2 CONTENTS This PDF document contains all information on accountability (“Management & facts”) from Deutsche Telekom’s 2019 CR Report. The themed pages “Green future”, “Digital life”, “New ways of working”, and “Good stewardship” may be downloaded individually using the “Print this page” function or as one document using the “Info basket” function. 4 4 5 13 16 18 19 22 25 27 28 30 30 33 39 42 44 45 47 51 52 FOREWORD IMPACT MEASUREMENT STRATEGY CR STRATEGY & MANAGEMENT MATERIALITY SUSTAINABLE DEVELOPMENT GOALS STAKEHOLDER MANAGEMENT COMPLIANCE POLITICAL ADVOCACY SUSTAINABILITY STANDARDS AWARDS ECONOMY SUSTAINABLE FINANCE SUPPLIERS SUSTAINABLE AND INNOVATIVE PRODUCTS NETWORK EXPANSION CUSTOMER SATISFACTION CONSUMER PROTECTION DATA PROTECTION AND DATA SECURITY FINANCIAL PERFORMANCE INDICATORS FINANCIAL PERSONNEL INDICATORS
3 ENVIRONMENT CLIMATE STRATEGY OUR ENVIRONMENTAL PROGRAM CO2E EMISSIONS ENABLEMENT FACTOR ENERGY CONSUMPTION & EFFICIENCY RENEWABLE ENERGY MOBILITY CIRCULAR ECONOMY & RESOURCE EFFICIENCY WASTE MANAGEMENT & RECYCLING ADDITIONAL ECOLOGICAL INFORMATION SOCIAL COMMITMENT EMPLOYEE RELATIONSHIPS EMPLOYEE SATISFACTION DIVERSITY HUMAN RIGHTS DEMOGRAPHY AND COMPANY PENSION SCHEME OCCUPATIONAL HEALTH AND SAFETY HEADCOUNT AND PART-TIME WORK FLUCTUATION & STAFF RESTRUCTURING IDEAS MANAGEMENT TRAINING AND DEVELOPMENT 54 54 61 62 66 68 72 74 76 79 81 82 82 88 91 93 96 98 100 103 105 107 109 SOCIAL 110 ABOUT THIS REPORT 112 113 DISCLAIMER IMPRINT
STRATEGY FOREWORD 4 FOREWORD Dear Readers, Since the 1990s, we have been taking on responsibility for the major issues of our age – climate change, social justice, and digital participa- tion are key action areas for Deutsche Telekom. However, the chal- lenges are growing exponentially and range from threats to our democ- racy from media phenomena such as fake news and filter bubbles all the way to resurgent populism in sections of our society. That’s why I firmly believe we need more than just a focus on sustainability – we need a sustainable business model. In 2019, we therefore modified our Group strategy to explicitly make “acting responsibly” a core element. This is something we’re working toward, step by step. For example, we have set ourselves new, ambitious climate protection targets – 90 percent lower emissions by 2030 and electricity generated solely from renewables from 2021. Furthermore, these are targets that apply to our entire Group. However, 80 percent of our CO2 footprint comes from the manufacture and use of our products. We are commit- ted to reducing these emissions by 25 percent per customer by 2030. The Science Based Targets initiative (SBTi) confirmed us as the third DAX company whose climate protection targets are helping achieve compliance with the Paris Climate Agreement. We have also examined our value chain to identify other areas where we could help improve cli- mate protection and resource conservation. Our “We care for our planet” Group program combines selected initiatives in which we’re working as a Group toward gradually becoming “greener”. Examples include our sustainable smartphone recycling initiative, reducing pack- aging, and switching our service fleet to alternative drives. Our media literacy initiatives promote safe and proficient use of digital media. After all, digitalization also has its dark side. How do we identify extremist propaganda on the net, for instance? In 2019, these initiatives ran under the banner of “Digital democracy”. Our aim is to connect everyone to present and future digital opportunities, whether in a pri- vate or social context. That’s why our mission is “We won’t stop until everyone is connected.” Digitalization is also having a huge impact on the world of work – and Deutsche Telekom is no exception. We are keen to have all our employ- ees on board as we navigate the increasingly complex digitalized econ- omy. To that end, we have made learning an integral part of our every- day work. In 2019, in conjunction with the Group Works Council, we set out guidelines for shaping the digital world of work with our “Manifesto of Agile Work”. Timotheus Höttges, Chairman of the Board of Management, Bonn, Germany We are also committed to responsible digitalization. We are the first company that has introduced guiding principles for the ethical use of artificial intelligence (AI). In 2019, among other activities, we carried out training and workshops on implementing the principles, integrated them into contract-relevant provisions for our suppliers, developed an internal test seal for ethical AI products, and held a conference on digital ethics. We want to be measured by our actions and not by our words! We also report extensively and transparently on our diverse sustainability activities in this year’s Sustainability Report. We remain committed to the principles of the United Nations Global Compact and the German Sustainability Code. Both of these frame- works, along with the UN Sustainable Development Goals, guide us in what we do. I hope you find the report enjoyable reading! Tim Höttges
STRATEGY CR STRATEGY & MANAGEMENT 5 CR STRATEGY & MANAGEMENT BUSINESS ACTIVITIES AND ORGANIZATION You can find a description of our business activities on our website and detailed information about our business development in the 2019 annual report. Our Group is broken down into five operating segments: CURRENT ORGANIZATIONAL STRUCTURE IN CR We believe that commercial, social, and ecological aspects can comple- ment each other and we aim to make a positive contribution to sustaina- ble development throughout our entire value chain. Overall responsibility for CR lies with our Board of Management; it discusses and decides on important CR matters. The Board Member for Human Resources and Legal Affairs, Labor Director Officer decides which CR matters are to be classed as important and represents them on the Board of Management. The Group Corporate Responsibility (GCR) unit reports to the Human Resources and Legal Affairs Board department. It develops Group-wide policies and guidelines with the goal of advancing the corporate culture with a focus on sustainable innovation and social responsibility. In order to always ensure direct feedback between CR and our core business, the CR Board advises GCR. The board is made up of the heads of the main Group units. The CR managers from the different business units and national compa- nies are responsible for implementing our CR strategy. They collaborate within the international CR Manager Network, where they coordinate their activities and share best practices. Our CR Policy provides the formal, mandatory framework for the sustain- ability management activities at all Group units. The CR Policy has also been successfully introduced in a majority of European national compa- nies since 2017. CR CONTROLLING – USING IT TO MEASURE AND MANAGE SUSTAINABILITY We use an IT-based data collection system to record environmental, social, and governance (ESG) data. It supports standardized, mandatory processes at the Group and national levels and enables Group-wide benchmarks.
STRATEGY CR STRATEGY & MANAGEMENT 6 DEVELOPMENT OF OUR ESG KPIS We use this data primarily to calculate relevant indicators and our ESG KPIs, with which we measure and control our CR performance through- out the Group. Our CR controlling ensures that ESG data and KPIs are both recorded transparently in good time and can be reported in the “Facts & figures” section and interactive KPI tool of this CR report. We are continuously improving our system for performance indicators on the basis of internal and external requirements. For example, we extended our reporting on resource protection in 2019 so we can report on the many successes in our “We care for our planet” program and in the “Green Pioneers” employee community. OUR MANAGEMENT TOOLS – THE ESG KEY PERFORMANCE INDICATORS ESG KPIs (key performance indicators) are used as management tools for our CR involvement. Since they are highly relevant, we also report them in the combined non-financial statement of our annual report. The national companies also record CR data and thus assist in the col- lection of Group-wide ESG KPIs. These national companies represent 99 percent of the Group’s net revenue. For the purpose of integrated financial and sustainability reporting, the KPIs map all six types of capital (see diagram).
STRATEGY CR STRATEGY & MANAGEMENT 7 CR STRATEGY Globalization, global population growth, and the ever wider use of digi- tal technologies are putting a strain on available resources and require a sustainable, more environmentally friendly approach to business as well as socially responsible conduct. We are tackling these challenges head on. Sustainability and social responsibility have played a key role in our corporate activities for many years. In 2019, we modified our Group strategy to explicitly make the concept of “acting responsibly” a core element. To meet our responsibility toward society, we are consist- ently organizing our core business processes on a sustainable footing. Our CR strategy also forms the framework for the sustainability activities of our national companies. An integrated governance structure helps us to closely interlink strategic management and operational implementa- tion of our CR strategy throughout the Group. Overall responsibility for sustainability lies with the Deutsche Telekom Board of Management. 2019 CR PROGRAM – TARGETS, ACTIVITIES, AND DEADLINES The CR program is where we define targets and report on progress regarding Group-wide implementation in the relevant processes of our core business. In 2019 we restructured our CR program in accordance to the four pillars of our Management & facts segment, Strategy, Econ- omy, Environment and Social. 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 (environment, social, and governance – ESG). We actively and systematically involve relevant stakeholders in order to identify which current and potential ESG risks and opportunities are important for Deutsche Telekom. We also partici- pate in a number of working groups and committees. We continuously track ESG issues and systematically ascertain our stakeholders’ posi- tions on these matters. You can find additional information on our Group strategy in the 2019 annual report. Important tools we use for this purpose are: Our CR strategy is derived from the Group strategy and revolves around our three CR action areas and six focus topics. Fortnightly social media monitoring, which evaluates information appearing on social media that is relevant to us Our involvement in working groups and committees, numerous relevant national and international business associations, and social organizations (GeSI, Federation of German Industries, BITKOM, econsense, and the German National Association of Senior Citizen's Organizations, for example) Stakeholder dialog formats organized by us Our various publications, such as the press review and newsletters Our internal compliance evaluation, which also examines the most important sustainability risks In the section risk and opportunity management our annual report also addresses the following issues, which we have identified as key aspects of our sustainability management: Climate protection Suppliers Health and the environment We are currently investigating internally how reporting on climate- related financial risks and opportunities can be aligned with the recom- mendations of the Task Force on Climate-related Financial Disclosures (TCFD). This should build on the existing approaches for strategy, con- trolling, and risk management. Further information on the TCFD is avail- able here.
STRATEGY CR STRATEGY & MANAGEMENT 8 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 company to all employees through binding Guiding Principles. We use various 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 2019, 74 percent of our employees believe that the Guiding Principles are applied to our everyday work. Our Code of Conduct and the Code of Human Rights & Social Princi- ples are other tools we use to ensure that our Group and our partners demonstrate corporate responsibility in their conduct. Our compliance management system, which guarantees that our business activities are in compliance with laws and regulations, is also based on these docu- ments. They also entrench ethical standards and, in particular, human rights within the Group. 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 to systematically 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 increas- ing number of potential customers now require their suppliers to pro- vide HSE certificates. Our Group-level HSE management system is covered by an umbrella certificate based on the international standards ISO 45001(formerly OHSAS 18001) for occupational health and safety and ISO 14001 for environmental management. For some units, it also covers international standard ISO 9001 for quality management. Some of the national companies are not covered by an umbrella certifi- cate because they have their own certifications which are, in part, even more comprehensive. This is the case in Greece, for example. This national company has an integrated management system, which in addition to the above-mentioned standards, also covers the interna- tional standards ISO 50001 for energy management and ISO 27001 for data security. Through our compliance with legal regulations, we already meet the essential requirements for ISO 45001 certification in Germany. 100 per- cent of our employees in Germany are employed at an ISO 14001- and ISO 45001-certified workplace. Internationally, 98 percent of employees are employed at an ISO 14001- and ISO 45001-certified workplace. Our goal was to cover all companies that have more than 50 employees by the end of 2018. We were not able to meet this target. However, we further expanded coverage in 2019: with certification of T-Systems Polska and T-Systems Schweiz according to ISO 45001 and 14001 and certification of T-Systems Iberia according to ISO 45001.
STRATEGY CR STRATEGY & MANAGEMENT CR PROGRAM 2019 STRATEGY Objectives Target achievement Implementation 9 Implemented in 2019 CR strategy First stage implemented in 2019 About this report Implemented in 2019 Certified health, safety and environmental management system Focus on 2, 3, 4, 5, 7, 8, 9, 11, 12, 13, 15 Our contribution to the Sustainable Development Goals Measures and KPIs relevant to SDGs The results of our employee study on the culture of compliance Integrate socially responsible conduct into the Group strategy Continue to develop reporting with a clear focus up to 2020 Additional implementation of health, safety, and environmental management systems in two more companies Contribute to the Sustainable Development Goals (SDGs) Conduct an international employee survey on compliance Implemented in 2019 Implement the AI guidelines adopted in 2018 Training and information for employees, conference on Responsible use of artificial intelligence (AI) digital ethics, integration into provisions for suppliers, internal test seal
STRATEGY CR STRATEGY & MANAGEMENT CR PROGRAM 2019 BUSINESS 10 Objectives Target achievement Implementation Cover 70 percent of our procu- rement from carbon-intensive suppliers with the CDP Supply Chain Program by 2020 Review 80 percent of procurement volume by 2020 Have 75 percent of the top 200 suppliers CR-qualified by 2020 99 percent LTE coverage in Germany by 2020 99 percent LTE coverage in Europe by 2021 99 percent 5G coverage in Germany by 2025 CR labeling of products and services to increase transparency for customers Increase Group-wide customer retention (measured using TRI*M index) 63 percent coverage in 2019 CDP Supply Chain Program 81 percent coverage in 2019 Sustainable Procurement ESG KPI 87 percent coverage in 2019 CR-Qualified Top 200 Suppliers ESG KPI 98 percent coverage in 2019 Progress in network expansion 98 percent coverage in 2019 Progress in network expansion Deutsche Telekom’s 5G network available in eight 5G expansion German cities at the end of 2019 Introduction of the “we care” label “we care” label Slight decline – 68.5 in 2018; 67.3 in 2019 Measuring customer retention and endorsement Obtain relevant service awards Achieved, among other things, thanks to accolades Awards for our service associated with the TÜV quality seal, the title “Service- König” (King of Service) from the trade magazine Focus Money, and the top score in the CHIP online test Develop and implement a sustainable investment strategy for Deutsche Telekom’s capital investments Ensure inclusion in relevant sustainability indices Implemented Sustainable investment at Deutsche Telekom Inclusion in four additional indices in 2019 T-Shares in sustainability ratings and indices
STRATEGY CR STRATEGY & MANAGEMENT CR PROGRAM 2019 ENVIRONMENT Objectives Target achievement Implementation 11 Achieved Climate strategy Climate protection from 2020 onward – new climate goal and revision of the climate protection strategy “We care for our planet” Group program adopted We care for our planet Assessment of target achievement in 20 Approx. 38 percent reduction from 2017 to 2019 Approx. 10 percent reduction from 2017 to 2019 Currently being evaluated to ascertain per-customer Climate strategy Climate protection from 2020 onward – new climate goal and revision of the climate protection strategy Total CO2e emissions (Scopes 1 to 3) Total CO2e emissions (Scope 1 and 2 emissions) Climate strategy Climate protection from 2020 onward – new climate goal and revision of the climate protection strategy Total CO2e emissions (Scopes 1 to 3) Total CO2e emissions (Scope 1 and 2 emissions) Climate strategy Climate protection from 2020 onward – new ratio. climate goal and revision of the climate protection strategy 2011 to 2019: Global PUE value lowered from 1.85 to 1.64 Germany: 1.67 to 1.56 Data centers (Biere) PUE value: 1.32 Proportion of renewable energy at Deutsche Telekom in Germany in 2019: 84 percent Group-wide in 2019: 64 percent Hungary in 2019: 100 percent Greece in 2019: 100 percent Austria: 99 percent The Netherlands: 100 percent Total CO2e emissions (Scopes 1 to 3) Climate protection from 2020 onward – new climate goal and revision of the climate protection strategy PUE ESG KPI – lower CO2 consumption in data centers Climate strategy Climate protection from 2020 onward – new climate goal and revision of the climate protection strategy Renewable Energy ESG KPI Renewable energy in the Group Renewable energy in the national companies Develop and adopt science-based climate targets and ensure official recognition from the Science- Based Targets initiative Develop a program to reinforce environmental management Decrease Group-wide Scope 1 and 2 emissions by 20 percent by 2020 compared to 2008 (without T-Mobile USA) Decrease Group-wide Scope 1 and 2 emissions by 90 percent by 2030 compared to 2017 Reduce emissions from the upstream and downstream value chain (Scope 3) by 25 percent per customer by 2030 compared to 2017 Boost the efficiency of our data centers Switch Group-wide power consumption to 100 percent renewable energy by 2021 Raise the profile and boost the impact of the Green Pioneers community Reduce the CO2 attributable to customers’ use of our products and solutions compared to our own emissions Develop carbon neutrality and join the GSMA initiative Achieved Increase from 40 to 200 Green Pioneers in 2019; Green Pioneers coverage of 40 sites in Germany; more community initi- atives in our national companies Improvement of the enablement factor in Germany to 2.44 (1.85 in 2018); Across Europe, to 1.74 (1.21 in 2018) Enablement Factor ESG KPI for DT Group in Germany Enablement Factor ESG KPI for Deutsche Telekom Group in Europe
STRATEGY CR STRATEGY & MANAGEMENT CR PROGRAM 2019 SOCIAL 12 Objectives Target achievement Implementation Increase the Media Literacy ESG KPI to 45 percent by 2020 Increase the proportion of women in top positions in middle and upper management to 30 percent Increase the Group-wide health rate to 95.9 percent by 2020 Reduce the accident rate in Germany December 31, 2019: 41 percent ESG KPIs “Beneficiaries” and “Media Literacy” December 31, 2019: 35 percent women Group-wide On Board of Management: 22.2 percent In middle and upper management: 26 percent On Supervisory Board (in Germany): 40 percent On Supervisory Boards (in Europe): 25 percent December 31, 2019: 94 percent Proportion of women on the Board of Management Proportion of women in middle and upper management Proportion of women on supervisory boards of Deutsche Telekom national companies Commitment to increasing the proportion of women Health rate Effectiveness of our health and safety measures 2019: Reduction to 6.8 accidents (resulting in more Effectiveness of our health and safety measures than three days of absence) per thousand employees (8.7 in 2018) Revise the Guiding Principles Implemented Our approach to employee relationships In 2019, over 60 percent of the training courses that could be booked via the Learning Management Sys- tem (LMS) were digital. (53 percent in 2018) Our approach to training and development Training courses offered by Telekom Training in Germany Two new modules on life in the city of the future and on Promoting media literacy and democratic competence Employee survey every two years Satisfaction and commitment indexes Human Rights Impact Assessments Boost digital further training Expand #DABEI-Geschichten.com (“#TAKEPART-stories.com”) Improve employee satisfaction digital democracy Commitment index in 2019: 4.0 (Commitment index in 2017: 4.1) Performance of Human Rights Impact Assessment (HRIA) and Employee Relations Review (ERR) Performance of HRIA at T-Systems India Performance of ERR at T-Mobile Polska, Deutsche Telekom field staff
STRATEGY MATERIALITY 13 MATERIALITY OUR PROCESS FOR IDENTIFYING MATERIAL CR TOPICS 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. Although our material topics had undergone detailed analysis and then been validated in an internal workshop as recently as 2018, the topic weightings were readjusted for the present report. This process factored in changes in stakeholder expectations and current internal developments. We have utilized the methodology of the Global e-Sustainability Initiative (GeSI) to assess materiality since 2015. It covers 55 topics that are rele- vant for the ICT industry, and places them 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 com- munity and environment impacts. These topics have been developed to pertain to a variety of companies and are therefore recognized in the industry. Identifying and evaluating material topics In order to determine our stakeholders’ expectations of our sustainabil- ity management, we have used an online survey since 2014. In this survey, our stakeholders can rate topics according to their importance and assess our performance in the different areas. However, willingness to participate in the survey has declined considerably since 2018. Consequently, the results can no longer be classed as representative. Nonetheless, to ensure external stakeholder requirements can still be factored into our materiality analysis, we also conducted a document analysis in 2018. This took into account legal texts, studies, position papers, and media publications that provide information about the demands and expectations made on Deutsche Telekom with regard to sustainability management. The analysis also considered whether Deutsche Telekom has any influence on the respective topic and whether the expectations have an impact on Deutsche Telekom’s busi- ness activity. The results of the stakeholder survey and the document analysis were then compared and finalized in an internal workshop attended by experts from various units. The table below sets out the criteria that determine whether or not a topic is highly relevant. Stakeholder perspective High expectations for the relevant topic when ... NGOs Competition Legislation ... the majority of NGOs express specific expectations or demand compliance with certain targets or standards. … multiple competitors actively communicate a more ambitious strategic objective or development concepts. … there are concrete regulatory objectives, laws or guidelines that directly impact the company. Financial market … the topic is part of the criteria for the rat- ings in question and is considered a top issue in the industry. Company perspective Highly influenced by the relevant topic when ... Value creation … all stages of the value chain are affected by the topic. Sustainable Development Goals … the topic is directly related to several SDGs. Industry …the ICT has a big influence on it and Deutsche Telekom holds a leading industry position on the topic. The 2019 document analysis shows our stakeholders now have consid- erably higher expectations regarding topics related to the environment and human rights. It is not just politicians and NGOs that have these expectations, but also the Fridays for Future movement, for example. We were acting in line with these requirements when, at the start of 2019, we adopted our climate target, which complies with the two- degree target. The study entitled “The State of Children’s Rights and Business 2019: From Promise to Practice” showed that our commitment to human rights – particularly as regards children – is on the right track. We secured second place in the “Telecommunications and Technol- ogy” category, scoring 9.4 out of 10 points.
STRATEGY MATERIALITY 14 Our document analysis also shows that the topics of water, waste, and the circular economy have fundamentally increased in relevance. In 2020, we will analyze whether and to which extent this affects the importance these topics hold for us. The document analysis shows that there had been either no changes or very limited changes to all the other topics. We identified the material topics for this year’s CR reporting based on these findings. We presented the results of the analysis in a materiality matrix in accordance with the requirements of the Global Reporting Ini- tiative (GRI). RESULTS OF THE MATERIALITY ANALYSIS Topics were rated as “very relevant,” “relevant,” “less relevant,” and “not relevant” in the materiality analysis. 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 50 to 100 below.
STRATEGY MATERIALITY 15 MATERIAL TOPICS MATCHED WITH GRI ASPECTS The following overview indicates which GRI aspects can be matched with the material topics of the stakeholder survey. # Material aspects GRI aspects Management approach 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Data security Privacy Customer privacy Our approach to data protection Customer privacy Our approach to data protection Network expansion Indirect economic impacts Our approach for infrastructural expansion Service quality Stakeholder engagement Our approach for top service quality ICT solutions for a low-carbon economy Products and services Our approach for sustainable products and services Climate change mitigation Emissions Energy Cybersecurity Customer privacy Talent acquisition, employee retention, develop- ment, and staff reduction Training and further education Employment Our approach to measuring our progress with regard to climate protection Our approach for energy-efficient networks Our approach to data protection Our approach for consumer protection Our approach to training and development Digitalization and the world of work Training and further education Our approach to training and development Electronic waste Waste and waste water Our approach to resource conservation and environ- mental protection Media literacy (including ICT and child safety) Customer health and safety Our approach to social responsibility Employee involvement Supply chain labor standards Employee diversity and anti-discrimination Ethical business practices and compliance Labor/management relations Freedom of association and collective bargai- ning Our approach to employee relations Our approach to protecting human rights Procurement practices Forced or compulsory labor Supplier human rights assessment Non-discrimination Diversity and equal opportunities Socioeconomic compliance Anti-corruption Our approach for sustainable procurement Our approach to protecting human rights Our approach to integrity and compliance Our approach to protecting human rights Our approach to diversity and equal opportunity Our approach to integrity and compliance
STRATEGY IMPACT MEASUREMENT 16 IMPACT MEASUREMENT IMPACT MEASUREMENT AND MANAGEMENT We aim to continuously improve the positive social impact of our prod- ucts, solutions, and activities, and minimize their negative impacts. We have made our contributions to achieving the United Nations Sustaina- ble Development Goals (SDGs) transparent in our reporting since 2015. With the support of internal and external experts, we have also devel- oped an overarching approach we can use to measure the impact of our activities – our blueprint as it were. This is based on a six-tiered formula that enables us to identify and evaluate causal relationships. To ensure transparency and comparability of the results, we use exter- nal frameworks to describe the effects of our contributions. These include both the SDGs and the Universal Declaration of Human Rights. The first step when measuring impact is to examine the consequences that a project, product, or activity (such as switching from paper billing to online billing, for instance) has for material key topics on an ecologi- cal, social, and economic footing. We then use the resultant findings to assess the associated SDG impact from a global perspective and to support the internal management and communication of corresponding activities. IMPACT MEASUREMENT: BROADBAND EXPANSION We examined one of our core topics – broadband expansion. Broadband expansion has a positive impact on many aspects of society and helps to deliver the SDGs. Improved network coverage (SDGs 9 and 17) can create new jobs, as a growing number of new businesses are established, for instance (SDG 8). Average income and gross domestic product also increase as a result. Network expansion also lays the foundation for many other positive effects, such as improved and more equal access to digital services in the educational and health care field for example (SDGs 3, 4, and10). However, network expansion also has negative consequences: On an intermittent and one-off basis, the civil engineering works that have to be undertaken to expand infrastructure consume resources, generate emissions, and infringe on natural habitats. In 2018, we introduced impact measurement for various activities and products. In doing so, we ensured that the methods we use are trans- parent, are based on robust data and assumptions, and are effective for several years. Moreover, we have described the relevant starting point, or baseline, as accurately as possible so that the concrete impact on the SDGs can be evaluated reliably. The results are both qualitative and quantitative in nature and are presented in the following sections. The expansion of higher-performance network infrastructure can lead to increased energy demand. To mitigate these effects, we are expanding our network in an energy- efficient manner and increasingly using renewable energies (SDG 7), which means that, in the long term, the positive impacts will outweigh the negative consequences. IMPACT MEASUREMENT: ONLINE BILLING Gradually switching from paper billing to online billing is a good exam- ple of the sustainability potential inherent in digitalization. We applied our new approach to impact measurement in order to analyze the effects more closely for Deutsche Telekom. This involved assessing the entire impact chain for both paper and online billing. Our comparison shows that the negative environmental conse- quences of online billing are more than 50 percent lower than those associated with paper billing. Striking elements include a lower con- sumption of paper and ink and reduced logistics services (SDGs 3, 6, 7, 8, 9, 11, 12, 13, and 14). We have identified the potential negative consequences of this measure as a drop in sales for the timber and paper industries and logistics sec- tor. However, these consequences are less substantial than the positive effects.
STRATEGY IMPACT MEASUREMENT 17 IMPACT MEASUREMENT: MEDIA LITERACY Turning to the topic of media literacy, we analyzed our Teachtoday initiative. The learning methods employed with Teachtoday appeal to multiple senses. According to our results, which we obtained together with the auditors from PwC, such methods are more than twice as effective as learning methods that only appeal to one sense (SDG 4). IMPACT MEASUREMENT: ECO-CONSCIOUS PACKAGING We are working to reduce as much as possible the amount of materials we use in packaging and in the devices we buy. In 2018, we applied our impact measurement methodology to analyze the effects of packaging improvements for one of our core products. Even before then, we had already started to reduce the amount of packaging used for various products. In 2019 we took this approach further, reducing the amount of packaging materials for more products and switching to alternative packaging materials. For example, by using 100 percent biodegradable PaperFoam for one product, we are saving approximately 95 metric tons of paper and around 200 metric tons of CO2 (per 250,000 packaging units). For 2020, as part of our “We Care for Our Planet” program, we are also planning to redesign the casing of the Speedport 4 router and our media receivers. In the future, they will be made from 100 percent recycled materials. In total, the switchover benefits nine SDGs, with a particularly striking impact on certain sub-goals of SDGs 6, 12, 13, and 14, such as lower- ing water pollution, CO2 emissions, and the use of plastics. IMPACT MEASUREMENT: OUR CONTRIBUTION TO RESPECT FOR HUMAN RIGHTS The following diagram illustrates the positive impact that can be achieved in both our value chain and society through our commitment to human rights. In 2019 we conducted a Human Rights Impact Assessment at unit-Sys- tems in India. It looked at the topics such as working hours, mental and physical stress and work-life balance as well as discrimination and working conditions of employees ou our suppliers.. We developed and introduced a range of improvement measures based on this assessment. Besides changes to the way work is planned, these included various measures for raising awareness, such as workshops designed to explain overtime regulations. With such specific measures we have a chance to have an positive impact on SDGs 3 and 8 and contribute towards the recommendations of the United Nations Office of the High Commissioner for Human Rights.
STRATEGY SUSTAINABLE DEVELOPMENT GOALS 18 SUSTAINABLE DEVELOPMENT GOALS THE GLOBAL DIMENSION TO OUR COMMITMENT – SUSTAINABLE DEVELOPMENT GOALS (SDGS) Deutsche Telekom emphatically supports the UN Sustainable Develop- ment Goals (SDGs). We are already making a contribution with many of our products, solutions, and measures. We also examine how our business activities affect the SDGs as part of our impact assessment. Internally, we use the SDGs effectively in our communication with vari- ous units. They help us clarify how we influence society and the environ- ment and improve our level of awareness when it comes to managing the social impact of our products and solutions. Our transparent external reporting in relation to the SDGs has previ- ously earned special recognition from PwC, among others. In both this CR report and our annual report, we draw attention to our contributions to the SDGs. The relevant sections are marked with the corresponding SDG symbols. Furthermore, we also set out how our commitment to the SDGs benefits the development of Deutsche Telekom. OUR CONTRIBUTION TO THE SUSTAINABLE DEVELOPMENT GOALS Various studies have come to the conclusion that 103 of all 169 sub- goals associated with the SDGs can benefit from the use of ICT. Exam- ples include the study entitled “ICT-centric economic growth, innova- tion, and job creation” published in 2017 by the International Telecom- munication Union and the “SMARTer2030” study launched by the GeSI initiative in 2019. Our network infrastructure offers the technological foundation for diverse and innovative approaches to solving social and ecological challenges – and hence also for achieving many SDGs. That is 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 overview details our contribution to the SDGs and refers to specific examples from the current CR report. Our efforts to support the SDGs also have a positive impact on our com- pany. To highlight the various internal contributions throughout our value chain that help us support the SDGs, we have divided them into five sectors. Each sector has its own logo. These logos appear along- side the SDG symbol in both our annual report and the “Facts & figures” section of the CR report and thus clarify the correlation between the SDG contribution and the relevant internal contribution. Deutsche Telekom’s value contributions
STRATEGY STAKEHOLDER MANAGEMENT 19 STAKEHOLDER MANAGEMENT OUR STAKEHOLDERS Our interaction with stakeholder groups helps us find support for the things that matter to us and makes it easier to identify trends early on, thereby fostering our innovation processes. The following overview sets out who our stakeholders are and what matters to them most: Analysts, investors and their representatives TOP-SUBJECTS: Cyber safety Privacy ICT Solutions for a Low-Carbon Economy Employee involvement Mitigating climate change STAKEHOLDER GROUPS: Private investors Funds, asset managers and analysts (SRI) rating agencies Analyst organizations and associations Institutional investors Customers, potential customers and their representatives TOP-SUBJECTS: Data security Employee involvement Privacy Cyber safety ICT Solutions for a Low-Carbon Economy Stakeholder groups: Youngsters and young adults Families Middle-aged people Senior citizens Small and medium-sized enterprises Large corporations Public authorities Consumer organizations and segment-specific interest groups Telekom Supervisory Board members Business sector and its representatives TOP-SUBJECTS: All top-subjects of the materiality analysis 2019 Stakeholder groups: DAX-listed companies Other large corporations Small and medium-sized enterprises Trade and industry associations Cooperation partners Competitors Science, research and education TOP-SUBJECTS: Employee involvement Socially relevant application of ICT products and services Cyber safety ICT Solutions for a Low-Carbon Economy Privacy Stakeholder groups: 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 TOP-SUBJECTS: Privacy Cyber safety Socially relevant application of ICT products and services Transparency and reporting ICT and child safety
STRATEGY STAKEHOLDER MANAGEMENT 20 Suppliers TOP-SUBJECTS: Privacy Cyber safety Mitigating climate change Talent acquisition, retention, development and staff reduction Data Security Stakeholder groups: Auditors and certification bodies Sub-suppliers Consultants First-tier suppliers Stakeholder 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 TOP-SUBJECTS: All top-subjects of the materiality analysis 2019 Stakeholder groups: 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 Politics TOP-SUBJECTS: Privacy Cyber safety Socially relevant application of ICT products and services Transparency and reporting ICT and child safety Stakeholder groups: Players at national level Embassies and consulates Supervisory and regulatory authorities Communities and their representatives International organizations Players at EU level Employees, potential employees and their representatives TOP-SUBJECTS: Data Security Privacy Cyber safety ICT Solutions for a Low-Carbon Economy Employee involvement Stakeholder groups: Employees Managers Board of Management Applicants and prospective employees Trade unions and works councils Employees and students Endowed chairs Apprentices/trainees
STRATEGY STAKEHOLDER MANAGEMENT 21 FORMATS FOR STAKEHOLDER ENGAGEMENT – MANAGEMENT APPROACH We encourage stakeholder engagement in our corporate activities. With this in mind, we developed a corresponding strategy in 2011. It is based on the three AA1000 principles developed by the NGO AccountAbility: materiality, inclusivity, and responsiveness. Our conformity with these principles was investigated and verified by an auditing firm in 2013. We used a case-based relevance analysis to identify the type and inten- sity of our stakeholder engagement. The more relevant a stakeholder group is to the topic or project concerned, the more intensive the engagement of that stakeholder group can be. Depending on the intensity, we make a distinction between three types of engagement: participation, dialog, and information. OVERVIEW OF MEMBERSHIPS AND COLLABORATIONS Business and industry associations American Chamber of Commerce in Germany Bundesvereinigung der Deutschen Arbeitgeberverbände (BDA, Confederation of German Employers' Associations) BITKOM industry association Corporate Digital Responsibility Initiative European Telecommunications Network Operators’ Association (ETNO) Forum Nachhaltige Entwicklung der Deutschen Wirtschaft e.V. (econsense, Forum for Sustainable Development of German Business) 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 CDP 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 Caring for Climate Joint Audit Cooperation (JAC) Deutsches CSR-Forum (German CSR Forum) nachhaltig.digital (sustainable.digital) Civic and aid organizations Bündnis für Verbraucherbildung (Alliance for consumer education) Charta der digitalen Vernetzung (Charter for Digital Networking) Deutschland sicher im Netz (Making Germany safe on the Net, DsiN) London Benchmark Group Help e.V. aid organization Bundesnetzwerk Bürgerschaftliches Engagement (National Network for Civil Society) 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 Deutschlandstiftung Integration (German Foundation for Integration) Bundesarbeitsgemeinschaft der Senioren-Organisationen (BAGSO – German Association of Senior Citizens' Organizations) Code of Responsible Conduct for Business GIZ Private Sector Advisory Board Together
STRATEGY COMPLIANCE 22 COMPLIANCE HOLISTIC COMPLIANCE MANAGEMENT SYSTEM 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 put in place a compliance management system to anchor lawful and ethical conduct in all areas of the Group. The specific purpose of this system is to ensure compliance risks are successfully tackled and make sure rules and regulations are followed throughout the entire Group. Responsibility for the compliance management system lies with top management. There is also a management position for compliance in every company of Deutsche Telekom. The Group-wide design, develop- ment, and implementation of the compliance management system falls under the remit of the Chief Compliance Officer of Deutsche Telekom AG and the Group Compliance Management unit she runs. We also have dedicated compliance officers (COs) at each of our operating seg- ments and national companies. It is their job to ensure the compliance management system and our compliance goals are implemented on site. At Deutsche Telekom, compliance means following the rules and always doing the right thing. Within the meaning of our five Guiding Principles and Code of Conduct, integrity – which necessarily encom- passes 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 environment. We have derived the following objectives for our compliance work: Preventing compliance violations and unethical business decisions Integrating compliance into business processes at an early stage and on a lasting basis Minimizing liability risks for the company Ensuring Deutsche Telekom is viewed as a dependable partner by its customers Adopting a consistent approach to preventing, identifying, and responding to non-compliance Fostering a compliance culture and ethical conduct COMPLIANCE MANAGEMENT CERTIFICATIONS In 2018, 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. Since 2016 25 international companies have been were certified. The certification focused on processes in Procurement, Sales, HR, and Mergers & Acquisitions, on the one hand, and on events, donations, and sponsorships on the other. The potential danger of corruption is greatest in these areas. Auditors investigated the efficacy of the compli- ance management system and verified it without any reservations. We document details regarding audit content and corporate depart- ments that have undergone anti-corruption audits in our audit report. COMPLIANCE MANAGEMENT ENHANCED WITH RISK ASSESSMENT If we are going to be successful in preventing and countering legal infractions and regulatory breaches, then we need to adopt the correct approach to assessing compliance risks. That is why our compliance management system is centered around an annual compliance risk assessment. To help us carry this out, we have put in place a Group- wide compliance management process, allocated responsibilities, and defined assessment criteria. The individual steps in the compliance risk assessment, all of which are documented transparently, are as follows: The companies that will take part in the compliance risk assessment are selected using a model based around how developed and com- plete their compliance programs are. A total of 80 companies took part in 2019. This equates to a coverage of just under 97 percent in terms of headcount. Responsibility for conducting the compliance risk assessment lies with the respective national company. Our cen- tral compliance organization provides support and advice in these matters. The national companies’ managing boards are responsible for the results of the compliance risk assessment. Activities and responsi- bilities for the following year’s compliance program are developed on the basis of these results. The managing board then passes a formal resolution to approve the program. The compliance program measures are monitored closely. We use the Group risk map to assess risks that are particularly sig- nificant to our company. The risk map enables Deutsche Telekom’s companies, with their various business models, to conduct system- atic risk analyses. It currently covers 27 core risk categories, ranging from corruption and anti-trust law violations to contraventions of the Code of Human Rights & Social Principles. Each national company
STRATEGY COMPLIANCE 23 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. A CLEAR REFERENCE FRAMEWORK: OUR CODE OF CONDUCT Integrity, respect, and compliance with the law – these are the principles on which Deutsche Telekom’s business activities are based. Our Code of Conduct is the central reference framework for completely lawful and ethical conduct. It makes a significant contribution to our business suc- cess by providing a solid foundation for our business activities. RAISING AWARENESS OF COMPLIANCE RISKS AMONG STAFF We aim to ensure the conduct of our employees in their day-to-day work is always ethical and lawful, which is why we implement the following measures across the entire Group: Annual compliance risk assessment (CRA), which we use to identify and assess compliance risks and specify key areas for suitable pre- ventive measures. Any weaknesses identified in the internal control system during the investigation are systematically analyzed and remedied. Deutsche Telekom is party to proceedings both in and out of court with government agencies, competitors, and other parties. We have reported on what Deutsche Telekom views as key processes in the 2019 annual report. “TELL ME!” WHISTLEBLOWER PORTAL We have created the “Tell me!” whistleblower portal to uncover non- compliance. Both our employees and external parties such as business partners and customers can use the portal to report misconduct – and can do so anonymously. We have introduced a Group-wide reporting process to control and monitor these activities. In 2019, 122 compliance-related reports were made to Deutsche Tele- kom via the “Tell me!” portal (137 reports were made in the previous year). 27 of those are still being reviewed for plausibility and investiga- tions are being made into 60 plausible reports (as of December 31, 2019). A total of 38 were confirmed as actual misconduct and were prosecuted accordingly. 13 cases are currently still being investigated. Preventive measures that are combined in a compliance program. Most of the tip-offs received in 2019 focused on “financial interests” A Group-wide Code of Conduct that sets out clearly how our employees are expected to behave. Compliance-related Group policies on areas such as anti-corruption, gifts, invitations, and events, as well as on dealings with consultants and agents. (possible cases of fraud, breach of trust, misappropriation, theft, manipulation of targets, and unfair sales methods). In confirmed cases, we impose systematic sanctions that are pro- portionate to the act and the guilt of the perpetrator and are in line with applicable legal provisions. Naturally, we always follow up on all compliance-related tip-offs, A policies database that helps staff find and implement applicable even those that reach us through other channels. regulations. Regular compliance and anti-corruption training (see GRI 205-2). The “Ask me!” portal for questions relating to compliance. The por- tal contains FAQs with example cases, as well as information on laws, internal policies, and behavioral standards. It also gives users the opportunity to contact the “Ask me!” advisory team, which will provide reliable answers if they are unsure about what to do in a particular situation. The number of inquiries and the topics covered can be viewed here. Reports (overall) Compliance relevant tip-offs thereof anonymous tip-offs confirmed misconduct in investigation non-plausible/proven tip-offs 2019 2018 2017 1 058 122 61 38 13 35 953 137 76 46 9 40 1 706 146 87 43 12 44 SYSTEMATIC HANDLING OF INFRACTIONS We always investigate tip-offs about a breach of statutory or internal regulations when there is a sufficiently tangible description of the matter at hand. Among other things, we run a whistleblower portal called “Tell me!” as a means of accepting tip-offs. Hints: Most of the reports submitted in 2019 were related to fraud, breach of trust, embezzlement, theft, target manipulation and unfair sales practices. Tipp-offs reported to portals in a business unit are only counted for the central Tell me! portal if Group relevant. All tip-offs are carefully investigated. Any violations we uncover are punished appropriately. In some cases employment relationships have even been terminated for good cause. Claims for damages may also be asserted. CURRENT MEASURES TO STRENGTHEN COMPANY CULTURE In 2016 we started the Compliance-based Corporate Culture initiative with the intention of encouraging integrity and a constructive speak-up culture within our company. Based on an employee survey in the follow- ing year, a comprehensive set of measures was put together and then rolled out in 2018 and 2019.
STRATEGY COMPLIANCE 24 The Speak-Up Culture initiative: Employees are encouraged to openly address grievances in critical situations, just as managers should be open to hearing these grievances. To help with this, “Speak Up!” training courses are offered on an international scale, in which employees learn communication techniques for use in diffi- cult situations. By the end of 2019, approximately 3,000 employees had taken part in one of these courses in Germany alone. “Ethical Leadership” training courses help our managers reflect on their own ethical conduct. So far, around 400 managers have taken part in one of these courses. In 2019, we introduced an e-learning and self-reflection tool for managers and project managers that helps them foster a speak-up culture in their teams and enhance their own ethical leadership behavior. Employee surveys: in 2019 we carried out a follow-up survey on our compliance culture and a good 46,000 employees took part. THE RESULTS OF OUR EMPLOYEE STUDY ON THE CULTURE OF COMPLIANCE In 2019, as part of the Compliance-based Company Culture initiative, we conducted our second ever international employee survey on com- pliance. The aim was to reassess how our compliance culture had developed since the last survey was conducted in 2017. The European School of Management and Technology (ESMT Berlin) and Hertie School of Governance were our research partners for the first, extensive study. Some 46,000 Deutsche Telekom employees took part in the lat- est survey – more than participated in the first. The initiative is sup- ported by an expert committee created specifically for this purpose. The committee is comprised of Deutsche Telekom employees as well as representatives from non-governmental organizations, the business and scientific communities, and society. The results have improved compared to 2017. Some 98 percent of those surveyed said they are committed to the rules at Deutsche Telekom and are unwilling to conduct themselves in an unethical manner (97 percent in 2017). Accordingly, the vast majority stand by their own values and would not stray from them, even under pressure. A total of 88 percent indicated that their manager sets a good example for ethical conduct. Just under 90 percent said they are well informed by the company as regards appropriate conduct at work and that they feel well prepared to deal with ethically dubious situations. A clear majority of survey respondents stated that the company management team sets a good example for ethical conduct. Weaknesses were identified with regard to feedback culture. A number of employees said they did not feel comfortable expressing their opinion openly. The weaknesses identified were the subject of intensive discussion on the Board of Management and a set of measures was developed to address them. The aim of these measures is to further reinforce the val- ues-based compliance culture in the Group and carry forward the cur- rent, overwhelmingly positive trend. One of the measures was the intro- duction of the “Managing Dilemmas” virtual reality program. The aim behind this program is to make it easier for staff to identify critical situa- tions and adopt the correct approach in these scenarios. A “speak-up culture” is also being promoted with measures such as the launch of a new e-learning program. BREAKING DOWN BARRIERS – WORLDWIDE COOPERATION FOR COMPLIANCE Different legal practices and cultural values in the countries where Deutsche Telekom is active represent a significant challenge for compliance. 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 also promote Group- wide compliance cooperation through meetings of the representatives of all compliance organizations from our international subsidiaries. We are working with other parties in national and international organiza- tions and professional circles, which involves discussing compliance issues, among other things. We also actively contribute to the ongoing development of compliance, for example by giving specialist presenta- tions and releasing publications. COMMITMENT TO ANTI-CORRUPTION INITIATIVES Deutsche Telekom AG regularly contributes to national and interna- tional organizations that focus primarily on compliance issues. As a member of associations and organizations such as the Compliance & Integrity forum of ZfW (Center for Business Ethics) and BITKOM (Fed- eral Association for Information Technology, Telecommunications, and New Media), we make use of the opportunity to exchange ideas and experiences related to compliance. RESPONSIBLE USE OF ARTIFICIAL INTELLIGENCE (AI) In 2018, with Group Compliance Management taking the lead, we intro- duced guiding principles for the ethical use of artificial intelligence (AI). These principles clarify how we at Deutsche Telekom aim to use AI responsibly and develop our AI-based products and services in the future. We do not claim that these guidelines constitute universally applicable rules on the responsible use of AI. Instead, we aim to continuously develop these guidelines in partnership with our employees and external stakeholders, anchoring them in our company. In 2019, we carried out activities such as training and workshops on implementing the guidelines, held a conference on digital ethics, pro- vided employees with comprehensive information through a range of formats, integrated the AI guidelines into contract-relevant provisions for our suppliers, and developed an internal test seal for ethical AI products. AI applications that satisfy our high standards carry the seal.
STRATEGY POLITICAL ADVOCACY 25 POLITICAL ADVOCACY COMMITMENT TO CONSUMERS Deutsche Telekom aims to become the leading European telco. That is why we again gave high priority to consumer-related topics in 2019. in Brussels. Within the context of our collaboration efforts in associa- tions and other bodies, we feel that we are under the obligation to comply with all ethical codes and legal provisions. Main topics included: In 2019, our political advocacy work focused on the following key issues: Framework for broadband and fiber-optic build-out 5G frequency auction Mobile strategy for Germany Data economy and artificial intelligence Secure networks and cybersecurity Digital self-determination Sustainability ASSOCIATION FEES – THE MAIN POLITICAL ADVOCACY OUTLAY Active involvement in associations is the cornerstone of our political advocacy work. Accordingly, all the various membership fees (for umbrella/trade/industry associations etc.) account for the majority of our outlay in this area. To make our involvement transparent, an overview of the main fees paid in the past three years is provided below. Maintaining data privacy for consumers (e.g., in online advertising). Improving comprehensive, cross-technology protection of young people at national and EU levels (in particular by advancing a com- prehensive, 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 the ongoing IP migration and when switching providers for fixed-line and mobile connections). Striving to provide better transparency for our customers (e.g., the data protection one-pager and the product information sheet on the Transparency Ordinance). Within the scope of IP migration in the fixed-line network, we have switched 98 percent of our customers to IP in the last five years and taken numerous measures to make the migration as easy and seamless as possible for customers. The IP migration is nearing completion. Only voice connections will still need to be migrated in 2020. We are also continuing our commitment in issues of provider switching, with the goal being to make it easier for both fixed-network and mobile consumers to switch providers, largely without any service interruptions. In all these areas, Deutsche Telekom stands for a constructive and solu- tion-oriented approach that is geared to both consumer interests and the interests of our company. POLITICAL ADVOCACY 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
STRATEGY POLITICAL ADVOCACY 26 OUR POSITION ON BROADBAND – INVESTMENT INCENTIVES ARE NEEDED 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 making considerable contributions for years by investing heavily in the infrastructure for mobile internet and the fixed-line network, including with optical fiber. We show more commitment than any other company to providing full-area coverage, including in rural areas. Building on the best effort internet, we are developing an innovative network architecture – 5G networks – which can better and more flexi- bly meet the various transmission quality requirements of specific services. We thereby fulfill business and regulatory requirements and enable innovation in the services we offer on our networks. Content is not monitored, nor do we have any influence over user or provider content. When competing with other network operators, we will con- tinue to market services with guaranteed quality features exclusively on a non-discriminatory basis. In order to drive network expansion, network operators in Germany need investment incentives, legal and regulatory planning security, and technological freedom of action. That enables them to respond flexibly to the circumstances of enterprises and households and meet political, economic, and social requirements. This is the only way to fully harness the potential for cost-effective private network expansion using all avail- able technologies. When it comes to areas where cost-effective broad- band expansion is not possible, it is down to the public sector to ensure the gaps are plugged by providing technology and supplier-neutral funding programs and exercising sound judgment. Legal frameworks and regulatory practice need to actively support private-sector invest- ment in new fiber-optic networks and prevent unnecessary financial burdens and red tape for the network operators investing in networks. In view of the fact that the internet and telecommunications markets are converging rapidly and in light of the growing market power of a few global internet players, the sector-specific regulation of telecommunica- tions that has been pursued to date is creating more and more of an imbalance. The same laws and regulations that apply to telecommuni- cations companies also need to apply to internet companies providing the same services. The objective here must be to create equal competi- tive conditions and enable fair distribution of the financial burden involved in broadband expansion. OUR POSITION ON NETWORK NEUTRALITY – THE INTERNET SHOULD STAY OPEN As part of the EU Telecoms Package, regulations on the open internet were adopted and came into effect on April 30, 2016. The regulations particularly address permitted traffic management and transparency requirements and limit commercial product 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. This means that data on the Internet are processed without preferential treatment and forwarded in the best pos- sible way. We are continuing to gradually expand our infrastructure so that we can cope with rapidly increasing amounts of data traffic and facilitate innovation in our network. As a result, we are satisfying our customers’ growing demands and meeting the expectations of online content and application providers, who want to be able to provide their services in high quality both now and in the future.
STRATEGY SUSTAINABILITY STANDARDS 27 SUSTAINABILITY STANDARDS UN GLOBAL COMPACT – COMMUNICATION ON PROGRESS This CR report also serves as a CoP (communication on progress) from Deutsche Telekom as part of the United Nations Global Compact. The table refers to the text passages in which we provide information about our commitment to implementing the ten principles of the Global Compact in this CR report and in other Group publications, thereby also meeting the expanded Global Compact Advanced criteria. 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’ commitment to sustainability transparent and compa- rable under a binding framework.Deutsche Telekom’s declarations of conformity for 2019 will be set out here.The German Sustainability Code was approved by the federal government’s Council for Sustaina- ble Development. Deutsche Telekom was one of the first companies to accede to the Sustainability Code. GRI-INDEX The 2019 CR Report of Deutsche Telekom was created in line with the Global Reporting Initiative (GRI) guidelines and in compliance with the "Core" option. In the GRI content index below we refer to content pertaining to general and specific standard disclosures and explain this content when neces- sary. The standard disclosures are based on the very relevant aspects identified in our materiality process. Selected content from different action areas and information on the materiality process was subjected to an assurance engagement and are identified with a in the index. The index also contains links and explanations to other GRI aspects that are included in the report.
STRATEGY AWARDS AWARDS 28 DEUTSCHE TELEKOM RATED ONE OF THE MOST ETHICAL COMPANIES IN THE WORLD IN 2019 In 2019, the Arizona-based Ethisphere Institute ranked Deutsche Telekom as one of the world’s most ethical companies for the second time. We are the only company in Germany to have been presented with the Ethisphere Award multiple times in succession. Ethisphere commends the excellent performance of companies with the highest ethical competence worldwide. AWARD FOR CLIMATE PROTECTION ALONG THE SUPPLY CHAIN Working on behalf of investors, the non-governmental organization CDP regularly assesses the climate protection activities of listed companies worldwide and compiles an index of leading companies, referred to as the A List. In 2019, Deutsche Telekom featured in this list for the fourth time in a row. The CDP Supply Chain Coverage ESG KPI was reported externally for the first time in 2017. It indicates the degree to which our procurement volume from carbon-intensive suppliers is covered by the CDP Supply Chain Program. As part of the CDP’s supplier program, companies ask their key suppli- ers about their emissions and their climate strategy. We use this pro- gram in order to survey our suppliers. In 2019, we invited 379 suppliers to participate in the CDP Supply Chain Program. These suppliers cover 80 percent of our procurement volume. A total of 204 suppliers took part in the program. They cover 63 percent of the procurement volume (2018: 71.35 percent). Our goal is to cover 70 percent of our carbon- intensive suppliers by 2020. At the same time, we have disclosed our own commitment to climate protection to eight suppliers through this program. Through our commitment to climate transparency in supply chains, we were once again awarded a place in the Supplier Engagement Leader Board in 2019. We intend to continue helping our suppliers to reduce their emissions. The first workshops for this purpose were held in 2019 with selected suppliers. Throughout 2020, we aim to further intensify our dialog with suppliers about reducing emissions in our shared value chain. AWARDS FOR SOCIAL COMMITMENT Comenius EduMedia Seal for Teachtoday In 2019, Teachtoday was awarded two “Comenius EduMedia Seals” by Gesellschaft für Pädagogik und Informationt e.V. (Association for Teach- ing and Information). The initiative impressed an international panel of judges with its Teachtoday online portal and the SCROLLER magazine. The quality of the educational media earned both elements of the initia- tive a seal each in the category of “Communication, media, and adult education.” FOX AWARDS for Scroller dapamedien Verlags KG has been presenting the FOX AWARD to trend setters in marketing and communications since 2011. In 2019, the SCROLLER magazine for children won a silver FOX Award in the cate- gory “Industry, technology, production – internal communication” for its communication concept. It also won silver in the FOX Visual category for its design. German Design Award for Scroller information movie In 2019, the SCROLLER animation series “Did you know?” won the German Design Award in the “Excellent Communications Design / Audi- ovisual” category. The prize, which is presented by the German Design Council, is awarded each year to innovative products and projects that are leading the way in design. German Reading Foundation quality seal for Scroller In 2019, Stiftung Lesen, the German Reading Foundation conferred its quality seal on the children’s magazine SCROLLER, part of the Teachto- day initiative. Their reasoning was: “Engaging, clear layout. Good overall concept. This publication was sorely needed!” AWARDS FOR OUR SERVICE TÜV quality seal for “tested customer satisfaction” For the seventh time in a row, TÜV Rheinland awarded our hotline, our technical service, and the Deutsche Telekom shops the coveted “tested customer satisfaction” quality seal based on a representative survey. Some 2,550 customers in Germany were polled for the study in a representative random sam- pling. With an average grade of 2.0 or better in each case, we achieved the best result since measurements started being taken. “King of Service” In 2019, Deutsche Telekom once again took first place in the customer satisfaction survey conducted by Focus Money. The trade magazine collected more than 275,000 customer votes for its survey. The test question was “which company do you think offers the best service?” Deutsche Telekom came out top for the telecommunica- tions sector, both on a national level and in 51 out of 56 cities. CHIP hotline test 2019 The trade magazine CHIP put the hotlines of 12 different sectors through their paces over several weeks. The testers made 8,906 calls and carried out 1,670 detailed interviews. The Deutsche Telekom hotlines for fixed-line network, mobile, and MagentaTV came out as winners. We achieved the top grade of 1.0 in three evaluation categories (service, wait time, transparency).
STRATEGY AWARDS 29 Connect mobile network hotline test 2019 Connect magazine conducts an annual review of broadband/fixed network hotlines from various provid- ers. Its 2019 test confirmed that Deutsche Telekom has the best fixed network infrastructure as well as the best hotline. Aspects such as accessibility, wait time, costs, friendliness of employees, and the quality of information were assessed. Connect service apps 2019 The trade magazine Connect tested the service apps of telecommunications service providers in Germany, Aus- tria, and Switzerland in 2019. With a total of 431 points, the “Mein Magenta” app was declared the winner for Germany. Connect looked at three categories – functionality and han- dling, service, and security. Best service quality in TESTBild In 2019, TESTBild magazine used a reader panel to examine the service quality of several industries. Deutsche Telekom was the clear test winner in the mobile category. More than 20,000 participants sub- mitted their ratings for this service test. Digital customer champion! According to a study by management consultants BearingPoint, Deutsche Telekom is the “Digital Leader in Europe.” As part of an industry-wide comparison, we took first or second place in four of the six categories that were rated, thereby securing first place in the overall evaluation, ahead of the other 75 companies that were analyzed. AWARDS FOR THE MOBILE NETWORK IN GERMANY Chip (edition 1/2020) We won the CHIP mobile network test for the tenth time in a row in 2020 and were declared the best network. Connect mobile network test (edition: 1/2020) We were the overall winner of the 2020 Connect mobile network test, with a rating of “very good”. Testing focused on the performance and reliability of the networks for voice and data.
ECONOMY SUSTAINABLE FINANCE 30 SUSTAINABLE FINANCE SOCIALLY RESPONSIBLE INVESTMENT SRI investment products consist of securities from companies that have passed an audit based on environmental, social, and governance (ESG) criteria. The development of demand from socially responsible investors for T-Shares serves as an indicator we can use to assess our sustainabil- ity performance. With our Socially Responsible Investment ESG KPI we measure how the financial markets perceive our CR activities. The concept of the United Nations’ Sustainable Development Goals (SDGs) is an increasingly popular topic among investors. This is espe- cially true with regard to the future orientation of the SDGs. To assess the impact of our activities on the SDGs and put it into quantifiable terms, we conducted an impact measurement project in 2018. T-SHARES IN SUSTAINABILITY RATINGS AND INDEXES As part of our CR strategy, we focus on specific rating inquiries, choosing them on the basis of reputation, relevance, and independ- ence. Examples include ratings from RobecoSAM, Sustainalytics, and oekom. In 2018, as part of its biennial analyses, the rating agency oekom once again singled us out as the world’s best telecommunications company for our ecological and social performance. Moreover, T-Shares were again listed on leading sustainability indices, including RobecoSAM’s prominent DJSI World and DJSI Europe. Our shares were also listed yet again in the FTSE4Good index (for the eighth year running) and the UN Global Compact 100 index. For further T-Share listings, please consult the table below. In the reporting year, our shares also made their way into four other sus- tainability indices: the Euronext Vigeo Europe 120, the Euronext Vigeo Eurozone 120, the S&P Europe 350 ESG by RobecoSAM, and the EURO STOXX 50 ESG by Sustainalytics. Furthermore, at the beginning of 2019 we were once again named one of the most ethical companies worldwide by Ethisphere, an institute that promotes ethical business methods. 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. („SRI Investment“; SRI for „Socially Responsible Investment“) And our commitment for more sustainability pays off: As of September 30, 2019,18 percent of all T-Shares were held by investors who partially take environmental, social, and governance criteria into account for their investment strategy; 3 percent were held by investors who manage their funds primarily in accordance with SRI aspects. Our ambition: increase KPI
ECONOMY SUSTAINABLE FINANCE 31 As the basis of calculation is updated annually, year-on-year compari- sons may be of limited value. (Source: Ipreo until 2016; from 2017 Nasdaq based on data of Thomson Reuters) 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. SUSTAINABLE INVESTMENT AT DEUTSCHE TELEKOM We apply our sustainability principles to the assets held in the Deutsche Telekom Pension Fund too. We have pursued a sustainable investment strategy for the selection of these capital assets since 2013. Besides financial aspects, we also factor in ecological and social principles and guidelines for good corporate governance. This encompasses: Targeted efforts to achieve the Sustainable Development Goals (SDGs) by exercising our rights to have a say in decisions as a shareholder General ban on all investments in companies that manufacture or do business with “controversial weapons” (e.g., anti-personnel mines, cluster munitions, nuclear weapons, biological or chemical weapons) Ban on investments in companies that have repeatedly violated the principles of the UN Global Compact Our best-in-class approach: Selected investment managers with ESG expertise make targeted investments in companies that are the best in their sector in terms of sustainability performance We aspire to reconcile attractive profit expectations with sustainable values We live up to our fiduciary responsibility toward our employees regard- ing capital investment by investing in stable values. Above and beyond this, we strive to avoid reputational risks and minimize major risks of loss. INVESTOR COMMUNICATION More and more investors and rating agencies are interested in receiving information about our CR activities, and there is a noticeable trend toward integrating SRI approaches into classic investment strategies. We use different formats – both in our reporting and in direct dialog – to inform SRI analysts and investors of our CR activities. In addition to our corporate responsibility report, we also publish a non- financial statement and key ESG KPIs in our annual report. Financial market players interested in sustainability can also review ESG informa- tion in the Socially Responsible Investment (SRI) section on our investor relations portal. We seek to engage with investors on a personal level, host Socially Responsible Investment (SRI) roadshows, and regularly accept invita- tions to present our CR strategy as a best practice at roadshows and conferences. We also provide interested investors with information in conference calls, answer numerous direct requests for information, and take part in SRI conferences. TAX POLICY GUIDELINES The Group Tax department is responsible for ensuring that the Deutsche Telekom Group pays taxes and duties at the national and international level in accordance with the applicable laws. It is the task of Group Tax to take measures that the Deutsche Telekom Group complies with all its tax obligations in Germany and abroad, in particular that it pays taxes in accordance with the local laws and regu- lations applicable to the individual Group entities. This includes the Group's income taxes, which must also be regularly reported in our IFRS financial statements, as well as, for example, VAT and wage taxes payable within the context of customer transactions and for Group employees. Group Tax also ensures that the Deutsche Telekom Group has an effi- cient tax structure within the framework of German and foreign tax laws as applicable in each country, i.e., that the Group does not carry any unnecessary tax burden. The goal is to achieve sustainable tax effi- ciency for the Group, which requires a transparent, trust-based coopera- tion with local tax authorities. The sustainable capital investment strategy for the Deutsche Telekom Pension Fund received praise from experts in 2019, when we came second in the “ESG Implementation” category at the Institutional Assets Awards organized by the specialist publishing house of German news- paper Frankfurter Allgemeine Zeitung. The award recognizes successful investment strategies that have been implemented in a particularly coherent manner. In addition, Group Tax undertakes to contribute to the greatest extent 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, Group Tax is particularly focused on clarifying upfront any unresolved tax law-related issues as well as providing practical solutions to meeting all applicable tax requirements. Since 2019, Deutsche Telekom’s capital investments (DT Trust) have also been geared toward ecological and social standards. The DT Trust is based on the criteria for Norway’s Government Pension Fund (“Norges”). Among other things, companies that violate human rights, manufacture certain weapons, or whose core business is considered harmful to the environment are excluded. We are currently drawing up further sustainable finance models in a joint project involving the Corporate Responsibility and Treasury units. The tax strategy – Tax Compliance, Sustainable Tax Efficiency, Tax as Valued Business Partner – was also adopted by the Deutsche Telekom Board of Management. For detailed information on the work of Group Tax, its principles, and its responsible approach to tax, please see the related document.
ECONOMY SUSTAINABLE FINANCE 32 Deutsche Telekom participates in initiatives for the development and establishment of a comprehensive approach regarding the determina- tion and publication by enterprises and groups of meaningful informa- tion relating to tax matters. The aim is to give a full and differentiated view of the various contributions to the financing of the public domain that are made in connection with or otherwise result from enterprises and entrepreneurial activities. In this respect, Deutsche Telekom deter- mines the so-called „Total Tax Contribution“ for the main European group companies in the telecommunications sector. This approach is explained in more detail in the attached document on Total Tax Contri- bution, which also contains the respective information relating to Deutsche Telekom. Deutsche Telekom intends to determine and pub- lish such information also with respect to subsequent years. TOTAL TAX CONTRIBUTION With its participation in a survey carried out by PwC regarding the Total Tax Contribution, Deutsche Telekom supports an initiative of the Euro- pean Business Tax Forum (EBTF) for the development and establish- ment of a comprehensive approach regarding the determination and publication of information relating to enterprises with respect to tax. In this context Deutsche Telekom has taken the main European group companies in the telecommunications sector into account. At the pre- sent time the information for the reporting year 2018 is available. Deutsche Telekom intends to determine and publish such information also relating to subsequent years. Put simply, the Total Tax Contribution addresses the contributions as a whole to the financing of public domain that are made in connection with, or are a result of enterprises and entrepreneurial activities. In this respect not only are the taxes levied on the profit of the enterprise or group of companies taken into account, further taxes are also addressed, which can be quite substantial, in particular also in the tele- communications sector. Moreover, the so-called “Taxes Borne” as well as so-called “Taxes Collected” are included in the approach in order to comprehensively visualize the financial weight of the enterprise and its activity for the public domain. For example, it also illustrates theaspects of employment and value-added through the presentation of wage taxes, social contributions and value-added taxes. As a consequence, a differentiated and therefore meaningful picture results regarding the positive financial impact on the public community in connection with the enterprise and its activity. In addition this approach can also show national differences in the tax frameworks. Further information regarding the EBTF as well as the PwC survey can be found at https://ebtforum.org/wp-content/uploads/2019/12/Total- Tax-Contribution-A-study-of-the-largest-companies-in-the-EU-and-EFTA- Full-report.pdf and https://www.pwc.com/gx/en/services/tax/publica- tions/total-tax-contribution-framework.html. Under both links, explana- tions and details regarding the definition of the Total Tax Contribution are also given, for example with respect to the concepts of Taxes Col- lected and Taxes Borne and further breakdowns of the Total Tax Contri- bution, as well as a presentation of the findings of the survey carried out by PwC. For 2018 in relation to Deutsche Telekom and for the included group companies (telecommunication sector, Europe, materiality) the Total Tax Contribution was 8.6 bn EUR, consisting of 2.1 bn EUR of Taxes Borne and 6.5 bn EUR of Taxes Collected. With respect to Germany the Total Tax Contribution was approx. 5.7 bn EUR, the Total Tax Contribution relating to all further material European telecommunication group com- panies included in the study (except for Germany) combined amounted to approx. 2.9 bn EUR. The following charts show the Total Tax Contri- bution of the group companies addressed. RESEARCH AND DEVELOPMENT As a telecommunications business, we naturally support ongoing research. The escalating number of inquiries about our research efforts proves we are right to do so. Deutsche Telekom promotes research in a number of ways. Since 2015, for instance, we have supported dementia research through the Sea Hero Quest project, in which a smartphone game records spatial navi- gation data to support scientists in the battle against dementia. We also collaborate with a large number of universities. In 2019, for example, we established a professorship for software engineering (with a focus on blockchain) at the CODE University of Applied Sciences in Berlin. Furthermore, we invest in various fields of research such as the Internet of Things. We invested a total of 45.5 million euros in research and development throughout the Group in 2019. In addition, we support innovative business ideas at “hubraum”, our start-up incubator.
ECONOMY SUPPLIERS 33 SUPPLIERS OUR APPROACH FOR SUSTAINABLE PROCUREMENT Encompassing the entire procurement process, our Group-wide sustain- able procurement strategy is put into action using internal and external performance indicators and management tools. The responsibility for ensuring sustainability in procurement lies with the Board departments for Finance as well as Human Resources and Legal Affairs. Our sustainability criteria are factored into the overall procurement process and given a weighting of 10 percent when choosing suppliers who have responded to tenders. In the event of a significant violation of our requirements, we initiate an escalation process. We train our employees throughout the Group using an e-learning tool. In addition, our Global Procurement Policy provides an over- view of which CR criteria must be considered at which point in the procurement process. The Supplier Code of Conduct forms part of our General Terms and Conditions for Purchasing, but does not, of course, replace the laws and regulations of countries in which our suppliers operate. Rather, it is designed to facilitate compliance with these laws and regulations and ensure that they are implemented faithfully and effectively. Since 2014, we have offered online compliance training for our suppliers. We select our business partners in line with compliance criteria, and conduct risk-oriented compliance business assessments for this pur- pose. Besides customers and suppliers, this also concerns consultants (Consultant Policy), sales agents, development partners, and joint ven- ture partners. 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 ensure business partners and suppliers are up to the mark by offering workshops on specific topics and through our Supplier Development Program. In 2020, we will adopt a somewhat different approach to generating the KPIs for sustainable procurement so that we continue to meet current requirements. SUPPLIER COMPLIANCE We have also drawn up a Code of Conduct for our suppliers to place them under an obligation to uphold the principles and values anchored in our Code of Conduct and in the “Code of Human Rights & Social Principles.” We expect our suppliers to impose the same requirements on their subcontractors, too. Deutsche Telekom suppliers are also under the obligation to do everything necessary to prevent active and passive forms of corruption. 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 standards 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.
ECONOMY SUPPLIERS 34 As a rule, we use a three-step approach to minimize risks and encour- age our suppliers to improve their practices. Leading up to the supplier evaluation, we rate our categories as critical or non-critical based on risk and opportunity (classification). Risk categories 2019: 6,208 suppliers (20.6 percent of the procurement volume) Non-risk categories 2019: 32,365 suppliers (79.4 percent of the procurement volume) We classify products based on risk and opportunity analyses, taking into consideration a wide range of sustainability aspects and risks, including risks of forced/child labor or environmental pollution, as well as opportunities such as the potential to reduce energy consumption. 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 Add ed 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). CR-QUALIFIED TOP 200 SUPPLIERS ESG KPI The ESG KPI „CR-Qualified Top 200 Suppliers“ is an internal manage- ment indicator which complements the ESG KPI “Sustainable Procure- ment”. While the ESG KPI “Sustainable Procurement” measures the share of procurement volume reviewed according to sustainability crite- ria, the KPI “CR-Qualified Top 200 Suppliers” reflects the share of sup- pliers from the Top 200 Suppliers pool. These are reviewed based on sustainability criteria according to Self-Assessments, Audits, Supplier Sustainability Workshops and Supplier Development Programs. The share of CR-qualified suppliers taken from the Top 200 pool amounts to 87 percent in 2019. Thus, our target to reach 75 percent by 2020 is already exceeded. In 2020, we will adopt a somewhat different approach to generating the KPIs for sustainable procurement so that we continue to meet current requirements. ESCALATION PROCESS In the event of a significant violation of our requirements, we initiate an escalation process. The escalation process comes into effect whenever a supplier refuses to meet our sustainability requirements in full and to our satisfaction. The procurement organization is primarily responsible for the process, with the GCR unit always on hand to offer advice and support. If the focused discussions held with the relevant supplier on various levels during the escalation process do not lead to the desired outcome, the last resort is to involve the Board of Management. The Board will then make the final decision about how to proceed with the supplier. In the worst case, this could lead to the business relationship with the supplier being terminated. If someone in our supply chain identifies irregularities regarding compli- ance with laws, internal guidelines, and standards of conduct, they can report these anonymously using our Tell me! portal, which is publicly accessible to all our stakeholders. SCORES IN SUSTAINABILITY RANKINGS Every year, leading rating agencies measure the sustainability perfor- mance of large enterprises. Deutsche Telekom scored 83 out of 100 points in the supply chain management category of the 2019 Robe- coSAM Corporate Sustainability Assessment. This makes us one of the leading companies in the ICT sector. SUPPLY CHAIN MANAGEMENT Before doing business with us, every supplier must initially register in our supplier pool. Those who do are fully informed of Deutsche Telekom’s fundamental principles and values regarding corporate responsibility and sustainability.
ECONOMY SUPPLIERS 35 RISK MONITORING In 2018, we established a comprehensive risk monitoring scheme for supplier procurement, subjecting the existing supplier basis to an extended risk analysis. The first step is to classify suppliers (segmenta- tion) based on criteria such as: Procurement volume Critical components Dependence on suppliers Depending on the segmentation result, appropriate risk monitoring is subsequently carried out: Basic monitoring:Financial, CSR, and compliance scoring is performed (by an external audit firm) for all suppliers within the scope of an ongoing review process. AUDITING PROCEDURES Our auditing activities center primarily on strategically important and/or particularly risky supplier groups. As part of these efforts, we focus on roughly 250 of our 30,000 or so suppliers, which are routinely audited every two to three years. These 250 suppliers already cover around 80 percent of our procurement volume, giving us transparency about the risks in large parts of our supply chain. The majority of these audits are conducted within the scope of the Joint Audit Cooperation (JAC). The audits cover the following areas: Labor standards Social standards Living standards Environmental requirements The JAC Guidelines require, among other things, that our suppliers: Pay a fair wage that enables employees to enjoy a decent standard of living. Active risk monitoring:Suppliers exhibiting the greatest risk are Respect the right to freedom of association and collective bargain- subject to additional active monitoring with regard to other, global risks (e.g., natural disasters, political risks). ing, and provide a healthy, safe working environment. 2019 SUPPLIER SUSTAINABILITY REVIEWS (EXCL. T-MOBILE USA) In 2019, external auditing firms conducted 84 on-site social audits on our behalf – 26 at our direct and 58 at our 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 contacts in key functions are present for the audit. In 2019, we also commissioned qualified supplier experts to conduct another 20 internal audits. On top of that, we completed 20 mobile surveys, which give our suppliers’ employees the opportunity to provide anonymous information about the social and ecological situation at their company. The surveys are primarily used to gain an initial impression of the local working con- ditions in order to then initiate further measures as needed, such as dedicated on-site reviews (social audits). Do not exceed a 48-hour working week and a weekly maximum of twelve hours’ overtime, and grant at least one free day after six con- secutive days of working. Compliance with all these requirements is regularly reviewed by means of on-site audits, during which the features and quality of the working, sleeping, and cafeteria areas are also inspected. Deutsche Telekom does not require its suppliers to obtain external environmental or social certification. But if suppliers cannot show any environmental and social accountability certificates, we do expect com- parable management systems to be used. Our auditing experience shows, however, that the majority of our relevant manufacturing suppli- ers have an external certificate or comparable management systems.
ECONOMY SUPPLIERS 36 Verification of important social and ecological aspects as well as funda- mental human rights during our audits is in line with internationally rec- ognized guidelines and standards such as the ILO core labour stand- ards, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. 2019 AUDIT RESULTS In the audit program, which was established and is controlled at the Group level, a total of 84 audits were carried out in 2019. As in previous years, we concentrated our auditing activities on suppli- ers in Asia, Latin America, Southern Europe, 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, bribery, or critical violations of compli- ance policies or the right to intellectual property were found. Area Findings at suppliers Initiated improvements Status (end of 2019) Child Labor Based on onsite observations Implementation of a new man- Closed & Juvenile and worker interviews, two agement and monitoring sys- Workers juvenile workers were found in tem for juvenile workers a soldering station which repre- including training of line man- sents a hazardous task and a gers to avoid placement of violation of national legislation. young workers in hazardous working stations. Factory did not provide valid Fire inspection certificates Closed fire inspection certificate for available now for all buildings; two production buildings and a fire drills are conducted on a dormitory building. regular basis. Some evacuation indicating All evacuation signs in produc- Closed signs in production buildings tion facilities are functioning were not working correctly. In correctly now. Fire exits and Health & addition, fire exits and escape escape routes in the dormitory Safety routes in the dormitory building buildings have been marked were not marked properly. properly. In addition, specific inspections of fire protection equipment at all production facilities and dormitories are conducted regularly. Thin-walled containers stored All chemical containers were Closed and used in an assembly work- marked with appropriate shop and marked with the safety labels. In addition, names of the chemicals con- Material Safety Data Sheets tained but not with their main (MSDS) for all chemicals were components, safety made available warnings etc.. Of the 84 suppliers we audited in 2019 (13 of which were in accord- Wages & The factory paid workers below Workers‘ salary has been Closed ance with the validated audit processes of the Responsible Busi- ness Alliance), around 31 percent (26 audits) were direct suppliers and 69 percent (58 audits) were tier 2, 3, and 4 suppliers – that is, indirect suppliers. Benefits the legal minimum wage. Fur- raised and exceeding now the ther, the factory did not pay local legal salary level. Over- adequate overtime compensa- time is payed according to tion as required by law. legal requirements now. The audits carried out in 2019 revealed a total of 567 violations of Working Workers‘ working hours Introduction of an electronic Closed Deutsche Telekom’s supplier requirements. In the process, a total of 165 violations were corrected in 2019, including several open improvement measures from previous years. These violations included two unacceptable incidents and eight critical findings. Examples of unacceptable and critical violations, as well as intro- duced improvement measures, are published here. Critical findings were discovered at 45 suppliers regarding occupational health and safety, at 45 suppliers regarding working hours, at 34 regarding environmental protection, at 24 regarding labor practices, and at 23 regarding wages and performance-related remuneration. Some 15 critical findings were discovered regarding business ethics. As in previous years, most violations were linked to occupational health and safety (43 percent, compared to 47 percent in 2018), followed by environmental issues at 16.4 percent (12.5 percent in 2018). At 15.7 percent, working hours constituted the third biggest issue (2018: 16 percent). hours exceeded legal requirements time recording system to mon- and also SA8000 standards. itor regular working hours including overtime. Working hours are now under control and meet requirements of national legislation as well as SA8000 standards. Environment The factory has no written Emergency procedures have Closed emergency procedures in been established and commu- place to address accidental nicated to address accidental leaks, spills or uncontrolled leaks, spills or uncontrolled releases of polluting sub- releases of polluting sub- stances. stances. In addition, chemical spill drills are conducted on a regular basis.
ECONOMY SUPPLIERS 37 SUPPLIER DEVELOPMENT PROGRAM We collaborate as partners with our suppliers to make sure they are able to meet our high sustainability criteria. In 2018, we placed our supplier program under the umbrella of the ICT industry’s Global Enabling Sustainability Initiative (GeSI) as an industry approach. The program has since been carried forward there as the Sustainable Development Program (SDP). The diagram shows the areas in which we audit the suppliers participating in our program. Using the results, we work with them to develop a plan for remedying any issues. All activities and results are documented so that we can gage the effec- tiveness of the measures employed. CDP SUPPLY CHAIN PROGRAM Since as early as 2016, we have been disclosing our activities to bring on board suppliers under the auspices of the supplier engagement rat- ing of the CDP (formerly the Carbon Disclosure Project). This rating assesses how well companies have been able to integrate the topic of climate protection into their supply chain. In 2019, we once again improved on the previous year and achieved an “A”, as we did in 2016. This has secured our place on the Supplier Engagement Leader Board. An important step in achieving this was calculating the supplier-specific emission intensities based on supplier responses to the CDP Supply Chain Program. This involves calculating the ratio between a supplier’s overall emissions (Scope 1 and 2 and Scope 3 from the upstream supply chain) in grams and the supplier’s overall sales. The CDP Supply Chain Coverage ESG KPI was reported externally for the first time in 2017. It indicates the degree to which our procurement volume from carbon-intensive suppliers is covered by the CDP Supply Chain Program. In 2019, 63 percent of the procurement volume was covered by CDP’s supply chain program. As the responses from individ- ual major suppliers have a disproportionate impact on this KPI, we make sure to discuss this with the relevant suppliers. Our goal is to cover 70 percent of our carbon-intensive suppliers by 2020. SUPPLIER RELATIONSHIPS The percentage of audited procurement volume increased from 29% in the previous year to 31% in 2019. At the same time, the percentage of procurement volume covered by EcoVadis increased slightly to 45 per- cent. A supplier prequalification process via the Supplier Management Portal (SMP) took place for 61% of the procurement volume in 2019. Prequalification is mandatory for all suppliers for which we anticipate an order volume of more than 100,000 euros. Reporting against standards The Sustainable Procurement ESG KPI together with information about our strategic approach fully covers the GRI 414-1 (Supplier Social Assessment) GRI indicators. We also comply with criterion 17 (Human Rights) of the German Sustainability Code. The KPI is also relevant for the EFFAS indicator (V28-04) and for criteria 1 (Opportunities and Risks), 3 (Sustainability Goals), 4 (Value Added Chain) and 6 (Rules and Processes) of the German Sustainability Code. It is also used for report- ing 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).
ECONOMY SUPPLIERS 38 RESPONSIBLE PROCUREMENT OF RAW MATERIALS We require our suppliers to protect the environment and use resources responsibly. This is anchored in our “Code of Human Rights & Social Principles” and in our Supplier Code of Conduct. As a form of verification, we request our suppliers to disclose informa- tion about their activities and we perform supplier audits (social audits). In these audits, we check whether our suppliers use an environmental management system, including a waste management system, and review how they manage their energy and water consumption. In addi- tion, we explicitly check whether there is a management system in place to address the issue of conflict resources.
ECONOMY SUSTAINABLE AND INNOVATIVE PRODUCTS 39 SUSTAINABLE AND INNOVATIVE PRODUCTS OUR APPROACH FOR SUSTAINABLE PRODUCTS AND SERVICES As a telecommunications company, our core business consists of expanding and operating our network. We are using this network to lay the foundations for digital participation and to enable our customers to reduce CO2 emissions with innovative, network-based solutions. To make our core product sustainable, we have set ourselves an ambitious climate target to transform the entire Deutsche Telekom network into a “green network” by 2021. By purchasing electricity from renewable energies our customers will be able to surf the web on a climate-neutral basis. Sustainability plays an important role in our other products, too, requir- ing systematic measures to be implemented across the entire value chain. This is why we begin with procurement: We can thereby ensure that sustainability criteria are met throughout supply chain. We have our products certified by recognized ecolabels 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. In 2019, we also launched our “we care” label for Deutsche Telekom products, services, and initiatives. Even our product packaging is becoming more sustainable. Wherever possible, we use special packaging machines to reduce packaging size. To protect products in the packaging, we will be utilizing more insulat- ing elements made from non-plastic materials. At the end of a product’s life cycle, we contribute to its reuse or recy- cling. For example, we regularly carry out used cell phone collection campaigns. Depending on their condition, the mobile devices collected in Germany are properly disposed of and recycled or refurbished and resold. We launched our sustainable cell phone recycling scheme in 2019. We want to actively encourage customers to sell certain cell phones back to us, which we will then refurbish and resell among our client base with a warranty. In Germany and several national companies, we offer various subsi- dized rates to enable customers on a low income and people living with a disability to make calls at reasonable prices. We measure our progress by means of various KPIs: We use the Sustainable Revenue Share ESG KPI to determine the proportion of sales generated with products and services that are classified as sustainable based on a risk-benefit analysis. We measure the impact of our collection campaigns with our Used Mobile Device Collection ESG KPI. We use the Enablement Factor ESG KPI to calculate the positive CO2 effects generated by customers who are using our products. CONTINUED ANALYSIS OF OUR PRODUCTS’ SUSTAINABILITY BENEFITS In 2014, we began analyzing our product portfolio together with exter- nal experts based on sustainability criteria. Recently, in 2018, we revised the filter logic of our approach so we can better map current developments. As part of our analysis, we are now placing greater emphasis on aspects such as information security and the circular economy. Overall, we have carried out in-depth analyses for 27 product groups with regard to their sustainability benefits and the corresponding busi- ness potential (as of year-end 2019). We measure the result with the Sustainable Revenue Share ESG KPI. The share of such products was already 43 percent in 2019 (excluding T-Mobile USA). Our ambition: increase KPI With a view to improving transparency in the reporting year, we ana- lyzed the sustainability benefits of our revenue categories and assigned these to the Sustainable Development Goals. This assignment was based on an expert assessment and is intended to provide an idea of the type of potential sustainability benefits our products deliver. Where revenues were limited, only the main SDG impact was taken into account.
ECONOMY SUSTAINABLE AND INNOVATIVE PRODUCTS 40 SMART INNOVATION In this section, we will introduce some "Smart Innovation" solutions. The associated business models are based on the most advanced technology and provide an immediate value-add for our customers. At the same time, these solutions are also making an ecological and/ or social contribution to society.We are, for example, utilizing future-ori- ented and widely available technologies to make cities viable for the future and to develop solutions for social challenges. For this, we are relying on innovative NarrowBand IoT (NB-IoT) technology, with which we are paving the way for the Internet of Things. NB-IoT devices have a large operating range and long battery service lives. Consequently, this technology provides the basis for many innovative uses that are both cost- and energy efficient. Particularly useful areas of application for NB-IoT are, for instance, smart parking, smart cities, smart meters, as well as transport and logistics solutions. End of 2019, NB-IoT was available in more than 4 500 cities and municipalities in Germany. Deutsche Telekom has rolled out NB-IoT in 10 countries. In most of them the countrywide rollout is completed: Germany, Greece, Croatia, Netherlands, Austria, Slovakia and the USA. In Poland, the Czech Republic and Hungary the rollout will be com- pleted shortly. In the area of e-health, we are highlighting, for the reporting year, two innovative applications that provide added social value, in particular, for our customers and for society: the game Sea Hero Quest gives scientists important insights into the spatial navigation ability of individ- uals of all ages, within minutes – and thus 150 times faster than with conventional research methods. Gamers thus make a direct contribu- tion to dementia research while having fun. The other e-health solution, iMedOne®, is a hospital information system. It creates optimal condi- tions for connected work and supports hospital processes in multiple ways. This means that physicians and nursing staff, for instance, are able to access required data and functions at all times and everywhere. This makes a significant contribution to cost-efficiency and quality improvement. An efficient and fully integrated hospital information system that can be used on mobile devices thus improves the quality of care. To date, there is no industry-wide established system that provides sus- tainability 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 in the first place. We are eager to step up our efforts in informing our customers about such sustainability benefits and thus also sharpen our competi- tive edge. In 2019, we therefore launched the “we care” label for Deutsche Telekom products, services, and initiatives. Deutsche Telekom employ- ees can put forward suggestions for the label, which are then reviewed by an expert committee. A product, service, or initiative can receive the label for its contribution either to environmental protection or digital participation. A brief description beneath the “we care” symbol refers to the specific sustainability benefits. We use the symbol to offer our customers greater transparency and to help them make a purchasing decision.
ECONOMY SUSTAINABLE AND INNOVATIVE PRODUCTS 41 For deaf customers and members of the German association for the deaf, Deutscher Gehörlosen-Bund e.V., we operate a special online distribution site. 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 infor- mation exchange platform Deaf-Café in the Telekom Hilft community. Since the summer of 2018, hearing-impaired people in Germany have had access to a 24-hour emergency call service with sign language interpreters through the Tess/Telesign interpreter relay service for emergency situations. Tess/Telesign is jointly financed by the manda- tory social security contribution paid by Deutsche Telekom to Germa- ny’s Federal Network Agency. Supporting users with simplified language According to studies, 12 percent of people in Germany are not able to grasp complicated texts. In our endeavor to make it easier for them to access our products, we are working with Lebenshilfe – an organization that helps people with disabilities live with greater independence – to gradually switch our product information to simpler language. The focus topics of our CR report and our #TAKEPART stories are offered in sim- ple language, too. The goals of preventing traffic jams and reducing CO2 emissions pose major challenges to cities and communities. Digital applications can help cut pollution and save drivers time by improving the flow of traffic. One example of this is the Park and Joy app, which we launched in 2017. The app pinpoints and navigates drivers to free parking spaces. It also enables users to pay for their parking directly and extend the parking time as required on the move. In 2019, the app already covered more than 170 000 parking spaces in 100 different towns and cities. An extension ticket free access with the Park and Joy app for around 200 multi-storey car parks is planned for early 2020. The national companies also make a dedicated effort to make their services accessible to customers. Further information is available in the respective country profiles. With the developed method, both individual savings potentials for a single user of the application and predicted emission savings for cities and municipalities can be calculated. ACCESSIBLE PRODUCTS AND SERVICES Deutsche Telekom wants to make it easier for people with disabilities to have access to the knowledge and information society. Services for the hearing impaired Back in 2003, we set up a hotline (Deaf Hotline) for deaf and hearing- impaired customers. Every day, up to 50 people contact the hotline. Customers and consultants can see each other using a video-based live chat application and can communicate with each other in sign lan- guage.
ECONOMY NETWORK EXPANSION 42 NETWORK EXPANSION OUR APPROACH FOR INFRASTRUCTURAL EXPANSION As the biggest investor in Germany’s network, our network expansion efforts are geared toward three key aspects – 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. Germany’s mobile network is being expanded under the terms and con- ditions resulting from the 2019 spectrum auction held by the German Federal Network Agency. Our initial target is to ensure nearly all house- holds in the country (99 percent) have LTE coverage by the end of 2020. We will also continuously improve the coverage of traffic routes with bandwidths of 100 Mbit/s or 50 Mbit/s. At the same time, we are kick- starting a new generation of mobile communications across the whole of Germany. By the end of 2025, we will provide 5G coverage to 99 per- cent of the population. In the fixed network, we have almost completed our FTTC (fiber to the curb) build-out and are now bringing fiber-optic connections into customers’ homes through our FTTH (fiber to the home) expansion. Our initial focus is on expanding into business parks and rural areas (with state funding) and establishing collaborations. Over the coming years, we will successively extend our FTTH expansion to reach up to an additional 2 million households each year. PROGRESS IN NETWORK EXPANSION Part of our network strategy is to also systematically build out our mobile networks with 4G/LTE technology to increase transmission rates in all national companies. Thanks to investments in our 4G/LTE net- work, our customers enjoy better network coverage with fast mobile broadband. In 2019, for example, we were already providing approxi- mately 98.1 percent of the population in Germany with LTE coverage and 98 percent in Europe. This puts us right on schedule to reach our goal of 99 percent network coverage by 2020. Furthermore, around 31 million households in Germany can already order a rate with up to 100 Mbit/s on our fixed network. This figure keeps growing daily, as can be followed in our online expansion tracker. UPDATING AND STABILIZING THE NETWORK ARCHITECTURE We are making our networks faster and more efficient. To do this, we are deactivating all analog public switched telephone network (PSTN) platforms that we no longer need and switching our entire telephone network to IP-based lines. By the end of 2019, around 99 percent of lines had already been switched to IP technology. Irrespective of the expansion and renewal of our infrastructure, we aim to operate our networks in the most stable and failure-free manner pos- sible. Major events such as festivals and summits place the network under particular strain. We make sure, however, that voice calls and data are still transmitted in the quality our customers have come to expect by temporarily setting up extra mobile masts or laying fiber-optic cables. In the event of natural disasters such as floods, our Disaster Recovery Management team ensures those affected can quickly start communicating again. 5G EXPANSION In October 2018, Deutsche Telekom presented an eight-point program for developing a 5G network infrastructure. The aim in Germany is to cover 99 percent of the population and 90 percent of the country with 5G by 2025.
43 ECONOMY NETWORK EXPANSION Status: By the end of 2019, Deutsche Telekom’s 5G network was already operational in eight German cities – Berlin, Bonn, Darmstadt, Frank- furt, Hamburg, Cologne, Leipzig, and Munich. By the start of 2020, Deutsche Telekom had already built 450 5G antennae, with this figure set to reach four digits as the year progresses. We aim to operate over 1,500 5G antennae, including in all 16 German state capitals, by the end of 2020. When it comes to the transition from LTE to 5G, the further expan- sion of LTE/LTE Advanced contributes to the future 5G infrastruc- ture, because LTE is the basis for 5G and will remain an integral part of it. There will be no standalone version of 5G at the start. Instead, in line with the standardization and development plans, parts of the implementation of 5G will initially be mapped in LTE. Implementing 5G is an evolution: thanks to a fiber-optic connection, the SRAN (Single Radio Access Network) modernization which is currently underway, and new services such as LTE 900 or 4x4 MIMO, the 30,000 or so mobile sites in Germany will soon be ready, if they are not already, for the new standard and will be able to map initial 5G applications. CONTINUING EXPANSION OF THE FIBER-OPTIC NETWORK Deutsche Telekom operates the largest fiber-optic network in Europe, covering a length of well over 500,000 kilometers in Germany alone. We are further expanding our fiber-optic network to keep pace with demand for higher bandwidths in the network. We use our expansion tracker for Germany to report on our progress. To reach this goal, we are using FTTC (fiber to the curb) technology with super vectoring and are expanding FTTH (fiber to the home) as well. NUMBER OF FIXED NETWORK CUSTOMERS
ECONOMY CUSTOMER SATISFACTION 44 CUSTOMER SATISFACTION Customer satisfaction and loyalty scores are factored into both the long- term variable remuneration scheme for our board members and, to an extent, the performance assessments of our managers, meaning some of their variable salary components are linked to these ratings. This key performance indicator is also used as a parameter in the long- term incentive plan for our managers (excluding Board of Management members). OUR APPROACH FOR TOP SERVICE QUALITY We strive to offer impeccable service that turns our customers into loyal fans. That’s why we have set out to offer a service that rolls digitalization and compassion into one. Our staff members are free to decide for themselves, based on the relevant circumstances, how to best help our customers and ensure they enjoy a positive experience. Our solution consists of devoting more time to customers, answering their queries on the spot and with a smile, and being there when they need us. In this way, we transform contact with customers into genuine client relations. Overall, this approach has enabled us to cut customer complaints by more than half since 2017. We have successfully reduced the propor- tion of missed technician appointments to 1.5 percent and the average wait time on the hotline to under two minutes. Just as importantly, how- ever, we have been able to resolve many customer requests on first contact and have thus improved our first resolution rate. These achieve- ments have also been independently verified by numerous successes in tests that show we are on the right track. MEASURING CUSTOMER RETENTION AND ENDORSEMENT We use the TRI*M index to gauge customer retention and regularly participate in benchmarking. The recorded data is based on a customer survey conducted in all markets and segments, except the United States (T-Mobile USA). The TRI*M value for the Deutsche Telekom Group is calculated by aggregating country and segment values. The index itself is determined based on four individual issues (competitive edge, performance, continued use, and recommendation). The Group-wide TRI*M index was 67.3 points in the 2019 reporting year, which constitutes a modest decrease compared to the benchmark value of 68.5 and means the Group did not achieve the slight increase it had hoped for. This decrease can be attributed primarily to the trans- formation of the Systems Solutions operating segment of T-Systems, during which it proved impossible to maintain the above-average level of customer satisfaction previously achieved. In addition to the largely stable values in the other areas, this caused the Group value to decline. Our goal for the coming years is to again improve customer satisfaction in all areas. The TRI*M index for Germany remained at the previous year’s level at 61 points. That means we didn’t attain our goal of a slight increase. Our target for 2020 is to achieve an improvement for the Group as a whole and to increase the TRI*M index by 0.5 points for the Germany segment.
ECONOMY CONSUMER PROTECTION 45 CONSUMER PROTECTION OUR APPROACH FOR CONSUMER PROTECTION Consumer protection is a multi-faceted topic at Deutsche Telekom. A core element is keeping our customers’ data safe and secure. Data protection and data security are therefore top priorities for us. The youngest members of society, in particular, need to be shielded from dangers online. That’s why protecting children and young people also plays a big part in what we do. Youth protection aspects are also taken into consideration in our product and service design. In Germany we involve our youth protection officers in all issues regarding planning and designing offers for young people. The youth protection officers can then recommend restrictions or changes. We have appointed a Child Safety Officer (CSO) at each of our national companies within the EU who is responsible for issues pertaining to the protection of minors. The CSO acts as a central contact for stakeholders from the community in the individual markets and plays a key internal role in coordinating issues related to youth protection. These measures increase the consist- ency and transparency of Deutsche Telekom’s involvement in protect- ing minors. In order to better coordinate our activities within the Group, we also approved a list of general guidelines in 2013 for our activities to help protect minors from unsuitable media content and made these guide- lines mandatory at international level, thereby setting new standards in our markets. In consideration of their particular cultural situation and business model, each international subsidiary in the European Union can further specify these measures, adopt additional measures, and also determine their own strategic focal points. Cooperating with organizations for the protection of minors 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 “Alliance to better protect minors online”, which has set out to make the internet a safer place for kids. Above and beyond this, we strive to ensure our network does not affect people’s health. We actively respond to the latest scientific research on mobile communications and health, and provide our customers with transparent updates in this regard. We have also taken a leading role in the “ICT Coalition for Children Online.” In this coalition, we pursue a comprehensive cross-industry approach based on six principles that expressly includes helping young people learn media skills. OUR APPROACH TO DIGITAL YOUTH PROTECTION 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. We participate in combating child abuse and its depiction to the extent that this is permitted within the national legal framework. 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 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 2013, as part of both coalitions, we announced plans to implement an EU-wide set of measures based on the principles of the ICT Coali- tion. We provide regular and transparent updates regarding implemen- tation of the set of measures adopted in 2013; our most recent report was in 2019. The ICT Coalition published an annual report in 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 Technology, comes to the conclusion that Deutsche Telekom’s approach to implementing the ICT Coalitionâs principles is exemplary. OUR APPROACH FOR SECURE MOBILE COMMUNICATION We want to make our mobile communications infrastructure and our 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. In 2018 we once again submitted a current annual mobile communications expert report, coor- dinated by Deutsches Institut für Urbanistik (German Institute for Urban Studies), to the German Federal Government. According to the report, mobile communications expansion is progressing for the most part free
ECONOMY CONSUMER PROTECTION 46 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. 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 most recently made a statement regarding the results in October 2014. In its statement, the World Health Organization concludes that the cur- rent threshold values for electromagnetic fields ensure that mobile com- munications 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. We provide detailed information on the Group website on the latest technology and scientific risk assessments published by expert committees. In 2019, for instance, we extended our „Fakten zu Mobilfunk und Gesundheit” (“Facts about mobile communications and health”) brochure to include a 5G factsheet and a new flyer containing answers to the 14 most important questions regarding mobile communications and health. Together with Telefónica Deutschland, we also support the information platform www.informationszentrum-mobilfunk.de. This platform pro- vides expert and evidence-based information on mobile communica- tions topics subject to controversial public debate: about health, research, technology, benefits, and applications. In 2019, Information- szentrum published, among other things, a new brochure on 5G and interviews with scientific experts on these topics. of conflict. 95 percent of the municipalities surveyed said that they had had little or no controversial decision-making cases. The report was published by the German Federal Environment Ministry. 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, 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: Transparency We place importance on openly discussing issues involved in mobile communications. We make all relevant information regarding our mobile communications equipment in Germany accessible to the pub- lic, 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 email. 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.
ECONOMY DATA PROTECTION AND DATA SECURITY 47 DATA PROTECTION AND DATA SECURITY OUR APPROACH TO DATA PROTECTION The highest standards of data privacy and data security are core charac- teristics of our brand identity. Back in 2008, we therefore set up a dedi- cated Board department for Data Privacy, Legal Affairs, and Compli- ance and established the Group Privacy unit. The responsible Board member is supported 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. In its meeting on May 22, 2019, the Supervisory Board of Deutsche Telekom resolved to restructure the Group Board of Management. As of March 31, 2020, the current Board of Management member respon- sible for Data Privacy, Legal Affairs, and Compliance is leaving the Com- pany for reasons of age. At the start of 2020, the Board department for Data Privacy, Legal Affairs, and Compliance and the Board department for Human Resources are being merged under the responsibility of the Chief Human Resources Officer. Our Data Privacy Advisory Board is taking on a bigger role, with more members from the Group Board of Management and the Supervisory Board joining. The Telekom Security business unit commenced operations in 2017. The new unit combines the security activities from various Group areas, thereby reinforcing our portfolio of cybersecurity solutions. Underlying regulations Data protection and data security at Deutsche Telekom are subject to the following regulations: The Binding Corporate Rules on Privacy govern the handling of personal data. The related Binding Interpretations document con- tains specific recommendations and best practice examples for implementing the EU General Data Protection Regulation, which was enacted in 2018. The Group Policy on General Security includes significant security- related principles followed within the Group. Both guidelines set forth binding standards that are in line with inter- national standard ISO 27001. These policies allow us to guarantee an adequately high and consistent level of security and data privacy throughout the Group. Ensuring effective data privacy Consistent transparency vis-à-vis the public We provide comprehensive information about our data protection activities such as the implementation of GDPR – at first in regular data protection reports and since 2016 online at www.telekom.com/ data-protection. We have also published an annual transparency report since 2014. Moreover, in the Consumer protection section of this CR report we explain how we make our products and services safe for users. 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 Group employees and place them under an obligation to uphold data privacy and telecommunications secrecy. We have also introduced specific training in the customer and human resources departments, where the risk of data misuse is higher. This training includes online courses for independent learning, presentations 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 an in-depth understanding of the relevant data privacy policies. Annual review and adaptation of measures Every two years, we conduct an annual Group data privacy audit to measure and improve the general data privacy standards through- out the Group. 15 percent of the Group employees, who are ran- domly selected, are asked to participate in an online survey. The Group data privacy audit is supplemented by self-assessments by the data privacy officers at the national companies to determine to what extent these companies are implementing the requirements defined in our Binding Corporate Rules on Privacy.The Group Pri- vacy unit assesses these surveys, checks whether action needs to be taken in the respective units, and calls for improvement meas- ures where necessary. 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 unit also helps implement the measures by providing information and advice, and checks they are effective. Unusual audit results are taken into consideration when planning the follow-up audit. Certifications We have our processes, management systems, products, and ser- vices certified by external, independent organizations such as TÜV, DEKRA, and auditing firms. This reporting year, TÜV Nord once again confirmed that the IT systems used by Telekom Deutschland are safe and secure. In addition, in 2014, we were the first DAX com- pany to have our data privacy organization reviewed and certified according to the IDW PS 980 standard.
ECONOMY DATA PROTECTION AND DATA SECURITY 48 Our approach to big data Growing volumes of data call for particular precautionary measures to protect citizens’ privacy, which is why, back in 2013, we approved eight mandatory principles for handling big data. In 2015, we also approved specific measures to protect data and infrastructure in our “Ten-point program for increased cybersecurity.” On top of that, we developed special protective products, including our Mobile Encryption app designed to ensure end-to-end encryption of mobile communication. Reviewing our products Data privacy and security play an important role that starts during the development of our 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. TRANSPARENCY REPORT Telecommunications companies are legally obliged to assist security agencies. This includes, for example, surveillance measures to record telecommunications connections and information about account hold- ers. Every year since 2014, Deutsche Telekom has published a transpar- ency report for Germany, which covers the types and amount of informa- tion we disclose to security agencies. In 2016, the transparency report was expanded to include all the national companies. The matching international report was last pub- lished in February 2019. 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 out more about the different situations in the relevant countries on our website. 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 state authorities meet our demands, we will strive to provide the necessary transparency ourselves to the extent legally possible. CYBERSECURITY We offer security products and services across Europe. Our Telekom Security unit focuses on internal security issues and develops security solutions for consumers as well as business custom- ers. This approach enables us to provide our customers with the right security solutions along the entire value chain – from product develop- ment and applications through to secure, high-performance networks and high-security data centers. Technological developments can also harbor risks, which 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. To enhance collaboration in the area of digital defense, we regularly host the Cyber Security Summit together with the Munich Security Conference. In addition, we collaborate with research institutes, industry partners, initiatives, standardization committees, public institutions, and other internet service providers on a global scale. Together, we want to fight cybercrime and improve online security. We collaborate, for example, with the German Federal Office for Information Security (BSI) through- out Germany and with the European Union Agency for Network and Information Security (ENISA) at a European level. We also provide up-to-date information about all of our data protection activities on our Group website under “Data protection and data security”. OUR CYBERSECURITY INFRASTRUCTURE Cyber Emergency Response Team We are always working to develop new ways to defend against attacks. We launched a Cyber Emergency Response Team (CERT) in the mid- 1990s, which is responsible internationally for managing security inci- dents for our information and network technologies. Since then, we have continued to expand our activities in relation to cyber defense, information on attacks, and information sharing. Cyber defense center In 2017, we opened a new cyber defense center with integrated security operation center (SOC) in Bonn. There we analyze behavioral patterns on the internet and draw up defense strategies. This new defense center is one of the largest and most advanced ones of its kind in Europe, analyzing 2.5 billion pieces of security-relevant data from 3,300 data sources every day. What’s more, the cyber defense center processes about 200 requests, filters about 5,000 viruses and malware programs, and scans on average 100 million incoming emails 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 international locations. The measures that we undertake to fight cyberattacks on our own infra- structure are also available to other companies. More than 30 German DAX companies and SMEs employ our services for their own protection. PROTECTION OF PERSONAL DATA Protecting our customers’ data is one of our top priorities. We also pro- vide up-to-date information about all of our data protection activities on our Group website under data protection and data security. The follow- ing examples serve as a brief excerpt of our recent activities: International cooperation for cyber security In 2018, we once again promoted data security on an international level. Among other things, we are a founding partner of the Charter of Trust, which was signed at the Munich Security Conference in February.
ECONOMY DATA PROTECTION AND DATA SECURITY 49 One of its objectives is to establish general minimum standards for cyber security that are aligned with state-of-the-art technology. Together with our partners, we have identified ten action areas which call for more activity. 2019 was characterized by the stabilization of the joit work and the infrastructure expansion. Another example is the "Magenta Speaker", the first intelligent Euro- pean Smart Speaker. We ensured highest possible transparency throughout the first time set-up of the speaker. It is being explained in simple language which data is being saved by us for which purpose. After the set-up, our costumers can access their data through the Smart-Speaker app and can delete it. Furthermore, in November 2018 we underscored our commitment to security in the digital world by signing the Paris Call for Trust and Secu- rity in Cyberspace. We thereby pledge to intensify and actively shape collaboration in support of integrity and security in the digital world. In this context we did not only adress this topic in the political discourse but also pushed the topic through the Internet Governance Forum 2019. Commendation for handling of customer data For the third time, in 2018 we were commended by the independent testing authority TÜV Informationstechnik (TÜViT) for our handling of customer data. TÜViT certified that our processing of customer data, as it relates to billing, for example, is done in a secure and careful manner. Security on the go Since November 2017, we have partnered with the company Check Point Software Technologies to offer the Protect Mobile security solu- tion for smartphones to our consumer customers. Protect Mobile pro- vides reliable protection from cyber attacks through a combination of network protection and app on the smartphone – for downloading apps, doing online banking or surfing in the browser. Deutsche Telekom customers can add this option free of charge to their existing mobile phone contract. For the most complete protection, the 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. Highest possible transparency for our customers Data security has the highest priority at Deutsche Telekom. We do not only want to comply with legal requirements but to actively shape data security. For this purpose we collaborate with data security experts, per- manently develop technical standards and are pushing for the highest possible transparency. We are doing this to allow our customers to be always assured that we treat their data confidentially. For example we ensured in the development of our service "Sprach ID" that not our customers voice is being saved, but mathematical patterns, which are being calculated from characeristics in the voice. Therefore, a person can not be traced back through the voice pattern. Encryption for all Together with the Fraunhofer Institute for Secure Information Technol- ogy (Fraunhofer SIT), we launched the “Volksverschlüsselung” encryp- tion solution in 2016. It is a simple, free way to encrypt emails. We oper- ate the solution at a high-security data center. The keys are generated 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 encryption, users only need to install the software and identify themselves as part of a simple one-time process. This product supports the federal govern- ment’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 proposed and signed by representatives from the business and scientific communities as well as by political representatives. IT SECURITY & DATA PROTECTION A random sample of 50,000 Telekom employees are surveyed on the topics of data protection and IT security every two years. The findings of the survey are used, for example, to determine the Security Aware- ness Index (SAI) and the Data Protection Award indicator. The indicators help us to review the effectiveness of our measures in the areas of IT security and data protection. The data protection award indicator was last measured in 2018 and stood at 76 % (without T-Mobile US). In the last survey, security awareness reached 78.3 (without T-Mobile US) of maximum 100 points (which is higher than for all other companies in the benchmark). The Data Protection Award indicator measures the level of data protec- tion within the units on a scale of 0 to 12. It is calculated based on what the employees said they thought, did and knew about data protection. The Security Awareness Index measures our employees' perception of IT security at Deutsche Telekom. The assessment is based on Deutsche Telekom employee answers on management awareness of the topic, the security culture, the influence of security requirements on their own work, and their personal responsibility for and attitudes towards IT secu- rity. The index includes a scale from 0 to 100 – the higher the value, the higher IT security is rated at Deutsche Telekom.
ECONOMY DATA PROTECTION AND DATA SECURITY 50 Reporting against standards The information on the indicator "IT Security & Data Protection" is rele- vant for GRI indicator GRI 418-1 (Substantiated complaints concerning breaches of customer privacy and losses of customer data). It is also used in our reporting on Global Compact Principle 1 (Protection of international human rights).
ECONOMY FINANCIAL PERFORMANCE INDICATORS 51 FINANCIAL PERFORMANCE INDICATORS NET REVENUE, EBITDA AND NET PROFIT A detailed clarification of our financial KPIs is available at www.telekom. com/investorrelations. REVENUE DEVELOPMENT In 2019 Deutsche Telekom generated Group revenue of 80.5 billion euros. With growth of just under 4.8 billion euros, it rose by around six percent compared with the previous yearâs level. The international share of Group revenue decreased by 0.7 percentage points to 86.3 percent. NET VALUE ADDED The increase in net value added from 33.5 billion euros to 40.2 billion euros is mainly due to the higher disbursement for investments in 5G licenses in Germany and spectrum acquisitions in the United States. Investments for the network build-out in the United States and the fiber- optic expansion in Germany remained at the same high level year-on- year. Payments to capital investors increased, in particular due to repay- ments for lease liabilities. The increase is due to the change in account- ing for leases as part of the initial application of the new accounting standard IFRS 16 - Leases. These payments were previously part of the operating cash flow. Payments to employees increased due, among other things, to salary development in the United States, and the inclu- sion of T-Mobile Netherlands and UPC Austria. This was offset by lower headcounts in Germany. In contrast to the statement of income, the net value added only takes account of real payment flows. That means that deferred tax expenses and the accrual of provisions do not impact the net value added of the reporting period. Although these costs are deducted from net profit in the statement of income, they are not linked to any current payments to stakeholder groups, as is the case with net value added. Outpayments in this respect are scheduled for the future and will only be accounted for in net value added in future years. Reporting against standards With this KPI, we fully cover the GRI 201-1 (Direct economic value generated and distributed) GRI indicator.
ECONOMY FINANCIAL PERSONNEL INDICATORS 52 FINANCIAL PERSONNEL INDICATORS REVENUE PER EMPLOYEE In the year 2019, revenues per employee increased to EUR 378,000 groupwide – this represents an increase of about 8 percent. In Ger- many, the revenues per employee has increased by 5 percent. Outside Germany, revenues per employee also increased slightly by about 6 percent. You can find further information in the HR Factbook. One driver for the 0.6 percentage point improvement in the adjusted personnel expenses ratio in the Group is the significant increase in Group revenues. The disadvantage of the personnel cost ratio is that it ignores external personnel costs. Therefore the total workforce costs ratio is more mean- ingful for the management of personnel costs at Deutsche Telekom. HR EBITDA (RATIO) The so-called „HR EBITDA“ of Deutsche Telekom Group (without T-Mobile US) puts into ratio the calculated earnings per employee with the investments in training per employee. PERSONNEL COSTS AND PERSONNEL COST RATIO Reporting against standards This data is relevant for the GRI 404-1 (Average hours of training per year per employee) and GRI 404-2 (Programs for upgrading employee skills and transition assistance programs) GRI indicators as well as the S02-02 (Training expenses per employee) EFFAS indicator. This data also covers criterion 16 (Steps taken to promote the general employ- ability of all employees) of the German Sustainability Code. By personnel costs we mean basic personnel costs (salaries) and inci- dental personnel expenses. The indicator is adjusted for special factors in conjunction with personnel restructuring measures (individual down- sizing instruments). The personnel cost ratio represents personnel costs as a proportion of revenue. The development of this rate serves as a benchmark for company business. In the Group as a whole, the personnel expenses ratio in 2019 fell slightly compared with 2018.
ECONOMY FINANCIAL PERSONNEL INDICATORS 53 HUMAN CAPITAL ROI The so-called "Human Capital Return on Invest (ROI)” illustrates the company’s return on investment in human capital by building a ratio between revenue, OPEX and the costs of our internal workforce (IWC). TOTAL WORKFORCE RATIO Total workforce management allows HR to be managed in a holistic manner, enabling qualitative and quantitative personnel planning over the long term. The total workforce ratio describes the relationship between all personnel expenditure and revenue. This means: if the ratio has fallen in comparison with the previous year, either revenue has remained constant while total workforce costs have gone down, or revenue has increased with stable Total Workforce Cost. Deutsche Telekom’s total workforce quota improved slightly in 2019. The adjusted ratio for the Group as a whole dropped by 0.9 percentage points in 2019 compared with the previous year. While total revenue was up 6.4 percent (488 million euros) in 2019, total workforce costs only increased by around 2.6 percent year-on-year. Reporting against standards This data is relevant for the GRI 404-1 (Average hours of training per year per employee) and GRI 404-2 (Programs for upgrading employee skills and transition assistance programs) GRI indicators as well as the S02-02 (Training expenses per employee) EFFAS indicator. This data also covers criterion 16 (Steps taken to promote the general employ- ability of all employees) of the German Sustainability Code. TOTAL WORKFORCE COSTS
ENVIRONMENT CLIMATE STRATEGY 54 CLIMATE STRATEGY 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 CO2 emissions we produce by 20 percent compared to the base year 2008 (excluding T-Mobile US). We expect to achieve this goal. In 2018, we have also developed a new climate target for the period after 2020. Our integrated climate strategy is part of our Corporate Responsibility strategy, which we have aligned with our Group strategy. This is how we ensure that climate protection measures are closely linked with our core business. We have defined objectives and/or key performance indica- tors for each of the four aspects of our climate strategy (“Emissions from the value chain”, “Renewable energy”, “Energy efficiency”, and “Positive social effects (Enablement)”). Emissions from thevalue chain We record all direct and indirect emissions using the globally recog- nized “Greenhouse Gas (GHG) Protocol”. By 2030, we aim to reduce our Scope 1 and Scope 2 emissions by 90 percent compared to the base year 2017. Since most of our emissions are caused by the use of electricity, our primary focus is to increase the share of renewable ener- gies in the electricity mix. By 2021, we will fully convert our entire Deutsche Telekom network, across the entire gamut from mobile tele- communications to the high-speed DSL network, to use electricity entirely from renewable sources. We will also reduce emissions pro- duced through the use of gas and oil, for instance. In addition, we will improve efficiency in areas with particularly high energy consumption, especially in our networks and data centers. This has already allowed us to moderately reduce our emissions over the past few years (excluding T-Mobile US) – despite rapidly growing data volumes and the necessary network build-out. Indirect emissions from the upstream and downstream value chain (Scope 3 emissions) make up the largest share of our total emissions. We have also set ourselves a target for achieving a reduction in such emissions: by 2030, we aim to reduce all emissions resulting from the manufacture and use of Deutsche Telekom products by 25 percent per customer (using 2017 as our base year). In September 2019, as part of an international industry initiative, we also committed to reducing our CO2 emissions to "net zero" by 2050 at the latest. By the year 2020, we are planning to reduce the absolute amount of CO2 emissions we produce by 20 percent compared to the base year 2008 (excluding T-Mobile US). We expect to achieve this goal. In 2018, we have also developed a new climate target for the period after 2020. Renewable energy We are researching and evaluating various options to increase our pro- portion of green energy. Possibilities include purchasing energy certifi- cates from renewable sources, but also, where possible, using cogen- eration (“CHP”) plants to generate our own renewable energy. Several of our national companies sourced 100 percent of their electricity from renewable sources in 2019: Greece, Croatia, the Netherlands, Austria, and Hungary. When purchasing electricity, we take a variety of sustaina- bility factors into consideration on a Group-wide level. These include, for instance, the average emission factor of the electricity mix (i.e., the amount of emissions for every kilowatt hour of electricity used) and the proportion of renewable energy. These parameters help us make our energy mix more transparent and increase the share of energy obtained from renewable sources at our company. We will shift our entire electric- ity consumption to 100 percent renewable energy by 2021. Energy efficiency Since the operation of our network infrastructure calls for a considera- ble 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. Higher energy efficiency also always brings a reduction in CO2 emissions. In order to measure our progress, we use key performance indicators (KPIs) Energy Intensity and Carbon Intensity. Positive social effects (Enablement) Many of our products and services provide sustainability advantages. They can help reduce energy consumption and CO2 emissions, improve healthcare, and make logistics more efficient. In addition to our own carbon footprint, we also calculate the positive CO2 effects facilitated for
ENVIRONMENT CLIMATE STRATEGY 55 our customers through using our products and solutions. We assess both variables in relation to the “Enablement Factor” ESG KPI. This helps us evaluate our overall performance in relation to climate protection. Concepts and strategies for climate protection are also developed at our national companies. These can be viewed in the country profiles. CLIMATE PROTECTION FROM 2020 ONWARD – NEW CLIMATE GOAL AND REVISED CLIMATE PROTECTION STRATEGY In 2018, we devised a new Group-wide climate goal for the period beyond 2020, our current target year. This was adopted by our Board of Management at the beginning of 2019. The goal was developed on the basis of the “Science Based Targets Initiative” (SBTi), which officially confirmed in May 2019 that we are the third DAX-listed company to contribute toward implementing the Paris Climate Agreement through our climate protection targets. We have thus followed our national companies in the United States and Hungary, whose targets were already endorsed by SBTi in 2018 and at the start of 2019, respectively. We have decided to switch to using 100 percent renewable energy for our entire power consumption by 2021 (Scope 2). As things cur- rently stand, we already derive 64 percent from renewable sources. In light of growing data traffic and the network build-out, we expect energy consumption to continue to rise over the coming years. To fulfill the requirements laid down by the Science Based Targets initi- ative, however, we are taking measures to boost efficiency and are using electricity generated by renewable power sources. We aim to reduce our total emissions by 90 percent (Scope 1 + 2), including emissions from the use of gas and oil, by 2030. 80 percent of our CO2 footprint arises from the production and use of our products. By 2030, we aim to reduce these emissions by 25 percent per customer in the main categories (emissions from the purchase of goods, services and capital goods, and emissions from the use of our products by our customers) (Scope 3). To achieve this, we have conducted initial workshops together with our key sup- pliers to develop measures and agreements for lowering CO2 emis- sions. The main difference between the new climate goal and the previous one is that the former takes into account emissions produced by T-Mobile US and arising from the upstream and downstream elements of the value-added chain (Scope 3 emissions). In September 2019 we also joined an international industry initiative. Under this initiative we undertake to reduce our CO2 emissions (Scope 1 and 2) to “net zero” by 2050 at the latest and thus to make our business operations completely climate neutral. OUR APPROACH TO MEASURING OUR PROGRESS WITH REGARD TO CLIMATE PROTECTION We calculate our emissions for our climate target along the entire value chain according to the market-based method of the internationally rec- ognized Greenhouse Gas (GHG) Protocol. We have broken down all our CO2 emissions in detail here. We ensure transparency for our stakehold- ers regarding the progress in implementing our climate strategy by using a number of key performance indicators (KPIs) to measure our contribution to climate protection. The Carbon Intensity and Energy Intensity KPIs are used to analyze the relationship between our carbon emissions or energy use and the transported data volume. Using data volume as a reference parameter makes it possible to create a direct link to the performance of our networks. The Enablement Factor, PUE, and Renewable Energy KPIs also improve the management and trans- parency of climate protection issues. Indirect emissions along our value chain, or Scope 3 emissions, make up the majority of our total emissions. Recording these emissions helps us take targeted measures at both company and product level. Our climate goal, adopted in 2013, to reduce the Group’s CO2 emis- sions by 20 percent (compared to 2008, excluding T-Mobile US) by 2020 is still in place. In all, 40 business units in 29 countries have undertaken to work toward this climate goal. GCR reports to the Board of Management in detail on the status of target achievement each year. We have further reduced our emissions over the last few years, bringing us to the level forecast for 2019. We expect to achieve our goal. ALIGNMENT WITH THE RECOMMENDATIONS OF THE TCFD The United Nations Climate Change Conference hosted in Paris in 2015 saw the launch of the “Task Force on Climate-related Financial Disclo- sures” (TCFD), which sets out to develop voluntary, consistent climate- related financial risk disclosures. In 2017, the TCFD published specific recommendations for putting these disclosures into practice, which companies can use as a guideline to inform investors, lenders, insurers, and other interest groups about the risks climate change presents for their business model. Deutsche Telekom welcomes the aims behind the TCFD. Among the risks that climate change harbors, meteorological extremes are one we are already experiencing. This is having a direct effect on our stakehold- ers, e.g., our customers, suppliers, and employees. The risk is assessed in relation to the continuation of operations as part of risk management and is managed at an operational level in the business units. In addition, we evaluate internally how reporting on climate-related financial risks and opportunities can be aligned with the recommendations of the “Task Force on Climate-related Financial Disclosures” (TCFD). This should build on the existing approaches for strategy, controlling, and risk management.
ENVIRONMENT CLIMATE STRATEGY GOVERNANCE Disclosures Guidance Input 56 a) Describe the Board’s oversight of climate-related risks and opportunities. b) Describe management’s role in assessing and managing climate- related risks and opportunities. Processes and frequency by which the Board is informed Deutsche Telekom’s Board of Management is informed every year about the about climate-related issues. Does the Board consider climate-related issues when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, and business plans? setting the organization’s performance objectives? monitoring implementation and performance? overseeing major capital expenditure, acquisitions, and divestitures? How the Board monitors and oversees progress against goals and targets for addressing climate-related issues. status of the company’s climate target achievement and climate protection issues in the Climate Target Monitoring Board Report. Deutsche Telekom’s risk management unit reports on a quarterly basis. If any unforeseen risks arise outside the regular reporting of key risks and opportuni- ties, they are recorded as appropriate. The identified relevant risks are reported to the Board of Management of DT. The DT Board of Management informs the Supervisory Board accordingly. Leading climate protection KPIs (Energy Intensity, Carbon Intensity) are part of the quarterly reporting to the responsible Board member (CHRO). The Audit Committee of the Supervisory Board appraises the risks at its meetings, and the main relevant risks for the Deutsche Telekom Group are also integrated into our Annual Report. The CR Board is informed about climate protection issues based on require- ments. Risk reporting will be expanded to encompass even more comprehensive inclu- sion of long-term climate-related risks. Financial implications have been integrated into business planning; further management instruments are evaluated for integrating climate protection into investment decision-making (e.g. internal price on carbon). Deutsche Telekom’s Board of Management decided on a new climate protection strategy for 2030 including a Science-Based Target. The overarching corporate strategy was extended at the end of 2019 by “acting responsibly”. This puts a major focus on CO2 and resource reduction as part of Telekom’s strategic direction. As part of our „We Care for our Planet“ initiative, we have examined our value chain for opportunities to achieve greater resource efficiency and CO2 reduction. Ten areas for action have been identified and these were approved by the Board of Management. Has the organization assigned climate-related responsibilities Deutsche Telekom’s current organizational CR structure can be found in to management-level positions or committees? the CR Report And, if so: At DT, the responsibility for CR includes oversight of climate-related issues. Do such management positions or committees report to the Board? Do those responsibilities include assessing and/or mana- ging climate-related issues? Description of the associated organizational structure(s). Processes by which management is informed about climate- related issues. How management (through specific positions and/or management committees) monitors climate-related issues.
ENVIRONMENT CLIMATE STRATEGY STRATEGY 57 Disclosures Guidance Input a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. Description of what they consider to be the relevant short, ICT solutions have the potential to facilitate the transformation to a decar- medium, and long-term time horizons. Taking into consideration the useful life of the organization’s assets or infrastructure and the fact that climate-related issues often manifest themselves over the medium and longer term. bonized society. DT is therefore participating in the studies of the GeSI (Global e-Sustainability Initiative) so as to systematically evaluate potential. For more details, please refer to the latest issue of the study. For details on our risk management, please refer to our Annual Report and Description of the specific climate-related issues for each time CR Report. horizon that could have a material financial impact on the organization. Description of the process used to determine which risks and opportunities could have a material financial impact on the organization. Please note: We are currently evaluating internally how reporting on climate- related financial risks and opportunities can be aligned with the recommen- dations of the Task Force on Climate-related Financial Disclosures (TCFD). This is to be based on the existing approaches to strategy, controlling and risk management. What is the impact on the business and strategy in the Considerations of physical risks to network infrastructure, e.g. due to ext- reme weather, are part of our Business Continuity Management, Technical Planning and Telekom Security, as well as the regular planning process for networking. Dialog is held with major suppliers on climate protection issues (e.g. Scope 3 emissions) and energy efficiency. Telekom was also repeatedly included in the CDP A List. Several programs have been launched to improve energy efficiency at our sites and operations. As part of our „We Care for our Planet“ initiative, we have examined our value chain for opportunities relating to greater resource efficiency and CO2 reduction. Ten key areas for action have been identified for future measures leading to a more sustainable company in general. As part of that program, the „We care“ product label is awarded to products that have been approved by a committee of internal experts. This label is intended to help customers to identify customer-facing examples in our sustainability program. The impact on our R&D budget follows the “win with partners approach”, using suppliers and especially start-ups to develop new innovative sustai- nable products and services in order to help our customers reduce their carbon emissions. Please note: We are currently evaluating internally how reporting on climate- related financial risks and opportunities can be aligned with the recommen- dations of the Task Force on Climate-related Financial Disclosures (TCFD). This is to be based on the existing approaches to strategy, controlling and risk management. DT set a Science-Based Target that is consistent with a 1.5°C scenario (for Scope 1+2) and signed the UN Global Compact net zero pledge. Further scenarios relating to physical and transition risks associated with a 2°C or lower scenario will be developed. Please note: We are currently evaluating internally how reporting on climate- related financial risks and opportunities can be aligned with the recommen- dations of the Task Force on Climate-related Financial Disclosures (TCFD). This is to be based on the existing approaches to strategy, controlling and risk management. b) Describe the impact of climate- related risks and opportunities on the organization’s businesses, strat- egy, and financial planning. following areas: products and services supply chain and/or value chain adaptation and mitigation activities investment in research and development operations (including types of operation and location of facilities). Description of how climate-related issues serve as an input to their financial planning process the time period(s) used how these risks and opportunities are prioritized. The impact on financial planning in the following areas: operating costs and revenues capital expenditure and capital allocation acquisitions or divestments access to capital. Description of climate-related scenarios, if they were used to inform the organization’s strategy and financial planning. c) Describe the resilience of the organization’s strategy, taking into consideration different climate- related scenarios, including a 2°C or lower scenario. Description of how resilient their strategies are to climate-related risks and opportunities (taking into consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario) and scenarios consistent with increased physical climate- related risks. Organizations should consider discussing: where they believe their strategies may be affected by climate-related risks and opportunities how their strategies might change to address such potential risks and opportunities and the climate-related scenarios and associated time horizon(s) considered.
ENVIRONMENT CLIMATE STRATEGY RISK MANAGEMENT Disclosures Guidance Input 58 Risk management processes for identifying and assessing cli- The process for the identification of climate change related risks and mate-related risks. opportunities includes: Determining the relative significance of climate-related risks in screening media and NGO publications relation to other risks. The consideration of existing and emerging regulatory requi- rements related to climate change (e.g. limits on emissions) as well as other relevant factors. Processes for assessing the potential size and scope of identi- fied climate-related risks. Definitions of risk terminology or references to existing risk classification frameworks used. actively supporting the work of various industry associations dealing with climate change, e.g. GeSI, econsense, 2-Degree Foundation, ICC, GSMA, ETNO participation & initiation of climate change related stakeholder dialogs analysis of the responses to the CDP supply chain program analysis of changes in information requests from ratings such as RobecoSAM, CDP, Sustainalytics, and others quarterly assessment of relevant data. The process for the assessment of climate change related risks and opportuni- ties includes: identification & quantification of the relevant developments calculation of the impact on operations analysis of impact on value chain. Furthermore, Telekom’s processes for identifying and assessing climate-related risks are integrated into multi-disciplinary company-wide risk identification, assessment, and management processes. Current regulation is relevant and always considered, owing to the need to com- ply with statutory regulations. DT (in Germany) therefore uses the WEKRA data- base, which is assessed by CR specialists, to track changes in the regulatory environment. DT also uses its internal capacities (e.g. policy and regulatory affairs) for assessing and evaluating the impact of existing regulations, like ETNO, BDI, bitkom, econsense, etc. Emerging regulation is considered whenever it is relevant and can be anticipa- ted. DT is also aware of upcoming regulations by actively working within various industry associations, e.g. GeSI, econsense or bitkom and intensive stakeholder dialogues with NGOs, e.g. WWF. Processes for managing climate-related risks, such as how decisions are made to mitigate, transfer, accept, or control those risks DT manages (climate-related) risks and opportunities, identified by intensive risk screening and assessed on the basis of market research and expert knowledge, according to the process described above and published in our Annual Report. which processes are available for prioritizing climate- related risks how materiality determinations are made within the organization. How the processes for identifying, assessing, and managing climate-related risks are integrated into overall risk manage- ment. Please note: We are currently evaluating internally how reporting on climate-related financial risks and opportunities can be aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This is to be based on the existing approaches to strategy, controlling and risk management. a) Describe the organization’s processes for identifying and assessing climate- related risks. b) Describe the organization’s processes for mana- ging climate-related risks. c) Describe how processes for iden- tifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk manage- ment.
ENVIRONMENT CLIMATE STRATEGY METRICS AND TARGETS 59 Disclosures Guidance Input a) Disclose the metrics used by the organization to assess climate- related risks and opportunities in line with its strategy and risk management process. Key metrics used to measure and manage climate-related Key metrics used to measure and manage climate-related risks and opportuni- risks and opportunities. ties are: Metrics on climate-related risks associated with water, energy, Scope 1-3 emissions land use, and waste management (where relevant). Share of renewable energy Description of whether and how related performance metrics are incorporated into remuneration policies. Where relevant: the internal carbon price climate-related opportunity metrics (e.g. revenue from pro- ducts and services designed for a lower-carbon economy). Metrics for historical periods to allow for trend analysis Description of the methodologies used to calculate or estimate climate-related metrics (where not apparent). Energy consumption Energy Intensity KPI Carbon Intensity KPI Enablement Factor. Furthermore, we calculate our sustainable revenue quota and continually ana- lyze the sustainability benefits of our products. Historical emission data for all DT subsidies can be found in the CR-report’s interactive benchmarking tool. The achievement of individual goals and/or targets related to an area of respon- sibility for selected relevant functions is part of target related remuneration, as well as targets based on the ESG KPI „Socially Responsible Investment“ and the target „Listing of the T-Share in the sustainable indices/ratings“ which reflect climate change issues and the directly related CR KPIs „Energy Intensity“ and „Carbon Intensity“. The introduction of an internal price on carbon is currently being evaluated. b) Disclose Scope 1, Scope 2, and if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. Scope 1 and Scope 2 emissions Scope 3 emissions and the related risks. Telekom annually discloses Scope 1-3 emissions in its CR Report and Annual Report. Calculation of GHG emissions in line with the GHG Protocol methodology to allow for aggregation and comparability across organizations and jurisdictions. Scope 1 and 2 emissions are calculated in line with the GHG protocol. The Scope 3 emissions calculation is based on the GHG protocol. Carbon Intensity ratios are also published annually in the CR Report and Annual As appropriate, related, generally accepted industry-specific Report. GHG efficiency ratios. Historical emission data for all DT subsidies can be found in the CR Report‘s GHG emissions and associated metrics for historical periods interactive benchmarking tool. to allow for trend analysis. Description of the methodologies used to calculate or esti- mate the metrics (where not apparent). c) Describe the targets used by the organization to manage climate- related risks and opportunities and performance against targets. Description of the key climate-related targets (e.g. those based DT’s climate emission targets can be found in the CR Report. Our targets based on energy efficiency are disclosed here. We also calculate the positive CO2 effects facilitated for our customers through the use of our products. Furthermore, we calculate our sustainable revenue quota and continually analyze the sustainability benefits of our products. We also publish targets for sustainable procurement here. on GHG emissions, water usage, energy usage, etc.) in line with anticipated regulatory requirements, market constraints, or other goals. Other goals may include: efficiency or financial goals financial loss tolerances GHG emissions avoided throughout the entire product life cycle net revenue goals for products and services designed for a lower-carbon economy. A description of the targets should include the following: a definition of the target as absolute or intensity based timeframes over which the target applies the base year from which progress is measured key performance indicators used to assess progress against targets. A description of the methodologies used to calculate targets and measures (where not apparent).
ENVIRONMENT CLIMATE STRATEGY 60 ADDRESSING CLIMATE RISKS In the context of our integrated climate strategy, we determine potential opportunities and risks that exist for us as well as for our stakeholders. We report to the Board of Management quarterly on current climate risks within the context of our “Group Risk Report”. You will find more information on risk management in the “Risk and opportunity manage- ment” section of our annual report. Physical risks Extreme weather conditions as a consequence of climate change will have a negative impact on our business processes and will inevitably lead to incidents or even network outages. Among the effects of such breakdowns is their massive impact on the management of rescue oper- ations, for example, sometimes even rendering such emergency efforts entirely impossible. In order to be able to react appropriately in these cases, our internal “Group Policy on Continuity and Situation Manage- ment” defines responsibilities, processes, and measures. It also outlines how to handle emergency and crisis situations like floods. In addition, possible consequences of climate change are also taken into account when planning our future business activities. For instance, our network infrastructure is set up to be protected from storm conditions, changes in temperature, and high winds. Financial risks Climate change also carries financial risks, whether from levies on CO2 emissions or an increase in energy costs. Our contribution to the mitiga- tion of these risks is that we measure our own energy efficiency and develop measures for improvement. Extreme weather events are another possible cause of infrastructure failure, and this could necessi- tate additional investment in a more robust infrastructure. Prevention We also help our customers reduce their carbon footprint by providing them with innovative solutions (mitigation). Possible examples include innovative projects in the area of sustainable urban development and mobility, and real-time solutions for agriculture. These do not only help reduce emissions, but also optimize the use of fertilizer, seed, and machinery. Increasing yields can help us achieve the second sustaina- ble development goal (SDG) of “zero hunger”. On top of that, we also help our customers deal with the adverse effects of climate change (adaptation). In the event of an imminent catastrophe, our infrastructure can be used, for example, to send alerts via early warning apps.
ENVIRONMENT OUR ENVIRONMENTAL PROGRAM 61 OUR ENVIRONMENTAL PROGRAM WE CARE FOR OUR PLANET With the adoption of the new climate targets, the Deutsche Telekom Board of Management issued a mandate in early 2019 to further expand our existing commitment to environmental protection and resource conservation. We then identified ten areas along our value chain in which we can improve resource efficiency. Initial measures have already been developed and summarized in the “We care for our planet” program. In October 2020, the Board of Management commis- sioned the implementation of the program. It is managed by the GCR department. Paperless and paper-saving work Switching to paperless processes. Our activities and achievements to date on this topic can be found here: Online billing for mobile and fixed-line customers in Germany, Other recycling indicators (print-on-demand), Resource efficiency at the workplace Sustainable product packaging Development and use of sustainable product packaging. Our activities and achievements to date on this topic can be found here: Sustainable business model for devices Refurbishing used smartphones. Our activities and achievements to date on this topic can be found here: Continued analysis of our products’ sustainability benefits Our national companies are committed to reducing our ecological foot- print too. For example, many of our national companies are committed to reducing plastic waste, by no longer handing out plastic bags or replacing them with reusable tote bags and tote bags made from paper or recycled material. Plastic waste can also be reduced in product design and packaging, e.g. OTE and Cosmote Greece reduced SIM cards to half their size in 2017. Part of the # Zeroplastic initiative by OTE and Cosmote is also a specially developed digital game that offers employees the opportunity to win reusable bottles as an incentive to replace single-use plastic bottles. So far, more than 5,000 employees have participated. Another good example is set by IT Services Hungary: Used IT devices are sold to employees on an in-house developed elec- tronic platform. Equipment that is not required is donated to schools. Green Shop Enabling a “green customer experience” at Telekom Shops Circular network and infrastructure at Deutsche Telekom Switching to recyclable components. Energy consumption and efficiency Green buildings Reducing CO2 emissions, waste volume, and water consumption at properties. Our activities and achievements to date on this topic can be found here: Energy efficiency in buildings Green DT mobility Converting the company vehicle fleet to alternative drives, and meas- ures for more eco-friendly commuting or avoiding travel. Our activities and achievements to date on this topic can be found here: Our strategy for climate-friendly mobility in Germany
ENVIRONMENT CO2E EMISSIONS 62 CO2E EMISSIONS CARBON INTENSITY ESG KPI DEUTSCHE TELEKOM GROUP Since 2016, we have reported on the Carbon Intensity ESG KPI. In contrast to the existing CO2 Emissions ESG KPI, the new ESG KPI shows the CO2e emissions in proportion to the transmitted data vol- umes. Using data volume as a reference parameter makes it possible to create a direct link to the performance of our networks. Our ambition: decrease KPI more relevant for criterion 13 (Climate-relevant emissions and objec- tives) of the German Sustainability Codex. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility). CARBON INTENSITY ESG KPI DT GROUP IN GERMANY Since 2016, we have reported on the Carbon Intensity ESG KPI . In contrast to the existing CO2 Emissions ESG KPI, the new ESG KPI shows the CO2e emissions in proportion to the transmitted data vol- umes. Using data volume as a reference parameter makes it possible to create a direct link to the performance of our networks. Data assured by PwC. For detailed assurance comments see „DT Group in Germany“. The ESG KPI figure also takes into account total CO2 emissions for all energy sources – fuel, gas, district heating and electricity, The data volume is composed of the transmitted IP data volumes (including Voice over IP, Internet, IP-TV). Data assured by PwC. Data is partly based on estimates, assumptions and extrapolations. The calculation method was adjusted in 2017. Values cannot be directly compared to the previous year. The ESG KPI figure also takes into account total CO2 emissions for all energy sources – fuel, gas, district heating and electricity, The data volume is composed of the transmitted IP data volumes (including Voice over IP, Internet, IP-TV). Reporting against standards The Carbon Intensity ESG KPI is relevant for the GRI indicator GRI 305-4 (Greenhouse Gas Emissions Intensity). This information is relevant for EFFAS KPI E02-01 (Greenhouse gas emissions Scope 1-3). It is further-
ENVIRONMENT CO2E EMISSIONS 63 Reporting against standards The Carbon Intensity ESG KPI is relevant for the GRI indicator GRI 305-4 (Greenhouse Gas Emissions Intensity). This information is relevant for EFFAS KPI E02-01 (Greenhouse gas emissions Scope 1-3). It is further- more relevant for criterion 13 (Climate-relevant emissions and objec- tives) of the German Sustainability Codex. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility). E EMISSIONS (SCOPE 1 - 3) TOTAL CO 2 Since the 2016 CR Report, Deutsche Telekom has provided a general overview of all its CO2 emissions (Scope 1-3). To ensure comparability with the Scope 3 emissions presented in CO2 equivalents (CO2e), Scope 1 and Scope 2 emissions were converted into kilotons of CO2e. Emis- sions are presented along Deutsche Telekom’s supply chain. This allows for an overview of where most of the emissions are produced. In 2019, market-based Scope 1 and 2 emissions totaled approx. 1.8 mil- lion metric tons of CO2e across the Group, marking a reduction of more than 20 percent compared to the previous year. Scope 3 emissions were reduced by 11 percent to some 12.8 million metric tons of CO2e in 2019. The majority of emissions can be attributed to the procurement (in particular of devices and network technology) and use of our products and services (for sold or rented) fixed-line and cell phones, routers, and media receivers, and for products such as lap- tops or television sets that our customers use so they can make the most of our services. Of equal importance are the emissions resulting from the manufacture and transportation of technology for establishing our networks. The decline in CO2 emissions is primarily down to the conversion to green energy. We are now analyzing whether a reduction in energy con- sumption through all-IP will be offset by increases resulting from 5G, expanded network coverage, and higher quality fixed lines. Data assured by PwC. For detailed assurance comments see „DT Group in Germany“ and „T-Mobile USA“.
ENVIRONMENT CO2E EMISSIONS 64 E-EMISSIONS (SCOPE 1 & 2 EMISSIONS) TOTAL CO 2 Our CO2 emissions are largely driven by our electricity consumption. That’s why the table below contains very detailed information about the Group numbers for the Scope 2 emissions resulting from our electricity consumption. We differentiate between the market-based and location- based methods, thereby adhering to the GHG Protocol Scope 2 Guid- ance. Market- and location-based emissions are reported in CO2 equiva- lents (CO2e). This change was made in order to allow a transparent comparison between Scope 1 to 3 emissions and to be consistent with the requirements of the Science-Based Targets Initiative, to which the new target is also geared. The leading reporting method is the market- based approach. This method is used to calculate emissions with a spe- cific emissions factor (provider factor) per DT company. This factor depends on a company’s actual energy procurement (electricity mix); procuring renewable energy (direct purchase, certificates) reduces emissions.a) In contrast to the market-based method, with the location-based method the emissions factors for the respective country are used (the country mix factor of the International Energy Agency (IEA)). A company’s actual energy procurement (electricity mix) is hence not taken into account, i.e., not even the procurement of renewable energy over and above the country mix. Change compared to the previous year: The Scope 2 emissions calcu- lated according to the market-based method are about 20 percent lower than in the previous year. The main reason for this is the direct purchase of renewable energy at T-Mobile US and the increased purchase of renewable energy certificates (RECS , GoO) at our national companies in Germany. a) If no provider factors are available for the market-based method, the country-related residual factor is used (based on the RE-DISS project of the European Commission, which assessed the national share of renew- ables). If there is no residual factor available either, the IEA factor is used (same as with the location-based method). As a rule, the value of the emission factor in the residual mix is higher than the IEA’s country mix factor. Renewable energy certificates are included in all cases. b) For our national company T-Mobile US, the market-based Scope 2 emissions were calculated using the eGRID emissions factors, which are reported by the American Environmental Protection Agency accord- ing to different grid regions in the USA. In addition, the quantities of electricity from renewable energy sources obtained under Power Purchase Agreements (PPAs) were taken into account in reducing emissions. Data verified by PwC. For detailed audit comments see „DT Group in Germany“ and „T-Mobile USA“. Data assured by PwC. For detailed assurance comments see „DT Group in Germany“ and „T-Mobile USA“. Data assured by PwC. The 2017 calculation was based on the utility's electricity mix. If this is was not possible, the residual mix or country mix was used. Values cannot be directly compared to the previous year. For detailed assurance com ments see „DT Group in Germany“ and „T-Mobile USA“. Reporting against standards By reporting our direct and indirect CO2 emissions (Scope 1 & 2) in accordance with the Greenhouse Gas Protocol, we fully cover the GRI 305-1 (Direct GHG emissions) and GRI 305-2 (Energy indirect GHG emissions) and partially cover the E02-01 (Total Scope 1-3 greenhouse gas emissions) EFFAS indicator. This data is also relevant for criteria 11 and 12 (Usage of natural resources) and 13 (GHG emissions) of the German Sustainability Code. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility). E-EMISSIONS (SCOPE 3) DEUTSCHE TELEKOM TOTAL CO 2 IN EUROPE* The majority of our total emissions can be classified as Scope 3 emissions. Scope 3 emissions are all emissions from the upstream and downstream value chain, which are generated in the supply chain, by business travel, commuter traffic ("upstream") or at the customer's premises by the use of products and services ("downstream"). Their recording is based on the globally recognized "Greenhouse Gas (GHG)" protocol. The graph shows Scope 3 emissions from 2017-2019, classified by emission sources. Upstream emissions accounted for around 46% of Scope 3 emissions in 2019, while downstream emissions accounted for around 54%. The basic data used to calculate Scope 3 emissions are reported in the key figure tool. You will find more information on record- ing Scope 3 emissions along the value chain here.
ENVIRONMENT CO2E EMISSIONS 65 Reporting against standards By reporting this data, we fully cover the GRI 305-3 (Other indirect GHG emissions) and the E02-01 (Total Scope 1-3 greenhouse gas emissions) EFFAS indicator. This data is also relevant for criteria 11 and 12 (Usage of natural resources) and 13 (GHG emissions) of the German Sustaina- bility Code. It is also used for reporting on the Global Compact princi- ples 7 (Precautionary approach) and 8 (Promoting environmental responsibility). COMPENSATION CO 2 Preventing greenhouse gas emissions is one of our top priorities. CO2 emissions that we are unable to prevent or reduce can be compensated by investing in certified climate protection projects in addition to devot- ing greater efforts to using renewable energy sources. Telekom Deutschland compensated for just under 6,271 metric tons of CO2 in the 2019 reporting year. These included emissions associated with our events (participants’ 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.
ENVIRONMENT ENABLEMENT FACTOR 66 ENABLEMENT FACTOR EMISSIONS ENABLEMENT FACTOR: CUSTOMERS SAVING ON CO 2 In addition to our own carbon footprint, we also calculate the positive CO2 effects facilitated for our customers through using our products and solutions. The ratio between these two figures – the “enablement factor” – allows us to assess our overall performance when it comes to climate protection. Since 2014, we have examined the savings potential for various products, 16 of which were in 2019. One example of savings made possible by our products is cloud com- puting, which enables our customers to reduce their CO2 emissions by using our cloud services and outsourcing their existing infrastructure to our efficient data centers. Better servers, more energy-efficient data centers, and higher infrastructure capacity utilization can cut energy consumption and the associated emissions by up to 80 percent. ESG KPI ENABLEMENT FACTOR FOR DT GROUP IN GERMANY We use the "Enablement Factor" to measure our overall performance in climate protection. According to this, in 2019 in Germany the positive CO2 effects enabled by our customers were 144% higher than our own CO2 emissions (enablement factor of 2.44 to 1). The positive CO2 effects facilitated for our customers through the use of our products and solutions rose from 12.1 to 13.9 million tons in 2019. With the ESG KPI "Enablement factor" we calculate the positive CO2 effects that arise on the customer side through the use of our products. Our ambition: increase KPI Reporting against standards Information on the enablement factor is relevant for GRI Indicator GRI 305-5 (Reduction of Greenhouse Gas Emissions). The information is rel- evant for the EFFAS KPI S13-01 (Intermodality). It is furthermore relevant for criterion 13 (Climate-relevant emissions and objectives) of the Ger- man Sustainability Codex. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promoting envi- ronmental responsibility). ESG KPI ENABLEMENT FACTOR FOR DEUTSCHE TELEKOM GROUP IN EUROPE In 2019, the positive CO2 effects enabled by our customers across Europe were 74% higher than our own CO2 emissions (enablement factor of 1.74 to 1). The positive CO2 effects made possible on the customer side by using our products and solutions amounted to almost 15.8 million tonnes in the reporting year. With the ESG KPI "Enablement factor" we calculate the positive CO2 effects that arise on the customer side through the use of our products.
ENVIRONMENT ENABLEMENT FACTOR 67 Reporting against standards Information on the enablement factor is relevant for GRI Indicator GRI 305-5 (Reduction of Greenhouse Gas Emissions). The information is rel- evant for the EFFAS KPI S13-01 (Intermodality). It is furthermore relevant for criterion 13 (Climate-relevant emissions and objectives) of the German Sustainability Codex. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility).
ENVIRONMENT ENERGY CONSUMPTION & EFFICIENCY 68 ENERGY CONSUMPTION & EFFICIENCY OUR APPROACH FOR ENERGY-EFFICIENT NETWORKS We operate our own fixed-line and mobile networks in Europe and the United States. The majority of our energy requirements come from oper- ating this network 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 requirements. In order to reduce our energy needs, we are pur- suing the following approaches: We are updating our network infrastructure, e.g., by migrating to IP technology and removing equipment we no longer need. We are optimizing energy generation and supply with the help of technical innovation. We are working on firmly embedding the aspect of “energy efficiency” in the architecture and design phase of new technology selection through specifications and requirements. We use energy-efficient technology not just for our networks, but also for lighting, monitoring, and – most importantly – cooling our systems. Our internal energy service provider, Power & Air Solutions, whose energy management has been ISO 50001 certified since 2013, plays a key role in these activities. ENERGY INTENSITY ESG KPI DEUTSCHE TELEKOM GROUP Since 2016, we have reported on the Energy Intensity ESG KPI. In con- trast to the existing Energy Consumption ESG KPI, the new ESG KPI shows energy consumption in proportion to the transmitted data vol- umes. Using data volume as a reference parameter makes it possible to create a direct link to the performance of our networks. Our ambition: decrease KPI The ESG KPI figure also takes into account total energy consumption for all energy sources – fuel, gas, district heating and electricity. The data volume is composed of the transmitted IP data volumes (including Voice over IP, Internet, IP-TV). Reporting against standards The Energy Intensity ESG KPI is relevant for the GRI indicator GRI 302-3 (Energy Intensity). This information is relevant for EFFAS KPI E01-01 (Energy consumption, total). It is furthermore relevant for criterion 12 (Resource management) of the German Sustainability Codex. It is also used for reporting on the Global Compact Principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility). ENERGY INTENSITY ESG KPI DT GROUP IN GERMANY Since 2016, we have reported on the Energy Intensity ESG KPI. In contrast to the existing Energy Consumption ESG KPI, the new ESG KPI places the energy consumption into a ratio with the managed data vol- umes. Using data volume as a reference parameter makes it possible to create a direct link to the performance of our networks. Data assured by PwC. For detailed assurance comments see „DT Group in Germany“ 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.
ENVIRONMENT ENERGY CONSUMPTION & EFFICIENCY 69 Reporting against standards By reporting our energy consumption from primary energy sources, we partially cover the GRI 302-1 (Energy consumption within the organiza- tion) GRI indicator and the E01-01 (Energy consumption, total) EFFAS indicator. By reporting fleet energy consumption, we also partially cover the GRI 307-1 (Environmental impact of transportation) GRI indicator. This data is also relevant for criterion 11 of the German Sustainability Code (Usage of natural resources). It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promot- ing environmental responsibility). EMISSIONS DECOUPLING POWER CONSUMPTION AND CO 2 Deutsche Telekom was able to reduce the emissions generated by its electricity consumption to zero from 2008 to 2012 by purchasing RECS certificates (Renewable Energy Certificate System). However, we feel that these certificates have not had as positive an impact on the environ- ment as we had hoped. Demand for certificates was generally limited. As a result, RECS certificates do not make a noticeable contribution to encouraging the expansion of renewable energy sources. That is why we feel it makes more sense both in terms of ecological and economic aspects to invest in reducing our energy consumption and increasing our energy efficiency than to purchase RECS certificates. We are also increasingly purchasing electricity from renewable energies. The ESG KPI figure also takes into account total energy consumption for all energy sources – fuel, gas, district heating and electricity. The data volume is composed of the transported IP data volumes (including IP telephone, internet, IP-TV). Reporting against standards The Energy Intensity ESG KPI is relevant for the GRI indicator GRI 302-3 (Energy Intensity). This information is relevant for EFFAS KPI E01-01 (Energy consumption, total). It is furthermore relevant for criterion 12 (Resource management) of the German Sustainability Codex. It is also used for reporting on the Global Compact Principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility). TOTAL ENERGY CONSUMPTION Total energy consumption indecreased by 1 percent year over year as a result of the rapidly growing data traffic and the corresponding continu- ous network expansion. In order to achieve our climate goal, we are focusing on areas with especially high energy consumption, such as our networks and data centers. For instance, we are migrating our network infrastructure to IP technology, which is not only more powerful, but also consumes less electricity than existing technologies. Reporting against standards By providing this information, we fully cover the E16-05 (Alternative energy consumption) EFFAS indicator. This data is also relevant for criteria 3 (Strategic analysis, strategy and goals), 11 and 12 (Usage of natural resources) of the German Sustainability Code. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility). Data assured by PwC. For detailed assurance comments see „DT Group in Germany“ and „T-Mobile US“.
ENVIRONMENT ENERGY CONSUMPTION & EFFICIENCY 70 Using LED lighting and motion sensors Using efficient building technology (e.g., high-efficiency pumps, fre- quency-dependent ventilation) Optimizing pre-programmed usage profiles (such as through absence profiles) Using efficient building automation systems Building shell The energy efficiency of the building shell is critical for all construction and renovation measures. This includes the energy-based design of facades, roofing, doors, and windows. GENERATION AT ESG KPI “PUE” – REDUCED CO 2 DATA CENTERS An important indicator for controlling our climate protection measures and the efficiency of our data centers is the annual “Power Usage Effectiveness (PUE)” value. The PUE factor is an indicator of the increased efficiency of the infra- structure in our data centers. The factor is calculated using the ratio between the total electrical energy consumed by the data center and the amount of electrical energy consumed by IT. We were able to reduce the average global PUE factor at our T-Systems data centers from 1.85 to 1.64 between 2011 and 2019. A reduction from 1.67 to 1.56 was also achieved for Germany between 2008 and 2019. To reduce CO2 emissions at our data centers (DC), we are optimizing energy consumption at individual data center locations and improving processes throughout the global data center landscape. Our state-of- the-art data centers, e.g., in Munich or Biere, are set up for a PUE value of 1.36 and are therefore much more efficient than the average for Ger- man data centers, which lies 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 volumes of data and new features. ENERGY EFFICIENCY IN BUILDINGS Deutsche Telekom in Germany focuses its energy management efforts on energy savings. Accordingly, we continuously monitor and supervise all resources that require energy. Based on this data, we identify where there is potential for increasing efficiency. The goal of energy manage- ment is to minimize the primary demand for building electricity and heating energy. Sustainability aspects are crucial for the selection of future energy carriers. 1. Achieving these goals includes pursuing the following strategies: Through innovative location and office concepts, we are reducing vacancies and optimizing the use of space in our buildings. 2. We identify the need for reduction in energy consumption by using specific indicators such as “kilowatt hours per square meter” to com- pare similar facilities. We also carry out load profile analyses for individ- ual buildings to identify anomalies in their energy consumption. 3. Through communication measures, we want to raise awareness of energy consumption among our employees and motivate them to be energy-conscious in the workplace. The Deutsche Telekom subsidiary Power & Air Solution Management GmbH (PASM) procures energy for the German Deutsche Telekom Group companies. Its energy management system is certified according to the ISO 50001 international standard. In addition, Deutsche Telekom’s real estate holdings undergo an energy audit according to DIN standard 16247 every four years. Heating and hot water We regularly assess the need for repairs at our properties and conduct profitability analyses to further reduce consumption, concentrating on necessary and especially economic measures, such as: Energy optimization of heating systems (e.g., by replacing old burner technologies) Updating heat generators and related hydraulic components (such as pumps and valves) Using waste heat (e.g., by using heat recovery systems) Using combined heat and power generation (e.g., by combined heat and power units) Reducing supply losses when heating water (e.g., by switching to decentralized hot water supply) Electricity The supply infrastructure of office buildings accounts for the biggest share of building electricity consumption (e.g., pumps, ventilation and cooling systems, building automation systems, elevators, and lighting). To reduce electricity consumption, we are focusing our measures on the following areas:
ENVIRONMENT ENERGY CONSUMPTION & EFFICIENCY 71 Data centers are becoming more energy-efficient The “DC11@2018” program ran from 2013 to 2018. Its objective was to combine data center capacity worldwide with the latest IT technology and hence improve energy efficiency. The goal was to achieve an aver- age PUE value of 1.4. To do this, data center space and locations were reduced and existing data center infrastructure was virtualized. This involved decommissioning several old data centers in Germany. At the Biere and Munich data centers and at other international data centers such as the Barcelona site in Spain, air conditioning was optimized. However, we were not able to achieve the targeted PUE value of 1.4. At the end of 2019, the same figure was 1.64. This is in part due to the gradual shutdown of old data centers, which become less efficient during decommissioning as less capacity is used. Another reason is the commissioning of the newly built Biere data center (second construc- tion phase), which initially produced low efficiency due to low capacity utilization. It is now in the ramp-up phase and efficiency is improving along with increased capacity utilization. Additional measures were identified at the end of the “DC11@2018” program. As a result, the follow-up program “Data Center Next” was launched at the beginning of 2019 with the aim of further homogenizing the IT landscape and purposefully optimizing utilization of the data center infrastructure according to IT requirements in order to further improve efficiency. The program utilizes factors that have a positive influence on a data center’s PUE development, such as selective cool- ing and raising the temperature within the possible range, while taking into account defined limit values. Our target PUE value for our highly efficient data center in Biere is 1.3. To achieve this target, it will be necessary to adhere to a prescribed temperature range, achieve a capacity utilization of at least 80 percent, and create an IT landscape that is as homogeneous as possible. By taking steps such as migrating data from inefficient data centers to Biere, we achieved a PUE metric there of 1.32 by the end of 2019. The data center was also awarded the respected LEED Gold sustainability certification (Leadership in Energy and Environmental Design).
ENVIRONMENT RENEWABLE ENERGY 72 Share of renewable energy in the total electricity consumption (in %) RENEWABLE ENERGY OUR APPROACH FOR MORE RENEWABLE ENERGY Renewable energies are an important element in avoiding greenhouse gases: By 2021, we want to obtain all of our electricity from renewable energies. To do that, we are sourcing more green electricity directly, acquiring corresponding guarantees of origin, or concluding power purchase agreements (PPAs), as is the case in the United States. When- ever possible and practicable, we invest in our own power plants – for instance in the construction of cogeneration plants and the installation of photovoltaic systems. We have been recording the “Renewable Energy” ESG KPI since 2016. In addition, we have developed parameters that apply Group-wide and let us assess electricity procurement at our national companies in terms of sustainability aspects in order to further increase the share of electric- ity from renewable sources in the future. Since 2019, we have also been testing alternatives for a climate-neutral power supply for mobile masts using fuel cells. They are economical, silent, low-maintenance, and, thanks to the use of bio-methanol, they are one thing in particular: carbon neutral. RENEWABLE ENERGY ESG KPI The Renewables ESG KPI is calculated based on the share of renewa- ble energy in the total electricity consumption. We are committed to increasing our reliance on renewable energy throughout the Group. The new climate protection target includes obtaining 100 percent of energy requirements from renewable sources. To this end, all national companies can purchase renewable energy directly as well as through certificates (guarantees of origin for electricity from renewable sources) if needed. In 2019, Deutsche Telekom obtained 64 percent of its electricity from renewable sources. The average share of electricity from renewable sources in the country mix across all countries where Deutsche Telekom is active was 31 per- cent. This was based on the supplier-specific electricity mix, the residual mix or the average country mix according to the U.S. Energy Information Administration, depending on the statistics available. The residual mix uses country-related residual factors (based on the RE-DISS project of the European Commission, which assessed the national share of renewables following subtraction of declared quantities of electricity). 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. The share of electricity obtained from renewable sources based on the country mix amounted to 24 percent (“remaining” country mix). b)
ENVIRONMENT RENEWABLE ENERGY 73 RENEWABLE ENERGY IN THE GROUP We are committed to increasing our reliance on renewable energy throughout the Group. To this end all European national companies can also purchase renewable energy certificates if needed. RENEWABLE ENERGY IN THE NATIONAL COMPANIES Group-wide, we have set ourselves the goal of using electricity from renewable energy sources alone from 2021. In the reporting period, the share of renewable energy at our national companies was an average of almost 30 percentage points above the respective country mix*. To achieve this, the national companies can also consider acquiring certifi- cates (guarantees of origin) and concluding power purchase agree- ments (PPAs) for electricity obtained from renewable energy. Our national companies in Greece (OTE), Croatia, the Netherlands, Aus- tria, and Hungary are already pioneers in this field and cover 100 per- cent of their electricity needs with renewable energies. Due to the EEG levy, 50 percent of the electricity purchased in Germany already con- sists of renewable energies. As a result of the current market situation, the rest will be covered by the purchase of guarantees of origin. T-Mobile US is planning on procuring its electricity entirely from renewa- bles by 2021 – predominantly from wind power. In order to achieve these targets, T-Mobile US has concluded long-term agreements (12-15 years) with wind and solar park operators. That gives the power produc- ers security of investment. As a result, in the United States, two new wind farms have already been set up and a further wind farm and four solar parks are to follow by 2021. We have been reporting on the Renewable Energy ESG KPI since 2016. It is calculated based on the share of renewable energy in total electric- ity consumption, and is compared here to the share of renewable energy in the national energy mix (country mix) for all national com- panies. * 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.
ENVIRONMENT MOBILITY 74 MOBILITY OUR STRATEGY FOR CLIMATE-FRIENDLY MOBILITY IN GERMANY Since 2008, we have been able to reduce CO2e emissions caused by our vehicle fleet by more than 40 percent or 74 kt CO2. Two factors were chiefly responsible for this: the increased use of CO2-optimized vehicles and reduced vehicle demand. Each year, our fleet shrinks by some 1,000 vehicles, as modern technologies allow us to make fewer service calls to our customers. The transition to climate-friendly mobility requires not only environmen- tally friendly drive systems (such as electric/natural gas) but also intelli- gent connectivity of all existing and new forms of mobility – for instance, we want to combine company and public transport on one digital plat- form for employees commuting between home and work. The key terms here are “sharing” and “Mobility as a Service” (MaaS). NUMBER OF VEHICLES The total number of vehicles at our company decreased year over year by around 1 percent.For detailed comments on the figures for each indi- vidual company, please refer to the interactive benchmarking tool. . To achieve our goal, we are pursuing a three-pillar mobility strategy: Improve: establish a more efficient and continuously sustainable fleet and integrate methods of micro-mobility (e.g., bicycles) The total number of our vehicles with alternative drive systems has more than doubled compared to the previous year. When purchasing com- pany and business vehicles, we continue to use alternative or low-con- sumption drive systems wherever economically feasible. Connected fleet: link existing and new mobility services, and expand digital pooling and sharing solutions Innovate: build an “MaaS” platform for Deutsche Telekom employees and develop additional supporting products and services Reporting against standards Logistics and transport are carried out by service providers at Deutsche Telekom. The environmental impacts of transportation are influenced by the contractual arrangements with service providers. This data is also relevant for criterion 11 (Usage of natural resources) of the German Sustainability Code. FUEL CONSUMPTION Overall fuel consumption fell by approximately 4 percent, and by 3 and 6 percent respectively for company cars and service vehicles. For detailed comments on the figures for each individual company, please refer to the interactive benchmarking tool. Last year, we were able to significantly increase the number of alterna- tive drives. We started regular operation of electric and eco-friendly natural gas vehicles, or are about to do so, for various fleet segments. Through our involvement in a nationwide funding project sponsored by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and the Federal Ministry of Economics and Technology (BMWi), we will add further locations for electromobility in the next two years. We are working together on this with other units in the Group: ComfortCharge as the operator of the charging infrastruc- ture, the Deutsche Telekom field service as a partner for installation and support, and Get Charge as charging current and billing service provider. Nevertheless, the high acquisition costs of electric vehicles compared with combustion vehicles and the required charging infrastructure sig- nificantly limit their use. Despite subsidies and lower fuel and mainte- nance costs, the vehicles are still substantially more expensive than diesel or gasoline-powered vehicles. Also, the available range of models is still smaller compared to models with conservative drives.
ENVIRONMENT MOBILITY 75 Reporting against standards Logistics and transport are carried out by service providers at Deutsche Telekom. The environmental impacts of transportation are influenced by the contractual arrangements with service providers. This data is also relevant for criterion 11 (Usage of natural resources) of the German Sustainability Code. JOB TICKET In 2019, 14,000 employees of the Deutsche Telekom Group in Germany used a discount season ticket provided by their employer to commute by public transport. This reduction is due to relocation of sites. We offer regional discount season tickets (monthly or annually) to our employees at many of our German Deutsche Telekom sites, especially in high-density population areas. The offer encourages our employees to use climate-friendly public transportation and helps them keep their commuting costs down. Reporting against standards By reporting on the use of discount season tickets, we partially cover the V04-13 (Percentage of services to reduce impact on climate) EFFAS indicator. This data is also relevant for criteria 2 (Implementation of the sustainability strategy) and 10 (Innovation and product management) of the German Sustainability Code. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promot- ing environmental responsibility).
ENVIRONMENT CIRCULAR ECONOMY & RESOURCE EFFICIENCY 76 CIRCULAR ECONOMY & RESOURCE EFFICIENCY OUR APPROACH TO RESOURCE CONSERVATION AND ENVIRONMENTAL PROTECTION facturing companies. The resource utilization for the manufacturing and use of our products and network infrastructure occurs in up- and down- stream stages of the value chain – with our suppliers and customers. This is why we are committed to the responsible handling of resources within our value chain. Here are the most important activities along our value chain: We reduce the use of plastic, paper, and packaging in key processes throughout the value chain. For example, we have halved the size of SIM cards, thereby saving 20.8 metric tons of plastic in the reporting year. It is planned to implement the half-size SIM card in all European national companies in the course of 2020. We promote the responsible use of raw materials among our suppliers and the reuse of materials. For example, we support cell phone collec- tion initiatives in various countries. 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 the international standards ISO 45001 on occupational health and safety, ISO 14001 on environmental management, and ISO 9001 on quality management. Ourenvironmental guidelinesummarizes all of the current voluntary commitments in effect throughout the Group. With the new Group-wide initiative “We care for our planet”, we are bun- dling existing and new projects for resource conservation under one new roof. The initiative strengthens the movement for more sustainabil- ity throughout the Group. Our Green Pioneers have already motivated employees at Deutsche Telekom AG to take part in numerous cam- paigns inside and outside Deutsche Telekom to make better use of resources. Resource efficiency is also a priority at the workplace. 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, coupled with the absence of quantitative specifications, gives us flexibil- ity when addressing the specific requirements of each country and company. The Take Back Mobile Devices ESG KPI measures the ratio of mobile phones in circulation to the number of used devices collected (exclud- ing T-Mobile US). We have also introduced a binding Group-wide guide- line with requirements for the recycling of copper cables, which are being partially replaced over the course of our fiber-optic roll-out. EMPLOYEE COMMUNITIES PROMOTE SUSTAINABILITY Green Pioneers (Telekom Germany): The internal “Green Pioneers” ambassador program was launched in September 2018. The aim of this grassroots initiative is to promote a fundamental shift toward more responsible management and conduct in all parts of the Group. There are now more than 200 employees at 40 locations and in more than 20 departments acting as Green Pioneers who specifically look out for improvement potential in their area of activity. The Corporate Responsibility department creates the framework condi- tions for the Green Pioneers. Its community management is responsible, among other things, for providing the initiative’s communication plat- form in the internal social network You and Me (YAM). Regular virtual and personal meetings allow users to exchange information and experi- ences, share knowledge through internal and external expert talks, and plan activities. Depending on their location, interests and expertise, the Green Pioneers come together to form thematic or regional “hubs”. Many Green Pioneers are active within the scope of flexible working methods, using them to establish modern work models ("80/20" and "Jobvisit") and gain new technical and methodological knowledge while strengthening Group-wide collaboration. The Green Pioneers act as internal multipliers for change: they motivate employees to be involved in numerous resource conservation cam- paigns, such as organizing an exchange for office supplies, clothing exchange campaigns, plant and waste collection campaigns, and an internal company ride-sharing agency. Numerous employee initiatives aimed at sustainability and environmen- tal protection are also active at the national companies of Deutsche Tel- ekom AG, as at the following companies, for example: T-Mobile Netherlands: In 2019 T-Mobile Netherlands has created a committed employee community to engage as many people as possible regarding recycling, efficiency and circular ambitions. Three teams have been set up: Climate & Energy, Circular business, and Sustainable Business Opera-
ENVIRONMENT CIRCULAR ECONOMY & RESOURCE EFFICIENCY 77 tions. The teams in turn are made up of three groups: 1) experts - employees who are dealing with waste, recycling and product streams on a daily basis, 2) ambassadors – people who feel committed to the topic and want to contribute to “Stop Wasting“, and 3) our most impor- tant waste and energy partners/suppliers. Together these teams are responsible for creating a long-term vision, setting annual goals, formu- lating action plans on how to realize these goals, but also to inspire the rest of the organization to join them. T-Systems Iberia (Spain): During the last quarter of 2019, T-Systems Iberia created the commu- nity T-OGETHER, the launch followed in the beginning of 2020. T-OGETHER is a group of volunteers committed to promoting sustain- able initiatives. At the heart of the community is the executive commit- tee consisting of currently ten committed employees. These volunteers are supported by an advisory committee, comprised of environmental, Corporate Responsibility and communications experts. The aim of T-OGETHER is to drive ideas around sustainability in line with the companyâs environmental and social objectives and also to raise awareness regarding environmental issues among all employees. The members develop initiatives and propose them to the company's management. Once an initiative and a budget has been approved, the executive committee starts with the implementation. IT-Services Hungary: At IT-services Hungary a community called “ITSH Environmentally Conscious Club” focusses on raising awareness among the employees in order to reduce electricity and water consumption, decrease paper usage and promote a more effective company and pool car usage as well as selective waste collection. Additionally, IT-Services Hungary is currently in the process of founding an Environmental SPoC (Single Point of Contact) network enabling employees to connect with their colleagues more easily regarding environmental concerns and ideas. Similar to the Green Pioneers in Germany, twenty Change Agents work to promote sustainability at T-Systems Singapore. In other national com- panies, such as T-Mobile Poland, Hrvatski Telekom (Croatia), T-Mobile U.S. or Crnogorski Telekom (Montenegro), employee communities are already active or at the stage of creation. To find out more about the commitment of your employees and corpo- rate responsibilities at our national companies please visit the company profiles. 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. In 2019, the percentage of sustainable products ordered was 30 percent. We also have the following measures: Our “IT Remarketing” project: used IT hardware is refurbished so that it can be reused. Some of our office products are labeled with the EU Ecolabel, the Fairtrade seal, the Organic Farming seal, the Blue Angel eco-label, and the FSC® and PEFC environmental labels. A total of 26 percent of the products in our office products catalog in Germany are classified as sustainable. Office supplies are delivered largely in accordance with the CO2- neutral certificate. Since January 1, 2018, we have procured only environmentally certified office paper, which has been awarded the “Blue Angel” label or the “Nordic Swan" certificate, through a paper wholesaler. To reduce the amount of paper used throughout the Group, we ask our employees to opt out of having salary statements sent by post and have them provided online instead. On our “You and Me” social network, we also offer employees a platform where they can exchange unneeded office supplies instead of reordering them. Our partnership with the charitable organization “AfB gemeinnütz- ige GmbH”, which offers jobs for people with limitations. We give some of our used IT hardware (e.g., laptops) to the organization for reconditioning and reselling. We are working on modernizing the media technology used within our company to meet the requirements laid down in the Minamata Convention. We are therefore currently replacing devices that still contain this heavy metal with new mercury-free versions while send- ing the old devices to be professionally recycled or disposed of. Where possible, we are opting for projectors with state-of-the-art lasers or laser-LED hybrids that work without any conventional lamps. ONLINE BILLING FOR MOBILE AND FIXED-LINE CUSTOMERS IN GERMANY More than 224 million online bills were sent out in 2019. This is the equivalent of around 78 percent of all bills and credit notes for mobile and fixed-line customers in Germany. Since 2017, the data has been collected using a more precise calculation method. a) The values for 2018 were corrected compared to the information published in the previousyear's report.
ENVIRONMENT CIRCULAR ECONOMY & RESOURCE EFFICIENCY 78 Reporting against standards By reporting on the use of discount season tickets, we partially cover the V04-13 (Percentage of services to reduce impact on climate) EFFAS indicator. This data is also relevant for criteria 2 (Implementation of the sustainability strategy) and 10 (Innovation and product management) of the German Sustainability Code. It is also used for reporting on the Global Compact principles 7 (Precautionary approach) and 8 (Promot- ing environmental responsibility). FURTHER RESOURCE PROTECTION MEASURES Print-on-Demand The advantage of the print-on-demand approach is obvious. Brief job- related instructions are printed on a daily basis and do not need to be produced in advance, transported, or stored. Changes to document templates are in use with the customer the very next day, which results in a far shorter response time and means out-of-date materials no longer need to be destroyed as was sometimes previously the case. The new concept has significantly reduced material usage, which is in keeping with the Deutsche Telekom goal of ensuring sustainable man- agement that conserves resources. Brief instructions for the Magenta- Zuhause rate plans marked the first step. In this initial project phase, paper consumption is already being reduced by 37.6 metric tons per year.The next step will be to investigate whether print on demand can also be used for other equipment documentation with particular specifi- cations (several sheets, brochure included, enclosure of SIM card, etc.). Reduction of paper consunption since project start: 140 t Paper Reduction of CO2 emissions since project start: 180 t CO2 RECUP returnable cup In 2018, Deutsche Telekom and Sodexo – the company running our canteens in Germany – joined forces to introduce the sustainable alter- native of RECUP returnable cups. A reusable RECUP can replace around 500 disposable cups and can then simply be recycled. In return for a deposit of 1 euro, our employees get their coffee in a reusable RECUP. This can be returned to any participating partner, where the deposit is returned and the RECUP rinsed and reused. The initiative started at the Deutsche Telekom sites of Stuttgart-Bad Cannstatt and Munich, Dachauer Strasse in November 2018. Many more sites were added in 2019, boosting the number of RECUPS by 115 % to more than 12,000 pieces.
ENVIRONMENT WASTE MANAGEMENT & RECYCLING 79 WASTE MANAGEMENT & RECYCLING MOBILE DEVICE COLLECTION Deutsche Telekom is voluntarily committed to collecting used cell phones beyond the legal requirements. This allows for functional devices to continue being used and the remaining devices to be profes- sionally recycled. We transport all collected devices in a controlled and safe manner to the Telekom Recycling Center. Each device is then electronically recorded and registered in a database. Around 10 to 15 percent of them are suitable for reuse. A DEKRA-certified process is used to carefully erase all of the previous users’ data from these cell phones and smartphones. Defective cell phones or devices, for which certified data erasure would be too costly, are properly recycled using state-of-the-art, environmentally-friendly processes at the Telekom Recycling Center in Western Europe. Up to 100 percent of the materials are reused – as recycled metals or for energy generation. Deutsche Telekom complies with high security standards as regards data protection during the entire process for returning old cell phones. During the collection, transport and thorough erasure of data from the used devices by a certified specialist company in Germany, we rely on secure solutions which correspond to state-of-the-art technology. The entire collection process by our partner Teqcycle was certified by DEKRA in terms of data protection compliance. Old mobile devices can be returned by post or deposited in a Deutsche Telekom collection box. Everyone can get involved in cell phone collec- tion via the online portal and order a free collection box. In order to reduce the ecological footprint when buying new smart- phones, we have developed the sustainable smartphone lifecycle - a central element of our environmental program. The proceeds from marketing and recycling are used to support pro- jects in nature conservation and environmental protection as well as social projects organized by the partners of the cell phone collection center. And, as a bonus, the joint cell phone collection system set up by Deutsche Telekom and Teqcycle was awarded the Blue Angel eco- label. "TAKE BACK MOBILE DEVICES" ESG KPI A) We are reporting the Take Back Mobile Devices ESG KPI based on the reference value "number of devices in circulation." This makes it possible to more precisely illustrate the ratio of the number of cell phones brought to market to the number of used devices collected. When customers use the devices for longer periods of time, the environ- ment benefits from this decision and, as a result, this has a positive impact on the KPI.More than 374 thousand mobile devices were collected throughout the Group (not including TMUS, AMC, Maktel, Crnogorski, DTSE units) in 2019, an increase of 1 percent compared to the previous year. The "Take-back of mobile devices" ESG KPI for the Group in 2019 is 35.5, which means that 3.6 % of the end devices put into circulation were taken back through collection campaigns. Out of 1000 devices put into circulation annually, we take back 36. Our ambition: increase KPI In 2019, about 4.1 million mobile devices were collected at TMUS alone. The KPI would be 93 for TMUS and 82 group-wide incl. TMUS. The aim of the scheme to take back old cell phones is to give them a second life and, if that isnât possible, to properly recycle them to recover the valuable raw materials inside them. Thanks to this, over 3 million used cell phones have been reused or recycled in Germany since 2003, thus conserving resources. In this way, we have helped to improve the eco-balance of mobile devices. The Take Back Mobile Devices ESG KPI measures the ratio of collected devices (in thousands) to the number of devices in circulation (in millions). The collected devices are recorded in kilograms or in units. When using kilograms, we apply a Group-wide conversion factor of 7.25 units per kilogram unless another conversion factor is typically used in that country. Mobile devices in circulation include smartphones, simple phones, tablets and cordless phones. Units are reported by Procure- ment for reasons of data quality. Reporting against standards By reporting the Take Back Mobile Devices ESG KPI as an indicator of progress achieved in the resource-efficient and environmentally friendly use of products, we partially cover the E14-01 (Recycling ratio) EFFAS indicator. This data is also relevant for criteria 7 (Rules and processes), 10 (Innovation and product management), 11 and 12 (Usage of natural resources) of the German Sustainability Code. It is also used for report- ing on the Global Compact principles 7 (Precautionary approach) and 8 (Promoting environmental responsibility).
ENVIRONMENT WASTE MANAGEMENT & RECYCLING 80 WASTE MANAGEMENT AND VOLUME 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, giving top priority to reducing hazardous waste such as lead batteries. Group-wide waste increased slightly by 15 percent compared to 2019. This increase is mainly due to the increase in technical waste. The quan- tities of technical waste fluctuate from year to year depending on pro- jects that are implemented irregularly. RECOVERED COPPER CABLES Copper cables were the main component of telephone lines for dec- ades. These are being partially replaced over the course of our fiber- optic roll-out. In 2016, we therefore introduced a Group-wide, manda- tory policy requiring copper cable recycling. This policy provides a guideline to our national companies when it comes to the recycling and disposal of used cables. In 2019, Deutsche Telekom removed around 7,900 metric tons of cop- per cable from duct systems in Germany alone. Due to intensified meas- ures, significantly more cables could be identified for recovery in 2019. The cable is processed in accordance with environmental standards at certified waste disposal facilities, and up to 90 percent of the material is recycled.
ENVIRONMENT ADDITIONAL ECOLOGICAL INFORMATION 81 ADDITIONAL ECOLOGICAL INFORMATION WATER CONSUMPTION As a service provider, 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, reducing our water con- sumption is part of our environmental guideline. We measure our annual consumption by means of our water consumption indicators. In 2019, there was increased public discussion on possible negative effects on animals and plants due to electromagnetic fields from mobile communications. The Federal Office for Radiation Protection held an international workshop on this topic in 2019 and determined that, based on the current state of scientific knowledge, there is no scientifi- cally reliable evidence of a risk to animals and plants from high-fre- quency electromagnetic fields below the threshold. In 2019, Group-wide water consumption decreased by 21 percent. For detailed comments on the figures for each individual company, please refer to the interactive benchmarking tool. LAND USE The property used by Deutsche Telekom in Germany covers most of our demands for technology, office and storage space as well as providing space for other needs. Total take-up decreased year-on-year with a total of 7,598 square meters of space being used. PROTECTING BIODIVERSITY One major cause of species extinction is the fact that more and more sity at our suppliers’ premises at the start of the value chain. The space taken up by our core business is also significantly lower than in other industries. Nevertheless, we are concerned about protecting biodiversity wherever we can. ICT solutions can help preserve biodiversity, such as through our “Bee and Me” project, which helps beekeepers protect their bees. Deutsche Telekom also emphasizes the protection of biodiversity as it expands its network and complies with relevant nature conservation regulations. Environmentally friendly measures helped us provide the famous Eltz castle with mobile coverage without disturbing the habitats in the nature reserve. In addition, we also cooperate with environmental and nature conserva- tion organizations to financially support nature and species protection. Proceeds from the used mobile device collection campaigns benefited the following organizations, among others: Landesbund für Vogelschutz Bayern e.V., Pro Wildlife e.V, projects for the protection of gorillas of the Frankfurt Zoological Society, and species protection projects of the Hel- labrunn Zoo, Munich. Reporting against standards This data is relevant for criterion 11 (Usage of natural resources). It is also used for reporting on the Global Compact principles 7 (Precaution- ary approach) and 8 (Promoting environmental responsibility).
SOCIAL SOCIAL COMMITMENT 82 SOCIAL COMMITMENT OUR APPROACH TO SOCIAL RESPONSIBILITY The digital revolution is changing almost every area of our lives. We want to help allow all people to shape these changes in a positive, active, and equal way. In short, we want everyone to #TAKEPART. That’s why, as part of our social commitment, we are also working on breaking down barriers to digital participation. We believe there are three key factors for ensuring everyone can partici- pate in our digital society on equal terms – technical access to fast net- works, the affordability of equipment and services, and the ability to use digital media competently. Access: We are continuously expanding our network to enable technical access. Affordability: With different rates for every budget and our social rate, we are striving to make digital access affordable for everyone. Ability/Competent use of digital media: Internet users should have positive experiences and suffer no harm online. Data security and data protection are top priorities for us. It is also important for every- one to use media in a competent, responsible, and critical manner, and in line with basic democratic values. We are therefore commit- ted to media and democratic competence. By focusing on promoting digital participation, our social commitment correlates closely with our core business. We consider ourselves responsible not only for our products and our network, but also for ensuring that people can interact with them confidently. This allows us to put our expertise as a telecommunications provider to the best possible use for the benefit of society. As one of the major employers, part of our social responsibility in 2019 was to support refugees in their integration into the German labor market. In carrying out our social commitment, we not only implement our own projects and initiatives, but also encourage the volunteer efforts of our employees. In addition, we provide financial support, for example, by being involved as a sponsor and providing support in the area of disas- ter response. The national companies carry out independent regional initiatives. We also work closely across national borders when it comes to our social involvement and share experience and best practices. Close cooperation with social players such as NGOs, associations, and initiatives also plays an important role. Measuring success We use a set of KPIs to measure our success: The Community Investment ESG KPI reflects our social commitment in terms of financial, human, and material resources. The Beneficiaries ESG KPI measures the number of active contribu- tors as well as the target groups they reach. The Media Literacy ESG KPI highlights the percentage of projects and activities that help people use media proficiently. It is highly relevant to us, as it correlates closely with our core business. Our measures are based on the Sustainable Development Goals (SDGs) of the United Nations. We have listed the activities with which we are pursuing SDGs in an overview. PROMOTING MEDIA LITERACY AND DEMOCRATIC COMPETENCE We have made it our mission to promote the safe and competent use of digital media – and the ability to use them in line with basic democratic values. We are therefore advocating trust and opinion forming online through a variety of projects and initiatives. We also provide updates about the responsible and critical use of media on our Group website and in our sustainability magazine “We Care”. Our focus for 2019 was “digital democracy”: What benefits does the digital world offer for political participation and opinion forming? Where is democracy threatened by what happens on the internet – for instance, through open or veiled populism, hate speech, fake news, and the manipulation of public opinion? In 2019, we reached many thousands of people with snackable content, discussion rounds, and workshops on the topic of “digital democracy,” at IFA in Berlin, for instance. We aim to raise awareness and highlight alternative courses of action, for example, on the question of how to identify fake news and how to apply this knowledge when using social media. Teachtoday The Teachtoday initiative supports children, young people, parents, and grandparents as well as teaching professionals with hands-on tips and materials about safe, proficient media usage. It covers a wide range of issues from the areas of family, school, and recreation. The materials are available at www.teachtoday.de in seven languages (German, English, Croatian, Montenegrin, Polish, Romanian, and Hungarian). A media obstacle course also presents media use in a fun way. Topics such as play times, privacy, and cyberbullying are addressed at different stations.
SOCIAL SOCIAL COMMITMENT 83 COMMUNITY INVESTMENT ESG KPI We report a set of three KPIs for calculating the impact of our social commitment. They comprise the Community Investment ESG KPI, the Beneficiaries ESG KPI and the Media Literacy ESG KPI. Our activities are based on the methods employed by the London Benchmarking Group (LBG), which incorporate the aspects, "input," "output" and "impact".The Community Investment ESG KPI illustrates activities in which Deutsche Telekom was involved in the community either finan- cially, through its employees, or through donating materials. Our ambition: increase KPIThe investment volume for our entire network infrastructure in 2019 was € 13.1 billion (with more than € 5.5 billion of this in Germany), and we are already providing LTE to 98 percent of the population in our national companies. What's more, we operate the larg- est fiber-optic network in Germany, with more than 500,000 kilometers of cables, and are driving the expansion of a large-scale NB-IoT infra- structure for the cities of the future. Thanks to the Internet rollout, our investments are making an important contribution to facilitating access to fast Internet for large sections of the public. This, in turn, is the foun- dation for the positive development of our business KPIs, e.g. the Media Literacy ESG KPI. Furthermore, our products and services are contribut- ing to climate protection and resource efficiency. Our products range from ICT solutions such as video conferencing and Industry 4.0 to sus- tainable connected farming and Smart City concepts. Additionally, the Community Investment ESG KPI makes an important contribution to the Sustainable Development Goals. In 2019, more than 24 million euros of the community investments have contributed to the SDG 4 (quality education). Teachtoday also has its own YouTube channel with short catchy videos about safe, proficient internet use, data protection, and how truthful people are online. It includes interviews on children’s rights, conducted on World Children’s Day 2019. The Scroller children’s media magazine is geared specifically to chil- dren aged nine to twelve to improve their media literacy. It is available in both an interactive web version and a free print format. At the National Youth Conference “Medien 2019” in Rostock in March 2019, “Teachtoday” presented materials that media scouts can use in their schools. More than 300 “media scouts” took part: they are specially trained young people who advise their fellow students on how to use the internet. #TAKEPART Stories #TAKEPART Stories (#DABEI-Geschichten) is a Deutsche Telekom initi- ative that addresses socially relevant digitalization topics in a practical way and turns them into opportunities for disseminators. The initiative highlights potential for participation and responsible conduct on the internet and aims to encourage a critical discussion with these options. Our goal is to provide ideas for the responsible use of digital media and to promote them so that participation in the digital space can succeed. In this way, the initiative contributes to our #TAKEPART campaign.The material can be used for self-study, but is also suitable for disseminators working with learner groups. The team uses innovative, didactically effective formats to develop the material together with modern technolo- gies in the form of modules. Ten modules are available in German and English, as well as in simple language. No matter how complex a topic is, we think it’s important to leave it up to the user to determine whether it’s important for them. We ensure appropriate linguistic and didactic preparation of the material. At #TAKEPART Stories you will also find information about Digital Friendship and opinion making on the internet. In 2019 we published two new modules on the topics “Living in the city of the future” and “Digital democracy”. Deutsche Telekom Stiftung's commitment The Deutsche Telekom Stiftung is committed to better education in STEM subjects (science, technology, engineering, and mathematics), with numerous programs and projects . It does so because it is con- vinced that a modern education system must give young people the best possible preparation for meeting global challenges such as digital transformation, climate change, electromobility, and biodiversity.
SOCIAL SOCIAL COMMITMENT 84 Volunteer involvement is an important component of our training. That is why we organized a fundraising run this year focusing on the partici- pant’s health as well as on the topic of “volunteer involvement”. The par- ticipants had the opportunity to have their type assessed for the national bone marrow registry of the DKMS (German "Deutsche KnochenMark- Spenderdatei" or "German Bone Marrow Donor File"). Moreover, by tak- ing part in the run the participants supported the association Gesicht Zeigen! Für ein weltoffenes Deutschland e.V (“Show your face! For an open-minded Germany e.V”). BENEFICIARIES AND MEDIA LITERACY ESG KPIS The report comprises a set of three KPIs for calculating the impact of our social commitment. In addition to the Community Investment ESG KPI, we report the Beneficiaries and the Media Literacy ESG KPI here. Our activities are based on the methods employed by the London Benchmarking Group (LBG), which incorporate the aspects, "input," "output" and "impact".The Beneficiaries ESG KPI reflects the number of people who got involved in community activities and the number of people in the target group that participate in or benefited from such activities (e.g. media literacy trainings, DSL connection in schools and crisis helpline). Our ambition: increase KPIThe Media Literacy ESG KPI reflects the share of people we have reached through programs addressing this topic. This KPI establishes a direct correlation between these activities and our core business. The ESG KPI reached 41 percent by the end of 2019 and our aim is to achieve a share of 45 percent by 2020. ENGAGEMENT@TELEKOM We support the social commitment of our employees with our range of corporate volunteering opportunities. Through their commitment, they play a major role in strengthening social cohesion, broadening their own horizons, and boosting their social skills. This in turn has a positive impact on teamwork at the company. Our corporate citizenship program engagement@telekom pursues two aims – to support our employees’ current involvement and encourage them to find new ways to contribute to society. To that end, we give them opportunities to volunteer: they can get involved in a good cause on numerous Social Days, for example. One focus is on projects that promote media literacy, where employees help people better understand digital phenomena, thus laying the groundwork for participation in the digital world. In 2019, employees also intensified their commitment to the environment. Among other things, they started their own activities as part of the Green Pioneers program which helps us reach our Group targets – for example, to reduce CO2 emissions. JOINT COMMITMENT WITH PARTNERS We have taken on the task of driving forward the social discussion on digital responsibility. To do this, we participate in various alliances and partnerships such as the “Corporate Digital Responsibility” initiative run by the Federal Ministry of Justice and Consumer Protection. By signing the Charter of Digital Networking and through our involvement in its supporting association, we emphasize our commitment. We have longstanding partnerships with many organizations, associa- tions, and initiatives with whom we work as part of our social commit- ment, for example: With the Telefon Seelsorge crisis hotline, With the Nummer gegen Kummer youth counseling line, run by an association offering advice in conflict and crisis situations, With Aktion Deutschland Hilft With “Deutschland sicher im Netz e.V. (DsiN)” to support activities aimed at IT safety and data privacy (among other things, we support the “Digitale Nachbarschaft” (Digital Neighborhood) project, where volunteers provide tips and advice on digital opportunities and data security),
SOCIAL SOCIAL COMMITMENT 85 With the “German Association of Senior Citizens' Organizations” (BAGSO) to promote media literacy among older people (among other things, we support their “Goldener Internetpreis” (Golden Internet Award) for proficient internet users ages 60 and up) and As a participant in the “Woche des bürgerschaftlichen Engage- ments” (Community Volunteering Week) sponsored by the National Network for Civil Society. FINANCIAL COMMITMENT AND SPONSORSHIPS In Germany we are involved in the fields of sport, culture, and social issues. The national companies are also engaged in these areas. In addition to providing funding, we help artists, athletes, event organizers, and associations with their communication and marketing activities. The Sponsorship Policy provides the framework for sponsoring activi- ties. Being involved in the regions where we are based is another impor- tant aspect. Examples of our involvement include: Music sponsorship Theater funding Competitive sport sponsorship with partners such as the DFB (German Football Association), FC Bayern Munich, Telekom Baskets Bonn, and Deutsche Sporthilfe, DFBâs Sepp Herberger Foundation, and the German National Paralympic Committee Recreational sport sponsorship Sponsorship of social activities associated with partnerships Corporate giving Through our corporate giving program, we support the work of aid organizations worldwide – preferably in the form of long-standing partnerships – and provide rapid assistance in disaster situations. Our Group Donation Policy lays out the guidelines for these activities. OUR APPROACH TO TRUSTWORTHY INTERACTION ON THE INTERNET The Initiative D21, Germany’s largest charitable network for the digital society, sponsored by Deutsche Telekom, and its Digital Index 2018/2019, confirmed that the degree of digitalization in Germany has continued to rise compared to last year. The index shows that the pro- portion of people outside the digital bubble has dropped by 4 percent since 2017. Over the same period, the group of people at the leading edge of digital progress has grown by three percent. Nonetheless, there are still major differences between various sections of the population. Having access to modern information technologies is the basis for the ability to participate in the knowledge and information society. We are committed to ensuring that everyone, regardless of age, back- ground or education, can participate in digital society. That is why we are continuing to rapidly expand our infrastructure and improve trans- mission speeds with new, secure technology. At the same time, we use our social initiatives to reduce potential obstacles to ICT use. We develop our own offers and support partner initiatives with our expertise in this area. In doing so, we always set specific targets – whether for ourselves or in collaboration with our partners. As we work toward giving as many people as possible the opportunity to participate in the digital world, we set the following focal points for our commitment: Creating awareness We have taken on the task of driving forward the social discussion on digital responsibility. To do this, we participate in various alliances and partnerships such as the “Corporate Digital Responsibility” initiative run by the Federal Ministry of Justice and Consumer Protection. We also want to work with our stakeholders to continue developing our guide- lines for working responsibly with artificial intelligence, which we pub- lished in 2018. We emphasize our commitment as a member of the Charter of Digital Networking. If the digitalization process is to succeed, it is vital that people have faith in the confidentiality of their personal data. Data protection and data security are top priorities for us. However, handling personal data with due care and attention is also an important element. We promote this approach through our online advice portal sicherdigital.de and a focus topic in our sustainability magazine “We Care”, for example. In addition, our website “Media, sure! But secure.” pools various initiatives with the aim of promoting responsible and critical interaction with media and to thereby improve participation of people in the digital world.In addition, we revised our Social Media principles in 2019 supporting our goal to ensure a respectful and appreciative dialogue both within the company and outside, as well as a communication culture that reflects this. Supporting implementation With our expertise, we support projects and initiatives that offer digital solutions for social challenges: As part of our corporate volunteering activities, our employees participate in a wide range of projects. Additional information can be found here [Verlinkung zu Management & Facts: engagement@ telekom]. We are making a contribution to dementia research through the virtual reality game “Sea Hero Quest VR”. We are supporting external initiatives, for instance through our membership 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. As part of the “Telekom@School” initiative, we offer free broadband connections to schools throughout Germany in order to further improve access to modern information technologies. This gives children and young people the opportunity to learn how to use digital media irrespective of their family background.
SOCIAL SOCIAL COMMITMENT 86 We also offer special rates to enable low-income customers and people with disabilities to make phone calls and surf the web at rea- sonable prices. More than one million customers in Germany take advantage of these special plans each year. REFUGEE AID: INTEGRATION INTO WORK, INTEGRATION INTO SOCIETY Deutsche Telekom’s commitment to refugees started in 2015 as a humanitarian aid task force with the following measures: Strengthening skills “Teachtoday” is part of our initiative “Media, sure! But secure.” focused on promoting safe, proficient media use for children and young people, parents and teaching professionals and offers practical and everyday tips and materials. One example is the free children’s magazine “Scroller”. The children’s media magazine published by Deutsche Telekom’s Teachtoday initiative addresses important issues related to learning with digital media and encourages children to help shape the digital world themselves. Our commitment also encompasses the following: “Code+Design Camps”: Young people attending these camps – who may or may not have any prior experience with programming – get to know new technologies and develop their skills under the guidance of professional mentors. We support the Digitale Nachbarschaft (Digital Neighborhood) project, which trains people to volunteer as IT ambassadors. We are involved in the Digital-Kompass (Digital Compass), which offers the association safe, straightforward, and free help to take advantage of digital opportunities. Workshops, manuals, webinars, and tutorials are offered. In partnership with BAGSO, the German National Association of Senior Citizens’ Organizations), we promote media literacy among older people and also support the “Goldener Internetpreis” (Golden Internet Award) for competent internet users age 60 and up. Along with four other foundations, the Deutsche Telekom Stiftung fosters the education and digitalization forum “Forum Bildung Digi- talisierung” that aims to improve education and equal opportunities using digital media. With #DABEI-Geschichten (#TAKEPART Stories), Deutsche Telekom invites users to address issues from the digital world in order to better understand them: from digital democracy and digital friendship to data protection and security – easy to understand, innovative, and full of tips! Suggestions and tips are offered for those working with learning groups. Documents are also available in simple language. The Deutsche Telekom Stiftung carries out numerous initiatives and projects that cover the full range of institutional education and utilize countless activities and programs to boost achievement in STEM sub- jects (science, technology, engineering, and mathematics). Free Wi-Fi hotspots in first aid facilities Deutsche Telekom buildings provided for use by the Federal Office for Migration and Refugees Deployment of staff at the Federal Office for Migration and Refugees Support for private volunteer work by employees In 2016, the first-aid initiative developed into the “Deutsche Telekom helps refugees” project, which aims to integrate refugees into the labor market. Promoting long-term integration In 2019, 450 positions were filled with refugees at Deutsche Telekom and partner companies – in the form of internships, as part of a training program, in the “Internship PLUS Direct Entry” program, or in perma- nent positions. 56 refugees who have previously completed a program at Deutsche Telekom were able to take up subsequent employment at Deutsche Telekom or a partner company of Deutsche Telekom. They will have, for example, switched to vocational training or a cooperative study program following an internship, or entered into permanent employment after their training. In 2019, the first participants also successfully completed the "Intern- ship PLUS Direct Entry" program. More than 70 percent of them switched to long-term follow-up employment. “Internship PLUS direct entry” is a program that was launched by Deutsche Telekom in 2016 in cooperation with the Federal Employment Agency, Deutsche Post DHL Group, and Henkel. A three to six-month orientation phase was followed by a two-year employment contract. In 2018, we continued and further developed the program for Deutsche Telekom. We created new jobs in areas with an especially high demand for staff, such as technical and customer service. The program will continue to run until 2021. In 2018, we received the “HR Excellence Award” for the “Internship PLUS direct entry” program for innovative flagship projects in human resources management in the Group Corporate Social Responsibility category. We also created internship positions for refugees in 2019 with the aim of providing them with their first step into the German working world. Many of these positions were awarded through applicant days, at which the focus was on getting to know each other, not on querying prior experience or looking at certificates. In 2019, Deutsche Telekom again supported its employees in their volunteer refugee work, for example, in cooperation with Volunteer Vision in the eStart program. At the end of the year, 150 Deutsche Telekom employees acted as language tutors to help refugees learn German.
SOCIAL SOCIAL COMMITMENT 87 Over the last few years, we have gained a lot of experience in integrat- ing refugees into the labor market. This has been incorporated into our standard HR procedures, helping to create a sustainable basis for inte- grating refugees into our company. At the end of 2019, we were able to stop using the special processes created to integrate refugees. Information about Germany: Handbook Germany Refugees and anyone new to Germany can find information about living, studying, and working in the Handbook Germany. The handbook emerged from the refugee portal we launched in 2015 in collaboration with the Federal Chancellery, Adobe, and Neue Deutsche Medien- macher (New German Media Professionals). Information is currently offered in seven languages, with Pashto (spoken in Afghanistan/Paki- stan), French, and Turkish alongside German, Arabic, English, and Farsi. Deutsche Telekom supports the site’s editing team in its capacity as technology partner. Handbook Germany was distinguished once again in 2019, this time with the "Smart Hero Award" in the Diversity and Equal Opportunity category awarded by the foundation “Stiftung Digitale Chancen”.
SOCIAL EMPLOYEE RELATIONSHIPS 88 EMPLOYEE RELATIONSHIPS OUR APPROACH TO EMPLOYEE RELATIONS We pursue dialog-oriented employee relations throughout the Group and engage in trust-based, constructive collaboration with employee representatives and unions. The works councils, central works councils, and Group Works Council represent the interests of our employees at our Group in Germany. Our partner representing the employees’ interests on a European level is the European Works Council (EWC). We also have executive staff representation committees and disabled employee representatives at the unit, company, and Group levels. As the underlying laws and contracts vary from country to country, codetermination matters are managed locally together with trade unions and employees’ representatives. Group management is involved in all major issues as a matter of principle. We have set Group-wide standards for managing employee relations. These were formalized in our Guiding Principles and our Group’s Employee Relations Policy. You can find comprehensive information about conduct in relation to human rights at our Group in the Human rights section. EMPLOYEE RELATIONS POLICY The Employee Relations Policy, which has been rolled out throughout the Group, defines the core elements of Deutsche Telekom's human resources policy and describes what we stand for in our relationships to our employees around the globe. Our Employee Relations Policy addresses the following topics: Employee development Handling change responsibly Healthcare and sustainability Fair pay Achieving a good work-life balance Leadership Diversity Ban on discrimination Communication Collaboration with employee representatives We constantly monitor our Employee Relations Policy. Deutsche Telekom publishes reviews on the reports of our national companies on our Group portal under “Responsible Employer”. REVIEWED: EMPLOYEE RELATIONS AT OUR NATIONAL COMPANIES What progress have our national companies been making in implement- ing our Employee Relations Policy? We examine this issue by means of special reviews. Two to three national companies are subject to such a review each year. They use the results to further improve their relations with employees. The reviews also help us conduct a Group-wide assess- ment of employer/employee relations and any human rights risks involved in our business activities. If necessary, we formulate additional measures, including a “Human Rights Impact Assessment and Engagement”, a process for estimating the actual and potential effects of business activities on human rights. The process also assesses the ability of the organization to prevent, miti- gate, or eliminate these effects altogether. Since 2019, we have been holding local workshops to provide training on and raise awareness of human rights issues. In 2019, we conducted such an assessment at T-Systems India. In the reporting period, we also conducted employee relations policy reviews at T-Mobile Poland and Deutsche Telekom Außendienst GmbH. We publish the detailed results on our website. FLEXIBLE WORKING MODELS FOR A WIDE RANGE OF NEEDS AT DEUTSCHE TELEKOM IN GERMANY Designing work so that it is flexible and meets individual needs makes it easier for employees to achieve a good work-life balance, and prevent stress and the feeling of being overworked. That is why we encourage flexible working models. Our offer ranges from flexitime and part-time work to lifetime work accounts. Promoting part-time work Deutsche Telekom supports the establishment of part-time jobs and guarantees employees the possibility to return to their original working hours. In Germany, 13 percent of employees under collective agree- ments and 18.5 percent of civil servants took advantage of part-time models (as at December 31, 2019). In addition, a total of 29 executives throughout Germany were working part-time (as at December 31, 2019). Detailed information about our numerous part-time regulations is available here. Mobile working Mobile working is the normal state of affairs for us. The first mobile working collective agreement arranged between Deutsche Telekom and ver.di has been in effect since 2017. Among other things, it includes rules regarding telecommuting and mobile working. Part-time training for single parents Deutsche Telekom has been offering single mothers or fathers up to the age of 25 the opportunity to complete a part-time training program or
SOCIAL EMPLOYEE RELATIONSHIPS 89 cooperative course of study since 2011 in collaboration with the German Federal Employment Agency. Parental leave network The “Stay in contacT” parental leave network enables employees to stay in touch with the company during parental leave and exchange informa- tion about job-related topics. Lifetime work accounts and leave of absence For the implementation of individual life plans, the majority of employ- ees at Deutsche Telekom can set up a specialsavings account. Gross salary conversions or the conversion of up to 80 overtime hours per year can be saved on these lifetime work accounts. In total, we have set up 12,263 accounts for employees and 724 accounts for civil servants (as of December 31, 2019). The savings can be used for a sabbatical, for an earlier exit from working life or for an increase in part-time salary. For those without savings there is also the option for leave of absence without pay. T-Systems employees can also release long-term time savings that result from (project-related) overtime. Leave of absence for personal reasons In case of special reasons, employees have the option of being released from their work at short notice after consultationand approval by their manager. For instance, this is an option when caring for a relative or after the statutory parental leave. In the individually agreed period, employees are exempt from performing their work and payment of the remuneration is suspended. All other aspects of the employment relationship remain unaffected. Time-off for education Time-off for education is based on the current offer of leave of absence without pay and makes it possible for employees to take up to four years off for a degree course or a doctorate. The employment contract is put on hold during this time and the employee does not receive any pay. Civil servants employed at the company can also take advantage of this offer in the form of a "leave of absence without pay for reasons of private interest." This time does not apply to their pension and no remuneration is paid. The 80/20 model Since 2017, we have been using the 80/20 model to give our employ- ees the opportunity to spend up to 20 percent of their working time on projects outside of their usual remit. This allows them to work with teams from other departments. Use of the model is voluntary and is tied to a specific Group project. Phased retirement We offer all Group employees over the age of 54 the option of phased retirement. Separate regulations apply to employees and to civil serv- ants. There are two options for the phased retirement: the block model or the part-time model. During the reporting year, a total of 1,634 phased retirement contracts were concluded with employees both cov- ered and not covered by collective agreements. Among civil servants there were 638 such contracts (as at December 31, 2019). Underlying regulations These are based on the laws and regulations applicable in the individ- ual countries. Working hours at Deutsche Telekom in Germany are gov- erned by collective agreements and works agreements. We document the daily working hours of our employees covered by collective agree- ments by means of electronic time recording in work time accounts. This guarantees compliance with legal and company regulations; for example, it makes sure that the weekly working hours for a specific flexi- time balancing period are complied with. At a large corporation like Deutsche Telekom, regulations are diverse and cannot be fully speci- fied for all the Group companies. ACHIEVING A GOOD WORK-LIFE BALANCE AT DEUTSCHE TELEKOM IN GERMANY We offer our employees attractive offers to help them achieve a better work-life balance. Achieving this requires more flexible work models, family-friendly options, effective health promotion and not least, a sus- tainable anchoring of work-life balance in the corporate culture: Childcare offers: At a number of sites with large numbers of employ- ees, Deutsche Telekom provides childcare facilities, holiday child- care programs, and parent-and-child offices. Free advisory and referral services: Through our cooperation part- ner “awo lifebalance” and an online service, we support our employ- ees with childcare (including emergency care), care for relatives, and household services. Employee networks: Through various networks, such as the “Fathers' Network” or “Stay in contacT”, we provide information for reconciling work and family life, as well as contacts and discussion forums. Family fund: We support employee projects that help them improve their work-life balance. Social fund: We provide fast financial aid to employees who find themselves in financial difficulties through no fault of their own. We also offer subsidies for recreational activities for severely disabled children. Welfare service: We provide support for children who have lost one or both parents, are committed to employees in crisis situations and students from low-income families, and promote leisure activities for senior citizens. Recreation service: Employees can take advantage of low-cost family holidays, such as at one of our 18 holiday resorts. Our complete range of offers for a better work-life balance can be found at www.telekom.com/work-life.
SOCIAL EMPLOYEE RELATIONSHIPS 90 SALARY DEVELOPMENT AT DEUTSCHE TELEKOM IN GERMANY In the 2018 collective bargaining round, the salaries of roughly 60,000 employees covered by collective agreements at Deutsche Telekom AG and in the Germany operating segment were raised in two stages by a total of 5.2 percent for employees in the lower pay groups and 4.8 percent for employees in the higher pay groups. The second salary increase took effect on May 1, 2019. The duration of collective wage agreements is mostly 26 months; they may be terminated for the first time at March 31, 2020. For the T-Systems segment, salaries rose in the first stage from January 1, 2019 by 3.0 percent in the lower pay groups and by 2.0 percent in the higher pay groups. A further salary increase of 2.5 percent will follow on January 1, 2020 for all T-Systems employees covered by collective agreements. The collective agreement is valid for a total of 33 months (Sunday, April 1, 2018 to Thursday, December 31, 2020). The salaries of trainees and cooperative degree students were raised by 30 euros in May 2019. Subsistence allowance for apprentices not living with their parents increased by 20 euros to €250. Harmonization of remuneration systems Together with the trade union, we succeeded in harmonizing the remu- neration systems in Germany as far as possible from 2018. For instance, non-sales was converted to a fixed annual salary effective January 1, 2019, eliminating variable remuneration. In addition, we achieved the goal of introducing global, uniform job descriptions from 2020, which will initially be used in Germany. This will help gradually establish new, market-oriented, and future-proof job descriptions throughout the Group. SALARY DEVELOPMENT AND REMUNERATION SYSTEMS AT T-SYSTEMS IN GERMANY In the course of the 2018 collective bargaining round, the salaries of roughly 20,000 employees covered by the collective agreement were raised in two stages by a total of 5.5 percent for the lower pay groups and 4.5 percent for the higher pay groups. After the first increase on January 1, 2019, the second increase took place on January 1, 2020. The new collective wage agreement has a term of 33 months and will expire on December 31, 2020. In 2019, we began to gradually harmonize regulations for variable remuneration at T-Systems as well. Non-sales will also be converted to a fixed annual salary in 2021. DIGITAL COLLABORATION The key to effective and transnational cooperation is simple, fast and virtual communication. Thus, the volume of online conference minutes has continued to grow steadily in 2019. DIALOG AND COOPERATION WITH EMPLOYEE REPRESENTATIVES We negotiated and adopted over 150 agreements in 2019 through constructive dialog with our works councils. Two key transformation projects we conducted in 2019 in close coordination with the works councils were the organizational measures “Technology & Innovation 2018” and “T-Systems Transformation”. In addition, 85 collective agreements were concluded with the union ver.di during the year. Apart from the collective bargaining agreements, the focus in 2019 was on concluding arrangements on harmonizing the Group’s remuneration systems as far as possible. Collective bargaining plays an important role and has a long tradition at our company. The percentage of employees covered by collective agreements is published in the non-financial statement in our Annual Report. Constructive dialog As the underlying laws and contracts vary from country to country, codetermination matters are managed locally with trade unions and employees’ representatives. Group management is involved in all major issues as a matter of principle. Information is available in the 2019 Annual Report. 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 employees additional benefits such as our company pension scheme. As part of our Group-wide employee survey, we regularly ascertain how satisfied our employees are with their pay and also conduct other sur- veys on specific topics and in specific units. In 2018, we compiled a report on equal pay and equality for the first time in order to comply with the new legal requirements of the Act to Promote Transparency of Pay Structures. It is published every five years. You can find the latest report as an annex to the 2017 management report.
SOCIAL EMPLOYEE SATISFACTION 91 EMPLOYEE SATISFACTION - Collaboration = In my experience, we all work together as partners at Deutsche Telekom in theinterests of the Group’s success. - Workload/quality = In my team, the workload and quality requirements are consistent with oneanother. - Work-life balance = The current working hours allow a good balance between private(family/leisure act.) and job-related interests. - HR development = Our company offers sufficient training opportunities to support myprofessional development. - Processes = Processes and procedures allow me to effectively meet my (internal and/ orexternal) customers' needs. - Recognition = Considering all my efforts and achievements, I feel that I have received theappropriate amount of recognition at work. - Guiding Principles = I feel that the Guiding Principles are reflected in my day-to-day work. - Learning = Our company supports innovative learning formats and offerings. - Digitalization = I feel that digital platforms/tools support dialog, networking, knowledgesharing, and collaboration at our company. - Recognition = Considering all of my efforts and achievements, I feel that I have received theappropriate amount of recognition at work. - Quality of leadership = My supervisor acts with integrity and walks the talk. - Guiding Principles = I feel that the Guiding Principles are reflected in my day-to-day work. - Code of Conduct = Our Code of Conduct is the basis for my behavior in my day-to-day work. EMPLOYEE IDENTIFICATION WITH CR COMMITMENT ESG KPI We use the Employee Identification with CR Commitment ESG KPI to determine the degree to which our staff identify with, or how satisfied they are, with our CR commitment. This is based on the Group employee survey (excluding T-Mobile US), which we conduct every two to three years. The last survey has been conducted in May 2019. Our ambition: increase KPI EVERY TWO YEARS: EMPLOYEE SURVEY Every two years we conduct our employee survey in order to obtain feedback from our employees, discover weaknesses, and implement suitable measures to eliminate those weaknesses. Some 76 percent of employees throughout the Group took part in the last employee survey in 2019. The Group index value for commitment – our gage for employee satisfaction – was 4.0 on a scale of 1 to 5, with 5 being the highest. TWICE A YEAR: THE PULSE SURVEY Deutsche Telekom wants to pursue an open dialog and productive exchange with its employees. New working models and state-of-the-art communication options, as well as regular employee surveys, help us to accomplish this. In addition to the employee survey, we also gauge employee satisfaction every six months through a pulse survey.The pulse survey in November 2019 saw a 69 percent response rate among employees. High ratings = Very good, good/agree fully, agree. Low ratings = Poor, very poor/do not agree, do not agree at all. “Neither agree nor disagree” ratings are not included. Explanations of questions asked: - Satisfaction = How do you feel in the company? - Product recommendation = I recommend the products/services of our company to potentialcustomers outside of my work environment. - Employer attractiveness = I would recommend our company as a great place to work. - Changes = I can understand the changes in our company. - Strategy = I can clearly explain to others the strategy of Deutsche Telekom.
SOCIAL EMPLOYEE SATISFACTION 92 Reporting against standards This data is relevant for criteria 7 (Control) and 14 (Employment Rights) of the German Sustainability Code. It is also used in our reporting on Global Compact Principles 3 (Freedom of association) and 6 (Elimination of discrimination). SATISFACTION AND COMMITMENT INDEX The Employee Satisfaction KPI has improved steadily in recent years. This is largely due to sets of measures which guarantee improvements right down to individual teams. We base this on the employee survey carried out every two years and monitor how effective these measures are through the half-yearly pulse survey. This allows us to continuously analyze and optimize our processes. It gives us the opportunity to continually improve employee satisfaction.
SOCIAL DIVERSITY 93 DIVERSITY OUR APPROACH TO DIVERSITY AND EQUAL OPPORTUNITY Diversity is our strength At our company, women and men, young and old as well as people with different abilities and cultural backgrounds from some 150 countries work together very successfully. This diversity helps us remain competi- tive around the world with good ideas and outstanding products, and consolidate our position as an attractive employer. For us, diversity means that we offer our employees numerous opportu- nities to develop professionally and grow personally, regardless of their gender, age, sexual orientation, health situation, ethnic background, religion, or culture. Our Group-wide Diversity Policy, the six Guiding Principles, the Group’s Employee Relations Policy and our “Code of Human Rights & Social Principles” form the foundation of our commit- ment to diversity. We are also a founding member of the corporate initiative “Diversity Charter” and aim to promote and use diversity both within and outside of the company. As early as during the hiring process we emphasize diversity and con- sider options other than just traditional educational and life paths. 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. 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. At the end of 2019, 10.8 percent of employees covered by collective agreements and 13.4 percent of Deutsche Telekom civil serv- ants throughout Germany were working part-time. 7.6 percent (as at December 31, 2019) of our employees in Germany are disabled, putting us well over the statutory quota of 5 percent. More than one percent of our apprentices and those in cooperative study programs in Germany are young people with disabilities. This is also above-average in view of the total number of disabled people in Germany. 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 man- agement worldwide with women. To that end, we have initiated several measures. DIVERSITY CHARTER The Diversity Charter is an independent economic initiative that is supported by around 3,000 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. 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 a host of measures: Expanding our opportunities to achieve a good work-life balance through parental leave models, flexible working hours, and child- care services The “Careers with children” mentoring program for female candi- dates for the Supervisory Board Specifically addressing female talent through cooperative activities and at events Many more support and networking services Our diverse range of measures has allowed us to continuously increase the share of women in middle and upper management – from 12.5 per- cent in 2010 to 26 percent on December 31, 2019. With 40 percent on the Group’s Supervisory Board, we have surpassed both 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. We also work to increase the number of women participating in techni- cal cooperative study programs. While in 2010 the share of women was only 11 percent in Germany, it has meanwhile risen to 14.3 percent (as at December 31, 2019).In 2019, our women’s network Women@ Telekom organized its second AI hackathon, this year on the topic of cybersecurity. A diverse group of some 55 experts from the program- ming, data science, and graphic design fields took part.
SOCIAL DIVERSITY 94 PERCENTAGE OF WOMEN IN TOTAL WORKFORCE In recent years, we have succeeded in maintaining the proportion of women in the total workforce at over a third and expect a slight upward trend in the future. PERCENTAGE OF WOMEN ON THE MANAGEMENT BOARD In 2019, as well, we continued pursuing the goal of achieving 30% women in management positions. Two of our nine board members are female. Deutsche Telekom is one of the few DAX Groups where women have been part of the Board of Management for several years now. In addi- tion, more and more women are working in international management teams below the Board of Management level. PERCENTAGE OF WOMEN IN MIDDLE AND UPPER MANAGEMENT In 2019, as well, we continued pursuing the goal of archiving 30% women in management positions. In Germany, the percentage of women in middle and upper management rose from 21.0 percent to 21.9 percent in 2019. Likewise, the figure for the entire Group increased and now stands at 26 percent. In the national companies outside Ger- many (excluding TMUS), the figure declined slightly due to a reduction in mandates and the deconsolidation of Albanian Mobile Communica- tions. You can find further information in the HR Factbook. Reporting against standards By reporting the percentage of women in middle and upper manage- ment, we fully cover the GRI 405-1 (Diversity of governance bodies and employees) GRI indicator and the S10-02 (Percentage of women in managerial positions) EFFAS indicator and partially cover the S10-01 (Percentage of women in total workforce) EFFAS indicator. This data is also relevant for criterion 15 (Diversity and health) of the German Sus- tainability Code. It is also used for reporting on the Global Compact principle 6 (Elimination of discrimination). You can find further information here and in the HR Factbook. Reporting against standards By reporting the percentage of women on the management board, we fully cover the GRI 405-1 (Diversity of governance bodies and employ- ees) GRI indicator and the S10-02 (Percentage of women in managerial positions) EFFAS indicator and partially cover the S10-01 (Percentage of women in total workforce) EFFAS indicator. This data is also relevant for criterion 15 (Diversity and health) of the German Sustainability Code. It is also used for reporting on the Global Compact principle 6 (Elimina- tion of discrimination). PERCENTAGE OF WOMEN ON THE SUPERVISORY BOARDS OF DEUTSCHE TELEKOM'S NATIONAL COMPANIES In the supervisory boards of our fully-consolidated European subsi- diaries, the percentage of women totals 25 percent (in Germany: 39.5 percent). You can find further information in the HR Factbook.
SOCIAL DIVERSITY 95 PROMOTING DIVERSITY AMONG OUR YOUNG TALENT We are committed to diversity among our junior staff and support young people with migrant backgrounds: as of December 31, 2019, 10 percent of the trainees and students on a cooperative degree pro- gram employed by us were of a nationality other than German; a total of 59 nations are represented. Since 2011, we have been collaborating with the German Federal Employment Agency to offer single parents the opportunity to complete a part-time apprenticeship or cooperative study program. 13 young people began their part-time training with this program in 2019. We offer refugees opportunities to embark on a career through our “Internship PLUS direct entry” program. EMPLOYEES WITH DISABILITIES Deutsche Telekom has already exceeded the prescribed minimum rate of 5 percent of disabled employees for a good many years, so that it heads the list of DAX 30 companies on this count. In 2019 the value of 7.6% could be maintained. You can find further information in the HR Factbook. Reporting against standards By reporting this data, we partially cover the GRI 405-1 (Diversity of governance bodies and employees) GRI indicator. This data is also rele- vant for criterion 15 (Diversity and health) of the German Sustainability Code. It is also used for reporting on the Global Compact principle 6 (Elimination of discrimination).
SOCIAL HUMAN RIGHTS 96 HUMAN RIGHTS OUR APPROACH TO PROTECTING 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 necessary. 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 measures and tools (see diagram). 1. Mission statement on human rights The obligation to respect human rights, individual rights and freedom of opinion, to safeguard the right to collective agreements and to guaran- tee diversity and equal opportunity is anchored in the following basic policies of Deutsche Telekom: Guiding Principles Code of Human Rights & Social Principles Employee Relations Policy Diversity Policy 2. How we handle human rights complaints: We receive complaints about possible human rights violations at all times via the anonymous whistleblower portal “Tell me!” and our con- tact point for human rights, which has been in place since 2013. The contact point can be reached via the public email address human- firstname.lastname@example.org. A complete overview of contact options can also be found on the “Tell me!” portal. We look into all tip-offs and reports received and introduce countermeasures as soon as the information is identified as plausible. You can find out how we handled the reports we received in 2019 here. In addition, human rights aspects have also been integrated since 2013 into due diligence activities conducted in the context of mergers and acquisitions. 3. Analysis of human rights risks and their potential impact: To review the potential impact of our business activities on human rights, we prepare a central Human Rights & Social Performance Report every year. In 2019, all 117 of the companies surveyed declared in this report that they comply with the Code of Human Rights & Social Princi- ples. The report indicated no violations for 2019. 4. Human rights and employee relations at our national companies: We also introduce special evaluation processes as required 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: Employee satisfaction (source: semi-annual pulse survey) Willingness to recommend Deutsche Telekom as an employer (source: semi-annual pulse survey) Health rate (source: HSE cockpit) Number of employees giving notice (source: HSE cockpit) Human rights risks at national companies (according to Maplecroft Human Rights Risk Index) The respective national company is classified according to a traffic light system for each key figure. The results are then discussed with the regional managers at the national companies and measures like human rights impact assessments and employee relations policy reviews are arranged as necessary. 5. Ensuring the effectiveness and adherence of 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 within our sphere of influ- ence outside of our Group. To this end, we supplemented our sustaina- ble procurement strategy with supplier management to improve our sus- tainability performance in our supply chain and ensure respect for human rights. Audits of our suppliers are one component, among oth- ers. Detailed results of our Group-wide auditing program are available here. 6. Raising awareness, training, stakeholder engagement, & networks: To ensure that human rights are safeguarded in accordance with our principles and our Code of Human Rights, we offer all employees world- wide online training courses on the subject of human rights. These are supplemented by internal communication campaigns with information about important aspects of the issue, such as anti-discrimination.
SOCIAL HUMAN RIGHTS 97 We are also involved in numerous networks such as the Global Com- pact and Econsense. Together with other companies, policymakers, and civil society, we can draw attention to existing grievances and press ahead with solutions. Whistleblower Portal Whistleblower portal 'Tell me!': 8 tip-offs relating to human rights issues in 2019. Assessments & Review A Human Rights Impact Assessment in 2019 (designed to assess the actual and potential consequences of corporate activities on human rights and the ability of the organization to prevent, mitigate, or compensate these consequences): T-Systems India. An 'Employee Relations Policy' review in 2019: T-Mobile Polska und Deutsche Telekom Außendienst. The Human Rights & Employee Relations Policy Cockpit is also used to measure impacts on human rights. To this end, the national companies collect data related to five human rights indicators and evaluate them according to a traffic light system. Data assured by PwC. Reporting against standards Statements by the participants in the Social Performance Report are relevant for GRI Indicator G4-HR9 (Operations that have been subject to human rights reviews). Some of the information is relevant for the EFFAS indicator S07-02 (Percentage of total facilities certificated according to SA 8000 standard). It is furthermore relevant for criterion 17 (Human rights) of the German Sustainability Code. It is also used in our report- ing on Global Compact Principles 1 and 2 (Protection of international human rights). CODE OF HUMAN RIGHTS & SOCIAL PRINCIPLES In 2017 we revised our Social Charter and renamed it our “Code of Human Rights & Social Principles” . This was adopted by the Board of Management in November 2017. This update underscored 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 Government in 2016. Our Code of Human Rights & Social Principles also represents our commitment to the guidelines and Declaration of Principles concerning Multi- national Enterprises and Social Policy of the International Labour Organization (ILO). the Convention of the Organization for Economic Cooperation and Development (OECD), the Universal Declaration of Human Rights, and the Guiding Principles on Business and Human Rights and the United Nations Global Compact. REPORTS AND INQUIRIES REGARDING HUMAN RIGHTS Between January 1 and December 31, 2019, we received eight reports related to human rights through our contact point for human rights or via the “Tell me!” whistleblower portal. Most of the inquiries and reports related to the topic of “compliance and verification of human rights at Deutsche Telekom”. Not all of these tip-offs were deemed plausible. We also received several fundraising and support questions, which we forwarded to the appropriate departments. Of course, all reports were treated as confidential. HUMAN RIGHTS AND SOCIAL PERFORMANCE REPORT 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 and has anchored these princi- ples in its Code of Human Rights & Social Principles. Social Performance Report To review possible impacts on human rights, we have operated a central Contact Point for Human Rights since 2013, and we prepare a Social Performance Report each year. In 2019 all 117 fully consolidated com- panies of Deutsche Telekom state whether they comply with the princi- ples of the Code of Human Rights & Social Principles. The report again shows no violations of our Social Charter for January to December 2019.
SOCIAL DEMOGRAPHY AND COMPANY PENSION SCHEME 98 DEMOGRAPHY AND COMPANY PENSION SCHEME AGE STRUCTURE AT THE DEUTSCHE TELEKOM GROUP The average age in the Group is 41.4 years. The average age in Ger- many is rising but is balanced out by the average age at international level (37.5 years). Reporting against standards By reporting on this data, we partially cover the GRI 405-1 (Diversity of governance bodies and employees) GRI indicator and fully cover the S03 -01 (Age structure/distribution) EFFAS indicator. This data is also relevant for criterion 15 (Diversity and health) of the German Sustainabil- ity Code. It is also used for reporting on the Global Compact principle 6 (Elimination of discrimination). COMPANY PENSION SCHEMES The increase in fund assets can be attributed to the payments of the increasing number of plan participants (as was the case in previous years). Because the majority of participants in the 2001 pension plan are still active, i.e., still paying into their retirement plans, this increase will remain steady over the next few years. Reporting against standards By reporting on this data, we partially cover the GRI 405-1 (Diversity of governance bodies and employees) GRI indicator and fully cover the S03 -01 (Age structure/distribution) EFFAS indicator. This data is also relevant for criterion 15 (Diversity and health) of the German Sustainabil- ity Code. It is also used for reporting on the Global Compact principle 6 (Elimination of discrimination). AGE STRUCTURE IN THE DEUTSCHE TELEKOM GROUP IN GERMANY Demographic shifts and low natural attrition explain why the proportion of employees over the age of 55 has risen from 15 to 22 percent in the past five years. The average age of employees in Germany rose to 46.5 years in 2019. One advantage is that this allows Deutsche Telekom to harvest the vast know-how of its many experienced employees.
SOCIAL DEMOGRAPHY AND COMPANY PENSION SCHEME 99 Investments in the capital market made by Deutsche Telekom for com- pany pension schemes and similar obligations in Germany are based on our sustainability principles. These principles were integrated into our socially responsible investment strategy for Deutsche Telekom pension providers, which we introduced in 2013, in the form of exclu- sion criteria. They prohibit investments in companies that produce NBC weapons, anti-personnel mines or cluster bombs or that trade in these or have repeatedly violated the UN Global Compact principles. Deutsche Telekom pension funds are also prohibited from purchasing government securities from governments that are subject to sanctions in accordance with public international law. Our pension providers agreed to our socially responsible investment strategy in 2013. This strategy was reviewed in 2017 and now incorporates Best-in-Class strategies and engagement approaches. We are convinced that putting this strategy into practice will help improve our financial risk indicators. This strategy will also promote perception of Telekom as a socially responsible company. It will help us avoid high-risk, controversial investments and, instead, invest in long- term, stable values that are in line with our principles of sustainability. Reporting against standards By reporting this data we fully cover the GRI 201-3 (Defined benefit plan obligations and other retirement plans) GRI indicator.
SOCIAL TRAINING AND DEVELOPMENT 100 TRAINING AND DEVELOPMENT OUR APPROACH TO TRAINING AND DEVELOPMENT We offer employees of Deutsche Telekom a wide range of individual vocational training and development programs. The cornerstones for this are our Employee Relations Policy and the Guiding Principles. Ensuring employability We help the experts of tomorrow gain qualifications through our com- prehensive training and continued education offers in both the techni- cal and commercial fields. In 2019, we provided 2,150 training posi- tions throughout the Group, of which 1,450 apprenticeships, 675 open- ings for students on cooperative Bachelor’s degree courses, and 25 for students on cooperative Master’s degree courses. That makes us one of the largest training providers in Germany. We promote lifelong learning in all phases of employment and support our employees on their own individual learning path. To be able to iden- tify individual needs for development in a targeted manner and provide tailored offerings, we obtain an overview of our employees’ skills. We offer our employees a wide range of individual training and develop- ment options, such as work abroad or work/study programs. Under the Bologna@Telekom program, we have been giving employees the chance to participate in a part-time university program for ten years now – and gain qualifications ranging from Bachelor’s to Master’s degrees. A total of 1,800 employees have taken up this offer since it was launched 10 years ago. Digitals skills are the key to the future Our employees around the globe spent some 4 million hours on training and skills development in 2019, 46 percent of which was on digital offerings, which is 5 percent more than in 2018. Many of our courses can now be booked via the global Learning Management System (LMS). In 2019, digital courses accounted for 60 percent of the training which could be booked via the LMS. In 2019, Deutsche Telekom began mak- ing long-term changes in the learning culture at the Group. With the “youlearn” initiative, we are pursuing the goal of turning Deutsche Telekom into a learning organization. For this, the company is focusing increasingly on supporting everyday, self-directed learning with content that should also be more enjoyable. In 2019, “youlearn” launched new information portals for learning opportunities, an improved search func- tion, new digital learning content, and a new experience-based learning platform. In addition, a “Learning Challenge” motivates employees to participate in voluntary informal learning. One remarkable example of self-managed, autonomous learning is the employee initiative “Learning from Experts” launched in 2018: by the end of 2019, some 450 experts had shared their knowledge in brief, digital sequences with a commu- nity of almost 50,000 colleagues. Strengthening leadership skills in the digital age We also adapt our management development programs to the chal- lenges of the digital age. Since 2017, our extensive training catalog has included classroom teaching as well as entirely digital offerings. As a result, we not only strengthen leadership skills, but also virtual leadership abilities, and offer many opportunities to network. As part of our “Lead to win” performance and development process, our top-level managers receive feedback on their current performance profile and have an opportunity to address their needs for development. We have consistent tools for performance assessment in Germany in the shape of “Compass” for employees covered by collective agree- ments and civil servants, and the Performance & Potential Review for managers and employees not covered by collective agreements. The Performance & Potential Review is also used at many national companies. Agile transformation of Deutsche Telekom in Germany In Germany, we are boosting our use of agile methods in the fields of product and process development. The goal is to intensify our focus on the customer and speed up our delivery capability. To this end, we have more closely dovetailed the cooperation model for the business and IT segments. In addition, management has been sim- plified and an overarching business and IT architecture created to increase standardization of our products. The agile transformation at Telekom Deutschland is bolstered by a com- prehensive range of training and education programs. Along with typi- cal training courses on agile working, this includes four-month classes for specific role profiles such as “Product Owner” or “Scrum Master” as well as a leadership program for managers.
SOCIAL TRAINING AND DEVELOPMENT 101 youlearn at T-Systems In 2019, the issues of skills management and learning were high on the agenda Group-wide. We are systematically building up skills at T-Sys- tems. The basis for this are approximately 200 “skill profiles”: they reflect not only what the job requires today, but also what will be needed in the near future. Using a self-assessment, our employees can see how well they already fit a profile. They can close any gaps with targeted training courses and retraining or further training programs. In 2019, T-Systems launched the #youlearn SAP Program, a one-year qualification program for junior employees in the SAP field. There are also other new development paths, such as for sales employees and junior project managers. One special feature is the training program to become a digital engineer, which is aimed at T-Systems’ employees. Together with the Business School of RWTH Aachen University, we will train these digital “all-rounders” within nine months. The first 20 digital engineers started and completed their training in 2019. TRAINING PROGRAM FOR CYBER SECURITY PROFESSIONALS Data security experts are still in short supply on the German labor market, which is why we developed our part-time training program for cyber security professionals (certified by the Chamber of Commerce and Industry) in 2014. The two-and-a-half-year program is integrated into their regular tasks and supplemented 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 professionals from the German Chamber of Commerce and Industry. They can obtain credits in their Bachelor’s and Master’s program for the skills they have acquired as part of the further training. Given the demand, including from other companies and public agencies, we have opened up our further training to employees from other organizations. The sixth year’s intake embarked on the program in 2019 and comprises 13 employees from Deutsche Telekom and five participants from other companies and public administration authori- ties. The verdict now that the first three years have completed the program is a positive one. Of the 29 graduates from the 2014, 2015, and 2016 intake, 28 were kept on at Deutsche Telekom. TRAINING PROGRAM PREPARES FOR SUPERVISORY BOARD POSITIONS In 2014, we became the first DAX company to develop a training pro- gram to prepare employees for supervisory board positions. The pro- gram was developed in collaboration with the European School of Management and Technology (ESMT). We are particularly interested in encouraging women to take a seat on the supervisory board. We have trained a total of 64 potential supervisory board members so far, around half of which work at national companies outside of Germany. Around half of the program’s graduates were then appointed to a Deutsche Telekom Supervisory Board. SKILLS DEVELOPMENT AT TELEKOM TRAINING IN GERMANY Deutsche Telekom offers its employees a range of advanced training measures, which enable them to develop and brush up their skills. You can find further information here and in the HR Factbook. Reporting against standards By reporting this data we fully cover the GRI 404-1 (Average hours of training per year per employee) and GRI 404-2 (Programs for upgrading employee skills and transition assistance programs) GRI indicators as well as the S02-02 (Average expenses on training per FTE p.a.) EFFAS indicator. This data also covers criterion 16 (Steps taken to promote the general employability of all employees) of the German Sustainability Code. INTERNATIONAL DEVELOPMENT AND LEADERSHIP PROGRAMS The object of our international development and leadership programs is for high potentials and high achievers to gain a foothold in the Group, to keep them loyal to the company and to position them in suitable jobs. These programs focus on development of the upcoming leader genera- tion and on support in coping with the challenges they face now and in the future. At the same time, the programs aim to enhance their sense of belonging, increase knowledge exchange and promote personal responsibility. For 2019, 952 participants were included in the Global Talent Pool. 2019 saw the continuation of successful formats, ongoing improve- ments based on participant feedback, and the redesign of individual courses. After two successful rounds, we continued our state-of-the-art levelUP! executive program in 2019. In total, over 2,100 executive staff have already participated in this program.
SOCIAL TRAINING AND DEVELOPMENT 102 levelUP! is designed to help managers tackle future challenges and facilitate their own development journey. The main aspect pursued in 2019 was to focus on leadership in an agile context. EMPLOYEE RECRUITMENT DEUTSCHE TELEKOM GROUP IN GERMANY In 2019, Deutsche Telekom hired almost 1,200 new employees from the external labor market in Germany. In addition, we gave around 1,300 internal junior staff permanent jobs on completion of their voca- tional training or cooperative study courses. A total of 8,300 employees were recruited outside Germany. You can find further information here and in the HR Factbook. APPRENTICES AND TRAINING PROGRAMS DEUTSCHE TELEKOM GROUP IN GERMANY In 2019, we recruited more than 5,900 junior employees for training or a cooperative degree program. More than 32% of them were women. The decrease on the previous year's figures is in line with the general employment trend at Deutsche Telekom. You can find further information here and in the HR Factbook. Employee recruitment Deutsche Telekom G You can find further information here and in the HR Factbook. Reporting against standards By reporting this data we partially cover the GRI 404-1 (Average hours of training per year per employee) GRI performance indicator. This data is also relevant for criterion 15 (Diversity and health) of the German Sus- tainability Code.
SOCIAL OCCUPATIONAL HEALTH AND SAFETY 103 OCCUPATIONAL HEALTH AND SAFETY OUR APPROACH TO HEALTH AND OCCUPATIONAL SAFETY The Board of Management assumes overall responsibility for occupa- tional health and safety, and environmental protection. We combine and control our programs for “Safety and Health at Work” at Group level; health and safety managers are responsible for implementing these programs locally. The general responsibilities, duties, and programs for health and safety management are outlined in the Health & Safety Environment handbook. The handbook serves to harmonize and align our management systems with common targets across the Group. Occupational health and safety is effectively incorporated into our struc- tures via certified management systems and appropriate policies and guidelines. The basis for this is the ISO 45001 standard. We were one of the first DAX companies to have our health and safety management systems certified according to ISO 45001. By the end of the reporting year, 92 German and international locations were audited according to ISO 45001 and ISO 14001. Their certification was renewed in all cases. We support our employees in maintaining and promoting their health with a host of target-audience-specific measures and extensive pro- grams. At the same time, safety in the workplace is our highest priority. We view occupational health and safety legislation as minimum require- ments. Awareness-raising, prevention, and individual responsibility are our top priorities. Our portfolio of occupational health and safety meas- ures also includes a wide range of voluntary measures to promote health within the company. These include, for example: An annual, comprehensive health check by the company doctor Vaccinations and hygiene measures Bowel cancer screening Seminars on recuperation ability, health-oriented leadership Online training on health and occupational safety Driver safety training EFFECTIVENESS OF OUR HEALTH AND SAFETY MEASURES We systematically evaluate the effectiveness of our measures. This includes reviewing the results of our employee survey, evaluating stress prevention measures under collective agreements, competitor analyses, and other indicators. We analyze this data each year to derive measures that exceed the statutory requirements. Different performance indicators reflect the effectiveness of our corporate health management activities: At Deutsche Telekom in Germany, the health rate for 2019 (includ- ing long-term illnesses) was 94.0 percent (prior year: 93.6 percent). Excluding long-term illnesses, the health rate in 2019 stood at 95.5 percent (prior year: 95.3 percent). The health rate is reported to the Board of Management at the end of each quarter. We aim to bring the Group-wide health rate up to 95.9 percent by 2020 (excluding long-term illnesses). 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 for 2019 was 6,8 accidents (resulting in over three days of absence) per thousand employees, well below the industry average. The Group-wide health index – calculated in 29 countries as part of the last employee survey in 2019 – remained stable at 3.6 (on a scale from 1.0 to 5.0). Despite the stress experienced, and against the backdrop of the transformation processes, the well-defined, available resources had a buffering effect. In 2019, Health & Safety Management was honored at several inter- national locations. Among others, the OTE Group Greece, T-Systems Iberia, and IT Services Hungary received awards. PSYCHOSOCIAL COUNSELING AS PART OF CHANGE MANAGEMENT Psychosocial counseling for transformation processes by the Employee and Executive Advisory Service plays an important role throughout Deutsche Telekom AG. The goal is to help affected employees, manag- ers and teams deal with professional and private changes, and prevent psychosocial crises. To this end, we offer free and anonymous individual counseling and consultation hours. Once they are registered, employees can take advantage of personal counseling sessions. They can receive immedi- ate telephone advice via the TALKTIME hotline and, if necessary, will be put straight through to local experts or specialist offices. The counselors have a duty to maintain confidentiality and are familiar with the specifics of the company. We also support specialists and managers with appropriate tools, such as presentations and workshops on the topics of “Change”, “Addressing change constructively”, “Shaping change successfully” and coping with psychological stress factors. We provide specific information about the availability of these services at the locations affected by change pro- cesses.
SOCIAL OCCUPATIONAL HEALTH AND SAFETY 104 Reporting against standards In combination with data on work-related accidents, the health rate data partially covers the GRI 403-2 (Types of injury and rates of injury, occu- pational diseases, lost days, and absenteeism, and number of work- related fatalities) GRI performance indicator. This data is also relevant for criterion 15 (Diversity and health) of the German Sustainability Code. WORK-RELATED ACCIDENTS IN GERMANY The number of work-related and commuting accidents was lower than in 2018. The accident rate is well below the average at comparable companies. Deutsche Telekom has a health and safety management system in place to reduce the number of work-related accidents. This certified system makes it possible to map the entire health and safety process and to develop sets of measures to further improve employee safety. You can find further information here and in the HR Factbook. Transformation programs such as “Shaping the future” at DT Technik GmbH not only lead to changes in the organization of the companies, but also alter the duties and ways of working. This can result in stressful situations for the employees. The focus of our psychosocial counseling services in 2019 was therefore on the impact of the transformation pro- grams. Another issue was the transformation into an agile organization. Various training modules were held for managers to prepare them for their changed leadership roles. Necessary restructuring activities also led to site closures during the reporting period. Employees often took the resulting change of location as an opportunity to take advantage of individual counseling. DIGITALIZATION AND HEALTH – JOINT PROJECT LAUNCHED WITH HEALTH INSURER BARMER In 2017, we launched a model project “Digitalization and Health” together with health insurer BARMER. With scientific support from the University of St. Gallen and the University of Cologne, among others, we are working on solutions to improve the health, motivation, and performance of employees in the context of digitalization. Deutsche Telekom is thus the first company to systematically tackle this range of topics together with a health insurer, in this case, BARMER. Over a period of three years, we will develop and evaluate different innovative apps, solutions, and measures that will undergo intensive field testing by Deutsche Telekom employees. In 2019, our employees also tested the “Digital Health Guide”, an online platform that helps employees select suitable health services and makes them easier use. Employees were also able to test an app called NutriAssist. It analyzes individual requirements for micronutrients such as vitamins, minerals, and omega fatty acids, and provides correspond- ing nutritional advice. The pilot project “Healthy and mindful leadership” was also launched in 2019. Its goal is to improve employee's digital health literacy. It is aimed at managers as important disseminators. Based on the results of the pilot projects, a decision will be made whether and how the programs will be used at Deutsche Telekom in the future. HEALTH RATE Nationally, the health rate for the Deutsche Telekom Group in 2019 showed a slight improvement of 0.4 percent year-on-year, and stood at an average of 94 percent (including the long-term sick). Musculoskeletal disorders, respiratory diseases, and mental health problems account for the bulk of illness-related absenteeism at Deutsche Telekom AG. The health rate is reported to the Board of Management at the end of each quarter. We aim to bring the Group-wide health rate up to 95.9 percent by 2020 (excluding long-term illnesses). Targeted health protection programs were implemented in the individ- ual companies. Across all segments, management training courses on the topic of “healthy leadership” were either introduced or continued. The aim is to raise managers’ awareness of this issue and train them accordingly. Additionally, a structured absence management system will be put in place to ensure that employees and managers regularly com- municate about illness-related absences so that appropriate action can be taken early on.
SOCIAL HEADCOUNT AND PART-TIME WORK 105 HEADCOUNT AND PART-TIME WORK WORKFORCE DEVELOPMENT WORLDWIDE The Group’s headcount fell by 2.4 percent compared with the end of the prior year. Development across the segments was varied. The number of employees in our Germany operating segment declined by 3.4 per- cent as a result of efficiency enhancement measures and the take-up of socially responsible instruments in connection with the staff restructur- ing. The total number of employees in our United States operating seg- ment increased by 0.9 percent as of December 31, 2019 compared with the prior year, primarily due to ongoing growth in our business. In our Europe operating segment, the headcount was down 7.4 percent com- pared with the end of the prior year. This was due in part to the sale of Telekom Albania. The headcount also decreased in Romania, Hungary, and Poland in particular. The number of employees in our Systems Solutions operating segment increased by 1.7 percent compared with the end of 2018, mainly due to the first-time inclusion and expansion of a service unit in India. The remaining headcount in this segment decreased by 3.5 percent on account of restructuring measures. In the Group Development operating segment, the 31.7 percent increase in the number of employees can be attributed to the inclusion of Tele2 Netherlands in the Netherlands. The headcount in the Group Headquar- ters & Group Services segment was down 6.3 percent compared with the end of 2018, mainly due to the ongoing staff restructuring at Vivento and the lower headcount in the Technology and Innovation unit. tions in some places. Whereas 88.2 percent of company employees were working in Germany in 1999, the rate has leveled at around 50 percent since 2015. The figure for 2019 was below 45 percent. Reporting against standards This data is relevant for criterion 15 (Diversity and health) of the German Sustainability Code. NUMBER OF EMPLOYEES BY COUNTRY Reporting against standards In combination with additional headcount data, the data on the trend in employee numbers worldwide fully covers the GRI 401-1 (New employee hires and employee turnover) GRI indicator. It also partially covers the S01-01 (Percentage of FTE leaving p.a.) EFFAS indicator. DEUTSCHE TELEKOM WORKFORCE 1999-2019 Our strategy to become the leading telecommunications provider in Europe is reflected in the trend in our international employee head- count. The number of employees working at sites outside Germany has risen notably since the turn of the millennium – albeit with fluctua- PART-TIME EMPLOYEES DEUTSCHE TELEKOM GROUP We believe it is important to offer our staff flexible working conditions that fit their needs at every stage of their lives. This includes the oppor- tunity to work part-time, but also the guaranteed option of returning to work when the employee no longer wants to work part-time. We also offer this to young parents so that they can balance starting their career through training or a part-time cooperative study course with the demands of family life as a single parent. Part-time training is available in all of our training programs, and means apprentices spend 25 hours per week either in the company, in school, or in the training center. The highlight: like all apprentices, part-time apprentices can cut their
SOCIAL HEADCOUNT AND PART-TIME WORK 106 training to two and a half years and therefore apply for a job earlier than would have otherwise been possible. A success model all round, since Deutsche Telekom also benefits from the young people's commitment. Reporting against standards By reporting this data, we partially cover the GRI 102-8 (Information on employees and other workers) GRI indicator. PART-TIME EMPLOYEES DEUTSCHE TELEKOM GROUP IN GERMANY The percentage of part-time employees came to around 13 percent in 2019, and thus remained stable compared to the previous year. Reporting against standards By reporting this data, we partially cover the GRI 102-8 (Information on employees and other workers) GRI indicator. This data is also rele- vant for criteria 14 (Employee rights) and 15 (Diversity and health) of the German Sustainability Code. It is also used for reporting on the Global Compact principles 3 (Freedom of association and the right to collec- tive bargaining) and 6 (Elimination of discrimination).
SOCIAL FLUCTUATION & STAFF RESTRUCTURING 107 FLUCTUATION & STAFF RESTRUCTURING SOCIALLY RESPONSIBLE STAFF RESTRUCTURING Against the backdrop of digitalization and the associated changes, we must secure our future viability and competitiveness in the long term. This process is connected to complex staff restructuring. We are creat- ing 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 responsible way for our employ- ees. In doing so, we support them in the best way possible on our jour- ney to a digitalized working world. The personnel service provider Vivento has provided support for imple- menting staff restructuring at Deutsche Telekom in Germany for many years. Since 2013, Vivento has been exclusively responsible for provid- ing support and placement services for civil servants. In 2019, the focus was primarily on transfers of civil servants to the Customs Office, the armed forces, and the Federal Central Tax Office. Employees were assisted in finding positions with federal, state, and local administrative authorities. 321 civil servants (FTE) employed at Deutsche Telekom in Germany opted for a permanent transfer to federal, state, or local authorities in 2019. Since Vivento was established 16 years ago, it has helped more than 52,000 employees (FTE; as at December 31, 2019) to gain a new role. Surplus staff have been looked after for several years in the segments, including T-Systems or Telekom Deutschland: the segments offer a special consulting concept for professional reorientation. Employees are accompanied and supported holistically from an early stage in their change process with the aim of finding permanent new employment. JOB SERVICE & PLACEMENT (JSP): STAFF RESTRUCTURING AT T-SYSTEMS Deutsche Telekom’s systems solutions business is currently undergoing a transformation. Around 5,600 job cuts are planned between 2018 and the end of 2020. In 2019 there was a focus on topics such as the trans- fer of activities to nearshore sites (cost-effective production sites outside of Germany) and automation. At the same time, we were creating new positions in growth areas such as cloud and security and used the savings for investment as well as to make our prices more competitive. Job Service & Placement (JSP), our internal service provider, advises and supports employees with a comprehensive program through the necessary change processes. T-Systems is also supporting the restruc- turing process in a socially responsible manner by means of instru- ments such as phased retirement, early retirement, and severance payments. HOLISTIC STAFF RESTRUCTURING AND TRANSFER MANAGEMENT AT TELEKOM DEUTSCHLAND GMBH Holistic staff restructuring and transfer management was established at Telekom Deutschland GmbH in 2017 in order to win employees over to the idea of a career change early on. In the case of tasks which are currently or soon to be eliminated, or which will require different skills in future, the colleagues affected will be given anticipatory advice regarding opportunities for professional reorientation. Managers are also actively involved in the change pro- cess. Together with them, internal and external employment alternatives are considered and specific personal labor market profiles developed. In addition, assistance is provided for the individual application process and training is offered where necessary. Since 2018, around 600 employees nationwide received consultations in the Germany segment. Approximately two-thirds of them were able to find new options through these measures. TOOLS FOR SOCIALLY RESPONSIBLE STAFF RESTRUCTURING DEUTSCHE TELEKOM GROUP IN GERMANY We continued our efforts to engage in socially acceptable staff restruc- turing. To this end, the Group continued to rely on the already proven tools of early retirement, severance pay and partial retirement in 2019. You can find further information in the HR Factbook. Reporting against standards This data is relevant for criteria 6 (Rules and Processes) and 14 (Employment Rights) of the German Sustainability Code.
SOCIAL FLUCTUATION & STAFF RESTRUCTURING 108 FLUCTUATION RATE The fluctuation rate in Germany increased slightly compared to 2018 and was 2.23%. Internationally, however, it has fallen compared with 2018. At Group level, it also increased slightly due to the increase in Germany and stood at 5.32% in 2019. Reporting against standards This data is relevant for criteria 6 (Rules and Processes) and 14 (Employment Rights) of the German Sustainability Code. PROPORTION OF CIVIL SERVANTS IN GROUP WORKFORCE The proportion of civil servants employed in the company fell once again in 2019. The reason for this is that Deutsche Telekom has not recruited any new civil servant staff since the company was privatized. In addition to civil servants leaving the company when they reach retire- ment age, others also took advantage of early retirement or moved to other agencies. This led to a continuous drop in the number of civil servants in our workforce. Reporting against standards In combination with additional headcount data, the data on the percent- age of civil servants in the workforce fully covers the GRI 401-1 (New employee hires and employee turnover) GRI indicator.
SOCIAL IDEAS MANAGEMENT 109 vital for these types of activity. We are strongly dedicated to generating our own property rights. Industrial property rights include inventions, patent applications, patents, utility models and design patents. Thanks to our intense efforts to develop and structure our IPR portfolio, the rights we hold are highly valuable and firmly in line with our Group's strategic objectives. We have put in place a professional patent law management process to keep our IPR assets safe. Additionally, we are represented on various standardization bodies in our industry. We man- age our IPRs on the basis of cost/benefit aspects, filing only selected applications and de-registering patents systematically. Reporting against standards This data partially covers the V04-05 (Number of patents registered within last 12 months) and V04-06 (Percentage of patents registered within last 12 months in relation to total number of patents) EFFAS indicators. IDEAS MANAGEMENT VALUABLE IDEAS IN GROUP-WIDE IDEA GENERATION MANAGEMENT In 2019, the “Idea Generation Management” program further intensified the promotion of valuable ideas. 6,007 ideas were submitted, generat- ing a value of €81 million. This represented an increase in idea submis- sion and their value. “Idea Generation Management” has entered into new in-house partner- ships, among others with the “Green Pioneers”, in order to bundle ideas on ways of supporting the company's focus on sustainability. In addition, we further expanded existing cooperation, for example, with the “Telekom Ideenschmiede” (think tank) and various innovation areas at the Group. Deutsche Telekom was awarded 1st place for Best Idea in Production and Technology 2019 by the Deutsches Institut für Ideen- und Innova- tionsmanagement. With Michael Kasprzyk’s idea, the Group was able to win out against the competition in the market as a Group and generate profits of €7.2 million. The idea has led to a significant process improve- ment in the conversion to the latest all-IP technology, and made imple- mented automation possible. PORTFOLIO OF INTELLECTUAL PROPERTY RIGHTS By the end of 2019, we owned around 8,000 intellectual property rights (IPRs). We take a targeted approach to managing these IPRs in consid- eration of cost-benefit aspects. We regularly take stock of our IPRs and eliminate those that are no longer relevant. Patents are gaining more and more significance in the telecommunica- tions industry. Market players and their areas of activity are changing, with a knock-on effect on our IPR (intellectual property rights) agenda. On the one hand, our Group's scope for action must be maintained. On the other hand and alongside our own research and development activities, we want to pave the way to open innovation through collabo- ration projects and partnerships. National and international IPRs are
ABOUT THIS REPORT 110 ABOUT THIS REPORT “Act responsibly. Enable sustainability.” is the title of our 2019 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. Every year, in addition to our CR Report, we publish a non-finan- cial statement as part of our Annual Report. To identify the key reporting topics for our company and stakeholders, we have regularly carried out a comprehensive materiality process. Our reporting is supplemented by updates in the Corporate Responsibility section of our website and by our We Care magazine. NEW STRUCTURE In 2019, we restructured our CR Report to satisfy the requirements of modern-day CR reporting: On our homepage, we contribute to societal discourse by tapping into the latest societal debates and examining them from different perspectives in descriptive stories. This content is also available in simplified language. In addition, we keep users on our homepage up to date about important events and activities in short news arti- cles. Our new themed pages appeal to a wide readership, explaining our CR topics in clear, easy-to-understand language and taking readers through the four societal trends of “Good stewardship”, “New ways of working”, “Digital life”, and “Green future.” Users can find detailed information in the “Management & facts” section, in which we fulfill the requirements for conventional accountability reporting. Across the four pillars of Strategy, Busi- ness, Environment, and Social, we provide updates about the advances we have made in the reporting year by harnessing Deutsche Telekom’s sustainability management structure. By break- ing these pillars down into further subcategories, we are able to address topics in specific detail. With regard to key topics, “Our approach” additionally explains our management system. Our key performance indicators (KPIs) are set out in transparent detail. In our interactive KPI tool, users can also pick and choose indicators to create a customized compilation. Our “Management & facts” section is particularly targeted at CR experts and the capital market. 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. Some of our national companies also provide information about their CR efforts on their internet portals and in their own publica- tions. The report is supplemented by the “CR facts” format, which individ- ual Deutsche Telekom departments use to report directly on their sustainability-related projects and measures. Readers can directly access the “CR facts” section at any time by clicking the footer in the report. As in previous years, a download area, search and dialog functions, and an interactive KPI 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. SCOPE, REPORTING PERIOD, AND TARGET GROUPS The 2019 CR Report is a Group report that includes many national com- panies in which Deutsche Telekom holds a majority stake. It also follows up on the 2018 CR Report. All quantitative data, key performance indicators, and descriptions of key events and activities in the section detailing our progress under “Management & facts” refer to the 2019 year. Any deviations are marked accordingly. Our themed pages are designed to cover the latest social develop- ments, which is why they may be updated and extended throughout the year if necessary. The current report is specifically addressed to Deutsche Telekom stake- holders. These include analysts and investors, CR ranking and rating agencies, and NGOs as well as customers, employees, business part- ners, and representatives from the worlds of business, science, research, education, and politics. IMPLEMENTATION OF HIGH INTERNATIONAL REPORTING STANDARDS Deutsche Telekom’s 2019 CR Report complies with the internationally 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. Deutsche Telekom also issues an annual, detailed Declaration of Con- formity with the German Sustainability Code.
ABOUT THIS REPORT 111 INDEPENDENT ASSURANCE REPORT Independent Practitioner’s Report on a Limited Assurance Engage- ment on Sustainability Information* To Deutsche Telekom AG, Bonn We have performed a limited assurance engagement on the disclosures denoted with Telekom AG, Bonn (hereinafter: “the Company”), for the period from 1 January to31 December 2019 (hereinafter: “Report”). Our engagement in this context relates solely to the disclosures denoted with the symbol in the Corporate Responsibility Report of Deutsche . 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 eval- uated. 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. Independence and Quality Control of the Audit Firm We have complied with the German professional provisions regarding independence as well as other ethical requirements. 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 equirements. Practitioner´s Responsibility Our responsibility is to express a limited assurance conclusion on the disclosures denoted with engagement we have performed. in the Report based on the assurance 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 conducted our assurance engagement in accordance with the Inter- national Standard on Assurance Engagements (ISAE) 3000 (Revised): Assurance Engagements other than Audits 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 Compa- ny’s Report for the period from 1 January to31 December 2019 has not been prepared, in all material aspects, in accordance with the relevant 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 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 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 Comparison of selected disclosures with corresponding data in the consolidated financial statements and in the group management report 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 from 1 January to31 December 2019 have not been pre- pared, in all material aspects, in accordance with the relevant GRI-Crite- ria. 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. Munich,26 March 2020 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft Hendrik Fink ppa. Juliane von Clausbruch Wirtschaftsprüfer (German Public Auditor) * PricewaterhouseCoopers GmbH has performed a limited assurance engagement on the German version of the Corporate Responsibility Report and issued an independent assurance report in German lan- guage, which is authoritative. The following text is a translation of the independent assurance report.
IMPRINT IMPRINT Adress: Deutsche Telekom AG Friedrich-Ebert-Allee 140 53113 Bonn, Germany District Court of Bonn HRB 6794, Registered Office Bonn VAT ID No. DE 123475223 E-Mail: impressum [at] telekom.de Telefon: 0228/ 181-0 112 Concept/research/design/programming: Deutsche Telekom AG Stakeholder Reporting GmbH, Hamburg yoocon GmbH, Berlin 1000°DIGITAL GmbH, Leipzig Photos: Frank Bauer Pictureworld, Deutsche Telekom Contact: Please use our contact forms for questions about the company or products and services provided by our business areas. The 2019 CR Report is available in German and English. The English version of the CR Report is a translation of the German version of the CR Report. The German version of this CR Report is legally binding. Translated by DTAG Corporate Language Management. Authorized representatives: Timotheus Höttges Adel Al-Saleh Birgit Bohle Srinivasan Gopalan Dr. Christian P. Illek Thorsten Langheim Claudia Nemat Dr. Dirk Wössner Regulatory authority: Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway Tulpenfeld 4, 53113 Bonn, Germany Responsible: Deutsche Telekom AG Birgit Klesper Senior Vice President Group Transformational Change & Corporate Responsibility Friedrich-Ebert-Allee 140 53113 Bonn Further information on Deutsche Telekom's corporate responsibility activities can be found at: https://www.telekom.com/en/corporate-responsibility and https://report.telekom.com/annual-report-2019/
DISCLAIMER 113 DISCLAIMER Deutsche Telekom AG in no way guarantees that the information made available on this website is complete, accurate or up-to-date in all cases. This also applies to any links to other websites. Deutsche Telekom AG shall not be held responsible for the contents of a page accessed via such a link. Deutsche Telekom AG reserves the right to amend, supple- ment or delete the information supplied without prior notice. The information on this website does not constitute an offer to sell or the solicitation of an offer to buy any securities and should not be relied upon in connection with any investment decision. In no event shall Deutsche Telekom be liable for any damage whatsoever resulting from loss of use options or data loss in connection with the use of documents or information and/or from the performance of services available on this website. With the exception of historical information, the matters discussed in the materials and documents on this website are "forward-looking state- ments". These forward-looking statements rely on a number of risks, uncertainties or other factors, many of which are outside Deutsche Telekom AG’s control, which could cause actual results to differ materi- ally from such statements. These risks, uncertainties and other factors are described in detail in Deutsche Telekom's financial reports which are available on Deutsche Telekom's website. Visitors of this website are cautioned not to put undue reliance on these forward-looking state- ments. Deutsche Telekom disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CORPORATE RESPONSIBILITY REPORT 2019 GRI-INDEX GLOBAL COMPACT COMMUNICATION ON PROGRESS
GRI-INDEX GENERAL STANDARD DISCLOSURES 2 GENERAL DISCLOSURES Reference Indicator GRI 102: GENERAL DISCLOSURES Organization profile 102-1 Name of the organization � Management & facts > Strategy > CR strategy & management > Business activities and organization 102-2 Primary brands, products and services There were no prohibitions on products and/or services in any countries in 2019. 102-3 Headquarters Checked Indicator Reference Checked 102-9 Supply chain � Management & facts > Economy > Suppliers > Supply chain management 102-11 Precautionary Principle Risk management, compliance management, and the ESG KPIs provide approaches for preventive action at Deutsche Telekom. � Management & facts > Strategy > CR strategy & management > Risk and opportunity management � Management & facts > Strategy > Compliance � Management & facts > Strategy > CR strategy & management > ESG key performance indicators � Publishing information > https://www.cr-report.telekom.com/ site20/publication-details 102-12 External charters, principles or other initiatives 102-4 Countries where the organization operates � www.telekom.com/worldwide 102-5 G4-7 Nature of ownership and legal form � Group profile > https://www.telekom.com/en/company/at-a-glance 102-6 Markets served � www.telekom.com/worldwide � https://report.telekom.com/annual-report-2019/ � Management & facts > Strategy > CR strategy & management > Business activities and organization 102-7 Scale of the organization � Management & facts > Strategy > CR strategy & management > Business activities and organization � 2019 Annual Report: Deutsche Telekom at a glance > https:// report.telekom.com/annual-report-2019/management-report/ deutsche-telekom-at-a-glance.html � Management & facts > Strategy > Sustainability standards > Global Compact Communication on Progress � Management & facts > Strategy > Sustainability standards > German Sustainability Code � Management & facts > Strategy > CR strategy & management > Values and Guiding Principles � Management & facts > Strategy > Stakeholder management > Overview of memberships and collaborations � Management & facts > Economy > Suppliers > Our approach for sustainable procurement 102-13 Memberships of associations and advocacy organiza- tions � Management & facts > Strategy > Stakeholder management > Overview of memberships and collaborations Due to reasons of confidentiality, it is not possible to list our member- ships and collaborations based on strategic aspects. Our policy on polit- ical advocacy applies to our involvement in committees and associa- tions. � Management & facts > Strategy > Political advocacy 102-8 Total workforce Strategy and analysis � Management & facts > Social > Headcount and part-time work 102-14 Statement of the Board of Management In Germany, 14 percent of employees under collective agreements and 18.5 percent of civil servants at Deutsche Telekom took advantage of part-time models (as at December 31, 2019). In addition, a total of 29 executives throughout Germany were working part-time (as at December 31, 2019). � Management & facts > Strategy > Foreword > Statement by the Chairman of the Board of Management 102-15 Impacts, risks and opportunities � Management & facts > Strategy > CR strategy & management > Risk and opportunity management
GRI-INDEX GENERAL STANDARD DISCLOSURES 3 Indicator Reference Ethics and integrity 102-16 Values, principles, standards and norms of behavior � Management & facts > Strategy > CR strategy & management > Values and Guiding Principles 102-17 Internal and external procedures on ethical and lawful conduct and procedures for reporting concerns regarding non-ethical or unlawful conduct Checked Indicator Reference Checked � Management & facts > Strategy > Stakeholder management > Overview of memberships and collaborations We work with various feedback formats that are difficult to classify due to their variety. Because we have informal discussions with our stake- holders at dialog events, the feedback cannot be broken down accord- ing to the stakeholder groups. 102-43 Approach to Stakeholder Engagement � Management & facts > Strategy > Stakeholder management > � Management & facts > Strategy > Compliance > Holistic Formats for stakeholder engagement compliance management system � Management & facts > Strategy > Stakeholder management > � Management & facts > Strategy > Compliance > Systematic Overview of memberships and collaborations handling of infractions Governance 102-18 Governance structure We work with various feedback formats that are difficult to classify due to their variety. Because we have informal discussions with our stake- holders at dialog events, the feedback cannot be broken down accord- ing to the stakeholder groups. � Management & facts > Strategy > CR strategy & management > 102-44 Key topics and concerns raised by stakeholders Business activities and organization 102-19 Delegating authority � Management & facts > Strategy > CR strategy & management > Business activities and organization 102-20 Responsibility for sustainability topics � Management & facts > Strategy > CR strategy & management > Business activities and organization 102-24 Selection processes for the highest governance body and its committees All skills and abilities required and useful in effectively enacting the responsibilities of a position are taken into consideration during the selection process. The requirements of a position are identified using a skills list. The selection process is conducted by the Supervisory Board, which acts in the interests of stakeholders and shareholders. Stakeholder engagement 102-40 Stakeholder groups engaged � Management & facts > Strategy > Materiality > Material sustainabil- ity topics: systematic process Identified material aspects and boundaries 102-45 Entities included in the consolidated financial state- ments � www.telekom.com/worldwide 102-46 Defining report content and topic boundaries � Management & facts > Strategy > Materiality > Key issues for sustainable business development � Management & facts > Strategy > Materiality > Material sustainabil- ity topics: systematic process � Management & facts > Strategy > Materiality > Material topics matched with GRI aspects 102-47 List of Material Topics � Management & facts > Strategy > Materiality > Key issues for sustainable business development � Management & facts > Strategy > Materiality > Material topics � Management & facts > Strategy > Materiality > Material sustainabil- matched with GRI aspects ity topics: systematic process � Management & facts > Strategy > Stakeholder management > 102-48 Restatements of Information Formats for stakeholder engagement There was no cause to restate information within the reporting period. 102-41 Employees covered by collective bargaining agree- ments 102-49 Changes in Reporting Collective bargaining plays an important role and has a long tradition at our company, a fact made clear by the percentage of employees cov- ered by collective agreements. As of December 31, 2019, some 73.4 percent of employees in Germany were covered by collective agree- ments. Group-wide this number was 52.3 percent. 102-42 Identification and selection of stakeholders � Management & facts > Strategy > Stakeholder management > Formats for stakeholder engagement There were no changes in reporting in the reporting period. Report profile 102-50 Reporting period � About this report 102-51 Date of most recent report � About this report
4 GRI-INDEX GENERAL STANDARD DISCLOSURES Indicator Reference 102-52 Reporting cycle � About this report Checked 102-53 Contact point for questions regarding the report � About this report 102-54 Claims of reporting in accordance with the GRI Standards � Management & facts > Strategy > Sustainability standards > GRI Index 102-55 GRI content index � Management & facts > Strategy > Sustainability standards > GRI Index 102-56 External assurance � Management & facts > Strategy > Sustainability standards > GRI Index
GRI-INDEX SPECIFIC STANDARD DISCLOSURES 5 TOPIC-SPECIFIC STANDARDS Reference Indicator GRI 203: INDIRECT ECONOMIC IMPACTS GRI 103: Management Approach 103-1 103-2 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Economy > Network expansion > Our approach to infrastructure expansion 203-1 Infrastructure investments and services supported � Management & facts > Economy > Network expansion > Our approach to infrastructure expansion GRI 204: PROCUREMENT PRACTICES GRI 103: Management Approach 103-1 103-2 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Economy > Suppliers > Our approach to sustainable procurement � Management & facts > Economy > Suppliers > Supply chain man- agement � Management & facts > Economy > Suppliers > Responsible raw materials sourcing 204-1 Proportion of spending on local suppliers at significant locations of operation As an ICT company, Deutsche Telekom works with suppliers worldwide. That is why we do not have Group-wide policies giving priority to local suppliers at our locations. GRI 205: ANTI-CORRUPTION GRI 103: Management Approach 103-1 103-2 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Strategy > Compliance > Holistic compli- ance management system Checked Indicator Reference Checked 205-1 Total number and percentage of operations assessed for risks related to corruption and the significant risks identi- fied The following risks of corruption were identified as the most likely within the scope of our risk analysis: 1. 2. 3. 4. Acceptance of a benefit in connection with a specific business decision (e.g., a supplier invites an employee to a prestigious sports event, where there is a close material and temporal correla- tion between the event and the upcoming renewal of an existing agreement). An employee formulates selection criteria in favor of one supplier/ consultant. Procurement has no choice other than to include this supplier/consultant in its selection. Alternatively, an employee influences an auction/tender in favor of one bidder. In return, the employee receives a benefit from the supplier/consultant. An employee makes an agreement with a supplier to add 10 per- cent to a bill. The supplier pays half of the extra amount charged into a private bank account of the employee. A benefit is granted to a business partner’s employee or represent- ative in connection with a specific forthcoming business decision in order to gain an unfair competitive advantage (e.g., inviting a decision-maker on the customer side to a prestigious sports event in order to sway them into renewing the existing framework agree- ment that is coming up for renewal). 5. An employee awards a contract in return for something without first obtaining a comparative bid from a competitor, which repre- sents a breach of duty. It makes no difference whether or not the competitor’s bid would actually have been lower. Each year, we carry out a Group-wide compliance risk assessment (CRA) to determine compliance risks and develop tailored compliance measures. In 2019, the CRA included 80 companies and thus covered around 97 percent (based on the number of employees). 205-2 Communication and training on anti-corruption policies and procedures We use regular training measures to inform and raise awareness among our employees about compliance. In addition to classroom courses, we also use various interactive e-learning formats. In addition, customized classroom courses on compliance and anti-corruption are given to members of the management boards and executives. Managers are addressed about their extraordinary responsibility and informed about trends and changes in the law.
GRI-INDEX SPECIFIC STANDARD DISCLOSURES Indicator Reference Checked E-learning training in Germany In 2019, more than 22,000 employees in high-risk positions (sales, pro- curement) in Germany completed the anti-corruption e-learning course; around 3,800 employees received a certificate for completing a compli- ance e-learning course; 41,000 employees participated in an e-quiz on gifts, and 609 employees took the e-learning course on consultant ser- vices. A total of 569 employees completed the e-learning training on anti-trust law. Implementation of Group policy throughout the Group Deutsche Telekom has introduced the Group Policy on Avoiding Cor- ruption and Other Conflicts of Interest, which sets out the relevant responsibilities and duties and includes a list of possible conflicts of interest. We also introduced our Group Policy on Accepting and Grant- ing of Benefits, which clearly specifies which benefits may be granted to and accepted from business partners. Both policies have been rolled out and communicated throughout the Group and approved by the managing boards at the various companies. Providing information and training to business partners Our business partners are required to accept the Deutsche Telekom General Terms and Conditions for Purchasing before entering into a business relationship with us. These include a Supplier Code of Con- duct incorporating our principles for avoiding corruption. In addition, we ask our business partners questions regarding their compliance man- agement systems as part of the supplier self-assessment process. Deutsche Telekom has been offering online compliance training to external business partners and suppliers since September 2014. The training particularly focuses on small and medium-sized German busi- ness partners and suppliers. This encourages our partners even more to conduct their business ethically and in compliance with relevant laws and regulations. The training addresses specific compliance-relevant topics such as corruption prevention, anti-trust law, and sustainability and introduces Deutsche Telekom’s compliance management system. 205-3 Confirmed incidents of corruption and actions taken Deutsche Telekom engages in extensive compliance management activities to prevent and fight corruption. Any violations we uncover dur- ing our investigations are punished appropriately. In some cases, employment relationships have even been terminated for good cause. The total number of sanctioned incidents of corruption is confidential. GRI 301: MATERIALS GRI 103: Management Approach 103-1 103-2 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Economy > Sustainable and innovative products > Our approach to sustainable products and services 301-3 Reclaimed products and their packaging materials � Management & facts > Environment > Waste management & recycling > Used mobile device collection � Management & facts > Environment > Waste management & recycling > Deutsche Telekom’s Used Mobile Device Collection ESG KPI 6 Checked Reference Indicator GRI 302: ENERGY GRI 103: Management Approach 103-1 103-2 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Environment > Climate strategy > Our approach to measuring our progress in climate protection � Management & facts > Environment > Energy consumption & efficiency > Our approach to energy-efficient networks � Management & facts > Environment > Energy consumption & efficiency > Energy efficiency in buildings � Management & facts > Environment > Mobility > Our strategy for climate-friendly mobility 302-1 Energy consumption within the organization � Management & facts > Environment > Energy consumption & efficiency > Total energy consumption indicator Energy consumption at Deutsche Telekom primarily pertains to the con- sumption of electricity, district heating, fossil fuels, and fuel for our vehi- cle fleet. The amount of energy sold by Deutsche Telekom is not signifi- cant and generally not included in our energy and fuel consumption val- ues. 302-3 Energy intensity � Management & facts > Environment > Energy consumption & efficiency > Energy Intensity ESG KPI GRI 305: EMISSIONS GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Environment > Climate strategy > Climate strategy � Management & facts > Environment > CO emissions > Scope 3 2 emissions along the value chain � Management & facts > Economy > Sustainable and innovative prod- ucts > Our approach to sustainable products and services 305-1 Direct GHG emissions (Scope 1) � Management & facts > Environment > CO Intensity ESG KPI � Management & facts > Environment > CO CO 2 emissions (Scope 1 & 2 emissions) 305-2 Indirect GHG emissions (Scope 2) � Management & facts > Environment > CO Intensity ESG KPI � Management & facts > Environment > CO CO 2 emissions (Scope 1 & 2 emissions) 2 2 2 2 emissions > Carbon emissions > Total emissions > Carbon emissions > Total
GRI-INDEX SPECIFIC STANDARD DISCLOSURES 7 Indicator Reference Checked Indicator Reference Checked 305-3 Other indirect GHG emissions (Scope 3) � Management & facts > Environment > CO emissions > Total 2 CO 2 emissions (Scope 3) ational changes and involved according to the legally applicable provi- sions such as the German Works Constitution Act (Betriebsverfas- sungsgesetz). We also regularly engage in dialog with employee repre- sentatives at a national and European level. 305-5 Reduction of GHG emissions GRI 403: OCCUPATIONAL HEALTH AND SAFETY � Management & facts > Environment > Climate strategy � Management & facts > Environment > Our environmental program > GRI 103: Management Approach We care for our planet GRI 401: EMPLOYMENT GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Training and development > Our approach to training and development � Management & facts > Social > Fluctuation & staff restructuring > Staff restructuring in a socially responsible way � New way of working > New world of work page 401-1 New employee hires and employee turnover � Management & facts > Social > Headcount and part-time work > Development of headcount worldwide � Management & facts > Social > Fluctuation & staff restructuring > Staff churn rate � Management & facts > Social > Fluctuation & staff restructuring > Share of civil servants in the Group workforce � Management & facts > Social > Fluctuation & staff restructuring > Staff restructuring in a socially responsible way The number of employees entering retirement, an important component of natural employee churn, is not recorded within the scope of the annual workforce structure report. We therefore cannot provide a break- down of natural churn according to gender and age. The time and effort involved in more detailed data collection would exceed any insights gained. GRI 402: LABOR/MANAGEMENT RELATIONS GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Employee relationships > Our approach to employee relationships 402-1 Minimum notice periods regarding operational changes 103-1, 103-2, 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Occupational health and safety > Our approach to health and occupational safety 403-1 Workers representation in formal joint management- worker health and safety committees We have created different steering levels at Deutsche Telekom in Ger- many to implement our occupational health and safety management activities. The first level is the Central Health Working Group, comprised of employer representatives from the Group and Group companies as well as employee representatives, occupational health and safety experts, and representatives of employees with disabilities. The second level comprises the Health Working Groups at Deutsche Telekom subsidiaries in Germany. The third level is comprised of local, on-site working groups respon- sible for implementing occupational health and safety management locally; there are at least 110 of these. The national companies are responsible for their own occupational health and safety management. However, all Deutsche Telekom employ- ees have gradually been included in a certified health, safety, and envi- ronmental management system based on the international standards ISO 45001 for occupational health and safety and ISO 14001 for envi- ronmental management that safeguards Group-wide standards. One hundred percent of our employees in Germany and 99 percent of our employees outside of Germany have occupational health and safety and environmental protection certificates (as at December 31, 2019). 403-2 Types of injury and rates of injury at the organization � Management & facts > Social > Occupational health and safety > Health rate � Management & facts > Social > Occupational health and safety > Work accidents in Germany This indicator cannot be used for Deutsche Telekom as a global corpo- ration because of the extensive effort involved in compiling all country- specific regulations, an effort that exceeds the benefit of such activities. The relevant works council committees are informed of significant oper-
GRI-INDEX SPECIFIC STANDARD DISCLOSURES Reference Indicator GRI 404: TRAINING AND EDUCATION GRI 103: Management Approach 103-1 103-2 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Training and development > Our approach to training and development 404-1 Average hours of training per year per employee by gender and by employee category Vocational training (Group in Germany) Total hours in 2019 Female Male Apprentices 6,515,440* 2,215,360* 4,300,080* 3,307,216* 926,440* 2,380,776* Students on coopera- tive study programs Total 9,822,656* 3,141,800* 6,680,856* (* Calculations based on average values.) Training (Group, international) Our employees around the globe spent some four million hours on train- ing and skills development in 2019, 46 percent of them in digital format, which is 5 percent more than in 2018. Most of our courses can now be booked through a global Learning Management System (LMS); in 2019, 60 percent of the training courses bookable via LMS were digital. Telekom Training continuing education program Apprentices and vocational training programs 404-2 Programs for upgrading employee skills and transition assistance programs Programs for lifelong learning � Management & facts > Social > Training and development Departure from the company and career perspectives: Depending on the situation, we use various tools to help affected employees leave their job at the Group in a socially acceptable manner. This includes options such as outplacement consulting and severance payments. In addition, Vivento, the service provider for staff restructur- ing in Germany, offers assistance to civil servants when transferring to a public-sector employer. In many cases, the job change can be accom- panied by financial incentives. In 2019, as in previous years, Vivento’s job portal www.interamt.de offered civil servants appropriate posts at national, regional, and local level. The Post/Telekom welfare service offers seminars on “Getting ready for retirement” in which Deutsche Telekom employees are invited to partici- pate. Participants work on ways in which they will be able to fill their retirement years with meaningful activities and enjoy their retirement for years to come. � Management & facts > Social > Training and development > Tele- kom Training continuing education program � Management & facts > Social > Employee relationships > Flexible working models for a wide range of needs at Deutsche Telekom in Germany 8 Checked Indicator Reference Checked 404-3 Percentage of employees receiving regular perfor- mance and career development reviews We use various tools to assess the performance and career develop- ment of our employees. “Compass” for employees covered by collective agreements and civil servants in Germany “Lead2Win” for managers in executive positions worldwide, employ- ees not covered by collective agreements in Germany, and employ- ees of national companies PPR4ALL (Performance & Potential Review) in T-Systems Interna- tional countries Our performance management is currently undergoing further develop- ment, with a clear focus on feedback discussions and transparency meetings. Performance management tools and employee category & number and proportion of employees whose performance and career development are assessed Compass (employees covered by collective agreements in Ger- many): approx. 67,000 employees (81 percent of target group) Lead2Win: number and proportion to be determined in Q1 2020, process period > 12 months Performance & Potential Review (T-Systems International): approx. 16,000 employees (91 percent of target group) In each case, the performance management tools apply for entire employee groups and therefore employees of any gender in equal measure. GRI 405: DIVERSITY AND EQUAL OPPORTUNITIES GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and provide its boundary. Explain how the organization manages the topic. Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Diversity > Our approach to diversity and equal opportunities 405-1 Diversity of governance bodies and employees: Per- centage of individuals within the organization’s governance bodies in each of the following diversity categories: gender, age group, other indicators of diversity where relevant (such as minority or other vulnerable groups) � Management & facts > Social > Diversity > Commitment to increas- ing the proportion of women � Management & facts > Social > Diversity > People with a disability � Management & facts > Social > Demography and company pension scheme > Age structure Deutsche Telekom is an international corporation that is only repre- sented by a majority interest in some of its national companies. For that reason it is not possible to break down these values based on employee category.
GRI-INDEX SPECIFIC STANDARD DISCLOSURES 9 Indicator Reference 405-2 Ratio of basic salary and remuneration of women to men Checked Reference Indicator GRI 409: FORCED OR COMPULSORY LABOR Checked We have been comparing the pay of male and female employees for several years now. We were unable to identify any significant gender- based differences in pay for our employees in Germany. In the past, studies (e.g., Logib-D) confirmed that women and men who do the same job receive the same pay. It was not possible to record the pay of our male and female employees at all of our international locations due to data unavailability, relevance to competition, and the time and effort involved. GRI 406: NON-DISCRIMINATION GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Human rights > Our approach to protecting human rights � New way of working > Human rights > Human rights page 406-1 Incidents of discrimination and corrective actions taken � Management & facts > Social > Human rights > Human Rights & Social Performance Report GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Human rights > Our approach to protecting human rights � Management & facts > Social > Human rights > Code of Human Rights & Social Principles � Good stewardship > Supply Chain > Supply chain page � Management & facts > Economy > Suppliers > Our approach to sustainable procurement � Management & facts > Economy > Suppliers > Improving sustaina- bility in the supply chain 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor, and corrective actions taken Risks related to forced labor are combated by auditing selected strate- gic and particularly high-risk suppliers. No significant risk of forced or compulsory labor was identified at our direct business facilities. GRI 412: HUMAN RIGHTS ASSESSMENT � Management & facts > Social > Human rights > Information and GRI 103: Management Approach questions about human rights GRI 407: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Human rights > Our approach to protecting human rights � New way of working > Human rights > Human rights page 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk, and corrective actions taken To our knowledge, there are no cases of this nature. Deutsche Telekom recognizes the fundamental right to freedom of association and the right to collective bargaining within the scope of national regulations and existing agreements. These principles form an integral part of the Code of Human Rights & Social Principles, are binding for the entire Group, and must be confirmed in writing annually by the Group compa- nies. We likewise expect our business partners and suppliers to comply with these principles as long as they do not contradict national legisla- tion. 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Social > Human rights > Our approach to protecting human rights � New way of working > Human rights > Human rights page 412-1 Operations that have been subject to human rights reviews or impact assessments � Management & facts > Social > Human rights > Our approach to protecting human rights � New way of working > Human rights > Human rights page GRI 414: SUPPLIER SOCIAL ASSESSMENT GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Good stewardship > Supply Chain > Supply chain page � Management & facts > Economy > Suppliers > Our approach to sustainable procurement � Management & facts > Economy > Suppliers > Supply chain management � Management & facts > Economy > Suppliers > 2019 audit results
GRI-INDEX SPECIFIC STANDARD DISCLOSURES 10 Indicator Reference Checked 414-1 New suppliers that were screened using social criteria Reference Indicator GRI 419: SOCIOECONOMIC COMPLIANCE Checked In 2019, compliance with social and environmental criteria was verified for 81 percent of our suppliers. This also covers human rights criteria. This verification will also be carried out for all future suppliers. Of our 200 most important suppliers in terms of procurement volume, we veri- fied compliance with sustainability criteria (CR-Qualified TOP 200 Sup- pliers ESG KPI) for 87 percent in 2019. 414-2 Negative social impacts in the supply chain and actions taken GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Strategy > Compliance > Holistic compliance management system � Management & facts > Economy > Suppliers > 2019 audit results 419-1 Non-compliance with laws and regulations in the social and economic area GRI 416: CUSTOMER HEALTH AND SAFETY litigation � Management & facts > Strategy > Compliance > Major ongoing GRI 103: Management Approach 103-1 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Economy > Consumer protection > Our approach to consumer protection � Management & facts > Economy > Consumer protection > Our approach to secure mobile communication � Management & facts > Economy > Sustainable and innovative prod- ucts > Our approach to sustainable products and services 416-2 Incidents of non-compliance concerning the health and safety impacts of products and services � Management & facts > Strategy > Compliance > Major ongoing litigation GRI 418: CUSTOMER PRIVACY GRI 103: Management Approach 103-1 103-2 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Economy > Data protection and data security > Our approach to data protection � Management & facts > Economy > Consumer protection > Our approach to consumer protection 418-1 Substantiated complaints regarding breaches of cus- tomer privacy and losses of customer data � Management & facts > Strategy > Compliance > Major ongoing litigation
GRI-INDEX FURTHER GRI ASPECTS REPORTED 11 FURTHER GRI ASPECTS REPORTED Reference Indicator GRI 201: ECONOMIC PERFORMANCE GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. Checked Indicator Reference Checked We comply with all legal requirements in all countries when disposing of hazardous waste. We are a service provider with low amounts of effluents as a result. We don’t collect data on effluents, as the amount of time and work involved could not be reasonably justified based on the benefit this would bring. GRI 308: SUPPLIER ENVIRONMENTAL ASSESSMENT � Group profile > https://www.telekom.com/en/company/at-a-glance GRI 103: Management Approach 201-1 Direct economic value generated and distributed � Management & facts > Economy > Financial performance indica- tors > Net added value 201-3 Defined benefit plan obligations 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Economy > Suppliers > Our approach to sustainable procurement � Management & facts > Social > Demography and company pension � Management & facts > Economy > Suppliers > Supply chain scheme > Company pension schemes management � Management & facts > Economy > Suppliers > 2019 audit results GRI 306: EFFLUENTS AND WASTE GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Environment > Circular economy & resource efficiency > Our approach to resource conservation and environ- mental protection � Management & facts > Environment > Our environmental program > We care for our planet � Management & facts > Environment > Waste management & recycling > Waste reduction and recycling 306-2 Waste by type and disposal method Deutsche Telekom has a Group-wide waste management policy in place (e.g., for recycling copper) to handle the major types of waste pro- duced by its business activities. We also use our Used Mobile Device Collection ESG KPI to determine the relationship between the number of mobile devices such as smartphones and tablets brought to market and the number returned to us (returned mobile devices in thousands / number of mobile devices brought to market in millions). Functional devices are reused, which gives them a longer life span. Cell phones that are no longer functional are properly recycled in an environmentally friendly manner. Data collection regarding disposal methods is com- plex, and the amount of time and work involved could not be reasonably justified based on the benefit this type of data collection would bring. 308-1 Percentage of new suppliers that were screened using environmental criteria In 2019, compliance with social and environmental criteria was verified for 81 percent of our suppliers (Sustainable Procurement ESG KPI). This verification will also be carried out for all future suppliers. Of our 200 most important suppliers in terms of procurement volume, we verified compliance with sustainability criteria (CR-Qualified TOP 200 Suppliers ESG KPI) for 87 percent in 2019. In addition, 63 percent of our pur- chases from emission-intensive suppliers were covered by the CDP Sup- ply Chain Program (CDP Supply Chain Coverage ESG KPI) in 2019. 308-2 Significant actual and potential negative environmental impacts in the supply chain and actions taken � Management & facts > Economy > Suppliers > 2019 audit results GRI 408: CHILD LABOR GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Economy > Suppliers > Our approach to sustainable procurement � Management & facts > Economy > Suppliers > Supply chain management � Management & facts > Economy > Suppliers > 2019 audit results
GRI-INDEX FURTHER GRI ASPECTS REPORTED 12 Indicator Reference Checked 408-1 Operations and suppliers at significant risk for incidents of child labor, and corrective actions taken � Management & facts > Economy > Suppliers > 2019 audit results No significant risk of child labor was identified at our direct business facilities, business partners, and suppliers. GRI 415: PUBLIC POLICY GRI 103: Management Approach 103-1, 103-2, 103-3 Explain why the topic is material and pro- vide its boundary., Explain how the organization manages the topic., Explain how the organization evaluates the manage- ment approach. � Management & facts > Strategy > Political advocacy > Political advocacy
GLOBAL COMPACT COMMUNICATION ON PROGRESS 13 GLOBAL COMPACT COMMUNICATION ON PROGRESS Principle 1: Support and respect for internationally proclaimed human rights Principle 3: Uphold freedom of association and the right to collective bargaining � Management & facts > Social > Human rights � Management & facts > Strategy > CR strategy & management > Values and Guiding Principles � Management & facts > Strategy > Compliance � Management & facts > Economy > Data protection and data security � Management & facts > Strategy > CR strategy & management > Values and Guiding Principles � Management & facts > Social > Employee relationships > Dialog and cooperation with employee representatives � Management & facts > Strategy > Compliance � Management & facts > Economy > Suppliers > Our approach for � Management & facts > Strategy > Political advocacy � Management & facts > Social > Human rights > Code of Human sustainable procurement � Management & facts > Economy > Suppliers > Supply chain Rights & Social Principles management � Management & facts > Social > Employee relationships > Fair pay � Management & facts > Economy > Suppliers > Auditing and benefits procedures � Management & facts > Economy > Suppliers > Our approach for sustainable procurement � Management & facts > Economy > Suppliers > Supply chain management � Management & facts > Economy > Suppliers > Auditing Principle 4: Elimination of all forms of forced and compulsory labor procedures � Management & facts > Economy > Consumer protection � Management & facts > Social > Occupational health and safety � Management & facts > Social > Diversity � 2019 Annual Report > Management report > Employees � 2019 Annual Report > Management report > Group strategy � 2019 Annual Report > Management report > Management of the Group Principle 2: No complicity in human rights abuses � Management & facts > Strategy > CR strategy & management > Values and Guiding Principles � Management & facts > Strategy > Compliance � Management & facts > Strategy > Political advocacy � Management & facts > Economy > Consumer protection � Management & facts > Economy > Suppliers > Our approach for sustainable procurement � Management & facts > Strategy > CR strategy & management > Values and Guiding Principles � Management & facts > Strategy > Compliance � Management & facts > Strategy > Political advocacy � Management & facts > Economy > Suppliers > Our approach for sustainable procurement � Management & facts > Economy > Suppliers > Supply chain management � Management & facts > Economy > Suppliers > Auditing procedures Principle 5: Abolition of child labor � Management & facts > Strategy > CR strategy & management > Values and Guiding Principles � Management & facts > Strategy > Compliance � Management & facts > Strategy > Political advocacy � Management & facts > Economy > Suppliers > Our approach for sustainable procurement � Management & facts > Economy > Suppliers > Supply chain man- � Management & facts > Economy > Suppliers > Supply chain agement management � Management & facts > Economy > Suppliers > Auditing � Management & facts > Economy > Suppliers > procedures � Management & facts > Social > Human rights > Human Rights and Auditing procedures Social Performance Report