EuRoSIf EuRopEaN SRI TRaNSpaRENcy coDE - DEcEmbER 2021 the way in which a company undertakes its environ- lifetime of each fund to ensure that ESG considerations mental responsibility; and the development of environ- are integrated in the investment process of each asset and mental solutions. along the duration of each fund. 3- Social: includes the issuer’s extent of dialogue with employees, workplace health and safety considerations, 3.4) What principles and criteria linked career management and the relationship with suppliers. to climate change are taken into account General social policy is considered in the assessment of in the funds? government states with a particular focus on topics such as the healthcare system, education, the role allianzGI believes that it is crucial to be able to identify played by women in civil society and infrastructures and assess sustainability risks as they can impact the invest- providing citizens with access to basic needs. ment performance of portfolios negatively. more specifi- 4 - Corporate Governance: includes an analysis of the cally, the risks that can arise from climate change (physical issuer’s willingness and capacity to organize its internal and transition risks) may result in significant economic and structure to limit dysfunction risks. for corporate issuers, financial losses and even impact financial stability. this includes an evaluation of the management board Thus, climate change is a serious issue for all our stakeholders. or Supervisory board composition, the transparency of at allianz Global Investors, climate risks are an important remuneration systems, the existence of independent consideration when assessing potential investments. remuneration, nomination and audit committees, audit and internal controls. for sovereign issuers, includes an In 2021, we have been developing tools aiming at integra- evaluation of systems used in the prevention and fight ting climate change in our analysis. We are now performing against corruption, the stability of political structures and monitoring a quarterly test on most all of the funds and government capacity to introduce necessary reforms. managed by allianzGI, with an annual review of the metho- 5 - Business Behaviour: includes the analysis of the rela- dology. tionships between the issuer and other parties, (client climate-related risks are considered through allianzGI’s suppliers, local authorities, etc.). for companies, this cri- sustainability risk management strategy, which was laun- terion also includes an evaluation of the impact the ched in 2021 and addresses two dimensions: products or services have on society and their safety • analysis and management of sustainability risks; (mainly product safety) as well as the respect of market • analysis and consideration in the investment process of regulations and business practices and ethics (absence principal adverse impacts. of anticompetitive and corruption practices). This domain is not applicable for the Sovereign analysis. our dedicated and experienced Sustainability Research In parallel with this quantitative rating, an internal analysis team analyzes the material implications of climate change is carried out covering a series of issues considered rele- to the economy, sectors' drivers and business models of vant by the Sustainability Research team. This qualitative individual companies. We research the following: analysis may lead to a rating being modified upwards or • How and where global warming as well as increasing downwards by the Sustainability analyst. extreme weather events stress the food system and the potential economic and social repercussions across the We firmly believe in the separation of roles to avoid conflict value chain; of interest. Thus, the quantitative SRI analysis is run by our • What are the key measures and challenges of the auto- IT unit which owns this process. The process is based on a motive sector to address its scope 3 emissions (use of methodology set up by the Sustainability-methodologies products); analytics team in collaboration with the Sustainability • by reviewing an energy production or distribution player, Research team and is reviewed continuously. only Sustai- how its methane performance and related emissions reduc- nability analysts have the authority to override ratings. The tion targets aligned with the latest methane emissions interaction of portfolio managers managing funds within pathway set by the IEa and whether investment plans in Sustainable product categories, is exclusively related to methane leakage prevention systems are credible. identifying which issuers are a part of their investable uni- for more information we refer to two documents: allianzGI's verse. portfolio managers cannot override a rating. TcfD Report 2021 and allianzGI climate policy Statement, for its closed-ended funds (aREf funds) that invest into which can be found in the Key policy Documents section of Renewable Energies, the Investment Team has incorporated our website: a clearly structured and binding process along the entire https://www.allianzgi.com/en/our-firm/esg/documents 12