Corporate governance
We take responsibility
Sustainably strategy and organization
As an engine manufacturer and key player in the sector, we want to actively shape the transformation of aviation. Our efforts are focused on climate action, driven by our vision of emissions-free flight. Moreover, as a manufacturing company and employer of some 10,000 people, we strive to act responsibly in all sustainability topics.
Shouldering responsibility is embedded in our corporate identity. Sustainability means that this sense of responsibility permeates every area of our business and extends to the entire value chain. We embrace the principle of bringing sustainability, economics, ecology and social responsibility into harmony. Our commitment is based on the observance of statutory regulations and internal standards—essentially, those enshrined in the MTU Code of Conduct—and the ten principles of the UN Global Compact, to which we have signed up. Our guiding principle “We shape the future of aviation” reflects our sustainable approach.
Our commitment to corporate responsibility (CR)
Our goals and fields of action
UN Global Compact & Sustainable Development Goals
The UN Global Compact is a unique sustainability initiative that we joined in 2011. As a signatory, we are committed to upholding the ten principles for respecting human rights, ensuring fair working conditions, protecting the environment and preventing corruption. We consider them important guidelines for responsible corporate governance. We strive to continuously improve the way in which we implement the principles. And through our Code of Conduct we transfer them to the supply chain. This Sustainability Report also serves as a Communication on Progress in line with the UNGC. Cross-references of the statements published here to the UNGC principles can be found here.
As a signatory to the UN Global Compact, we also want to contribute to the UN’s 2030 Agenda, which is founded upon 17 sustainable development goals (SDGs). These goals embrace the three dimensions of sustainability—economy, environment and society—in equal measure. We support the implementation of the SDGs and have identified eight that are particularly relevant for MTU:
This was the result of a workshop in which the CR team considered all 17 SDGs and assessed their significance for MTU. In the process, the eight stated goals were prioritized. Our efforts for a sustainable future also have an impact on other SDGs, where we can make an indirect positive contribution, such as to SDG 10 “Reduced inequalities.”
→ Learn more about our contribution to the SDGs
Standards and guidelines that we follow:
- UN Universal Declaration of Human Rights
- Principles of the UN Global Compact
- The UN’s 2030 Agenda and Sustainable Development Goals (SDGs)
- Core labor standards of the International Labour Organization (ILO)
- German Corporate Governance Code
Climate action is a key concern
MTU is committed to the goal of limiting global warming preferably to 1.5 degrees Celsius, as set out in the Paris Agreement. We are pursuing our long-term goal of zero-emission aviation through our Clean Air Engine (Claire) technology agenda. Through Claire, we are developing innovative propulsion concepts that meet the high safety standards of aviation, greatly improve energy and emissions footprints and fulfill all future noise emissions limits. We firmly believe that taking a sustainable approach to our business will allow us to remain competitive and successful in the long term. Because stakeholder expectations are clear: The players in the aviation industry, and especially aircraft and engine manufacturers, must find answers and solutions to make the emissions produced by flying as low as possible in the future. For more about aligning our product stewardship with the Paris Agreement, see the chapter Climate impact of aircraft engines.
We also want to implement concepts for our own business activities, in production and maintenance at our plants, that reduce our carbon footprint and go as far as achieving climate neutrality. For more information, see Energy management and climate action
Governments around the world are working on incorporating the goals of the Paris Agreement into national legislation. The European Commission has set itself the goal of climate neutrality by 2050 with the European Green Deal. Furthermore, through the new EU taxonomy established as part of the action plan on financing sustainable growth, the European Commission calls on companies to classify their business activities according to sustainability criteria. The taxonomy provisions first became effective for the environmental goals of climate action and adaptation to climate change for the 2021 financial year. MTU furnishes EU taxonomy information in the non-financial statement of the Annual Report (p. 105ff.) Moreover, investors are increasingly evaluating companies and their business models according to ESG (environmental, social, governance) criteria.
ESG goals at MTU
To strengthen sustainability and make progress more measurable, we have introduced non-financial KPIs for environmental, social and governance performance (ESG) for the 2021 financial year, which are factored into the variable compensation of the Executive Board. The goals are drawn from climate action at our sites and employee satisfaction.
For climate action, the annual progress is taken from the new ecoRoadmap, which was launched in 2021. The “CO2 emissions related to production hours” indicator for the Munich site is incorporated into the variable compensation of the Executive Board as an ESG-relevant KPI. Detailed presentation of the ecoRoadmap and goal attainment in 2021
In the employee category, the ESG goal is derived from the results of the regular PulseCheck surveys and goal attainment is determined based on the index value from the feedback of employees to the subject areas of commitment and leadership. More about PulseCheck and goal attainment in 2021
Organization and management of sustainability
Chief Sustainability Officer appointed to Executive Board
We have integrated sustainability into organizational structures and established sustainability management throughout the MTU Group. Through the corporate responsibility (CR) management system, we monitor our sustainability strategy, performance and goals.
A CR Board is responsible for the implementation of CR management on behalf of the Executive Board. At Executive Board level, Chief Operating Officer Lars Wagner was appointed as Chief Sustainability Officer (CSO), making him the MTU’s first representative for sustainability. He is primarily responsible for defining the positioning of MTU and the sustainability strategy and objectives. As CSO, moreover, he monitors goal attainment and ensures that CR organization at MTU is suitably aligned with the requirements and successfully rooted in the company. In fulfilling these responsibilities, the CSO works closely together with the CR Board. The CR Board acts in cooperation with the CSO as the highest decision-making body and draws its members from the tier-1 senior management team. It is responsible for driving sustainability forward at MTU, controlling CR activities and adopting CR actions and initiatives. The CR Board reports directly to the CSO as well as reporting regularly to the Executive Board and the Supervisory Board.
The CR Board meets regularly and as required. If necessary, representatives from further operational functions are invited to the meetings. A central CR coordination team manages Group-wide sustainability activities, overall CR management, communication with stakeholders about CR topics, and reporting on CR issues. It also works with an interdisciplinary CR team to continuously develop CR management.
At the heart of the interdisciplinary CR team are the CR divisional coordinators. They play an important part in operational implementation, working with experts in their disciplines to develop goals and measures, implement them, and take responsibility for monitoring their progress. In collaboration with the representatives in the business areas, the divisional coordinators are heavily involved in shaping the strategic focus of their respective CR goals and developing these goals over time. CR management officers at the sites support the CR divisional coordinators and the overall CR coordination team. The CR team also jointly conducts the annual materiality analysis for the sustainability topics. By implementing this organizational structure, we ensure that sustainability is embedded throughout the entire company for all relevant topics.
CR management at MTU
We steer our sustainability strategy through the CR management system, while the CR Board acts as the decision-making body in conjunction with the Chief Sustainability Officer. A central CR coordination team manages Group-wide sustainability activities and overall CR management, and CR divisional coordinators are responsible for goals and actions in their disciplines.
Risk management
We integrate sustainability risks into our internal control system, and map and evaluate them using defined processes. MTU has established a Group-wide integrated risk management and control system, based on the leading international COSO II ERM Framework standard, with which it manages risks and opportunities for its business. The system also takes into account non-financial risks. For the topic of compliance, MTU has established a separate risk assessment and a separate reporting line, which the Compliance Officer coordinates.
Building on these processes, the company conducts a quarterly risk survey for all sustainability topics, which records the effects of our business activity on the environment and society over defined time horizons. Using a risk register, the risk is identified and possible effects and probabilities of occurrence are evaluated. In consultation with their upper management, the CR divisional coordinators conduct the survey according to standardized criteria using a multistage scale. The results of the risk assessment are reviewed quarterly by the CR Board. Should significant sustainability risks be identified for third parties, the Board passes the report on to the risk management team and, if appropriate, to the Executive Board.
The risk assessment for the 2021 financial year identified no material risks in relation to the topics of our CR strategy. Material risks are those that are very likely and have a severe negative impact.
Materiality analysis: Strategic process for sustainability topics
We review our sustainability strategy annually to reflect recent changes and developments, refining our priorities in the process. This allows us to recognize opportunities and risks for our business in good time and to honor our claim of being a company that acts in a sustainable manner. In this materiality analysis, we evaluate the topics using defined criteria. These criteria correspond to each topic’s significance for our business activities and how they affect society and the environment. Criteria for our social and environmental effects include statutory regulations, a positive or negative impact from MTU business activity, and the demands of stakeholder groups; criteria for business relevance include possible effects on the reputation of the company or on its profit and loss account. The criteria are incorporated into the evaluation according to a defined weighting scheme. For the 2021 financial year, we weighted the positive contribution that MTU can make with a topic more strongly than before. The analysis covers all our key business areas and fully consolidated locations as well as information gathered from our dialogue with internal and external stakeholders, which helps us address societal expectations and requirements. → More information about stakeholder dialogue We present the results for the respective financial year in our materiality matrix.
Results for 2021
Carbon emissions and energy management at our sites are becoming even more important
The determination of materiality for the 2021 financial year led to changes in some of the 24 topics. All of these changes involved ratings going up, with no instances of ratings going down compared to the previous year. The biggest changes compared to the previous year related to climate action and energy management at our production sites, along with stakeholder dialogue (each of which went up by 2 on a scale to 24). Carbon emissions in production and maintenance acquired a higher rating as regards business relevance for MTU on account of the new EU taxonomy, the EU Green Deal and its incorporation into the variable compensation of the Executive Board as an ESG goal. The energy management rating likewise went up, as carbon emissions are a result of energy consumption in the facilities. As for stakeholder dialogue, the importance of this category gained in importance on account of increasing requirements in cooperation with customers and partners with regard to sustainability performance and assessments. The work-life balance category was expanded to include working conditions and increased in importance over the course of the coronavirus pandemic.
Materiality matrix: Important sustainability topics for MTU
GRI 102-46: Evaluation of topics for the financial year 2021 adopts the definition of materiality set out in the German CSR Directive Implementation Act (CSR-RUG).
Report structure and cross-references of sustainability topics to the SDGs
All the topics we have identified as relevant to our sustainability strategy are covered in this report. They are cross-referenced to the six sustainability fields of action at MTU into which this report is structured: Corporate governance – Products – Production & maintenance – Employees – Procurement – Society.
Field of action: Corporate governance
|
Material topics |
Chapter in the report |
Relevance for MTU along the value chain |
||
|
|
|
Upstream activities (e.g. supply chain) |
Activities within the MTU group |
Downstream activities (e.g. flights operated by airlines) |
|
Trade compliance |
Compliance |
significant |
significant |
significant |
|
Anti-corruption |
Compliance |
significant |
significant |
significant |
|
Stakeholder dialogue |
Stakeholder dialogue |
significant |
significant |
significant |
|
IT security |
Compliance |
significant |
significant |
significant |
|
Data protection |
Compliance |
significant |
significant |
significant |
Field of action: Products
|
Material topics |
Chapter in the report |
Relevance for MTU along the value chain |
||
|
|
|
Upstream activities (e.g. supply chain) |
Activities within the MTU group |
Downstream activities (e.g. flights operated by airlines) |
|
Product quality and flight safety |
Product quality and flight safety |
significant |
significant |
significant |
|
Innovation |
Research & development |
significant |
significant |
significant |
|
Climate impact in operation |
Climate impact of aircraft engines |
|
significant |
significant |
|
Fuel effiency of products |
Climate impact of aircraft engines |
|
significant |
significant |
|
Health impact in operation |
Health impact of aircraft engines |
|
significant |
significant |
Field of action: Production & maintenance
|
Material topics |
Chapter in the report |
Relevance for MTU along the value chain |
||
|
|
|
Upstream activities (e.g. supply chain) |
Activities within the MTU group |
Downstream activities (e.g. flights operated by airlines) |
|
CO 2 emissions at production sites |
Energy and climate protection |
|
significant |
|
|
Environmental management: water |
Conservation of resources |
|
significant |
|
|
Environmental management: energy |
Energy and climate protection |
|
significant |
|
|
Noise abatement at production sites |
Environmental management |
|
significant |
|
|
Environmental management: waste |
Conservation of resources |
|
significant |
|
Field of action: Employees
|
Material topics |
Chapter in the report |
Relevance for MTU along the value chain |
||
|
|
|
Upstream activities (e.g. supply chain) |
Activities within the MTU group |
Downstream activities (e.g. flights operated by airlines) |
|
Human Rights |
Human Rights |
|
significant |
|
|
Employee development |
Employee development |
|
significant |
significant |
|
Occupational safety |
Occupational health and safety |
significant |
significant |
significant |
|
Diversity and equality of opportunity |
Diversity and inclusion |
|
significant |
|
|
Health management |
Occupational health and safety |
|
significant |
|
|
Work-life balance and working conditions |
Collaboration and leadership |
|
significant |
|
Field of action: Procurement
|
Material topics |
Chapter in the report |
Relevance for MTU along the value chain |
||
|
|
|
Upstream activities (e.g. supply chain) |
Activities within the MTU group |
Downstream activities (e.g. flights operated by airlines) |
|
Human Rights |
Human Rights in the supply chain |
significant |
|
|
|
Responsible Sourcing OEM |
Responsible Sourcng OEM |
significant |
significant |
significant |
|
Resonsible Sourcing MRO |
Responsible Sourcng MRO |
significant |
significant |
significant |
Field of action: Society
|
Material topics |
Chapter in the report |
Relevance for MTU along the value chain |
||
|
|
|
Upstream activities (e.g. supply chain) |
Activities within the MTU group |
Downstream activities (e.g. flights operated by airlines) |
|
Corporate Citizenship |
Corporate social responsibility |
|
significant |
|
Sustainability ratings and rankings
MTU’s performance in relation to non-financial indicators is regularly assessed by capital-market analysts and independent experts. The company is currently listed in the following sustainability indexes and rankings:
ISS ESG
MTU Aero Engines is rated Prime Status (C+) in the overall rating.
CDP
In this global carbon accounting of the annual climate footprint, we received a score of B- in 2021.
MSCI ESG Research
MTU Aero Engines is rated AA.
