Sustainable Corporate Governance
Long-term growth forms the basis of Vonovia’s business model. The preservation and long-term development of our real estate portfolio contribute to a strategy focusing on stable value and growth (see chapter entitled “Fundamental Information about the Group”).
Vonovia wants to be seen as a trusted partner – by its customers, shareholders, business partners and employees, and by society and the general public at large. With a Code of Conduct, we provide the ethical and legal framework within which we act. It describes the conduct guidelines that apply with binding effect to Vonovia’s employees and managers and forms the basis for an open, appreciative and legally compliant corporate culture. The Code of Conduct features provisions on issues including environmental or health protection, respect for employee rights, dealing with conflicts of interest or interacting with governments and public-sector agencies.
Compliance and Anti-corruption
Adherence to all of the provisions and laws that apply to the company plays a key role within this context. A good compliance organization makes a key contribution to a company’s sustainable development and value creation.
Through the corresponding monitoring of our compliance rules, we protect the integrity of employees, customers and business partners and shield our company from negative consequences.
Our corporate compliance – internal rules and Group guidelines, e. g. to protect the capital market, ensure data protection, secure information, manage risks, fight corruption or set out guidelines on how to deal with donations and sponsoring – is based on the relevant statutory requirements, the articles of association and the rules of procedure for the Supervisory Board and the Management Board. Our compliance principles are also detailed in our Code of Conduct which is binding for all Group employees under the Group works council agreement.
Compliance management at Vonovia is part of the legal department. A central compliance officer is assigned the task of identifying compliance risks, taking suitable measures to avoid and detect these risks and taking appropriate action in response to determined compliance risks. This officer is supported by operative compliance managers and compliance specialists in individual departments who, along with the officer, are the key contacts for compliance matters and suspected cases at the company.
An external ombudsperson is available to all employees and business partners as a confidant for compliance matters. If necessary, the ombudsperson accepts information about suspected compliance cases on an anonymous basis.
A Compliance Committee also discusses and coordinates compliance issues. The Compliance Committee meets every quarter to discuss current cases as well as the refinement of Vonovia’s compliance management system. Along with the compliance officer, the compliance managers and the ombudsperson, other members of the Compliance Committee include representatives from the areas of internal audit, risk management, HR management and the works council.
The compliance management system is designed to reduce and prevent the detrimental impact of any misconduct for which Vonovia is responsible on the company and its executive bodies. There are three escalation levels: The first level consists of the operational management within Vonovia’s business units, which is where the internal control mechanisms are implemented. The second level comprises the compliance management system and the risk management system, in particular. The third and final level is made up of the internal audit, as an auditor that is independent of the system.
Vonovia’s employees also undergo regular training on compliance issues. Procurement, for which the issue is particularly relevant, receives special training on corruption and criminal law pertaining to corruption. Managers can book special compliance courses at the Vonovia Academy.
The Supervisory Board is also regularly and comprehensively briefed on the issues of compliance, corruption and existing guidelines and procedures. The Audit Committee regularly receives a compliance report, which reports on suspected cases, measures and training offered on the issue of corruption. In the 2017 fiscal year, there were isolated suspected cases of corruption, which we investigated diligently. None of the cases were confirmed.
Otherwise, there were several non-material compliance violations or suspected cases during the reporting year. This clearly shows, however, that the system we have put in place is proving effective: cases are reported and addressed and corresponding consequences ensue.
Adherence to Labor, Social and Environmental Standards in the Supply Chain
Vonovia is very aware of the sustainability risks in the supply chain. The challenges primarily relate to compliance with labor and social standards in construction companies and their subcontractors. Since Vonovia conducts considerable trade-related construction work on its own through the craftsmen’s organization, most of the risks that could arise with external suppliers can be reduced from the outset. As it is less dependent on the offerings of existing construction firms, Vonovia is able to exclude service providers that violate certain sustainability criteria.
The nature of the services purchased by us is extremely important for the sustainable quality of our services and, as a result, for the satisfaction of our customers. This is why we attach a great deal of importance to extensive supplier management that focuses on quality aspects. This also applies, to a particular degree, when it comes to ensuring integrity on the part of our suppliers. Our Business Partner Code for subcontractors and suppliers sets out clear expectations regarding integrity, legal compliance and ethical conduct. It stipulates, among other things, that illicit employment must be ruled out, that the legal minimum wage must be paid and that valid German regulations on occupational safety and human rights must be observed. These obligations also apply to third parties – i. e. subcontractors of our contractual partners.
The company’s construction managers maintain direct contact with our subcontractors and have a clear picture of the persons working on construction sites. Compliance with the Business Partner Code can thus be largely verified within the scope of this working relationship. In addition, our procurement department holds annual reviews with key subcontractors.
In case of repeated violations of the Code or other legal provisions, we take appropriate steps, either significantly reducing the sales volume with the affected supplier or terminating the business relationship entirely. Vonovia did not learn of any significant cases of noncompliance in the reporting year.
A uniform supplier assessment system is currently being developed. The goal is for key suppliers to be evaluated by procurement as well as the Group’s departments in order to achieve transparency and to obtain a systematic overview of the performance and development of suppliers.
Open Dialog with Society
We have also set ourselves the objective of making our sustainability approach even more transparent. We use open dialog with society to promote communication with various stakeholder groups. We also participate in a whole range of sustainability benchmarks and ratings, for example the EPRA Best Practices Recommendations on Sustainability Reporting, in respect of which we received a Silver Award in 2017 for our sustainability reporting in 2016. Participation in the CDP, the Dow Jones Sustainability Index or the sector-specific GRESB also highlights our efforts to make our sustainability performance transparent. Participating in these ratings is our way of rising to the competition and contributing to increased transparency and improved comparability within the sector. We want to continue participating in selected benchmarks and achieve ongoing improvements in our results.
We intend to use active participation in associations and initiatives to achieve greater transparency and comparability and to make our own contribution to ensuring a strong real estate industry in Germany.