01 Our sustainability approach 02 Sustainable investing 03 Active stewardship 04 Corporate sustainability 05 Appendix 03.4 Engagement outcomes Principles 7 9 Engaging with banks on climate forward by the US Federal Reserve, time. While it is encouraging to see airlines Corporate action must play a key Indirect emissions via financial and will use engagement to assess and addressing climate challenges, we would role in achieving recovery by 2050. support of business activities means encourage balanced decarbonisation like to see them address other issues Our engagement sought to understand banks are highly exposed to climate of books, namely the monitoring and associated with these solutions such as whether and how companies are taking risks. Systemic considerations add management of business risks through biodiversity impacts associated with the action to operate within planetary further motivation to select this as an the climate transition. biomass input for SAF. This will remain a boundaries and protect and enhance engagement theme. We prioritised key focus when we engage with airlines biodiversity. Engagement was strongly systemically important banks for Understanding the role of sustainable and air transportation companies in the driven by our sustainable strategies seeking engagement in 2022 because of aviation fuel for airlines coming year. to foster positive progress within relevant their critical importance to economic Airlines’ use of sustainable aviation fuel (SAF) themes, such as deforestation or pollution. stability first, and second as they play is a key solution to decarbonise aviation GHG 03.4.2 Engagement topic: a leveraged role in transitioning the emissions. Despite the advantage for climate, Planetary boundaries Biodiversity was discussed as a topic in 36 economy through their financing activity SAF faces sustainability challenges linked Economic activities depend engagements with investee companies across the entire spectrum of business to biodiversity (eg, sustainable sourcing on the availability of in 2022. Most companies have started to sectors. The Sustainability Research of biomass-based oils) and food security. natural capital and we need to act within work on addressing biodiversity impacts team developed a framework to assess planetary boundaries to preserve vital by, for example, setting up biodiversity climate performance and identify In 2022, we engaged with several airlines finite resources. Biodiversity is crucial to policies and working with the Taskforce gaps in commitments and governance, for our fixed income holdings with SAF maintaining safe planetary boundaries on Nature-related Financial Disclosures strategic drive and disclosure quality. being a main topic in our dialogues. through vital ecosystems and also helps (TNFD). For those that have not yet This was done by focusing on 15 KPIs While airlines’ use of SAF varies, it mitigate the impacts of climate change. started, we raised awareness of this topic. across commitment and policy, targets, remains a significant focal point for Overall, we sensed that this is a relatively strategy and reporting. The resulting the industry. Common SAFs used are In 2022, after four years of negotiation, new engagement topic for companies, gap analysis was used as the basis for produced from waste fats or vegetable 196 countries adopted the Post-2020 and it requires more consistent reporting. engagement calls, which informed voting oil. Food security and logistics (for waste Global Biodiversity Framework. It sets decisions for shareholder resolutions filed collection) are the main obstacles for out a plan of action to halt and reverse We began a series of pilot in-depth at some US banks and say on climate scaling up. Some airlines invest in Air- nature loss by 2030 and aims to ensure thematic engagements on biodiversity in the UK. We will broaden the theme to-fuel SAF (converting CO2 via carbon that, by 2050, the shared vision of “living with five companies in sectors with high to consider climate risks beyond proxy capture and green H2 via electrolysis into in harmony with nature” is fulfilled. biodiversity impact and dependency, voting implications in 2023. We support hydrocarbons). This is more sustainable such as paper and forest products, the increased prudential focus on climate but technically challenging at the current construction, and chemicals. risks, including those most recently put Allianz Global Investors Sustainability and Stewardship Report 2022 73