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Case Study

 

Deutsche Telekom on Corporate Responsibility

insiderPROFILES

April 1, 2010

In this Q&A with Luis Neves, Deutsche Telekom’s VP of Corporate Responsibility, find out about the relationship between sustainability and economic performance at Deutsche Telekom. Neves provides an up-close view of the company’s sustainability efforts, including a popular mobile phone take-back program, and the ensuing benefits.
 

Deutsche Telekom’s environmental performance consistently scores at the top of international sustainability rankings. Through its technology and service offerings and engagement with customers, the company also helps save energy and reduce emissions across nearly all the industries and households it serves worldwide.*

Setting the strategy for these efforts is Luis Neves, Vice President of Corporate Responsibility for Deutsche Telekom. insiderPROFILES asked Luis Neves about the relationship between sustainability and economic performance at Deutsche Telekom. His answer offers an up-close view of the company’s sustainability efforts, including a popular mobile phone take-back program, and their ensuing benefits.

*Findings from the 2009 “SMART 2020 Deutschland” (www.gesi.org) study conducted by Deutsche Telekom, SAP, Siemens, Huawei, and The Boston Consulting Group

Q: Hundreds of millions of cell phones are in use today, and all will eventually be discarded. Do information and communications technology (ICT) companies bear any responsibility for minimizing the impact? Where do old cell phones go?

Environmentally, the worst thing you could do is throw your cell phone away. Recycling is better. Refurbishment and reuse is the best option, and that’s what we do through our “take-back” programs for cell phones, batteries, and chargers. In fact, we recycle and refurbish the majority of cell phones that T-Mobile takes back. This year in Germany, we have set the target of taking back one million used mobile phones.

Through this campaign, we strive to engage our customers to cooperate with Deutsche Telekom, achieve this objective, and contribute to a more sustainable society.(For more information on our “take-back” campaign, visit www.telekom.com/nachhaltig-handeln.)

Q: You recently conducted a study in Germany to calculate what percentage of carbon emissions could be cut within the next 10 years through targeted use of ICT. What did you find?

Our findings placed the emissions savings as high as 25% (the equivalent of 207 megatons). Even more impressive was the expected value for businesses that leverage ICT to lower their energy consumption and emissions during this same period. We calculate that to be 84 billion euros.

The areas where we see ICT having the greatest potential to help lower emissions are:

  • Logistics
  • Building management
  • Electricity generation
  • Industrial automation
  • Dematerialization (i.e., replacing physical products)

A good example of lowering emissions through dematerialization would be downloading your favorite songs or videos using our telecommunications infrastructure through the Internet — instead of buying a CD or DVD.

The degree to which companies embrace sustainable practices in these and other business areas is a leading indicator of their economic performance. Deutsche Telekom is a good example. By reducing our energy consumption, we saved roughly 500 million euros over the last 10 years. In addition to these savings, there are intangible benefits. Consider the contribution of sustainable business practices to a corporation’s credibility and reputation among its customers and shareholders. This is why you see many agencies and analysts now rating companies from a sustainability view point, and why sustainability rankings have taken on so much importance in international finance sectors. Demand for ethical and sustainable corporate conduct is on the rise by customers and investors. 

Q: How do you institute the type of changes that translate into these benefits?

First of all, we got the license to operate from the board of directors at Deutsche Telekom. There is a high level of commitment to sustainability from the board. Through this mandate, we are able to embed sustainability across the Deutsche Telekom group. We’ve created a corporate culture that brings sustainability to the forefront of our employees’ minds and cements it as a core value for us as a company.

We developed training tools for all employees to impress upon them the importance of sustainability and show them what they can do as individuals to make a difference. Forgoing travel in favor of video conferencing, wherever possible, is one example. It used to be that we had lots of employees traveling inside Germany on any given day. Today, much of that has been supplanted with video and telephone conferencing.

We encourage employees who have a car to attend eco-driving training. We’ve found that participation in this training has helped to curb gas consumption by at least 10%. Our Green Card policy is another good example of how we offer alternative sustainable solutions to our employees.

Our “train card,” for example, gives employees an alternative to their car for commuting. With this card, employees can travel by train all over Germany without paying. We have lots of programs now to bring the sustainability dimension to the daily, personal lives of our employees.

As a corporation, we have set up targets and employed technologies to actively measure and monitor our carbon emissions. Some software providers, like SAP, offer solutions to help manage this process. We hold ourselves to very high-level international standards. I am of the opinion that the targets being discussed at an international level are not enough and that we, as a corporation, need to do much more. So we have much tougher targets for management around reducing our own carbon footprint, and we established these sustainability targets to put Deutsche Telekom in the leading position for the ICT sector. 

Q: How do you see these tough targets affecting your broader business practices?

A commitment to sustainability impacts all of our business practices and departments. Our research and innovation departments are incorporating more sustainability criteria into their way of thinking and the way they develop products and services. 

And given that one-third of our annual revenue — roughly 21 billion euros — is spent acquiring goods and services, our procurement organization plays a very big part in all this. We work to ensure that our procurement and sourcing activities, which span the globe, do not damage the environment and that human rights and internationally recognized standards are maintained. 

Suppliers that work with us must meet our ecological and social standards. Sustainability factors heavily into our supplier decisions. It is one of the criteria by which we choose a supplier to sell a product or service. The goal is to work with manufacturers and suppliers with offerings that are both environmentally competitive and socially responsible. Since 2008, our network in Germany has been running 100% carbon neutral. We have accomplished this by securing renewable energy as much as possible and buying renewable energy certificates (RECs).

Q: Have you also seen a strong interest in sustainability from your customers?

Customer engagement is a critical avenue for tackling climate change, and we just launched a new three-year campaign to infuse sustainability into our customer relationships. With this campaign, we offer customers different ideas (including taking advantage of our free mobile phone take-back program) that allow them to individually contribute to a more sustainable way of living.

Do customers want to hear from companies in this way? Are they more apt to do business with companies that can demonstrate sustainable business practices? Our market research leaves no doubt. In Germany now, 57% of consumers are ready to buy more environmentally friendly devices and are willing to pay a premium (as much as 10% more than they pay today). A majority of respondents (64%) stated unambiguously that buying sustainable products is important to them. So there is clearly a market out there and evidence of a strong correlation between a company’s sustainability practices and its future economic performance.

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