Rules and Processes

5. Responsibility

5. Accountability in the corporate management with regard to sustainability is disclosed.

FMG has clearly defined the departments with responsibility for sustainability.

FMG applies a central approach to managing sustainability, whereby responsibility lies with Strategic Sustainability Management, part of the Corporate Development division. It consolidates the entire Group’s sustainability activities and sets the tone for the strategic approach. Illustration on page 24 in the integrated Report 2014, the five strategic fields of action.

Implementation of the strategy ranges from the picture of the future at the very top level down to individual fields of action and the associated strategic objectives. These are allocated to the divisions and broken down into initiatives and measures. The Executive Board is responsible for formulating and achieving the strategic objectives. The first and second tiers of management are responsible for implementing the initiatives and measures derived from the objectives. Target achievement is also the basis for variable performance-related remuneration. This helps to ensure that strategic issues, including those relating to sustainability, are implemented across the divisions in people’s day-to-day work. Target achievement is monitored on a quarterly basis via internal management reporting.

See also:
"Strengths 2014" - Integrated Annual Report, p. 24.

6. Rules and Processes

6. The company discloses how the sustainability strategy is implemented in the operational business by way of rules and processes.

Sustainability is incorporated into FMG’s strategy for the long term. External standards are used as a basis (e.g., GRI, IIRC, German Sustainability Code) for developing specific sustainability activities, which are then transferred into operations by applying internal measures (including diversity, digital strategy, etc.), communication measures (integrated report, sustainability days), and external measures (including stakeholder dialog, presentations/publications). At the same time, higher-level standards and social expectations are used to identify relevant influences and value drivers, helping to boost the continued development of the business model.

The main sustainability issues for FMG are identified during an annual online survey of stakeholders, the results of which are compared to a survey of the Group’s managers. The materiality matrix prioritizes these issues and presents them in a clear manner. The sustainability program sets out specific short and medium term goals, initiatives, and measures for the fields of action. The individual business divisions are responsible for implementing the sustainability measures. The majority of Group processes are recorded in organizational manuals, which, for example, set out transparent and verifiable regulations to ensure adherence to public procurement law in the Procurement division. An online compliance training program for all employees was launched at the end of 2014.

See also:
"Strengths 2014" - Integrated Annual Report, p. 24–29, p. 91–93, p. 163–167.

7. Control

7. The company discloses how and what performance indicators on sustainability are integrated into its periodical internal planning and control and how the reliability, comparability and consistency of the data applied to internal controls and external communication are safeguarded through appropriate processes.

Once a year, relevant sustainability indicators are published in the integrated report in accordance with reporting standards. For the first time (2014), FMG has had its central performance indicators examined by an auditing company, which issued it with limited assurance.
Environmental indicators can be found in FMG’s environmental declaration. These indicators are drawn up and validated in accordance with EMAS and ISO 14001.

See also:
"Strengths 2014" - Integrated Annual Report, p. 182–195, p. 168–189.
2014 environmental declaration

Key Performance Indicators (KPI)

Key Performance Indicator GRI 4,8
Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

The four main fields of action are developed from the three perspectives afforded by sustainability – economy, ecology, and society – and contain strategic targets, which are incorporated into business operations by applying specific measures. As such, sustainability is translated into business practice in the form of various projects and packages of measures.
The FMG business model is clearly oriented towards sustainability. This is made clear to outside observers with the release of the integrated report, which describes both business operations and the company’s activities in relation to sustainability. These activities are presented in the form of financial and non-financial performance indicators. FMG also contributes to the German Sustainability Code Guideline for Medium-Sized Companies, providing input by attending numerous workshops. In addition to the traditional financial performance indicators of EBIT and EBITDA, FMG also measures itself among other things against the non-financial key performance indicators of Airport Service Quality (ASQ), carbon reductions, and employee retention. This underlines the central importance of service Quality improvements, carbon-neutral growth, and employee retention both in terms of strategic target achievement and for internal and external stakeholders.

The compliance guidelines and the guidelines covering gifts and invitations support managers and employees in ensuring legally compliant and ethical behavior at the workplace. They are published on the intranet and are available to all employees. They also reference other guidelines with employees must comply.

See also:
"Strengths 2014" - Integrated Annual Report, p. 91.
FMG’s mission statement
• FMG’s values:
http://www.munich-airport.de/de/micro/karriere/ueberuns/kultur/index.jsp

Key Performance Indicator GRI 4,9
Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.

Strategy and management: While the Executive Board is responsible for meeting the strategic objectives, the divisional managers (first management tier) and business unit managers (second management tier) take responsibility for the initiatives and measures. Regular internal management reports are drawn up to monitor target achievement.

Incentive Schemes

8. Incentive Systems

8. The company discloses how target agreements and remuneration schemes for executives and employees are also geared towards the achievement of sustainability goals and how they are aligned towards long-term value creation. It discloses the extent to which the achievement of these goals forms part of the evaluation of the top managerial level (board / managing directors) conducted by the monitoring body (supervisory board / advisory board).

The strategy stretches from the mission statement on the uppermost tier right down to the managers’ annual objectives and forms the basis for performance-based remuneration for the management team.
Because sustainability forms an integral component of the corporate strategy with the higher-level goal of increasing value over the long term, target agreements and remuneration for managers are based around the achievement of sustainability targets (relevant to the division in question). This helps to make sure that sustainability is incorporated into day-to-day work within each division and across all divisions.
FMG also uses the non-financial key performance indicators Airport Service Quality (ASQ), carbon reductions, and the employee retention index. This underlines the central importance of service quality improvements, carbon-neutral growth, and employee retention both in terms of strategic target achievement and for internal and external stakeholders.

See also:
• "Strengths 2014" - Integrated Annual Report, p. 24-29.

Key Performance Indicators (KPI)

Key Performance Indicator GRI 4,5
Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance).

While the Executive Board is responsible for meeting the strategic objectives, the divisional managers (first management tier) and business units (second management tier) take responsibility for the initiatives and measures. The strategy stretches from the mission statement on the uppermost tier right down to the managers’ annual objectives and also forms the basis for performance-based remuneration. This also helps to ensure that the strategy, including those issues relating to sustainability, are implemented across the divisions in people’s day-to-day work.

Besides individual target agreements, manager performance is measured using the KPIs EAT, carbon reductions, ASQ (airport service quality), and employee retention.
The remuneration of the members of the Executive Board contains fixed and variable, performance-based components.

Key Performance Indicator GRI 4,10
Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

The remuneration of the members of the Executive Board contains fixed and variable, performance-based components. The status of strategy fulfillment forms the basis for the performance-based components. This helps to make sure that the strategy, including issues relevant to sustainability, is implemented at the uppermost level. Regular management reports are drawn up to monitor target achievement.

Stakeholder Engagement

9. Stakeholder Engagement

9. The company discloses how the socially and economically relevant stakeholders are identified and integrated into the sustainability process. It is disclosed whether and how an ongoing dialogue takes place with them and how the results are integrated into the sustainability process.

Corporate Communications at Munich Airport is responsible for dialog with the public, media, and employees. In order to inspire confidence in the objectives and actions of the Group, it provides all the main stakeholder groups with information via suitable communication channels.
An important strategic factor in the airport’s success is acceptance by wider society. This is particularly true of expansion projects like the proposed third take-off and landing runway. This is why Flughafen München GmbH places so much emphasis on stakeholder dialog.
Again during 2014 the airport engaged in dialog, based on a three-phase concept, with all stakeholder groups, whose interests were recorded via systematic interviews.

The first phase is all about giving information to the various groups. This involved defining communication content tailored to the respective interests and developing formats for communication purposes. The integrated company report represents one of the most important measures; FMG is now publishing the report for the fifth time for the fiscal year 2014. This brings together financial and sustainability reporting within a central publication and addresses all target groups in equal measure.

In a second stage, the airport aims to incorporate stakeholders into discussions about important issues and to involve them in decision-making with the annual stakeholder survey. This direct exchange will become even more important in future, with social media giving everyone the opportunity to make information and opinions public directly.

During the third phase Munich Airport takes into account stakeholder suggestions and feedback in relation to its business activities. Its stakeholders often force the airport to confront new and relevant issues and thereby act like a mirror, giving the company an idea of what is going on in wider society. This in turn makes it possible to identify issues and trends at an early stage, benefit from outside know-how, communicate the company’s positions, and take the sting out of conflicts.

Any climate protection measures must therefore ensure first and foremost that the system for recording the various emissions is both reliable and lends itself to international comparisons. The so-called carbon footprint attributed to an airport, namely the breakdown of all greenhouse gas emissions, consists of three different sources (scopes) in accordance with the international standard known as the Greenhouse Gas Protocol.

See also:
"Strengths 2014" - Integrated Annual Report, p. 35.
List of current stakeholders and further information on the issue

FMG and its subsidiaries are in regular close contact with their most important stakeholders. This includes passengers and visitors, airlines and the air traffic industry, employees, the local area, business partners, political groups and associations, ministries and officials, and the media.

Systematic interviews are conducted with in-house contact partners for each individual group for the comprehensive analysis of the stakeholder groups.

Fair and respectful discussions are held with passengers and visitors, airlines, and employees, so that they can share their opinions. These groups are included in campaigns such as ongoing surveys. Some of the results from these interviews are incorporated into the materiality matrix. Cooperation with neighbors and business partners in the region is an essential element in the successful development of the FMG Group. The Regional Liaison Office acts as link between the airport and the region, and is in close contact with the municipalities, political decision-makers, and local citizens.

The visitor service, open days, and visitor tours of the airport site are all good examples of FMG’s dialog-oriented public relations work. The in-house Social Media Team talks to the public through the channels of Facebook, Twitter, and YouTube. FMG explicitly allows it employees to take part in discussions on social media during working hours. The Group's in-house professional development program includes courses that give employees the chance to improve their social media skills. These training sessions form part of FMG’s updated social media strategy.

See also:
"Strengths 2014" - Integrated Annual Report, p. 51-53.
List of current stakeholders and further information on the issue

Key Performance Indicators (KPI)

Key Performance Indicator GRI 4,16
Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

For further information, please see:
"Strengths 2014" - Integrated Annual Report, p. 51-53.
List of current stakeholders and further information on the issue

Key Performance Indicator GRI 4,17
Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

Service quality and complaints management: FMG’s ongoing goal is to offer its passengers a diverse portfolio of services and products. The opinions of its customers, including passengers, airlines, employees from other companies working in the airport, visitors, and airport workers are of utmost importance in the airport’s bid to improve service quality. In light of this, FMG has been running a feedback system for a number of years, enabling its customers to submit comments and complaints. Furthermore, it has also been conducting surveys which allow it to measure customer satisfaction for a long time. The company’s concentrated efforts to incorporate customers’ expectations in 2014 resulted in the airport receiving a 5-star rating from the Skytrax panel in March 2015, the first and only airport in Europe to have received this award.

Noise protection: Noise emissions are a particularly big challenge for airports. FMG is working with the industry and air traffic control to introduce new technology and improved flight procedures to actively reduce noise levels. The telephone line for aircraft noise complaints can be used to submit questions and complaints to FMG.

See also:
"Strengths 2014" - Integrated Annual Report, p. 82-84.
Aircraft noise brochure

Innovation Management

10. Innovation and Product Management

10. The company discloses how innovations in products and services are enhanced through suitable processes which improve sustainability with respect to the company’s utilization of resources and with regard to users. Likewise, a further statement is made with regard as to how the current and future impact of the key products and services in the value chain and in the product life cycle are assessed.

The Strategic Management, Sustainability Management, and Innovation Management divisions at FMG are closely related to one another in terms of organizational structures and processes. One of Innovation Management’s goals is to develop sustainable products and services, which is why sustainability issues are included as criteria in the evaluation of innovation projects.

The issue of seamless travel is currently being promoted as a Group-wide innovation project for process improvement. FMG is working hard to develop a sustainable network of transportation operators throughout the transport chain that meets customer needs, opens up new digital sales channels, and increases customer satisfaction.

The in-house employee suggestion program acts as an incentive program and is used to collect innovative ideas from employees, reward employees, and help them to implement new concepts. This not only results in improved motivation and esteem, but also helps employees to identify directly with the Group and increases economic efficiency. One of the aims is to raise employee awareness of cross-divisional improvement measures, in relation to sustainability issues for instance.

In the area of HR development, the EU’s Leonardo da Vinci education and cultural program gives apprentices and trainers the chance to visit partner European airports, so they can work in partnerships on new ideas. Furthermore, FMG works closely with local universities and training institutions on a number of innovative projects. For example, FMG runs “Jugend forscht” (Youth researches) events once a year.

See also:
"Strengths 2014" - Integrated Annual Report, p. 46-48.

Key Performance Indicators (KPI)

Key Performance Indicator GRI EN6
Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

As an airport operator, FMG is working hard to create the most energy efficient form of air travel possible. Some sample projects include:

As the central passenger handling buildings, the terminals play an important role in the field of sustainable construction. The satellite for Terminal 2 currently under construction has been designed as a “Green Satellite”. Like all other new buildings at FMG, carbon emissions are due to be 40% lower than existing buildings. This is achieved through a number of measures such as a climate facade, modern air source technology for air conditioning, and LED technology and dimmers for the lighting.

FMG’s membership in the German Sustainable Building Council (DGNB) emphasizes just how important this issue is to the company.
FMG offers airline customers a number of innovative solutions for reducing carbon emissions at the airport. Following completion of the planning process in 2012, the ground-based pre-conditioned air units (PCAs) for heating and cooling the planes during the ground handling process are almost ready to be launched. These will replace the planes’ own cooling units (APUs), which are significantly less efficient.
Airport Collaborative Decision Making (A-CDM) is a collaborative operations-based approach to streamlining ground handling processes from landing to take-off. As a result, waiting times on the take-off runway were reduced to around 2.5 minutes in 2014. This corresponds to a 51% decrease compared to the period prior to the introduction of A-CDM in 2007 and translates to fuel savings of 3,920 tonnes a year.
The area of fleet management is focusing on hybrid technology and electromobility. For example, it is currently testing various types of hybrid drive. Five electric vehicles are being used to raise employee awareness and conduct research into charging infrastructure. The Production division has been converting various devices (e.g., electronic passenger stairs). FMG is also using 27 buses that have been certified under the “Blue Angel” environmental program.

As a service provider, FMG is participating in joint mobility projects in a bid to offer employees, passengers, and visitors a balanced range of options for traveling to the airport. This involves adding more options for electromobility. There are currently four free charging stations in place for passenger cars.

See also:
"Strengths 2014" - Integrated Annual Report, p. 51-53, p. 92-94, p. 99-100.

Key Performance Indicator GRI EN26
Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

Noise protection:
Noise emissions are particularly challenging for airports. FMG is working with the industry and air traffic control to introduce new technology and improved flight procedures to actively reduce noise levels. Measures include raising emissions-based landing charges, conducting extensive noise measurements, setting up a noise complaint management system, and continuous descent approach (CDA), the noise-reduced aircraft approach procedure. In addition to emissions-based landing charges, FMG also raises noise-related fees as an incentive for airlines to use quieter, more energy-efficient aircraft.

Biodiversity:
In 2008, the 4,525 hectare European bird sanctuary “Nördliches Erdinger Moos” was established in the area around Munich Airport and its north-easterly peripheral. The sanctuary is highly important for the conservation of various species of birds in their natural habitats and is a significant issue for Germany as a whole. The ecological quality of the airport meadows located around the two runways made an important contribution to the establishment of this bird sanctuary. For years, the breeding birds on the airport meadows have been carefully observed, identified, and looked after. The upkeep of the meadows, building and maintenance work, and any measures needed for bird strike prevention are compared closely to the meadow breeders’ conservation requirements. This enables Munich Airport to strike the perfect balance between nature and the process of running an airport. The meadows are mowed in a way which meets the conditions the birds need for their nesting sites and the surrounding area and in a way which protects the eggs and baby birds.

Climate protection strategy:
Major airports loom large when politicians and wider society discuss the issue of climate protection, since their emissions can be compared to that of a small town. This is why an efficient approach to climate protection management – something Munich Airport has been doing since 2008 – is particularly important. The airport aims to achieve climate neutral growth by 2020, which means that carbon emissions have to remain at the same level as 2005 despite ongoing growth.
The basis for this voluntary commitment is a joint paper on climate protection, which met with agreement in 2008 from Flughafen München GmbH, the operator of Frankfurt Airport Fraport AG, Deutsche Lufthansa AG, and Deutsche Flugsicherung GmbH. In signing up to this initiative, the various parties are already going much further than the targets for the sector worldwide.

De-icer recycling:
The way Munich Airport handles resources from a de-icing perspective
is the only approach of its kind in the world. The de-icer that drips off the aircraft is collected underground and treated in the airport’s own recycling system. Thanks to this recycling process, some 58.7 percent of the aircraft de-icer used was treated and reused during the winter of 2013/2014. The recycling rate is heavily dependent on weather conditions and therefore tends to fluctuate.
Involvement in industry groups: By working with other companies in the industry, FMG is doing its bit to make air travel greener.
This refers in particular to its work as part of the German Airports Association (ADV), which has set out a 4-pillar strategy to significantly reduce the environmental impact of air travel.

See also:
"Strengths 2014" - Integrated Annual Report, p. 73-87.
The ADV’s environmental activities

Key Performance Indicator GRI FS11
Percentage of assets subject to positive and negative environmental or social screening.

There are currently no financial assets that are subject to positive and negative environmental or social screening.