German engineering fund signs up to UN Principles of Responsible Investment

Scheme has been doing some sustainable investing since 2002

MetallRente, the €3bn pension scheme for engineering and metalworking employees, has become the ninth asset owner from Germany to sign up to the United Nations-backed Principles for Responsible Investment (UN PRI) in a sign that signatory numbers in the country are starting to grow: Link.

“We thought about joining the UN PRI for some time,” said CEO Heribert Karch.

He told Responsible Investor: “That’s because if we take such a step, we want to be serious about it. We don’t believe in window dressing.”

Joining the UN PRI is in fact a big step for a German investor. The main reason is the reporting requirements, which are extensive – and in English.

Indeed, UN PRI chairman Wolfgang Engshuber acknowledged the requirements were a hurdle to attracting German investors during an event in Frankfurt last May: Link .

MetallRente was one of Germany’s first industrywide pension schemes that sprang up following historic pension reforms in 2001.It is backed by a consortium of five German insurers in which Allianz is the largest stakeholder with 55%. The other 45% stake is held by the mutual R+V, Swiss Life, Generali and Ergo, a unit of reinsurance giant Munich Re.

Since 2002, MetallRente, along with certain other schemes, has been required to disclose the extent to which it invests sustainably.

Karch said that initially the scheme had relied on a strategy of exclusion.

“But we had to give the negative list up. It was limiting our investment horizon and costing way too much time and effort,” said Karch, adding that MetallRente has since moved to a best-in-class strategy.

This has led to investments in the Eurostoxx Sustainability 40. The scheme also continues to avoid investments in cluster bomb manufacturers.

Covering just €75m worth of equities, MetallRente’s sustainable engagement only accounts for a small portion of total assets. Most of the scheme’s money is invested in fixed income, although the precise allocation is not disclosed.