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.
Fundamental norms and standards
Our Supplier Code of Conduct is part of the General Terms and Conditions for Purchasing and must therefore be accepted by our suppliers. Ethical, social and ecological principles as well as fundamental human rights are codified in this Code of Conduct. Sustainability concerns are given a weighting of 10 percent in selecting suppliers in bidding processes. The Supplier Code of Conduct is based on our overarching Group policies “Code of Conduct” and “Code of Human Rights & Social Principles”. The values and principles stated therein largely coincide with those of telecommunications provider Orange – our partner in the BuyIn procurement joint venture. In connection with their joint venture, Orange and Deutsche Telekom harmonized their Supplier Codes of Conduct in 2017 to ensure that they both now place exactly the same requirements on suppliers.
The following guidelines are also binding for our suppliers:
- Group Policy on Avoiding Corruption
- Statement on Extractives
- 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, the Organisation for Economic Co-operation and Development, the Universal Declaration of Human Rights and the UN Global Compact. For our strategic suppliers who exhibit a higher CR risk, we have on-site audits conducted regularly by external auditors to check compliance with the Supplier Code of Conduct.
Entrenchment in the company
We have been working to improve sustainability throughout our supply chain for many years. We derive our sustainability strategy in procurement from our CR strategy; it is anchored in the purchasing processes used throughout our Group. The heads of the CR and Procurement units are jointly responsible for implementing sustainable procurement practices. They report respectively to the Chief Human Resources Officer and Chief Financial Officer. An escalation process calls for decisions to be made at Board of Management level in serious cases. The Sustainable Procurement Working Group supports the international Procurement departments in implementing the sustainability requirements. Our sustainability principles for procurement are set forth in the Global Procurement Policy; associated Procurement Practices provide specific purchasing instructions for Germany and are considered recommendations for our national companies. We train our employees throughout the Group using an e-learning tool. In addition, a buyer handbook has been available since 2016 to provide an overview of which CR criteria must be considered at which point of the procurement process.
Harmonization of the Supplier Codes of Conduct of Deutsche Telekom and Orange in 2017 also created sustainable procurement requirements for the procurement joint venture BuyIn. The high ethical, social, environmental and human rights standards and requirements for suppliers are thus not only part of both companies’ Supplier Codes of Conduct, they also apply to BuyIn.
KPIto promote sustainability
We measure and manage our sustainability performance in our procurement activities with the Sustainable Procurement ESG KPI. This KPI presents the procurement volume for suppliers who have accepted our Supplier Code of Conduct* (SCoC) and whose compliance with social and environmental criteria has been verified through dedicated self-assessments such as EcoVadis, or social audits. It is calculated in relation to our total procurement volume. We already achieved our goal of covering 80 percent by 2020 in 2016. We want to maintain this target value until 2020. We met this target in 2018: The share of risk-assessed procurement was 80 percent.
In addition, 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 program (CDP Supply Chain Coverage ESG KPI). On the other hand, we want to increase the share of CR-classified suppliers among our Top 200 suppliers (CR-Qualified TOP 200 Suppliers ESG KPI). Qualification tools include self-assessments, audits, sustainability workshops and supplier development programs. We assess risky product groups and suppliers with the help of appropriate management tools.
Scores in sustainability rankings
Every year leading rating agencies measure the sustainability performance of large enterprises. Deutsche Telekom scored 85 out of 100 points in the supply chain management category of the 2018 RobecoSAM Corporate Sustainability Assessment. We were thus able to substantially improve our good performance of the previous year (72 points) and are one of the leading companies in the ICT sector.
*As of mid-2018, we no longer use our supplier sustainability questionnaire in the pre-qualification process. Instead, we now demand a commitment from all our suppliers to our Supplier Code of Conduct (SCoC).
Many players, one goal: forum on sustainability in supply chains
At the end of January 2018 the Joint Audit Cooperation (JAC) once again organized the Corporate Social Responsibility Forum. At the event in Guangzhou, China, some 200 representatives from ICT companies, equipment makers, consulting firms, audit firms, international NGOs and science discussed how, after a fundamental review of the supply chain, a long-term improvement in sustainability performance can be achieved. The discussions also included how transparency with regard to production conditions can be improved in the downstream production stages. One main finding from the forum was that a closer, ongoing relationship between the players involved is the key to an improved sustainability performance in the downstream supply chain.
During a panel discussion, representatives from Nokia, ZTE, Huawei, Vodafone, Deutsche Telekom and audit firm SGS announced an alliance to establish the JAC Academy. The aim of this Academy will be to strengthen skills at the suppliers’ factories in order to implement and measure JAC requirements in a structured framework. JAC is an alliance of currently 16 telecommunications providers; Deutsche Telekom is a founding member.
Sustainability in Procurement online training
In 2018 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. In addition, our suppliers can also inform themselves at any time about sustainability and compliance requirements as part of a training course.
And it’s not only our own employees whom we train on the topic of sustainability. We also help our business partners and suppliers to develop further with a supplier development program.