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  • 2017 Corporate Responsibility Report
2017 Corporate Responsibility Report

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. Compliance 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.

Managing sustainability in procurement processes

We have been working to improve sustainability throughout our supply 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.

Procurement process

Fundamental norms and standards
We have defined minimum social and environmental standards for our corporate governance through our Guiding Principles and voluntary commitments. We also require our suppliers to comply with these standards. 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:

In November 2017 we underscored our commitment to human rights and developed our Social Charter further into the "Code of Human Rights & Social Principles".

The following guidelines are also binding for our suppliers:

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 Economic 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.

SUSTAINABLE PROCUREMENT STRATEGY

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 practices. 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.

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 recommendations 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 img to promote sustainability
We measure and manage our sustainability performance in our procurement 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 covering 80 percent by 2020 as early as 2016. We want to maintain this target until 2020. What's more, we have established two other ESG img 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 Program. 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 supplier development programs. In the future, we will be focusing even more on monitoring risky material groups/suppliers with the help of suitable management tools.

Scores in sustainability rankings
Every year leading rating agencies measure the sustainability performance of large enterprises. Deutsche Telekom scored 72 out of 100 points in the supply chain management category of the 2017 RobecoSAM img Corporate Sustainability Assessment. Although we were unable to repeat our excellent performance of last year (98 points) due to new issues and a changed evaluation method, we remain one of the leading companies in the ICT img sector. We are continuously working on improvements in our supply chain, thereby securing our leading position and expanding it.

Progress

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Many players, one goal: forum on sustainability in supply chains

In January 2017 the Joint Audit img Cooperation (JAC) organized a dialog event in Xi’an, China. About 130 representatives from ICT img 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 telecommunications 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 realistic 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 information 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.