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.