Enable Scope 3 data transparency

T-Systems is an integral part of Deutsche Telekom and leverages this ecosystem for the benefit of its’ customers. T-Systems has 500+ technology and industry partners and suppliers, as well as numerous start-ups and provides solution development, capability augmentation, joint project delivery and co-innovation. In 2023, T-Systems generated € 3.9 billion in revenue globally.

The primary decarbonization challenge was to deal with limited visibility and influence over supplier climate performance, a significant component of Scope 3 emissions. To address this, the decarbonization strategy focuses on comprehensive Scope 3 emissions management through proactive supplier engagement and increased accountability throughout the supply chain.

T-Systems addressed the Scope 3 emissions data challenge through an initiative in partnering with The Climate Choice (TCC).

The Climate Choice’s intelligence platform enables interoperability of climate related data. The solution leverages AI to extract data from publicly available sources like CSR-reports, websites and databases as well as supplier-provided data and documents.

The solution provides audit-ready supplier data profiles, which are scored and analyzed to produce benchmarks for suppliers. The results empower procurement & climate teams with comparable metrics and data to track progress, as well as continuously improve climate performance in the supplier base.

By working together, T-Systems can enhance supplier monitoring, employing automated data processes to provide suppliers with valuable feedback and benchmarks.

Here's the step-by-step breakdown:

1. Challenge Identification: The company recognized limited data transparency regarding supplier climate performance as a key hurdle in decarbonization efforts.

2. Strategic Partnership: To address this challenge, T-Systems partnered with TCC to implement a specialized software solution.

3. Data Automation: TCC's AI-powered platform streamlined data extraction from various sources (sustainability reports, websites, financial reports, databases, engagement assessments).

4. Supplier Scoring: The companies collaborated on a comprehensive supplier climate readiness scoring process. In 2023, over 3,000 documents and data sources were analyzed within six weeks.

5. 100% Data Coverage: The initiative resulted in a comprehensive supplier climate data coverage, providing a solid foundation for emissions management.

6. Customization: TCC's flexible API allowed for tailored data analysis and aggregation, aligning with T-Systems' supply chain reality. (An API or Application Programming Interface is a tool that allows different software programs to talk to each other and share data seamlessly.)

Sustainability impact

Climate

• Scope 3 category 1 emissions (purchased goods and services)

• Direct Impact: Fosters data transparency, enabling T-Systems to tailor supplier engagement strategies for long-term emissions reduction, as described in the Net Zero Transition Plan within the CR Report of Deutsche Telekom

• Enabling Impact: Provides suppliers of varying maturity with actionable insights. This empowers supplier-level climate action, indirectly contributing to a reduction in overall Scope 3 emissions.

Nature

Indirect Positive Impact: T-Systems' commitment to reduce 55% of its overall emissions by 2030 can only be achieved with the engagement of its suppliers in the same direction. More explicitly, the commitments to decarbonization through actions such as transitioning to electric transport or deployment of renewable electricity in operations. For example: by gradually adopting clean energy sources, suppliers actively invest in reducing emissions moving away from coal and other pollutant sources – indirectly impacting biodiversity and climate change.

Social

Equity and Social Impact: The initiative promotes equity by fostering a collaborative approach with suppliers. Through the support and guidance provided, suppliers of varying maturity levels can receive guidance in improving their climate actions. This inclusive strategy ensures that the benefits of sustainability are distributed across a broader spectrum of partners, contributing to a more equitable and sustainable business ecosystem.

Business impact

Benefits

• Operational Efficiency: TCC's software automates supplier data analysis, streamlining processes, and reducing manual workloads.

• Risk Mitigation: Proactive Scope 3 emissions management mitigates climate-related risks in the supply chain, enabling informed decision-making about partnerships.

• Potential Cost Savings: Data-driven insights support optimization in supplier engagement and may lead to long-term cost reductions in emissions management.

• Innovation Opportunities: Utilizing AI-powered technology fosters innovation in sustainability practices.

• Enhanced Stakeholder Relations: The initiative demonstrates T-Systems' commitment to environmental responsibility, strengthening relationships with stakeholders who value sustainability, regardless of their size.

• Regulatory Compliance: Proactive emissions management considering evolving environmental regulations reduces the risk of future penalties.

• Positive Brand Image: A commitment to sustainability and collaborative climate action enhances T-Systems' brand image, as customers and partners value companies with a broader societal impact, creating a positive ripple effect in the industry.

• Supply Chain Transformation: The initiative contributes to the resilience of suppliers by providing them with actionable assessments and support. Suppliers, especially those in the early stages of climate action maturity, benefit from the expertise and guidance offered, enhancing their capacity to navigate and thrive in a changing business landscape.

Costs

• Operational expenses: Reduced through automation and efficient use of data repository.

• Investment: Steering project internally plus customization and licensing fees for The Climate Choices’ Intelligence Platform, which vary based on specific needs and number of suppliers.

• Subsidies: No subsidies or financial incentives used.

• Dependencies: Number of suppliers increase cost base for data collection, -verification and supplier engagement.

Impact beyond sustainability and business

Co-benefits

Beyond the direct impacts on business operations and emissions management, the collaboration contributes to a holistic and responsible approach within supply chains.

Educational Opportunities: The collaboration provides educational opportunities for both T-Systems and its suppliers. Through evaluating and improving climate maturity, there is an exchange of knowledge and best practices. This educational aspect contributes to building a collective understanding of sustainable business practices within the network of collaborators.

Potential side-effects

Equity Concerns:

Risk: Smaller suppliers with lower reporting obligations or less resources may encounter some disadvantage in the data assessment and in meeting the sustainability requirements adopted by T-Systems.

Mitigation: All supplier assessments at T-Systems are reviewed by a team of experts, taking into account the specific characteristics of the partner, their limitations and long-term plans. The company also engages in proactive communication, announcing future changes in requirements in advance and providing an open channel for exchange.

Supplier Relations:

Risk: The initiative could strain relationships with suppliers, especially if they perceive the sustainability requirements as burdensome or if there are disagreements over targets, timelines or contract requirements.

Mitigation: proactive engagements with suppliers and partners, fostering open communication and collaboration throughout the process.

Resource Allocation:

Risk: Implementing and managing the initiative requires allocation of resources in terms of time, personnel, and financial investment, potentially diverting attention and resources away from other business priorities.

Mitigation: Qualified allocation of resources within yearly planning and in accordance with climate targets.

Typical business profile

The initiative described is particularly relevant for businesses with complex and diverse supplier networks, operating globally across various sectors. It is beneficial for companies at different stages of their Net Zero journey, especially those seeking to automate and scale climate performance integration into decision-making processes. Geographically, the initiative is most relevant for businesses with a global footprint. Additionally, organizations prioritizing procurement processes and aiming for enhanced Scope 3 data transparency will find this initiative highly relevant.

Approach

Companies looking to implement this initiative, can follow these steps:

• Understanding the Challenges: Data transparency within the supply chain level is a hurdle shared by many companies, especially the ones with targets aligned with SBTi.

• Assess benefits: Demonstrate the granularity of data that it is possible to achieve considering supply chain specifications of the partner.

• Involve Relevant Key Stakeholders and Share Milestones: Engage procurement, sustainability, and IT teams from the start to manage expectations and communicate milestones for alignment.

• Build Proof of Value: Conduct pilot to showcase the effectiveness of The Climate Choice solution. Step-by-step preparation of data and alignment on expected outcomes.

• Emphasize Business Model Understanding: Provide insights into supplier relations to ensure The Climate Choice comprehends the operational context to support suppliers with data insights and scorecards.

• Adapt Procurement Process for Startups: Streamline procedures and offer flexibility in contracting to accommodate capabilities.

• Prioritize Direct Communication and Project Management: Appoint dedicated project manager for seamless communication and issue resolution.

• Escalate and integrate into process: Collect learnings and define timeline for regular update cycles, considering possible escalation in volume and partnerships.

• By following these steps, T-Systems established a successful partnership with The Climate Choice and drove progress towards its goals.

Stakeholders involved

• T-Systems Sustainability Team and Project Lead (ESG & Procurement departments): Proactively identified the Scope 3 challenge, coordination of collaboration with TCC and management of information

• The Climate Choice (TCC): Actively customized and implemented their software as technology partner.

• Suppliers: Provided necessary data and participated in the process.

Key parameters to consider

Working with The Climate Choice is an innovative approach to automate data collection.

A potential long-term initiative can continuously improve climate data transparency and -performance in the supplier base. This would allow the integration of other data bases and improvement in the calculation methods used for the Corporate Carbon Footprint calculation.

Implementation and operations tips

• Automation is Crucial: Streamlined supplier data extraction and analysis significantly improved efficiency.

• Flexibility is Key: TCC's adaptable API enabled solutions tailored to T-Systems' needs.

• Supplier Engagement is Essential: Collaboration and providing suppliers with benchmarks fostered shared progress.

• Transparency Drives Success: T-Systems' proactive approach highlights the importance of recognizing the need for Scope 3 management.

• Continuous Improvement is Ongoing: Tracking supplier progress allows for data-driven optimization and engagement strategies.