Defending the defensible: is the defence sector sustainable? There are other reasons why weapons may be excluded, even if they are not explicitly banned under international Did you know? agreements. Examples of such exclusions include country- – The theory of just war from the Latin “bellum specific commitments to nuclear disarmament; white 7 justum”, has existed since ancient times. phosphorus which has lawful and unlawful uses; and However, the description by Greek historian depleted uranium weapons for which no international Appian of the means used by the Romans to be agreement exists. able to claim that they were on the “just” side of Our final exclusion addresses companies generating the Third Punic War show that in 149 BCE just more than 10% of revenues from weapons and military wars were already difficult to define. equipment and services. By excluding these companies, we aim to avoid the active financing of military acts of aggression and conflict. International law recognises the right for a state to defend itself, but there is no legal Military equipment is the main reason for companies consensus on the concept of “legitimate war”. In addition, being excluded – see Exhibit 2. The application of our 10% by setting a threshold of 10% of revenues, we aim to revenues threshold ensures that we minimise exposure avoid excluding companies whose core business is not to military equipment through other sectors outside of military in nature. industrials – as shown in Exhibit 3. Exhibit 2: AllianzGI exclusions applied to the A&D sector* by weapon type Nuclear weapons (outside NPT) ines epleted uranium hite phosphorus Cluster munitions Weapon typeNuclear weapons (inside  outside NPT) ilitar euipment excluded 0 50 100 150 200 250 300 Companies in the A&D sector (Companies can be excluded for more than one criteria) *Based on the Bloomberg Industry Classification System Source: Allianz Global Investors internal data Exhibit 3: AllianzGI’s 10% threshold minimises investor exposure to weapons Companies by sector* flagged by AllianzGI’s exclusion policy for military equipment but non-excluded (itin  tresold Go‚ernment ƒi‚ersified …tilities †nergy Consumer‡ ˆon-cyclical Industrial (A‰ƒ Šinancial ‹asic Œaterials Companies by sectorCommunications Žecnology Consumer‡ Cyclical Industrial (ˆon-A‰ƒ      ­ ­  € Companies in the A&D sector *Bloomberg Industry Classification System Source: Allianz Global Investors internal data 3