Letter from the Green Bond Department

Dear Investors and Stakeholders,

Sustainable finance and sustainable financial market policymaking are important means of supporting the shift toward climate neutrality in the real economy. According to the German government’s Climate Action Program 2030 for implementation of the Climate Action Plan 2050, sustainable finance means taking sustainability aspects (ESG criteria) into account when making decisions about financing.

In Germany, real estate accounts for around a third of total CO₂ emissions, with buildings being directly responsible for 14% of the CO₂ emissions. By 2030, buildings may not emit more than 72 million metric tons of CO₂ – equivalent to a decrease of 39% compared with 2018. In order to achieve these ambitious targets, additional effective measures are needed to steer investments in the buildings sector. Green bonds are a suitable way of funding these investments.

In May 2018, Volkswagen Immobilien GmbH became the first German real estate company to launch a green bond program. It has successfully placed two transactions to date. The innovative approach to project selection and appraisal was commended with the immobilienmanager Award in the “Financing” category in February 2019.

Following last year’s decline in green bond issues for the first time in history, the players appear to have adapted to the market environment, and the volume of new issues is rising year on year. According to the Climate Bond Initiative’s annual report (up to Q3; annual report not yet published), new issues of green bonds had increased by 24.8% to €415 billion by Q3 2023. The forecasts and initial reports in 2024 confirm this trend.

Our fifth green bond report contains information about our activities, allocation and the impact of our measures.

We hope you enjoy reading it!

Sandra Dieckmann and Melissa Kronig