S4-1 – Policies Related to Consumers and End-Users

Affordable Housing Tailored to Tenants’ Needs

As a responsible company, we want to meet the basic human need for housing and provide affordable housing that is tailored to tenants’ needs as part of this quest. We express this in our Business Philosophy.

We aim to offer long-term homes to as many people as possible. The challenge here lies in being able to offer a broad supply of housing at fair, transparent and market-oriented prices, even in a more challenging environment, while at the same time pursuing our climate objectives, which include a greenhouse gas-neutral housing stock by 2045. At the same time, our aging society, a result of demographic change, means that our customers’ needs are changing, too. Our annual investment program for accessible (partial) modernization is our way of implementing our policy for creating housing that is senior-friendly/tailored to tenants’ needs. This policy targets the senior-friendly refurbishment of vacant apartments (during tenant transitions). By 2030, we are aiming to ensure that approximately 27% of apartments rented out annually in Germany have been (partially) modernized to make them accessible (see S4-5). The approach also includes fully accessible new construction.

Social responsibility and the transparency of our rents are decisive factors in this context. Through investments in core business activities – rental, refurbishment and new construction – we aim to ease the current housing market situation.

Compliance with regulatory requirements is a must for us. Applying the relevant regulation helps us to offer fair rents – particularly in tense rental markets – and to rent properties out without discriminating against any particular group. This offers particular benefits for our new customers, to whom we can offer reliable rental conditions. However, we also recognize the potential risk of regulatory frameworks for rents and rent caps as well as (construction) standards and regarding potential restrictions on the recoverability of investment expenses and ancillary costs, or the transfer of residential properties to public ownership, developing in an unfavorable direction for Vonovia, directly influencing the company’s financial performance. In our rental operations, we always observe the applicable country-specific legislation, monitoring compliance through our local regional organization and systematic support from our central portfolio management team.

Our policy for creating affordable homes applies across the entire Group and relates to our own operations. An exception is Sweden, where rents are generally set as part of a binding, consensual process involving negotiations between tenants’ associations and landlords. Increases tend to occur annually and after refurbishment to a higher standard. In Sweden, the scope for rental pricing is narrower than in other markets, particularly Germany, resulting in less pronounced implementation of these policies there.

The policy for creating senior-friendly homes also applies to the company’s own operations, but is limited to Germany and focuses on the target group of older customers.

The Management Board makes the key decisions regarding the strategic direction of the rental business. The same also applies to our investment program aimed at accessible (partial) modernization. Following approval by the Management Board, the concrete planning and execution of measures are carried out by local representatives in the different regions.

Customer Satisfaction

Customer satisfaction is instrumental in the success of a company. This means we aim to maintain consistently high customer satisfaction, reflected in the positive development of the Customer Satisfaction Index (CSI). The CSI is a sub-indicator of our non-financial performance indicator, the SPI (for more information on the SPI, please refer to ESRS 2 GOV-3). For us, it is closely tied to customers being happy with our service quality and the accessibility of our customer service. In this regard, Vonovia has implemented a central and digital property management platform. This is an ERP-based application with company-specific configurations that enables the efficient and effective management of our housing portfolio (own business area) in Germany. This platform also forms the basis for the successful digitalization of our process chains. This fully end-to-end digitalized process ensures significant efficiency advantages and scalability, represents substantial cost benefits and serves as a key differentiating factor in the competitive market. Vonovia has adapted the expertise from this platform and its centralized and local property management processes for the property management business in Austria and Sweden, in line with the requirement profiles that apply in those markets. The implementation of this policy is overseen by the Management Board.

The management platform and access to a large customer base represent a material intangible resource for Vonovia.

Quality of Living Through Neighborhood Development and Infrastructure

The size of the overall portfolio and Vonovia’s presence in neighborhoods in (major) cities and metropolitan areas enable a neighborhood-based, holistic management and development approach. Portfolio enhancement measures are planned holistically and 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 customers’ quality of living in the process. We use corresponding synergy effects to achieve 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 ESRS E1) and the portfolio management investment calculator are based on the segmentation of the portfolio into neighborhoods.

Segmentation by urban quarters based on the definition above is only used for the German market segment at present (see Portfolio in Rental Business). Neighborhood-based approaches are also pursued in Sweden and Austria.

The Management Board (and in particular the CRO) is responsible both for the decision to structure the portfolio and for the resulting segmentation into urban quarters and urban clusters as well as for fundamental investment decisions. 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 central portfolio management.

Policy Availability

We convey our core values externally through our corporate principles and mission statement, which are publicly available on our website, as well as our communications and public relations efforts. Additionally, our customer website provides direct access to information and contact options, such as those related to our social management initiatives. We determine tenant satisfaction regarding rent levels through customer surveys, which offer customers the opportunity to highlight any issues. Similar surveys are conducted for new construction projects, allowing us to gather customer feedback at those locations on the product.

Respect for Human Rights

All human rights-related obligations and frameworks applicable to Vonovia also apply to our customers. In our Declaration of Respect for Human Rights, which is binding throughout the Group, we communicate our clear conviction for a pluralistic democratic society and zero tolerance of human rights violations along with our commitment to respect human rights in all aspects of our business. This includes the exclusion of discrimination of any kind, for example in the allocation of housing.

We adhere to the core labor standards of the International Labour Organization (ILO), the UN Guiding Principles on Business and Human Rights and the principles of the UN Global Compact as well as complying with the Universal Declaration of Human Rights (UDHR).

Compliance with these principles is a top priority when it comes to implementing the policies described above. Please refer to ESRS 2 GOV-4 for more information on the monitoring process.

In the markets where we operate, there are also extensive legal protection mechanisms in tenancy law and social charters to safeguard customers against human rights violations.

Consumers or end-users are not directly involved in this process. However, customers can report violations of human rights or suspected cases of discrimination through various channels. Reported cases are followed up immediately, ensuring our customers are indirectly involved in monitoring compliance with the stated principles and guidelines. By handling rentals primarily through our own employees, who are directly bound to follow the stated principles and guidelines, rather than external brokers, we minimize the risk of non-compliance. During the reporting year, we did not become aware of any cases of non-compliance with the guiding principles described above.

Further details about our whistleblower channels can be found in S4-3 and G1-3.