Forward-Looking Business Practices

GRI 3-3

In the concrete implementation of our sustainability goals, we align our activities with the Volkswagen Group guidelines, adopt their principles and formulate company directives which are specifically tailored to Volkswagen Immobilien. In this report, the various sections include a reference to any Group guidelines which apply, including the relevant section of the Group sustainability report. If special actions are associated with the implementation of these guidelines which are relevant in the context of our sustainability strategy, we elaborate on these in the corresponding passages of text.

A Sustainability Committee supported by the Sustainability business unit helps us to implement the strategy (see section “Strategic Management of Focus Areas”). This acts as an interface for all sustainability-related activities and is responsible for tasks such as overseeing and coordinating sustainability ratings and producing the sustainability report.

GRI 2-28, 2-29, 3-3, 413-1, 415-1

To ensure that we meet our stakeholders’ expectations and to identify potential for further development in the field of sustainability, we pursue a strategic approach for active stakeholder dialog. In doing so, we consider it crucial that all stakeholders are informed about all of our activities in accordance with the respective topics and are given opportunities to provide feedback. Our website serves as a central dialog platform for all other media and channels (“Contact”). Clear responsibilities are assigned at VWI in connection with this. Decisions about how frequently to publish reports and information are made by the individual holders of these responsibilities and oriented on the need for dialog.

Our most important stakeholders are our staff, our clients, Volkswagen AG, business partners and investors, policymakers and public authorities, and society.

We want to be an excellent employer for our staff in order to retain employees and attract external applicants. For this reason, staff satisfaction is at the heart of our human resources strategy. We monitor staff satisfaction by means of surveys and feedback processes between managers and their teams. We also use tools such as the intranet and staff meetings to actively inform our employees about measures and updates to our strategy, and answer coworkers’ questions directly. The intranet pages for the topic of sustainability were completely reworked in the year under review. In the future, they will be used to inform staff about one of the eight focus areas each month and to communicate the milestones that have been achieved. Additional formats for regularly involving the workforce in sustainability issues will be developed in 2023.

We have set out how important clients are for our company in our corporate strategy and defined “Excited customers” as a strategic target area. To find out how satisfied they are, we conduct regular surveys and maintain direct dialog via various channels, such as local customer service centers, telephone helplines and our tenant magazine. Additionally, “green” tenancy agreements and alternative landlord-to-tenant electricity models strengthen the partnership between our company and its clients in the interests of sustainability. Volkswagen Immobilien offers a comprehensive range of services for the Volkswagen Group to do with residential and commercial property: from investment and concept development to maintenance. We are heavily integrated into the Volkswagen Group’s sustainability activities via our Brand Sustainability Manager and make a substantial contribution towards its targets. We are in contact with the relevant Group units concerning all sustainability initiatives via the digital knowledge-sharing network Group Connect and event formats such as Group summits. In addition, we advise the Group and its subsidiaries on sustainability in the construction and utilization of properties.

We share ideas with our business partners and investors at conferences and inform them about our projects and initiatives with the aid of specialist articles, the Internet and our sustainability report. We have long-standing business relationships with our suppliers and service providers which are founded on trust. We expect them to meet the required compliance, environmental and social standards. This is checked via a sustainability rating by the Volkswagen Group. On top of this, we are intensifying our regular dialog with important capital market operators, rating agencies and initiatives in the field of sustainable finance to develop and optimize our green bond activities.

Our company has particularly strong roots in Wolfsburg, where it carries significance and weight among policymakers and public authorities. We support municipal interests primarily by means of our activities in the construction of new housing and modernization. For instance, we are part of the alliance “Bündnis für Wohnen und Leben in Wolfsburg” and play a major role in the city’s home-building offensive. At national level, we are involved in the industry associations ZIA, VdW and GdW. As a member of these bodies, we are involved in drafting statements concerning developments in policy. Furthermore, we are actively involved in the “Initiative Wohnen.2050” and the “Immo2.Zero” forum initiated by Deutsche Unternehmensinitiative Energieeffizienz e. V. (DENEFF) to support the decarbonization of buildings.

As one of the biggest landlords in Wolfsburg, we take responsibility for society in the region. We support numerous activities which promote social cohesion, good health and education. In conjunction with the charity ready4work e. V., for instance, we back the creation of additional traineeships in the region and the integration of socially disadvantaged young people. We are also keen to support fundraising projects and promote culture in the city.

We see finance as a natural part of any sustainability concept and want to use “green capital” for “green assets”. This is why we offer green bonds in the form of borrower’s note loans and registered bonds. Doing so also helps us to diversify our investor base and tap financing options. In an ESG rating by ISS ESG, we were awarded “Prime” status in 2022 for the fifth consecutive year, giving investors the confidence they need. We also implemented the Green Bond Principles of both the ICMA (International Capital Market Association) and the Climate Bonds Initiative. Detailed information is disclosed in the compulsory green bond report, which we are publishing as part of our sustainability report again this year.

To align our real estate portfolio with climate protection considerations, we take climate-related financial risks into account in our business processes. For instance, we have systematically incorporated carbon tax into our medium-term planning and into the portfolio management system as a key performance indicator for property-specific plans relating to investments and modernization work. Due to legal changes in the year under review, 28% of our carbon footprint (35,512 metric tons of CO₂) is subject to carbon pricing. This results largely from VWI’s obligation to be connected to the district heating network in Wolfsburg.

GRI 2-6, 3-3, 308-2, 414-2

We recognize that much of our environmental and social impact results from upstream processes which do not form a direct part of our business activities. Our sustainability performance therefore also depends heavily on our suppliers, service providers, advisers and construction companies. Effectively involving these groups is the only way to ensure sustainability throughout the value chain. When awarding contracts and drafting agreements for our partners, we therefore pay close attention to the compulsory guidelines and processes of Volkswagen Group (Volkswagen Group Sustainability Report 2022, “Supply Chain and Human Rights” chapter, p. 104).

In this area, we operate within the responsible supply chain system with which the Group aims to prevent or minimize social or environmental risks throughout its supply chain. For example, before potential service providers and suppliers are engaged, VWI conducts integrity checks of business associates, known as business partner due diligence (BPDD). This assessment is completed as part of a risk-based, transparent process which is documented carefully. An internal company directive stipulates the order value from which the prescribed processes apply. Generally speaking, contracts worth €50,000 or more are awarded by the Group procurement team. The procurement process, including BPDD, is handled within VWI for orders worth less than €50,000.

To help suppliers become sustainable companies and ensure that our requirements are met, the Volkswagen Group has introduced a sustainability rating (S rating) as a Group-wide process linked to the awarding of contracts. The S rating assesses suppliers’ sustainability performance with regard to social, environmental and corruption risks. The rating is based on a self-assessment questionnaire (SAQ) completed by suppliers as well as a risk assessment carried out by means of a site visit and an in-depth corruption audit. No contracts can be awarded to suppliers who do not fulfill the requirements or who are unable to provide evidence of a rating. At Volkswagen Immobilien, the S rating rules apply to contracts awarded via the Group (usually contracts worth > €50,000).

To make our expectations of partners’ conduct during our collaboration clear, we include the “Volkswagen Group requirements for sustainability in relations with business partners” in our Code of Conduct for Business Partners, which forms part of their contract. The Code of Conduct plays a crucial role in our supplier management and requires adherence to environmental, social and compliance standards. The requirements are based on recommendations including the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights and the relevant Conventions of the International Labor Organization (ILO).

A responsible approach to human rights is not just embedded in the Group requirements and the Code of Conduct for Business Partners, however. A whistleblower system has also been introduced which can be used by any staff member or external individual to report potential violations of human rights or compliance/environmental guidelines in the supply chain (link to the whistleblower system)

The Group-wide responsible supply chain system was also put in place to comply with the legal requirement for human rights due diligence, to prevent violations and to continually improve suppliers’ sustainability performance in this field. It rests on a risk assessment, legal requirements such as the Code of Conduct, whistleblower systems and measures which target human rights issues, e.g. the human rights focus system (Volkswagen Group Sustainability Report, “Supply Chain and Human Rights” chapter, p. 104; section of this report “Risk Management Focusing on Prevention”).