Aspect 4: Respecting human rights

We place high priority on respecting human rights. This applies not only to our Company, but also to our business partners and our approximately 20,000 suppliers in more than 80 countries – whom we explicitly place under the same obligations.

Labor standards in the supply chain and in the Group SDG 10

There are still places in the world where human rights are not a given. As part of our global procurement activities, we can be exposed to country- and supplier-specific risks. These include, for example, inadequate local working and safety conditions. Violations cause severe damage to those affected and can result in reputational damage and negative financial consequences for companies.

For further information, please refer to the section “Risk and opportunity management.”

As a responsible company, we have made an express commitment to upholding the UN Guiding Principles on Business and Human Rights adopted by the United Nations Human Rights Council in 2011 (Ruggie Principles). The obligation to respect human rights is anchored in our core regulations – i.e., our Guiding Principles and our Code of Human Rights & Social Principles policy statement. The latter underscores 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. At the same time, the code embodies our commitment to complying with the principles laid down by the International Labour Organization (ILO), the Organisation for Economic Co-operation and Development (OECD), the Universal Declaration of Human Rights, and the UN Global Compact. We also require our suppliers to comply with all our guidelines related to human rights. Within the Group, our primary focus is on safeguarding the right to conclude collective agreements and on guaranteeing diversity and equal opportunity.

For further information, please refer to the passages entitled “Collaboration with employees’ representatives and trade unions” and “Diversity and equal opportunity” in this section under Aspect 2 “Employee concerns.”

In order to meet the requirements of the UN Guiding Principles, we have developed an extensive program to implement these Principles throughout our Group and introduced an ongoing process comprising several interconnected measures and tools. The program includes promoting awareness, a mechanism for lodging complaints, a risk and impact analysis, and reporting.

We use two main instruments to review our Code of Human Rights & Social Principles: Firstly, we compile a central Human Rights & Social Performance Report each year. In 2019, all 117 of the companies surveyed declared in this report that they comply with the rules and principles of the Code of Human Rights & Social Principles. The report indicated no violations for 2019. Secondly, we have a central point of contact for human rights issues, available at the email address humanrights@telekom.de or through an anonymous whistleblower system. We have summarized all relevant contact information on our whistleblower portal Tell me!. We look into all tip-offs received and introduce countermeasures, provided the information is identified as plausible. In 2019, the point of contact received eight tip-offs relating to human rights. Not all of these tip-offs were deemed plausible. Whenever necessary, we carry out review processes at our national companies to assess employer-employee relationships. To do so, we compile five human rights-related key performance indicators, such as employee satisfaction, then assess these using a traffic light system.

For further information about employee satisfaction, please refer to the section “Employees.”

In addition, we conduct an annual formal review of compliance with the Employee Relations Policy. The results are discussed with the regional managers in our national companies. If necessary, we agree upon measures such as a Human Rights Impact Assessment and Engagement – a process for estimating the actual and potential effects of business activities on human rights, as well as the ability of the organization to prevent, mitigate, or eliminate these effects altogether. In 2019, we began holding local workshops to provide training on and raise awareness of human rights issues. We completed such an assessment at T‑Systems India and carried out Employee Relations Policy reviews at T‑Mobile Polska and in Deutsche Telekom’s field service in 2019.

Our perception of ourselves as a company that acts in a socially and ecologically sustainable way includes assuming responsibility along our entire value chain. We have been working to improve sustainability throughout our supply chain for many years. Our strategy for sustainable procurement practices is embedded Group-wide in our procurement processes. The heads of the CR and Procurement units are jointly responsible for its implementation. They report to the CHRO and CFO, respectively. An escalation process calls for decisions to be made at Board of Management level in severe cases. The Sustainable Procurement working group supports our international procurement units in meeting sustainability requirements. Our sustainability principles for Procurement are set out in the Group’s Global Procurement Policy. The supplementary Procurement Practices provide specific guidelines for procurement in Germany and serve as recommendations for our national companies. We train our employees throughout the Group using an e-learning tool. In addition, a buyer handbook provides an overview of which CR criteria must be considered at which point of the procurement process. SDG 8

We cannot guarantee that all our suppliers conform to the principles of our Supplier Code of Conduct. However, we review their compliance regularly to minimize risks and support suppliers in further developing their sustainability performance, working closely with them on these issues. Leading up to the supplier evaluation, we classify our categories as critical or non-critical based on risk and opportunity. We have defined 14 Corporate Social Responsibility (CSR) risk criteria and four CSR opportunity criteria on the basis of expert interviews. These criteria were updated most recently in 2018.

For the supplier evaluation itself, we use a three-stage approach:

Stage 1: The Supplier Code of Conduct is an integral part of all supplier agreements and binding for all of our suppliers. Ethical, social, and ecological principles as well as fundamental human rights are codified in this document. When selecting a supplier after issuing an invitation to tender, sustainability factors are given a weighting of 10 percent. In addition, new suppliers are subjected to a sustainability risk assessment by an external audit firm. In this way, we discover if there is any increased risk in terms of specific sustainability criteria at any of our suppliers.

Stage 2: Sustainability assessments and reviews are conducted for selected suppliers of critical categories. Depending on their individual sustainability performance and risk classification, we use a range of instruments, for instance, the information system EcoVadis, mobile surveys, or on-site supplier audits (social audits). Our focus here is not only on our direct suppliers but also, wherever possible, on downstream suppliers. We also boost the effectiveness of our audits by collaborating with 17 other companies in the Joint Audit Cooperation (JAC). In 2019, we completed a total of 84 social audits – 26 at our direct and 58 at our indirect suppliers. Since 2010, we have carried out 550 audits within the framework of the JAC. SDG 10

Stage 3: We work in close cooperation with our strategically important suppliers on improving their sustainability performance, for example, in terms of environmental protection, working hours regulations, and occupational health and safety. This is primarily done as part of the development program we initiated for suppliers. Since 2018, this has been set up as an industry-wide Sustainable Development Program (SDP) at the ICT association Global e-Sustainability Initiative (GeSI). In 2019, the telecommunications company Swisscom also joined the industry program. As a result, five additional suppliers (three of Deutsche Telekom and two of Swisscom) were included in the SDP in the course of the year. Since the program was launched in 2014, a total of 23 suppliers have joined the SDP. In 2019, we again achieved not only social and ecological improvements, but also economic ones: For example, an increase in job satisfaction of 18 percent at one of our suppliers was accompanied by an 8 percent reduction in staff turnover. Ecological improvements at another of our suppliers who is part of the SDP include an 88 percent reduction of CO₂ emissions caused by logistics and a 14 percent saving of CO₂ emissions per product unit. SDG 17

We use the Sustainable Procurement ESG KPI to measure and manage our sustainability performance in procurement. This KPI represents the procurement volume attributable to suppliers who have accepted our Supplier Code of Conduct and have been checked on the basis of the information they have disclosed, for example, via EcoVadis or in a social audit, with regard to social and ecological criteria. This calculation relates to our procurement volume throughout the entire Group (excluding T‑Mobile US). The share of the procurement volume subject to a risk assessment remained at around 81 percent in 2019, which is the target level we had set for 2020. The TOP 200 CR-qualified Suppliers ESG KPI complements the Sustainable Procurement KPI. It reflects the share of our top 200 suppliers audited for sustainability criteria. In 2019, the share of TOP 200 CR-qualified suppliers was 87 percent.

Our aspiration to increase social and ecological sustainability in the value chain is increasingly also reflected in our product portfolio. In 2019, we added the Fairphone smartphone to the product range of our online shops in Germany. Our Austrian national company has been offering its customers the Fairphone since April 2016. The Fairphone discloses all of its manufacturing processes, from responsible materials procurement through to a commitment to the wellbeing of workers.