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Munich Re

PRI reporting framework 2018

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

          Position Papers
        

01.3. Indicate if the investment policy covers any of the following

Position papers and applications on sensitive topics at Munich Re

Banned Weapons Policy on Cluster Munition and Land Mines

ESG Criteria for Engineering ESG tool for engineering / large infrastructure projects 15

Oils sands Position paper including specific questions on ESG aspects

Fracking Position paper including specific questions on ESG aspects

Mining Position paper in collaboration with Mining business unit; based on a master thesis "ESG aspects in the mining industry"

Arctic Oil Drilling Guideline, risks to be referred to Arctic Drilling Panel

ESG country rating ESG information included in MR Country Risk Assessment

Investments in Farmland Position paper in collaboration with MEAG and Agro business unit

In 2013, we developed an ESG questionnaire for engineering projects (using the example of technical insurance for construction projects). These help our underwriters and asset managers to systematically incorporate ESG aspects into their risk assessment. This control mechanism is used in particular for risk assessment with major infrastructure projects. For the time being, the ESG tool applies to 5 areas of industry.

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

Responsible investemt strategy:

As an intergaral part of our Group strategy coporate resonsibility is also reflected our sustainable approach to investment. The Principles for Responsible Investment (PRI) serve as the framework in this context.

As early as 2002, we decided that our equity and bond investments had to meet specific sustainability criteria. In 2005, this requirement was incorporated in our Group-wide Investment Guideline. The Responsible Investment Guideline (RIG) was extensively revised in 2016 and now summarises all guidelines and requirements related to PRI and ESG concerning asset management at Munich Re (Group). For the asset classes of infrastructure, renewable energies and forestry, we have established an investment process that takes into account both financial and ESG criteria. We regularly review our sustainability criteria for these asset classes using the ESG criteria of external rating agencies. Sustainability investment criteria have not yet been defined for all asset classes. The small number of blank spots on our sustainability map are gradually being filled in on the basis of criteria developed in-house and criteria available externally.

source: https://www.munichre.com/corporate-responsibility/en/responsibility/corporate-responsibility-in-business/cr-in-investment/index.html

 

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Our Responsible Investment Guideline (RIG):

The RIG is applicable to Munich Re, including its reinsurance and primary Insurance branches worldwide. It applies to the complete investment portfolio, no matter whether managed by MEAG, any other third party or the company itself. The RIG includes following regulations:

[1] […] The majority of the investments in shares, corporate, government or covered bonds, real estate and alternative investments should be invested in assets that are members in one of the established sustainability indices or meet other accepted sustainability criteria[BE-M1] . […][DH-M-e2] 

 [BE-M3] [2] Munich Re does not invest in companies that produce, trade in or transport banned weapons if such production, trade or transport is material for the respective company. […]

[3] Trading and holding investments in food-related commodities (e. g. grains and oilseeds, livestock, dairy, etc.) and related derivatives is not allowed. […]

[4] The Group Corporate Responsibility Committee (GCRC) evaluates and prioritises sensitive issues for Munich Re (Group). There are position papers in place for the following sensitive issues:

oil sands, fracking and mining. All these position papers include specific questionnaires regarding ESG aspects. For arctic drilling there is a position paper and guideline in place. Insurance risks related to arctic drilling are to be referred to an expert team, the Arctic Drilling Panel, for assessment […]

[5] The position paper and guideline on investment in farmland are to be taken into account as part of the due diligence on investment decisions in relation to farmland. This applies both to investments in funds and to direct investments for the purpose of leasing and/or farming.

[6] Investment in equity shares of companies which generate 50% or more of their entire revenue from coal mining and energy production based on coal is not permitted.

[7] Investments into government bonds and bonds of government-related institutions of countries assessed in a certain category according to Sustainalytics Country Risk Monitor are not permitted.

 

 

 

Beside an overall ESG approach covering insurance and investment activities, we focus on screening (external ESG ratings) and Group-wide exclusion policies( banned weapons, soft commodities) complemented by formalized guidelines (internal topic papers on sensitive issues see below).  

We display on our CR Portal our approach:

Our sustainable investment criteria in the different asset classes:

  • Equities and corporate bonds: We base our investments on the analyses and classifications of external research providers in the field of sustainability. Munich Re invests in equities and corporate bonds featured in sustainability indices, such as the Dow Jones Sustainability World Group Index, the FTSE4Good Index Series and the Ethibel Sustainability Index (ESI).
  • Government bonds: We also assess government bonds in terms of sustainability. As the starting point for this process, we take the internal Munich Re (Group) sustainability country rating, which is based on the Country Risk Monitor of the Sustainalytics rating agency. In cases where countries fail to satisfy our criteria, MEAG refrains from investing in their government bonds or the bonds of quasi-governmental organisations.
  • All other bodies issuing interest-bearing securities, such as state-owned companies, public and private financial institutions, or issuers of covered bonds, are assessed as well. We use the ratings of independent providers of ESG analyses, for example oekom research, for this purpose.
  • Real estate: Sustainability is also important for us when it comes to real estate. We have defined sustainability criteria (for example, for energy efficiency and construction materials) which we apply on the purchase, construction or renovation of properties.
  • Infrastructure/renewable energies: As investments in renewable energies or infrastructure may extend over very long periods, we carefully examine all risks associated with these investments. For this investment class, we have also defined specific ecological, social and governance aspects (ESG criteria) which form part of the due diligence. In addition to these aspects, we examine meteorological and climate-related factors (such as solar irradiation in the case of solar installations or wind force in the case of onshore wind farms), as well as political parameters such as the relevant national energy policy.
  • Private Equity: For all Private Equity Investments it is integral part of the due diligence process to analyse whether an appropriate Responsible Investment Guideline for the target fund is applied

  • Forestry and Agricultural Land: In the asset class we have also established an investment process which, as well as financial criteria, follows additional important objectives relating to investment (including ESG criteria). We regularly review our sustainability criteria for these asset classes using the ESG criteria of external rating agencies.

Source: https://www.munichre.com/corporate-responsibility/en/responsibility/corporate-responsibility-in-business/cr-in-investment/index.html

 


SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].

Our publically available Responsible Investment Guideline (RIG):

The RIG is applicable to Munich Re, including its reinsurance and primary Insurance branches worldwide. It applies to the complete investment portfolio, no matter whether managed by MEAG, any other third party or the company itself. The RIG includes following regulations:

[1] […] The majority of the investments in shares, corporate, government or covered bonds, real estate and alternative investments should be invested in assets that are members in one of the established sustainability indices or meet other accepted sustainability criteria

 [2] Munich Re does not invest in companies that produce, trade in or transport banned weapons if such production, trade or transport is material for the respective company. […]

[3] Trading and holding investments in food-related commodities (e. g. grains and oilseeds, livestock, dairy, etc.) and related derivatives is not allowed. […]

[4] The Group Corporate Responsibility Committee (GCRC) evaluates and prioritises sensitive issues for Munich Re (Group). There are position papers in place for the following sensitive issues:

oil sands, fracking and mining. All these position papers include specific questionnaires regarding ESG aspects. For arctic drilling there is a position paper and guideline in place. Insurance risks related to arctic drilling are to be referred to an expert team, the Arctic Drilling Panel, for assessment […]

[5] The position paper and guideline on investment in farmland are to be taken into account as part of the due diligence on investment decisions in relation to farmland. This applies both to investments in funds and to direct investments for the purpose of leasing and/or farming.

[6] Investment in equity shares of companies which generate 50% or more of their entire revenue from coal mining and energy production based on coal is not permitted.

[7] Investments into government bonds and bonds of government-related institutions of countries assessed in a certain category according to Sustainalytics Country Risk Monitor are not permitted.

 

 


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

In order to counteract potential conflicts of interest in the field of asset management and managing securities/real estate funds, the company takes care to ensure a clear separation of functions all the way up to Management Board level. Beyond that the company also obliges its staff to adhere to Conflict of Interest Principles and in general to observe high ethical standards, including but not limited to the Code of Conduct and the Best Execution Principles. A Compliance department was established at Munich Re's group asset manager MEAG to identify, prevent and manage conflicts of interest.

03.3. Additional information. [Optional]

Please find attached further information regarding potential conflicts of interest and proactive measures (Principles for avoiding conflicts of interest) under the following link: https://www.meag.com/reddot/downloads/de/Interessenkonflikte_enneu.pdf


SG 04. Identifying incidents occurring within portfolios (Private)


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