Sustainability

Proven sustainability expertise

Doing business responsibly has a long tradition in Munich Re Group.

Munich Re is an internationally recognised expert in the fields of risk management, sustainability and climate change. MEAG’s constant exchange of expertise and know-how with Munich Re helps us recognise investment risks early and exploit opportunities.

As the global asset manager for Munich Re Group, we focus on long-term value-managed investments. In doing so, our core field of expertise lies in particular in the sustainable management of fixed income and illiquid assets, based on our many years of experience in the field of risk management and a profound understanding of the needs of liability-driven investors.

With our future-oriented approach and by systematically taking sustainability aspects into account in all the relevant investment classes, we aim to achieve outperformance for our clients over the long term, while at the same time making a significant contribution to a sustainable future. In doing so we observe the United Nations’ Principles for Responsible Investment (UN PRI), which Munich Re was one of the first German companies to become a signatory of, in 2006.

We integrate sustainability criteria into our investment decisions

In addition to customary financial analysis, MEAG’s integration approach also takes extensive environmental, social and governance (ESG) criteria into account when making investment decisions. For our long-term investments in the field of infrastructure, we also integrate ESG criteria into our due diligence. This enables us to identify all risks and opportunities early on, and to act accordingly. We see a positive relationship between the sustainability of investment strategies and their performance, a view that is supported by numerous studies.

When integrating ESG, MEAG uses the analyses from leading providers of sustainability data, and the expertise of Munich Re Group in the fields of risk management and climate research. In order to ensure and further improve the quality of our ESG integration, we are constantly further educating our staff with regard to ESG.

We influence with our Investment Stewardships

MEAG leverages its influence on issuers within the scope of commitment dialogues and by exercising voting rights. The objective here is to minimise potential ESG risks and promote sustainable development. In doing so we also refer to the expertise of external voting advisors.

We help our clients with sustainable investment solutions

We help our clients extensively in implementing their individually tailored sustainable investment strategy, and we offer top-quality investment products with an ESG focus, both for our institutional investors and in the retail investment funds field. At the client’s request we also compile detailed evaluations and reports on the sustainability balance of their investments.

We place a special focus on climate change

We are constantly measuring the effects of our investments on climate change, and documenting climate opportunities and risks. Here, MEAG collaborates closely together with the globally lauded climate experts at Munich Re. We are also helping Munich Re achieve a climate-neutral portfolio by 2050. The Group committed to this goal within the scope of its membership in the Net Zero Asset Owner Alliance.

Strategies for including sustainability risks in the investment-decision process (Article 3 SFDR)

The analysis of sustainability risks plays a very important role in MEAG's investment decisions. Alongside conventional financial analyses, we also assess numerous financially relevant criteria from the fields of environment, social and corporate governance (ESG). Ensuring that sustainability risks and opportunities are accounted for adequately in the asset's purchase price is an integral part of our investment-decision process.

In the investment process for market-traded securities, MEAG draws on the analyses performed by leading providers of sustainability data. Special ESG ratings serve to indicate the extent to which the issuers of the securities are subject to sustainability risks and actively manage those risks.

For the sustainable MEAG retail funds we have also developed special ESG investment concepts designed to further reduce sustainability risks in the funds. You can find more on this in the funds' sales prospectuses.

In the investment-decision process for long-term infrastructure investments, asset-specific ESG criteria are integrated into the due diligence process. Here, MEAG also leverages the risk management and climate research expertise of Munich Re Group. We classify the ESG risks in our risk management second opinion.

All data as of 10 March 2021

Statement on due diligence policies with respect to the principle adverse impacts of investment decisions on sustainability factors (declaration as provided for by Art. 4 para. 1 of Regulation (EU) 2019/2088)

MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH (“MEAG”), Munich, LEI 529900UCDILVT7WI6S55, considers principle adverse impacts of investment decisions on sustainability factors.

The Statement does not yet cover the more extensive demands required by the European Union in the draft version of the regulatory technical standards (RTS). The RTS will, among other things, detail more precisely the requirements of Art. 4 para. 1 Regulation (EU) 2019/2088 (Disclosure Regulation) and provide detailed requirements on methods and the structure of the Statement. MEAG will comply with these requirements when they come into effect.

Sustainability factors and principle adverse impacts of investment decisions as seen by MEAG

Investment decisions can cause, contribute to or be directly linked to effects on sustainability factors that are negative, material or likely to be material. Sustainability factors include, for instance, environmental protection, employee matters, respect for human rights and anti-corruption and anti-bribery matters.

Fighting climate change is without doubt one of the greatest challenges of our age. We consider it our responsibility to contribute to shaping global monetary flows in accordance with the Paris Agreement. That means reducing the emission of greenhouse gases and enabling development that is resistant to climate change. We can help decarbonise the world with our investments and through the dialogue with the investee companies.

We therefore consider the principle adverse impacts (“PAI”) on the environment to be greenhouse gas emissions and fossil fuels. That is why we are working on measuring the effects of our investments on climate change and considering those effects appropriately. In doing so we also want to help Munich Re achieve a climate-neutral investment portfolio by 2050, which Munich Re committed to by joining the Net Zero Asset Owner Alliance.

We are also aware of the importance of social standards, human rights and corporate governance for sustainability. This applies in particular to the UN Global Compact and conventions on banned weapons.

Measures in the context of principle adverse impacts of investment decisions on sustainability

MEAG has formed a team of ESG experts, which advises the company management on ESG matters and offers ESG trainings. MEAG regularly reviews regulatory ESG demands and strives to meet them. This includes structuring and adjusting our reporting on sustainability impacts.

MEAG strives to provide comprehensive information on PAI of the assets it manages and getting that information into the IT-supported systems. The ability to consider principle adverse impacts depends largely on the availability of this information on the market and in MEAG's IT systems. Examples of measurable indicators are, for example, the absolute amount of total carbon emissions and the relative carbon footprint. The number of serious breaches of the UN Global Compact may also be a possible indicator for measuring the degree to which international standards are upheld. For gradually gathering PAI on sustainability factors MEAG uses external specialists. In doing so, MEAG aims to create a solid basis of data for making the adverse impacts of investment decisions visible.

Policies for identifying and prioritising principal adverse sustainability impacts and indicators

As MEAG manages retail funds and domestic special AIFs with various investment focuses, and financial portfolios for institutional investors from outside Munich Re Group, different sustainability-related strategies can be used depending on the investment product and customer. The strategies named below for meeting the due diligence obligations with regard to the adverse impacts on sustainability are therefore product-specific and not applied in the same way and to the same extent to all investment decisions and strategies.

The strategies listed below can be used in dependence on the product and mandate. It is important to MEAG to add to these where possible and applicable.

ESG criteria in the investment process

The portfolio management has ESG-ratings and -research at its disposal. This information can give an indication of PAI. When it comes to long-term investments, such as in the field of infrastructure, we have integrated ESG criteria into the due diligence, enabling us to identify risks and opportunities in the investment process and to act accordingly. In doing so we make use of external research agencies, due diligence consultants and our in-house expertise.

Exclusion criteria

Exclusion criteria are defined to rule out companies from the outset that are active in certain controversial fields of business or that breach recognised norms. Exclusion criteria are important strategies for upholding due diligence obligations and they are applied in numerous of the funds and mandates managed by MEAG across various asset classes.

Best-in-class approach

A best-in-class strategy is used on selected products. Issuers are only allowed in the fund on the basis of their ESG performance if they are sustainability leaders in their field.

Engagement policy

MEAG has a Proxy Voting Guideline that contains ESG aspects. We also call on the expertise of external voting consultants when exercising our voting rights. Sustainability aspects will be integrated to an even greater extent into our engagement policies in future.

MEAG is committed to the Climate Action 100+, one of the largest engagement initiatives run by investors. This initiative challenges the world's largest emitters of greenhouse gases to change their business models in reaction to climate risks. It wants emissions to be reduced, climate change to play a bigger part in corporate decisions and the reporting of climate-related financial risks to be improved. We commit to discussing the topic of climate change with companies within the scope of this initiative.

Codes and standards

The Munich Re (Group) Code of Conduct is a binding set of rules for all employees of the Group companies, and thus also for MEAG. The Code lays out what is needed to act responsibly in five core areas of our daily work: the core business, working together with customers and sales partners, disciplined financial management, Group-wide HR management and taking responsibility. Additional regulations in individual divisions or companies in the Group underscore this Code.

Together with our parent company Munich Re, we are a member of Climate Action 100+. This membership is a key component of our engagement policy, highlighting our focus on climate change in this area as well.

MEAG has committed to upholding the United Nations Principles for Responsible Investment (UN PRI), following in the footsteps of our parent Munich Re, which in 2006 became one of the first companies in Germany to sign the UN PRI. These six Principles introduced by the UN serve us as the framework for sustainable and responsible investment.

Where MEAG manages Munich Re Group investments, Munich Re's commitment to several national and international sustainability organisations is also indirectly of great relevance to MEAG:

The Responsible Investment Guideline (RIG) is a binding set of rules for investments of Munich Re Group. It contains rules and requirements regarding UN PRI and ESG that pertain to the management of Munich Re Group's investments, in particular exclusion criteria.
Munich Re joined the UN Net-Zero Asset Owner Alliance (AOA) in 2020. The signatories commit to facilitating the accomplishment of a 1.5° world by means of net zero emissions in their investments by 2050. We support Munich Re implement the demands of the AOA.
In 2006 our parent company Munich Re signed the UN Principles for Responsible Investment (UN PRI).
Munich Re is also a member of the UN's Global Compact initiative, the ten principles of which represent an accepted international standard for companies and organisations in the field of human rights, employee rights, environmental protection and anti-corruption.

Update from 15 October 2021 of the Declaration of 10 March 2021

Procurement principles

By establishing its Procurement Principles, Munich Re (Group) has integrated the principles of the United Nations laid down in the Global Compact, and committed to upholding them. The business activities and strategies of the Group companies are based around ten universally recognised principles from the fields of human rights, labour standards, environmental protection and the fighting of corruption. All suppliers and service providers that the Group units work with are requested to observe these principles when making bids and concluding contracts. The Munich Re Procurement Principles also apply at MEAG.