Corporate Responsibility Report 2010/2011. Suppliers. Home > Suppliers

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Home > Suppliers

Corporate Responsibility Report 2010/2011

Suppliers.

As a globally active company, Telekom procures goods and services worldwide and is involved in supplier relationships in more than 50 countries. We emphasize trust and dialog as well as controls in these relationships. We promote a sustainable supply chain throughout the Group. Within the scope of industry initiatives, we develop procedures for working together to structure supplier relationships sustainably. In doing so, we underscore our claim to leadership when it comes to responsible procurement practices as well.

Raw materials, but not at all costs.

In a conversation with Klaus Milke (right), Chairman of the Board of Germanwatch e. V., Volker Pyrtek (left), Chief Procurement Officer at Deutsche Telekom, explains how the Group ensures sustainability in its procurement management processes.

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Home > Suppliers > Sustainability strategy for procurement

Corporate Responsibility Report 2010/2011

Sustainability strategy for procurement.

Within the scope of its CR strategy Telekom, as a reliable partner, is working toward becoming the industry leader also in the area of procurement and supply chain management. The fact that we were once again at the top this year in renowned sustainability rankings is proof that we are already on our way to successfully achieving this goal.

Compared to our competitors, we hold a leading position when it comes to managing our supply chain. We intend to solidify this position and expand it further. The basis for this is the strategic integration of sustainability into our procurement activities.

During the reporting period, we focused our activities on further developing measuring tools and expanding our social audit activities. We also made some organizational changes in Group procurement .

At a glance: Sustainability in procurement activities at Deutsche Telekom. Methods, tools and stakeholders.

Procurement volumes and procurement regions.

We work with suppliers in over 50 countries. We procured a total of EUR 398 million in goods and services from emerging and developing countries during the reporting period. That is the equivalent of 1.9 percent of Telekom's total procurement volume.

Comparatively, 12 percent of Telekom's procurement volume came from emerging and developing countries in the previous year - goods in the amount of EUR 2.4 billion. This difference can be attributed to the new data collection method being used in our procurement area. We introduced this new method during the reporting period. By introducing it, we modified our earlier procedures so that we now use the supplier's location and not the location of the site ordering the goods or services to determine local allocation. This has increased process effectiveness.

Close collaboration with stakeholders in these countries plays a significant role in making sure the production conditions meet Telekom's environmental and social standards. We consider it our duty to ensure basic social and environmental standards, particularly in emerging and developing countries.

CR KPI introduced throughout the Group.

The CR KPI Sustainable Procurement enables us at the Group level to calculate the share of total procurement volume that we receive from audited suppliers or from suppliers that provide self-assessments using E-TASC .

The share reviewed in this manner for the reporting period was calculated at 55 percent.

As part of our efforts to enhance the CR key performance indicators (KPIs) , we have defined the scope of the Sustainable Procurement CR KPI. As of 2011, it will be mandatory for all international subsidiaries represented in the CR Manager Network to report their Sustainable Procurement KPIs.

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Positioning within the organization.

The Corporate Procurement Strategy department has been responsible for developing concepts and methods for achieving sustainability in our procurement practices since 2010.

The Sustainable Procurement Working Group continues to provide assistance when it comes to realizing sustainability in our procurement activities throughout the Group. Experts from the CR area work together with representatives from Telekom's major procurement areas on this international committee. Group-wide implementation of our strategy for realizing sustainability in our procurement activities is being actively pursued through the increasing participation of the CR manager network within the scope of the international implementation of our CR strategy .

Strategic framework for realizing sustainability in our procurement activities.

Telekom places importance on more than just financial aspects when it comes to procurement. Ecological and social criteria need to be taken into consideration as well. This has been laid down in our Group-wide Sustainable Procurement Strategy designed to implement sustainability in our procurement activities, which was approved in 2007 and revised in 2010. We refer to this strategy as the Sustainable Procurement Strategy. All guidelines and processes dealing with improving sustainability in the supply chain are based on this strategy. For example, the entire life cycle of products and services is analyzed for potential environmental impact before any decisions are made regarding procurement. Telekom also acknowledges its social responsibility with this strategy, i.e., regarding fair payment and the observance of basic human rights.

Binding rules of conduct.

The Deutsche Telekom Group requires all of its suppliers, as far as possible, to comply with the company's Code of Conduct and prefers to work with suppliers that exhibit environmental and social responsibility in their business practices. Our fraud policy designed to fight corruption applies to all supplier relationships as well. We also demand that our suppliers take all standards that apply to them and obligate their own suppliers to comply with these as well. We conduct regular social audits to make sure that our suppliers comply with the mandatory minimum standards specified in the Code of Conduct, the Fraud Policy and the Social Charter.

Social Charter.

Deutsche Telekom prefers to work with suppliers that exhibit environmental and social responsibility in their business practices. Because of this, we passed our Social Charter in 2003. As an integral part of Deutsche Telekom's Code of Conduct , the charter is based on the values of the UN Global Compact , the guidelines of the International Labour Organization (ILO) and the OECD .

It contains Group-wide guidelines on Human rights and working conditions Environmental protection

Equal opportunities

Occupational safety and health The right to set up and join a trade union

The principles described in the charter apply to all Telekom business units worldwide. In the charter, which is an integral part of our General Purchasing Terms and Conditions, we require all suppliers to comply with these basic principles as far as possible. Our fraud policy designed to fight corruption applies to all supplier relationships as well.

An internal Supplier Code of Conduct has been in force at Cosmote Greece since April 2008. In keeping with the principles and values of Telekom's Social Charter, this code requires all of Cosmote's suppliers to adhere to minimum social and ecological standards.

T-Mobile Netherlands will require compliance with the Social Charter and environmental criteria in its supplier contracts as of 2011, thereby further integrating sustainability criteria into its procurement practices.

Download: Code of Conduct Download: Fraud Policy Download: Social Charter

Sustainable procurement policy and practices.

New version of purchasing guidelines ups demands on suppliers.

The Global Procurement Policy plays a vital role as part of a series of internal guidelines for integrating high standards into the supply chain. The policy was revised during the reporting period and the new version was approved by the Telekom Board of Management in November 2010. With this policy, we have raised our demands on our suppliers and contribute to the Group-wide standardization of our requirements. The policy is being rolled out successively at Telekom's international subsidiaries in 2011.

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Our Global Procurement Practices provide detailed rules and standards for our buyers, fleshing out the general standards contained in the Global Procurement Policy. The document defines standards for our procurement processes including principles for supplier selection that is sustainable and avoids any undue risk. The Global Procurement Practices are currently being revised and the new version is scheduled to be published during the first half of 2011.

In 2011, T-Systems Iberia is planning to introduce its own procurement guidelines and a prequalification system as part of the supplier selection process . These will supplement existing Group-wide Telekom guidelines and regulations and form the basis for a procurement policy that is in line with local conditions.

CO₂ footprint in the supply chain.

Our goal was to develop an effective evaluation method for CO2 emissions in the supply chain in 2010 as well as to identify and make targeted use of reduction potential. We were unable to fully accomplish this goal during the reporting period. Our research has shown that, due to the lack of effective methods, it is still not possible to report a realistic goal for CO2 reduction in the supply chain.

We therefore launched a sub-project for the supply chain within the scope of our new climate protection strategy. In this project, we plan to collect and evaluate information on Scope 3 emissions as defined by the Greenhouse Gas Protocol – above all emissions resulting from the supply chain - and energy efficiency. Based on these evaluations, we plan to develop joint measurement procedures and a joint reporting approach together with selected suppliers, thereby laying the foundation for mandatory emissions reduction targets.

Guidelines for a responsible supply chain.

Telekom is on the board of the International Chamber of Commerce (ICC) for Germany. There we participated in the development of the “ICC guidance on supply chain responsibility.” These guidelines were published in 2010 to help guarantee a responsible supply chain. They provide a global, cross-industry reference and include a plan to establish the mutual recognition of company-internal codes. Telekom supported the work of the International Chamber of Commerce during the meetings held between February 2010 and March 2011 and contributed its expertise to the cross-industry establishment and further development of minimum standards for supply chains.

Participation in the German Global Compact Network.

Telekom also contributes to improving social conditions in the procurement area through its participation in the German Global Compact Network (DGCN) . In 2010, Telekom participated in two DGCN meetings and discussed the issue of balancing business and human rights with other companies.

DGCN has offered three training courses for companies on human rights since 2008. An informal workgroup on business and human rights was founded based on these courses. In the workgroup, eleven multinational companies get together to discuss the progress being made and the challenges involved in conducting projects to enforce human rights.

Telekom also makes a significant contribution in supporting DGCN's activities with its expertise and recognized CR performance. Topics discussed in the Business and Human Rights working group include the observance of human rights in the supply chain, the risks involved and available options. The workgroup is planning to develop a benchmark tool in 2011, which will be used to monitor compliance of the the Guiding Principles on Business and Human Rights drawn up by UN special representative John Ruggie. The workgroup meets at least twice a year. The next meeting is scheduled for May 26, 2011, at Telekom Headquarters in Bonn. At the meeting, the eleven members will discuss the new benchmark tool with representatives of other companies among other matters.

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Home > Suppliers > Using raw materials

Corporate Responsibility Report 2010/2011

Using raw materials.

Sustainable procurement of raw materials in the ICT industry comes with big challenges. Numerous metals are used in making phones, cell phones, computers and other ICT products. These valuable raw materials are often extracted in emerging and developing countries under problematic conditions. One example of this is the metal tantalum, which is extracted from coltan and is present in many products that are sold or used by Telekom. We do not directly purchase this raw material or the metal that is extracted from it. Nevertheless, we consider it our duty to minimize the harm caused to people and the environment in connection with extracting these substances and to completely put a stop to these consequences in the long term. We work closely with our suppliers in the context of our efforts to make improvements in this area.

We are planning to develop specifications based on the Sustainable Guideline for Product Design passed by Öko-Institut e.V. , to be used in procurement bidding procedures. One purpose of developing these specifications is to minimize the use of raw materials by our suppliers as well. We also conduct an extensive e-Waste management program via which we are able to collect old cell phones . This helps conserve our natural resources.

Rules for procuring raw materials.

The extraction of valuable metals and ores such as coltan, tin, gold and platinum has a serious impact on the environment and people in a number of developing countries. We passed a

Statement on Extractives in 2009 as an update of and supplement to our Coltan Statement, which was passed in 2005.

This statement specifies compliance with the minimum standards contained in our Social Charter for the entire supply chain. By doing this, we hope to guarantee that both our direct suppliers as well as their sub-suppliers minimize the risks associated with extracting raw materials.

We expect a clear commitment to the Statement on Extractives from our suppliers. During the reporting period, we sent a letter to all of our strategic suppliers to inform them of our Statement on Extractives. We also explicitly demanded compliance with the requirements contained in the statement.

In addition, we actively support the efforts of the industry association Global e-Sustainability Initiative (GeSI). One of the initiative's goals is to increase transparency in the raw materials extraction process and minimize the negative social and environmental impact of raw material extraction .

Download: Coltan Statement Download: Extractives Statement

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Home > Suppliers > Supplier selection

Corporate Responsibility Report 2010/2011

Supplier selection.

Telekom lays the foundation for a sustainable supply chain even when selecting its suppliers. Suppliers and sub-suppliers interested in entering into a relationship with Telekom will undergo a prequalification process.

With the help of an online questionnaire on our procurement portal , we are also able to collect information on compliance as well as conformity with sustainability criteria and then take these factors into consideration during the further selection process.

Stricter requirements on selected supplier groups.

Not only do our strategic suppliers and suppliers from high-risk industries have to pass the

prequalification, they are also asked to provide additional information on the topic of sustainability using the Electronics Tool for Accountable Supply Chains ( E-TASC ). The term “strategic suppliers” refers to suppliers that are significant for procurement activities at Telekom due to the extent of the supply relationship, their position on the market or their potential for innovation.

Prequalification process in Hungary, Greece and Croatia.

Magyar Telekom in Hungary has been working with a new system for supplier prequalification since December 2010. The prequalification process includes key aspects of the Group-wide sustainability criteria for Deutsche Telekom suppliers.

In 2010, Cosmote Greece also introduced a supplier assessment system that covers 77 percent of its entire procurement volume. In order to guarantee a sustainable supply chain, we ask our suppliers to fill out CR self-assessment questionnaires during the evaluation process as well. This system was also tested at the international subsidiaries, AMC, Cosmote Romania, Globul and Germanos, in a pilot project. Since February 2011, T-Hrvatski Telekom has also been requiring its main suppliers to fill out a

questionnaire providing information on their social, ecological and ethical standards. Sustainability criteria during the bidding process.

2,000 T-Shops in Europe equipped according to sustainability

criteria.

In 2009, we developed criteria for evaluating proposals in terms of environmental and social requirements. In 2010, we began thoroughly reviewing these criteria within the scope of different pilot projects and were able to identify initial improvement potential.

For example, one such project involved opening 2,000 T-Shops in Europe, 800 of which were in Germany. Suppliers were selected for this project on the basis of criteria such as environmental protection and resource efficiency. Compliance with standards such as occupational safety and health, preventing child labor, observing human rights and fair pay were also taken into consideration. The company is also planning to equip the T-Shops with energy-efficient LED lighting in 2011. Additional pilot projects for other procurement activities are currently underway. Once the pilot projects have been evaluated, the company is planning to introduce these criteria and standards for all of its procurement activities step by step.

Systematic application of the sustainability criteria in bid procedures is scheduled to begin in 2011. Adjustments to the contract award notice.

In 2010, we included the concept of sustainability in our contract award notice regarding high-volume procurement decisions. With the revised contract award notice, we will be able to create more transparency regarding the integration of sustainability aspects in contract awared decisions.

Online CR training tool for Telekom buyers.

We established an internal online training tool on the topic of corporate responsibility for our buyers already in 2008. We intend to synchronize concepts for sustainable procurement throughout the Group with this tool. During the reporting period, we began revising the content and methods used in the tool concept in cooperation with Humboldt University in Berlin. Use of the tool is now more efficient and user-friendly due to shorter training periods and reduced content. These measures should make it easier to use the tool on a daily basis. The revised tool will be introduced sometime in 2011.

By using the tool, employees are trained to recognize risks in the supply chain. They become familiar with tools and techniques for engaging in sustainable procurement activities and learn about the advantages of being able to steer the supply chain. They also get tips on how to best include their

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Home > Suppliers > Supply chain management

Corporate Responsibility Report 2010/2011

Supply chain management.

The processes and instruments that Telekom uses to evaluate its suppliers are a key aspect of supply chain management. These are, for example, valuable in identifying financial improvement potential and in controlling supplier progress in social and environmental areas.

By systematically managing its suppliers, Telekom is able to identify possible risks in the supply chain in advance and respond to them.

For this purpose, we use

A software-based prequalification system ,

An extensive supplier self-assessment questionnaire in E-TASC and Social audits on suppliers' premises.

We also rely on dialog in cooperation with our suppliers when it comes to sustainability. For us at Telekom, it is important to know that our business partners are supporting new ways of achieving sustainable business practices. This is the only way to effectively improve the supply chain. To this end, we also participate in industry initiatives such as the Global e-Sustainability Initiative ( GeSI) and the Joint Audit Cooperation in order to improve ethical, social and ecological standards.

Dialog to promote sustainable procurement.

Telekom considers itself to be an open, transparent company and is involved in constant communication with its stakeholders. This also includes internal groups such as the Procurement department and Telekom's international subsidiaries.

In addition to our suppliers, who are our most important external procurement stakeholders, our collaboration partners, institutions and NGOs are important stakeholders when it comes making the supply chain more sustainable.

Results of communication with stakeholders in 2010.

Inspired by discussions with our stakeholders, we decided to post a link on our procurement portal that takes our contract partners to online training courses for corporate responsibility and sustainability, which are offered on the Deutsche Telekom CR website. We developed the training content in collaboration with GeSI and EICC (Electronic Industry Citizenship Coalition). The courses have been designed to

familiarize our suppliers with CR topics and help them comply with our sustainability requirements. Supplier workshops for a more sustainable supply chain.

Telekom organizes workshops in Germany with important suppliers in order to more firmly integrate sustainable elements into the supply chain. The company conducted four sustainability workshops during the reporting period:

with Research In Motion Deutschland GmbH in September 2010 with Microsoft in May 2010

with HTC in November 2010 with Vattenfall in November 2010

At these four workshops, company representatives discussed topics including the integration of sustainable elements into research and development activities as well as into the supplier selection process. Closer collaboration in calculating the CO₂ footprint of product lifecycles was also on the agenda. These dialog sessions are helpful when it comes to comparing corporate standards regarding sustainability issues and serve as a platform for future collaboration on the basis of common standards.

Sustainable Procurement Stakeholder Dialog Day.

The Group's third Sustainable Procurement Stakeholder Dialog Day, which is held annually, was on June 29, 2010. The main focus of this year's open stakeholder discussions was Telekom procurement topics for daily business practices.

Participants discussed the following questions in workshop groups: What are the sustainability requirements of our customers? Can you save money with sustainable procurement?

What are the challenges and opportunities of sustainable business practices in procurement activities?

Besides Telekom employees, mainly from Procurement and CR, more than sixty supplier employees as well as representatives of universities and non-governmental organizations (NGOs), such as

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Germanwatch, participated in this event.

In an effort to extend talks with local suppliers, institutions and NGOs in high-risk regions, we are planning to conduct a dialog event in the Southern Chinese city of Shenzhen during the fourth quarter of 2011.

Sustainable sourcing research project.

The Corporate Procurement Strategy department is currently participating in a research project being conducted by the European Business School within the scope of the Effizienzcluster LogistikRuhr initiative. The focus of this joint Sustainable Sourcing Excellence project includes:

Developing a procedure for the standardized measurement of environmental impact caused by purchasing and procurement logistics

Creating a sourcing governance code

Creating guidelines for sustainable purchasing and procurement logistics Creating a CO₂-efficient sourcing platform

Developing an IT-based sustainability risk management system for purchasing and procurement logistics

Telekom decided to participate in this project, which is sponsored by the German Federal Ministry of Education and Research (BMBF), for a period of two years to begin with. Initial results are expected to be released sometime in 2011.

Magyar Telekom recognizes dedicated trading partners.

In June 2010, the Hungarian subsidiary presented the DOLPHIN Award for the third time to suppliers showing particular dedication in the area of sustainability. Magyar Telekom recognized four suppliers for their activities in three sustainability categories:

Innovation realized in the interest of sustainability (positive impact on social and environmental effects).

Supporting equal opportunity and non-discrimination within and outside of the company. Sustainability education and awareness.

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Home > Suppliers > Supply chain management > E-TASC

Corporate Responsibility Report 2010/2011

E-TASC.

E-TASC , or the Electronics Tool for Accountable Supply Chains, is an online information system for evaluating our suppliers' risks in terms of sustainability that is used throughout the industry. This tool enables us to recognize existing or potential CR risks in the supply chain early on and to respond to them appropriately.

As a member of the Global e-Sustainability Initiative ( GeSI) [link to 7.5 International collaboration (GeSI: Initiative in the telecommunications industry)], Telekom played a key role in the development of this system and is involved in its further development.

Using E-TASC at Telekom.

We thoroughly examine selected suppliers for possible sustainability risks. That is why we require them to use E-TASC even during the selection process. If a supplier is not able to provide us with the information we have requested, we will initiate an internal, multiple phase process to encourage the supplier to use E-TASC. Through repeated discussions we have been able to achieve this goal in collaboration with our suppliers in many cases.

Several escalation phases are applied within the process should disagreements arise. Suppliers use the online information system to provide detailed information on their social and environmental production conditions as well as their management systems. They also benefit from using E-TASC because this helps them to demonstrate their CR status to other business partners and critical members of the public. Increasing international use.

The international subsidiary Magyar Telekom also takes advantage of E-TASC's potential when it comes to assessing its local suppliers. OTE, T-Mobile USA and Slovak Telekom have also indicated their interest in using E-TASC.

In addition to the E-TASC tool , which is used throughout the industry, our supplier scorecard (SSC) is another element for evaluating selected suppliers. The SSC is generated every 6 months. In addition to evaluating key performance indicators, it also provides a Group-wide overview of the performance of our strategic suppliers when it comes to sustainability.

Increased willingness to provide self-assessment information.

More than half of our purchasing volume is registered in E-TASC .

Over the past few years, the willingness to provide self-assessment information using E-TASC has constantly increased. This trend also continued during the reporting period. From January to December 2010, 126 suppliers were invited to use E-TASC for this purpose. By the end of 2010, the number of suppliers participating in E-TASC had risen to 69, compared to only 58 at the end of 2009. The procurement volume share of suppliers that post information in E-TASC increased from 36 percent in 2009 to 55 percent at the end of 2010.

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Home > Suppliers > Supply chain management > Social audits

Corporate Responsibility Report 2010/2011

Social audits.

We significantly expanded and systematized our social audit activities in 2010. By commissioning recognized auditing firms, we were able to audit significantly more suppliers than in the previous years. During this process, we created a systematic audit program using the recently developed audit risk matrix. Selected strategic and particularly high-risk suppliers were included in this audit program. We identified these suppliers on the basis of specific risk aspects such as sales volume, material group, information provided by the suppliers themselves or information from reports by NGOs.

Components of the social audit.

A social audit at Telekom comprises the following essential elements: A general risk assessment of suppliers conducted by Telekom, An evaluation of the supplier self-assessment conducted by Telekom, Personal communication with the suppliers and

The on-site audit.

Finally, the external auditors write up an audit report including an audit rating. Instead of ending our business relationship with suppliers who violate our policies, Telekom works together with these suppliers to permanently improve conditions.

We address any problems in an action plan and work together with the supplier to remedy these within a pre-defined period of time.

Social audits in 2010.

From July to the end of December 2010, external auditors conducted a total of 26 social audits of our suppliers. In the past, internal auditors were only able to audit an average of four to six suppliers each year. With this significant increase, we were able to improve our performance in important sustainability ratings in the supply chain category compared to 2009. Due to the extensive selection process we engaged in when choosing the auditing firms, which continued until the end of June 2010, we were not able to attain our goal of conducting 50 social audits in 2010.

The international subsidiaries also increased their social audit activities.

Hrvratski Telekom in Croatia audited five suppliers in 2010. That means a total of 18 audits have been conducted since 2003.

OTE Greece is also planning to audit selected suppliers. Audit collaboration in the telecommunications industry.

2010: 18 audits in collaboration with Orange/France Télécom and

Telecom Italia.

Collaboration between Telekom and its competitors Orange/France Telecom and Telecom Italia was initiated in December 2009. This collaboration is unique in the industry. The companies agreed to engage in a joint procedure to improve the sustainability of their supply chains in Asia. In October 2010, this decision resulted in a binding agreement, the Joint Audit Cooperation (JAC).

JAC comprises a strategy that enables the three companies to audit their shared suppliers globally on the basis of standardized criteria. The collaboration partners are also striving to establish social, ethical and environmental standards at their suppliers. The processes used for accomplishing this goal are based on the international social and environmental standards SA 8000 and ISO 14001 . Audits are conducted by internationally recognized auditing firms.

JAC improves the efficiency of social auditing processes since only one audit needs to be conducted of shared suppliers. The three companies then provide the results to each other.

Joint activities in 2010.

Within the scope of JAC, we are planning to conduct a total of 34 social audits of shared suppliers and sub-suppliers. 18 were already conducted in 2010 and 16 are scheduled for 2011. Experience gained so far has been absolutely positive. Of course there were a few cases where we had to work to convince the parties involved, but the majority of the targeted suppliers endorsed and supported the JAC initiative. We are planning to expand our cooperation with Orange/France Télécom and Telecom Italia. Our next step will be to develop joint measures as part of JAC to improve supply chain transparency in 2011.

Social audit activities as of 2011.

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We will continue to focus our social audit activities on Asia. We are also considering conducting audits of suppliers from other high-risk regions, such as Latin America and Eastern Europe.

Our goal is to have external auditing firms conduct a total of 200 social audits of strategic suppliers between 2010 and the end of 2012.

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Home > Suppliers > Supply chain management > 2010 audit results

Corporate Responsibility Report 2010/2011

2010 audit results.

In 2010, we conducted 26 social audits of Deutsche Telekom's direct suppliers and sub-suppliers. We particularly focused our social audit activities on suppliers located in China, Japan and Taiwan. However, we also conducted three social audits in Southern and Eastern Europe. We were therefore able to significantly increase our risk coverage compared to 2009, when we only conducted four social audits. T-Hvratski Telekom conducted an additional five social audits of its suppliers in 2010. Their results have not been included in the list below.

Results and measures for improvement.

Four social audits were conducted by internal auditors and 22 were conducted by external auditors. Of these, 18 audits were conducted within the scope of the Joint Audit Cooperation (JAC). In general, the auditors looked at areas in which Telekom generates the highest procurement volume and which involve the highest risk potential. Among the 26 suppliers audited were manufacturers/suppliers from the terminals, IT services, IT hardware/software and network areas. We did not find any cases of corruption. Weak points were found in the following areas:

Work and ethics

Environment, health and safety Corporate ethics

We found violations against Telekom supplier requirements in a total of 74 cases, 28 of which can be considered critical. Suppliers primarily violated regulations regarding occupational health and safety and working hours. Based on these findings, measures were immediately introduced to improve conditions on site.

Work and ethics.

Issue Key findings Measures and improvements made

Working hours

A significant amount of overtime was found. Employees at one production site were scheduled to work 24 days in a row.

A system was introduced to automatically register and monitor working hours.

Additional employees were hired.

A mandatory day off after seven working days was introduced. Pay and

benefits

Insufficient pay for regular working hours. Overtime was not paid in accordance with legal regulations.

No social security contributions for unemployment and pregnancy were made.

Payment of the legal minimum wage was introduced for regular work and overtime.

Payment of social security contributions in accordance with legal regulations was introduced.

Child labor One employee was younger than the legal minimum age of 16.

Young people ages 16 to 18 were working the

The 15-year-old employee was given the opportunity to go to school instead of working at the factory, with the option of returning to work at the factory once they turned 16.

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Young people ages 16 to 18 were working the

night shift. A system to reliably determine the age of employees, which

prevents the use of forged documents, was introduced. A guideline banning younger employees from working the night shift was introduced.

Recruiting measures targeted at very young people were canceled.

Discrimination Special disciplinary measures used for immigrant workers were identified.

Female employees had to undergo a pregnancy test before being hired.

Standardized disciplinary rules for all employees were introduced.

Pregnancy tests are no longer being conducted before a female employee is hired.

Forced labor Trainees were employed via an agency. Due to a lack of controls and steering measures, there was a risk of exploitive and forced labor.

Trainees are now hired directly in all cases.

Environment, health and safety.

Environment Environmental certificates from suppliers of products involving higher environmental risks were not being requested.

Mandatory environmental certification was introduced for suppliers of products involving higher environmental risks.

Occupational health and safety

The emergency lighting was defective. Emergency exits were blocked. Fire safety equipment was not suitable.

There were no adequate emergency plans in case of fire on the premises.

There were no regular medical check-ups for employees who work with hazardous substances. Employees were not wearing appropriate protective gear.

There were not enough occupational health and safety officers.

Employee sleeping quarters were too cramped.

Adequate emergency lighting was installed. The emergency exits were cleared.

The fire safety equipment was updated and regular controls were introduced.

Medical check-ups are now being conducted regularly. Filters in the ventilation system are now replaced more frequently.

Wearing personal protective gear was made mandatory and is being controlled regularly.

Occupational health and safety officers were hired and/or trained.

The number of employees per sleeping area was reduced.

Corporate ethics.

Corporate ethics

Lack of social commitment to promote sustainable business processes.

Lack of requirements for suppliers to comply with ecological, social and ethical standards.

Social commitment was intensified.

Mandatory environmental and social standards for suppliers were introduced, including regular assessments.

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Home > Suppliers > International collaboration

Corporate Responsibility Report 2010/2011

International collaboration.

Telekom has been working on an international level toward establishing sustainable supplier relationships for several years now; this can be seen, for example, in the Global e-Sustainability Initiative (GeSI). We are also directly active in the countries of our suppliers. One focus of our current activities is China. In addition to our official branch in Beijing, our procurement, technology and product management units have an office in Shenzen in the south of China. As a partner of the SWITCH-Asia project, we work toward embedding sustainability in the Chinese electronics industry.

GeSI: Initiative in the telecommunications industry.

As a founding member of GeSI, Telekom has been promoting more transparency in the supply chain since 2001. The main goal of GeSI is to improve social and environmental conditions when it comes to the extraction of raw materials.

Telekom has been heading the initiative since 2006. During the reporting period, we also participated in several workgroups including

the Supply Chain Working Group, the Climate Change Working Group and the Extractives Working Group.

We also supported the further development of E-TASC as a member of the E-TASC Executive Council. Raising awareness of sustainability in China's small and medium-sized enterprise sector.

As a strategic partner, we support the SWITCH-Asia project in China, which was initiated in 2009 and is funded by the EU. In this project, Telekom is the sole representative of the ICT industry. The objective of this project is to provide information and training to more than 500 small and medium-sized enterprises from the electronics industry in areas such as ecological efficiency, occupational safety and CR. During the reporting period, Telekom participated in several activities in China.

We took part in a workshop in Shanghai in April 2010. The workshop's goal was to give local Chinese companies insight into the topics of environmental efficiency, occupational safety and health and CR.

In May 2010, we visited different SWITCH Asia project partners in Beijing and were updated on the project status.

Representatives of the Chinese Ministry of Industry and Information Technology, the Chinese Ministry of Environmental Protection and the Chinese Institute of Electronics visited different institutions in Germany and Belgium within the scope of the Policy Tour in Europe, which also took place in May. As part of the tour, the Chinese government representatives also visited Telekom Headquarters in Bonn.

Additionally, we participated in the EC/SWITCH seminar at the UN Conference on Climate Change, which took place in New York City in May 2010.

In October 2010, Telekom participated in a local kick-off event in Shunde, China. At the event, representatives of small and medium-sized companies learned about the benefits of improved ecological efficiency, health and safety standards and the CSR performance, among others.

The goal of SWITCH Asia is to conduct 35 training workshops between 2010 and 2012 in the five project regions and reach out to around 500 companies. We will continue to support this goal as a strategic partner in 2011.