Velliv: “The ESG and sustainability requirements for our business partners must grow”

“As one of Denmark’s largest pension companies, we have a social responsibility that we must live up to. That is why ESG, and sustainability are the foundation of everything we do and a key part of our strategy to create a robust and future-proof property portfolio with attractive long-term returns,” says Solveig Rannje, Real Estate Director at Velliv, Pension & Forsikring, which is a pension and insurance company with around 420,000 customers. It is 100% customer-owned and has a property portfolio valued at approximately 20 billion DKK.

Solveig Rannje has more than 30 years of experience in the real estate industry and originally trained as a legal secretary. She is also a certified real estate agent and holds a law degree (cand.jur.) from the University of Copenhagen. She has served as Deputy Director at PFA Ejendomme, Real Estate Director at Proark, Managing Director at Rosk Ejendomme/FS Ejendomsselskab under Finansiel Stabilitet, Real Estate Director at SEB Pension, and Partner/Real Estate Director at Thylander Gruppen.

“When I joined Velliv in 2019, we developed a strategy to bring the management of our wholly owned properties in-house. We went from 2-3 employees to at present having a team of 18 employees with expertise in investment, development, asset management, law, and ESG. We are in the process of repositioning our property portfolio and selling off small, medium-sized, and non-future-proof properties, including those in secondary locations and sectors we aim to reduce our allocation to. Ideally, we prefer not to own properties valued at less than 100 million DKK, and we are particularly focused on investing in larger, modern residential and logistics properties.”

Divestments mean that, among others, EDC Poul Erik Bech is continuously facilitating the sale of investment properties on behalf of Velliv, primarily in larger Danish provincial cities.

Fighting loneliness
Overall, Velliv has approximately 75% of its assets within office/warehouse/logistics, while dwelling accounts for the remaining approximately 25%. “In 2019, we had a property portfolio of 275 wholly and partly owned properties and today we are down to 225. Our expectation is that the number will decrease further. We have come a long way, but the current transaction market with lower transaction levels and thus low liquidity can be challenging – not least in relation to our desire to eventually reallocate the property portfolio to match our strategy for property investments. So, we have not come as far as we had hoped, but we are noticing increased activity in our sales and that the transaction market is slowly improving,” says Solveig Rannje.

“Generally, we do not want to increase volume, but we are very eager to expand our new residential community concept, ‘Naboliv,’ where we aim to connect generations within a community while providing an attractive, risk-adjusted return to our pension customers. We also hope to contribute to an important societal agenda by creating well-being among residents and fighting loneliness. Our first project is in Birkerød, featuring 110 rental apartments, which will be completed in 2025. It is our first project that complies with the ESG requirements of the EU taxonomy, and we are developing this project in collaboration with Nordstern. We want to invest in residential properties where we can implement our community concept, but the current transaction market makes it challenging to execute our strategy.”

ESG goals are a priority
In 2023, Velliv set new, ambitious goals for sustainability in the property portfolio leading up to 2030. The goals focus on seven key areas: CO₂e-reduction, sustainable certification, active ownership, data, circular economy, biodiversity, and social sustainability.

Solveig Rannje says: “ESG and sustainability are the foundation of everything we do at Velliv. We work hard every day to meet our established goals for our property portfolio (read more in the box, ed.). The ambition is to reduce CO₂ e emissions from both wholly and partly owned properties by 80% CO₂ e/m² in 2030, relative to the 2019 level. So far, in 2024, we have reduced our CO₂ e emissions by 59% since 2019. At the same time, we have a goal for our portfolio to be CO₂e-neutral by 2040. This is a huge priority for us – and it’s a task that never ends.”

ESG requirements for suppliers
As a supplier and partner, EDC Poul Erik Bech has received approximately 20 ESG and sustainability-related questions that Velliv wants answered. Solveig Rannje explains: “As mentioned, we are aware of our role and responsibility, and we want to guide the real estate industry in the right direction. Therefore, we have also started to gain an overview of the ESG efforts and goals of our largest partners. So far, we have asked 10 of our primary partners, and initially, we want a better understanding of where we stand in the industry.”

“Based on this, we will get an overview and, in the long term, help to push for change. So far, the feedback has been positive, and it is definitely a good dialogue tool that triggers a lot of thoughts for us and hopefully also our suppliers. The idea is that this is something even more of our suppliers should respond to, probably once a year, so we can see how progress is being made, and our requirements for our suppliers will become more strict along the way. It’s about collaboration because one thing is certain; we cannot achieve much on our own. ESG and sustainability need to be integrated throughout the entire chain of value, and we want to contribute to expanding this work within the real estate industry.”

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Velliv’s overall approach to ESG and sustainability

1. CO₂ reduction: This includes an 80% reduction of the Velliv portfolio by 2030 in scope 1 & 2 and raising 80% of all energy ratings to C or better by the end of 2025.
2. Certification (DGNB/Taxonomy): 50% of the Velliv portfolio will contribute to EU taxonomy alignment by 2030, and all new construction will be at least DGNB or taxonomy certified.
3. Active ownership: Influencing our co-owned investments to contribute to the overall goals.
4. Data: Ensuring that the Velliv portfolio provides energy data and that we can deliver it to tenants.
5. Circular economy: The majority of Velliv’s renovations must follow circular principles, and there should be a general focus on reducing Velliv’s CO₂ emissions from construction.
6. Biodiversity: Developing a program and goals to incorporate biodiversity into the management of Velliv’s investment properties.
7. Social sustainability: Developing a housing community concept for the benefit of its residents and Velliv’s customers, as well as increasingly integrating social sustainability into the management of investment properties.

Source: Velliv