For some two decades now, we have used a materiality-assessment process to identify the topics that are relevant for our sustainability strategy and for our reporting. Our materiality-assessment process takes account of provisions of the German Commercial Code (HGB) and of the 2021 Global Reporting Initiative. We are continuously refining our materiality analysis. In 2023, the key factors influencing refinement of this process included the provisions of the EU Corporate Sustainability Reporting Directive (CSRD), which will be relevant for our reporting as of the 2024 reporting year. However, since the CSRD will have the effect of changing the materiality criteria, we have selected the topics for the present non-financial statement (NFS) on the basis of our 2022 materiality analysis, which we reviewed in the reporting year to ensure it was fully up to date.
In connection with a document analysis covering the value chain, we explored existing and forthcoming legislation, various competitors, and the expectations of our stakeholders, e.g., the capital markets. An underlying process dating from 2022, considering the entire value chain, had identified the negative and positive impacts of our business activities on the environment, society, and human rights, along with pertinent financial sustainability opportunities and risks. We then assessed the positive and negative impacts based on the probability of their occurrence and the scope of their impacts on the environment, society, and human rights. In the process, we examined the following value creation stages: extraction of resources, production by our suppliers, Deutsche Telekom’s business operations – divided into “administrative processes” and “network build-out and data centers,” usage of our products and services by our customers, and disposal and recycling. In the year under review, we also considered the results of existing materiality analyses from four national companies (T-Mobile US, T-Mobile Polska, Hrvatski Telekom, and OTE Group), in order to incorporate a geographically and socially broad-based international perspective.
In addition, to determine financial materiality, the identified sustainability opportunities and risks were assessed, in internal interviews, with regard to the probability of their occurrence and their potential financial impact on our business. The results of the updated materiality analysis were then validated in an internal workshop with participants from various functional units. As a result of their own activities, the participants were familiar with the concerns of a range of external stakeholders, and they highlighted these concerns in the process.
This review process identified energy consumption in the supply chain, and in transportation, as an additional key issue for the non-financial statement. Last year’s CR report covered the same issue in connection with the topic “Greenhouse-gas emissions – Scope 1, 2, 3.” All in all, the analysis results and related internal discussions have identified issues relating to climate action, circular economies, and health and safety as being of particular importance for Deutsche Telekom.
Complete overview of the issues covered by the materiality analysis
Our materiality analysis, now already oriented to the CSRD, considered a total of 34 issues with regard to materiality. Within these, a total of ten sub-issues were identified as material (highlighted in boldface in the list). More information about the materiality-analysis process is available here.
The following issues were covered by the materiality analysis:
ESG area
Issue
Sub-issue
Environment
Climate action
Energy consumption and energy mix (including energy efficiency)
Greenhouse-gas emissions – Scope 1, 2, 3
Environmental pollution
Air pollution (including various pollutants)
Water pollution (including marine resources and pollutants)
Soil pollution (including various pollutants)
Water and marine resources
Water balance (including water management on the part of suppliers)
Biodiversity and ecosystems
Production-related/production-site-related stresses on biodiversity, ecosystem performance and ecosystems
Circular economies
Resources/materials used, and circular economies
Waste, waste management, and recycling processes
Social
Working conditions
Training and development
Health and safety
Working hours
Work-life balance
Fair remuneration
Social security
Water and sanitary facilities
Equity and diversity
Inequality (with regard to working conditions, salaries, and remuneration ratios)
Non-discrimination and equity for all
Precarious employment conditions
Other employment-related rights
Collective bargaining, freedom of association, and social dialog
Forced labor, human trafficking, and child labor
Privacy protection/data privacy
Decent housing
Only end consumers / users
Access to information/freedom of speech
Access to products/accessibility
Only for affected communities
Access to decent, adequate food
Protection of land rights, and free, prior, and informed consent
Safety
Freedom of speech, freedom of association, and self-determination
Protection of human rights organizations/protection of human rights
The results of this year’s materiality analysis will help us prepare for the upcoming reporting requirements from the CSRD. For reporting in our non-financial statement (NFS) pursuant to §§ 315c in conjunction with 289c 289e of the German Commercial Code (HGB), we used the results of this year’s materiality analysis to review the key topics described there. In the present CR report, we are already applying the topic adjustments that we studied in connection with CSRD preparations and that comply with the 2021 GRI Standards.
As part of the materiality analysis, we analyzed potential scenarios for financial materiality. Sustainable products can help mitigate existing social, economic, or ecological problems, for example. On the other hand, adverse environmental impacts, such as larger quantities of produced waste, can increase costs (in this case, costs for waste management). The results show that currently, climate-related topics, data protection, access to the information society, and individual aspects in the supply chain pose a financial risk to society, the environment, and human rights, as well as to us as a company. Harmful substances along the supply chain can impair human health, for example, and increasing legal requirements that we have to meet can increase costs. On the other hand, our products and services can help solve ecological and social challenges. For example, we offer solutions that help reduce energy consumption. Such challenges, therefore, pose opportunities for sustainable development, as well as market opportunities for us. For years now, these issues have been taken into account in Deutsche Telekom’s overarching risk-and-opportunity management process, and they are described in detail each year in our annual report.
To determine the key topics, we defined “materiality thresholds” for each of the impacts (financial as well as impacts on the environment, society, and human rights). A topic is considered material as soon as one of these thresholds is exceeded.
Materiality as a basis for evaluation of ESG risks and opportunities
In the year under review, we once again used our materiality analysis as a starting point for identifying and evaluating financial risks and opportunities that arise in connection with our sustainability issues. In the Group, risks and opportunities are generally assessed using a standardized risk process. As a result, many topics are covered that are also highly relevant from a sustainability perspective. The complementary consideration of financial impacts in the framework of the materiality analysis also helps us take impacts on the environment, society, and human rights into account. If new findings arise in this process, they are incorporated within the standardized risk process.