01 Our vision of 02 Sustainable 03 Active 04 Strengthening sustainability 05 Appendices sustainability investing stewardship in our operations 02.1 Delivering change We are seeing more climate awareness to take a forward-looking perspective from clients because climate risk can on asset class returns in likely climate Comparing traditional and alternative sustainable now be modelled, and its portfolio scenarios. Because Climate Navigator investment approaches via risklab e昀昀ects quanti昀椀ed, with greater accuracy. encompasses both traditional and We can demonstrate to a client how For example, we can show investors For example, new advances in simulation sustainable investment approaches, di昀昀erent sustainable investing approaches that a carbon intensity reduction can be make it possible to quantify sustainability it can form the basis for a decision on a昀昀ect both the sustainability and 昀椀nancial achieved by adopting an exclusionary risks rather than simply applying a which approach to take to prepare the performance of a portfolio. or a climate transition (but not a Best-in- qualitative rating. This is helping respond portfolio for climate change. We simulate one scenario in which the class) approach and that each approach to the ESG pushback in some markets, Portfolio-level sustainability investment benchmarks incorporate has di昀昀erent implications for the portfolio with risklab’s advances in 2023 helping typically accepted (traditional) exclusions, composition. Throughout, we work with to provide clients with the transparency, More investors are looking to incorporate our Portfolio Management team to clarity and long-term view they need. sustainability considerations at the and one that uses a Best-in-class ensure that both approaches can be portfolio modelling level. We can apply approach to identify issuers that are better implemented in practice. Climate Navigator actionable advice to help them achieve prepared for a climate transition. Risklab’s new Climate Navigator this goal by simulating sustainability- capability o昀昀ers analysis that helps related actions that would impact their investors think about future climate portfolio. For example, we can simulate scenarios and quantify what they mean what it would mean if a sustainable in terms of expected returns, as well as investing approach is changed for an extra 昀椀nancial impacts. We can now whole portfolio approach in terms of the simulate asset class returns for traditional portfolio’s sustainability considerations, and sustainable investment approaches – carbon footprint and controversies, or and therefore expected portfolio returns 昀椀nancial considerations such as yields. –in di昀昀erent Network for Greening the Financial System (NGFS) scenarios, helping clients to position themselves for these scenarios. This allows investors Allianz Global Investors Sustainability and Stewardship Report 2023 20