Corporate governance
We take responsibility
Sustainability 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 and our vision of emissions-free flight. In addition, as a manufacturing company and employer of some 11,000 people, we aim to act responsibly in all areas.
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, on those enshrined in the MTU Code of Conduct and on the protection of human rights of our Policy Statement—as well as on the ten principles of the UN Global Compact. Our guiding principle “We shape the future of aviation” reflects our sustainable approach.
UN Global Compact and 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 prnciples for respecting human rights, ensuring fair working conditions, protecting the environment and preventing corruption. We consider them important guidelines for responsible corporate governance, and we also pass them on to the supply chain by means of a Code of Conduct.
As a signatory to the UN Global Compact, we also want to contribute to the UN’s 2030 Agenda. At the core of the agenda are 17 goals for sustainable development, or SDGs for short, which address the three dimensions—economy, environment and society. We support the implementation of the SDGs and have identified eight for MTU to focus on.
→ 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
Our fields of action and goals
Our claim: As a technology leader, we are shaping the future of sustainable aviation through innovative propulsion solutions. Emissions-free flight is our vision. In doing so, we stand for responsible and environmentally friendly production, maintenance and procurement and offer a safe and attractive working environment.
Corporate governance
- Comprehensive sustainability management
- Ensure the security of information and systems
- Protect personal data in all areas of the company
- Compliance as part of the corporate culture
- Active commitment to combating corruption in all business areas
- Ensure compliance with embargo and export guidelines
- Regular and open dialogue with all stakeholder groups
Products
- Make product quality and flight safety top priority
- Compile the MTU Group’s Scope 3 activities
- Reduce the climate impact of products during operation
- Reduce the energy consumption of products during operation
- Minimize the health effects of product use (exhaust and noise emissions)
Production & maintenance
- Reduce CO2 emissions at all production sites (Scope 1–3)
- Continuously improve resource efficiency
- Efficient management processes have been established
- Advanced procedures in site and plant operations
- Raise employee awareness of environmental protection in production
Procurement
- Human and employee rights are central components of our business relationships
- In our cooperation with suppliers, we pay attention to a resource- and environment-friendly value chain
- CSR is embedded in our contracts and sourcing decisions. In this way, we safeguard social and ecological standards
- Responsible handling of conflict minerals is ensured
- A Scope 3 upstream carbon footprint is compiled
Employees
- Ensure compliance with human rights at our own sites
- Provide active and targeted employee development at all hierarchical levels
- Continuously promote diversity and equality of opportunity in the workforce
- Enable a work-life balance for all employees
- Ensure a high level of health and safety in the workplace
- Promoting mutual employer/employee dialogue
- Continuously increase external and internal employer attractiveness
- Trust-based leadership
- Ensure a high level of employee satisfaction
Society
- Research collaborations for joint knowledge building
- Corporate citizenship: MTU is part of society and a good neighbor
- Employees use the knowledge they have acquired at MTU to play a responsible role in society
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 reduce impact on the climate 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. More on aligning our product stewardship with the Paris Agreement in the chapter Climate impact of aircraft engines
Our value creation should be sustainable as well. We are implementing concepts to reduce the carbon footprint of our own operations in production and maintenance at our sites, and attaining carbon neutrality in the long-term. For more information, see climate action at production sites
Stronger commitment to human rights
The protection of human rights has always been an important concern for MTU. Against the backdrop of increasing regulatory requirements such as Germany’s Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) and given stakeholder expectations of responsible management of global supply chains, MTU has established a stricter risk management system for potential human rights violations in the supply chain and in its own business operations. As a high-tech company, we are generally exposed to a lower risk of human rights violations than other industries.
ESG targets are relevant to compensation
Sustainability topics are an integral part of MTU’s strategy and selected control variables from CR management are relevant to compensation. This will strengthen sustainability in the Group and make progress more measurable. For the 2022 financial year, the environmental, social and governance (ESG) targets came from the areas of climate action in site operations and employee satisfaction, which are incorporated into the variable compensation of the Executive Board and senior executives.
For climate action, annual progress is taken from the company’s climate strategy, the ecoRoadmap. The ESG-relevant performance indicator CO2 as a component of variable compensation was related to the European production sites (Munich, Hannover, Berlin and Rzeszów) in 2022. Detailed presentation of the ecoRoadmap and goal attainment in 2022 MTU plans to extend this indicator to all its production sites in the current financial year of 2023.
Regarding employees, the ESG goal—encapsulated under the corporate value of “We create trust”—is derived from the results of the regular PulseCheck surveys, and goal attainment is determined based on the index value from feedback on the subject areas of commitment and leadership. More about PulseCheck and goal attainment in 2022 From 2023 onward, the ESG target in this area will be assigned to the leadership value “We empower” and determined from employees’ qualifications and training. The average number of training days per employee is taken into account.
Sustainable investment
The European Commission has set itself the goal of climate neutrality by 2050 with the European Green Deal. Furthermore, through the 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 apply to six environmental targets in the areas of climate change, water and marine resources, circular economy, pollution, and biodiversity. In addition, companies must demonstrate minimum social standards in order to claim green revenue, capex and opex shares. So far, there are no assessment criteria specifically for the aviation sector regarding the classification of economic activities within the taxonomy. MTU’s approaches and EU taxonomy information can be found in the non-financial statement of the Annual Report (p. 113ff.)
As demand for ESG-focused investment opportunities increases, frameworks and requirements on sustainability reporting are on the rise, too. For example, the EU is currently preparing the Corporate Sustainability Reporting Directive (CSRD), which is intended to provide an expanded framework for corporate non-financial statements. External reporting on ESG issues is thus becoming more and more demanding and complex. MTU is preparing for the implementation of the CSRD requirements and continuously reviews current developments for its own reporting.
MTU ratings & rankings
Moreover, investors are increasingly evaluating companies and their business models according to ESG criteria. MTU’s performance in relation to non-financial indicators is regularly assessed by capital-market analysts and independent experts. Important indices and rankings in which the company is currently represented are:
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 2022.
EcoVadis: MTU received a silver medal in this holistic corporate responsibility rating.
MSCI: MTU Aero Engines is rated A.
Sustainability management across the entire Group
Chief Sustainability Officer (CSO) on the 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 the Executive Board level, CEO Lars Wagner is also Chief Sustainability Officer (CSO), making him MTU’s first representative for sustainability. He is primarily responsible for defining the positioning of MTU and its sustainability strategy and objectives. In this way, sustainability is integrated into our corporate decision-making processes. Moreover, the CSO monitors goal attainment and ensures that the CR organization is suitably aligned with the requirements and successfully implemented in the company. In carrying out these responsibilities, the CSO works closely together with the CR Board.
Corporate Responsibility Board as a central body
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 in corporate functions. 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 the 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 for non-financial issues
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.
Potential risks for the environment, society and employees that arise from MTU’s business activities are identified and assessed on a quarterly basis by those responsible in the technical areas and by the CR Board. This is done in line with the existing opportunity and risk process, taking into account the respective probability of occurrence and the impact of the risk. The risk inventory is also reviewed for new material issues or aspects. Should substantial 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 2022 financial year identified no material risks in relation to the topics of our CR strategy. Material risks are those that are highly likely and have a severe negative impact.
Materiality analysis: Topics relevant for MTU
We review our sustainability strategy annually to reflect recent changes and developments, refining our priorities in the process. As part of this annual materiality analysis, we assess the issues relating to the social and environmental impact of our business activities and look at positive and negative aspects alike (opportunities and risks). In addition, we evaluate the business relevance of the issues, based among other things on the impact they may have on the company’s reputation or on the income statement. The analysis covers all our key business areas and fully consolidated sites as well as information gathered from our dialogue with internal and external stakeholders. → More about stakeholder dialogue We map the results in a materiality matrix.
Materiality matrix: Important sustainability topics and their weighting
GRI 102-46 Evaluation of topics for the 2022 financial year adopts the materiality concept in accordance with the legal implementation of CSR guidelines in Germany (CSR-RUG)
The determination of materiality for the 2022 financial year led primarily to a consolidation of multiple topics. Energy management was given a higher rating and merged with CO2 emissions to form the topic “Climate action at the production sites,” as CO2 emissions in site operations (Scope 1 and 2) result mostly from energy consumption. All other environmental aspects in site operations (water, waste, noise) have been combined as “Environmental management.” For the supply chain, too, the previously separate topics of responsible sourcing OEM and responsible sourcing MRO have now been consolidated across the two business units. Regarding employees, work-life balance and health management have been merged to form “Attractive working conditions.” We have adjusted the evaluations accordingly. The topic of the circular economy has been assessed for the first time in terms of its importance for MTU and its impact on third parties, and has been newly anchored in the matrix.
