The Company
Vonovia’s business model is based on the rental of good-quality, modern and, most importantly, affordable homes, the development and construction of new apartments, both for its own portfolio and for sale to third parties, and the provision of housing-related services. These housing-related services mainly include the caretaker organization, the craftsmen’s organization, the residential environment organization, multimedia services and metering services. The option to have cable TV, bathroom renovations in response to tenant requests, automated meter reading and senior-friendly apartment modernization are also included.
Vonovia manages a housing stock of around 355,700 of its own apartments in almost all of Germany’s attractive cities and regions. It also manages a portfolio of around 38,000 units in Sweden and approximately 22,500 in Austria. The total fair value comes to around € 53.3 billion, with net assets based on the EPRA definition coming to approximately € 29.7 billion (European Public Real Estate Association EPRA). In addition to its own apartments, Vonovia manages around 78,700 apartments for third parties. This makes Vonovia one of the leading residential real estate companies in Germany, Sweden and Austria, albeit with a very low market share of around 1.5% in Germany due to the highly fragmented nature of the market.
The age structure of Vonovia’s German portfolio of approximately 355,700 apartments shows that around 69% were built between 1945 and 1980. Around 15% originate from the period before the Second World War, while around 16% were built after 1980. Of these, approximately 1% were built after the year 2000. Vonovia’s roots and those of its predecessor companies extend back into the 19th century and lie in not-for-profit housing and housing for factory workers in Germany’s Ruhr region. These properties were transferred to private equity investors as part of the liberalization and privatization of the real estate market. At the time of the initial listing, Vonovia ultimately had an outdated housing portfolio for which substantial maintenance and modernization measures were long overdue. This resulted in serious housing shortcomings and, therefore, persistent complaints being lodged by tenants to the detriment of the company’s reputation.
As a sustainable and responsible residential real estate company in Germany, Sweden and Austria, Vonovia believes that it has a particular obligation toward its customers, but also toward society and its shareholders. In all of its three core markets, Vonovia takes responsibility as a provider of affordable housing and as a service provider, building contractor and developer as well as in its role as a corporate citizen. Sustainability is an integral part of our business model. Our customers and the sustainability of our business activities are both at the center of our strategy. Vonovia’s business model allows it to provide answers and solutions to issues such as the shortage of housing and climate protection – also by creating new homes. Vonovia makes a decisive contribution to solving the current issues facing society with homes and neighborhoods that have undergone energy-efficient and senior-friendly modernization measures and meet state-of-the-art standards, as well as by implementing vertical expansion projects and building new homes.
Sustainability is first and foremost about ensuring that the company has a license to operate, meaning that its business model is comprised of corporate activities that are of benefit to society as a whole. The conviction that only those companies whose activities benefit society overall will be able to operate successfully in the long run and enjoy acceptance is becoming increasingly established. This is why sustainability for Vonovia is about operating to ensure that our business activities create long-term benefits for society as a whole and that the company earns society’s tacit license to operate in the long term.
A Large Number of Issues are Related to Sustainability
Vonovia’s business model offers a large number of approaches as far as sustainability is concerned. Our efforts to maintain and develop our residential properties, as well as to ensure customer satisfaction, are already examples of long-term, sustainable business activities. In addition, Vonovia has made an explicit commitment to the 17 UN Sustainable Development Goals (SDGs), all of which have an impact on the company’s business model in one way or another. The resulting focus on environmental, social and governance issues as well as our commitment to keeping a close eye on the impact that our business activities have are associated with these endeavors.
(E) Environmental: Our environmental commitment refers to our energy-efficient building refurbishment measures, the use of renewable energy, ecological and social supply chain management, sustainability in the use of construction materials in our modernization and new construction measures as well as moves to ensure biodiversity when it comes to designing green spaces and residential environments. Specifically, Vonovia has set itself the environmental objective of a renovation rate of 3%, as well as launching the “1,000 roofs” photovoltaic program.
(S) Social: Vonovia’s social commitment includes the provision of affordable and suitable homes, while at the same time complying with an appropriate level of regulations and adhering to voluntary commitments. At the same time, we aim to ensure that our neighborhoods, i. e., our tenants’ living environments, are designed as part of an integrative process that our customers are invited to participate in. Our social commitment, however, also involves our measures aimed at our employees and our efforts to value the diverse contributions that they make. Vonovia has set itself the objective of improving its customer satisfaction levels, measured based on the Customer Satisfaction Index (CSI), on an ongoing basis, or at least to ensure that customer satisfaction does not deteriorate. It also aims to ensure that 30% of its senior executives are female by 2021.
(G) Governance: Governance means acting in accordance with the principles of lawful and responsible management, protecting human rights and ensuring sustainable financing in the process. The company is also aiming for a Supervisory Board that is 30% female.
As Germany’s leading residential real estate company, Vonovia maintains close dialogue with its numerous other stakeholder groups that are important for the company’s development. These mainly include its employees, investors, suppliers and service providers, as well as social interest groups, including non-governmental/non-profit organizations. We also use our sustainability reporting to meet these stakeholders’ expectations in terms of information. In order to live up to our responsibility in every respect, we use our sustainability reports to set out not only economic, but also ecological and social aspects and decision-making parameters for Vonovia.