Sustainability

The MEAG ESG strategy

Sustainability strategy

MEAG is the global asset manager of Munich Re Group. Our focus is on achieving lasting sustainable growth with the investments of our clients, which include Munich Re, ERGO and other non-Group institutional and private clients. Our core competency lies in liquid assets and increasingly in alternative investments such as real estate, infrastructure, renewable energies and agriculture and forestry. Among our particular strengths are our many years of expertise in the field of risk management and our in-depth understanding of the needs of investors that want to cover their payment obligations with the cash flows from their assets.

We strive to exceed our clients' demanding goals while at the same time making a significant contribution to a sustainable world by systematically considering the sustainability aspects of investments in all relevant asset classes. To this end, we adhere to, among other things, the United Nations Principles for Responsible Investment (UN PRI), which Munich Re was one of the first companies in Germany to sign in 2006. To further strengthen the Group's commitment, MEAG has also signed the UN PRI in 2021.

MEAG's Management Board is responsible for the sustainability strategy, with the support of the company's ESG department, which advises MEAG's business units on sustainability issues and helps them implement the strategy.

ESG Governance
To ensure company-wide alignment on ESG strategy, implementation and communication, MEAG has set up a new ESG Governance in 2022. The MEAG ESG Committee (voting members: Chief Administration Officer, CIO Alternative Assets, CIO Public Markets, Chief Customer Officer, Head of ESG & Sustainable Finance) decides on strategic ESG matters, while the MEAG ESG Management Team is responsible for the MEAG-wide ESG implementation. A dedicated ESG Team with a direct reporting line to the Management Board of MEAG is responsible for enabling compliance with ESG regulation in cooperation with the legal department. The legal department is staffed with dedicated ESG experts. Further, the ESG team develops ESG guidelines and implementation measures and empowers ESG product development and communication.

The MEAG ESG team is supported by ESG multipliers across the different investment management and portfolio management teams. Staff members functioning as multipliers are actively sharing their knowledge on ESG integration within their own department and continuously build asset-class-specific ESG expertise.

Training
MEAG provides regular awareness raising sessions on ESG, addressing topics such as ESG trends and regulation for all employees. Numerous employees from MEAG’s investment management, portfolio management and credit research teams are offered in-house training on ESG in cooperation with MEAG’s ESG data providers MSCI ESG and ISS or have been trained to become certified ESG analysts.

Further developing the Stewardship efforts of Munich Re and MEAG¹

Stewardship has become a tool of choice for ESG implementation thanks to its potential to create real-world impact through the dialogue with investee companies. After successful engagements with a focus on climate, Munich Re and MEAG are excited to now expand the scope to Human Rights starting with a first step to become endorser of the PRI Advance Stewardship Initiative. The initiative serves as a platform for investors to discuss Human Rights and social issues in investee companies and to foster positive change for employees and society. Besides the climate and net zero focus, Human Rights is another key aspect within the ESG integration approach of Munich Re Group’s Responsible Investment Guideline (RIG).

The RIG provides our framework for Munich Re Group investment activities on an entity-level, and specifies, amongst others, exclusion criteria for investments in companies not in line with expected Human Rights conduct.

Our support of the PRI Advance stewardship initiative now expands the instruments we can use to integrate Human Rights aspects into the investment decision process with the potential to generate real world impact.

Therefore, we support the investor statement of PRI advance: https://dwtyzx6upklss.cloudfront.net/Uploads/w/x/y/advance_investorstatement_17may2022_339587.pdf

¹ _{MEAG in terms of this statement comprises: MEAG MUNICH ERGO AssetManagement GmbH, Munich; MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH, Munich; MEAG New York Corporation, New York; MEAG Hong Kong Limited, Hong Kong}

We integrate sustainability criteria into our investment decisions

In addition to traditional financial analysis, MEAG's integration concept also takes account of extensive environmental, social and governance (ESG) criteria in all investment decisions. We have integrated ESG criteria into the due diligence process for our long-term investments in infrastructure and real estate, which enables us to identify opportunities and risks comprehensively at an early stage and to take them into account in our decisions in the interests of our clients. We concur with numerous studies that see a positive long-term correlation between the sustainability of investment strategies and their performance.

MEAG excludes investments in producers of controversial weapons and companies whose business models are based on thermal coal or oil sands beyond certain limits. Bonds from countries with an MSCI ESG CCC rating are also excluded. For more details, please see our Exclusion Policy.

As part of its integration concept, MEAG uses analyses from leading providers of sustainability data, and Munich Re Group's expertise in risk management and climate research. To ensure and further enhance the high quality of this concept, we enable all colleagues to continuously expand their knowledge and keep abreast of the latest research findings.

When choosing investments for Munich Re Group and our sustainable mutual funds, we apply a number of exclusion criteria. Including coal production and power generation, the mining of oil sands and speculation with agricultural commodities.

We exert influence within the scope of our investment stewardship

MEAG influences issuers through engagement dialogues and by exercising voting rights. The aim of this is to minimise potential ESG risks in the investments we manage, create transparency with regard to sustainability and promote sustainable social and environmental development. In doing so, we also draw on the expertise of external voting advisors.

We are also a member of the Climate Action 100+ initiative, which helps us conduct our dialogues on climate change even more effectively with the relevant issuers.

We help our clients with sustainable investment solutions

We support our clients in all facets of implementing their sustainable investment strategies and offer our institutional investors and our retail clients in the mutual fund segment high-quality investment products with an ESG focus. On request, we also compile detailed evaluations and reports for our clients on the sustainability balance of their investments.

We place a special focus on climate change

We work to measure the impact of our investments on climate change and to holistically record climate opportunities and risks. Here, MEAG collaborates closely with Munich Re Group, which holds very special expertise in this area due to its insurance background. We also support Munich Re Group in achieving a climate-neutral portfolio by 2050. Munich Re Group has committed to this goal as part of its membership in the Net Zero Asset Owner Alliance.

We practice sustainability at our locations worldwide

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.

Sustainability-related disclosures

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

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)

Statement on principal 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 principal adverse impacts of investment decisions on sustainability factors.

MEAG PAI Statement

Remuneration policies in relation to the integration of sustainability risks (Art. 5 SFDR)

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

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.

Our Supplier Code of Conduct

Munich Re Group’s Supplier Code of Conduct is designed to help ensure that all third-party suppliers providing goods and/or services to a Munich Re company meet our standards for protection of the environment, fair and respectful treatment of their workforce, safe working conditions, zero tolerance regarding corruption, and ethical business practices.

We would also like to encourage them to go beyond current requirements and work with us together to shape a more sustainable future. Therefore we have defined a minimum set of criteria which the supplier must comply with (“Requirement”). In addition, we have defined “Aspirations” that go beyond the minimum requirements and shall be considered as an ambition.

Supplier Code of Conduct