Taxonomy-aligned Shares of Vonovia’s Business Activities
Taxonomy-aligned Shares of Vonovia’s Business Activities
Review of Substantial Contribution
Turnover associated with new construction (activity 7.1) is deemed taxonomy-aligned if the relevant buildings have a primary energy demand that is at least 10% below the national standard for nearly zero-energy buildings. Vonovia checks compliance by obtaining an energy performance certificate for each building. The relevant buildings undergo the thermal integrity and airtightness test. Where required to do so, Vonovia determines the global warming potential for each phase of the building life cycle (for buildings with an area of > 5,000 m²) using a model calculation of life cycle emissions based on emission factors that have been determined for different types of construction.
Turnover generated from the acquisition and ownership of buildings (activity 7.7) is deemed taxonomy-aligned if the buildings constructed before December 31, 2020 have been assigned energy efficiency class A (or better) or, alternatively, are among the top 15% of regional or national housing stock in terms of primary energy demand in operation. Vonovia checks compliance by obtaining an energy performance certificate for each building. We base our assessment of the top 15% on relevant threshold values for primary energy demand for Germany, Austria and Sweden, which were determined in a benchmark study. The study was updated for Germany in the 2023 fiscal year and the new threshold (lower and, as a result, more restrictive than in the previous year) was applied for the first time for the 2024 reporting year. For buildings constructed after December 31, 2020, the same criteria for significant contribution to climate change mitigation apply as for new construction (activity 7.1). Turnover from electricity generation using solar photovoltaic technology (activity 4.1) is treated as a direct climate change mitigation measure in the EU Taxonomy Regulation.
In accordance with Vonovia’s business model, the relevant criteria for determining taxonomy-aligned capital expenditure stem from activities 7.2, 7.3, 7.4, 7.5, 7.6 and 7.7:
At Vonovia, capital expenditure associated with the renovation of existing buildings (activity 7.2) always relates to energy-efficient modernization. Vonovia verifies the required 10% reduction in primary energy demand through energy-efficiency assessments or based on energy certificates. Capital expenditure as part of energy-efficient modernization projects is allocated to activity 7.2. Capital expenditure on heating modernization, charging stations and wall boxes, metering technology and smart metering, and photovoltaic systems is generally treated as a direct climate change mitigation measure and is allocated to activities 7.3, 7.4, 7.5, and 7.6.
Activity 7.7 “Acquisition and ownership of buildings” includes capital expenditure from acquisitions, Development to hold, investments not including energy efficiency measures (e.g., refurbishment of vacant apartments or major maintenance measures) or other internal expenses that can be capitalized. These qualify as taxonomy-aligned if the building-related technical screening criteria are met. The relevant criteria for determining taxonomy-aligned operating expenses stem from activity 7.7. This is non-capitalized maintenance (usually minor maintenance). In addition to maintenance services provided by third parties, this also includes services provided internally by the company’s own craftsmen’s organization.
The alignment review was not completed for capital expenditure in connection with the purchase of electrical and electronic goods (1.2) and for the fleet (3.3), as the criteria would be difficult to meet and the effort involved would be disproportionate. Vonovia’s fleet is gradually being switched to alternative drive systems; at present, only a small number of vehicles meet the required threshold for CO2 emissions, as these are mainly technicians’ vans. Electrical and electronic goods only account for a very small proportion of CapEx.
Assessing Significant Harm on One or Several Environmental Objectives (“Do No Significant Harm”)
In order to avoid significantly compromising adaptation to the effects of climate change (EU environmental objective 2), the EU taxonomy requires a robust climate risk and vulnerability assessment to be carried out for all taxonomy-aligned economic activities. Vonovia uses an IT tool to identify and evaluate physical climate risks for the Group-wide portfolio on a continuous basis using the prescribed climate scenarios (RCP2.6, RCP4.5 and RCP8.5). The risk assessment is based on scenario RCP4.5, which, according to the United Nations (UNEP Emissions Gap Report 2024), represents the probable increase in the global average temperature that will result from the national contributions to climate change mitigation that have currently been defined and implemented. In this scenario, no material risk has been identified for any of the climate-related hazards up to 2045. Therefore, no adaptation plan is required in accordance with the EU Taxonomy Regulation. As part of the neighborhood strategy, potential adaptations are defined at portfolio level and subsequently implemented individually for the properties or neighborhoods for which there are material risks at the corresponding level.
With regard to the sustainable use and protection of water and marine resources (EU environmental objective 3), no criteria need to be assessed for the taxonomy-eligible economic activities for residential building units.
The requirements for transitioning to a circular economy (EU environmental objective 4) are set out in the German Waste Management Act (KrWG)/national legislation, and are passed on to business partners by Vonovia through the Business Partner Code and the General Terms and Conditions of Contract for Construction Services, as well as being included in framework agreements with waste disposal companies. This ensures that the requirements are implemented for each project. The selected building and construction technology strengthens resource efficiency, adaptability and dismantling capacity, taking into account the requirements set out in the ISO 20887 standard. The photovoltaic systems installed by Vonovia also meet the “Do no significant harm (DNSH)” requirements of EU environmental objective 4 on account of their design and service life.
In order to avoid and prevent environmental pollution (EU environmental objective 5), compliance with certain EU directives must be ensured (Appendix C to Annex 1 to the Supplement to EU Regulation 2020/852). The additional paragraph on requirements under Appendix C, regarding substances relevant for the purposes of the CLP Regulation, has been reviewed by Vonovia. The relevant substances are adhesives or foams used in individual cases in construction or renovation work. The maximum mass concentration of hazardous substances of 0.1% that has been defined for mixtures of these products is not exceeded, as the threshold relates to the mass of the combined products. Furthermore, the substances are no longer hazardous in their ultimate form, e.g., hardened foam or dried adhesive.
Compliance with statutory requirements is defined in Vonovia’s Business Partner Code that all subcontractors and suppliers have to sign. Vonovia has established a toxic materials management system to ensure the safe handling of toxic materials. Among other measures, safety fact sheets and operating instructions are kept for affected products and the company’s own employees are trained on how to handle these products correctly from an occupational safety perspective. Substances of very high concern (SVHC) cannot generally be found in the construction materials used. If these substances are identified in small amounts, Vonovia constantly examines substitutes in the individual cases.Vonovia’s economic activities do not significantly harm the achievement of EU environmental objective 6 (protection and restoration of biodiversity and ecosystems), as Vonovia only builds in designated areas and with a building permit.
Compliance with Minimum Standards at Group Level (“Minimum Social Safeguards”)
We are committed to our human rights due diligence obligations and align our conduct with internationally recognized frameworks such as the OECD Guidelines for Multinational Enterprises, the ILO Core Labour Standards and the UN Guiding Principles on Business and Human Rights.
Vonovia adopts a Group-wide approach to meeting minimum safeguards that address the issues of corruption and bribery, fair competition and taxation in addition to respect for human rights: comprehensive procedures forming part of the compliance management system, including Group-wide guidelines and complaints mechanisms, have been put in place to prevent and uncover violations.
A due diligence process to avoid scenarios in which business activities have negative impacts on people and the environment forms the core of compliance with the minimum safeguards. Taking the OECD Guidelines as a basis, Vonovia has implemented all of the recommended due diligence steps. In the reporting year, we conducted a human rights and environmental risk analysis for our own business area and the supply chain.