Climate roadmaps and sustainability strategy for HanseMerkur Grundvermögen

In 2022, HanseMerkur Grundvermögen (HMG), one of Germany’s leading investment and asset managers, commissioned consulting firm Wüest Partner to carry out a comprehensive sustainability assessment for 84 existing properties. This was followed in 2023 by a commission to strategically develop the entire property portfolio.

Sustainability strategy goals

This strategy project had three objectives:

1. The main objective was to draw up specific climate roadmaps for decarbonizing the property portfolio.
2. To identify further fields of action in the ESG area, based on the previously determined ECORE rating.
3. To develop strategies for classifying selected funds as “Article 8 funds” under the EU Disclosure Regulation SFDR.

“It is important to always consider a property’s long-term economic viability, especially when designing short- to medium-term decarbonization strategies. This is because they can be influenced by a near-term stranding date or dynamically increasing CO₂ cost burden. Thanks to our interdisciplinary expertise, we could bundle HMG’s operational and regulatory sustainability requirements into a comprehensive consultancy service.”

Stefan Stute, Managing Partner, Wüest Partner

Requirements for institutional investors

• Considering ESG aspects as an integral part of institutional end investors’ investment and acquisition strategies. 
• Tackling the biggest challenge in the direct and indirect portfolio: Anticipating and reducing transitory risks, particularly those arising from excessive CO₂ emissions, and from energy and resource consumption.
• Overcoming the additional challenges of data collection and aggregation as part of the increasing ESG reporting obligations, which the EU is further tightening through the new Corporate Social Responsibility Directive (CSRD).

Foundations of the strategy concept

Transparency and implementation measures thanks to the sustainability strategy

The expected price per tonne of emitted CO₂ is a decisive factor for the implementation date of energy efficiency measures and designing a renewable energy supply. Until 2026, statutory fixed prices cap this cost in the German building sector. From 2027, however, the National emissions trading (BEH) instrument will be replaced by European emissions trading (ETS2) and the Carbon Dioxide Cost Sharing Act (CO2KostAufG), bringing significant changes.

To ensure that HMG has the necessary quantitative data to develop sustainable business plans and can thus transparently assess its own portfolio quality, we took into account the CO₂-induced risks and defined corresponding CapEx budgets.

In addition, we analyzed selected funds in the portfolio for their potential to be classified as sustainable financial products (“Article 8 funds”). Finally, we developed fund-specific SFDR (Sustainable Finance Disclosure Regulation) strategy approaches based on ESG roadmaps and provided concrete implementation measures.

“This comprehensive sustainability strategy ensures that HanseMerkur Grundvermögen not only fulfills the current regulatory requirements but also assumes a leading role in sustainable property management in the long term.”

Lutz Kandzia, ESG Department, HanseMerkur Grundvermögen

Derivation from the UN SDGs:

• Mapping of corporate goals with the UN Sustainability Development Goals relevant to property: Health and well-being (3), Affordable and clean energy (7), Sustainable cities and communities (11), Responsible consumption and production (12), Climate action (13).
• Analyzing the current fund strategy and deriving an individual ESG strategy based on the selected UN SDGs.