1 Perspectives Sustainability Report 2009
2 About this report This, Flughafen München GmbH s second Sustainability Report, reviews the wide-ranging measures undertaken by our company with the goal of operating Munich Airport according to sustainable principles. The report provides an overview of the key thrusts of our economic, environmental, social and societal responsibility initiatives. It is intended not just for our stakeholders our customers, the organizations we do business with, our employees, our neighbors in local communities, policymakers and officials in government ministries and authorities, and industry organizations but also for the interested public. The report has been prepared in accordance with the guidelines of the Global Report Initiative (GRI) and covers the fiscal year from January 1 to December 31, It is published annually.
3 Core topics in the report The materiality matrix printed below lists the core topics covered here in this report. It shows how key sustainability issues are prioritized according to their importance for stakeholders groups and for Munich Airport. Changes in the importance of issues for stakeholder groups since our prior sustainability report are based on a survey conducted among last year s report readers. Their feedback essentially reaffirmed our established choice of themes. However, minor changes have been incorporated into the new matrix. In particular, the majority of readers requested more detail on training programs and on initiatives to reduce the airport s environmental footprint. We have expanded our coverage of these topics accordingly in this report. In addition, our sustainability panel reviewed the thematic emphasis from Flughafen München GmbH s perspective; their priorities are the same as a year earlier. Career training Better integration with mass transit systems Collaboration with home region Facilitation of global mobility Reduction of environmental footprint Stakeholder dialogue and communications Lasting increase in value Importance for stakeholders Very important Regional sponsorships Collaboration with academic institutions Supplier management Cultural diversity in the workforce Political stance and participation in organizations Co-determination Risk management and anti-corruption initiatives (compliance) Conservation Industrial health and safety Health management Continued education and HR development Airport development and demand-driven capacity expansion Customer satisfaction and feedback management Competitive operating structures Energy efficiency and resource conservation Safety and security Promotion of employee sustainability awareness Sustainable building Important Waste management Water and wastewater Handling of hazardous substances Important Very important Importance for Flughafen München GmbH
4 Cover photo Vogelfreistätte Mittlere Isarstauseen, one of Bavaria s most important reserves for waterfowl, is located along the river Isar s catchment lakes between the towns of Moosburg and Eching. The area pictured here, near Weixerau, is at the heart of a conservation area covering almost six square kilometers. More than 260 species of bird can be seen here, including kingfishers, little ringed plovers and even endangered varieties like the bluethroat and the common tern. The reserve is an important breeding area and winter habitat for thousands of waterfowl. The Isar is 295 kilometers long, from its source in the Karwendel mountain chain in Tirol to the point where it joins the Danube, near Deggendorf in Lower Bavaria.
5 Perspectives We are an airport operator. We run a major piece of aviation infrastructure part of an international, interconnected transport network that sustains global mobility and unites people across national boundaries. We are also a responsible corporate citizen who seeks an open, fair and balanced dialogue with stakeholders and interest groups and for whom the long-term protection of the environment, climate and natural resources is paramount. As such, we pursue a forward-looking business strategy intended to strike a successful balance between business, environmental and social objectives. We provide our dedicated workforce with the training and continuing education they need to be their best; we offer attractive, long-term employment; and we deliver valuable economic and labor-market stimulus with a reach far beyond the bounds of our airport. Our goal: to create value for our customers, employees, owners and host region. Flughafen München GmbH s perspective on sustainability
6 Contents 2 Contents
7 Contents 4 5 Foreword Structures Company and governance Consequences Environmental and climate protection Change Workforce and work environment Responsibility Social responsibility and regional engagement Balance Facts and figures Back inside cover GRI index
8 Foreword 4 Foreword Dear Reader, With 32.7 million passenger movements in 2009, Munich Airport remained the seventh-busiest among the top ten commercial airports in Europe. However, the continuing global economic turmoil meant our passenger numbers were down 5.4 percent, year on year. Economic crises are a serious test of the resilience of any business, and we believe firmly that, today, those companies who commit firmly to sustainable long-term business practices are much more likely to emerge from such periods of turbulence unscathed. But this is not the only reason why we are determined to manage our airport sustainably. Sustainability has become a core value; it is at the heart of everything we do and has been anchored in our new mission statement: By 2015 we will be one of the most attractive, efficient and sustainable hub airports in the world. This means that we are determined to continue providing access to global mobility, creating value, driving employment, and safeguarding the unique appeal of our local region and the whole of Bavaria. More than that, we are keen to remain an exceptional asset to our region and our local communities not just through the air transport infrastructure that we operate but also as a purchaser of goods and services and partner to local industry, as a good corporate citizen and local sponsor, and as a major employer. To stay successful and competitive in the longer term, we need to grow and expand our hub. That said, we plan to do so responsibly on a sustainable basis, particularly from an environmental perspective. For example, to reduce our climate impacts and our overall eco-footprint, we aim to achieve carbon-neutral growth by Managing an enterprise responsibly is also about remaining employee-focused, and for Flughafen München GmbH in 2009 this meant finding ways to avoid actively shedding headcount in spite of the effects of the economic crisis on our business. At the same time, we continued to work closely with employee representatives on finding workable solutions for restructuring our loss-making Ground Handling division. In our perception, HR sustainability is also about providing comprehensive health management services, extensive training and continued education programs, and the kind of safe, healthy work environment that encourages our people to give their best. Given the current pattern of demographic change, all these initiatives are ultimately about protecting our future. By taking the long view and making the most of our opportunities, fostering investment and abiding by proven principles, we aim to operate our airport and manage our business sustainably. Dr. Michael Kerkloh Walter Vill Thomas Weyer Executive board of Flughafen München GmbH
9 Executive board Walter Vill Vice President and Chief Financial Officer Dr. Michael Kerkloh President and Chief Executive Officer Personnel Industrial Relations Director Thomas Weyer Chief Operating Officer
11 Munich Sydney Rice terraces, Bali, Indonesia Some 2,000 years ago, the peoples of southeast Asia began cutting terraces into the landscape in order to cultivate rice. In many places, these terraces are thought to be the region s oldest built structures. This cultivation technique allows rice to be grown on slopes with gradients as steep as 70 percent. Structures Intelligent, solid structures allow precious resources to be used efficiently. We are building the foundations today that will enable mobility to evolve sustainably tomorrow.
12 8 Company and governance Company profile Organization and management Customer focus Performance and growth
13 Company and governance Company profile Company profile 9 We operate one of the most advanced and efficient aviation hubs in Europe. This role brings with it special responsibilities both environmental and societal. By managing our business operations sustainably, we aim to balance economic, environmental, social and societal objectives successfully while keeping the company firmly focused on the future. FMG s organizational structure Flughafen München GmbH (FMG) is a limited liability company domiciled and registered in Munich, Germany. Together with a group of 13 subsidiaries, it operates Munich Airport, a commercial passenger facility. The company s shareholders are the Free State of Bavaria with a stake of 51 percent, the Federal Republic of Germany with 26 percent, and the City of Munich with 23 percent. This ownership structure has remained unchanged since The company s organizational structure is based on central, business and support divisions. The central divisions are responsible for the overall control of the FMG Group of companies. The business divisions Aviation, Corporate Real Estate Management and Development, Retail and Services, Ground Handling and Terminal 2 are responsible for operations and conduct their businesses independently, each generating revenue within its specific market segment. The support divisions Engineering and Facilities, Information Technology, Corporate Services, Security, and Planning and Construction primarily provide support services to the Group. Planning and Construction is a new support division, formed during internal restructuring in Barring a number of consulting projects for international airports, the company confines its operations to Munich Airport. High-performance aviation hub Munich Airport is one of the largest and most efficient aviation hubs in Europe. In spite of the global economic and financial crisis, which in 2009 caused passenger traffic to contract by 5.4 percent, Munich Airport logged 32.7 million passenger movements and succeeded in retaining both its number-seven ranking among Europe s ten busiest passenger airports and its position as Germany s second-largest aviation hub. Five FMG divisions The FMG Group has two main revenue streams: from its aviation business, essentially comprising landing fees and ground handling service charges, and from its non-aviation business mainly retail, hospitality and real estate which accounts for close to half of the Group s total revenue. > Aviation Our Aviation division is responsible for the safe and orderly handling of air traffic within the bounds of the airport. Its areas of responsibility include the runway system, apron areas, terminal and passenger services, and central infrastructure. The division s tasks and duties are extremely varied and include running the airport s fire service, processing aviation data and preparing forecasts, marketing the airport, developing traffic, operating the airport s lounges and service center, and managing international consulting projects. Munich ranks seventh among Europe s ten busiest commercial airports
14 Company profile Company and governance 10 > Corporate Real Estate Management and Development Our Corporate Real Estate Management and Development division s activities comprise developing, marketing and managing company-owned buildings and other facilities in line with market needs. Besides the airport s own infrastructure, the real estate under management includes buildings outside the airport itself, plots of land acquired to enable future expansion, and compensatory mitigation sites created to restore the ecological balance. > Retail and Services The Retail and Services division is responsible for our extensive retail and hospitality activities in our so-called airport city. The retail operations are run by an FMG subsidiary, eurotrade Flughafen München Handels-GmbH. Another subsidiary, Allresto Flughafen München Hotel und Gaststätten GmbH, manages our hospitality operations and the municon conference center. The company MediCare Flughafen München Medizinisches Zentrum GmbH delivers employee healthcare and passenger out-patient services at the airport and operates the AirportClinic M treatment facility at Munich Airport. The Parking and Services subdivision operates the airport s extensive parking facilities and develops and delivers value-added products and services for customers. > Ground Handling The Ground Handling division is responsible for aircraft and passenger handling operations and the transportation of baggage and freight. Its tasks include the loading and unloading of aircraft, the transportation of passengers, crews, baggage and freight, and the handling of baggage in the airport s sorting facilities. A number of other affiliates, including mucground Services Flughafen München GmbH, assist with aircraft and baggage handling and the transportation of baggage and freight. The company aerogate München Gesellschaft für Luftverkehrsabfertigungen mbh provides a range of passenger and aircraft handling services, and Cargogate Flughafen München GmbH is responsible for processing air cargo. Aircraft deicing during the winter and aircraft pushback and maneuvering operations year round are carried out by EFM Gesellschaft für Enteisen und Flugzeugschleppen am Flughafen München mbh, a joint subsidiary of Deutsche Lufthansa AG and Flughafen München GmbH. > Terminal 2 The Terminal 2 division consists solely of the company Terminal 2 Betriebsgesellschaft mbh & Co ohg, which is responsible for operating the airport s second passenger handling facility. The company is co-owned by Flughafen München GmbH (with 60 percent) and Deutsche Lufthansa AG (40 percent). The FMG Group generates revenue through aviation and non-aviation activities Aviation/Non-aviation sales Aviation sales Non-aviation sales 52% 48% Terminal 2 Betriebsgesellschaft does not work in an operational capacity as such its two corporate parents actually provide the services involved in operating and marketing the building. The subsidiary s role is to coordinate all of the services and processes in the terminal, to optimize passenger handling procedures, and to develop new strategies to enhance the quality of services provided in the passenger terminal.
15 Company and governance Company profile 11 Flughafen München GmbH s subsidiaries and affiliates Share of capital aerogate Flughafen Gesellschaft für Luftverkehrsabfertigungen mbh passenger handling % AeroGround Flughafen München Aviation Support GmbH aircraft handling % Allresto Flughafen München Hotel & Gaststätten GmbH hospitality and dining % Beteiligungsgesellschaft mbh der FMG % Cargogate Flughafen München Gesellschaft für Luftverkehrsabfertigungen mbh cargo handling % eurotrade Flughafen München Handels-GmbH retail stores and businesses % FMV Flughafen München Versicherungsvermittlungsgesellschaft mbh insurance % mucground Services Flughafen München GmbH ground services % CAP Flughafen München Sicherheits-GmbH security 76.1 % FMBau Flughafen München Baugesellschaft mbh construction 60.0 % FM Terminal 2 Immobilien Verwaltungsgesellschaft mbh & Co ohg 60.0 % Terminal 2 Betriebsgesellschaft mbh & Co ohg Terminal % MediCare Flughafen München Medizinsches Zentrum GmbH 51.0 % Bayern Facility Management GmbH 49.0 % EFM Gesellschaft für Enteisen und Flugzeugschleppen mbh 49.0 % Group reporting covers all of the subsidiaries and affiliates in which FMG has a stake of at least 50.0 percent.
16 Organization and management Company and governance 12 Organization and management What drives us is the desire to remain an attractive, efficient and sustainable airport. Building on defined strategic sustainability targets, we are rolling out a catalog of precisely focused measures across all our operations and tracking their success carefully. We are architecting change to prepare for tomorrow s challenges. Sustainability is a core principle in our 2015 mission See p. 93 ff. A new mission for 2015 In large-scale passenger surveys carried out over the past five years, Munich Airport has been picked time and again as the best airport in Europe and one of the top five in the world. This consistently exceptional showing means we have succeeded in accomplishing one of the primary objectives we laid out in our 2010 mission to become one of the most attractive and efficient hub airports in Europe. In our five-year strategy review, we reframed our objectives in a new corporate mission that incorporates sustainability as a core principle. Our new mission, like its predecessor, sets the key targets that guide the actions of our divisions and our workforce. Our mission up to 2015 By 2015 we will be one of the most attractive, efficient and sustainable hub airports in the world. Sustainability strategy and management The internal strategic objectives that we have defined for Munich Airport in line with our mission up to 2015 cover a range of economic, environmental, citizenship and social responsibility factors. Given the ground it covers, this strategy is, in essence, a sustainability strategy. Based on our objectives, we have mapped out a comprehensive program that turns our strategic sustainability goals into specific actions and initiatives. These actions and initiatives are also incorporated, where appropriate, into our various units balanced scorecard (BSC) targets. The chart below illustrates this process. We re-evaluate our sustainability goals along with other aspects of corporate strategy in regular reviews and realign them where necessary. Information on our overall sustainability program, including details of specific initiatives and their progress can be found in the Facts and Figures section of this report. The company has a sustainability management panel which is responsible for reviewing and approving our strategic sustainability program. Turning strategy into initiatives Group strategic roadmap Four sustainability focus areas Strategic sustainability objectives Sustainability program (BSC targets) (Innovative) initiatives to achieve targets
17 Company and governance Organization and management 13 Flughafen München GmbH s key sustainability objectives at a glance Focus areas Strategic sustainability objectives Company and governance Sustain value creation through a yield-driven business model and continued investment in our location Greater customer focus and a more attractive product and service portfolio Establish management structures to foster responsible corporate leadership Environmental and climate protection Group-wide expansion of environmental management system Resource efficiency and reduction of emissions and other impacts Workforce and work environment Advance employees knowledge and skills and promote a performancedriven corporate culture Increase attractiveness as employer Efficiency gains in human resource management processes Social responsibility and regional engagement Embrace social responsibility Development in partnership with the region
18 Organization and management Company and governance 14 Corporate values Preserving values, mastering the present, shaping the future Collaboration We foster respectful, fair win-win partnerships within the FMG Group and with our customers, business partners and neighbors Communication We communicate clearly, openly and honestly internally and externally Sustainability We operate the airport according to principles of sustainability and sound environmental stewardship Tradition We are proud of our tradition and our strengths, and we build on them to master future challenges O U RF U T U R E Our airport We work competently and with dedication for our airport, and we are proud of our achievements Entrepreneurship We create value and opportunities through entrepreneurial thinking and profit-oriented action Progress We embrace change and seek proactively to shape the future in line with our interests These corporate values are the fundamental principles and standards that guide and inform our employees conduct and interaction at every level within the FMG Group.
19 Company and governance Organization and management 15 The sustainability management panel SG President and CEO, Personnel Industrial Relations Director PE Human Resources FC Finance and Controlling KE Corporate Development and Environment UK Corporate Communications TE Engineering and Facilities Sustainability thought-leaders The sustainability management panel is staffed by people from Human Resources, Finance and Controlling, Corporate Communications, Engineering and Facilities, and Corporate Development and Environment. The panel is responsible for fundamental decisionmaking on sustainability-related projects and reports directly to executive management. At quarterly meetings or more frequently if necessary the panel explores opportunities and risks relating to sustainability, evaluates these in terms of our current sustainability program, and recommends possible course adjustments as appropriate. The panel also receives reports that enable it to track the progress of initiatives and is responsible for prioritizing themes in our materiality matrix. Our sustainability panel decides on the focus of sustainability projects
20 Organization and management Company and governance 16 Executive and supervisory boards: A two-tier management and oversight structure Supervisory board and executive board As a limited liability company domiciled in Munich, Flughafen München GmbH is governed in accordance with the requirements of Germany s Limited Liability Companies Act, co-determination statutes, and the company s own articles of association. FMG has a two-tier management and oversight structure consisting of a supervisory board and an executive board. The supervisory board and the executive board are entirely separate and distinct bodies in terms of their membership. Under the articles of Flughafen München GmbH, the company s supervisory board monitors executive management as appropriate. The supervisory board consists of eight members representing the company s shareholders and a further eight representing the company s employees. Flughafen München GmbH s shareholders are represented on the supervisory board in proportion to their percentage ownership of the company. On the employee side, the board has members representing company employees (five seats), labor unions (two seats), and management-level employees (one seat). The supervisory board s key powers include the authority to appoint and dismiss members of the company s executive management team. Under the provisions of the company s articles, certain steps and transactions undertaken by executive management that exceed set maximum monetary values may only be conducted with the express approval of the supervisory board. In the event that supervisory board members are divided on a decision and the numbers in favor and against are equal, the vote of the chair (a representative of the shareholders) counts double. The shareholders representatives on the supervisory board are from relevant federal and state ministries and administrative districts; they ensure that policy takes into account wider political and societal interests. Flughafen München GmbH s executive board consists of the President and Chief Executive Officer (who is also Personnel Industrial Relations Director and spokesman for the executive board), the Vice President and Chief Financial Officer, and the Chief Operating Officer. The company publishes key financials and consolidated yearend accounts in an annual report. The report includes details of the company s system of executive pay as well as remuneration received by individual members of the executive and supervisory boards. FMG s governance builds on transpar- Structure of Flughafen München GmbH General meeting of shareholders Supervisory board Shareholder representatives Labor union representatives Management representatives Employee representatives Chief Financial Officer Executive board President and CEO, Personnel Industrial Relations Director Chief Operating Officer Divisions Business divisions Support divisions Central divisions Executive support offices Corporate Real Estate Management and Development Retail and Services Aviation Ground Handling Terminal 2 Engineering and Facilities Information Technology Security Corporate Services Planning and Construction Finance and Controlling Human Resources Legal Affairs and Security Corporate Development and Environmental Issues Corporate Communications Assistant to the Executive Board Office of Committees Corporate Representative for Government Affairs Regional Liaison Officer
21 Company and governance Organization and management ency and a swift and steady flow of information between shareholders and executive management. Parallel to its financial reporting, FMG also regularly publishes press releases covering current events of importance or interest at the company. The supervisory board is provided with financial and risk reports on a quarterly basis. Public corporate governance Flughafen München GmbH aligns with and upholds responsible business management practices as defined in the Public Corporate Governance Code issued by the federal government in July Anticorruption guidelines and training The anticorruption guidelines we published in 2008 provide the FMG workforce with clear guidance on correct and appropriate dealings with business partners. These guidelines, which are available on the corporate intranet, ensure that employees abide by the proper procedures, particularly in procurement and the award and handling of contracts. To familiarize our employees and managers with these guidelines, we provided training programs and published information on updates and additions. In 2009, we issued amended and revised instructions on purchasing processes and delivered training to those employees affected by these changes. Company managers and employees are required to confirm by signature that they acknowledge our FMG Group Code of Conduct and that they undertake to support and abide by it. In 2009, we combined the roles of anticorruption officer and the head of internal auditing in a single person. The reason for this move was that the latter position is equipped with comprehensive and unrestricted access and information rights that are essential to performing anticorruption duties to best effect. Our anticorruption officer reported that four alleged cases of corruption at Flughafen München GmbH and a further three at FMG subsidiaries were investigated in However, all were deemed to be unfounded. Sustainability in procurement When calling for bids, we take steps to ensure compliance with national and international legal requirements and agreements. This compliance is reaffirmed in legally binding form when contracts are concluded. In 2009, Germany enacted revised legislation on the award of contracts. The new legislation enables the public sector to stipulate environmental and social factors as additional requirements that suppliers must fulfill. In line with this, Flughafen München GmbH has decided to amend its supplier management system to include environmental and social criteria in its tender documents. Our initial steps toward this objective were to issue guidance on sustainable procurement and to conduct a supplier survey in Following on from this, we are currently rolling out a pilot project to define sustainability criteria for selected groups of products. This will enable us to ensure that there is no child labor, forced labor or discrimination anywhere along the supply chain for specific product groups. Accounting The company prepares its consolidated yearend accounts and interim reports in accordance with the requirements of the German Commercial Code (HGB). Legal compliance Flughafen München GmbH complies with statutory regulations and provisions based on the applicable legislation and legal framework. Barring events involving our subsidiary CAP addressed elsewhere in this report, we are not aware of any infringements of these regulations or provisions in the period under review. Guidelines All policies and procedures in the FMG Group are laid out in our organizational manual. This contains extensive guidance on a range of important topics, such as procurement processes (everything from issuing notices of requirements to verification of invoices) and information security, and ensures that all our internal processes are transparent and traceable. Review of advertising messages Flughafen München GmbH s advertising conforms to the requirement catalogs issued by the German Advertising Council. The advertising we publish avoids all forms of discrimination and unfairness; it does not mislead; it follows the Council s code regarding advertising that involves or is accessible to children; and it remains within the realm of what may be considered decent, proper and moral. In the period reviewed in this report, we incurred no sanctions, fines or warnings for infringements of advertising regulations. 17 See p. 79 We are phasing sustainability requirements into our supplier management system See p. 21
22 Customer focus Company and governance 18 Customer focus We aim to set ourselves apart from our rivals through our high standards of service. Our airport is more than just a fast and efficient international hub, it also offers users a quality retail, hospitality and entertainment experience. To continue improving standards, we keep track of what our customers think through a detailed feedback system. Transfers account for 37 percent of our passenger base Passenger growth Munich Airport defines itself as an international aviation hub. This role and strategic focus are anchored in our corporate mission. In 2009, the number of transfer passengers compared to our overall passenger volume increased by a percentage point to 37 percent, year on year. Compared to the overall drop in the passenger volume of 5.4 percent, the decline in transfers was significantly less at under 3 percent. Importantly, there was a sharp increase in the number of intercontinental transfers up 71 percent on 2008 from 24,632 to 42,061. This passenger segment accounted for 0.7 percent of the overall transfer volume, compared to 0.4 percent a year earlier. We recorded our strongest intercontinental transfer traffic on the India Munich USA route, with around 25,700 passengers in total. The effects of the global economic and financial crisis were most evident in business traffic. The exceptionally sharp drop of 16 percent in this segment was mainly responsible for the overall decline of 5.4 percent in our passenger numbers during the year. Compared to 2008, business travelers as a percentage of passenger traffic as a whole slid from 51 percent to 45 percent. By contrast, tourist traffic grew 6 percent, driven mainly by private transfer passengers. More than just aviation Parallel to our aviation business, we continue to explore new areas of business in the non-aviation sector. True to our motto, Service nonstop, we consistently put passengers and their needs front and center in everything we do. For passengers, visitors and other end-users, Munich is more than just a well designed, user-friendly traffic facility, it also offers a first-rate range of services. Our hospitality segment is as rich as it is varied, and there is an extensive array of stores in our airport city with an attractive retail mix. We also host various large-scale events in the München Airport Center s Forum, such as concerts, big screen sports events, beach volleyball tournaments, presentations, and our now traditional winter market. These are a big attraction, not just for passengers but also for people who work on-campus and visitors from our local region. Promoting customer satisfaction Surveys to assess customer satisfaction are standard practice at Munich Airport. Through monthly Airport Service Quality (ASQ) Surveys conducted by the Airports Council International (ACI) in Europe and the annual passenger surveys carried out by Skytrax, we regularly receive feedback on how air travelers rate our service and performance standards.