Sustainability

Strategies for dealing with sustainability risks

In our own investment decisions

Sustainability risks are events or conditions arising from environmental, social or company management areas, the occurrence of which can have or can potentially have an adverse influence on the asset, financial and earnings situation of a company as well as on its reputation and therefore on the value of the investment. Sustainability risks impact via known risk categories using a whole range of transmission routes and can have a major influence on these risks.

The decision processes relating to investments of ERGO Life Insurance SE consider all relevant risks including sustainability risks. In the course of this process, risks are reduced by the targeted selection of investments and the diversification and mix of risks across the entire portfolio.

The process also includes consideration of relevant sustainability risks which can have significant adverse effects on the yield of an investment; the most important prejudicial effects of an investment decision based on sustainability factors are also considered. Limit systems and control mechanisms ensure that the weighting of individual issuers, assets or markets are limited in their cumulative effect. MSCI ESG sustainability ratings, as well as other factors, are used for the assessment of sustainability risks. In addition, the risk situation is subject to continuous scrutiny as part of the risk management system so that counter measures can be taken if particular hazards occur.

In the selection and examination of funds for unit-linked insurances
In addition to sustainability criteria, the decision processes for the selection and examination of funds for fund-linked insurances consider fund ratings, risk categories, historic performance as well as other qualitative and quantitative criteria. These processes apply ESG ratings when selecting and reviewing funds.


Statement on the adverse effects of investment decisions on sustainability factors

ERGO Life Insurance SE (including branches in Latvia and Estonia) is a company of the ERGO Group which belongs to Munich Re. The Group is one of the world’s leading providers of re-insurance, primary insurance and insurance-related risk solutions.
The decision processes for investments of the ERGO Life Insurance SE consider the most important adverse effects of their investment decisions on sustainability factors.

This statement on the most important adverse effects relates to the period from 1 January to 31 December 2021.

Investment decisions can generate, contribute to or be directly associated with adverse - major or probably major - effects on sustainability factors (adverse sustainability effects). The most important impacts include those impacts generated by investment decisions which have adverse impacts on sustainability factors. Sustainability factors include but are not limited to environmental, social and employee factors, observance of human rights and action to combat corruption and bribery. Sustainability factors are also called “ESG criteria”. The abbreviation ESG stands for Environmental, Social and Governance.

Within the bounds of the predetermined risk profile, the decision processes on the investments of ERGO Life Insurance SE are managed via a central, specialist department of Munich Re which also bears the responsibility for this procedure. A major part of the capital investments of Munich Re - including all business areas - are managed by a shared asset manager, MEAG MUNICH ERGO AssetManagement GmbH (MEAG). ESG criteria are also applied in asset selection across the entire Group.

The prime objective is our ability to meet our obligations to our customers at all times and to comply with statutory requirements relating to the basic principle of management with “prudent enterprise” in all matters. Thus all decisions are subject to stringent requirements of security and safety.

The achievement of our objective is measured in quantitative terms using, amongst other yardsticks, an internal sustainability report (sustainability ratio). The systematic integration of ESG criteria is a fundamental component of Group investment strategy. Individually defined ESG criteria are incorporated into the selection process for every asset class (equities, bonds and property). The Group is contributing to climate protection and supporting the move towards renewable energies by targeted investments in future-oriented technologies and sustainable infrastructure (e.g. solar power plants or wind parks).

Munich Re has set internal investment principles and guide-lines for itself which also apply to all ERGO companies including ERGO branches and subsidiaries world-wide. These investment principles form the fundamental framework for the sustainable investment strategy of the ERGO Life Insurance SE and supplement the overall management of assets and obligations of the Company by rules even for selected individual investment decisions.

The investment principles also define which areas must be consciously avoided when taking an investment decision. For example, the Group has decided to no longer invest in companies that manufacture, sell or transport outlawed weapons. Also excluded are investments in raw materials that serve as food. Similarly, we do not invest in companies that achieve more than 30% of their revenue from the extraction of coal, or from its use for electricity generation, or in companies that generate more than 10% of their revenue from the extraction of oil or tar sands. Specific position papers and check-lists apply for a range of other sensitive areas, such as fracking or the purchase of land used for agriculture.



Details of the assessment of the most important adverse effects on sustainability factors

Climate-related and other indicators relevant to the environment

Social and labour issues, observance of human rights, anti-corruption and bribery measures

Description of the action taken to identify and prioritise the most important adverse effects on sustainability factors

Description of the action taken to combat the most important adverse impacts on sustainability factors

Engagement policy

Compliance with international standards

Information on sustainability in the advisory process

Remuneration policy