With size comes
responsibility

Dear readers,

You have before you the Deutsche Wohnen Sustainability Report for 2018: a year which was important for us because we achieved good progress in making our thought processes, planning, construction and business practices more sustainable. Or, in other words, taking greater responsibility for tomorrow.

This ethos is not an end in itself: it is crucial that our company is aligned in this way because rented units account for approximately 40% of final energy consumption in Germany and are responsible for roughly a third of the country’s carbon emissions. In the light of climate change, this is no small matter. With our portfolio of 167,000 residential and commercial units, we have a major responsibility in this regard. Accordingly, we are making targeted investments in our districts. These allow us to improve energy efficiency by an average of 30%, putting us ahead of the field. The energy footprint of around 60% of our residential units is already better than the comparable average consumption of residential buildings in Germany. We are focusing primarily on thermal insulation, more efficient power generation units and switching to more environmentally friendly sources of energy. All in all, with these measures, we achieved a reduction in carbon emissions of approximately 26,000 tonnes last year.

It’s about future generations ...

We are driven by our own mission to ensure that our apartments and districts also meet the needs of future generations. As properties have a long life cycle, we have to take changing living expectations into account today. In connection with this, we expect to see a tax on carbon emissions in the future. This would be good and right, provided the levies are socially ethical and distributed fairly. Our tenants will benefit from the refurbishment measures we are completing today because the energy performance of our apartments far exceeds that of other residential units.

... and that means it’s about money too

Without question, this approach costs money. That is because our holdings are an average of 70 years old and we are refurbishing them thoughtfully and sensitively. For instance, we are fitting sustainable thermal insulation made from mineral wool or cellulose, instead of plastics. This means that future generations will not have to deal with mountains of hazardous waste further down the line. Are we doing this at our tenants’ expense? No: our refurbishment work is being carried out in a confirmed socially ethical fashion. We apply a hardship rule which ensures that the total rent does not exceed 30% of a household’s net income

It is also worth mentioning that we take on the lion’s share of the refurbishment expenses ourselves. Just under a third of the refurbishment costs forms the basis for our so-called modernisation charge, which in recent years averaged far less than the statutory limit of 11% that was applicable at the time. Furthermore, we have reached agreements with a number of Berlin boroughs concerning the responsible completion of refurbishment measures.

Refurbishment work goes hand in hand with noise, dirt and expense. It can often be a nuisance for residents. For this reason, we involve them in the process early on and seek direct dialogue via tenant events and consultations or more than 800 face-to-face discussions with our clients at the properties. This is a tried and tested approach which we intend to expand further. We can count on dedicated employees who explore issues raised by residents and seek individual, acceptable solutions.

We value our clients’ satisfaction highly and are keen to maintain it. This objective is therefore an important part of our strategic sustainability programme. A stakeholder survey conducted in autumn of the reporting year also confirms that this is a sound approach. It showed that customer satisfaction, customer health and safety, and dialogue with customers are among the key issues.

Addressing legacy contamination

Saving energy and reducing carbon emissions play a major role in managing our holdings sustainably, but there is more to it than that. Decontamination has become another important issue in our company’s day-to-day operations. We remove contamination left behind by other generations and ensure there is no longer any cause for concern. This includes everything from disposing of asbestos responsibly during refurbishment measures to cleansing the soil and groundwater by removing arsenic. Work is currently under way to do just this at a site in the Berlin borough of Spandau which was home to an munitions factory well over a hundred years ago. We are taking on the costs for this ourselves.

Preserving historic buildings is immensely important to Deutsche Wohnen. In protecting historic buildings and listed architecture, we are living up to our responsibility to play our part in preserving cultural identity. To ensure that these buildings are preserved as part of our heritage for generations to come, we invested approximately EUR 29 million in their future viability, intrinsic value and energy efficiency improvement in 2018.

Digitisation: a tool for sustainable business

Another aspect was added to our sustainability activities in 2018 as well: digitisation. Here too, the focus is on doing business more sustainably. For example, the digital management of our gardens and green spaces enables us to enhance environmental protection and biodiversity. Digital control systems for lifts, thermostats in the apartments, or outside lights save electricity and energy. Last but not least, we plan to record and present every single residential unit in our portfolio digitally, which will reduce travel distances – for instance in connection with client visits.

Demographic change is still happening

Demographic change no longer features so prominently in public discourse. We believe this is wrong. It remains a growing challenge which we are addressing with a view to future viability. For us, that also means taking the needs of older residents into account in our modernisation and new construction projects. Such considerations include floor area, layout and step-free access – along with the right mix within each neighbourhood. Nursing is also a part of later life: 37 new facilities were added to our portfolio in 2018. This makes Deutsche Wohnen one of the largest owners of nursing properties in Germany with a total of 12,200 beds and apartments for assisted living.

To achieve our goals, we need staff with excellent qualifications. In 2018 alone, our employees and managers completed approximately 21,000 hours of training. We also ensure that we offer market-aligned remuneration and make regular adjustments accordingly. On top of all this, we ensure our employees share in the company’s success, to which they make a crucial contribution. Staff loyalty in particular is rewarded. This approach is positively received: the 2018 employee survey showed that 79% of staff are satisfied with Deutsche Wohnen as an employer.

Read on to find out more about these and other issues. I hope you will be inspired by our steps towards more sustainable business practices.

Berlin, June 2019

Michael Zahn
CEO of Deutsche Wohnen SE