An under-developed dimension in upgrading energy-inefficient German rental buildings: Corporate social responsibility as a hybrid form of governance

Abstract

Germany aims to achieve climate neutrality in its residential building stock by 2050. It is on track for this with newbuilds, through mandating tight energy efficiency standards. However, it lags more than 50 % behind its climate goals for energy-efficiency upgrading of existing buildings. Further, the costs of upgrading often fall on tenants, through legally permitted post-upgrade rent increases that are too high to be offset by energy savings. This paper reports on a set of interviews and discussions with a panel of experts/stakeholders, exploring how these climate goals can be met without economically disadvantaging low-income tenants. A key finding is that the governance of this transition is weak, including both “hard” governance, through laws, regulations and sanctions, and “soft” governance, through corporate and cultural drivers of energy efficiency renovation. A hybrid between these two, corporate social responsibility, appears to offer promise for moving things forward. However, while large corporate rental housing providers have corporate social responsibility frameworks, there is no equivalent among small private landlords/landladies. Further, while these frameworks help drive energy efficiency renovation forward, they often fail to protect low-income tenants from sharp rent increases. Rental corporations' corporate social responsibility frameworks need be revised to take this issue into account. Further, a framework similar to corporate social responsibility needs to be developed for small private landlords/landladies. This could begin as voluntary, as in Scotland and Wales, and transition to mandatory over time, as has happened with corporate social responsibility in the EU.