,000 cus- tomers received a free upgrade for their Speedport smart routers. By integrating the smart home functionalities into the router, they can con- vert their own four walls into an intelligent home. PROTECTING RESOURCES WITH CLOUD COMPUTING With cloud computing, our customers no longer need to be bothered with their own servers and storage media. In most cases, cloud comput- ing is more resource and energy-efficient than running your own infra- structure outside of the cloud. Our data centers require up to 80 percent less energy thanks to more effective capacity utilization and less hard- ware. We also continue to work on further improving the efficiency of our data centers. The cloud for the public sector For companies that want to convert their systems to cloud solutions, T-Systems offers a program called The Cloudifier. We analyze the cus- tomer's IT landscape and identify which applications can be transferred to the cloud. Building on this, we developed the Cloudifier4Public in 2017 – a service with which T-Systems designs and implements cus- tomized cloud strategies for the public sector in Germany. Advice is tai- lored to the objectives and particulars of German public administration. There are clear framework conditions in place for the development of cloud architectures with regard to data protection and information secu- rity, safeguarding of statutory tasks and compliance with legal frame- work conditions. 2 emissions. Customers return the devices if they DON'T BUY, RENT We want to make sure that used routers and media receivers don't just end up in the trash. That is why we promote the "Don't buy, rent" approach. Our rental services conserve resources, reduce electronic waste and prevent CO cancel their contract. The devices are then either refurbished and rented out again or properly recycled. We have simplified the return process by introducing a returns portal. The online portal enables cus- tomers to manage their own returns. We actively and effectively promote the rental service in many ways including at Telekom Shops, online, via customer service and in product flyers. The offer has been well received by our customers; the number of people using the rental service increased to around 9.5 million by the end of 2017. RAPID ENTRY INTO THE SMART HOME BUSINESS We want to make it easy for companies – such as those in the tele- communications or energy sector – to expand their core business with a Smart Home offer. To this end, we developed a special white label portfolio. It combines our open and secure Smart Home platform Qivi- con, Smart Home gateways, apps, devices and services, based on which companies can offer Smart Home solutions to their customers. Business customers also have the option of offering our white label app under their own brand and customizing it. Consumers can easily and conveniently control the devices in their connected home using the app. QIVICON – Our smart home platform A smart home can make life easier for its occupants in many ways, allowing them to control and monitor various devices remotely – from security systems and home appliances to home electronics. Of course, one big challenge remains, in that a provider's smart home solution is often not compatible with the functions and devices of other manufac- turers. That is why we have jointly set up the open, manufacturer-inde- pendent smart home platform QIVICON. This platform gives consumers the option to combine devices made by different companies. More than 40 partner companies and brands currently offer their solutions on the platform. In 2017 we added solutions with Volkswagen and the ERGO Versi- cherung insurance company, among others. Volkswagen owners can control their smart home directly using their car's infotainment system. And the ERGO emergency service will automatically initiate the neces- sary measures in case of an emergency, such as a water pipe breaking, if the customer does not respond to the system's notification. We were also able to further increase the number of devices that are compatible with the platform during the reporting period. Products by the companies Centralite and Sengled will give consumers a better selection of security and illumination options in the future. Even today our customers can choose from among more than 200 different smart home devices. Security and data protection at QIVICON All communication via the QIVICON Home Base, which is connected to the Internet via servers, is encrypted. Any user data related to QIVICON is stored exclusively on our servers in Germany. All devices made by brands managed via QIVICON employ wireless technology based on state-of-the art security functions. The Smart Home solution received ISO 9001 certification – the most widespread and most important quality management standard – during the reporting period. In addition, we commissioned the testing institute AV-TEST GmbH to check, for the third time, how secure the Qivicon Smart Home platform and the Magenta Smart Home app are. Once again, the rating was "very good protection". Open platform As a member of the Eclipse Foundation, one of the largest international open source communities, we are opening up the Qivicon platform to developers and start-ups. They will be able to use the platform to develop their own innovative smart home ideas.
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 7474 PRODUCT CERTIFICATIONS: DEMONSTRABLY SUSTAINABLE Sustainable products are a key factor in competition for us. In order to inform our customers about the sustainability benefits of our products, we rely on recognized ecolabels, such as the Blue Angel in Germany. The majority of fixed-line phones and some media receivers boast the Blue Angel label. In 2017 the Media Receiver Entry and the Media Receiver 201 also received the Blue Angel. End devices certified with this ecolabel also contain information for customers as to how the prod- ucts can be used in an energy-efficient manner. In addition to the Blue Angel, we have also increasingly been using the TÜV Green Product Label. This label exceeds the Blue Angel criteria in ways such as requir- ing inspections of working conditions at production sites. A number of our routers, including the Speedport Neo, have already been certified by the TÜV Green Product Label.In addition to ecological criteria, TÜV Green Product Label also provides for a review of working conditions in production plants. The labels not only serve as information for our customers, however. Their strict requirements also help us see how we can further improve our products. FAIRPHONE 2 AT T-MOBILE AUSTRIA T-MobileAustria is one of the first mobile network providers in the world and the only provider in Austria to combine a mobile contract with Fairphone2, the first sustainable and socially responsible smartphone. The company has been offering this product since early2016and it gives new and current customers an opportunity to choose a sustaina- ble way of life when it comes to their smartphones.T-MobileAustria actively supports the Dutch company Fairphone in its efforts to raise awareness of fair electronics and promote responsibility in the industry. Fairphone focuses on four main challenges: to make mining at the beginning of the value chain, design, production and the product life cycle more sustainable and transparent. In order to achieve this goal the company cooperates with initiatives for the extraction of tin and tanta- lum from conflict-free mines in the Democratic Republic of Congo and sources conflict-free tungsten from Rwanda. It also created the first pilot supply chain for fair-trade gold in smartphones and promotes longevity through the modular product design of the Fairphone2.In order to facili- tate long-term use of the product, spare parts for the Fairphone2can also be ordered viaT-MobileAustria. USED CELL-PHONE COLLECTION IN GERMANY Germany's recycling and reuse rate for small electronic appliances is too low. Too many used cell phones, smartphones and tablets are stuck in drawers or disposed of illegally with the household waste. But these devices should be refurbished and reused or properly recycled to help us conserve valuable resources. We have been offering different ways for people to hand in their devices since 2003. Customers have been able to return their used, high-end cell phones and smartphones to Telekom Shops under a buyback program since 2013. They receive store credit from the Telekom Shop reflecting their old device's current value, which they can use to purchase a new device, or they can choose to have the amount booked to their customer account. Business cus- tomers can send in their used cell phones and smartphones through a buyback portal (www.handyankaufsportal.de) for business customers, which we created in 2016. After the device's value has been deter- mined, the amount can be paid out or donated to a charitable organiza- tion. Together with company Teqcycle Solutions we also operate the Cell Phone Collection Center online portal. Through this portal, authori- ties, associations and other organizations have the opportunity to start collection campaigns for donating used cell phones and smartphones. The website provides an overview of these partners and the collection campaigns they conduct. Such campaigns took place in Bavaria and North Rhine-Westphalia during the reporting period. We also welcomed two new cooperation partners in 2017: the Frankfurt Zoological Society and Pro Wildlife e.V. At the end of the year we donated the proceeds from the devices collected through recycling and reuse to environmen- tal organization Deutsche Umwelthilfe e.V. In 2017 we joined together with radio station Antenne Unna to hold a cell phone collection competition between the communities of the region. The station followed the various collection campaigns and crowned one of the communities the victor. The objective of the compe- tition was to increase listeners' awareness of environmentally friendly resource consumption. The proceeds from the sales and recycling activ- ities were donated to the Lichtblicke e.V. charity. In 2017 we collected exactly 148,888 used cell phones and smart- phones throughout Germany and either reused them or had them prop- erly recycled. During the cell phone collection campaign we use a data deletion process that is DEKRA certified and complies with strict data protection requirements. Defective cell phones or devices where certi- fied data deletion would be too costly are properly recycled using state- of-the-art, environmentally friendly processes at the Telekom Recycling Center in Goslar. Up to 100 percent of the materials can then be reused – as recycled metals or for energy generation. We depict the relationship between commercially sold and collected mobile phones with our Cell Phone Collection ESG KPI. We map the relationship between mobile devices brought onto the market and taken back with our ESG KPI "Take-back mobile devices". In 2017, approximately 317,000 mobile devices (excluding T-Mobile US, AMC, Maktel, Crnogorski) were taken back throughout the Group. Support of various collection campaigns As in previous years, we supported the Die Handyaktion campaign conducted by different church-affiliated groups in the state of Baden- Württemberg in 2017 as well. This time the partners reinforced the campaign, together with the German Mineral Resources Agency and the Ministry of the Environment of Baden-Württemberg, with various educational measures. For example, they redesigned the "cell phone raw materials kit" for school classes. The kit contains various minerals that are used in cell phones. Using accompanying teaching materials, teachers can explain the significance of the raw materials in smart- phones to their students. The Responsibility and Sustainability. Join in! collection campaign in the state of Saarland, which we have been supporting since 2014, was extended until the end of 2018 due to ongoing interest. We are still a cooperation partner to the campaign, which focuses on projects such as providing special course material on the topics of cell phone collec- tion and resource efficiency. Mutual cell phone collection campaigns with Saarland companies and institutions are a further focus.
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 7575 HANDSET RECYCLING AT T-MOBILE USA ACCESSIBLE PRODUCTS AND SERVICES T-Mobile USA’s device recycling program mobilizes customers to help reduce environmental and human health impacts from improper recycling. This program also increases access to quality reusable and refurbished equipment for those who need it, while conserving our limited natural resources. Any wireless consumer can bring any make, model or carrier phone, battery, accessory, tablet or netbook into any T-Mobile USA location to be recycled for free. Through the JUMP! and Mobilize programs, T-Mobile USA incentivizes its customers to trade in their used devices and accessories for great deals on the latest technology. Those trade- ins are all reused, refurbished or recycled. In 2017, T-Mobile sponsored a special holiday recycling campaign to encourage customers to bring in their used devices to T-Mobile. T-Mobile matched the recycled value of each device, and donated USD 1,000,000 from the campaign to Feeding America and Team Rubicon to support their hunger relief and disaster response initiatives. T-Mobile USA launched the recycling program for its customers in 2008, resulting in over 14.4 million devices being reused or resold since then. 87% of the devices that are taken back are reused or resold, with the rest being responsibly recycled by providers selected on the basis of their leading industry environmental certification. In 2017, T-Mobile USA collected 4,130,582 used cell phones. HANDSET RECYCLING PROJECT WITH PRIMARY SCHOOL PUPILS IN CROATIA For many years, the international eco primary school in Sisak has been a beacon in its local community for collecting and dealing properly with old mobile phones. Hrvatski Telekom (HT) has a long tradition of proactive collaboration with Croatian schools and helps to teach pupils from an early age about adopting good habits for separate collection of waste, appropriate recovery and recycling. HT has been teaching pupils how to deal effectively with electronic waste, in particular the electronic waste from mobile phones and their accessories. This is an inspiring project within the company since it enables pupils to develop a respon- sible attitude toward environmental protection and waste management. In2017, HT continued its cooperation with the eco primary school in Sisak and celebrated the World Environment Protection Day by award- ing all pupils who participated in the project for collecting old handsets. This year the pupils collected180obsolete mobile phones, which HT handed over to authorized companies for environment-friendly treat- ment. Over a period of more than ten years, HT has used this project and other similar environmental projects and initiatives to collect a total of137,000old mobile phones and dispose of them in an eco-friendly way. Deutsche Telekom wants to make it easier for people with disabilities to have access to the knowledge and information society. Not only do we offer subsidized rates to people from low-income households, we also offer them to people with hearing and vision impairments. We also sup- port them with products and solutions especially designed to meet their needs. Services for the hearing impaired We set up a hotline (Deaf Hotline) for deaf and hearing-impaired cus- tomers in 2003. Up to 50 people currently call the hotline every day to get help with connections to their DSL routers or to find out more about special cell-phone rate plans, for example. The employees of the Deaf Hotline are equipped with live consultant workplaces that have HD cam- eras, among other things. Customers and live consultants can see each other using a video-based live chat and can communicate with each other in sign language. Since 2017 the Deaf Hotline has also explicitly offered the option of making appointments with technicians. For deaf customers and members of the German association for the deaf, Deutscher Gehörlosen-Bund e.V., we operate a special online dis- tribution site (www.telekom.de/deaf). There we offer a discounted mobile communications and fixed-line portfolio that is tailored to the exact needs of deaf people. Customers can order their desired plans directly on the website, can contact the employees of the Deaf Hotline or be forwarded to the new information exchange platform DEAF-Café in the Telekom Hilft community. The DEAF-Café provides a safe space to discuss or clarify questions about telecom offers together with other deaf people in groups and forums. Engagement for hearing impaired people in Slovakia About 1% of the population in Slovakia is hearing impaired, and Slovak Telekom is very active in developing comprehensive programs and activities to support them in ordinary everyday living situations. We also help families with hearing-impaired children to master their everyday lives. Another aim is to raise public awareness about the challenges they face. Since 2015, Slovak Telekom has hosted a community portal where par- ents with hearing-impaired children can communicate with each other and find out important information. This portal supports hearing parents with hearing-impaired children in showing them how to properly stimu- late and develop their children. In 2017, a lot of new content was added to the portal which was visited by thousands of individual visitors. A community of hundreds of returning visitors has started to form. As a carrier, we provide significant support for the hearing impaired and offer them an advantageous mobile data package. In 2017, Telekom began to offer a preferential “Mobile Internet L” plan with a discount of more than 95 percent. In order to be eligible for the Mobile Internet L program for the deaf, the customer needs to be recognized as hearing impaired by the relevant Labor, Social Affairs and Family Office. Since 2013, Telekom has also been offering a special mobile plan for hearing-impaired people thatincludes unlimited SMS and 2GB of inter- net data on the mobile phone, along with 20 free minutes to all net- works at a price of € 12 per month.
CUSTOMERS & PRODUCTS SUSTAINABLE PRODUCTS & SERVICES 7676 Mobile cell phone repair with Reparando You need fast help if your cell phone or smartphone breaks down. Start- up company Reparando does the necessary repairs directly at their cus- tomers' home or office. Founded in mid-2015, the Stuttgart-based start- up already has 10,000 repair jobs under its belt and offers its services in 20 German cities. hub:raum has supported the company since 2017. Repair services such as those offered by Reparando extend the life cycle of smartphones, thereby helping save resources. Start-up support for internal "founders" Since 2011 we have been helping our employees develop their own concepts for new services and business areas at Deutsche Telekom within the context of the „UQBATE“ internal innovation program. Employees can present their ideas to interested colleagues on the UQBATE platform, create teams and then work together to gradually turn their ideas into products that are ready to go to market. 2017 was another year for exciting ideas. One of these ideas was BeOn Track, a particularly durable device for localizing people. BeOn Track does not use the GPS signal to locate people, but rather a new technology with a much longer battery life. This device could be used to quickly track down missing dementia patients, for example. The tracking device can be installed in a necklace or armband and works for up to 10 years. TAKE-OFFS PROGRAM SUPPORTS REGIONAL START-UPS IN CZECH REPUBLIC 2017 saw the seventh round of the Take-offs program. The T-Mobile Czech Republic program provides financial support, long-term profes- sional advice, and expertise to regional start-ups. The overall aim is to help potential entrepreneurs, who often come from vulnerable back- grounds (people in regions of high unemployment, women on maternity leave, senior or handicapped citizens, students without work experi- ence). Out of the 437registered projects this year, 40regional winners were chosen and announced by an expert jury at9 regional workshops run for all interested participants free of charge and attended by 550 peo- ple. The regional winners all receive a helping hand from experts in marketing, communication, and finance, as well as tangible, financial support worth EUR 3,700. Members of the general public are invited to select the overall winner from among 40 regional winners. More than 14,000 people took part in the online voting and selectedPetr Šmídand his project called Hobl- home (kitchen products made of wood) as the overall public winner to receive an award worth EUR 5,500. A professional jury also selected a national winner. This yearDagmar Duškováand her project called Damilk (production of homemade cheese) was selected as the national winner and received prizes worth a total of EUR 25,900. The Take-offs again enjoyed significant media coverage. The winners were invited to present their projects on TV and radio, and in various print and online media. SUPPORTING START-UPS: CREATING SPACE FOR IDEAS hub:raum start-up incubator We have been running our own start-up incubator in Berlin, Cracow and Tel Aviv since 2012 under the name hub:raum. This gives us direct insight into the innovative ideas of start-ups. In return, we offer access to our technological expertise and our customers. We also provide sup- port with company development. Experienced entrepreneurs and Deutsche Telekom experts act as mentors to the start-ups in a variety of programs. In addition, hub:raum also provides selected start-ups seed funding of up to 300,000 euros.We made six investments in start-up companies in the reporting period. Interested start-ups can go to the hub:raum website and apply for collaboration or seed funding. Since April, hub:raum has been collaborating intensively with Partnering and Business Development at Deutsche Telekom, which is responsible for business collaborations. We also promote lots of new ideas for more sustainability with hub:raum. hub.raum program for lightning-fast data transmission with 5G The up-and-coming 5G mobile communications standard promises to provide more than just faster Internet speeds. This technology is creat- ing entirely new possibilities for many sectors. So-called low latency interactions are a significant advantage. They enable very fast data transmission times. This could facilitate the tasks of first responders at accident sites, for example, by allowing them to exchange real-time data with doctors in hospitals. In 2017 hub:raum started a prototype program to promote the development of such innovative 5G-capable use cases in Europe. Companies have been able to sign up as partners for this project since October 2017. hub:raum has also been supporting good ideas for the use of the new mobile communications standard with test environments in Cracow and Berlin. App in the gap: The eParkomat In 2017 hub:raum invested in the eParkomat start-up company, which operates an app for digital parking space searches. Using an algorithm, the app calculates the number of available street parking spaces in real time. The app shows the empty parking spaces on a map and navigates the user directly to the respective space. The app also has benefits for the environment, since finding a parking space faster reduces the amount of CO2 emissions in cities. In 2017 eParkomat successfully completed a pilot project in Prague with more than 25,000 public park- ing spaces. Thanks to hub:raum's investment, the company is slated to expand to other cities in 2018.
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY 77 CONSUMER PROTECTION AND SECURITY In October 2015, the European Court of Justice determined that the Safe Harbor Agreement was invalid. In accordance with the agreement, U.S. companies were able to self-certify that they met European data pri- vacy regulations. But these principles were not effectively implemented at those companies. Edward Snowden's revelations also demonstrated that U.S. security authorities store all of the personal data transmitted to the United States. The protection of personal data is part of the shared fundamental values in Europe. It is up to the German government, the EU Commission and the United States to create an appropriate basis for secure data exchange between Europe and the United States. For us at Deutsche Telekom, the decision passed by the Court of Justice of the European Union is a sign that we are on the right path. We called for an "Internet of short distances" at an early stage, ensuring a direct path from the sender to the recipient when transferring data - without any detours through other jurisdictions such as the United States. This has already been implemented in our networks. European business customers are critical of data storage outside of Europe; demand for secure cloud services "made in Europe" is growing. Our security solutions meet this demand. We guarantee the same high security standards at all of our data centers. We also develop products for consumers, such as products offering end-to-end encryption, and solutions for SMEs to detect and fend off hacker attacks in real time. In addition to data security, we have also introduced measures for consumer and youth protection. To us, security is more than just protecting data and infrastructure - it also means protecting the public's health. We have established a Group-wide basis for this with our EMF policy.
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Consumer and youth protection 78 CONSUMER AND YOUTH PROTECTION We stand for the highest possible standards when it comes to consumer and youth protection. We want to teach children and young people in particular how to use digital media safely and effectively and protect them from inappropriate content, which is why we work throughout the Group to improve their media skills in a variety of projects. We also work with a variety of initiatives and partners to create a child-friendly Inter- net. We have reinforced our stance with numerous national and interna- tional voluntary commitments and internal codes of conduct. In doing so, we often exceed the standards required by national regulations. Our products and services have always provided a high degree of data privacy and data security. Growing volumes of data require special pre- cautions to protect the privacy of citizens, which is why we approved eight mandatory principles for handling big data, or large amounts of personal data, in 2013. In January 2015, we also approved specific measures to protect data and infrastructure in our "Ten-point program for increased cyber security." We also developed new protective prod- ucts including our Mobile Encryption app designed to ensure end-to- end encryption of mobile communication. GOALS MEASURES MEASURING SUCCESS § Best possible protection of § Developing data privacy § Online reporting about data users and minors products § Binding Corporate Rules Privacy § Promoting media skills § Partnerships and alliances protection measures and activities PROTECTING CONSUMERS AND MINORS Data privacy and data security are very important to us. In 2008 we created a Board of Management department for Data Privacy, Legal Affairs and Compliance as well as the Group Privacy unit. The responsi- ble Board member has been advised by the independent Data Privacy Advisory Council, which comprises renowned experts from politics, science, business, and independent organizations, since 2009. In addi- tion, we were the first DAX company to have our data privacy organiza- tion reviewed and certified according to the IDW PS 980 standard in September 2014. At Deutsche Telekom, data protection and data secu- rity are subject to the Group’s Binding Corporate Rules on Privacy and the Group Policy on General Security. The Binding Corporate Rules on Privacy govern the handling of personal data. The related document Binding Interpretations contains specific recommendations and best practice examples for implementing the EU General Data Protection Regulation, which will be enacted in May 2018. The Group Policy on General Security includes significant security-related principles fol- lowed within the Group. Both guidelines set forth binding standards that are in line with international standard ISO 27001. These policies allow us to guarantee an adequately high and consistent level of secu- rity and data privacy throughout the Group. Deutsche Telekom has been publishing an annual transparency report for Germany since 2014, which covers the types and amount of information we disclose to secu- rity agencies. This way we comply with our legal obligations as a tele- communications company. Our international business units have also been publishing similar transparency reports since 2016. We also pro- vide up-to-date and transparent information about all of our activities and measures regarding data protection and data security on our Group website. Data privacy and security also play a key role in the development of our other products and services. Our Privacy and Security Assessment (PSA) procedure allows us to review the security of our systems in each step of the development process. This procedure applies to newly developed systems as well as existing systems that undergo changes in technology or in the way data is processed. We use a standardized procedure to document the data privacy and data security status of our products throughout their entire life cycle. Youth protection aspects are also taken into consideration in our product and service design. In Germany we involve our youth protection officer in all issues regarding planning and designing offers for young people. The youth protection officer can then recommend restrictions or changes. We have appointed a Child Safety Officer (CSO) at each of our national compa- nies within the EU who is responsible for issues pertaining to the protec- tion of minors. The CSO acts as a central contact for members of the community in the respective market. The CSO also plays a key internal role in coordinating topics related to the protection of minors. These measures increase the consistency and transparency of Deutsche Telekom's involvement in protecting minors. Strategic approach to protecting minors from unsuitable media content Our strategy to protect children and young people from harm when using digital media is based on three pillars. We provide attractive, age-appropriate offers for children and give parents and guardians tools (filters) that they can use to restrict the access minors have to harmful content, participate in combating child abuse and its depiction to the extent that this is permitted within the national legal framework, and we promote skills to help people use the Internet safely. We also collaborate closely with prosecuting authorities and NGOs as well as other partners from business, politics, and society to ban online content that is harmful to children and young people. We have docu- mented our commitment to protecting minors from unsuitable media
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Consumer and youth protection 7979 content in Germany in relevant codes and introduced minimum stand- ards. In 2007, we committed ourselves to fighting child pornography on the Internet throughout the European Union. At a global level, we have been a member of the global association of mobile providers, GSMA, since 2008, which pursues the same objectives. In order to better coor- dinate our activities within the Group, we also approved a list of general guidelines in October 2013 for our activities to help protect minors from unsuitable media content and made these guidelines mandatory at international level, thereby setting new standards in our markets. In consideration of their particular cultural situation and business model, each national company in the European Union can further specify these measures, adopt additional measures, and also determine their own strategic focal points. Because protecting minors from unsuitable media content poses a challenge that affects many industries, we cooperate with different organizations for the protection of minors and participate in coalitions that coordinate the involvement of companies and organizations from the Internet and media sector. For example, we are a member of the “CEO alliance to better protect minors online”, whose goal is to make the Internet a safer place for kids. We also play a leading role in the ICT Coalition for the Safer Use of Connected Devices and Online Services by Children and Young People in the EU. In this coalition, we pursue a comprehensive cross-industry approach based on six principles that expressly includes helping young people learn media skills. In January 2013, as part of both coalitions, we announced plans to implement an EU-wide set of measures based on the principles of the ICT Coalition. The ICT Coalition published an annual report in April 2014 on the implementation of corresponding measures at all of the companies represented in the ICT coalition. The report, which was written by an independent expert from the Dublin Institute of Technol- ogy, comes to the conclusion that Deutsche Telekom's approach to implementing the ICT Coalition's principles is exemplary. New strategic Cyber Defense and Security Operation Center In October 2017, the Telekom Security unit expanded the Cyber Defense Center in Bonn into an integrated Cyber Defense and Security Operation Center (SOC). This new defense center is one of the largest and most modern ones of its kind in Europe, analyzing one billion pieces of security-relevant data from 3,000 data sources every day in a nearly fully automated process. PROTECTING PERSONAL DATA Almost one-third of all Germans are afraid of their data being misused and of insufficient data security in general. These were the findings of the 2016 Security Report that we commissioned from the Allensbach Institute. However, we are by far the most trusted company in the ICT industry when it comes to handling personal data. And we are proud of it, because protecting our customers' data is one of our top priorities. We also provide up-to-date information about all of our data protection activities on our Group website at https://www.telekom.com/en/corpo- rate-responsibility/data-protection-data-security. The following are just a few examples of our activities during the reporting period. Competition on digital data protection tools At the beginning of 2017, we launched a worldwide idea competition. The competition called on participants to create a privacy bot - an intelli- gent, digital data protection tool. The bot had to be useful for all sorts of web services, not just aimed at individual providers such as Facebook or travel portals. The award ceremony took place in July in Berlin. A team from Germany was the winner. This team developed a privacy bot that automatically verifies the Privacy Notices of Internet services based on individual preferences specified by the user. The privacy bot also provides a variety of other information relating to data privacy, such the number of data privacy incidents affecting the relevant Internet provider in the past. There were 12 entries, five of which advanced to the final round, with the top three being awarded prize money. The jury was made up of data privacy experts as well as specialists from the Internet economy and the world of corporate communications. Among its most prominent mem- bers was Peter Schaar, former German Federal Commissioner for Data Protection and Freedom of Information. Mobile protection According to the 2016 Security Report, about half of smartphone own- ers in Germany have no software installed on their phone to protect it from cyber attacks. Since November 2017, we have partnered with the company Check Point Software Technologies to offer the Protect Mobile security solution for smartphones to our consumer customers. Protect Mobile detects and wards off cyber attacks in the mobile com- munications network, before they can even get to the smartphone. This protection is automatically integrated into Deutsche Telekom's mobile communications network. The Protect Mobile app detects additional cyber attacks when browsing the Internet on a WLAN or using hotspots as well as when downloading apps, doing online banking or surfing in the browser. Deutsche Telekom customers can add this option on to their existing mobile phone contract. For the most complete protection, the free app is available for Android and IOS from app stores. Simple data privacy statements for everyone Data Privacy Notices are often incomprehensible to the layperson. Our one-pager provides our customers with an easy-to-read overview of data privacy at our company. It contains simple, condensed information on the basics behind our data processing activities. It does not replace our formal data privacy statement, to which we link in the document and which complies with legal requirements. Instead, it provides users with transparent information on how and to what extent we process and use personal data. With this one-pager, we have followed an initiative launched by the National IT Summit, supported by the Federal Ministry of Justice and Consumer Protection. Encryption for all Together with the Fraunhofer Institute for Secure Information Technol- ogy (Fraunhofer SIT), we launched the "Volksverschlüsselung" encryp- tion solution in mid-June 2016. It is a simple, free way to encrypt emails. We operate the solution at a high-security data center. The keys are gen- erated on the user's device. The user is the only person with access to them; they are not sent to the infrastructure operator. To use the encryp- tion, users only need to install the software and identify themselves as part of a simple one-time process. This product supports the federal government's digital agenda. What's more, we fulfill the requirements of the Charter for the Promotion of Trustworthy Communications (Charta zur Stärkung der vertrauenswürdigen Kommunikation), which was pro- posed and signed by representatives from the business and scientific communities as well as by political representatives. For more informa- tion, go to www.krypto-charta.de/.
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Consumer and youth protection 8080 Other examples of our comprehensive data security offering Information on cyber criminals, malware and phishing is distributed over thousands of websites on the Internet. The www.sicherdigital. de website brings this information together, providing users with easy access to security issues. Young people, adults and businesses can find useful information and specific tips concerning security and data protection. The "Confidential" issue of our We Care magazine talks about how dangerous hacker attacks can be and how users can protect them- selves. Users can track cyber attacks on our website in real time using our security dashboard. We show the countries where the cyber attacks are coming from on a map. For more information on this, go to www. sicherheitstacho.eu. Our Netzgeschichten (Network Stories) also discuss issues regarding protection of minors and consumers. You can watch all of our videos on Youtube: https://www.youtube.com/user/ deutschetelekom COLLABORATION FOR THE PROTECTION OF MINORS We want to create a safe, positive online experience for children and young people. We offer them attractive, exciting content on age-appro- priate websites. Promotion of standardized child protection offers In August 2016, we joined the non-profit organization JusProge.V.. The organization operates the child protection program JusProg. The software, which can be installed on any computer, allows parents to decide which content their children can see. The system works with fil- ter lists, among other things, which block many websites with unsuitable content and content that may even impair the development of minors. The system also allows you to enter customized settings based on age for the display of age-appropriate content. This software is the only general child protection program in Germany that has been officially recognized by Freiwillige Selbstkontrolle Multi- media-Diensteanbieter e.V. (FSM, association for the voluntary self-mon- itoring of multimedia service providers) pursuant to statutory require- ments (Interstate Treaty on the Protection of Human Dignity and the Protection of Minors in Broadcasting and in Telemedia). The software was most recently evaluated in March 2017. We decided in 2016 to donate the rights to the program code behind our child protection software (Windows) and our child protection app, Surfgarten, (iPhone/iPad) to JusProg e.V. in order to expand our involve- ment in child protection efforts. Teachtoday in the Aktionsbund Digitale Sicherheit (Digital Security Action Alliance) In addition to these solutions, we also promote secure and responsible media use among children and young people with our Teachtoday initi- ative. The initiative supports children and their families with practical and everyday tips and materials. FIGHTING CHILD PORNOGRAPHY We consider it our obligation to take rigorous action against depictions of child abuse on the Internet. We have been involved in an EU-wide fight against the depiction of child abuse since 2007 in the European Framework for Safer Mobile Use by Younger Teenagers and Children. Since 2008 we have been committed to combating the spread of such content together with other mobile providers in a global association. Since 2013 we have been actively participating in two cross-industry coalitions committed to fighting child abuse on the Internet, the "CEO Coalition to make the Internet a better place for kids" and the "ICT Coali- tion for the Safer Use of Connected Devices and Online Services by Children and Young People in the EU." New structures for cooperation on child safety on the Internet We were involved in the work of the Centre for Child Protection on the Internet (I-KiZ) until the end of 2016. The I-KiZ was dissolved at the end of 2016. However, the important fields of activity of the forum were assumed by existing networks. The safer-internet.de association, for example, took over the jugend.support advice and help system. The No Gray Areas project is now being coordinated by jugendschutz-net – with the assistance of Freiwillige Selbstkontrolle Multimedia-Diensteanbieter e.V. (FSM, association for the voluntary self-monitoring of multimedia service providers). We are actively supporting this initiative as well. DIGITAL INCLUSION OF SENIOR CITIZENS AND SCHOOL CHILDREN IN CZECH REPUBLIC As part of our e-safety strategy, T-Mobile Czech Republic issued a bro- chure called “Safely on the Net” that will be distributed to our customers for free in the shops. The illustrated and lifestyle-like publication was written in cooperation with a specialist on e-safety. It is intended for all users of the internet but with the main focus on parents. It includes tips on avoiding risks when using computers, the internet, and social net- works in particular. The main part is dedicated to tips on how to protect children from potential abuse and the Školák (“Schoolchild”) package is a special offer for parents of schoolchildren. Independently of the child’s mobile credit, parents can purchase the package to keep an eye on their chil- dren’s movements, protect them against inappropriate content on the internet and keep track of their mobile credit. The package is linked to the “Surfie” application. This app is provided free of charge and makes it possible to track the location of children and restrict viewing of inter- net content. The app is in the Czech language, works with iOS and Android operat- ing systems, and includes three licenses. These can be used to protect three children or they can be installed on three different devices. The app requires internet access and the bundle therefore contains a 10 MB data allowance per month for the child. After the data allowance has been used up, the internet access speed slows down. However, children will still be able to use the app. In the area of IT and e-safety, we held 4 seminarsfor senior citizens on “How to use mobile phones” and “Internet and apps” at the Centre for seniors in Prague. The seminars were run for 25 participantsbyT-Mobile employees.
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Consumer and youth protection 8181 PROTECTION FROM CYBER BULLYIN Our Computerhilfe Plus service offers reliable protection from cyber bullying and competent assistance in the event of libel on the Internet. Consumers, especially families with children, can get tips and instruc- tions here about safe handling of data in social networks and messag- ing services. If a customer is affected, Deutsche Telekom experts will help them delete insults, disreputable slander or other defamatory content on the Internet. This involves researching the appropriate contacts, initiating exchanges between the conflicting parties and compiling replies. Our services are tailored to meet the needs of each case. In addition to a digital service, a service phone number (0800-330 1473) has also been set up where Deutsche Telekom experts provide assistance. Since the introduction of Computerhilfe Plus, the need for security and support for digital topics has risen steadily. That's why the Digital Schutzpaket (Digital Protection Package) will replace Computerhilfe Plus in the spring of 2018. This package offers comprehensive preven- tive measures such as home network security and data backup. It also provides assistance in case of damage, such as financial losses due to online purchases, data retrieval or cyber bullying.
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Cyber security 82 CYBER SECURITY Criminal hackers are getting more and more professional by the day. Private individuals as well as public organizations, companies and the military are all at risk. Weaknesses in computer systems are often taken advantage of within hours, with attacks being run fully automatically. As a responsible ICT provider, we are fighting this trend. Our business model includes guaranteeing our customers a high degree of security and effectively protecting the data and infrastructure of the people and companies who use our services from unauthorized access. GOALS MEASURES MEASURING SUCCESS § Maximum protection of our inf- § Establishing the Cyber Defense § Web portal: Data privacy and rastructure from attacks and Security Operation Center data security § Guaranteeing data security § Analyzing attacks § Web portal: Telekom Security § Developing defense strategies § Entering into collaborations PROTECTING OURSELVES AND OUR CUSTOMERS Based on our Group strategy, we promote our business with security products and services throughout Europe. In 2016 we united all secu- rity-related departments Group-wide under one roof, thereby expanding our abilities to not only detect cyber attacks early on but also to quickly introduce countermeasures. Our new Telekom Security unit started up operations at the beginning of 2017. It focuses on internal security issues and develops security solutions for consumers as well as busi- ness customers. With this approach we can provide our customers with the perfect security solutions along the entire value-added chain, from product development to secure, high-performance networks and high- security data centers to applications and individual consulting. We are always working to develop new ways to defend against attacks. To this end, we established our own Cyber Defense Center in Bonn in 2014. There we analyze behavioral patterns on the Internet and draw up defense strategies. In October 2017 we expanded the Center, which is now an integrated Cyber Defense and Security Operation Center (SOC). This new defense center is one of the largest and most modern ones of its kind in Europe, analyzing one billion pieces of security-relevant data from 3,000 data sources every day. What's more, the cyber defense center processes about 1,000 requests, filters about 1,000 viruses and malware programs and scans about 10 million incoming e-mails for spam every day. This is how we protect our infrastructure, and hence also our customers' data. Some 200 security experts work round the clock at the new SOC in Bonn and its affiliated national and interna- tional locations. The measures that we undertake to fight cyber attacks on our own infra- structure are also available to other companies. More than 30 German DAX companies and SMEs are already employing our services for their own protection. New dangers require new solutions Technological innovations can bring new dangers. That is why we develop targeted measures for combating potential new security risks – such as those associated with drones, for example. We developed the Magenta Drone Shield together with our partner Dedrone. At Drone Detection Day 2017, we presented the drone defense shield to the pub- lic together with DFS, the German air traffic control service. Collaborating in the name of security Cyber security is a communal task. In order to further improve collabora- tion in the area of digital defense, we regularly host the Cyber Security Summit, in collaboration with the Munich Security Conference. The last summit was held in June 2017. We also organized the Magenta Security Congress in 2017 for the second time. We also collaborate with research institutes, industry partners, initia- tives, standardization committees, public institutions and other Internet service providers on a global scale. Together, we want to fight cyber- crime and improve online security. We collaborate, for example, with the German Federal Office for Information Security (BSI) throughout Ger- many and with the European Union Agency for Network and Information Security (ENISA) at a European level. We also provide up-to-date information about our numerous data pro- tection activities at www.telekom.com/en/corporate-responsibility/data- protection-data-security. CYBER SECURITY SUMMIT Together with the Munich Security Conference, we organized the Cyber Security Summit (CSS) in June 2017, which marked the fifth time we did so. The venue was Tel Aviv. Israel is among the leading countries in the area of cyber security. About 150 high-ranking international politicians, top managers and sci- entists met at the conference to discuss the biggest cyber security chal- lenges and offer ideas for solutions. Also up for debate were the topics of refining international cyber strategies and how to protect critical infra- structures in the brave new connected world. MAGENTA SECURITY CONGRESS How do I adequately protect myself and my company from cyber attacks? What are the latest security trends and solutions? How high is the risk of elections being hacked in Germany? Questions such as these were the focus of the Magenta Security Congress, which took place on June 20-21, 2017 in Munich. There Deutsche Telekom teamed up with experts in the security sector for the second time to share current cyber security developments with national and international partners as well as customers.
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Cyber security 8383 IT DRONE DEFENSE SHIELD Drones can make many processes easier and more efficient – for exam- ple, in the film and surveying technology or logistics sectors. But the technical opportunities drones provide can also be misused for illegal and criminal objectives. Since the end of 2016, the Magenta Drone Shield has offered our customers an IT solution that protects them from the increasing danger of private drones. Business customers with criti- cal infrastructures, data centers, stadiums, and authorities can secure their premises from remote controlled flying objects with the shield and thus defend themselves against espionage, smuggling and vandalism. In order to develop the Magenta Drone Shield, we first intensively tested the worldwide leading systems for detecting and defending against drones. We then bundled the best technologies into an integrated offer together with our partner Dedrone. The Dedrone DroneTracker, which, as a special Telekom version, is part of the Magenta Drone Shield, detects drones with the help of various sensors such as video cameras, frequency scanners and microphones. We also help our customers fight the danger of drones with organizational measures and, if necessary, by implementing electronic countermeasures. The use of jamming must be approved by the necessary authorities. Drone Detection Day 2017 At Drone Detection Day in June 2017 in the Hessian city of Langen, we pointed out the challenges of the ever-growing use of drones together with DFS, the German air traffic control service. The Magenta Drone Shield was also presented to the public. The shield reliably detected various types of drones, which simulated various danger scenarios, and issued warnings about them.
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Mobile communications and health (EMF) 84 MOBILE COMMUNICATIONS AND HEALTH (EMF) Electromagnetic fields (EMFs) are a prevalent element in our connected world, even if we are not able to perceive them directly. Their effects on our health remain a topic of discussion. It is very important to make sure that the EMFs employed do not present a problem for people or the environment when we use them in mobile communications. responsible way throughout the Group. All of our national companies have officially accepted the EMF Policy and implemented most of the required measures. Our EMF Policy stipulates the following principles and measures: The effects of electromagnetic fields have been thoroughly researched over past decades in numerous scientific studies. The World Health Organization (WHO) analyzes the findings of scientific research and recently made a statement regarding the results in October 2014. In its statement the World Health Organization concludes that the current threshold values for electromagnetic fields ensure that mobile communications technology can be used safely but that further research is required. Deutsche Telekom has made a commitment to actively address scien- tific research on mobile communications and health, and provides detailed information on the Group website regarding the latest technol- ogy and scientific risk assessments published by expert committees and organizations. To this end, we published a brochure titled "Fakten zu Mobilfunk und Gesundheit" ("Facts about mobile communications and health") and revised it in 2017. The document is available on our Group website: https://www.telekom.com/de/verantwortung/klima-und- umwelt/mobilfunk-und-gesundheit GOALS MEASURES MEASURING SUCCESS § Protecting people's health § EMF Policy § Evaluating the EMF Policy § Voluntary commitment STRIVING FOR SECURE MOBILE COMMUNICATIONS We want to make our mobile communications infrastructure and our new products, as well as the processes on which they are based, as resource-efficient, secure and safe for health as possible. In Germany these activities are based in particular on voluntary commitments by mobile communications providers and an agreement with local authori- ties' associations. Compliance with these voluntary commitments is reviewed every two years by external experts. We submitted our annual mobile communications expert report to the German Federal Govern- ment in 2016. What's more, in collaboration with Telefónica, we also support the information portal www.informationszentrum-mobilfunk.de. Transparency We place importance on discussing issues involved in mobile communi- cations openly. We make all relevant information regarding our mobile communications equipment in Germany accessible to the public, e.g., on the EMF database operated by the German Federal Network Agency. Information We provide consumer information that is easy to understand and pur- sue a fact-based, sound information policy. On our Group website we provide the latest information to those interested. We also provide our customers with information on the SAR levels of their devices. In addi- tion, customers can get information on SAR levels at many of our shops, via our free environmental hotline or via e-mail. Participation We rely on close collaboration and constructive dialog with all those involved, including communities, when it comes to network expansion. Our goal is to find amicable solutions and negotiate acceptable com- promises, which can only be achieved by responding fairly to critical arguments and being ready to learn from mistakes. Promoting science & partnerships Our guidelines call for promoting targeted research, scientific excel- lence, transparency, objectivity and intelligibility. We conduct ongoing reviews of compliance with our EMF Policy. The findings are used to improve individual aspects and develop solutions in different working groups such as our EMF Core Team and the EMF Technical Working Group. Our Group-wide EMF Policy, which we adopted in 2004, plays a pivotal role. The policy specifies standardized minimum requirements in the area of mobile communications and health, requirements that by far exceed those set forth by national laws. Our policy provides our national companies with a mandatory framework that makes sure that the topic of mobile communications and health is addressed in a consistent, EVALUATING AND IMPLEMENTING THE EMF POLICY We want to seamlessly implement our EMF Policy throughout the Group. We help our national companies do this by providing specific tools. For example, we formulated standardized policies for funding research, for example, and published these on the Deutsche Telekom
CUSTOMERS & PRODUCTS CONSUMER PROTECTION AND SECURITY Mobile communications and health (EMF) 85 website. The national companies take these policies into account when formulating their own funding programs. We also rely on our national companies' own initiative and encourage them to continue to improve their measures even after they have fully implemented the EMF Policy. The dialog conducted by the Deutsche Telekom national companies with other network providers and with consumers, politicians and scien- tists plays a central role in this context. Regular reviews show us that the EMF Policy is being implemented in all of our action areas. We are also working on expanding our country-spe- cific activities. In 2016 we introduced small cells, an innovative, high-performance mobile communications technology. Small cells add additional capacity to our mobile communications network in places with high traffic vol- umes. Small cells generally emit weaker electromagnetic fields than traditional macrocells as they are used in mobile communications net- works. Due to the small distance, the cell phone's transmission power can be reduced with small cells. Because cell phone transmission levels are often the main source of electromagnetic fields in our immediate environment, reducing these is a particularly effective way to reduce EMF exposure. In 2017 we commissioned a study from RWTH Aachen in cooperation with TU Ilmenau. The study aimed to elaborate practical procedures for assessing the effect of small cells on people and the environment. The results were discussed in October 2017 in a work- shop with representatives of various scientific institutes and the compe- tent authorities. The state capital of Munich has partnered with Deutsche Telekom since 2016 to conduct a pilot project adopted by the Munich City Council for the development of innovative small cells. During the project, small cells sites were measured, and the results were presented to the City of Munich in July 2017. In Austria, the citizens' mobile communications forum gives interested citizens the opportunity to ask experts questions about mobile commu- nications directly and online. The forum is an initiative sponsored by the industry association Forum Mobilkommunikation (FMK). Over time, it has grown into a knowledge platform containing answers to the most important questions regarding the topics of mobile communications technology and mobile communications and health.
SOCIETY 86 SOCIETY We want to be a trustworthy partner for people in an increasingly digital world and want to enable equal participation in the information and knowledge society to as many people as possible. That is why we are laying the foundation for everyone being able to navigate the digital world safely and competently. We are involved in social concerns with our own initiatives and programs and support charitable organizations.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD 87 A RELIABLE PARTNER IN THE DIGITAL WORLD The digital revolution is changing our lives. The technological opportu- nities that come along with it are almost infinite. Digitalization has the potential to make the world a better place to live in – by providing easy access to information, enabling greater transparency and providing a previously unheard-of capacity to create networks. But it also bears risk. This raises many general ethical issues: How much technology is (still) good for human beings? What defines humans and differentiates us from machines and robots? To stand still or go back are no options because the digital development cannot be stopped or even reversed. Rather, digitalization must be designed for the purposes of human beings - a task that challenges everyone: politics, economy and civil society. In addition, humans must be enabled to use opportunities and to avoid dangers. In this context we as a telecommunications company consider ourselves to carry respon- sibility. Grouped together under the question "Are we stumbling blindly into digitalization? We need digital responsibility!“ we started an initia- tive in 2016, with which we are facing our Corporate Digital Responsibil- ity. The main idea behind this is that we have to deal with the question of exactly what shape digital responsibility is going to take. But no one company, institution or government can mandate digital responsibility on its own. It is something that involves everyone. For this reason, we are seeking dialog with experts, opinion leaders, but also regular citi- zens. In our web special, we are offering information and expert inter- views and during our events, we invite discussion. Furthermore, we are also engaged in numerous other initiatives and through other activities. In order to ensure everyone can participate in the knowledge and infor- mation society, it is important that they know how to use digital media safely, competently, and responsibly. Media literacy has become a key skill. Our aim is to make sure that people know how to competently and safely use new technologies regardless of their social background or personal abilities. With our numerous projects and initiatives in Ger- many and Europe, we target children and young people as well as adults and people of a more advanced age. It remains part of our social responsibility to support people seeking refuge in Germany with cultural integration and inclusion in the employ- ment market. Our goal is to open up career perspectives for a success- ful new start and motivate other employers to join in. We are convinced that companies as well as politics and civil society make an important contribution to the integration of refugees into our society. We also apply our civil duty regionally, in particular in Bonn, where our headquarters is located. There, we support the local sport with Telekom Baskets and Baskets@school, and cultural events such as the Beethov- enfest Bonn and the Jazzfest Bonn. On our numerous Social Days, we give our employees throughout Germany the opportunity to volunteer for local social projects or the environment. GOALS MEASURES MEASURING SUCCESS § Strengthen equal opportunities and media literacy for people of all ages § Provide broad access to digital technologies § Ensure better access to educa- tion for children and young people § Media literacy projects § Social Commitment KPI § Educational projects § Network coverage status § Engagement for refugees § Providing technical infra- structure WHAT MAKES US A RELIABLE PARTNER IN THE DIGITAL WORLD Digital technologies have penetrated German society like never before. This is shown in the D21 Digital Index 2017, which is promoted by Deutsche Telekom. However, the index also shows that with respect to the use of digital technologies, there are big differences between indi- vidual groups in society. Having access to modern information technolo- gies is the basis for the ability to participate in the knowledge and infor- mation society. We are committed to ensuring that everyone, regardless of age, background or education, can participate in digital society. That is why we are continuing to rapidly expand our infrastructure and improve transmission speeds with new, secure technology. At the same time, we use our social initiatives to reduce potential obstacles to ICT use. To this end, we contribute our core expertise as an international ICT corporation. We develop our own offers and support partner initia- tives with our expertise in this area. We have specific goals in this aspect, for ourselves as well as for our partners. Our activities focus on the following: Creating awareness The only way to effectively shape the digitalization process is in collabo- ration with the worlds of business, politics and society. We have made a commitment to promoting social dialog and are active in collaborations and partnerships to facilitate this dialog. By signing the Charter of Digi- tal Networking we emphasize our commitment. If the digitalization process is to succeed, it is vital that people have faith in the confidentiality of their personal data. Data privacy and data secu- rity are our highest priority, which is why we support the conscious and safe handling of personal data, for example with our online guide sicherdigital.de.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD 8888 With its "Yes, I can!" initiative, Deutsche Telekom Stiftung supports projects and organizations that help socially and educationally dis- advantaged young people improve their personal and media skills. We are also involved in the Digital-Kompassproject, which offers volunteers a platform to help seniors navigate the Internet. Along with the Bundesarbeitsgemeinschaft der Senioren-Organisa- tionen (BAGSO, German Association of Senior Citizens' Organiza- tions), we support the media literacy of older people and also sup- port the "Golden Internet Award" for competent internet users age 60 and up. In this context, Deutsche Telekom awarded the special prize "Letting ideas grow" in 2017 to a special project that is now being supported in its implementation. The question of whether and how information and news on the Internet can be identified as "true” is also vital to ask. We have addressed this subject internally on our activity day "1001 truths - trust and opinion- forming online". Supporting implementation With our expertise, we support projects and initiatives that offer digital solutions for social challenges: We are a member of the association Deutschland sicher im Netz e. V. [DSiN] (Making Germany Safe on the Net), which serves as a central point of contact for IT security and data protection issues. In the context of DsiN, we support the Digital Neighborhoodproject, which trains people to be volunteer IT ambassadors. With the virtual reality game "Sea Hero Quest VR", we are making a contribution to dementia research. In the context of our corporate volunteering activities, our employ- ees are participating in helping refugees to learn the German lan- guage online through the program eStart. Further, they spark chil- dren's interest for STEM subjects as reading tutors and mark wheel- chair friendly locations on an online map wheelmap.org. We are also working to further improve access to modern information technology. Within the scope of the Telekom@School initiative, we therefore offer general and vocational schools throughout Germany free Internet access up to 16 Mbit. Connections at higher speeds are availa- ble to schools at significantly reduced prices. We also offer special rates to enable low-income customers and people with disabilities to make phone calls and surf the web at reasonable prices. More than one million customers in Germany take advantage of these special plans each year. Strengthening skills "Teachtoday" is our initiative promoting safe, competent use of media. It supports children, young people and parents as well as teachers by offering hands-on tips and materials. The free children’s magazine „Scroller“ by the Teachtoday initiative encourages children to think about how they use media and learn to co-create the digital world. We strengthen competence in the STEM fields of science, technol- ogy, engineering, mathematics with a number of measures and programs. Many of these projects are supported by the Deutsche Telekom Stiftung foundation. Along with four other foundations, the Deutsche Telekom Founda- tion is a supporter of the "Education and Digitalization Forum" that intends to improve equality with digital media education.http://www. forumbd.de/
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Raising awareness 89 RAISING AWARENESS We want to be a reliable partner in the digitalized world. This is why we work to raise awareness of the opportunities and challenges that digital- ization brings and encourage public dialog, for example, by fostering the Charter of Digital Networking. “1001 TRUTHS – TRUST AND OPINION FORMING ONLINE” ACTIVITY DAY The Internet makes it possible to distribute information directly and unfiltered. Serious news is more and more often mixed with opinions or "fake news". And in social networks, insults and hate messages can be found more and more often. But how can fake news be identified? And what can we do about personal attacks and insults on the Internet? More than 2000 of our employees discussed these and other questions in July 2017 during the "1001 Truths - trust and opinion forming online” activity day in Bonn. Internal and external experts were on hand to answer questions, from Barack Obama's election campaign manager to the founder of "Hate helps", a Facebook group that turns hate messages into donations. In numerous presentations and personal talks, the experts provided infor- mation about the impact of fake news and ways of identifying it. Further- more, our employees were able to participate in discussion rounds with internal and external experts, found out how the police use their social media channels or how they can react to cyberbullying, and learned more about the darknet in our Cyber Defense Center. SAFETY FIRST: OUR COMMITMENT TO SECURE HANDLING OF DATA Deutsche Telekom continuously works on providing transparent infor- mation on data protection for Internet users and raising the users’ awareness of the necessity to handle data securely. The sicherdigital.de advice portal, for example, provides information on online risks and protective measures. Our Teachtoday initiative and our engagement in "Making Germany safe on the net" are our commitment to more secure and competent media usage.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Building skills 90 BUILDING SKILLS We want to enable people to participate in the knowledge and informa- tion society and to benefit from the opportunities of digitalization. It is not just technical access to the Internet that is crucial for this, but also that people know how to use digital medial safely, competently and responsibly. For this reason, we teach specific target groups about opportunities and risks and are committed to improving their digital skills. All such initiatives in Germany, including Teachtoday, will be pre- sented on our website www.medienabersicher.de. We relaunched the website in 2017 and are successively expanding it. Our activities in Ger- many in the area of youth protection are presented on a page dedicated to the protection of young people, which was re-designed in 2017 and is part of our corporate website. This is how we are complying with the transparency requirements of our international voluntary commitments such as the ICT Coalition or the Alliance to Better Protect Minors Online, which aim to create better online environments for children and young people. Deutsche Telekom Stiftung's purpose is promoting digital skills and thus supports projects and programs in that area. TEACHTODAY – AN INITIATIVE FOR SAFE, COMPETENT MEDIA US Teachtoday(www.teachtoday.de) supports children, young people, parents and grandparents as well as teachers by offering hands-on tips and material about safe and competent media usage.. Among other things, Teachtoday has developed a media obstacle course that is a fun way of learning about safe media use. All information are available in German, English, Croatian, German, Montenegran, Polish, Romanian, and Hungarian. And on YouTube, Teachtoday can be enjoyed with its own channel, which provides short, catchy videos about safe, competent Internet use, data protection and the issue of being authentic on the Internet. Student projects award at "Summit for Kids" At this year's event of Teachtoday "Summit for Kids" in November 2017, the six finalist teams of the competition "Medien, abersicher" (Media, of course) were in the focal point. They had previously qualified for the finale in a public online vote and then carried out a project under the heading "Do the media influence opinion?” The media scouts of the comprehensive school Heinrich-Heine-Gesamtschule in Duisburg landed first place with a project that addressed the structure, effects and dangers of chain letters. Media scouts are students who contribute to media competence among their fellow students. The children from Duisburg designed their own chain letter experiment in order to educate their fellow students on the subject. Partner events: Touring the country to promote safe online behavior With their own event day at the Haus der Geschichte in Bonn (German History Museum), Teachtoday 2017 participated again in the Safer Internet Day. This time, the event took place under the motto "Be the change: unite for a better internet". In various workshops, more than 60 school kids learned how to use digital media safely and to form their own opinions and answers to problems. The workshops dealt with important aspects such as safety, data protection, duration of cell phone use or cyberbullying. All participants also went through the Teachtoday media obstacle course. Safe online media usage was also the subject of the event day sup- ported by Teachtoday for the pilot project FSJdigital of the German Red Cross. More than 200 children participated in this event in March of 2017 in Halle (Saale). The young schoolchildren had fun exploring safe media use at four stations of the Teachtoday media obstacle course. Among other things, the children learned how to create a strong password and how to protect their personal data. All stations were monitored by second year FSJdigital volunteers. In order to prepare the volunteers for the day, they were given special coaching by Teachtoday employees.Moreover, Teachtoday was present at the German Youth Conference "Media 2017" in Rostock, where over 210 media scouts from all over Germany got together. Teachtoday was at the event with three different product options to show the media scouts how they can support elementary school students in the safe, competent use of digital media. Award-winning initiative The Teachtoday initiative received a number of awards in 2017 once again. As in the previous year, Teachtoday received three Comenius EduMedia Seals presented by the scientific association Gesellschaft für Pädagogik und Information (GPI). The entire initiative was recognized in the "Didactic Multimedia Products" category, the obstacle course in the "Competence-Building Computer Games" category, and the Scroller magazine in the "General Multimedia Products" category. CONNECTED KIDS PROJECT IN AUSTRIA Digital literacy is becoming a basic skill required for participating in any aspect of society. T-Mobile Austria wants to use its Connected Kids project to raise awareness among students, parents and teachers about the many different ways of making use of mobile Internet for learning. The company also wants to advance the use of digital media in schools. Since its launch in 2013, almost 10,000 students in some 400 partici- pating classes and about 500 teachers have already had the chance to explore digital learning in a connected classroom. The topic of this year’s “Connected Kids” event was “The digital school is more than
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Building skills 9191 0 and 1”. One of the key themes was the profound change that the digi- tization of school books will bring in the future, as it offers individualized learning experiences. The overall aim of the annual event is to introduce teachers, parents and employees to new learning formats that corre- spond with the current transformation of society towards digitalization, automatization, and interconnectedness.Educational and technical sup- port is provided by T-Mobile Austria to make sure students get to experi- ence all the advantages of mobile communication in teaching. The Connected Kids blog is an important tool to make the experience of using digital media in schools and families part of a connected class- room available to the general public. Long-term project goals include inspiring students to pass on what they learn to people outside traditional educational institutions. GETTING A HEAD START WITH DIGITAL TECHNOLOGIES: OUR CHILDREN'S MAGAZINE SCROLLER The Teachtoday initiative’s media magazine Scroller was published twice in 2017. The magazine targets children between the ages of nine and twelve and provides parents and teachers with information in spe- cial supplements. It encourages children to think about how they use media and learn to co-create the digital world. Scroller is available online and as a free print version which is read by14,000 subscribers. The scroller.de portal is available in German and English. Deutsche Telekom has provided the initiative Teachtoday 2017 with free outdoor advertising space. There, Scroller was advertised in a national billboard campaign for three months at 4,300 locations with an attention-grabbing motif. Scroller was also once again recommended by StiftungLesen 2017, the German Reading Foundation, to promote safe, competent media use. Furthermore, Scroller won the "German Design Award 2018" in the "Excellent Communications Design Editorial” category. SHAPING EDUCATION – THE DEUTSCHE TELEKOM STIFTUNG FOUNDATION The Deutsche Telekom Foundation is engaged in good education in the digital world and is focused on the subjects of science, technology, engineering and math (STEM). The foundation began combining its activities under the categories of "education drivers," "education oppor- tunities," "education innovations" and "education dialog" in July 2016. Projects such as the "Junior Engineering Academy" are examples of the foundation’s successful work. Since January of 2017, the "Yes I can!" initiative has officially been integrated into Deutsche Telekom Stiftung, where it is one of the projects in the "Education Opportunities” action area. Forum Bildung Digitalisierung Deutsche Telekom Stiftung launched the „Forum Bildung Digital- isierung“ education and digitalization forum together with four other German foundations in 2016. Since September of 2017, two additional foundations have joined forces with Deutsche Telekom Stiftung. All the foundations involved in the initiative are convinced that digital media can help improve the education system, thereby improving participation and equal opportunity. The three core topics of the initiative are "per- sonalized learning," "developing skills," and "shaping change." When it comes to personalized learning, digital media can be used to give differ- ent target groups access to different learning approaches, including people with disabilities, particularly talented people and refugees. The goal of the second core topic is to convey the media skills necessary for living an independent life. "Shaping change" focuses on developing an educational concept for using digital media at educational institutions and within the education system. The Forum also looks to engage in dialog with different participants in the educational sector and to develop new approaches to education. Experts from the worlds of science and education collaborate at confer- ences, in networks and at development workshops to find answers to the big questions and challenges involved in the digital transformation of educational institutions. The schulentwicklung.digital workshop focuses on changing the school and learning culture through the use of digital media. 38 schools that are already successfully using digital media in the classroom are participating in the workshop.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Building skills 9292 The STEM reading mentors In collaboration with the German Reading Foundation, Deutsche Telekom Stiftung is looking for volunteer reading mentors to get chil- dren from the ages of 3 to 10 excited about STEM content. A total of 1,450 reading mentors have already signed up to the network, including six mentors in Madrid and Málaga. The reading mentors receive training in both classroom and online formats. They are then able to work with children at day-care centers and elementary schools. At the end of 2017, Deutsche Telekom Stiftung and the German Reading Foundation were able to offer around 100 media and action tips in nine languages. In 2017, there were STEM reading events in Germany, Austria, Roma- nia, Spain and the USA. GestaltBar – the digital workshop Young people need to learn how to skillfully and creatively use digital tools so they can actively shape their lives and have the opportunity to work in a future-oriented profession. With its "GestaltBar – the digital workshop" project, Deutsche Telekom particularly targets students at lower-level secondary schools. The goal is to use a hands-on approach to introduce young people to digital technology and give them some insight into the different technical professions. Courses include topics like robotics, app development and 3D printing. The project is initially being conducted in four pilot locations – Bonn, Berlin, Hamburg and Cologne. Calliope Mini – a mini-computer for young schoolchildren The Calliope Mini mini-computer helps young schoolchildren learn how to program a computer. In 2017, Calliope gGmbH provided pilot schools in the states of Saarland and North Rhine-Westphalia with mini- computers. The Deutsche Telekom Stiftung foundation supports the project by developing and testing learning materials and course con- cepts. Ideas for the creative use of digital technology are currently being worked on at six universities within the scope of the "Elementary school digital learning" project. Junior Engineer Academy The Junior Engineer Academygets secondary-level students (grade eight and higher) excited about technical professions and careers in engineering. The Junior Engineer Academy is offered as an elective at participating schools for two years and conducted in collaboration with universities, scientific institutes and companies. The project was imple- mented for the first time in 2005 and gives students the opportunity to put the knowledge they learn in the classroom into practice. Since the beginning of the project, the school network has been growing steadily. In 2017, nine new Junior Engineer Academies joined the network, which means that there are already 88 schools in Germany that offer an academy. In 2017, for example, students from secondary schools in Leipzig were able to research interesting telecommunications projects the Leipzig University of Applied Sciences (HfTL). One group of stu- dents developed a cost-efficient robot that can be used in IT classes at school. For the school year 2018/2019, Deutsche Telekom Stiftung is inviting applications for new junior engineering academies across Germany for the last time. Schools that would like to integrate the teaching model on a long-term basis into their teaching schedule can submit an application to Deutsche Telekom Stiftung along with their concepts. Deutsche Telekom Stiftung will provide the winning schools with seed funding of up to 10,000 euros to enable them to set up a Junior Engineer Academy. Participants are encouraged to meet regularly at annual JIA conferences to share their experiences. FundaMINT FundaMINT is Deutsche Telekom Stiftung's grant program for student teachers in STEM subjects. It helps student teachers get ready for their future career. Up to 25 grants are awarded every year for a period of four semesters each. The program was expanded in collaboration with the PädagogischerAustauschdienst (PAD), a department of the Stand- ing Conference of the Ministers of Education and Cultural Affairs, and the Central Agency for German Schools Abroad. Grant recipients now have the opportunity to work at schools in central, eastern and southern Europe, conduct student projects and participate in preparatory and post-project seminars. STEM Didactics Fellowship program In 2017, Deutsche Telekom Stiftung invited applications for the STEM Didactics Fellowship program for the second time. Up to nine fellow- ships are granted each year to young researchers and scientists in the fields of mathematics, physics, chemistry, biology, computer science, technology and science education. The young fellows can attend semi- nars and workshops on topics such as job negotiations and supervising doctoral candidates and are involved in the Deutsche Telekom Stiftung network. "Yes, I can!" initiative: support for 82 new digital competence projects With the "Yes, I can!" initiative, Deutsche Telekom Stiftung teaches young people key skills for an independent and confident life in the digital world. In 2017, 82 open youth work projects fostering digital skills were funded through the initiative. The overall funding amount was once again around 600,000 Euro in 2017. The key aim of the initiative is to empower children and young people and facilitate their participation in social development through skills building. In 2017, the project focuses on the development of media and digital skills. The age bracket for the target group was slightly expanded and is now between 9 and 16 years. More than 1,200 projects through- out Germany have been funded by the "Yes, I can!" initiative with a total of more than 6 million euros since the initiative was launched seven years ago. PROMOTING STEM EDUCATION IN GERMAN As a future-minded telecommunications and technology company, we depend on well-qualified talent, in particular in the STEM areas (science, technology, engineering, math). For this reason, we do a lot to introduce young people to these subjects, to get them excited about them and to improve education in the STEM subjects. It is particularly important to us to increase the ratio of women in STEM education. We are convinced that diversity helps us remain competitive around the world with good ideas and outstanding products and consolidate our position as an attractive employer. However, getting young women excited about an education in technology remains difficult. In our technical cooperative study programs we were able to increase the ratio of women from eleven percent in 2010 to 18 percent by the end of 2017 - but we don't consider this to be enough, by far.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Building skills 9393 Women's STEM Award International With the Women's STEM Award, we hope to increase the attractiveness of STEM subjects and encourage women to choose careers in these areas. The prize is awarded annually in collaboration with the "audimax" student magazine and the "MINT Zukunftschaffen" (Creating a STEM future) initiative. It goes to thesis papers written by female graduates that focus on one of the following key growth areas: Internet of Things, artificial intelligence, cyber security or networks of the future. In 2017/18 female graduates from around the world could apply as well. 30 international thesis papers, for example from Finland, the UK, India, Italy, the Netherlands, Austria, Romania, Russia and the USA were submitted. The winners will be chosen on June 21, 2018 in Bonn. RoboNight in Saarland During the RoboNights at the University of Applied Sciences (HTW) in Saarbrücken students are introduced to technical subjects in a fun way. At the RoboNight in November 2017, Deutsche Telekom was not only present as a sponsor, but also had a stand presenting future topics such as AR (Augmented Reality) and VR (Virtual Reality). The participating student teams were given tasks in the context of a competition and had to solve them with their robots. The winning team got to enjoy a robot kit and an invitation to the Telekom Design Gallery in Bonn. There, they could see for themselves what will be possible with robots in the future, in virtual reality and in the connected home. STEM projects of Deutsche Telekom Stiftung Deutsche Telekom Stiftung sponsors STEM education with a number of projects, among them the STEM reading mentors, "GestaltBar – the digi- tal workshop" for students at lower-level secondary schools, the mini- computer "Calliope Mini" for primary schools, the Junior Engineering Academy for secondary-level students (grade eight and higher), Funda- MINT, a grant program for student teachers. Every year, the foundation invites applications for the STEM Didactics Fellowship program from young scientists. EDUCATIONAL STEM ACTIVITIES IN CROATIA Hrvatski Telekom is a technology leader and it has identified develop- ments in the labor market, in the economy and in the academic commu- nity. The company has launched a STEM program that raises the popu- larity of STEM occupations among university students, with elementary and high school students, and also among our employees. Hrvatski Telekomrecognizes the importance of fostering the interest of young people in science, technology, engineering and math (STEM). In 2017, we therefore continued to focus our activities on strengthening this interest. In 2017, the competition for funding entitled “Together we are Stronger” (Zajedno smo jači) concentrated on projects aimed at the education of school and university students, educators, and on socially responsible innovations. The winner in the category of Youth Education was the "HT Campus" project developed by the Astronomical Society Višnjan. The monetary prize in the category Teacher/Professor education was awarded to the Institute for Youth Development and Innovation for the project entitled "Advanced Internet of Things (IoT) Technologies in Croatian Schools". The project developed by the Zagreb-based Faculty of Mechanical Engineering and Naval Architecture of the University of Zagreb entitled "The First Croatian Hydrogen Refueling Station" was declared the best in the category of Innovations. HT STEM HUB The launch of the HT STEM HUB incubator in 2016 was directed toward fostering the development of skills in science, technology, engineering and math. The intention is to create an academic and economic com- munity of young experts, enabling them to realize their professional ambitions in Croatia using the most advanced technology with secured resources. The STEM program of Hrvatski Telekom facilitates inclusion in international projects that are realized within the Deutsche Telekom Group inside Croatia. Hrvatski Telekom was the first organization to bring together several individual STEM initiatives. This has involved integrating a number of activities to introduce children to interdisciplinary knowledge such as robotics and astronomy. We cooperate with STEM faculties and their students come to us for practice and mentoring. They then have an opportunity to earn a scholarship and excellent associated job opportu- nities. The students selected for the Faculty of Electrical Engineering receive a monthly scholarship of HRK 3,000. Collaboration with student associations enables us to participate in competitions relating to the design of business cases, in career fairs, and frequent visits by our specialists to faculties imparting specific practical knowledge to students. A machine learning workshop held during the year for students of the Faculty of Electrical Engineering and the Faculty of Science was also very successful, and the participants gave favorable feedback. HACK IT! We joined forces with hub:raum – Deutsche Telekom’s incubator – to organize the “HACK IT!” hackathon. The hackathon is part of our broader strategy to enhance STEM activities in Croatia. Ten teams com- peted to develop the best solution in the field of immersive within the space of 24 hours. The main prize was for HRK 30,000 (approx. EUR 4,000). Out of 125 applications submitted from across the region, the 10 best teams have been selected to compete in offering the best and most comprehensive solution for future communication. Virtual and augmented reality, holograms, and artificial intelligence will be included in our future communication The winning team “Tartle” presented an interactive fairy tale for young children. The solution uses extended reality to communicate with chil- dren on smartphones. It "listens" and creates virtual objects and charac- ters to the keywords in the environment. The team gets access to hub:raum programs. REFUGEE AID: INTEGRATION INTO WORK, INTEGRATION INTO SOCIETY A total of 340 refugees were working at Deutsche Telekom in 2017 – primarily as apprentices, interns or as part of the "Internship PLUS direct entry" pilot initiative Deutsche Telekom’s commitment to working with refugees started with a first-aid task force in 2015, which provided, for example, free Wi-Fi in refugee reception centers and properties to be used as refugee housing. In addition, employees were assigned to the Federal Office for Migration and Refugees, and employees involved in volunteer refugee work received support.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Building skills 9494 Information about Germany: The Handbook Germany Under www.handbookgermany.de – the further development of our refugee portal started in 2015, in cooperation with the Federal Chancel- lor's office and the New German Media Professionals – refugees find information regarding life, learning and working in Germany. The infor- mation is not only presented in German, but also in other languages such as Arabic, English and Persian. Deutsche Telekom supports the editing team as a technology partner. Handbook Germany was recog- nized at the Film Festival Cologne by the "MEDIA & MIGRATION NRW 2017" project in the category "Best Project of an Initiative/Institution". For its engagement in the support of millions of Syrian refugees, the GSM Association recognized Deutsche Telekom furthermore with the Glomo Award 2017 in the category "Outstanding Contribution to the Mobile Industry". In 2016, the first-aid project developed into the current "Deutsche Telekom helps refugees” project. By now, the focus is on integration of refugees into the labor market. To this end, we offer internships – the first step in getting a foothold in the German labor market. In 2017 alone, there were 270 new job placements in the various programs. Up to 100 training positions, entry-level training schemes and coopera- tive Bachelor's and Master's programs were offered. We introduced recruitment days for the intern selection process, which are more about getting to know each other than about perfect prior experience and cer- tificates. Six recruitment days were held in 2017 at different locations, with the majority of the more than 100 internships available being awarded on those days. Through recruiting measures, collaboration with the Federal Employment Agency, communication via social media, volun- teer workers and refugees who already work for the company, we were able to increase the number of applications and increase the ratio of applicants to job offers from roughly 2:1 to 5:1. Internship PLUS direct entry = integration into the working world The “Internship PLUS direct entry” pilot initiative, a cooperation with the Federal Employment Agency, the Deutsche Post DHL Group and Hen- kel, also started in 2017. A six month orientation phase is followed by a two-year employment. The advantage is that in addition to work, the refugees will also have enough time to improve their language skills and to find their way step by step into the new job assignment. Overall, we have assigned 38 relevant positions at Deutsche Telekom. Four of the new employees on this program are supporting customer service with their Arabic language skills as part of the "Telekom hilft!” (Telekom helps!) team by answering questions through the ArabicTwitter hotline that was established in this context. Awards Winners, e.g. of the Glomo Awards 2017 in the category "Outstanding Contribution to the Mobile Industry" Handbook Germany: Winner of the MEDIA & MIGRATION NRW 2017 award in the category "Best Project of an Initiative/Institution" at the Film Festival Cologne Wi-Fi provision By the end of 2017, 56 free Wi-Fi hotspots for refugees in refugee centers (figure decreased as expected as some refugee centers were closed) Properties 35 Deutsche Telekom buildings provided for use by the Federal Office for Migration and Refugees Grants create opportunities In 2016, just under 20 refugees took up studies at Deutsche Telekom’s own University of Applied Sciences in Leipzig and obtained grants from Deutsche Telekom. Moreover, we support the academic education of people who took refuge in Germany through the Welcome grant pro- gram from Deutsche Universitätsstiftung. The program offers refugee students in Germany one-on-one counseling with a lecturer from their field of study who lives near their university. Placement in training Offer of up to 100 training places and scholarships, allocation of places in dual Bachelor's and Master's degree programmes "Internship PLUS direct entry” initiative Two-year employment of refugees following a six-month orientation phase. Pilot initiative initiated in cooperation with Deutsche Post DHL Group, Henkel and the German Federal Employment Agency.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Building skills 95 The students will undergo full training and certification examinations and will emerge from the process with a qualification which will enable them to find work in any IT help desk call center or as a field technician, among other potential possibilities. Finding employment is particularly challenging for individuals living with disabilities not because they are incapable, but because they are often denied the opportunities that are made available to their able-bodied counterparts. Refugee portal Technology partnership for the "Handbook Germany" refugee portal containing information on the asylum process and life and work in Germany (re-launch on February 3, 2017) Recruiting Support for the Federal Office for Migration and Refugees provided by over 500 civil servants employed at Deutsche Telekom. Recruiting Support for the Federal Office for Migration and Refugees provided by over 500 civil servants employed at Deutsche Telekom. Involvement of DTAG employees DTAG employees involved in volunteer refugee work, e.g. the eStart program of cooperation partner Volunteer Vision, received support As of December 2017, 63 Deutsche Telekom employees supported one refugee each as language tutors. "ALL FOR ONE WORLD - ONE WORLD FOR ALL": SCHOOL MEETS DEVELOPMENT POLICY In 2017/2018, we supported the school competition "All for one world - one world for all" as an industry partner. The competition aims at sup- porting the teaching of global development in classes for all ages and raising the schoolchildren’s awareness of questions of international development. The competition calls on children and young people to submit texts, photos, videos, art work, plays or music, posters or even digital work. "All for one world - one world for all" is an initiative carried out by Engagement Global, under the auspices of the Federal President and on behalf of the Federal Ministry for Economic Cooperation and Development. ANS BOTHA LEARNERSHIP IN SOUTH AFRICA T-SystemsSouth Africa, digital transformation specialist and technology partner to Olympian and400m World Record holder – Wayde van Niekerk, is putting its weight behind sustainable job creation for young people living with disabilities in South Africa through the Anna Botha Learnership program. This program, which comes as part ofT-System’s ongoing Nation Building and CSI initiative, is named in honor of Anna “Tannie Ans” Botha, Wayde’s coach and mentor. T-Systemshas launched the Anna Botha Learnership Program in con- junction with the Wayde Dreamer Foundation, a collaborative initiative betweenT-Systemsand Wayde van Niekerk which seeks to uplift the youth of South Africa. The program is aimed specifically at young peo- ple living with disabilities and learning difficulties. It underpins Botha’s support for the Foundation’s drive to give something back to those who don’t often get the opportunity to better their disabilities. Eleven candi- dates are accepted into the program as part of the initial trial period. Each candidate will graduate with a NQF4qualification in Information and Communication Technology Literacy and their A+ certification, which will enable them to find suitable employment within the IT field.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Encouraging implementation 96 ENCOURAGING IMPLEMENTATION We want to motivate people to find creative digital solutions to social challenges. To do this, we provide tangible support and make it easier for them to realize their ideas. Our efforts include, for example, our involvement with the "Deutschland sicherimNetz" association and our collaboration with the German National Association of Senior Citizen's Organisations (BAGSO) to sponsor media literacy projects for seniors. Furthermore, we support the development of innovative solutions, such as new apps, and we develop our own sustainable products and ser- vices. We want to be a reliable partner in the era of digitalization, which is why we closely evaluate all of the feedback we receive. Our stake- holder dialog gives stakeholders the opportunity to rate sustainability topics according to their importance and assess our performance in the different areas. PARTNERING WITH "DEUTSCHLAND SICHER IM NETZ" AND BAGSO The Deutschland sicher imNetz e.V. (DsiN) association has served as a central point of contact for consumers and small businesses interested in the topics of IT security and data privacy for ten years now. Thomas Kremer, Deutsche Telekom Board Member for Data Privacy, Legal Affairs and Compliance, is chairman of the board at DsiN. As a member of the association, we are engaged in the youth competition myDigital- World and the workshop series IT-Sicherheit@Mittelstand. We also participate in the Digital Neighborhood project, which trains people to become volunteers sharing their IT knowledge with others. The Digital Neighborhood project was presented during the Community Volunteer- ing Week in September 2017. At the Engagement Market, we presented self-study courses for training as a volunteer security and Internet trainer. We promote media literacy among seniors in collaboration with the German National Association of Senior Citizen's Organisations, BAGSO. As a partner, we sponsored the Internet Gold Award 2017. Further part- ners are DsiN, Wegeaus der Einsamkeit e.V. (Wade), Google Germany and SAP. The award recognizes people over the age of 60 who use the Internet skillfully and help others to get started in the online world. The Minister of the Interior, Dr. Thomas de Maizière, acted as patron for the year 2017. In the context we support one of the winners of the special award "Let ideas grow” in implementing their project by providing advice and support in public relations and networking. As an advisory board member we are also involved in the joint Digital- Kompass project conducted by BAGSO and DsiN. Digital-Kompass provides older people and those teaching them to navigate the Internet with tried and tested materials. INNOVATIVE SOLUTIONS TO SOCIAL CHALLENGES Technology can also be used to address social challenges. This is why we support the development of various digital solutions and education offers such as the German concussion test app GTE or the "MyShake” app, which turns smartphones into earthquake early warning systems. In the reporting year, we also supported the following projects: Supporting dementia research in a fun way with the virtual reality game"Sea Hero Quest VR" Based on the successful mobile game, Deutsche Telekom launched a virtual reality version of Sea Hero Quest in 2017. The aim is to bring scientists one step closer to the development of new methods for the early diagnosis of dementia. Dementia is a big medical challenge, with 47 million patients as of today. In 2050, there will be three times as many. "Sea Hero Quest Mobile" generated data about the users’ spatial navigation ability as the loss of this ability is one of the first symptoms of dementia. Based on this data, scientists were able to determine a worldwide benchmark of spatial navigation in healthy people. "Sea Hero Quest VR" now takes the next step: this innovative format will enable much more precise data on spatial navigation ability to be collected thanks to its three-dimensional display. 2 percent of all Samsung Gear owners worldwide already have down- loaded and played the VR game. Overall, by today, over 3.8 million people have supported dementia research by playing Sea Hero Quest mobile & VR. The initiative shows how digitalization can influence and change scientific research in a positive way. The VR game can be downloaded for free at the Oculus Store and in Google Daydream. The mobile game is furthermore available for down- load in the App Store as well as in Google Play. Year of voluntary social/digital work: Under the pilot project "Year of voluntary social/digital work" (FSJ Digital) in Halle, Saxony-Anhalt, young people with an interest in media supported non-profit organiza- tions, such as facilities for seniors and people with disabilities, with digital projects and the application of new media. Volunteers received media teaching support during their entire time on the program. The concept was tested at 25 facilities in Saxony-Anhalt. The program offered a wide spectrum of activities ranging from digital storytelling to creating accessible web content. The project was sponsored by the German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSFJ) and supported by Deutsche Telekom and NrEins.de AG. The project is being evaluated after completing its second year.
SOCIETY A RELIABLE PARTNER IN THE DIGITAL WORLD Encouraging implementation 9797 TELEKOM ALBANIA RECEIVES "CONTRIBUTION TO NATIONAL LEVEL" PRIZE Telekom Albania was awarded the “Contribution to National Level” Prize by Partners Albania at a ceremony on 1 December. The award acknowledged Telekom’s major contributions supporting social, health- care and environmental development in Albania. The contributions include stocking with books at the public libraries in the City of Tirana, donation of medical equipment to the “Shefqet Ndroqi” Hospital and the Neurology Service at the ”Mother Theresa” University Hospital Center, and the special contribution for research into the fight against dementia through the use of virtual reality. This is the third award of its kind for Telekom Albania. In 2012, an award was bestowed on Telekom for its contribution to vulnerable communi- ties and its long-term engagement in encouraging volunteering initia- tives. In 2012, Telekom Albania received an accolade for its contribu- tion to vulnerable groups requiring refurbishment the Retirees’ Home in the City of Fier. EDUCATIONAL ROBOTICS IN GREECE COSMOTE is a strategic partner of the non-profit organization for edu- cational robotics, science and technology WRO Hellas and over the past three years the Group has been implementing a series of educa- tional robotics initiatives with the aim of disseminating STEM subjects (science, technology, engineering and mathematics) in the Greek edu- cational system. The following initiatives were launched in 2017: The Pan-Hellenic Educational Robotics Competition for primary, junior high and high school students was rolled out. More than 3,500 children participated in the competition and over 1,000 teachers were trained to enable the students’ teams to design and build a complete robotic model. The National WRO Competition was organized with more than 700 students participating from all over Greece. The winning teams took part in the World Robot Olympiad (WRO) held in Costa Rica in November 2017. Greek students spent an intensive preparation period from the announcement of the WRO in March 2017 until the finals in Costa Rica developing critical skills such as teamwork, problem-solving, engineering, and programming. The Bronze Medal and significant awards were bestowed on Greek teams at the World Robot Olympiad 2017. The SMARTBIRDS NEXT team from Patras won aBronze Medaland was ranked third world- wide (category: "Open Elementary"). This was the 2ndOlympic Award gained by Greece at the WRO. Other Greek teams ranked 7th and 15th in the “Regular Junior” category, 11th in the “Open Senior” category, and 16th in the WRO Football category worldwide.
SOCIETY ENGAGEMENT@TELEKOM 98 ENGAGEMENT@TELEKOM Our social commitment reflects our responsibility as a company acting in the political, social and business environments. To us, this also means encouraging the volunteer efforts of our employees, which contribute significantly to strengthening the sense of community. Their voluntary community work makes our employees ambassadors of our values. Volunteering is also very beneficial when it comes to internal HR devel- opment. It expands each person's horizon and has a positive impact on social skills and teamwork. That is why we give our employees ample opportunity to volunteer, preferably with a focus on teaching media skills. This is just another way in which we help simplify and enrich the lives of those around us. Supporting our employees ongoing commitment and providing incentives for getting involved are two aspects covered by our corporate citizenship program, Engagement@telekom. GOALS MEASURES MEASURING SUCCESS § Using our core areas of § Corporate volunteering § Social Commitment KPI expertise to benefit society § Corporate giving § Reviewing compliance with our § Supporting society as a trusted partner § Donation Policy Donation Policy § Cooperation with non-profit organizations TAKING RESPONSIBILITY IN OUR SOCIETY We contribute to society in a number of ways with our corporate citizen- ship program, engagement@telekom. engagement@telekom is based on two pillars: Long-term partnerships with non-profit organizations Corporate volunteering (supporting our employees in their volunteering activities) and corporate giving (our donation activities) In times of digital transformation, we want to be a trusted partner to society. We contribute our core expertise and the commitment of our employees to these efforts. Our social commitment often takes the form of longstanding partner- ships like our partnership with Nummer gegen Kummer (youth coun- seling line), the Telefonseelsorge crisis helpline, the Lebenshilfe aid organization and DKMS, the German Bone Marrow Donor Center. In addition, we promote media literacy among seniors in collaboration with the German National Association of Senior Citizen's Organisations (BAGSO). As a member of Deutschland sicherimNetz e.V. (DsiN), we support the association in its work for IT security and data privacy. Beyond this, we participate in the Civic Involvement Week sponsored by the National Network for Civil Society. We give our employees the opportunity to volunteer for social or, with our partners, for environmen- tal projects, within the scope of our Social Days. Through corporate volunteering measures, our employees have the opportunity to teach media skills. This can be done, for example, in cooperation with the Teachtoday initiative, where our employees are provided with teaching materials. Another way of getting involved is by joining Deutsche Telekom Foundation in its efforts to introduce children to the subject of programming using the mini-computer Calliope Mini. In addition, we encourage our employees to help integrate refugees into society and support them in learning German online under the e-Start project. Corporate volunteering is also an important component of our training and development activities. The volunteer efforts of our appren- tices are given special recognition in our Group competition, Responsi- bility wins! Our corporate giving concept includes donations for aid organizations worldwide, preferably those with which we have longstanding partner- ships, and fast disaster relief. Our Group Donation Policy lays out the guidelines for these activities. For example, we have been collaborating with Germany’s Relief Coalition, Aktion Deutschland Hilft, since 2003. We collaborate closely across country borders when it comes to our involvement and share experiences and best practices. We use a set of KPIs to measure our success: The Social Commitment ESG KPI reflects our performance. The Community Investment ESG KPI reflects 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.
SOCIETY ENGAGEMENT@TELEKOM 9999 The Media Literacy ESG KPI highlights the high percentage of pro- jects and activities promoting the competent handling of media. It is highly relevant to us as it correlates closely with our core business. These KPIs are also the basis for our collaboration with partner organi- zations that help us to continuously control and evaluate our project measures and goals. These are monitored closely throughout the pro- ject year to enable us to adjust our target ranges or goals accordingly. A study by Beyond Philantrophy and Goetzpartners shows that we are one of currently only five Dax 30 companies analyzing the benefits of their social commitment. According to this study, only two companies' donation activities are clearly related to their core business. In our case, this is the promotion of media skills. In 2017, we assessed to what extent our Corporate Citizenship Program contributes to the UN’s Sustainable Development Goals (SDGs). The contribution we make to the implementation of the individual SDGs is shown in an overview. Apart from this, our network expansion also con- tributes significantly to the SDGs as it is the basis for connecting people and helps, for example, to improve access to education. INCENTIVES FOR DIVERSITY AND EQUAL OPPORTUNITY: THE DEUTSCHLANDSTIFTUNG INTEGRATION AND START- STIFTUNG FOUNDATIONS We are convinced that cultural diversity enriches our society and offers opportunities for the innovative strength of our country’s industry. This conviction is, for example, reflected in our strategic partnership with the German foundation for integration, Deutschlandstiftung Integration. The foundation supports young people with a migrant background, for example, by helping them to take their first steps into the world of work and offering the support of a large network. The patron of the foundation is German Chancellor Dr. Angela Merkel. In October 2017, Deutschlandstiftung started a cooperation with START-Stiftung. START- Stiftung has been supporting the integration of young migrants and immigrants for 15 years by issuing educational scholarships. The first joint events are planned for 2018. Scholarship program "Go your own way" The scholarship and mentor program "Go your own way" of the German Foundation for Integration places young people with migration back- grounds with mentors from politics, business, the media, culture and science. We have been a partner of the program since it was launched in 2012. Almost 600 mentors support the scholarship recipients in their professional and personal lives. So far, they have contributed over 25,000 hours of volunteer work to this program. The program also offers coaching, workshops on specific topics, internship platforms, and net- work events. In 2017, "Go your own way" celebrated its five-year anniver- sary and welcomed over 100 new scholarship recipients, so that the program now supports a total of about 700 young people. DIGITAL LITERACY PARTNERSHIPS WITH SCHOOLS IN THE USA In June of2017,T-Mobile USA launched a new program to provide stu- dents across the nation with equal access to learning for academic suc- cess and build the digital skill set that will help them compete in today’s digital economy. This new program is called EmpowerED,and it’s a spe- cial education offering that provides wireless devices and service to schools in low-income communities. In the first six months of operation, this program provided over13,000devices and lines of service to help schools and students succeed. EmpowerED is a no-cost program for students and their families. All data plans includeT-Mobile’s Web Guard CIPA compliant content filter that prevents access to adult content through three usage levels that include child, teen and young adult. All school systems participating in EmpowerED receive planning, implementation and deployment sup- port. CORPORATE VOLUNTEERING: OUR EMPLOYEES IN ACTION Under our Corporate Volunteering program, employees volunteer for social action activities. We support this kind of social commitment through a variety of projects and events. This enables our employees to make valuable contributions to strengthening our society. At the same time, however, by volunteering on meaningful projects, they are learning new skills, which also has a positive effect on their everyday work. In 2017, we supported the following projects: eStart – digital language coaching for refugees Deutsche Telekom actively supports the e-Start program facilitated by the organization Volunteer Vision. At the end of December 2017, 63 Telekom employees were already helping refugees learn German via a video platform. They meet with their students in a video chat once a week for one hour. With the help of integrated learning materials, they jointly practice homework assignments from a German course. „Responsibility wins!“ Our "Responsibility wins!" competition gives our apprentices and coop- erative degree students the opportunity to get involved for the greater good and develop their skills beyond the scope of their professional training. In 2017, many of them once again participated in a variety of projects across Germany, experiencing social responsibility first hand. The best projects will be recognized at the end of April 2018 in an award ceremony. STEM reading mentors In collaboration with the German Reading Foundation, Deutsche Telekom Stiftung is looking for volunteer reading mentors to get chil- dren from the ages of 3 to 10 excited about books with STEM content. So far, 1,450 reading mentors have already registered with the network – including 73 Deutsche Telekom employees (as of December 2017). Christmas campaign: Fulfilling children's wishes In 2017, Deutsche Telekom employees once again volunteered to fulfill the Christmas wishes of children and adolescents who live in group homes. The children and young people write their name, age and wish on a paper star. Each star has a value of €30. Employees take one or several stars, buy the desired present, wrap it in Christmas gift wrap, and hand it in to the organizational team. Once all presents are gath- ered, they are handed over to the homes. Donations for "Ein Herz für Kinder" Almost 900 Deutsche Telekom employees supported the television show in aid of the "Ein Herz für Kinder" children’s charity as volunteers at six locations in December of 2017. They volunteered at call centers collecting donations from TV viewers over the telephone. In total, over €17 million were donated. All the money collected goes to the "Ein Herz für Kinder” children’s charity. Fundraising for "Aktion Deutschland hilft" At the 2017 Guiding Principles Day, Deutsche Telekom employees donated a total of 7,500 euros, which were given to Germany's Relief
SOCIETY ENGAGEMENT@TELEKOM 100100 Free Texting & Calling: During the hurricanes and for weeks following, T-Mobile offered customers in affected areas the ability to call or text anywhere in the US for free. Customers in affected areas who were not on the T-Mobile ONE plan were also given unlimited data (T-Mobile ONE customers always have unlimited data). Text-based Fundraising: T-Mobile promoted ‘Text to Give’ mobile phone fundraising to help those impacted by the hurricanes. To par- ticipate, any consumer could donate USD 10 to the American Red Cross for Hurricane disaster relief efforts by texting short codes to 90999. Several other nonprofit hurricane relief text-to-give options were also included. Recovery Efforts: Once recovery efforts began, T-Mobile deployed equipment, supplies and disaster experts to all affected areas in all three disasters. Emergency equipment included portable genera- tors, fuel trucks, Cell On Wheels (COWs), Cells on Light Trucks (CoLTS), fuel and diesel trucks and other vehicles. Puerto Rico Response: Puerto Rico was especially hard hit by Hurricane Maria, and lacked the infrastructure and resources of the US mainland. Our immediate support to the island included a dozen cargo planes and multiple barges packed full of supplies and equip- ment, trucks, cells-on-wheels, cells-on-light-trucks and hundreds of portable generators. T-Mobile provided the Federal Aviation Admin- istration a large generator to help keep the San Juan airport open allowing for the delivery of life-saving supplies. We sent hundreds of emergency and disaster relief experts specializing in the restoration of communications networks to the island. Innovative Approaches to Service Restoration: T-Mobile also used several innovative technology approaches to restore service. One of the solutions was Project Loon, an experimental system that our engineering experts worked on with the team at X, Alphabet’s Moonshot factory. This balloon-based LTE access allowed us to deliver more limited data and texting services to customers in hard to reach areas. Another example is our partnership with Vanu, which deployed several self-contained portable cellular network units that provide voice, data and text capabilities in some of the hardest hit areas. Coalition, "Aktion Deutschland Hilft”. The money goes towards projects by the member organizations "Help", "Handicap International" and "Care". Moreover, Deutsche Telekom held a Twitter event with the hashtag #Magentaverbindet (magenta connects) on December 24, in which it donated a base amount of 3,000 euros to "Aktion Deutschland Hilft". For each additional tweet under this hashtag, Deutsche Telekom donated another euro. At the end of the day, the donation totaled 4,185 euros. TELEKOM ALBANIA SUPPORTS ACT NOW Telekom Albania supported the “Act Now” organization and their “Social Glow” project. The aim of this project is to tackle social prob- lems such as unemployment, poverty, and the exploitation of vulnerable groups in the city of Tirana. The project was implemented by setting up a coffee bar employing people with disabilities, economic problems, and divorced women from rural areas. It serves as a social center where workshops, reading nights, and social events are held on a regular basis. The center features a separate space where children with special needs and performance talents can perform in front of an audience. It is open to anyone who needs a space to perform and a potential audience to attend. HELP MEASURED IN KILOMETERS AT T-MOBILE POLAND Help Measured in Kilometers is a nationwide campaign launched in2013and carried out byT-MobilePoland since then. It aims to support physically disabled children by providing prostheses and rehabilitation. All smartphone users who run, cycle, rollerblade, walk or take part in wheelchair sports are able to join the campaign. The kilometers cov- ered are added together using the free Endomondo Sports Tracker app installed by all the participants on their smartphones. The secret of the campaign’s success is a combination of three ele- ments: new technologies, a passion for physical activity and a desire to help kids. Since the beginning of the campaign, we have been able to continuously increase the number of kilometers involved. From gath- ering 40 million kilometers in 2013, we went to collecting almost 140 million kilometers in 2016. In 2017, close to 1.4 million participants covered almost 140 million kilometers within 92 days, burning 6,670 million calories in the process.For the fifth time we have turned the kilo- meters gatheres into zlotys to help children in need. Another million zloty was donated to the TVN Foundation “You are not alone”. DISASTER RESPONSE IN THE USA 2017’s hurricane season topped records on all fronts as Hurricanes Maria, Harvey and Irma did catastrophic damage to communities in Texas, Florida and Puerto Rico. To support customers and maximize network availability, T-Mobile USA activated extensive preparation, response, and fundraising efforts. Hurricane Preparation: Before any hurricane forecasted to make landfall in the US or its territories, T-Mobile sets up an engineering command center near the expected area of impact and deployed rapid-response teams to minimize potential interruptions to wireless service. In addition, T-Mobile’s Geo-Redundant Network Operation Centers (NOCs) closely managed network traffic and further coordi- nate any response to an event.
SOCIETY CULTURAL AND SPORTS SPONSORSHIP 101 CULTURAL AND SPORTS SPONSORSHIP Culture and sports are a source of pleasure and inspiration for society. They create a sense of community and enable understanding across cultural and political borders. As an international corporation, we feel that sponsoring cultural activities and sports is another element of our corporate responsibility. GETTING EXCITED ABOUT SPORTS WITH THE TELEKOM BASKETS We take responsibility for our immediate social environment, which is why we sponsor the Telekom Baskets in Bonn. GOALS MEASURES MEASURING SUCCESS § Broad access to culture § Sponsorship Policy § Reviewing compliance with § Promote competitive and popu- § Promoting school sports, the Sponsorship Policy lar sports recreational sports and inclu- sion projects § Supporting cultural offers GETTING INVOLVED IN CULTURE AND SPORTS In Germany, we are one of the leading sponsors of culture and sports, and our national companies are also engaged in this area. In addition to providing funding, we support artists, athletes, event organizers and associations in their communication and marketing activities. Regional involvement at our locations also plays a key role. Sponsoring music is a long-standing tradition at Deutsche Telekom and a vital element in our company's brand communication activities. It is our goal to give people access to cultural events, thus encouraging them to share thoughts and ideas. Our main sponsorship focus is placed on events like the Beethovenfest and the International Telekom Beethoven Competition in Bonn, which has been providing a stage for up-and-coming pianists from all over the world for twelve years. We are a partner of Junges Theater Bonn and sponsor a number of projects, including a media education school project that is aimed at motivating young schoolchildren to learn about the new media through fun and creative activities. As part of our sports sponsorship activities, we support both competi- tive and recreational sports. Our main focus is on soccer partnerships with the German Football Association, FC Bayern Munich, and other German major league soccer teams. As a Bonn-based company, we moreover support the Telekom Baskets Bonn. In addition, we sponsor athletes through non-profit organizations such as Deutsche Sporthilfe (a German sports aid foundation), Deutscher Behindertensportverband (National Paralympic Committee Germany) and DFB-Stiftung Sepp Her- berger (the German Soccer Association's Sepp Herberger Foundation). Furthermore, we also place emphasis on those aspects of sports that foster community life. The focus of our engagement is on recreational sports, school sports programs as well as athletes with disabilities. Our partnership with the Deutsche Sporthilfe foundation has been extended to 2020, with special emphasis on Paralympic sponsorship and athlete career transition. Ticket sweepstakes for the Telekom Baskets Before the 2017/2018 season got underway, we launched our tenth Tix for Kids ticket sweepstakes. We raffled off two sets of tickets (2 x 30) for each home game. All schools in Bonn had the opportunity to participate in the raffle. Bonn-based businesses were invited to become ticket sponsors for social welfare institutions, school classes, club teams and back-to-work centers for disabled people. We participated in the sweep- stakes and donated an additional 160 tickets to various organizations including the "Maria imWalde" children and youth center, and various refugee housing centers. Baskets@school student training project Deutsche Telekom's Baskets@school initiative makes it possible for students in 5th through 10th grade to have their sports idols visit their school. Children and young people experience what professional bas- ketball training is like by participating in a training session that lasts for around 90 minutes. The Telekom Baskets pros teach them tips and tricks. Head team trainers offered a total of eight such training sessions from November 2017 through April 2018. The project strengthens team spirit and teaches students from the region more about basketball. A highlight of the season was a visit by the Telekom Baskets to the Otto-Kühne School rowing club (RVPG). During joint rowing practice on the Rhine, the students showed off their talents to the six stars. In a following basketball unit, the Baskets pros showed off their skills in the court. Baskets Primary School Challenge In 2017, we started the Baskets Primary School Challenge together with the Telekom Baskets and in cooperation with the City of Bonn. This training project wants to get second and third graders excited about sports and awaken their athletic ambition. The students are given the opportunity to train with Telekom Baskets players – and to then compete with other primary schools in a challenge. Deutsche Telekom furthermore provides a free box with training equipment that the schools may keep after the end of the project. Interested primary school classes from Bonn and its surroundings may register online. The finale of the first challenge took place in January of 2018 at the Telekom Dome.
SOCIETY CULTURAL AND SPORTS SPONSORSHIP 102102 PROGRAMS FOR YOUNG SOCCER TALENT "Stollenhelden" (Soccer Heroes), Deutsche Telekom's soccer program for future stars, had evolved from the ANSTOSS! soccer initiative. With the election of the Stollenhelden (Soccer Heroes) 2017, we have ended the project in January of 2018 after four years. We continue to support the development of new soccer talent through the "New Sports Experi- ence" program. New Sports Experience We run the "New Sports Experience" development program in collabo- ration with the National Paralympic Committee Germany and the National Soccer Association's Sepp Herberger Foundation. The "blind soccer" training unit gives teams with players 12 years and older an opportunity to experience something new and to learn how to play blind soccer. In the "blind stadium experience" students with and without visual impairments attend a German national league soccer game together, following the action by only hearing the live commentary. This experience promotes camaraderie among young people. SPORT IS GOOD CAMPAIGN IN ROMANIA The “Biggest Sports Hour” 2017 During June and July 2017, Telekom Romania in partnership with SmartAtletic organized the 7th edition of the sports event “The Biggest Sports Hour” in Bucharest, Braov, and Mamaia. The event was attended by more than 50,000 people from 21 cities in Romania. It featured around 35 fitness classes, coordinated by 118 instructors, and 18 sports such as: cycling, street workout, freewheel, table tennis, football, etc. In addition, 3 medical stations were provided by BTL Romania. They carried out more than 500 ECG tests for the detection of sudden death syndrome, and medical aesthetic sessions. The Red Cross offered first aid and resuscitation courses for 100 children and adults, while the Leventer Foundation provided tests for skin cancer. Last but not least, the Telekom Romania Foundation supported two charitable causes throughout the event: 40 families without income from Giurgiu County received non-perishable food and the Casa Speranţei Hospice for children and adults with incurable diseases received financial donations gathered through the "Sport is good" cross, part of "The Biggest Hour of Sport" event in Braov. Telekom Romania supports the third edition of Brasov International Marathon In May 2017, Telekom Romania organized the Brasov International Marathon as part of the “Sport Is Good” campaign. More than 2,600 national and international runners of all ages competed in the marathon (+26% more than in 2016). More than 100 runners from Telekom – 1st place for “The biggest running team” 4,500 euros raised by the Telekom Romania Foundation from registration fees to support therapy for children with incurable diseases Fundraising for a colleague in need of surgery: approximately 5,200 euros collected in a single week by 22 Telekom runners through a donation platform and by 1 Telekom employee offering photo ses- sions at the company. CULTURAL SPONSORSHIPS: PROMOTING ACCESS TO ART With the exhibition "Henry Moore.Vision Creation. Obsession", we would like to facilitate access to art for people from different social backgrounds and sponsor the art and media competence of children and adults. The exhibition took place from May 2017 to January 2018 at the Arp Museum Bahnhof Rolandseck in Remagen near Bonn. In cooperation with the museum's public outreach department, we offered a variety of workshops in which visitors were able to not only contem- plate art, but to get creative themselves and improve their digital media skills with photo or video apps. Moreover, Deutsche Telekom provided an allotment of 50 free tickets for charitable organizations and holders of the Bonn Card. The Bonn Card allows low-income citizens of Bonn to access certain services and reduced fees. For Bonn-based social institutions and organizations, Deutsche Telekom also held free photo rallies across the Arp Museum grounds. The end of the year-long exhibition was formed by the "Magic of Advent Weekend" that we held in cooperation with Junges Theater Bonn. In four acting taster workshops at the museum, participants had fun bringing Henry Moore sculptures to life. A UNIQUE CONCERT EXPERIENCE: BEETHOVENFEST AND Over 100 runners from 21 foreign countries (+ approximately JAZZFEST 100% compared with 2016) Approximately 300 volunteers in the organizing team Final accreditation from AIMS (Association of International Marathons), two years in advance Ranked 13th place in the top 20 best city sightseeing races in the world according to Culture Trip Beethovenfest Bonn: Deutsche Telekom presents inspiring concert evenings In 2017, we were once again the main sponsor of the Beethovenfest in Bonn, which was inspired by the motto "The Distant Beloved" this time. We sponsored two fascinating concert evenings. On September 30, the Musiciens du Louvre orchestra, conducted by Sébastien Rouland, played works by Joseph Haydn, Hector Berlioz, Charles Gounod and Jacques Offenbach at the World Conference Center Bonn. Another concert evening was presented by Francesco Tristanoon September 16.
SOCIETY CULTURAL AND SPORTS SPONSORSHIP 103103 The pianist combines classical music with techno in his shows. The concert was organized by eight students within the scope of the student manager project of the Young Beethovenfest. The students handled financing and advertising and made sure the concert runs smoothly. Beethovenfest employees assisted the students in all of their responsi- bilities. 2017 was already the seventh time that Deutsche Telekom has sponsored this project. Moreover, during the period covered by this report, we held another International Telekom Beethoven Competition for pianists. The competi- tion has been held every other year since 2005. We sponsor young pro- fessional pianists and offer them an international forum. We specifically expect of the participants that they imbue their performances with their own interpretations and ideas. The awards were given out in December 2017. Jazzfest Bonn We were also once again a main sponsor of last year's Jazzfest Bonn in May 2017, where we presented a double concert at the sold-out Telekom Forum on May 12. The audience greatly enjoyed the perfor- mances by actress Jasmin Tabatabai, accompanied by the David Klein Quartett, and by the jazz/rap group Jazzkantine. FOSTERING CULTURE AND DIGITIZATION IN GREECE Free WiFi Services at 20 Top Archaeological Sites and Museums in Greece In cooperation with the Greek Ministry of Culture and Sport, COSMOTE has launched the provision of free WiFi at 20 archaeological sites and museums throughout Greece. By 2017, Wi-Fi access was already in place at the Acropolis, Delphi, Akrotiri on Santorini, the Knights’ Palace and Archeology Museum on Rhodes, the Athens Byzantine Museum, Eleftherna Museum on Crete, and at the Delos museum and archeologi- cal site. The archeological sites at Knossos and Sounio, the Royal Tombs (Vergina), the National Archeological Museum, Ancient Olympia, the Archeological Museums at Heraklion and Thessaloniki, the Acropo- lis on Lindos, Ancient Epidaurus, the Acropolis of Mycenae, Spinaloga, the Museum of Byzantine Culture, ancient Dodoni, and ancient Corinth will be the next sites to go online. COSMOTE is investing more than € 2 million to harness the power of technology and promote Greek cultural heritage. The project includes the study, design, and development of wireless network infrastructures at selected locations by the Ministry of Culture and Sport, provision of the necessary equipment, operation and maintenance of the networks, and free wireless Wi-Fi internet for three years. Free WiFi provision will be completed in the course of 2018. Contemporary Artistic Creation at the Onassis Foundation The OTE Group supports the Onassis Foundation with the aim of pro- moting more than 120 productions in the field of culture. The focus here is on contemporary art. In 2017, COSMOTE focused on supporting the exhibition "Science Fiction: Travel to the Unknown". This included crea- tions by modern artists inspired by the opportunities of science fiction in design, cinema, and literature. The exhibition also included concerts, educational programs, workshops and film screenings. At the same time, COSMOTE is supporting the upgrade for the application entitled "Soundscapes – Landscapes 2". This enables visitors to take part in a poetic journey of sound and image around the streets of the city using tablets and smartphones.
EMPLOYEES 104 EMPLOYEES We shape the digital world of work and offer our approximately 217,300 employees an environment that supports new forms of cooperation. We encourage independence, create development opportunities and offer systematic health management, all the while placing a high degree of importance on dialog, participation and fairness.
EMPLOYEES COURAGE TO TRY 105 COURAGE TO TRY Dear Readers, The changes we have experienced in the onward march of the digital revolution have meant no less than a remapping of our world – bringing radical rupture to every area of our lives. These changes are opening up unimagined new opportunities. But we also need to ensure that people remain at front and center during this digital upheaval. We at Deutsche Telekom are in the avant-garde of the digital revolution, pushing on change with our products and services, yet at the same time also keenly aware of the need to keep up the same pace in achieving our own transformation. That is why we are searching for ways to find the right balance in the changes happening in our company, and to take our employees on the journey with us. A positive attitude to change is fundamental, and that is why we are providing opportunities in the digi- tal workplace and supporting co-workers by providing the right sort of environment. We are also establishing a new culture of knowledge and of learning from error that provides the freedom to keep up with the blis- tering pace of change. In some places we need the courage to dare to try out the new. And that is why I urge you to “just go ahead and do it”! That is the reason we are creating new spaces for experimentation in which we can try out new possibilities – without organizational and operational pressures. One of these spaces for experimentation is the 80/20 model. It offers the freedom to employees to dedicate 20 percent of their work time on projects not directly connected to their regular duties. In the manage- ment area too we are exploring new terrain; things that used to be run by command and control supervision often just do not work that way anymore. The growing complexity and volatility of the digitalization pro- cess is forcing us to abandon our tried-and-tested leadership models. In particular, the concept of “lifelong learning” is acquiring even greater weight as the digital revolution moves forward. And that is why we are developing digital tools that help put the fun into learning – including the use of gamification and virtual reality, for example. And we have already tried out both successfully. Technological progress cannot be stopped. But it can be shaped to our needs. And the way digitization is reshaping our world will, as men- tioned above, surely lead to social innovations – innovations that will especially affect our working lives. Aside from the examples I mention here, we have set out a few thoughts in a position paper on how we can prepare for the future of Deutsche Telekom right now. I am convinced that flexibility is set to become the "new normal". Firmly embedded in a responsible corporate culture, it gives us the key to the successful digital transformation of work. Christian P. Illek Christian P. Illek, Member of the Deutsche Telekom Board of Management for Human Resources since April 2015
EMPLOYEES AGILE AND FLEXIBLE: PROMOTING NEW MANNERS OF COOPERATION 106 AGILE AND FLEXIBLE: PROMOTING NEW MANNERS OF COOPERATION Our employees use their commitment, their expertise and their abilities to pave the way for a digital society. About 217,300 people in over 50 countries worldwide make a major contribution to our business suc- cess. As a responsible employer, we very much value dialog, coopera- tion and fairness. We give our employees the opportunity to realize their potential and to contribute their individual strengths and ideas within our Group. We use future-oriented methods and tools to support them on their road to the digital working world. GOALS MEASURES MEASURING SUCCESS § Employee relationships charac- terized by fairness and respon- sibility § Fair remuneration and devices for performance assessment § Reviewing implementation of our Employee Relations Policy § Flexible working time models § Assessing employee § Cooperation with employee representatives § Socially acceptable staff restructuring § Employee surveys and corresponding measures satisfaction § Reviewing compliance with current collective agreements and relevant Group and com- pany policies SHAPING CHANGE AT THE COMPANY Digitalization is revolutionizing the way we work. Today, we are seeing new ways of cooperating and an increased degree of automation. Employees are expected to offer more flexibility, social competence, and personal responsibility. They also need to be life-long learners and be more self-directed. We have made it our goal to help our employees make these changes – and to help them not only manage change, but also take an active role in shaping it. Co-determination rights play a key role in this. Hence, we pursue dialog-oriented employee relations throughout the Group and engage in trust-based, constructive collabo- ration with employee representatives and unions. Fair pay and benefits We offer our employees competitive, performance-based pay oriented to the relevant national market. Our remuneration policies are struc- tured to guarantee equal pay for men and women and do not discrimi- nate. Executive compensation at Deutsche Telekom is based on our Group-wide Global Compensation Guideline. We also offer our employ- ees additional benefits such as our company pension scheme. We regu- larly poll our employees' satisfaction with their remuneration with the employee survey and also conduct surveys on specific topics and in specific units. We have compiled a separate report in order to comply with the new legal requirements of the Act to Promote Transparency of Pay Structures. This is enclosed to the management report as an appen- dix. Flexible working models Having the chance to structure one's work according to one's own needs considerably improves work-life balance and helps prevent stress and the feeling of being overworked. That is why we actively promote flexible working time models. Our offer ranges from flexitime and part- time to lifetime work accounts. Since 2016 we have offered about 80,000 employees in Germany a so-called lifetime work account. This offer has been available to about 20,000 civil servants in Germany since mid-2017. This amounts to 90 percent of all employees in Germany. Lifetime work accounts give our employees the opportunity to finance future absences from work lasting longer than one month, which may be used for early retirement, a sabbatical or to support a period of part- time work. Executives have had this option since 2012. We set up 9,000 lifetime work accounts by the end of 2017. What's more, we created the prerequisite for establishing mobile working as a new way of working at our company when we concluded the sector-specific collective agree- ment on mobile working in 2016. Socially responsible personnel restructuring We must continually develop as a company in order to fulfill our custom- ers' requirements. This also means quantitative and qualitative staff restructuring at some of our companies. The main objective is to struc- ture these changes for our employees in a socially responsible manner. At the companies affected, for example, we decided to enter into collec- tive agreements that rule out compulsory redundancies. Within the scope of this socially responsible staff restructuring, we employ alterna- tive tools such as severance payments and phased retirement as well as training programs that help our employees prepare for new assign- ments. Employee satisfaction and participation We highly encourage a feedback culture throughout the Group and pro- mote open dialog and constructive communication with our employees Our social network "You and Me" (YAM), the Group-wide network that has about 123,000 users, is an important tool for this. YAM provides not only comprehensive information but also a platform for our employees to engage in cross-hierarchical dialog and raise topics that are impor- tant to them for discussion within the Group. Our Board of Management also regularly uses YAM as a platform for direct dialog. Another key ele- ment of our feedback culture is our Group-wide employee survey. This is supplemented by pulse surveys, which give us a snapshot of the mood at the company twice a year. Our Group-wide ideas management activities are another key tool in encouraging employee contributions to the success of the company. We have seen an increase in the number of employees participating in our Group-wide pulse surveys as well as our ideas management activi- ties. In 2017, 71 percent of our employees took part in the pulse survey (previous year: 73 percent). Employee satisfaction remained high at 72 percent. Interest in ideas management is also very good; statistically, every eleventh employee submitted a new idea in 2017. We also offer
EMPLOYEES AGILE AND FLEXIBLE: PROMOTING NEW MANNERS OF COOPERATION 107107 our employees opportunities to help shape our corporate social commitment within the scope of corporate volunteering initiatives. We have set Group-wide standards for managing employee relations. These were formalized in our Guiding Principles, Leadership Principles and Employee Relations Policy. You can find additional information about respect for human rights at our Group in the Strategy chapter. EMPLOYEE RELATIONS AT OUR NATIONAL COMPANIES What progress have our national companies been making in implement- ing our Employee Relations Policy? We determine such progress using special reviews. Two to three national companies are subject to such a review each year. They use the results of the review to further improve their relations with employees. The results also help us conduct a Group-wide assessment of employer/employee relations and any human rights risks involved in our business activities. In 2017 we conducted reviews at T-Systems Netherlands and IT Services Hungary, a subsidiary of T-Systems International. We publish the results on our website. Extensive discussions with management and numerous employees of T-Systems Netherlands showed that all elements of the ER policy intro- duced in 2011 had been successfully implemented. The employees proved to be very satisfied with their employer and praised both cooper- ation within their team and with management. The respondents sug- gested additional measures regarding communication of the com- plaints procedure, the ER policy, and the Guiding Principles as part of the ER policy. For example, they recommended that these topics be communicated even more intensively at events such as the Guiding Principles Day. At IT Services Hungary (ITSH), the key elements of the policy have been successfully integrated into day to day business, and employees are familiar with these elements. Management has also focused in particu- lar on reconciling work and family life, among other things, due to the large amount of young employees. A Working from Home policy was introduced in 2014. During the 2017 review process, the respondents indicated they would like additional options for flexible working sched- ules, such as tandem or part-time work. In 2017 ITSH was selected by the global service company Aon as the company with the best employee program and the most dedicated employees in Hungary. This award is given to companies that are particularly attractive employers. SOCIALLY RESPONSIBLE STAFF RESTRUCTURING CONTINUED The transformation of our Group was a key issue in past years and will continue to be so in coming years. Against the backdrop of digitaliza- tion and the associated changes, we must secure our long-term viability and competitiveness. This process is connected to complex staff restructuring. We are creating new jobs in growth fields and are training qualified personnel to fill these positions. Other areas are the focus of restructuring activities involving workforce reduction. We make sure that all restructuring measures are implemented in a socially responsi- ble way for our employees. In doing so, we try to support them in the best way possible on our way to the digitalized working world. Integrated staff restructuring management introduced at Telekom Deutschland GmbH Over the course of the upcoming changes, our goal is to provide even more professional assistance to employees during their professional reorientation phase. That is why integrated staff restructuring manage- ment was introduced in the Germany segment, which should be effec- tive early on in the restructuring process. This means that in cases where tasks could be canceled or different skills could be required for certain positions, we want to take preemptive steps and consult with the affected colleagues and managers much earlier than we have in the past. During such consultation, various employment alternatives are devised together with the affected employees and their specific poten- tial labor markets are ascertained. Added to this is comprehensive assistance with developing an individual job application approach and – if necessary – targeted planning and implementation of skills develop- ment measures. Civil servanttransfer Accompanying the above measures, Vivento, our internal service pro- vider for Deutsche Telekom's staff restructuring measures in Germany, will continue to help civil servants transfer to positions in public service. About 450 civil servants employed at Deutsche Telekom opted for a permanent transfer to federal, state or local authorities in 2017. In 2017 the focus was primarily on transfers of civil servants to the Federal Employment Agency, branches and field offices of the Federal Office for Migration and Refugees and to the Federal Armed Forces. Employees were assisted in finding positions with federal, state and local adminis- trative authorities. New framework conditions for staff restructuring at T-Systems Competition in the worldwide ICT market and the changes resulting from digitalization are creating major challenges for us. This necessi- tated a collective agreement for 2016 and 2017 that does not place any additional strain on T-Systems' competitiveness and supports staff restructuring measures. The collectively agreed upon moratorium on compulsory redundancies will last until December 31, 2018. As an employer, we continued to make significant investments in the neces- sary socially acceptable staff restructuring measures in 2017.T-Systems' goal is competent, employee-oriented change management that ena- bles employees affected by staff restructuring to undergo professional reorientation and effective reintegration. Negotiations with employee representatives regarding framework regulations for the staff restructur- ing process took place at the end of 2016. The central works agreement on supporting and implementing staff restructuring at T-Systems Inter- national (CWA on Staff Restructuring 3.0) was revised in March 2017. It defines HR instruments as well as processes and procedures for carry- ing out compulsory staff-related measures. The Job Service & Place- ment (JSP) service launched in 2014 will continue to support affected employees in finding new jobs. The cooperation with JSP is set forth in T-Systems' Central Works Agreement on Change Management. Transformation measures were necessary at the TC Division and IT Division in 2017. This change resulted in a moderate loss of jobs. The reconciliation of interests required for this were negotiated with the relevant department representatives. Here too, assistance with helping employees find new employment opportunities is important so as to ensure that the restructuring process remains socially responsible.
EMPLOYEES AGILE AND FLEXIBLE: PROMOTING NEW MANNERS OF COOPERATION 108108 Thanks to JSP, T-Systems was able to find new career perspectives for 50 percent of the 188 affected employees. JSP's success stories in past years were also noticed by other Group units. As a result, JSP took over advisory activities for 25 Telekom Train- ing employees and has already found solutions for 75 percent of them. Since September 2017, JSP has additionally been supporting the inter- nal staff restructuring process of the Europe Board department and has achieved initial success in advising both employees and managers. Reorientation of Telekom Deutschland GmbH Telekom Deutschland successfully completed its transformation pro- gram in 2017. The goal of the reorientation was to make the unit more competitive by changing its structure. To this end, Telekom Deutschland concentrated on processes and interfaces that directly affect custom- ers. The transformation project consists of three large organizational key elements. First, a new service organization was created that includes most of the operational back office – customer service and technical service. Hence services for consumer, business and carrier customers now come from one source. Second, a new sales organiza- tion was created for business customers from the sales units of the busi- ness customer segment, while the sales organization for consumers was rebranded and expanded. Technical service units were integrated into Deutsche Telekom Technik so that network expansion would be managed entirely by this company. On July 1, 2017, about 20,000 col- leagues moved to the new units by way of transfer of operations, job offer process, transfer, assignment or temporary leave from civil-servant status. The last steps of reorganization and transfer of operations were completed at the turn of 2017/2018. In order to promote Telekom Deutschland's targeted transformation, a needs-based staffing strategy was developed, consisting of three ele- ments: staff cuts, restructuring and safeguarding the company’s future. The strategy entails monitoring of how requirements change over time in the individual companies and units. This is the basis for planning ideal headcount development. To this end, Telekom Deutschland uses a forward-looking competence management concept that analyzes which skills will be in demand in the future. The concept allows a rea- sonable assessment of the areas where staff cuts or recruitment should take place and of how existing skills need to be managed and missing skills need to be added. In addition, this helps to transfer employees to new positions, also beyond their own departments, and ensure system- atic succession management. The year 2017 also saw new impetus for transfers to a different employment relationship – such as by making phased retirement more flexible, which can now last between two and eight years. Special severance packages are also still on offer, espe- cially for managers. Telekom Deutschland is also going down new paths with respect to working hours. "Breathing working time" is one example of this. This concept enables flexible response to fluctuation in workload, such as during network expansion activities. In order to introduce the new model, a collective agreement was concluded with ver.di as a basis for a temporary increase in weekly working hours. Next, specific regulations were agreed with the works councils of six technology units. These reg- ulations have been applicable for about 2,600 employees since April 2017. This way, a "breathing capacity" of around 150 employees was created, enabling a flexible response to special requirements. This con- cept is scheduled to be expanded in the technology units. FLEXIBLE WORKING HOUR SCHEMES EXPANDED FURTHER We offer a wide range of optional working models tailored to the needs of specific target groups. These are based on the laws and regulations applicable in the individual countries. Working hours at the Group com- panies in Germany are governed by collective agreements and works agreements. Daily working hours are electronically recorded for employ- ees who are covered by collective agreements. This guarantees compli- ance with legal and company regulations; for example, it makes sure that the weekly working hours for a specific flexitime balancing period are complied with. At a large corporation such as ours, regulations are diverse and cannot be fully specified for all the Group companies. Our flexible and innovative working time models were honored with an award in 2017: the Time-to-Change project received the Pillar World Award. The project consists of three individual measures: tandem, right of return from part-time work and additional days off. Deutsche Telekom Services GmbH received Gold in the "Employer of the Year" category and silver in the "Best Products & Services of the Year" category. Promoting part-time work Working based on various part-time models is a concept that is estab- lished throughout the Group. We have offered our employees a return to work guarantee since 2014, with employees being able to return to their original weekly working hours at any time. To promote part-time work for executives as well, we adopted a policy to this end in 2010. A total of 27 executives throughout Germany were working part-time as of December 31, 2017. Deutsche Telekom also made a similar voluntary commitment regarding employees covered by collective agreements and civil serv- ants. What's more, 14 percent of employees covered by collective agreements and 20 percent of civil servants were working based on part-time models as of December 31, 2017. In 2017 we developed another part-time model for our employees in Germany, which we refer to as "additional days off" and which is scheduled to go into effect in 2018. This model enables part-time employees to accumulate addi- tional days off. We also offer a number of additional part-time options for reducing working hours such as job sharing, in which two or more employees share a position. This option can be employed using a job splitting model where each employee is responsible for different tasks or via job pairing, where employees share responsibility for one area. Mobile working Mobile working is the normal state of affairs at Deutsche Telekom. We laid the foundations for this back in 2016. Deutsche Telekom and ver.di agreed on the first collective agreement on mobile working concluded by an employer association, which includes rules regarding telecom- muting and mobile working, among others. Thanks to increased geo- graphic flexibility, our employees have more freedom to plan their work, thereby gaining more job satisfaction and increasing productivity - and allowing them to achieve a better work-life balance. Lifetime work accounts Since 2016 we have offered about 80,000 employees in Germany so- called lifetime work accounts. About 20,000 civil servants in Germany have had this option available to them since 2017, which allows them to finance a future leave of absence lasting more than one month. The account may be used for early retirement, a sabbatical or to support a period of part-time work. Our employees can finance their lifetime work account either from their gross salary or with time credits converted into monetary amounts. Until 2018 we will also support employees who are
EMPLOYEES AGILE AND FLEXIBLE: PROMOTING NEW MANNERS OF COOPERATION 109109 below a certain income limit with an annual contribution. We had already set up 8,629 accounts for employees and 575 accounts for civil servants by the end of 2017. Phased retirement We offer all Group employees over the age of 54 the option of phased retirement. Separate regulations apply for employees and for civil serv- ants. Phased retirement can be taken either based on the block or the part-time model. Unlike regular part-time regulations, we make a sub- stantial top-up payment to the employees' part-time pay with our phased retirement offer. This means that reducing their weekly hours does not equate to a proportionately high reduction in net pay for employees. During the reporting year, a total of 1,747 phased retirement contracts were concluded with employees both covered and not covered by c ollective agreements. Among civil servants there were 580 such con- tracts. Part-time training for single parentsWe have been offering single par- ents up to the age of 25 the opportunity to complete a training program or cooperative course of study part-time at Deutsche Telekom in Ger- many since 2011 in collaboration with the German Federal Employment Agency 22 young people began their part-time training with this pro- gram in 2017. Re-entry into the workforce after parental leaveWe offer all Group employees the option of re-entering the workforce with part-time work after parental leave. IMPLEMENTATION OF THE 2016 COLLECTIVE BARGAINING ROUND AND OTHER HARMONIZATIONS IN 2017 In the course of the 2016 collective bargaining round, the second phase of salary increases was successfully implemented for the majority of Deutsche Telekom employees in Germany. Starting in 2016, the salaries of roughly 60,000 employees covered by collective agreements at Deutsche Telekom AG and in the Ger- many operating segment were raised in two phases by a total of 4.7 percent for employees in the lower pay groups and 4.3 percent for employees in the higher pay groups. After the first increase in 2016, the second increase took place on April 1, 2017. The duration of the new collective wage agreements is 24 months and they are sched- uled to end on January 31, 2018. Salaries at T-Systems for some 20,000 employees under collective agreements will be raised in two phases by a total of 3 percent for employees in the lower pay groups and a total of 2.5 percent for employees in the higher pay groups. After the first increase in 2016, the second increase took place on April 1, 2017. The collective wage agreement has a term of 24 months and will expire on March 31, 2018. The wages of apprentices and students in cooperative study pro- grams will also be increased in two phases. After the first increase in 2016 by EUR 35.00, another increase of EUR 25.00 followed on April 1, 2017. Subsistence allowance for apprentices not living with their parents was increased by EUR 23 for all those eligible. The standardization and harmonization of our German remunera- tion systems adopted in the 2016 collective bargaining round was further driven forward. The first successful collective bargaining took place in 2017; the results will be implemented on January 1, 2018 and January 1, 2019. Collective bargaining on additional harmonization topics will take place in 2018. GREAT INTEREST IN EMPLOYEE SURVEY Our employee survey, which is conducted every two years, is an impor- tant tool for obtaining feedback from our employees, discovering weak- nesses and implementing suitable measures to eliminate those weak- nesses. The twice-yearly pulse survey additionally helps us obtain a current snapshot of the mood at the company and verify whether the introduced measures have been successful. This lets us make quick adjustments if necessary. Some 75 percent of employees throughout the Group took part in the 2017 employee survey. The Group index value for commitment – our gage for employee satisfaction – was 4.1 on a scale of 1 to 5, with five being the highest. The pulse survey in November 2017 saw a 71 per- cent response rate among employees. 72 percent of participants expressed high satisfaction with their employer. TRUST-BASED COOPERATION WITH EMPLOYEE REPRESENTATIVES Co-determination rights play a key role with respect to digital transfor- mation. We want to create the working world of the future alongside employee representatives and unions – with an eye towards the needs of our workforce and the success of our company. We negotiated and signed over 200 agreements in 2017 through constructive dialog with our works councils. One key project was the organizational measure "Einfach Anders” (Simply different), which focused on a re-alignment of the entities within the Germany operational segment of the Group. The new organizational structure allowed us to harmonize the management of service responsibilities combined within the Service board depart- ment, to establish a customer-centric sales process for consumers and business customers in separate sales entities, and to combine the activi- ties for the network build-out in a single entity. We concluded another 65 collective agreements with the union ver.di in 2017. In order to make phased retirement an even more attractive option for leaving working life early with sufficient social security, a general collective agreement on phased retirement was concluded in 2017 between Arbeitgeberver- bandfürTelekommunikation und IT e.V. (agvcomunitye.V., the employ- ers' association for the telecommunications and IT industry) and the ver. di union. The works councils, central works councils and Group Works Council represent the interests of our employees at our Group in Germany. Our partner at a European level is the European Works Council. We also have executive staff representation committees and disabled employee representatives at the unit, company and Group level. Collective bar- gaining plays an important role and has a long tradition at our company, a fact made clear by the percentage of employees covered by collective agreements. As of December31, 2016, some 69percent of employees in Germany were covered by collective agreements.
EMPLOYEES AGILE AND FLEXIBLE: PROMOTING NEW MANNERS OF COOPERATION 110110 Bernd Zopf was awarded second place in the "Best Idea of 2017 from Production and Technology" category with his idea "Laying fiber-optic cables in the ventilation tubes of existing copper main cables". Markus Cremer was awarded third place in the "Best Idea of 2017 from Management and Administration" category with his idea "Reducing the mast replacement rate by using an additional testing tool". Based on this idea, the mast replacement rate can be reduced from 14 percent to 10 percent, so the idea makes a significant contribution to conserving resources and reducing cost. WE HONOR THE SERVICE OF OUR LONGTIME EMPLOYEES In September 2017, we honored the commitment of our employees celebrating their 25th, 40th and 50th service anniversaries at Telekom Deutschland with a central Anniversary Celebration Week . The idea for Anniversary Celebration Week came about in 2008 in the customer ser- vice department and was expanded year after year due to positive employee response and importance to our corporate culture. The year 2017 also marked the first time that the employees of Telekom Technik Deutschland joined the central festivities, as previously these employ- ees had been honored at regional celebrations. Eligible T-Systems employees were also welcomed to the joint celebrations for the first time this year. The former HR Director of Telekom Deutschland, Martin Seiler, the HR Director of T-Systems, Georg Pepping, as well as Member of the Board of Management of Deutsche Telekom AG and CEO of T-Systems, Reinhard Clemens, were all present at the celebrations. More than 3,000 eligible employees were invited in 2017, with about 1,400 of them attending the event in Bonn personally. A total of 43,650 years of work and experience at Bundespost and Telekom were repre- sented at our forum in Bonn during the four-day event. The excellent cooperation between our colleagues, both young and old, is a key pillar of our business success. That's because learning from each other, being interested in each other's ideas and growing and working out solutions together are basic conditions in professional life. Constructive dialog with T-Mobile USA As the underlying laws and contracts vary from country to country, codetermination matters with trade unions and employee representa- tives are managed locally. Group management is involved in all major issues as a matter of principle. We carefully monitored trade union issues in the USA operational seg- ment in 2017 and discussed individual cases in dialog with the manage- ment of T-Mobile USA. The responsibility for national Human Resources Management matters lies with the management of T-Mobile USA. This responsibility is administered with a high degree of dedication and accompanied by excellent customer satisfaction results. In a US-wide survey of 360,000 customers by market research institute HarrisX, T-Mobile USA received the highest customer satisfaction ratings among all network operators in the US for all four quarters of 2017. Deutsche Telekom respects freedom of association and the right to collective bargaining in accordance with national regulations. This naturally applies to the USA as well. All employees at T-Mobile USA have the right to form and join a trade union. At the same time, employ- ees are free to choose not to do so. T-Mobile USA will not exert any influence on this decision and will not favor or impede employees based on their choice. The results of the employee survey in 2017 showed that 93 percent of employees are proud to work for T-Mobile USA. Some 88 percent would recommend T-Mobile USA as an attractive employer, and 84 percent feel inspired by the company such that they go beyond their normal job requirements to make the company more successful. These results are some of the highest in the entire Group. TMUS has also been honored with a Glassdoor Employees’ Choice Award, recognizing the Best Places to Work in 2018. The Employees’ Choice Awards program, now in its 10th year, relies solely on the input of employees, who elect to provide feedback on their jobs, work envi- ronments and companies via Glassdoor. More than four out of five (81%) T-Mobile USA employees say they recommend the company to a friend. This is the highest percentage of any company in the US mobile communications industry. In addition to this award from Glass- door, T-Mobile USA received further recognitions for Best Places to Work throughout 2017. GOOD PARTICIPATION IN GROUP-WIDE IDEA GENERATION MAN- AGEMENT Many employees once again took part in idea generation management in 2017. In Germany, every 15th employee submitted a new idea, giving us a continually high participation rate. The economic benefit translated into a total of 99 million euros in cost savings and tapping of new busi- ness potential. With a total of 6,902 new ideas, employees again proved the great extent of their interest in helping shape the Group through cre- ativity and commitment. They also make an important contribution to Deutsche Telekom's target objectives. Two of our employees' ideas came up winners of the Idea Management Award 2017 bestowed by the German Institute for Idea and Innovation Management:
EMPLOYEES OCCUPATIONAL HEALTH AND SAFETY 111 OCCUPATIONAL HEALTH AND SAFETY Measures that promote health within the company not only help individ- ual employees and ensure long-term business success, but also have positive effects on society as a whole. We use corporate health manage- ment to take on social responsibility and proactively promote a culture of health. We support our employees in maintaining their health and occupational safety with a host of target-audience-specific measures and extensive prevention programs. In doing so, we consider the statu- tory requirements to be only the minimum standard we must achieve. GOALS MEASURES MEASURING SUCCESS § Promoting employee health § Occupational health and safety § External and internal audits and performance management system § Consulting offers § Preventive measures § Assessing risks, e.g., as part of the employee survey § Regular workplace inspections § Accident rate § Health rate § Evaluating measures and offers § Employee satisfaction and health index from the employee survey and collective agree- ment on stress prevention PROMOTING THE HEALTH OF OUR WORKFORCE Our health management strategy is designed to maintain and promote our employees’ health and performance. We view occupational health and safety legislation as minimum requirements. Incorporating health and safety management throughout the Group Our corporate occupational health and safety measures are effectively incorporated into our structures via certified management systems and appropriate policies and guidelines The foundation for this is the inter- nationally recognized management standard OHSAS18001, which we have been using since 2010. During the reporting year, 73 German and international locations were audited according to OHSAS 18001 and ISO 14001. Their certification was renewed in all cases. With these results, we can guarantee a high health and safety standard in years to come. All of the parties, tasks, and measures involved in the health and safety management system are described in a handbook titled Health & Safety Environment. The handbook was signed by our Board of Management as a symbol of our commitment to health and safety. Our health and safety measures are centrally steered at Group level, with health manag- ers being responsible for implementation at the different locations. We systematically assess the effectiveness of our measures. This includes reviewing the results of our employee survey, evaluating stress preven- tion measures under collective agreements, competitor analyses, and other relevant indicators. The analysis of this data forms the basis for annual measures that by far exceed legal requirements. Some examples of this are our comprehensive psychosocial counseling programs as well as our driver safety training and exercise offers. One focus of our corporate health promotion activities is encouraging our employees to assume responsibility for their own health. In this vein, we expect our managers to foster a corresponding corporate culture. Our Group-wide employee survey in particular, which is conducted in 30 countries, outlines a follow-up process which the managers go through together with their teams in 2-year cycles. Among other things, the employee survey determines the mental stress in the workplace, the available resources, and the consequences of stress on health. Health and safety management assists managers and teams when there are unsatisfactory results and provides recommendations for action together with offers based on the team results. Different performance indicators reflect the effectiveness of our corporate health management activities: At Deutsche Telekom in Germany, the health rate (not counting people with long-term illnesses) in 2017 decreased slightly by 0.1 to 93.7 percent but still remained high. The total number of work-related accidents continued to decline in the reporting year in comparison with the previous year. The acci- dent rate in Germany was 8.5 accidents (resulting in over three days of absence) per thousand employees, which continues to be well below the industry average. The Group-wide health index – calculated as part of the 2017 employee survey in 30 countries – increased positively by 0.1 to 3.6 (on a scale of 1 to 5). In 2017, we were once again distinguished for our health and safety management. Within the scope of the German Corporate Health Award (DeutscherUnternehmenspreis Gesundheit), we received the excellence seal for our holistic corporate health management and were awarded the special prize "Innovative Corporate Health Promotion " for our Active Workplace project. We also again received the Corporate Health Award, an initiative of the Handelsblatt publishing group, among others. We've been in first place in the Service, IT, and Communication category multi- ple times. The jury, which consisted of experts in the fields of science, health, and occupational health and safety, especially honored the fact that health awareness is an important component of our corporate phi- losophy. FIT AND MOBILE AT WORK We have been offering our employees special fitness programs at locations in Germany since 2014 to help counteract the effects of a day spent working at their desks. Qualified "mobile fitness coaches" teach easy-to-do exercises particularly for back and neck to small teams of employees. These programs are very popular among our employees.
EMPLOYEES OCCUPATIONAL HEALTH AND SAFETY 112112 By the end of 2017, we had given more than 1,000 courses within the framework of our comprehensive health promotion activities. T-SYSTEMS: THE HAPPINESS PROJECT AND RESEARCH PROJECT ON MANAGERIAL HEALTH COMPETENC Recent scientific studies show that taking regular breaks is more effec- tive than lengthy exercise sessions after work for people with desk jobs. We therefore added a new exercise offer in 2016 with the Active Work- place project. This project gives our employees the opportunity to com- bine their job with exercise with the help of so-called desk bikes. These stationary bikes help effectively prevent health risks associated with lack of movement at the office workstation. About 4,000 employees were able to use a desk bike during its first implementation phase. This first phase was scientifically supported by a study conducted by BerufsgenossenschaftVerkehr (the occupational accident insurer of the transportation and telecommunication indus- tries), the Institute for Occupational Safety and Health of the German Social Accident Insurance (DGUV), and the German Sport University Cologne. The academics examined not only the test participants’ levels of acceptance and whether they felt good using the equipment, but also physiological activity parameters, energy conversion levels, and individ- ual posture. Not only were participants having fun, their mental activity also increased. Another positive side effect was that participants burned more calories when cycling than when just sitting. Because the positive response of our employees was supported by the accompanying study, we decided to order an additional 500 desk bikes in 2017. In the meantime, over 10,000 employees have taken advan- tage of this program. We are planning to expand the program in 2018 and include international locations as well. PSYCHOSOCIAL COUNSELING AS PART OF CHANGE MANAGEMENT All employees face major challenges when there are changes in the workplace. That is why psychosocial counseling for transformation pro- cesses by the Employee and Executive Advisory Service plays an impor- tant role at Deutsche Telekom. Our goal is to provide support to employ- ees and managers and prevent psychological crises. To this end, we offer individual counseling and consultation hours. Employees can take advantage of several one-hour counseling ses- sions. Immediate phone counseling is also available through a special hotline ("TALK TIME"). We support managers and supervisors during change processes with appropriate tools. Talks and workshops on psychological health complete the offer. Targeted communication measures inform employees at affected locations of these offers. In 2017 we especially supplemented the restructuring measures at DTSE (Deutsche Telekom Services Europe) by offering psychosocial counseling. We held special counseling days ("Employee and Executive Advisory Service on site") for greatly affected locations. Continuation of the Corporate Happiness project: T-Systems started initiating changes in its corporate culture within the scope of a pilot project in 2016. The aim of the project is to apply the scientific findings of "positive psychology" to identify values that will enable all employees to better realize their potential. The project encourages them to independently work toward their own, as well as the company's, success. In 2016 we trained 27 "happiness ambassa- dors" under the pilot project, offered training courses and impulse talks, and launched the Stop Complaining initiative. Due to the positive effect of the project, we decided in 2017 to expand it throughout the entire Group and train an additional 30 happiness ambassadors. We also car- ried out numerous other activities at T-Systems during the reporting year. For example, we conducted various training sessions within the framework of the HR Academy, held numerous impulse talks, and offered team building measures. Research project on managerial health competence Managers play a key role in promoting corporate health. That's because they not only influence their employees' workplace environment but also serve as an example. Numerous studies have proven a connection between managerial conduct and employee health. At the same time, managers themselves are an important target group for corporate health promotion measures, as they are frequently exposed to higher health hazards than employees without personnel responsibility. Managers are hence the focus of the "HeLEvi" research project - the "Health opportunities – healthy self-management: recognizing, developing, and implementing potential" training program. T-Systems has paired up with the German Sport University Cologne and the local Cologne Institute for Health Economics and Clinical Epidemiology to carry out this project. The goal of the project is to design, implement, and evaluate an evidence-based training program for promoting health competence among managers. The project is being supported by the German Federal Ministry of Education and Research. A total of 143 managers have participated in the HeLEvi program. The project ended in November 2017 with a closing event in Bonn, during which the professors presented the research partners with the project method and the study results. The next step will be to entrench the topic and increase corporate health promotion awareness within the Group. STRENGTHENING THE ROLE OF MANAGERS Managers play an important role at the company when it comes to health promotion. In order to support Deutshe Telekom managers in their exemplary function, we already offer web-based training in addi- tion to individual coaching. Topics include occupational health and safety, employee mental health, and corporate integration management after long-term illness. Health promotion is also a component of our cur- rent management development programs. Our managers can choose from among a comprehensive portfolio of offers for supporting their managerial competence. One such example is the "HelEvi" project - the evidence-based development program for T-Systems managers. DIGITALIZATION AND HEALTH – A JOINT PROJECT WITH HEALTH
EMPLOYEES OCCUPATIONAL HEALTH AND SAFETY 113113 In 2017, all employees atT-Systems CIS & Rus were given an opportu- nity tohave a preventive medical check-up throughout the year. It included checks by the specialists listedbelow (Neurologist, Ophthal- mologist, Cardiologist, and others). A total of 1074 employees attended the medical check-up in 2017. 305 employees were vaccinated in the fall of 2017 (voluntarily). The doctor in the office is still available every Tuesday from11 a.m. until 3.00 p.m. for a consultation. Between15 and 20 employees are given check-ups each week. INSURER BARMER In 2016, researchers at the University of St. Gallen commissioned by health insurer BARMER and Deutsche Telekom examined how digitali- zation had changed the working world. The study showed positive aspects of digitalization, e.g. more flexible configuration of working hours and locations. Nevertheless, the results also pointed out risk factors with respect to physical and mental health. The study results are the basis for a corporate health management project that we started at the Group in May 2017 together with health insurer BARMER. The aim of the project is to scientifically examine the effects of digitized workplaces as well as other use of digital technologies on employee health. With its "Digitalization and Health" pilot project, Deutsche Telekom is the first company to systematically tackle this range of topics together with a health insurer. The goal is to increase employee perfor- mance and identify starting points for engaging in early prevention within the corporate context. The project connects science, HR man- agement, employee representatives as well as health business units, thereby contributing to innovative human resources and health manage- ment. Managers are the focus of this project. On the one hand, their managerial conduct is a decisive factor in the success of digitalization. On the other hand, they also bear a significant responsibility, for which they require support. Initial measures were already tested at the end of 2017 – including M-Sence, an app for headache prevention, and Soma-Analytics, an app that provides personalized feedback on improving mental resil- ience and productivity. Other pilot projects are planned for 2018. A digi- tal guide will be created, among other things, which will help with the selection of the individually appropriate health promotion measures. HEALTH AND SPORTS AT T-SYSTEMS MEXICO Health Month As part of our “Total Health” Program, an in-company training program was launched to promote physical exercise, improve the health and life- style of employees, and enable them to participate in relaxing activities with their co-workers. This year’s “Health Month” was organized in October 2017 and included activities for all our employees. The company received govern- ment supportthrough the Mexican Social Security Institute and employ- ees were offered a check-up with eye test, blood-pressure measure- ments, testing for glucose levels, vaccinations for seasonal diseases, and height and weight checks.The program included six health presen- tations, five guest specialists in insurance, dental and eye care, and four courses on civil defense. 371 employees took part in the Health Month representing 30 % of the workforce. They were able to attend any of the health events held in Puebla and Mexico City. Sports Tournaments T-Systems Mexico seeks to promote greater integration, better quality of life, and a good work-life balance. This year TSMX organized various sports tournaments such as volleyball, basketball, soccer, and dominos from January to December. There was a big uptake and approximately 40 % of our employees took part in various activities. This helped to improve our work ethic,enhanced teamwork, contributed to a healthy lifestyle and released stress. MEDICAL CHECK-UPS AT T-SYSTEMS IN RUSSIA
EMPLOYEES TRAINING AND DEVELOPMENT 114 TRAINING AND DEVELOPMENT Whether they are entry-level professionals, experts or managers – we offer our employees diverse development opportunities. That's because we know we can only master the dynamic challenges of our industry with excellently qualified and motivated employees. We offer them a wide range of individual training and development options, such as work abroad or work/study programs. Thanks to our comprehensive training and continued education offers in both the technical and com- mercial fields, we are actively preventing our company from being affected by the increasing shortage of skilled specialists. This way we can strengthen our company's competitiveness and prepare ourselves for the digital future. GOALS MEASURES MEASURING SUCCESS § Promoting our employees' skills development and performance § Training offers § Number of openings for app- § Training and development § Management development § Talent programs rentices § Participation in training and development opportunities § Percentage of digital learning § Digital forms of learning formats used § Employee satisfaction PREPARING OURSELVES FOR THE DIGITAL WORKING WORLD With a combined total of more than 6,600 apprentices and students on cooperative degree programs in the 2017/2018 training year, Deutsche Telekom is one of Germany's biggest training providers. In 2017 we provided 2,200 training positions throughout the Group, of which 1,300 apprenticeships, 700 openings for Bachelor's students and 100 for Master's students. Up to 100 training positions were open to young refugees. We promote lifelong learning and offer our employees a wide range of individual training and development opportunities, such as various programs for advancing expert or management careers. The cornerstones of our vocational training and development programs are our our Employee Relations Policy, the Guiding Principles and the Leadership Principles. Digital skills are the key to the future We gear our training and continuing education offers to future-oriented strategic key areas such as big data, All IP and security. For example, our Cyber Security Professional program, which we started in 2014, started its fourth year during the reporting period. In March 2017, all participants in the program's first year successfully passed their final exams. T-Systems created the Training & Skills Management (TSKM) depart- ment in 2017. For example, TSKM supports the transformation of T-Systems, with 2,700 measures (as of November 2017), various skills management offers and an internal service agency with a special skills development portfolio. TSKM has an eye on technology trends such as artificial intelligence and hybrid cloud, analyzes possible training requirements and develops a suitable offering for T-Systems employees. Digital learning is becoming standard We have been promoting digital learning at our Group for many years. In 2017 more than 37 percent of all course hours were completed in digital form. We use innovative formats such as our Massive Open Online Courses (MOOCs) as well as simulations, concise learning mod- ules for on the go and learning games. We also rely increasingly on self- organized digital learning. For example, experts discuss future topics in Communities of Practice (CoPs). In 2017 there were 30 such CoPs working on strategic topics such as cyber security, clouds and Industry 4.0 img. The digital learning options are being gradually expanded, with T-Systems purchasing licenses for external online learning platforms since 2016. T-Systems employees can use these platforms to take advantage of various learning opportunities regardless of their location and according to their needs. In 2017 T-Systems added another pro- vider to its portfolio, who provides digital learning offers specially for experts in the IT sector.
EMPLOYEES TRAINING AND DEVELOPMENT 115115 Strengthening managers The portfolio for management development programs at Deutsche Telekom AG was completely redesigned in 2017. The contained pro- grams focus on helping DT managers to master challenges and assist- ing them with their management duties. In addition to an extensive train- ing catalog, which supports managers in mastering their requirements, many new – primarily digital – programs were developed and carried out in 2017. motto, "We shape the digital world to bring people closer together", we are shaping the digital world in order to bring people together and establish close relationships. Take the CMD+O project, which served to create an open workspace at the end of 2017 in Berlin for two weeks for students and young professionals. Those who were interested could take part in workshops and attend presentations. By employing these and other measures, we were able to acquire over 1,000 IT and tele- communications experts in Germany alone in 2017. Proven tools for performance assessment The Performance Dialog is the tool that we use to assess the perfor- mance of top-level managers. Around 2,800 managers are evaluated with this tool. The assessment involves not only target achievement lev- els but also looks at how the manager went about achieving these goals. Managers complete a self-assessment and obtain feedback from their colleagues who share the same hierarchy level. We also continue to use our Compass tool to assess civil servants and employees covered by collective agreements in Germany and our Per- formance & Potential Review for employees outside collective agree- ments in Germany, a tool that is also used at many of our national com- panies. Reviewing effectiveness We review the effectiveness of our training and development activities. These reviews involve standardized surveys conducted as part of our quality circle, which gives us a regular overview of the quality of our training and development activities via monthly reports. This allows us to continuously ensure the quality of the individual measures. Our Bolo- gna@Telekom program designed to encourage part-time study, for example, is subject to extensive quality controls – from the application process to graduate management. We also use our regular employee survey to evaluate our training and continuing education offers and employ additional tools beyond our standard reports and surveys in special cases. WE WANT TO BE A MAGNET FOR GLOBAL DIGITAL TALENT As a leading European ICT service provider, we need the best minds: creative thinkers and employees with a knack for technology that want to help us design the digital transformation. We look for top talent in all countries, which also contributes to the further internationalization of our Group. We offer applicants a worldwide platform for job searches and international standards in our selection process. To further strengthen our employer brand in the growing job markets, we developed a new global Employer Value Proposition (EVP) in 2017. This value proposition showcases what distinguishes us as an employer and helps us to achieve a consistent perception of our Group across all target groups. We also use digital channels for recruiting. This includes our Global Online Challenge Platform, which we use to reach students, graduates, start-ups and IT professionals worldwide who enjoy mastering virtual business games. Our recruiting robot Roberta is our answer to "living digitalization". Roberta allows colleagues to participate in trade shows, events and trade congresses, personally answer questions on site and even provide people with live glimpses of Deutsche Telekom's working world - all while sitting at their office desk. Completely in line with our We received several honors for our recruiting activities in 2017 as well. Our Find Your Team career website received the HR Excellence Award 2017. The portal is helping us go down a new path between the classic career website and job search portal, where future colleagues and teams introduce themselves to each other. Every applicant thus has the opportunity to get to know the diversity of people, working methods, topics and tasks at our Group. We received the Innovation of the Year European HR Excellence Award for our recruiting robot Roberta. We also achieved second place for our social media activities in Germany in the overall ranking of market research institute Potentialpark. Further- more, we were able to impress visitors to Europe's largest career trade fair for women, women&work, with our trade fair presence, which resulted in them once again selecting us as the most appealing employer. We are particularly focused on increasing our attractiveness as an employer in new and growing markets. An example: Our Women's STEM Award, which we have been presenting since 2013 in collabora- tion with "audimax" student magazine and the MINT-Zukunft-schaffen (Creating a STEM future) initiative, is now open to STEM students not only from Germany but also from other European countries. We will con- tinue to promote the participation of women in STEM topics. START UP!: OUR TRAINEE PROGRAM FOR YOUNG INNOVATORS Our Start up! trainee program helps young people start their career at Deutsche Telekom in Germany with a good skill set under their belt. The trainee program above all targets technology and IT graduates who have an entrepreneurial spirit and are open to new challenges. Since we also explicitly want to reach talent outside of Germany, we adapted our language requirements to those applicants in 2017. In the reporting period we accepted 32 university graduates into our trainee program, roughly 50 percent of whom were women. We want to increase the number of new trainees in the future. During a period lasting 15 to 18 months, trainees familiarize themselves with different areas of the company in Germany and abroad. They take on challenging project assignments in various business areas. Experi- enced mentors assist the trainees. The program is supplemented by innovative training formats and events. Our Start up! trainees also pur- sue their own initiatives and support social projects within the context of our Social Days. DEUTSCHE TELEKOM’S IN-HOUSE UNIVERSITY EDUCATES THE EXPERTS OF TOMORROW We educate experts for tomorrow's telecoms market at our University of Applied Sciences in Leipzig (HfTL). With 1,400 students in full-time, cooperative and part-time Bachelor's and Master's programs, HfTL is the only university in Germany to offer this special profile. When it
EMPLOYEES TRAINING AND DEVELOPMENT 116116 comes to research, it focuses on ambitious topics that are relevant to society like conserving natural resources and advancing Germany's standing in the technology sector. Both research and academia are involved with innovative digitalization topics such as Industry 4.0 and smart cities. Digitalization plays an important role in supporting learning and teaching methods (blended learning) and in IT-assisted planning and administrative processes at HfTL. Intelligent lighting in carsIn recent years, HfTL students teamed up with the Institute of Textile Technology at RWTH Aachen University and the Dormagen-based company Perlon-Nextrusion GmbH to develop an environmentally friendly and energy-efficient manufac- turing process for optical polymer fibers. This process cannot only be used in data communication, but also for intelligent lighting concepts in the car, especially for surface lighting of roof liners. Deutsche Telekom is currently examining the possibilities of further developing and aligning its university. One of these possibilities could be the creation of a foundation faculty for digital transformation at the adjacent Leipzig University of Applied Sciences (HTWK Leipzig). Initial evaluations show that combining the competencies of both academic institutions can lead to additional strong impulses for IT development in Leipzig and Saxony. Data privacy certification program for Deutsche Telekom employees Data privacy and data security are essential for acceptance and use of modern technologies. After successful implementation of an initial continuing education offer, Deutsche Telekom employees have been communicating detailed technical, legal and organizational knowledge in the area of data protection and data security since March 2018 within the scope of a certification program. The program qualifies participants for handling and managing demanding projects. We also want to offer participants with the right qualifications the opportunity to complete the certification program with a Master's degree. Position paper on artificial intelligence Use of artificial intelligence (AI) is an important driver of digital transfor- mation and is very rapidly gaining in importance at companies, govern- ment agencies and in our daily lives. Not many people are aware that AI is used in Internet searches, in online shops and for voice-controlled assistants. In 2017 the industry association Bitkom published a position paper titled "AI-Assisted Decision-Making", which explained the impor- tance of algorithms in the digitalization of business models nowadays. The position paper was authored by a large team of business and science experts, including experts from HfTL. It is the basis for the discussion of the social, economic and ethical prerequisites for making AI a success in digitalization. Students are given insights into research and development activities A key element in our study programs at HfTL is to actively involve stu- dents in research and development projects. Some important projects in 2017 were the following: Prototype of a digital organ donor card developedIn the past, there was no digital solution for documenting a person's decision to be or not be an organ donor. A team of students has now developed a prototype of a digital organ donor card. The card holder’s personal decision can be saved in a database using an app. The app is easy to use and features a strict data security concept. What's more, the app features a comprehensive FAQ section, articles that clear up common prejudices about organ donation and other helpful infor- mation. A fun quiz tests users' knowledge about organ donation. The students will present the prototype to the Federal Centre for Health Education (BZgA) in 2018. Optical technologies for fifth generation (5G) mobile communica- tions, the next mobile communications generation, will use many different technologies, including optical transmission. In this con- text, HfLT is carrying out multiple research activities with student involvement. For example, the properties of LED are being investi- gated and a model is being developed that will predict the extent to which LED is suitable for data communication. The research activities have been integrated into the international standardization activities of the IEEE (Institute of Electrical and Electronics Engi- neers). They are slated to be further developed within the European context. Another project, being conducted together with the Telekom Innovation Laboratories in Berlin, is comparing and assessing the performance of free-space optical communication and 60-GHz technology under various weather conditions. PROMOTING THE DIVERSITY OF OUR YOUNG TALENT We stand for open-mindedness and are committed to diversity also among our young talents. To this end, we pay attention to the most var- ied of performance levels and needs: Depending on how long their families have been in Germany and where they come from, young people with migrant backgrounds often encounter particular problems on the job and vocational train- ing market. We see encouraging them as an opportunity and are careful to guarantee a non-discriminatory selection process. As of December 31, 2017, 10.3 percent of our apprentices and students in cooperative degree programs in Germany have a nationality other than German, representing a total of 68 other countries. In 2009 we launched the "My chance to get going" entry-level train- ing scheme in collaboration with the German Federal Employment Agency. The project prepares disadvantaged young people with very little chances on the vocational training market for an appren- ticeship at Deutsche Telekom. Results so far have been good. A total of 460 out of 664 interns from 2009 through 2016 started a vocational training program with us; 110 were accepted into the first year of the program and 350 directly into the second year. Another approx. 20 interns started the program in 2017. Since 2011 we have been collaborating with the German Federal Employment Agency to offer single parents the opportunity to com- plete a training program or cooperative degree program part-time. 22 young people began their part-time training with this program in 2017.
EMPLOYEES TRAINING AND DEVELOPMENT 117117 To encourage diversity in the program, we also work to increase the number of women participating in technical cooperative study pro- grams. While in 2010 the share of women was only 11 percent in Germany, it has meanwhile risen to 17.6 percent. Around 1.2 percent of our apprentices in Germany are young peo- ple with disabilities. This is above-average in view of the total num- ber of disabled people in Germany. We offer in our refugee initiative in Germany up to 100 training posi- tions, entry-level training schemes and cooperative Bachelor's and Master's programs. In our recruiting efforts, we rely on our long-term successful cooperation with the Federal Employment Agency, social media communication and dedicated volunteers. We want to optimally support the refugees to help them integrate into regular educational structures. They receive support from their trainers or coaches and also have the opportunity to attend additional, job-related language courses. The training staff receive assistance from an external service provider to make sure that the needs of this target group are met. The refugees also have access to counseling and supportive services as needed. PROMOTING DIGITAL COMPETENCE IN TRAINING We want to enable our young talent to competently use digital tools such as e-learning systems, communicate online in a professional manner, research and properly process information for a specific target group and share their knowledge and experiences with others. It is also important for them to critically assess their own media use and know which online information is reliable. Digital learning: flexible and individual To make learning more location- and time-independent, we equip our apprentices with modern laptops, smartphones and access to our Group's internal social network YAM. We are continuously expanding our digital formats when communicating career- and study-specific expertise. Additionally, our apprentices use the TelTec learning plat- form, with which they can independently plan, document and balance the learning process. The platform also offers a digital learning blog, which can be used as a learning aid and also as preparation for the introduction of a new digital learning portfolio in 2018. The new portfo- lio will do even more to help the apprentices plan, document and reflect on their learning phases. ADVANCED TRAINING TO BECOME A CYBER SECURITY PRO- FESSIONAL: SUCCESSFUL TRAINING OF FIRST COMPANY-OWN HACKERS Our training courses for cyber security professionals (certified by the Chamber of Commerce and Industry) are important continuing educa- tion offers in Germany. Data protection experts are rare in today's labor market – which is why we started the part-time training program in 2014 that bridges this gap. In 2017 all of the participants of the first year of the program successfully completed their training and passed their exams at the German Chamber of Industry and Commerce. All of the graduates were given positions at various Telekom Security units. Deutsche Telekom apprentices and students in cooperative study programs can apply for the two-and-a-half-year part-time course after completion of their vocational training or course of study. If they are accepted, the program is integrated into their regular tasks and supple- mented by topic-based and general modules in a variety of formats (classroom courses, e-learning, blended learning). Those who complete the development program receive a certificate for IT security profession- als from the German Chamber of Commerce and Industry. The fourth year of the program started in September 2017 with 12 par- ticipants. In 2016 we won third place with our innovative continuing education concept in the "Large Enterprise" category at the Education Awards hosted by the German Chambers of Commerce and Industry (DIHK). COMPETENCE MANAGEMENT: PREPARED FOR THE CHALLENGES OF TOMORROW To remain competitive in the future, we are gearing our continuing education programs, skills-building measures and recruitment practice to the skills that will be needed in the future. T-Systems HR Academy continued Our HR experts also need regular continuing education to help them stay on top of the latest technological trends and future skills require- ments. The T-Systems HR Academy focuses on the requirements of the digital future. To date, more than 1,300 experts have taken part in 59 workshops. The focus was on methods, tools and topics such as corporate happiness and collaboration. The feedback on these offers was very positive. T-Systems: transparent processes for requirements planning The pace of technological development is becoming increasingly faster. Correspondingly, the requirements regarding employee skills are also changing. In order to survive in a highly competitive environment, employers must be precise in planning requirements and resources and ensure that the right skills are available at the right time in the right place. Companies need clarity about the required skills so as to offer the corresponding training opportunities. One thing is clear, however: conventional resource management is nearing its limit. That is why T-Systems launched the Dynamic Capacity Management (DCM) project in 2017. The goal is to create worldwide transparency about existing and necessary skills, identify possible gaps and derive specific action areas and measures, such as strategic skills development and recruiting activities. Such transparency is an essential prerequisite for targeted staffing of future deals and projects. After the project content and project managers were identified and the respec- tive departments committed to the project in April 2017, the project was officially launched in May 2017. DCM processes will be based on an IT tool that is already established at the company. Following successfully concluded talks with the employee representatives, a pilot phase will start at the beginning of 2018. Over 200 employees with various job profiles, such as project managers and IT architects, will test the newly designed processes. The focus will be on testing the functionality of the IT applications and the efficiency of the new roles and processes. With DCM we offer our employees increased transparency about the skills we are looking for and the possibility of channeling their own develop- ment accordingly.
EMPLOYEES TRAINING AND DEVELOPMENT 118118 Telekom Deutschland: Planning the job profiles of the future Competence management also plays an important role at Telekom Deutschland. Skills needed by employees in the future are identified early on. HR and the respective departments, such as Sales, Service and Technology, work together closely on this. They jointly identify strategic focal topics, develop future job profiles and determine the skills and hiring needs through the year 2020. Measures are then defined to close any gaps in terms of skills, hiring and training. The pilot project started in 2015 at Technology with the "speed boat technology". The second step was to develop a skills database and test it in a pilot project involving specific departments in 2017. Here skill deficits are being determined in detail, training measures devised and other asser- tions made regarding retraining and recruitment. Further pilot expan- sions and negotiations with the employee representatives for a Group- wide rollout will follow in 2018. FUTURE WORK – WORKING IN THE DIGITAL AGE We support mobile working models and give our employees the free- dom to shape their working environment. The working environment of the future – Future Work – is based on four modules: open-plan offices, desk-sharing, mobile working and a new type of collaboration. We pro- vide the corresponding IT solutions. Since the launch of the Future Work concept in 2014 in Germany, we have equipped Group headquar- ters in Bonn and the Hamburg and Frankfurt locations with open office areas, the option of desk sharing, networking rooms as well as project and creativity rooms. We continued down this path in 2017. The focuses were: Virtual and self-organized cooperation More and more, our employees are no longer working in inflexible, closed project teams but rather are developing cross-functional and cross-hierarchical solutions. This also helps them expand their knowl- edge and better see the big picture. In 2017, for example, there were 30 Communities of Practice (CoPs) at T-Systems working on strategic topics such as cyber security, clouds and Industry 4.0 – less than in the previous year (40). The reason for this was a concentration and bundling of the CoP topics. A guideline intro- duced in 2017 and a platform for sharing best practices are helping to continuously improve this form of cooperation. The T-Systems' HR Academy focused, among other things, on the topics of digital collaboration and new working methods in 2017. One high- light of the year was the Virtual HR Convention. About 400 employees from 21 countries took part in 14 virtual workshops and presentations. In this context, we handed out seven HR Awards to teams who worked together particularly successfully. The most important ideas stemming from the workshops – on topics such as attitude, strengths and a posi- tive culture of dealing with mistakes – will be further elaborated and implemented after the convention. Agile project work – effective and success Customer projects are becoming more complex and dynamic. That's why instead of using classic project planning, we rely on agile working methods, so that we can be flexible in responding to customer require- ments. Simple methods, combined with the right agile tools, ensure communication, effective teamwork and a coordinated approach in the team. In 2017 we launched the GSI Goes Agile program to consolidate the many agile initiatives within Global Systems Integration at T-Sys- tems, some of which were established years ago. Our Agile University offers employees training and certifications on agile methods and roles, such as Scrum Master, as well as design thinking. About 1,000 employ- ees have taken part so far. Of course, we need the right framework conditions in order to make agile working successful. That is why in 2017 T-Systems became a part- ner of the diGAP (Good Agile Project Work in the Digitalized World) research project sponsored by the Federal Ministry of Education and Research. This project is investigating agile working in order to derive recommended actions for designing the working environment and the cooperation of agile teams. Agile project methods have been on the agenda of T-Systems' Global Systems Integration (GSI) department for quite some time now. That's why a preliminary study on diGAP entailed a survey of GSI employees, asking about their experiences. In Septem- ber 2017, the results of the survey were presented to the diGAP project, where they will serve as the foundation for further data collection and measures. The research project will run for a term of three years. ENCOURAGING AND RETAINING TALENT Dedicated, technology-minded and service-oriented employees are pivotal to the success of our business. The aim of our global talent management is to identify such employees at the company, support and involve them, give them opportunities for further development and ultimately retain them. Global Talent Pool: A new Group-wide process simplifies staffing Employees planning their next career step or who want to amass experi- ence in projects can join the Global Talent Pool. With more than 850 employee profiles, some 25 percent of which were posted by women and 56 percent by international colleagues, almost two-thirds more employees introduced themselves on the new platform compared to the predecessor platform during the reporting year. The share of female colleagues (27 percent in 2016) remained about the same, while the number of international employees on the platform rose significantly (41 percent in 2016). The platform is a useful tool for increasing talent visibility and simplifying staffing processes throughout the Group. HR experts are able to peruse the profiles employees post to the platform and contact suitable candidates. The Global Talent Pool also encour- ages employees to gain experience at different business units or national companies and in a range of functions, furthering diversity at the Group. Talent conferences offer opportunities to engage in dialog In September 2017, around 350 employees from about 20 countries attended two conferences. One of these conferences took place simul- taneously in Bonn and Athens, linked by live streaming. Participants had the opportunity to learn more about effective strategies to help them advance their careers in the age of increasing competition by AI and robotics. The event also offered an opportunity to network with around 65 of the Group's top-level managers, who made guest appear- ances at the event.
EMPLOYEES TRAINING AND DEVELOPMENT 119119 MANAGER PERFORMANCE REVIEWS REVISED BASED ON PER- YOUTH IN T-SYSTEMS SOUTH AFRICA FORMANCE DIALOG The Performance Dialog, introduced in 2014, is a Group-wide, system- atic process for the assessment and development of our managers. It takes place once per year and is based on continuous feedback. How- ever, the manager's leadership behavior is not only evaluated by his/her direct supervisor but by his/her colleagues on the same hierarchy level as well. The goal is to assess the manager's potential and continuously improve individual performance. In 2017 we restructured the Perfor- mance Dialog and simplified the process. We now focus on the manag- er's individual development and strengthening the feedback culture. The new performance management process is modular in design so that preferences and situational circumstances can be taken into account. This performance assessment continues to be based on our Guiding Principles and our Leadership Principles of "Collaborate," "Innovate" and "Empower to Perform." Our Compass tool for assessing employees covered by collective agree- ments and civil servants in Germany and our international Performance & Potential Review continue to be used throughout the Group. MANAGEMENT DEVELOPMENT PROGRAMS EXPANDED Our new levelUP! program prepares executives at Deutsche Telekom to handle the topics of tomorrow in just ten months. The model of the ambidextrous organization sets the focus on strengthening a culture of innovation and technology-based management within the initiative. A mixture of digital and on-site formats enables managers to shape their learning flexibly and individually and define their own learning path- ways. 700 managers at Deutsche Telekom took part in levelUP! in 2017; another class is planned for 2018. leadFirst is a completely digital, virtual management transition program that is intended for managers who have recently assumed a manage- ment position at DT International. Its aim is to convey their new roles to the managers clearly and comprehensively and to create a solid management foundation in harmony with the leadership principles at Deutsche Telekom AG. During the program, the participants reflect on their own ideas regard- ing leadership. This global, digital program not only helps to develop leadership skills at the highest level, but also promotes virtual leader- ship skills and offers numerous opportunities for networking. We also offer a wide range of challenging training courses for future leaders in our German-language management development program (Führungskräfte-Entwicklungsprogramm, FEP) and our English-lan- guage Leadership Development Program (LDP). Both programs prepare participants for their first or more challenging management positions. With these steps, we also aim to implement a shared vision of leadership within Deutsche Telekom AG. T-Systems South Africa established an internal Internship Program in 2006, to assist graduates with work experience. The Internship Pro- gram, registered with MICT Seta, is a one-year structured program comprising 95 % practical training with the balance being compli- mented by mentoring, life skills, and technical training. Every year, the program offers interns an opportunity to get international exposure through a 5 to 6-week International Exchange Program. To date, over 700 interns have participated in the program, with a place- ment rate of 75%. However, 2015 boasted a 96% placement rate, of which 80% are employed within T Systems. Not only do the interns receive valuable practical experience, they also receive soft skills training in the following areas: Twelve modules are covered during the internship contract period: World of Work, Commu- nications, Customer Service, Self Awareness & Personal Branding, Conflict & Diversity Management, Personal Finances, Presentations & Assertiveness, Business Writing and Job Readiness. AWARDS AND ACCOLADES FOR YOUTH PROGRAMS YEAR AWARD 2013 1ST Place in the Diversity Awards (Leadership in the Field of Transformation, Diversity and Inclusion) 2014 Gender Mainstreaming Award for female youth 2015 CompTIA Largest Academic Partner in Africa Gender Mainstreaming Award for initiatives for introduction of Disabled Youth Programs 2016 Cisco Networking Academy: Instructor recognition Award 2017 CompTIA - CAPP Academic Partner of the Year CompTIA - Workforce Development Academic Partner of the Year CompTIA - Outstanding Leader award EMPLOYABILITY PROGRAM IN THE NETHERLANDS T-SystemsNetherlands deliberately encourages its employees to invest in their professional development and position themselves as experts in their individual fields. This is reflected in the company’s Employability Program. T-Systemsadvocates lifelong learning and continuously raising the awareness of our employees for sustainable employability on the inter- nal and external labor markets. This is achieved by offering relevant tools, internal mobility, and opportunities for our staff.
EMPLOYEES TRAINING AND DEVELOPMENT 120 In 2017, we introduced the career check for all employees. This is a program employees can participate in once every three years and undergo a career health check. They work together with an external coach and are offered career interviews, social media training, presen- tation skills, coaching on setting up a career/development plan, and support for achieving their goals. We have received very positive feed- back from our staff about this opportunity. EMPLOYEE DEVELOPMENT AT HRVATSKI TELEKOM Our professional education program “HT Academy” and unlimited availability of digital learning platforms enable all our employees to participate in a rolling program of skill enhancement. Talent Development In 2016, we launched our new talent management program “Top Talent” with the aim of retaining and motivating our key people, and high-poten- tial staff. Manager nomination and assessment center results were used to identify 105 talented high-flyers with expert or leadership career potential out of larger pool of employees. The high-flyers participated in targeted development activities over a period of 1.5 years. In 2017, the talent program for the first generation of talents was successfully completed. By the end of 2017, 30 % of these top talents had been promoted to a more complex or a managerial role at Hrvatski Telekom. Leadership Development From 2016, all managers in B-1positions have been involved in a tailor- made leadership program. The program started with assessment center as a quality baseline for identifying skill gaps and continued with seven targeted two-day workshops consisting of a range of self-help activities for attendees. The program came to an end in November 2017and the majority of attendees evaluated it as an exceptional opportunity for development of personal skills, experience sharing, and networking. In 2017, a dedicated development program was set up for mid-level managers concentrated on typical challenges for this target group. The program was launched in Q4 2017.
EMPLOYEES DIVERSITY AND EQUAL OPPORTUNITIES 121 DIVERSITY AND EQUAL OPPORTUNITIES Diversity and equal opportunity are essential not only for a stable soci- ety but for a company as well. People from approximately 150 countries, women and men, young and old as well as people with different abilities and cultural backgrounds, work together effectively at Deutsche Telekom. This diversity helps us come up with the best ideas and products in global competition. As early as during the hiring process we emphasize diversity and consider options other than just traditional educational routes. Good examples of this are our entry-level training scheme for young people who are disadvantaged in terms of their social and educational back- ground and our part-time apprenticeships/degree programs for single parents. GOALS MEASURES MEASURING SUCCESS § Encouraging international diversity and intercultural experiences the number of women at our company § Fair Share initiative to increase § Percentage of women at the company § Percentage of women in managerial positions § Filling 30 percent of manage- § Work-life balance offers ment positions with women § Multiplier and mentor programs § Percentage of employees for experts and managers § Action plan to promote inclusion § Entry-level training scheme for working part-time or on parental leave § Percentage of employees with disabilitie disadvantaged young people § Percentage of disadvantaged § Job rotation and international talent and leadership programs young people starting an apprenticeship § Diversity in HR development programs SUPPORTING DIVERSITY Our aim is to promote and benefit from the diversity of our employees as a source of creativity and innovation. That is why we offer our employ- ees numerous opportunities to grow personally and professionally, regardless of their gender, age, sexual preference, health situation, ethnic background, religion, or culture. Our Group-wide Diversity Policy, Guiding Principles, and Employee Relations Policy as well as our "Code of Human Rights & Social Princi- ples" form the foundation of our commitment. We are also a founding member of the Diversity Charter association. Equal opportunity is a particularly important issue for us - one for which we have been fighting for more than two decades. Our goal is to increase the number of women in expert and managerial positions: We want to fill 30 percent of leadership positions in middle and upper management worldwide with women. To this end, we launched the Fair Share initiative. On December 31, 2017, the percentage of women in middle and upper management was 25.4 percent similar to the previous year; the share of women in our Group’s Supervisory Board was 45 per- cent (previous year: 40 percent). Our commitment to integrating refugees into the labor market also promotes diversity within our company. We offer entry opportunities by means of internship, training, the "Internship PLUS Direct Entry" pilot project, or direct entry into an expert or managerial position. We support an effective work-life balance with an extensive work-life portfolio to allow our employees to realize their abilities in the best pos- sible way. This includes daycare offers and assistance with caring for family members; these offers exceed legal requirements. Examples include different options for reducing working hours, the lifetime work account, and guaranteed return to full-time work. As of December 31, 2017, 13.6 percent of employees covered by collective agreements and 20.4 percent of Deutsche Telekom civil servants throughout Germany were currently working part-time. The number of disabled employees working for us in Germany puts us well over the statutory quota of 5 percent. We offer multiplier and mentor programs to establish managers as role models and ambassadors who encourage diversity. Many of our employees have become actively involved in addressing various aspects of diversity, for example as members of internal initiatives such as queerbeet, a network of lesbian, gay, bisexual, and transsexual employees, or of the numerous women's networks that have been estab- lished within the Group. In 2015 we initiated a Group-wide campaign on unconscious bias, which we continued in 2017. Since then we have been increasing appreciation for diversity within the Group through explanatory videos and digital workshops. We regularly assess the effectiveness of our measures for encouraging diversity and internally publish the findings on platforms such as Fair Share and the Deutsche Telekom work-life report. We complied with the new legal requirements stipulated by the Act to Promote Transparency of Pay Structures with a separate remuneration report as an annex to the 2017 management report. At the start of 2018, the T-Share was included in the global and cross- sectoral Bloomberg Financial Services Gender-Equality Index (BFGEI). Bloomberg is a U.S. information service provider that primarily provides financial data. The Index acknowledges a total of 104 companies that promote gender equality at work. At the same time, the Index provides investors and organizations with aggregated, standardized data about the percentage of women and men employees at companies and about specific offers for employees, social commitment to equal opportunity as well as the product and vendor structure. The analyzed data refer to the 2016 financial year.
EMPLOYEES DIVERSITY AND EQUAL OPPORTUNITIES 122122 FIFTH GERMAN DIVERSITY DAY: MANAGERS DISCUSS DIVERSITY AT WORK The Diversity Charter is an independent economic initiative that boasts the participation of 2,600 companies and institutions in Germany. The Charter's goal is to create a work environment free of prejudice. All employees deserve respect and appreciation – regardless of gender, nationality, ethnic origin, religion or belief, disability, age, sexual orienta- tion and identity. Deutsche Telekom is a founding member of the initia- tive. As in past years, we participated in the fifth nationwide German Diversity Day in 2017. Together with 120 managers from partner compa- nies from the Rhine-Ruhr network, we exchanged information during a meeting on topics such as "Working World 2030," "Unconscious Bias," "Cultural Skills," and "Flexible Working Hours" and discussed the inter- ests of the LGBTI (= Lesbian, Gay, Bisexual, Transgender, Intersexed) community. ACTION PLAN FOR INCLUSION YIELDS INITIAL SUCCESS In 2017, more than 7 percent of Deutsche Telekom employees Group- wide were either disabled or have equivalent status. This number was higher than average compared to other private and public-sector employers and thus remained at a high level. In 2016 we introduced the "Living Diversity – Inclusion@DT" action plan. This plan helps imple- ment the UN Convention on the Rights of Persons with Disabilities and yielded initial success in 2017. Deutsche Telekom's good examples were honored with the first-time-ever bestowing of the Inclusion Award. As of September 2017, the town hall meetings and the HR Business Talk are being translated by sign language interpreters and transmitted live throughout the company on an additional channel. CAREER WITH CHILDREN PROGRAM STARTED FOR A THIRD TIME Our Career with Children mentoring program started up again in April 2017. Potential junior employees for technical and managerial positions from various Group business units in Germany are coached before, during, and after their parental leave by an experienced manager in their role as mentor. They amass new technical and methodological competencies "in tandem" and benefit from participating in the pro- gram's network. The third round of the Career with Children program saw the training of 31 tandems. The program was also supplemented by web-based learning modules on various topics. More than 90 per- cent of participating junior employees and two-thirds of the managers are female. The program lasts 22 months and ends in January 2019. TRAINING PROGRAM PREPARES EMPLOYEES FOR THE SUPERVISORY BOARD In 2014 we became the first DAX company to develop a training program to prepare employees for supervisory board positions. The program was developed in collaboration with the European School of Management and Technology (ESMT) . We are particularly interested in encouraging women to take on supervisory board positions. In addition to information on the traditional activities of supervisory board mem- bers, the training also gives insight into practical experiences presented by supervisory board members, case studies from the Group, and a simulated supervisory board meeting. So far we have trained a total of 64 potential supervisory board members, around half of whom work at business units outside of Germany. Ten women who have completed the program were appointed to a Deutsche Telekom supervisory board. A more extensive workshop for former program participants took place in Berlin in October 2017. They were trained in various subjects such as corporate governance, cyber security, and startup investments as well as ethical matters. COMMITMENT TO INCREASING THE NUMBER OF WOMEN IN MANAGERIAL POSITIONS Our goal is to have women occupy at least 30 percent of positions in middle and upper management. To this end, we have initiated numer- ous measures: expansion of our work-life balance offer by means of parental leave models, flexible working hours, and childcare programs, a mentoring program for supervisory board candidates, targeted recruit- ing of female talent, for example through the Talents@Telekom talent platform, and the "Fair Share" initiative started in 2010. This allowed us to continuously increase the share of women in man- agement positions – from 19 percent in 2010 to 25.4 percent on December 31, 2017. With 45 percent on the Group's Supervisory Board, we have already surpassed our own goal as well as the statutory gender quota introduced in Germany on January 1, 2016. Our quota for women, which we want to achieve by the end of 2020, also applies to the two levels beneath Board of Management level, the management of the national companies, and the internal supervisory boards in Germany. With these efforts, we are significantly surpassing the statutory regulations in effect in Germany since 2015. SPONSORSHIP OF “EVERY WOMAN IN TECHNOLOGY” AWARDS IN GREAT BRITAIN T-Systems Limited partnered with Everywoman in 2013 and is now an active member of the network. Everywoman is a membership organiza- tion that has championed the advancement of women in business since its foundation in 1999. It works alongside companies looking to develop and retain a pipeline of female leaders who want to advance themselves and others. In 2017, we rebranded our own Everywoman community – which is now known as Diversi-T. It has a broader focus on ensuring that T-Systems is a truly inclusive environment where all diversity issupported and cham- pioned. The aim of the network is to help staff connect and stay inspired by providing the opportunity to network internally and externally. There are also opportunities to attend in-company webinars, bi-monthly meet- ings and an annual event to hear and learn from each other and from other tech companies leading in diversity. As part of our commitment toDiversi-T, the Board and all people manag- ers received training in unconscious biasand how this can affect recruit- ment, personal development and other core processes. The most posi- tive outcome of this training was to allow the conversation on diversity and bias to becomemore open. While our Everywoman Program has evolved into Diversi-T, we are still very committed to helping to close the gender gap in the ICT industry and attend the “Everywoman in Technology” awards each year taking some of our customers with us to help build our brand and maintain a broad client relationship. The awards play a vital part in highlighting role models whose stories and achievements demonstrate to those young women and girls that they too can achieve great success if they opt to forge a career in IT. With this in mind, T-Systems sponsors the “rising
EMPLOYEES DIVERSITY AND EQUAL OPPORTUNITIES 123 star” award for women in tech under the age of 26. Christoph Rode, MD of T-Systems Limited sits on the judging panel and will present the award on the night. T-Systems views the Diversi-T Program as an important part of its strategy and will continue to support it in 2018.
SUPPLIERS 124 SUPPLIERS We are systematically working to create a sustainable ICT supply chain. Our efforts are based on trusting, long-lasting relationships with our suppliers as well as tried-and-true tools, methods and measures.
EMPLOYEES SUSTAINABLE PROCUREMENT STRATEGY 125 SUSTAINABLE PROCUREMENT STRATEGY There are still places in the world where human rights are not a respected. We may be exposed to country- and supplier-specific risks through our global procurement activities; these include, for instance, the use of child labor or poor local labor and safety conditions. Compli- ance with human rights is very important to our Group. This applies both internally within our company and to our business partners and suppliers as well. To also ensure compliance with human rights outside of our Group, we expressly require our over 30,000 suppliers in more than 80 countries to assume this responsibility as well. 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 stand- ards. To this end, we use our Supplier Code of Conduct, which is an integral component of our suppler contracts. This Code of Conduct makes reference to the following Group policies: Our Group-wide Code of Conduct and The document "Code of Human Rights & Social Principles" GOALS MEASURES MEASURING SUCCESS (previously: Social Charter img) § Implementing a sustainable § Standards and guidelines § Sustainable Procurement procurement strategy § Group-wide implementation by the Sustainable Procurement Working Group § Employee training courses § Stakeholder involvement § Established escalation proce- dure for serious cases ESG KPI § Sustainability rankings In November 2017 we underscored our commitment to human rights and developed our Social Charter further into the "Code of Human Rights & Social Principles". MANAGING SUSTAINABILITY IN PROCUREMENT PROCESSES We have been working to improve sustainability throughout our sup- ply chain for many years. 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. Our sustainability criteria therefore apply to the entire procurement process, i.e. from the initial request to contract signing. The following guidelines are also binding for our suppliers: The Anti-Corruption and Bribery Policy The Fraud Policy The Statement on Extractives The List of banned substances With our Supplier Code of Conduct we have made a commitment to complying with the fundamental principles and standards set forth by the International Labour Organization and the Organisation for Eco- nomic Co-operation and Development as well as with the Universal Declaration of Human Rights and the UN Global Compact. We regularly check compliance with the Supplier Code of Conduct among our strategic suppliers.
EMPLOYEES SUSTAINABLE PROCUREMENT STRATEGY 126 Entrenchment in the company Our sustainable procurement strategy is based on our CR strategy and has been effectively incorporated into our procurement processes. The Sustainable Procurement Working Group (SPWG img) ensures Group-wide implementation. The members of the SPWG are available to assist all 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 prac- tices. They report directly to the Board of Management member for Human Resources and Finance, respectively. Our Chief Human Resources Officer is responsible for supply chain management as well as for implementing the Global Compact [Info icon] principles regarding human rights and work standards. An established escalation process calls for decisions to be made at Board of Management level in serious cases. to new issues and a changed evaluation method, we remain one of the leading companies in the ICT sector. We are continuously working on improvements in our supply chain, thereby securing our leading posi- tion and expanding it. MANY PLAYERS, ONE GOAL: FORUM ON SUSTAINABILITY IN SUPPLY CHAINS In January 2017 the Joint Audit Cooperation (JAC) organized a dialog event in Xi’an, China. About 130 representatives from ICT companies, international NGOs, CR organizations, auditing firms as well as the world of science discussed how to promote the development of a more sustainable supply chain for ICT products. They especially focused on the supply chain aspects of working hours/wages, health and safety, the environment, and ethics. JAC is an alliance of currently 17 telecom- munications providers; Deutsche Telekom is a founding member. Among other things, the following results were achieved at the event: JAC member companies and suppliers should commit to going beyond merely fulfilling minimum requirements in order to empower management and employees on site to drive improvements. Cooperation between the JAC, suppliers, and local authorities offers opportunities to train employees and management in regard to real- istic and understandable sustainability goals. During audits, more focus should be placed on aspects such as social dialogue with stakeholders. SUSTAINABILITY IN PROCUREMENT ONLINE TRAINING In 2017 we revised and updated the Sustainability in Procurement e-learning tool. A short video summarizes the most important informa- tion and measures in Procurement with regard to sustainability. And it's not only our own employees whom we train on the topic of sustainability. Our business partners and suppliers also receive training within the scope of our supplier development program. We have also specified sustainable procurement requirements for the BuyIn Joint Venture between Deutsche Telekom and Orange. To this end, both companies created a joint supplier code. The code describes the high ethical, social, ecological, and human rights expectations and requirements for our suppliers. We have incorporated our sustainability principles into the Group's Global Procurement Policy to provide orientation for our Procurement employees. The procurement practices set forth in the policy provide specific guidelines for rocurement in Germany and serve as recommen- dations for our national companies. An e-learning tool is available to our employees throughout the Group for training purposes. This learning offer is available to our buyers and all other interested employees. It describes how sustainability principles should be implemented in day- to-day business, among other things. Our new buyer handbook provides an overview of which CR criteria need to be taken into account during which part of the procurement process. KPI to promote sustainability We measure and manage our sustainability performance in our procure- ment activities with the "Sustainable Procurement" 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. We accomplished our goal of cover- ing 80 percent by 2020 as early as 2016. We want to maintain this tar- get until 2020. What's more, we have established two other ESG KPIs for managing our procurement activities. On the one hand, we want to increase the order volume that is covered by the CDP Supply Chain Pro- gram. On the other hand, we want to increase the share of CR-classified suppliers among our TOP 200 suppliers. Qualification tools include self- assessments, audits, sustainability workshops for suppliers, and sup- plier development programs. In the future, we will be focusing even more on monitoring risky material groups/suppliers with the help of suit- able management tools. Scores in sustainability rankings Every year leading rating agencies measure the sustainability per- formance of large enterprises. Deutsche Telekom scored 72 out of 100 points in the supply chain management category of the 2017 RobecoSAM Corporate Sustainability Assessment. Although we were unable to repeat our excellent performance of last year (98 points) due
SUPPLIERS SUPPLY CHAIN MANAGEMENT 127 SUPPLY CHAIN MANAGEMENT We maintain business relationships with more than 30,000 suppliers in over 80 countries. Our relationships with suppliers are based on trust and dialog combined with monitoring and providing concrete support for the implementation of sustainability standards. We have a variety of tools, methods, and measures in place to help us improve the sustaina- bility of our supply chain. Our basic aim is to recognize the cause of any problems and to work closely together with our suppliers to resolve them. GOALS MEASURES MEASURING SUCCESS § Increasing the share of sup- § Weighting sustainability § Social Audits pliers audited for sustainability aspects at 10 percent for bids § Sustainable Procurement § Supplier Code of Conduct ESG KPI (SCoC) § Supplier risk analysis § Supplier surveys and self-assessments § Supplier evaluation and development § Escalation process for violations IMPROVING SUSTAINABILITY IN THE SUPPLY CHAIN Depending on the development phase of the supplier relationship, we use different tools to make our supply chain more sustainable. When selecting a new supplier, the topic of sustainability is included in the decision-making process with an importance of 10 percent. This creates strong incentives for suppliers to make their business more sustainable and to offer more sustainable products and services. We also use a four-level approach to minimize risks and encourage our suppliers to improve their practices. The funnel chart illustrates the pro- cess. In the first step, the pre-qualification, we obligate all of our suppli- ers to acknowledge our Supplier Code of Conduct (SCoC), which places strict ethical, social, ecological, and human rights requirements on our suppliers. We conduct a risk analysis to identify suppliers with a particularly high risk with regard to these aspects. We require strategi- cally relevant or high-risk suppliers to provide us with comprehensive self-disclosures. They can provide this information to us using the E-TASC (Electronics-Tool for Accountable Supply Chains powered by EcoVadis) system. Our experts then assess the self-disclosures as well as additional background information. We take things a step further in our relationships to certain suppliers that exhibit a higher CR risk and conduct on-site audits (2017 audit results) (step 2). In 2017 we conducted 89 on-site assessments (audits) on direct and indirect suppliers. We let the supplier know the approximate time of the audit in advance ("semi-announced audit"). This is necessary to make sure that relevant representatives and employees in key functions are present for the audit. In doing so, we focus not only on Deutsche Telekom's direct suppliers but also on downstream suppliers as much as possible. We also boost the effectiveness of our audits by collaborating with thirteen other com- panies in the Joint Audit Cooperation (JAC). Due to the growing number of JAC members, the intersection of audited suppliers is also increasing, with multiple audits for individual suppliers being prevented. We employ the "quality over quantity" principle when auditing suppliers. That is why we focus on some 250 strategically relevant and particularly risky suppliers among our more than 30,000 suppliers worldwide. We aim to audit these suppliers at least every two to three years. We do not require our suppliers to obtain external environmental or social certificates. Based on our auditing experiences, however, the majority of our relevant manufacturing suppliers have an external "Envi- ronment" and "Social Accountability“ certificate pursuant to ISO14001 and SA8000 or comparable management systems. Verification of important social and ecological aspects as well as fundamental human rights during our audits is in line with internationally recognized guide- lines and standards such as the ILO Labour Standards, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. Based on all available sustainability-relevant information (from the E-TASC information system, our own research, audits, and pre-qualifica- tion results), we classify and evaluate suppliers according to CR criteria (step 3). This is done using supplier scorecards, which let us assess a supplier's sustainability performance and compare them with other suppliers at a glance.
SUPPLIERS SUPPLY CHAIN MANAGEMENT 128128 We work closely with our suppliers to address and resolve any acute problems that are identified. The subsequent process for improving the sustainability performance of these suppliers aims at long-term, continu- ous progress. This will primarily take place through our supplier devel- opment program (step 4). Improvements achieved in 2017 The program's successes are tangible. During the operational review meeting in November 2017 in China, we evaluated last year's results together with the suppliers. As in previous years, the program suppliers achieved significant improvements*, such as the following: In cases of significant disregard of our requirements, we initiate an escalation process to effect fast resolution in accordance with our sustainability standards. If employees have concerns along our supplier chain regarding compliance with laws, internal guidelines, and stand- ards of conduct, they can report these anonymously using our whistle- blower portal. TWO COMPANIES, ONE STANDARD: NEW SUPPLIER CODE FOR THE BUYIN JOINT VENTURE One of the goals of the BuyIn procurement joint venture between Deutsche Telekom and Orange is to ensure a sustainable supply chain. To this end, both companies introduced a joint Supplier Code of Con- duct (SCoC) in 2017. It specifies joint principles and values in the cor- porate responsibility area and sets forth strict ethical, social, ecological, and human rights expectations and requirements for suppliers. This Code can obviously not replace the laws and regulations of coun- tries where our suppliers are active. Rather, its aim is to facilitate compli- ance with these laws and regulations and guarantee that they are imple- mented faithfully and effectively. As of July 2017, the Code applies to all procurement activities of Deutsche Telekom, Orange, and the BuyIn joint venture, that is: All current contracts (new contracts) One supplier reduced its CO 2 emissions by 8.8 percent. Another supplier decreased staff churn by 7.4% thanks to improved working conditions. One supplier introduced a CSR management system with goals and concrete action plans. One of our Chinese suppliers, who manufactures set-top boxes, decreased monthly overtime hours from 87 to 71 hours per week. Another supplier of smartphones was able to reduce its electricity consumption by 21 percent and increase recycled waste by 11 percent. A direct supplier who manufactures network hardware housing improved its health and safety measures, which resulted in decreased absences due to workplace accidents by 35 %. The suppliers were once again honored for their performance in 2017. Significant and meaningful improvements of social or ecological aspects by our suppliers resulted in notable cost savings in 2017. Since the start of the program, total savings amounting to double-digit millions (in euros) could be achieved. Contract changes such as extensions and additional negotiations Project negotiations (based on framework contracts of all types – * All figures and success stories pertain to one year and to specific sup- pliers (i.e. the above numbers do not represent cumulative statistics for all program participants). except catalog call-offs) Individual orders The Supplier Code is a fixed component of the General Terms and Con- ditions/General Terms and Conditions for Purchasing. All new suppliers must accept it within the scope of the supplier onboarding process. DEMAND AND PROMOTE: OUR CR DEVELOPMENT PROGRAM FOR SUPPLIERS We collaborate as partners with our suppliers to make sure they are able to meet our high sustainability criteria with measures like our devel- opment program for key strategic suppliers. Under this program we work together to come up with solutions for topics such as environmen- tal protection, working hour regulations, and occupational health and safety. Better working conditions have a positive influence on employee loyalty and motivation, raise productivity, and improve the quality of products; a clear win-win situation for our suppliers as well as for our company. In April 2017 we welcomed three new suppliers in China to the program, which now counts 14 suppliers. The new participants are currently working on creating their CR improvement plans. The diagram shows the areas in which we audit the suppliers participat- ing in our program. Using the results, we work with them to develop a plan for remedying any issues. Suppliers receive support from Deutsche Telekom experts as well as professional external consultants in apply- ing these measures. All activities and results are documented so that we can gauge the effectiveness of the measures employed. These are cor- rected, if needed.
SUPPLIERS SUPPLY CHAIN MANAGEMENT 129 We want to establish our supplier program as an industry-wide approach in 2018 using the GeSI ICT sustainability initiative. Participat- ing suppliers will be trained using a web-based tool. After completing the training successfully, they will be able to use the tool independently so that they can in turn train their own suppliers. This way we hope to achieve larger economies of scale. AWARD FOR CLIMATE PROTECTION ALONG THE SUPPLY CHAIN The non-governmental organization CDP regularly assesses the climate protection activities of companies worldwide and compiles an index of leading companies called the A List. Suppliers publish their CO emis- sions within the scope of the CDP supplier program. We ourselves act as a supplier to our customers. Just like the previous year, we were once again among the leading companies in 2017 and received the top grade "A." 2 We invited 195 suppliers in 2017 (compared to 181 in 2016) to partici- pate in the CDP Supply Chain Program. These suppliers cover 73 per- cent of our procurement volume. A total of 109 suppliers took part in the program (compared to 108 in 2016). They cover 66.4 percent of the procurement volume (2016: 65 percent). In 2017 we were also again included in the A List based on the CDP's general ranking.
SUPPLIERS SUPPLY CHAIN MANAGEMENT 2017 audit results 130 2017 AUDIT RESULTS In the audit program, which was established and is controlled at the Group level, a total of 89 audits was carried out in 2017. Like in the pre- vious year, our activities focused on suppliers in Asia, particularly China, South Korea, Thailand, and India. We also conducted social audits in Latin America and Eastern Europe. Audited suppliers included manufacturers in the areas of IT hardware, software, and services, as well as networks and devices. No cases of corruption or bribery nor any critical violations of compliance policies or the right to intellectual property were found during the audits. The JAC Guidelines require suppliers to grant their employees the free- dom of association and the right to collective bargaining, as well as a healthy and safe working environment. The following minimum require- ments are applicable regarding working hours: a maximum of 48 work- ing hours per week, a maximum of twelve hours of overtime each week and one day off after six consecutive days of work. We also demand a fair wage that enables employees a decent standard of living. Compli- ance with all these requirements is reviewed regularly during our on-site audits. This also includes inspection of the features and quality of the working, sleeping, and cafeteria areas. THE 2017 AUDIT RESULTS AT A GLANCE Legend: Area (Number of violations) DETAILED RESULTS We do not audit all of our suppliers (over 30,000) equally, but instead focus on strategically important and/or high-risk supplier groups. We focus on roughly 250 suppliers that are regularly audited every two to three years. The majority of these auditsis conducted within the scope of the Joint Audit Cooperation (JAC). Labor standards Social standards Living standards Environmental requirements We do not require our suppliers to obtain external environmental or social certificates. Based on our audits, however, the majority of our rel- evant manufacturing suppliers have an external certificate confirming compliance with ecological and social standards. Reviews of the major ecological and social aspects during our audits are compliant with the relevant international regulations and standards, such as the ILO core labor standards, the UN Guiding Principles on Business and Human Rights, and recognized management systems such as ISO14001 and SA8000. Of the 89 suppliers we audited in 2017 (nine of which were in accord- ance with the validated audit processes of the Responsible Business Alliance), around 29 percent (26 audits) were direct suppliers and 71 percent (63 audits) were tier 2 and 3 suppliers – that is, indirect suppli- ers. In the course of the audits in 2017, a total of 581 violations of Deutsche Telekom's supplier requirements were discovered. In the process, a total of 634 violations were corrected in 2017, including several open improvement measures from previous years. Among the violations were 22 unacceptable incidents and 156 critical findings; 94 violations were rectified. Examples of unacceptable and critical violations, as well as introduced improvement measures, are published here. Critical findings were discovered at 68 suppliers in the areas of occupational health and safety, environmental protection, labor practices, working hours, and wages and performance-related remuneration. There were no critical findings in the business ethics area. Like in past years, most of the viola- tions were related to occupational health and safety (46percent, com- pared to 47 percent in 2016), followed by working hours and wages with 17 percent (12 percent in 2016). The business ethics area took the third spot, with 13 percent (18 percent in 2016).
SUPPLIERS SUPPLY CHAIN MANAGEMENT 2017 audit results 131131 EXAMPLES OF PROBLEMATIC FINDINGS Area Findings at suppliers Initiated improvements Status (end of 2017) Discrimination Environmental protection The „New Employee Orientation Health Check Stan- dards“ showed that the factory did not hire pregnant women. The company‘s management stated that they did not demand pregnancy tests as part of the application process, but still rejected visibly pregnant women. In its job advertisements, the factory mentioned gender and age as follows: „Technician: Older than 23“. „Operator: Male, age 18-28“. „QC: Age 20-27“. „Warehouse worker: Age 20-27“. According to an interview with management and a review of the relevant documents, the audited factory had neither inspected the environmental facilities nor received a permit. This practice was discontinued and management issued an official confirmation of this fact. Completed In the case of public job advertisements, the factory will not define any require- ments for age, gender, nationality, etc. Ongoing An environmental permit was issued on August 25, 2017. Completed 1. The manager for chemicals in the warehouse did not strictly follow the instructions for waste manage- ment procedures and had mixed different liquid wastes together in the same container. 1. Employees who are responsible for handling chemicals should undergo training in chemicals management. Each barrel should bear a label with the name of the chemical it contains, as well as other specifications and information about dangers and handling. Ongoing 2. The manager for chemicals lacks the necessary knowledge about chemicals management, because he does not know that multiple chemicals must not be kept on the same shelf. 2.1 Trained managers for chemical waste in the warehouse should ensure that the requirements of the Hazardous Waste Management Procedure are visible on the waste barrels. 2.2 A list for daily safety checks for chemical waste inspections in the warehouse, including barrel labeling, should be introduced. Occupational health and safety No emergency exit signs installed. Emergency exit is not illuminated. Emergency exits labeled and repaired. The factory does not meet the legal requirements applying to processes for accidents and emergen- cies. 1. 2. 3. More evacuation instructions for the evacuation drills. Establishment of an additional escape corridor for a warehouse. Establishment of an escape corridor in „Silk Legend“. Completed Completed Wages and per- formance-related remuneration Working hours The company instructed its logistics employees in the use of the fire suppression equipment; however, no evacuation drills were held. The factory carried out an evacuation drill in the workers‘ dormitory. Completed 15 percent of the examined workers did not receive any overtime pay. The factory has been advised that overtime work should be compensated in accordance with the legal requirements. Ongoing The weekly hours worked exceed the legally permit- ted 60 hours. The monthly overtime hours worked exceed the legally permitted 36 hours. The weekly overtime hours worked exceed the legally permitted 12 hours. There is no legally prescribed limit on overtime worked. 1. 2. 3. 1. 2. 3. The parameters for overtime work should be defined. The new measures for recording overtime should be communicated within the company. Overtime worked should be reported weekly. Create a management plan on production capacity, adjustment of pro- duction planning, planning of production capacities, and corresponding arrangement of orders. Optimize the production processes and improvement of production efficiency. Hire additional workers. Completed Completed 1. Work arrangements will be changed such that any overtime worked in Completed 2. 3. excess of 48 hours will be strictly on a voluntary business. The factory complies with local, federal, and national laws. The factory will conduct a follow-up every quarter to prevent health prob- lems and accidents caused by overtime.
SUPPLIERS RESOURCE SCARCITY AND RAW MATERIALS SOURCING 132 RESOURCE SCARCITY AND RAW MATERIALS SOURCING Production of electronic devices like smartphones is harmful to the environment and requires large amounts of water and energy. Because the production facilities of suppliers and manufacturers are often located in regions where water is scarce or the population does not have sufficient access to electricity, the availability of resources plays a more significant role there than it does in countries like Germany. Moreover, valuable raw materials like metals are used in producing smartphones and other ICT products. Some metals, including tantalum, gold, tin, and tungsten, are extracted from ores, some of which are extracted in the eastern part of the Democratic Republic of Congo under conditions that are inhumane and/or associated with civil war. The parties involved in conflict in the region use the profit for pur- poses such as financing civil wars. However, Deutsche Telekom does not manufacture any ICT products itself: We purchase these products from international manufacturers and sell them at our stores, offer them in the context of service provision, or use them in our network infra- structure. We require our suppliers to refrain from using any of these so-called conflict resources. We also support industry initiatives like the Conflict-Free Sourcing Initiative, which work toward a more sustainable supply chain. GOALS MEASURES MEASURING SUCCESS § Sustainable use of resources and responsible raw material procurement § Support of the Responsible § Annual reporting Minerals Initiative (RMI) § Conflict-free resources integra- ted into our manufacturer product requirements § Coltan Statement § Statement on Extractives § Research project on recycling tantalum SUPPORTING RESPONSIBLE RESOURCE EXTRACTION We require our suppliers to protect the environment and use resources responsibly. We have set forth these requirements in the document "Code of Human Rights & Social Principles"; they are also described in detail in our Supplier Code of Conduct. We require our suppliers to provide information on their activities as part of a self-assessment and conduct supplier audits to emphasize the importance of these require- ments (audit results). In the scope of the audits, we check whether our suppliers use an environmental management system and how they manage their energy and water consumption, as well as other factors. We also explicitly ask them about their waste management system. Handling critical raw materials We collaborate with suppliers and industry initiatives to effect responsi- ble raw materials sourcing. Although we do not purchase any raw mate- rials ourselves, we do require our manufacturing suppliers not to use any conflict minerals or other such resources in their products. Our requirements are expressly and comprehensively set out in our "Coltan Statement" and "Statement on Extractives." These are an integral part of our contracts with manufacturing suppliers. The goal is for both our direct suppliers as well as their sub-suppliers to decrease social and societal risks that could be associated with the mining of resources. We verify implementation of our guidelines regarding conflict resources during our supplier controls as well. As a GeSI member we also actively support the GeSI Responsible Minerals Initiative (RMI). We strongly encourage our direct and indirect suppliers to utilize the RMI tools for ensuring responsible resource procurement. Tantalum is a conflict resource. Recycled tantalum, on the other hand, is considered conflict-free, Telekom Deutschland is conducting a research project on reclaiming precious metals such as gold and tantalum from outdated network infrastructure components. TOGETHER AGAINST CONFLICT RESOURCES Deutsche Telekom has supported the Responsible Minerals Initiative (RMI) since it was founded in 2008 under the name Conflict-Free Sourc- ing Initiative (CFSI). RMI is the largest business initiative for responsible raw materials sourcing. Its objective is to identify conflict resources and prevent their extraction and sale. RMI is based on a working group that was founded in 2008 by the Global e-Sustainability Initiative and the Electronic Industry Citizenship Coalition industry associations (Extractives Working Group) to address sustainable raw materials extraction. Since then, the number of metal processing companies and smelters participating in RMI has continued to grow. A total of 255 of these companies have been audited in compli- ance with the standard audit protocol (as of January 2018). CROSS-SECTOR EXCHANGE FOR CONFLICT-FREE RESOURCES In August 2017 we took part in a workshop titled "Conflict Minerals – Transparency in the Supply Chain" given by missio, the international Catholic relief organization in Germany. Experts of the Friedrich Nau- mann Foundation, the Südwind Institute, the Federal Institute for Geo- sciences and Natural Resources (BGR) and Deutsche Telekom reported on their experiences. We presented our commitment to raw material recycling with our cell phone collection program and our project for recycling the metal tantalum. The discussion also illustrated that this field is undergoing a lot of upheaval due to the new EU guidelines on transparency in the resource chain.
CLIMATE & ENVIRONMENT 133 CLIMATE & ENVIRONMENT We are dedicated to protecting the climate and environment. To this end, we record and reduce CO emissions along our entire value chain. We are increasing our energy efficiency, using more and more renewa- ble energy, conserving resources and decreasing environmental impact. 2
CLIMATE & ENVIRONMENT CLIMATE STRATEGY 134 CLIMATE STRATEGY One of our goals is to reduce the negative environmental impact of our business activities. One important milestone is our climate target. By the year 2020, we are planning to reduce the absolute amount of CO emis- sions we produce by 20 percent compared to base year 2008 (exclud- ing T-Mobile USA). One step in this process is investing in energy-effi- cient network technology. 2 And we are concerned with more than just reducing our own carbon footprint. We want to help our customers reduce their CO well. The GeSI SMARTer 2030 study shows that information and com- munications technology may be part of the solution in the fight against climate change. Products such as our cloud and mobility solutions help reduce the amount of CO emissions our customers produce. emissions as 2 2 OUR INTEGRATED CLIMATE STRATEGY We designed our integrated climate strategy following our Group strat- egy "Leading European Telco". This is how we ensure that our climate protection measures are closely connected with our core business. Our integrated climate strategy includes four aspects of climate protection: CO products. For each one of these aspects, we have defined goals and key figures. emissions, renewable energy, energy efficiency, and sustainable 2 networks and data centers. We have already achieved a moderate reduction in emissions (excluding TMUS) over the past few years. To achieve our goal, we also want to increase the share of renewable energy. Renewable energy We are evaluating various options to increase our share in green energy. This includes purchasing energy certificates from renewable sources, generating our own renewable energy such as through the use of cogeneration (“CHP”) plants. Some national companies are setting a great example: T-Mobile Austria and OTE in Greece obtained 100 per- cent of their electricity from renewable sources in 2017. We have intro- duced parameters throughout the Group that can be used to assess electricity procurement in terms of sustainability. These parameters help us make our energy mix more transparent and increase the share of energy obtained from renewable sources at our company. Energy efficiency Because the operation of our network infrastructure calls for a consider- able amount of energy, we are investing in modernization and energy- efficient technology. For instance, we are migrating our network infra- structure to IP technology, which is not only more powerful, but also consumes less electricity than existing technologies. In addition, we are working to process data traffic from no more than a few, particularly efficient data centers. In order to measure our progress, we use two key performance indicators (KPIs). They show the relationship between our energy consumption or carbon footprint and transported data volume. 2 Sustainable products Many of our products and services provide sustainability advantages. They can help reduce energy consumption and CO emissions, improve healthcare and make logistics more efficient. Since 2016 we have been measuring the amount of CO emissions that our customers can reduce by using our products and services. With our Enablement Factor ESG KPI, we set our emissions in relation to potential savings for our custom- ers in order to evaluate our overall performance in climate protection. Moreover, we use the Sustainable Revenue Share ESG KPI to measure the share of sustainable products. These are products that provide sus- tainability advantages and that do not entail any significant sustainabil- ity risks. 2 2 emissions CO To help us achieve this goal, we record all direct and indirect emissions using the globally recognized GHG protocol. The goal is to reduce our emissions by 20 percent by the year 2020 compared to the base year 2008 (excluding T-Mobile US). We uphold this ambitious climate goal despite the challenges arising from fast growing data traffic and the consequent ongoing network expansion. In order to achieve this, we are focusing on areas with especially high energy consumption, such as our Collaborating for climate protection Effective climate protection calls for joint efforts on the part of business, politics, science and society. That is why we are involved in a number of German initiatives, such as the 2° Foundation, and international associ- ations. One of these is the Global e-Sustainability Initiative (GeSI). As an industry association, GeSI's vision is to help make society greener and more climate-friendly with the help of ICT solutions.
CLIMATE & ENVIRONMENT CLIMATE STRATEGY 135135 WORLD CLIMATE CONFERENCE: EXCITING DEBATES AND MODERN INFRASTRUCTURE In November 2017, the 23rd World Climate Conference took place under the presidency of the Fiji Islands in Bonn. Diplomats, politicians and representatives of civil society came together at the Conference of the Parties (COP). We contributed to the content of the Conference with an event and provided state-of-the-art infrastructure. We also work on the reduction of our own and our customers' and sup- pliers' CO emissions. 2 We report to the Board of Management quarterly on current climate risks within the context of our Group Risk Report. You willYou will find more information on risk management in the "Risks and Opportunities” section of our Annual Report. Digitalization for climate protection and sustainability On November 14, 2017, our headquarters in Bonn were entirely focused on climate protection. The real potential of digitalization for climate protection is still being underrated. In order to change this, we have joined our stakeholders for a dialog about "The impact of ICT on climate change – curse or blessing". Along with our partner, the Global e-Sustainability Initiative (GeSI), as well as numerous stakeholders and experts from politics, civil society and corporations, we discussed the opportunities and risks of information and communication technology (ICT) for climate protection. In collaboration with partners, we presented products and solutions for connected and therefore sustainable life and work - for example, relating to e-mobility, Smart City and logistics. With innovative solutions, we support our customers in mitigating their carbon footprint or in better adapting to the negative consequences of climate change. Some examples for this are innovative projects in the area of sustainable urban development and mobility, or real-time solu- tions for agriculture. These do not only help reduce emissions, but also optimize the use of fertilizer, seed and machinery. An increase in crops can also contribute to preventing agricultural areas from expanding, which helps retain valuable rain forest areas. RECOGNITION OF LEADERSHIP ROLE IN CLIMATE PROTECTION German Sustainability Prize 2017: Deutsche Telekom AG is Germany's most sustainable large company. Fiber optics for the climate summit For the 23rd World Climate Conference in Bonn, Deutsche Telekom provided the technical infrastructure. For the supply of the two tempo- rary tent towns alone we laid over 25 kilometers of optical fiber and copper cables each - capacities that would also suffice for the supply of a small town. Antennas that were installed for the event ensured the necessary wireless capacity. In this way, the park in Bonn where the tent towns were located was equipped with modern, broadband communi- cations technology that will also benefit future events. The sheer amount of infrastructure that an event with over 25,000 visitors requires can be seen in the following “Netzgeschichte” (network story): ADDRESSING CLIMATE RISKS In the context of our integrated climate strategy, we address the environ- mental impact of our business and determine potential opportunities and risks that exist for us as well as for our stakeholders. For example, extreme weather conditions as a consequence of climate change can have a negative impact on our business processes and lead to incidents or even network outages. A very real example for this was the storm Friederike, which lead to an outage of more than 600 cross- connect cabinets and over 200 mobile base stations in early 2018. Such failures can massively impact the managementl of rescue opera- tions, if not render them entirely impossible. In order to be able to react appropriately in these cases, our internal "Group Policy on Continuity and Situation Management" defines responsibilities, processes and measures. It also outlines how to handle emergency and crisis situa- tions like floods. In addition, possible consequences of climate change are also taken into account when planning our future business activi- ties. For instance, our network infrastructure is set up to be protected from storm conditions, changes in temperature and high winds. Climate change also carries financial risks, whether from the introduc- tion of a levy on CO emissions or an increase in energy costs. Our contribution to the mitigation of these risks is that we measure our own energy efficiency and develop measures for improvement. 2 For our uniform sustainability manage- ment, we won the German Sustainability Award in December of 2017. Our com- mitment to climate protection, for exam- ple by operating energy-efficient net- works or providing products that help our customers reduce carbon emissions, helped us win the award. Repeated inclusion in CDP ranking We made it onto the CDP Climate A List for the second time in 2017. CDP com- mends companies that report their CO emissions extremely transparently and in detail. Under the CDP, we have reported Group-wide not only Scope 1 and Scope 2 emissions but also Scope 3 emissions 2 from our business operations in Germany and almost all our interna- tional companies since 2014. Finalist for the 2017 German CRS Award The German CSR Award is given out annually by the German CSR Forum and celebrates extraordinary performance in the area of CSR (Corporate Social Responsibility) and therefore the social engagement of corporations. In the year 2017, we made it into the final round in the category "CO tection." avoidance as a contribution to climate pro- 2
CLIMATE & ENVIRONMENT CLIMATE STRATEGY CO emissions 2 136 CO2 EMISSIONS Demand for fast data services with full-coverage availability is growing rapidly. That is why we continue to push the build-out of our infrastruc- ture and increase data transmission rates. Despite constantly growing amounts of data, we are able to remain stable in our energy use due to our efforts to improve energy efficiency - for example in the upgrade of network infrastructure. Other focal points include how we operate our buildings, business trips and our fleet of company and service vehicles in Germany. Our vehicle fleet boasts roughly 24,000 vehicles in Ger- many and is one of the largest in Europe. GOALS MEASURES MEASURING SUCCESS 2 § Decrease Group-wide CO emissions by 20 percent by 2020 compared to 2008 (wit- hout T-Mobile US, based on metric tons of CO 2) § Increasing the share of renewa- Emissions in metric tons of CO 2 ble energy § Modernizing and upgrading network infrastructure § Consolidating data centers § Scope 1 emissions § Scope 2 emissions (market- based and location-based) § Optimizing energy use in buil- Specific emissions § Carbon Intensity ESG KPI § Energy Intensity ESG KPI dings § Reducing fuel consumption by streamlining and optimizing our fleet § Reducing business trips and using audio and video confe- rences PROTECTING THE CLIMATE "We assume responsibility for a low-carbon society" is one of the key action areas of our CR strategy. We intend to keep this promise with the help of our Group-wide climate protection target, which was adopted in 2013: to reduce our CO USA) by 2020 compared with 2008. We have specified a variety of measures and developed measurement tools to help us reach this goal. emissions by 20percent (excluding T-Mobile 2 New method to calculate our climate target Increasing data traffic and the related network expansion are present- ing us with considerable challenges. We need more performance and data centers, but at the same time we want to reduce our carbon emis- sions and energy use. We are facing this challenge and continue to stand by our ambitious climate goal. We are focusing our activities for the reduction of emissions on areas with especially high energy con- sumption, such as our networks and data centers. This way, despite increasing data volumes, we have already been able to achieve a mod- erate reduction in emissions (excluding TMUS) over the past few years. Moreover, we will put a stronger focus on renewable energy. Renewable energy certificates have not yet been taken into consideration in the cal- culation of our climate target. In the context of our annual climate goal monitoring, we have reviewed and revised the method for the calcula- tion of our climate target. In accordance with the framework of the Greenhouse Gas (GHG) Protocol, we have been calculating our emis- sions using the market-based method since 2015. We are now applying this calculation method to our climate target. This means that the pur- chase of electricity from renewable energies through certificates or electricity from low-emission sources can also be taken into account. Consequently, we also adjusted the 2008 baseline to reflect the propor- tion of renewable energy at that time. The baseline reduced from 2 602 431 metric tons of CO . As a result, the climate target will be reduced to 1 185 120 metric tons of CO by 2020, which also represents a reduction of -20% compared to 2008. With this calculation method, we are at the forecasted level for 2017. to 1 481 400 metric tons of CO 2 2 2 This is how we measure our progress We measure our contribution to climate protection using different key performance indicators (KPIs) and thereby provide transparency to shareholders regarding our progress in realizing our climate strategy. The Carbon Intensity and Energy Intensity KPIs are used to analyze the relationship between our carbon emissions/energy use and the trans- ported data volume. Using data volume as a reference parameter makes it possible to create a direct link to the performance of our net- works. The Enablement Factor, PUE and Renewable Energy KPIs also serve the purpose of controlling and providing transparency regarding climate protection. Data assured by PwC. Data is partly based on estimates, assump- tions and extrapolations. The calculation method was adjusted in 2017. Values cannot be directly compared to the previous year. Data assured by PwC. Data is partly based on estimates, assump- tions and extrapolations. The calculation method was adjusted in 2017. Values cannot be directly compared to the previous year.
CLIMATE & ENVIRONMENT CLIMATE STRATEGY CO emissions 2 Direct and indirect emissions Across the Group, we measure our emissions along the value chain on the basis of the internationally recognized GHG Protocol. This standard distinguishes between three CO emissions categories (Scope 1, 2 and 3). Scope-1 and scope-2 emissions are what we use as the basis for the calculation of ourCarbon Intensity ESG KPI. We break down all carbon emissions in detail in the indicator section. 2 RECORDING SCOPE 3 EMISSION Indirect emissions along the value chain, or Scope 3 emissions, make up the majority of our total emissions. Recording these emissions helps us design targeted measures to reduce our carbon footprint at a corpo- rate and product level. 2 We have been fully disclosing the Scope 3 emissions generated throughout the Group since 2016. They came to 6,013,202 metric tons of CO equivalents in Germany, roughly 23 percent more than in the pre- vious year. The reasons for this increase were more investment in net- work expansion and positive business growth: increasing client num- bers as well as the sale of high-quality services (especially triple-play) resulted in higher CO emissions during use of our services. T-Systems' emissions were included in the Group number for Germany in 2017. Use of the consumer products we sold and leased as well as energy consumption of the devices used for our services account for the largest part of the Scope 3 emissions – both in Germany as well as Group-wide. Emissions generated by purchasing technology to expand our networks as well as the purchase of devices and other goods and services were significant as well. 137137 The year 2017 marked the first time that, in addition to the national com- panies in Albania, Macedonia and Montenegro, we also recorded the Scope 3 emissions of T-Systems units, which also contributed to a 27 percent increase of the Group number compared to 2016. The numbers for the USA as well as for a few of the European countries from 2016 were revised upward due to recalculations regarding the purchase of products and services.
138138 launched in 2014. We were able to conduct fifteen case studies for our products in Germany in 2017. One study focused on the savings our customers achieved by using our cloud offers and outsourcing their infrastructure to our highly efficient data centers. In addition, we carried out five case studies for Europe. Our findings: The positive CO Germany in 2017 were 71 percent higher than our own CO (an enablement factor of 1.71:1). 2 effects facilitated for our customers in emissions 2 In all of Europe (incl. Germany), the savings potential for our customers was higher in 2017 than in the preceding year, with the factor having a value of 1.21 (2016: 0.95). CLIMATE & ENVIRONMENT CLIMATE STRATEGY CO emissions 2 Overview of Scope 3 emissions (t CO e) 2 National company 2016 2017 Comparison year-on-year Germany (incl. T-Systems) 4,879,850 6,013,202 Hungary 572,533 672,046 Croatia 320,386 363,383 Slovakia 265,095 327,906 Greece 1,243,149 1,049,535 Romania 500,539 660,381 Austria 116,802 142,762 Czech Republic 185,787 226,466 Netherlands 190,656 211,694 Poland 362,078 572,403 Albania Macedonia Montenegro 7,507 33,028 20,535 Documented for the first time in 2017 Documented for the first time in 2017 Documented for the first time in 2017 United States 4,217,941 5,768,480 T-Systems (without Germany) 239,195 Documented for the first time in 2017 Total 12,854,817 16,307,523 ENABLEMENT FACTOR: CUSTOMERS SAVING ON CO 2 EMISSIONS 2 Our products and services not only connect people, they also help them reduce their CO emissions. That is why, in addition to calculating our own carbon footprint, we also calculate the positive CO effects facili- tated for our customers through the use of our products and services. The ratio between these two figures – the "enablement factor" – allows us to assess our overall performance when it comes to climate protec- tion. We began calculating the enablement factor in a pilot project 2
CLIMATE & ENVIRONMENT CLIMATE STRATEGY CO emissions 2 We always employ a conservative approach with our case studies and in our methodology. This applies to both the emissions reduction realized by our customers and our own emissions generated throughout the value chain. For example, we incorporate all levels of emissions genera- tion when assessing our carbon footprint, including emissions from our own energy consumption (Scope 1 and 2) and also Scope 3 emissions generated by our suppliers and customers. The latter includes even the emissions produced by electricity consumption of our Entertain custom- ers' TV sets. COGENERATION PLANTS REDUCE CO 2 EMISSIONS We are using combined heat and power (CHP) plants in addition to the conventional power grid.In the year 2017, we commissioned a new CHP module at the Berlin site. The majority of our 32 units in total (as of late 2017) power our network nodes. The CHP plants convert the energy supplied by gas into electricity and heat. We use the waste heat pro- duced on site to heat our office buildings, which brings overall energy efficiency to a level of up to 90 percent. As a comparison, electricity generated by conventional sources and fed through the general Ger- man power grid has an efficiency level of roughly only 40 percent. This is how we can reduce the carbon emissions of our network operation through the use of CHP plants. Sustainable urban district concept A local heating pipeline runs from our CHP unit in Berlin to a neighbor- ing school. With the waste heat of the plant, the heating needs of the school and its gym could be covered entirely in 2017. This helps reduce carbon emissions by up to 700 tons a year. Updated CHPs save additional resources In October of 2017, we completed the update of two CHP plants. Absorption chillers in both units now convert waste heat into cold air, which will then be used to cool network nodes. Additionally, environ- mentally friendly dry coolers have also been installed in order to further reduce water consumption during the cooling process. The conse- quence is that the use of water and chemicals needed for the operation of the CHPs can be reduced considerably in the future. ROUGHLY 9,000 METRIC TONS OF CO 2 COMPENSATED Preventing greenhouse gas emissions is one of our top priorities. Invest- ing in certified climate protection projects is one way to compensate for some of the CO reduce, our increased commitment to purchasing renewable energy is another. emissions that we are unable to avoid generating or 2 2 Telekom Deutschland compensated for further 8,971 metric tons of CO in the 2017 reporting year. These included emissions associated with our events (participant travel to and from the event, room usage, etc.) and certain products and services (e.g., conference calls or web conferences). Our Event Policy specifies the ways in which we compen- sate for emissions generated by events. 139139 OUR STRATEGY FOR CLIMATE-FRIENDLY MOBILITY We pursue a three-pillar strategy to ensure a climate-friendly fleet management strategy: Rightsize: selecting appropriately sized, energy-efficient, low-emis- sions cars. By introducing our Green Car Policy we have also cre- ated incentives for drivers of company cars to select smaller, more efficient cars. Economize: encouraging a fuel-efficient, low-emissions driving style with driver training courses Substitute: piloting and testing alternative mobility concepts. We plan to keep average CO purchase (company and service vehicles) below 95 g CO end of 2020 in Germany. 2 emissions levels of all of the new cars we /km by the 2 Alternative engines We can further reduce our fleet's carbon footprint by purchasing vehi- cles with alternative engines and fuel systems. For a while now, we have been using a certain number of vehicles powered by natural gas and electricity. In the short and mid-term, we will considerably increase the share of alternative engines in our fleet. In the context of the regular renewal of the fleet, we will work together with the units and use gas or electricity driven cars where the use and circumstances allow it. Extensive choice of mobility options We also encourage our commuting employees to actively protect the climate by enabling them to buy discount season tickets for local and regional public transport. We also rely on other modern forms of mobil- ity including our shuttle service, which we have been offering at a vari- ety of locations for ten years, loaner bikes for getting around in the city and rental cars. Our employees benefit from the attractive option of buying bicycles and e-bikes through a salary sacrificing scheme. ON THE GO AND GREEN: E-BIKES, SHUTTLES, RENTAL BIKES Since 2015, we have offered our employees in Germany the chance to purchase a bicycle or e-bike as a green and healthy alternative, through deferred compensation schemes. With the support of Telekom Mobility- Solutions, employees can lease a bicycle through their employer for three years. The monthly payments are subtracted from the employee's gross salary. The new offer has met with a tremendous response right from the off. By the end of 2017, roughly 3400 colleagues were already making use of this option - a considerable increase of 160 percent as opposed to the previous year. We provide shuttle service between different locations, e.g., to the Cologne/Bonn airport or the Siegburg ICE train station to reduce the carbon footprint of business trips. Roughly 120,000 passengers used this service in 2017. Employees can use an app or visit the intranet to conveniently book a shuttle. Our employees can also use bicycles available at more than 30 Deutsche Telekom locations in Germany to get to their business appointments within the city.
140 FOSTERING THE USE OF ELECTRIC CARS IN THE NETHERLANDS In May 2014, T-Systems Netherlands introduced electric cars for lease drivers in order to help reduce the CO emissions discharged from the company’s cars. Charging stations have now been installed in parking areas to facilitate charging during office hours. 2 emissions as shown in All-electric and hybrid cars help to reduce CO the table below. The reduction in CO emissions is good for the environ- ment and the lower tax rates provide a further major big advantage for drivers. These two benefits promote the popularity of these types of car in the Netherlands. This appeal is illustrated by the 24.5 % share of cars designed to reduce CO in the company’s fleet at the end of 2017. 2 2 2 CLIMATE & ENVIRONMENT CLIMATE STRATEGY CO emissions 2 Get to your customer faster with e-bikes In 2017, we have started a pilot for our field service. Instead of using a car, some of our service technicians have been on the road with delivery e-bikes as a test. We have the hope to get to the customer faster in large cities and to improve our ‘on-time’ promise. Currently, six delivery e-bikes are in use in Hannover, Düsseldorf and Duisburg. We have also started a similar project in Stuttgart, where we are testing the use of scooters for field service staff. ELECTRIC CARS IN US There are still several hurdles to overcome before electric cars can be widely employed. Limited range, insufficient charging infrastructure and high procurement costs make the cars unattractive in many usage sce- narios. It is particularly difficult to find suitable service vehicle models. There is a bright side, however. Thanks to the government environmen- tal bonus, we were able to somewhat reduce the costs for electric vehi- cles in our fleet. Nevertheless, our electric car projects have only been possible because project partners have supported the set-up of charg- ing stations at our locations. We participate in selected electric mobility pilot projects in order to take advantage of the medium-term potential of electric mobility. At our Bonn offices, for example, we offer four next-generation elec- tric rental cars. Employees can use these cars for business trips free of charge. Deutsche Telekom Technischer Service is currently using three electric service vehicles. Further electric service cars are used in Stuttgart and Munich. We have two electric chauffeured cars in our management fleet for trips in the Greater Cologne/Bonn area and in Berlin. Charging stations for the car were set up on-site. Since the summer of 2014, we have been gradually offering selected hybrid vehicles and, in certain regions, electric vehicles as company cars. MAGYAR TELEKOM STAYS CARBON NEUTRAL The Magyar Telekom Group stayed completely carbon neutral in 2017and repeated its success from the previous 2 years. This achieve- ment has put the company ahead of the largest telecommunication companies around the world. Our success is based on the purchase of 100 % renewable energy, enhancing energy efficiency, implementing carbon offset, and saving energy. The Group has defined an average emission value for our company cars and we reward compliance with the emission value. Users of cars with emissions above the reference values attracted penalty payments that were used for carbon offset. In 2017, we purchased CO certificates that offset 25,000 mt of CO . 2 2
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Renewable energy 141 RENEWABLE ENERGY Renewable energy is an important component in preventing the emis- sion of greenhouse gases. We are therefore not only improving our car- bon footprint by reducing our use of electrical power through energy efficiency measures, but are also optimizing the energy mix. The issue of renewable energies is one of the pillars in our four-pillar strategy for climate protection. Our national companies in Greece (OTE), Hungary, Albania, Austria and in the Netherlands are already pioneers in this field. 100 percent of their electricity came from renewable sources in 2017. OUR APPROACH FOR MORE RENEWABLE ENERGY In order to specify our integrated climate strategy, we are currently work- ing on suitable goals and strategies in the field of renewable energy. One thing is clear - we want to increase the share of renewable energy across the Group and thus reduce our carbon emissions. For this, we want to procure more power from renewable sources, but also buy corresponding power certificates. Where it is possible and sensible, we are already investing in our own power generating systems, such as the construction of cogeneration plants or the installation of solar systems. Since 2016, we have been capturing the ESG Renewable Energy KPI. The KPI is calculated based on the share of renewable energy in total electricity consumption. This is how it makes our progress in the area transparent. In 2017, the figure was at 41 percent across the Group (33 percent in 2016). In addition, we have also introduced parametersthroughout the Group that can be used to assess electricity procurement at our national com- panies in terms of sustainability. These parameters help us make our current energy mix transparent and increase the future share of energy obtained from renewable sources.
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Renewable energy 142 CLEAN ENERGY GENERATION: NEW SOLAR POWER SYSTEMS INSTALLED We are making the share of renewable energy transparent on a national company level: At our technology sites in Germany, we are increasingly relying on solar energy. By the end of the year 2017, we were already operating a total of over 300 of our own solar photovoltaic plants. Two new plants were added in the reporting year. In total, the plants have a capacity of 4,000kWp (kilowatt peak). In this way, we are reducing our ecological footprint by more than 1,700 metric tons of CO .In 2017, only two addi- tionalsolar plants (with a total of 16 kW) were installed. 2 With the additional expansion, we are approaching our goal to equip a total of 600 sites with solar photovoltaic systems in the coming years. In 2017, we drew up a concept specifying how we can render more roof space usable for photovoltaic systems. Our internal energy service pro- vider, Power & Air Solutions, is responsible for installing the systems. MORE GREEN ENERGY AT EUROPEAN NATIONAL COMPANIES In our European national companies, we want to increase the share of renewable energy in overall energy consumption to a level of at least 10percent above that of the respective national energy mix on an annual basis. In the reporting period, we were able to further increase the share of renewable energy in the European national companies. On average, the share of renewable energy was registered at almost XX percentage points above the respective country mix*. To this end the national companies can also purchase renewable energy certificates (proof of origin) if needed. Our national companies in Greece (OTE), Hungary, Albania, Austria and in the Netherlands are already pioneers in this field and cover 100 per- cent of their electricity needs with renewable energies. T-Mobile US is planning on procuring its electricity entirely from renewables by 2021 - predominantly from wind power. * In the calculation of the share of renewable energy in electricity pro- curement, the provider mix, the residual mix or the country mix is used as available, according to the IEA factor (in this order). The share of renewable energy in the residual mix is typically lower than the share in the country mix. For Germany, the EEG surcharge paid is taken into account when calculating the share of renewable energy.
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Energy efficiency 143 ESG KPI ) in proportion to the transmitted data volume. Using data vol- ume as a reference parameter makes it possible to create a direct link to the performance and use of our networks. In the next few years, we are expecting a positive trend in both KPIs. The PUE (Power Usage Effectiveness) factor is measured annually and is another important performance indicator for managing our climate protection measures. Our state-of-the-art data centers, e.g. in Munich or Biere, are set up for a PUE value of 1.3 and are therefore much more efficient than the average of German data centers, which lie at about 1.8. We are planning to reduce the PUE factor of our fixed-line network in Germany to 1.4 by the year 2020. For this value, we also forecast an additional reduction in the coming years. This will allow us in part to compensate for increasing energy requirements due to growing vol- umes of data and new features. MORE CAPACITY FOR OUR ENERGY-EFFICIENT DATA CENTER Our data center in Biere (near the city of Magdeburg) was put into oper- ation in 2014 and is one of the world's most efficient data centers. And because demand for cloud services "made in Germany"is on the rise worldwide, we are currently expanding it to increase its server capacity by 150 percent. The foundation for the expansion of the data center has been laid:The new modules are scheduled to commence operation in the second quarter of 2018. In 2017, a LEED (Leadership in Energy and Environmental Design) certification in Gold was requested for the expansion, just like it was requested for the first construction phase - an award that only very few data centers receive worldwide. ENERGY EFFICIENCY Our network infrastructure forms the basis of our products and services. At the same time, network operation requires the most energy and therefore results in the largest carbon emissions, which makes achiev- ing greater energy efficiency in network operation a key component of our climate protection target. When it comes to our networks, we engage in activities such as replacing outdated technology with new technology, e.g., the migration of our fixed-line network to IP technology. In addition, we are currently consolidating data traffic into only a few, particularly efficient, data centers. GOALS MEASURES MEASURING SUCCESS § Reduce energy requirements § Migration to IP § Energy Intensity ESG KPI § A PUE factor of 1.4 in the fixed § Decommissioning legacy § Carbon Intensity ESG KPI network in Germany by 2020 technology § Consolidating data centers § Efficient technology for cooling, for energy supply within the network and for data centers § PUE value § Energy consumption OPERATING ENERGY-EFFICIENT NETWORKS We operate our own fixed-line and mobile networks in Europe and the U.S. Much of our energy requirements come from operating this net- work infrastructure. In the interest of our customers, we continue to increase the capacity and performance of our networks so that we can handle growing amounts of data and improve the speed and quality of data transmission. However, this also means higher energy require- ments. We pursue three different approaches to reduce our energy needs. We update our network infrastructure, e.g., by migrating to IP tech- nology, and systematically removing equipment we no longer need. We optimize energy generation and supply with the help of techni- cal innovation. We use more energy-efficient technology for lighting, monitoring and above all cooling our facilities. Our internal energy service provider, Power & Air Solutions, which buys energy and then makes it available for use by our Group companies in Germany, plays a key role in these activities. Power & Air Solutions' energy management practices have been ISO50001 certified since 2013. Measuring and controlling energy consumption In order to measure our progress across the Group, we introduced two key performance indicators (KPIs). They show our energy consumption (Energy Intensity ESG KPI) and our carbon footprint (Carbon Intensity
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Energy efficiency 144144 MEASURABLE SUCCESS: REDUCED CO 2 GENERATION AT DATA CENTERS We also keep our goal of reducing our carbon footprint in mind when planning and operating our data centers. To achieve this goal, we take a two-step approach. It starts with optimizing energy consumption at each data center site and then continues with improving processes through- out the global data center landscape. The key indicator for increased energy efficiency at our data centers is the PUE factor. We were able to reduce the average PUE factor at the T-Systems data centers in Germany from 1.85 to 1.54 between 2008 and 2017. In comparison with the previous year, the figure remained constant in 2017. The reason for this is the ongoing consolidation of the data centers, where applications from less energy-efficient sites are migrated to new, highly efficient data centers. This increases the PUE value of the decommissioned data centers in the short term. Overall, this process lead to a constant PUE value across all data centers in the reporting year. The DC11@2018 program for improving processes throughout our global data center landscape has been up and running since 2013. The project combines physical data center consolidation (i.e., reducing data center space and sites) with logical consolidation (i.e., virtualizing data center infrastructure). The objective of the DC11@2018 program is to consolidate global data center capacity at FMO (future mode of opera- tion) data centers using the latest IT technology. In 2017, we continued to remain on schedule with this program. Within the scope of the physi- cal consolidation, we decommissioned three old data centers in Ger- many. At the same time, we further optimized air conditioning in the existing data centers in Biere and Munich. The target average PUE factor at all FMO data centers in the Group will be 1.4 once the program has been completed in late 2018/early 2019. At the end of 2017, we were already at a PUE value of 1.51. This requires a homogeneous IT landscape combined with optimum capac- ity utilization of data center infrastructure, IT hardware and the software running on the systems. For the year 2020, the latest program plans indicate accumulated reductions in CO to 2012. by up to 51 percent compared 2 Our target PUE factor for our highly efficient data center in Biere is 1.3. To achieve this target, it will be necessary to respect a given tempera- ture level and to achieve a capacity utilization of at least 80 percent. We were not yet able to achieve the PUE target value in 2017. ENERGY EFFICIENCY IN BUILDINGS Our facility energy management activities focus on the two areas of heating energy and electricity consumption. We have defined sub- targets for each of these areas to help us attain our climate target in Germany. Twice a year, we measure our progress. Two approaches help us achieve our sub-targets. We are reducing our office space as part of HR downsizing measures and are optimizing space usage by introducing new office concepts. We also identify needs for reduction in energy consumption by using specific indicators such as "kilowatt hours per square meter," "energy consumption at mid- night" or "peak loads" to compare similar facilities. The energy manage- ment system of Power & Air Solutions, the provider purchasing energy for the German Group companies, is certified according to the interna- tional ISO standard50001. Heat and hot water In 2017, we used approximately 379 GWh of heating energy throughout Germany each year, primarily by using gas and heating oil as well as dis- trict heating. The need has decreased continuously in the past years. We regularly assess the need for repairs at our properties and conduct profitability analyses to further reduce consumption. Keeping the availa- ble budget in mind, we focus on the most necessary and particularly cost-efficient measures, including: Optimizing heating systems Updating the heating system in line with the German Energy Saving Ordinance Using condensing boiler technology to replace old heating systems and pumps Recovery of waste heat produced by data centers Using CHP plants In order to reduce the use of heating energy in our exchanges, we have reduced the starting temperature of the heating system to 12 degrees. Electricity Our employee workstations, lighting, and building technology, including pumps, ventilation, cooling and elevators, are responsible for the largest part of electricity consumption in our buildings. We focus our energy conservation measures on the following areas: Using LED lighting and motion sensors Using state-of-the-art pumps and fans Switching off building technology outside working hours
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Energy efficiency 145145 ENERGY AND CLIMATE CHANGE PROJECTS IN GREECE ENERGY STRATEGY AT T-MOBILE USA Energy Management System according to ISO 50001 The OTE Group has prioritized improvement in all the functions of energy performance and major company installations (office facilities, call centers, data centers and telecommunication networks). This is a response to global efforts directed toward mitigating climate change. The cross-functional energy team at T-Mobile USA representing retail, corporate real estate, critical facilities, network engineering, procure- ment and sustainability meets several times annually to raise the profile of energy efficiency across the business. T-Mobile submitted its second Carbon Disclosure report in 2017. In 2016, OTE and COSMOTE achieved certification of two important buildings in their portfolio and five base stations in the mobile network in conformity with the ISO 50001 standard. The first year for implemen- tation of the Energy Management System saw energy savings of some 3.5% in each building and an average of about 16 % in each base sta- tion. In 2017, the Energy Management System successfully expanded to seven important new facilities including technology andoffice build- ings, call centers, data centers, and the head office of the OTE Group. The system has also been expanded to seven base stations in the mobile network. The strategic aim of the OTE Group for 2018 is to further enrich its port- folio with a significant number of facilities certified according to ISO 50001. “Green” building with LEED Gold Certification The OTE Group respects the environment in practice and invests in the rational and sustainable use of energy throughout its operations. OTE Estate is a company of the OTE Group and it is responsible for the man- agement and commercialization of the OTE Group’s real estate portfo- lio. The company organized and implemented renovation of a building (with total floor space of 10,850 m2) located in the historic center of Athens that houses part of the OTE Group’s Call Center services. The aim was to construct an environmentally sustainable building model capable of offering an ideal workplace for the Group’s employees. The effectiveness of the building renovation was certified to gold level by the international LEED (Leadership in Energy and Environmental Design) certification scheme for environmental and sustainable build- ings from the U.S. Green Building Council (USGBC). This is one of just few buildings in Greece with Gold level LEED certification and it is the second building in the portfolio of the OTE Estate to achieve this certifi- cation. emissions, the quality of the inter- The building’s GOLD level LEED certification constitutes a significant distinction that was achieved after a very demanding process. The objective is to improve performance for a series of indicators such as energy consumption, water use, CO nal environment, and management of resources. Indicatively, the energy and environmental measures implemented in the building include the energy efficiency of the shell, installation of new electrical and mechani- cal equipment with optimum energy performance, an automation and control system for monitoring and optimizing the operation of electrical and mechanical building installations, and implementation of an exten- sive commissioning program during construction. 2 Our key energy metrics, energy and carbon intensity both saw strong improvements in 2017: Our energy intensity KPI decreasedfrom 549 to 430 kWh per terabyte. Our carbon intensity KPI decreasedfrom 260 to 192 kg C0 2 per terabyte. Theseimprovements largely resultedfrom a 67% increase in data traffic while only experiencing a 17% increase in energy usage. Efficiencies in our equipment allowed for greater traffic loads without requiring an equal increase in energy consumption. Our Renewable Energy Commitment: In 2017, T-Mobile made a commitment to move toward 100% renewa- ble energy usage by 2021. Early in the year, we made the largest wind- power investment ever by a U.S. wireless company, buying up to 160 MW of renewable energy credits from the Red Dirt wind power project in Oklahoma. A second investment in the new Solomon Forks Wind Pro- ject in Kansas is underway. The combined production of the Red Dirt Wind Power and the Solomon Forks Wind Project is a total contracted capacity of 320 MW, the largest amount held by any US wireless company and a landmark holding in the world of wind energy. These 12 and 15-year clean energy contracts will reduce T-Mobile’s operating CO network operations by 60 percent over the next two years. emissions across our US retail stores, call centers, and 2 ENVIRONMENTALLY FRIENDLY DATA CENTERS IN AUSTRIA Operating data centers requires a great deal of energy and T-Systems Austria is dedicated to running its data centers in a maximally environ- mentally friendly approach. Mitigation makes our data centers in Gmünd, Linz and Vienna entirely carbon neutral. Mitigation means that resources are used to absorb the same amount of CO production of the energy necessary to run them. asemitted by 2 We are also actively engaged in initiativesto reduce energy consump- tion. A “cold/heat technique” is used in server cabinets to regulate the temperature as efficiently as possible with resultant savings in energy. In 2017, we expect to achieve atotal energy reduction of 389,522 kWh. This yields a year-on-year reduction of 63 percent. Our fire-extinguishing system has also been designed on environmental principles. Our data center at theT-Centerin Vienna has168fire extin- guishersfilled with a mixture of nitrogen, argon and carbon dioxide for emergencies. The extinguishing agent is harmless to humans, leaves no residue, and is 100 percentenvironmentally neutral.
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Energy efficiency 146146 ENERGY SAVINGS AT T-SYSTEMS MEXICO Several measures are being implemented to help save energy in our offices. These include replacement of fluorescent lamps with LED lamps, installation of motion sensors, and monitoring of the air condi- tioning system in all offices. As a result, a 9.5% saving in watts was achieved in 2017 compared with 2016. Moreover, we were able to implement efficient measures in energy consumption, such as photovol- taic cells. This allowed for a saving of 15% of the entire consumption of the facilities. PROGRESS AT OFFICE BUILDINGS AND DATA CENTERS AT T-SYSTEMS NETHERLANDS Since 2016, our office building in Vianen has been supplied entirely with green energy (100 %). Our offices in Heerlen and The Hague can- not be supplied with green energy due to the fact that there are other tenants in the building and to the strategy of the owner of the building. In 2017, we focused on improved efficiency for the floor space of our office buildings. A significant decrease in floor space will be achieved as a result: at the end of 2018, a decrease of 50 % in The Hague and at the end of 2019 a decrease of 40 % in Vianen. The main focus for our data centers in 2017 was the significant decrease of floor space and energy consumption (28 % less energy consumed by comparison with 2016, 13 % less energy consumed by comparison with 2015). This was achieved through asset refresh (life- cycle management), decommissioning, and data-center consolidation.
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Sustainable products 147 SUSTAINABLE PRODUCTS Our products and services contribute to more sustainability. With solu- tions such as Magenta SmartHome, consumers can control their heat- ing, lighting and electrical devices in a way that they only consume energy when the customer is at home. This lowers energy consumption and preserves resources. Our cloud solutions are another excellent example of how our products can help customers considerably reduce CO advantage of cloud solutions can reduce CO emissions by up to 21 metric tons each year on average. This is because, instead of being operated on the customer's premises, applications are shifted to effi- cient data centers, enabling customers to minimize their infrastructure. emissions. Small and medium-sized enterprises (SMEs) that take 2 2 That makes sustainable products such as the ones mentioned above are a key element in our integrated climate strategy. Our goal is to con- tinue to systematically record and increase the CO reduction potential offered by our products. 2 Learn more about our sustainable ICT solutions in the Customers and Products section.
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Circular economy 148 CIRCULAR ECONOMY There are a lot of areas where digitization can help conserve valuable resources and protect the environment. One example is dematerializa- tion. Companies that store their data in the cloud no longer need a hard drive. Doing away with your hard drive conserves natural resources, reduces electricity consumption and generates less waste. The "sharing instead of owning" approach also contributes significantly to resource conservation. Numerous sharing economy offers such as car-sharing become possible thanks to digitalization. We have set the goal for ourselves to support suitable concepts with our expertise and to advance them with respective offers. Another solution approach is the responsible use of raw materials. It is our goal to reintroduce raw materials obtained from outdated products to the production process, which is why customers can return their out- dated devices to us for proper recycling. GOALS MEASURES MEASURING SUCCESS § Improve resource efficiency § Health, safety and environmen- § Waste volumes tal management system § Used Cell-Phone Collection § International waste manage- ESG KPI ment framework § Use of space SAVING RESOURCES AND PROTECTING THE ENVIRONMENT With our health, safety and environmental management system (HSE) we have made a commitment to continually improving our performance in these areas. The system is based on international standards OHSAS 18001 on occupational health and safety and ISO 14001 on environ- mental management. As a service provider, we use considerably less resources than manu- facturing companies. The resource utilization for the manufacturing and use of our products occurs in up- and downstream stages of the value chain - at our suppliers and customers. Within our value chain, we are committed to the responsible handling of resources. This means that we support the responsible use of raw materials by our suppliers and the re-utilization of materials by our customers. For example, we support cell-phone collection initiatives in various countries to facilitate the recovery of valuable resources. For this purpose, we have introduced the Used Cell-Phone Collection ESG KPI, which compares the number of cell phones in circulation (excluding TMUS) to the number of col- lected devices. We support cell-phone collection initiatives in different countries to facilitate the recovery of valuable resources. For this pur- pose, we have introduced the Used Cell-Phone Collection ESG KPI, which compares the number of cell phones (excluding TMUS) in circu- lation to the number of collected devices. We regularly collect Group-wide data on the amount of waste we pro- duce. Our International Waste Management Framework guarantees standardized guidelines for all of our national companies. They are required to use this framework as a basis for identifying their own meas- urable targets and then monitor target achievement. This approach makes it possible to flexibly address the specific requirements of each country and company without working with quantitative objectives. Resource efficiency is also a priority at the workplace. We use recycled paper and energy-efficient multifunctional printers and encourage pro- curement of green office materials. In order to reduce the amount of paper used throughout the Group, we ask our employees to have their salary statements sent to their "De-Mail" account instead of having a printout sent by post. Around 20 percent of employees have already canceled delivery by post. WASTE REDUCTION AND RECYCLING Our waste management is organized according to uniform principles across the Group. The implementation lies in the responsibility of the national companies. On a Group level, we have not set a goal for the reduction of hazardous and non-hazardous waste. Instead, our national companies are developing their own waste strategies or updating their current strategies on the basis of our International Waste Management Framework, which we adopted in 2013. They are also setting their own targets, with the reduction of hazardous waste such as lead batteries having top priority. Requirements for Group-wide copper cable recycling Copper cables were a main component of telephone lines for decades. These are being replaced over the course of our fiber-optic roll-out. In January 2016, we therefore introduced a Group-wide, mandatory policy requiring copper cable recycling. This policy provides a guideline to our national companies when it comes to recycling and disposal of used cables. TESTING ON RECOVERY OF TANTALUM FROM ELECTRONIC SCRAP With our switch-over to IP technology and dismantling of analog infra- structure, we will be removing tons of old electronics over the next few years. We intend to recover precious metals such as gold and tantalum from the scrap. However, there are not yet suitable recycling methods for all metals. The tantalum used to manufacture condensers is extracted from coltan, which is considered a conflict resource. For this reason we have been conducting a project together with the bifaUm- weltinstitut environment institute since 2013. The goal is to develop the perfect method for disassembling and recycling tantalum condensers. Different manual and automated methods for disassembling tantalum condensers were tested. Based on the results, we opted for an auto-
CLIMATE & ENVIRONMENT CLIMATE STRATEGY Circular economy 149149 mated method in 2016. The circuit boards will be disassembled using thermal treatment. In order to implement the method in regular opera- tions, a sufficiently high amount of electrical waste would be required. In 2017, we have not yet been able to provide this. We are planning to implement this method starting in 2018. SALE AND REUSE OF ELECTRICAL AND ELECTRONIC EQUIP- MENT IN SPAIN Since 2012, T-Systems Iberia has been handing over redundant electrical and electronic equipment to Kapema, a company committed to refurbishing and reselling this type of equipment. Employees at T-Systems are given top priority for the resale of any equipment. This scheme has greatly reduced the amount of electrical and electronic waste generated. During 2017, 543 laptops and 96 desktops were sold. This has exerted a significant impact as a result of reducing emissions from devices by 2,844 kg. COSMOTE PROVIDES REFURBISHED EQUIPMENT The OTE Group integrates the principles of the circular economy in its operations across its value chain. Since September of 2013, contracts for fixed telephony, internet and TV have included lease provisions for the equipment provided (provided that the customer chooses to obtain the necessary equipment from COSMOTE) at no cost. This is intended to expand the lifetime and over- all utilization of the equipment provided to customers of COSMOTE and the GERMANOS retail network, and ensure proper end-of-life manage- ment for end-devices. According to these conditions, operation of the equipment is covered by a guarantee while the client is under contract. The client is obliged to return the equipment after the contract comes to an end. Returned equipment undergoes detailed control checks and is repaired as necessary. It is then returned to the market in fully opera- tional condition. COSMOTE cooperates with licensed disposal compa- nies, and discarded equipment is forwarded to them for recycling. As a result, consumption of resources and waste generation rates are reduced and the value of the embedded resources is maintained in the economy for as long as possible, while customers benefit from lower costs for high quality services. Highlight figures for 2017: All new contracts (residential and business customers) included lease options at no cost for terminal equipment 147,897 items of equipment were checked and 115,239 items were refurbished and returned to the market. During the period from 2013 to 2017, around 259,092 items were recycled.
CLIMATE & ENVIRONMENT OTHER ENVIRONMENTAL TOPICS 150 OTHER ENVIRONMENTAL TOPICS We assume responsibility for creating a climate-friendly society – at our company, among our customers and suppliers and through our social commitment. We focus on those areas where we can make the most impact. Cooperation with Environmental ActionGermany ended We supported the nature conservation projects of Environmental Action Germany from 2003. This cooperative venture was terminated at the end of 2017. Other environmental topics are addressed as well, such as protecting biodiversity and responsible water consumption. Our infrastructure can also be a part of our solution – for example, with the "Bee and Me" project, which helps beekeepers protect their bees. PROTECTING BIODIVERSITY Species extinction is occurring at an alarming rate worldwide, and the consequences are difficult to predict. One major cause of extinction is the fact that more and more space is being taken up by industry, agri- culture and transportation. When it comes to our environmental impact, the topic of land usage plays a subordinate role for us. Deutsche Telekom's business operations primarily impact biodiversity at the beginning of the value-added chain. This impact is clearly diminished at later stages. Nevertheless, we are concerned about protecting biodiversity. To this end, we develop and support ICT solutions that can help maintain biodiversity. Furthermore, we influence the maintenance and enhance- ment of biodiverse habitats in the direct surroundings of our various locations. That is why we collaborate with competent partners on nature conservation efforts near us. Fighting bee mortality with narrowband technology Deutsche Telekom supports solutions that help maintain biodiversity. One example of this is a solution by start-up company "Bee and Me" from Montenegro. This young company uses narrowband technology NB-IoT (Narrowband Internet of Things) for optimizing apiculture. With this technology, data relevant to the beehive, such as temperature, rela- tive humidity, air pressure, weight and bee activity, can be recorded and sent to the beekeeper using an app. This allows the beekeeper to take immediate action if the beehive is in danger. Renaturation of biodiverse habitats Since 2003 we have been carrying out comprehensive collection campaigns for used cell phones. The cell phones are then reused or, if they are no longer functional, properly recycled in an environmentally responsible manner. We use the profits from these collection cam- paigns to support charitable organizations, especially in the fields of resource protection, environmental protection, nature conservation and education. In 2017, we supported two biodiversity protection projects – a gorilla protection project sponsored by the Frankfurt Zoological Soci- ety as well as the monkey orphanage J.A.C.K. sponsored by Pro Wildlife e.V. Both organizations have been partners in the cell phone collection center since 2017. You can find more information at www.handysammelcenter.de. INITIATIVES FOR RESOURCE EFFICIENCY AT THE WORKPLACE We try to use as many green office supplies as possible in order to improve resource efficiency at the workplace. A total of 16% of prod- ucts are classified as sustainable in our office products catalog in Germany. This includes paper that has been distinguished with the "Blue Angel" eco-label or the "Nordic Swan" certificate. Some of our office products have also been honored with the EU Flower eco-label, the Fairtrade seal, and the FSC (Forest Stewardship Council) and the PEFC (Program for the Endorsement of Forest Certification Schemes) eco-labels. In 2017, the percentage of sustainable products ordered was 96%. During this year, we repeatedly sold remaining stock, giveaways and corporate clothing to our employees at our Bonn location as well as in the online shop. These activities were very well-received this year as well. The office supplies swap meet has become a fixture in Bonn, an event during which colleagues can pick up discarded office supplies from other departments instead of ordering new products. We also entered into a cooperative venture with the non-profit organiza- tion "Afb social & green IT" in 2017. Within the scope of this venture, we will give some of our used IT hardware (e.g. laptops) to the organization so that it can recondition and resell this. This will not only help us save resources but also create jobs for people with disabilities as well as extend the life cycle of our used hardware. We held a very successful on-site sales promotion at our Bonn location at the end of November 2017 within the framework of this cooperation. WATER CONSUMPTION We need water to live and it continues to grow scarcer. The World Health Organization estimated that more than one billion people world- wide do not have access to clean water. As a service provider, our water consumption is comparatively small compared to the agricultural and manufacturing industries. We almost exclusively use water within the scope of our office activities. Water consumption also plays but a minor role along our supply chain. For that reason, water is not a main focal area in our CR management activities. Nevertheless, we use our Water Consumption KPI to record our annual water consumption, which we have been able to consistently reduce since 2012.
FACTS & FIGURES 151 FACTS & FIGURES
FACTS & FIGURES ECONOMIC INDICATORS Socially responsible investment 152 SOCIALLY RESPONSIBLE INVESTMENT SOCIALLY RESPONSIBLE INVESTMENT (SRI) ESG KPI The Socially Responsible Investment (SRI) ESG KPI indicates the pro- portion of shares in Deutsche Telekom AG held by investors who take, among other criteria, environmental, social, and governance criteria into account for their investment strategy. As the basis of calculation is updated annually, year-on-year comparisons may be of limited value. (Source: Ipreo, based on Deutsche Telekom’s shareholder structure as of Sept. 30, 2017) Our commitment for more sustainability pays off for investors as well: As of September 30, 2017, roughly 18 percent of all T-Shares were held by SRI (socially responsible investment) investors, and around 3 percent were held by investors who manage their funds primarily in accordance with SRI aspects. Reporting against standards The KPI is relevant for criteria 1 (Strategic Analysis, Strategy and Goals) and 7 (Rules and Processes) of the German Sustainability Code.
FACTS & FIGURES ECONOMIC INDICATORS Socially responsible investment 153 Reporting against standards The KPI is relevant for criterion 1 (Strategic Analysis, Strategy and Goals) of the German Sustainability Code. LISTING OF THE T-SHARE Sustainability ratings play a key role in SRI investment decisions. In line with our corporate responsibility strategy, we concentrate on specific rating agencies that we select on the basis of reputation, relevance and independence. In 2017, the T-Share was again listed on leading sustainability indexes, including RobecoSAM’s prominent DJSI World and DJSI Europe. Once more, our share was listed on the FTSE4Good and UN Global Compact 100 indexes. Rating agency “oekom” singled us out as the world’s best telecommunications company in terms of ecological and social perfor- mance in 2016.
FACTS & FIGURES ECONOMIC INDICATORS Suppliers SUPPLIERS 154 SUSTAINABLE PROCUREMENT ESG KPI The Sustainable Procurement ESG KPI remained on a stable level against the prior-year figure. The share of the procurement volume that has been risk-assessed momentarily amounts to 81 percent. Over the next two years, we expect our Sustainable Procurement ESG KPI to remain stable at a high level. Our aim is to keep a coverage of at least 80 % until 2020. We measure the degree to which our procurement volume is covered by sustainable activities with the Sustainable Procurement ESG KPI. It measures the share of procurement volume we obtain from suppliers where one or several Group companies of the corporate group have been assessed for compliance with our social and environmental stand- ards by way of self-assessments and/or audits. This also applies for audits carried out on subcontractors. In the coming years we expect our Sustainable Procurement ESG KPI to stay at a constant level. Reporting against standards The Sustainable Procurement ESG KPI together with information about our strategic approach fully covers the GRI 412-1 (Human Rights Assessment) and GRI 414-1 (Supplier Social Assessment ) GRI indica- tors. By providing this information, we cover the V28-04 EFFAS indica- tors (Supply Chain). It is also relevant for criteria 1 (Opportunities and Risks), 3 (Sustainability Goals), 4 (Value Added Chain), 6 (Rules and Processes), 7 (Performance Indicators) and 17 (Human Rights) of the German Sustainability Code. It is also used for reporting in accordance with the Global Compact Principles 1 (Supporting and respecting human rights), 2 (No complicity in human rights abuses) and 5 (Effective Abolition of Child Labor).