1. Strategic Analysis and Action

The company declares whether or not it pursues a sustainability strategy. It explains what concrete measures it is undertaking to operate in compliance with key recognised sector-specific, national and international standards.

By applying a future-oriented, responsible corporate development strategy, Flughafen München GmbH (FMG) aims to protect its business model for the long term. As a result, sustainability represents an integral part of its corporate strategy and is incorporated into every aspect of its business.
For the future, the company has identified three key strategic challenges:  The airport defined the guidelines for the medium-term development of the airport in its Strategy 2025. This describes five key fields of action for the successful operation of Munich Airport: 
These fields of action were identified as a result of scenario analyses regarding the future of the aviation industry. They constitute an essential element of the picture of the future 2025 and are incorporated in the materiality matrix and the sustainability program.
 
As a «corporate citizen», i.e. a company that consciously acts in a responsible manner towards society, Munich Airport is always looking to pick up on issues of importance to its stakeholder groups. It welcomes dialog as an opportunity to continue developing its corporate policy, focused on sustainability. A fundamental review of Strategy 2025 was planned for 2019, in order to identify any areas that need adjustment and to take stock. This review was deferred to 2020 owing to achange in management personnel.
 
The sustainability management of the company incorporates the concerns of the stakeholders into its own concerns as well as into the strategic planning and operational implementation.   
 
Using a materiality process, FMG identifies and prioritizes the issues that are important to external stakeholders and airport employees. Existing in-house processes and methods are linked to the internal strategy process for this purpose.
The Group-wide materiality analysis is based on the principles of the Global Reporting Initiative (GRI). It is an important tool for strategic sustainability management. The materiality matrix and the sustainability program are further important elements and provide the basis for the Executive Board to set the central parameters for the sustainable development of the Group.
FMG has set itself the goal of continuously improving processes, particularly with respect to the assessment and measurability of internal and external impact.       
 
In 2015, the United Nations adopted 17 Sustainable Development Goals (SDGs). Politicians and businesses around the world have been called upon to transfer these SDGs into their fields of action and make a key contribution to achieving them by the year 2030 through, for example, innovation, pioneering technology, and responsible supply chains. The airport wants to demonstrate the impact its business activities has on the SDGs and how it can contribute positively in the future to achieving the Sustainable Development Goals through its strategic projects.   
 
To this end, FMG first identified the goals that are relevant to it and that it can influence. In 2017, another goal was added to the eleven identified: With SDG 11 «Sustainable cities and communities», sustainability is also taken into account in the realization of strategic building projects on the airport campus.  
 
Munich Airport pursues the principles of sustainable building, focusing in particular on ecological, economic, and socio-cultural aspects. In terms of ecology, the goal is that the building itself, and then afterwards the operation of the building, should have a minimal impact on the environment through contaminants and through the consumption of resources, water, and energy. Building measures can lower greenhouse gas emissions and thus contribute to the achievement of the ambitious climate protection goals. One example of this is the already implemented switch of all the apron lighting from traditional lights to LED. An innovative concept in the field of water management is that of reusing gray water where possible. 
 
Ecological improvements often require significant investment initially. However, they also frequently prove to be economically sustainable, since the operating costs fall in the long-term, for example, when less energy is consumed. As the original Munich Airport buildings are now more than 30 years old, there is significant potential, through renovations, to improve both their ecological and economic sustainability.  
 
The third aspect of sustainable building is the goal of creating, through the buildings, a healthy and pleasant environment for employees and users. Here ecological issues intertwine with issues of comfort and high-quality amenities. This goal was already realized with the new building for the Real Estate division on the edge of the emerging LabCampus, which offers relaxation spaces and communications zones. To this end, FMG already established an internal pool of DGNB Consultants back in 2018.

2. Materiality

The company discloses the aspects of its business operations that have a significant impact on sustainability issues and what material impact sustainability issues have on its operations. It analyses the positive and negative effects and provides information as to how these insights are integrated into the company’s processes.

The key topics for the airport are determined on the basis of a materiality analysis. The airport’s management approaches are also presented for selected topics. The airport’s business activities have a major impact on various areas and stakeholders: Munich, Bavaria, and Germany as business locations, the region and its inhabitants, the airport staff and passengers, as well as other companies in and around the airport plus further stakeholder groups. The overriding objective is to ensure the economic and sustainable business activity of the airport. However, the airport is also aware of the negative effects that its business may have, and is making targeted efforts to avoid these, keep them to a minimum and, where required, compensate for them.    
 
The sustainability management of the company incorporates the concerns of the stakeholders into its own concerns as well as into the strategic planning and operational implementation. Using a materiality process, FMG identifies and prioritizes the issues that are important to external stakeholders and airport employees.  

Materiality process  
  1. Identification: FMG conducts an annual survey of its main stakeholder groups and FMG management when it publishes its integrated report. It also uses the results of internal scenario analyses to understand the business model in the broader context of a sustainable approach to development.
  2. Prioritization: The results of the annual stakeholder and FMG management survey are presented in a materiality matrix with two equivalent axes, which represent the importance of the individual issues for internal and external stakeholders. These issues are then discussed with experts within the company, and content is allocated to the strategic fields of action. The issues are also incorporated into the targets process.In 2018, internal and external stakeholders’ top priorities were air traffic development, infrastructure and sustainable building, customer orientation, air traffic safety, and digitalization.  Further information: Management
  3. Validation: Members of the management team discuss the relevant issues as part of the annual strategic target agreement process. The stakeholder survey also provides external feedback on the content of the integrated report. Fields of actions and targets are adapted, expanded, or incorporated for the first time. The materiality matrix prioritizes the key sustainability topics contained in the strategic sustainability program.



    Further information: Sustainability program


    Risk management
    The Executive Board of FMG and all subsidiaries and affiliated companies is responsible for the early detection and prevention of risks that jeopardize the continuity of Munich Airport and the investments. Group Management has overall responsibility for an effective risk management system and lays the essential foundation for it by communicating and defining corporate strategy and targets. It formulates specifications for the risk management process and the organizational structure of the risk management system. The aim of the risk management system is to identify events and developments that may have a negative impact on the achievement of strategic and operational targets in good time and develop suitable countermeasures. It takes account of all aspects of entrepreneurial activity – economic as well as environmental and social.   
     
    The CO2 strategy as an opportunity
    The continuing increase in efficiency with energy-saving technologies and an associated improvement in the price-performance ratio of low emissions energy generation could lead to the costs of Munich Airport’s new CO2 strategy being lower than expected.  
      
    Natural disasters as a risk
    Natural disasters are an identified risk for example: Breaches of the Isar dams at Freising as a result of heavy rainfall could lead to the terminals being flooded. This can be countered through the gradual renovation of the Isar dams by the water authority. They have already been partially renovated. Insurance has been arranged to cover earthquakes, storms, hail, and flooding.  
     
    Further information: Outlook: Risks and opportunities report

3. Objectives

The company discloses what qualitative and/or quantitative as well as temporally defined sustainability goals have been set and operationalised and how their level of achievement is monitored.

The topics from the materiality matrix can also be found in the sustainability program. The main objectives of the Strategy 2025 are broken down into individual initiatives and measures in the sustainability program.

The three fields of action Company & Management, Employees & Society, Environment & Climate Protection include initiatives on each key topic as well as a description of short, medium, and long-term measures and the respective status of implementation.

Members of top management take responsibility for the sustainability program initiatives, while members of middle management are responsible for implementing the associated measures. Manager remuneration then contains a variable element calculated according to the success of these initiatives and measures. FMG monitors target achievement in an internal management report prepared on a quarterly basis. This approach aims to ensure that the strategic targets are actually being realized in practice.

The strategic sustainability program acts as a schedule for the sustainable development of Flughafen München GmbH. The program defines the end dates of the measures and provides information on the status of implementation. Each field of action contains strategic objectives, which are translated into initiatives and measures (along with their own timeline) for the sustainability program. These are reflected in all aspects of the company’s business operations.  Munich Airport picked up on the Sustainable Development Goals (SDGs) in 2016 and asked around 400 employees for their opinion on the relevance of these goals. Twelve SDGs were identified, which were both relevant for FMG and could be influenced by FMG, and these SDGs then transferred to the internal fields of action. These are as follows:

4. Depth of the Value Chain

The company states what significance aspects of sustainability have for added value and how deep in the value chain the sustainability criteria are verified.

Munich Airport does not have a conventional supply chain, but procures a wide range of products and services needed to operate an international hub airport. The range of essential products are comparable to the requirements of a small town: The 139 product groups range from things like office supplies and road construction to vehicles and buildings. In 2018, the total procurement volume1) of the Munich Airport Group amounted to around 750 million euros. All procurement by specialist areas and subsidiaries is handled by the central Group-wide product group management system. Only the merchandise, food & beverage, and medical equipment product groups are procured directly from subsidiaries. FMG takes sustainability criteria into account throughout its entire value-added chain. Its main focus is the area of procurement. When issuing calls for tenders for services, it always adheres to national and EU legislation and treaties, the application of which is then confirmed again when the offers are submitted. The purchasing policies contain precise sustainability criteria, while adherence to competition requirements is monitored by the in-house Compliance division. As part of its supplier management process , FMG conducts annual assessments of around 150 partners under framework agreements. In 2018, suppliers were again evaluated on the basis of such criteria as product quality or the quality of the service provided, reliability, and developments in terms of services and pricing, as well as whether companies were certified in accordance with quality and environmental standards. In the event of poor outcomes, the suppliers are given the opportunity to eliminate existing deficiencies in supplier audits. FMG’s current supplier structure allows regional economic cycles to be strengthened, traffic emissions lowered, and the risk of violation of human rights reduced.    
  
Around 5,100 suppliers work for the Munich Airport Group.The supplier structure during 2018 was relatively consistent with the previous year. 98 percent of the procurement volume of the airport went to companies headquartered in Germany. Of these, 61 percent are from Bavaria, and 38 percent are from Munich and the area surrounding the airport.   
 
Munich Airport has regional economic impact at a number of different levels. A basic distinction is made between the effects resulting directly from airport operations on the one hand and the effects of its use on the other.  

Further information: Value creation 
 
 
1) Figures relate to the total procurement volume of the Munich Airport Group in 2018.

Value-added effects resulting from airport operation The value-added effects generated by airport operations can be categorized into direct, indirect, and induced effects.  

Key Performance Indicators to criteria 1 to 4

Indicator system ensures sustainable business
 
Munich Airport measures the performance of its managers using financial and non-financial indicators. In doing so, it focuses on indicators that measure corporate sustainability and quality. Accordingly, the perception of traditional sustainability management is governed economically by earnings before taxes (EBT), ecologically by CO2 reductions, and socially by the employee retention index. Munich Airport uses the Passenger Experience Index (PEI) to determine the achievement of quality objectives, which act as strategic impetus for ensuring increased customer satisfaction. FMG surveys internal and external interest groups each year to determine and regularly affirm the relevance of the performance indicators for stakeholders. 

You will find further details concerning the performance indicators including projections in the integrated report’s management report: Economic report

Earnings before taxes (EBT)
At TEUR 7,921, Munich Airport’s EBT for fiscal year 2018 fell by 3.5 percent to TEUR 221,319, representing a smaller decline than expected. The expected result was therefore exceeded.
      
Greenhouse gas emissions intensity1) / GRI standard 305-4
In kg/passenger 2018
CO2 emissions 3,24
1)The calculation of CO2 emissions per passenger enables the physically meaningful addition of the various forms of primary and secondary energy used at the airport in relation to passenger figures.  
 

The CO
2 emissions from scope 1 and 2 are added, as well as power, heat, cooling energy, natural gas, and fuel consumption by external companies. The figure therefore includes all emissions that must not exceed the targets for carbon-neutral growth.
 
Passenger Experience Index (PEI)  
  2018
  Actual as %
Passenger experience index 79.16
   
Since 2017, the passenger experience index (PEI) has replaced the airport service quality value as a non-financial key performance indicator.  
 

In 2018, an indicator was used as a target value that differs from 2017.