Magyar Telekom Távközlesi Nyilvánosan Müködö Reszvenytársaság : Sustainability Report 2023

Letter from the CEO

LETTER

FROM THE CEO

Dear Reader,
Green energy in the middle of the desert,	Continuous change therefore requires
pedestrian-friendly cities, solar trucks, ur-	continuous adaptation. In this spirit, we re-
ban forests. Just a few positive sustaina-	newed our sustainability strategy in 2023,
bility initiatives from around the world, all	but our three pillars - climate protection,
proving that wherever we live, we all need	digitalisation and an inclusive and diverse
to do our part to save the planet. When it	workplace - remain unchanged, as does
comes to sustainability, especially as a big	our commitment to remaining one of the
business, we cannot point fingers at each	leading companies in Hungary in the field
other and say "as long as he doesn't do any-	of sustainability.
thing, I won't either". Magyar Telekom, as a
responsible market player, knows that al-	We remain determined on climate action.
though there are many changes and uncer-	All of our Group's electricity use, including
tainties in the world, sustainability-related	in our data centres, has been sourced ex-
tasks should never slip to the bottom of the	clusively from renewable energy since 2021
to-do list. We acted in this spirit in 2023 and	and we are now in our ninth year of offset-
will continue to do so in the years to come,	ting our scope 1 and 2 emissions. Our next
and it is along this principle that I share with	step is to expand our own (onsite) renewa-
you now what steps Magyar Telekom is tak-	ble energy capacity.
ing to assume responsibility for the protec-
tion of our environment and society.	We are also constantly looking for areas
	where we can do more to improve energy ef-
In our constantly changing world, the key to	ficiency. To this end, in 2023, we tested a pro-
success and sustainable operation is to react	prietary energy management solution at our
and adapt as quickly as possible. And in 2023,	headquarters in Budapest, which has helped
there was no shortage of changes and chal-	us to achieve significant energy savings.
lenges. Just think of the dramatic rise in en-
ergy prices affecting all market players while
meeting ever-increasing energy demands.

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Letter from the CEO

The circular economy is the second impor-	The employees of Magyar Telekom Group
tant element of our climate ambition, and	are the key to the implementation of our
in 2023 we made it a priority. As the first	sustainability strategy, which is why it is of
service provider in Hungary, we are now of-	paramount importance for us to provide an
fering our customers not only new devices,	inclusive and accepting work environment
but also fully refurbished ones, ensuring that	for all our colleagues.
we can meet the needs of our residential and
business customers who are also striving for	We are continuously working to deliver our
a more material-efficient and circular econ-	commitment to provide 100% accessible
omy. However, we do not stop here. In line	customer experience and services to our
with our parent company's ambitions, we	customers by 2030. As an important step to-
are exploring our opportunities to be at the	wards this, in 2023, we made KONTAKT sign
forefront of the circular economy by 2030.	language interpretation services available
	free of charge in 29 of our designated stores
We also made significant progress in dig-	and our call centre nationwide, in partner-
itisation over the past year. We continued	ship with the Hungarian Association of the
our network modernisation programme,	Deaf and Hard of Hearing.
which brought the number of gigabit-ena-
bled access points to more than 3.6 million	Our work towards sustainability continues to
across the country by the end of 2023. In	be guided by the objectives of the UN Global
the coming years, we will increase this even	Compact and the Sustainable Development
further: our goal is to provide gigabit-ena-	Goals (SDGs). In order to provide investors
bled access to 4.5 million households and	and value chain partners with an accurate
businesses by 2027.	and detailed picture of Magyar Telekom
	Group's climate protection activities, we
The fastest possible roll-out of 5G is essen-	have been reporting annually to the CDP
tial for Hungary's digitalisation. We are com-	(formerly Carbon Disclosure Project) online
mitted to ensuring 99% population coverage	platform since 2010. Thanks to the expertise
of 5G by 2026. I am proud that, thanks to	and dedication of our staff, we achieved an
the dedicated and efficient work of our em-	A- rating again in 2023, despite the increas-
ployees, this figure already exceeded 65%	ingly stringent requirements. The CDP's
in 2023. At Magyar Telekom, we prioritise	increasingly demanding requirements have
not only infrastructure but also the digital	played and continue to play a role in the de-
skills development of people, because we	velopment and continuous improvement of
are convinced that everyone can benefit	our new sustainability strategy, too.
from digitalisation. It is in this spirit that we
launched our Hello Business and Hello Par-
ent platforms and Netrevalók programme.

I am proud that our sustainability activities and achievements in 2023 were also recognised by the Budapest Stock Exchange (BSE): Magyar Telekom Plc. won the Best of BSE Award in the category of Respon- sibility, Sustainability, Responsible Corporate Governance.

I firmly believe that our renewed sustainability strategy will enable us to provide real answers to real problems in this different and ever-changing environment. But one thing will certainly remain the same: our commitment to sustainability, to the continued improvement and progress on this path. I hope that Telekom can serve as an example and inspiration for others to take on this responsibility in their own areas.

Budapest, April 16 2024

RÉKASI TIBOR vezérigazgató

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Sustainability approach

SUSTAINABILITY APPROACH

Magyar Telekom HU has long recognized the im-	and businesses, and the protection of the environ-
portance of sustainable development and the fact	ment. The main guiding principle of the company's
that it is essential for its future business activities,	new strategy is to maintain its leading role in sus-
and therefore remains committed to conducting	tainability, both as a company and as an ICT service
its operations, corporate governance and activi-	provider. It has therefore set long-term goals up to

STRATEGY

CLIMATE PROTECTION

Magyar Telekom HU (Magyar Telekom Plc. and Telekom System Integration Ltd. Co.) has set a target to reduce its extended scope emissions (see Climate and environment protection section) - direct (scope 1) and indirect (scope 2) - by a total of 80% by 2030 compared to the 2015 base year.

ties in this spirit at Group level, both in Hungary	2030, which it will monitor and update as necessary
and in all countries where it is present on its own	in line with the emerging trends.
merit or in cooperation with other entities. This is
not only an inherent key for the Group's long-term	At the beginning of 2023, Magyar Telekom HU revised
success, but also a fundamental value in terms of	its strategic objectives in order to respond to the chang-
its role in the region and its social, environmental	ing external and internal circumstances and to set its
and economic impact through its services.	objectives along even more accurate calculations.
	This is because the strategic sub-objectives are affect-
Sustainable development is not a single-person	ed by risks related to the price and availability of fuels,
challenge. It affects everyone personally and per-	as well as the increased energy demand for 5G ser-
meates the whole company and corporate group.	vices and data centres. In addition to external chang-
It cannot be treated in isolation as the responsi-	es, there have also been changes in the structure of
bility of a single organisational unit. Each busi-	Magyar Telekom Plc: T-Systems Hungary Ltd. Co. has
ness unit learns about and applies sustainability	undergone a transformation.
practices in its own area through internal work-	Despite the changes, Magyar Telekom Plc is still sub-

The above is to be achieved by the following steps:

Reduction of electric power consumption of 55% by 2030 compared to 2015 base year through modernisation the fixed network

Green transition of data centres following the EU Taxonomy* recommendations

Continue to cover 100% its electric power demand from renewable sources

Efforts to further increase the share of local renewable energy

Decrease other indirect emissions (Scope 3):

Strive to reduce

Magyar Telekom HU suppliers' emissions associated

with the Group by 30% by 2030

Striving to lead the way to implement a circular economy by 2030

flow policies. The company-wide sustainable op-	ject to the 2019 renewed emission reduction commit-
erating policies are provided to and acquired by	ment - approved by the Science Based Target Initiative
new employees as an integral part of the compa-	(SBTi). For more information, see the Climate and envi-
ny culture. Each task is carried out by a different	ronment protection chapter.
area of the Group and often requires the cooper-
ation of remote units. Magyar Telekom HU's cor-
porate governance practices from a sustainabili-	SUSTAINABLE DEVELOPMENT GOALS (SDGS)
ty perspective are summarised in the chapter on
Corporate Governance.	In 2015, the UN adopted its sustainable develop-
	ment blueprint to be implemented by 2030. These 17
	goals and 169 targets determine the main direction
SUSTAINABLITY STRATEGY	towards resolving the most urgent problems posing
	a threat to humanity and the planet. Magyar Telekom
The main objective of Magyar Telekom HU's 5th Sus-	HU also elaborated its Sustainability Strategy en-
tainability Strategy is to remain the country's leading	compassing the period from 2021 through 2030 in
sustainable company by putting digitalisation at	line with these SDGs.

Energy efficiency
investments
in Magyar Telekom HU
buildings and infrastructure	DIGITALIZATION OF
Gradual green transition	HUNGARY
of the vehicle fleet

Magyar Telekom HU's contribution as committed:

4,5 million households and businesses to be Gigabit-enabled by 2027

Acieve 99% outdoor 5G population coverage by 2026

Provide various programs to support digital maturity

DIVERSITY AND INCLUSION

Magyar Telekom HU's committed:

the service of the development of people, families

• The present Sustainability Report presents the results of Magyar Telekom Plc, Telekom Rendszerintegráció Ltd. Co. (formerly T-Systems Hungary Ltd. Co.) and Makedonski Telekom. Magyar Telekom HU refers to Magyar Telekom Plc. and Telekom Rendszerintegráció Ltd. Co. collectively. In this Sustainability Report, the term Magyar Telekom Group refers to Magyar Telekom Plc, Telekom Rendszerintegráció Ltd. Co. and Makedonski Telekom collectively.

Inclusive employer (2025):

100% accessible workplace

Ratio of women in management to reach minimum 35%

100% WCAG-compliance

Inclusive employer (2030):

Ratio of women in management to reach minimum 40%

Introduction of an internal education program

for Telekom HU employees to promote inclusion and the related mindset change.

*Decree 2020/852 of the European Parliament and the Council (EU)

6

Corporate governance

CORPORATE GOVERNANCE

Public, listed companies are expected by their pro-	The ESG Squad provides its opinion and assists
fessional peers and the investment community to	the responsible area in strategy development and
make it clear what governance model they follow	management. Each strategic topic has a CxO-level
and how it is applied in practice. As a corporation	responsible person and a dedicated sponsor from
listed on the Budapest Stock Exchange, it is of par-	the leadership team.
amount importance for the Company to meet this
expectation and to comply with the relevant legal	Operational implementation is carried out by
and stock exchange requirements.	cross-functional working groups, whose task is to
	refine objectives, develop business plans and time-
In orderto ensure transparency in the matter, Magyar	lines, as well as implement them.
Telekom Group provides information on its corpo-

The Leadership Squad liaises with stakeholders directly or through the responsible unit. Incoming requests are passed on to the individual areas, with critical sustainability-related requests being forwarded to the relevant ESG Squad members. It is important that Magyar Telekom Group is to meet the parent company's sustainability expectations, therefore regular consultation and reporting on Group level is also a priority.

Communication is based on the results of the above activities, one important element of which is the annual Sustainability Report, which in 2023 was overseen by the CFO, i.e. the executive responsible for sustainability, and compiled by the Capital Market Relations Hub.

rate governance on this page.	The operation of the ESG Squad is governed by
	the Group Directive "On the regulation of Magyar
Information relevant to the General Meetings and	Telekom Group's sustainability operations, respon-
the resolutions adopted at them can be found on	sibilities and powers of participants".
thiswebsite.
	As required under the Directive, the ESG Squad
	meets regularly, at least quarterly, in order to ef-
Sustainability coordination	fectively coordinate the company and group-wide
	sustainability tasks, and adopts its resolutions by a
In 2023, sustainability activities were governed in a	simple majority of its members.
structure as shown in the chart below. From 2023
onwards, the ESG Squad (formerly the Sustainabili-	The ESG area submits regular reports and pres-
ty Squad) led the coordination at Group level.	entations to the management body responsible
	for corporate governance (hereinafter: Leadership

COMPETENCE	RESPONSIBLE
Determine main directions of the activities, adopt main decisions.	CEO, CFO
Provide a framework for and supervise the activities.	CFO, member of the Leadership Squad
Adopt the decisions, resolutions necessary for operations, provide a coordination forum to carry out the tasks.	ESG Squad
Professional governance, management;	Leader of ESG Squad - ESG expert delegated
take part in local and international professional activities.	from the Corporate Communication Hub
Implement the tasks the governance area / unit / affiliate is in charge of, provide information, attend meetings, provide	ESG Squad members
data, carry out relevant operative tasks.

MANAGEMENT OF MAGYAR TELEKOM HU

FROM SUSTAINABILITY ASPECT IN 20231

From 2020 to 2022, the Chief People Officer (CPO)	Squad*), based on which it determines the main di-
was the executive responsible for sustainability	rection of Magyar Telekom HU's sustainability activ-
and the relevant activities were coordinates by	ities and adopts decisions on the following topics:
the Corporate Communications Hub of the People
Unit. From January 01, 2023, the CPO remained	• Group-wide policies
in charge of social issues, while corporate govern-	• Group-wide sustainability strategy

LEADERSHIP SQUAD		BOARD OF		SUPERVISORY
		DIRECTORS		BOARD

CAPITAL MARKET RELATIONS HUB (under Finance unit)

LEADER OF ESG SQUAD

PARENT COMPANY

ance and environmental tasks, as well as general • Group-wide sustainability development goals

sustainability coordination tasks were transferred

to the Capital Market Relations Hub under the Chief

Financial Officer (CFO), where a dedicated ESG ex-

pert was put in charge of Group-wide coordination

and management of the ESG Squad.

ESG SQUAD

e-fleet	green procurement	inclusive workplace	digitalization	circularity	green data centers
buildings	ESG coordination	multigeneration	energy efficiency	digital inclusion	sustainable solutions
regulatory	risk management	education
founds

1Social topics has being managed by People Unit.

Finally, in 2022, Magyar Telekom Group published itsBiodiversity Policy.

CORPORATE COMPLIANCE

The changes in the hierarchy of Magyar Telekom HU's sustainability activities and in the Group's structure during the agile transformation can be tracked in the annual sustainability reports. Ma- gyar Telekom HU defines its sustainability stra- tegy on the basis of its business strategy, taking into account domestic and international trends (climate protection, electromagnetic fields, res- ponsible content provision, etc.) and the expe- ctations of stakeholders (suggestions made at various sustainability forums, comments rece- ived by e-mail,public surveys etc.), as well as the goals and tasks derived therefrom, which are regularly updated.

CASCADE OF SUSTAINABILITY ACTIVITIES

in more details the Company's commitments and requirements.

Corporate governance

During the year, the validity of all reports of alleged unethical behavior was checked and, where necessary, the reports were further investigated. Where abuse was found to have occurred, the necessary actions were taken. Complaints and comments regarding violations of internal and external rules can be submitted through Magyar Telekom Group's "Tell us!"portal.

In line with the requirements of the internal control framework in place, management assesses the effectiveness of the internal control system every financial year. The assessment for 2023 was completed and based on the information gather- ed, the internal control framework had been effective in preventing any materially incorrect data to be included in the financial statements and mitigating operational and compliance risks

	In developing Magyar Telekom Group's Corpora-
	te Compliance Program, the goal was to ensure	INTERNAL CONTROL SYSTEM
	that Magyar Telekom Group conduct its business		INTERNAL AUDIT
	with maximum awareness of and commitment	Magyar Telekom Group's management is com-
	to, as well as in compliance with applicable laws	mitted to establishing and operating an adequate	Magyar Telekom HU's internal audit organisa-
	and regulations, and in accordance with the hig-	level of internal controls to ensure the reliability	tion is located in the Group Internal Audit and
	hest standards of ethical business conduct.	of financial reporting and to minimize operational	Risk Management Hub. Functionally, this area
		and compliance risks. The control environment	reports to the Audit Committee and the Su-
All activities are supervised by the Leadership Squad.	To this end, directives have been issued to add-	to ensure the reliability of financial reporting has	pervisory Board, while administratively it is the
	ress any compliance risks that may arise, and the	been designed to provide reasonable assurance	responsibility of the Chief Financial Officer. The
A sustainable supply chain management process	procedures contained therein are applied, with	that financial reports and financial statements	head of the area also reports regularly to the
has been developed to manage the risks affecting	ongoing training provided to the employees on	prepared for external purposes comply with	Board of Directors on the results of audits and
business operations.	the matter. Clear processes are in place to report,	the International Financial Reporting Standards	other audit activities.
	investigate, follow up on and remedy any suspe-	(IFRS) adopted by the European Union.
Incidents are managed by working groups estab-	cted instances of non-compliance.	From 2021 onwards, the internal control	The internal audit function operates in accordan-
lished by the ESG Squad and measures are devel-		framework includes Corporate Responsibility as	ce with international standards, following regula-
oped to mitigate any risks that may arise.	The Corporate Compliance Program is overseen	a separate area, with dedicated controls to cover	ted procedures set out in the Group Audit Charter
	by the Group Compliance Manager. The Group	the risks associated with this function, the number	and Group Audit Manual. The internal audit functi-
	Compliance Manager reports directly to the Au-	of which significantly increased in 2023. For the	on is independent and objective; its activities en-
ENVIRONMENT PROTECTION POLICIES	dit Committee and cooperates with the Board of	financial year 2023, the documentation and as-	compass assessing and improving the operation,
	Directors, the Supervisory Board and manage-	sessment of controls is supported by an IT system.	processes and efficiency of organisations and pro-
Magyar Telekom Group first expressed its com-	ment (i.e. the Leadership Squad).		viding advisory services.
mitment to sustainable development and, within		The operation of the internal control system is also
its context, its efforts and commitments aimed at	At the heart of the Corporate Compliance	audited by the independent Internal Audit functi-	The Head of this area is responsible for preparing
environmental protection in its environmental po-	Program is a Code of Conduct applicable to all	on, which also monitors the implementation of	the annual audit plan, submitting it to the Audit
licy. The policy contains obligations for the affilia-	employees, which summarises the company's	the measures defined on the basis of the audits.	Committee for information and to the Supervisory
tes of Magyar Telekom Group individually and for	compliance requirements and ethical standards.	The Supervisory Board and the Audit Committee,	Board for approval, and regularly reviewing and
the Group as a whole, as well.	Employees can ask compliance-related ques-	among others, are regularly informed of the find-	amending it in accordance with changes affecting
	tions through the "Ask a question" portal.	ings of the audits, the resulting actions and the	Magyar Telekom HU's business, risks, operations,
In addition to the policy, an Environment Protec-		fulfilment of the tasks.	programs, systems and controls.
tion Guidelinewas also published, which defines

8

Corporate governance

In developing the plan, due consideration is given to the risks and trends that could potentially impact Magyar Telekom HU, and accordingly ESG considerations were incorporated into the 2023 Annual Audit Plan, supporting the organization in improving the effectiveness of internal controls and processes.

It is the responsibility of the head of the area to ensure that the tasks set out by the annual audit plan are fulfilled. As part of the audit reports, corrective measures and recommendations are made, the implementation and follow-up of which is actively supported by the internal audit function.

RISK MANAGEMENT

It is Magyar Telekom Plc's policy that disclosures to shareholders and market players should give an accurate and complete picture of the Group and reflect in all respects its financial position and operational results. These disclosures are made on a regular basis in accordance with applicable laws, rules and regulations.

In order to meet these objectives, the functionality and effectiveness of the components of the risk management system are regularly reviewed and continuously improved.

The standard risk management process estab-

Risk factors affecting the operations of Magyar

Magyar Telekom Group conducts the risk as-

lished provides a framework for the following

Telekom Group are reviewed regularly. All our sub-

sessment for a three-year period. If significant

program components:

sidiaries and organisations are required to identify

risks exist beyond this risk assessment time ho-

and report the risks of their operations.

rizon, they are monitored on an ongoing basis.

x Full identification of risks by involving all organi-

sations;

After the evaluation of these risks, the results

In addition to the systematic management of

x Once risks have been identified, more detailed

are forwarded to the Board of Directors, the

risks, the identification of opportunities and

analysis, assessment and quantification of risks.

Audit Committee and Deutsche Telekom's Risk

their strategic and financial evaluation is an es-

Risk assessment allows management to focus

Management organization. This regular report-

sential part of Magyar Telekom Group's annual

more effectively on risks that have a significant

ing ensures that the most significant risks are

planning process.

impact on the Group's strategic objectives.

monitored, that up-to-date risk mitigation mea-

x A decision is then taken on the specific course of

sures are in place and regularly followed up.

Information on the Company's approach to climate

action to be adopted in order to mitigate the risks.

risks and opportunities is provided in Climate and

x The relevant risk owner implements, monitors and

Our quarterly risk reporting system is comp-

environment protection chapter.

evaluates the related actions.

lemented by ongoing proactive reporting at

x These steps are repeated as necessary to reflect

Group level. As part of this, Group entities and

current developments, decisions.

subsidiaries are required to report promptly any

new facts, information or risks that come to the-

For the effective operation of the risk manage-

ir attention that meet the criteria for mandatory

ment system, it is necessary to ensure that ma-

reporting. The information so reported is asses-

nagement make its business decisions in posses-

sed by the Risk Management function and the

sion of all relevant risks, which is supported by

Chief Financial Officer is informed, if significant

regular risk reporting at Magyar Telekom Group

new risks or information emerge. The responsi-

level. At the same time, risks related to our busi-

bility of staff for monitoring and managing risks

ness plans are also continuously assessed, ma-

is governed by the relevant directive.

naged and taken into account in the risk mana-

gement process.

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