S4-5 Targets Related to Managing Material Negative Impacts, Advancing Positive Impacts, and Managing Material Risks and Opportunities
Affordable Homes That Meet Tenants’ Needs
Vonovia has not set any specific targets for the metrics linked to the impact “Contribution to affordable homes,” namely “Average rent per square meter,” “Number/proportion of price-controlled apartments” and “Average modernization cost allocation (in Germany)”. This is because compliance with regulatory standards is not a quantifiable metric but rather reflects the company’s fundamental alignment and its dependency on the design of regulatory frameworks, over which the company has no direct influence. The chosen metrics serve as a benchmark to demonstrate the nature of responsible rent setting, particularly in comparison to industry benchmarks.
Additionally, we consider the planned organic rent increase for the following year to be an appropriate approximation for a target metric. This increase aligns with customary local rents or rent indices. Central rental management monitors the development process and all regulatory requirements. For 2026, we anticipate an organic rent increase of approx. 4.2% compared to the 2025 base year.
The metric “average rent per square meter” represents the average rent across all rented apartments in Germany, Austria and Sweden. Currency conversion for Sweden is based on the reference date of December 31, 2025. A separate figure covering all rented apartments is reported for Germany as it is Vonovia’s core market. The average rent per square meter reflects the monthly contractual rent divided by the rented area. An average value is calculated across all rental properties, with the figure given in euros.
The metric “Number/proportion of price-controlled apartments” describes the total number of apartments classified as “price-controlled” within Vonovia’s portfolio. To determine the percentage of price-controlled apartments, the number of such apartments is compared to the total portfolio. In Germany, rent restrictions typically apply to publicly subsidized apartments, subject to contractual or statutory cost-based rent limits. In Austria, price controls are based on the applicable rental model outlined in the lease agreement or unit classification. Price controls are generally tied to the organizational structure of the company (at the time the apartment was built). In Sweden, base rents are negotiated annually with local tenants’ associations. They must be reasonable and cost-based, leading to collective restrictions that classify all rents or apartments managed by Vonovia in Sweden as price-controlled.
The metric “Average modernization cost allocation (in Germany)” represents the average rent increase per square meter for all modernized apartments in Germany during the reporting year. In Germany, the costs of energy-related refurbishments can be passed on in the net rent – within a specific framework. As this cost allocation model does not exist in Austria and Sweden, the KPI applies only to the German portfolio, with the figure given in euros.
The core indicator for adapting apartments to meet the needs of an aging population is the proportion of accessible (partially) modernized newly rented apartments in Germany. This includes both measures in the event of a change of tenant and modernizations at the request of the tenant. We assess new rentals based on comparable portfolios and exclude newly constructed homes.
Our medium-term goal for 2030 is to modernize around 27% of newly rented apartments every year so that they meet the demands of an aging society. This quantified goal directly aligns with our policy objectives for housing tailored to tenant needs. The reference year for tracking progress on this and all other sub-indicators of the Sustainability Performance Index (SPI) is always the current year. The metric covers all modernization measures carried out as part of the relevant investment program during the reporting year. The criteria for “accessible” align with the product catalog of the German Development Bank (KfW). This KPI applies specifically to the German portfolio.
In the fiscal year under review, we achieved our target, (partially) modernizing approximately 12,900 apartments to be accessible (2024: 11,100 apartments), representing 36.8% (2024: 29.5%) of new rentals in Germany. Since this is a sub-indicator of the SPI (for further information, see ESRS 2 GOV-3), it is monitored directly by the Management Board.
Customer Satisfaction
The core indicator we use to measure customer satisfaction is the CSI. The KPI is derived from 25 questions included in customer surveys. These questionnaires remain unchanged over time to ensure comparability. Approximately 31,000 customers are surveyed each quarter. The CSI applies specifically to Germany. The satisfaction level we use as the basis for calculating the improvement is expressed as a percentage, while the change compared to the previous year is given in percentage points.
Our medium-term goal for 2030 is to maintain our high level of satisfaction, which we define as a satisfaction index above 73%, and we aim to achieve this target annually. The target is derived from the peer benchmark provided by the external service provider conducting the satisfaction survey. This quantified goal directly aligns with our policy objectives for customer satisfaction. The reference year for tracking progress on this and all other sub-indicators of the Sustainability Performance Index (SPI) is always the current year. In 2025, we increased customer satisfaction by 1.3 percentage points compared to the previous year, achieving a satisfaction score of 76.5%. Since this is a sub-indicator of the SPI (for further information, see ESRS 2 GOV-3), it is monitored directly by the Management Board.
Quality of Living Through Neighborhood Development and Infrastructure
Regarding the impact associated with “increased quality of living for tenants through contribution to neighborhood development and infrastructure,” we monitor how effective our actions and targets are using the metrics “Neighborhood investments (in Germany),” “Tenant satisfaction with the neighborhood environment (in Germany)” and “Share of socially used commercial space (in Germany).”
The “Neighborhood investments” are based on the approach set out in GRI (2016) 203-1, which reflects the status of the development of major infrastructure investments and services supported. It describes the investments in euros that Vonovia made in its strategic portfolio located in urban quarters in Germany as of the reporting date of December 31, 2025. It is calculated as the sum of investments made within this portfolio structure during the reporting year in building upgrades (measures for modernization of energy efficiency and heating), refurbishment of vacant apartments (partial or full modernizations of apartments for full accessibility), capitalized maintenance, new construction completed for our own portfolio (including added stories to existing buildings), and the expansion of photovoltaics. Based on this definition, Vonovia invested approx. € 548 million (2024: approx. € 510 million) in neighborhoods in Germany in 2025.
“Tenant satisfaction with the neighborhood environment in (Germany)” comprises a subset of three questions from the CSI questionnaire for measuring customer satisfaction (see “Customer Satisfaction”). These are added up – with equal weightings – to produce a score. The figure is expressed as a percentage of the average annual value of all “rather good” or “very good” responses from the four CSI questionnaires in a given year. Only Vonovia tenants in Germany are included in the survey. The aim is to maintain this satisfaction figure at a consistently high level (> 80%) in the medium term. The value for 2025 came in at 83.8% (2024: 83.4%).
The “Share of socially used commercial space (in Germany)” is derived from an analysis of the usage type of commercial units. It extracts data covering all types of use of commercial units actively rented out by Vonovia in Germany that were classified in advance as “social.” These include types of use such as a neighborhood office, meeting point, day-care center or use of a space for other educational purposes. These are expressed in relation – in terms of square meters of space – to all rented commercial units in Germany with confirmed usage type. Large commercial units are excluded from this metric. The metric is based on the approach taken in GRI (2016) 413-1, which shows the percentage of operations (in this case rented commercial units) where local community engagement measures were implemented. According to this calculation, around 88,000 m² of commercial units were allocated to social facilities as of the reporting date of December 31, 2025 (2024: around 100,000 m²). This corresponds to 13.9% (2024: 14.0%) of all let commercial units in Germany.
Investments in neighborhoods make up the central framework for action in connection with the material sustainability aspect of “neighborhood development” and the associated impact: “Increased quality of living for tenants through contribution to neighborhood development and infrastructure.” Vonovia has not set any targets for this metric due to the varied nature and number of the various individual measures, which are taken depending on the needs of the neighborhoods concerned. We consider the planned budget targets for the following year, however, to be a suitable approximation tool for investments in neighborhoods in Germany. Successful infrastructure projects and the resulting improved quality of living in cities and neighborhoods can be quantified most specifically – alongside other meaningful indicators – by the investments made in their development.
Further Explanations of the Remuneration-relevant S4 Indicators
The indicators “proportion of accessible (partially) modernized apartments among new rentals in Germany” and “customer satisfaction in Germany” are part of our Sustainability Performance Index (SPI). They are two of the six KPIs linked to remuneration in the sustainability area (see ESRS 2 GOV-3).
The Management Board has set the SPI’s individual indicator targets for 2030, which are closely tied to the company’s five-year investment planning. The relevant key figures are recorded quarterly by Controlling and used in our external reporting and for communication with the capital market. Target achievement is determined at the end of the year based on the actual values achieved. For details about the SPI, refer to ESRS 2 GOV-3. Scientific findings were not considered in setting the targets mentioned under ESRS S4. Additionally, consumers or end-users, or their representatives, were not directly involved in setting the sub-indicator targets of the SPI, tracking performance toward these targets, or identifying areas for improvement.