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
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, the main focus of our attention is on preserving the right to collective agreements, and on ensuring diversity and equal opportunity.
For further information, please refer to the passages entitled "Collaboration with employees’ representatives/trade unions" and "Diversity and equal opportunity.”
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 the policy statement, 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 in the Group: Firstly, we compile a central Human Rights & Social Performance Report each year. For 2020, all 121 of the companies surveyed declared in this report that they comply with the rules and principles of the Code of Human Rights & Social Principles. We also included our five joint ventures in the survey for 2020. The report indicated no violations for 2020. Secondly, we have established a central point of contact for human rights issues, which can be reached via the email address “humanrights@telekom.de.” Further contact options and an anonymous whistleblower system can be found on Tell me!, our Group-wide whistleblower portal. We look into all tip-offs received and introduce countermeasures, provided the information is identified as plausible. In 2020, nine tip-offs relating to human rights were received via the point of contact and the whistleblower portal. 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 our Employee Relations Policy. In February 2020, an employee relations policy review was conducted at Crnogorski Telekom in Montenegro. After a review like this, the results are discussed with the regional managers in our national companies. If necessary, we agree 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 negative effects. In view of the coronavirus pandemic, we were unable to perform any further assessments abroad in 2020. The pandemic also prevented us from holding on-site training courses to raise awareness among managers and employees for human rights issues. Instead, we organized a Human Rights Risk Assessment at Group Headquarters, in the course of which we identified further Group-wide challenges as regards human rights; among other things, these will make it necessary to adjust individual policies and communications measures. We will take corresponding action before the end of 2021.
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 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 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. The section of the Procurement Practices covering sustainability gives purchasing officers an overview of the CR criteria that are to be taken into account in each stage of the procurement process. An e-learning tool is available to our employees throughout the Group for training purposes. 
We cannot guarantee that all our suppliers conform to the principles of our Supplier Code of Conduct. 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.
For the supplier evaluation itself, we use a multi-stage approach: The Supplier Code of Conduct, for instance, 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 %. 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.
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 15 other telecommunications companies in the Joint Audit Cooperation (JAC). In 2020, we completed a total of 89 social audits (76 audits and 13 mobile surveys) – 29 at our direct and 60 at our indirect suppliers. Since 2010, we have carried out 728 audits within the framework of the JAC. The coronavirus pandemic had little impact on the planned JAC audits: where in-person audits were not possible, they were conducted by video conference, for example.
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 done primarily as part of the development program we initiated for suppliers. Since 2018, we have been implementing this program on the basis of a voluntary industry-wide approach known as the Sustainable Development Program (SDP). In addition to Deutsche Telekom, telecommunications companies Telefónica and Swisscom have thus far joined the SDP as well and more are to follow. In the reporting period, six further suppliers (two of Deutsche Telekom, three of Swisscom, one of Telefónica) were included in the SDP. Since the launch of the program in 2014, a total of 29 suppliers have completed the SDP, achieving measurable ecological, social, and economic progress. Suppliers made further progress in 2020, too. For instance, one of them succeeded in raising its employee satisfaction level by 11.5 %. Another installed its own photovoltaic system, cutting by 3,700 MWh/year the amount of energy needed to heat and cool its buildings and saving 3,034 metric tons of CO2e emissions. 
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 – for which the target is 95 % 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 % in 2020. On the other hand, the Order Volume Verified as Non-Critical ESG KPI – target for 2025: 60 % – measures the share accounted for by suppliers checked for social and ecological criteria by means of dedicated reviews – e.g., via EcoVadis, the Carbon Disclosure Project (CDP), social audits, supplier visits, or our Supplier Development Program. In 2020, the share of these CR-qualified suppliers was 62 %. 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.”
We are constantly working to enhance the social and ecological sustainability of our value chain. In the reporting year, we developed specific sustainability criteria for IT and network products and tested them in a pilot project. As of 2021, these criteria will be applied in all tenders for hardware products and have a weighting of 10 % when selecting suppliers.
Detailed information on our supplier management system will be published in our 2020 CR report.