01 Our sustainability approach 02 Sustainable investing 03 Active stewardship 04 Corporate sustainability 05 Appendix 02.6 Sustainable investing categories Principle 7 The general philosophy and process of encouraging greater inclusivity in society. assessing sovereigns with a focus on topics And second, to achieve an ongoing year- applying the SRI Best-in-class approach We assess the ability of corporate issuers to such as healthcare, education, the role on-year improvement against a chosen are identical across listed asset classes organise their internal structure to improve played by women in civil society and the environmental or social KPI. globally. The specific processes may differ risk management. This includes evaluating infrastructure available to provide access to slightly depending on the asset class, management or supervisory board basic needs. Our first KPI is GHG intensity. By actively resulting in different portfolio compositions. composition, board independence and managing the GHG intensity of portfolios, Multi-asset products, for example, can be remuneration transparency. We analyse Business behaviour: We assess the we aim to contribute to help shape split into two categories: sustainable audit and control mechanisms to prevent relationships between issuers and their the pathway to a low emission future. advanced (where more than 70% of assets abuse and reduce risks under review. supply chains, customers and communities The GHG intensity KPI-based approach need to be sustainable) and sustainable Finally, we analyse shareholder rights and along with the impact of their products helps us better understand a portfolio’s complete (where more than 90% of assets anti-takeover measures. For sovereign- and services on society and respect for carbon footprint status quo and need to be sustainable). bond issuers, we evaluate systems used to market regulations and fair business future development. prevent and fight corruption, the stability practices. These criteria do not apply to Equity portfolios use AllianzGI’s of political structures and government sovereign-bond issuers. Our goal is to continuously expand the proprietary ESG ratings to identify capacity to introduce necessary reforms. list of available KPIs and extend them to outperformers in each industry with KPI-based other products. In addition, the KPI-based regards to ESG performance. A tailored Environment: We assess issuers’ direct Our KPI-based approach was rolled out approach is to be applied to more products. process for certain fixed income products and indirect environmental impacts, in Q4 2022 and targets measurable, assesses sovereign-bond issuers based risks, approach to environmental monitored and reported KPIs to track ESG Looking ahead on a proprietary emerging-markets ESG responsibility and development of results that are significant enough to drive We plan to further evolve our framework that screens out the bottom environmental solutions. Our analysis sustainability in the investment process of sustainability-focused product 10% of countries on the E, S and G pillars. of sovereigns assesses measures taken a portfolio. offering over the course of 2023. to address a comprehensive range of We will extend the newly introduced Our proprietary sustainability rating environmental issues with a country’s A potential advantage of the approach KPI-based approach by implementing methodology spans the different asset political and legal framework being key is the ability to quantify the sustainability additional sustainability-related key classes and is based on four factors: elements of our assessment. feature of a portfolio and regularly report performance indicators. In addition, outcomes. It allows us to choose between innovative climate-related concepts Corporate governance: Strong corporate Social: We review the extent of issuers’ two objectives. First, to outperform across asset classes will be explored governance helps foster long-term workplace health and safety, dialogue with a reference investment universe or to address our clients’ preferences to investment, financial stability and business employees and relationships with suppliers. benchmark or a defined threshold on at tackle global climate change. integrity, supporting stronger growth and We consider general social policy when least one environmental or social KPI. Allianz Global Investors Sustainability and Stewardship Report 2022 50