Archive ERGO Sustainability Reporting - 2015

Dr. Markus Rieß, Chairman of the Board of Management of ERGO Group AG

Dear Readers,

Insurance is a long-term business. We insure people and companies for the future. Looking into the future and acting sustainably is an integral part of our activities. It is how we understand entrepreneurial responsibility. We believe that we can only be successful as a company and as a society over the long term if we are able to bring economic, environmental and social interests into harmony.

As part of Munich Re, we were among the first companies in the sector to sign the Principles for Sustainable Insurance. They guide us in integrating sustainability into our core business. In concrete terms, this means that our experts review the economic, environmental and social aspects of all our newly developed products. Our customers also benefit in other ways from our approach. For example, they may invest in a sustainable fund offered by our asset manager MEAG. Or we help customers who want to mitigate the emissions generated from their car and promote climate protection.

Sustainable business is also our general principle within the Group. For many years, we have been conserving natural resources. In 2015, we achieved our goal of carbon-neutral business operations throughout the company. Most of our assets under management are placed in sustainable investments. We help children and young people to develop, and we also provide emergency aid in crisis situations. However, our interpretation of sustainability also involves taking up new community challenges and identifying new trends at an early stage. Our innovative insurance solutions pave the way for new technologies.

You have an opportunity to read all about how we have made sustainability more tangible on these pages. You will find here the latest Sustainability Reporting based on the generally acknowledged criteria of the Global Reporting Initiative (GRI).

We will be delighted if you take the time to look at this, and naturally we look forward to your feedback, constructive criticism and ideas.

Yours,
Markus Rieß

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.

ERGO International - Countries

The ERGO 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 figures

At the end of the year under review, the ERGO Group had a workforce of 28,487 (2014: 28,020) salaried employees, of which 23,646 (23,198) employees are in-house staff and 4,841 (4,822) employees are field staff.

The majority of our employees are employed in Germany and with the exception of senior executives all employees have pay-scale salaries based on the German collective agreement for the private insurance industry. Local regulations apply to our international companies and branch offices, e.g. the tariff legislation in the Netherlands and Austria.

We mainly purchase goods, work and services from the following sectors:

• Travel
• External Resources (advice, consulting, HR services, qualification, translation, language Services)
• Advertising & Communication (promotional articles, print media, marketing services, media services, web media)
• Facilities & Real Estate (health and safety)
• Fleet Management (Leasing)
• Office Support (office supplies, operating and business equipment)
• Transport & Logistics (courier and logistics Services)

Our supplier management makes long-term relationships based on partnership a top priority. Sustainability and transparency along the value chain are equally important, together with price and quality. These principles apply to all the business units of our parent company Munich Re. Compliance with the principles of the UN Global Compact and consent to the anti-corruption agreement of ERGO are therefore prerequisites for acceptance as a potential supplier.

During the reporting year 2015, the scale and structure of the Group did not undergo significant change.

In April 2016, the ERGO Versicherungsgruppe AG was restructured and renamed “ERGO Group AG”. In future, the German, international, and direct and digital business operations will be managed in three dedicated units under the umbrella of ERGO Group AG.

ERGO Group Portrait

ERGO takes account of the precautionary principle with its risk management in order to take preventive action and avoid or mitigate potential negative impacts, losses or damage for the Company and the environment. You will find additional information on the website of Munich Re.

Annual Report Munich Re 2015, p. 114 (PDF file)

In July 2013, the ERGO 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”.

Code of Conduct for Self-employed Sales Agents (PDF file)

Certification of industry Code of Conduct for selling insurance products

Privacy statement

In 2015, ERGO was a member of around 100 sector organisations, associations and networks. A selection is provided below:

• “Charta der Vielfalt e.V.” (Charter of Diversity, Network)
• “Deutscher Kinderschutzbund Ortsverband Köln e.V.” (German Child Protection Association, local Cologne branch)
• “UPJ e.V.” (Federal Initiative for Companies: Partners of Young People)
• “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)
• “Industrie-Club” (Industrial Club)
• “Kulturkreis der deutschen Wirtschaft im BDI” (Association of Arts and Culture of the German Economy of the Federation of German Industries)
• “RKW Rationalisierungs- und Innovationszentrum der Deutschen Wirtschaft” (Rationalisation and Innovation Centre of German Industry)

ERGO Group AG manages the various companies and business lines.

• Life: ERGO Lebensversicherung AG, Hamburg; Vorsorge Lebensversicherung AG, Düsseldorf; Victoria Lebensversicherung AG, Düsseldorf
• Property-casualty including legal protection insurance: ERGO Versicherung AG, Düsseldorf; D.A.S. Rechtsschutz Leistungs-GmbH; various international companies of D.A.S.
• Health: DKV Deutsche Krankenversicherung AG, Cologne
• Legal protection: Europäische Reiseversicherung AG (ERV), Munich; various international companies of ERV
• Direct insurance: ERGO Direkt Lebensversicherung AG, ERGO Direkt Krankenversicherung AG, ERGO Direkt Versicherung AG, Fürth
• International: ERGO International AG, Düsseldorf; various international companies of ERGO

ERGO holds 40 percent of the shares in MEAG MUNICH ERGO AssetManagement GmbH, the asset manager of ERGO and Munich Re.

Our business activity is defined by a complex framework and a landscape of emerging potential for new risks and opportunities. It is therefore important that we regularly appraise the issues and focuses associated with our responsibility. In order to live up to our customer promise of “To Insure is to Understand”, we strive to understand the expectations and needs of our most important stakeholder groups and identify new developments at an early stage. In spring 2016, we launched a three-stage materiality analysis for this purpose and this simultaneously enabled us to determine the content of our Sustainability Report.

The first stage involved us in identifying relevant topics that were derived from potential social impacts of ERGO’s business model and requests put forward by stakeholders to our company. We also analysed the following aspects:

• the G4 Guideline of the Global Reporting Initiative (including the Financial Services Sector Supplement),
• material challenges identified for Munich Re
• the content of sustainability ratings and
• the Principles for Sustainable Insurance.

We also debated relevant issues arising from the perspective of consumer protection at a workshop held in conjunction with the Consumer Advice Centre North Rhine-Westphalia. This analysis yielded eight relevant issues.

The eight issues were prioritised in the second stage by carrying out an online survey of our Customer Workshop encompassing nearly 900 customers. “Fair and transparent dealings with customers” was identified as the major issue, followed by “Sustainable investment of capital” and “Basic training and advanced training”. Generally speaking, two thirds of the surveyed customers stated that they believed it was very important for ERGO to take entrepreneurial responsibility.

In the third stage, internal representatives from specialist areas assessed the value contribution of the issues to the future-proof capability of ERGO. Each was discussed in a workshop in light of the associated opportunities and risks. The materiality matrix that was developed was then validated by the ERGO Sustainability Committee.

You can see the results of the assessments in the materiality Matrix.

The configuration of our materiality topics does not only relate to ERGO internally. It also takes has impact on external stakeholder groups. The table shown below provides an overview of these issues. We have allocated the relevant GRI aspects to our materiality topics to provide assistance in general orientation. The materiality topics relate to the entire ERGO Group.

See G4-19

See G4-19

In 2015, we adjusted our data reporting for donations, social sponsorship and memberships. Expenditure is now reported in accordance with the sponsorship categories of science/education, social projects, health, natural catastrophes and culture (see G4-EC1).

Vereinzelte Mitarbeiterkennzahlen im Bereich Aus- und Weiterbildung mussten aufgrund von Datenkorrekturen rückwirkend angepasst werden (see G4-LA9).

For the first time, we are reporting indicators on expenditure for donations, social sponsorship and memberships at our international locations (see G4-EC1).

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.

It is also important to know what our customers think about the subject of sustainability. During the reporting period, we therefore carried out a survey in the course of implementing the materiality analysis (see also G4-19 and G2-27).

ERGO Customer Workshop

See G4-24

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 2015, the Customer Report, the comprehensive “responsibility” section on the Group’s website, and various social media channels (ERGO Blog, Facebook, Twitter) provided important instruments for external communication on the subject of responsibility.

ERGO makes people the centre of attention with the 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, employee representatives, ombudsman (external)
• Shareholders: financial communication, Annual General Meeting
• 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.

In the context of the materiality analysis for the Sustainability Report 2015, we carried out a dedicated online survey of our ERGO Customer Workshop involving nearly 900 customers – including representatives of the Customer Advisory Board. Customers taking part in the survey stated that the topics “fair and transparent dealings with customers” and “sustainable investment of capital” were top priorities as far as they were concerned (see G4-18). More than two thirds of the customers taking part in the survey believed that it was very important as a matter of principle for ERGO to take entrepreneurial responsibility.

The reporting period is the calendar and business year 2015. Important events up to 31 May 2016 have been included in the report to reflect current developments.

The sustainability report for the year 2014 was published in October 2015.
ERGO Sustainability Report 2014

ERGO has published a sustainability report since 2012. Starting in the reporting year 2014, we have been reporting about our sustainability activities in the form of an extensive GRI Balance Sheet on our website.

ERGO Group AG
Corporate Responsibility (UCRD)

Contact Corporate Responsibility

This table is the GRI Content Index in accordance with G4.

The report was not verified by an external auditor.

In accordance with the Articles of Association of ERGO Group AG (2015 still known as ERGO Versicherungsgruppe 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. At the end of the business year 2015, the Board of Management had nine members, two women and seven men. Since 16 September 2015, the Chairman of the Board of Management has been Dr. Markus Rieß. He took over from Dr. Torsten Oletzky.

The Supervisory Board is the highest monitoring body for corporate governance. In 2015, it comprised 16 persons, ten men and six women. The Chairman of the Supervisory Board is Dr. Nikolaus von Bomhard. The Supervisory Board formed five committees (Audit Committee, Standing Committee, Board Committee, Mediation Committee and Nomination Committee).

ERGO Articles of Association

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 ERGO 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
  ERGO Code of Conduct for Self-employed Sales Agents (PDF file)
• Environmental Guidelines of the Group
  ERGO Environmental Guidelines (PDF file)

ERGO makes compliance with the principles of our Code of Conduct a top priority for our employees and sales partners. We follow up all reports of misconduct which we receive from inside or outside the Company. Relevant incidents are individually assessed and sanctions are imposed in accordance with the severity of the infringement of regulations.

Triggered by the investigation into the incentive trip “Budapest 2007” in our multi-level sales organisation, ERGO has carried out a large-scale investigation looking into incentive trips and other incentives across all sales organisations over a period of ten years. Extensive information is available for you to read on the results and the approach to incentive trips here:
Compliance / Incentive Trips & Incentives.

Criminal proceedings relating to this matter against a former sales manager of ERGO and a Managing Director of a travel agency on account of embezzlement and abetment were stopped shortly before the start of the trial in July 2016 following a payment of a fine.

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.

Communication with its stakeholders and their community environment is important for ERGO so that new challenges and changes can be identified at an early stage, and appropriate solutions can be developed. We regard ourselves as being part of the community, and wherever possible our aim is to change it for the better. We create value added for the community as an employer and through our business activity. We also generate value through our many initiatives relating to community engagement.

Operational business declined slightly overall in the 2015 business year. Total premium income amounted to 17.9 billion euros (2014: € 18.1 billion) and this was therefore at the upper end of our target corridor for 2015 between 17.5 and 18 billion euros.

Targets and measures

At nearly 600 million euros, ERGO generated an operating result for 2015 that yielded a consolidated result that was 4.2 percent below the result for the previous year (2014: 624 million euros). After depreciation and amortisation, an unsatisfactory consolidated result of -227 million euros was generated. Sales fell by 1.1 percent to 17.9 billion euros (2014: 18.1 billion euros).

Key figures

During the year under review, we adjusted our data reporting for donations, social sponsorship and memberships. The expenditure is now recorded in accordance with the sponsorship categories of science/education, social projects, health, natural catastrophes and culture. In 2014, we developed reporting of expenditure at our international locations. In 2015, we were again able to significantly improve the interrogation system. The expenditure for 2015 is therefore only partially comparable with the data from the previous year.

Our business as an insurer is impacted by claims due to natural catastrophes caused by the consequences of climate change. As far as ERGO is concerned, climate change is a risk with direct financial impact. 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 which generate renewable energies. We also contribute to CO2 reduction within our own Company. By 2015, we had achieved our goal of carbon-neutral operations for all our sites worldwide (see also G4-DMA-EN).

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

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.

MEAG is the asset manager of ERGO and Munich Re and it invests in global infrastructure projects. These include equity investments in projects such as solar plants and wind farms, and taking shareholdings in a high-voltage grid and a natural-gas grid.

Microinsurance

ERGO responsibility - Commitment

As a major employer and provider of work, the ERGO 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. Since January 2016, ERGO has also been marketing the Elektro Plus module in motor insurance in order to provide an even better package meeting the insurance requirements for electric and hybrid vehicles. 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 or damage caused by 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.

Since summer of 2015, ERGO has been cooperating with the German PROJECT CLIMATE under the motto “Now become a climate hero”. Car drivers are able to mitigate the carbon-dioxide emissions of their vehicle with a monthly donation. The aim of the cooperation is to raise customers’ awareness for climate protection. The donations made for mitigation are used to promote climate protection Projects.

ERGO project Climate Hero (German version)

ERGO makes a contribution with special solutions for building up under-developed insurance markets in developing and emerging countries. For example, the majority of people in India do not have access to traditional insurance products. The German-Indian joint venture company HDFC ERGO sells microinsurance policies in rural areas providing health, accident and fire insurance cover. In 2010, HDFC ERGO on behalf of the Indian government was the first private insurance company to launch a weather insurance for harvest failures (for further information see G4-FS7 and G4-FS13).

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. These collected data form the basis for controlling consumption so that it is as environmentally benign as possible. They also help us to improve our Performance.

The CO2 footprint of our business activity forms the key indicator for measuring and evaluating environmental performance. We calculate our CO2 emissions annually from energy, paper and water consumption, business trips and waste in standardised form and to a high standard. This was confirmed by Ernst & Young for selected quantitative environmental data in 2015 at the Munich Re Group, and consequently also at ERGO (see verification statement by Ernst & Young).

In 2015, eight large German locations and five locations of DAS in the United Kingdom and Ireland were certified in conformity with the international standard ISO 14001. During the reporting year, certified environmental management covered 41.9 percent of our employees (2014: 44.3 percent). The lower coverage rate is due to the slight decline in the number of employees at certified locations. 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 top priority of the company environmental strategy at ERGO is keeping energy consumption and CO2 emissions as low as possible and conserving natural resources.

We achieved our goal of reaching carbon neutrality for our business by 2015. We intend to continuously reduce our CO2 footprint. By 2020, our CO2 emissions are projected to fall by 35 percent (baseline year 2009), with measures including the purchase of green electricity.

We install modern building and plant technology in order to minimise energy consumption at our locations. Every employee has an obligation to assist in reducing the consumption of resources – including energy, paper and water, and in avoiding waste. This is why we promote open dialogue and provide regular information and updates about our activities in the area of the environment. We raise the awareness of our employees through training sessions and campaigns – such as the annual “Bit-Weg-Tage” (Data Delete Days) when we ask our employees to delete unnecessary data in order to save energy.

Targets and measures

Responsibility / Environment

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. During the course of 2015, we were once again able to reduce the absolute consumption of paper by 7.3 percent to 674 tons (2014: 727 tons).

The recycled materials used at ERGO are restricted to paper. In 2015, it made up a proportion of 46.8 percent (2014: 57.1 percent). The reasons for the decline are due to a change in supplier and a changed order form; we have already introduced measures to reverse this trend.

In the business year 2015, direct energy consumption – also on account of the unusually mild winter – amounted to 577,375 gigajoules (GJ). This is two percent less than in the previous year (2014: 589,443 GJ). The primary energy source was almost exclusively natural gas.

In the business year 2015, direct energy consumption – also on account of the unusually mild winter – amounted to 577,375 gigajoules (GJ). This is two percent less than in the previous year (2014: 589,443 GJ). The primary energy source was almost exclusively natural gas.

See G4-EN3

In the business year 2015, we succeeded in reducing total (direct and indirect) energy consumption by 1.2 percent. The specific energy consumption per employee fell to 17.93 gigajoules (GJ).

Over the past several years, we have carried out a large number of measures and these include the modernisation of our building technology, replacement of 10,800 standalone PCs with energy-saving network computers and installation of modern LED lighting. In 2015, we succeeded in reducing consumption by 540 GJ a year at the Hamburg location, for example by the use of LED lighting in the underground car park. 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 designed to save fuel. In 2015, ERGO trained around 100 drivers. Our 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 160g/km. We are gradually converting our company fleet to fuel-efficient models. We are also providing our employees with an infrastructure for video and web conferencing and therefore creating alternatives to business trips.

The locations of ERGO withdraw their water from the local (municipal) networks. In the business year 2015, consumption came down slightly. Total consumption amounted to 445,744 cubic metres (2014: 446,813 m³). Consumption per employee was 15.65 cubic metres (2014: 15.95 m³).

In 2015, the total greenhouse gas emissions caused by us (Scope 1-3 in accordance with the GHG Protocol) decreased slightly to 92,230 tons (2014: 92,565 t). The specific emissions per employee therefore came down to 3,238 kilograms (2014: 3,304 kg). These data are based on CO2 equivalents.

See G4-EN15

See G4-EN15

See G4-EN15

ERGO was one of the first primary insurers to create a carbon-neutral environment for group-wide CO2 emissions from its business operations. We compensate for unavoidable CO2 emissions by purchasing CO2 certificates. In 2015, certificates for 75,000 tons of CO2 were purchased. 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

We intend to continually reduce our CO2 footprint in the future. By 2020, our CO2 emissions are projected to fall by 35 percent (baseline year 2009), measures include the purchase of green electricity.

The data quality and depth of environmental indicators are continually being improved at our European reporting locations.

Implementation of Group-wide carbon neutrality in stages by 2015

As a service provider, our business operations do 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. We do not collect data on these emissions because they are not of significant importance for ERGO as a financial services provider.

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 2015, 6,381 tons of waste were generated at the locations representing a significant reduction (2014: 7,231 t), this amounted to 224 kilograms per employee (2014: 258 kg). The high volume of waste in 2014 was due to conversion and refurbishment measures. Waste and recyclable materials are separated, most materials are recycled or recovered and disposed of through regional service providers.

We are well aware of our responsibility as the employer of around 28,500 people. As far as we are concerned, a sense of responsibility means ensuring that ERGO is future-proof and remains competitive. The objective is to make sales more agile and to provide a more digital structure for the Company. Comprehensive structural measures are necessary in order to achieve this goal. These changes will also lead to a painful and unavoidable reduction in the number of jobs. We will make arrangements to ensure that job cuts are made within a framework that is as socially acceptable as possible. ERGO is in negotiations with the co-determination bodies with a view to structuring the arrangement.

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. The members of our workforce 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 which focus 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

ERGO has a comprehensive advanced training programme directed towards promoting our employees at all hierarchical levels. In 2015, our in-house staff and salaried field staff in Germany attended training sessions on a total of more than 102,098 participant days (2014: 72,818). The average number of days invested for advanced training of each employee rose to 5.9 days in 2015 (2014: 4.3 days). One reason for the rise is the increased number of IT training sessions. From autumn 2016, the new group-wide international Group trainee programme EXPLORE of the Munich Re Group was started with placements at ERGO and the other business areas.

We do not collect data for advanced training days separately for women and men because these indicators are not relevant for management at ERGO. Due to the introduction of new IT systems, the number of IT trainings was higher than in 2015.

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 2015, the proportion of female employees was approximately equal to previous years with 56.9 percent (2014: 56 percent). The proportion of women in management positions (based on all management levels) for in-house staff and salaried field staff in Germany increased to 24 percent in a year-on-year comparison (2014: 23.1 percent). 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 was 31.1 percent at the end of 2015 (2014: 31.5 percent).

At the end of the business year 2015, the Board of Management had nine members, of which two were women and seven were men. After Bettina Anders stepped down from the Board at the end of 2015 and Silke Lautenschläger moved to the Board of Management of ERGO Deutschland AG in July 2016 there are currently no women represented on the Board of Management of ERGO Group AG. Six women and ten men were represented on the 16-strong Supervisory Board of ERGO in 2015.

The number of disabled employees in the German in-house staff and salaried field staff increased slightly in a year-on-year comparison and is now 1,074 (2014: 1,006).

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.

Since 2015, ERGO has been carrying out an annual independent salary analysis with the assistance of the Logib-D tool in order to record potential differences in salary between men and women. According to the analysis, the salary of men in 2015 was on average 2.1% higher compared with women. This result indicates that ERGO is significantly below the average for Germany. Nevertheless, we are working steadily towards continuing to improve the ratio.

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.

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

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. We are planning to strategically refocus our community commitment for the future.

Targets and measures
Codes of Conduct
Compliance
Certification of industry Code of Conduct for selling insurance

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 G4-FS13.

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 2015, 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.

We are not aware of any cases of corruption during the year under review.

One of the most frequent reasons for dissatisfaction among customers is their feeling of having being treated unjustly. If this is the case, customers are able to take advantage of our internal complaints management system to provide explanations and dialogue. The unit “Central Complaints Management” manages, coordinates and supports cross-divisional complaint processing and analysis. The objective is to learn how to rectify faults and improve services and processes.

The unit was established on 1 January 2015 and it is dedicated to continuous development and improvement of complaints handling. This unit has one primary objective: improving the satisfaction of our customers. This entails:

• deriving weak points from complaints and encouraging cooperation with the specialist departments, the Customer and Sales Service Centre (KVC) and sales
• Continuously developing complaints processes in order to optimise throughput time, comprehensibility and completeness in processing complaints.

A structure for systematic recording of data about complaints is currently being developed.

The ERGO Customer Advocate based within the portfolio of the Chairman of the Board of Management. This position carries out an arbitration function within the company, if customers feel that they have been unjustly treated and they are not making any progress. The ERGO Customer Advocate and the associated team deal with the concerns of customers and their role is to provide clarification for these matters. In the business year 2015, the spokesperson dealt with around 70 cases. In three out of four cases, we were able to arrive at a solution in favour of the customer.

Customer Advocate

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. We therefore avoid unnecessary jargon, foreign words and Anglicisms. We formulate our texts to ensure they are as short and comprehensible as possible.

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.

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. Around 13,000 employees are able to use the “Textlab” comprehension software. In 2015, the number of text analyses carried out by “Textlab” increased to 344,000. 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 Germany. In February 2016, the agency reassessed the comprehensibility initiative at ERGO. This audit resulted in a further increase in the score to 1.72 (good) (previously 1.90). ERGO is so far the only insurer in the marketplace to undergo this voluntary audit.

We are not aware of any cases during the year under review.

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 57,000 customers (2014: 88.000), 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.

We have drawn on the results of the surveys and initiated improvements to processes and in sales. One of the initiatives has been to launch empathy training at the Customer Service Centre. If a customer feels that they have been treated unfairly, the internal complaint management system is available to provide explanations and dialogue. If customers feel that their concerns have not been adequately addressed, they can consult the ERGO Customer Advocate. In the business year 2015, 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 G4-FS15)

ERGO customer initiatives

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 G4-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 2015, specific position papers were written on selected topics like “Mining” and “Arctic Drilling”. 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 possible to check ESG criteria systematically when developing new products or when modifying existing products in tariff business. No irregularities were identified in this process. (see also G4-FS1)

See answers to G4-FS1, G4-FS2 and G4-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 trainees at a launch event. The regular environmental audits of the individual departments carried out within the framework of environmental management also continuously raise the awareness of employees for the environmental and social requirements in our business areas. We also raise the awareness of our employees at the local sites in working groups, through our internal media and by means of campaigns.

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. We want to know what our customers think about the topic of sustainability. This information is provided to us by customer surveys. During the reporting period, one of the issues we surveyed was the relevance of sustainability as part of the materiality analysis (see also G4-19, G4-24 and G4-27).

On behalf of the Indian government, HDFC ERGO General Insurance Company (HDFC ERGO), in which ERGO now has a 49 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 around 80 percent of harvest failures in India are due to the weather, whereas less than one quarter of Indian farmers are insured. The structure of the product is simple and flat-rate payments are made if a specified temperature or level of precipitation is exceeded or not achieved. Gross premiums amounting to the equivalent of around 40 million euros were written and 2 million farmers were insured during the course of 2015.

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. Since January 2016, ERGO has also been marketing the Elektro Plus module in motor insurance in order to provide an even better package meeting the insurance requirements for electric and hybrid vehicles. 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 G4-EC8).

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 the indexes used include the following ones:

• Dow Jones Sustainability World Group Index,
• FTSE4Good,
• Ethibel Sustainability Index.

Sustainability ratings drawn up by the agencies oekom research AG and Systainalytics are also used.
We also monitor government bonds for sustainability. This is based on the internal sustainability country rating of Munich Re, which is in turn based on the Country Risk Monitor of the rating agency 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.

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) helps young people to prepare for getting on the career ladder with the “Job Lokomotive” project. Apart from providing ideas on selecting a vocation, concrete support for the application process is at the centre of activities.