Separate combined non-financial report 2021 for Aareal Bank AG
Separate combined non-financial report 2021 for Aareal Bank AG
3 About this report
4 Description of the business model
5 Sustainability Management at Aareal Bank Group
6 Determination of materiality
8 Risk report
9 1. Environmental issues
16 2. Employee Matters
24 3. Social issues
28 4. Respect for human rights
31 5. Compliance
38 EU taxonomy
42 Independent Auditor’s Limited Assurance Report
About this report
This separate combined non-financial report for Aareal Bank AG and Aareal Bank Group relates to the financial year 2021. It has been prepared in accordance with Section 340a (1a) of the German Commercial Code (Handelsgesetzbuch – HGB) in conjunction with Articles 289b (3) and 340i (5) HGB in conjunction with § 315b (3) HGB as amended by the German CSR Implementing Act (CSR-Richtlinie-Umsetzungsgesetz – CSR-RUG), and was published separately from the group’s management report. Additional information and performance indicators for environmental, social and governance aspects are published in the image section of the annual report, in the online annual report and in the “Responsibility” section of the Aareal Bank Group website.1)
Section 171 (1) sentence 4 of the German Companies Act (Aktiengesetz – AktG) requires the supervisory board to examine the non-financial report. This review by the Supervisory Board focused on the compliance of the reporting with the law, as well as its regularity and suitability for use. As support, the Supervisory Board commissioned a limited assurance review in accordance with ISAE 3000 (revised) from the audit firm KPMG AG. In addition to reporting and extra-financial performance indicators, the review by the auditors focused on the materiality analysis, due diligence policies and processes. KPMG AG Wirtschaftsprüfungsgesellschaft has issued an unqualified report on a limited assurance engagement (see page 42 and following).
The central topics identified in the materiality analysis were used to select the content to be disclosed in the report on each of the five required aspects (environmental issues, social issues, social issues, respect for human rights and anti-corruption issues). corruption and bribery). The non-financial report has been prepared based on the requirements set out in the HGB. Given the growing importance of information security and data protection, we have created a new chapter, “Compliance”, which addresses these issues as well as the content of anti-bribery and corruption issues. -of-wine. In addition, our description of the management approaches and the implementation of the materiality analysis is based on the standards of the Global Reporting Initiative (“GRI referenced”) and also takes into account the principles set out in the Global Compact for United Nations.
The information we provide in the individual chapters is aligned with the selected GRI indicators2) in order to make our performance comparable in the different aspects. The GRI 101 and 103 indicators have been integrated into the reporting texts.
In addition, we have considered the recommendation of the Task Force on Climate-related Financial Disclosures (TCFD) and have incorporated the recommended content for the four-pillar structure into the structure of this Non-Financial Report. In line with this, we use a uniform structure to report relevant content on our strategy, governance, risk management, and metrics and targets for each aspect, ensuring content is transparent and easily accessible. In addition, this non-financial report for 2021 presents the environmental, social and governance (ESG) objectives that have been resolved by the management committee, the timeline of which also extends beyond 2022. We are continuously measuring progress what we do to achieve our goals. using appropriate milestones and associated key performance indicators. The sub-chapters, which are reproduced consistently in the different subjects, group together the recommendations of the TCFD as follows:
2) GRI 101, 102, 103, 205, 206, 302, 305, 401, 404, 405, 406, 414, 419
a) Importance to our industry and our business
Description of the importance of the issue in question for us as a company and for our business environment, and the resulting strategic implications for us
b) Our managerial approach and how we have positioned ourselves
A description of how we have positioned ourselves with respect to governance and the management of opportunities and risks for the subject in question, insofar as this is applicable and deemed relevant
c) Performance indicators and progress made during the reference period
This is used to disclose relevant results and indicators, including progress reports, showing how we are progressing towards achieving our goals
References to information other than that contained in the group management report/corporate governance statement represent additional information and do not form part of the separate combined non-financial report.
Description of the business model 1)
The Structured Real Estate Finance segment of the Aareal Bank Group finances commercial real estate, including office buildings, hotels and shopping centers, as well as logistics infrastructure, residential buildings and student residences. The focus is on medium and long-term, complex and large-volume financing for completed buildings (average duration of around 4 years). Therefore, the ability of properties to retain their value over the long term and the careful selection of its business partners are very much in the interests of the Company.
With its three strategic business segments – Structured Real Estate Finance, Banking & Digital Solutions and Aareon, Aareal Bank Group goes beyond traditional banking activities. Our goal is to provide our customers with forward-looking solutions that provide them with competitive advantages and facilitate their long-term business success.
In the Banking & Digital Solutions (BDS) business area, we are a digitization partner for companies in the housing, real estate and energy sectors, combining extensive advisory services and product solutions with traditional business banking and deposits. A key part of what we do is to integrate the housing and real estate industries with related sectors. In addition, we offer end-to-end solutions for rental deposit management, as well as payment systems that allow our customers to efficiently design their business processes.
Aareon – our subsidiary and one of the leading providers of ERP software and digital solutions for the European real estate industry and its partners – represents our third business segment. Aareon provides innovative and secure solutions across consulting, software and services to optimize IT-based business processes and extend customers’ business models. Its international research and development and cross-border knowledge transfer enable its clients to benefit from all of the Aareal Bank Group’s expertise. Areon
1) See also the “Fundamental Group Information” section of the Group Management Report in the Aareal Bank Group Annual Report 2021 for a description of the business model.
The Smart World portfolio connects real estate companies and their employees with customers, business partners and technical devices in homes and buildings. At the heart of this digital ecosystem are Aareon’s ERP systems, which can be seamlessly combined with additional digital solutions to meet individual business needs.
Group companies are managed at Group level, ie the descriptions of management approaches for the five aspects apply to both the parent company and the subsidiaries. Where specific sustainability management issues exist, we draw attention to these in the appropriate places. We again used our [email protected] initiative, launched in 2020, during the reporting period for ESG integration – i.e. to accelerate the inclusion of ESG aspects in our decision-making and management processes . The divisions were largely responsible for promoting the Group’s ESG activities under this initiative during the reporting period. Examples include supporting regulatory measures relating to ESG topics by participating in official consultations organized by the EU, developing and resolving quantitative ESG objectives for the Group, including green product offerings in the lending and financing from Aareal Bank AG, and the expansion of digital products aimed at solving societal problems. We will examine these in more detail in our discussion of the individual questions and present the results where appropriate. Awareness of ESG issues has increased significantly across the Group as a result of our thorough review of regulatory requirements and our identification of associated opportunities and risks, which can make a significant contribution to the future viability of the Aareal Bank Group.
Sustainability Management at Aareal Bank Group
Aareal Bank Group’s sustainability management activities are centrally managed by the group’s parent company, Aareal Bank AG. The corporate sustainability team, part of the Investor Relations division, with the help of contacts in the various divisions, ensures that the Group’s sustainability activities are extended and improved; overall responsibility rests with the Chairman of the Management Board. In addition, Aareon – as the largest subsidiary of the group – has its own contacts who are responsible for driving the subject forward in collaboration with the Sustainability team. This allows us to emphasize the strategic importance of ecological and social sustainability and corporate governance aspects for our corporate philosophy, to manage their practical implementation centrally and to ensure that relevant ESG information is included. in our communications with our stakeholders.
The Group Sustainability Officer reports directly to the Chairman of the Management Board, keeps him constantly informed of major developments and supports him in his activities. In particular, she is responsible for strategic developments in the management of sustainable development and sustainable finance activities, and liaises closely with the Group’s divisions and subsidiaries to coordinate and advance their implementation. Other priorities include appropriate communication of Aareal Bank Group’s sustainability performance to different target groups in the areas of reporting, ratings, internal and external communications, etc. ; represent the Aareal Bank Group in professional bodies and in working groups; and act as the recipient of and respond to the concerns of relevant stakeholders.
Our sustainable finance activities aim to promote sustainable development and create long-term value while taking into account ESG risks. To do this, we focus on both the international climate protection goals set out in the Paris Agreement and the United Nations Sustainable Development Goals (SDGs).