2018 audit results
In the audit program, which was established and is controlled at the Group level, a total of 117 audits were carried out in 2018. As in previous years, we concentrated our auditing activities on suppliers in Asia, in particular in China and neighboring countries such as India, Malaysia, South Korea, and Thailand, as well as in Brazil, Mexico, and Eastern Europe.
Audited suppliers included manufacturers in the areas of IT hardware, software, and services, as well as networks and devices. During the audits, we identified one case of bribery and consequently ended the business relationship with the supplier with immediate effect. Beyond this, no other cases of corruption or bribery nor any critical violations of compliance policies or the right to intellectual property were found.
The 2018 audit results at a glance
Detailed results
Our audit activities do not include all suppliers with whom we have an active business relationship (around *20,000), but instead focus on strategically important and/or particularly high-risk supplier groups. We focus on roughly 250 suppliers that are regularly audited every two to three years. The majority of these audits are conducted within the scope of the Joint Audit Cooperation (JAC).
The JAC Guidelines require suppliers to grant their employees the freedom of association and the right to collective bargaining, as well as a healthy and safe working environment. The following minimum requirements are applicable regarding working hours: a maximum of 48 working 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. Compliance 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.
We do not require our suppliers to obtain external environmental or social certificates. If no certificates are available for the “Environment” and “Social Accountability” fields, such as ISO 14001 and SA8000, we nevertheless expect comparable management systems to be used. Our auditing experience shows, however, that the majority of our relevant manufacturing suppliers have an external certificate 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 guidelines and standards: these include the ILO 
Labour Standards, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises.
Of the 117 suppliers we audited in 2018 (13 of which were in accordance with the validated audit processes of the Responsible Business Alliance), around 24 percent (29 audits) were direct suppliers and 76 percent (88 audits) were tier 2, 3 and 4 suppliers – that is, indirect suppliers.
The audits carried out in 2018, revealed a total of 768 violations of Deutsche Telekom’s supplier requirements. In the process, a total of 594 violations were corrected in 2018, including several open improvement measures from previous years. Among the violations were 49 unacceptable incidents and 193 critical findings; 191 violations were rectified. Here are some examples of unacceptable and critical violations as well as the measures taken to improve these situations. Critical findings were discovered at 49 suppliers in the area of occupational health and safety field, at seven suppliers in the area of environmental protection, at three suppliers with regard to labor practices, at 50 suppliers with regard to working hours, and at nine suppliers with regard to wages and performance-related remuneration. There were no critical findings in the business ethics area. As in past years, most of the violations were related to occupational health and safety (47 percent, compared to 46 percent in 2017), followed by working hours with 16 percent (17 percent in 2017). The business ethics area took the third spot, with 14 percent (13 percent in 2017).
*In the past, the number of our suppliers referred to our approx. 30,000 total business relationships. We now have more precise reporting capabilities that allow us to specify the number of suppliers with whom we had an active business relationship in 2018.
Examples of problematic findings
| Area | Findings at suppliers | Initiated improvements | Status (end of 2018) | ||
|---|---|---|---|---|---|
| Child/juvenile labor | According to management and employee interviews as well as document reviews, five young workers were employed at the punching shop, the Maopian (raw materials) shop and the injection shop, where they were exposed to hazardous factors such as noise, dust, etc. This was in violation of the Chinese labor law (1994), Article 64. | According to legal requirements, the factory took action to stop exposing juvenile worker to hazardous work factors. The affected workers were moved to a quieter assembly line. | Closed | ||
| Environmental protection | Based on observations made on site, the factory did not provide containment/collection containers for two empty lubricating oil chemicals in the chemical storage facility, two empty cleaning chemicals in the cleaning shop and six empty guide rail oil chemicals on the outdoor site. This was in violation of the following articles of the environmental protection standard for the storage of hazardous waste (GB18597-2001): Article 6.2.2: The storage facility for hazardous waste must provide a leak indicator, a gas venting system, and a gas purification system. Article 6.3.9: The storage facility for hazardous waste must be wind-proof, rain-proof and protected from sunlight. | The factory is to install a containment/collection container for empty chemicals from the area mentioned above. | Closed | ||
| Finding: According to documents reviewed, last year the factory did not transfer hazardous waste (PCB boards and cleaning waste) to qualified sites for processing. Comment: The factory stored hazardous waste on factory premises and did not transfer it. It was therefore in violation of the law of the People’s Republic of China to avoid and reduce environmental pollution resulting from solid waste (amended in 2016), Article 55: Facilities that produce hazardous waste must dispose of the hazardous waste in accordance with applicable government regulations and may not store or dispose of them without permission. | The hazardous waste was transferred at the end of 2018. | Closed | |||
| Area | Findings at suppliers | Initiated improvements | Status (end of 2018) | ||
| Occupational health and safety | There are not enough emergency exit signs on the main routes of the sewage treatment plant to ensure proper evacuation in an emergency. This makes it difficult to find the emergency exit. |
| Closed | ||
| Fire alarms and alarm systems are tested by a fire safety company once a month. Finding: One of the fire alarms in the hazardous waste room did not work. This means there is a lack of fire protection. |
| Closed | |||
| During the plant tour, it was found that in the storage area for flammable chemicals and in the printing area where work involves chemicals, there was no emergency shower/eye irrigation station. | Every department must identify and provide the appropriate safety equipment. | Closed | |||
| Finding: The factory began operations in October 2017, even though a firefighting certificate had not yet been issued for building no. 4 (25194 square meters, completed in June 2017). Comment: The factory has completed its fire protection concept for building no. 4. Acceptance for firefighting systems was underway but the acceptance procedures were very complex. This was in violation of the following article of the fire protection law of the People’s Republic of China (2008): Article 11: For the construction of large facilities intended for use by large numbers of people or special construction projects as stipulated by the national safety authority of the State Council, the employer is required to present the fire protection documents to the fire protection department of the national safety authority for review. The law specifies that the fire protection department of the national safety authority is responsible for the result of the review. Article 13: When construction work is completed on a project that requires fire protection planning according to national fire protection standards, fire protection acceptance testing or submission of the relevant documents is to be carried out as follows:
| We have meanwhile received the certificate for the fire protection concept covering all buildings. | Ongoing | |||
| Finding 1: A metal warehouse with approx. 600 square meters area had just one safety exit at the time of the audit. This is in violation of the Code of Design on Buildings Fire Protection and Prevention (GB50016-2006), Article 3.8.2: Every storage site must have at least two exits. One exit is sufficient for storage sites with an area of less than 300 square meters. There must be at least two exits leading to a hallway, a stairway or outside from every zone of the warehouse. One door is sufficient for building sections with an area of less than 100 square meters. The door leading to the hallway or stairway should be a class B fire protection door. Finding 2: 20% of the emergency exits in building no. 4 had a net width of 0.75 meters. This does not meet legal requirements. Comment: The factory began implementing corrective measures prior to the final meeting. This was in violation of the Code of Design on Buildings Fire Protection and Prevention (GB50016-2014), Article 3.7.5: The net width of the evacuation stairs should be at least 1.10 m, the net width of the evacuation route at least 1.40 m and the net width of the door at least .90 m. The width of the evacuation stairs should correspond to the number of workers on all levels. The net width of the lower stairway therefore corresponds to the number of workers on all floors. The net width of the exterior door on the first floor also corresponds to the number of workers on all floors. The net width of the door must be at least 1.20 m. |
| Ongoing | |||
| The evacuation plan in the dormitories did not correspond to the actual layout. This was in violation of the Code of Design of Dormitory Buildings (JGJ36-2005), Article 4.1.4: Dormitories must have an emergency evacuation plan and clearly visible evacuation signs posted. |
| Ongoing | |||
| Area | Findings at suppliers | Initiated improvements | Status (end of 2018) | ||
| Wages and performance-related remuneration | According to Article 44 of the Labor Law of the People’s Republic of China, under the following circumstances, the employer shall pay workers higher compensation than for regular working time:
| No overtime is planned for public holidays. Should overtime be worked on public holidays, however, employees should be paid 300% of the regular wage. | Closed | ||
| Social security. Compliance with this item could not be verified because the auditor did not have access to the payroll accounting of the third-party provider. | This item was corrected for the follow-up audit on July 12, 2018; access was granted. There were no apparent violations. | Closed | |||
| Based on the document review and the management interview, it was determined that the factory paid only 100% of the regular hourly wage for overtime on regular working days and public holidays. Example a) In April 2018, all 25 employees reviewed were paid only 100% of the regular hourly wage for overtime (100% of employees); Example b) On April 5, 2018, (Qingming Festival, Tomb-Sweeping Day), 3 out of 25 workers (12% of employees) were paid only 100% of the regular hourly wage for overtime. This was in violation of the Chinese labor law, Article 44. | The company pays all employees 1.5 times the wage for overtime on working days, 2 times the wage for overtime on weekends and 3 times the wage for overtime on public holidays, based on the actual date worked. | Ongoing | |||
| Area | Findings at suppliers | Initiated improvements | Status (end of 2018) | ||
| Working hours | Finding: The factory used imprecise manual attendance logs to record employee attendance. Weekly working time and daily/monthly overtime could not be verified. This was in violation of the Chinese labor law, Article 41: The employer can extend the working time due to production or corporate requirements after consulting with the union and the employees. As a rule, the extended working time may not be longer than one hour per day. If an extension is necessary for special reasons, the working time may be extended up to three hours per day as long as the health of the employee is ensured. However, extended working time may not amount to more than 36 hours per month. Finding: The factory used manual attendance logs to record worker attendance information. It could not be determined in the manual attendance logs whether the workers had one, two or three shifts and whether they worked 7, 7.5, 8, 9.5 or 12 hours per day. No shift information or working hours per day were recorded for workers. Due to imprecise manual attendance recording, the weekly working times and daily/monthly overtime could not be verified. | An electronic attendance system will be introduced to record employee attendance information. | Ongoing | ||
| Compliance with work breaks, public holidays and vacations could not be verified because the auditor did not have access to the payroll accounting of the third-party provider. | This item was corrected for the follow-up audit; access was granted. There were no apparent violations. | Closed | |||
| Employee overtime amounted to more than the legal provisions and the weekly working time more than the SA8000 standards. Finding based on the present attendance log: Approximately 30% of the employees surveyed worked more than three overtime hours a day. The highest number of overtime hours was four hours/day. Around 90% of the employees surveyed worked more than 36 overtime hours a month. The highest number of overtime hours was 142 hours in January. The weekly working time for all employees surveyed exceeded 52 hours per week in all months. The highest weekly working time was 76.5 hours in January 2018. | A production plan based on customer demand will be prepared one month in advance to ensure that employees do not work more than 60 hours per week. | Closed |
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