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