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Background and Objectives of the EU Taxonomy

The EU Commission has set out the “Sustainable Finance” action plan, which seeks to 1) promote sustainable investment, 2) tackle financial risks arising from climate change, resource scarcity, environmental destruction and social problems and 3) boost transparency and long-term focus in the area of financial and economic activity. One concrete measure of the action plan is the introduction of a sustainability taxonomy, which has been established through the Taxonomy Regulation1. The EU taxonomy, which came into force midway through 2020, constitutes a classification system for environmentally sustainable economic activities. Starting from the 2021 fiscal year, this gives rise to a reporting obligation for Vonovia with respect to the disclosures required by the EU taxonomy; we are hereby meeting this reporting obligation.

In particular, listed industrial companies must state the following key performance indicators (“KPIs”) in their non-financial Group Declaration2: Disclosure of the share of revenue generated with products/services that are associated with economic activities to be classified as environmentally sustainable. In addition, disclosure of the shares of investment (“CapEx”) and operating expenses (“OpEx”) in association with assets or processes that are associated with economic activities to be classified as environmentally sustainable.

Only those economic activities currently outlined in the Annexes to the delegated act on EU taxonomy (Annex I) or for the purpose of adapting to climate change (Annex II)3 are eligible for taxonomy in the first stage. Further delegated acts to specify additional environmental objectives are expected and will then be taken into consideration accordingly.

The performance indicators are ultimately designed to provide information about the share of taxonomy-aligned and therefore sustainable economic activities. A determination of taxonomy eligibility requires that the eligible economic activity concerned 1) makes a significant contribution to the attainment of one or more environmental objectives, 2) does not significantly impair any other environmental objective and 3) is carried out in compliance with the minimum requirements for occupational health and safety and human rights. With respect to the first two steps, the technical evaluation criteria for the individual climate objectives are defined in Annex I and Annex II of the delegated act, observance of which is a prerequisite for classification of an activity as taxonomy-aligned.

The EU taxonomy formulates six environmental objectives:

The initial reporting obligation with respect to the EU taxonomy for the 2021 fiscal year encompasses the first two environmental objectives, i.e., climate change mitigation and climate change adaptation. On the basis of the reflief provisions4 applicable for the 2021 fiscal year, we disclose taxonomy-eligible and non-taxonomy-eligible economic activities as a share of revenue, CapEx and OpEx. Starting in the 2022 reporting year, entities are required to report on the compliance of economic activities with the EU taxonomy. Starting in the 2023 reporting year, the disclosure of prior-year figures is mandatory.5

Reporting Principles

Identification and Categorization of Economic Activities Eligible for Taxonomy

Based on Annex I and Annex II of the delegated act on the climate targets of the EU taxonomy, Vonovia has analyzed all activities and determined those that are deemed eligible for taxonomy based on the descriptions in the taxonomy and, where applicable the supplementary NACE codes6.

Alongside the letting of housing, our business model includes the development and construction of new rental units for the company’s own stocks and for the purpose of sale. Vonovia is also a modern provider of housing-related services, such as energy services, senior-friendly apartment modernization, and caretaker and craftsmanship services.

For our company, we have identified the following activities as being environmentally sustainable and therefore eligible for taxonomy:

Performance Indicators

Definition and Calculation Method

In order to calculate the taxonomy-eligible shares, we proceeded as follows. Calculation of the performance indicators is based on the accounting and measurement methods of the consolidated financial statements. The consolidated financial statements of Vonovia are prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted in the EU.

In order to calculate the KPIs reportable in accordance with taxonomy, which are presented as percentages, the taxonomy-eligible net revenue, CapEx and OpEx are determined in relation to total net revenue, total CapEx and total OpEx. The definition of each KPI is based on Annex I of the Delegated Act on Article 8 on the content and presentation of the information to be disclosed.


The taxonomy-eligible net revenue (numerator) comprises amounts that were generated from taxonomy-eligible economic activities (see also the chapter entitled “Categorization of relevant taxonomy-eligible economic activities”).

In the numerator (total net revenue), Group revenue from the income statement is used in the calculation of the taxonomy-eligible revenue. For more details on accounting methods, please refer to the accounting and valuation methods within the Notes to the IFRS consolidated financial statements (Section (B): Profit for the Period, Chapter [B10] Income from property management, Chapter [B11] Profit on the disposal of properties and Chapter [B12] Profit on the disposal of properties (Development).

CapEx and OpEx

The taxonomy distinguishes between three different types of taxonomy-eligible CapEx and OpEx (numerators):

Pursuant to the EU taxonomy, the numerator of CapEx consists of additions to property, plant and equipment and intangible assets (including additions from business combinations) before depreciation and amortization, including depreciation and amortization from remeasurements and impairments, without taking into account changes to fair value. As such, Vonovia incurs costs that are recognized as additions on the basis of IAS 16.73(e) (i) and (iii), IAS 38.118(e) (i), IAS 40.76(a) and (b) and IFRS 16.53(h) pursuant to this definiton11, 12.

Pursuant to the EU taxonomy, the OpEx numerator encompasses direct, non-capitalized costs relating to research and development, building renovation measures, short-term leasing, maintenance and repair, as well as all direct expenses in connection with day-to-day maintenance of property, plant and equipment that are necessary in order to ensure the continuous and effective functionality of these assets. To this extent, this is an addition to the performance indicator of the recognized CapEx values rather than a full presentation of the OpEx of Vonovia, as shown under Section (B) Profit for the Period, Chapter [B15] Cost of Materials in the Notes to the consolidated financial statement. We regard direct costs as those costs that can be clearly and directly attributed to an identified activity, but not to a specific building. Pursuant to the requirements, we include costs for building renovation measures and costs for maintenance and repair when defining the denominator. With respect to direct expenses, costs for maintaining the functionality of property, plant and equipment are included. Expenses for research and development and short-term leasing are usually capitalized and therefore part of CapEx.

The denominator includes direct non-capitalized operating expenses in connection with the day-to-day maintenance of property, plant and equipment that are necessary to maintain the continuous and effective functionality of these assets.

Supplementary Disclosures

Duplicate counting is avoided by means of direct allocation of the taxonomy-eligible revenue, CapEx and OpEx to a taxonomy-eligible economic activity.

Shares of Performance Indicators That Are Associated with Taxonomy-eligible and Non-taxonomy-eligible Economic Activities

In order to comply with regulatory requirements for the 2021 fiscal year, Vonovia discloses the following shares in performance Indicators that are associated with taxonomy-eligible and non-taxonomy-eligible economic activities. The key figures shown relate solely to the legally required disclosures pertaining to the first two environmental objectives of climate change mitigation and climate change adaptation.

CapEx for 2021 is heavily influenced by the business combination with Deutsche Wohnen. Deutsche Wohnen is included in three months of OpEx and revenue (October to December).

Share of taxonomy-(non-)eligible economic activities

in %

Share of taxonomy-eligible economic activities

Share of Taxonomy-non-eligible activities

Net Turnover









The largest share of taxonomy-eligible revenue is attributable to activity 7.7 “Acquisition and ownership of buildings.” In addition to these revenues, revenues from 7.1 “Construction of new buildings” and 4.1 “Electricity generation using solar photovoltaic technology” are also eligible for taxonomy. Non-taxonomy-eligible revenues include revenues from management of residential property, energy distribution and multimedia.

The activities 7.7 “Acquisition and ownership of buildings” and 7.2 “Renovation of existing buildings” account for a large share of CapEx. Non-taxonomy-eligible CapEx results chiefly from undeveloped land, technical equipment and goodwill.

The OpEx includes maintenance expenses from the income statement including those that were the internal craftsmen’s organization. In order to prevent double counting, the capitalized share already included in CapEx has been deducted. Maintenance expenses for property management, on the other hand, are not eligible for taxonomy.

On February 2, 2022, the European Commission published a second FAQ document addressing questions regarding the interpretation of Article 8 of the EU Taxonomy Regulation. This interpretation guidance came too late in the financial statement preparation process for the Vonovia Group and could not be implemented in the current financial statements. The corresponding comments in the FAQ document could only be taken into account for the second environmental objective, climate change adaptation, when determining the activities eligible for taxonomy. The interpretation issues will be evaluated and implemented in the taxonomy reporting processes for 2022.

Outlook for the 2022 Reporting Year

As described in the section “Background and Objectives of the EU Taxonomy,” relief provisions apply for the 2021 reporting year that only require the disclosures stated above. Further details will be provided for the 2022 reporting year. These include on the one hand the breakdown of KPIs into various activities and, on the other, the additional disclosure of compliance.

The significant CapEx influence of the Deutsche Wohnen acquisition will no longer be reflected in the figures next year. By contrast, the revenue and OpEx will reflect twelve months of Deutsche Wohnen.

  1. 1 Cf. Regulation (EU) 2020/852 (hereinafter referred to as the “EU Taxonomy”).
  2. 2 Cf. Article 8(2) of Regulation (EU 2020/852) and Delegated Regulation (EU) of July 6, 2021 supplementing Regulation (EU) 2020/852 (hereinafter referred to as the “Delegated Act on Article 8 on the content and presentation of the information to be disclosed”).
  3. 3 Cf. Delegated Regulation (EU) of 4 June 2021 supplementing Regulation (EU) 2020/852 (hereinafter referred to as “Annex I and Annex II of the Delegated Act on the climate targets of the EU taxonomy“).
  4. 4 Cf. Article 10(1) of the Delegated Act on Article 8 on the content and presentation of the information to be disclosed.
  5. 5 Cf. Article 8(3) of the Delegated Act on Article 8 on the content and presentation of the information to be disclosed.
  6. 6 NACE is the European standard classification of productive economic activities. NACE presents the universe of economic activities partitioned in such a way that a NACE code can be associated with a statistical unit carrying them out.
  7. 7 Construction or operation of power plants that generate electricity using photovoltaic (PV) technology (in particular NACE codes D.35.11 and F.42.22).
  8. 8 Development of construction projects for residential and non-residential buildings by combining financial, technical and material resources to realize the construction projects for subsequent sale and construction of entire residential and non-residential buildings for the company’s own account to be sold on, or on a fee or contract basis (in particular NACE codes F.41.1 and F.41.2, which also include activities with NACE code F.43).
  9. 9 This includes residential, commercial and nursing care properties.
  10. 10 The CapEx plan to be published needs to be approved by the management (directly or indirectly by way of delegation) and generally covers a period of five years.
  11. 11 With regard to economic activity 7.1 New construction, the corresponding properties do not constitute fixed assets but rather are reported within current assets in the real estate inventories (Chapter [D35] Real Estate Inventories), with IAS 2 Inventories being applied as the relevant IFRS standard. As IAS 2 Inventories does not fall within the scope of CapEx as defined by the EU Taxonomy, the real estate inventories do not form part of the denominator
  12. 12 The numerator used in the CapEx KPI is calculated by analyzing the assets or processes related to the CapEx covered by the numerator to determine their taxonomy-eligible status. With regard to developed land, the CapEx for buildings and land has been included as additions, as economic activity 7.7. cannot be performed without the relevant land. In addition, as the building is one of the key components of a plot of land, the building and the plot of land are considered one and the same legal entity.