Telefónica Deutschland : Enabling a sustainable digitalisation

Enabling sustainable digitalisation

CORPORATE RESPONSIBILITY

REPORT 2020

TELEFÓNICA DEUTSCHLAND 2020 CORPORATE RESPONSIBILITY REPORT

About this report

102-46;102-50;102-51;102-52;102-53;102-54

A note on human rights

We are committed to the human rights listed below and highlighted by the icons in the report.

Prohibition of child labour, protection of minors

Prohibition of slavery and forced labour

Prohibition of discrimination, the right to equal opportunities and treatment

Right to health, well-being and secure work

Right to work, fair pay, safe working conditions and social security

Observance of statutory working time regulations

Right to further training

Corporate responsibility (CR) is a central component of the Telefónica Deutschland Group's business mindset and activities. In this CR Report, we present the key information regarding our sustainability activities. It is aimed at our stakeholders such as the customers, employees, business partners, shareholders, policy- makers, academia, non-governmental organisations (NGOs) and the interested public.

Reporting period and report boundary

This CR Report contains information pertaining to the Telefónica Deutschland Group and Telefónica Deutschland Holding AG. This CR Report covers the financial year from 1 January to 31 December 2020. The report also contains information regarding relevant CR activities that extend beyond this period into other financial years. The quantitative key figures given in the report principally relate to the Telefónica Deutschland Group in the financial year 2020. Key figures that deviate from this are marked accordingly. The copy deadline for the CR Report is 30 March 2021. This report was published in German and English at the following online address in May 2020: www.telefonica.de/responsibility

Comprehensive reporting in accordance with the GRI Standards and the UNGC principles

This report was prepared in accordance with the Comprehensive option of the GRI Standards. The report content was chosen on the basis of the principle of materiality and takes into account our stakeholders' crucial expectations, the impact of our business activity and decisions relating to corporate strategy.

From this financial year, we are additionally reporting in accordance with the principles of the United Nations Global Compact (UNGC). This report constitutes a Communication on Progress (CoP). In this way, we are making a commitment to the UNGC's ten principles and undertake to realise these in the interests of governance for responsible corporate management.

The CR strategy was developed further in the reporting year and will replace the previous Responsible Business Plan from 2021. An extensive materiality analysis performed in 2020 served as its basis. The results

of the new materiality analysis will guide Telefónica Deutschland Group's actions from 2021 and will serve as the basis for its CR reporting in the reporting years to come.

The 2020 CR Report comprises the chapters "Manag- ing corporate responsibility", "Responsible business", "Strengthening life in the digital world" and "Environ- mental and climate protection" that provide information on our CR strategy, measures, results, targets and challenges. During the coronavirus pandemic in 2020 we ensured there was reliable basic communication that met our customers' expectations regarding dependable network operation. At the same time, we introduced all the necessary measures to protect our staff in these extraordinary times. A detailed account of the pandemic and our handling of its impacts can be found in the chapter "Digital responsibility in times of the coronavirus pandemic" and on the coronavirus information page.

In the chapter "Derivation and evaluation of the CR strategy", we show how we take frameworks into account in the orientation of our CR strategy and how we continuously evaluate our CR performance. The chapter "Facts and figures" then lists all the relevant key figures. The entire report (including the table of key figures and GRI content index) was audited by the

external audit firm PricewaterhouseCoopers (PwC) in accordance with the ISAE 3000 (Revised) standard with limited assurance.

Report formats, reporting cycle and contact

We publish the CR Report annually. Readers with comments or questions can contact the CR team at [e-mail].

The Combined Separate Non-Financial Report for Telefónica Deutschland Holding AG for the reporting year 2020 is available to download in German and English at www.telefonica.de/nfs. As such, we fulfil our obligation pursuant to the "Act to strengthen non-financial reporting by companies in their management reports and group management reports" (pursuant to Sections 315b, c in conjunction with 289b-289e of the German Commercial Code, HGB - based on the CSR Directive Implementation Act; CSR-RUG) and complement our management reporting with compact information on our sustainability achievements.

The 2020 Annual Report can be found at the following address: www.telefonica.de/annualreport

TELEFÓNICA DEUTSCHLAND 2020

CORPORATE RESPONSIBILITY REPORT

Contents

1.0

Shaping digitalisation

1.1	Foreword	05
1.2	Our Responsible Business Plan	07
1.3	Portrait of the company	09

2.0

Managing corporate responsibility

2.1	Business strategy	12
2.2	CR strategy	15
2.3	CR management	18
2.4	Stakeholder engagement	22
2.5	Digital responsibility in times	28
	of the coronavirus pandemic

3.0

Responsible business

3.1	Customer satisfaction	32
3.2	Compliance	40
3.3	Employer	45
3.4	Supplier management	57
3.5	Human rights due diligence	65

4.0

Strengthening life in the digital world

4.1 Digital sustainability

	innovations	73
4.2	Digital inclusion	85
4.3	Data protection and	92
	information security

4.4 Protection of children

and young people

98

5.0

Environmental and climate protection

5.1 Environmental management 101

5.2	Energy & CO2 reduction	104
5.3	Conservation of resources	111

5.4 Mobile communication

and health

116

6.0

Derivation and evaluation of the CR strategy

6.1	Materiality according to GRI	120
6.2	Financial climate risks	122
6.3	ESG ratings & finance	125
6.4	SDG declaration	127

6.5 Responsible Business Plan

2020: 2020 status

128

6.6 Responsible Business Plan

2025: CR targets from 2021 136

7.0

Facts and figures

7.1	Table of key figures	140
7.2	Awards	148
7.3	Memberships	151

7.4 GRI content index and global

	compact progress report	153
7.5	Independent	177
	assurance report
7.6	Imprint	179

TELEFÓNICA DEUTSCHLAND 2020 CORPORATE RESPONSIBILITY REPORT

04

1.0 Shaping digitalisation

1. Foreword
2. Our Responsible Business Plan
3. Portrait of the company

2.0 Managing corporate responsibility

3.0 Responsible business

4.0 Strengthening life in the digital world

5.0 Environmental and climate protection

6.0 Derivation and evaluation of the CR strategy

7.0 Facts and figures

Shaping digitalisation

44Overmillion

mobile connections

Every second person in Germany uses our network.

Markus Haas

TELEFÓNICA DEUTSCHLAND 2020 CORPORATE RESPONSIBILITY REPORT

05

1.0 Shaping digitalisation

1. Foreword
2. Our Responsible Business Plan
3. Portrait of the company

Dear Readers,

COVID-19 has caused the greatest economic and social crisis since the end of the Second World War. Society and the economy have really been put to the test. The importance of digital infrastructures and services to society has been made more evident than ever. Overcoming the crisis would have been inconceivable without our networks and without digital solutions not only for telecommuting, home schooling and shopping, but also for social interaction between people.

"It became even clearer during the pandemic just how important digital infrastructure is. Our network is the backbone of the economy and society - we want to use this crisis responsibly as an opportunity for sustainable digitalisation." 

102-14

  1, 2, 7, 8, 9, 10

For us, social responsibility during this crisis first and foremost meant safeguarding a stable efficient infrastructure in order to guarantee the secure basic communication services that were urgently needed. From the outset, another key priority for us was to contribute in a variety of ways to protecting people's lives and to social cohesion.

The opportunities and challenges of digital transformation have become even clearer in recent months. Our technology set-up is good and we effected the fastest and most extensive network expansion in our company's­ history last year in spite of the pandemic. As such, we have met the nationwide obligation of the Bundesnetzagentur (Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway; BNetzA) of mobile communications coverage for 98 % of all households. At the same time, we gave 5G the green light and are rolling the new mobile communications standard out in Germany. This represents a quantum leap for data-drivenreal-time applications where industry and consumers are concerned.

Digitalisation is not only with us only centrally in our day-to-day lives - it is also becoming a principal driver of greater sustainability. Achievement of this cannot be taken for granted, however, and calls for maximum creative­ energy and a will to change. This is because digitalisation­ is only sustainable if it couples healthy economic growth with the achievement of climate targets and the strengthening of social participation and cohesion. Our responsibility that we derive from this is as follows: we want to democratise access to a sustain­ able future to make day-to-day life better for everyone.

For us, corporate responsibility means applying our resources and technologies to play a part in solving societal and environmental challenges. Environmental and climate protection is one of our main thrusts here. We want to continue to be a pioneer within our industry and make a clear statement - our goal is to be climate-neutral by 2025 at the latest! Behind this goal is an ambitious climate strategy that supports the Paris Agreement and the 1.5-degree target. At the

same time, we are also supporting achievement of the global Sustainable Development Goals (SDGs) and are promoting the efficient use of clean energy.

An energy-efficient and high-performance network is not only good for the climate, but also for our ability to compete. This is why we continue to invest in comprehensive LTE expansion and the 5G infrastructure. Sustainable digitalisation is dependent above all on innovations. Our innovation laboratory Wayra is working closely with creative start-ups here, for example to make promising business models marketable with 5G and AI.

We are committed to people of all ages being able to benefit from the advantages of digitalisation. Our initiatives that tackle cyberbullying give young people encouragement, enabling them to navigate the Internet safely and confidently. We help the elderly assuredly explore the digital world with our advice and technology.