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