Market terminology Best-effort : this approach seeks to include in the portfolio only issuers that have made the greatest sustainable development effort. Issuers that have made the most progress are not necessarily best-in-universe in ESG. C Carbon footprint Carbon footprint is the sum of greenhouse gas emissions, measured in CO 2 equivalents, for a specified entity, eg, a company, the life cycle or partial life cycle of a product, or a service. A lower carbon footprint can be achieved through the use of renewable energy and efficient use of resources. A carbon footprint of zero is said to be carbon neutral which implies either there are no greenhouse gas emissions, or any carbon causing activities are offset by environmental activities to counter tackle carbon emissions, eg, reforestation activities. Carbon intensity The carbon efficiency of the portfolio, determined by measuring the volume of carbon emissions per dollar of sales generated by portfolio companies (tons CO 2 /USD mn owned revenue). When used in other contexts and other industries, the denominator of this fraction may be other factors, eg, for a company in the property sector, tons CO 2 /square meter of property managed. Climate change risks Climate change risks are risks that result as a consequence of climate change. They are typically broken into two risks: – Transition risks: transitioning to a lower-carbon economy may entail extensive policy, legal, technology, and market changes to address mitigation and adaptation requirements related to climate change. – Physical risks: physical risks resulting from climate change can be event driven (acute) or longer-term shifts (chronic) in climate patterns. These risk factors stem from various weather and climate-related hazards, AllianzGI Sustainable Investing – Glossary 6