Materiality, Impact, and Risks
Based in Germany and with business activities in Europe and North America, United Internet has to comply with strict standards in the areas of environmental protection, and labor and human rights. At the same time, expectations are growing that the organization will use these high standards as the basis for its work with its business partners and suppliers. This is required both by frameworks such as the UN SDGs and the GRI Standards and e.g., by the German government in its National Action Plan for the Implementation of the UN Guiding Principles on Business and Human Rights (“NAP”)(1) (German only) and the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz – LkSG) that was resolved in 2021. Comparable action plans are also under development in other countries, or have already been implemented (e.g., in the form of the UK Modern Slavery Act). Equally, investors and analysts are joining consumers, civil society players, and the media in looking more closely at the issue of value chains.
See 1&1 IONOS UK and fasthosts for our UK companies’ slavery and human trafficking statements.
(1) According to the NAP (page 4), “few countries’ economies are so internationally entwined as that of the Federal Republic of Germany.”
In principle, the same topics are relevant in our supply and value chain as in our own business – the topics that are included in our sustainability strategy and in this report, such as climate and environmental protection, and human rights. Human rights comprise not only fundamental rights such as the rights to life, freedom, and equality, but also a wide range of aspects from the world of work, such as the prohibition on discrimination and (“modern”) slavery, and the right to rest. Also included are rights relating to the internet and the digital arena, such as freedom of opinion and information, and the protection of privacy.
We aim to create value together with our business partners through strong, fair partnerships.
As regards business partnerships and supplier relationships, companies in Germany are subject to the same strict statutory requirements as United Internet itself. In addition, telecommunications is largely a regulated market and many suppliers have also introduced voluntary commitments. This means that there is a very low risk of child labor or forced labor, for example, in the domestic links of our value chain. However, such risks can take on a different dimension abroad in view of the legal, political, and social frameworks there. In addition, business partners’ specific activities may give rise to other relevant topics, depending on how far up the value chain an examination goes (it may extend as far back as the extraction of raw materials). This means that other stakeholders may be affected indirectly by the way we behave as a business partner. Examples include business partners’ employees and those of their suppliers, residents living near production sites, and people or groups affected by potential environmental impacts.
The ability to work together reliably with wholesalers and business partners is crucial for United Internet. For example, collaborating with specialized partners and outsourcers, and sourcing wholesale services are decisive for our business success. Successful partnerships are based firstly on partner screening, but above and beyond that on close cooperation and personal support. Another reason why the integrity of our business partners is essential for us is that negative events could impact United Internet (market and reputational risk). In addition, due diligence requirements in the value chain are currently attracting political attention (see above), which could result in political and legal risks.
The purpose of the management approach is to create value together with our business partners through strong, fair partnerships. On the one hand, we want to avoid any liability and reputational risks that could arise from business relationships, while on the other we aim to establish the trust needed for long-term partnerships, and to reinforce taking responsibility together.
Relevant guidelines include our Code of Conduct and, in particular, the United Internet Group’s Code of Conduct for Business Partners (German only). The latter is a key way of ensuring that partners observe the duties of care that are relevant for compliance, and of reducing compliance risks within the value chain. It builds on our corporate values to define minimum social and environmental standards, and lays down rules on how to comply with them. The Code of Conduct for Business Partners has been incorporated into the contracts entered into with business partners by including it in the General Terms and Conditions for Procurement (German only).
The analysis of our supply chain and value chain has already led to the realization that we source significant volumes of wholesale services for the Consumer Access Segment of the Access Division (1&1) in particular. The areas entrusted with procuring wholesale services such as network services and devices also see themselves as “partner managers.” They ensure that the products and services concerned are of a high quality and fit for the future, and manage reliable business relationships on the basis of trust. Carrier Management is responsible for end-to-end management and coordination of the relationships with wholesale telecommunications partners, both for fixed networks and for MBA and national roaming (mobile communications). Partner Account Management Access is responsible for hardware procurement (information and communications technology (ICT) products and devices) for our customers in the case of both fixed networks and mobile accounts. Responsibility lies with the Management Board member for Product Management and the Management Board members at Versatel and 1&1 Mobilfunk. In addition, special areas coordinate network procurement by the Business Access (1&1 Versatel) Segment and the outsourcing of customer care services. The Corporate Procurement unit, which purchases a large number of products and services for the Group, is part of Corporate Finance and reports to United Internet AG’s CFO.
We are continuously and successively expanding our mapping of our value chain, especially in light of the need to implement the requirements of the LkSG. As part of this, the whistleblowing systems, reporting channels, and due diligence outsourcing, were also steadily extended.
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