ESRS E1 – Climate change

ESRS E1‑2 – Policies related to climate change mitigation and adaptation

Deutsche Telekom wants to play a leading role in climate change mitigation and environmental protection in the context of its current and future business activities and is constantly defining new goals to achieve this. We underpin our commitment in our Environmental Guidance (Deutsche Telekom excluding T‑Mobile US), which takes into account all relevant environmental aspects in our own business activities as well as in the upstream and downstream value chain. T‑Mobile US has also implemented its own environmental policy (T‑Mobile Environmental Policy) that formulates the key elements and requirements of a sustainable business policy, such as a commitment to climate change mitigation and resource conservation.

These environmental policies are part of our Group-wide CR strategy. They are publicly accessible and make our Group-wide targets and voluntary commitments transparent to all of our stakeholders. The Environmental Guidance of Deutsche Telekom (excluding T‑Mobile US) is the remit of GCR, which is also responsible for the direction taken with the content of the T‑Mobile Environmental Policy and thus has overall responsibility. The Group companies are required to implement the requirements set out in these policies in their business activities and to ensure that they implement any systems needed to do this, instruct their employees accordingly, and provide regular training as needed. Implementation is documented by means of the existing data collection systems and controlling processes in the national companies. We review these environmental policies annually and adapt them if one of the following conditions applies:

• change in regulatory requirements;
• change in key references and the underlying standards, such as the ISO standards or the Greenhouse Gas Protocol (GHG Protocol);
• new findings concerning existing and insufficiently addressed environmental aspects, e.g., as a result of further refinements to the sustainability strategy;
• changes in the requirements of relevant stakeholders that we identify through our stakeholder communication and various dialogue formats.

If Group companies have implemented policies that go beyond the requirements of the Environmental Guidance, we give these preference.

Among other aspects, these environmental policies consider the negative impacts of our GHG emissions (Scope 1–3) in terms of climate change mitigation and adaptation, e.g., due to the energy-intensive operation of our data centers. They also include our mitigation actions.

Deutsche Telekom’s Environmental Guidance (excluding T‑Mobile US) also addresses the positive impacts associated with the extension of PPAs and the improvement in energy efficiency resulting from the modernization of our networks. In addition, it takes the climate strategy described below into account. Both are integrated into our CR strategy.

Climate-neutral business practices are one of the core elements of our overarching CR strategy. Our climate strategy focuses on the key areas of greenhouse gas emissions management, renewable energy, energy efficiency, and climate-friendly products. In addition to the climate-related targets specified in the “ESRS E1‑4 – Targets related to climate change mitigation and adaptation” section, it covers actions that we describe in the “ESRS E1‑3 – Actions and resources in relation to climate change policies” section.

The climate strategy is subject to a continuous review and update process to reflect changes in the market and internal requirements. In addition, Deutsche Telekom supports various internationally recognized standards and seals of quality for improving the energy efficiency of products and services – including the EU Code of Conduct for Data Centers and the Blue Angel seal in Germany – by participating in working groups to develop these further, for instance.

We have implemented a Group-wide environmental management system (EMS) for managing our environmental impacts. This is part of the Group-wide integrated QHSE (quality, health, safety, and environment) management system. The EMS covers all Group companies and is regularly certified by external auditors. The basic requirements of the system apply to all Deutsche Telekom employees. We successively integrate existing management systems and certificates outside the EMS into the Group certificate or, if they go beyond the Group EMS, adapt them to regional approaches in relation to management systems.

We take responsibility both for our own business activities and for our supply chains. We communicate our environmental and human rights-related requirements to our suppliers and outsourcing partners by means of our Supplier Code of Conduct. In signing our Supplier Code of Conduct, our suppliers are contractually obligated to comply with Deutsche Telekom’s minimum sustainability requirements, as well as with statutory requirements and international standards. We regularly review the requirements for our products, services, and suppliers. Sustainability criteria are incorporated into our decisions on contract awards in tenders. Part of our sustainable procurement strategy is also contractually agreeing with our suppliers that they must increase transparency regarding GHG emissions and draw up mitigation plans.

ESRS E1‑3 – Actions and resources in relation to climate change policies

Specific actions for reducing GHG emissions result from the identified key decarbonization levers that we described under “ESRS E1‑1 – Transition plan for climate change mitigation”. As a general rule, the actions have 2030 as their target year or the overarching target of climate neutrality (net zero) by 2040. For Scopes 1 and 2, these include the following:

• procurement of electricity from renewable sources, with a focus on increasing coverage through PPAs and our own generation;
• energy efficiency actions by using more efficient technologies and decommissioning outdated ones;
• reducing floor space in buildings and modernizing them;
• electrification and reduction of our vehicle fleet;
• electrification of heating with heat pumps.

In line with our sustainable procurement strategy, a Group-wide task force is currently leading an initiative to reduce GHG emissions at both the supplier and product level (Scope 3). This task force plays a key role in coordinating efforts across all segments and ensures a consistent approach is taken to reducing emissions. Other Scope 3 actions include extending the life cycle of products, improving the energy efficiency of devices sold, and more sustainable sourcing of materials and packaging.

We are continually improving the energy efficiency of our data centers through a range of actions. The Power Usage Effectiveness (PUE) metric serves as an indicator for the efficiency enhancement in our data centers. We determine this metric using the method recommended by the standard DIN EN 50600 for data centers, which takes the total energy consumed by data centers into account, not just that used to operate the servers. The PUE metric is calculated using the ratio between the total electrical energy consumed by the data center and the amount of electrical energy consumed by IT. In the reporting year, the average global PUE score for our T‑Systems data centers was 1.56 (2023: 1.53).

Thanks to our adequate liquidity reserves and solid investment-grade rating, we have the necessary financial flexibility and unobstructed access to the capital markets. This means that there are no factors limiting our ability to finance capital spending and implement the actions planned.

ESRS E1‑4 – Targets related to climate change mitigation and adaptation

The figure in section “ESRS E1‑1 – Transition plan for climate change mitigation” shows our climate-related targets. It also specifies the key decarbonization levers that we have identified.

Our climate-related targets are:

• 100 % of electricity from renewable energy sources Group-wide (Scope 2, market-based method). We achieved this target by the end of 2021.
• We will achieve net zero in terms of our own emissions (Scopes 1 and 2) by the end of 2025. To achieve this, we will reduce emissions from our own operations globally by up to 95 % against the 2017 level. The fact that we source Group-wide 100 % of our electricity from renewable energy sources is a major step towards achieving this target. We plan to offset the remaining emissions of our CO₂e footprint through high-quality carbon offsets, for example, through reforestation.
• As an interim goal on the journey towards climate neutrality along the entire value chain, we aim to reduce CO₂e emissions across Scopes 1 to 3 by 55 % in absolute terms by 2030 compared with 2020. We are in close dialogue with our suppliers to reduce emissions in the production phase through more sustainable manufacturing and to develop products that consume less energy in the utilization phase.
• By 2040 at latest, we want to achieve net zero emissions along the entire value chain – across Scope 1, 2 and 3 emissions. To achieve this, we aim to reduce total emissions by at least 90 % from a 2020 baseline; only up to 10 % may be offset.

In general, we want to offset GHG emissions that we cannot avoid, (e.g., by using renewable energy sources, improving energy efficiency or agreeing on climate-related targets with suppliers) through compensatory actions so that they are permanently removed from the atmosphere. This can be achieved, for example, through natural sinks, where greenhouse gases are absorbed by natural ecosystems. We have set ourselves the quality requirement for offsetting that we only want to use high-quality offsetting projects in accordance with Oxford category IV and V, i.e., we strive to remove carbon from the atmosphere through short- and long-lived storage.

We have developed our climate-related targets in line with current scientific and regulatory conditions. In the reporting year, the Science Based Target initiative (SBTi) once again confirmed to us that our current climate-related targets contribute to compliance with the Paris Agreement even under its new, stricter guidelines. The initiative also reviewed the baseline value. When setting our reduction targets and forecasting our progress towards them, we considered a variety of factors: expected market developments (customer figures, sales figures), technical developments in our own operations and in products, and regulatory elements (e.g., expansion of renewable energy/electricity mix).

One of the ways in which we monitor our climate-related targets is through reduction of our GHG emissions. To achieve this, several KPIs are integrated in our internal controlling process, including multi-year planning and projections during the year. Our progress is in line with our original planning. The market-based method is used for Scope 2 emissions.

We continuously evaluate new technologies and processes in terms of whether they can help the Group act more efficiently in the market and conserve essential resources. This extends to both our own product development and our collaboration with strategic suppliers and also applies in particular to our own network technologies. Going forward, artificial intelligence (AI) will increasingly be used to optimize processes. We use an AI application in 5G towers, for example.

ESRS E1‑5 – Energy consumption and mix

Total energy consumption decreased year-on-year from 12,241,281 MWh to 11,925,733 MWh. In the reporting year, 7,819 MWh of energy was generated from renewable sources. We are not active in high climate impact sectors.

The disclosures are based on data reported by our operating segments. This data comes from consumption bills and figures supplied by local utilities. If it was not available in due time, projections were made to extrapolate consumption levels without precise consumption figures based on information about the significant consumers. Consumption data from the previous year and the relevant prior periods as well as additional information about adjustments to energy requirements were used for these calculations. All renewable electricity certificates are validated by an authorized or accredited certification authority.

We measure progress in improving energy efficiency through network modernization by means of the Energy Intensity ESG KPI. This KPI puts our energy consumption in relation to the transmitted data volume. Using data volume as a denominator makes it possible to create a direct link to the performance of our networks. This takes into account the data volume transported between our customers and the relevant service providers. Any multiple counting of a package across multiple sections of our networks is avoided by various assumptions, such as by limiting it to the first entry into the base network. The numerator of the KPI takes into account the total energy consumption of all energy sources – electricity, fuel, gas, and district heating. In the reporting year, energy consumption relative to IP data volume was approximately 56 kWh/terabyte (2023: 70 kWh/terabyte). The KPI is relevant because large quantities of energy are needed to operate and maintain the networks.

Energy Intensity ESG KPI

ESRS E1‑6 – Gross Scopes 1, 2, 3 and total GHG emissions

We present our Scope 1–3 GHG emissions in a standardized format to make them comparable. To that end, emissions are converted into metric kilotons of CO₂ equivalents (CO₂e). Breaking down the GHG emissions along our value chain gives us an overview of the points in the value chain where the majority of them occur.

The factors that influence gross GHG emissions are regularly reviewed. We document any changes or additions in our Emission Calculation Manual. We communicate any significant changes that affect the annual comparability of our GHG emissions. We use the following sources of emission factors in our calculations: Department for Environment, Food and Rural Affairs (DEFRA) (2024), International Energy Agency (IEA) (2021/2024), United States Environmental Protection Agency (EPA) (2024), ecoinvent version 3.10, CDP (2024), the German heat and power association (AGFW) (2023), and World Resources Institute (WRI) (2015).

We apply the market-based and location-based methods to calculate GHG emissions, particularly in relation to usage of electricity. The market-based method considers specific emissions factors of the electricity suppliers that an entity actually uses. The location-based method uses average emissions factors for the geographical location in which the electricity is consumed. Our GHG emissions are largely generated by the vehicle fleet, fossil fuels, and district heating. We differentiate between the two methods, thereby adhering to the GHG Protocol Scope 2 Guidance. We disclose market-based and location-based emissions as CO₂ equivalents (CO₂e). We calculate Scope 1 and 2 emissions as well as Scope 3 emissions based on the GHG Protocol. We derive the latter from direct supplier data as well as from indirect statistical data.

From Deutsche Telekom’s perspective, the market-based approach is the leading method in non-financial reporting. We use this method to calculate emissions with a specific emissions factor (provider factor) per company. This factor depends on a company’s actual energy procurement (electricity mix); procuring renewable energy (direct purchase, certificates) has a decreasing effect on emissions.

For the location-based method, we always use the IEA emissions factors for the country in question (country mix factor). A company’s actual energy procurement (electricity mix), including the procurement of renewable energy that goes beyond the country mix, is not taken into account.

Scope 1 biogenic emissions from the incineration of organic materials amount to 299 metric tons of CO₂e. The IEA factors we use do not allow for any breakdown by biogenic emissions, so the Scope 2 “location-based” figures do not include any additional biogenic emissions from electricity consumption.

Our Scope 1–3 GHG emissions can be broken down as follows:

CO₂e emissions (Scope 1–3) ^a

Scope 3 emissions declined from 10.4 million metric tons of CO₂e to around 10.1 million metric tons of CO₂e compared with the prior year. The vast majority of the Scope 3 emissions were generated in the categories of the manufacturing of products and components (in particular of devices and network technology) and from the use of our products and services (e.g., sold or leased fixed-network and mobile phones, routers, and media receivers) by our customers. The proportion of emissions calculated using primary data from suppliers was approximately 60 % in 2024. This is predominantly CDP data for the categories of purchased goods and services and capital goods, plus disposal company information for the category of waste generated in operations.

Scope 3 GHG emission categories comprise all indirect GHG emissions that occur in a company’s value chain, both upstream and downstream. These categories are described in the GHG Protocol and comprise 15 specific types of emissions ranging from the production of raw materials up to the use and disposal of the products. Deutsche Telekom does not cover category 8 “Upstream leased assets,” category 10 “Processing of sold products,” and category 14 “Franchises” because these are not relevant for our business model.

The following overview shows the reporting boundaries, calculation methods, and calculation tools based on the categories of Scope 3 GHG emissions in the GHG Protocol.

We are not aware of any biogenic CO₂e emissions from the incineration or bio-degradation of biomass in our upstream and downstream value chain. Furthermore, we are not releasing CO₂e emissions or other types of greenhouse gases from life cycles of biomasses that would be relevant for the calculation of our Scope 3 emissions.

We report the Carbon Intensity ESG KPI based on revenue. The numerator of the KPI takes into account total CO₂e emissions (Scopes 1–3) for all energy sources – electricity, fuel, gas, and district heating. Location-based carbon intensity in the reporting year was 124 metric tons of CO₂e/€ million. Market-based carbon intensity was 90 metric tons of CO₂e/€ million.

For information on net revenue, please refer to the “Consolidated income statement” in the consolidated financial statements and to note 20 “Net revenue” in the notes to the consolidated financial statements.

ESRS E1‑7 – GHG removals and GHG mitigation projects financed through carbon credits

We did not carry out any offsetting activities in 2024 within our own business activities with regard to GHG removals and GHG mitigation projects financed through carbon credits. The focus in the reporting year was on projects and actions for actually reducing GHG emissions.

In addition, we purchased carbon credits to further reduce emissions outside our value chain, in particular to offset internal events. The total amount of carbon credits outside our value chain that were verified against recognized quality standards and canceled in the reporting period is 35,167 metric tons of CO₂e. Of the carbon credits from removal projects, 25,000 metric tons of CO₂e are attributable to biogenic sinks and 8,000 metric tons of CO₂e are attributable to technological sinks.

The following table provides an overview of the canceled carbon credits and lists, for example, the different standards that we have selected for our portfolio. These standards guarantee the integrity and credibility of the emission reductions and ensure that the credits meet international requirements.

Of the carbon credits from removal projects from 2025 to 2028, 455,140 metric tons of CO₂e are attributable to biogenic sinks and 170,200 metric tons of CO₂e are attributable to technological sinks. The total amount of carbon credits outside the value chain planned to be canceled and that are based on contractual agreements is 625,340 metric tons of CO₂e. This figure does not include T‑Mobile US, as the contracts will not be concluded until 2025.

ESRS E1‑8 – Internal carbon pricing

In the reporting year, internal carbon pricing systems were only used at T‑Mobile US. Specifically, these are shadow prices that are used in activities related to capital expenditures, in procurement, and in operations. T‑Mobile US’s internal CO₂e price is calculated based on the cost of acquiring guarantees of origin for electricity from renewable sources (renewable energy certificates – RECs) for the 2023 calendar year. The figure was calculated using the Emissions & Generation Resource Integrated Database (eGRID) sub-regional file for 2022 so as to ensure accurate emissions factors. The internal CO₂e price applied was USD 7.33/t CO₂e. The internal CO₂e price is used to ensure an accurate assessment of the financial effects of reducing CO₂e emissions, alongside other project costs and benefits. Savings in RECs costs achieved through lower energy consumption are also taken into account. By evaluating the cost of purchasing renewable energy, T‑Mobile US can identify opportunities for cost savings. This pricing approach underpins our strategy of reducing Scope 2 emissions by prioritizing the reduction of energy consumption and investing in energy-efficient technologies. 100 % of T‑Mobile US’ Scope 2 emissions are covered through the internal CO₂e pricing mechanism. In 2024, T‑Mobile US’ location-based Scope 2 emissions amounted to 2,633,330 metric tons of CO₂e.

T‑Mobile US’ internal CO₂e price is based on the RECs costs and is used to assess the financial effects of energy consumption and emission reduction, but not to measure assets or determine residual value.