Declaration of strategies for upholding the duty of care in the context of the principle adverse impacts of investment decisions on sustainability factors (Principle Adverse Impacts Statement pursuant to Art. 4 subs. 1 of EU regulation 2019/2088)
MEAG MUNICH ERGO Kapitalverwaltungsgesellschaft mbH, Munich, LEI 529900UCDILVT7WI6S55, considers principal adverse impacts of its investment decisions on sustainability factors.
This Principle Adverse Impacts Statement covers the period from 10 March to 31 December 2021.
Sustainability factors and the principle adverse impacts on sustainability of investment decisions, as seen by MEAG
Investment decisions can cause negative effects on sustainability factors, contribute to them or be directly connected with them. Sustainability factors include, among others, environmental protection, employee needs, respect for human rights and the fight against corruption. The most important negative effects on sustainability factors are called "principal adverse impacts".
Our team of ESG experts develops strategies for determining and weighting the most relevant adverse impacts for MEAG, and advises the management board and portfolio management on ESG-related effects. Fighting climate change is without doubt one of the greatest challenges of our time. We consider it our responsibility to contribute to the alignment of global monetary flows with the Paris Agreement. The main objective of the Paris Agreement is to restrict the rise in the average global temperature to less than 2 degrees Celsius above its pre-industrial level. This entails reducing the emission of greenhouse gases and making a climate-change-resistant development possible going forward. We can make a significant contribution to decarbonisation through our investments and through our dialogue with invested companies.
Because the main problems for environmental sustainability lie in greenhouse gas emissions and fossil fuels, we work on measuring the effects of our investments on climate change and taking them into account in our actions. In doing so we also help Munich Re achieve a climate-neutral portfolio by 2050 – something that Munich Re committed to when joining the Net Zero Asset Owner Alliance.
We are also aware of the importance of social standards, human rights and good governance for sustainable progress. This is particularly true of the UN Global Compact and conventions on banned weapons. We are continuously working to meet acknowledged international standards and to mitigate possible adverse impacts of our investment decisions.
We measure and analyse the principle adverse impacts on sustainability
Integrating ESG criteria is a strategic component of our investment process. When making investments, we analyse whether they meet (E)nvironmental and (S)ocial standards, and whether the structures of good (G)overnance (company/state) are in place. We also include ESG criteria in the due diligence we perform for long-term investments, for instance in infrastructure. This enables us to quickly and fully identify risks and opportunities, and to act accordingly.
ESG integration is the basis for measuring, analysing and understanding the principle adverse impacts on sustainability. ESG integration is not only a starting point for the measurement and collection of data, it also allows us to consider the lasting sustainability consequences of an investment within the context of its overall ESG performance. When measuring the indicators of these impacts that we have identified, we rely on specialist providers of ESG and climate data, and on expertise within Munich Re Group.
Examples of measurable indicators include the total carbon emissions and the carbon footprint. The number of severe violations of the UN Global Compact remains an indicator for measuring adherence to international norms. The ability to consider the principle adverse impacts is heavily dependent on the availability of the relevant data in the market. We are constantly working on improving the sustainability data coverage of the assets we manage.
We promote responsible management through shareholder engagement
MEAG leverages its influence on issuers in engagement dialogues and when exercising its voting rights. Our goal is to minimise negative impacts on sustainability factors and to promote sustainability going forward. MEAG's Proxy Voting Guideline contains ESG aspects. When exercising our voting rights, we also call on the expertise of external voting rights advisors. In the future, we will integrate sustainability aspects even more into our collaboration policies.
To make better use of our opportunities to help reduce greenhouse gas emissions, MEAG and Munich Re companies are members in "Climate Action 100+". The initiative asks the world's largest producers of greenhouse gases to change their business model with regard to climate risks. Climate Action 100+ wants to reduce emissions, have climate change play a more key role in business decisions and improve the reporting on climate-related financial risks. With our membership, we commit to discussing the issue of climate change together with other investors.
We observe Group standards and international standards for reducing adverse impacts on sustainability
The Munich Re (Group) Code of Conduct is a binding set of rules for all employees, including the management and management boards, of the Group companies, and thus also for MEAG. The Code of Conduct documents the requirements for responsible behaviour in five areas of our daily work: core business, collaboration with customers and sales partners, disciplined financial management and Group-wide personnel management. Additional regulations in individual Group divisions or companies supplement the Code.
Together with our parent company Munich Re we are a member of "Climate Action 100+", one of the largest investor-managed initiatives. This membership is a key component of our co-operation policy and places the proper importance on our focus on climate change.
Munich Re is a member of several national and international sustainability organisations, which highlights the Group's strategic engagement in the field of sustainability, especially when it comes to responsible investment, and influences the basic scope of investments for Munich Re Group:
- In 2020, Munich Re joined the UN's "Net-Zero Asset Owner Alliance" (AOA). The signatories of this alliance commit to promote the achievement of a 1.5° world through net zero emissions in investments by 2050. We assist Munich Re in meeting the demands of the AOA.
- Our parent Munich Re was the first company in Germany to sign the UNO's six Principles for Responsible Investment (PRI) in 2006. These Principles provide a framework for sustainable behaviour in investment management.
- We have established the Responsible Investment Guideline (RIG) within the Group as an internal set of rules for pursuing our sustainable approach towards investing. The RIG contains all directives and requirements pertaining to PRI and ESG that affect the management of Munich Re Group's investments. This includes in particular the exclusion criteria for investments in issuers involved in controversial sectors or issuers which breach recognised norms, and aims to restrict negative impacts on sustainability factors. Manufacturing banned weapons or mining and conversion of coal into electricity are examples of these.
- Munich Re is also a member of the United Nations' "Global Compact" initiative, which comprises ten principles and provides an acknowledged international standard for companies and organisations in the fields of human rights, labour rights, environmental protection and anti-corruption.
As of: 10 March 2021