Status Update

May 20, 2021

Welcome to this presentation of sustainability efforts at Tele2. My name is Kjell Janssen, and I'm the CEO of Tele2. In a historic perspective, we've seen that there was a camp around shareholder value and around stakeholder value. Over time, these two camps have converged, and now we all see that being a part of society means that we have to work with our sustainability efforts over time. This is our license to operate, and it's an area that is increasingly important not only for our shareholders, but also for our customers and, of course, our employees who want to feel that they are part of a company that contributes to society. Sustainability is high on the agenda and also increasing in importance. That's why I would like to take you through some of the sustainability achievements that we have here at Treatu. Starting off with Sweden, our home country, climate neutral since 2018, first one in Sweden. As a group, we became climate neutral in April 2020, so all of our operations are climate neutral. We have largely achieved this by using 100% renewable energy and by offsetting the remaining emissions through carbon offsetting schemes. So a good start to an important issue. Let's look at how we compare to others in the industry. And we see that we are number two in Europe in terms of our sustainability efforts. We're very happy to see that. We are also very happy to see that we are ahead of competitors in all of the markets where we operate. So we're taking a significant responsibility for climate issues where we operate. In actual numbers, because one thing is to be rated, the other thing is what is the actual impact, we have seen, I'm quite proud of this, a reduction of 86% in our continued operations over the last four years. That's quite staggering. Looking forward to what's the next we can do, we have to look at the entire value chain where we operate, our suppliers, vendors, everyone we interact with because we are part of a whole delivery chain. 75% of our value chain emissions come from purchased goods and services. That is why we will be working actively on reducing also these emissions going forward. Erik, who is the Head of our Sustainability Efforts, will come back later in the presentation with more details on how we plan to continue reducing emissions in our value chain. As we have moved to the stakeholder value perspective, ESG has emerged more and more over the years as an important part of how we are looked upon by society. And that means that we are starting to get ratings, and that is important both to measure our performance but also as a way for us to get unfiltered, clear feedback on how the outside world looks at what we do in sour iron companies. We are very happy when indices go up. We're also very happy to extract the learnings from these reports and these ratings to further improve how we run our business. So looking at these indices, we see that, by and large, they are improving. We're very happy to see that the outside world recognizes our efforts. We still have much work to do. Some of these ratings will go sometimes down or flat. Our task is then to interpret those, learn from those, bring it back to how we run our business so that we can continuously improve. This job is not finished in 02/2021. It is also not finished in 02/1930. This is an ongoing challenge for any business also at and we're to take that very seriously. Eric, our head of sustainability, is the next one coming on. He's going to take you through more of what we do here at Tele2. So I'd like to take the opportunity to thank you all for listening to me and welcome Eric. Please, Eric. Thank you very much, Kjell. My name is Eric Watric. I'm the Head of Sustainability here at Tele2. And I'm going to start off by telling you a little bit about our sustainability strategy. Our strategy has the aim of making sustainability an integrated part of our core business. We want to have a strong sustainability agenda that meets the demands from our key stakeholders such as investors, customers and employees. And as a sustainable business, we want to maximize the creation of shared value for all stakeholders. We have recently launched a new sustainability strategy, and I want to briefly tell you about the process that we went through in creating this new strategy. We started out with an orientation phase where we did a trend and competitor analysis. We then did a very comprehensive stakeholder dialogue where we invited customers, employees, investors, our Board of Directors and suppliers to give us input on which the most important sustainability topics for us to address are. And in this process, we received over 9,000 responses through surveys and interviews that we then used as input for our materiality analysis. In our materiality analysis, we also conducted an impact analysis on the sustainability topics from the perspective of the impact on the environment, on society and the economy. And we also did an evaluation of what the business impact is of these sustainability topics. The outcome of this materiality analysis is that we have four focus areas in our sustainability strategy. And these four focus areas are: advancing circular economy to combat climate change, boost innovation for sustainability, maximize potential through an inclusive and diverse workplace, and protect children in a connected society. Each of these four focus areas have a person who reports directly to our CEO who's responsible for them. For each of the areas, have also set, long term goals and KPIs to measure our progress towards these long term goals. And every year, we will set activities, that will enable us to make progress towards these goals. For several years, we have had a connection between our sustainability performance and the short term incentive programs for top management. New for 2021 is that this connection will also be applicable for all managers in our Swedish operations. We have, of course, also identified how our sustainability strategy contributes on a target level to the United Nations Sustainable Development Goals, and we will measure and report on this progress in our upcoming sustainability reports. Now on to some very exciting news. I'm very proud today to announce that Tele2's science based targets have been approved by the Science Based Targets Initiative. These targets reflect our very high ambition in the climate area and is another example of how we are making progress towards our ambition to lead in sustainability. The goals are to reduce our Scope one and two emissions by 90% by 2025 and by 100% by 2029. In terms of our Scope three emissions, our ambition is to reduce these by 60% by 2029. These science based targets that we are announcing today are among the most ambitious science based targets of any telco in the world. And we've come very far in our Scope one and two emissions, as Kjell spoke about previously. So our focus will need to be on reducing our emissions in Scope three. So I'm going to talk a little bit more about that. But before I move on to that, I'd just like to say that if you want to read more about our climate ambitions, there is a dedicated page on the tele2.com website where you can find more information. Now in Scope three, the main source of our emissions is from purchased goods and services, and they account for more than 75% of our emissions in Scope three. So it will be very important for us to engage in a dialogue with our suppliers about our reduction targets for Scope three. So we have set a plan for how we're going to communicate with our suppliers regarding our targets. The first step, of course, will be to engage in a dialogue with our suppliers to inform them of the targets that we have set. After that, we will expect our suppliers to set their own targets that support our target of reducing emissions by 60% by 2029, and they should have that in place by 2023 or 2024 at the latest. We will then develop a process for how we can measure our suppliers' progress towards their own targets and also how that adds up to the progress towards our targets. And finally, we plan to include carbon emissions reduction as one of the criterias in our business partner code of conduct, which is our most important guiding document when it comes to our suppliers. Now that is not the only thing that we are launching here today. With this presentation, we are also announcing that we are implementing the recommendations of the task force for climate related financial disclosures and also that we are publishing our first TCFD report. I will shortly tell you a little bit more about that, but I'll also say in this section that we will give an update on sustainable finance, because we're seeing more and more demands both from investors and from regulators when it comes to transparency around sustainability information. Now regarding TCFD, as I said, we are implementing the recommendations of the TCFD, and we're also launching our first TCFD report as one of the first telcos in our region. We have done a scenario analysis according to the scenarios RCP 2.6, which is the Paris Agreement, and RCP 8.5, which is business as usual. And in these scenarios, we have both identified physical and transition risks as well as business opportunities that may arise from climate change. For more details, please see the full report, which will be available on tele2.com. Now in terms of sustainable finance, I think we can all agree that the EU taxonomy is one of the hottest topics for 2021. And we started in the beginning of this year to evaluate the impact that the taxonomy will have on Tele2. And we can conclude that the majority of our economic activities are not included in the taxonomy, as the taxonomy points to the 93.5% of the biggest emitters in the EU in terms of greenhouse gas emissions. However, there are four activities that we have identified for potential taxonomy alignment. And for these activities, we plan to have a strategy in place by the 2021, so that we can in time achieve 100% alignment for these economic activities. We welcome the upcoming objectives later this year. And also we hope that we can engage in dialogue with our stakeholders around this topic. Now, let's turn our attention to the Sustainable Finance Disclosure Regulation. This is part of the EU action plan for sustainable finance. And even though Tele2 is not directly impacted, we see that the SFDR could indirectly impact Tele2 if requests are made by investors to deliver on the identified KPIs. And there, we're also being proactive. So we have taken steps to be able to meet demands from the markets when it comes to adverse impacts and other disclosures. Now in this final part of the presentation, I want to give you some insights into our operational eco efficiency and our sustainable product portfolio. First off, of course, energy efficiency, a very important topic for our industry. And here are some examples of activities that we are undertaking to increase our energy efficiency. The first of those is network sharing. Tele2 is the telco in Sweden that shares the most of its mobile network, and that enables us to cut the need for hardware and energy in half. The second point here is network modernization. When we are simplifying our networks, that leads to less need for both hardware and energy. An example of that is Remote PHY that requires significantly less hardware, and an example of increased energy efficiency will be the rollout of five g. Another interesting function that we have implemented since a few years back is called symbol power saving. This enables us to save more than two gigawatt hours per year in the four g network. And finally here, I want to tell you about the AI4Green research project, which is a European research project led by Tele2 that has 18 participants from over five countries. And the aim of the research project is to use AI to increase energy efficiency in mobile networks. I think these are great examples of how we are creating both business and sustainability value through our energy efficiency initiatives. Next up, I'd like to tell you a little bit about our Mobility as a Service offering. This is part of our circular service offering, where we are combining hardware and services and financing solutions to create a closed loop for reuse and recycle. This is currently available to the large segment for our B2B customers, and we see that a significant part of the hardware that we deliver to these customers is through our Mobility as a Service solution. For our customers, they go through three steps when they buy this solution from us. The first, they can choose from sustainable products and suppliers that we have vetted, making the choice for you as a customer simple. In the second stage, the use phase, we have a strict life cycle of twelve, eighteen or twenty four months, and this will enable us to have a high reuse level of the products that then come back when we come to the update part of the process, the end of the life cycle and all products are returned. As much as 95% of the hardware that is returned can be refurbished and reused, and the remaining 5% are, of course, recycled. As a customer, you can save up to 50% on the total hardware cost through Tele2's Mobility as a Service solution. And we are currently evaluating if this is a if the as a service concept could be expanded to other customer segments and to other product categories. And I think this is another great example of how we're creating both business and sustainability value. Another thing that we are proud to have launched recently is the half sized SIM card holder. Now Tele2 has an ambition to minimize waste, and we want to try to reduce, reuse or recycle in that order. And with this initiative, we are reducing the waste that is generated by the millions of SIM cards that we send out every year. Now the traditional SIM card SIM card holder is, as you know, the size of a credit card. But with this new SIM card holder, we would be cutting that in half. We are the first telco in Sweden and one of the first telcos in Europe to be launching this new SIM card holder. And I think this is a great example of how we are reducing the environmental impact of our business and saving up to six tons of plastic waste every year. Finally, I would like to talk about Internet of Things and our IoT solutions. And I think this is a really great example of how we are using innovative technology that's based on connectivity that can create both business and sustainability value. During the year, our plan is to create a model for how we can evaluate the sustainability impact of the IoT solutions that we provide. There are many examples of how IoT creates increased efficiencies in different areas such as smart cities, energy and agriculture. But IoT can also support circular economy, for instance, by prolonging the life cycle of products by upgrading them or by enabling the sharing economy by providing connectivity to car sharing services. We hope that this has provided you with a good overview of our sustainability efforts, some examples of our key achievements to date, how we are integrating sustainability as a part of our core business and our operations, but also some insight into the very ambitious plans and targets that we have put in place to achieve our ambition to lead in sustainability. If there's any part of this presentation that you have any questions about, please don't hesitate to get in touch. Thank you very much for watching.