MEAG adheres to key sustainability standards of Munich Re Group, such as the Code of Conduct, which refers to the UN Global Compact Principles. Further information on Munich Re Group's sustainability initiatives is published at munichre.com.

Policies of MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH on the integration of sustainability risks

The analysis of sustainability risks plays a very important role in MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH’s (“MEAG”) 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.

Update of the statement of 10 March 2021, as of 30 November 2021 (Clarification on MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH)

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

1. Sustainability factors and principal adverse impacts of investment decisions
   In accordance with Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”), investment decisions might cause, contribute to or be directly linked to effects on sustainability factors that are negative, material or likely to be material. Sustainability factors in that regard mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters. Impacts of investment decisions that result in negative effects on such sustainability factors are to be understood as principal adverse impacts (“PAI”), irrespective of any detrimental effect on the value of the investment (so-called “inside-out approach”). Indicators relating to PAI have been further specified in Annex I Table 1, 2 and 3 of the Commission Delegated Regulation (EU) 2022/1288 supplementing the SFDR (“SFDR RTS”).
2. Scope of Application
   This Statement is applicable to the investment processes concerning all asset classes reasonably controllable by MEAG. Certain exceptions may apply to specific investment assets, where identification of PAI for technical and operational reasons can currently not be applied. This statement is not applicable to portfolios in case of which MEAG has delegated the portfolio management to a third-party asset manager.¹
3. Details on the consideration of PAI
4. 1. Identification and prioritization of PAI

In order to identify PAI of MEAG’s investments, several methods are deployed: Initial information on whether and to what extent PAI occur is retrieved from third party data providers for Public Markets assets such as public corporate equity & fixed income and sovereign bonds. For alternative assets data is collected by MEAG internally or via a specialized data provider. For Public Markets assets, these underlying data on PAI are integrated into MEAG’s key data system and issuers’ PAI data are further displayed in the investment management platform and thus made available to portfolio managers. In addition, own analysis is conducted by MEAG’s ESG experts for selected PAI, where potential impacts are considered as highly material and probability of occurrence across majority of industries is high.
Based on several factors such as data availability, applicability, probability of occurrence and potential irremediable character MEAG prioritizes certain PAI indicators. In the course of the investment due diligence, MEAG’s portfolio managers pay special attention to these indicators, that are i.a., greenhouse gas (“GHG”) emissions, fossil fuel sector involvement, negative impact on biodiversity sensitive areas, UN Global Compact principles / OECD guidelines for multinational enterprises violations and violation of social norms by sovereigns. This selection of key indicators is regularly reviewed and will potentially be extended as data matures and other selection factors might change or evolve. 

1. 2. Consideration during investment process and monitoring

MEAG applies different measures to consider PAI indicators in its investments, depending on the respective asset classes. 
Besides the asset class specific due diligence procedures further described below (see 3.2.1-3.2.3), MEAG conducts an overall quarterly portfolio screening for all asset classes based on selected PAI indicators which MEAG has identified as most material considering data availability, applicability, probability of occurrence and potential irremediable character.
Results of this portfolio screening are further analyzed by the MEAG ESG Team in close alignment with relevant investment functions and then presented to the MEAG ESG Committee for transparency and to define appropriate follow-up actions, such as e.g. engagement, closer monitoring, potential portfolio re-allocation. 
Furthermore, as an additional part of the applied overall PAI-approach investments into companies and assets related to controversial weapons and (sub-) sovereigns having a MSCI ESG Research Rating of “CCC” are prohibited and therefore excluded (for more details see MEAG Exclusion Policy).

1. 1. • Public Markets

PAI data on corporates and sovereigns are displayed to portfolio managers in MEAG’s investment management platform which is used for any investment decision. In addition to raw PAI values, further guidance is provided to portfolio managers in order to allow them to properly consider and assess PAI and take a well-informed investment decision. 
Initial trainings on the comprehension of PAI as such and respective indicator values are being provided to portfolio managers. These will be repeated regularly as well as continuously enhanced. 
Based on the PAI information and additional guidance provided to portfolio managers, it generally  remains at their discretion how PAI are taken into consideration when making investment decisions. 
Besides this general approach specific measures are introduced for selected PAI indicators, based on severity and materiality. This includes a pre-trade flag procedure, whereby any investments into issuers of securities that are associated with very severe controversies2 and/or negative impacts on biodiversity sensitive areas shall be avoided or justified by portfolio managers (so-called “comply-or-explain-approach”). The justification rationale is regularly reviewed by the MEAG ESG Team, further analyzed and taken to the MEAG ESG Committee to define appropriate actions if needed.

1. 1. • Alternative Assets: Infrastructure Equity, Infrastructure Debt & Forestry

Pertaining to MEAG’s existing Infrastructure Equity and Debt investments, PAI data for each asset are collected internally or with the support of external sustainability advisors on an annual basis.  
With a view to any new investment available PAI indicators are integrated into the ESG assessment, thus becoming a relevant component of the ESG evaluation presented to MEAG´s Investment Committee. In the course of this ESG assessment special attention is paid to the following indicators: greenhouse gas (“GHG”) emissions, fossil fuel sector involvement, negative impact on biodiversity sensitive areas, UN Global Compact principles / OECD guidelines for multinational enterprises violations. To the extent available and where feasible, benchmarks will be used to evaluate the PAI indicators against PAI indicators of similar projects or sector averages. The collected data on PAI are duly considered in the investment process. 

1. 1. • Real Estate

With regard to MEAG’s real estate investments, data on the two PAI indicators applicable to real estate assets as specified in Annex I, Table 1 No. 17 and 18 SFDR RTS are collected internally by MEAG Real Estate Asset Management Team. As part of the data collection process, the development of the energy efficiency status will be monitored and potential actions might be defined by investment managers. The continuous improvement of the energy efficiency of MEAG’s assets is part of the ESG integration in Real Estate. 
In relation to any new investment, PAI indicators are integrated into ESG questionnaires that are used during the investment due diligence, thus becoming a relevant component of the overall ESG assessment presented to MEAG´s Investment Committee. Further, the real estate asset related PAI indicator ‘energy consumption’ is included as a criterion in future due diligence procedures to prioritize investments on energy efficient real estate assets.

1. 3. Product specific measures to address PAI
      In addition to the general approach and general due diligence procedures described above, certain specific or additional measures to address selected PAI may be applied on single product level depending on the respective investment product. These measures may include i.a., exclusion criteria such as e.g. fossil fuel related business activities, companies that are in breach of the UN Global Compact or best-in-class approaches as described in more detail in the respective product’s offering documents.

4. Engagement
   MEAG is committed to the Climate Action 100+ initiative, one of the largest climate engagement initiatives run by investors. This initiative challenges the world's largest emitters of GHG to change their business models in reaction to climate risks. It strives for 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. MEAG commits to discussing the topic of climate change with companies within the scope of this initiative.
   Further MEAG enters into bilateral dialogue with selected single investee companies where severe ESG-related controversies are identified and which are assessed to be not sufficiently addressed by the respective company.
   In its Participation Policy MEAG explains how it exercises shareholder rights and integrates shareholder engagement in its investment strategy, how MEAG monitors relevant issues in the portfolio companies and communicates with relevant stakeholders of the investee companies. The Participation Policy also describes how MEAG cooperates with other shareholders and deals with conflicts of interest in relation to their engagement.
   MEAG is obliged to exercise voting rights for the companies of which securities are held in its investment funds (“Portfolio Companies”) always in the interest of its investors. MEAG therefore generally exercises influence on the corporate governance and business policy of Portfolio Companies at general meetings of Portfolio Companies in the interest of its own investors and exclusively for the benefit of the relevant investment fund; in doing so, MEAG takes into account environmental, social and governance aspects. MEAG’s Proxy Voting Policy describes in more detail how ESG aspects are taken into account, whereby specific focus is set on investee companies’ climate actions and commitments. Hereby, MEAG also calls on the expertise of external voting consultants when exercising voting rights.

5. 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 the 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 its parent company Munich Re, MEAG is a member of Climate Action 100+. This membership is a key component of MEAG’s engagement approach, highlighting the focus on climate change in this area as well.
   MEAG has committed to upholding the Principles for Responsible Investment (PRI), following in the footsteps of its parent Munich Re, which in 2006 became one of the first companies in Germany to sign the PRI. These six Principles serve MEAG 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 organizations and their respective set of rules / principles or codes are taken into account by MEAG:

• The Munich Re Responsible Investment Guideline (RIG) is a set of rules for investments of Munich Re Group. It contains rules and requirements regarding 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. MEAG supports Munich Re in implementing the demands of the AOA.
• 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 organizations in the field of human rights, employee rights, environmental protection and anti-corruption.

Update from 10 February 2023 of the Declaration of 10 March 2021

Fundamentals of the staff remuneration system of MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH