ESRS E1 Climate Change
E1-1 – Transition Plan for Climate Change Mitigation
Vonovia has a transition plan that aims to attain a climate-neutral housing stock by 2045, and has set several medium and long-term reduction targets to help it achieve this objective. In the long term, we want to reduce the greenhouse gas (GHG) intensity of our housing stock in Germany to below 25 kg CO₂e/m2 of rental area by 2030, and to less than 5 kg CO₂ equivalents per square meter of rental area by 2045 (includes Scopes 1, 2 and 3.3). The emissions remaining in 2045 are to be offset by suitable measures that the company is still to define, achieving a CO₂ intensity of net zero. Binding interim targets have been defined for the next five years.
In the medium term, we also plan to reduce the absolute Scope 1 and 2 greenhouse gas emissions from all of our housing stock (Germany, Sweden and Austria) by 42% by 2030 compared to the base year 2021. Vonovia is also committed, by 2030, to reducing absolute Scope 3 greenhouse gas emissions from the categories “Fuel and energy-related activities,” “Use of sold products” and “Downstream leased assets” by 25% as against 2021.
In March 2024, the Science Based Targets initiative (SBTi) confirmed that Vonovia’s absolute target for Scopes 1 and 2 (near-term target) was in line with the 1.5 degree target set out in the Paris Agreement and that the absolute target for Scope 3 met the necessary SBTi criterion of “well below 2 degrees.” While the long-term target of reducing CO₂ intensity has not been validated externally, the emissions it encompasses are included in the absolute medium-term targets validated by the SBTi. Detailed information on the company’s climate targets can be found in Disclosure Requirement E1-4.
The transition plan for our housing stock, our climate pathway, consists of three decarbonization levers:
- Increasing efficiency and thus reducing energy demand for heat and warm water supply by way of energy-efficient refurbishment of the building envelope
- Increasing the generation of renewable energies in the neighborhood by installing heat pumps and expanding power generation using photovoltaic systems on our buildings, and
- Comprehensive transformation of the energy sector and supply of sufficient quantities of GHG-free district heating and electricity by the energy sector.
The CO₂ intensity of the housing stock represents the central indicator of our climate performance management. It is the most heavily weighted component of the Sustainability Performance Index (SPI) and therefore of the Management System and the remuneration paid to the Management Board and senior management.
Further information on the policies and actions for implementing the transition plan can be found in Disclosure Requirements E1-2 and E1-3.
To support and implement our transition plan, we invested a total of € 700.9 million in the reporting year, or 25.6% of our total capital expenditure in the reporting year. This amount represents the taxonomy-eligible CapEx in accordance with Delegated Regulation (EU) 2021/2178 in the business activities of energy-efficient renovation of existing buildings (7.2/CE3.2), the installation, maintenance and repair of energy-efficient equipment, the installation, maintenance and repair of charging stations for electric vehicles in buildings, the installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings, and the installation, maintenance and repair of renewable energy technologies (CCM 7.3 to 7.6) and well as the construction of new buildings for self rental purposes (CCM 7.7).
The GHG emissions that can be predicted to be emitted by the time the targets are reached in 2045 are to be understood as “locked-in GHG emissions.” By 2045, GHG emissions of around 7.8 million metric tons of CO₂e (Scope 1+2+3.3) are expected to be generated following the implementation of the transition plan. Around 15,500 metric tons of CO₂e also come from Scope 3.11 “Use of sold products.” This category contains the GHG emissions from the new residential units built for sale that were completed in the reporting year. A lifespan of 50 years has been applied.
Vonovia is continuously reducing greenhouse gas emissions in its housing stock and in its operations thanks to the GHG emission reduction targets it has set itself and the corresponding measures to boost energy efficiency and make the switch to renewable energies. The plans to reduce “locked-in GHG emissions” are described in detail in the transition plan. There is no threat to the reduction targets or any promotion of transition risks.
Vonovia has not set any target values for the key figures referred to in the EU taxonomy for 2025 or 2030. We are aiming to increase the proportion of taxonomy-aligned business activities (sales, CapEx, OpEx) on an ongoing basis.
Taxonomy-aligned capital expenditure is as follows, based on Vonovia’s business model: capital expenditure associated with the renovation of existing buildings (activity 7.2) that contributes to the transition plan always relates to energy-efficient modernization at Vonovia. We take the required 30% reduction in primary energy demand into account when designing projects. 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. Only investments in new buildings for self rental purposes are included as being relevant for contributing to the transition plan. The proportion of taxonomy-aligned activities will be steadily increased as the transition plan is implemented as a result of ongoing modernization measures. Vonovia did not make any significant investments in connection with economic activities related to coal, oil or gas in the reporting year. Vonovia is not excluded from the EU Paris-aligned benchmarks.
The transition plan has been fully integrated into the company’s business strategy and financial planning. The GHG emission reduction targets have been integrated into the management system as a sub-indicator of the Sustainability Performance Index (SPI). The SPI and all of its sub- indicators, such as CO₂ intensity, form part of the planning process, and the progress made as well as the forecast value for the fiscal year concerned are calculated and reported to the Management Board on a quarterly basis.
The neighborhoods and buildings to be modernized are selected in a targeted manner in cooperation with the regional business areas, and the optimal degree of modernization and modernization roadmap for each building is defined. The investments for the refurbishment programs and photovoltaics expansion are approved by the Management Board. The use of the investment funds required to implement the measures is mapped out as part of the five-year plan and the budget prepared for the following year, and is adopted by the Management Board before being confirmed by the Supervisory Board. The Supervisory Board discusses and approves the SPI targets proposed by the Management Board for the following year and the period covered by the Long-term Incentive Plan (LTIP; for four years in each case).
In the reporting year, the CO₂ intensity for our housing stock in Germany was 30.7 kg CO₂e/m² of rental area, down by around 1.6% year-on-year (2024: 31.2 kg CO₂e/m²), and 0.6% below the target for the reporting year (30.9 kg CO2e/m²). In addition to the modernization measures implemented (building envelope and replacement of heating systems), this reduction can also be traced back to the inclusion of specific certificates for two district heating grids as well as the sale of buildings.