Dear Readers,

The demonstrations across the globe organized by the Fridays for Future movement last year once again brought the issue of sustainability into the public eye – and also into the eye of our industry. The German government’s environmental protection plan aims to make the building stock in Germany climate-neutral by 2050. From the perspective of the real estate industry, this presents a major challenge.

A second topic that is extremely relevant to our industry is the current debate surrounding the tension on the housing markets and the discourse on the structural shortage of housing. Last year, this even led to discussions about the expropriation of residential real estate companies in Berlin. As a result, we are witnessing more stringent regulation of the rental markets and increased intervention by the legislator.

As a company with around 356,000 of our own apartments located throughout the country, we see it as our duty to strike a balance between both issues – we want our homes to meet environmental standards. At the same time, homes have to remain affordable for our customers.

This places Vonovia at an intersection where different social concerns collide. And we have to ask ourselves: What contribution can we make to solving these problems? As we tackle these issues, it goes without saying that we want to ensure that our investors, too, remain satisfied at all times. In order to live up to our social responsibility, we need the trust of the capital market.

Our business model gives us the opportunity to make a difference in the interests of society, as we did again in 2019. To cite three examples: We provide our tenants aged over 70 with a guarantee that their apartments will remain affordable for them. When we modernize our buildings, we are committed to only passing a maximum of two euros per square meter on to our customers, even though the legislation would, in theory, allow us to pass a greater portion of these costs on. On average, the amount allocated in 2019 came to only € 1.36 per square meter. What is more, our modernization rate came to 3.7% in 2019, meaning that it not only outstripped our target of 3%, but also came in well above the average for Germany and Europe, which is only around 1%.

Year after year, we make a key contribution to protecting our climate by ensuring high energy efficiency levels in both modernized and newly built homes. Since 2015, this has allowed us to save around 96,000 metric tons of CO₂ by implementing energy standards, an annual CO₂ reduction of as much as 2% to 3%. And we want to – and indeed, in view of the German government’s new Climate Protection Act and the associated tax on carbon emissions, have to – do even more, which is why we are using renewable energy sources and testing innovative and carbon-friendly end-to-end solutions at neighborhood level, such as in our project in Bochum-Weitmar.

In order to get others on board as we embark on this process, we launched the “Outlook for climate-neutral housing” (Perspektiven klimaneutralen Wohnens) initiative last year in partnership with the German Energy Agency (dena) and the Fraunhofer Institute. We will be working hand-in-hand with these partners to consolidate key expertise for a climate-neutral future for the housing industry and make sure that it can be put into practice. The first specialist conference in November 2019 marked a promising first step in this process.

In the current coronavirus crisis, too, we want to live up to our social responsibility and offer our employees and our customers as much safety as we can. This is why we have assured all of our tenants that no one will have to move out of their apartment due to the coronavirus crisis. We have picked up on the fact that community spirit and social cohesion within the neighborhood are particularly important at the present time, which is why we are using our tenant app, for example, to promote solidarity campaigns, create new networking opportunities and assist with various aspects of everyday life, such as organizing help with shopping.

We enhanced our sustainability management system in 2019 and launched a strategy process that we will be continuing this year. In the second quarter of 2020, we also shifted the issue of sustainability to a separate department, establishing a strong organizational link to the Management Board.

In our latest sustainability report, you can read in detail all about the sustainability projects that Vonovia is involved in in Germany to ensure that people feel at home in our apartments in the long term, and about how we are taking our responsibility as a corporate citizen seriously.

I hope you enjoy reading the report.

Bochum, June 2020

Yours,

Rolf Buch