Human rights and sustainable supply chain management

Strategy

Protect human rights, reduce risks

To effectively embed respect for human rights within our Group and in our own business activities, we employ a human rights due diligence process. This process implements the requirements of international frameworks, such as the UN Guiding Principles and the OECD Guidelines, as well as legal regulations, such as the German Supply Chain Act (LkSG). The six components of the process are described on the O₂ Telefónica human rights website. We have also established a comprehensive supply chain management.

It relies on four levers:

• the early identification of risks
• targeted cooperation with suppliers to promote social standards
• Prevention through awareness
• Transparency and monitoring

We require our suppliers to comply with clear minimum standards, conduct risk analyses, and supplement these with continuous monitoring. Based on the results, we implement targeted measures and, for example, provide online training to more firmly embed human rights standards in our processes. Multilingual complaint channels, a human rights mailbox, and independent ombudspersons are available for reporting potential violations. Remedial measures are taken as part of our due diligence process. The goal is to comply with legal requirements, reduce risks, and put our values into practice.

Detailed information on the four steps of managing supplier relationships can be found in our 2024 Annual Report (from page 129 onwards).

Policies

We adhere to binding standards

In addition to the Responsible Business Principles, the Human Rights Policy defines the commitment to integrating international standards, such as the UN Guiding Principles, the OECD Guidelines, and ILO Standards, into our processes, as well as systematically identifying and appropriately mitigating human rights risks. It is complemented by the Commitment to Children’s Rights, which focuses on the protection of children and young people and is based on the UNICEF Principles on Children’s Rights and Business Practices.

The O₂ Telefónica Declaration of Principles on Respecting Human Rights explains our areas of action and reaffirms our commitment to fair working conditions. It sets out requirements for preventing child and forced labour as well as discrimination, supports the involvement of employee representatives, and explains the due diligence process as a key element for monitoring the implementation of these guidelines.

Our Supply Chain Sustainability Policy is a binding code of conduct for suppliers and applies to the procurement of products and services. It establishes clear minimum environmental, social, and ethical standards, including in particular human and labour rights, environmental and climate protection, integrity in business conduct, and data protection. Direct suppliers are required to contractually obligate their subcontractors to comply with comparable standards and regulations.

Our goal is to promote resilient and competitive supply chains together with our suppliers.

Targets

By the end of 2025, we pursued the following targets:

• Almost all of O₂ Telefónica’s potential high-risk suppliers were reviewed using self-assessments regarding ESG aspects.

• The percentage of resolved complaints and reports on human rights issues is 100%.

Performance

Progress, but yet a need for action

• In 2025, the proportion of potential high-risk suppliers who had conducted an ESG self-assessment was 100% (2024: 78%).

• The percentage of resolved reports and complaints relating to human rights issues remained at 100%, same as the previous year.

Actions

Governance, risk management and transparency: this is how we implement responsibility

We act in accordance with applicable laws: Our human rights due diligence process enables us to identify human rights and environmental risks and violations at an early stage and to take appropriate measures to prevent, mitigate, or – if they have already occurred – to initiate remedial measures.

Handling of reports and complaints: Individuals, companies, and organisations can report human rights and environmental risks or violations. All relevant information can be found on our Whistleblowing Procedure website, which we further improved in 2025 by using easily understandable language and infographics for all stakeholders.

Monitoring in high-risk countries: As part of the Joint Alliance for CSR (JAC), Telefónica, S.A. Group conducts regular audits of its suppliers. These audits verify compliance with key social and labour standards, including fair working conditions with appropriate wages and working hours, as well as health and safety in the workplace. The audits also define necessary corrective actions to specifically address identified risks. As a subsidiary of Telefónica, S.A. Group, we are part of JAC and have direct access to the results of the supplier audits.

Collaboration with suppliers: Nearly 100% of the suppliers contracted in 2025 through the procurement system have committed to complying with the Supply Chain Sustainability Policy. In addition, as part of our annual risk analysis, we use standardised questionnaires for high-risk suppliers to capture the identified priority risks. In 2025, these risks included: inadequate wages, unequal treatment in employment, disregard for freedom of association and the right to collective bargaining, and inadequate health and safety in the workplace. Through dialogue with suppliers, we clarify our expectations regarding working conditions and job security.

Supplier monitoring: Through AI-supported screening, we identify risks and critical events in the value chain early on (see section Business value) and initiate measures as needed.

Review of internal processes and training: We continuously review governance structures and processes to improve transparency and human rights due diligence. Regular online training for employees and suppliers supports the implementation of the German Supply Chain Act.

Business value

For sustainable partnerships: real-time monitoring of the supply chain

We have further developed our AI-based supplier screening to assess supply chain risks transparently and efficiently. Using advanced AI models, we analyse information from news, social media, and trusted sources in more than 180 languages. This allows us to identify potential human rights or environmental violations early on and forward critical alerts to procurement in real time. Continuous adjustments based on user feedback ensure the quality of our risk identification.

By using AI-powered supplier monitoring, we aim for transparency and security in the direct supply chain. We contribute to supporting fair and environmentally friendly conditions in the production of goods and the provision of services, aim to reduce failure and compliance risks, and strengthen ESG conformity. In this way, we pursue the goal of developing suppliers into reliable partners and creating added value through trust and competitiveness.

Next steps

Consistently advancing human rights due diligence

We solve all reports and complaints responsibly, aim to maintain the rate of ESG self-assessments for high-risk suppliers to nearly 100%, and further developing AI-supported systems for risk analysis. In addition, we intensify awareness training for internal teams and suppliers to ensure the consistent implementation of international standards.