E5 Resource Use and Circular Economy

ESRS 2 SBM-3 – Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model

Material Impacts, Risks and Opportunities

Within the scope of our materiality assessment, we identified one material IRO related to “resource use and circular economy”:

• Contribution to Resource Consumption

We currently expect our actual material impact “Contribution to resource consumption” to have an influence on our business model, strategy and value chain in the short term. Part of Vonovia’s current and future business activities involves further developing its neighborhoods, which includes modernizing and maintaining existing buildings, as well as constructing new ones. Construction products and building materials from primary production are used for these activities, which involves significant resource consumption (including concrete, steel, stone, sand, gravel, wood, insulation and synthetic materials). This contributes to overall resource consumption. This material impact affects the upstream value chain. In the long term, the negative impact could contribute to a future shortage of resources, which would have a negative effect on Vonovia in the form of rising material prices.

Resilience of Our Business Model

The resilience of Vonovia’s strategy and business model is analyzed and evaluated annually as part of risk management (see ESRS 2 GOV-2). First-level executives below the Management Board are responsible for identifying and assessing risks within their areas of responsibility during the semiannual risk inventory process. The risk management horizon and the evaluation period extend five years beyond the reporting year. Risk management assessments focus on net risks.

To assess the resilience of our business model in terms of its ability to cope with the material impact of its contribution to resource consumption, we analyze the services associated with material inflows in the areas of vacant apartment modernization, energy-efficiency modernization, maintenance/major repairs and new construction/development, as well as the quantities involved. As this analysis was conducted in this specific form for the first time in the reporting year, it is not yet possible to draw any conclusions from past experience. In the future, this process will allow us to identify, early on, which materials and crafts involve the most considerable inflow of resource and to take targeted action with partners in the value chain to reduce the proportion of virgin resources. No shortage of resources (suppliers and raw materials) or any major changes in regulatory requirements are expected in the short or medium-term period covered by our assessment. We do not anticipate any significant dependencies based on our current analyses.