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