ESRS E5 – Resource use and circular economy

ESRS 2 SBM-3 E5 – Material impacts, risks, and opportunities and their interaction with strategy and business model

The table below shows the material impacts of our business activities on society and the environment that we have identified through the double materiality assessment.

We provide overarching information on how material impacts, risks, and opportunities interact with our strategy and business model in section “ESRS 2 SBM-3 – Material impacts, risks, and opportunities and their interaction with strategy and business model.”

The following overview illustrates Deutsche Telekom’s material topic-specific risks and opportunities and their financial effects on our financial position, financial performance, and cash flows.

Risks and opportunities that represent a top risk in the next two years are described in the “Risk and opportunity management” section.

ESRS E5‑1 – Policies related to resource use and circular economy

We aim to minimize our negative impact in the context of resource inflows and resource use in the field of network technology by taking a variety of approaches to achieve efficient use of resources and promote circular economy. The sourcing volume will remain high in the coming years due to the continuous network build-out. By promoting the reuse of products and materials, we are reducing our raw material requirements. In addition, we are endeavoring to repair more network technology components and to reuse them elsewhere, so as to reduce the amount of new equipment needed.

Starting in 2025, we aim to make our holistic approach to increasing our circularity measurable by means of a comprehensive set of KPIs (Telekom Circularity Score, TCS) and to facilitate management of the underlying strategic actions. This set of KPIs will also include a specific KPI for the circular material use ratio for network technology, which takes into account the proportion of reused or refurbished network technology and the share of circular materials when it comes to new procurement. This is another way in which we aim to counteract the negative impact of our resource inflows for the network build-out. Responsibility for implementing the circular business models lies with the relevant business units, i.e., at company level.

For more information on the development of the TCS, please refer to the section “ESRS E5‑3 – Targets related to resource use and circular economy.”

Our procurement strategy and the implementation policies derived from it address sustainability throughout the entire sourcing process. We are committed to ensuring that our suppliers comply with our environmental, social, and ethical sustainability requirements. In the course of tenders, we weight our environmental objectives, our suppliers’ GHG emissions and, in the case of individual product groups, other social sustainability criteria. By doing so, we seek to minimize the negative influences of resource inflows for network technology while at the same time promoting sustainable innovations at our partners. The carbon footprint of our suppliers and their commitment to achieving our Scope 3 climate-related targets are particularly important to us. When it comes to new procurement, we want to increase the use of recycled materials with our approach to increasing our circular material use ratio. In addition, we are working with the manufacturers of network technology and devices to develop roadmaps and actions as part of a program to reduce GHG emissions in production and to integrate circularity aspects, among other aspects.

We use KPIs and management tools to monitor the implementation of our procurement strategy. These include, for example, scorecards that can be used to assess the sustainability of individual providers and products. Responsibility for the topic of sustainable procurement lies with the Finance Board of Management department and the Group’s procurement functions. Other functional units and the GCR unit provide support in terms of content.

We also place particular emphasis on sustainable features when designing our products. Our holistic approach (Deutsche Telekom excluding T‑Mobile US) comprises our telecommunications services, the related devices, including plastic-free packaging, and low-carbon shipping to customers. Together with our partners, for example various suppliers of buy-back, refurbishment or collection services, we create the conditions so that our customers can use the devices for longer, and for ensuring that the hardware can be reused or professionally recycled at the end of its service life. We use low-threshold return mechanisms for this, such as collection boxes in all stores. In addition, we engage in specific customer outreach or offer buy-back options to purchase used but still high-quality customer devices. This particularly affects our positive impacts in the context of our new business models. T‑Mobile US utilizes global sustainability certifications to evaluate products, like handsets and tablets, and requires manufacturers to achieve a certain minimum UL ECOLOGO Certification Program or Electronic Product Environmental Assessment Tool (EPEAT) rating. The certifications covers a range of product sustainability topics, including material use and end-of-life management.

In addition, we (Deutsche Telekom excluding T‑Mobile US) set requirements for the development of new devices that are sold under the T brand, which will increase the use rate of secondary raw materials, among other aspects. This design approach is driven by our Environmental Guidance. It considers factors such as the upstream negative impacts of resource inflows and – in order to mitigate these – defines actions to reuse products. In addition, the Guidance explains concepts for professional recycling and thus covers risks that may arise due to potential resource scarcity.

For more information on our Environmental Guidance, please refer to the section “ESRS E1‑2 Policies related to climate change mitigation and adaptation.”

Our waste management (Deutsche Telekom excluding T‑Mobile US) is organized in line with the International Waste Management Framework. We strive to avoid creating waste wherever possible and to recycle as much as possible of the waste we do produce. In this context, we pursue a variety of approaches to ensure, for example, controlled handling of electronic waste generated and to avoid disposing of it in landfills. The waste pyramid provides a methodological framework for these approaches: The first step is to avoid waste, followed by reuse, recycling, and other forms of recovery (e.g., energy recovery) – so that, in the end, only those materials remain for disposal that cannot be treated at the other levels of the pyramid.

Waste pyramid in connection with Deutsche Telekom’s approach to circular economy

We monitor implementation of the waste management system with a set of KPIs that are continuously being refined. We not only focus on the waste generated by Deutsche Telekom itself, but also include the upstream and downstream value chain in our analysis. In the upstream value chain, this particularly refers to increasing the share of refurbished devices or prioritizing the modular design of network technology in order to avoid waste. Later reuse, refurbishment or recycling at the end of life is also taken into account in procurement and product design. In the downstream value chain, we take responsibility for electronic waste, such as by implementing the circular economy policies mentioned above (e.g., buy-back, refurbishment, collection). Our waste management approaches aim to counteract the negative impacts of the waste we produce, for example through the construction and operation of data centers or the network build-out. The individual segments are responsible for implementing the waste management system. The most important metrics in waste management are incorporated into the TCS described above. T‑Mobile US is also committed to effectively reducing and responsibly disposing of waste. Efforts are targeted to train and empower internal teams and external partners to avoid waste. In addition, we actively work with partners who help us with the repair, reuse, and resale of equipment.

Because our supply chains are international, the associated geographical regions related to the policies for resource conservation and circular economy and to the procurement strategy must be considered globally. The policies for product design and waste are focused primarily on Europe.

ESRS E5‑2 – Actions and resources in relation to resource use and circular economy

The following actions are in line with our approach to circularity, our procurement strategy, and our waste management. They are ongoing with no defined end date and are applicable in Europe and, in part, globally. Some of the topics are also incorporated into the TCS, for example, the recycling of electronic waste or the refurbishment of devices. The factor of sustainability is also used in T‑Mobile US’ procurement assessment. The remaining actions mentioned below apply only to Deutsche Telekom excluding T‑Mobile US.

The following actions apply primarily to the upstream value chain:

• We weight the sustainability factor in our procurement assessment and thus make it an economic differentiation factor in procurement. By doing so, we seek to minimize the negative influences of resource inflows while at the same time promoting sustainable innovations at our suppliers.
• We are currently introducing an internal platform for used network technology to make it available for reuse in other areas of the Company and at other locations. This aims to reduce use and procurement of new equipment.
• We collaborate with our strategic suppliers for the network build-out to reduce the quantity and size of packaging for network equipment/technology and hence also minimize negative environmental impacts, e.g., due to the high use of plastics.

The following actions apply primarily to the downstream value chain:

• Our business model in the area of customer premises equipment (CPE) – such as modems, routers, or TV receivers – has always been based on the principle of circular economy, since the devices are predominantly leased by customers and their return is thus usually ensured. We resell or re-lease the returned products, which means that they have a longer useful life than the devices that customers themselves buy or own. We also advocate the refurbishment and professional recycling of CPE, with the aim of recovering the valuable raw materials they contain.
• We also try to avoid electronic waste by informing our customers about our take-back offers and encouraging them to make use of these offers and return their end-of-life devices to us for our recycling processes.
• We have adopted a binding policy concerning the recycling of copper cables. Such cables are being partially replaced over the course of our fiber-optic build-out.

ESRS E5‑3 – Targets related to resource use and circular economy

As part of our Europe-wide resource efficiency strategy, our European national companies have voluntarily committed to being fully circular in technology and devices by 2030. In this context, we aim to ensure by 2030 that almost all of the products we bring into the market are circular. This includes all network technology, most T‑branded products, and a large share of the mobile devices we sell. In addition to recycling, the goal also includes aspects such as design, material selection, useful life, and durability. T‑Mobile US does not have any formal targets for the circular economy.

The sub-target “zero ICT waste to landfill,” which was already achieved by the end of 2022, also contributes to our European circularity target: EU law requires all electronic waste or returned devices, such as smartphones, routers, or laptops, attributable to Deutsche Telekom throughout Europe to be properly disposed of or recycled. We are also working to avoid the incineration of electronic waste. Our minimum target in this regard is to fully recycle electronic waste – both our own and that of our customers. Our target (Deutsche Telekom excluding T‑Mobile US) was defined in cooperation with the segments. We monitor implementation and target achievement through overarching, consistent sustainability-related reporting. Progress is going according to plan. T‑Mobile US remains committed to responsibly managing network equipment and electronic waste across the network, which is why it aims to recover as much as possible by repairing and reusing what they can and sending the rest to certified recyclers. For customers, there is a Device Reuse and Recycling program, extending the device lifecycle through reuse, recycling and resale.

Our goal of being almost fully circular in technology and devices by 2030 calls for a holistic approach across the entire value chain. We are currently developing a specific target for increasing our circular material use ratio for network technology, as mentioned before in section “ESRS E5‑1 – Policies related to resource use and circular economy.” Target development has already been initiated and is expected to be completed in 2025. In addition, we are currently defining various circularity KPIs that address the topics of procurement and development, packaging, use and extension of life cycle, collection of electronic waste, recycling and proper waste treatment of end-of-life devices and network technology.

Our approach to defining our circularity targets and prospectively defining targets for the TCS is based on scientific studies, case studies (including from the Ellen MacArthur Foundation), and existing policies such as the waste pyramid already described. These are intended to help us to ensure that our approaches are methodologically sound and that their substance is robust. The interests and views of our external stakeholder groups are indirectly taken into account in target setting, for example through information collected from committee work.

We aim to expand circular product design, to increase the circular material use rate and minimize use of primary raw materials, and to promote sustainable sourcing and use of renewable resources. This is the reason we are currently working on defining specific, measurable targets within this framework that will be mapped in the TCS. We plan to roll out the targets by early 2026 and make it possible to measure progress going forward.

ESRS E5‑4 – Resource inflows

The material resource inflows for the network build-out include, in particular, mobile communications antennas and optical fiber. Raw materials and materials for mobile communications antennas include iron, aluminum, copper, nickel, magnesium, cobalt, silicon, precious metals (gold, platinum), rare earths, plastics and fiber-reinforced plastics (FRP). The essential materials used in optical fiber are glass and plastics (PE, PC).

Use of sustainably sourced biological materials for the build-out and maintenance of the network infrastructure is mainly limited to packaging for network technology. Specifically, this relates to the proportion of sustainably sourced fresh fibers used for network technology packaging. These fresh fibers are added to recycled fibers to increase the stability of the (cardboard) packaging. In addition, sustainably sourced fresh wood is used for cable drums. Due to the low weight of the packaging in relation to the total weight, the corresponding proportion is estimated at 5 % of the total weight. Since manufacturers did not submit any information on this, an estimate was made based on experience from previous years. The level of accuracy of the estimate is therefore limited. For certification, we primarily focus on responsible forestry labels, such as the internationally recognized certificate issued by the Forest Stewardship Council (FSC).

We use recycled materials primarily in packaging, as well as in network technology materials and components. This mainly concerns recycled metals such as iron, aluminum, and copper, and – to a lesser extent – recycled plastics. It also relates to recycled sources for packaging. Specifically, this includes recycled fibers for (cardboard) packaging in network technology and recycled or reused wood for cable drums. The recycling rate is estimated at 15 % of the total weight. This corresponds to approximately 1,177 metric tons. The level of accuracy of the estimate is considered low because no data is disclosed and the estimate is based on assumptions derived from experience in previous years.

We use historical average weights to record data on fiber-optic cables and mobile communications antennas. For cables, these are based on data on the total length of cables used and the average weight per unit of length. To calculate the total weight of the antennas, we multiply the number of antennas by the average weight per unit. When collecting data for both cables and antennas, we use two weight categories in order to measure the weights of different cable and antenna types per unit as precisely as possible.

We are not aware of any overlap between reuse and recycling.

ESRS E5‑5 – Resource outflows

At Deutsche Telekom, we distinguish between the following categories of technical waste: electronic waste, cables, and other. Non-technical waste is sorted into paper waste, municipal waste, and other waste. We divide these items into “hazardous” and “non-hazardous” waste. How we treat the waste depends on its categorization. To calculate the waste quantities per recovery method, the waste quantities are multiplied by quotas per recovery type depending on the type of waste. To calculate the proportion of non-recycled waste, the corresponding quantity is divided by the total amount of waste. If no separate data is available, which is the case in particular for municipal and office waste due to data collection limitations, the figures are extrapolated using average values per workplace.

Waste generation based on waste classification – hazardous waste

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Waste generation based on waste classification – non-hazardous waste

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The waste processing category “preparation for reuse” does not include our refurbishing initiatives for devices, as these do not form part of our volume of waste.

Our total volume of waste generation in the reporting year was 71,385 metric tons. Of this figure, 18,420 metric tons were non-recycled waste, representing a share of 26 %. The total volume of hazardous waste generated was 7,013 metric tons. No radioactive waste was generated in the reporting year. The biomass we generate primarily relates to biowaste in office buildings and canteens. In the field of network technology and IT, the following waste is generated: metals, rare earths, nonmetallic minerals, and plastics. These elements can be found both in the waste generated by active technology (transmitter and receiver technology, storage technology, etc.) and in passive technology (e.g., cables, technology housings). The same applies to the devices taken back from customers in the fixed network (routers, TV boxes, etc.) and mobile communications businesses (e.g., smartphones, tablets). A small quantity of textiles accumulates in the office buildings from textile floor coverings and work clothing.