Aspect 1: Environmental concerns

We are committed not only to minimizing the impact our business activities may have on the climate, but also to tapping into the opportunities for sustainable development offered by digitalization. When used properly, it can also make a valuable contribution to saving energy and thus slowing down climate change.

For further information, please refer to the section “Deployment of ICT products to the benefit of society.”

In order to handle the rising tide of regulatory requirements, especially from the EU, we established an internal, cross-divisional Green Deal task force in 2020. The purpose of the task force is to ensure that necessary measures and processes can be implemented without delay and to create the necessary transparency. As a result, assessments and indications from the task force are taken into account in the Group’s different sustainability initiatives. For example, T‑Systems has joined the Climate Neutral Data Centre Pact. Our holistic environmental management system is based on the international ISO 14001 standard. A Group-wide environmental guideline brings together the main voluntary commitments to which the Group as a whole is subject.

Climate protection and resource conservation

Our investments in the network build-out make us one of the biggest investors in the industry. Rising demand for faster data services with full-coverage availability must not lead to an increase in CO₂ emissions and thus accelerate global warming. We are therefore making sure that we increase energy efficiency, for example in our data centers, so that we can at least keep our energy consumption at a stable level. We also use energy from renewable sources to decouple CO₂ emissions from energy consumption. To support Deutsche Telekom’s sustainability initiative in the long term, two ESG targets are to be used as components of the variable remuneration of the members of the Board of Management. Since the reporting year, the members of the Board of Management are incentivized to ensure that energy consumption remains at least stable in the medium term and that CO₂ emissions are reduced. The two non-financial performance indicators “energy consumption” and “CO₂ emissions” (Scope 1 and 2) provide the measurement base for target achievement. In the reporting year, energy consumption remained stable year-on-year at 13,323 GWh. Due in particular to the Group-wide use of electricity from renewable energy sources, CO₂ emissions fell sharply against the previous year, and are at 247 kt CO₂e.

For about the last two decades, climate protection has been steadily increasing in importance at Deutsche Telekom. Our Group-wide climate protection strategy covers the following aspects: “Emissions from the value chain,” “Renewable energy sources,” “Energy efficiency,” and “Enablement: positive climate-protection effects on our customers.” In 2019, the Group Board of Management adopted ambitious climate goals, which it stepped up again in 2021:

1. By the end of 2021, we will use electricity that comes from 100 % renewable sources everywhere in the Group (Scope 2, market-based method). We have achieved this goal.
2. By the end of 2025, we aim to reach climate neutrality across the Company. We will cut up to 95 % of our CO₂ emissions (Scope 1 and 2) with the transition to electricity from renewable energy sources and other measures. We will need to offset the remaining emissions through compensatory measures.
3. By 2030, we aim to reduce the emissions created by the manufacture and use of our products by 25 % per customer (compared to 2017) (Scope 3, categories: purchased goods and services, capital goods, use of sold products, use of leased products). These emissions account for more than 98 % of our carbon footprint. We maintain a close dialog with suppliers in order to reduce the emissions generated during production and to ensure that the products we offer consume less energy during the utilization phase.
4. We want to reach “net zero” by the end of 2040 at the latest, leaving no carbon footprint in any of the three scopes. This goal is in line with the targets set out by the European Green Digital Coalition, of which Deutsche Telekom is a founding member.

We developed our Group-wide climate goals in line with the current scientific and political conditions. The Science Based Targets initiative (SBTi) has confirmed to us that our climate protection targets contribute to compliance with the Paris Climate Agreement. The climate goals, which were tightened in 2021, will be reviewed in 2022 in line with the SBTi guidance. The SBTi also gave a positive assessment of the targets set by our subsidiaries in the United States and Hungary. The national companies are taking different steps to achieve these targets. These include power purchase agreements (PPAs) for procuring electricity from specific sustainable sources, such as wind and solar power. At the end of 2021, we were obtaining 23.1 % of our electricity through these PPAs.

We calculate our CO₂ emissions across the Group in line with the market-based method of the Greenhouse Gas (GHG) protocol. The standard distinguishes between three categories of CO₂ emissions (Scope 1, 2, and 3). We report on these each year as part of the CDP and in our CR and Annual Reports.

Detailed information on year-on-year data trends will be published in our 2021 CR report.

The following graphic illustrates the emissions of the different scopes resulting from our business activities, shown as CO₂-equivalent emissions (CO₂e emissions).

CO₂e emissions (Scope 1-3)

Deutsche Telekom Group in 2021 in % and kilotons (kt) of CO₂e

The Power Usage Effectiveness (PUE) metric serves as one indicator for enhancing energy efficiency in our data centers. We determine this metric using the method recommended by the standard EN50600 for data centers, which takes the total energy consumed by data centers into account, not just that used to operate the servers. In 2021, the global PUE score for our T‑Systems data centers was 1.58. Our high-availability, state-of-the-art data centers operated by T‑Systems in Germany are designed with even greater efficiency in mind, and as such are capable of achieving a PUE of 1.30. From 2008 to 2021, we reduced the average PUE score for data centers in Germany from 1.85 to 1.49.

We determine the effectiveness of our climate protection measures using key performance indicators (KPIs). The KPIs Energy Intensity and Carbon Intensity for Deutsche Telekom (fixed-network and mobile entities) are shown in the following graphics. Both KPIs reflect our energy consumption and our CO₂ emissions in relation to the volume of data transmitted, thus demonstrating how our network’s energy and emissions efficiency has developed in practice. The result for the Energy Intensity KPI is 102 and for the Carbon Intensity KPI, 2. For the Group entities in Germany, the Energy Intensity KPI stands at 45 and the Carbon Intensity KPI is also at 2. This means that our networks have grown continually more efficient in the course of recent years, despite rising data volumes.

Energy Intensity ESG KPI

Deutsche Telekom Group (fixed-network and mobile entities) in 2021

Carbon Intensity ESG KPI

Deutsche Telekom Group (fixed-network and mobile entities) in 2021

Another important metric for us is the Renewable Energy KPI. It shows how much of our Company’s overall electricity consumption is obtained from renewable energy sources. In 2021, this amounted to 100 % across the Group. Direct procurement, guarantees of origin, and own energy production are included in this calculation.

In order to effectively curb climate change, many relevant players must work together, which is why we participate in national and international associations and organizations, such as the Global Enabling Sustainability Initiative (GeSI) and econsense. We are also working systematically on improving climate protection throughout our supply chain. Since 2016, the CDP supplier engagement rating has assessed how well companies have integrated the topic of climate protection into their supply chains. In 2021, we were awarded an A rating by CDP and included on its Supplier Engagement Leader Board. Our CDP Supply Chain Coverage ESG KPI indicates the degree to which our procurement volume was covered by supplier participation in the CDP Supply Chain Program in 2021. In 2021, more than 70 % of the procurement volume was covered. A record 268 suppliers took part in the program in the reporting year (2020: 222).

Last but not least, handling valuable resources efficiently also plays a vital role in a holistic approach to ecological responsibility. Our previous environmental program “We care for our Planet” was renamed the #GreenMagenta program during the reporting year. This makes it clear that the program is part of our higher-level sustainability agenda #GreenMagenta and #GoodMagenta. Whether in our Telekom shops, with our products and networks, or in terms of mobility, we have adopted an array of measures to conserve resources as part of the program. For example, all of Deutsche Telekom’s new branded products have had sustainable packaging since the end of 2020. We developed corresponding sustainability criteria precisely for this purpose. Over 60 % of the new packaging for smartphones we source from our suppliers also meets these criteria. Our subsidiary Comfort Charge provides charging infrastructure for e-mobility in Germany. Operating rapid charging stations has allowed us to save more than 548 metric tons of CO₂. That is the equivalent of the CO₂ emissions produced by a passenger car on a journey of around three million kilometers. One of the Group’s goals is to increase the proportion of electric vehicles in its fleet. Currently, around 30 % of new vehicles ordered are electric. Various measures have been agreed to significantly increase that share in the coming years and to reduce the share of vehicles with combustion engines. In addition, during the reporting year we again focused on international networking and expansion of the #GreenMagenta program. KPIs were developed for each component of the initiative, which will feed into our ESG KPIs. These KPIs help us measure our progress and also enhance public transparency of what we do.

For further information on the progress of our environmental program and on our KPIs, please refer to the 2021 CR report.

Conserving resources is also a goal of the Green Pioneers initiative launched by our employees. More than 350 employees from around 50 locations in Germany have joined the initiative thus far. Our Green Pioneers play a proactive role within the workforce, promoting awareness of resource efficiency in the workplace and providing impetus for our core business – and they do so voluntarily, on top of their professional duties. In 2021, some Green Pioneers held courses on environmental issues for their colleagues, with more than 1,500 employees in total taking part. They organized workshops as part of #GreenMagenta Week and launched a trash collection competition to mark World Clean-Up Day in September. Other Green Pioneers organized activities on sustainable mobility in the reporting year, such as Cycling to Work and Cycling at Lunchtime. Despite the high proportion of employees working from home during the pandemic, these cycling campaigns had saved more than 20,000 kg of CO₂ by the end of September 2021. The Green Pioneers also worked with Facility Management to install bicycle service stations, where employees who bike to work can quickly and easily carry out minor repairs. At international level, the CR managers in the national companies also launched relevant local activities. DT IT Solutions Russia, for example, carried out local campaigns during #GreenMagenta Week in which, as well as training options, the program also included team trash collection initiatives.

Compliance with the EU taxonomy transparency requirements

The EU taxonomy aims to promote investment flows from the finance sector to businesses that are involved in environmentally sustainable activities. It is thus intended to help the EU implement the European Green Deal, while, at the same time, creating a common understanding of the environmental sustainability of activities and investments. The regulation also lays down corporate reporting obligations in regard to these economic activities. Criteria were set out in EU legislation in mid-2021 for the first environmental objectives of the taxonomy, Climate Change Mitigation and Climate Change Adaptation.

For Deutsche Telekom, as a company in the information and telecommunications industry, two of the economic activities currently listed in the EU taxonomy are relevant:

• Data processing, hosting and related activities (8.1. in Annex I + II of the Delegated Regulation (EU) 2021/2139)
• Data-driven solutions for GHG emissions reductions (8.2. in Annex I + II of the Delegated Regulation (EU) 2021/2139)

The relevant indicators are applicable to two environmental objectives: Climate Change Mitigation and Climate Change Adaptation. We are allocating them to the objective Climate Change Mitigation.

The EU taxonomy does not currently include criteria for the economic activity “Provision and operation of a network infrastructure for telecommunications.” This means that the key part of our business model is not yet covered by the taxonomy. As a result, we cannot describe our core business as taxonomy-eligible. Suitable EU taxonomy criteria with which we could describe our contribution to climate protection as taxonomy-aligned do not yet exist either. We therefore lobby in a range of business and industry associations for the inclusion of suitable, relevant criteria in the EU taxonomy to describe our core activities.

At the same time, the EU taxonomy does address economic activities that are relevant, e.g., for our fleet and building management activities, but that are not within Deutsche Telekom’s core business. These include the installation, maintenance and repair of energy-efficient devices, of electric vehicle charging stations, of devices for measuring, regulating and controlling the overall energy efficiency of buildings, and of renewable energy technologies. Activities in these areas largely relate to our capital expenditure and our operating expenditure. It will not be possible to gauge whether the associated turnover of the providers of these services are taxonomy-aligned until early 2023, when our business partners publish reports with the relevant information. Until then, we cannot report any capital expenditure and operating expenditure relating to the procurement of products from taxonomy-aligned economic activities as being taxonomy-eligible. We were not able to take the Draft Commission Notice published on February 2, 2022 into account. It provides further details on the interpretation of capital expenditure and operating expenditure (category c in item 1.1.2.2 and 1.1.3.2. of Annex 1 to the Delegated Act). Due to the publication date of the Notice, it will only be possible to carry out the complex and quality-assured collection and review of the necessary disclosures for the first time for the 2022 financial year.

The table below shows the taxonomy-eligibility of our economic activities for this reporting year in absolute figures and as a percentage of the Group’s total turnover, capital expenditure, and operating expenditure. As of the 2022 reporting year, we will also report the amount and the proportion of our economic activities that are taxonomy-aligned. Below, we explain our approach to the two economic activities that are currently relevant to us.

Based on the provisions of the EU taxonomy, the total figures for the Group that are relevant for this calculation in the reporting year are EUR 108.8 billion (turnover), EUR 35.7 billion (capital expenditure), and EUR 0.5 billion (operating expenditure). The definition of turnover from the EU taxonomy is equivalent to net revenue in our Group. The relevant capital expenditures were determined on the basis of the consolidated statement of financial position and are calculated by adding together the following key line items: additions and changes in the composition of the Group under property, plant and equipment, intangible assets (excluding goodwill), and right-of-use assets. The disclosures on capital expenditures do not form part of a capital expenditure plan in line with the EU taxonomy guidelines. The definition used in the EU taxonomy for calculating relevant operating expenditure encompasses costs that relate to research and development; building remediation measures; short-term leases; maintenance and repair; and any other direct expenditures relating to the day-to-day maintenance of property, plant and equipment which are presented in the consolidated income statement under other operating expenses.

The disclosures on taxonomy-eligibility in terms of turnover, capital expenditure, and operating expenditure are directly assigned at the level of product groups to either the operation of data centers in accordance with economic activity 8.1. or the provision of ICT solutions in accordance with economic activity 8.2.

The economic activity “Data processing, hosting and related activities” covers “Storage, manipulation, management, movement, control, display, switching, interchange, transmission or processing of data through data centers, including edge computing”, and pertains to group J.63.1.1. of the same name in the European registry of sectors. Of our Group-wide business activities, our Systems Solutions operating segment (T‑Systems) falls into this sector. To evaluate whether activities are taxonomy-eligible, we consider T‑Systems’ global business, including data centers operated by other companies in which we lease space (“third-party data centers”). Taxonomy-eligible turnover can be clearly and transparently assigned to specific data centers using a suitable ratio. To do so, we use the proportion that a data center makes up of the total number of T‑Systems server IDs. Capital expenditure and operating expenditure can be calculated specifically for all data centers using the relevant IT systems. This analysis shows that a large proportion of the revenue from our Systems Solutions segment is taxonomy-eligible. To avoid double counting under the EU taxonomy, T‑Systems’ cloud solutions are not covered and reported here; they are only included under the economic activities for data-driven solutions detailed below.

Based on the relevant total figures for the Group, the taxonomy-eligibility of our business activities for data processing and hosting stands at 1.1 % (turnover) and 0.2 % (capital expenditure). Since we classify our data centers as non-current assets, no direct expenses are incurred in this context. In order to also include a view of taxonomy-eligibility from a segment perspective, we additionally report the KPIs in respect of Systems Solutions. The taxonomy-eligible portion, determined using the same calculation logic, is 36.6 % in relation to net revenue of the segment, and 21.3 % in relation to its capital expenditure.

We apply the definition of the economic activity “Data-driven solutions for GHG emissions reductions” to those solutions and products in the Group that are “predominantly aimed at the provision of data and analytics enabling GHG emission reductions,” which means that they have clear potential to enable users to save CO₂. In this context, we are guided by the key levers of the established Enablement Factor ESG KPI and by other solutions with clear potential to enable users to save CO₂ within the Sustainable Revenue Share ESG KPI and the #GreenMagenta label. These include first and foremost the following services from among our Group-wide business activities: web- and video-conferencing tools, workplace and cloud solutions, and connected car. We mainly provide these services in the Germany operating segment, in our major subsidiaries in the Europe operating segment, and in the Systems Solutions operating segment. We therefore focus on the relevant companies when evaluating the taxonomy-eligibility of activities. To avoid double counting under the EU taxonomy, T‑Systems’ cloud solutions are only reported under this economic activity, and not under that for data processing and hosting.

The very specific selection of economic activities for this taxonomy environmental objective means that only a small proportion of the Deutsche Telekom Group’s turnover (0.8 %) and operating expenditure (2.1 %) is taxonomy-eligible. We only disclose direct operating and capital expenditure for economic activity 8.2 in the Systems Solutions operating segment; we do not provide these figures for the other operating segments due to lack of materiality.

Even an aggregate view of the taxonomy-eligibility of both economic activities provides very low proportions in the reporting year of turnover (1.8 %), capital expenditure (0.2 %), and operating expenditure (2.1 %).