Climate Protection and Decarbonization

GRI 3-3

At roughly 30%, the management and use of residential and commercial properties accounts for just under one-third of carbon emissions in Germany, not including emissions from the use of electricity and district heating². That is why reducing carbon emissions in the building sector is one of the priorities of the German government’s climate protection program. The ultimate goal is to achieve greenhouse gas neutrality in Germany by 2045, with all greenhouse gases to be reduced by 65% by 2030 compared to the reference year 1990³.

The aim of our climate strategy is to align our corporate activities with the German government’s climate protection program. We have set ourselves the goal of reducing carbon emissions by at least 35% based on intensity – throughout their entire life cycle – by 2025, using the 2015 figures as a baseline. Our decarbonization strategy rests on three pillars: transparent energy and CO₂ reporting, optimizing the building stock and the necessary financing instruments. These three pillars are to serve as a starting point for defining climate pathways for the residential and commercial divisions at Volkswagen Immobilien.

Developing climate pathways⁴ as the main instruments for achieving our climate targets is a component of the VWI sustainability road map. In 2022, climate pathways were developed for residential and commercial properties based on the Carbon Risk Real Estate Monitor (CRREM) tool. An interdisciplinary team has been established for the residential property climate pathway. Its members continuously discuss, test and define measures for achieving targets. The steps taken in 2023 included the continued renewal of a selected heating plant as a pilot project involving the conversion from high-pressure to low-pressure systems. The efforts reduced the flow temperature from 100 °C to 75 °C in order to increase the energy efficiency of our buildings.

A similar procedure was set up for the commercial properties in the second quarter of 2023. Various information on the properties is continuously compiled for analysis purposes, with potential savings being identified for the development of measures. The aim is to prioritize the properties in the year ahead (2024) in order to define the achievement of carbon-emission targets in stages.

We prioritize measures based on the three hierarchical elements of the Volkswagen Group’s decarbonization program: reduction, transformation and offsetting.

Reduction: Lowering CO₂ Emissions Effectively and Lastingly

We initially established BLUE BUILDING in 2019. Geared toward sustainability and climate protection, our own standard for newly built residential and commercial properties was revised in 2022. BLUE BUILDING 2022 requires buildings to comply with the EG-40-EE energy efficiency standard. It continues to undercut the statutory energy efficiency standard EG-55-EE, which was tightened in January 2023, by 15%. We also avoid the use of fossil fuels in newbuild projects through the targeted integration of renewable energies. Where technically feasible, we additionally use the surfaces of the buildings to generate electricity. Other important aspects have also been incorporated into BLUE BUILDING 2022, such as requirements to fulfill the EU Taxonomy Regulation and pay closer attention to circularity and biodiversity.

With its specifications for energy-efficient modernization, materials efficiency and the supply of heat, BLUE BUILDING goes beyond the legal requirements. It is based on sound science and has been tried and tested in practice. It also follows the methodology used for recognized property certification systems. With BLUE LEASE, we are designing our tenancy agreements to encourage users to conserve resources in the day-to-day running of properties. Meanwhile, BLUE FINANCE safeguards financing for a climate-friendly real estate portfolio.

We also minimize the climate impact of our own corporate processes (logistics, fleet, business trips). For example, we aim to completely convert our vehicle fleet to electric vehicles and/or hybrids in 2024. We are also currently planning to convert our depot fleet to electric vehicles, provided that the respective vehicle type allows the conversion.

Transformation: Switch to Renewable Energies

We have been using renewable energy for common areas and landlord-to-tenant electricity at properties occupied by Volkswagen and its subsidiaries for a number of years already. Most of that energy is Volkswagen Naturstrom® supplied by VW Kraftwerk GmbH. The properties occupied by VWI itself also use green electricity.

The use of photovoltaic panels (PV systems) is now a fixed part of the BLUE BUILDING standard. In the commercial sector, we have already implemented lease models to supply autonomously generated power to our business customers using photovoltaic technology. These systems include one for Brose Sitech in Emden with an output of 330 kWp and another for the Porsche center in Stuttgart (90 kWp). The commissioning of a further system on the new Volkswagen dealership currently under construction in southern Hanover, including façade PV systems, is planned for 2024. We are also currently taking a close look at the option of installing PV systems on existing commercial buildings.

In the residential division, a battery storage system with a capacity of 2 MWh has already been installed at the Steimker Gärten multifamily project, with commissioning planned for 2024. The storage system is designed to help cushion energy use peaks, which are costly and place a strain on the grid. We were able to construct a PV system as well, which is also scheduled to be commissioned in 2024. In addition, we are using a 40 kW heat pump system to supply heat to 87 residential units at the Mozartbogen development following its renovation. A 75 kWp PV system is planned for the Mozartbogen residential building as part of the extensive renovation project.

As part of our overall charging infrastructure concept, we are shaping connectivity at the properties in our portfolio by means of infrastructure solutions that are also based on Volkswagen Naturstrom® or green electricity. In the residential division, we had more than 86 charging points with a charging volume of over 100,000 kWh a year in the garages next to domestic properties in various parts of the city at the end of 2023. We plan to increase the total number of charging points to 100 in 2024.

In the commercial sector, access to an existing transport infrastructure plays a role in the selection of sites. At present, VWI provides access to 164 charging points with a charging volume of over 250,000 kWh a year at its commercial sites. There are 74 charging points at the Bürozentrum Nord office complex alone, including four high-power chargers (HPC) that were installed by Ionity, a joint venture involving the Volkswagen Group and other car makers. In 2023 alone, 14 charging points were set up by VWI and taken into operation. An additional eight charging points are currently planned or under construction.

A further 182 charging points with a charging volume of over 500,000 kWh of Naturstrom a year are managed and monitored by VWI in Braunschweig at FSAG.

Offsetting: Compensating for the Remaining Emissions

Our primary goal is to have to compensate for no or few emissions. We have produced a green space and tree register for our properties to enhance transparency and pave the way for offsetting via our green space management. At the same time, we are actively promoting land restoration and measures to enhance biodiversity (see “Biodiversity” for more).

The real estate sector has a responsibility to develop forward-looking building concepts that conserve resources in order to minimize the environmental impact of properties. To do this, we need to gain a comprehensive understanding of the environmental footprint of our properties. We are pursuing this goal by assessing the environmental footprint of our construction projects, using a material-efficient building structure and optimizing the end-of-life phase of our properties.

We use a project-specific environmental footprint assessment as per the requirements of the German Sustainable Building Council (DGNB) to assess, optimize and document the materials usage of construction projects and the environmental impact of our properties. We have already completed two environmental footprint studies for our residential and office portfolio. This has enabled us to analyze the key carbon drivers for the operating and construction phases and examine measures for optimizing future newbuild projects during conceptualization. We have also gained valuable experience from our newbuild projects, such as the Audi dealership in Munich Trudering or the new Škoda office complex in Mladá Boleslav. In 2023, we decided to use the professional assessment software One Click LCA to prepare environmental footprint assessments going forward and to build up internal expertise in environmental footprint assessment through further training. Doing so will enable us to optimize our own planning processes for newbuilds and renovations while also providing a new consulting service for our customers.

A material-efficient building structure and a high degree of flexibility are key factors for us so that we can adapt our properties to changing usage requirements. This means focusing on sortable, recyclable solutions even in the early stage of planning. We are already using products made from recycled materials for certain residential projects, such as paving stones at Steimker Gärten. In addition, we choose products with a longer lifespan than other materials, like mineral wool insulation. Historic materials are sometimes reused for buildings subject to a preservation order.

At the same time, optimizing the buildings’ end-of-life phase is steadily gaining in importance for Volkswagen Immobilien. For commercial newbuilds, Volkswagen Immobilien uses an environmental footprint assessment, an environmental product declaration and a recovery analysis to establish a reliable set of data enabling it to record the quantities of materials used for construction and return them to the materials cycle at the end of the building’s useful life. The environmentally and socially responsible sourcing of raw materials plays a major role in this. For that reason, we only use FSC- or PEFC-certified materials for wooden structures and products that carry the CE label for constructions made from natural stone.

Furthermore, the BLUE BUILDING 2022 standard and DGNB certification contain clear specifications concerning recovery and recycling, including efforts to minimize construction site waste, sort it into separate materials and document it. Disposing of hazardous waste in accordance with statutory provisions and ensuring that commercial newbuilds are convertible are also important parts of the specifications. In line with this, at least 70% of construction and demolition waste (by mass) is processed for reuse, recycling or recovery, including filling.

We expect the building materials passport to be established by law in 2024 based on a DGNB draft. As per our BLUE BUILDING standard, we already produce a component catalog for each newbuild project. It contains information about the construction products used, the cubic capacity and the end-of-life scenario, and can serve as a basis for a building materials passport in the future.

² Federal Environment Agency (2024): Energiesparende Gebäude. https://www.umweltbundesamt.de/themen/klima-energie/energiesparen/energiesparende-gebaeude#gebaude-wichtig-fur-den-klimaschutz

³ Federal Government (2024): Ein Plan fürs Klima. Klimaschutzgesetz und Klimaschutzprogramm. https://www.bundesregierung.de/breg-de/themen/tipps-fuer-verbraucher/klimaschutzgesetz-2197410

⁴ Definition of climate pathway: The term climate pathway defines a working group to identify sub-strategies of our climate strategy and to develop and initiate measures.