Sustainable finance: decisions for the future

When selecting stocks, investors pay attention not only to financial performance indicators, but also to the so-called ESG criteria: that is, they take into account a company’s actions in the areas of environment (E), social (S) and governance (G). In order to meet the demands of financial market players, we have our sustainability performance independently assessed. We also incorporate ESG criteria into our own investments. When working with the tax authorities – for example on the subject of taxes – we rely on transparency and trust.

Our approach

As a public limited company, we are dependent on the capital market and the financial market participants. We want to respond to this target group in a forward-looking and transparent way. To this end, we map our performance using performance indicators in the areas of environmental, social and governance (ESG KPIs), participate in ratings and rankings, and regularly participate in investor dialogues. Sustainability also plays an important role in our own financing decisions – capital investments, for example, or investments in research and development initiatives.

Our focus areas in sustainable finance

• Climate protection
• Transition to a circular economy
• Cybersecurity
• Artificial Intelligence and ESG
• Social aspects (e.g., equal treatment, fair pay)
• Governance

The T-share in sustainability ratings and indices

For more than two decades, we have been participating in various ESG ratings with our shares (T-shares). How we select them depends on their financial market relevance, independence, quality of analysis and the strategic relevance of the results. If the T-share receives a good ESG rating from the rating agencies, it will be listed in corresponding sustainability indices on the financial market.

In 2024, the T-share was again listed in major sustainability indices, including the “Best European Telecommunications Company” category in S&P’s Dow Jones World. It was also again listed in CDP’s Climate A-List.

Here is a selection of the listings of the T-share:

Through our commitment to sustainability, we also want to win over financial market stakeholders. We can only succeed in this if we offer high levels of transparency and honest communication – and that's why we prioritize sustainability reports, ratings and rankings as well as direct dialogue with investors.

For sustainability reasons: investments in the T-share

Investment products in the area of SRI (Socially Responsible Investments) consist of securities of companies that are successfully assessed according to ESG criteria. The development of demand for the T-share in this investment category serves as an indicator for us to assess our sustainability performance.

The ESG KPI “Sustainable Investment” indicates the proportion of Deutsche Telekom shares held by investors with SRI investment intentions. As of December 31, 2024, it was around 30.4 % of the T-shares. (Source: Nasdaq)

ESG KPI “Socially Responsible Investment (SRI)”

in %

We focus on sustainable investments

We want to make our investments financially attractive and in line with ESG criteria – both for money we invest as an investor and for bonds to raise debt capital for investments. To this end, the Corporate Responsibility and Treasury (financial management) divisions regularly evaluate sustainable and attractive financing models.

Since 2019, Deutsche Telekom’s capital investment (the so-called DT Trust) has been based on ecological and social standards. DT Trust is guided by the criteria of the National Pension Fund of Norway (“Norges”). In this way, we exclude, among other things, companies that violate human rights, produce certain weapons or whose core business is considered harmful to the environment.

Our commitment to research and development

As a future-oriented telecommunications company, we work closely with universities, other industries and partners and participate (financially) in current innovations. Here is a selection:

• How can clubs, associations or committed citizens be better involved in coping with crisis and disaster situations? T‑Systems has been working on a solution for this since 2023 together with partner organizations from civil protection, science and industry in the “KatHelfer PRO” project. So far, for example, a chatbot has been developed that can schedule registered helpers for an assignment.
• More and more people are using streaming services to watch movies, series and clips. This consumes a lot of energy. Since 2023, we have been working closely with various stakeholders to research to make this increasing media use more energy-efficient, among other things. In the year under review, we published a joint guide for decision-makers, development teams and consumers to help them assess the energy needs of video streaming and promote more sustainable criteria.
• Together with companies from the high-tech, hardware and chemical sectors, we have developed an approach to reuse components from old equipment for the production of new equipment. A first prototype is the NeoCircuit router: It uses central electronic components from old smartphones. More than half of the resources used consist of reused or recycled sources. More details about the router can be found here in the CR report under Circular Economy.

Further information on our innovations can be found in the Annual Report 2024.

Managing taxes responsibly and transparently

The Group Tax department is responsible for ensuring that the Deutsche Telekom Group pays taxes at the national and international level in accordance with the applicable laws. This includes the Group’s income taxes, as well as VAT and income tax on salaries payable and other taxes that are triggered for the Group.

Group Tax also ensures that the Group has an efficient tax structure within the framework of German and foreign tax laws as applicable in each country. In the view of Group Tax, it is essential to cooperate transparently and trust-based with local tax authorities to achieve sustainable tax efficiency, for example, in connection with operationally advisable company reorganizations.

In addition, Group Tax undertakes to contribute as much as possible to the success of Deutsche Telekom’s operations, e.g., by providing detailed advice regarding new business models or innovative technological developments. In particular any unresolved issues related to tax law are clarified directly and practical solutions to meeting all applicable tax requirements are provided.

The company’s “Tax Compliance, Sustainable Tax Efficiency, Tax as Valued Business Partner” tax strategy (incl. tax policy) has been approved by the Deutsche Telekom Board of Management.

For detailed information on the work of Group Tax, its principles, and its responsible approach to taxation, please refer to the detailed document “Taxes”.

Looking ahead

For more than 20 years, we have had the T-share evaluated in sustainability ratings and rankings and also include ESG criteria in our own investments. In order to consolidate our position as a leading digital and sustainable telecommunications company, we will continue to focus on performance and transparency vis-à-vis financial market players in the future.

Deep Dive for experts

Management & Frameworks

• Deutsche Telekom is guided by the EU’s Sustainable Finance Disclosure Regulation (SFDR). It primarily applies to financial companies that are required to incorporate sustainability factors into their investment decision-making processes and collect corresponding data on the sustainability impact of their investments. However, companies outside the financial sector are also affected, which is why we have tabled the most important possible Principle Adverse Impacts (PAI) on sustainability aspects for our investors and financial service providers.
• The EU’s Taxonomy Regulation aims to encourage investment in companies that are responsibly managed and implement sustainable economic activities. Its goal is to create a uniform understanding of sustainable activities and investments.
  At present, it does not include criteria related to an economic activity “provision and operation of electronic communications networks and services” – the essential part of our business model. Therefore, we cannot show our contribution to climate protection in the area of network expansion and operation for fixed and mobile networks in accordance with the EU taxonomy. In various business and industry associations, we are committed to the inclusion of relevant and appropriate criteria for mapping our core activities in the EU taxonomy. In 2024, we have therefore developed a joint position paper with individual associations: It underlines the important contribution that our industry is making to achieving Europe’s digitalization and climate goals. Detailed information on the EU taxonomy can be found in our Sustainability Statement 2024.

Relevant standards

• Task Force on Climate-related Financial Disclosures (TCFD)
  • The most important key figures for measuring and managing climate-related opportunities and risks

Learn more about taxes

• Tax strategy
• Country-by-Country Reporting 2023
• Cash Tax Rate Reconciliation
• Total Tax Contribution

Net value added

• In the year under review, we recorded net value added of EUR 65.2 billion. The year-on-year decline (EUR 68.3 billion) is mainly due to significantly lower repayments to investors. In contrast, investments in intangible assets (especially spectrum licenses) and our investments in grid expansion increased in 2024. Payouts for employees also increased, partly due to the restructuring expenses recognized in the previous year in the United States operating segment. Lower headcount in the Germany, United States and Europe operating segments as well as in the Group Headquarters & Group Services segment had a negative impact on personnel expenses. This was counteracted by the agreed salary increases from the 2023 and 2024 collective bargaining agreements in Germany and abroad.

Net value added

• In contrast to the income statement, only actual cash flows are included in the net value added account. This means that, for example, deferred tax expenses and the recognition of provisions do not affect the net value added in the reporting year. Although these expenses reduce the consolidated net income in the income statement, they are not associated with a payment to a stakeholder group, as is the case with net value added. The payments for this will only be made in the future and can therefore only be taken into account in the net value added in the following years.