Aspect 1: Environmental concerns

“We assume responsibility for a low-carbon society” is one of the action areas of our CR strategy. It not only expresses our commitment to minimize the potential climate impacts of our business activities, but also our desire to utilize the opportunities offered by digitalization for sustainable development. For further information, please refer to “Deployment of ICT products to the benefit of society” in this section. The impacts of our business activities are comparatively minor in relation to other topics, such as water or waste, covered by our comprehensive environmental management system based on the international standard ISO 14001. Therefore, they are not included in this NFS, but rather in our CR report.

CLIMATE CHANGE AND ITS REPERCUSSIONS

Demand for fast data services with full-coverage availability is growing rapidly. That is why we continue to push the build-out of our infrastructure and increase data transmission rates. Our investments in the network build-out make us one of the biggest investors in the industry. Operating our network consumes energy. Increasing energy consumption is associated not only with higher costs, but can also lead to an increase in CO2 emissions and thereby accelerate climate change and its repercussions. For this reason, we need to ensure our energy consumption grows at a slower rate than the volumes of data we transmit and, at the same time, promote the use of renewable energies to decouple energy use from CO2 emissions. We are also required to utilize the possibilities offered by digitalization, as it too can help save energy and slow climate change. Further information on the opportunities and risks associated with climate protection is provided in the section “Risk and opportunity management.”

Our integrated climate strategy includes four aspects of climate protection: CO2 emissions, renewable energy, energy efficiency, and sustainable products. The climate strategy applies Group-wide and is implemented on an interdisciplinary basis at the level of the national companies. Our Board of Management set a climate-related goal as early as in 2013: By the year 2020, we intend to reduce total CO2 emissions in the Group (excluding T-Mobile US) by 20 percent compared with 2008. 40 business units in 29 countries have committed themselves to this goal. Our national companies are helping us achieve this goal in different ways and to different extents, depending on developments in their local markets. Group Corporate Responsibility reports to the Board of Management on the status quo on an annual basis. We have already achieved a moderate reduction in emissions (excluding T-Mobile US) over the past few years. Despite the challenges posed by rapidly growing data volumes and the continuous build-out of networks to cope with demand, we continue to stand by our ambitious climate goal and look into further measures that could be needed to help us meet this goal, such as increasing the relative share of energy obtained from renewable sources.

In order to achieve our climate goal, we are focusing on areas with especially high energy consumption, such as our networks and data centers. For instance, we are migrating our network infrastructure to IP technology, which is not only more powerful, but also consumes less electricity than existing technologies. By the end of 2017, we had migrated 69 percent of our lines – around 17.3 million – to IPFor further information, please refer to the section “Development of business in the operating segments.” We are working to process data traffic from no more than a few, particularly efficient data centers. The PUE metric serves as an indicator for improvements in energy efficiency. We calculate this metric using the method recommended by The Green Grid Association, which takes the total energy consumed by data centers into account, not only that used to operate the servers. We reduced the average PUE metric at T-Systems data centers in Germany from 1.85 to 1.54 between 2008 and 2017. Our data center in Biere, Saxony-Anhalt, is extremely efficient. It was also awarded the respected LEED Gold sustainability certification (Leadership in Energy and Environmental Design). By migrating data from existing data centers to Biere, we achieved a PUE value of 1.43 by the end of 2017. During the course of 2018, we will migrate additional servers to Biere. The PUE metric is expected to rise further as a result of the increased utilization of our data center capacity there.

We are increasing our share of renewable energy – both through direct purchases and the acquisition of certificates for electricity from renewable energy sources – in order to reduce CO2 emissions. In addition, we also invest in our own systems whenever possible and reasonable, for instance constructing cogeneration plants or installing photovoltaic systems. Climate protection is also an important consideration in the way we manage our fleet of vehicles in Germany, which includes testing out alternative drive concepts.

We determine the effectiveness of our climate protection measures using key performance indicators (KPIs). We have been recording two new KPIs since 2016: Energy Intensity and Carbon Intensity. These replaced the Energy Consumption and CO2 Emissions KPIs. The two new ESG KPIs reflect our energy consumption and our CO2 emissions in relation to the volume of data transmitted. They thus show the specific trend in the energy and emissions efficiency of our network. The KPI values for Deutsche Telekom in Germany are shown in the following graphics for 2016. The result for the Energy Intensity KPI is 146 and 61 for Carbon Intensity. We expanded the coverage of these KPIs to further parts of the Group in the course of 2017 and initial positive trends became apparent even before the year-end. We will publish the KPIs for the 2017 reporting year in our CR report. The Renewable Energy KPI shows how much of our Company’s entire electricity consumption is obtained from renewable sources. In 2016, the share was 33 percent. The figure takes into account the share of renewable energy purchased directly, Guarantees of Origin, Renewable Energy Certificates, autoproduction, and the share of renewable energies in the national mix. We will also disclose this KPI for 2017 in our CR report to be published in April 2018. We use the Enablement Factor ESG KPI to calculate the positive CO2 effects facilitated for our customers through the use of our products. For further information, please refer to “Deployment of ICT products to the benefit of society” in this section.

We use the internationally recognized GHG protocol to calculate our CO2 emissions. This allows us to take measures to reduce our ecological footprint at the corporate and product levels. The standard distinguishes between three CO2 emissions categories (Scope 1, 2, and 3). As part of the CDP, in June of every year we publish a Group-wide report not only on Scope 1 and Scope 2 emissions, but also Scope 3 emissions from our business operations in Germany and virtually all European subsidiaries.

The following graphic visualizes emissions of the different scopes from our business activities in Germany; shown as CO2-equivalent emissions (CO2e emissions).

We are aware that, to effectively contain climate change, all those involved need to collaborate and take determined action. That is why we participate in many national and international associations and organizations. One of them is GeSI – a corporate association with the vision of making society more climate-friendly and sustainable with ICT solutions. We also want to promote dialog within society on the opportunities the digital transformation offers for climate protection. Within the scope of the 23rd World Climate Change Conference in Bonn, we invited numerous stakeholders to an event to discuss “The Impact of ICT on climate change – curse or blessing,” in November 2017. We are also working systematically and successfully on improving climate protection throughout our supply chain. Since 2016, CDP’s supplier engagement rating has assessed how well companies have integrated the topic of climate protection into their supply chains. Over 3,300 companies participated in the rating; in 2016, just 29 companies qualified for the Supplier Engagement Leader Board, and Deutsche Telekom was one of them. 17