ESRS-1 (Annex A, AR2) / ESRS 2 (MDR-P) – Strategic Policies Related to Neighborhood Development and Contribution to Infrastructure

We see it as our mission to provide people with sustainable, affordable homes and a life in neighborhoods where they feel comfortable, safe and at home.

Thinking and acting in terms of neighborhoods serves as the central management level at which Vonovia’s business model and strategy are manifested. Details on the overarching business model and our understanding of affordability can be found in section ESRS 2 SBM-1.

The actual positive impact identified as part of our materiality assessment, “increased quality of living for tenants through contribution to neighborhood development and infrastructure,” defines the level of action for corresponding strategic policies, which are explained below. The impact is reviewed annually by the portfolio management team to check its validity as part of the update to the IRO assessment.

The size of the overall portfolio and Vonovia’s presence in neighborhoods in (major) cities and metropolitan areas enable a neighborhood-based, holistic development approach. Portfolio enhancement measures are implemented sequentially in a neighborhood context to develop socially and ecologically sustainable places for people to live together in central urban locations and in metropolitan areas, improving our tenants’ quality of living in the process.

At the same time, the size of our portfolio and our local presence in neighborhoods enable us to drive forward the energy-efficient building refurbishment in line with our climate pathway, contribute to the energy revolution and actively drive the infrastructure transition, without losing sight of the need to ensure commercial viability that any private-sector company has to meet.

This approach also applies, in particular, to our new construction activities, which, to the greatest extent possible, are aligned with the neighborhood concept and are already designed as part of the planning process such that holistic measures can be applied.

The size of the portfolio – in tandem with the neighborhood approach – represents a key intangible resource for Vonovia.

The neighborhood approach is embedded in various investment programs (including modernization, heating system replacement, photovoltaics, senior-friendly housing, maintenance) and is reflected systemically in the geographical categorization by urban quarters/clusters. Both the decarbonization tool (DKT, see chapter ESRS E1) and the portfolio management investment calculator are based on the segmentation of the portfolio into neighborhoods.

Fundamental investment decisions are made at Management Board level (in particular the Chief Rental Officer), implemented on a decentralized basis in the regional business areas and monitored with regard to target achievement – in particular regarding compliance with the climate pathway. The strategic policies for the urban quarter/cluster approach and the investment programs have been formally documented in corresponding resolution documents. The latter can be categorized according to different types of investment, which vary depending on the individual circumstances of our neighborhoods and can involve energy-efficient modernization measures in existing buildings, apartment refurbishment measures to meet tenant needs, and the replacement of heating systems or the installation of photovoltaic modules.

Segmentation by urban quarters based on the definition above is only used for the German market segment at present. This means that 77% of the strategic portfolio is covered by the neighborhood concept (see chapter entitled “Portfolio in the Property Management Business”). Neighborhood-based approaches are also pursued in Sweden and Austria, but based on different segmentation principles. While at the Austrian company BUWOG, measures in contiguous neighborhoods are taken when developing new construction projects, the segmentation of the existing portfolio in Sweden matches the division of regional neighborhood districts used by the police authorities there. The measures relate to our own business area and the downstream value chain. We take this to mean, in particular, the use of neighborhood services and measures by tenants and residents.

The Management Board (CRO) is responsible both for the decision to structure the portfolio and for the resulting segmentation into urban quarters and urban clusters. All measures resulting from this decision for a specific neighborhood area are planned and reviewed in the respective regional business areas before they are implemented, working in collaboration with the departments for investment, climate-neutral housing stock and corporate development.