ESRS 2 – General disclosures

ESRS 2 BP-1 – General basis for preparation of the sustainability statement

This sustainability statement was prepared on a consolidated basis. The scope of consolidation of the companies included in the consolidated sustainability statement generally consists of Deutsche Telekom AG and its subsidiaries. Subsidiaries classified as not material from a financial perspective were analyzed in terms of their impact on society and the environment caused by our business activities, and are also not material for the sustainability statement. The sustainability statement covers both our own business activities and our upstream and downstream value chain.

When preparing the statement we did not make use of the option to omit specific pieces of information corresponding to intellectual property, know-how, or the results of innovation. We also did not omit the disclosure of impending developments or matters in the course of negotiation.

ESRS 2 BP-2 – Disclosures in relation to specific circumstances

The following table provides an overview of the metrics we identified by means of estimates and describes the basis for preparation and the resulting level of accuracy.

For more detailed information on the calculation of Scope 3 emissions, please refer to the section “ESRS E1‑6 – Gross Scopes 1, 2, 3, and total GHG emissions.”

The following table shows an overview of metrics that are subject to a high level of measurement uncertainty. It also indicates the sources of those measurement uncertainties.

The following overview shows the information that we incorporate by reference.

ESRS 2 GOV-1 – The role of the administrative, management, and supervisory bodies

The Board of Management and Supervisory Board of Deutsche Telekom AG collaborate closely for the benefit of the Company and maintain regular contact. The Board of Management coordinates the strategic direction with the Supervisory Board and works towards its implementation in the Group in accordance with applicable law and the existing opportunities for influence under company law. Local adaptations are and remain possible at our national companies. We determine a uniform strategic framework by integrating minimum standards into our Group-wide policies, such as the Code of Human Rights, wherever this is legally possible. The Board of Management and Supervisory Board discuss progress in the implementation of the strategy at regular intervals.

As of December 31, 2024, the responsibilities of the Board of Management of Deutsche Telekom AG were distributed across eight Board departments. The Supervisory Board of Deutsche Telekom AG advises the Board of Management and oversees its management of business. It is composed of 20 members: 10 represent the shareholders and 10 the employees.

The members of the Board of Management have the relevant experience to be able to perform their function. As a whole, the Board of Management is in particular to have many years of experience in the telecommunications sector, technology, innovation, finance, digitalization, human resources management, and legal and compliance affairs. Until January 26, 2025, as a rule, members of the Board of Management were not to be older than 65 years of age. No Board member is currently older than this limit. From January 27, 2025, as a rule, members of the Board of Management should not be older than 67 years of age. In view of the Group’s international focus, it is our aspiration for at least one member of the Board of Management to have an international background. The Supervisory Board members also have experience that is relevant to our sector, our products, and the geographical locations where we operate. As a whole, the Supervisory Board must in particular have experience in the areas of business that are important for Deutsche Telekom, especially the fields of telecommunications and infrastructure, as well as experience with strategy, finance, control, innovation, ESG, and human resources.

The following table shows the gender diversity of the Board of Management and Supervisory Board of Deutsche Telekom AG.

According to the assessment of the shareholders’ representatives on the Supervisory Board, all members on the shareholders’ side (100 %) are independent within the meaning of the German Corporate Governance Code (GCGC) as of December 31, 2024.

The Board of Management assesses, manages, and monitors the social and environmental impacts of our business activities identified in the double materiality assessment, as well as risks and opportunities. The Supervisory Board advises the Board of Management and oversees its performance of these activities. For this purpose, it has set up an Audit and Finance Committee as well as a Strategy, ESG, and Innovation Committee, among others.

The Supervisory Board of Deutsche Telekom AG is informed regularly about the corporate responsibility (CR) strategy, its implementation, and its key metrics. The Supervisory Board additionally has a number of committees. While the Audit and Finance Committee monitors the effectiveness of the internal control system and the risk management system, as well as the sustainability reporting and the audit thereof, the Strategy, ESG, and Innovation Committee addresses matters such as the Company’s activities in the areas of environment, social, and governance (ESG) and the implementation of the sustainability strategy. The Board of Management of Deutsche Telekom AG adopts Group-wide sustainability-related policies and strategic objectives. It is regularly informed by representatives of the business areas about the status and progress in implementing the CR strategy and about the status of the targets and related actions. The Group Corporate Responsibility (GCR) department is a key center of competence for strategy, strategic policies and projects, functional and process-related advice, external reporting, and stakeholder management of sustainability topics. The segment heads are responsible for implementing strategy, objectives, and targets within the segments, reporting on these to the Board of Management, and fleshing out the CR strategy in line with business requirements. The management bodies of the Group companies are responsible for implementing strategy, objectives, and targets in the Group companies, reporting on them to their own segment, and also fleshing out the CR strategy.

Processes, controls, and procedures used to monitor, manage, and oversee sustainability-related impacts, risks, and opportunities are not the responsibility of only one specific position or committee in the Company. Rather, they are part of the standard process of the Group-wide risk and opportunity management system. The Group risk report, which presents the major risks, is prepared for the Board of Management on a quarterly basis. The Audit and Finance Committee of the Supervisory Board of Deutsche Telekom AG also examines this report at its meetings. In addition, the Board of Management briefs the Supervisory Board on the Group’s sustainability-related impacts, risks, and opportunities.

Deutsche Telekom has established a Group-wide internal control system (ICS) to ensure the accuracy of its financial reporting. Deutsche Telekom reviews the effectiveness of all controls internally every year.

For further information on our integrated control and monitoring system, please refer to the section “Governance and other disclosures.”

The Supervisory Board monitors the definition of targets related to material impacts, risks, and opportunities, and the progress in achieving these targets, by continuously monitoring and assessing them and by regularly obtaining information about progress from GCR.

Thanks to her proven enterprise in the area of ESG, in particular her responsibility for this subject area at a DAX company (including a role as Head of the Corporate Sustainability Board) and on association level (Chair of the Committee at the German Chemical Industry Association, VCI), Margret Suckale was appointed by the Supervisory Board as an ESG expert to specifically address the Group’s sustainability-related topics and areas. Moreover, Ms. Suckale undergoes continuous training in the area of ESG. In addition, the Supervisory Board’s Strategy, ESG, and Innovation Committee was established in the reporting year. Furthermore, GCR experts provide training to the Supervisory Board on sustainability matters. GCR also briefs the Board of Management on sustainability matters. In doing so, we take our material impacts, risks, and opportunities into account and enable our Board of Management and Supervisory Board to properly monitor sustainability matters.

ESRS 2 GOV-2 – Information provided to and sustainability matters addressed by the undertaking’s administrative, management, and supervisory bodies

The Chair of the Board of Management is responsible for GCR. GCR informs the Board of Management every quarter in the Group Performance Report about the status of the most important sustainability indicators. In addition, a deeper exchange between the members of the Board of Management about these indicators and about developments in the Group takes place in a sustainability business review. Additionally, the Global CR Board serves as a Group-wide steering committee and preparatory body for the Board of Management. GCR also regularly updates the Supervisory Board on the CR strategy and progress in implementing it, as well as on new sustainability-related requirements for the Supervisory Board.

The Board of Management of Deutsche Telekom AG and the management of the individual Group companies are responsible for implementation of and compliance with our due diligence processes. Periodic and/or event-driven internal reporting on human rights and environmental results in decision-making bodies (e.g., management bodies) is designed to ensure that informed decisions can always be made.

The Board of Management and the Supervisory Board were informed by GCR in the reporting year of the outcome of the double materiality assessment and the identified sustainability-related impacts, risks, and opportunities, and discussed these. The Supervisory Board and the Board of Management of Deutsche Telekom AG take the material impacts, risks, and opportunities into account when monitoring the strategy, the decisions of the Company on major transactions, and its risk management process by risk and opportunity management. Compromises in relation to our impacts, risks, and opportunities are only accepted if there are no breaches of the law and, at the same time, all relevant codes and sustainability targets are complied with. Deviations from the Group strategy are reported. We take corresponding actions to mitigate our negative impacts on society and the environment.

The Board of Management and Supervisory Board addressed all material impacts, risks, and opportunities during the reporting year. A list of the material impacts, risks, and opportunities can be found in the disclosure requirements for SBM-3 in the relevant topical standards.

ESRS 2 GOV-3 – Integration of sustainability-related performance in incentive schemes

The remuneration system for the members of the Supervisory Board is submitted to the Shareholders’ Meeting of Deutsche Telekom AG for resolution whenever material changes are made, but at least every four years. The remuneration system for the members of the Board of Management is initially approved by the Supervisory Board of Deutsche Telekom AG. The Shareholders’ Meeting is likewise required to approve the remuneration system for the Board of Management members whenever material changes are made, or at least every four years.

While the remuneration of the Supervisory Board members is comprised exclusively of fixed basic remuneration, committee remuneration, and meeting attendance fees, the remuneration system for the members of the Board of Management provides for basic remuneration in addition to one-year and multi-year variable remuneration components, with target achievement depending on both financial and non-financial performance indicators. In the following, we will consider only the non-financial performance indicators of the variable remuneration instruments for Board of Management members.

Please refer to the separate Remuneration Report and the remuneration systems for detailed information on the financial performance indicators of the individual remuneration components, as well as on the other remuneration components of the remuneration system for Board of Management members that are not discussed in detail here, and on the remuneration system for Supervisory Board members.

The one-year variable remuneration (Short-Term Incentive, STI) for the members of the Board of Management comprises the non-financial environmental performance indicators “energy consumption” and “CO₂ emissions” (Scope 1 and 2). These account for one third of the total target amount (before application of the performance factor) and are each weighted at 50 %. Since 2022, the two environmental performance indicators have also been applied for our managers (excluding T‑Mobile US) and all employees not covered by collective agreements in Germany.

Before the start of a financial year, the Supervisory Board derives the target and threshold values for these performance indicators from the company planning. The 100 % target value corresponds to the budget value from the planning. The target achievement level for each target parameter can vary between 0 % and 150 %.

The energy consumption performance indicator is a record of the energy consumed in connection with the operation of our actual business model. The aim is to incentivize the members of the Board of Management to behave in a way so as to ensure that energy consumption that is harmful to the environment remains at least stable in the medium term (2027 compared with 2023, Deutsche Telekom excluding T‑Mobile US). This target is supported by programs and investments in energy-saving measures for all energy sources, the optimization of infrastructure, and through the use of innovative technology components. The CO₂ emissions performance indicator (Scope 1 and 2) is designed to motivate the Board of Management members to sustainably promote green energy, to optimize consumption levels in buildings, and to successively convert the Group’s vehicle fleet from fossil fuels to emission-free or low-emission engine types. The level of ambition and the target achievement in terms of short-term variable remuneration for both sustainability-related goals were calculated excluding T‑Mobile US. This is due in part to the fact that we are forging ahead with the intensive build-out of the 5G network in rural areas of the United States, which leads to increased electricity consumption. T‑Mobile US, like the Group, has covered 100 % of these electricity requirements from renewable energy sources since 2021. In addition, the Scope 1 emissions at T‑Mobile US are subject to strong fluctuations due to unforeseeable natural disasters and the associated temporary use of equipment such as diesel generators to restore and back up damaged network infrastructure. Consideration should be given to the special national situation in this key market, which is why the decision was taken not to include T‑Mobile US in the sustainability-related goals in respect of short-term variable remuneration. This step aims to ensure that the right incentives are set for the Board of Management toward the sustainable development of the business, while at the same time safeguarding the stability of network operations. The annual ambition for the performance indicators “energy consumption” and “CO₂ emissions” (Scope 1 and 2) will continue to be set, managed, and reported for the entire Group as before, including a target value for T‑Mobile US.

As part of the multi-year variable remuneration for Board of Management members (Long-Term Incentive, LTI), the Supervisory Board decided to incorporate the non-financial social performance indicators of “customer satisfaction” and “employee satisfaction” in the remuneration system in addition to the financial performance indicators ROCE and adjusted earnings per share (EPS), to ensure that the Board of Management is appropriately committed to the interests of customers and employees (Deutsche Telekom excluding T‑Mobile US). The LTI is designed as a share-based plan with a term of four years. At the start of the LTI plan, the participation contribution of a member of the Board of Management is converted into phantom shares of the Company and divided equally among each of the four years of the plan. The two performance indicators – customer satisfaction and employee satisfaction – each have a 25 % weighting in the LTI, and the resulting target achievement level can vary between 0 % and 150 %. Customer satisfaction is measured using the globally recognized TRI*M method. The Supervisory Board assesses and measures employee satisfaction based on what it considers to be particularly relevant questions for the pulse surveys carried out during the year and the employee survey, which is conducted every two years.

For more information on our non-financial performance indicators for employee satisfaction (engagement score) and customer satisfaction (TRI*M index), please refer to the section “Management of the Group.”

ESRS 2 GOV-4 – Statement on due diligence

The following overview shows how and in which sections of the sustainability statement the main aspects and steps of the due diligence process are considered.

ESRS 2 GOV-5 – Risk management and internal controls over sustainability reporting

Risk management and the internal controls of sustainability reporting are part of Deutsche Telekom’s risk management process. As a rule, we assess all sustainability-related risks and opportunities in our risk and opportunity management system, including those in relation to the sustainability reporting process. No such risks were identified in the reporting year. However, the internal control system includes continuous controls that address the Group-wide, IT-based collection process for ESG data from the ESRS E1, E5, and S4 topical standards.

For a more precise description of our risk management process, please refer to the section “Risk and opportunity management.”

The various systems implemented by the Board of Management (in particular the internal control system and the risk and opportunity management system including the compliance management system) to record and mitigate risks work together as part of a mutually complementary control and monitoring system and are subject to review by Internal Audit.

The ICS supports the organizational implementation of the Board of Management’s decisions. This includes achieving the business targets, proper and reliable accounting, and compliance with significant legal requirements and regulations. Sustainability aspects, such as sustainability reporting, which are continuously developed on the basis of regulatory requirements, are also taken into consideration.

Effectiveness is regularly reviewed applying the dual-checking principle and, depending on the risk exposure of the controls within the functional unit, across departments or (additionally) by Internal Audit. The aim is to identify control gaps and non-effective controls, in particular to analyze the impact on financial reporting and to initiate and monitor suitable countermeasures.

The ICS process is completed with a cascaded approval process, starting with the function owners in the entities and the local finance and managing directors, through to Group level. The ICS Steering Committee, with the involvement of the Group’s most important function owners, then evaluates the results and makes recommendations to the Board of Management. Based on this, the Board of Management decides on the appropriateness and effectiveness of the ICS twice a year. The Audit and Finance Committee is informed in detail on the status and results of the ICS process at least three times a year and discusses the alignment of the ICS with management and the external auditors. Nevertheless, there are inherent limitations in every ICS. No control system – even if it is deemed to be appropriate and effective – can ensure that all relevant control risks are identified and are being completely and effectively addressed by means of controls.

For further information on our integrated control and monitoring system, please refer to the section “Governance and other disclosures.”

ESRS 2 SBM-1 – Strategy, business model, and value chain

Our Group is divided into five operating segments plus the Group Headquarters & Group Services segment, each of which we describe below.

Our Germany operating segment comprises all fixed-network and mobile business activities for consumers and business customers, including separate sales entities in Germany to allow a customer-centric sales approach. The Wholesale business delivers wholesale telecommunications services for third-party telecommunications companies.

Our United States operating segment combines all mobile activities in the U.S. market. The wireless communications portfolio comprises a variety of rate plan options for consumers and business customers, as well as mobile devices. In addition to its wireless communications services, T‑Mobile US offers high-speed internet utilizing its nationwide 5G network.

Our Europe operating segment comprises all fixed-network and mobile operations of the national companies in Greece, Hungary, Poland, the Czech Republic, Croatia, Slovakia, Austria, North Macedonia, and Montenegro. In these countries, we are an integrated provider of telecommunications services. In Romania, our focus is on mobile communications. Besides traditional B2C and B2B fixed-network and mobile business, most of the national companies also offer ICT solutions for business customers.

Our Systems Solutions operating segment offers B2B ICT services in the core DACH market (Germany, Austria, and Switzerland) under the T‑Systems brand. T‑Systems primarily addresses the ICT growth areas of advisory, cloud services, and digitalization with a corresponding portfolio of products. Security solutions and networking are integral components of its service offering, supported by strategic partnerships.

Our Group Development operating segment actively manages entities, subsidiaries, and equity investments to grow their value while giving them the entrepreneurial freedom they need to promote their continued strategic development.

Group Headquarters & Group Services comprises all Group units that cannot be allocated directly to one of the operating segments, as well as our Board of Management department Technology and Innovation, which unites the cross-segment technology, innovation, IT, and security functions of our Germany, United States, Europe, and Systems Solutions operating segments.

For further information on our business operations and segment structure, please refer to the section “Group organization.”

Of the segments presented, the Germany, United States, Europe, and Systems Solutions operating segments make a significant contribution to the Group’s sustainability performance. As the Group Headquarters, Deutsche Telekom AG exercises strategic and cross-segment management functions and provides services to other Group companies.

The following table shows the assessment of the currently most significant products and services, as well as significant markets and customer groups, in relation to Deutsche Telekom’s sustainability-related goals.

Sustainability has been a component of our corporate activities for more than two decades. We see ourselves as a responsible company and have made this part of our Group strategy. By doing so, we commit ourselves to implementing sustainability along our value chain – and to playing an important role in meeting environmental, economic, and social challenges.

Our CR strategy is derived from the Group strategy. It focuses on good governance and on four environmental and social areas in which we aim to lead by example:

1. Our strict commitment to climate-neutral business practices: We want to play a pioneering role on the way to a climate-neutral future and enable our customers and society as a whole to complete this journey together with us by 2040. We want to cut emissions by at least 90 % compared with 2020, so that we only need to offset up to 10 %.
2. Our efforts to ensure products and services are compatible with the circular economy: We want to make almost all of our technologies and terminal equipment circular across the entire value chain by 2030 (Deutsche Telekom excluding T‑Mobile US).
3. Our pursuit of diversity, equity, and inclusion as well as our investments in training for our employees: We want to provide a safe, supportive environment where we promote equity among people – across all dimensions of diversity.
4. Our commitment to help shape a digital society that is based on fundamental democratic values and in which all people can participate safely, competently, and with autonomy: We want to help make the digital world a tolerant, safe space for everyone and enable society to bridge the digital divide.

Good governance is the basis of these strategic pillars. To implement this, we concentrate on a number of different but equally important aspects:

• Data protection, cybersecurity, and information security
• Compliance and risk and opportunity management system
• Application of the basic principles of digital responsibility
• Respect for human rights and the sustainable development of supply chains
• Investment based on environmental and social criteria and transparent communication about our activities relating to ecological and social sustainability
• Effective management for sustainability topics in the Group

In terms of the associated challenges, we are working on solutions to address the most important challenges. We intend to further develop and integrate them in the coming years. For us, this involves:

• integrated ESG management in the Group’s value chain, e.g., through a project on supplier management with regard to Scope 3 emissions or by implementing a management system to meet the requirements of the German Act on Corporate Due Diligence in Supply Chains (Lieferkettensorgfaltspflichtengesetz – LkSG),
• developing cross-industry standards for the key sustainability indicators in the value chain through collaborations, and
• enabling employees and managers to overcome specific sustainability challenges in their respective roles through the Telekom Sustainability Campus, a learning platform for digital ESG training.

We are one of the leading telecommunications companies worldwide. We have structured our business into the areas of fixed network, mobile communications, merchandise (sale of hardware for using the network), and the systems solutions business (business customers).

For further information on our business model, please refer to the sections “Group organization” and “Group strategy.”

The following figure shows our value chain along our business areas, including the inputs used and outputs generated by our Company. We have considered the impacts, risks, and opportunities for the telecommunications industry as part of our double materiality assessment and examined a potential relationship with our value chain and business model. We explain material potential impacts, risks, and opportunities in the relevant topical standards.

Value chain

Our goal is to make our product portfolio increasingly sustainable. To achieve this, we take a holistic approach to resource conservation and are committed to the responsible use of resources along our entire value chain. Reusing products and materials and extending their use phase not only saves on resources, but also reduces energy consumption and emissions. By 2030, we aim to ensure that almost all of the products we bring into the market are circular. This also applies to the network technology we use. T‑Mobile US does not have any formal targets for the circular economy.

For further information on our approach to the extraction of raw materials as well as disposal and recycling, please refer to the section “ESRS E5 – Resource use and circular economy.”

The most important economic actors for Deutsche Telekom are its suppliers, customers, and investors.

• Suppliers: For the build-out of our network infrastructure, our suppliers from the civil engineering sector and manufacturers of fixed-network and mobile devices and ICT network technology are particularly important. They provide the infrastructure services, technology, devices, and network technology required to operate and develop the telecommunications infrastructure. Deutsche Telekom works closely with its suppliers to achieve common sustainability-related goals, for example reducing emissions from CO₂ equivalents (CO₂e) and promoting a circular economy. In addition, we have requested our suppliers of network technology and terminal equipment (Deutsche Telekom excluding T‑Mobile US) to make their products and services almost completely circular by 2030. The relationship between Deutsche Telekom and its economic actors is distinguished by close cooperation on the one hand and by interdependencies on the other hand. The two sides are working to achieve common goals and promote sustainable practices.
• Customers: Our customer portfolio comprises consumers, business customers, the public sector, and wholesale. These customer groups use the different telecommunications services and products that Deutsche Telekom offers, such as mobile communications, fixed-network, internet, and TV services. Our relationship with our customers is shaped by our high standards in terms of service quality and customer satisfaction. We also attach great importance to the protection of their privacy and data.
• Investors: One of the main objectives of our finance strategy is to ensure unrestricted access to capital markets. Investors are therefore critically important to us as a company, providing the capital we need to grow, innovate, and expand. They enable us to share risks and offer strategic support and valuable networks that help us to secure our ability to obtain financing and optimize our value chain. The liquidity this provides us with is indispensable for scaling up our business model. The support received from investors thus strengthens our long-term competitiveness and sustainability, enabling us to efficiently achieve our business goals and continuously evolve.

ESRS 2 SBM-2 – Interests and views of stakeholders

Interaction with our stakeholder groups does not only help us to find support for our concerns. It also provides input that helps us identify key trends early on. In this way, it facilitates our innovation processes. Our stakeholder groups are listed below:

• Shareholders
• Providers of debt capital
• Workers (employees, managers, members of the Board of Management, applicants and potential employees, trade union and works council members, apprentices, and students)
• “Entrepreneurs within the enterprise”
• Society (from a sustainability perspective, broken down into: customers, potential customers, end-users and their representatives, analysts, NGOs and interest groups, media, companies in the supply chain and their workforce, science, research and education, endowed chairs, business and its representatives, politics and public administration)

For further information on our stakeholder groups, please refer to the section “Management of the Group.”

We involve our stakeholder groups in our business activities. We have developed an appropriate approach to do this. It is based on the AA1000 principles developed by AccountAbility, a non-governmental organization (NGO): materiality, inclusivity, and responsiveness. In the reporting year, we continued to intensify our dialogue with employees to embed the topic of sustainability even more firmly in our internal processes, e.g., at the CR management meeting in Bonn and through regular virtual meetings with the CR network.

We organize our stakeholder engagement in three forms: participation, dialogue, and information. We use our recurring case-related relevance analysis to determine how intensively we involve our stakeholders. The more relevant a stakeholder group is to the topic or project concerned, the more intensively that stakeholder group is to be engaged. We list some examples of our active stakeholder management below:

• Data Privacy Advisory Board: The Data Privacy Advisory Board is an independent advisory body to Deutsche Telekom AG’s Board of Management. It advises on key data privacy and data security issues. The Advisory Board also covers aspects of digitalization, societal developments, and ethical issues. It includes members of stakeholder groups from science, business, politics, and independent organizations.
• “Telekom hilft” (Telekom helps out): We include customers and end-users by giving them the opportunity to ask questions and provide answers in the community, as well as to take part in discussions, read and comment on blogs on Deutsche Telekom topics, and test new Deutsche Telekom products.
• “Telekom Ideenschmiede” (Telekom’s Ideas Forge): Deutsche Telekom’s Ideas Forge also facilitates dialogue with customers, end-users, and interested parties and gives them the opportunity to share and assess ideas for innovations. Our employees can also submit ideas and suggestions for improvement through our idea management program.
• Deutsche Telekom’s Municipal Advisory Board: The board provides the framework for direct dialogue between municipalities and Deutsche Telekom. It functions as a platform for discussing ideas, interests, and expectations and for finding a rapid resolution to certain issues. The board may also invite outside experts to attend individual meetings. It consists of 14 members from municipalities and municipal umbrella organizations.
• Dialogue with our employees: Our employees can exchange ideas in various areas of interest through our internal communities, such as GreenPioneers, the Human-Centered Technology Community, and Telekom@School.
• Town hall meetings: The members of the Board of Management regularly enter into dialogue with our employees and answer questions on current topics.

The feedback we receive from our stakeholders is incorporated into the alignment of our CR activities and has an impact on the CR program.

Our approach is to address the concerns of stakeholders, if possible, where dialogue with the stakeholder takes place. The areas involved in the dialogue receive direct feedback and can incorporate this directly into the organization of their work. They are responsible for referring concerns that cannot be resolved locally to the appropriate bodies within the Group. This also applies accordingly to the specific topics that are relevant in the context of the due diligence process and the materiality assessment. If a topic proves to be of particular interest to certain stakeholders, we initiate a topic-specific response and, if necessary, develop special dialogue formats. We are also committed to respect for human rights and are dedicated to protecting them in connection with our business operations, our suppliers, and our customers at both global and regional level. Our actions are based, among others, on the relevant recognized international standards and guiding principles, which we describe in section “ESRS S2‑1 – Policies related to value chain workers.” In addition, we express our commitment to this in our Code of Human Rights.

The Supervisory Board and the Board of Management of Deutsche Telekom AG were informed in the 2024 financial year about the views and interests of affected stakeholders with regard to the Company’s sustainability-related impacts in the context of the presentation of the materiality assessment.

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

Deutsche Telekom’s material impacts on society and the environment, risks and opportunities, and their interactions with our strategy and business model are described in the relevant topical standards. There we describe in detail the ESRS topics identified as being material and report on corresponding policies, targets, actions, and metrics in conjunction with the material impacts, risks, and opportunities.

We continuously review the current and anticipated effects of the impacts, risks, and opportunities on our strategy, business model, value chain, and decision-making and their interaction and develop actions to address these. Neither the identified impacts, risks, and opportunities nor the actions taken and planned led to a change in strategy or the business model in the reporting year. Furthermore, the material risks and opportunities did not have any relevant current financial effects on our financial position, financial performance, and cash flows in the reporting year. We aim to foster change towards greater sustainability through new technologies and innovative ideas and by offering more sustainable products and services. This is our response to the effects of climate change. We always take care to comply with the due diligence process and consider all aspects for sustainable governance. The results of the recurring risk analysis pursuant to the LkSG in our own business areas and in the upstream value chain serve, for example, as a basis for deriving actions and are also integrated into corporate decision-making processes (Deutsche Telekom excluding T‑Mobile US). As a company listed in the US, T‑Mobile US carries out a company-specific risk assessment using its own methodology. The Company regularly reports the results to representatives of Deutsche Telekom AG, among others.

The actual and potential impacts on the different stakeholders, on which we report under ESRS S1, S2, and S4, arise from our strategy or our business model (ESRS S1) or are connected with these through the procurement of goods (ESRS S2) and our focus on the advancing network build-out (ESRS S4). All material negative impacts on the affected stakeholders that we identified in the double materiality assessment are of a systemic nature; they are not connected with individual incidents or with specific business relationships of Deutsche Telekom. In addition to reporting on how we deal with significant impacts, we also disclose information in the social topical standards on the relationship between significant risks and opportunities arising from impacts and dependencies with regard to our different stakeholders.

Deutsche Telekom’s Business Continuity Management (BCM) is a process within operational security and risk management that helps protect business processes from the consequences of damaging incidents and disruptions. By continuously analyzing, assessing, and managing risks, BCM aims to ensure the continuity of business processes and to guarantee the resilience of the Group.

In addition, Deutsche Telekom reports on its climate risk analysis taking into consideration the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in order to ensure resilience, particularly with regard to risks arising from the consequences of climate change.

For further information, please refer to the section “ESRS E1 – Climate change.”

The following table provides an overview of the impacts, risks, and opportunities covered by additional entity-specific disclosures.

ESRS 2 IRO-1 E5 – Description of the process to identify and assess material impacts, risks, and opportunities

We performed a double materiality assessment to identify our impacts, risks, and opportunities. The objective of the double materiality analysis was, first, to identify all actual and potential material impacts on society and on the environment that are caused by our business activities and locations along the entire value chain. Second, our objective was to obtain a thorough understanding of the financial risks and opportunities for Deutsche Telekom that may arise from the responses of stakeholder groups and from climate change.

The double materiality assessment for this sustainability statement was based on extensive research with reference to studies, other publicly available information, as well as internal and external stakeholder engagement in the form of qualitative interviews.

For the double materiality assessment, the functional units addressed the disclosure requirements of all ESRS in the reporting year and considered their relevance for Deutsche Telekom’s business. They also compared the maturity of the existing management systems with the requirements of the sustainability standards. The findings were used to review and update the materiality assessment from the previous year and to identify impacts, risks, and opportunities. In addition, the experts compared the results with all the datapoints required by the ESRS to ensure that all disclosure requirements had been reviewed and that Deutsche Telekom was complying with its disclosure obligations.

We considered both the negative and the positive impacts of our business activities and locations on society and on the environment and along the entire value chain. We considered factors such as the impacts on pollution, on water and marine resources, and dependencies on biodiversity and ecosystems. We then assessed our financial sustainability opportunities and risks, also considering transition risks and physical risks and opportunities connected with biodiversity and ecosystems. This process also considered systemic risks. The results were subsequently validated in an internal workshop with attendees from various functional units. They also raised the concerns of different external stakeholders whose positions they are well aware of due to their work. In this context, we conducted a biodiversity analysis that identified social and environmental impacts along Deutsche Telekom’s entire value chain. Fixed-network and mobile communications infrastructure is primarily installed in built-up urban areas. In rural areas and biodiversity-sensitive areas, any intervention takes place in accordance with the national legal requirements (e.g., environmental impact assessments) and is coordinated with the local environmental authorities as required. However, our activities do not have any material impacts on these areas. Nevertheless, Deutsche Telekom attaches great importance to this topic and will continue to track it.

We made the following basic assumptions to allow us to analyze Deutsche Telekom’s business activities and value chain realistically and efficiently:

• We have structured our business into the areas of fixed network, mobile communications, merchandise (sale of hardware for using the network), and the systems solutions business (business customers).
• As a service provider that generally does not manufacture products itself, we distribute the products of our suppliers. These are primarily manufacturers of mobile devices. Deutsche Telekom only has a very limited influence on the extraction of raw materials for its merchandise and does not establish a direct link between these activities and its own business model.

Our due diligence process is based on the ESRS dimensions of severity and likelihood of occurrence. Based on these criteria, we used an assessment scheme to evaluate the relevance of positive and negative actual and potential impacts. We considered the following aspects and determined the severity when assessing actual and potential impacts:

• Scale: How grave is the impact?
• Scope: How widespread is it?
• Irreversibility: How difficult is it to reverse it? (only for negative impacts)

In addition, potential impacts are assessed based on their likelihood of occurrence and the time horizon (short, medium, or long term), and we used a five-point scale for this which is based on the recommendations of the December 2023 Implementation Guidance of the European Financial Reporting Advisory Group (EFRAG). We also identified the stage in the value chain where each impact occurs or could occur.

The structure of the financial materiality assessment follows the four-level assessment logic of our established risk and opportunity management system. To determine our financial risks and opportunities, we inventoried and assessed them, allocated them to the ESRS subtopics, and identified correlations with the impacts. The risks are divided into the following categories:

• Strategic risks
• Operational risks
• Regulatory risks
• Legal and antitrust proceedings (risks only)
• Compliance risks
• Financial risks

For a more precise description of our risk management process, please refer to the section “Risk and opportunity management.”

We also identified the stages of the value chain where risks and opportunities arise. Likewise, we assigned the time horizon during which they may arise for us to the risks. The two criteria we use – probability of occurrence and risk extent – are taken from the established criteria in our Group-wide risk and opportunity management. Any individual risks or opportunities that exceed GCR’s internal monitoring thresholds are reported as part of the Group-wide risk and opportunity management process. In the reporting year, we continued to apply the assessment scheme from our risk and opportunity management, which is linked to our materiality processes. GCR has been using the risk and opportunity inventory since 2022 as part of the materiality assessment to track new sustainability-related risks and take the assessment scheme into account accordingly in the Group-wide risk management system.

After identifying our sustainability-related impacts, risks, and opportunities, we prioritized these on the basis of a threshold. The negative and positive impacts close to the materiality threshold are subject to internal control processes and are continuously observed to determine their potential materiality.

Responsible, appropriate management of risks and opportunities is a core component of our governance. The Board of Management has implemented systems for risk identification and mitigation, in particular the risk and opportunity management system and the internal control system, including the compliance management system. Sustainability topics are integrated into both the risk and opportunity management system and the internal control system. Both systems incorporate sustainability aspects, which are becoming increasingly important as regulatory requirements continue to evolve.

The Group-wide risk and opportunity management system covers risks and opportunities of all segments and central departments. In addition, all material risks and opportunities are measured and disclosed separately based on ESG criteria. Sustainability-related goals are also a component of the Group’s risk reporting. The internal control system includes controls that address the Group-wide, IT-based collection process for ESG data from the ESRS E1, E5, and S4 topical standards.

The risk and opportunity inventory for the reporting year is based on the previous year’s inventory. It was enhanced and reviewed for plausibility following the analysis of the ESRS datapoints. We used the insights gained from this to adjust and update individual ratings.

The outcome of the double materiality assessment shows that Deutsche Telekom does not have any material impacts through sites located in or near biodiversity-sensitive areas. No mitigation measures are therefore required.

ESRS 2 IRO-1 E1 – Description of the processes to identify and assess material climate-related impacts, risks, and opportunities

We calculate GHG emissions for our climate-related targets for our own energy consumption (Scope 1 and 2) as well as the energy consumption in our upstream and downstream activities along our value chain (Scope 3). We align ourselves with the internationally recognized Greenhouse Gas Protocol. Indirect GHG emissions from upstream and downstream activities make up the majority of our total emissions. Collecting this data helps us to identify ways of reducing emissions in our own business activities and also of working with our suppliers and customers to reduce emissions in our value chain through targeted actions. As part of our materiality assessment, we identified actual and potential sources of greenhouse gas emissions for our own operations and along the value chain. The main levers have been systematically analyzed.

Deutsche Telekom reports on its climate risk analysis taking into consideration the recommendations of the TCFD.

In the course of the climate risk analysis, we identified the material climate-related opportunities and risks with experts from the areas of technology, procurement, and strategy and risk management, and began weighting them on this basis. In the process, we considered the consequences for our business activities that may result from the physical impacts of the ongoing climate change. On the other hand, we analyzed the potential impacts as a result of political, technological, and social developments associated with the transition to a low-emission economy that has already begun. The analysis also involves a financial quantification of transition risks. This process was last carried out in full in 2023; in the reporting year, we reviewed the defined risks and updated the data basis for the physical climate risks.

In 2023, we analyzed selected Deutsche Telekom locations in Germany, Hungary, Greece, and Croatia with regard to their physical climate risks. The analysis included all data centers as well as critical infrastructure in the fixed network and sampling in the mobile communications network. We extended this analysis to Austria, Poland, Slovakia, the Czech Republic, and the US in 2024. The analysis thus comprises our German and international units that made up a total of 97 % of our revenue in 2023. Locations related to mobile communications, fixed networks, and data centers whose functionality has a material influence on our business activities were taken into account. In total, we analyzed more than 8 thousand sites using a recognized software platform that is based on the climate scenarios developed by the Intergovernmental Panel on Climate Change (IPCC).

The analysis comprised nine climate indices. We considered the risks for the various sites in light of two climate scenarios of the IPCC: a business-as-usual scenario (RCP 4.5/SSP2‑4.5), with a global temperature increase of more than two degrees, and a four-degree scenario (RCP 8.5/SSP5‑8.5).

In addition to the climate scenarios, we examined the risks in different time periods: in the reporting year for the years 2030, 2040, and 2050.

Deutsche Telekom has defined short-, medium-, and long-term time horizons based on the existing time horizons from the Group-wide risk and opportunity management system. Our intention is to ensure that climate risks are integrated into our risk and opportunity management system and that all business risk categories follow a comparable approach. We also selected a time horizon up to 2050 for the scenario analysis. On the one hand, this matches the time horizons of international agreements on climate change mitigation, such as the Paris Agreement. On the other, it corresponds to a realistic planning horizon for internal strategic planning and the useful life of classic Deutsche Telekom assets such as infrastructure components.

When assessing climate risks, we assessed the probability of occurrence and risk extent. We assessed both the physical climate risks and the transition hazards, taking into account the geographical coordinates of Deutsche Telekom’s key locations. We also analyzed the upstream and downstream value chain for the transition risk assessment. Due to the prioritization of our own business activities, our upstream and downstream supply chain was not included in the physical climate risk analysis for the time being.

To identify transition opportunities and risks, we also applied the Net Zero Emissions (NZE) 2050 scenario described under “ESRS 2 SBM-3 E-1 – Material impacts, risks, and opportunities and their interaction with strategy and business modelESRS 2 SBM-3 E-1 – Material impacts, risks, and opportunities and their interaction with strategy and business model.” The process for assessing the opportunities and risks associated with climate change includes:

• identifying and quantifying the important trends
• calculating the impacts on the undertaking
• analyzing the impacts on the value chain

As part of our risk management activities, we quantify a number of risks and publish these in the questionnaire for the CDP, a tool for disclosing climate-related indicators to investors, for example. We factor the extent of the risks into our corporate planning. We also assess the applicability and benefits of management tools that we use to regularly integrate sustainable, attractive financing models, e.g., related to climate protection aspects in investment decisions.

We have not identified any assets and business activities that are incompatible with a transition to a carbon-neutral economy or that require significant effort to be compatible with a transition to a carbon-neutral economy. No critical climate-related assumptions have been used to date to measure assets and liabilities in the consolidated financial statements.

ESRS 2 IRO-2 – Disclosure requirements in ESRS covered by the undertaking’s sustainability statement

The following table contains a list of the disclosure requirements that we complied with in preparing the sustainability statement, following the outcome of the double materiality assessment, as well as the disclosures required by Article 8 of Regulation (EU) 2020/852 (Taxonomy Regulation). The datapoints to be reported and hence the material information were determined using qualitative mapping based on an in-depth examination at a content level of the identified impacts, risks, and opportunities. The mapping is based on the criteria defined in para. 31 of ESRS 1. Following a comprehensive examination of our business activities and locations, we assessed the topical standards ESRS E2 – Pollution, ESRS E3 – Water and marine resources, ESRS E4 – Biodiversity and ecosystems, and ESRS S3 – Affected communities as not material. By contrast, the following topical standards were assessed as material:

The following table contains all the datapoints that derive from other EU legislation, as listed in ESRS 2 Appendix B, and also indicates where the datapoints can be found in our report and which datapoints are assessed as “not material,” “not reported,” and “not relevant.”