Sustainable Asset Management

The Munich Re Foundation finances its entire work with income generated from its own assets. The success of the foundation is therefore heavily dependent on successful asset management and on achieving good returns. However, a foundation may take only very few risks. The asset management of foundations is subject to very strict requirements in Germany. A foundation’s capital has to be invested prudently and profitably, and achieve a reasonable return. The level of capital must be maintained in any case. Consequently, foundations have to think in the long term so that in real terms they have the same assets in the distant future as they have today.

Therefore, and not least, it is important to take account of sustainability criteria in asset management. A foundation that is concerned with global risks – such as environmental and climate change, disaster prevention, population growth, water as an increasingly scarce resource and as a risk factor, poverty and urbanisation – is under particular obligation to make every attempt also with its investments to utilise any remaining scope with a view to fulfilling the purposes of the foundation.

The Munich Re Foundation has therefore defined criteria that have to be taken into consideration when selecting shares or other securities within the framework of the predetermined margins for the individual investment classes.

Positive criteria define which branches of industry or corporate activities may have to be given additional weighting. The selection of companies which can be classed as the best in their particular field in terms of integrating sustainability aspects in their business processes (so-called “best-in-class approach”) plays an important role here. Negative criteria define which branches of industry or corporate activities should not be included in special funds of the Munich Re Foundation. The foundation will liaise with the fund managers to determine which securities to select for the investment universe. An investment committee will monitor adherence to all of the requirements stipulated as relevant for the foundation and offer advice particularly with regard to strategic asset allocation.

Even if the Munich Re Foundation itself is only a relatively small investor, it nevertheless seeks to make its contribution – through active dialogue – to the discussion on sustainability within the framework of asset management.