Allianz GI Sustainability and Stewardship Report 2021
2021 | 92 pages
Value. Shared.
About this report How to read this report Our Sustainability and Stewardship Report 2021 comes in four primary sections plus an appendix, reflecting our commitments as a sustainable investor, an active steward, and a sustainable business. Learn more about AllianzGI and Introduction hear from our CEO and Head of Sustainable and Impact Investing on their vision for the future. Read about our investment offering Sustainable that aims to position us as a shaper investing of sustainable investing solutions We shape pathways that seek to secure the future across public and private markets. for our clients, for our business and for society. Read examples of our active Active approach to engaging with investee stewardship companies and see details of our Allianz Global Investors (AllianzGI) is We have incorporated UK Stewardship Code reporting voting record as a shareholder. an active investment management firm to demonstrate our active ownership approach and Learn about our focus on integration of stewardship1 into our sustainable and part of Allianz Group. Sustainable investment activities. As part of our commitment to Sustainable sustainability in our own business investing is a core part of our strategy transparency and accessibility, we have produced business – from reducing our environmental a separate Task Force on Climate-Related Financial impacts to building an inclusive to shape pathways that secure the Disclosures (TCFD) Report. This describes our climate- and diverse culture. future – for our clients, for our business related risks and opportunities and how we integrate UK Stewardship Code indexing and for society as a whole. them into the business. Where report content specifically addresses the A unified approach to transparency Read the TCFD Report 2021 here Principles of the UK Stewardship Code we have We began our sustainable investing journey over Report scope and boundaries marked the relevant pages. For the full indexing 20 years ago and published our first Responsible see page 74. Investing Report in 2018. Our sustainability reporting The content of this report relates to all AllianzGI now incorporates our investment activities and activities and locations. All measures, activities and Principle 1 commitment to environmental, social and governance figures refer to the 2021 fiscal year (1 January 2021 (ESG) practices and active stewardship across our to 31 December 2021) unless otherwise stated. business operations. Principles 2 3 1 AllianzGI has applied to be a signatory to the UK Stewardship Code, pending formal approval from the FRC (Financial Reporting Council).
What’s inside? 01 02 03 39 05 73 Introduction Active stewardship Appendix 01.1 In co nversation with Tobias Pross 03.1 Our engagement approach 40 05.1 U K Stewardship Code index 74 and Matt Christensen 03 03.2 E ngagement outcomes by theme 43 05.2 Engagements 76 01.2 A bout AllianzGI 06 03.3 Co llaborative engagements 48 05.3 S ustainability initiatives overview 82 01.3 What sustainable investing means to us 08 03.4 Escalation where initial engagement is 05.4 U N Sustainable Development Goals key 88 01.4 Acting on climate risks and opportunities 11 not enough 50 01.5 Sustainability governance 13 03.5 Influencing companies through proxy voting 51 01.6 Shaping sustainable investing with 03.6 Conflicts of interest 58 our clients 16 03.7 Industry engagement and commitments 59 02 21 04 61 Find out more Sustainable investing AllianzGI as a Read more about our approach to sustainability 02.1 Building our approach to sustainable business and explore our latest research via our website. sustainable investing 22 04.1 Building our approach to You will also find our key policy documents and 02.2 Sustainability research and data and sustainable investing 62 reports, including our latest TCFD Report. analytics – our strong foundation 25 04.2 D eveloping a shared vision for For information on the sustainability commitments 02.3 Sustainability risk management 29 inclusion and diversity 63 and performance of Allianz, please refer to the 04.3 Pr omoting employee health and wellbeing Allianz Group Sustainability Report 2021. 02.4 S ustainable investing categories 30 in a hybrid work environment 65 AllianzGI website 04.4 Business conduct and operational AllianzGI TCFD Report 2021 risk management 67 Allianz Group Sustainability Report 2021 04.5 Managing the environmental impact of our operations 69 04.6 Corporate citizenship 72
01 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI 01.3 W hat sustainable investing means to us 01.4 Acting on climate risks and opportunities 01.5 Sustainability governance 01.6 Shaping sustainable investing with our clients 02 Sustainable investing 03 Active stewardship 04 AllianzGI as a sustainable business 05 Appendix Allianz Global Investors (AllianzGI) Working in 23 locations, we manage is an active investment management EUR 673 billion of assets on behalf of firm and part of Allianz Group. institutional and retail clients worldwide –from pension funds and blue-chip multinationals to charitable foundations, family offices and individuals. 01 Introduction
This is a modal window.
01 01.1 In conversation with Tobias Pross Principle 1 Introduction 01.1 In conversation with and Matt Christensen Tobias Pross and Matt Christensen 01.2 About AllianzGI AllianzGI CEO Tobias Pross and 01.3 W hat sustainable investing Global Head of Sustainable and means to us Answering your questions Impact Investing Matt Christensen 01.4 Acting on climate risks and opportunities discuss sustainable investing 01.5 Sustainability governance Tobias Pross highlights from 2021 and how 01.6 Shaping sustainable investing Chief Executive Officer, with our clients Allianz Global Investors they see the landscape developing 02 in future. Sustainable investing “ Sustainability is a fast-evolving space and it is vital we keep pace Q What did you see as the biggest 03 developments in sustainability Active stewardship with our clients’ thinking and during 2021? 04 major advances in understanding The most significant trend has been the AllianzGI as a sustainable business around both the challenges MC continued move of sustainability to the 05 and opportunities.” mainstream. ESG investing is no longer a niche Appendix – it is now seen as “business as usual”. We have reached a tipping point where investors are not just demanding that sustainability informs investment decisions, they expect it. This thinking has guided the build-out of our sustainability team and capabilities at AllianzGI over the Matt Christensen past year. We are led by opportunities in the Global Head of Sustainable and Impact Investing, marketplace and the need for pragmatic Allianz Global Investors approaches that acknowledge the fact that perfect solutions to these challenges do not yet exist. “ We have reached a tipping point There are reasons to be optimistic about where investors now expect global progress towards sustainability goals. sustainability to inform investment Last autumn’s COP26 conference in Glasgow decisions. This thinking has guided could still prove to be a landmark on the path the build-out of our sustainability to net zero, while the European Green Deal and China’s net zero pledge are helping to team and capabilities at AllianzGI drive us towards a more sustainable future. over the past year.” The importance of “building back better” following the pandemic has come to the fore and will inform developments in the coming years. The opportunity to create more sustainable infrastructure and – crucially – to foster equitable growth must be seized wholeheartedly.
01 01.1 In conversation with Tobias Pross and Matt Christensen continued Principle 1 Introduction 01.1 I n conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI TP I agree that 2021 was a year that truly shone At the UN Climate Conference in Glasgow, MC When looking at how we frame those goals 01.3 What sustainable investing a light on the challenges facing the planet and we launched a strategy, built around a public- and solutions, we have identified three key means to us the urgency with which we must face them. private partnership that will invest in climate- themes that we see as the most urgent 01.4 Acting on climate risks Collaborative action will be vital to develop the focused private equity funds and projects active challenges globally and which will be integral and opportunities right solutions and I am pleased we played a in emerging markets and developing countries. to sustainable businesses in the future – climate 01.5 Sustainability governance part in some major initiatives and cross-industry Our clients will benefit from this commitment change, planetary boundaries and inclusive 01.6 Shaping sustainable investing collaborations. With our parent company, through the co-investment opportunities that capitalism. These themes guide targeted with our clients Allianz, we have committed to measurably exist with Allianz. Through these and other research and engagement to identify the most reduce the carbon footprint of our real assets initiatives, we are partnering with clients to tackle material risks and opportunities for our business 02 portfolio by growing our share in low greenhouse the most pressing sustainability issues and create and our clients. Sustainable investing gas (GHG)-emitting assets and engaging on a better future for all. Our participation in these decarbonisation with the companies in which we organisations and programmes complements We also see impact investing as a core area 03 are invested. In March 2021, we joined the Net the various industry bodies in which we play an of opportunity, aligned with client motivation. Active stewardship When constructing investment products and Zero Asset Managers initiative which supports active role. portfolios, impact will eventually become a 04 the goal of net zero emissions by 2050, in line What do you see as the most significant third dimension for measuring investment AllianzGI as a sustainable business with global efforts to limit warming to 1.5°C. Q This aligns us with the commitments made by future trends around sustainability? performance, next to risk and return. Therefore, 05 Allianz as a founding member of the Net Zero Sustainability is a fast-evolving space and it it becomes increasingly important that we are Appendix Asset Owner Alliance in 2019. TP is vital we keep pace with our clients’ thinking able to measure impact – of private markets as and major advances in understanding around well as public markets investments – and we are With Allianz, we are also co-developing both the challenges and opportunities. We are developing a framework for this. dedicated impact investment strategies that proud of our long track record in sustainable How do you define AllianzGI’s role in foster the energy transition in both developed investing, launching our first SRI fund in 1999. Q shaping the future? and developing markets, often partnering with We plan to expand our sustainable investment global development banks and organisations. offering, from innovative impact-focused funds We want to provide our clients with access For example in November 2021, together with TP to the growth opportunities of a sustainable the International Finance Corporation and Hong to tailored solutions for our clients, including future. US Special Presidential Envoy for Kong Monetary Authority, we set up the world’s through our risklab team (an advisory service Climate John Kerry said that 50% of the carbon first cross-sectoral portfolio of emerging-market within AllianzGI) where we added a dedicated reductions needed to get to net zero will come loans aligned with the Paris Agreement. The sustainable investment advisory offering in 2021. from technologies that have not yet been strategy supports the IFC and Allianz in making While being excited by these initiatives and invented. With our clients, we will be investing 1.5°C-aligned investments in emerging markets. confident in our expertise, we aim to be modest at the cutting edge to enable the development and pragmatic in our approach. We do not claim of these technologies. Our approach is both to have all of the answers, but we are committed optimistic and realistic. This can be clearly to making progress in pursuit of the goals that seen in our engagements, as we seek to work our clients – and society – seek. with the companies we invest in to shape their transition pathways to a more sustainable future. Generating these improvements and progress needs to be a collective endeavour.
01 01.1 In conversation with Tobias Pross and Matt Christensen continued Principle 1 Introduction 01.1 I n conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI We see our stewardship activities as a critical Q How do you view your responsibilities 01.3 What sustainable investing MC element, with opportunities to help our investee beyond investment? means to us companies transition to a sustainable future. 01.4 Acting on climate risks Picking up on what Tobias outlined, we have TP It is imperative that we demonstrate commitment and opportunities adopted a Climate Engagement with Outcome to sustainability and the values we stand for 01.5 Sustainability governance (CEWO) approach in select portfolios which sees across our entire business, beyond our investment 01.6 Shaping sustainable investing us work with investee companies to understand processes. We must live up to the standards we with our clients their climate pathways, and work with them demand of the companies we invest in, and I am where necessary to identify ambitious but pleased that we continued to make significant 02 progress. In 2021, we reduced CO emissions achievable climate goals alongside a specified 2 Sustainable investing timeframe to achieve them. This is on top of our per employee to 0.9 tonnes, compared with 2.1 comprehensive approach to active engagement tonnes in 2020, helped by low levels of business 03 and proxy voting across our portfolios. travel and increased use of renewable electricity. Active stewardship In fact, 100% of the electricity used by AllianzGI 04 Proxy voting gives us a platform to influence the came from renewable, low-carbon sources. AllianzGI as a sustainable business issues that matter globally and will be key to our Building an inclusive and diverse organisation commitment to issues like inclusive capitalism is an essential part of delivering on our goal of 05 and climate change. We will continue to helping our clients reach their long-term goals Appendix encourage transition among the companies we invest in, promoting net-zero goals and pushing by generating sustainable returns. We believe firms to tackle challenges such as excessive passionately that an open and inclusive culture executive pay and board diversity. that encourages collaboration and diversity of thought ultimately benefits our clients. In terms of gender representation, we have a 50:50 male to female representation in our Executive Committee, and are implementing a plan for promoting gender equality spanning all levels of seniority. And, through participation in initiatives such as 10,000 Black Interns, we are enhancing the diversity of our workforce across other dimensions. We are proud of the track record in sustainability documented in this report across both our investing capabilities and business operations. Like the industry as a whole, we still have progress to make and we look forward to sharing future updates with you.
01 01.2 About AllianzGI Principle 1 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI As one of the world’s leading active 01.3 W hat sustainable investing asset managers, AllianzGI employs 2021 highlights means to us more than 700 investment professionals 01.4 Acting on climate risks and opportunities and 550 relationship managers across 01.5 Sustainability governance 23 offices worldwide. We manage 01.6 Shaping sustainable investing 1 EUR 673 billion New partnerships with our clients EUR 673 billion (USD 765 billion) of Total assets under management (AuM) Joined the Net Zero Asset Managers initiative assets for institutions and individuals and One Planet Asset Managers initiative 02 Sustainable investing around the globe. 2 EUR 303 billion Controversial 03 Our experience in sustainable Total value of ESG and sustainable Active stewardship investing spans more than 20 years. investment offering weapons and thermal 04 We are part of Allianz Group and coal exclusion policy AllianzGI as a sustainable business we share and contribute to our 47% parent company’s commitments on Adopted firmwide for all mutual 05 increase in AuM in sustainable funds that we manage Appendix tackling climate change and doing investments compared to 2020 business sustainably. Active stewardship: We offer a diversified range of active investment 5 A+ ratings 299 engagement strategies across four main pillars: equities, fixed income, and 3 A ratings multi asset and private markets. Our key markets are on occasions Europe, Asia Pacific and the United States. In the United Nations Principles for Responsible Investment covering Our extensive expertise in both public and private 3 (PRI) assessment 482 topics markets covers developed and emerging markets. Our investment advisory services – delivered by our 2020: 303 engagement occasions specialist risklab capabilities – help clients achieve their covering 491 topics investment objectives, including in sustainable investing. We see embedding sustainability as the role of everyone at AllianzGI, because it is intrinsic to our success as an active investor and our function as a responsible business. Our role is to create long-term value for clients by navigating financial markets and deciphering the resulting challenges and opportunities. Sustainability is core to this purpose. 1 Data as at 31 December 2021. 2 This figure includes EUR 156 billion of integrated ESG assets that are not considered sustainable according to EU Sustainable Finance Disclosure Regulation. 3 Reporting period January 2019 – December 2019. PRI reporting has been delayed by the PRI Association by one year. Ratings for the reporting period January 2020 – December 2020 are expected to be available by June 2022, while ratings for the reporting period January 2021 – December 2021 will not be available at all.
01 01.2 About AllianzGI continued Principles 1 4 6 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Evolving our strategic approach 01.3 W hat sustainable investing Creating long-term, sustainable value 3 Foster a fulfilling work environment Sustainability is at the forefront of our decision-making means to us Our mission is to help our clients reach their long-term and activities. With the appointment of Matt Christensen 01.4 Acting on climate risks goals by generating sustainable returns. Our clients for employees as our Head of Sustainable and Impact Investing in and opportunities are our centre of gravity. We generate value for them We motivate our people by fostering a merit- December 2020, we accelerated our progress in anchoring 01.5 Sustainability governance – and with them – by partnering to meet their needs based, values-driven, inclusive culture and sustainability into our investment process. 01.6 Shaping sustainable investing and those of wider society. Together with our clients, providing the right technology and support. with our clients we aim to drive lasting change across the investment The annual global Allianz Engagement We take a structured approach to identifying the major value chain using our expertise, influence and impact- Survey is our main tool for assessing employee long-term opportunities for our clients. Our annual 02 focused investing. satisfaction. The results highlight what is Investment Positioning Dialogues (IPD), instigated in Sustainable investing working well and where we need to improve 2020, bring together our senior investors and distribution 03 We focus on five principal business objectives: (see section 04.3). leads globally to discuss the most significant risks and Active stewardship opportunities for clients. First, we convene the two groups 1 separately to sound out their latest thinking and reflect 04 Generate strong investment returns the views on risk and opportunity from the different AllianzGI as a sustainable business for our clients 4 Grow our company organically regions, client types and areas of the market. Then the We measure our strategies’ asset-weighted and sustainably entire group meets to develop a final list of priority topics. 05 performance against their benchmarks over We measure our growth in terms of revenues The outcome is a set of deeply interconnected “investable Appendix one-year and three-year periods. We also track and net cash flow to gauge the extent to themes” that provide a guiding focus for our business, how strategies are performing against peers. which we are offering clients the most relevant currently Achieving Sustainability; Navigating Rates; and and attractive capabilities. Appreciating China. These themes drive our research and product development effort. 2 Provide excellent client service We repeat the IPD process annually to revalidate the list 5 Generate profitable growth and revise and add themes as needed. In 2022, we will We measure client satisfaction through an for our shareholders add a fourth theme – Embracing Disruption – to reflect the annual survey carried out by independent All five objectives are interlinked. By serving evolution of a trend that began in the technology sector consultants Coalition Greenwich. It assesses our clients well and motivating our employees but increasingly pervades every aspect of our lives and is how our institutional and intermediary clients to excel, our company will grow sustainably closely aligned with sustainability. view our investment and client services. and deliver strong results for our shareholders We aim to achieve first-quartile performance The insights of our Global Investment Council (GIC) are a and we use the feedback to identify areas over the long term. critical input. Led by our Economics and Strategy team, the where we can strengthen our offerings. Since GIC provides a forum where our strategists can share their 2018, Coalition Greenwich has also conducted view on macro risks and opportunities with our investment client interviews to measure clients’ perception teams, allowing these insights to be implemented within of our sustainable investing capabilities (see our investment processes as appropriate. The GIC is held page 17). Through our client forums in select monthly and additionally on an ad hoc basis as market markets, we promote two-way feedback and events dictate. shared learnings.
01 01.3 What sustainable investing means to us Principle 1 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI 01.3 What sustainable investing “ Our ambition is to help our clients be informed and position themselves for means to us 01.4 Acting on climate risks the opportunities of sustainable investing and the outcomes they seek.” and opportunities 01.5 Sustainability governance 01.6 Shaping sustainable investing with our clients We are integrating sustainability considerations want to achieve a measurable impact with their across AllianzGI’s offering and accelerating the money which we seek to demonstrate to our clients 02 growth of impact investing as part of our fast-growing with our sustainable investment strategies Sustainable investing private markets offering. We made considerable progress in 2021, developing new sustainable We also engage with the companies in which 03 investment products and innovative analytical we invest on a range of priorities – shaping their Active stewardship tools and methods to aggregate and process data low-carbon transition strategies, mitigating their from third-party providers and alternative data broader environmental impact and enhancing 04 sources, informing our proprietary sustainability governance approaches. AllianzGI as a sustainable business scoring system. To achieve all of this, we built out In our view, this kind of active stewardship is essential, 05 the resources and organisational structure of our because simply divesting from so-called “offenders” Appendix Sustainable and Impact Investing team to advance limits opportunities to drive change. Instead, we our strategy and support data, research and engage with companies to develop constructive stewardship activities. routes to a more sustainable future, recognising that Sustainability is an area filled with innovative and meaningful progress often happens incrementally progressive approaches, but it is also a complex rather than in big, transformative bounds. space where many of the solutions and proof points Climate transition pathways are works in progress, not least due to the evolving One way we are looking to drive real-world impact regulatory landscape and client demand. That is why is through our enhanced climate engagement with we focus first on being a resourceful partner that can high emitting companies highlighted by the launch provide education and thought leadership to our of our Climate Engagement with Outcome approach. clients to help them focus their efforts. We then shape This enables us to use expanding data coverage sustainable pathways for our clients by offering a to fully scope the climate profiles of the highest range of investment options and guidance in public carbon emitters in portfolios and engage more fully and increasingly in private markets with them to identify and develop climate transition New wave of sustainable growth pathways. The most important part of this approach We observe that a large number of our clients are is its real-world impact across all topics, beyond convinced of the necessity and value of investing just carbon emissions. We also gain insights into sustainably. For those ready to make the journey, climate transition efforts across regions and sectors the potential is vast. A wave of sustainable growth which allows us to identify progress of our invested is sweeping the globe, creating significant investable companies in a consistent and comparable way. opportunities. At the same time, investors increasingly Read more on page 32.
This is a modal window.
01 01.3 What sustainable investing means to us continued Principles 1 4 9 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Focusing on the material sustainability Planetary boundaries – How we sustain Inclusive capitalism – Living equitably 01.3 What sustainable investing themes of today and tomorrow ourselves in a higher temperature world in a world with rising population and means to us Sustainable investing requires a lateral approach, Focusing on climate change alone will not maintain a resource constraints 01.4 Acting on climate risks by interconnecting focus areas to achieve the highest stable planet that continues to support life and human and opportunities As resources grow more limited, the threat of distributing 01.5 Sustainability governance impact. We have identified three pivotal themes – development. We have to define the environmental them unequally increases. This challenge was highlighted 01.6 Shaping sustainable investing climate change, planetary boundaries and inclusive limits within which humanity can safely operate. Nine by the Covid-19 pandemic. We need to focus on the with our clients capitalism – which we believe are critical to society, planetary limits have been identified through a scientific “social” in ESG, avoiding social inequalities that hold back our investors and us as a business. approach, as regulating the stability and resilience the growth and resilience of economies. It is part of our 02 According to the World Economic Forum’s 2022 of the planet we live on: climate change, biodiversity fiduciary duty to support a just transition including, for Sustainable investing Global Risks Report, failure to act on climate change, loss, ocean acidification, ozone depletion, atmospheric example, access to health services, finance and education. biodiversity loss, social cohesion erosion, human aerosol pollution, freshwater use, biogeochemical flows Therefore, we are focusing on factors that enable inclusive 03 of nitrogen and phosphorus, land-system change, and capitalism when constructing portfolios, since maintaining Active stewardship environmental damage and the natural resource crisis release of novel chemicals. Identification of these core social cohesion underpins economic growth. are among the most potentially severe risks society will boundaries and the effects of crossing tipping points are 04 face over the next decade. While climate change is now central to our investment approach. We aim to identify AllianzGI as a sustainable business a mainstream area that many asset managers focus on, how capital can be deployed to support the efficient staying within planetary boundaries and achieving a use of land and water resources – from forestry to food 05 just transition are key themes that will become material Appendix in the future. to fishing. We use these themes to guide targeted, themed Climate Planetary Inclusive engagement and research designed to ensure we change boundaries capitalism identify the most material risks and opportunities for our business and make an impact going forward. Key ESG • Climate change • Biodiversity • Ways of working, retirement Climate change – Avoiding the harmful issues • Climate action • Circular economy, resilience • Access to health, finance impacts of climate change • Resource use (eg, water use, and education Climate change is among the most pressing challenges land management ) • Human capital, livelihoods facing humanity and has significant implications for all Beliefs Climate change is one of There is a risk of irreversible “Inclusion” will become the three ESG elements, not just the “E”. Being a member our planet’s most pressing and abrupt environmental and next big wave after climate of the Net Zero Asset Managers initiative, we are challenges, AllianzGI takes an social changes change and require innovative committed to aligning our investment approaches active role in shaping our future thinking and solutions with its objectives. We do this by analysing the physical that meet the demands threats of climate change, identifying which sectors are of younger generations impacted most and engaging with companies to set Examples • Over 40 mutual funds • SDG-aligned capabilities: • SDG-aligned capabilities: transition pathways. implement our Climate Global water, clean planet, Sustainable health, Engagement with Outcome food security positive change approach and engage • Collaboration with • Emerging markets top carbon emitters to set initiatives to develop blended finance focus ambitious pathways standardised indicators in private markets • Decarbonisation solutions
01 01.3 What sustainable investing means to us continued Principles 1 4 6 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI How active asset management supports • Advising on sustainability risks and engineering active 01.3 W hat sustainable investing the transition to a better future investment solutions that meet our clients’ individual means to us Our commitment to active asset management is objectives, powered by an innovative approach to 01.4 Acting on climate risks unequivocal. We think being an active asset manager allocation and a deep understanding of risk. With 60 and opportunities offers unique advantages in today’s investment investment advisers globally, risklab – an advisory team 01.5 Sustainability governance environment – whatever the asset class, geographic within AllianzGI – helps our clients to meet their 01.6 Shaping sustainable investing scope or investment style. Being active also allows us to investment goals through specialist advice and solutions. with our clients stay ahead of our clients’ future needs and to manage In 2021, we added sustainability-specific capabilities emerging and developing risks and opportunities when within risklab – (see case study on page 18). 02 Sustainable investing it comes to sustainable investing. • Financing the United Nations Sustainable In 2021, we implemented a number of sustainability- Development Goals (SDGs) by incorporating ESG 03 related initiatives in our investment and advisory considerations in our active investment decisions. Active stewardship We partner with our clients to mobilise capital to functions – and enhanced existing ones – as part of meet multiple sustainability-related goals, such 04 our active approach: as those set out in the UN SDGs. Our SDG-aligned AllianzGI as a sustainable business • Identifying our three key sustainability themes strategies specifically address the financing of the 05 – climate, planetary boundaries and inclusive SDGs. These strategies have grown to EUR 2.9 billion Appendix capitalism – that will shape our research and over the past year. engagement activities (see page 09). Capital allocation and company engagement are • Integrating ESG risk considerations into all our key drivers of positive change, and active stewardship investment processes and active stewardship continues to be a core action across our product approach (see page 39). strategies. In 2021, we engaged with 238 companies • Constructing portfolios designed for strong across 11 different sectors and 27 countries. We sustainability performance (see page 16). participated in 10,190 shareholder meetings in 2021, representing 95% of all votable meetings. We voted • Enhancing the ESG approach in private markets against, withheld, or abstained from at least one alongside creating an Impact Management agenda item at 68% of all meetings globally; and and Measurement team. This team has built the overall we opposed 21% of all resolutions globally AllianzGI Impact framework for private markets (see page 51). impact strategies to ensure investments generate material and measurable positive impact for our clients (see page 36).
01 01.4 Acting on climate risks and opportunities Principle 4 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI As an active investor, we look for Climate strategy • In the short term, policy and reputational risks of our 01.3 W hat sustainable investing innovative ways to reallocate capital According to the World Economic Forum’s Global Risks investee companies are the leading climate-related means to us Report 2022, failure of climate change mitigation and risks that may affect investments. 01.4 Acting on climate risks to support a climate transition that adaption come first in a list of the top ten global risks • In the medium term, market and technology risks and opportunities meets the goals of the Paris Agreement. over the next decade in the report’s annual survey 01.5 Sustainability governance associated with the climate transition may develop 01.6 Shaping sustainable investing As part of our commitment to increase of perceptions. more substantially, while acute physical risks may with our clients transparency and performance across In this context, we help our clients reflect climate risks emerge more frequently. our sustainable investment approach, and opportunities in their holdings. As a committed • In the long term, chronic physical climate risks could 02 member of the Net Zero Asset Manager initiative, we become more substantial. Sustainable investing we joined the Net Zero Asset Managers are supporting the goal of net-zero GHG emissions initiative in 2021 and published our first by 2050 in line with global efforts to limit warming to When it comes to the opportunities, initiatives that 03 1.5°C. Next to mainstream strategies, we offer climate enable and benefit from the climate transition are the Active stewardship annual Task Force on Climate-Related leading climate-related opportunities that may affect Financial Disclosures (TCFD) report. thematic and impact-driven opportunities such as green investments in the short term. In the medium and long 04 bonds, climate transition equity and private markets term, climate-related investment opportunities will arise AllianzGI as a sustainable business For investors to be able to make informed decisions, renewable energy investments. These specialised assets companies must report comprehensively on how they contribute to the alignment of an asset owner’s portfolio from competitive positioning and climate innovation. 05 are tackling dominant global long-term trends such as and its compatibility with climate transition targets. Integration of climate risks and opportunities Appendix climate change. The climate transition will create both investment opportunities and risks across all sectors A key belief in our philosophy surrounding climate in investment processes of the economy. Our industry has a crucial role to play investments is that public corporate disclosures AllianzGI’s dedicated sustainable investment team, in addressing climate change risks and opportunities on climate are not yet in-depth enough to inform portfolio managers and analysts collectively monitor through investment decisions and influencing investee simple rules-based strategies. We believe market and assess the science, regulatory response and companies and other institutions. inefficiencies on climate risks and opportunities exist, business implications of climate change (see page 22). and active research and corporate engagement are We examine the implications for individual issuers and For more information see our Climate Policy Framework necessary to tackle the dominant long-term global sectors and the ways in which climate change can be on our website trends comprehensively. a driver of investment performance. We will continue Climate-related risks and opportunities our engagement with companies on climate-related Climate risks are a crucial consideration when assessing issues and encourage them to report on TCFD and potential investments. As an active investor, we look for Science Based Targets(SBTs) to improve the quality of innovative ways to allocate new capital – and reallocate disclosures provided to our investors, positioning them existing capital – towards a climate transition that meets to meet their climate ambitions more precisely. Climate the Paris Agreement goals. change-relevant indicators are part of our Principal Adverse Impact assessment (see page 22). We support Transition and physical climate factors may pose a and implement the recommendations of the TCFD. For significant risk or opportunity in the short, medium and more information on climate-related risk management long term through the value of assets we manage on process, please read our 2021 report. behalf of our clients, the investment products at the core Read the TCFD report 2021 here of our business, and how we operate as a corporation.
01 01.4 Acting on climate risks and opportunities continued Principle 4 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Climate-related metrics and targets Investment-related climate metrics 01.3 W hat sustainable investing We aim to be as transparent as possible in our climate- Indicator Unit 2021 YOY 2020 2019 means to us related profile, including the disclosure of our investment- 01.4 Acting on climate risks related climate metrics. As a committed signatory of the Listed equity assets and opportunities Net Zero Asset Managers initiative (NZAM), we support Total financed emissions million t CO 15.22 25.8% 12.10 15.27 01.5 Sustainability governance 2 the goal of net-zero greenhouse gas (GHG) emissions by Total carbon intensity t CO /€ million invested 47.80 -5.3% 50.50 76.20 01.6 Shaping sustainable investing 2050 – in line with global efforts to limit warming to 1.5°C. 2 with our clients Weighted average carbon intensity t CO /€ million revenues 119.90 -8.3% 130.80 142.30 2 After becoming a NZAM signatory in 2021, we submitted Emissions data coverage of 02 first interim targets at the beginning of 2022. As the first listed equities AuM % 98% – 99% 97% Sustainable investing step, these targets cover listed equity, corporate debt, infrastructure equity, and infrastructure debt, and reflect Corporate bonds assets 03 Total financed emissions million t CO 13.72 -23.5% 17.94 16.87 Active stewardship the targets set in 2021 by Allianz for its proprietary 2 assets based on its commitment as a member of the Total carbon intensity t CO /€ million invested 77.90 -35.0% 119.80 118.70 2 04 UN-convened Net-Zero Asset Owner Alliance. Weighted average carbon intensity t CO /€ million revenues 192.20 -4.7% 201.70 206.90 AllianzGI as a sustainable business 2 The assets in-scope for these targets represent 12% Emissions data coverage of 05 of AllianzGI’s overall assets under management. corporate bonds AuM % 94% – 89% 86% Appendix The submitted targets include: Green assets Listed equity and corporate bonds – 25% GHG Investments in renewable energy € million 5,185.95 9.0% 4,756.27 5,307.00 reduction, Scopes 1 and 2, by the end of 2024 (baseline Investments in green bonds € million 10,017.69 54.9% 6,468.07 4,557.00 year: 2019). Infrastructure equity – 28% GHG reduction, Scopes 1 • For metrics related to our business operations, market standard following its adoption by the EU and 2, by the end of 2025 (baseline year: 2020). see page 69. Technical Expert Group on Sustainable Finance Infrastructure debt – Our target is to grow the share of • For more information see our separate TCFD and the EU Benchmarks Regulation. We have also low-emitting and EU taxonomy-eligible assets. report 2021 implemented a new waterfall process that allows us to improve data coverage of emissions, combining MSCI For more information on the Net-Zero Asset Owner Read the TCFD report 2021 here and Refinitiv data. Data for 2019 and 2020 has been Alliance commitment of Allianz, please see the Allianz recalculated using this new methodology to provide Group Sustainability Report. For our Sustainability and Stewardship Report 2021, comparable results. At AllianzGI, we will focus continuously on our net- we have changed the methodology for calculating the financed emissions. We have replaced the use of See our TCFD Report for the full methodology of how zero commitment as a signatory of NZAM. In the enterprise value (EV) with enterprise value including we calculate the financed emissions. near future, we will increase the scope of our assets cash (EVIC) as the latter is expected to become a and set intermediate targets for our third-party client assets. We will continue to actively engage with our institutional clients and distributors on integrating net-zero objectives in their investments and into our mutual funds. We plan to review our targets and progress annually.
01 01.5 Sustainability governance Principles 1 2 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Responsible and transparent Our sustainability governance structure The Global Proxy Voting Committee ensures that 01.3 What sustainable investing governance is crucial to enable the AllianzGI has clearly established lines of responsibility our global proxy voting practices reflect industry best means to us for sustainability: practice and that we fulfil our fiduciary and stewardship 01.4 Acting on climate risks creation of sustainable value for all duties on behalf of our clients. and opportunities stakeholders. This extends to our The Executive Committee is the central governance 01.5 Sustainability governance and decision-making body for AllianzGI and other The Reputational Risk Working Group comprises 01.6 Shaping sustainable investing governance of sustainability as we relevant committees on sustainability issues. global representatives from across functions who with our clients embed ESG and evolve our approach meet semi-annually to proactively discuss topics that to sustainable investing. The Investment Executive Committee has responsibility may pose a reputational risk and determine whether 02 for all sustainability-related topics within investments. further action is necessary, including escalation to senior Sustainable investing Sustainability is embedded throughout AllianzGI and The Head of Sustainable and Impact Investing reports management. Additionally, the group may convene or our sustainability ambition is set by senior management to the Global Head of Investment Platform, who is communicate on an ad hoc basis topics that require a 03 as part of the overall strategy of the business. As a a member of the Executive Committee, anchoring collaborative sounding board for establishing a need Active stewardship member of the Allianz Group, we are subject to strong for action. sustainable and impact investing at the top of 04 governance requirements relating to ESG matters. the organisation. The International Management Group acts as a AllianzGI as a sustainable business The Allianz Group ESG Board is the highest executive The Sustainable Investing Working Group ensures sounding board and communication platform for management governing body for sustainability- that high-quality sustainable investing standards are strategy and decisions firmwide. 05 related issues at management board level. In 2021, Appendix being applied across the firm and allows especially for As AllianzGI consists of various operational entities, the Supervisory Board established a new Sustainability cross-asset class topics to be considered. It is a forum to additional lines of responsibility exist at the AllianzGI Committee to oversee ESG issues and support the share best practices and discuss, agree and execute on GmbH level. The GmbH management board is Supervisory Board in the oversight of the execution sustainable investing activities at AllianzGI. responsible for overall strategy and sustainable of the Group’s sustainability strategy. investing strategy. It reports to the Supervisory Board. For more information, see the Allianz Group Sustainability governance structure Sustainability Report 2021 Executive Committee Investment Executive Committee Sustainable Global Proxy Reputational Risk Investing Voting Working Group Working Group Committee International Management Group
01 01.5 Sustainability governance continued Principles 1 2 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI The GmbH supervisory board receives regular updates The members of the Sustainable and Impact Investing they can now add impact as a third dimension 01.3 What sustainable investing on the business strategy of AllianzGI GmbH from the team have a diverse range of professional backgrounds of oversight of their portfolios. To leverage this means to us management board. This includes a section on the including finance, investment and legal as well as future growth opportunity, we must ensure that our 01.4 Acting on climate risks latest strategic updates regarding sustainability. environmental and sustainability expertise. The team investments create credible impact – and measure and opportunities Investing in our team to position AllianzGI is gender-balanced as part of our commitment to and report this impact. Our Impact Investing team 01.5 Sustainability governance diversity, which enables us to create a holistic and is responsible for managing private equity social 01.6 Shaping sustainable investing as a shaper of sustainable pathways interdisciplinary view on all aspects of sustainable and environmental impact portfolios and mobilising with our clients With sustainable and impact investing being a strategic investment. Our leadership team continuously assesses commercial capital to achieve the United Nations’ growth area, we significantly expanded our team in 2021 training needs. For example, in 2021 we identified Sustainable Development Goals (SDGs). In 2021, we 02 to include 38 team members in a well-organised structure that the team could benefit from deepening its skills created a new Impact Measurement and Management Sustainable investing with clear lines of responsibility. Sub-teams co-operate on climate, given the rising focus on this topic. Several team which has developed an impact measurement 03 closely and report directly to Matt Christensen, team members participated in the CFA UK Certificate framework to ensure high standards of due diligence, Active stewardship Global Head of Sustainable and Impact Investing. in Climate and Investing and their input helped develop measurement and management for AllianzGI’s private Sustainable Investment Office (SIO): this course which was in its pilot phase at the time. markets investments in this space (see page 36). 04 Shapes AllianzGI’s overall sustainable investment strategy Developing our impact investing expertise Following the changes made to the team structure in AllianzGI as a sustainable business 2021, we expect our set-up to be effective in meeting and policies, sustainable product strategy and leads key Impact investing represents an important and fast- 05 initiatives. The team also plays a critical role in providing growing asset class that facilitates positive change business demands in 2022 and we currently plan no Appendix improved knowledge to clients and other stakeholders while resonating with a growing interest from clients. further changes to our Sustainable and Impact Investing on AllianzGI’s sustainable investment capabilities. Opportunities in this area are increasing quickly, team governance. Sustainability Methodologies and Analytics (SMA): particularly in private markets. Where investors As part of its remit, the team is responsible for driving previously thought only in terms of risk and reward, innovation using state-of-the-art technology and ESG Organisational structure – Sustainable and Impact Investing team data. This includes employing artificial intelligence (AI), natural language processing (NLP) and new forms of data to support the ESG research team, develop new methodologies across asset classes, deliver innovative Global Head of Sustainable and Impact Investing tools for our investment platforms and shape elaborate client-oriented solutions for the future. The team oversees ESG integration and scoring approaches and develops the climate strategy dataset. Sustainability Research Sustainability Research and Stewardship teams: and Stewardship Manage thematic research and engagement strategy Sustainable Sustainability Impact Investing and develop a thematic approach along the strategic Investment Office Methodologies Private Markets topics of climate, planetary boundaries and inclusive and Analytics capitalism. The Stewardship Team leads AllianzGI’s Sustainability engagement and proxy-voting activities globally. Research Stewardship
01 01.5 Sustainability governance continued Principles 1 2 5 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Linking sustainability with remuneration All review processes are based on the regulatory 01.3 What sustainable investing Our International Management Group – comprising requirements and developments in the jurisdictions in means to us senior functional heads from across the firm – has which we operate. To be at the forefront of sustainability 01.4 Acting on climate risks sustainability embedded into its goals through the regulation, we set up a separate global regulation and opportunities firmwide global solidarity goals. A specific sustainability workstream to implement sustainability-related 01.5 Sustainability governance goal was introduced in 2021 and will be implemented regulation into our investment approach. This has a 01.6 Shaping sustainable investing in 2022. This goal targets sustainability achievement focus on implementation projects to comply with the with our clients as measured by our delivery of above peer average EU Sustainable Finance Disclosure Regulation (SFDR) PRI results. Achievement of the global solidarity goals (see page 23) as well as Markets in Financial Instruments 02 influences the firmwide remuneration pool. Directive (MiFID) II sustainability preferences as part of Sustainable investing the suitability assessment. 03 AllianzGI functions are also embedding sustainability In 2021, we commissioned an audit to review our Active stewardship considerations into team and individual goals. For sustainability policies and processes for the first time. instance, the investment platform has implemented This was performed by an external audit firm with the 04 goals that specifically reflect the sustainability journey remit to identify potential weaknesses in our reporting AllianzGI as a sustainable business and focus areas of each team. and processes. The Sustainable Investing Working 05 Review and assurance Group discussed the key findings and recommended Appendix The credibility of our approach, as reflected in our actions to the Executive Committee. internal processes and external reporting, is crucial to AllianzGI’s Executive Committee reviewed and ensure trust in our company. We have sound processes approved this Sustainability and Stewardship Report in place to review ESG-related policies and procedures 2021. In doing so, they consider the report to provide a at least annually to ensure continuous improvement. fair and balanced view of our approach to sustainability In 2021, this included strengthening our exclusion policy investing and stewardship activities. Initial input was (see page 22), climate policy statement and proxy provided by the respective teams responsible for the voting policy (see page 51). We also reviewed our various activities, with overall review by the Sustainability processes to meet the requirements of sustainability and Impact Investing team given the changes in our labels for our funds when it comes to engagement. reporting structure. This review process was considered Review processes are led by our Sustainable Investment the most effective in consolidating our sustainability Office and Stewardship team. In 2021, we developed and stewardship reporting. our Global Sustainability Risk Policy and established a Reputational Risk Working Group to ensure that we analyse emerging sustainability-related reputational risks in a timely manner.
01 01.6 Shaping sustainable investing with our clients Principle 6 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI 01.3 What sustainable investing Our global asset and client mix (EUR billion, as at 31 December 2021) means to us Asset class split Client split Managed per region Distributed per region 01.4 Acting on climate risks and opportunities Fixed income Institutional EMEA EMEA 01.5 Sustainability governance Equities 93 business US 48 US 104 01.6 Shaping sustainable investing Multi-asset Retail Asia Pacific Asia Pacific with our clients Private 211 business 209 128 markets 47 02 179 Sustainable investing 464 496 03 522 Active stewardship 190 04 AllianzGI as a sustainable business Guiding clients on sustainable These capabilities are increasingly important to both We provide thought leadership and investment 05 investment solutions retail and professional investor clients. The recent health expertise in client meetings and host regular client Appendix crisis and natural catastrophes, and the ensuing market events on sustainable investing. These events provide As an active asset manager, we seek to create volatility, have intensified the already growing positive a platform for renowned keynote speakers and solutions and products that address our clients’ sentiment for ESG priorities. In 2021, our Request for AllianzGI’s own sustainable investment experts to evolving investment objectives. We manage EUR Proposal (RfP) team answered over 100 dedicated discuss the opportunities and challenges of sustainable 673 billion across all asset classes in public and ESG questionnaires from clients – a strong proof point investing, the emerging regulatory framework and the private markets for our global client base. for the increasing client focus on sustainable investing. measurability of sustainable and impact investments. We aim to give investors access to a broad range of Engaging with clients is a key element of helping them sustainable investment strategies. Since the inception to understand their sustainable investing preferences of our first sustainable investment strategy in 1999, and objectives. In our regular client meetings, we also our number of sustainable products had increased discuss stewardship activities and gain important insights to 150 by the end of 2021, up from 36 at the end of into the engagement themes that clients would like us 2020. In 2021, we converted 102 mutual funds to a to prioritise. For certain portfolios, we hold dedicated sustainable investing approach and launched 12 new ESG feedback meetings to discuss the decarbonisation funds – a path we aim to continue in 2022 for a range pathway of the portfolio as well as the outcomes of 1 of additional funds . engagement and voting. The climate strategies of the companies we invest in are a particular focus of these meetings. 1 These figures relate to EU-domiciled funds that are classified as either Article 8 or Article 9 under SFDR.
01 01.6 Shaping sustainable investing with our clients continued Principle 6 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Supporting institutional clients to set 01.3 What sustainable investing Maintaining our position as Highlights from the 2021 Coalition their sustainability agenda means to us a client service leader Greenwich Report: It is part of our fiduciary duty to help institutional 01.4 Acting on climate risks Our focus on providing guidance on sustainable • Eleventh consecutive year as Greenwich Quality Leader clients understand and fulfil their long-term financial and opportunities investment solutions is part of a wider commitment to in institutional investment management in Germany, obligations and navigate their present and future 01.5 Sustainability governance clients. We look beyond pure economic gain to develop and fourth consecutive year in Continental Europe. investment challenges. 01.6 Shaping sustainable investing strong and enduring partnerships with them. This has • Fourth consecutive year as Greenwich Quality Leader with our clients been especially important against the backdrop of the Institutional clients have seen rising regulatory pressure pandemic and the resulting economic uncertainty and in overall European intermediary distribution quality. around the disclosure of sustainable investment activities, 02 market volatility. • Sole Greenwich Quality Leader in intermediary particularly in the EU. There is also a bigger drive to align Sustainable investing investment activities with specific values and long-term Our aim is to create value together and we believe every services in Asia. 03 sustainability convictions. Consequently, our clients are Active stewardship interaction should support this goal. We want to elevate • The leading ESG investment manager for institutional looking for a strong partner in solving challenges around our clients’ investing experience by understanding their clients in Continental Europe. ESG risks and seek to capture opportunities, aligning with 04 individual needs, providing the right solutions and always carbon-reduction commitments and assessing which AllianzGI as a sustainable business acting in their best interests. Drawing on our toolkit of activities they want to finance or divest. Our goal is to capabilities, we create solutions that help clients achieve help clients implement investment solutions that fit their 05 their investment objectives, today and in the future. own value framework. Appendix We are proud that independent client satisfaction Our track record in sustainable investing allows us to share surveys consistently highlight client service as one of knowledge and best practices with our clients to support our main strengths. Historically, AllianzGI has ranked in them in setting their sustainable investment objectives and the first quartile against competitors across all relevant finding the most appropriate investment solutions. major markets in the annual Coalition Greenwich survey. As part of this engagement, we help clients understand We are a quality leader – as recognised by Coalition current sustainability developments and regulatory Greenwich for more than a decade – with technological changes. We typically analyse the sustainability features capabilities and client service procedures that ensure we of their current portfolios, help to formulate their ESG stay close to clients. We actively use the findings of these approach and discuss how it can be implemented or surveys to continually enhance our service. further enhanced. 50+ dedicated ESG workshops and training sessions with institutional clients globally on various sustainable investing topics in 2021.
01 01.6 Shaping sustainable investing with our clients continued Principles 2 6 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI 01.3 What sustainable investing Shaping pathways for a sustainable future Shaping pathways for a sustainable future means to us 01.4 Acting on climate risks Building on our sustainable advisory Advising clients on a and opportunities capabilities with risklab strategy to reduce a 01.5 Sustainability governance 01.6 Shaping sustainable investing portfolio’s CO footprint with our clients 2 02 Sustainable investing In 2021, we expanded our offering by implementing and varying motivations, but all of them want to We performed a long-term strategic asset a dedicated expertise in sustainable investing within understand the impact of ESG on the risk and return allocation optimisation for the pensions team 03 risklab – AllianzGI’s unit offering customised analysis of their asset allocation. We aim to build on risklab’s of a global technology and optics manufacturer. Active stewardship and investment solutions – with a focus on asset longstanding expertise to provide transparency The company has committed to a carbon 04 allocation, risk management and private markets on the interaction of complex investment decisions neutrality goal. To contribute to this goal AllianzGI as a sustainable business implementation. We identified three pillars of and the long-term impact on traditional investment with the company’s pension assets, an equity this analysis: metrics while enhancing for sustainability metrics. investments sleeve was identified as a starting 05 • Sustainability transparency aims to help In 2022, we will continue to build out our institutional- point. We performed an analysis of available Appendix investors understand the sustainability quality grade sustainable investment advice that helps sustainable investment strategies and advised of their investment and best practices. investors view sustainability as a third dimension in the client on a choice that incorporated risk, addition to risk and return, by integrating ESG metrics return, ESG metrics and the carbon footprint of • Actionable advice focuses on establishing into our capital markets model. Our ambition is a the equity investment. The result was a change sustainability goals and implementing those goals level of transparency that allows for the display of bi- of the investment strategy and benchmark that through asset allocation changes, while keeping in directional implications of sustainability and financial will lead to a reduction of the carbon footprint mind the impact on risk and return characteristics metrics, ie, the implications of financial decisions on of the portfolio by 14,410 mtCO2e annually, of the portfolio. sustainability KPIs and the impact of a sustainability- as measured by financed Scope 1 and Scope • Customised solutions allows for a collaboration driven investment decision on traditional metrics such 2 emissions. between the client, risklab and AllianzGI with the as financial risk and return. reduction of the carbon footprint goal of developing investment strategies that To deliver on these ambitions, we plan to add further of the portfolio by meet specific client sustainability needs. resources and intensify the close collaboration 14,410 mtCO e To deliver on our ambition to offer outstanding between risklab and the rest of AllianzGI, in particular annually 2 sustainable investment advisory, we hired an the Sustainable and Impact Investing team. initial team of sustainability specialists and have started by expanding risklab’s tools and solutions in the first two pillars: transparency and actionable advice. We aim to help clients work within their own values framework rather than telling them what sustainability should mean to them. We support clients with different levels of experience
01 01.6 Shaping sustainable investing with our clients continued Principle 6 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Creating real impact in private markets 01.3 What sustainable investing Shaping pathways for a sustainable future With Allianz SE, we have committed to measurably means to us reduce the carbon footprint of our real assets portfolio 01.4 Acting on climate risks Helping our largest by growing our share in low GHG-emitting assets and opportunities client on its path and engaging with the companies we are invested in 01.5 Sustainability governance on decarbonisation. AllianzGI is also co-developing 01.6 Shaping sustainable investing to net zero dedicated impact investment strategies that foster the with our clients energy transition in developed and developing markets, 02 often partnering with global development banks Sustainable investing Managing over EUR 200 billion for our and organisations. shareholder, AllianzGI is a key partner in helping In November 2021, together with the International 03 Allianz to reach its ambitions across public and Finance Corporation and Hong Kong Monetary Active stewardship private markets. As one of the world’s leading insurance companies and a founding member Authority, AllianzGI set up the world’s first cross-sectoral 04 of the Net-Zero Asset Owner Alliance, Allianz portfolio of emerging-markets loans aligned with the AllianzGI as a sustainable business is pursuing ambitious sustainability targets for Paris Agreement. The strategy supports the IFC and its entire business. As one of several interim Allianz Group in making 1.5°C-aligned investments in 05 emerging markets. AllianzGI also announced at the Appendix goals, we are working with Allianz to reach a UN Climate Conference in Glasgow the launch of a new decarbonisation target of -25% greenhouse gas strategy – a public-private partnership that will invest emissions by the end of 2024 across listed equity in climate-focused private equity funds and projects and corporate bond investments that AllianzGI active in emerging markets and developing countries manages on behalf of Allianz, and by the end with a focus on climate mitigation, climate adaptation, of 2025 for infrastructure equity investments. and access to electricity. Our third-party clients will Allianz and AllianzGI are on track to achieve benefit from this commitment through the co-investment the interim goal of -25% without withdrawing opportunities that exist with Allianz. capital from hard-to-abate sectors. This is just a first step. We continue to engage with borrowers and partners to further increase the scope of assets and construct long-term portfolios and commitments to fulfil higher decarbonisation goals beyond 2025.
01 01.6 Shaping sustainable investing with our clients continued Principle 6 Introduction 01.1 In conversation with Tobias Pross and Matt Christensen 01.2 About AllianzGI Increasing transparency of 01.3 W hat sustainable investing Shaping pathways for a sustainable future sustainable investments means to us With the growth in sustainable investing, clients 01.4 Acting on climate risks Funding the world’s largest offshore windfarm understandably want increased transparency around and opportunities the performance and impact of these investments. 01.5 Sustainability governance Regulators are reinforcing this drive. 01.6 Shaping sustainable investing with our clients In December 2021, Allianz Capital Partners (ACP), “We are very pleased to be AllianzGI has provided a standard monthly reporting on behalf of Allianz Insurance Companies, signed partnering with BASF on this offering for sustainable investments to its clients since 02 an agreement to purchase a 25.2% stake in the 2020. Depending on the investment strategy, clients Sustainable investing Hollandse Kust Zuid (HKZ) windfarm. This was opportunity. BASF is providing can view their sustainable investments compared to 03 the first offshore wind and first equity renewables a long-term fixed-price power- the product benchmark. Our reporting contains carbon Active stewardship investment of Allianz in the Netherlands. Once purchasing agreement for the emissions information that enables investors to see fully operational, HKZ will be the largest offshore project which will ensure a strong the carbon footprint of their portfolios in absolute and 04 windfarm in the world with 140 wind turbines and relative terms as well as an overview of the engagement AllianzGI as a sustainable business a total installed capacity of 1.5GW. The project is contracted revenue stream for activities relevant to the fund. located in the North Sea and is expected to become many years to come.” 05 fully operational in 2023. As agreed in a long-term To respond to the rising client demand for sustainability Appendix fixed-price corporate power-purchasing agreement, Andrew Cox information and reporting, we are enhancing our German chemical company BASF will receive Co-Head of Infrastructure at reporting capabilities to support evolving regulatory most of the power originating from the overall Allianz Capital Partners. requirements. From the end of 2022, we will include 49.5% share of Allianz and BASF in HKZ. Allianz’s additional sustainability information such as ESG ratings equity investments in the renewable energy sector, as well as EU taxonomy considerations. With the revamp managed by ACP, currently amount to over 100 of our reporting infrastructure, institutional clients wind parks and solar farms across Europe and the and distributors will be able to access all relevant US, generating around 5TWh in clean energy for sustainable information digitally via a dedicated client more than two million people a year. reporting portal. The application will allow continuous enhancements as sustainability reporting requirements 5TWh and client needs evolve. clean energy generated for more than Our clients’ stewardship and investment principles are the basis for how we manage their portfolios, and we 2 million people evolve our processes and client reporting in line with per year their needs. For example, in our conversations with some of our large clients, we observed that they would like to receive more granular reporting of engagement conversations with companies held in portfolios. As of 2022, we will provide this detail during regular review meetings.
This is a modal window.
01 Introduction 02 Sustainable investing 02.1 Building our approach to sustainable investing 02.2 Sustainability research and data and analytics – our strong foundation 02.3 Sustainability risk management 02.4 Sustainable investing categories 03 Active stewardship 04 AllianzGI as a sustainable business 05 Appendix AllianzGI has been at the forefront 1 of responsible investing since the EUR 303 billion >100 total assets under management mutual funds converted to a launch of our first sustainable in ESG and sustainable investments sustainable-focused investment investing portfolio in 1999. as at 31 December 2021 approach in 2021 Building on a strong foundation (45% of total assets under management) in environmentally and socially responsible investment (SRI), we aim to become a shaper of sustainable investing solutions across public and private markets – leading clients and companies on an inclusive transition pathway to a better future. 1 This figure includes EUR 156 billion of integrated ESG assets that are not considered sustainable according to EU Sustainable Finance Disclosure Regulation. 02 Sustainable investing
This is a modal window.
01 02.1 Building our approach to sustainable investing Principle 2 Introduction 02 Sustainable investing 02.1 Building our approach to Our proprietary best-in-class model Key milestones in our sustainable investing journey sustainable investing and in-depth research have helped 02.2 Sustainability research and 1999 data and analytics – our strong to establish us as a major player in Launched our foundation sustainability strategies. Drawing on our first sustainable Looking ahead to 2022 02.3 Sustainability risk management expertise and track record, we focus investing strategy. 02.4 Sustainable investing categories 2007 October 2021 on designing pathways for our clients, Were among the first 50 Joined the One Planet We will continue to innovate around our sustainable 03 wider stakeholders and the companies Asset Managers (OPAM) investing capabilities and engagement strategies Active stewardship asset managers to sign the initiative, which supports in which we invest to help advance Principles for Responsible the One Planet Sovereign with the aim of increasing our sustainable assets 04 their sustainability journeys. Investment (PRI). Wealth Funds (OPSWF) to under management. Our plans for 2022 include: AllianzGI as a sustainable business 2015 tackle the challenges of • Actively growing and enhancing our existing As more information on companies’ environmental, Launched a green bond climate change. sustainable strategies while building new 05 social and governance (ESG) practices has become July 2021 Appendix strategy ahead of the Paris approaches to create added value. available, we have refined our ESG ratings model Agreement, and were the Announced our firm-wide and produced a body of proprietary sector, thematic first asset manager to exclusion policy, which • Setting carbon objectives and scope for our and stock-specific research that is available for our back the private investment includes a dedicated Net Zero Asset Managers initiative interim target investment professionals. This has led to a high level and venture-capital sector coal policy and an to help meet our net-zero 2050 commitment. of ESG awareness within the firm and a culture of close in Africa. enhanced policy on • Exploring new ways to monitor and report collaboration between sustainability analysts and 2020 controversial weapons. on impact. portfolio managers. Launched an ambitious March 2021 We offer a broad range of sustainable investment programme to strengthen • Co-developing customised investment solutions Launched a “Climate to match our clients’ investment objectives. strategies to meet various client needs and objectives, our sustainability Engagement with and we continue to evolve our proposition. As a baseline, value proposition. Outcome” investment • Reviewing and refining our firmwide and all our strategies incorporate active stewardship and 2021 strategy, where we sustainable minimum-exclusion policies. an ESG risk assessment. This means that our portfolio Expanded and engage with the top managers have full transparency on E, S and G scores strategically reshaped emitters of a portfolio • Taking an even more activist approach and principal adverse impacts such as CO emissions, our sustainability team to reduce emissions to engagement. 2 without constraining water use, etc, for each holding in a portfolio and under the leadership the investment universe. on aggregate. of Matt Christensen, Head of Sustainable March 2021 and Impact Investing. Joined the Net Zero Asset Managers initiative and committed to set decarbonisation targets for all funds where we have discretion, and to work with our clients to support them in their net- zero objectives.
01 02.1 Building our approach to sustainable investing continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to A clearer definition of sustainable investments sustainable investing Our sustainable investing solutions In 2021, we reviewed our definition of sustainable Assets under management 02.2 Sustainability research and We categorise our strategies into three different types, investments to follow the rules set by EU Sustainable data and analytics – our strong depending on clients’ sustainability objectives: Finance Disclosure Regulation (SFDR)1 and applied Sustainable foundation 02.3 Sustainability risk management ESG risk-focused (EUR 156bn/23% of total AuM): this to our funds globally. product categories2 02.4 Sustainable investing categories Strategies incorporate material ESG risk considerations Under the revised definition, we consider a strategy EUR 147bn into investment analysis without constraining the “sustainable” when it meets one of the following criteria: (22%) 03 investment universe. This category includes our EUR 673bn Active stewardship “integrated ESG” investment approach.* 1. Promotes environmental or social characteristics AuM (“light green” products, ie, labelled under Article 8 ES risocused 04 See page 30 of the SFDR). AllianzGI as a sustainable business EUR 16bn Sustainability-focused (EUR 137bn/20.4%): These 2. Has sustainable investment as its objective to (23%) 05 strategies have specific sustainability objectives and contribute to environmental and/or social objectives Appendix values, and they apply sustainable minimum exclusion positively, without doing significant harm and 1% ES risassessed criteria. This category includes our “sustainable and following good governance practices (“dark green” Portfolio and individual security level responsible investment (SRI) best-in-class” and “Climate products, ie, labelled under Article 9 of the SFDR). analysis applied across all assets, Engagement with Outcome” investment approaches. Our three product categories help provide transparency providing transparency on ESG risks on the SFDR characteristics of our products: and principal adverse impacts (PAI) See page 31 Impact-focused (EUR 9.5bn/1.4%): These strategies ESG risk-focused products are classified as Article 6 aim to achieve measurable sustainable outcomes across only funds and not considered as sustainable, as they do topics such as energy and the priorities set out in the not promote or target any kind of sustainability aspects UN SDGs. This category includes our “private market in the investment process according to EU SFDR. impact” and “SDG-aligned” investment approaches. Sustainability-focused products aim at meeting the See page 33 requirements of Article 8. Impact-focused products generally aim at meeting the requirements of Article 9. 1 Sustainable Finance Disclosure Regulation (SFDR) (Regulation (EU) 2019/2088). 2 Includes sustainability-focused and impact-focused strategies. * ESG risk-focused category (integrated ESG investment approach) is not considered sustainable according to EU Sustainable Finance Disclosure Regulation.
01 02.1 Building our approach to sustainable investing continued Principle 7 Introduction 02 Sustainable investing 02.1 B uilding our approach to In detail: our sustainable investing solutions sustainable investing 02.2 S ustainability research and Sustainable product categories data and analytics – our strong foundation 02.3 S ustainability risk management 02.4 Sustainable investing categories 03 ESG risk-focused Sustainability-focused Impact-focused Active stewardship 04 Objectives Objectives Objectives AllianzGI as a sustainable business Financial returns and material E, S and G Financial returns and sustainability objectives Financial returns and measurable risk considerations and values sustainable outcomes 05 Strategies Sustainable investing strategies Sustainable investing strategies Appendix Integrated ESG SRI best-in-class Impact Climate Engagement with Outcome SDG-aligned 1 Not sustainable (Article 6 only) Sustainable according to Article 8 Sustainable according to Article 9 100% ESG risk assessment: E, S and G consideration and analysis 100% active stewardship: company engagement and proxy voting 1 ESG risk-focused category (integrated ESG investment approach) is not considered sustainable according to EU Sustainable Finance Disclosure Regulation.
01 02.2 Sustainability research and data and analytics Principle 7 Introduction –our strong foundation 02 Sustainable investing 02.1 Building our approach to Our dedicated and experienced Three interconnecting research pillars discussion, form our view and articulate it to our portfolio sustainable investing Sustainability Research team is a entities, clients and other stakeholders. A full selection of 02.2 Sustainability research and our thematic research is available on our website. data and analytics – our strong cornerstone of AllianzGI’s active foundation investment approach on sustainability Company Sector research 02.3 Sustainability risk management topics. The team conducts proprietary research Sustainability issues differ by sector, and understanding 02.4 Sustainable investing categories the key considerations and factors is central to our research on sustainability issues and company assessments. This analysis flows into our 03 helps to translate them into impactful sector frameworks, allowing us to identify the sectors Active stewardship most impacted by relevant developments. For example, investment insights that are shared when assessing the impact of carbon emissions at a 04 with all investment professionals Differentiating global level, we identified oil and gas as one of the most AllianzGI as a sustainable business insights via our collaboration platform. Thematic Sector exposed sectors. As a result, we analysed and defined 05 research research criteria that can be used at the company level to assess Appendix The team formulates views, which are shared internally energy transition strategy (eg, whether the company and externally, covering the three interconnecting pillars: has a decarbonisation policy). thematic, sector and company research. These three pillars are closely linked, and an iterative process ensures Another important outcome of sector research is the that analysis in one pillar informs the others, evolving the identification of evolving data and KPIs, and the ways breadth and depth of our understanding of companies’ in which they can be incorporated into our proprietary sustainability profiles – and how to measure and engage Thematic research assessment systems. This includes sector-specific these companies. Our thematic research focuses on three strategic weightings of sustainability domains and selected sustainability themes – climate change, planetary specific factors within these domains. boundaries and inclusive capitalism, which are explained Company research on page 9 – to create a better understanding of how to Our company analysis comprises a proprietary rating consider investing in these themes. and qualitative research. With the context provided Through these themes, and the sub-themes within them, by thematic and sector research, we focus on the most we discuss the breadth and depth of related sustainability relevant and, in some cases, controversial factors to factors, including opportunities and risks. capture the broadest possible view of a company’s sustainability profile. In 2021, we completed in-depth One example is our introductory paper on climate sustainability analysis of over 300 entities. This analysis change, published in 2021, in which we discuss the helps frame specific and focused engagement with different, complex and, in some cases, misunderstood companies. One example involved a utilities company elements of the notion of net zero. Its purpose was to that may have been inadequately consulting and explore in detail the various terms and definitions used engaging with the indigenous communities that lived by stakeholders in relation to climate strategies, how nearby. After three years of engagement with the best to assess alignment with the Paris Agreement company, it put in place tangible efforts to mitigate its and how to identify areas where we can develop social impacts. Over time, this has translated into an analysis and engagement. In 2021, we started to improvement in the company’s profile and rating. produce research papers on specific issues to stimulate
01 02.2 Sustainability research and data and analytics – our strong foundation continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to sustainable investing 300 Shaping pathways for a sustainable future 02.2 Sustainability research and sustainability analyses performed data and analytics – our strong on companies worldwide Sharing our thematic research and engagement foundation 02.3 Sustainability risk management 02.4 Sustainable investing categories 10 Research papers published in the past year include: 3. Carbon offsets: debate to define role 03 third-party data providers in net zero Active stewardship 1. A re all net-zero goals created equal? The race is on for companies to declare their Use of carbon offsets sparked fierce debate between 04 10,000+ commitments to achieve net-zero emissions, policymakers and campaigners during COP26. Such AllianzGI as a sustainable business as outlined in the Paris Agreement. But given discussion is vital to help fix some of the perceived companies/178 countries rated by the various inconsistencies in how the phrase is flaws in a tool that will have a role to play in the drive 05 proprietary sustainability methodology for net zero. Appendix understood, what does “net zero” really mean? And how should progress towards this goal Read more 3 be measured? research papers published Read more 2. Beyond climate: it's time for investors to protect biodiversity The biodiversity crisis is moving out of the shadow of climate change, with which it is closely interlinked. It is vital to integrate biodiversity into investment strategies by defining the concept, the extent of biodiversity loss, associated challenges and the role investors can play in protecting and promoting the world’s natural capital. Read more
This is a modal window.
01 02.2 Sustainability research and data and analytics – our strong foundation continued Principles 7 8 Introduction 02 Sustainable investing 02.1 B uilding our approach to Ensuring robust data and methodology How we select and monitor data providers Using ESG data in methodologies sustainable investing The Sustainability Methodologies and Analytics team Our Sustainability and Impact Investing team selects the and analytics 02.2 Sustainability research and oversees AllianzGI’s ESG integration, SRI scoring third-party providers we partner with through a robust Our core competency is to develop methodologies data and analytics – our strong methodology and development of the analytics Request for Proposal (RfP) process, which is applied foundation and analytics based on the overall ESG dataset to 02.3 Sustainability risk management dataset for climate strategy, KPI target setting and to teams across AllianzGI. Data origin, methodology which we have access. This process begins with various 02.4 S ustainable investing categories SDG measurement. (qualitative and/or quantitative), raw data points, issuer methodologies to assess ESG key characteristics of ESG data is the raw material for any sustainability- coverage, resources in place, expertise, granularity issuers – both corporates and sovereigns. 03 informed investment decision. We have access to multiple of research, approach, IT support, client support, It also includes climate analytics to measure the impact Active stewardship third-party providers and a huge amount of data relating and consistency/quality of data feed are all assessed of climate change or to monitor the Paris-aligned to a global universe of companies. But third-party and tested during RfPs. commitment of a specific corporate. Over time, the 04 provider data alone is not sufficient to assess a company’s Data is sourced from providers directly into our internal AllianzGI as a sustainable business improvement of corporate disclosure should help to sustainability profile. We also use differentiable, material cloud-based datalake in line with AllianzGI’s data strategy. design innovative proprietary frameworks for evaluating 05 information on ESG premia that we harvest through our We use technology such as application programming sustainability risks and opportunities. Appendix own investment research processes. interface (API) and secure file transfer protocol (SFTP) Our strategy over the long term is to develop and use when not made available by providers, allowing close our own proprietary research as the primary driver of monitoring and a smooth and constant update of data ESG insights and investment decision-making. This will points. Controls apply to data flows and their evolution be made possible by the use of new AI technologies over time (coverage, expected values, etc) to track and alternative data sources to expand the range of potential issues upstream in our data supply chain. available data and provide new perspectives, as well as At AllianzGI, we continuously monitor the quality of provide smarter analytics and real-time signals relating our key service providers. There are either service level to company behaviours. agreements or operating memoranda in place with It is our goal to leverage ESG data to implement all of our key service providers. Depending on the innovative sustainable investment approaches. Over the nature of the service, business owners may receive course of 2021, we developed a new key performance regular information from service providers to inform indicator (KPI) approach which targets measurable, on the quality of the services (eg, standard KPIs and monitored and reported KPIs to track ESG results that other information). are significant enough to drive sustainability in the In addition, the independent Risk Management function investment process of a portfolio. The new approach will reviews the monitoring procedures of key service provider be implemented into selected portfolios in the course relationships implemented by the respective business of 2022. owner in line with AllianzGI’s key vendor and outsourcing provider policy. Please refer to page 51 for monitoring of our proxy voting process and vendors.
01 02.2 Sustainability research and data and analytics – our strong foundation continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to sustainable investing Shaping pathways for a sustainable future 02.2 Sustainability research and Looking ahead to 2022 data and analytics – our strong Increasing collaboration and knowledge-sharing foundation 02.3 Sustainability risk management 02.4 Sustainable investing categories ESG data and methodologies need a proper interface In 2021, we established a new Sustainability to enable credible firmwide integration of ESG with 03 Methodologies and Analytics Working Group to efficient processing of proprietary models, high Active stewardship foster collaboration across the investment function democratisation of sustainability data, and consistent by increasing interaction between portfolio embedding of ESG data in our investment processes. 04 managers, and increasing transparency on ESG In 2022, we will develop our Sustainability Insights AllianzGI as a sustainable business data-related topics. The working group will help Engine tool, SusIE. The digital platform will use 05 the Sustainability Methodologies and Analytics state-of-the-art technology to facilitate mainstream Appendix team communicate and align interests on new access to a range of ESG data in one place for all sustainability approaches, methodologies and our investment experts, distribution colleagues, risk frameworks for all asset classes. The working group management teams and other stakeholders. SusIE meets monthly with representatives from equities, will be a key enabler of active investment decisions fixed income, multi asset and private markets along on sustainability across all asset classes, feeding with guests from risklab, Sustainability Research, all front-office tools with consistent ESG data. This Product Specialists, IT, Reporting, etc. The working will contribute to our differentiation, leveraging our group is part of our integration strategy, sharing expertise via a powerful proprietary engine that best practices and experience relating to ESG delivers added value to our clients. providers, providing updates on ESG data and systems, and discussing client feedback.
This is a modal window.
01 02.3 Sustainability risk management Principles 4 7 Introduction 02 Sustainable investing 02.1 Building our approach to ESG risk-assessed In line with European regulation, AllianzGI considers sustainable investing AllianzGI ensures that we consider sustainability risks sustainability risks and PAIs of prospective and 02.2 Sustainability research and in our investment processes across all the assets we active investments. data and analytics – our strong manage globally. All our investment strategies are ESG foundation • For publicly listed asset classes we have implemented 02.3 Sustainability risk management risk-assessed. This enables investment teams to monitor a tool – the ESG Hub – to systematically monitor and 02.4 Sustainable investing categories ESG risks as part of the investment process, although assess sustainability risks (see page 30). they do not necessarily actively incorporate ESG risks • For private markets asset classes, ESG risks are 03 and opportunities into their investment decisions. considered throughout the investment process and Active stewardship Portfolio and individual security level analysis is applied ongoing asset management activities. In many cases, 04 across all assets, providing transparency on ESG risks they are specifically screened along sustainability-risk AllianzGI as a sustainable business and principal adverse impacts (PAIs). guidelines, or using minimum-exclusion lists as defined Sustainability risk factors may materialise along any by Allianz’s ESG Risk Framework. 05 of the three dimensions of ESG investing. We consider Further detail is given in our Sustainability Risk Appendix sustainability risks to be potential drivers of financial Management Policy Statement and Principal Adverse risk factors in investments, such as market price risk, Impact Statement. credit risk, liquidity risk and operational risk. We follow the EU SFDR definition of sustainability factors and Read more sustainability risks: • Sustainability factors: Environmental, social and employee matters, respect for human rights, anti- corruption and anti-bribery matters. • Sustainability risks: Environmental, social or governance risk factors that, if they occur, could cause an actual or a potential material negative impact on the value of the investment.
01 02.4 Sustainable investing categories Principles 4 7 Introduction 02 Sustainable investing 02.1 B uilding our approach to 02.4.1 ESG risk-focused Investment teams are required to explain the rationale The ESG Hub also enables portfolio managers to sustainable investing for holding poorly rated companies and are encouraged download a full list of all portfolio holdings, including 1 02.2 S ustainability research and Our ESG risk-focused portfolios aim to incorporate to use engagement to better understand the key all relevant ESG data points, into an Excel spreadsheet data and analytics – our strong material ESG risk considerations into our investment elements of a company’s ESG profile and, as needed, to to perform further quantitative or qualitative analysis. foundation process across all asset classes to seek a better risk/ identify areas for improvement. External providers’ views 02.3 Sustainability risk management return profile without restricting the investment and ratings can be questioned by our investment teams. The data in the ESG Hub is updated quarterly and past 02.4 S ustainable investing categories universe. Integrated ESG is our primary strategy within Our sustainability research and stewardship analysts reports remain accessible so that portfolio managers can this category. may also undertake detailed analysis of top-down and track how the sustainability risk profile of the portfolio 03 bottom-up risks: and single indicators within it have evolved over time. Active stewardship Central to our fiduciary responsibilities, integrated ESG The investment process mentioned above applies across applies a holistic lens to identify material ESG risks and • Top-down risks are broad mega-risks to which issuers listed asset classes globally. 04 opportunities when we invest. Understanding these are exposed, such as climate change, water risk, AllianzGI as a sustainable business impacts is vital to inform investment decisions that population growth and ageing societies. deliver long-term performance for clients. 05 • Bottom-up risks are generally individual ESG risk Looking ahead to 2022 Appendix For listed asset class portfolios applying integrated ESG, factors, such as how well a company anticipates risks portfolio teams use an analytical framework to manage and adjusts its business model based on ESG factors tail risks and/or weakness in a company’s ESG profile. that could have an impact on its performance. Portfolio managers are responsible for monitoring We observe growing expectations from clients, financially material ESG risks for each portfolio holding. All research, comments and conclusions are documented distributors, market participants and regulators on They question potential asset holdings with low ESG on our global research platform and can be viewed at ESG oversight, even for portfolios not categorised as ratings and contribute to internal debate – facilitated by the stock and strategy levels. This creates a high degree sustainable investments. In response, we continually our cloud-based research platform – about companies’ of transparency internally and, on request, to clients. enhance our ESG risk-focused product offerings to ESG risks. This internal crowdsourcing ensures It also provides portfolio managers with an easy way to fulfil clients’ financial goals of better risk-adjusted experienced portfolio managers and sustainability monitor ESG risk in their portfolios. returns, and we aim to market them to a broader analysts contribute their views rather than relying solely With our new Sustainability Risk Management Policy audience. Examples of such efforts include: on external ESG ratings and third-party methodologies Statement, launched in February 2021, we implemented • Continuous review of our sustainability risk and judgments. Our portfolio managers understand a new ESG Hub to systematically monitor and assess management process and our Sustainability Risk ESG risk and can invest in companies with higher ESG sustainability risks. This tool is accessible to all portfolio Management Policy Statement at least annually, risks where appropriate. When a portfolio team sees a managers and enables them to find reports on the or if material changes to the regulatory or market compelling opportunity to invest in a company despite sustainability risk profile of each of their portfolios. environment occur that may require adjustments. an acknowledged ESG risk, they must document their thinking around risk and return in our system. The reports give portfolio managers additional • A refined proprietary sustainability research and transparency by providing a view of the overall portfolio’s scoring model. sustainability risk profile, potential ESG pillar or sector concentration risks, details of a portfolio’s PAIs, and the • Sustainability Insights Engine, SusIE, tool for individual holdings from which tail risks derive. portfolio managers to provide additional ESG information at the issuer level from various sources available. 1 ESG risk-focused category (including Integrated ESG investment approach) is not considered sustainable according to EU Sustainable Finance Disclosure Regulation.
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 B uilding our approach to ESG in private markets 02.4.2 Sustainability-focused sustainable investing Private markets investing can act as an important 02.2 S ustainability research and lever for sustainable change. It is well suited for Looking ahead to 2022 Our sustainability-focused product offering aims to data and analytics – our strong integrating ESG risk analysis given the detailed achieve financial returns for clients while following foundation sustainability objectives and values. It is essential that 02.3 Sustainability risk management information received during due diligence phases our investment approaches in this category align with 02.4 S ustainable investing categories and the opportunity, where possible, to influence the In 2022, we will introduce an enhanced level of investors’ values. Products following this approach apply terms of the investment and improve ESG practices ESG oversight. ESG analysis and assessment is an SRI best-in-class (SRI BIC) or a Climate Engagement 03 after entering into the investment. We act directly, or truly embedded in the investment process and with Outcome (CEWO) investment approach. Active stewardship by leveraging our relationships with asset managers the relevant investment committee responsible in our indirect strategies. Private markets also provide for ensuring quality ESG integration on a deal- SRI Best in Class 04 the ability to focus on investing in real economies, to by-deal basis. Enhanced oversight will ensure The SRI BIC approach encompasses strategies that seek AllianzGI as a sustainable business identify and incubate important themes, and to play continued monitoring of ESG risks, consideration returns measured in financial as well as social and/or a collaborative role in engaging with companies on of changes in private markets portfolios and a environmental terms. Underlying analysis applies both 05 sustainability targets. requirement that high ESG-risk deals be further financially material and non-material ESG considerations. Appendix considered by an independent group, including Our private markets platform takes a systematic The approach identifies sustainability leaders in their approach to integrating ESG across the entire sustainability experts. respective sectors based on AllianzGI’s proprietary investment process – from sourcing and due diligence As a private markets investor, we engage and rating methodology, which is applied to sovereigns, through to monitoring and engagement. This ensures steward the assets and funds we invest in governments, companies, agencies and supranationals. that sustainability risks are identified and considered in through the levers of influence specific to each Companies that demonstrate a clear upwards trend in every investment decision, and that steps are taken to strategy. We take this role seriously and look their ESG profile may also be selected. The approach is mitigate them. to push the market towards best standards, geared towards providing improved risk-adjusted returns leveraging and inputting into industry bodies and allows for a decrease in reputational risk due to its such as the ILPA (Institutional Limited Partners selectivity. In addition to the previously mentioned criteria, Association), Institutional Limited Partners we apply AllianzGI’s sustainable minimum-exclusion list Association (ILPA), Longterm Infrastructure and a human rights filter that can trigger divestment. We Investors Association (LTIIA), International also offer strategies that apply additional filters aligned Project Finance Association (IPFA) and the with specific client values. Private Placement Investors Association (PPiA). The proprietary ESG rating methodology applied is based on four factors: Corporate governance: Strong corporate governance helps foster long-term investment, financial stability and business integrity – supporting stronger growth and encouraging greater inclusivity in society. We assess corporate issuers on their ability to organise their internal structure to improve risk management. This includes evaluating management or supervisory board composition, board independence and remuneration transparency. We analyse the audit and control mechanisms in place to prevent abuse and reduce the
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 B uilding our approach to risks under review. Finally, we analyse shareholder issuers are assessed based on a proprietary emerging- sustainable investing rights and anti-takeover measures. For sovereign-bond markets ESG framework that screens out the bottom 02.2 S ustainability research and issuers, we evaluate the systems used to prevent and 10% of countries on the E, S and G pillars. Looking ahead to 2022 data and analytics – our strong fight corruption, the stability of political structures and foundation government capacity to introduce necessary reforms. Climate Engagement with Outcome (CEWO) 02.3 Sustainability risk management The CEWO approach was first established to engage 02.4 S ustainable investing categories Environment: We assess issuers’ direct and indirect with high-emitting companies with regard to greenhouse We plan to significantly evolve our sustainability- environmental impacts and risks and their approach gas (GHG) emissions (Scopes 1 and 2). It enables us to focused product offering in 2022. Our clients want 03 to environmental responsibility, along with their understand the climate pathway of these companies transparency and tangible ESG results, and we Active stewardship development of environmental solutions. Our analysis and to identify credible yet ambitious climate goals that have developed a new KPI-based approach to of sovereigns assesses measures taken to address the company aims to achieve over a specified timeframe. address this demand. Products following the new 04 a comprehensive range of environmental issues. The approach leverages AllianzGI’s strong stewardship approach will aim to outperform a benchmark AllianzGI as a sustainable business A country’s political and legal framework are key based on sustainability KPIs while meeting elements of our assessment. track record. To date, the CEWO approach encompasses their risk/return objectives by following a fund 05 203 company engagements across 48 portfolios which strategy. The KPI-based approach carries three Appendix Social: We review the extent of issuers’ workplace health amount to EUR 51.9 billion in assets under management. unique characteristics: it is based on high-quality and safety, dialogue with employees and relationships Within the CEWO approach, the top 10 absolute GHG ESG data; KPIs are measurable, monitored and with suppliers. We consider general social policy when emitters per CEWO strategy are identified. Engagement reported on; and the approach is committed to its assessing sovereigns with a focus on topics such as letters are sent to these identified companies, allowing sustainability KPI alpha. This alpha describes the healthcare, education, the role played by women in civil our engagement team to collect insights by means of outperformance of the fund on the selected KPI society and the infrastructure available to provide access a questionnaire before providing details of AllianzGI’s compared to its benchmark. While the approach to basic needs. intention regarding the engagement. Companies that brings many unique advantages, it also carries Business behaviour: We assess the relationships fail to engage prompt a review for required divestment the general characteristics of all our sustainability- between issuers and their supply chains, customers by the respective portfolios at the end of the review cycle. focused products by applying our sustainable and communities along with the impact of their In addition to conducting engagement, CEWO portfolios minimum exclusions, stewardship and ESG risk- products and services on society, and their respect apply the same sustainable minimum exclusions as other screened approach. for market regulations and fair business practices. sustainable strategies. The implementation of the CEWO These criteria do not apply to sovereign-bond issuers. approach does not differ across listed asset classes but The general philosophy and process of applying the would not apply to sovereign bonds – only strategies or SRI BIC approach are identical across listed asset non-corporate bonds holdings. classes globally. Still, a more detailed process may As an active asset manager, AllianzGI constantly differ slightly depending on the asset class at hand, aims to improve and evolve its climate engagement. resulting in different portfolio compositions. Multi-asset Expanding data coverage at both company and products, for example, can be split into two categories: sector levels, coupled with strategic initiatives among sustainable advanced (where more than 70% of assets industry bodies, allows us to better scope, articulate need to be sustainable) and sustainable complete and measure a company’s relative climate profile and (where more than 90% of assets need to be sustainable). where and how we engage on the topic. The highest Equity portfolios use AllianzGI’s proprietary ESG ratings decarbonisation change is to be achieved through the to identify outperformers in each industry with regards highest-emitting companies and sectors, and much of to ESG performance. There is a tailored process for our climate engagement centres on these. certain fixed-income products where sovereign-bond
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to 02.4.3 Impact-focused financing gap of the SDGs – thus improving health innovation in economic systems requires substantial sustainable investing and education, reducing inequality, tackling systemic mobilisation of capital and effort. As public equity 02.2 Sustainability research and Our impact approaches are focused on enabling risks such as climate change and working to preserving struggles to meet the full list of characteristics of impact data and analytics – our strong clients to invest with both their financial objectives and oceans and forests.. investments, the SDGs create an avenue that enables foundation their sustainable goals in mind. We aim to support effective investment for environmental and social 02.3 Sustainability risk management those investors who want to see a positive change The greater quantification of impact returns can help outcomes in public markets. For the world, that means 02.4 Sustainable investing categories for the planet while generating a return. Our impact support financial returns and, as non-financial returns a larger pool of public capital that can now be used to investing approaches – in both public and private become an increasingly important factor, they could finance the transition towards positive change. Using 03 markets – provide solutions to do so. Impact investing help to drive returns for investors. The more that the the SDGs as a basis for opportunity-based sustainable Active stewardship contributes to material positive environmental and/ industry can quantify and qualify those non-financial investment strategies allows investors to focus on key or social outcomes that can be measured using KPIs returns, the more likely these will not only complement, environmental and social issues, backed by a globally 04 against specific goals that are often consistent with the but also support financial returns. recognised organisation with an independent and AllianzGI as a sustainable business United Nations Sustainable Development Goals (SDGs). Supporting the UN Sustainable objective view on societal challenges. 05 While investors have become increasingly aware of the Development Goals (SDGs) To better structure the investment universe, we have Appendix role their capital can play in addressing environmental Defined with the intention of mobilising global defined eight core themes out of these 17 broader and social concerns, the challenge has been to combine leadership and economies towards a more sustainable goals. This allows us to effectively focus our investments this with the need to deliver a financial return. Impact and equitable future, the UN SDGs have brought a on companies with outputs that actively contribute to investing offers an answer by providing a credible and substantial shift in the industry’s approach to sustainable attainment of the targeted outcomes. scalable pathway to balance a targeted measurable investing. While the regulatory and behavioural aspects and beneficial environmental and/or social impact of the SDGs are being addressed by public authorities, with a financial return. Impact investing has transitioned from the realm of Our SDG themes and the SDGs they support direct private-market investments into a significant and expanding market segment, with an increase in Social Inclusion Food Security available investment options. Investors can now gain exposure through fixed income, equities and real assets, as well as in private equity and venture capital Health (Innovation and Promotion) Clean Water investment vehicles. AllianzGI’s impact investments can be accessed through private markets (eg, private equity impact fund of funds) or public markets (eg, green bonds). Impact investing also extends to our Financial Inclusion Clean Land/Circular Economy blended finance approaches, where investment from institutions and philanthropic funds can be combined to create opportunities to generate impact, especially in Education Clean Air/Energy Transition emerging markets, which are de-risked for commercial investors. This helps to mobilise large-scale private capital for development in developing countries and See page 88 for more information on these SDGs 1 supports closing the estimated USD 2.5 trillion annual 1 https://www.oecd-ilibrary.org/sites/6ea613f4-en/index.html?itemId=/content/component/6ea613f4-en.
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to All of our SDG funds follow our thematic investment potential, are more resilient to macroeconomic and sustainable investing approach, built on a solid understanding of secular political volatility and benefit from regulatory tailwinds. The footprint/handprint concept 02.2 Sustainability research and drivers and the ability to identify companies with long- Our SDG funds address either a single sustainable core –investing in key enablers data and analytics – our strong term potential. These companies have greater growth theme, or several themes. Our listed impact approach uses a model grounded in foundation 02.3 Sustainability risk management the core principles of thematic investing, targeting the 02.4 Sustainable investing categories structural growth driven by economic and social shifts. The thematic view provides an alternative framework to 03 identify key enablers and beneficiaries of the change. Active stewardship Social Health Financial Education Food Clean Clean Clean Air/ Investors participate in the investments that society Inclusion (Innovation Inclusion Security Water Land/ Energy will commit to, which will in turn contribute towards the 04 and Circular Transition attainment of the SDGs. AllianzGI as a sustainable business Promotion) Economy Single theme A company’s footprint is a common measurement of the 05 capabilities impact on the environment and society resulting from Appendix its activities. Frequently measured footprint categories Global water include, for example, a company’s carbon footprint (the Food security amount of carbon dioxide emitted) or its water footprint (the fresh water consumed and/or polluted). Smart energy Traditional sustainable investment strategies typically Sustainable health focus on minimisation of the overall portfolio footprint. SDG-aligned investment strategies also take footprint Main theme into consideration, but go one step further by looking capabilities at a company’s overall potential impact on society Clean planet and environment beyond just its own operations. The aim is to invest in companies that contribute to the Positive change achievement of the SDGs. As key enablers of the SDGs, these companies’ innovations, products and services result in a much larger potential to facilitate change. Those companies ideally not only have a good footprint themselves, but also allow others to lower or minimise their footprint. The handprint describes this multiplier effect: key enablers not only manage their own footprint but have a potentially much larger contribution through their impact on others.
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to Impact-focused investing in public markets sustainable investing Shaping pathways for a sustainable future Green bonds 02.2 Sustainability research and data and analytics – our strong Investing in optimal solutions to clean water The channelling of capital flows towards projects foundation with measurable environmental benefits and tangible 02.3 Sustainability risk management positive impacts on energy transition marks a 02.4 Sustainable investing categories fundamental milestone in the transformational process The theme of clean water is closely aligned with and affect the final societal value generated by an of a global economy still largely dependent on finite 03 SDG 6 (Clean Water and Sanitation), a central goal investment. Each company involved in desalination resources, to a sustainable and clean-energy society. Active stewardship with a multitude of interactions with other SDGs, activity requires careful evaluation of its processes, In this context, green bonds are an important vehicle to facilitating the preservation and development of exposures and strategic initiatives – which a mobilise capital markets towards this green transition, 04 natural processes as well as enabling sustainable thematic investment approach can incorporate. as their use of proceeds is explicitly dedicated to projects AllianzGI as a sustainable business development and human wellbeing. with environmental benefits. 05 There were significant developments in 2021, as Our strategy relating to green bonds is to participate Appendix companies already had the technology necessary to in this mobilisation of capital markets towards the address water supply and quality issues. This means transition to a low-carbon society, natural capital the catalyst for growth is mainly capital expenditure preservation and adaptation to climate change. and, to a lesser extent, innovation. Water spending By using the green bond market segment, we favour is on the rise as governments and corporates the reallocation of investments through a lower carbon- have started to realise the need for urgent capital intensive economy, which is an important challenge for expenditure. The passing of the US Infrastructure the fight against climate change. Bill, which represents the largest investment in clean Our investment approach considers the structure of the drinking water in US history, is indicative of this bonds to focus on those aligned with the green bond increased recognition. principles defined by the International Capital Markets Our thematic approach to SDG-aligned investing Association (ICMA). The respect of those principles considers the interconnected nature of the goals (use of proceeds, internal process, management of and focuses on optimal solutions at a company- proceeds and reporting) is a prerequisite for a bond to specific level. For example, investing in desalination be considered a green bond. This evaluation is followed technology can support the achievement of targets by the analysis of the projects financed with the green within SDG 6 (Clean Water and Sanitation). In areas bond proceeds. To be eligible, these projects have to where freshwater resources are insufficient, be part of the list defined internally by AllianzGI based desalination may be the only solution that secures on research from the Climate Bonds Initiative (CBI), access to water. However, investors need to evaluate a world-class organisation that provides a science- the viability of the technology in conjunction with based evaluation of the impacts of many different types SDG 13 (Climate Action), which demands building of projects. The last step of our analysis is focused on the resilience to climate change. Rising sea levels may issuer’s approach regarding its transition to a business threaten water supplies derived from desalination. model aligned with the goal of the Paris Agreement. Such factors can have a direct and conflicting influence on decisions around desalination solutions
This is a modal window.
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to For example, AllianzGI invests in companies that have Scoring modules within the Impact Rating Framework For our blended products, where the strategy is sustainable investing specialised in developing large offshore windfarms, or in are adapted to reflect the impact thesis for different typically managed by AllianzGI in partnership with 02.2 Sustainability research and converting fossil-fuel powered power stations to run on asset classes and investment strategies (for example, a development finance institution (DFI) partner, the data and analytics – our strong biomass, or on other renewable energy materials/sources. debt/equity, direct/indirect investments), providing partner may apply their respective impact assessment foundation flexibility across our platform. frameworks in carrying out impact due diligence on 02.3 Sustainability risk management Impact investing in private markets potential opportunities. In these cases, we work closely 02.4 Sustainable investing categories The growing frequency of major environmental events The Framework takes into account two key components to ensure broad alignment of impact objectives and and social movements has raised awareness that of impact contribution: assessment frameworks, such that we are confident in 03 capital can – and should – play a role in addressing 1) The social and/or environmental impact generated our investments’ ability to deliver material impact under Active stewardship these issues. Our Private Markets Impact teams are by the enterprise/project; and these strategies. 04 committed to delivering tangible real-world impact 2) Investors’ contribution towards impact generation. Alongside implementing our impact approach (and as AllianzGI as a sustainable business through direct and indirect private equity and debt with all our private markets strategies), we fully assess investments, as well as blended-finance vehicles. These two components make up the Overall Impact and pay due attention to identifying and managing ESG 05 The introduction of the AllianzGI Impact framework in Contribution Rating of an investment, which is risks as part of the risk assessment, and we continue to Appendix 2021 ensures the investments made as part of these incorporated into investment decision-making, monitor these post-investment. strategies generate material and measurable net alongside financial performance. positive impact for our clients. This approach is aligned with recognised industry frameworks and standards, AllianzGI’s Impact Rating Framework such as the UN SDGs, the Impact Management Project (IMP) and Global Impact Investing Network’s Impact Reporting and Investment Standards (GIIN’s IRIS+). 1 Enterprise Impact Rating 2 Investor Contribution Rating Key components of our impact approach include: This component assesses This component assesses: a) Establishing impact objectives that target key the impact of the enterprise/ • Non-financial additionality societal challenges in line with the UN SDGs. portfolio that AllianzGI invests that AllianzGI and its in – either directly or indirectly partners1 bring to support b) Selecting investment opportunities with potential to via a fund manager. investees’ impact outcomes contribute significantly towards impact objectives, Our assessment of enterprise/ generation (eg, a project’s as assessed by AllianzGI’s Impact Rating Framework. portfolio impact is based on social and/or environmental c) Identifying, measuring and reporting core impact Impact Management Project’s impact) and impact capacity Impact KPIs over the life of the investment to demonstrate five dimensions of impact of investee). Contribution impact delivery – these are often aligned with the • Who • Financial additionality Rating SDGs and GIIN’s IRIS+. of AllianzGI as an investor d) Ongoing impact management via engagement with • What (eg, enabling increased the investee to enhance impact delivery. • How Much investments in undersupplied The Impact Rating Framework is aligned with IMP’s • Contribution financial markets/first time five dimensions of impact (Who, What, How Much, fund managers). Contribution and Risk) to enable the assessment of • Risk impact materiality in a consistent way. 1 Partners being Fund Managers in the cases of FoF investments and Development Finance Institutions of [XXX] investments
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 Building our approach to sustainable investing Shaping pathways for a sustainable future 02.2 Sustainability research and Looking ahead to 2022 data and analytics – our strong Providing emerging-market loans aligned with foundation 02.3 Sustainability risk management the Paris Agreement 02.4 Sustainable investing categories In 2022, we will begin to develop further private market impact strategies, applying 03 AllianzGI’s Impact Rating Framework to In November 2021, Allianz and AllianzGI Active stewardship ensure positive contributions to social and “In 2016, together with Allianz and IFC, environmental outcomes. announced an extension of the partnership we created a blueprint with the MCPP 04 with the International Finance Corporation (IFC), AllianzGI as a sustainable business In the future, we will be looking to invest in a member of the World Bank Group, under the on infrastructure. Today, we are proud global private equity and venture capital funds Managed Co-Lending Portfolio Program (MCPP). to extend that successful partnership 05 with impact strategies aiming to create social The new program, MCPP One Planet, is the world’s to enable the launch of MCPP One Appendix and/or environmental impact in OECD (focus) first cross-sector portfolio of emerging-markets and emerging markets (satellite), alongside loans aligned with the Paris Agreement. AllianzGI Planet. This is a great example of opportunistic co-investments. This landscape has is part of a new global platform for climate-smart effectively scaling private capital for seen increasingly developed impact approaches investment that will provide up to USD 3 billion sustainable investing as part of our in recent years, providing opportunities to invest to private enterprises in developing economies. in positive impact alongside attractive returns The investors’ contributions will be combined with Development Finance business.” and enhanced diversification, a necessity in these IFC’s own funds to scale up climate-responsible ongoing volatile times. financing in emerging markets. Deborah Zurkow Global Head of Investments, Allianz Global Investors Other offerings will look to provide tailor- The partnership with IFC underlines Allianz’s made debt to private-sector companies in leading investment expertise and clear commitment “MCPP One Planet will create a global OECD countries which are applying innovative to support the global transition to a low-carbon model for mobilisation of institutional solutions to pressing societal challenges. economy across markets as well as serving the Leveraging AllianzGI’s private debt experience customers’ interest. Our Development Finance team investor financing in support of the and underwriting standards, the financing will was instrumental in building the structure and will climate agenda for the most vulnerable incentivise a positive rate of change across manage the vehicle on behalf of investors. IFC will communities on the frontlines of four major themes: sustainability; physical originate and administer the loans on behalf of the and social infrastructure; food security; and vehicle in addition to providing a first-loss protection. climate change – in emerging and financial inclusion. Read the press release here developing economies.” Makhtar Diop IFC Managing Director
01 02.4 Sustainable investing categories continued Principle 7 Introduction 02 Sustainable investing 02.1 B uilding our approach to Introduction to blended finance sustainable investing Blended finance is a technique used to attract large- Blended finance approach: de-risking via blending 02.2 S ustainability research and scale commercial capital into emerging markets for data and analytics – our strong sustainable development. Blended finance tends to foundation Senior investors 02.3 Sustainability risk management include a combination of commercial or “private capital” 02.4 S ustainable investing categories at a senior position and development or “public capital” Private capital at a junior position. The junior capital absorbs certain Local impact by investing 03 risks within a portfolio of debt or equity investments alongside Development Active stewardship (e.g., credit losses, currency) and therefore provides as anchor investor alongside other Finance Institutions in risk mitigation to commercial investors. institutional investors First loss sustainable projects 04 protection AllianzGI as a sustainable business AllianzGI manages a number of blended Junior investors and companies. finance strategies. 05 Public capital Appendix Shaping pathways for a sustainable future Debt investments with positive impacts In 2021, one of our impact-focused strategies made need to comply with defined energy-efficiency minimum The team will actively engage with the asset to two debt investments, one of which involved a standards (eg, refurbishment needs to cause at least discuss the impact and raise awareness towards real estate company specialising in senior citizens’ 30% of energy-efficiency improvements). impact and improve the generated impact of the housing and assisted living real estate, providing On an annual basis the company will report to the company. The transaction supports the following care facilities to low-income elderly and disabled Impact Investment team on the impact of the assets SDGs: SDG 3 (Good Health and Well-Being); SDG people. The transaction provides the company funds financed. These will include (but not be limited to): 10 (Reduced Inequalities); and SDG 11 (Sustainable to finance investments to defined social purposes Cities and Communities). and environment objectives. • Total number of beds provided. “Social purposes” includes promoting access to essential • Implementation of energy-monitoring systems healthcare services for elderly or vulnerable people. The across properties to provide tools to control energy majority of the company’s property portfolio is operated and water consumption, and to improve the by municipalities or not-for-profit operators, resulting in efficient use of energy and water. affordable healthcare housing for low-income elderly • GHG and water utilisation intensity (in this case and disabled people. “Environmental objectives” means Scope 3). that new construction and/or renewals of buildings
01 As an active asset manager, Introduction we take our responsibility as a 02 steward of our clients’ assets very Sustainable investing seriously. We believe only through 03 close engagement with investee Active stewardship companies can we deliver the real- 03.1 Our engagement approach world change that is needed and 03.2 Engagement outcomes that our clients increasingly seek. by theme To maximise our impact, we pursue 03.3 Collaborative engagements 03.4 Escalation where initial a global approach to engagement engagement is not enough and proxy voting. 03.5 Influencing companies through proxy voting 03.6 Conflicts of interest 238 03.7 Industry engagement and commitments companies engaged in 04 27 AllianzGI as a sustainable business markets globally 05 Appendix 10,190 shareholder meetings participated in during 2021 We opposed 21% of all resolutions 03 Active stewardship
This is a modal window.
01 03.1 Our engagement approach Principles 7 9 Introduction 02 Sustainable investing As an active investment manager, Thematic approach: We also lead themed engagement How we go about engagement 03 projects. These are either linked to our three strategic Active stewardship we are committed to driving positive sustainability themes – climate change, planetary We use a broad range of engagement tools including 03.1 Our engagement approach change and believe that constructive boundaries and inclusive capitalism – or related to one-on-one or group meetings with chairpersons, board 03.2 Engagement outcomes engagement dialogue with investee governance themes within specific markets or more members, senior management, company secretaries, by theme broadly. We identify thematic engagement projects heads of specific company functions, as well as 03.3 Collaborative engagements companies is essential. based on topics that we deem to be important for our written correspondence. 03.4 E scalation where initial At the start of 2021, our approach was primarily based portfolio investments, for example energy transition or We believe it is important to differentiate between engagement is not enough on bottom-up identification of engagement targets, climate change. We prioritise them based on the size the normal research and monitoring meetings that we 03.5 I nfluencing companies through largely focusing on portfolio priorities and material of our holdings per market or portfolio, and also factor undertake as an active manager, and instances where proxy voting risks. Historically this approach was taken to ensure the in the priorities of our clients. We observe an increasing we actively seek to make an impact. The latter meetings 03.6 Conflicts of interest most meaningful integration of material risk factors in number of requests from clients for engagement, are, by default, classified and reported as engagement 03.7 Industry engagement our investment decision-making. Additionally, several in particular on topics such as climate and energy meetings. We expect that our overall stewardship and and commitments themes relating to governance and sustainability such transition. This has prompted us to make these topics influence is much broader than reflected in the numbers 04 as engaging with oil and gas majors (see page 43). a priority of our engagement programme in 2021 below, considering our work in industry bodies or AllianzGI as a sustainable business were identified as priorities for engagement. As the and beyond. conveying our stewardship stance to larger audiences year progressed, we transitioned our strategy towards We believe this two-pronged approach will allow us at industry events. 05 a greater emphasis on thematic analysis aligned with to achieve better balance between ESG risk reductions Through our Climate Engagement with Outcome Appendix our three-pillar approach focused on climate change, in our portfolios and leading clients and companies on (CEWO) programme (see page 32), we systematically planetary boundaries and inclusive capitalism (see an inclusive transition pathway to a sustainable future. reach out to target companies in writing to discuss section 03.2). This allows us to scale up the integration The approach also improves our ability to set out the scope and progress of their climate strategy. whilst ensuring systematic coherence across portfolios. engagement objectives clearly at the outset. In 2021, This programme is intended to achieve an ongoing The resulting engagements rest clearly on we developed a new engagement template to support evaluation of progress via questionnaires. In many two approaches: us with this change of approach and improve the efficiency cases (see figures on following page) these letters Risk-based approach: Our risk-based approach of recording engagements. The template was rolled were followed up by engagement conversations. focuses on the material ESG risks that we identify. out via a series of workshops within sustainability and To make engagement meetings impactful and productive, Targeting is closely related to the size of our exposure, investment teams. we frequently include relevant investment team members whether per market, fund or considering total value of While our preference is to engage investee companies in addition to members of the Sustainability Research and investment. The focus of engagements is determined confidentially, we are prepared to escalate engagement Stewardship team at AllianzGI. This means the company by considerations such as significant votes against activities publicly if we conclude that the confidential receives insights from all critical parts of our investment company management at past general meetings approach has gone as far as it can without delivering platform. Our investment views are influenced by the and sustainability issues that we identify as below progress, and that our engagement objective would be outcomes of engagements and are linked to the proxy market practice. Engagements can also be triggered best served by escalation see page 50. voting process, forming a consistent stewardship approach. by controversies connected to sustainability or All engagement results are shared on our collaborative governance. Engagement activities typically relate research and investment platform and thus can be to an investee company’s strategy, operational accessed globally. or financial performance, capital management, corporate governance and ESG risks and impacts.
01 03.1 Our engagement approach continued Principles 7 9 Introduction 02 Sustainable investing 03 How engagement has differed for funds, AllianzGI’s engagement in numbers Active stewardship assets or geographies Shaping pathways for a sustainable future In 2021, we engaged companies on 299 occasions in 03.1 Our engagement approach Our engagement activities are applicable to all Boosting funding for mostly virtual engagement meetings (2020: 303) and 03.2 Engagement outcomes our public market activities, comprising equity and covered 482 topics (2020: 491). We often engaged on by theme fixed-income strategies. Within fixed income, certain the SDGs in Uruguay more than one topic per company. 03.3 Collaborative engagements teams have developed more nuanced approaches In addition, we reached out to 203 companies under 03.4 E scalation where initial to embedding sustainability in their stewardship our CEWO approach. We engaged with 88% of engagement is not enough processes. These consider differences in investment We regularly engage Emerging Markets companies amounting to 95% of these companies’ 03.5 I nfluencing companies through strategies and time horizons, as well as the different sovereigns to discuss and encourage financing aggregate emissions, collecting information on climate proxy voting types of portfolio entities they hold (eg, listed, unlisted of SDGs. Typically, we do this via conference strategy, governance around the strategy and the full 03.6 Conflicts of interest subsidiary, sovereign, quasi-sovereign). For example, calls, participating in panels and organised scope of the decarbonisation pathway. As of year end, 03.7 Industry engagement our Emerging Markets Debt team follows a specific field visits. In 2021, due to the pandemic, 63% of companies had provided a response. While most and commitments engagement approach that rests on an integrated risk our engagement moved fully to virtual modes, of this was achieved through answers to very specific factor modelling framework to assess non-financial we held three conference calls (in May, July and questionnaires for each company, we completed 13 04 risks that may impair counterparty creditworthiness. specific engagement meetings related to this approach, AllianzGI as a sustainable business The team regularly runs meetings with sovereign issuers, October) and shared views on a conference where it raises ESG topics for engagement. This allows panel (March) with the Debt Management which are included in our engagement statistics. 05 us to better understand what may support or hinder Office (DMO) of Uruguay. Appendix the potential attainment of specific ESG outcomes We engaged on the country’s thematic bond in a certain sovereign. In this context, engagement issuance plans and on how to upgrade the also offers the opportunity to exercise a measure of country’s systems of budget expenditure tracking influence on a sovereign by raising important ESG and monitoring for the purpose of improved issues, indicating that our clients care about them, reporting under different types of thematic and clarifying the set of standards that we consider bond structures. In the course of our discussions, essential for investing in a certain issuer in our we shared experience we gained from other sustainability-focused portfolios. engagements, specifically with government bodies in Nigeria and Mexico. In those cases, with support from the United Development Program, the countries developed a system of budget expenditure tagging and tracking for similar purposes. On their environmental efforts more specifically, we also discussed Uruguay’s plan to develop hydrogen power capacity. Outcome: the DMO took on board the suggestions around peer experiences for budget expenditure tagging and tracking and indicated they would study their applicability to the Uruguayan Treasury set-up. For 2022 we plan to engage further on this topic and more broadly, on funding for the SDGs.
01 03.1 Our engagement approach continued Principles 7 9 Introduction 02 Sustainable investing 03 Engagement by geography Engagement by topic issues. In some instances where we did not see sufficient Active stewardship With our engagements, we target issuers globally Engagement activities covered a broad range of topics progress, or where we wanted to follow up on recent with a particular focus on Europe, the US and our (see chart). In 52% of cases, we spoke to companies on developments, we engaged more than once. We engaged 03.1 Our engagement approach major markets in Asia. The geographical distribution corporate governance, business conduct and transparency 18% of companies more than once during the year. 03.2 Engagement outcomes of engagement activities1 reflects the main markets issues, down slightly from 2020. Environmental by theme Outcomes achieved 03.3 Collaborative engagements we invest in and the size of individual holdings in strategy, risks and performance were covered by 22% We registered 28 stewardship outcomes where companies 03.4 E scalation where initial those markets, both assets under management and of engagements, up three percentage points on 2020. took steps that we had explicitly and specifically referenced engagement is not enough relative share of the holding. Our engagements in This reflects our stronger focus on climate-related topics during our engagement (2020: 23). Some cases involved 03.5 I nfluencing companies through 2021 spanned 238 companies in 27 markets globally in meetings and our CEWO outreach programme. multi-year engagement. Executive remuneration and proxy voting (2020: 224 companies in 29 markets). Around 9% of conversations focused on social topics and governance issues were the focus in about three quarters 03.6 Conflicts of interest risk management, often addressing pandemic-related of these cases. 03.7 Industry engagement and commitments Engagements per geography Engagements per topic Number of companies engaged, by topic 04 AllianzGI engaged 238 companies across 27 markets % AllianzGI as a sustainable business globally in 2021. Other Corporate 05 Capital management 2 3 3 governance 16 Appendix USA UK Germany Audit & accounting 5 19% 15% 14% Business conduct & culture 7 Environmental Transparency and disclosure 40 risks/impacts France Netherlands Switzerland Strategy/Business Model 8 Social risks/ Social risks/impacts impacts 10% 4% 4% Environmental risks/impacts 9 Corporate governance Strategy/ Italy China and Japan 22 Business model 3% Hong Kong 3% Transparency 10% and disclosure Engagements per industry Business conduct % of occasions & culture 1 Europe other Asia other Other Real estate 10% 5% 1% Telecoms 2 4 Audit & 1 Utilities 17 4 accounting Health 5 Capital 1 Cons discretionary 8 management Cons staples 16 Energy 9 Other 11 Materials Financials 9 Industrials 13 Tech 12 Percentages do not total 100 due to rounding. 1 The following statistics only comprise our engagement meetings and do not cover our CEWO outreach programme.
01 03.2 Engagement outcomes by theme Principles 7 9 Introduction 02 Sustainable investing In the following pages, we discuss engagement and is critical to decarbonising the firm’s primary energy mix. 03 related outcomes under our three strategic sustainability Through this engagement, we gained a good sense of Active stewardship themes – climate change, planetary boundaries and the level of accountability, transparency on lobbying, Stewardship Principles 03.1 Our engagement approach inclusive capitalism – as well as outcomes of our the executive incentive structure and its alignment with 03.2 Engagement outcomes governance-driven engagements. the firm’s decarbonisation journey. As a consequence of by theme the dialogue and evidence, AllianzGI supported the firm’s 03.3 Collaborative engagements Engagement topic: resolution on its climate strategy at its general meeting. In 2021 we launched our new publication series 03.4 Escalation where initial Climate change “Stewardship Principles” to outline the way we engagement is not enough Many of our discussions focus on climate risk Ongoing monitoring of progress is key to successful work with the companies in which we invest, 03.5 Influencing companies through assessments, exploring how companies are reflecting engagement outcomes. We will continue to track the to promote best corporate governance practice and proxy voting climate risk and the low-carbon transition in their company’s climate action and net-zero alignment. collectively work towards environmental and social 03.6 Conflicts of interest strategy, operations and product pipelines. In 2021, We will encourage the firm to work with established transformation. In this series, we share results of our 03.7 Industry engagement we engaged 88 companies in direct conversations initiatives developing dedicated sectoral frameworks themed engagements. The series will also suggest and commitments on environmental risks and impacts, including climate aligned to the Paris Agreement goal of limiting global the introduction of new governance concepts for change. Environmental issues continued to gain relative warming to 1.5°C. certain markets or industries, and analyse changing 04 market trends, such as linking climate strategy to AllianzGI as a sustainable business importance in our engagement activities, increasing 2. L inking engagement and Annual General Meeting voting. We think that such a series of publications is their share by another three percentage points to (AGM) vote for a high emitter a timely response to increasing demands from our 05 22% of all engagements in the past year. This reflects We held numerous discussions (bilaterally and clients and regulators alike, relating to all aspects Appendix the high priority that our clients place on decarbonising collectively) with a large international mining company. of governance as well as environmental and the economy, as well as the higher scrutiny of the The company is a large emitter and is held by a number social issues. In addition to our introductory piece sustainable use of resources by our portfolio companies. of our funds. Our discussions covered wider governance – “Achieving best practice through engagement” – 1. E ngaging oil and gas companies on the and environmental topics and specifically addressed we published: energy transition climate change issues ahead of the AGM vote on the Oil and gas majors: active stewardship Our increasingly thematic and focused approach company’s climate strategy. We engaged the company rather than divestment. to engagement targets organisations where the to get a deeper understanding of the challenges faced, implications can be most significant, such as oil its framework and future ambitions related to Scope 3 Read the paper here companies. We continued our engagement programme emissions. Following our discussion, the board chairman reached out to address some of our key concerns on Addressing executive pay in the with oil and gas majors and spoke with energy companies science-based targets and their roadmap for reduction US technology sector. on 27 occasions. We also published a position paper as targets, including Scope 3. We fed back considerations part of our new “Stewardship Principles” series. directly and via an Investor Forum co-ordinated group Read the paper here As an example, in the context of this programme, meeting to ensure our questions were clarified ahead we engaged one oil major on its climate strategy, of the vote. Ultimately, we were comfortable that the targets and progress to inform our votes at its AGM company was on the right track and making positive and ensure its climate targets were ambitious enough. steps. We supported the company at the AGM but The firm’s climate approach is supported by a net-zero reserved the right to withhold future support should ambition by 2050, including all emissions (Scopes 1, we feel insufficient progress was being made. 2 and 3) as well as short- and medium-term targets. The latter is important given that the current decade
01 03.2 Engagement outcomes by theme continued Principles 7 9 Introduction 02 Sustainable investing 3. Scrutinising progress on climate change strategies companies are taking action. Engagement within the the entire food supply chain. As an SFDR 9 fund, the 03 Our Climate Engagement with Outcome (CEWO) planetary boundaries theme was also strongly driven strategy actively engages with investee companies, Active stewardship by our sustainable strategies seeking to foster positive aiming to encourage sustainable value creation and 03.1 Our engagement approach programme allowed us to systematically screen and evaluate companies’ climate profiles, including related progress within a certain thematic focus. to increase contribution to SDGs 13 (Climate Action) 03.2 Engagement outcomes social and governance indicators. The feedback and 15 (Life on Land). One of the engagement topics by theme we collected, along with our discussions in related 1. A ssessing a French chemical company’s impact is regenerative agriculture. 03.3 Collaborative engagements engagement meetings, provided us with in-depth on biodiversity 03.4 E scalation where initial We conducted a pilot biodiversity impact assessment Regenerative agriculture refers to farming and grazing engagement is not enough insights into where companies stand when it comes using CDC biodiversity data, which highlighted one practices that can regenerate soil and organic matters 03.5 I nfluencing companies through to implementing climate strategies, the specificity chemical speciality company that appeared to be the and rebuild degraded soil biodiversity. As soil health proxy voting of pathways, how embedded climate is in strategy worst contributor to biodiversity loss in our portfolio. improves, fertiliser input should decrease, crop yields 03.6 Conflicts of interest planning, alignment of management interests, To understand the company’s position, we engaged could increase, and soils become more resilient against 03.7 Industry engagement dedicated capex to sustainable products and solutions, with the Chief Sustainability Officer and members of the pests and pathogens as well as climate change. and commitments and just transition. This allows us to assess the ambition Investor Relations team. We learned that the company Regenerative agriculture is a solution which could and credibility of the pathway and where best to is aware of its high negative biodiversity impact and contribute to solving the challenges of sustainable 04 engage in future to ensure its execution. While most has started to take action, including setting formalised agriculture and feeding a growing population. AllianzGI as a sustainable business of our engagements covered equity and fixed-income holdings, in 2021 16 engagements were dedicated to targets focused on reducing pollutants and emissions. In In 2021, we identified and engaged four companies 05 fixed-income funds only. addition, it joined Act4nature International, an alliance that we believe have the potential, willingness and Appendix which was created to accelerate concrete business ability to integrate regenerative agriculture into their For example, at the time of engagement, our holding in action to support the natural world. To join value chain. One of the companies, a US agricultural one US petrochemical firm was mainly via fixed-income the initiative, businesses must sign 10 common machinery manufacturer, formalised its strategy for asset classes, with much smaller investment through commitments including incorporating biodiversity capturing value from regenerative agriculture and equity holdings. The fixed-income team consequently into corporate strategy, biodiversity assessment soil carbon sequestration, as we encouraged it to do. became actively involved in the engagement, including and disclosure. The chemical company defined eight The company will focus first on developing hardware company calls. We wanted to understand whether the additional commitments based on the most significant and software to ensure farmers have a detailed company sought to actively shape the transition to a biodiversity impacts throughout its value chain. It is understanding of their soil health and are enabled lower-carbon business model and if it was using any collaborating with an expert organisation to scale up to monitor soil quality. It will then help farmers drive offsetting mechanisms. We also addressed its stance its capacity to address biodiversity issues. While we revenue from their efforts via a carbon trading platform. on lobbying. appreciate this approach, we expect the company to Engagement topic: make progress on its internal analysis and encourage 3. D eforestation: Putting pressure on all stakeholders Planetary boundaries it to increase transparency on its efforts. This is even more Deforestation accounts for around 11% of annual carbon important as standardised metrics and methodology to emissions globally as well as being a key driver for Biodiversity has become an increasingly prevalent theme capture biodiversity impact do not currently exist. We will biodiversity loss. In order to combat climate change and in our engagement, reflecting clients’ heightened interests follow the progress of the company closely. enhance biodiversity, we need to grow more forests, rather and rising demand for transparency around companies’ 2. E ngaging a US agricultural machinery than lose them. At the COP26 global climate summit biodiversity impact. For example, the new decree under manufacturer on regenerative agriculture in 2021, world leaders discussed a new agreement to Article 29 of the French law on Energy and Climate reverse forest loss and land degradation by 2030. requires financial institutions to disclose how they will One of our strategies is committed to invest a We actively urge investee companies, especially those identify, prioritise and manage climate and biodiversity minimum of 90% of its assets in companies which in agribusiness, to address deforestation in their value risks as of 2022. Our engagement on the topic in the offer products or solutions that actively contribute to chains where possible. Our deforestation engagement reporting year therefore sought to understand whether positive environmental and social outcomes along strategy has focused on putting significant pressure
01 03.2 Engagement outcomes by theme continued Principles 7 9 Introduction 02 Sustainable investing on agribusinesses as well as their customers, covering 1. Covid-related risks and implications We engaged with a Spanish utility company on a human 03 investment banks and shareholders. We believe this We continued to assess the implications of the rights controversy to understand the background and Active stewardship multi-pronged effort will achieve the greatest impact. determine whether the company is investable for our 03.1 Our engagement approach pandemic through engagement activities covering In 2021, we engaged twice with a US agriculture multiple industries and countries, thus continuing SRI funds. It was encouraging to see that the company 03.2 Engagement outcomes and food company on its potential supply-chain our engagement focus from 2020. We scrutinised has implemented a thorough mitigation plan and by theme chairpersons on board oversight in times of crisis consulted the affected community, related authorities 03.3 Collaborative engagements deforestation risk, especially soybeans sourced from and NGOs. Later, we observed that the controversy 03.4 E scalation where initial Brazil. We believe the company could gain value and their interaction with management and the from 100% deforestation-free products and urged appropriateness of company’s risk management was downgraded from severe to moderate by our data engagement is not enough systems and any amendments. We put particular provider. We also engaged with the data provider 03.5 I nfluencing companies through it to bring forward its target of achieving assured to be certain that the negative impact of the human proxy voting zero deforestation in its supply chain by 2025. As an focus on employee health and safety and the outcome of our engagements, the company started implications of the pandemic for staff turnover rights controversy had subsided. With this reassurance, 03.6 Conflicts of interest and talent retention. we removed our internal flag. We will follow up with the 03.7 Industry engagement monitoring soybeans indirectly acquired within the company to monitor progress on the investigation and and commitments Brazilian Cerrado. It now monitors 98% of all soy Encouragingly, many companies were well prepared mitigation measures. directly purchased from farms in the region. The to deal with the risks and uncertainties. For example, 04 company also began receiving third-party verification we engaged with a chemical company on board 3. Ensuring employee safety AllianzGI as a sustainable business for its “traceability to farm” scheme, offering another oversight in times of crisis and the appropriateness of We engaged with an Asian construction company 05 layer of assurance to give stakeholders confidence its risk management systems. We learned that there regarding employee safety. From our research, we found Appendix that its zero-deforestation policy is being enforced. has been frequent exchange between the board and that the company is lagging behind peers in adopting Engagement topic: the executive team including daily reports to the board. robust safety programmes with a quantified incident Inclusive capitalism The company reacted quickly worldwide and had only rate target. Given the criticality of employee safety, a few cases among employees working onsite. not least when assessing social risks, we started an There is a growing focus on the concept of “inclusive We expect investee companies not only to address engagement with the company. Its dominant position capitalism” as a more comprehensive approach to the immediate impacts of Covid-19 but to consider in the local market means it has an important potential economic growth to address the many inequalities strengthening risk management for the long term, signalling effect to its peers. that exist and overlap globally. Our engagements taking into account changes in supply chains or ways During the engagement meeting with the deputy under the theme of inclusive capitalism spanned a of working caused by the pandemic. For instance, general manager of the corporate finance department broad range of topics. we engaged with a sports and apparel company which and the Head of ESG, we raised our concerns and In 2021, we engaged companies with a particular continued to suffer disruption to its supply chain in received a commitment to address the issue within focus on how they manage their workforce. Topics Southeast Asia and encouraged it to think about long- the year. In December, we were encouraged to see included health and safety issues and the implications term solutions to strengthen supply-chain resilience. the company publish its sustainability roadmap, with of the pandemic on the workforce, client relationships 2. Engaging on human rights controversies employee safety a key principle. It set an ambitious goal and supply chains. In the case of shareholder proposals, of achieving a work-related injury rate of below six per we also reached out to understand companies’ We expect companies to respect human rights and 1,000 persons by 2025, promised to provide annual views on a specific voting item. We engaged with a make appropriate efforts to ensure there are no safety and health training to 100% of employees by number of companies on controversies, for example human rights violations in their own operations and 2025, and established a mechanism for subcontractor related to workers’ rights and human rights, to seek the wider value chain. We believe human rights are workers to report safety hazards. We will continue our more information on the situation and understand the basis of an inclusive and sustainable society. In engagement to track progress on implementation. the action being taken to remedy it. This also related our SRI strategy, we exclude companies that have to names held in our sustainable funds to confirm faced severe controversies, including convicted whether certain companies were investable or not. human rights violations.
01 03.2 Engagement outcomes by theme continued Principles 7 9 Introduction 02 Sustainable investing 03 4. Customer and product responsibility investee companies. During the year we continued our Active stewardship As part of our ongoing engagement with a US engagement focus on the following governance topics: Shaping pathways for a sustainable future 03.1 Our engagement approach technology company, we discussed its plans to enter • Board composition, quality and competence of Promoting executive 03.2 Engagement outcomes the emerging “buy now, pay later” (BNPL) area of board members. by theme finance. In our view, this move requires sensitivity to pay aligned with social issues, access to finance and responsible provision • Succession planning for directors and 03.3 Collaborative engagements of credit. While we are supportive of the company senior management. performance 03.4 Escalation where initial entering the new business area, it is important that it engagement is not enough manages the broader social risks. Failure to do so could • Independence and expertise of audit committees. 03.5 Influencing companies through result in reputational controversies and potential risks • Structure and quantum of executive remuneration. proxy voting A number of our funds are invested in technology 03.6 Conflicts of interest to the business. Our discussion involved investment • Shareholder rights, especially in the context sectors and several investment teams and clients 03.7 Industry engagement professionals as well as members of the sustainability of takeover-related matters, capital issuance are based in the US. In 2021, we observed several and commitments team to gain an integrated perspective on the issue. authorities and other issues. notable technology companies attracting large The company stated that the size of the segment is now shareholder opposition to pay, evidenced by weak 04 small and that they are pursuing disciplined growth of 1. Overboarding at a technology company support for their advisory executive pay resolutions AllianzGI as a sustainable business under 15% of revenues. The business is not primarily Overcommitment by directors is a serious concern for (“say on pay”). We decided to focus on this issue as a credit company, but it is looking to grow steadily investors as it can compromise the quality of boards. a theme for engagement, recognising that many 05 in that market. With respect to systemic risks of the This is explicitly covered within our global Corporate technology companies are still run by their founders Appendix BNPL market, it outlined some of the key analytical Governance Guidelines which outline our position on in the US. This makes the sector an outlier in what tools it uses to ensure affordability via monitoring of what other commitments are acceptable for a board is otherwise one of the most dispersed ownership the funding mix at a customer level. We will continue to member. We engaged one US technology company over markets internationally. It means that assessing the monitor the issue via periodic calls. By sharing details a director who we were concerned was over-committed. quality of alignment between shareholders and of this engagement with our investment platform, In a subsequent call, the company updated us that management requires more nuanced analysis. we have raised an issue that may be relevant to other the director would be stepping down. We routinely companies. If this topic becomes more of a heightened raise the issue of overboarding with companies in our We selected a group of 10 companies for follow- market risk, we may evolve it into an engagement engagement meetings. We frequently observe positive up on the basis of their portfolio importance, theme to be applied to more companies via systematic outcomes, typically following extended pressure from the weakness of overall support for their “say on pay”, selection of targets. several shareholders pursuing the topic. and issues identified through previous engagements. Where we thought it would be beneficial, we reached Engagement topic: Fostering strong 2. P rofessionalisation of the board of out to set up a meeting to share our specific institutions through good governance a European small-cap improvement requests. To reach a wider audience, and transparency We started our engagement with a European we also published a paper in our “Stewardship Strong governance practices at investee companies are entrepreneur-driven small-cap in 2020. At the time we Principles” series to explain our position to companies. critical enablers of investment performance. With these voiced our concerns with respect to the size and set- This means that we are now better prepared for the practices in place, boards and management can better up of the board, which did not have any committees 2022 AGM season, more informed and – we believe address other topics that are highly relevant to the supporting it. We specifically suggested to add more – able to be more effective with our votes. business and investment case, including environmental financial expertise. In 2021, the company added a Addressing executive pay in the and social risks. In 2021 we engaged 160 companies financial expert to the board and established an audit US technology sector at least once on governance issues, underlining our committee and a remuneration and nomination Read here strong focus on a sound institutional set-up for our committee. We consider this outcome of our
01 03.2 Engagement outcomes by theme continued Principles 7 9 Introduction 02 Sustainable investing engagement to be an important step to professionalise 5. Engagement with a UK bank on pay transparency 1. E ngaging with a food products company to 03 the board. We will continue our dialogue with the During several years’ engagement with a UK bank we develop its sustainability strategy Active stewardship chairman to point to additional improvements in 03.1 Our engagement approach highlighted concerns around the transparency and Following an engagement meeting with a food governance standards. disclosure of its remuneration report. We had previously products company on its business model and strategy, 03.2 Engagement outcomes noted the complexity of the balanced scorecard the company requested our guidance on formulating by theme 3. Engagement with US technology company – used for the annual bonus. Our understanding was 03.3 Collaborative engagements shareholder rights its sustainability strategy. We advised the company to 03.4 Escalation where initial This company reached out to us for input on its response that this historic complexity was largely driven by map its sustainability footprint using the Sustainability engagement is not enough to a shareholder proposal that called for adoption of regulatory requirements, which need to be reflected Accounting Standards Board (SASB) standards to 03.5 Influencing companies through the right for shareholders to act by written consent. in addition to internal strategic objectives. Following capture operational performance and to link its proxy voting Given the well-defined scope of the consultation reach further consultation, we saw material improvements handprint (the impact of its products and services) to 03.6 Conflicts of interest and our publicly provided guidance, we replied in in the 2021 remuneration report, aligned with our specific SDGs. We also encouraged the company to set 03.7 Industry engagement writing to set out our position. The outcome was that feedback. The bank was able to simplify and enhance a climate target for 2040. In addition, we highlighted the and commitments management did not submit a voting recommendation remuneration disclosures while reducing scorecard importance of reporting these efforts. We will follow up and, with almost 80% of shareholders supporting this metrics from 15 to seven. We think this simplicity greatly closely with the company on any developments. 04 topic at the AGM, we expect the company to implement enhances investors’ ability to scrutinise pay outcomes 2. E ncouraging disclosure using English AllianzGI as a sustainable business and provides a clearer focus for management. this resolution. language in Asia 05 4. E ngagement with a chemicals company on Engagement topic: Sustainability strategy A common issue for Asia-based companies is lack of Appendix long-term incentive targets and transparency public disclosure in English, especially on sustainability The company consulted us on proposed remuneration Integrating sustainability into their strategies will practices. While companies may have made progress changes as part of its shareholder engagement help enhance companies’ value and uncover new towards being more sustainable, global investors programme. As we are supportive of the long-term business opportunities. We seek to understand and rating agencies can struggle to get updates in a oriented management team, we did not raise material companies’ strategies and how they integrate their timely way. This results in misinformed or out-of-date concerns around remuneration increases through sustainability efforts. disclosure that can undermine investment decision- adjusted CEO base salary and increased overall For companies at the early stage of integrating making. When our local research and sustainability variable opportunity. However, we suggested more sustainability, we advise them on adopting and teams come across such cases, they reach out to the diverse performance metrics, in particular the inclusion developing a sustainability strategy that comprises company and encourage it to publish its sustainability of a returns or cash flow metric. We also highlighted a material ESG matters and ambitious targets. reports in English. Investee companies in Asia generally stagnant earnings per share (EPS) target range and We encourage companies to improve their disclosure welcome our engagement as they often underestimate stated that we expected to see further stretch built into and report consistently on strategy and targets in line the negative impacts of a lack of English language the plan given the greater pay opportunity. In the latest with internationally accepted standards, and their disclosure. The majority of companies we have annual report, proposed changes to the remuneration progress in achieving them. engaged with have committed to improving their structure show a higher threshold and EPS target sustainability disclosure. range as well as the inclusion of return on average For example, we engaged with a Chinese company capital employed as a factor accounting for 20% of the that produces a detailed sustainability report in Chinese. long-term incentive plan. We welcome these positive We learned that the company has established an ESG changes, which are in line with our suggestions. strategy with a dedicated team. We encouraged them to report additionally in English to ensure international outreach and the company has committed to do so. We will follow up with the company in 2022.
01 03.3 Collaborative engagements Principles 7 10 Introduction 02 Sustainable investing In some cases, collaborative engagement offers the 2. Ce res Food Emissions 50 03 most effective way to achieve engagement objectives in Several of our funds are themed around sustainability, Active stewardship the best interests of our clients. Collaboration with other Looking ahead to 2022 03.1 Our engagement approach food and water. The food sector is closely linked with investors is particularly important when we have major climate change as the global food system is responsible 03.2 Engagement outcomes concerns but only small holdings; we can have a greater for approximately one-third of all global GHG emissions1. by theme impact by working together. While we led the majority That is why we identified the intersection between 03.3 Collaborative engagements of our engagements ourselves in 2021, we undertook Our intention is to expand and intensify 03.4 E scalation where initial food production and climate to be an important collaborative engagement activities and we several collaborative engagements with a focus on engagement area and joined the Food Emissions 50 are reviewing our strategic approach for 2022. engagement is not enough climate issues as well as governance and joined industry effort co-ordinated by Ceres. This investor-led initiative 03.5 I nfluencing companies through initiatives to promote the robust functioning of markets. In particular, we have started an analysis of proxy voting is aimed at accelerating progress towards a net-zero statutory rules and guidelines from regulatory 03.6 Conflicts of interest 1. C limate Action 100+ future in the food and agriculture sector by engaging authorities that will shape how we approach 03.7 Industry engagement We are a member of Climate Action 100+. In line 50 of the highest-emitting public food companies in collective engagements moving forwards. In and commitments with our thematic focus on climate, we supported North America. It seeks to improve GHG emissions our home market of Germany, we observe that a collaborative engagement letter that asked a US disclosures, set ambitious emissions reduction targets collaborative engagement is still in an emerging 04 company to add a discussion item to its AGM agenda and implement credible climate transition action state on the back of a regulatory environment AllianzGI as a sustainable business about its climate change commitments, as well as plans in line with the Paris Agreement. As part of our that is not clearly defined when it comes to the adopting a routine advisory vote on its climate strategy. involvement, we joined the working group on land use “acting in concert” implications outlined below. 05 and climate and will be looking to collaborate actively We will continue our work within the DVFA Appendix Given our limited direct exposure, adding our support in 2022 by setting up engagement calls. Governance and Stewardship Commission on to a collective engagement was likely to have a collaborative engagement in Germany. In 2021, greater impact. With the addition of discussion items 3. U K Investor Forum this included a position paper on collaborative to the agenda – as well as a formal response from the We value engagements facilitated by the UK engagement and dialogue with other company – it was clear that climate had become a Investor Forum on issues related to business strategy, market participants. board-level issue and continued engagement would environmental concerns, management of social risks be beneficial (eg, through our Climate Engagement and board oversight, among other topics. In 2021, with Outcome initiative – see page 32). we worked on the two projects: “Engagement with Bid Situations” focusing on takeover situations; and An important outcome of our activity in 2021 was to “Voting Turnout at Irish Companies” (see case study on further define internal frameworks for engaging when page 51). Regarding takeover situations, we facilitated a portfolio company becomes involved in a takeover several meetings with other investors and market bid. The concerns of our Legal and Compliance teams participants to inform our decision-making. This was centred around regulatory restrictions known as important given the level of activity in the UK market “acting in concert”, as well as the sharing of material where access to capital and potentially undervalued non-public information. Through the UK Investor Forum, assets has resulted in a material number of takeover we engaged regulators to better understand their views bids. Both initiatives are ongoing and feed into our around stewardship activity. Going forward, we will work on improving well-functioning markets. enhance our internal guidelines to be more effective in ensuring the best outcomes for clients. 1 https://www.ceres.org/climate/ambition2030/food-emissions-50
01 03.3 Collaborative engagements continued Principles 7 10 Introduction 02 Sustainable investing 03 Active stewardship Shaping pathways for a sustainable future 03.1 Our engagement approach Promoting gender diversity via collective engagement 03.2 Engagement outcomes by theme 03.3 Collaborative engagements 03.4 E scalation where initial In 2021 we joined the French investor group From our conversation, we understand that the engagement is not enough of the 30% Club, a campaign group aiming to company is looking to develop its female talent 03.5 I nfluencing companies through increase gender diversity on boards and senior pool with both women and men playing a role as proxy voting management teams. Female representation in the mentors, and senior management is committed 03.6 Conflicts of interest main listed French companies remains low and to making it happen. To this end, the company 03.7 Industry engagement we think improved gender balance would achieve develops active campaigns to avoid unconscious and commitments better outcomes for investors. We led collaborative bias among managers and uses mentoring 04 engagements with two companies under this programmes to develop female talent and foster a AllianzGI as a sustainable business framework and decided to make this an important better gender balance. It is undertaking an external engagement topic beyond 2021. We will chair the diversity and inclusion audit which we consider to 05 French investor group in 2022. be best practice. While we appreciate the progress Appendix We led an engagement with a major French made, we will continue the engagement to monitor reinsurance company, motivated by the disconnect the results of the audit and the company’s progress between the percentage of women in the workforce in advancing female representation at every level and their representation at management and of the company. executive positions. We appreciate that the board of directors set and achieved a target of 20% women at group executive committee level by 2021 and is targeting 30% by 2025. To build a strong pipeline of senior female talent, the company set an additional target of 27% female representation among senior management by 2025, up from 19% today.
01 03.4 Escalation where initial engagement is not enough Principles 7 11 Introduction 02 Sustainable investing In our engagements, companies are not always • Co-filing/filing resolutions at shareholder meetings. 3. A ddressing the violation of workers’ rights to 03 responsive to our concerns or their actions do not freedom of association Active stewardship give due consideration to the interests of minority • Reducing or exiting our investment position when 03.1 Our engagement approach shareholders. If we conclude that our concerns cannot appropriate (any decision to exit an investment We expect our investee companies to respect and 03.2 Engagement outcomes be resolved through standard interactions with investee position is taken at a portfolio level). ensure labour rights for their own employees and by theme companies, we may start a more focused engagement workers across their supply chain. We reached out to an We consider making public statements in respect of apparel company with respect to an alleged accusation 03.3 Collaborative engagements and consider escalation to achieve our engagement individual companies as a last resort when all other of anti-union behaviour at one of its international plants. 03.4 Escalation where initial objectives. The chosen engagement approach will channels of constructive dialogue have been exhausted. If confirmed, the company would have been acting in engagement is not enough depend on the circumstances and the nature of our violation of its social responsibilities as an employer 03.5 Influencing companies through concerns. Escalation options are not mutually exclusive 1. I nfluencing the takeover of an Irish under the OECD Guidelines for Multinational Enterprise proxy voting and can be combined depending on the situation. healthcare company 03.6 Conflicts of interest During the takeover of the company, we pursued and would be in conflict with our expectations. We had 03.7 Industry engagement Engagement is typically escalated through additional various escalation strategies which resulted in an recorded several unsuccessful attempts to engage with and commitments meetings with management and more intensive improved final bid. Following an initial offer which this company on governance topics in the past. In our dialogue with non-executive directors or with the we considered too low and limited engagement by letter to the company, we presented our viewpoint and 04 chairperson. We prefer to address issues directly with the company, we issued a press release highlighting gave them the opportunity to respond to the allegation. AllianzGI as a sustainable business a non-executive board chairperson, lead or senior The company declined to engage openly with us and independent director, or other non-executive board our concerns. Other key shareholders subsequently only provided an extract of their public statements. This 05 members – thereby gaining senior input on the matters did the same. To inform our strategy, we had follow- failed engagement is further evidence of the company’s Appendix of concern. We also consider emphasising our position up discussions with the board in consultation with poor governance and testifies to its unwillingness to to the board in writing if we have the impression that external legal counsel, other institutional investors and consider minority shareholders’ concerns. At the end direct interaction has been unsuccessful. activists. We also held discussions with the acquirer’s of 2021, we followed up with the company to request advisers to negotiate a more acceptable price. After next steps but did not receive a response. We will now We prefer to engage directly with companies but, a lengthy iterative process, we were able to provide consider further escalation measures. where direct engagement does not progress satisfactorily a “letter of intent” and a public statement of support or where our shareholding is insufficient for an effective for the improved offer. Crucially, as the largest escalation in our own right, we consider other options. shareholder, we were able to achieve a 5.6% uplift These may include: on a recommended bid to the benefit of our clients. • Voting against resolutions at shareholder meetings. 2. T argeting improved cybersecurity with a German • Collaborating with other institutional investors on media company single issues. During our regular engagement in 2020, we discussed the company’s policies and governance on • Joining collaborative engagement initiatives cybersecurity, which we consider to be a material risk co-ordinated by investors, trade associations and for the company. We resolved that the company’s IT other organisations where these seek to address security and data protection framework was insufficient, market or industry-wide concerns. addressed our concern with the management board • Expressing concerns through advisers to the and requested a follow-up. The chief operating officer company, for example in merger and acquisition laid out the strategic programme that the company has (M&A) situations. embarked on to address the highlighted issues. We will continue to monitor its progress going forward.
01 03.5 Influencing companies through proxy voting Principles 7 8 12 Introduction 02 Sustainable investing Exercising voting rights at shareholder meetings is a We are committed to full transparency of our proxy- 03 fiduciary responsibility to our clients and a core part of voting activities. Our disclosures include detailed Global Active stewardship our role as an active investor. It allows us to have a say Corporate Governance Guidelines, a Stewardship Shaping pathways for a sustainable future 03.1 Our engagement approach on some of the most important issues affecting the long- Statement detailing our engagement and conflict of Removing barriers to 03.2 Engagement outcomes term development of investee companies – including interest policy and real-time disclosure of all votes by theme the election of board directors, executive compensation, cast, accessible through our website. This insight active stewardship 03.3 Collaborative engagements capital-related authorities and the appointment of includes commentary on our votes against resolutions 03.4 E scalation where initial external auditors. Other important voting topics include and abstentions. engagement is not enough climate change, workforce diversity, political donations Following the UK’s departure from the European 03.5 Influencing companies through and lobbying activities. Union, changes were implemented to the Irish proxy proxy voting voting system including to the central securities 03.6 Conflicts of interest We apply proprietary Corporate Governance Guidelines 10,190 depository (CSD) used by domestic issuers. An 03.7 Industry engagement across our holdings globally. We put great effort and shareholder meetings participated unintended consequence was that the European and commitments care into developing in-house views and positions in during 2021 replacement operated an intermediated system on corporate governance and proxy voting matters. that was structurally different from its predecessor. 04 Our voting decisions are informed by in-depth research, AllianzGI as a sustainable business analysis and discussions with investee companies which Representing 95% Changes included additional process constraints we often conduct over several years. Detailed proxy resulting in a number of shareholder meetings with 05 voting policies help shape our voting decisions. of all votable meetings “shareblocked” votes. This materially impacted our Appendix ability to exercise our stewardship responsibilities Voting on shareholder proposals is a key part of our in the market. stewardship programme. Shareholder proposals offer At 68% We joined a working group formed to raise the companies an important insight into the views and of meetings globally, we voted against, issue and engaged with various players across concerns of investors. They provide meaningful support withheld or abstained from at least the proxy voting value chain, including registrars, for issues raised that merit careful consideration by one agenda item voting service providers, custodians and CSDs. companies’ boards and management. Our objective was to push for changes to reduce Our goal is to vote at the shareholder meetings of all these adverse consequences, protect the rights the companies we invest in where we have the authority We opposed 21% of beneficial owners and improve the functioning to exercise voting rights. Our Proxy Voting Committee of all resolutions of the Irish capital market. Going forward, we will reviews vote outcomes and we evaluate and address review our voting experience in the market and notable year-on-year changes in the number of shares continue to hold stakeholders accountable for voted – see the case study on exercising voting rights any further process failings. with Irish companies below (right). We respect the right of clients in segregated accounts to retain voting rights, request that voting rights are exercised in line with the client’s voting policy, or delegate proxy voting and engagement activities to a third-party service provider. We do not provide clients with the option to influence voting decisions on a case-by-case basis.
01 03.5 Influencing companies through proxy voting continued Principles 7 8 12 Introduction 02 Sustainable investing Ensuring a robust voting process Once reviewed, proposals are posted on an internal In a minority of cases, we apply policy overrides – 03 global research and collaboration system which is for example when we gain additional information Active stewardship All proxy voting research and initial voting accessible to our investment teams. This means they following engagement that is pertinent to the voting 03.1 Our engagement approach recommendations are generated based on our can review potentially contentious proposals for decision, or when a company makes a commitment 03.2 Engagement outcomes proprietary proxy voting policy. Proxy voting research holdings in their portfolios and discuss them with the that we consider important. We may also override by theme is provided by ISS Institutional Shareholder Services, Stewardship team for further analysis before reaching policy to factor in specific circumstances concerning 03.3 Collaborative engagements a third-party proxy voting service provider. a consensus decision. For policy overrides, internal the company, for instance its business context. 03.4 E scalation where initial We use an electronic proxy voting platform provided by consultations involving analysts and portfolio managers engagement is not enough ISS to cast our votes. Our Stewardship team is in ongoing also take place through this platform. We aim to have 03.5 Influencing companies through contact with ISS whenever questions arise with regards one integrated view when it comes to proxy voting proxy voting to a specific piece of research and the application of our decisions. In exceptional cases where we do not reach 03.6 Conflicts of interest policy. Additionally, we hold quarterly review meetings to consensus, voting decisions are escalated to the Proxy 03.7 Industry engagement review broader process issues involving teams responsible Voting Committee. and commitments for compliance and the operational integrity of the voting 04 process next to members of the Stewardship team. AllianzGI as a sustainable business We review changes to voting rights weekly to ensure AllianzGI proxy voting process we only vote on funds where we have the legal right 05 to do so. We also conduct a quarterly audit across all Appendix our funds with data reviewed by the Compliance team. We review and challenge unvoted meetings. Portfolio General meetings: Application of Automated vote Vote execution We take a risk-based approach to research and analysis holdings date and agenda AGI PV policy implementation around proxy voting. This means the Stewardship team focuses its efforts on reviewing shareholder meeting proposals for the proportion of holdings in our portfolios deemed particularly important to us and election potentially higher risk. These holdings are mainly criteria apply large aggregate positions across our strategies, core holdings in individual funds, companies with an ongoing engagement activity, etc. Our proxy voting policy is consistently applied to the remaining holdings. Case-by-case review eview by anual vote Vote execution stewardship analyst implementation
01 03.5 Influencing companies through proxy voting continued Principles 5 7 8 12 Introduction 02 Sustainable investing 03 Review of voting policies and of the Amendments to the Global Corporate Governance Active stewardship voting process Guidelines are approved by the Global Proxy Voting We review our Global Corporate Governance Guidelines Committee. The Committee considers proposals for 03.1 Our engagement approach change as raised by the Investment and Stewardship 03.2 Engagement outcomes and related policies at least annually, considering teams. In 2021, a notable change to our guidelines by theme changes in market developments, vote turnout, included voting rules on “Say on Climate” resolutions. 03.3 Collaborative engagements regulatory amendments and changes in expectation As this type of proposal gains traction in some markets, 03.4 E scalation where initial levels of our clients. We include feedback from our we decided to update our guidelines to be more engagement is not enough service provider on the applicability of our voting policy transparent and detailed about our approach. 03.5 Influencing companies through in the review process. All proposed amendments to proxy voting the guidelines and voting policy require consultation Securities lending 03.6 Conflicts of interest with our investment platform, involving equity portfolio Securities lending can play a role in enhancing returns 03.7 Industry engagement managers in all of our locations globally. Input from where it is deemed appropriate. We do not actively and commitments our investment teams enables us to create a nuanced engage in securities lending on behalf of either our approach that combines global best practice standards mutual funds or assets for institutional clients, whether 04 for corporate governance with the knowledge of via an in-house securities lending desk or a third-party AllianzGI as a sustainable business how these can be best applied and promoted in local markets. agency. However, where an individual institutional 05 client requests us to facilitate securities lending Appendix through external agency lending – for example via an independently selected custodian – we strive to support this activity within our operational process frameworks. Select changes to our Global Corporate Governance Guidelines in 2021 Issue New policy Reasons for the change Say on Climate Developed voting guidelines for Say on Climate resolutions and Management resolutions specified criteria to be able to support these resolutions on climate were tabled for the first time Diversity Included ethnic diversity aspect into our US voting policy when Developments in the US evaluating director elections in 2020 Remuneration Developed rules on remuneration policies whenever companies Covid-19 pandemic received substantial direct state aid, recorded substantial lay- offs, or cut dividends (not prescribed by regulators) as a result of the Covid-19 pandemic
01 03.5 Influencing companies through proxy voting continued Principles 7 11 12 Introduction 02 Sustainable investing 1 In Germany, we voted on 153 resolutions seeking 03 How we voted in 2021 2 Active stewardship We participated in 10,190 shareholder meetings in 2021 Voting in shareholder meetings approval of remuneration policy (in contrast to 38 (2020: 10,183), representing 95% of all votable meetings. % of total votable meetings proposals in 2020) and voted against in 42% of the 03.1 Our engagement approach We voted against, withheld or abstained from at least In favour of management cases. Our major concerns included payouts for 03.2 Engagement outcomes one agenda item at 68% of meetings globally (2020: 72%). Against management, with at performance inferior to that of the selected peer group by theme least one vote, withheld in the long-term variable compensation component. 03.3 Collaborative engagements We opposed 21% of all resolutions (2020: 23%). or abstained 32 We also opposed the scope for discretionary payments. 03.4 E scalation where initial These figures reflect our highly active and globally engagement is not enough consistent approach to stewardship and our willingness to Our abstentions on compensation proposals globally 03.5 Influencing companies through vote against proposals that do not meet our expectations. remained broadly unchanged at 6%. These abstentions proxy voting typically reflect instances where we have concerns but 03.6 Conflicts of interest How we voted by topic 68 are reluctant to oppose the specific resolution while 03.7 Industry engagement Executive compensation engagements with investee companies are ongoing. and commitments In 2021, we amended our Proxy Voting Guidelines to Compensation-related proposals continued to stand Source: Allianz Global Investors, as of 31 December 2021. 04 out as the most contentious area globally, with AllianzGI scrutinise generous pay proposals on a case-by-case AllianzGI as a sustainable business voting against 47% (2020: 49%) of all compensation- basis whenever companies received substantial direct related management proposals. Voting on 107,218 single proposals state aid, recorded substantial lay-offs, or cut dividends 05 % (not prescribed by regulators) as a result of the Covid-19 Appendix We typically voted against packages that were not In favour of management pandemic. We observed that, by and large, companies supported by robust and challenging targets or when Against management 7 were acting responsibly, with some also cutting variable performance KPIs and actual targets were not sufficiently Abstained/did not vote compensation. Nonetheless, we voted against plans transparent. Other concerns included the use of stock 21 where boards paid out variable compensation on options to foster unsustainable financial performance at a discretionary basis and beyond the scope of their the expense of shareholders, and variable compensation remuneration policy despite poor performance, or where apparently rewarding underperformance. 72 the company received pandemic-related state aid at the We observed a decrease in votes against pay proposals same time as paying out variable compensation. in some European markets. This is indicative of companies Examples of our voting in 2021 and boards being more receptive to investor feedback German company receiving state aid and soliciting views on upcoming remuneration proposals. Source: Allianz Global Investors, as of 31 December 2021. The EU Shareholder Rights Directive II, where investors are We voted against the remuneration policy of one given a say on pay and a vote on remuneration reports, German company. The company received state aid has been a positive driver for investor dialogue. in the form of a loan in the wake of the Covid-19 In some European markets such as Germany, regulation crisis, which it repaid. At the same time, the board required companies to put their remuneration policy decided to grant a discretionary payment to members to a shareholder vote by 2021. While we generally of the management board, which we considered observed improved market standards and transparency inappropriate considering the overall situation. going hand-in-hand with engagement on the topic, After discussion with our investment teams, we decided there is still considerable room for improvement. to vote against and communicated our voting decision to the chairman in a subsequent engagement. 1 The voting examples provided in this section were selected contextually, as they illustrate a key feature of the voting stance and trends of our voting application 2 Equals c95% of all votable meetings.
01 03.5 Influencing companies through proxy voting continued Principles 7 11 12 Introduction 02 Sustainable investing Insufficient transparency of remuneration policy scrutinised director commitments where companies believed that, with the Covid-19 crisis, the risk of the 03 with a Japanese company were hit strongly by the economic implications of the candidate being overstretched was high. After careful Active stewardship pandemic and directors had a high number of external consideration we decided not to support the election. 03.1 Our engagement approach We expect companies to transparently disclose their commitments or were serving in an additional executive 03.2 Engagement outcomes remuneration policy, targets and achievements, and position elsewhere. Environmental and social matters by theme other components, and to align compensation practices In 2021, for the first time, companies tabled resolutions 03.3 Collaborative engagements with shareholder interest. In the case of one Japanese Concentration of power at the top of a company seeking shareholder consent on their climate strategy 03.4 E scalation where initial company, we observed that it did not disclose the through combined chair/CEO roles also led to votes (Say on Climate). We developed specific voting engagement is not enough level of retirement bonuses. As a retirement bonus can against. This was the case where appropriate checks guidelines and reviewed resolutions on a case-by-case 03.5 Influencing companies through comprise a substantial proportion of a director’s lifetime and balances – such as the appointment of a lead basis for material holdings. Often, our voting decisio proxy voting compensation and is typically linked to tenure, not independent director and strong board independence was preceded by engagement with the company, 03.6 Conflicts of interest performance, we decided to vote against the item. – were not in place. where we sought to clarify the climate strategy put to 03.7 Industry engagement Board independence and overboarding Examples of our voting in 2021 vote, its ambition level and whether companies would and commitments commit to annual updates for investors to judge progress. Despite a slight decrease in votes against director- US educational services company with lengthy 04 related proposals (23% in 2021 vs. 26% in 2020), we board tenures We voted on 31 climate-related resolutions raised by AllianzGI as a sustainable business continue to have major concerns about the sound and One of the directors of a US educational services management of 30 companies and supported all of balanced set-up of many boards. We voted against company has been on the board for 13 years and is a them. While we gave certain companies some credit 05 several companies where we deemed the board of member of the compensation committee. Under our for being first movers, we will apply more rigorous Appendix directors and/or board committees to be insufficiently benchmarking going forward as we expect Say on independent, either because directors had a long tenure policy, these are grounds to vote against his re-election. However, four other directors had much longer tenures Climate resolutions to become more prevalent and or were representatives of major shareholders. This was resulting in an overall board average tenure of 14 market standards on these votes to evolve. a concern in the US where we routinely come across years. This is inappropriately lengthy and prioritised directors with long tenure. While we fully appreciate We encourage high-emitting companies to put their the quality and company insight an experienced the need to encourage broader board refreshment. In climate strategy to a vote and we supported all director may bring, our approach reflects a concern that consultation with the portfolio manager, we decided to shareholder resolutions requesting non-binding advisory familiarity with the company can be a disadvantage override our proxy voting policy, support the election of votes on climate action plans. We also supported when it comes to the need for independent scrutiny by the director with the 13 years’ tenure, and oppose the re- almost 80% of proposals requesting improved reporting the board. We do not oppose long-tenured directors election of another director who had been on the board on climate change and sustainability, and 100% of being on the board as such, but we regularly vote for 20 years, although that director was not a member proposals on community environmental impact. against the re-election of those who are members of of any committee. At this stage, our view is reflected board committees where we think independence is by a small minority of votes since all the directors were Human rights continued to be a strong focus and we of utmost importance, namely the compensation and elected by a majority exceeding 90%. We will reassess voted for 100% of all proposals. These included human audit committees. our position as we head into the 2022 voting season. rights risk assessments and improving a company’s human rights standards or policies. We also voted Overboarding remains another major concern in Overboarding concerns at an industrials company for all resolutions asking for reporting on gender pay many markets. As demands on non-executive directors We engaged a German industrials company on board gaps. As in past years, we strongly supported proposals increase, we voice our concerns and typically vote elections and discussed the CEO of another company seeking transparency of political contributions and against when full-time executives take on more than standing for election. We had overboarding concerns lobbying payments, voting for 94% of these proposals. one executive role, or when non-executive directors as the candidate also served on the board of a Swiss take on a large number of appointments in public company and we would only allow for one additional and private companies. In the past year, we especially board seat on top of an executive role. We also
01 03.5 Influencing companies through proxy voting continued Principles 7 11 12 Introduction 02 Sustainable investing 03 Examples of our voting in 2021 We continue to have particular concerns about some by the company. As an outcome of reviewing our voting Active stewardship Mining company’s first Say on Climate vote Chinese companies and voted against 60% of all pattern for 2021, we will include this specific issue in our Following extensive engagement with a mining audit-related proposals in China. We expect higher annual review of our Corporate Governance Guidelines 03.1 Our engagement approach transparency when it comes to the breakdown of in 2022, to assess whether a more nuanced approach is 03.2 Engagement outcomes company, bilaterally and through CA100+, we supported audit fees and explanation of any non-audit services. appropriate in the US. by theme management on its first Say on Climate vote. Our view In China, we often observe that executive directors 03.3 Collaborative engagements was that the company made significant progress towards are proposed as chair of Audit or Compensation Exercising our rights and responsibilities 03.4 E scalation where initial aligning strategy and ambitions with a net-zero Committees. Such practices would seriously harm the beyond equities engagement is not enough outcome. Despite the existence of material limitations independence and objectivity of the committees’ work Exercising voting rights is typically limited to equity 03.5 Influencing companies through (eg, only partial inclusion of Scope 3 emissions) support and give rise to conflicts of interest. We believe that the holdings. As debt investors, we also exercise rights at proxy voting was warranted at this stage. AGM results showed 84% of board’s Audit Committee should comprise directors who the fund level. For example, when our investment teams 03.6 Conflicts of interest shareholders supported the plan, indicating heightened are unquestionably independent and have appropriate deem market conditions to be favourable, they may 03.7 Industry engagement scrutiny of plans more generally. We supported the qualifications, experience, skills and capacity to decide to negotiate covenants in order to secure better and commitments shareholder resolution on lobbying but voted against effectively contribute. We would vote against if this debt holder rights. the capex-related resolution given its overlap with the were not the case. 04 company’s transition plan. Our engagement approach applies to our equity and AllianzGI as a sustainable business Capital-related resolutions fixed income holdings, in so far as the counter parties Shareholder proposal on human rights overlap. We ensure flow of information through our 05 The extensive, cross-border nature of a large US food We continued to vote against large capital issuance investment and collaboration platform, which both Appendix producer and distribution firm’s supply chain heightens authorisations that were not supported by a credible business rationale from management. Only in teams can access. In 2022, we plan to broaden and the risk of human rights issues. We supported a exceptional circumstances will we support an increase systemise the work between the Sustainability and Fixed shareholder proposal calling for the company to report in capital with pre-emption rights of greater than 33% Income teams in several areas. In particular, we will on its due diligence processes to assess, identify, prevent, and an increase in capital without pre-emption rights improve the connection across the teams to include mitigate and remedy actual and potential human rights of greater than 10% – and only when justified by an more fixed income-specific topics and tailor it to the impacts. The resolution failed to gain majority support, 1 requirements of particular fixed income funds, such as but it attracted just under 20% support. We expect the individual company . sustainability labelled debt. company to have taken note of investor concern and We voted against 15% of capital-related proposals will monitor this issue in future engagements. in 2021 (2020: 16%). In many markets, our votes Auditor-related votes against were because companies did not provide pre-emption rights according to our expectations. We expect investee companies to evaluate and retender In Hong Kong, Taiwan and several European markets, audit contracts regularly and to change auditors after such as Germany and Italy, we voted against up to a maximum of 20 years of service unless stricter local 30% of capital-related resolutions. In the US, we voted laws apply. We voted against 26% of proposals to ratify against 60% of such resolutions. A frequent concern the auditor (2020: 25%), in particular where there was was around resolutions to increase authorised common no commitment from the company to retender the stock by over 10%, where these were not undertaken in audit mandate. exceptional circumstances and appropriately justified 1 Note that we apply stricter rules for Germany.
01 03.5 Influencing companies through proxy voting continued Principles 7 12 Introduction 02 Sustainable investing 03 Breakdown of proxy voting by country Active stewardship 03.1 Our engagement approach Total percentage votes against all management proposals by location in 2021 03.2 Engagement outcomes by theme 03.3 Collaborative engagements 03.4 E scalation where initial engagement is not enough 03.5 Influencing companies through US Japan Italy Hong Kong France Belgium Switzerland Taiwan Germany China Netherlands Spain Sweden UK proxy voting 40% 32% 32% 25% 20% 20% 18% 18% 17% 15% 12% 11% 10% 4% 03.6 Conflicts of interest 03.7 Industry engagement and commitments Total percentage votes against compensation-related proposals by location 2021 04 AllianzGI as a sustainable business 05 Appendix Hong Kong US Belgium Italy China Spain Germany Netherlands Sweden Taiwan France Switzerland UK Japan 95% 84% 59% 51% 48% 43% 38% 36% 32% 29% 24% 22% 20% 17% Total percentage votes against director-related proposals by location 2021 Italy Japan Hong Kong US Taiwan France Germany Switzerland Belgium China Sweden Netherlands Spain UK 49% 35% 29% 28% 23% 22% 16% 16% 16% 15% 11% 10% 6% 5% Source: AllianzGI proxy voting data.
01 03.6 Conflicts of interest Principle 3 Introduction 02 Sustainable investing Our fiduciary duty requires us to exercise any rights We have a dedicated governance structure and a set of In 2021, the Proxy Voting Committee convened twice 03 – including engagement – in the best interest of our policies and processes for managing conflicts of interest to decide on proxy voting decisions that constituted a Active stewardship clients. This includes identifying, monitoring and actively in proxy voting and engagement, including a Conflict conflict of interest in our view. Both concerned voting 03.1 Our engagement approach and fairly managing any conflicts of interest that may of Interest Policy which we publish in our Stewardship matters relating to our parent company, Allianz. 03.2 Engagement outcomes arise from our activities. We regularly review existing Statement. These comprise the following elements: We bring all voting matters related to Allianz to the by theme and new business processes, new products and services, Committee’s attention for decision-making on a regular 03.3 Collaborative engagements new business relationships and internal restructuring • Global oversight – AllianzGI has established a Global basis. This included election of a board member of 03.4 E scalation where initial measures to ensure we identify conflicts of interest at Proxy Voting Committee to provide oversight of the Allianz at another company and approval of the engagement is not enough the earliest reasonable opportunity. proxy voting process. remuneration policy. In both cases the Committee 03.5 I nfluencing companies through • Conflict management – There are instances when confirmed our analysts’ proposals, which resulted in proxy voting We have identified the following major examples we may not wish to vote proxies in strict adherence an against vote in the case of the election. 03.6 Conflicts of interest of potential conflicts of interest with respect to our to our voting guidelines. Where a potential material 03.7 Industry engagement stewardship activities: conflict of interest arises between the company’s and commitments 1. A llianzGI is owned by Allianz, a global insurance interest and those of a client with respect to 04 and financial group whose interests and views may proxy voting, the Global Proxy Voting Committee AllianzGI as a sustainable business not always align with what we consider best for will convene to evaluate the issue, considering our clients. information from all relevant sources. 05 2. Our c ore business is investment management – • Functional separation – A separation of processes Appendix managing money and assets for our clients. Where and management within AllianzGI helps ensure a client’s fund holds securities in a sponsor company, that individuals who are clients or have business a perceived conflict of interest may arise if we relationships with the firm are not able to exercise exercised the proxy vote or engaged in topics on improper influence over our proxy voting decisions. behalf of our client which may impact our own Proxy voting rests entirely with the Investment platform. commercial interests or arrangements. • Training – We have implemented employee training 3. W e may sometimes have clients that advocate a designed to prevent perceived or actual conflicts of voting position with respect to a proxy vote on a interests from constituting or giving rise to a material company that we view to be inconsistent with the risk of damage to the interests of our clients. long-term best interests of other clients. • Risk management – To manage potential conflicts 4. W e may invest in a company that is also a significant in our engagement activities, the Risk Management distributor of our products. function has developed clear and transparent internal escalation guidance. The guidance distinguishes between non-public and public engagement activities.
01 03.7 Industry engagement and commitments Principles 4 10 Introduction 02 Sustainable investing 03 We are committed to helping shape In 2021, we were particularly active in the We were also involved in SFDR interpretation of what Active stewardship industry standards that are effective, following groups: comprises an Article 8/Article 9 product and what is European Fund and Asset Management meant by “consideration of principal adverse impact”. 03.1 Our engagement approach fair and reasonable to promote We contributed to support the understanding and 03.2 Engagement outcomes well-functioning markets. Next to Association (EFAMA): standardisation of clients’ ESG preferences, a discussion by theme collaborative engagement (see AllianzGI is a member of the Stewardship Committee which is ongoing. 03.3 Collaborative engagements and Distribution Committee and its sub-groups for 03.4 E scalation where initial page 48) we are active in a number Sustainable Finance Disclosure Regulation (SFDR) Bundesverband Investment and Asset engagement is not enough of committees, working groups and and Markets in Financial Instruments Directive (MiFID) Management (BVI) 03.5 I nfluencing companies through sustainability preferences. As a member of these We have chaired the Sustainability Committee at BVI proxy voting initiatives globally. In 2021, we joined working groups, we participate in consultations and since 2021 which focuses on regulatory and market 03.6 Conflicts of interest six new initiatives and two working discussions on a variety of sustainability topics at the developments. We were also involved in developing 03.7 Industry engagement groups within initiatives of which we European level. In 2021, we took part in a discussion a target market concept for delivering sustainability and commitments with EFAMA and FinDatex around how ESG information data to distributors. The goal is to support distributors were already a part. We focused on should be provided to information platforms, in fulfilling their duties under the amended MiFID rules, 04 building out our memberships where institutional investors and distributors. Our clients need which will come into force in August 2022. We are an AllianzGI as a sustainable business we can make a difference with respect this information to fulfil reporting obligations under active member of the working groups on Corporate 05 to shaping the thematic agenda SFDR and Solvency II on the institutional side, as well as Governance and Responsible Investment and helped to Appendix MiFID/IDD for distributors. shape the discussion on preserving shareholder rights in setting a focus on climate. virtual shareholder meetings, which arose in the context of the emergency laws in Germany. Initiatives we joined in 2021 Working groups within initiatives Association Française de la Gestion Financière (AFG) Net Zero Asset Managers initiative Engagement and Policy Working Group AllianzGI is a long-term member of AFG and we actively (Initiative: AIGCC) participate in various ESG-related working groups. At One Planet Asset Managers (OPAM) initiative the Corporate Governance Committee, we contribute Paris Aligned Investment Working Group to the development of proxy-voting guidelines that 30% Club France Investor Group (Initiative: AIGCC) we would like French corporations to apply. We also Global Private Capital Association (GPCA) discuss how to improve corporate governance practices ESG Working Group (Initiative: HKIFA) as an opportunity to shape the agenda towards better Initiative Climate International (iCl) Net Zero Stewardship Working Group stewardship practices. Swiss Sustainable Finance (SSF) (Initiative: IIGCC) Hong Kong Investment Funds Association (HKIFA) AllianzGI has been part of the Hong Kong Investment Funds Association since 2004. In 2021, we were among the first asset management firms to join its newly established ESG Working Group. A core focus of the working group is to contribute to the discourse and development of Hong Kong’s sustainable investing policies and regulations.
01 03.7 Industry engagement and commitments continued Principles 4 10 Introduction 02 Sustainable investing 03 Through HKIFA, we initiated dialogues with the We are committed to work in partnership with asset- “Partnering with clients to tackle Active stewardship Securities and Futures Commission of Hong Kong, owner clients on decarbonisation goals across all assets the most pressing sustainability providing feedback and suggestions regarding its under management. We will set an interim target for 03.1 Our engagement approach circular on ESG funds and the fund manager code the proportion of assets to be managed in line with the issues and create a better future 03.2 Engagement outcomes of conduct. In parallel, the Mandatory Provident attainment of net zero emissions by 2050 or sooner and for all is at the heart of what we do. by theme Fund Authority introduced ESG principles for trustees review clients’ interim target at least every five years, We are committed to advancing the 03.3 Collaborative engagements which will come into force in November 2022. We with a view to increasing the proportion of AuM covered 03.4 E scalation where initial actively contributed to discussions with trustees and until 100% of assets are included. For more information understanding of the implications engagement is not enough members of the Hong Kong Trustees Association to on our first interim target, please see page 12. of climate-related risks and 03.5 I nfluencing companies through shape how these principles should be interpreted proxy voting and implemented. In addition, we are an active member of the Paris opportunities within long-term 03.6 Conflicts of interest Aligned Investment Initiative which was launched by investment portfolios through the 03.7 Industry engagement Industry consultations the Institutional Investors Group on Climate Change sharing of investment practices. and commitments We responded to consultations from local and regional (IIGCC) to bring together some of the world’s largest authorities including the European Commission, asset owners and asset managers for the development AllianzGI looks forward to 04 US Securities and Exchange Commission, Financial of a “Net Zero Investment Framework”. We are also AllianzGI as a sustainable business joining forces with other institutional investors in contributing to the work of the Conduct Authority in the UK, Monetary Authority of encouraging companies to implement such pathways. One Planet initiatives, given our 05 Singapore and Securities and Futures Commission of Our participation in the engagement platform Climate Appendix Hong Kong. We also responded to a consultation by Action 100+ and the Institutional Investors Group on experience in climate finance – the International Organization of Securities Commissions Climate Change connects us with like-minded investors through our investment process, (IOSCO) on ESG ratings, setting out our views and and offers platforms for collaborative engagement. strong stewardship policy, and recommendations as an ESG data user. We responded to the EU consultation for an Initiative on Sustainable One Planet Asset Manager (OPAM) initiative investment solutions that contribute Corporate Governance, underlining that shareholder The One Planet Asset Manager (OPAM) initiative was positively to the alignment of an interests should not be compromised. first launched to support the members of the One asset owner’s portfolio to a low Commitment to the Net Zero Asset Managers Planet Sovereign Wealth Fund in their implementation carbon economy.” initiative and other climate-related initiatives of the One Planet Sovereign Wealth Framework Recognising the urgency with which we need to tackle (OPSWF). The goal is to accelerate the understanding Tobias Pross, climate change, in March 2021 AllianzGI joined the and integration of the implications of climate-related Chief Executive Officer, Net Zero Asset Managers initiative. The initiative brings risks and opportunities within long-term investment Allianz Global Investors together an international group of asset managers portfolios through sharing of investment practices committed to supporting the goal of net zero GHG and expertise. emissions by 2050 or sooner, in line with global efforts to The OPSWF network comprises 43 of the world’s largest limit warming to 1.5°C. As of December 2021, it included institutional investors with over USD 36 trillion in assets 220 signatories managing AuM of USD 57 trillion. under management and ownership. AllianzGI was the first German asset manager to join the initiative. We are committed to actively collaborating within the OPSWF Framework and to engaging with other key actors – including standard setters, regulators and the broader industry – to further the framework’s objectives.
01 Trust in our company is based those of the companies we invest in. 50:50 Introduction on the integrity, resilience and Our efforts range from reducing our male to female representation in our competency of how we do business environmental impacts and securing Executive Committee 02 Sustainable investing as well as on our culture and how it our systems and data to creating an Most Improved 03 is brought to life by all colleagues. inclusive workplace and supporting Active stewardship We are shaping a pathway to a colleagues’ health and wellbeing. Retention Rate more sustainable future by focusing Citywire Gender Diversity Awards 2021 04 AllianzGI as a sustainable business on our own operations as well as 77% 04.1 B uilding our approach to reduction in greenhouse gas emissions sustainable investing 04.2 Developing a shared vision for per employee inclusion and diversity 04.3 Promoting employee health and wellbeing in a hybrid work environment 04.4 Business conduct and operational risk management 04.5 Managing the environmental impact of our operations 04.6 Corporate citizenship 05 Appendix 04 AllianzGI as a sustainable business
This is a modal window.
01 04.1 Building our approach to sustainable investing Principle 1 Introduction 02 Sustainable investing 03 Our company values – excellence, Promoting inclusive meritocracy – where Fit and proper standard Active stewardship integrity, respect and passion – describe people and performance matter To implement and safeguard a strong “fit and proper” how we want to conduct our business. We use the term inclusive meritocracy to describe standard, we must ensure senior management and 04 a culture and working environment where people key function members have the required knowledge, AllianzGI as a sustainable business They underpin our commitment to and performance matter. Inclusive meritocracy experience, professional qualifications, integrity and 04.1 B uilding our approach to being sustainable and our stewardship describes a corporate culture of mutual trust and soundness of judgement. The fitness and propriety sustainable investing approach. In practice, this means: respect, empowerment and collaboration, where of senior management and key function members is 04.2 Developing a shared vision for diversity is fostered and client satisfaction is a high assessed individually during recruitment or appointment inclusion and diversity • Excellence in operations drives us to optimise our priority. Performance and behaviour have an impact and on an ongoing basis as part of annual reviews. 04.3 P romoting employee health ways of working and reduce emissions. on rewards and are encouraged by clear dialogue If a person’s fitness and/or propriety is questioned, and wellbeing in a hybrid with leadership teams. we reassess the situation and take necessary actions work environment • Respect confirms our commitment to develop long- aligned to our policy. 04.4 Business conduct and term relations with clients, providers and colleagues. Inclusive meritocracy underpins a key index in the operational risk management annual Allianz Engagement Survey – the Inclusive Compliance as a key part of 04.5 Managing the environmental • Integrity means holding ourselves to standards over Meritocracy Index (IMIX) – which measures the progress performance appraisal impact of our operations and above compliance requirements. we are making across 10 aspects covering leadership, 04.6 Corporate citizenship • Through passion, we apply ourselves consistently, performance and corporate culture. We monitor any breaches or misconduct in employees’ through both success and adversity. behaviour and performance. Through the year-end 05 Ensuring compliance through harmonised appraisal process, the Compliance team and direct Appendix In addition, our culture principles support sustainable people processes managers are asked to detail any misconduct or behaviours and foster a working environment that Harmonised process documentation is important for breaches to ensure they are considered accordingly. supports our strategy of being the natural choice for making our organisation resilient and enabling us to Depending on the nature of a breach or misconduct savers and investors who care about sustainable returns. cope with the volatility of AllianzGI’s external business case, the range of possible outcomes may vary from a environment. This ensures compliance with established simple reprimand of the employee to formal disciplinary Our culture principles regulations and legislation, and provides greater action, including potential termination of employment. Be sustainable in everything we do context, visibility and transparency into our people processes. It also enables further simplification and Put the client first scalability and enhances process quality and efficiency. Be solution-oriented Be courageous and make tough choices Think out of the box and embrace failure as a learning opportunity Take ownership for the final outcome Win together as a team
01 04.2 Developing a shared vision for inclusion and diversity Introduction 02 Sustainable investing 03 Together with our values and culture, “We want to create a workplace we Workforce: attracting, developing and Active stewardship our focus on inclusion and diversity are all proud of, where there is space retaining a diverse range of people (I&D) shapes how we work and serve for different opinions to be voiced and Our commitment to I&D includes all dimensions of 04 diversity – ethnicity, sexual orientation, gender identity, AllianzGI as a sustainable business our large and varied client base. heard, and where we can continuously age, disability, thoughts, skills and backgrounds. Our 04.1 B uilding our approach to By building an inclusive culture that learn from each other. Simply speaking, Workforce pillar is about attracting and developing sustainable investing brings out the best in people, we we want AllianzGI to be a safe, inclusive a large variety of talents to grow the diversity of 04.2 Developing a shared vision for employees at all levels. inclusion and diversity contribute to improved investment and diverse place which we all enjoy 04.3 P romoting employee health performance and create long-term being part of.” We systematically review the language used in job and wellbeing in a hybrid postings to ensure they are phrased in an inclusive work environment value for our clients and society. Tobias Pross way. We have included our Diversity Charter as an 04.4 Business conduct and I&D is a company-wide responsibility and everyone CEO, Allianz Global Investors addendum to contracts with recruitment partners to operational risk management state our expectation of attracting diverse pools of 04.5 Managing the environmental who works at AllianzGI has a role in creating an candidates. To make the company more attractive to impact of our operations inclusive culture and supporting our commitments to Workplace: building a work culture that women and support the progression of women in senior 04.6 Corporate citizenship I&D. Guided by our business strategy, our I&D strategy enhances psychological safety roles, we partner with organisations such as the Diversity is led by the Executive Committee and delivered by In 2021 we focused specifically on building strong Project and 100 Women in Finance. We are also a 05 working groups of employees across our locations. foundations for a more inclusive workplace culture. signatory of the Women in Finance Charter. Appendix It focuses on three key pillars – Workplace, Workforce We worked to enhance psychological safety and and Marketplace – to create meaningful change prevent any forms of harassment and discrimination. In 2021, AllianzGI won the “Most Improved Retention and embed I&D behaviours into the very fabric of For example, we introduced Rungway, an online Rate” category of the Citywire Gender Diversity Awards our business. platform offering a safe space for everyone to get help which recognise fund management groups that We are developing a network of local working from colleagues and provide help to others. We also have made progress on bringing more women into groups to help drive and embed our I&D agenda. revamped our anti-harassment and anti-discrimination fund management. Members come together regularly to identify areas policy and training, which will be implemented globally We have reached 50:50 male to female representation for improvement and develop local action plans to in 2022. in our Executive Committee (ExCo). In line with Allianz’s deliver the highest value for us and our clients. We also We continued to leverage key I&D events such as targets for 2024, our ambition is to achieve a global collaborate with global Allianz employee networks. Black History Month, International Day of People female representation of a minimum of 30% at all senior Read more about our I&D strategy and achievements with Disabilities and Pride Month to raise awareness levels. We have enhanced our approach since 2017 with in the Allianz Global Investors Inclusion and Diversity around the stereotypes that minority communities actions for 2021-2022 spanning all levels of seniority Report 2021 can experience. In particular, we created guides for and with targeted focus on key functions and locations. colleagues on how to play an active role in fostering a positive environment for ethnic minorities, LGBT+ and disability inclusion.
01 04.2 Developing a shared vision for inclusion and diversity continued Introduction 02 Sustainable investing 03 We access diverse candidate pools by engaging Equal access to learning and development Active stewardship in external initiatives. For example, we took part To support employees’ career development, we ensure in the #10000Blackinterns initiative to tackle the equal access to learning and development including 04 underrepresentation of black people in the UK’s training, networking and mentoring. We offer self- AllianzGI as a sustainable business investment industry and build a pipeline of young black managed mentoring matching on our Opportunity 04.1 B uilding our approach to talent. During the summer, six new interns worked across Platform, which allows employees to volunteer as sustainable investing various investment functions including infrastructure mentors and mentees to “crowdsource” mentoring 04.2 Developing a shared vision for debt, UK equities and global fixed income, and two matches across the firm. inclusion and diversity of these internships led to full-time roles. 04.3 Promoting employee health Increasing I&D through succession planning Marketplace: embedding I&D in our wider and wellbeing in a hybrid social purpose work environment Our focus on the long-term success of our clients We believe our firm can be a powerful force by 04.4 Business conduct and makes succession planning vital. To ensure stable client increasing investment in assets, products and businesses operational risk management management and avoid knowledge and relationship 04.5 Managing the environmental disruptions, we continuously maintain our succession that help the world become more sustainable and impact of our operations plans for critical roles, which are formally reviewed equitable. This third pillar of our I&D strategy is about 04.6 Corporate citizenship annually. This planning considers potential successors at leveraging our I&D values to strengthen our positive different levels of readiness. Each succession plan must impact on society. With this pillar we aim to strengthen 05 include at least one potential successor who would be the way we influence external stakeholders, and Appendix ready within 12 months and an emergency candidate. create greater alignment with the UN’s Sustainable In line with our emphasis on gender diversity, each in- Development Goals. We will develop our strategic scope position must have at least one female successor approach in this area in the coming years to build on in its succession plan. the many initiatives already in place, including our financial literacy programmes and support for other Apart from critical roles, we also review key roles whose community initiatives. incumbent is at risk of leaving, has a planned move to another position, is retiring within two years, or has held the position for longer than five years, after which mobility may be expected or encouraged. This robust process for succession planning – and follow-up to develop identified potential successors – contributes to the retention of top talent and helps secure business continuity for our clients.
01 04.3 Promoting employee health and wellbeing Introduction in a hybrid work environment 02 Sustainable investing 03 We strive to provide a caring work Supporting flexible working at home Active stewardship environment where employees have and abroad the support they need to succeed. AllianzGI has offered employees the opportunity to work 04 flexibly in terms of time or place for several years. During AllianzGI as a sustainable business We also empower our colleagues the pandemic, we put measures in place to ensure safe 04.1 B uilding our approach to to balance work, career development office working where this was permitted. Our flexible sustainable investing and personal priorities through working arrangements proved to be robust with a crisis 04.2 Developing a shared vision for team set up to co-ordinate our approach, including inclusion and diversity wide-ranging initiatives. how to: 04.3 Promoting employee health Our holistic approach to health incorporates mental, and wellbeing in a hybrid • Work when we are most productive. work environment social and physical wellbeing. We consider the causes 04.4 Business conduct and of stress and depression to promote good mental health • Work when and where we have fewer distractions. operational risk management and offer advice on topics such as nutrition, sleep or • Avoid peak commute times and/or reduce them. 04.5 Managing the environmental managing work-life balance. impact of our operations Measures are implemented globally, regionally and • Reduce work-life conflicts and stress. 04.6 Corporate citizenship locally to enable employees to manage their work- • Reduce our environmental footprint. 05 related responsibilities and personal circumstances, • Support business continuity in the event of disruptions Appendix including: in the workplace. • Our Employee Assistance Programme (EAP) offers Building on our existing policy covering flexible working free and confidential support for employees and their within the country of employment, and subject to families to deal with problems such as those related a set of rules to ensure compliance with local and to mental health, substance abuse, stress, grief, international tax, social security and immigration relationships and financial matters. regulations, we have amended our global guidelines • Our new Health and Wellbeing Hub is a one-stop- to give employees the opportunity to work abroad for shop for tips, resources and events to nurture a up to 25 days in a calendar year. healthy mind, body and overall self – both at work and outside of work.
01 04.3 Promoting employee health and wellbeing in a hybrid work environment continued Introduction 02 Sustainable investing 03 Looking beyond the pandemic Listening to and engaging our employees Active stewardship Improving workplace culture is a smart, long-term Our vision is to be the preferred inclusive home for our investment in employees. As new generations enter industry’s best talent. We rolled out a range of cross- 04 the workforce, employee expectations around topics functional transformation projects to further strengthen AllianzGI as a sustainable business such as wellbeing, flexible working and I&D are our inclusive culture and work environment in 2021. 04.1 B uilding our approach to continuously changing. Employee feedback, including through our annual sustainable investing The Covid-19 pandemic has been devastating over the Allianz Engagement Survey, provides the most 04.2 Developing a shared vision for past two years. While the dangers of falling ill were at important input as we continuously seek to become inclusion and diversity 04.3 Promoting employee health the forefront of people’s minds, the knock-on impacts a better place to work. While we are pleased that and wellbeing in a hybrid such as on mental wellbeing were also felt acutely. the 2021 survey showed positive developments on work environment Positive learnings from the pandemic include extending engagement (+7%), and IMIX (+6%), it highlighted 04.4 Business conduct and our focus beyond how work should be done to look at areas for improvement such as the expectation of operational risk management what is needed for people to be happy and productive. more innovation and change, continuing to identify 04.5 Managing the environmental That is why, alongside our parent company Allianz, we and resolve complexity drivers, and creating even impact of our operations have launched Ways of Working (WOW) – a global more cross-functional collaboration and development 04.6 Corporate citizenship framework designed to capture the lessons learned opportunities for employees. during the pandemic as well as to look ahead to ensure In 2021, a total of 108 cross-functional collaboration 05 that Allianz possesses the characteristics that will be Appendix needed for future growth. opportunities were posted on our Opportunity Platform, allowing employees to collaborate and contribute with In the 2021 Allianz Engagement Survey teams across functional and geographical borders. 87% In 2022, we will identify barriers and strengthen our concept for employees to easily explore and of AllianzGI employees agree that our take on opportunities that contribute to their career company communicated clear policies and development. Through our I&D action plan, we continue guidelines to assist employees during the to increase the focus on equal opportunities for minority pandemic and that our company is responding groups. We will also begin complementing the annual appropriately to the Covid-19 crisis. Allianz Engagement Survey with quarterly pulse surveys, covering topics such as new ways of working, health and team spirit. These insights will help steer our efforts towards becoming an even better place to work.
01 04.4 Business conduct and operational risk management Principles 3 5 Introduction 02 Sustainable investing Our success is built on the trust our The responsibility to perform tasks concerning anti- laws as well as to the Allianz Privacy Standard (APS), 03 money laundering and to implement procedures to which – together with the Allianz Binding Corporate Active stewardship clients, employees and the public have prevent money laundering and terrorist financing Rules – ensures a common understanding of, and 04 in our performance and integrity. They (following the “three lines of defence” model) lies within adherence to, global privacy standards. AllianzGI as a sustainable business expect their personal information to be the business and Compliance and Audit functions. We As part of the Legal and Compliance function, 04.1 B uilding our approach to treated with the utmost care and we take document all procedures and measures regarding the AllianzGI has established a Global Data Privacy function sustainable investing this responsibility extremely seriously. prevention of money laundering and terrorist financing. with regional Data Privacy Officers and one Global 04.2 Developing a shared vision for Key responsibilities of the Compliance Data Privacy Officer. This function informs, advises and inclusion and diversity Code of Ethics function include: issues recommendations regarding compliance with 04.3 P romoting employee health We have embedded robust business policies and applicable data privacy laws and regulations, the APS, and wellbeing in a hybrid • Implementation of regulatory requirements into the and other internal and legal standards and guidelines. work environment processes governing ethics and client confidentiality. business processes of AllianzGI It works in close co-operation with the respective 04.4 Business conduct and These are detailed in the AllianzGI Code of Ethics and Information Security Officers to ensure that adequate operational risk management echo Allianz’s overall group standards. • Management of conflicts of interest 04.5 Managing the environmental • Anti-money laundering and anti-bribery/fraud data protection-related technical and organisational impact of our operations Employees are required to act in accordance with measures are in place. 04.6 Corporate citizenship these policies at all times whether dealing with clients, monitoring other external third parties or other Allianz employees. • Setting up information barriers to prevent confidential Risk management along the value chain 05 They must adhere to confidentiality in relation to client information from being passed on We consider risk management to be an integral part of Appendix information and firm activities. Additionally, employees our business processes throughout the value chain, from must not engage in any activities that would result in • Monitoring of personal account dealings client onboarding and portfolio risk management to either a direct or indirect conflict of interest. • Prevention of insider trading and market abuse monitoring operational risks. Risks are addressed as part The Compliance function oversees the effective of an overarching reporting and controlling framework implementation of all regulations stipulated in the • Monitoring trading activities to ensure best execution covering both qualitative and quantitative risks for each Code of Ethics regarding acceptable business practices, to all clients of our functions along three lines of defence: conflicts of interest policies and expected standards • Investment guideline coding and monitoring: • The first line of defence is where each function of ethical behaviour. Every employee participates AllianzGI checks portfolios for compliance with is responsible for designing and implementing in regular compliance training. Personal account investment guidelines, both pre- and post-trade adequate controls related to its processes. dealing is an important topic of compliance with • Employee regulatory training • The second line of defence provides independent the Code of Ethics and is monitored via the online oversight and challenge of the day-to-day risk controls StarCompliance system. • Implementation and maintenance of an effective and risk-taking by the first line. This second line of Our Anti-Money Laundering (AML) policy and Global compliance programme (including the execution of defence is performed by the Legal and Compliance Client Due Diligence (CDD) procedures reflect the a compliance risk analysis and an annual compliance function and the Risk Management function. current requirements of the fifth EU AML Directive, the self-assessment). recommendations of the Financial Action Task Force Data privacy • The third line of defence provides independent on Money Laundering (FATF), the German Anti-Money assurance across the first and second lines of defence. Laundering Act and other European AML laws. We have We are committed to protecting the privacy rights of The third line of defence is performed by the Internal implemented procedures and controls to prevent money our clients, employees, business partners and other Audit function. laundering and terrorist financing. third parties when processing personal data. Personal data includes any information related to an identified or identifiable individual. We adhere to strict data privacy
01 04.4 Business conduct and operational risk management continued Principles 3 5 Introduction 02 Sustainable investing Cybersecurity Business resilience Business recovery plans are mapped to each major 03 function. This ensures that key business processes can Active stewardship Strong cybersecurity is essential for protecting our Business resilience (incorporating business continuity resume in the event of a serious interruption to business systems, data and communications from intended and disaster recovery) is an essential component of our activities. Plans cover the major risk scenarios of a loss 04 and unintended misuse. As such, our cybersecurity service commitment to our clients. The importance of of employees, facilities, technology and third-party AllianzGI as a sustainable business programme is a fundamental to the sustainability business resilience came to the fore during the Covid-19 04.1 B uilding our approach to of our business. pandemic. Our Business Resilience team provided support. Business Resilience teams enforce a review of sustainable investing constant oversight of the frequent changes to local business recovery plans every year. To ensure practicality 04.2 Developing a shared vision for We focus on designing, operating and monitoring an government requirements to support the pandemic and effectiveness, we run testing on the highest risk inclusion and diversity appropriate level of preventive, detective and responsive efforts. This co-ordination ensured that our employees plans and most critical processes, IT applications and 04.3 P romoting employee health security controls. This is a priority as increasingly more could move efficiently and safely between remote systems. These tests are planned on a multi-year cycle and wellbeing in a hybrid complex attack methods impact organisations around working and office locations to support the business to confirm recovery capabilities. work environment the world. At the same time, our digital assets are and our clients. Through a programme of continuous improvement, we 04.4 Business conduct and evolving and expanding and we are implementing collect and analyse feedback to improve the effectiveness operational risk management new technology to meet growing business demand. Our business resilience framework is a multi-tiered risk 04.5 Managing the environmental Both the increasing maturity of attackers and our defence model supported by input from steering groups, of the business resilience framework. A recent major impact of our operations evolving business signal the need for a sophisticated a corporate resilience organisation and each function global crisis management exercise showcased the ability 04.6 Corporate citizenship cybersecurity programme. within the firm. The programme is subject to oversight by of our Global Crisis Unit to successfully manage through Allianz and Allianz Asset Management (AAM). Annual a ransomware attack and minimise potential damage to 05 To protect AllianzGI from cyber risks, we select best self-assessments are submitted to AAM in accordance the firm and our clients. Appendix practices from multiple cybersecurity frameworks, such with Group requirements and the programme is subject as the International Organization for Standardization to periodic audit reviews. The Business Resilience team (ISO) or the National Institute of Standards and manages and administers the programme, ensuring Technology (NIST). These frameworks set standards all business functions comply with the framework and for processes, controls, security testing and reporting. policies. Its role includes: However, there can never be 100% protection against a cyberattack. Therefore, we also focus on controls and • Creating policies, procedures and guidelines training around how to recover from a successful attack, • Identifying threats and weaknesses with the aim of reducing the impact and duration of business disruption to a tolerable level. • Implementing controls • Developing tools and best practices • Delivering training and awareness.
01 04.5 Managing the environmental impact Introduction of our operations 02 Sustainable investing 03 As part of our commitment to a Reducing GHG emissions GHG emissions Active stewardship sustainable future, we manage the Our carbon reduction strategy is designed to reduce environmental impacts of our operations GHG emissions from material sources, namely energy GHG emissions 04 use for office buildings and IT, business travel and paper tons of GHG per employee AllianzGI as a sustainable business and aim to be a role model in delivering use. The strategy focuses on energy-efficient planning, 04.1 B uilding our approach to our own targets on climate change and construction and operation of buildings, sourcing green 2021 0.9 sustainable investing the environment. Our efforts contribute electricity and using carbon-efficient vehicles. 04.2 Developing a shared vision for 2020 2.1 inclusion and diversity to Allianz goals, including working Allianz has committed to set long-term climate targets 04.3 P romoting employee health towards sourcing 100% renewable for its business operations in line with the science 20191 3.9 and wellbeing in a hybrid underpinning the Paris Agreement climate goal. In work environment electricity for our operations by 2023 2020, it set GHG emission targets to 2025 in line with Reducing energy consumption 04.4 Business conduct and and reducing greenhouse gas (GHG) the latest climate science. AllianzGI has committed operational risk management emissions by 38% per employee by to reduce GHG emissions by 38% per employee by Our 2025 target is to reduce energy consumption in our 04.5 Managing the environmental 2025 (against a 2019 baseline) across Scope 1, 2 and office buildings by 10% per employee compared with impact of our operations 2025 against a 2019 baseline. selected Scope 3 emissions (covering energy-related 2019. In 2021, we achieved a 22% reduction (2020: 9%). 04.6 Corporate citizenship emissions, business travel and paper use). This was mainly due to energy-saving initiatives such Environmental management systems as installation of occupancy sensors and refurbishment 05 We apply the Allianz environmental management Our impacts in 2021 activities as well as increased remote working. Appendix system (EMS), which provides clear standards and By the end of 2021, AllianzGI achieved a 77% reduction controls, supports environmental data collection, in GHG emissions per employee (2020: 46%), mainly Energy consumption and promotes transparent reporting of environmental as a result of increasing our use of renewable power, gigajoules per employee impacts across the Group. EMS guides the monitoring improved energy management and reduced business and management of our carbon footprint, use of travel. We expect to include GHG emissions from flexible 2021 16.1 energy and natural resources such as water, and and hybrid working within scope of our future reporting efforts to reduce waste. Implementation of the EMS to reflect infrastructure changes as the way we work 2020 18.7 is monitored by the Group Environmental Officer continues to evolve. (part of Global Sustainability) and supported by Read more about the Allianz approach to tackling 2019 20.6 the Board of Management of Allianz. We apply climate change targeted environmental management system (EMS) processes, certified to ISO14001 standard, to improve environmental management governance practices at our major locations. 1 GHG emissions data (old absolute: 3.5 tonnes) has been restated for 2019.
01 04.5 Managing the environmental impact of our operations continued Introduction 02 Sustainable investing 03 Increasing use of renewable electricity Cutting GHG emissions from business travel Active stewardship As a signatory of the RE100 initiative, Allianz has While business travel accounted for 40% of GHG Prioritising digital: In 2021, we decided to cancel committed to source 100% renewable electricity (RE) emissions from operations in 2021 (2020: 25%), all newspaper and print periodical subscriptions 04 for its group-wide operations by 2023. In 2020, Allianz overall emissions associated with travel are decreasing. at our main offices in Germany. Our subscriptions AllianzGI as a sustainable business started to embed RE in the management targets of our Covid-19 measures played a material role in reducing had grown over time and no longer reflected 04.1 B uilding our approach to Board of Management and CEOs of Allianz entities. In business travel emissions along with our new Global the current demand and prioritisation of digital sustainable investing 2021, 100% of the electricity used by AllianzGI came Travel Policy that prioritises client-facing business travel options, especially during Covid-19. Colleagues 04.2 Developing a shared vision for from renewable, low-carbon sources. This was achieved over travel for internal reasons. can now subscribe to more environmentally inclusion and diversity through agreements with suppliers on “green tariffs” friendly and cost-effective online solutions. 04.3 P romoting employee health (51%) and first-time sourcing of “unbundled” renewable GHG emissions caused by business travel and wellbeing in a hybrid energy attribute certificates (49%). tonnes of GHG per employee work environment 04.4 Business conduct and The purchase of energy attribute certificates (EACs) Reducing water use operational risk management plays an important role in the short to medium term in 2021 0.4 Minimising our water consumption is a key principle 04.5 Managing the environmental delivering on our goals, especially in countries where 2020 0.5 of the Allianz Group Environmental Guideline. Our impact of our operations renewable power cannot yet be readily sourced. office-based operations do not result in significant water 04.6 Corporate citizenship Allianz has opted to take a centralised approach to usage, but we reflect the growing importance of using ensure it sources credible EACs based on operating 20191 2.1 05 water efficiently and considering the impacts of climate Appendix entities’ specific needs and operating regions. We see change. We have committed to reduce water use in this as a temporary solution while we target real-world Reducing paper use our offices by 15% by 2025 against a 2019 baseline. renewable energy solutions to achieve our RE100 target. We use paper mainly for external communications with By the end of 2021, we achieved a reduction of 4% by clients, with a smaller amount used for internal office applying water-saving measures in our facilities and printing. Our efforts to reduce paper consumption are office kitchens. underpinned by the shift to digital communication and reduced paper use in our offices. By the end of 2021, Water consumption AllianzGI had achieved a reduction of 66% (target: 20%) 3 m per employee in paper use per employee against a 2019 baseline (2020: 29%). 2021 24.9 2 Paper consumption 2020 35.4 kg per employee 2019 26.0 2021 9.4 2020 19.4 2019 27.4 1 Business travel data (old absolute: 1.9 tonnes) has been restated for 2019. 2 Water consumption (old absolute: 20.9 m³) has been restated for 2020.
01 04.5 Managing the environmental impact of our operations continued Principle 8 Introduction 02 Sustainable investing 03 Driving down waste Sustainable procurement Active stewardship We aim to minimise waste and reuse and recycle Building strong relationships with our partners and materials wherever possible. Our operations mostly suppliers is essential to run our operations and investment 04 generate household-type waste and our target is to platforms and build sustainable growth. In line with AllianzGI as a sustainable business drive down waste by 14% by 2025 against a 2019 our corporate strategy and culture principles, we seek 04.1 B uilding our approach to baseline. By the end of 2021, we achieved a reduction to collaborate with suppliers that drive innovation in sustainable investing of 49%. This was driven by a range of initiatives focused sustainable business practices. 04.2 Developing a shared vision for on waste centralisation and separation, increased use Market Data Services is a core team in our procurement inclusion and diversity of recyclable packaging and the avoidance of plastic. 04.3 P romoting employee health function, which collaborates with major ESG data and wellbeing in a hybrid We have adopted the global Allianz best practices for providers to support business functions in forming sound work environment removing single-use plastic from our operations. Our investment decisions. High-quality, reliable data is key 04.4 Business conduct and actions vary by location and include replacing single- for developing robust analytics and methodologies to operational risk management use boxes for take-away meals with reusable boxes determine sustainable investment measures. 04.5 Managing the environmental and banning single-use plastics in kitchens. Our efforts Another focus area of procurement is to accelerate the impact of our operations continue to evolve across locations. 04.6 Corporate citizenship adoption of electronic ordering and invoicing solutions across AllianzGI entities. The self-service system- 05 Waste output assisted process ensures AllianzGI standards and ESG Appendix kg per employee criteria are embedded in procurement decisions while enabling paperless and automated transactions. We 2021 75.3 are continuously extending the availability of the tool 2020 89.7 and catalogues, including for eco-friendly promotional materials and stationery. 2019 149.0 Looking ahead, we will develop a revised supplier management programme to ensure greater transparency in the supply chain with clearer sustainability standards. As a leading asset management company, we are investigating options to develop ESG ratings for suppliers to be integrated as supplier classification criteria.
01 04.6 Corporate citizenship Introduction 02 Sustainable investing 03 The pandemic exposed the inequalities Shaping a new generation of innovation “In my daily work as portfolio Active stewardship and barriers faced by people and with Enactus manager, I am often impressed by highlighted the role of businesses in Our partnership with the German division of the global the innovation capabilities of our 04 student network, Enactus, aims to support students to AllianzGI as a sustainable business creating a more equitable and resilient develop pathways to a sustainable future. With more investee companies in addressing 04.1 B uilding our approach to society. We play an active role in than 72,000 students in 35 countries, Enactus is one of environmental and societal sustainable investing local communities and support social the largest student networks in the world. It makes an challenges – such as climate 04.2 Developing a shared vision for important contribution to values-oriented education inclusion and diversity initiatives that contribute to the delivery by helping students to improve the world sustainably change or how the world creates 04.3 P romoting employee health of the UN SDGs, complementing our through entrepreneurial action. and consumes food within planetary and wellbeing in a hybrid work environment focus on impact, SDG-aligned and In our second year of collaboration as a gold member boundaries. Many Enactus projects 04.4 Business conduct and sustainable investments. of Enactus Germany, AllianzGI worked with students to also address environmental and operational risk management support activities that target the UN SDGs through our societal development goals with 04.5 Managing the environmental Beyond our core operations and sustainable investing, sponsorship of the “Start-up Accelerator” in November impact of our operations we seek to use our resources and employee skills to 2021. The various teams had the opportunity to innovation-driven solutions, 04.6 Corporate citizenship have a positive impact on the social and economic pitch their projects in the categories of “start-up” or as demonstrated again during development of our communities. In addition to “innovation” to win exclusive prices. As the event partner, 05 outreach and volunteering activities organised by our we would like to congratulate the teams of Mannheim, the Start-up Accelerator. Appendix employees, AllianzGI supports initiatives in communities with the project “Moufense” (a body lotion to fight local to our operations with a focus on those that align malaria), and Munich, with the project “SeaSoilution” I am also delighted to support with the UN SDGs as chosen by our employees. (seaweed recycling by producing organic fertiliser), a team of Enactus Frankfurt Examples include: which won first prize in their categories.” as business adviser on their • Children’s charities in Germany, Hong Kong, Japan, We share the passion of the students engaged in entrepreneurial journey.” Singapore, Taiwan and the US, with priorities such Enactus networks on their journey to create a better Christoph Berger as health, education, and children’s rights. world through innovation and entrepreneurial action. Head of German Equity Team • Organisations fighting poverty in France, the US and Singapore. • Projects helping to provide food to disadvantaged communities in France, Germany, Peru, Hong Kong, Italy, Singapore and the UK. • Initiatives working with children and adults with disabilities in Hong Kong, Japan and Luxembourg. • Charities fighting homelessness in the US. • Organisations promoting environmental protection in China and Taiwan.
01 Introduction 02 Sustainable investing 03 Active stewardship 04 AllianzGI as a sustainable business 05 Appendix 05.1 UK Stewardship Code index 05.2 Engagements 05.3 Sustainability initiatives overview 05.4 U N Sustainable Development Goals key 05 Appendix
01 05.1 UK Stewardship Code index Introduction 02 Sustainable investing 03 This report should be read in its entirety to obtain a comprehensive picture of our stewardship activities during 2021. The table below provides links to the specific sections within Active stewardship this report that demonstrate how AllianzGI applies the principles of the 2020 UK Stewardship Code. Confirmation of our compliance is now pending approval by the FRC. 04 2020 United Kingdom Stewardship Code Principle Section Page AllianzGI as a sustainable business 1 Signatories’ purpose, investment beliefs, strategy, and culture enable stewardship In conversation with Tobias Pross and Matt Christensen 3 – 5 05 that creates long-term value for clients and beneficiaries leading to sustainable About AllianzGI 6 – 7 Appendix benefits for the economy, the environment and society. 05.1 UK Stewardship Code index What sustainable investing means to us 8 – 10 05.2 Engagements Sustainability governance 13 – 15 05.3 Sustainability Building our approach 62 initiatives overview 05.4 U N Sustainable Development 2 Signatories’ governance, resources and incentives support stewardship. Sustainability governance 13 – 15 Goals key Investing in our team 14 Linking sustainability with remuneration 15 Our advisory capabilities 18 Looking ahead to 2022 22 3 Signatories manage conflicts of interest to put the best interests of clients and Conflicts of Interest 58 beneficiaries first. Business conduct and operational risk management 67 – 68 4 Signatories identify and respond to market-wide and systemic risks to promote a Evolving our strategic approach 7 well-functioning financial system. Focusing on material sustainability themes 9 Acting on climate risks and opportunities 11 – 12 Sustainability risk management 29 Industry engagement and commitments 59 – 60; 76 – 81 5 Signatories review their policies, assure their processes and assess the effectiveness Review and assurance 15 of their activities. Review of voting policies and of the voting process 53 Business conduct and operational risk management 67 – 68 6 Signatories take account of client and beneficiary needs and communicate Provide excellent client service 7 the activities and outcomes of their stewardship and investment to them. Supporting the transition to a better future 10 Shaping sustainable investing with our clients 16 – 20
01 05.1 UK Stewardship Code index continued Introduction 02 Sustainable investing 03 2020 United Kingdom Stewardship Code Principle Section Page Active stewardship 7 Signatories systematically integrate stewardship and investment, Our sustainable investing solutions 23 – 24 04 including material environmental, social and governance issues, Sustainability research and data and analytics 25 – 28 AllianzGI as a sustainable business and climate change, to fulfil their responsibilities. Sustainability risk management 29 05 Appendix Sustainable investing categories 30 – 38 05.1 UK Stewardship Code index Active stewardship 40 – 57 05.2 Engagements 05.3 Sustainability 8 Signatories monitor and hold to account managers and/or service providers. How we select and monitor data providers 27 initiatives overview Removing barriers to active stewardship 51 05.4 U N Sustainable Development Goals key Ensuring a robust voting process 52 Sustainable procurement 71 9 Signatories engage with issuers to maintain or enhance the value of assets. What sustainable investing means to us 8 – 10 Our engagement approach 40 – 47; 76 – 81 10 Signatories, where necessary, participate in collaborative engagement to Collaborative engagements 48 – 49 influence issuers. Industry engagement and commitments 59 – 60; 82 – 87 11 Signatories, where necessary, escalate stewardship activities to influence issuers. Escalation 50 Proxy voting escalation examples 54 – 56 12 Signatories actively exercise their rights and responsibilities. Exercising our rights in equities 51 – 57 Beyond equities 56
01 05.2 Engagements Key Principle 9 Introduction 1 E Environmental O Other engagements S Social C Climate Engagement 02 G Governance with Outcome Sustainable investing 03 Issuer E S G O C Issuer E S G O C Active stewardship AP Moller Holding A/S Banca Transilvania SA 04 Aareal Bank AG Banco Bilbao Vizcaya Argentaria SA AllianzGI as a sustainable business ABB Ltd Banco Santander SA Accenture PLC Bank Millennium SA 05 Activision Blizzard Inc Bank of America Corp Appendix adidas AG Barclays PLC 05.1 UK Stewardship Code index AGCO Corp BASF SE 05.2 Engagements Air Products and Chemicals Inc Bayer AG 05.3 Sustainability Akamai Technologies Inc Bayerische Motoren Werke AG initiatives overview 05.4 U N Sustainable Development Alcoa Corp Beijing Oriental Yuhong Waterproof Technology Co Ltd Goals key Alibaba Group Holding Ltd Berkshire Hathaway Inc Allianz SE BHP Group PLC Alphabet Inc Bilibili Inc Aluminum Corp of China Ltd BlackBerry Ltd Amazon.com Inc BNP Paribas SA AMETEK Inc Booking Holdings Inc Anglo American PLC BP Plc Anhui Conch Cement Co Ltd Braskem SA Antofagasta PLC Brenntag AG Applied Materials Inc Bridgestone Corp ArcelorMittal SA Bunge Ltd Archer-Daniels-Midland Co Buzzi Unicem SpA Arkema SA CANCOM SE ASM International NV Capital Ltd ASML Holding NV Carrefour SA ASOS PLC CDW Corp/DE Assicurazioni Generali SpA Cemex SAB de CV AT&T Inc Cenovus Energy Inc Atlantic Sapphire ASA Cerved Group SpA Auchan Holding SA Cheerwin Group Ltd Australia & New Zealand Banking Group Ltd Cheniere Energy Inc Auto Trader Group PLC China Airlines Ltd Avary Holding Shenzhen Co Ltd China Everbright International Ltd 1 Other engagements include engagements on strategy, risk management, transparency etc.
01 05.2 Engagements continued Key Principle 9 Introduction 1 E Environmental O Other engagements S Social C Climate Engagement 02 G Governance with Outcome Sustainable investing 03 Issuer E S G O C Issuer E S G O C Active stewardship China Everbright Greentech Ltd Deutsche Post AG 04 China Mengniu Dairy Co Ltd Deutsche Telekom AG AllianzGI as a sustainable business China National Building Material Co Ltd Deutsche Wohnen SE China Resources Cement Holdings Limited DFS Furniture PLC 05 China State Construction International Holdings Ltd Diversified Gas & Oil PLC Appendix China Steel Corp Dl E&C Co Ltd 05.1 UK Stewardship Code index China Tourism Group Duty Free Corp Ltd Dollar General Corp 05.2 Engagements Chubu Electric Power Co Inc Dow Inc 05.3 Sustainability Cisco Systems Inc DSV PANALPINA A/S initiatives overview 05.4 U N Sustainable Development Citigroup Inc DXC Technology Co Goals key CK Infrastructure Holdings Ltd E.ON SE CNOOC LIMITED Eclat Textile Co Ltd Comcast Corp Ecolab Inc Compagnie de Saint-Gobain EDP – Energias de Portugal SA Compagnie Generale des Etablissements Michelin Electricite de France (EDF) Continental AG Elkem ASA Corbion NV Empresaria Group PLC COSCO SHIPPING Holdings Co Ltd Enel SpA Country Garden Services Holdings Co Ltd Engie SA Covestro AG Eni SpA Covivio EQS Group AG Cranswick PLC Equinix Inc CRH PLC Equinor ASA Crowdstrike Holdings Inc ERG SpA CSL Ltd EssilorLuxottica SA Daimler AG Essity AB Danone SA Estun Automation Co Ltd Daqo New Energy Corp Evonik Industries AG Dechra Pharmaceuticals PLC Evotec SE Delta Air Lines Inc Exxon Mobil Corp Deutsche Boerse AG F5 Networks Inc Deutsche Lufthansa AG Faurecia SE Deutsche Pfandbriefbank AG Fittech Co Ltd 1 Other engagements include engagements on strategy, risk management, transparency etc.
01 05.2 Engagements continued Key Principle 9 Introduction 1 E Environmental O Other engagements S Social C Climate Engagement 02 G Governance with Outcome Sustainable investing 03 Issuer E S G O C Issuer E S G O C Active stewardship FLEXium Interconnect Inc Hindalco Industries Ltd 04 FMC Corp Hitachi Ltd AllianzGI as a sustainable business Forbo Holding AG HomeServe PLC Ford Motor Co Honda Motor Co Ltd 05 Formosa Petrochemical Corp Horizon Therapeutics Plc Appendix Formosa Plastics Corp HSBC Holdings PLC 05.1 UK Stewardship Code index Fortinet Inc Hua Hong Semiconductor Ltd 05.2 Engagements Fortum Oyj Huhtamaki Oyj 05.3 Sustainability Freeport-McMoRan Inc Hyundai Steel Co initiatives overview 05.4 U N Sustainable Development Fresenius Medical Care AG & Co KGaA Iberdrola SA Goals key Fresenius SE & Co KGaA Imeik Technology Development Co Ltd Fuchs Petrolub SE Industria de Diseno Textil SA Futu Holdings Ltd Infineon Technologies AG Gazprom PJSC Infrastrata PLC General Electric Co ING Groep NV General Motors Co Intel Corp Georg Fischer AG International Business Machines Corp Gerresheimer AG International Consolidated Airlines Group SA Giant Manufacturing Co Ltd Interroll Holding AG GlaxoSmithKline PLC Intertek Group PLC GoerTek Inc ITEQ Corp The Goldman Sachs Group Inc Jiangsu Hengli Hydraulic Co Ltd Grafton Group PLC Jinyu Bio-Technology Co Ltd Gree Electric Appliances Inc of Zhuhai Johnson Controls International plc Guangdong Investment Ltd JOST Werke AG GVC Holdings PLC JPMorgan Chase & Co The Hain Celestial Group Inc Kerry Group PLC Hangzhou Tigermed Consulting Co Ltd Keyence Corp HeidelbergCement AG Kinder Morgan Inc Heineken NV Kingspan Group PLC Helical PLC KION Group AG Hella GmbH & Co KGaA KNOW IT AB Henkel AG & Co KGaA Koninklijke Ahold Delhaize NV 1 Other engagements include engagements on strategy, risk management, transparency etc.
01 05.2 Engagements continued Key Principle 9 Introduction 1 E Environmental O Other engagements S Social C Climate Engagement 02 G Governance with Outcome Sustainable investing 03 Issuer E S G O C Issuer E S G O C Active stewardship Koninklijke DSM NV National Grid PLC 04 Korea Shipbuilding & Offshore Engineering Co Ltd Naturgy Energy Group SA AllianzGI as a sustainable business Kumho Petrochemical Co Ltd NCC Group PLC The Toronto-Dominion Bank Neste Oyj 05 LafargeHolcim Ltd Nestle SA Appendix Lam Research Corp New Oriental Education & Technology Group Inc 05.1 UK Stewardship Code index LANXESS AG Newlat Food SpA 05.2 Engagements LEG Immobilien AG NextEra Energy Inc 05.3 Sustainability Legrand SA Nexus AG initiatives overview 05.4 U N Sustainable Development LG Chem Ltd Norcros PLC Goals key Linde PLC Novartis AG LONGi Green Energy Technology Co Ltd Novatek PJSC Lonza Group AG Nutrien Ltd L'Oreal SA Occidental Petroleum Corp Luxshare Precision Industry Co Ltd OCI NV LyondellBasell Industries NV Oji Holdings Corp Manulife Financial Corp Okta Inc Marriott International Inc OMV AG Marrone Bio Innovations Inc Orsted A/S Medios AG Paycom Software Inc Melrose Industries PLC PayPal Holdings Inc Mercia Asset Management PLC PBF Energy Inc Merck KGaA Pegavision Corp Microport Scientific Corp Petroleo Brasileiro S.A. Microsoft Corp Petroleos Mexicanos Midea Group Co Ltd Ping An Insurance Group Co of China Ltd Mitsui OSK Lines Ltd Plug Power Inc MOL Hungarian Oil & Gas PLC Powszechna Kasa Oszczednosci Bank Polski SA Moneta Money Bank AS Prysmian SpA Morgan Stanley PTC Inc MTU Aero Engines AG Reckitt Benckiser Group PLC Muenchener Rueckversicherungs-Gesellschaft AG in Redrow PLC Muenchen Renault SA Repsol SA 1 Other engagements include engagements on strategy, risk management, transparency etc.
01 05.2 Engagements continued Key Principle 9 Introduction 1 E Environmental O Other engagements S Social C Climate Engagement 02 G Governance with Outcome Sustainable investing 03 Issuer E S G O C Issuer E S G O C Active stewardship Republic Services Inc Singapore Airlines Limited 04 Rio Tinto PLC SITC International Holdings Co Ltd AllianzGI as a sustainable business Roche Holding AG Skyworks Solutions Inc Rongsheng Petrochemical Co Ltd SMC Corp/Japan 05 Rosneft Oil Co PJSC S-Oil Corp Appendix Royal Caribbean Cruises Ltd Solvay SA 05.1 UK Stewardship Code index Ryanair Holdings PLC Splunk Inc 05.2 Engagements S.F. Holding Co Ltd Square Inc 05.3 Sustainability SafeStyle UK PLC SSE PLC initiatives overview 05.4 U N Sustainable Development Salzgitter AG St James's Place PLC Goals key Samsung Electronics Co Ltd SThree PLC SAP SE STMicroelectronics NV Sberbank of Russia PJSC Stora Enso Oyj Schindler Holding AG Strike Co Ltd Schlumberger NV Stroeer SE & Co KGaA Schneider Electric SE Suez SA SCOR SE Sunjuice Holdings Co Ltd SEB SA Sunoco LP Segezha Group PJSC SunOpta Inc Sekisui House Ltd Swiss Re AG Semiconductor Manufacturing International Corp Symrise AG Shanghai Jinjiang International Hotels Co Ltd Taiheiyo Cement Corp Shanghai Ground Food Tech Co Ltd Taiwan Semiconductor Manufacturing Company Ltd Shell Plc Tate & Lyle PLC Shenzhen Transsion Holdings Co Ltd TC Energy Corp Shibaura Machine Co Ltd Telefonica SA Shin-Etsu Chemical Co Ltd Teleperformance Shinhan Financial Group Co Ltd Temenos AG Siemens AG Tencent Holdings Ltd SIG Combibloc Group AG TerraForm Power Inc Signify NV Tesla Inc Sika AG Tetra Tech Inc Siltronic AG Texas Instruments Inc 1 Other engagements include engagements on strategy, risk management, transparency etc.
01 05.2 Engagements continued Key Principle 9 Introduction 1 E Environmental O Other engagements S Social C Climate Engagement 02 G Governance with Outcome Sustainable investing 03 Issuer E S G O C Issuer E S G O C Active stewardship The Goodyear Tire & Rubber Co Waste Management Inc 04 The Sherwin-Williams Co Weichai Power Co Ltd AllianzGI as a sustainable business Thermo Fisher Scientific Inc Wells Fargo & Co thyssenkrupp AG Whole Earth Brands Inc 05 Tingyi Cayman Islands Holding Corp Wienerberger AG Appendix TKH Group NV Wizz Air Holdings Plc 05.1 UK Stewardship Code index Tokai Carbon Co Ltd Wolters Kluwer NV 05.2 Engagements Tokyo Gas Co Ltd Worldline SA/France 05.3 Sustainability Tongwei Group Co Ltd Wuliangye Yibin Co Ltd initiatives overview 05.4 U N Sustainable Development TOTAL SE Xinyi Solar Holdings Ltd Goals key Toyota Motor Corp Yandex NV Treatt PLC Yonghui Superstores Co Ltd Trelleborg AB Yum China Holdings Inc Tyman PLC Zalando SE UBS Group AG Zeon Corp UDG Healthcare PLC Zijin Mining Group Co Ltd UniCredit SpA Zur Rose Group AG Unilever PLC United Airlines Holdings Inc UPM-Kymmene Oyj Valmont Industries Inc Vedanta Resources Limited Veolia Environnement SA Victorian Plumbing Plc Vinci SA Visa Inc Vital Farms Inc Vodafone Group PLC Volkswagen AG Wacker Chemie AG 1 Other engagements include engagements on strategy, risk management, transparency etc. The Walt Disney Co Source: Allianz Global Investors, as of 31 December 2021. The lists above exhibit the companies which AllianzGI engaged Wanhua Chemical Group Co Ltd in dialogue in 2021. The above information is used for the purpose to demonstrate AllianzGI’s ESG engagement activities, it is not a recommendation or investment advice to buy or sell any particular securities and should not be considered Waste Connections Inc investment advice/recommendation. Past performance is no guarantee of future results. There is no assurance that any companies/securities discussed are/will be held in any fund/portfolio at managed by AllianzGI.”
01 05.3 Sustainability initiatives overview Key Principles 4 10 Introduction New this year 02 Sustainable investing 03 Initiative Allianz Global Description Date Topics Active stewardship Investors‘ Position – present 30% Club France Member The purpose of the Club is to co-ordinate the investment community’s approach to diversity, in 2021 Inclusion and 04 particular to explain the investment case for more diverse boards and senior management teams; Diversity (I&D) AllianzGI as a sustainable business exercise ownership rights, including voting and engagement, to effect change on company boards and within senior management teams and encourage all investors to engage on the issue of 05 diversity with chairs of boards and senior management teams. Appendix Association Française ESG, Corporate Governance AFG is the French Asset Management Industry Association. Since ESG, 05.1 UK Stewardship Code index de la Gestion inception Corporate 05.2 Engagements Financière (French Member Corporate The Corporate Governance Committee of the AFG aims to promote best governance practices on Since Governance 05.3 Sustainability Asset Management Governance Committee the French marketplace, improve practices at French issuers and discuss proxy-related issues such inception initiatives overview Association) as the role of proxy advisors, shareholder activism. 05.4 U N Sustainable Development Member Technical Committee Standing committee organises the working groups such as those focused on the SRI label, ESR 2019 Goals key Responsible Investment indicators or energy transition law and others. The committee aims to be a place for sharing information on current regulations, initiatives, promotion responsible investment. Asia Investor Group Member The Asia Investor Group on Climate Change (AIGCC) is an initiative to create awareness among 2018 Climate on Climate Change Asia’s asset owners and financial institutions about the risks and opportunities associated with climate change and low-carbon investing. Member Engagement and The work this group undertakes on engagement is complementary and in parallel with company 2021 Policy Working Group engagement as part of Climate Action 100+. Given the interconnected nature of company engagement and government policy in the region, combining the focus of this working group will initially enable investors to understand how their increasingly important role in policy advocacy can also help drive more ambitious corporate climate action. Member Paris Aligned The group focuses on developing investor solutions for facilitating the transition to a net-zero 2021 Investment Working Group emissions economy in Asia, and to track global progress. The group oversees AIGCC’s second annual low carbon investment survey. The group identifies and collates what institutional-grade low-carbon opportunities are available in the region and how they can be scaled up based on research. Bundesverband Member BVI is the German Investment Funds Association. 2011 ESG Investment und Asset Member Committee Sustainability The committee deals with strategic and technical issues related to sustainable investing, including 2020 Management corporate governance. It accompanies regulatory and political initiatives in the field of sustainable finance, especially at the European level, and evaluates their practical effects. It decides on the positioning of the BVI in the context of ongoing regulatory projects and develops approaches for the BVI's pro-active role in the further development of the legal framework. In addition, it discusses essential aspects of standardisation in the market for sustainable investments. Member Working Group The working group prepares the association's positions on responsible investing. 2011 Responsible Investing Member Working Group The working group prepares the association's positions on current legislative projects relating to 2015 Corporate Governance corporate governance at national and European level and develops the BVI analysis guidelines for general meetings. Member Working Group ESG The working group prepares the association's positions on sustainability risks in the risk 2020 Risk Management management processes of fund portfolios and on the management company level.
01 05.3 Sustainability initiatives overview continued Principles 4 10 Introduction 02 Sustainable investing 03 Initiative Allianz Global Description Date Topics Active stewardship Investors‘ Position – present Carbon Disclosure Investor Member International non-profit organisation that promotes carbon reporting by requesting information 2015 Climate 04 Project from leading companies about their GHG emissions and other environmental impacts. AllianzGI as a sustainable business Climate Bonds Partner International, investor-focused not-for-profit. The only organisation in the world working solely on 2015 Climate 05 Initiative mobilising the USD 100 trillion bond market for climate change solutions. Appendix Climate Finance Founding Member CFLI aims to unlock climate finance in emerging markets, thereby mobilising private capital in order 2019 Climate 05.1 UK Stewardship Code index Leadership Initiative to help finance the transition towards a more sustainable tomorrow. 05.2 Engagements Council of Institutional Member The Council of Institutional Investors is the leading corporate governance network in the US, 2017 Corporate 05.3 Sustainability Investors advocating effective corporate governance practices for US companies and strong shareowner Governance initiatives overview rights and protections. 05.4 U N Sustainable Development Climate Action 100+ Participant The Climate Action 100+ is an investor-led initiative to ensure the world's largest corporate 2017 Climate Goals key greenhouse gas emitters take necessary action on climate change. The Conference Board Member The Conference Board connects businesses across geographies and provides them with insights 2019 Corporate that enable them to anticipate what is ahead, improve their performance and better serve society. Governance Member of Corporate The Corporate Governance Council was founded in Europe in recognition of the growing 2019 Governance Council importance attached by investors to the effectiveness of the corporate board. It has strong connections to the Corporate Governance Research Center, based in New York. The Council is dedicated to executives with governance interest and responsibility, based in Europe, including corporate secretaries, legal counsel, and institutional investors responsible for corporate governance policies. Deutsche Vereinigung Board Member/ Sponsor DVFA is a professional association of investment professionals in Germany. DVFA sets German 2005 ESG für Finanzanalyse und industry standards. Asset Management Member Kommission The DVFA Kommission Sustainable Investing addresses how to better integrate Sustainability in 2018 Sustainable Investing analyis and how to address policy and regulation in the German market with a focus on education and formation of analysts. Member Kommission The DVFA Kommission Corporate Governance has set itself the goal of promoting best practice 2015 Corporate Governance for corporate governance in listed companies. The commission's activities include addressing current aspects of corporate governance, developing standards and helping to shape relevant regulatory processes. European Fund and Member Stewardship, Market The standing committee’s areas of focus are stewardship role of asset managers, market integrity Since ESG Asset Management Integrity, ESG Investment and ESG and sustainable investment topics. In particular, the committee addresses the topics inception Association Standing Committee of shareholders rights and obligations, relationships between asset managers and investee companies (stewardship), responsible investment, ESG labels, market abuse and sanctions.
01 05.3 Sustainability initiatives overview continued Principles 4 10 Introduction 02 Sustainable investing 03 Initiative Allianz Global Description Date Topics Active stewardship Investors‘ Position – present European Leveraged Member ELFA is the European Leveraged Finance Association , which derived from a former European High 2020 ESG, 04 Finance Association Yield Association. The foundation of the association is to have a buyside group which helps push Corporate AllianzGI as a sustainable business for improved reporting and governance in the European leveraged finance arena. With regard to Governance topics on ESG, it covers primarily governance, but the association helps educate and promote asset 05 management engagement with issuers on ESG. Appendix Member of ESG Committee The ESG Committee is working to improve disclosure on ESG topics in the leveraged finance market 2020 05.1 UK Stewardship Code index and to develop best practice guidance on ESG disclosures for sub-investment grade corporate 05.2 Engagements borrowers in collaboration with the PRI. 05.3 Sustainability FAIRR Initiative Member FAIRR is an investor network raising awareness of ESG risks and opportunities in intensive animal 2019 ESG initiatives overview agriculture, and helping build a more sustainable food system. 05.4 U N Sustainable Development Forum pour Member French Sustainable Investment Forum – membership-based organisation addressing policy and 2009 ESG Goals key I´Investissement other ESG topics specific to the French market. Organises regular events, seminars, workshops, co- Responsable ordinates responses to consultations, etc. Forum per la Finanza Participant Italian Sustainable Investment Forum – membership-based organisation addressing policy and 2011 ESG Sostenibile other ESG topics specific to the Italian market. Organises regular events, seminars, workshops, co- ordinates responses to consultations, etc. German, Austrian and Member German Sustainable Investment Forum – membership-based organisation addressing policy and 2013 ESG Swiss Sustainable other ESG topics specific to the German market. Organises regular events, seminars, workshops, Investment Forum co-ordinates responses to consultations, etc. Green Bond Principles Member The GBP are intended for broad use by the market: they provide issuers guidance on the key 2015 Environment components involved in launching a credible Green Bond; they aid investors by ensuring availability of information necessary to evaluate the environmental impact of their Green Bond investments; and they assist underwriters by moving the market towards standard disclosures which will facilitate transactions. Member Advisory Council Green The role of the Advisory Council is to advise the Executive Committee, to increase its market 2019 Bonds and Social Bonds awareness and outreach, and to enable further engagement with specific membership categories and observers. Global Impact Investing Member The Global Impact Investing Network is a nonprofit organisation dedicated to increasing the 2018 Impact Network scale and effectiveness of impact investing around the world. They do this by building critical Investing infrastructure and developing activities, education, and research that help accelerate the development of a coherent impact investing industry. Global Private Member The Global Private Capital Association (GPCA) aims to connect and influence key market 2021 Impact Capital Association participants, and to promote the sectors, strategies and deals driving investment returns and Investing meeting societal needs.
01 05.3 Sustainability initiatives overview continued Principles 4 10 Introduction 02 Sustainable investing 03 Initiative Allianz Global Description Date Topics Active stewardship Investors‘ Position – present Hong Kong Investment Member The HKIFA represents the fund management industry of Hong Kong. It aims to foster the 2004 ESG 04 Funds Association development of the fund management industry in Hong Kong, enhance the professional standards AllianzGI as a sustainable business of the industry and to maintain Hong Kong's competitiveness as the major fund management centre in Asia. 05 Member ESG The ESG working group brings together fund managers to discuss on current ESG topics in the 2021 Appendix working group industry, thereby shaping the development of sustainable investment in Hong Kong. 05.1 UK Stewardship Code index The Investment Member A trade body for the UK's asset management industry. We are a member and represented on 2015 ESG 05.2 Engagements Association various working groups. 05.3 Sustainability Member Sustainable The Committee has a broad objective to consider and lead on all issues affecting the Investment 2018 initiatives overview and Responsible Association’s (the “IA”) member firms in the area of sustainability and responsible investment. The 05.4 U N Sustainable Development Investment Committee Committee will not deal with governance and engagement matters already covered by the IA Goals key Governance & Engagement Committee. International Corporate Member Aims to inspire effective standards of corporate governance to advance efficient markets 2015 Corporate Governance Network worldwide. This is achieved through the ICGN Global Governance Principle. Co-chair ICGN's Governance Shareholder Rights Committee. Initiative Climate Member The iCI represents a collective commitment to understand and reduce carbon emissions of private- 2021 Climate International equity based companies and secure sustainable investment performance. Institutional Member IIGCC provides investors with a collaborative platform to encourage public policies, investment 2016 Climate Investors Group practices, and corporate behaviour that address long-term risks and opportunities associated with on Climate Change climate change. (under Paris Aligned The group contributes to the PAII by addressing analytical gaps where further development of 2021 Investor initiative) methodologies and approaches is required to support implementation of the Framework. Topics include development of target setting methodologies, use of offsetting, Scope 3 emissions inclusion Net Zero Technical Working Group and measurement. The Net Zero technical working group takes forward development and oversight of this work. (under Paris Aligned A dedicated working group to develop best practice and support members to increase investment 2020 Investor initiative) in climate solutions. This group oversees analytical work on defining pathways and setting targets for investment in climate solutions, support members to set targets and make commitments Climate Solutions Working Group in relation to investment in climate solutions, and more broadly share best practice and build capability for investing in climate solutions. UK Investor Forum Underwriting signatory An investment industry body set up to facilitate dialogue between UK corporates and 2015 ESG their investors.
01 05.3 Sustainability initiatives overview continued Principles 4 10 Introduction 02 Sustainable investing 03 Initiative Allianz Global Description Date Topics Active stewardship Investors‘ Position – present The Investor Mining & Participant The Investor Mining & Tailings Safety Initiative is an investor-led engagement convening 2019 ESG 04 Tailings Safety Initiative institutional investors active in extractive industries, including major asset owners and AllianzGI as a sustainable business asset managers. 05 Nasdaq Sustainable Member of the Advisory Board Nasdaq Sustainable Bond Network (NSBN) is a global platform that aims to increase transparency 2019 Climate Appendix Bond Network of the Nasdaq Sustainable and accessibility to environmental, social and sustainability bonds. NSBN utilises an open-to-all Bond Network platform on which issuers can showcase their sustainable bonds and related documents and 05.1 UK Stewardship Code index data. The role of Advisory Board is to continuously provide feedback to NSBN. Advisory Board is 05.2 Engagements comprised of major public and private investors, issuers and experts organisations, including Allianz 05.3 Sustainability Global Investors, Nordic Investment Bank, SEB, Alecta, among others. initiatives overview Net Zero Asset Member The Net Zero Asset Managers initiative is an international group of asset managers committed to 2021 Climate 05.4 U N Sustainable Development Managers initiative supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global Goals key efforts to limit warming to 1.5ºC. Net Zero Stewardship This working group aims to provide a forum to help investors view how best to operationalize ‘net 2021 Working Group zero stewardship,’ and develop key tools to enable progress and work with proxy advisors to ensure they are ready to support investors. One Planet Asset Member The One Planet Asset Managers initiative (OPAM) was launched to support the members of the 2021 Climate Managers initiative One Planet Sovereign Wealth Fund Coalition (OPSWF) in their implementation of the OPSWF Framework. The goal is to accelerate the understanding and integration of the implications of climate-related risks and opportunities within long-term investment portfolios through sharing of investment practices and expertise. Member of steering committee The steering committee brings together technical leadership and commitment by its participants 2021 aiming to further support the implementation of the OPSWF framework. Thereby this group contributes to actively shaping the future of the initiative. UN Principles for Signatory Global industry-wide initiative to mobilise greater integration of ESG factors in day-to-day 2007 ESG Responsible Investment investment decisions and processes. Member Global Policy The aim of the group is to inform and strengthen PRI's and its signatories' public policy engagement 2018 Reference Group on responsible investment topics, as well as to encourage alignment between signatories' responsible investment commitments and public policy efforts. Ultimately, the group strives for a regulatory environment aligned with PRI's mission and principles. Spain Sustainable Member Spanish Sustainable Investment Forum – membership-based organisation addressing policy and 2018 ESG Investment Forum other ESG topics specific to the Spanish market. Organises regular events, seminars, workshops, etc. Swiss Sustainable Member Swiss Sustainable Finance aims to strengthen Switzerland´s position as a leading voice and actor in 2021 ESG Finance sustainable finance, thereby contributing to a sustainable and prosperous economy.
01 05.3 Sustainability initiatives overview continued Principles 4 10 Introduction 02 Sustainable investing 03 Initiative Allianz Global Description Date Topics Active stewardship Investors‘ Position – present Task Force on Climate- Supporter The TCFD seeks to develop recommendations for voluntary climate-related financial disclosures 2019 Climate 04 Related Financial that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful AllianzGI as a sustainable business Disclosures information to lenders, insurers, and investors. 05 Value Reporting Member SASB Alliance The Value Reporting Foundation aims to establish industry-specific disclosure standards across 2020 ESG Appendix Foundation ESG topics that facilitate communication between companies and investors about financially (SASB Standards) material, decision-useful information. The SASB Alliance is a new membership programme for 05.1 UK Stewardship Code index organisations and individuals that support the need for more decision-useful, cost-effective 05.2 Engagements sustainability disclosure. Members share the belief that today’s capital markets need standardised 05.3 Sustainability sustainability disclosure and effective ESG integration into investment practices – for the benefit of initiatives overview both companies and investors. 05.4 U N Sustainable Development Member SASB Investor The IAG comprises leading asset owners and asset managers who are committed to improving the 2020 Goals key Advisory Group quality and comparability of sustainability-related disclosure to investors. IAG membership is by invitation only to global institutional investors which have previously joined the SASB Alliance and which commit to engaging companies on the use of the SASB standards. World Benchmarking Member The World Benchmarking Alliance (WBA) seeks to generate a movement around increasing the 2019 ESG Alliance private sector’s impact towards a sustainable future for all. In 2015, the United Nations developed 17 Sustainable Development Goals (SDGs) to help guide us. The WBA is working to incentivise and accelerate companies’ efforts towards achieving these goals.
01 05.4 UN Sustainable Development Goals key Introduction 02 Sustainable investing 03 Active stewardship 04 AllianzGI as a sustainable business 05 Appendix 05.1 UK Stewardship Code index 05.2 Engagements 05.3 Sustainability initiatives overview 05.4 UN Sustainable Development Goals key
01 Introduction 02 Sustainable investing 03 Imprint Project responsibility Active stewardship Copyright © Allianz Global Investors 2022 Kathrin Beck, Sustainable and Impact Investing 04 Publisher John Bolton, Content Management AllianzGI as a sustainable business Allianz Global Investors GmbH Jon Cudby, Content Management Bockenheimer Landstr. 42–44 05 60323 Frankfurt Design, concept and production Appendix German Radley Yeldar, London, U.K. allianzgi.com/sustainability ry.com Editor-in-chief We would like to thank all of our colleagues and Matt Christensen, Global Head of Sustainable partners who have helped us to create this report. and Impact Investing Date of publication: May 2022 Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities. In mainland China, it is for Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations and is for information purpose only. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication’s sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional/professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws. This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors U.S. LLC, an investment adviser registered with the U.S. Securities and Exchange Commission; Allianz Global Investors Distributors LLC, distributor registered with FINRA, is affiliated with Allianz Global Investors U.S. LLC; Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; in HK, by Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; ; in Singapore, by Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore Company Registration No. 199907169Z; in Japan, by Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424, Member of Japan Investment Advisers Association, the Investment Trust Association, Japan and Type II Financial Instruments Firms Association; in Taiwan, by Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan; and in Indonesia, by PT. Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK). 2065975
Allianz Global Investors Global Head of Sustainable and Impact Investing 3 Boulevard des Italiens 75002 Paris France www.allianzgi.com/sustainability