01 Our sustainability approach 02 Sustainable investing 03 Active stewardship 04 Corporate sustainability 05 Appendix 03.6 Escalating engagement concerns Principles 7 11 We apply these tools broadly across Our Sustainability team held a series our concerns on climate disclosure and our holdings globally. For fixed income of engagement meetings with subject pointed to progress lagging behind holdings, escalation tools are by nature matter experts and Investment teams previously given commitments. As an more limited as they do not extend to to crowdsource perspectives. We then outcome, we supported the dissident actions taken in the context of shareholder escalated the topic with the company and board candidates and voted against the meetings. However, if we have holdings completed two separate calls – one with recommendations of management. both in equity and fixed income funds, the board and the other with the Forestry we lead escalation measures across asset unit – to understand the firm’s sustainable 4. Targeting improved cybersecurity with classes to be more effective. business practices, governance over a German media company See also section 03.7. labels in different locations and the We had entered a multi-year engagement broader regulatory environment in with a company based on its policies 1. Concern over delisting of an which it operates. The insights we gained and governance on cyber security, investee company through collaboration across the firm which we considered to be a material risk. We engaged several times with a German translated into a thorough engagement We considered the company’s IT security company that intended to delist from the on a complex topic and our informed and data protection framework to be Frankfurt Stock Exchange. We were not perspectives were appreciated by the insufficient and had escalated our concern convinced with the rationale the company firm’s management. Portfolio managers with the management board in 2020 and put forward and considered this move to across investment styles gained deeper followed up in 2021. In 2022, we requested have potential negative implications for our perspectives into their investment another conversation at management investment universe in certain strategies. theses, and some decided to divest board level and were pleased to see As a result, we brought the issue to the as a consequence. We were also able that the company had greatly improved attention of the whole board. The company to provide stewardship advice to an its governance around cyber security was not responsive to our concerns, and we investee company. and data protection, made considerable decided to vote against the related agenda investment and employed more people to items at the extraordinary general meeting 3. Supporting dissident board candidates deal with these issues. We consider this to in early 2023. We engaged a US industrial company be a stewardship outcome of our multi- amidst an activist campaign culminating year engagement and escalation strategy 2. Controversy related to deforestation in a proxy contest. The activist pointed to with the company. A core part of the investment thesis for financial under-performance, proposing a UK energy company has been the a stronger element of independence use of biomass as a renewable energy on the board to address this. We had source, which came under scrutiny bilateral calls with both sides. During our following a televised investigative report. discussions with the board, we voiced Allianz Global Investors Sustainability and Stewardship Report 2022 85