Archive ERGO Sustainability Reporting - 2014

In our business, we provide protection for people against risks every day – often over a long period of time. We record and evaluate these risks over the long term. Sustainable thinking and action are therefore part of our daily routine. In order to avoid long-term risks, we take account of environmental and social standards, as well as aspects of responsible corporate governance as we transact our business and manage our investments.

With our project “Corporate Responsibility (CR) in Business”, we strive to maintain sustainability criteria along the entire value chain. Here, we focus on the content of the Principles for Sustainable Insurance (PSI). This is a framework from the United Nations Environment Programme to promote the integration of sustainability criteria in the insurance industry.

We pursue a sustainable investment strategy so that we can comply with our commitments to our customers over the long term. The framework for this is provided by the Principles for Responsible Investment (PRI) supported by the United Nations, which we signed in the year 2006.

Furthermore, we made a commitment to complying with the ten principles of the UN Global Compact in conjunction with our parent company Munich Re and. We expect our service providers to commit to similar compliance with these principles. Visionary thinking and actions are consequently an integral part of the approach and strategy of the ERGO Group. We have defined clear targets along our four key areas of action in the sphere of sustainability – Business, Employees, Environment and Society – we pursue these targets by implementing concrete measures.

Our objective is to confront global challenges in a future-oriented approach – identifying the risks involved but also grasping the opportunities they present. For example, the aging of society and the associated burden being placed on social security systems represent challenges for insurers as well as opportunities. The requirements of our customers are increasingly changing. That is particularly the case in the provision of annuities and healthcare where innovative insurance solutions are especially needed. Conversely, climate change and damage caused by climate-related natural catastrophes present a particular challenge to property insurance. We therefore want to make a contribution to climate protection and are developing solutions for our environmentally aware customers, for example with insurance products for renewable technologies.

Targets and measures

ERGO Group AG

ERGO is one of the major insurance groups in Germany and Europe. The Group is represented in more than 30 countries worldwide and it concentrates on the regions of Europe and Asia. ERGO offers a comprehensive spectrum of insurance policies, provision and services. In the home market of Germany, ERGO ranks among the leading providers across all insurance lines.

We provide life and property-casualty insurance under the ERGO brand. The broadly based portfolio complements the offer of our brands for health (DKV), legal protection (D.A.S.) and travel coverage (ERV). Within the Group, ERGO Direkt provides competence in direct insurance, sale by Internet and on the phone.

Business fields ERGO International
Companies and Brands in Germany

Düsseldorf (Germany)

ERGO is represented in almost all countries of Europe, as well as having a presence in Asia and Canada. The international companies generated 25 percent of premium income in 2015. The Group intends to continue gradually expanding its business in Eastern Europe and Asia. ERGO remains committed to focusing on growth markets abroad.

The group is a joint-stock company (Aktiengesellschaft, AG) under German law. It is part of Munich Re, one of the world’s leading reinsurers and risk carriers. The DAX company holds 100 percent of the shares in the ERGO Group.

The ERGO Group offers a comprehensive spectrum of insurance policies, provision and services in more than 30 countries and supports both private and corporate customers.

Around 43.000 people work for the Group as in-house employees or as full-times sales agents. In 2015, ERGO received premiums worth nearly 18 billion euros and provided insurance benefits for customers amounting to virtually the same amount.

Key employee figures
Key financial figures

The scale and structure of the ERGO Group did not undergo significant change during the year under review.

Annual Report 2014 (see pp. 19-22) (PDF file)

The reporting period is the calendar and business year 2014. Important events up to 30 June 2015 have been included in the report to reflect current developments.

The Sustainability Report for the year 2013 was published in August 2014.

ERGO Sustainability Report 2013 (PDF file)

ERGO has published a sustainability report since 2012. Starting in 2014, we will be reporting about our sustainability activities in the form of an extensive GRI Balance Sheet on our Website.

ERGO Group AG
Corporate Responsibility
Heike Poganaz

Contact Corporate Responsibility

Reporting is based on the guidelines of the Global Reporting Initiative (GRI) in the G3 Version at Level B and the GRI for the Financial Services Sector Supplement (FSSS). ERGO reports on all the key indicators and additional supplementary indicators. The focus for the content of the report was defined in accordance with the four strategic areas of action for ERGO: Business, Employees, Environment and Society.

All statements relate to the entire ERGO Group with all its companies. If statements only relate to parts of the Group, this is clearly identified. We have achieved a coverage level of 86 percent of our employees for environmental key indicators.

None.

The structure of shareholdings as at 31 December 2014 is provided in the Annual Report 2014 (p. 144).

We make our performance and progress in the area of sustainability transparent with quantifiable detailed indicators on finance, employees, environment and society. They serve as a basis for developing our activities systematically. We collect data on corporate environmental protection as part of our environmental management in a standardised format through a specialist database (SoFi Database, software for sustainability in companies). We calculate our CO2 indicators for Scope 1-3 (direct and indirect emissions as well as indirect emissions outside the Company) in accordance with the requirements of the Greenhouse Gas Protocol (GHGP). The GHGP is an internationally recognised standard on measurement and calculation of greenhouse gases which was developed by the World Resource Institute. ERGO also uses existing reporting structures in the Human Resources and Controlling Divisions for data recording. (See also section 3.6)

In the reporting year 2014, we have broken down the employee structure (see LA13) for the first time into in-house staff and salaried field staff in order to create greater transparency.

A number of key figures for direct energy consumption (EN3), direct and indirect greenhouse gas emissions (EN16) and waste by type and disposal method (EN22) were adjusted retrospectively for the reporting years 2013 and 2012 following data corrections in the international ERGO companies. The value for total water consumption in 2013 was also corrected retrospectively because not all measurement areas were recorded.

This table is the index in accordance with G3 of the GRI.

The report was not verified by an external auditor.

In accordance with the Articles of Association of ERGO Group AG, the Board of Management consists of at least two persons. The Supervisory Board determines the number of members of the Board of Management. The Company is represented by two members of the Board of Management or one member of the Board of Management together with an Authorised Signatory. In the business year 2014, the Board of Management had ten members, eight men and two women. The Chairman of the Board of Management was Dr. Torsten Oletzky.

ERGO Articles of Association

Management

Supervision and management of the Company are separated in terms of personnel. The Chairman of the Supervisory Board is Dr. Nikolaus von Bomhard, the Chairman of the Board of Management of Munich Re.

In accordance with the Articles of Association of ERGO Group AG, the Supervisory Board monitors the Board of Management. The Supervisory Board elects a Chairman and a Deputy Chairman from amongst its members for the length of their term of office on the Supervisory Board.

ERGO Articles of Association

Supervisory Board

Munich Re is the only shareholder of the ERGO Group. ERGO is an integral part of Munich Re and as such it is integrated into the core processes of Munich Re in terms of regulatory and corporate law, e.g. Group strategy, capital and finance planning, risk management, controlling, reporting and accounting, and in general significant legal transactions and measures.

Our employees can make recommendations to their supervisors, HR departments, employee representatives and the Corporate Responsibility department. The Compliance Department Team is available to every employee for providing advice on guarding against breaches of internal rules of conduct and statutory regulations. Employees at ERGO can also report any potential breaches anonymously to an independent neutral party in the form of the external ombudsman.

Our remuneration policy is based on a specific incentive system designed to support the commitment of Board Members and executive management to creating added value. The share of remuneration based on the sustainability of business success rises with the hierarchical level of a Board Member or an executive manager.

Our intention is to avoid situations that may lead to conflicts between personal interests and the interests of ERGO, Munich Re or our customers. The Code of Conduct for Staff, Senior Executives and Management of ERGO and its companies sets out the relevant regulations in this area.

The Corporate Responsibility Department advises the Board of Management on all issues relating to sustainability management. On behalf of the Board of Management, the Department coordinates the relevant activities within the Company and is part of the portfolio under the responsibility of the Chairman of the Board of Management.

The Principles for Sustainable Insurance (PSI) and the Principles for Responsible Investment (PRI) signed by Munich Re are binding for the ERGO Group. ERGO has also made a commitment to the ten principles of the UN Global Compact.

Other internal guidelines also apply to the Group:

• Code of Conduct for Staff, Senior Executives and Management of ERGO
  ERGO Code of Conduct (PDF file)
• Code of Conduct for Self-employed Sales Agents of ERGO Companies
  Code of Conduct for Self-employed Sales Agents ( PDF file)
• Environmental Guidelines of the Group
  ERGO Environmental Guidelines (PDF file)

The Board of Management discusses and approves the sustainability key figures and the continuation of the Sustainability Programme.

Every six months, a Sustainability Committee meets with representatives of different lines of business and specialist departments. If possible, the Chairman of the Board of Management takes part in the meeting. The progress and the targets in the area of sustainability are presented at this meeting and discussed.

There is also a Central Committee for Sustainability at Munich Re. Two representatives from ERGO participate in the meetings. The Committee advises on strategic issues and positions relating to sustainability. It reports to the Group Committee of Munich Re.

The Board of Management submits a detailed review of its performance to the Supervisory Board. The Supervisory Board evaluates whether and how this performance contributes to the ongoing success of the ERGO Group.

ERGO takes account of the precautionary principle with its risk management in order to identify current developments at an early stage which constitute a risk for the continuation of the Company as a going concern. The risk report in the Annual Report 2014 provides information for the year 2014 (p. 32).

Annual Report 2014 (PDF file)

In July 2013, the group was among the first companies to adopt the “Code of Conduct for selling insurance products” of the German Association for Insurance (GDV). The code applies to all operational German ERGO insurance companies and the sales company ERGO Beratung und Vertrieb AG.

On 1 March 2013, the German insurance companies of ERGO also signed up to the “Code of Conduct for handling personal Data by the German Insurance Industry” (Data Protection Code of Conduct). This code regulates the collection, processing and use of personal data.

ERGO is also participating in the initiative of the German insurance industry entitled “Well advised – Advanced training for insurance agents in Germany”.

In 2014, ERGO was a member of around 100 sector organisations, associations and networks. A selection is provided below:

• “Charta der Vielfalt” (Charter of Diversity, network)
• “Deutscher Kinderschutzbund” (German Child Protection Association)
• „Deutscher Verein für Versicherungswissenschaft“ (German Association for Actuarial Science)
• „Deutsches Aktieninstitut“ (German Equities Institute)
• “Deutsches Institut für Compliance” (German Institute for Compliance)
• „Gesamtverband der Deutschen Versicherungswirtschaft“ (German Insurance Association)
• „Gesellschaft für Datenschutz und Datensicherheit“ (German Association for Data Protection and Data Security)
• “Industrie-Club” (Industrial Club)
• “Kulturkreis der deutschen Wirtschaft im BDI” (Association of Arts and Culture of the German Economy at the Federation of German Industries)
• „RKW Rationalisierungs- und Innovationszentrum der Deutschen Wirtschaft“ (Rationalisation and Innovation Centre of German Industry)
• "UPJ Bundesinitiative Unternehmen": Partner der Jugend (Federal Initiative for Companies: Partners of Young People)

Our most important stakeholder groups are customers, sales partners, employees, investors and the community at large. We are in dialogue with them through a wide range of different channels. The main focus lies on our customers. We ask them about the experiences they have had in contacts with our company. In Germany, we regularly talk to members of the ERGO Customer Advisory Board and seek the opinions of the participants in the ERGO Customer Workshop on the Internet. In 2014, the Sustainability Report, the Annual Report, the Customer Report and the comprehensive CR section on the Group’s website provided important instruments for external communication on the subject of responsibility.

ERGO customer initiatives

See section 4.14

ERGO makes people the centre of attention with their customer promise “To insure is to understand”. We want to identify and understand the needs of our most important stakeholder groups. Feedback from our customers is particularly important to us. We regularly ask them about their satisfaction with our performance so that we are in a position to continually improve our services, processes and products.

Ways of including our stakeholder groups are for

• Customers: sales partners, customer service and customer advisors of the companies, ERGO Customer Advisory Board, ERGO Customer Workshop
• Employees: dialogue formats, employee surveys, HR departments, ombudsman (external)
• Shareholders: financial communication, Annual General Meetings
• General sustainability issues: Corporate Responsibility Department

Continuous communication with our customers is particularly important to us. As a participant in the ERGO Customer Workshop or as a member of the ERGO Customer Advisory Board, they can play a role in influencing the Company with their ideas and their criticism. Alternatively, they can give us their feedback in the online form on our website and by taking part in customer surveys. We also engage with customers and the general public through social media. Each year we publish our approach to dealing with our customers’ concerns in our ERGO Customer Report (only available in German). (See also section 4.16)

We consistently manage our business with the focus on customers, service and earnings. Our management is concentrated on integrated controlling for our lines of business and their administration processes, a modern risk-management system, and value-based and risk-oriented controlling for all business activities. These activities include all forms of life, annuity and health insurance and virtually all branches of property and casualty insurance, as well as legal protection.

Our objective is to record, evaluate and diversify all aspects of risks. This empowers us to create sustainable value for our shareholders, customers and employees. Sustainably increasing our corporate value forms the guiding principle of our entrepreneurial mindset and action. This also includes our active capital management. We consistently deploy valued-based controlling systems and subject them to a process of continuous development.

Our guiding principle of “To insure is to understand” distinguishes us from our competitors. Compliance with this principle means that we have to focus consistently on the aspirations and needs of our customers. Our objective is to provide needs-based advice and tailor-made products which understand and take account of the personal concerns of our customers. We are in continuous communication with our customers in order to identify these concerns.

Operational business rose slightly overall in the 2014 business year. Premium income increased to 18.2 billion euros (2013: 18.1 billion euros), thanks to international business, where we have been performing very well. We carried on with our growth strategy in international business.

Targets and measures

Responsibility / Environment

At 620 million euros, ERGO attained a consolidated result for 2014 that was 42 percent above the result for the previous year (2013: 436 million euros). The increase is significantly attributable to a tax refund. Premium income increased by 0.3 percent to 18.2 billion euros (2013: 18.1 billion euros).

Key figures

Our business as an insurer is impacted by claims from natural catastrophes caused by the consequences of climate change. As far as ERGO is concerned, climate change is a risk that entails direct financial impacts. At the same time, we also perceive business opportunities in this challenge. We strive to support innovative solutions for climate protection, e.g. with insurance policies for technologies to generate renewable energies. We also want to raise the awareness of customers for climate-conscious action through services such as CO2 compensation. However, we also make a contribution to CO2 reduction in our own Company. In line with our plans, we achieved the fourth stage in implementing our strategy of carbon neutrality in 2014. Our major sites in Europe now have carbon-neutral operations. (See also DMA EN)

For the majority of staff employed with the ERGO Insurance Group, Group companies have either undertaken retirement provision directly or by means of premium payments made to private and state institutions. The nature and extent of pension sums are determined by the respective pension plan and are generally based on the length of service and the salary of the employee. A distinction is made between the defined-contribution and defined-benefit pension schemes. Under defined-contribution schemes, the companies pay premiums to insurers on a voluntary basis or as a result of terms in a contract. Defined benefit systems are financed within the Group by means of provision for pension fund liabilities. In 2014, ERGO spent a total of 76,737,771 euros on company pension provision in Germany.

Annual Report 2014 (see pp. 78, 110) (PDF file)

No financial assistance was received from the public sector in the year under review.

During the year under review, the Central Purchasing Department of ERGO developed a standardised system of supplier management and defined various criteria for the selection of suppliers in Germany. Local suppliers are not given preferential treatment according to these rules. (See also HR2)

Most of our salaried employees live near our locations or in the local areas. However, place of residence is not a criterion for the employment of new personnel. Outside Germany, we generally employ local managers who are familiar with the market and the local cultural features.

ERGO develops insurance policies which are tailored to the financial situation and living circumstances of people living in developing countries. For example, in India the German-Indian joint-venture company HDFC ERGO is offering a wide range of microinsurance policies in rural areas, such as health, accident and fire insurance. Cooperations with local institutions have frequently proved effective in achieving the aim of reaching as many people as possible. These initiatives are often supported by non-governmental organisations and microfinance institutions. ERGO uses these activities to support infrastructure development in regions with restricted access to financial services.

Microinsurance

ERGO is committed to playing an active role in the community beyond the world of business. On 9 June 2014, for example, the “Ela” storm caused damage measured in millions to the trees in the German city of Düsseldorf where ERGO has its head office. Düsseldorf lost almost 40,000 trees. The local initiative “Blickwinkel Ela” (Perspective Ela) provided 125,000 euros in order to plant new trees for the public spaces in the city. ERGO also contributed 35,000 euros to the initiative launched by local association “Düsseldorfer Jonges”. (See also section EC1 for more information on other expenditure for social purposes)

ERGO responsibility - ERGO and society

As a major employer and provider of work, the ERGO Insurance Group exerts a positive impact on business and community development at its locations.

Indirect positive environmental effects are generated by our insurance tariffs which support environmentally conscious customers and environmentally benign technologies. For example, ERGO promotes the growing market of electric cars with particularly favourable tariffs in motor liability and in fully comprehensive insurance. Special insurance solutions support the use of renewable energies. For example, operators of photovoltaic plants are able to conclude a photovoltaic and reduced-yield insurance with us. It offers protection if the expected annual energy yield for the system is not achieved. At the same time, the policy provides insurance against theft, material failure and snow pressure. Our homeowners’ insurance also covers damage caused by fire or storm to photovoltaic, solar and heat-pump systems used for private purposes. In commercial buildings insurance, environmentally conscious owners can also insure additional costs for re-planting and for improved energy efficiency. Since September 2014, ERGO has played a pioneering role in insuring residential buildings in areas subject to high risk of flooding in Germany.

In order to raise the awareness of its customers for climate protection, ERGO has been cooperating with German PROJECT CLIMATE under the motto “Now become a climate hero” since the summer of 2015. Car drivers are able to mitigate the carbon-dioxide emissions of their vehicle with a monthly donation. The proceeds are used to promote climate-protection projects.

Environment protection has been an important issue at ERGO for many years. Since 2010, we have had our own Environmental Guidelines. These guidelines acknowledge our responsibility for environmental and climate protection and our active promotion of environmental awareness among our employees.

Our standardised environmental management system helps us to record, assess and minimise the environmental impacts systematically and consistently. They address our business operations, the consumption of energy and resources, and the volume of waste at the locations of our Company. We can also monitor business trips across all our locations and the associated emissions. These data form the basis for controlling consumption so that it is environmentally as benign as possible.

In addition, eight large German locations and five locations of DAS in the United Kingdom and Ireland have been certified in conformity with the international standard ISO 14001. In 2014, certified environmental management covered 44.3 percent of our employees (2013: 42.2 percent). We regularly have the systems at our certificated locations audited by an independent external environmental auditor. Once all the requirements have been complied with, certification is progressed – a continuous process which consistently generates improvements.

The central aim of our environmental management is to achieve carbon neutrality for our business by 2015. Since 2012, we have had carbon-neutral operations at all locations in Germany for the CO2 emissions generated in the areas of energy, water, printer and copy paper, waste and business trips. Since the end of 2014, this also applies to all European locations. We anticipate that we will have achieved group-wide carbon neutrality by end of 2015. (See also EN 18)

Targets and measures

Because ERGO is a financial services provider, the direct requirement for materials is essentially restricted to consumption in the office setting. In particular, this relates to the paper used for correspondence and promotional material. In 2014, we were able to reduce the absolute volume of paper consumption by 15.2 percent to 727 tons (2013: 857 tons).

The recycled materials used at ERGO are restricted to paper. In 2014, recycled paper made up a proportion of 57.1 percent of total paper consumption (2013: 54.5 percent).

In the business year 2014, direct energy consumption amounted to 589,443 gigajoules (GJ) and this was 8.2 percent less than in the previous year (2013: 642,287 gigajoules). The primary energy source was almost exclusively natural gas.

In the business year 2014, indirect energy consumption amounted to 508,544 gigajoules (GJ) and this was 13 percent less than in the previous year (2013: 584,749 gigajoules). The most important energy sources are electricity (conventionally and renewably generated) and district heating and cooling. The proportion of green electricity increased from 31 to 36 percent of total electricity consumption (See also EN5).

In the business year 2014, we succeeded in reducing total (direct and indirect) energy consumption by almost 11 percent. The specific energy consumption per employee fell to 39.19 gigajoules.

Over the past several years, we have modernised our building technology at many of our locations, replaced standalone PCs with energy-saving network computers and installed energy-efficient telephone facilities and lighting systems. We have been able to reduce energy consumption in IT by converting to energy-saving storage solutions.

All drivers of company cars throughout Germany have to participate in an ecodriving training course. In 2014, about 400 drivers were trained. Our new company-car guideline has been in place since October 2014 and it makes a central contribution to sustainable mobility. This guideline states that CO2 emissions from company cars must be below 160 g/km. We are gradually converting our company fleet to fuel-efficient passenger-car models. Supplementary measures include carbon-neutral rail journeys and expansion of the infrastructure for video and web conferencing at the locations.

The locations of ERGO withdraw their water from the local (municipal) networks. In the business year 2014, absolute and specific consumption of water came down. Total consumption amounted to 446,813 cubic metres (2013: 478,442 cubic metres*). Consumption per employee was 15.95 cubic metres (2013: 16.17 cubic metres). We were able to reduce water consumption by completing modernisation and restructuring measures at our large office locations.

*Subsequent correction for values registered in 2013, since not all measuring areas were recorded.

ERGO has no parcels of land which are located in conservation areas or are adjacent to such areas.

As a financial services provider, the impacts of ERGO on biodiversity are negligible (see section EN11).

In 2014, the greenhouse gas emissions caused by us (Scope 1-3 in accordance with the GHG Protocol) decreased to 92,565,386 kilograms (2013: 99,775,645 kilograms). The specific emissions per employee therefore came down to 3,304 kilograms (2013: 3,371 kilograms). These data are based on CO2 equivalents.

Our emissions caused directly and indirectly are shown in CO2 equivalents and already take account of all the emission sources known to us in accordance with Scope 1-3 (see EN16).

ERGO is pursuing the goal of running all its business operations in a carbon-neutral environment by the end of 2015. A five-stage plan describes the stages of how we intend to achieve this aim (see chart). The priority is reducing the consumption of energy and resources. Since 2012, all locations in Germany have had carbon neutral operations (with regard to energy, water, printer and copy paper, waste and business trips). Since the end of 2014, this applies to all European locations. We were able to significantly improve the data quality and depth of the environmental indicators at our European reporting locations. We compensate for unavoidable CO2 emissions by purchasing CO2 certificates. In 2014, ERGO supported the following projects through the purchase of certificates:

• Hydropower plant Sahanivotry Hydro, Madagascar
• Energy-efficient ovens for the Kampala region, Uganda
• Wind-power plant in Shandong Province, China

Our business does not produce any ozone-depleting substances.

Sources for nitrogen oxide (NOx) and sulphur dioxide emissions (SO2) include our thermal power stations with combined heat and power technology, the car fleet, and business travel and commuter journeys taken by employees. ERGO does not collect data for these emissions.

Our wastewater is discharged sanitary water. The amount almost exactly corresponds to the amount of water withdrawn (see section EN8). We channel all such water into the local drainage system.

In the business year 2014, 7,231 tons of waste were generated at the locations (2013: 7,476 tons), this amounted to 258 kilograms of waste per employee (2013: 253 kilograms). We dispose of waste and recyclable materials through regional service providers.

This indicator is not relevant for a financial services provider like ERGO.

This indicator is not relevant for ERGO because our insurance policies do not have direct environmental consequences. (See also the answers for the indicators EC9 and FS8.)

This indicator is not relevant for a financial services provider like ERGO.

In the year under review, there were no fines and sanctions for non-compliance with environmental regulations.

We activate the potential of our employees by actively promoting them, giving them scope for getting the work-life balance right between family and the world of work, and safeguarding their health – this is the platform for our success.

We offer our employees long-term perspectives. They benefit from the great diversity of functions in an international group with ambitious targets – and the opportunity to grow. We support the professional development of our employees with individual training programmes and prepare them for new functions.

Our independent sales partners can take part in comprehensive training packages with the focuses on service and advisory competence. ERGO takes part in the initiative of the German Insurance Association “Gut beraten – Die Weiterbildung der Versicherungsvermittler in Deutschland” (Well-advised – Advanced training for insurance agents in Germany) in order to maintain the quality and relevance of advanced training for insurance agents constantly at a high level.

ERGO benefits from the different qualifications, experiences and mindsets of its workforce. We want to be more proactive in promoting this diversity and the potential of our employees. ERGO is one of the signatories of the “Charta der Vielfalt” (Charter of Diversity). All the signatories make a commitment to creating a working environment that is free from prejudices and exclusion. Employees should be respected – irrespective of their gender, nationality, religion, disability, age and sexual orientation or identity. Our Code of Conduct for employees also contains a clear prohibition on discrimination.

ERGO is committed to integration of people with disabilities into the Company. A dedicated integration team with representatives of disabled people in the Company, the human resources department and the Works Council ensures that their needs are looked after over the long term. This might be by providing appropriate equipment in their workplace or offering the opportunity to work for a trial period.

The group in Germany takes part in the initiative “Fair Company” which is dedicated to fair and paid internships and opportunities for university graduates.

Targets and measures

In 2014, employees had worked at the ERGO Group on average for 13.4 years (2013: 12.9 years). The fluctuation rate for in-house staff and employed field staff in Germany amounted to 7.1 percent in 2014 (2013: 6.3 percent). We do not break down this rate by age group and gender.

Co-determination at ERGO has a high status. There are a large number of company agreements at ERGO on a variety of different issues that regulate relations within the scope of statutory regulations and collective agreements. The Works Constitution Act forms the legal basis for concluding a company agreement. The negotiating parties are the management and the Works Council, respectively the General Works Council or Group Works Council. We comply with the applicable national or local notification periods and obligations.

During the year under review, the sickness leave rate among our in-house staff in Germany amounted to 6.6 percent (2013: 6.7 percent). Because the risk of occupational diseases and work-related fatalities is low for us as a financial services provider, we do not collect any further data.

As far as ERGO is concerned, a holistic HR concept also entails looking after the health needs of our employees in all phases of their life and career. This is why we are committed to providing a comprehensive range of company healthcare promotion. The majority of our employees work in our domestic German market where five company doctors and a social worker are specialised in providing assistance in acute cases. They provide support and advice to employees on all issues relating to health prevention, such as nutrition, physical exercise, dealing with stress and prevention of addiction. In 2014, a focus of company health promotion was on prevention of back pain (campaign “Healthy Back”) – a topic that is particularly important in office work. We train our senior executives in management triathlons on health issues and show them the best way of protecting their own health and that of their employees.

ERGO has a comprehensive advanced training programme directed towards promoting our employees at all hierarchical levels. In 2014, our in-house staff and salaried field staff in Germany attended training on more than 63,500 participant days (2013: 61,000). During the year under review, we placed a particular focus on dealing with processes of change. Newly developed packages raise the awareness of employees for processes involving change and they also support them in successfully accepting challenges. These measures are intended to empower employees to identify their own strengths and deploy them effectively.

We support knowledge acquisition and development for staff appropriate to their career phase through e-learning packages, training sessions on a needs basis and stays abroad. ERGO is particularly keen to recruit and develop the next generation of managers. Our Talent Identification Process (TIP) is directed towards strategic advanced development of our employees based on a systematic analysis of their potential talents. This process involves highlighting attractive development opportunities presented at ERGO for talented employees, high-flyers and managers at an early stage. ERGO offers comprehensive mentoring programmes for promoting female managers. An experienced manager acts as a mentor for each potential junior manager providing support and encouragement. These tandem partnerships are matched so that the mentees are provided with optimum support in accordance with their skills and future requirements. We also offer our older employees the opportunity to work together with their managers to identify individual working-time arrangements for the period in the run-up to retirement which suit their particular needs.

The annual employee interview is an important tool for HR development at ERGO. Supervisors use the meeting to provide their employees with systematic feedback and to agree suitable measures for advanced career training. We expect our managers to offer their employees this kind of performance assessment and development planning every year. We do not collect any participation rates because participating in these annual meetings is voluntary for employees.

In 2014, the proportion of female employees was equal to previous years at 56 percent. In 2014, women held a proportion of 23.1 percent (2013: 21.8 percent) of management positions for in-house staff and salaried field staff in Germany. The objective is to increase this ratio to at least 25 percent by the end of 2020. If the international companies are included, the ratio of women in management positions is 31.5 percent (2013: 30.8 percent). In 2014, two women were represented in the ten-strong Board of Management.
The number of disabled employees in the German in-house staff and salaried field staff is 1,006 (2013: 1,057).

The basic salaries for pay-scale employees covered by collective agreements working at German locations are defined on the basis of the relevant contractual regulations (collective agreement for the insurance industry). Since the job evaluation is carried out independently of the holder of the job, the principle applied here is that the same functions receive equal remuneration irrespective of gender.

ERGO took part in the project “Logib-D” (Equal pay in business – Germany) organised by the Federal Ministry of Family Affairs, Senior Citizens, Women and Youth in order to record potential differences in remuneration between men and women. The objective of this project was to provide evidence-based measurement of wage differences in companies. The result: There are no significant differences at ERGO.

As part of Munich Re, which was one of the signatories of the UN Global Compact, ERGO is committed to upholding human rights. The principles of the Global Compact include a commitment to maintaining, promoting and implementing basic values in relation to human rights, decent working conditions, environmental protection and combatting corruption within our area of influence.

We expect our service providers also to comply with the principles of the UN Global Compact. Furthermore, we base our approach on the Principles for Responsible Investment (PRI) and the Principles for Sustainable Insurance (PSI). On the basis of the PSI, we have defined our goal as focusing even more effectively in our core business on the environmental, social and economic criteria – also known as ESG criteria (Environment, Social, Governance). These criteria include various aspects relating to human rights, for example the issue of child labour. By signing the PRI, we have also made a commitment to systematically implementing ESG criteria in the management of our Investments.

Targets and measures

We have a commitment to considering ESG aspects (Environment, Social, Governance) including human rights criteria in the management of our investments. The Principles for Responsible Investment (PRI) and the General Investment Guidelines of our parent company Munich Re define the group-wide framework for this approach.

ERGO is a financial services provider. Our main suppliers are energy utilities, companies supplying office materials and consumables, and other service providers. We expect them to comply with the principles of the UN Global Compact. There has been no formal audit procedure to date.

No cases of discrimination are known in the ERGO Group during the year under review.

During the year under review, no business activity was identified which posed a threat to the right to freedom of association.

As a financial services provider, this topic has low relevance for ERGO. Munich Re has joined the UN Global Compact which also applies to ERGO. The Company will not tolerate breaches of human rights such as child labour and forced or compulsory labour.

See answers to HR2 and HR6.

Lawful, honest and fair action is crucial to success for ERGO. As a financial services provider, we are largely dependent on trust. In order to avoid damage to our reputation, we have formulated clearly defined rules of conduct for employees and sales partners.

The Code of Conduct for staff, senior executives and members of the management of ERGO Group AG and its domestic and international subsidiaries provides all our employees with guidelines to help them act ethically and with integrity. We have defined the principles for cooperation with sales partners in a Code of Conduct for self-employed field staff.

ERGO along with all its German insurance companies and the sales company ERGO Beratung und Vertrieb AG adopted the Code of Conduct for selling insurance products which was initiated by the German Insurance Association. An external auditor verifies the appropriateness and effectiveness of the measures developed and implemented within the framework of the Code.

ERGO has its own Compliance Management System to ensure compliance with statutory, regulatory and internal rules within the Company. The Compliance Division is directly under the responsibility of the Chairman of the Board of Management. It monitors compliance with the principles laid down in our Codes of Conduct. Employees of ERGO can report any breaches anonymously to an external ombudsman as a neutral office. We are consistent in investigating any indication of misconduct and we apply sanctions that are appropriate to the seriousness of the breach of rules.

As a company aware of its responsibilities, we also want to make a contribution towards solving problems in the community. We make strenuous efforts to help people in the areas around our locations. Promoting the education and personal development of children and young people is a particular focus. Our social projects also involve us in providing aid to people in crisis situations.

As a financial services provider, ERGO exerts minimal impacts on the local community compared with production facilities. The impact of our business activity is mainly restricted to our role as an employer and contractual partner in sales. (See also DMA SO)

The functions of ERGO Compliance include systematic risk analysis and ongoing development of our compliance rules, training and advice for employees, and prevention of corruption. In the scope of prevention of corruption, ERGO Compliance regularly carries out a review to ascertain the business processes where corruption risks could occur. If necessary, ERGO Compliance agrees with the process owners on suitable risk-reduction measures.

ERGO Compliance Management System

We train our employees in compliance and corruption prevention with the aim of achieving a clear understanding within the Company about which actions are compliant with the rules and which aspects constitute breaches. In 2014, all senior executives had to undergo mandatory compliance training sessions. The senior executives then acted as multiplicators and used the documents provided to pass on the content of the training sessions to their staff. ERGO Compliance provided training for those employees working in sensitive areas.

SO4 Action taken in response to instances of corruption

Participation in political opinion-forming is primarily managed by our parent company Munich Re and its Group Legal Department. ERGO supplements the political communication of the Group through its own conversations with opinion-formers about issues which specifically affect primary insurance.

In 2014, donations totalling 75,000 euros were made to German political parties, with equal shares being given to the CDU (Christian Democratic Union), CSU (Christian Social Union, Bavaria), SPD (Social Democratic Party), Bündnis 90/Die Grünen (Green Party) and FDP (Free Democratic Party). Membership dues paid by ERGO to organisations linked to political parties amounted to 18,000 euros.

During the year under review, there were no legal actions against the ERGO Group for anti-competitive behaviour, antitrust agreements or formation of monopolies.

During the year under review, no fines were imposed on the ERGO Group in Germany for non-compliance. This indicator has not been recorded for international companies.

To insure is to understand: ERGO uses various instruments to fulfil this promise to our customers. We are engaged in an ongoing dialogue with customers along many different channels and we invite them to tell us about their needs and requirements. As a participant in the ERGO Customer Workshop or as a member of the ERGO Customer Advisory Board in Germany, they have the opportunity to play a role in influencing the Company by putting forward their ideas and constructive criticism. German customers can also use the online form on our website to provide us with feedback. ERGO uses clear language to explain to our customers exactly what they are getting and the Company avoids using complicated specialist language. Our dedicated standards guarantee clear, comprehensible language and these have been certified for communication by external experts. If customers have a claim, we make it our business to provide them with rapid assistance and sustainable solutions. They are invited to publicly rate our products and services on the websites of our German companies.

Our insurance products do not have any direct physical impact on the health or safety of our customers.

The aim is for our customers to understand us better. The first step towards this goal is to communicate in language that is comprehensible in our letters and in our contractual conditions. This includes some general rules for writing and internal software for checking documents. In 2014 alone, we carried out more than 338,000 text analyses. Around 13,000 employees are able to use the “Textlab” comprehension software. Our Clear-Language Initiative is now part of the everyday routine for work at ERGO. The German Inspection Agency TÜV Saarland has carried out a review on establishing comprehensibility throughout the Company. In March 2015, the inspectorate evaluated the comprehensibility initiative by ERGO for a second time and once again awarded the score Good (1.90). In 2013, we achieved a score of 2.07.

We work consistently on precisely determining the satisfaction of our customers because they are the most important controlling parameter as far as we are concerned. In the year under review, we carried out a survey of more than 88,000 customers (2013: 55,000), who had recently had a service experience with ERGO in Germany. The feedback they provided gave us information on issues such as the comprehensibility of our letters, the handling of enquiries and the time it actually took to deal with issues and the desired time. The surveys were carried out by an external market research company. The international companies of the Group have also made a commitment to carry out a customer survey at least once a year.

One of the most frequent reasons for dissatisfaction among customers is the sense that they have been treated unjustly. In such cases, our customers can turn to our internal Quality and Complaints Management. If customers feel that their concerns have not been adequately addressed, they can consult the ERGO Customer Advocate. In 2014, the Customer Advocate dealt with around 70 cases. We reached a solution in favour of the customer in three out of four cases.

The ERGO Customer Advisory Board covers the entire spectrum of our customers in Germany. The Customer Advisory Board has 25 members and meets twice a year. The valuable ideas help us to make our processes even more customer-focused and empower us to develop needs-based products and service packages. In April 2014, the ERGO Customer Advisory Board started its second period of office after a further selection procedure. This Board will serve for three years. (See also FS15)

Dialogue with customers (German)

We comply with all laws relating to advertisements, advertising and sales promotion. In Germany, this equally applies to the advertising guidelines of the insurance industry. There are no internal guidelines other than the statutory requirements.

No systematic breaches were known during the year under review. In Germany, there were isolated objections by competitors or customers in individual cases on account of (alleged) breaches against the Fair Trade Law.

During the year under review, no complaints about breaches of this nature were made to our knowledge.

During the year under review, no fines for non-compliance were imposed on the companies in the Group by the supervisory authorities. This indicator has not been recorded for international companies.

We joined forces with out parent company Munich Re to set up the “CR in Business” project in order to establish sustainability systematically in our business. The Principles for Sustainable Insurance (PSI) are the platform for defining the target of embedding environmental, social and business criteria – known as ESG Criteria (Environment, Social, Governance) – even more firmly in our core business. The ERGO Board of Management defined areas of action along the value chain of ERGO for the business of primary insurance.
Successful advances achieved during the year under review included the following measures:

You will find a comprehensive overview of targets and measures in our Sustainability Programme.

We have also made a commitment to observe ESG criteria for the management of our investments. The Principles for Responsible Investment (PRI) and the General Investment Guidelines of our parent company define the group-wide framework for this. Concrete criteria for investment are also defined for the sustainability of investments in accordance with asset classes. (See also FS2)

We are incorporating sustainability aspects in standard contracts (tariff business, for example in private customer business) and in individual business (conditions negotiated on an individual basis, for example in business with major customers and Group business). We take particular account of sensitive issues which cannot be combined with our fundamental concept of sustainable business practices. A joint CR Committee of Munich Re and ERGO regularly provides all the relevant organisational units with an updated list of sensitive issues. In 2014, specific position papers were written on selected topics like “Banned Weapons”, “Oil Sands” and “Fracking”. The underwriting guidelines are reviewed in the light of these issues and revised as necessary.

The ESG (Environment, Social, Governance) audit list developed by Munich Re and ERGO is another milestone in establishing sustainability in core business. Since the beginning of 2015, this list has provided support for employees in evaluating risks to be insured. The tool raises the awareness of users for assessing ESG criteria and for carrying out an appropriate risk assessment. Since 2015 it has been mandatory to check ESG criteria systematically when developing new products or when modifying existing products in tariff business. (See also FS1)

See answers to FS1, FS2 and PR5.

ERGO uses internal communication channels such as Intranet and the staff magazine to regularly inform employees about current sustainability issues and projects. We also use a variety of events to communicate to employees our interpretation of sustainability at ERGO. For example, the Sustainability Department presented its work to new employees at a launch event.

We develop new products to suit the needs of our customers. The customer survey is a fixed element in the process of developing new products. Our Customer Workshop and the Customer Advisory Board also provide us with important information. We audit and evaluate new products based on social, environmental and economic criteria. We are strengthening the relevant market research so that we will be in a position to address insurance customers with a focus on sustainability even more selectively.

On behalf of the Indian government, HDFC ERGO General Insurance Company (HDFC ERGO), in which ERGO has a 26 percent stake, was the first private insurance company to launch a weather-based crop insurance scheme (WBCIS) for failed harvests on the market in 2010. The background to this is that 80 percent of harvest failures in India are due to the weather, whereas less than one quarter of Indian farmers take out insurance. Small farmers are now able to take out this insurance policy in 14 out of 28 states in India. The structure of the product is simple and flat-rate payments are made to reduce the financial risks of failed harvests if a specified temperature or level of precipitation is exceeded or not achieved. Gross premiums amounting to the equivalent of 60 million euros were written and 3 million farmers were insured during the course of 2014.

Our insurance products include an environmental benefit if they support environmentally benign and innovative technologies. For example, ERGO promotes the growing market of electric cars with particularly favourable tariffs in motor liability and in fully comprehensive insurance. Special insurance solutions support the use of renewable energies. Our residential buildings insurance also covers claims caused by insured hazards to photovoltaic, solar and heat-pump systems used for private purposes. Operators of photovoltaic plants are able to conclude a photovoltaic and reduced-yield insurance with us. (See also EC9)

See answers to FS1, FS2 and FS11

MEAG is the asset manager of ERGO and Munich Re. It is in regular communication with individual companies to help them improve their sustainability performance. The close contact between MEAG and the management of many companies is also used to address environmental problems within the framework of our systematic risk analysis. However, MEAG does not record concrete figures on the scope of these meetings in a standardised way.

We have made a commitment to observe environmental, social and economic criteria in the management of our investments. We therefore define appropriate guidelines for our asset manager MEAG so that investments are always compliant with our sustainability requirements. The Principles for Responsible Investment (PRI) and the General Investment Guidelines of our parent company define the framework for this. Concrete investment criteria are defined in these guidelines in accordance with asset classes, including guidelines on sustainability.

ERGO invests more than half of the premiums received from customers in companies which take account of economic, ethical, social and environmental criteria. We invest in shares and corporate bonds which are listed in sustainability indexes. We carry out regular assessments for sustainability and use the following indexes for this purpose:

• Dow Jones Sustainability World Group Index,
• FTSE4Good,
• Advanced Sustainable Performance Index and
• Ethibel Sustainability Index.

We also assess government bonds for sustainability by means of a rating of the countries according to sustainability criteria drawn up by Munich Re. This rating is based on country-specific monitoring by sustainability research company Sustainalytics.

Our asset manager MEAG regularly checks whether shareholder resolutions are compliant with ESG criteria (Environment, Social, Governance) and the targets defined by ERGO. Voting is based on this.

ERGO develops insurance policies which are tailored to the financial situation and living circumstances of people in developing countries and emerging economies. For example in India, the German-Indian joint-venture company HDFC ERGO is offering a wide range of microinsurance policies, such as health, accident and fire insurance, in rural areas. Cooperations with local institutions have frequently been proven effective in reaching as many people as possible. These initiatives are often supported by non-governmental organisations and microfinance institutions. In the province of Uttar Pradesh, for example, sales outlets have been set up in some 50 rural supermarkets. A registration system based on the use of mobile phones permits the simple and paperless conclusion of insurance contracts.

Microinsurance

See answer to FS13.

Responsible design and fair sale of insurance products is a top priority at ERGO. We systematically take account of environmental, social and economic factors in our product development process. When we sell our products, a consistently high level of high-quality advice is a top priority in line with our claim “To insure is to understand”. Our sales partners operate on the basis of a standardised approach to advice, known as the “ERGO Kompass” (ERGO Compass), which focuses on customers and their current life situation. This enables them to survey customer needs selectively and offer concrete proposals for tailor-made protection.

We have laid down the principles for cooperation with our sales partners in Germany within a Code of Conduct for self-employed sales agents. This defines the key principles for cooperation and understanding of fair dealings with customers, and goes beyond the requirements for ethical conduct. ERGO has also joined the Code of Conduct for selling insurance drawn up by the German Insurance Association. An external auditor assesses the appropriateness and effectiveness of the measures developed and implemented under the Code.

Fair dealings with customers also mean accepting responsibility for mistakes. One such example was where income and credits for life insurance customers were calculated incorrectly by ERGO in our computer programs. This led to sums being paid out that were either too low or too high. We are working on the problem consistently, and proactively informing our customers about the incorrect calculations. Since 2012, statements have been corrected in 350,000 cases and amounts not paid out have been reimbursed. ERGO did not require the excess sums paid out in error to be reimbursed.

ERGO Code of Conduct for Staff, Senior Executives and Management of ERGO (PDF-File)
Code of Conduct for Self-employed Sales Agents (PDF-File)
Certification of industry Code of Conduct for selling insurance

The promotion of education is the focus of our donations and social sponsorship activities. We want to make a contribution to the future capability of society through our engagement for education. The main focus of our endeavours is on the promotion of innovative projects and initiatives which improve education for children and young people in tangible ways. The ERGO Foundation “Jugend & Zukunft” (Youth & Future) conferred awards for new education innovations in 2014.