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Our approach to sustainable procurement

Our contribution to the SDGs

Encompassing the entire procurement process, our Group-wide sustainable 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 overview of which CR criteria must be considered at which point in the procurement process.
  • We ensure business partners and suppliers are up to the mark by offering workshops on specific topics and through our Supplier Development Program.

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Supplier Code of Conduct
Our Supplier Code of Conduct forms part of our General Terms and Conditions for Purchasing and must therefore be accepted by our suppliers. Ethical, social, and ecological principles as well as fundamental human rights are codified in this Code of Conduct. It also includes requirements relating to relevant issues such as data protection, corruption, and artificial intelligence. For our strategic suppliers who exhibit a higher CR risk, we have on-site audits conducted regularly by external auditors to check compliance with the Supplier Code of Conduct.

Supplier Code of Conduct
With our Supplier Code of Conduct we have made a commitment to complying with the fundamental principles and standards set forth by the International Labour Organization (ILO), the Organisation for Economic Co-operation and Development, the Universal Declaration of Human Rights and the UN Global Compact.

Global Procurement Policy
Our sustainability principles for Procurement are set out in the Group’s Global Procurement Policy.

Procurement guidelines
The Procurement guidelines provide specific instructions for procurement in Germany and serve as recommendations for our national companies.

Other policies
The Group Policy on Avoiding Corruption, the Statement on Extractives, and the list of prohibited materials are binding for our suppliers, too.

Implementation in the company

  • Our sustainability strategy in Procurement is derived from our CR strategy and is anchored in the procurement processes used throughout our Group. The heads of the GCR and Procurement units are jointly responsible for implementing sustainable procurement practices. They report to the Board of Management members for HR and Legal Affairs as well as Finance. An escalation process calls for decisions to be made at Board of Management level in serious cases.
  • The Sustainable Procurement Working Group supports the international Procurement departments in implementing the sustainability requirements.

Steering tools

The ESG KPIs are an important steering tool for Procurement.

Reporting against standards

 

Global Reporting Initiative (GRI)

  • GRI 102-12 (General Disclosures)

Global Compact

  • Principle 1 (Support and respect for internationally proclaimed human rights)
  • Principle 2 (No complicity in human rights abuses)
  • Principle 3 (Uphold freedom of association and the right to collective bargaining)
  • Principle 4 (Elimination of all forms of forced and compulsory labor)
  • Principle 5 (Abolition of child labor)
  • Principle 7 (Support a precautionary approach to environmental challenges)
  • Principle 8 (Undertake initiatives to promote greater environmental responsibility)
  • Principle 9 (Encourage the development and diffusion of environmentally friendly technologies)
  • Principle 10 (Work against corruption in all its forms of, including extortion and bribery)

Supplier compliance

With our Supplier Code of Conduct, we place our suppliers under an obligation to uphold the principles and values anchored in our Code of Conduct and in the “Code of Human Rights & Social Principles”. Suppliers of solutions involving artificial intelligence (AI) must also comply with the requirements of our Guidelines for Artificial Intelligence. Deutsche Telekom suppliers are also under the obligation to do everything necessary to prevent active and passive forms of corruption. We expect our suppliers to impose the same requirements on their subcontractors too.

The Supplier Code of Conduct forms part of our General Terms and Conditions for Purchasing, but does not, of course, supersede 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 legal requirements are implemented faithfully and effectively. Since 2014, we have offered online compliance training for our suppliers.  

When selecting business partners, we conduct compliance business assessments based on the risk of compliance violations. In addition to suppliers, and development and joint venture partners, this applies in particular to certain consultants, such as sales agents. We have created a separate policy for partnerships with them Consultant Policy.

Reporting against standards

 

Global Compact

  • Principle 10 (Work against corruption in all its forms of, including extortion and bribery)

Sustainable Procurement ESG KPI KPI

The Sustainable Procurement ESG KPI img 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. Our aim to keep a coverage of at least 80 percent until 2020 was thereby achieved.

As announced in the 2019 CR Report, we changed our sustainability performance metric for procurement in 2020 in order to meet the increasing requirements of our stakeholders. To this end, one of the steps we took was to define two new ESG KPIs: The “Procurement Volume Without CR Risk ESG KPI” and the “Order Volume Verified as Non-Critical ESG KPI”. The new KPIs replace the previous KPIs “Sustainable purchasing” and “CR-qualified top 200 suppliers”.

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.

 

Reporting against standards

 

Global Reporting Initiative (GRI)

  • GRI 412-1 (Human Rights Assessment)
  • GRI 414-1 (Supplier Social Assessment)

German Sustainability Code

  • Criterion 1 (Strategy)
  • Criterion 3 (Objectives)
  • Criterion 4 (Depth of the Value Chain)
  • Criterion 6 (Rules and Processes)
  • Criterion 7 (Control)
  • Criterion 17 (Human Rights)

Global Compact

  • Principle 1 (Support and respect for internationally proclaimed human rights)
  • Principle 2 (No complicity in human rights abuses)
  • Principle 5 (Abolition of child labor)

European Federation of Financial Analysts Societies (EFFAS)

  • V28-04 (Supply Chain)

ESG KPI „CR-qualified TOP 200 suppliers“ KPI

The ESG KPI imgCR-Qualified Top 200 Suppliers“ is an internal management indicator which complements the ESG KPI “Sustainable Procurement”. While the ESG KPI “Sustainable Procurement” measures the share of procurement volume reviewed according to sustainability criteria, the KPI “CR-Qualified Top 200 Suppliers” reflects the share of suppliers from the Top 200 Suppliers pool. These are reviewed based on sustainability criteria according to Self-Assessments, Audits img, Supplier Sustainability Workshops and Supplier Development Programs. The share of CR-qualified suppliers taken from the Top 200 pool amounts to 84 percent in 2020. Thus, our target to reach 75 percent by 2020 is exceeded.

As announced in the 2019 CR Report, we changed our sustainability performance metric for procurement in 2020 in order to meet the increasing requirements of our stakeholders. To this end, one of the steps we took was to define two new ESG KPIs: The “Procurement Volume Without CR Risk ESG KPI” and the “Order Volume Verified as Non-Critical ESG KPI”. The new KPIs replace the previous KPIs “Sustainable purchasing” and “CR-qualified top 200 suppliers”.

"Procurement Volume Without CR Risk" ESG KPI KPI

As announced in the 2019 CR Report, we changed our sustainability performance metric for procurement in 2020 in order to meet the increasing requirements of our stakeholders. To this end, one of the steps we took was to define two new ESG img KPIs: "Procurement Volume Without CR Risk" and "Order Volume Verified as Non-Critical". The Procurement Volume Without CR Risk ESG KPI  – for which the target is 95 percent by 2025 – measures the procurement volume from direct business partners on whom an established external service provider carried out checks in the reporting period for negative reports in the media and found no irregularities. It also includes suppliers for whom irregularities were identified, but where corresponding corrective action was taken. The share of this procurement volume subjected to a risk assessment amounted to 99.6 percent in 2020.

The new KPIs replace the previous indicators “Sustainable procurement” and “Top 200 CR-qualified suppliers.”

"Order Volume Verified as Non-Critical" ESG KPI KPI

As announced in the 2019 CR Report, we changed our sustainability performance metric for procurement in 2020 in order to meet the increasing requirements of our stakeholders. To this end, one of the steps we took was to define two new ESG img KPIs: "Procurement Volume Without CR Risk" and "Order Volume Verified as Non-Critical". The Order Volume Verified as Non-Critical ESG KPI – target for 2025: 60 percent – measures the share accounted for by suppliers checked for social and ecological criteria by means of dedicated reviews – e.g., via EcoVadis img, the Carbon Disclosure Project (CDP img), social audits, supplier visits, or our Supplier Development Program. In 2020, the share of these CR-qualified suppliers was 62 percent. Both ESG KPIs are calculated in respect of the audited Group-wide procurement volume already largely mapped in a standardized procurement reporting system (excluding the “Network Capacity” category and T‑Mobile US).

The new KPIs replace the previous indicators “Sustainable procurement” and “Top 200 CR-qualified suppliers.”

 

Supply chain management

Our contribution to the SDGs

Before commencing 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 – also regarding corporate responsibility and sustainability.

As a rule, our supplier management runs through a five-step cycle. The aim is to minimize risks in the supply chain and encourage our suppliers to improve their practices.

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Stage 1: Classification

All new suppliers are introduced to our basic principles and values on sustainability and human rights. To identify critical, strategically important and sustainability-relevant suppliers, risks (such as country risks) are clustered for all product categories. We also use external evaluation systems such as RepRisk and RiskMethod to assist with this.

We classify supplier risks based on risk and opportunity analyses, basically differentiating between

  • Risk categories 2020: 5,526 suppliers (42.33 % of the procurement volume)
  • Non-risk categories 2020: 28,439 suppliers (57.67 % of the procurement volume)

Within the categories, we also take into account a wide range of sustainability aspects and risks, including the risk of forced/ child labor or environmental pollution. Opportunities such as the potential to reduce energy consumption are also included in the classification.

Stage 2: Selection

All suppliers, for both critical and non-critical categories, must accept our Supplier Code of Conduct before commencing business relations. Selection is also based on environmental, social, and human rights criteria. In addition, we take into account relevant product criteria such as energy consumption, resource efficiency, suitability for circular economy, pollutants and conflict materials.
The sustainability criteria mentioned are given a weighting of 10 percent when choosing suppliers.

Stage 3: Assessments

Our basic goal is to identify the causes of problems in our supply chain and resolve them together with our suppliers. To that end, we conduct comprehensive sustainability assessments and reviews of selected suppliers assigned to critical commodity groups using, for example, the EcoVadis ESG questionnaire, data from the CDP suppliers disclosure or the RepRisk Rating. We also use social audits and anonymous mobile surveys for assessments. You can read about these measures and the number of participating suppliers here.

The decision regarding which tool to use is made individually for each supplier and depends, among other things, on the supplier’s sustainability performance and risk classification. We improve the effectiveness of all our assessment activities by cooperating with other telecommunications operators in the Joint Audit Cooperation (JAC).

If the assessment shows a need for action, we define corrective measures and a timeframe for their implementation. We then monitor whether the schedules are met and, if necessary, initiate an escalation process that can lead to termination of the business relationship.

Stage 4: Monitoring

We hold regular talks with critical suppliers who present a sustainability risk, in which we also address CR topics with the aim of ensuring and promoting the companies’ sustainability performance. We also use the following Group-wide ESG KPIs as a monitoring and control tool:

Stage 5: Development

To improve sustainability performance in our supply chain, we implement a specially designed development program in close cooperation with selected suppliers. We also hold regular workshops with selected suppliers on relevant sustainability topics. In addition, we continuously assess, support and train our suppliersas part of the JAC activities. Since 2010, we have reached more than 1,100 direct and indirect supplier sites through these activities. The topics covered by the workshops included:

  • Emissions managemen
  • Avoiding hazardous substances and using alternative materials in products
  • Extending the product life span
  • Reducing electrical scrap and launching collection programs
  • Designing for greater sustainability and innovation

The main objective of supplier reviews and training is to minimize potential risks while generating long-term economic benefit for all parties involved.

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Reporting against standards

 

Global Reporting Initiative (GRI)

  • GRI 102-9 (General Disclosures)

Global Compact

  • Principle 1 (Support and respect for internationally proclaimed human rights)
  • Principle 2 (No complicity in human rights abuses)
  • Principle 3 (Uphold freedom of association and the right to collective bargaining)
  • Principle 4 (Elimination of all forms of forced and compulsory labor)
  • Principle 5 (Abolition of child labor)
  • Principle 7 (Support a precautionary approach to environmental challenges)
  • Principle 8 (Undertake initiatives to promote greater environmental responsibility)
  • Principle 9 (Encourage the development and diffusion of environmentally friendly technologies)

Escalation process

If a supplier cannot meet the sustainability requirements anchored in our Supplier Code of Conduct to our satisfaction, we initiate an escalation process.

Our procurement organization is primarily responsible for this process – with support and advice from Group Corporate Responsibility. We hold discussions with the supplier to make our requirements clear to them. If the discussions held on various levels do not lead to the desired outcome, our Board of Management, as the last resort, decides about how to proceed with the supplier. In the worst case, this could lead to the business relationship with the supplier being terminated.

Everyone who identifies irregularities in our supply chain regarding compliance with laws, internal guidelines, and standards of conduct, can report these – and can do so anonymously if they wish – using our Tell me! portal.

Escalation process  for violations against the supplier code

Risk monitoring

In Procurement, we work with a comprehensive supplier risk monitoring scheme. subjecting our existing supplier basis to an extended risk analysis. In the first step, we assess the risks associated with individual suppliers based on three criteria:

  • Procurement volume
  • Critical components
  • Dependence on suppliers

Depending on the classification, we then carry out either basic or active risk monitoring:

  • Basic monitoring: An external auditing company evaluates all suppliers according to financial, CSR and compliance criteria, and gives them a score.
  • Active risk monitoring: Suppliers exhibiting the greatest risk are also monitored with regard to other global risks (e.g., natural disasters, political risks). Our aim is to address deficits together with the supplier and take appropriate corrective action. Only if no solutions are possible do we have to cut ties with suppliers.

2020 supplier sustainability reviews (excl. T-Mobile US) KPI

In 2020, we conducted a total of 89 supplier reviews – 76 of which were on-site reviews (social audits) and 13 mobile surveys. 29 direct and 60 indirect suppliers were involved in the checks.

For the on-site reviews,we let the supplier know the approximate time of our visit in advance (“semi-announced audit”). This is necessary to make sure that relevant contacts in key functions are present for the audit. The mobile surveys 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 conditions in order to then initiate further measures as needed, such as specific on-site reviews (social audits).

Due to Covid-19, we were not able to carry out all of the planned on-site reviews (> 100) of suppliers in 2020. If possible given the developments of the pandemic, we will catch up on these reviews in 2021.

 

  Number of reviews Number of findings Number of completed finding
Social audits img (by external audit firms) 76 665 248
Mobile surveys * 13 - -
EcoVadis img (20142020) 353 - -
CDP img supply chain ** 222 - -
Total 664 - -

* Mobile surveys with selected suppliers as a supplementary, innovative review method
** CDP’s supply chain program is used for direct suppliers with high emission intensity.

Auditing procedures

We focus our audit activities on strategically important and particularly risky suppliers. They are routinely audited every two to three years. This group includes roughly 250 of our 20,000 or so active suppliers. Together, they cover around 80 percent of our procurement volume. These audits give us transparency about the risks in large parts of our supply chain.

The majority of the audits are conducted within the scope of the Joint Audit Cooperation (JAC). The audits cover the following areas:

The JAC Guidelines require, among other things, that our suppliers:

  • Pay a fair wage that enables employees to enjoy a decent standard of living;
  • Respect the right to freedom of association and collective bargaining, and provide a healthy, safe working environment and
  • 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 consecutive days of working.

Compliance with all these requirements is reviewed regularly during our on-site audits. This also includes inspection of the features and quality of the working, sleeping, and cafeteria areas.

Deutsche Telekom does not require its suppliers to obtain external environmental or social certification. But if suppliers cannot show any environmental and social responsibility certificates, we do expect equivalent management systems to be used. Our auditing experience shows, however, that the majority of our relevant manufacturing suppliers have an external certificate or equivalent management systems.

Verification of important social and ecological aspects as well as fundamental human rights during our audits is in line with internationally recognized guidelines and standards such as the ILO img core labour standards, the UN Guiding Principles on Business and Human Rights, and the OECD img Guidelines for Multinational Enterprises.

Reporting against standards

 

Global Compact

  • Principle 1 (Support and respect for internationally proclaimed human rights)
  • Principle 2 (No complicity in human rights abuses)
  • Principle 3 (Uphold freedom of association and the right to collective bargaining)
  • Principle 7 (Support a precautionary approach to environmental challenges)
  • Principle 8 (Undertake initiatives to promote greater environmental responsibility)
  • Principle 9 (Encourage the development and diffusion of environmentally friendly technologies)
  • Principle 10 (Work against corruption in all its forms of, including extortion and bribery)

2020 audit results KPI

In the audit program, which was established and is controlled at Group level, a total of 76 audits were carried out in 2020.

As in previous years, we concentrated our auditing activities on suppliers in Asia, North America, Oceania, Africa, Southern Europe, and Eastern Europe.

Audited suppliers included manufacturers in the areas of IT hardware, software and services as well as networks and devices.
In addition to serious violations of working conditions and working hours, we also found specific indications of forced labor and lapses in youth labor protection at one supplier during the inspections. The business relationship with this supplier was consequently terminated with immediate effect and only resumed after corrective measures were verified. Beyond this, no other cases of corruption, bribery, or critical violations of compliance policies or the right to intellectual property were found.

Legend: Area (Number of violations)

  • Of the 76 suppliers we audited in 2020 (6 of which were in accordance with the validated audit processes of the Responsible Business Alliance img), around 37 percent (28 audits) were direct suppliers and 63 percent (48 audits) were tier 2, 3, and 4 suppliers – that is, indirect suppliers.
  • The audits carried out in 2020 revealed a total of 665 violations of Deutsche Telekom’s supplier requirements. These findings are broken down as follows: 297 cases regarding occupational health and safety, 101 cases regarding working hours, 96 cases regarding environmental protection, 34 cases regarding labor practices, and 62 cases regarding wages and performance-related remuneration, and 61 cases regarding business ethics. These included 95 lapses to be dealt with with priority  and a further 408 serious findings (according to the definition and assessment structure adapted in the reporting year). A total of 610 violations were corrected in 2020, including several open improvement measures from previous years. Examples of critical violations in 2020 and improvement measures can be found in the table below. As in previous years, most violations  (45 percent) were linked to occupational health and safety (2019: 43 percent), followed by violations linked to working hours (15 percent, comparable to 2019). At 14 percent, environmental violations constituted the third biggest issue (2019: 16 percent).
Areas   Findings at suppliers Initiated improvements Status (end of 2020)
Environment   The factory did not identify opportunities/ measures to reduce greenhouse gas emissions and set reduction target. Energy consumption related to greenhouse gas emissions is mainly due to the use of electricity and water. The company has set annual targets for electricity and water consumption and conducts monthly evaluations. Measures for energy saving and emission reduction have been elaborated. Closed
  According to documents reviewed and management interview, no systematic approach has been implemented to prevent pollution of stormwater runoff and illegal discharges and spills into the storm sewer. Implementation of a management system for stormwater and wastewater discharge and daily maintenance. Closed
Business Ethics   According to documentation reviewed and management interview, the facility did not have an adequate and effective process for monitoring, identifying, and ensuring compliance with applicable laws and business ethics regulations. A process for monitoring, identifying, evaluating, and ensuring compliance with business ethics laws and regulations was established. A list of business ethics laws and regulations and customer requirements has also been established. Closed
Child Labour & Juvenile workers   Despite an existing procedure for the protection of juvenile workers that prohibits them from working overtime or night shifts, random sampling found juvenile workers working night shifts. It has been established that juvenile workers are given special protection (e.g., no night shifts or overtime). Closed
Forced Labour   None of the randomly sampled employment contracts contained information on working hours and compensation. The employment contracts now require the signing of working hours and work compensation. Overtime work cannot exceed 36 hours, and hourly pay cannot be less than the local minimum wage standard. Closed
Health and Safety   Some of the chemicals were missing secondary containments and valid safety labels (e.g., glue in the glue mixing rooms and ink in the packaging area). Secondary containments were installed in the packaging area and in the glue room, and valid safety labels for chemicals were attached. Closed
  Some emergency exits and evacuation routes were blocked. The emergency exits and evacuation routes have been cleared and can now be passed normally. Closed
  The production area of the assembly hall was not equipped with a fire alarm and emergency notification system. There was no evidence of regular technical maintenance of the fire alarm and warning system. Missing fire detection sensors installed. There was also a contract signed for fire alarm system maintenance with a nationally recognized company. Closed
Working hours   Workers' overtime hours exceeded legal requirement and their weekly working hours exceeded 60 hours. The workers' overtime hours are now in compliance with legal requirements. Closed
Wages And Compensation   During the audit, it was found that wage payments for workers were delayed.  Wages of departed workers were also delayed.    The date of salary payment has been adjusted in accordance with local law requirements. In addition, the leaving salary must now be paid within three working days. Closed

Supplier Development Program

We collaborate as partners with our suppliers to make sure they are able to meet our high sustainability criteria.

Since 2018, we have continued the former Deutsche Telekom supplier development program as an industry approach (Sustainable Development Program, SDP). Telefónica and Swisscom have since joined this program. We expect more telecommunications providers and other ICT img companies to join us in the near future. The diagram shows the areas in which we audit the suppliers participating in our program. Based on these audits, we work with the respective supplier to develop a plan for remedying any issues. All activities and findings are documented so that we can gage the effectiveness of the measures employed.

Corporate Responsibility Excellence

Capex/opex analysis for 2020

Our suppliers come from various industries and countries. To capture the diversity of our more than 20,000 suppliers, the following graphic depicts the types of suppliers we commission; the overview includes the share of our expenditure (capex and opex) attributable to them and their geographical distribution.

2020
Supplier Category Proportion of Spend % Number of Consolidated Suppliers Number of domestic subsidiary suppliers Number of foreign subsidiary suppliers Number of critical subsidiary suppliers Number of risky subsidiary suppliers
Building, facilities, furniture and rel. services 2,9% 2645 688 2273 147 1
Civil Works 14,4% 6122 5504 1625 390 1
Consulting,contracting,temp. labour and service center 3,3% 1217 333 976 62 0
Electrodomestic appliances 0,0% 89 21 73 80 0
Enduser communication technology and equipment 17,2% 1320 504 1159 107 0
Energy, fuel, gas, water 2,8% 220 94 137 12 0
FinancialServices,insur,fees,investig,cert 2,7% 776 195 679 54 1
Fleet and travel 0,9% 534 196 399 31 2
Food and catering 0,2% 282 46 254 27 0
HR services, training and translation 0,8% 2424 1061 1639 164 6
Information technology 16,2% 5516 2154 4969 434 9
Logistics and mail 1,2% 587 258 446 42 0
Marketing, media, content, print, fairs 9,1% 4787 2170 3183 318 4
Network capacity 11,0% 1801 152 2141 136 1
Network infrastructure 12,3% 2372 1099 2157 201 3
Office equipment, office technology and stationery 0,2% 676 390 382 46 0
Service platforms 1,7% 754 341 576 70 2
Sim cards 0,1% 47 45 25 4 0
Tools and protection equipment 0,3% 692 314 462 42 0
Undefined/Undefined 2,7% 144 82 66 12 0
TOTAL 100%       1810 20
    Unique consolidated suppliers: 25149 Unique local/subsidiary suppliers: 31183   In total with no regards to the corresponding category In total with no regards to the corresponding category

Definitions and examples

  • Consolidated supplier = Group level.
  • Domestic subsidiary supplier = Subsidiaries of the corresponding company located in Germany.
  • Foreign subsidiary suppliers = Number of supplier subsidiaries which are located outside of Germany.
  • Consolidated suppliers are uniquely counted at group level; local suppliers are multiple counted in case of different business operations/locations.
  • Critical supplier: compliance, finance and resilience risks
  • CR risky supplier: Adherence/Compliance risks to defined ethical, environmental and social requirements

CDP Supply Chain Program KPI

Since as early as 2016, we have been disclosing our activities to bring on board suppliers as part of CDP’s supplier engagement rating. This rating assesses how well companies have been able to integrate the topic of climate protection into their supply chain. In 2020, we were awarded an A rating, as in the previous year. 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 img Supply Chain Program. This involved calculating the ratio between a supplier’s overall emissions (Scopes 1 and 2 and Scope 3 for the upstream supply chain) and the supplier’s overall sales.

We reported the CDP Supply Chain Coverage ESG KPI img 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 2020, 70.2 percent of the procurement volume was covered by the CDP Supply Chain Program, which means we achieved our goal of covering 70 percent of our carbon-intensive suppliers by 2020.

Supplier relationships KPI

The percentage of audited procurement volume decreased from 31 percent in the previous year to 23.2 percent in 2020. At the same time, the percentage of procurement volume covered by EcoVadis img decreased to 37 percent. This is mainly due to the fact that more purchases were made from suppliers, which unfortunately are not yet qualified. A supplier prequalification process via the Supplier Management Portal (SMP) took place for 60 percent of the procurement volume in 2020. Prequalification is mandatory for all suppliers for which we anticipate an order volume of more than 100,000 euros.

Reporting against standards

 

Global Reporting Initiative (GRI)

  • GRI 414-1 (Supplier Social Assessment)

German Sustainability Code

  • Criterion 1 (Strategy)
  • Criterion 3 (Objectives)
  • Criterion 4 (Depth of the Value Chain)
  • Criterion 6 (Rules and Processes)
  • Criterion 17 (Human Rights)

Global Compact

  • Principle 1 (Support and respect for internationally proclaimed human rights)
  • Principle 2 (No complicity in human rights abuses)
  • Principle 5 (Abolition of child labor)

European Federation of Financial Analysts Societies (EFFAS)

  • V28-04 (Supply Chain)

Responsible procurement of raw materials

Our contribution to the SDGs

We require our suppliers to protect the environment and use resources responsibly. This requirement 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 information 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 addition, we always check whether there is a management system in place to address the issue of conflict resources.

When selecting suppliers and products, we review and evaluate the use of hazardous and conflict materials. The criteria were tested in 2020 as part of a pilot project and are to be applied in the future to the procurement of IT and network products.

Reporting against standards

 

Global Compact

  • Principle 7 (Support a precautionary approach to environmental challenges)
  • Principle 8 (Undertake initiatives to promote greater environmental responsibility)
  • Principle 9 (Encourage the development and diffusion of environmentally friendly technologies)

 

Antonio Veloso

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Antonio Veloso