Management & facts

In Procurement, we work with a comprehensive supplier risk monitoring scheme. We first conduct a risk assessment of all material groups on the basis of the CSR sets of criteria defined by Group Corporate Responsibility. We then subject suppliers to a comprehensive risk analysis. Specialized companies evaluate all suppliers with regard to financial, CR, and compliance risks.

Suppliers that present especially high levels of risk are also monitored with regard to global risks (e.g., natural disasters, political risks). For this purpose, we use EcoVadis  and carry out special audits  on location. Our aim is to address deficits together with the supplier and take appropriate corrective action. Only if no solutions are possible do we have to cut ties with suppliers.

In 2022, we conducted a total of 98 supplier reviews – 83 of which were on-site reviews (social audits ) and 15 mobile surveys. 40 direct and 58 indirect suppliers were involved in the checks.

For the on-site reviews, we let the supplier know the approximate time of our visit in advance (“semi-announced audit ”). This is necessary to make sure that relevant contacts in key functions are present for the audit. The mobile surveys give our suppliers’ employees the opportunity to provide anonymous information about the social and ecological situation at their company. The surveys are primarily used to gain an initial impression of the local working conditions in order to then initiate further measures as needed, such as specific on-site reviews (social audits).

	Number of reviews	Number of findings	Number of completed finding
Social audits (by external audit firms)	83	549	464 (224 findings from 2022 and 240 outstanding findings from previous audits )
Mobile surveys *	15	-	-
EcoVadis  (2014–2022)	275	-	-
CDP  supply chain **	207	-	-
Total	580	-	-
* Mobile surveys with selected suppliers, in particular to assess the situation of workers at the operating sites ** CDP’s supply chain program is used for direct suppliers with high emission intensity.

We focus our audit  activities on strategically important and particularly risky suppliers. They are routinely audited every two to three years. This group includes roughly 250 of our 25 000 or so active suppliers. Together, they cover around 80 percent of our procurement volume. These audits  give us transparency about the risks in large parts of our supply chain.

The majority of the audits are conducted within the scope of Joint Audit Cooperation (JAC). The audits cover the following areas:

• Labor standards
• Social standards
• Living standards
• Environmental requirements

The JAC Guidelines require, among other things, that our suppliers:

• Pay a fair wage that enables employees to enjoy a decent standard of living;
• Respect the right to freedom of association and collective bargaining, and provide a healthy, safe working environment and
• Do not exceed a 48-hour working week and a weekly maximum of twelve hours’ overtime, and grant at least one free day after six consecutive days of working.

Compliance with all these requirements is reviewed regularly during our on-site audits. This also includes inspection of the features and quality of the working, sleeping, and cafeteria areas.

Deutsche Telekom does not require its suppliers to obtain external environmental or social certification. But if suppliers cannot show any environmental and social responsibility certificates, we do expect equivalent management systems to be used. Our auditing experience shows, however, that the majority of our relevant manufacturing suppliers have an external certificate or equivalent management systems.

Verification of important social and ecological aspects as well as fundamental human rights during our audits is in line with internationally recognized guidelines and standards such as the ILO  core labor standards, the UN Guiding Principles on Business and Human Rights, and the OECD  Guidelines for Multinational Enterprises.

In the audit  program, which has been established and is controlled at Group level, a total of 83 on-site audits  were carried out in 2022.

As in previous years, we concentrated our auditing activities on suppliers in Asia, Europe, Latin America, Oceania, and Africa.

Audited suppliers included manufacturers in the areas of IT hardware, software and services as well as networks and devices.

All violations identified in the course of such audits enter into a correction and measures plan, and the timely implementation of measures is regularly monitored. In the audits carried out in the period under review, no serious transgressions in the areas of working conditions and other basic human rights – such as discrimination, forced labor, and child labor – were found. In addition, no cases of bribery or corruption, and no critical violations of general compliance rules, such as rules governing the right to intellectual property, were found.

• Of the 83 suppliers we audited in 2022 (eleven of which were in accordance with the validated audit processes of the Responsible Business Alliance ), around 43 percent (36 audits) were direct suppliers and 57 percent (47 audits) were tier 2, 3, and 4 suppliers – that is, indirect suppliers.
• The audits carried out in 2022 revealed a total of 549 violations of Deutsche Telekom’s supplier requirements. These findings break down as follows: 231 cases regarding occupational health and safety, 67 cases regarding working hours, 104 cases regarding environmental protection, 23 cases regarding working conditions, 51 cases regarding wages and remuneration, 53 cases regarding corporate ethics, eight cases regarding freedom of association, four cases regarding disciplinary measures, and eight cases regarding discrimination. In addition, the violations included 36 transgressions that needed to be addressed on a priority basis and an additional 286 serious findings. A total of 464 violations were corrected in 2022, including several open improvement measures from previous years. Examples of critical violations in 2022 and improvement measures can be found in the table below. As in previous years, most violations (42 percent) were linked to occupational health and safety (2021: 43 percent), followed by violations linked to the environment at 19 percent (2021: 16 percent). At 12 percent, working hours constituted the third biggest issue (2021: 18 percent).

We collaborate as partners with our suppliers to make sure they are able to meet our high sustainability criteria.

Since 2018, we have continued the former Deutsche Telekom supplier development program as an industry approach (Sustainable Development Program, SDP). In 2021, the SDP was transferred to the Joint Audit  Cooperation (JAC). Alongside Deutsche Telekom in charge of project management, Telefónica, Swisscom, and Orange are working together to continually refine the SDP concept in accordance with the JAC sustainability targets.

We expect more JAC member companies to join the program in the near future. The diagram shows the areas in which we audit the suppliers participating in our program. Based on these audits, we work with the respective supplier to develop a plan for remedying any issues. All activities and findings are documented so that we can assess the effectiveness of the measures employed.

Our suppliers come from various industries and countries. To capture the diversity of our more than 25 000 suppliers, the following graphic depicts the types of suppliers we commission; the overview includes the share of our expenditure (capex  and opex) attributable to them and their geographical distribution.

Since as early as 2016, we have been disclosing our activities to bring on board suppliers as part of CDP ’s supplier engagement rating. This rating assesses how well companies have been able to integrate the topic of climate protection into their supply chain. In 2022, we were awarded an A rating, as in the previous year. This has secured our place on the Supplier Engagement Leader Board. An important step in achieving this was calculating the supplier-specific emission intensities based on supplier responses to the CDP Supply Chain Program. This involved calculating the ratio between a supplier’s overall emissions (Scopes 1 and 2 and Scope 3 for the upstream supply chain) and the supplier’s overall sales.

The ESG KPI  “CDP Supply Chain Program” indicates the degree to which our procurement volume from carbon-intensive suppliers is covered by the CDP Supply Chain Program. In 2022, over 52 percent of the procurement volume was covered by the CDP Supply Chain Program.

The percentage of audited procurement volume increased slightly from 20.6 percent in the previous year to 21.1 percent in 2022. At the same time, the percentage of procurement volume covered by EcoVadis  increased sligthly to 39.7 percent.

We require our suppliers to protect the environment and use resources responsibly. This requirement is enshrined both in our “Code of Human Rights & Social Principles” and in our Supplier Code of Conduct, which sets out requirements that must generally be accepted by all suppliers.

In the case of relevant material/product groups, the use of hazardous materials and conflict materials is checked and assessed as part of the supplier and product selection. In the case critical suppliers in particular, we request disclosure of information about their activities (via EcoVadis  and CDP ) and we perform supplier audits  in the form of social audits. In these audits, we check whether our suppliers use an environmental management system, including a waste management system, and review how they manage their energy and water consumption.

In addition, we always check whether there is a management system in place to address the issue of conflict resources. When selecting suppliers and products, we review and evaluate, for example, the use of hazardous and conflict materials as well as rare-earth metals – especially in light of the OECD  Due Diligence Guidance for Responsible Supply Chains.

In the period under review, we have readjusted the requirements placed on our suppliers and tightened them up significantly, particularly in relation to environmentally-responsible action, including against the background of the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz – LkSG). Since then, contributions to environmental protection and climate change, responsible waste management, and the handling of persistent organic pollutants that only degrade very slowly in the environment, have been enshrined in our Supplier Code of Conduct along with a ban on manufacturing any products containing mercury. Since 2022, these criteria are being used for selected tenders and incorporated into the supplier selection process with a weighting of up to 20 percent.