E1-3 – Actions and Resources Related to Climate Change Policies

Vonovia implemented the following measures in the reporting year to address the policies described in E1-2 and the material impacts and opportunities described in that section:

CO₂ Reduction in the Real Estate Portfolio

Energy-efficiency modernization to improve energy efficiency is an essential pillar of Vonovia’s climate pathway. Using our decarbonization tool (DCT), an overall plan is prepared featuring an individual energy refurbishment and energy concept solution plan for each specific building. The energy efficiency measures, in particular insulating facades, cellar ceilings and lofts, and replacing windows, are implemented as part of the Upgrade Buildings investment program. In order to make energy-efficient building refurbishment even more cost-effective in the medium and long term, we continued to forge ahead further with serial refurbishment in the reporting year. Over the next few years, we will be making much greater use of this approach.

Another measure involves the digitalization of heat supply. In the reporting year, more than 2,200 gas-fired heating systems had already been connected to a digital solution developed in collaboration with the start-up Othermo, which detects heating system failures in real time and supports optimized adjustments to the system technology. This system offers the potential to save around 15% in energy and CO₂, with direct benefits for our tenants.

Another aspect of implementing the climate pathway is increasing energy generation from renewable sources. This includes the electrification of heat generation through our heat pump initiative. Based on a series of pilot projects and the knowledge gained from them regarding the use of the technology in existing apartment buildings, the initiative is now being extended to include other regions. In addition to the installation of the air-to-water heat pumps, the focus was also on replacing radiators wherever this was necessary in order to further reduce the supply temperature to enable efficient heat pump operation. A pilot project in the reporting year also tested an “EnerCube,” a compact heat pump center that combines all of the necessary components in an external module, supplies several buildings and can be installed outside the buildings in a short space of time. Based on the successful pilot, the implementation of the EnerCube will be intensified.

Vonovia is also continuing the program it launched back in 2021 to expand electricity generation using photovoltaics. The focus is on ensuring that the electricity generated is used directly in the neighborhood – by our tenants and to operate heat pumps. The installation of these systems is therefore also closely interlinked with the heat pump initiative and the modernization program.

Our own energy supply company Vonovia Energie Service GmbH (VESG) provides our customers with electricity from renewable energies. Communal areas are already supplied with certified green electricity. Our objective is to maximize the share of energy we produce ourselves for the benefit of our customers and the environment, and also to use it for our housing-related services, e. g., e-mobility. By providing green energy that has been generated in the neighborhood or certified, we are supplying over 46,000 households with reasonably priced electricity and helping them to reduce greenhouse gas emissions. In this context we have concluded two power purchase agreements for around 38 million kWh. The electricity is generated by 15 wind turbines, which reduces approximately 28,800 tons of CO₂ equivalents.

At the end of reporting year, Vonovia owned 3,627 photovoltaic systems with an installed output of 134.8 MWp. This outstripped the target of 133.1 MWp. We will continue to forge ahead with the expansion of photovoltaics over the next few years: We aim to have installed around 400 MWp of capacity by 2028 and up to 700 MWp in the long term. We are aiming for additional capacity of 80 MWp in the 2025 fiscal year.

A further key lever for our climate pathway is the supply of sufficient quantities of CO₂-free district heating and electricity by the energy sector. This requires that the energy sector reaches the targets set by policymakers for phasing out coal and increasing the share of renewable energies in energy or electricity generation. We consider the mandatory municipal heating planning process to be an important step towards this goal. This can provide long-term planning security with respect to the availability of district heating within the municipalities. The German Heat Planning Act (Wärmeplanungsgesetz) also features mandatory targets for the decarbonization of heating networks.

One good example in practice is the Bochum heat transition project (“Wärmewende Bochum“) that Vonovia is involved in. One key element of this project involves adopting an integrated view of heat and electricity generation that takes all stakeholders in the municipality into account. District heating is always an important lever for us where it is economically viable to connect additional properties to a district heating network while making consistent progress in decarbonizing heat generation by utilities companies. As a result, Vonovia is examining the decarbonization strategies of the most important district heating providers and, based on these conclusions, drawing up potential courses of action for incorporating them into its long-term neighborhood strategy.

The ability to implement the measures described depends on the availability and allocation of the corresponding investment funds and access to funding at affordable capital costs.

Like the climate pathway, the measures described refer to the housing stock in Germany and, as a result, largely to Vonovia’s own operations. As the climate pathway also includes GHG emissions from the upstream chain involving the energy sources used, the measures also relate to part of the upstream value chain. Part of the downstream value chain is also included, as the expansion of photovoltaic capacity in conjunction with tenant electricity models also reduces our tenants’ GHG emissions.

The measures to implement the three levers in the climate pathway (the Upgrade Buildings investment program and the elements it involves, such as modernization of the building envelope; heat pump initiative, digitalization of heat supply) are designed to be permanent until the overarching target for 2045 has been achieved.

The CapEx spent on the measures described in the reporting year consists of the investments within the Upgrade Buildings energy-efficiency modernization and heating replacement program, including investments in photovoltaic power generation capacity, and amounts to € 1,162 million. This equates to 96.3% of total CapEx in the reporting year.

Annual CapEx of around € 400–500 million a year has been earmarked for the implementation of all measures in the transition plan. In the reporting year, Vonovia expected the CO₂ intensity of its housing stock in Germany to increase slightly by +0.3 kg CO₂e/m² to 32.0 kg COe2e/m² of rental area. The savings achieved came to -0.5 kgCO₂e/m², bringing the CO₂ intensity at the end of the reporting year to 31.2 kgCO₂e/m² (previous year: 31.7 kg CO₂e/m²).

CapEx of € 1,162 million and OpEx of € 409 million were spent on implementing the climate protection measures in the reporting year.

Climate Change Adaptation

Vonovia systematically analyzes the relevant climate risks, which are mapped in an IT tool using the relevant climate scenarios developed by the IPCC (Intergovernmental Panel on Climate Change), assessing the impact on our portfolio. During this process we also take into account the particular characteristics of the respective buildings and neighborhoods, such as existing sun protection or the degree of surface sealing. 

Climate change adaptation is also taken into account in the planning guidelines for sustainable residential environment, which describe various components that can contribute, for example, to reducing heating in the neighborhood or improving drainage options. These guidelines must be taken into account as a mandatory requirement when planning open spaces in new neighborhoods.

We are taking various measures to make our existing neighborhoods more climate-resilient. These include, for example, the targeted planting of climate change-resistant tree species, the unsealing of parking areas and the establishment of seepage areas, as well as the creation of landscaped roofs.