01 Introduction and strategy 02 Measuring and managing sustainability 03 Climate change related disclosure 04 Strengthening our foundation 05 Our universal principles 02.2 Sustainability in proprietary investments Next steps for target setting We are continuously enhancing our decarbonization targets and intend to: 1. Increase the scope of asset classes covered with emission reduction targets: Allianz is working with the NZAOA to finalize the methods for sovereign bonds as next asset class. We will set targets for this asset class within 12 months after the recommended methodology is released by the NZAOA. 2. Tighten the threshold for coal-based business as of 2023 ( see 02.2.1.5 ). 3. Enhance targets for oil and gas companies reflecting Allianz’s new guideline: Similar to our own Scope 3 targets, the oil and gas industry also has a responsibility to reduce their Scope 3 emissions, which mainly are the emissions resulting from the burning of oil and gas downstream. Most companies have not yet set Scope 3 targets, making it difficult to track progress. We expect for the companies with the largest hydrocarbon production (i.e. above 60 million barrels of oil equivalent production in 2020) to make a thorough commitment to net-zero greenhouse gas emissions by 2050 across their full value chain by January 2025. Calculating the carbon footprint of asset classes To set targets and measure achievement, we calculate the carbon footprint of the respective asset classes. While we have already been reporting the carbon footprint of our Corporates and Listed Equities portfolios, we now also calculate the carbon footprint of our (direct) Real Estate, (direct) Infrastructure Equity and Sovereign bond 1 portfolios in line with the latest Partnership for Carbon Accounting Financials (PCAF) guidance. For details see our carbon footprint methodologies and TCFD reporting for our portfolio carbon footprint. 2 See chapter 03 for more information on TCFD. 1 Our sovereign carbon footprint calculation is in line with PCAF (Partnership for Carbon Accounting Financials) recommendations. Due to data uncertainty related to emissions from Land use, Land Use Change and Forestry (LULUCF), as a first step we currently calculate the Sovereign Carbon footprint excluding LULUCF only. In case no reasonable input data is available for a specific sovereign bond issuer, we exclude this issuer from the calculation. 2 Source: PCAF Global GHG Standard. Allianz Group Sustainability Report 2022 50