Disclosures pursuant to Article 8 of Regulation 2020/852 (Taxonomy Regulation)
The EU Taxonomy is designed to promote investment flows from the finance sector to businesses that are involved in environmentally sustainable activities. The EU Taxonomy is therefore aimed at helping implement the European Green Deal. As a basis for this, the EU Taxonomy provides a binding definition of the environmental sustainability of activities and investments. The EU Taxonomy Regulation requires companies to report on these economic activities.
Under the EU Taxonomy Regulation, the first step is to ascertain the taxonomy-eligible economic activities of a company. These are activities that are covered by the EU Taxonomy and that therefore potentially contribute significantly to achieving the environmental objectives. The second step is to check whether these activities are taxonomy-aligned. An activity is defined as taxonomy-aligned if it meets the technical screening criteria for a significant contribution to at least one environmental objective listed in the Annexes to Delegated Regulations (EU) 2021/2139, (EU) 2022/1214, (EU) 2023/2485, and (EU) 2023/2486. At the same time, it must not do any significant harm to any of the other environmental objectives and must meet the minimum social standards (“minimum safeguards”) set out in Taxonomy Regulation (EU) 2020/852, which in particular require compliance with human and labor rights.
Deutsche Telekom is a company in the information and telecommunications industry. The following two economic activities are therefore relevant to our core business in connection with the “Climate change mitigation” (CCM) environmental objective under the EU Taxonomy:
- Data processing, hosting, and related activities (CCM 8.1)
- Data-driven solutions for GHG emissions reductions (CCM 8.2)
Additionally, we also lease devices to our customers as part of our core business, so the following economic activity, which is assigned to the “Circular economy” (CE) environmental objective, is also relevant for Deutsche Telekom:
- Product-as-a-service and other circular use and result-oriented service models (CE 5.5)
No economic activities relevant to the environmental objective “Climate change adaptation” (CCA) were identified.
The EU Taxonomy does not currently include criteria for an economic activity “Provision and operation of electronic communication networks and services.” This means that most of our business model is not yet covered by the EU Taxonomy. As a result, the EU Taxonomy does not give us an opportunity to indicate our contribution to climate change mitigation in the area of fixed and mobile network build-out and operation. We are active in various business and industry associations to ensure that relevant and appropriate criteria are added to the EU Taxonomy to reflect our core activities in the area of fixed and mobile networks. To this end, we developed a joint position paper in 2024 with industry associations including Connect Europe, GSMA, and Ecta. This paper underscores the significant contribution our sector is making to achieving Europe’s digital transformation and climate goals.
The EU Taxonomy provides a list of cross-cutting activities outside of our core business that are potentially relevant for our general business activities, such as for fleet and building management and energy production. In the 2024 financial year, Deutsche Telekom carried out the following taxonomy-eligible cross-cutting activity for the environmental objective “Climate change mitigation” (CCM) to a financially material extent:
- Transport by motorbikes, passenger cars, and light commercial vehicles (CCM 6.5)
The three tables below provide an overview of our taxonomy-eligible and taxonomy-aligned economic activities. They break the figures down into both absolute values and the applicable percentage of Deutsche Telekom’s turnover, capital expenditure, and operating expenditure.
Method for ascertaining taxonomy eligibility and alignment
When ascertaining the taxonomy-eligibility of economic activities, we focused on our core business activities taking cost-benefit aspects into account.
Those activities identified as taxonomy-eligible were checked individually for their taxonomy alignment. However, proof of conformity for avoiding significant harm to the environmental objective “Climate change adaptation” (CCA) was provided comprehensively for all taxonomy-eligible activities, as we manage climate risks centrally at Group level. We monitor compliance with minimum social safeguards using a Group-wide management system.
To avoid significant harm to the environmental objective “Climate change adaptation” (CCA), checking for taxonomy alignment of all of the economic activities listed above requires an analysis of potential physical climate risks. As part of our risk management, we carried out a comprehensive analysis of physical climate risks in 2023 and extended it to include the United States operating segment in 2024. The climate risk analysis was carried out using a recognized software platform based on the most recent climate scenarios defined by the Intergovernmental Panel on Climate Change (IPCC). In connection with the taxonomy-eligible activities, no significant harm to the environmental objective “Climate change adaptation” (CCA) was identified, as individual local climate risks are minimized by existing mitigation measures.
The minimum social safeguards require a management system to monitor compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the ILO Core Conventions and the International Bill of Human Rights. We have made an express commitment to the principles listed above. We perform human rights-related due diligence using a risk-based management system encompassing both the Group and our supply chain that we use to monitor compliance with social and environmental standards. We also maintain a process of trust-based dialogue with employees’ representatives and trade unions. To prevent corruption and safeguard fair competition, Deutsche Telekom has established a compliance management system that is aligned with the company’s risk situation and is externally certified at regular intervals.
You can find more information on the minimum social standards in the sections “ESRS S1 – Own workforce,” “ESRS S2 – Workers in the value chain,” “ESRS S4 – Consumers and end-users,” and “ESRS G1 – Business conduct.”
Economic activities that are relevant to turnover
The taxonomy-eligible economic activity Data processing, hosting and related activities (CCM 8.1) covers “Storage, manipulation, management, movement, control, display, switching, interchange, transmission or processing of data through data centers, including edge computing.” Of our Group-wide business activities, our Systems Solutions operating segment (T‑Systems) comes under this sector. As well as data centers operated by T‑Systems, we also included data centers operated on co-locations in the assessment. Only data centers that comply with the European Code of Conduct for Energy Efficiency in Data Centres can be considered as making a substantial contribution to climate change mitigation in accordance with the EU Taxonomy. All of the nine locations directly managed by T‑Systems comply with this code. As we have not yet verified compliance with the Code of Conduct through external audits in accordance with EU Taxonomy requirements, we are classifying the data centers used for economic activity CCM 8.1 as not taxonomy-aligned in the reporting year. In addition, in accordance with the EU Taxonomy, the global warming potential of refrigerants that need to be used in data center cooling systems may not exceed a value of 675 GWP (Global Warming Potential). This criterion is currently met by one data center that was fully refurbished in 2022. The other sites currently still use industry-typical refrigerants that meet the criteria of the EU regulation on fluorinated greenhouse gases. We will make the change to taxonomy-aligned refrigerants as part of the regular refurbishment program for our data centers. We will carry out a detailed review of the individual data centers’ compliance with the criteria for preventing significant harm to the remaining environmental objectives in each case as soon as they fulfill the aforementioned climate change mitigation requirements in full.
We associate those solutions and products in the Group that, in accordance with the description in the EU Taxonomy, are “predominantly aimed at the provision of data and analytics enabling GHG emission reductions” with the economic activity “Data-driven solutions for GHG emissions reductions” (CCM 8.2). These are solutions and products that have clear potential to enable users to save CO2 emissions. We thus identified the following taxonomy-eligible services within our Group-wide business activities:
- Business-related video conferencing solutions (save travel-induced CO2 emissions)
- Workplace and cloud solutions (increase energy efficiency by improving server utilization)
- IoT solutions (save CO2 emissions)
We provide these services to a significant financial extent in the Germany operating segment, in our major national companies in the Europe operating segment, and local business units in the Systems Solutions operating segment.
The technical screening criteria require a life-cycle analysis as evidence of the taxonomy alignment of the solutions in question. This must show that a solution results in substantial greenhouse gas emission reductions both over and beyond its entire life cycle in comparison with the relevant reference solution available on the market. We understand reference solutions to be alternative solutions that would typically be used in a company in our footprint markets. This assumes that the companies are aligned with best practices. The technical screening criteria do not stipulate a specific threshold for “substantial” reductions in greenhouse gases in comparison with the reference solution. In 2022, we therefore defined a threshold based on scientific findings; greenhouse gas reductions resulting from taxonomy-eligible solutions exceeding this threshold value are thus considered “substantial.” We update the necessary life-cycle analyses on an ad hoc basis to reflect relevant technological developments and market trends. For the reporting year, we rely on the life-cycle analyses that we conducted in 2023 for business-related web conferencing solutions and for the Future Cloud Infrastructure, Open Telekom Cloud, and SAP Cloud Services cloud solutions. Deutsche Telekom also offers IoT solutions that can reduce CO2 emissions. As we have not yet prepared any life-cycle analysis to demonstrate the effects of these solutions, they are reported as not taxonomy-aligned.
The taxonomy-eligible business-related web conferencing solutions were analyzed by comparing them with hybrid meetings. This provided evidence for significant greenhouse gas savings. For instance, compared with hybrid meetings, virtual-only meetings reduce greenhouse gas emissions by around 62 % (small meetings) or 32 % (large meetings).
Of the workplace and cloud solutions covered by the life-cycle analysis, the Future Cloud Infrastructure, including the SAP Cloud Services run on this infrastructure, reduced greenhouse gas emissions by around 9.7 % in comparison with decentralized data centers operated by our customers themselves. However, this effect was below the threshold value defined in the 2022 financial year. Future Cloud Infrastructure and SAP Cloud Services are hence also reported as not taxonomy-aligned for the 2024 financial year. The life-cycle analysis also found that using the Open Telekom Cloud reduced greenhouse gas emissions by 47 % compared with the reference scenario. The reference scenario is based on the assumption that our customers use their own, decentralized server infrastructure for storing and processing data rather than the cloud solution. We therefore classify the Open Telekom Cloud and all web conferencing solutions included in a life-cycle analysis as taxonomy-aligned.
For the aforementioned solutions, we exclusively use infrastructure located in Germany. The requirements for the “Transition to a circular economy” (CE) conform to current EU legislation, which we implement as part of our environment management activities at our EU sites. We also require our business partners to provide evidence that the hardware used in the data centers is actually reconditioned or recycled at the end of its service life.
We primarily record leases of devices to business customers and consumers in the Germany operating segment under the taxonomy-eligible economic activity “Product-as-a-service and other circular use and result-oriented service models” (CE 5.5). By leasing new and returned used devices instead of selling them to our customers, we are enabling a longer use phase and hence making a material contribution to circular economy – including by using environmentally friendly packaging for the devices. Our climate strategy for the upstream and downstream value chain enables us to help minimize greenhouse gas emissions in connection with the manufacturing and transportation of devices. Moreover, our business partners use processes for reconditioning leased devices that do not significantly impact water bodies and biodiversity. We meet the requirements for preventing and mitigating pollution (Appendix C to Annex II of Commission Delegated Regulation (EU) 2023/2486) in part by complying with applicable EU law when manufacturing and marketing devices. This includes the EU Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS). Deutsche Telekom has set itself the goal of only using devices that do not contain any substances of very high concern. However, suitable technical alternatives are not yet available for all substances. In individual cases, we therefore make use of the exemptions defined in the Taxonomy criteria. We are able to verify compliance with Appendix C for the more recent generations of our devices. We therefore classify the service described above as proportionately taxonomy-aligned. Using the number of leased and Appendix C-compliant devices, taxonomy-aligned turnover and capital expenditure were calculated as a percentage of total turnover and capital expenditure.
Cross-cutting activities
Deutsche Telekom has a vehicle fleet that includes both company cars and service vehicles. The economic activity “Transport by motorbikes, passenger cars, and light commercial vehicles” (CCM 6.5) is therefore relevant as a cross-cutting activity that applies to the purchase, the lease, and the operation of vehicles of the classes M1 (passenger cars) and N1 (light commercial vehicles with a maximum weight of 3.5 t). As we are pushing forward with the transition to a fully electric fleet, especially in Germany and the EU, some of the new vehicles purchased already meet the CO2 thresholds set by the EU Taxonomy. We were also able to provide evidence of the alignment of these vehicles with the other key EU Taxonomy requirements, which are based on current EU legislation for new vehicles. As the choice of tires is left to the vehicle users themselves, we could not provide evidence of the taxonomy alignment of tires for the reporting year. We therefore report capital expenditure associated with our vehicle fleet as not taxonomy-aligned.
Calculation of the Taxonomy KPIs
Deutsche Telekom’s total figures used as the basis for calculation in accordance with the EU Taxonomy in the reporting year amounted to EUR 115.8 billion in turnover (2023: EUR 112.0 billion), EUR 25.6 billion in capital expenditure (2023: EUR 24.3 billion), and EUR 0.5 billion in operating expenditure (2023: EUR 0.4 billion). The definition of turnover according to the EU Taxonomy is equivalent to net revenue in our consolidated income statement contained in the consolidated financial statements. The relevant capital expenditure was determined on the basis of the consolidated statement of financial position contained in the consolidated financial statements and is determined as the sum of additions under property, plant, and equipment, intangible assets (excluding goodwill), and right-of-use assets. It also includes additions from these assets acquired as a result of business combinations and additions recognized under non-current assets and disposal groups held for sale. In line with the EU Taxonomy requirements, the disclosures on capital expenditures do not form part of a capital expenditure (capex) plan. The EU Taxonomy defines costs that relate to building remediation measures, short-term leases, maintenance and repair, research and development, and any other direct expenditures relating to the day-to-day maintenance of property, plant, and equipment as relevant operating expenditure.
The disclosures on taxonomy eligibility and taxonomy alignment 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 CCM 8.1, the provision of ICT solutions in accordance with economic activity CCM 8.2, and lease of devices in accordance with economic activity CE 5.5. We do not generate any turnover with cross-cutting activities. Exclusively capital expenditure was assigned to economic activity CCM 6.5.
To avoid double counting within the meaning of the EU Taxonomy, we have almost exclusively allocated taxonomy-eligible cloud solutions from T‑Systems to economic activity CCM 8.2; we report those few solutions portfolios under economic activity CCM 8.1 that are not taxonomy-eligible in accordance with economic activity CCM 8.2. The lease of devices to our customers in accordance with economic activity CE 5.5 does not overlap with the solutions that fall under economic activities CCM 8.1 and CCM 8.2. In the case of the capital and operating expenditure allocated to the cross-cutting activity CCM 6.5, a direct connection with the turnover-related economic activities reported is excluded.
As the EU Taxonomy does not yet adequately cover our core business, an aggregate view of the taxonomy eligibility of all economic activities results in very low proportions again in 2024 of turnover of 2.5 % (2023: 2.5 %), of capital expenditure of 2.2 % (2023: 2.1 %), and of operating expenditure of 29.1 % (2023: 33.2 %) for Deutsche Telekom.
The largest proportion of taxonomy-eligible turnover of 1.0 % (2023: 1.0 %) can be allotted to economic activity CCM 8.1, which comprises data processing and hosting, followed by economic activity CCM 8.2 of 0.8 % (2023: 0.8 %), to which the business-related web conference solutions make a substantial contribution. We generated relevant taxonomy-eligible turnover from the lease of terminal equipment in accordance with economic activity CE 5.5 that accounted for 0.6 % (2023: 0.6 %) of total turnover.
Economic activity CCM 8.1 also accounts for the largest proportion of taxonomy-eligible capital expenditure (1.0 %; 2023: 0.9 %). For economic activity CE 5.5 we invested 0.6 % (2023: 0.7 %) of the relevant capital expenditure. Cross-cutting activity CCM 6.5 has only a supporting function for Deutsche Telekom’s core business. The taxonomy-eligible proportion here is 0.6 % (2023: 0.5 %). The largest proportion of taxonomy-eligible capital expenditure can be allotted to property, plant, and equipment (71.0 %; 2023: 76.4 %), followed by right-of-use assets (19.4 %; 2023: 15.5 %) and intangible assets (9.6 %; 2023: 8.0 %).
Economic activity CCM 8.1 accounts for the largest proportion of direct operating expenditure with 16.5 % (2023: 19.1 %). This is followed in second place by economic activity CCM 8.2 with 12.7 % (2023: 14.1 %).
In the 2024 financial year, the taxonomy-aligned proportion of all of Deutsche Telekom’s economic activities was 0.5 % of turnover (2023: 0.2 %), 0.3 % of capital expenditure (2023: 0.0 %), and 0.0 % of operating expenditure (2023: 0.5 %). The taxonomy-aligned proportion of turnover results both from economic activity CE 5.5, whose taxonomy alignment we are disclosing for the first time for this reporting year in accordance with legal requirements, and from economic activity CCM 8.2. In the 2024 financial year, only economic activity CE 5.5 contributed to the taxonomy-aligned capital expenditure.