E1-4 – Targets Related to Climate Change Mitigation and Adaptation

The climate change mitigation policies described in E1-2 and E1-3 and the measures implemented to realize them aim to reduce the impact on climate change. Vonovia has set itself several reduction targets that cover both direct and indirect emissions.

• Vonovia is committed to reducing absolute Scope 1 and 2 greenhouse gas emissions by 42% by 2030 compared to the base year 2021. This applies to the GHG emissions from operation of the housing stock in Germany, Sweden and Austria, which together account for around 97% of the Vonovia Group’s total Scope 1 and Scope 2 GHG emissions (based on the base year 2021). The target was developed in accordance with the SBTi criteria in line with the 1.5°C target set out in the Paris Agreement, using the absolute contraction approach for near-term targets (cross-sector approach). At the time of validation, there was no valid SBTi sector-specific approach. In the absolute contraction approach, the SBTi defines a reduction target value of at least -4.2% per year as a prerequisite for alignment with the 1.5°C target. In its independent validation, the SBTi confirmed that Vonovia’s target meets the required ambition, meaning that it is considered science-based and compatible with a 1.5°C pathway in accordance with the Paris Agreement.
• Vonovia is committed 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% by 2030. The GHG emissions in the Scope 3 categories included in this target (Scope 3.3, 3.11 and 3.13) cover around 80% of the total Scope 3 emissions in the base year. This target was also developed in accordance with the SBTi criteria using the absolute contraction approach for near-term targets (cross-sector approach). In the absolute contraction approach, the SBTi defines a reduction ambition of at least -2.5% per year as a prerequisite for compatibility with “well below 2 degrees.” In its independent validation, the SBTi confirmed that Vonovia’s target meets the required ambition, meaning that it is considered science-based and compatible with a “well below 2 degrees” pathway in accordance with the Paris Agreement.
• Vonovia is committed to attaining a climate-neutral housing stock in Germany by 2045. The CO₂ intensity is to be reduced to less than 5 kg of CO₂ equivalents per square meter of rental area, with appropriate action being taken to offset any remaining, unavoidable emissions. By 2030, our interim target is to achieve a CO₂ intensity of less than 25 kg CO₂e/m2. The target includes Scope 1, Scope 2 (market-based) and Scope 3.3 of the housing stock in Germany. This is a specific absolute target value for the relevant target year, measured in kg CO₂e per m² of rental area. The target is based on the German Federal Climate Change Act (Klimaschutzgesetz) and is based on the science-based KNDE 2045 scenario of Agora Energiewende with regard to the development of the energy sector, which describes a pathway towards a climate-neutral energy and building sector. Minor changes in the housing stock due to sales or new construction measures have also already been reflected in the assumptions. The reduction ambition of the target is between -87% and -93% (assumption: target achievement of between 2.5 kg and 5 kg CO₂e/m² of rental area). The SBTi defines a reduction of -90% as consistent with a 1.5°C pathway. As a result, we consider the target to be compatible with the 1.5°C pathway. While the target has not been validated externally, all of the emissions it encompasses are included in the absolute medium-term targets validated by the SBTi.

All targets are based on the overall plan that was prepared using the decarbonization tool. This plan rests on the assumption that the current legislation will remain unchanged and that both demand and the technological options available will remain constant. The assumption has also been made that the investment funds for modernization measures will be put to optimum use in line with the applicable internal return requirements. For emissions that arise indirectly from the purchase of district heating and electricity, a continuous decrease in nationwide CO₂ intensity (location-based) is assumed over the target period, based on Agora Energiewende’s climate-neutral Germany scenario. A similar trend is also assumed for the specific emissions (market-based) of the individual district heating suppliers. Regarding emissions from general electricity and electricity for heating (heat pumps and direct electricity-based heating), it has been assumed that the electricity will be supplied by self-generated power, as well as that the purchase of electricity from renewable sources will continue based on a Power Purchase Agreement (PPA) or in combination with guarantees of origin, resulting in an overall emission factor of 0 kg CO₂e/kWh. As far as the absolute reduction targets are concerned, assumptions were also made for the housing stock in Sweden and Austria regarding a reduction in the emissions intensity of electricity and district heating over the target period. In Sweden, the assumptions regarding the development of the GHG intensity of district heating are based specifically on the targets of district heating suppliers. In the case of Austria, the assumptions regarding the development of emissions from district heating and electricity are based on the scenarios of the Environment Agency Austria. The assumptions made regarding changes in the housing stock, demand and available technologies match those applied to the CO₂ intensity target.

Another target involves reducing the average primary energy demand (non-renewable share) of newly constructed buildings to less than 25 kWh/m² of usable building area by 2030. This target refers to all newly constructed buildings in Germany, Sweden and Austria, both to-sell and to-hold, with the exception of vertical expansion and purely commercial buildings. This is a specific absolute target for the relevant target year, measured in kWh per m² of usable building area, meaning that the reference year is always the current year. In the reporting year, the average primary energy demand came to 21.9 kWh/m² (previous year: 22.0 kWh/m²). This target does not relate directly to GHG emissions as a target unit, but rather influences the development in future GHG emissions in Scopes 1 and 2 as well as Scope 3 indirectly.

External stakeholders were not directly involved in setting the targets. Various departments were involved in-house.

Target achievement is monitored on an ongoing basis. CO₂ intensity and the average primary energy demand are part of the quarterly forecasting process, which illustrates the expected target achievement level throughout the year. The absolute GHG reduction target is monitored through the annual calculation of GHG emissions as part of the reporting process.

As GHG emissions are calculated based on the energy demand and consumption values shown in energy certificates at Vonovia, the values in the base year are robust in relation to external factors such as fluctuating weather conditions. They are representative because energy certificates are available for more than 92% of the housing stock. For buildings that do not have energy certificates, energy consumption was extrapolated based on the year of construction using empirical values for comparable buildings from Vonovia’s own housing stock. Actual tenant behavior may lead to deviations from the calculated energy requirements of the energy certificates at building level.

Regarding the target for absolute GHG emissions, 62% are attributable in the base year to Scope 1 and 38% to Scope 2 (market-based method). Regarding GHG intensity in the German housing stock, 47% are attributable in the base year to Scope 1, 42% to Scope 2 (market-based method) and 11% to Scope 3.3.

Vonovia is aiming to offset the unavoidable emissions remaining in 2045 by taking suitable measures that the company is still to define, achieving a CO₂ intensity of net zero.